Highlights:
Smartphone growth is slowing.
Global Internet use continues to grow at 10% year over year, with 3.4 billion people on the Internet as of 2016. [QZ]
Advertising is about visuals (pics/vid), measurement, mobile and engagement. UCG (user generated content) is back.
Growth in Internet population is slowing, but growth in online ads is accelerating.
Combined, Google and Facebook accounted for 85% of the total internet ad revenue growth between 2015 and 2016. [QZ]
Amazon Alexa and other voice assistant devices are disrupting Brands as well as text based search. That is going to effect advertising revenue on one hand. On the other hand, Alexa is pushing Amazon house brands over better known quantities in order to push up margins. And they are winning at it!
Customer Service is about real time customer conversations. The Holy Grail used to be single call resolution that was hampered by silos and technology. Today with AI, Cloud, omni-channel contact center, we are closer than ever to that goal.
Retail has some bright spots but requires strong community and specific target market (slide 58). Or Subscriptions. [Funny, I say the same thing about UC/Hosted VoIP!]
For Restaurants, Eating Out is now Eating in with restaurant delivery. Grocery shopping is also about personal and delivery. Do you see where this is trending?
I am skipping Gaming, China, india, except to say that Gaming is a skills school and the old time the phone is put away (as another tech toy has your attention).
88% of U.S. consumers use at least one digital health tool.
"The rise of fitness trackers and health apps are collecting more user data than ever, while hospitals are sharing more health care information with patients. The average hospital holds 50 petabytes of health care data, and the total amount of that data is growing by 48 percent a year, Meeker says." [venturebeat]
What happens online in 60 seconds: HERE.
]]>Most of the collapse was due to the Big 3 claimed 94% of the market by 1955. So a hundred other companies were competing for 6% of the market.
And it was a Big Market. "A total of almost 58 million cars were produced and sold during the 1950s by the American manufacturers. Compared to the total population of the United States by the end of the decade, 179,323,175, that is almost one new vehicle for every three living persons of all ages." [wiki]
It reminds me of the cable industry. There were hundreds of mom-and-pop cable companies. Some merged to be regional; some sold out. Now there are 660 cable operators according to NCTA, but it is mainly just 4 with majority market share - Charter, Comcast, Cox, Altice.
CLEC numbers have dwindled. RBOCs are back together in 2 buckets - Verizon and AT&T. Frontier, CenturyLink, Windstream, VZ and AT&T have the lion share of the business telecom market.
Hosted VoIP/UC is a lot like the auto industry in the 1950s. Only the product is so similar as to be indistinguishable. At least, cars had distinguishing features like car doors, lines, looks, radio, interior. VoIP pretty much all looks the same. Some of the mobile apps are starting to change that a little.
Some of it is scale. Once the Big 3 got big, costs go down, name recognition goes up. The smaller guys cannot afford to make one-tenth the number of cars at the same cost. Vendors give volume discounts but when Ford is selling 12M cars and Edsel is selling is 108 thousand! there will be cost differences. It is one of the things that smaller ISPs don't grasp. They want to resell from AT&T or Verizon for cheaper than their vendor. It doesn't work that way in any industry. Do you think Firestone sold tires to Ford for a lot less than Edsel?
The problem with cable/pay TV right now is that the OTT product is a little cheaper and much better at meeting the needs of the buyers. Think Netflix or Hulu.
There are so many analogies but look at Italian food. Chains with Italian food like Olive Garden and Carabba's appeal to masses who just want food that looks Italian and is affordable. The foodies want the authentic food. Still others want pampering and service etc. VoIP providers are shooting for the masses. They have a mass market product for the masses. They are Olive Garden. However, in technology today, there isn't really a MASS market. There are many market segments with different types of buyers with varying needs and desires.
Only so many brands (I use that term loosely in telecom) will dominate the mass market. Everyone else will be niche or fringe (like the MSO sector or even the auto industry).
]]>The real buzz came from Amazon that launched Amazon Connect - Customer Contact Center in the Cloud. GE Appliances is one of Amazon Connect's initial customers (and shared the stage at EC17 with them). Last week, they launched contact center tools. Before that, they launched Chime, a web conferencing app.
"Amazon Connect is a self-service, cloud-based contact center service that makes it easy for any business to deliver better customer service at lower cost," according to the website. It got a lot of coverage (telecomp and techcrunch, to link but 2).
Chime was launched in conjunction with Vonage who will be handling the consumer and small business market. Level3 partnered with Amazon on Chime for Enterprise, which partners will get to sell soon.
In both cases, Amazon is entering a crowded field with a self-service, low priced offering that hangs off of their massive computing infrastructure. It is mainly price disruptive, but that doesn't mean it won't shake up Wall Street which will re-adjust valuations for the likes of Cisco, Citrix, Genesys and Avaya.
