"Put it all together and you can see a day when you're watching content that Google produced disseminated via infrastructure that Google owns on a phone that Google made using wireless service Google brokered." Amazon tried it and failed. Google's phones are nice, but the Fi service has done about as well as Google Fiber.
The opposition - the cellcos, the RBOCs, the ILECs - don't want to be just dumb pipes. That's why Comcast owns NBCU; AT&T is buying TimeWarner; and Verizon owns AOL and is buying Yahoo. They want to own the whole OSI stack - Layer 1 to 7 - the walled garden that was AOL.
Facebook wants the same thing. Amazon, Microsoft and Google, too. Live in their ecosystem, where they collect as much data as possible to target you better to sell you more.
Amazon is selling ISP service, as a retail channel for Comcast and Frontier, not as a virtual network operator.
Meanwhile, a bunch of articles over the last two weeks talked about the ILECs lack of investment in broadband. Cable Will Keep Ruling US Broadband.
LightReading states, "All seven of the top MSOs registered broadband subs gains in the summer quarter. Over the past year, the cable companies have added more than 3.5 million data customers. Once again in contrast, five of the seven leading telcos lost broadband subscribers overall in the third quarter as they focused mainly on upgrading their DSL customers to fiber lines, not bringing on new customers." Once again telcos are late to the game - in TV and in competing against DOCSIS. Telcos were even late to get in the DSL game, afraid of losing T1 business. They have always had short term thinking.
"More than 80 service providers have opted out of participation in the Lifeline broadband program for at least part of their territories," writes Telecompetitor. Verizon, AT&T, Cox, Windstream, Charter, CenturyLink, FairPoint and Frontier have all opted out to the FCC. Part of it is "rural carrier stand-alone broadband pricing"; and part is the 10MB x 1MB requirement which DSL can't meet.
Meanwhile, telcos have to re-think their TV strategy in the wake of OTT video. A consortium of them should buy DISH Network and its Sling TV.
After Google Fiber's debacle in 2016, all providers will re-evaluate fixed wireless instead of a wired strategy.
Maybe g.fast makes its way past some trials in 2017.
Will Comcast, Charter or Google become the number 4 cellular provider in 2017 after AT&T, VZW and a combo of T-Mobile+Sprint.
FiberLight, LUMOS, Sprint wireline, Fatbeam, Wilcon, Towerstream, and some others will likely be part of some M&A this year. No one saw Fairpoint getting picked off by Consolidated - or the pending Level3+CenturyLink disaster.
Another year of turmoil coming at you! With a new FCC.
One thing all this says: we don't know what will disrupt in 2017.
]]>Comcast Xfinity, Verizon, Boingo, DISH (Sling TV) have joined Hulu, HBO, Starz, and CBS with streaming TV services. It will all move to IP -- not necessarily over the Internet. Netflix has been trying (mostly unsuccessfully) to be treated like a cable channel on cable networks. WOW accepted the challenge.
On Sunday morning, Yahoo exclusively streamed an NFL game from the UK. Yahoo paid $17 million for the privilege and had about 13.5 million unique visitors. The experience had mixed reviews. "Why, it's almost as if people were using different connections, technologies, hardware and transit routes to connect to the same source! Interestingly, the stream appeared to fare much better for set top (Roku, etc.) and mobile devices than it did for traditional browsers, though I've yet to see a comprehensive explanation why," reported DSLR.
I find it interesting that the Roku is a common denominator in these deals (not Cisco).
Roku allows consumers to (1) own the set-top box; (2) save money (as much as $10.95 per month on set-top box rental); and (3) one portal for all TV choices. This may be the wave of the future; moreso than the Internet TV due to the ease of updates to the Roku.
NPR has a story about cable nevers and cable cord cutters. It seems the big reason is money.
We are in the midst of a fight for the middle class, a living wage, et al. What gets lost in that over and over is that our economy is based on service industries. Look at any major thoroughfare in the US: it contains grocery stores, dry cleaners, restaurants, drugstores, coffee shops, etc. RETAIL and SERVICE. This only works if consumers have disposable income. Income has been flat for a long time (while expenses have increased).