GENBAND partnered with IBM Watson for AI chatbots in its Kandy wrappers. The Kandy wrappers are pre-packed programs like a customer service chatbot that can answer FAQs and detect when the caller is getting agitated. It then takes the call transcript and sends it to a live rep, who if all the back-end works would be able to take over the call in continuum. The demo was great. Implementation will be difficult, but I would like to see Florida Blue jump on board and give it a try because they have horrible customer service systems (maybe on purpose).
West showcased the new version of Spark with Hybrid Voice.
Sprint had a robot running around their booth but I don't know why.
Counterpath demonstrated its new capabilities for what was once just a softphone. Now there is a good amount of reporting and analytics on users and calls. One user experience across multiple platforms (phone, tablet, laptop, Mac, Android, PC). It layers on top of existing UC, so Broadsoft providers can get better reporting, analytics and user experience without having to upgrade their investment. Counterpath also added a Salesforce plug-in so that interactions inside the Bria app can be captured in a CRM record. And you get screen pops!
BTW, "Voice is still a customer's number one choice when dealing with a customer service issue." [twitter]
"Cloud computing: Are these the hurdles that trip you up? More companies are using cloud-powered services, but it's not without pain. Here are some of the common complaints." Interesting read on ZD.
One thing that seemed to be a theme: User and Customer Experiences Matter.
]]>Both VZW and AT&T are experiencing a saturated cell phone market. AT&T lost a record 268,000 postpaid wireless subscribers last quarter. The DirecTV arm is replacing the U-Verse TV service but "While DirecTV added 323,000 video subscribers on the quarter, AT&T reports that the company lost 326,000 TV subscribers during that same period," according to DSLR. "AT&T's fixed-line broadband growth was unimpressive as well. While AT&T added 156,000 U-Verse broadband subscribers, it lost 161,000 DSL customers, for a net loss of 5,000 broadband subscribers on the quarter."
When you look at ARPU for video, in December 2014 it was $102.66 rising to $118.09 in 3Q16. IP Broadband ARPU (DSL) in the same period went from $44 to almost $50. You can only raise prices so far to increase revenue. You need more subscribers, but that is clearly NOT happening. So you go wider and buy another vertical. It is funny to watch Ma Bell follow cable's lead. A long time ago, AT&T owned cable under the AT&T Broadband brand. Now, it is playing catch up to VZ and Comcast.
TW owns movie studios, DC Comics, The CW TV Channel, HBO, TBS, CNN, a publishing house and 10% stake in Hulu. It will make AT&T on par with Comcast which owns NBCU.
This administration just doesn't know how to say NO to mergers (one notable exception was TWC-Comcast). There have been too many, leaving consumers with less choice -- and corporations with too much power and size (and debt). [If this deal goes through, AT&T will have about $175 billion in debt -- more than many banks!
A quieter but big merger: Phone maker VTECH is buying SNOM! In a move similar to Mitel buying Polycom (which a PE firm saved from happening), VTECH decided to scoop up German IP Phone maker, snom. All about Scale, right? Bigger is better. Just ask Mitel after buying Aastra.
And the third acquisition was assets only. "Endstream has completed the acquisition of the assets of Mainstream Communications, a provider of wholesale voice termination," reports Channel Vision magazine.
]]>UC&C transitions closer to Workflow platform as task management is added to the UC&C system from Cisco:
Channel Vision magazine reports, "Redbooth has announced an integration with Cisco Spark to unite task-centric Redbooth workspaces and communications-centric Cisco Spark rooms. Through this integration, users can now work simultaneously in both Redbooth and Cisco Spark to seamlessly communicate and collaborate."
The premise of Spark is that it will be so integrated with the software that an enterprise uses that a user will only have to work in the Spark window all day instead of bouncing between browser tabs or application windows.
Velocloud is now powering Mettel's SD-WAN solution. It is going to be huge for CLECs and channel partners. Not just powering MPLS, but offering a layer of network management, security and continuity to the new network environment that is a mixed bag of DIA, MPLS, and broadband trying to connect to SaaS, AWS, data centers and offices. It deployed correctly, SD-WAN could be the competitive edge that CLECs and OTT cloud service providers need.
In the network space, NITEL has a database to view "Over 500,000 fiber-lit, CLEC buildings" due to its "Partnerships with over 130 providers to provide network agnostic last-mile access". Having a fiber lit building list is good IF it was used for prospecting but it isn't. It is mainly used to determine install times or what carrier to quote. CLECs are starting to publish their LIT building lists. TWC, too. You would think they would want that data available in as many places as possible to sell deeper into LIT premises. Not hidden behind a subscription service like NEF or Geo-Tel. Veterans in telecom would rather have a LIT building than manage a fiber construction project that can take 6 months or more.
NITEL hired a new channel chief too. Congrats Michael Masini.
Charter is retiring the Time Warner Cable Brand. It confused people - TWC, twtc, Time-Warner. Now it will all be New Charter. "Charter will continue to be led by Tom Rutledge, serving as chairman, president and CEO. Charter's board will have 13 directors, including seven independent directors, two designated by Bright House's owner Advance/Newhouse, and three designated by Liberty Broadband (including John Malone and Greg Maffei)."
Congressional IT desk warns representatives of ransomware threats - and bans Yahoo Mail from Congress. How will these Congress Critters get mail now? Oh, right - AOL.
The LinkedIn password breach was 117 million records, according to ARS. Have you changed your password recently?
Fitbit acquires "wearable payment assets" from startup Coin, from ARS.
TelePacific Communcations receives the Women in the Channel's first ever Platinum Sponsorship Award 2016. TelePacific is a sponsor of TCA since its founding as well as a sponsor of WIC since its inception too. (Thanks, TPAC!)
Congrats to CRN Women of the Channel friends of mine: Karin Fields and Trish Kapos of master agency Microcorp; Hilary Gadda of TelePacific; Caitlin Clark-Zigmond at CoreDial; Brittani Von Roden of VAR Dynamics/CloudPlus; and to the rest of the winners as well!
In broadband, the cable modem is beating anything telco. Cable is winning 1M to 11k net new adds in 1Q16.
AT&T will be laying off between 50K and 80K workers in the next 5 years. It is trying to retrain some. AT&T will follow VZ into the OTT video arena. AT&T purchased Quickplay before launching its DIRECTV streaming service, according to Telecompetitor.
That's a wrap.
]]>Frontier says that the 30K people affected by the transition (and who still have issues) will get credits and should get over it as 30K represents less than 1% of their customers. The Florida Attorney General jumped on the PR bandwagon to wag her finger at Frontier. When you deregulate phones and then give a pass on an acquisition like this, you can't do more than wag a finger.
Sprint just remembered that they have a fiber network. It only generates about $600M in revenue for them currently - about the same as the revenue VZW makes on IOT.
This is offbeat: The FCC issued an Order ($100K fine) resolving a call completion investigation involving inContact.
Evolve IP took a majority investment from a private equity firm, Great Hill Partners. It is a cash infusion for growth and ramping up. " The Company's services are currently deployed in four continents and 15 countries, to more than 1,300 commercial business accounts with more than 100,000 users, licensed seats and managed end points." This investment makes it a little harder for someone like Vonage to scoop up Evolve IP.
Vonage spent most of its acquisition fund buying twilio's biggest competitor, Nexmo for $230 Million. This is CPaaS, communications platform as a service space that Twilio has owned. This is the elastic VoIP space. It will be the fourth platform that VB will be running, which is an expensive proposition. It is a business more like wholesale VoIP Orig/Term than it is about retail VoIP, which is Vonage's bread and butter. This begs the question how do their salespeople sell this versus UCaaS? Two entirely different businesses.
Diane Meyers at IHS released their Top 10 UCaaS players scorecard: 8x8, Vonage, West, RingCentral, Mitel, Verizon, Star2Star, Broadview Networks, Fuze and Nextiva. 600K seats puts you at the top of the heap. "Landing just outside the top 10 were Comcast, ShoreTel, Cox, CoreDial and Windstream."
Lenovo gets into the UCaaS space with the launch of its "Smart Meeting Room Solution, essentially a unified communications offering which allows various devices and screens to be able to collaborate in a workplace... The solution combines Lenovo's ThinkCentre Tiny desktop with Intel's Unite software."
Streaming video is a big thing for Live events like Blab, FB Live, Periscope and others Rich Tehrani takes a look at it here. Note: no telecom companies are in this space.
Telcos in the US and UK are not making enough SaaS sales. A majority of the SMB cloud revenue is going to the SaaS providers themselves, according to a report.
The Digital Divide is real: Broadband service tends to stop at the poverty line in the US.
The FCC approved Globalstar's spectrum for wi-fi. They want to create a nationwide wi-fi service and charge for it. No idea if the radios in devices can utilize it. Google of course despises this plan.]]>
Cisco demonstrated Spark, which I thought was for SMB, but is being pitched to Enterprise especially with its big hook into Salesforce. The demo that I got at the booth was rather disappointing. Not very visual. Looked like a console.
"Cisco Spark delivers cloud-based business communications that enables customers to message, meet and call anyone, whether it be on their mobile device, desktop or meeting room end-points." [PR] Isn't this what all the UC&C platforms promise? And keep in mind that this is re-branded Squared.