Henry Ford knew it. Today's CEOs do not get it.
I have always looked at financial reports thinking that most companies have peaked organically. VISA, Mastercard, NFL, Comcast, AT&T, Verizon. Without inorganic moves, these companies have peaked and the revenues have one way to go: down.
Take Sprint for example. Softbank dumped like $20 Billion into Sprint. It is losing ground to T-Mobile. It never got close to Ma and Pa Bell (ATT, VZW). Now it is in cost cutting mode. Organic sales/growth just have not happened for Sprint. So revenues go slip, sliding away.
"Every industry and every organization will have to transform itself in the next few years. Every industry and every organization needs to transform itself...or fade away." - Tim O'Reilly
"The pace of change is unprecedented--and staggering. ... From a business--and, for that matter, government--perspective there is, in a sense, only one overarching strategy: constant, high-speed innovation." - Tom Peters
]]>Most of that increase is due to about 5 companies charging a premium for content -- and packaging channels that no one wants with the 1 channel viewers do want. [That is why a la carte channels will just not work. And it tops out with ABC/ESPN/Disney corp charging $6 per subscriber for ESPN - and the cableco has to carry all 7 ESPN channels.]. But not all of it!
"According to the latest annual survey by Leichtman Research Group, 83% of U.S. households subscribe to cable, down from 87% in 2010." [Yahoo]
It won't be Netflix or VZ's new mobile go90 video service that kills TV. It will be 2 things: (1) Millennials can't afford it or don't find value in traditional pay TV; and (2) TV ad spending is declining at a rate of 3% pr year, according to WP.
Why do you see the same ads ad nauseum on TV? Fewer advertisers spending fewer bucks on ads. That model can't last for long. The content providers are used to making money on cable carriage fees as well as on ad revenue. These stodgy companies are slow to change - and adopt to what is happening in the marketplace. They are slower learners than the music industry who got Napster-ed; the movie industry that made claims that piracy was killing them (not that they were making crappy movies not worthy of the substantial movie date bill); and the newspaper industry. Who will TV blame for this one?
The flat disposable income of two-thirds of US consumers makes me worry. The US of A is built on a service economy that is kept spinning by consumer spending - even if that consumer spending is credit card, student loans and other types of debt.
But the woes of TV have more to do with the shift in ad spending by companies from TV to the Internet. Notice that even YouTube has a bunch of ads that look an awful lot like TV ads. Mobile video consumption is rising. All of that will have an effect on the current pay-TV ecosystem. Think about all the telcos that spent millions to get into the TV game around 2004.
One last thought from this article: "In a short time, more people will stream video online each day than will watch scheduled programs on traditional TV, according to a new study from Ericsson, the Swedish communications company."
]]>Comcast removed itself from the $45B acquisition of TWC. Both the DOJ and the FCC were opposed to it. Comcast is facing other issues, like cord-cutting and the demise of the pay-cable-TV model that it was built on.
In fact, Verizon announced new TV channel bundles -- and ABC/ESPN/Disney quickly sued them. While most Americans hate their cable bill what they fail to grasp is that content is not free -- and it is owned by just 6 conglomerates - Comcast/NBCU, FOX/Newscorp, CBS/Viacom, TW, Disney and Sony. These conglomerates are always at odds with the TV distributors - DISH, DirecTV, the cablecos and now the telcos.
I find it striking that DISH Network was able to do Sling TV, a TV channel bundle that rides over the top - without any litigation.
Cablevision announced new plans for the cord-cutters and cord-never-haves: just get a big pipe and OTT and an over-the-air antenna! There is a tie-in to its wi-fi only cellphone plan. This is a very consumer-centric plan.
Two fiber players are merging: Lightower Fiber Networks and Fibertech Networks. "The agreement is an all-cash transaction valued at $1.9 billion, which will be funded through a combination of equity and debt" from Lightower's existing financial backers, Berkshire Partners, Pamlico Capital and ABRY Partner.
Two other players got together to make a regional network: Arkansas-based Ritter Communications and Missouri-based Fidelity Communications. "The new regional fiber network comes from and will support broadband connections between 10 Mbps and 100 Gbps. The network will link Dallas and Memphis, serving rural communities in Arkansas, Louisiana, Missouri, Oklahoma, Tennessee and Texas. The Ritter-Fidelity network has direct connections to major network operator hubs including the Telx facility and the InfoMart data center in Dallas, and the Level 3 data center in Memphis." [source]
CenturyLink makes a strategic partnership in Australia to target financial firms with managed IT. It looks like with XO, Level3 and AT&T growing in LATAM that C-Link had to go Down Under. Where will Comcast go to grow?
CenturyLink also bought database-as-a-service company, Orchestrate.
]]>In a conversation today, a cable exec said, "What if cable didn't sell cable TV any more?" Great question!
Cablecos make more profit on broadband and voice than they do on TV. TV content is becoming a big pain in the ass to negotiate. (How many blackouts have there been?) TV content comes in packages now of multiple channels - many of which no one would every willingly pay for - yet these channels must be paid for to get the few channels that everyone wants.
Is this a sustainable model?
Cablecos have to add authentication so subscribers can view content online. There are fights over network DVRs and IPTV and mobile TV. Is it worth the hassle?
Cablecos are closing more deals in business with TV for the lobby and waiting room.
AT&T is buying DirecTV to negotiate for content. What will FiOS do?
"The top cable TV providers had 49,915,000 broadband subscribers at the end of the second quarter of 2014, compared to about 49,910,000 cable TV subscribers."
What would happen to the TV industry if cable stopped selling TV? Poof!
Not going to happen since we have to entertain the masses or the world ends.
]]>Then there is the AT&T buying DirecTV rumor. Never hear the rumor about DISH being bought, huh? It would seem that all of DISH's moves in wireless - the spectrum acquisition, the trials, the tribulations, Artemis, etc. - don't make it a good fit for anyone, even though DISH has the Hopper, a great DVR, and Slingbox.
On the content side, Netflix is paying Verizon FiOS for access as it did to Comcast. That means it will have to pay the Top 20 ISPs. Rates will have to go up. On the up side, three smaller cablecos - Atlantic Broadband, RCN and Grande - are dealing with Netflix to carry the service. (Details here) Interesting.
Why wouldn't Netflix go to smaller hotel chains (like Days Inn, say) to offer Netflix in place of VOD systems? On a similar note, VZ FiOS has a deal with Redbox for VOD (video-on-demand). AT&T and Chernin couldn't buy Hulu so they put a $500 million investment in a to-be-launched VOD and streaming video service. If you have a Roku, you know that there are literally a hundred channels now for VOD and streaming video services. How much room is there in this space for profitability?
]]>Image via CrunchBase
Highwinds is a CDN player out of Florida. The only reason I know them is that I track tech funding in Florida. Highwinds had a booth at the Channel Partners Expo, which made me scratch my head. Why?"On November 19, 2010, Comcast informed Level 3 that, for the first time, it will demand a recurring fee from Level 3 to transmit Internet online movies and other content to Comcast’s customers who request such content. By taking this action, Comcast is effectively putting up a toll booth at the borders of its broadband Internet access network, enabling it to unilaterally decide how much to charge for content which competes with its own cable TV and Xfinity delivered content. This action by Comcast threatens the open Internet and is a clear abuse of the dominant control that Comcast exerts in broadband access markets as the nation’s largest cable provider." Level3 is calling this a video surcharge So L3 is pulling out the Net Neutrality card.
Meanwhile, Comcast writes that the trouble stems from Level3 sending it 5x the traffic it sends to Level3. If this is the case, then it requires a commercial negotiation. It requires more than peering; it requires the purchase of transit.
Most of the blog post from Comcast sounds a little too much like a former Ma Bell CEO screeching that Google wants it for free. In this case, I guess Level3 wants it for free. Wants what exactly? Well, video traffic. Video traffic on the Internet is increasing steadily. "A recent study found that at peak times, Netflix represented 20 percent of Internet download traffic in the United States," from a NYTimes article. It just so happens that L3 carries a lot of traffic for its partners like Netflix, Google/YouTube, and more: 9 of the top 10 U.S. cable companies.
What Comcast is really saying is that Comcast customers are downloading 5x times the video that they used to. So Comcast's customers are watching way more video, like Netflix and Hulu, and not buying VOD or PPV or premium cable. Comcast is just trying to make up for the revenue.
The major ISP's are all part of the Duopoly. They have to squeeze someone, because they are already squeezing the consumer.
Comcast customers would have a lousy experience if L3 fought this longer, but so too would L3 customers.
Rob Powell says that he saw this coming and it has nothing to do with Net Neutrality. It may not, but the principle is worrisome.
Susan Crawford thinks that it's bad timing for Comcast as the FCC considers its purchase of NBCU.
"Comcast, the largest broadband provider, largest pay-TV company, and third-largest telephone company in the country, distributes communications services to more than a third of the country. Today, Comcast's existing overwhelming market power was on display in major public battles with (1) Level 3 and (2) cable modem manufacturer Zoom," writes Crawford, a law professor and former tech advisor to President Obama.
She missed the carriage dispute with DISH Network, whereby DISH dropped 3 Comcast regional sports networks. Could it be that Comcast is getting "too big to fail"? I'm not anti-business. I'm anti-monopoly.
Certainly content customers have the upper hand. It used to be about eyeballs, but now its about content. The cablecos develop content and have delivery systems in place for that content. Telcos are mainly just dumb pipe. It's going to be a very uneven playing field very soon.
For those interested Rob Friedman goes into the evolution of Peering based on this story.
]]>So if TelcoTV costs big money, but the market is flat, why spend the money?
There are ways to make the landline relevant again, but it would take some ingenuity. There are bundles that can be packaged that would reduce churn without becoming a price war.
I can't understand how telco TV bundles can get into a price war with cable TV bundles. The only variable is the channel lineup. Maybe I'm old but the TV Everywhere pitch doesn't work for me. I don't like watching movies or sports on my laptop and my cellphone has trouble delivering Facebook and LinkedIn data, how would I watch TV on that network? Plus the small screen. Again old. Remember Slingbox that DISH bought? Wouldn't that have taken off if folks wanted to watch TV Everywhere? Is there TV that is that compelling that can't be DVR'ed?
"As some had expected all along, video entertainment is winding up as a way of gaining customer "stickiness" and preventing churn, but is not contributing to profit, though it does contribute revenue," Kim writes. It's sticky if consumers buy the triple-play or if the service provider offers exclusive channels (or exclusive features like a DVR). But in a triple play world, if the service provider doesn't have at least 2 services with the consumer, that consumer is subject to churn. Also, in 2Q10, overall US TV subscriptions dropped 216K, according to SNL Kagan. Kagan cited the economy, unemployment and poor housing starts as reasons for the decline. I'd put foreclosures and bankruptcies in there too, because when a home is foreclosed there's no tenant for TV. I saw many foreclosures in 2009 that had VZ FiOS equipment sitting idle -- that's an expensive situation.
In a flat market which erupts into a price war, customer acquisition costs increase. Interestingly, Netflix customer acquisition cost is $22! That's a steal.
The telcos will need to learn how to make money from the Cloud. Luckily, IBM is trying to make it easy for them by operating the platform for Cloud services and managed services. The key is finding out what services the consumer base is willing and able to pay for.
There are a lot of moving parts right now - Cloud, SAAS, managed services, Over-the-Top-Video, VoIP, Hosted PBX - and all of them rely on Internet Access. Therein lies the revenue.
]]>Now if I could get NFL Network as OTT video, I would be really happy.
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