Not that Slack is the end-ll-be-all, but if you can't at least offer that type of look and feel and functionality (what I refer to as UX and CX or simply user or customer experience) then what are you doing? With two million daily users in 2 years, there is something they like about it besides the way it decreases internal email that people like.
Atlassian HipChat has a similar UX. The room or container or locker or folder or whatever you want to call the holding space for documents, conversations, recordings and notes around an event - sales call, project, meeting - is about organization and working on it when I want to or can as well as a depository for everything about the event in one easy to use, share, store space. This is a long time coming - and it still needs some improvement but it is getting better.
I still am waiting for a single inbox for email, texts/SMS, IM, etc. One place for all my comms. Maybe some day. Right after SSO (single sign on), which we haven't heard about since FOWA 2007.
I did hear more talk about APIs, SDKs, and integrations. Zapier and IFTTT weren't there but maybe in spirit.
Genband had some news. It has re-organized its product portfolio under Kandy. Now fring and other products that are monthly recurring revenue are under Kandy. Genband is in a patent dispute with Metaswitch that some have speculated leads to a merger. Genband is also doing co-marketing for its customers - see here.
And XO touted that it is using GenBand for advanced real time communications. When XO becomes Verizon in 2017 that means Alex Doyle will have one more platform to deal with!
ThinkingPhones came out as Fuze at this show with a marketing campaign playing on Unified.
NETSCOUT has a platform to measure service delivery issues in a multi-vendor environment. This platform looks at Voice and video media performance; Call signaling and UC server performance; as well as Network and enablers' infrastructure performance.
One big announcement came out before the show: Switch.co re-branded as Dialpad. Craig Walker was a keynote speaker at the show. Dialpad was in the Sprint booth talking about mobility and enterprise. (They gave away nice jackets.)
Another big deal was Avaya launching Zang.io, in what at first glance looks a little like Kandy's logo (and font and colors) and at second glance looks like they are trying to put one up on twilio. It is kind of a mixture of the two. "Zang connects popular collaboration apps like Google Hangouts with business solutions like Salesforce.com or SAP for a seamless user experience. Zang comes with simple SDKs, sample apps and the ability to use other third-party communications apps, which speed adoption and value creation." (You can read the rest here.)
This either works for Avaya and they move beyond premise PBX - or it fails and they file BK. Those are the only 2 options because while telcos like Windstream still sell Avaya, from what Avaya partners tell me, it is more about old logos, not new logos. And there is too much competition in the Enterprise space. Lot of big booths (20x20 and larger) at the #EC16.
One cool toy came from Oblong. "The result of more than 20 years of research at MIT Media Lab, Oblong´s flagship product, Mezzanine, is an immersive visual collaboration solution defining the next era of computing: multi-user, multi-screen, multi-device, multi-location." It was a total immersion telepresence system that could be controlled by something like a Wii game controller or an IOS device. It was a nifty toy that brings Minority Report to life.
Voxbone was serving up international DIDs, right alongside Belgian chocolates and expresso! Thanks!
Yesterday (3/8) was International Women's Day, so here are some forgotten women in tech history.
Today's GapingVoid cartoon is about silos in organizations and collaboration. Ha!
]]>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
]]>Birch bought some of Sage Telecom's customers. From the Sage page, it looks like Residential base but there are probably some small business too. More inorganic growth.
Competition can keep broadband prices from rising. Except AT&T and Verizon have chosen not to compete head to head against cable. (VZ co-markets cable since the SpectrumCo deal). And cable companies do NOT compete against each other -- except the two over-builders, RCN and WOW!. Maybe Altice will change that now that it bought Suddenlink and Cablevision.
Competition is up to the independent service provider. In this story in ARS, once Sonic entered the area, Comcast reduced rates. Nice to see! Congress and the FCC are intertwined with the Duopoly. There isn't any money in helping the indie to drive competition. That just takes money out of a politician's pocket.
Someone pointed out to me that Accel Networks, the 4G/3G data MVNO, was acquired by Sierra Wireless in May for $9M. No idea how I missed that. Accel Networks was headquartered in Tampa Bay, my home town. It gives Sierra's hardware a network provider. And they get the antenna that Accel was pitching.
Wi-fi provider, Boingo, launched an OTT (over-the-top) TV offering that includes some sports. The OTT TV market is getting better, while it destroys the regular TV distribution system. The cablecos have money invested in TV distribution, but most of that CAPEX has been ROI-ed. The Telco TV CAPEX that VZ (FiOS), C-Link (PRISM), AT&T (U-Verse) have spent billions on has not been returned - and likely never will.
Jabra released a speakerphone- the Jabra Speak 810. Finally, another speakerphone hits the market.
Off to give a Noon session on open source.
]]>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."
]]>Step into 2015 and FTTX is huge. Yes Comcast has Gigabit2, CenturyLink is rolling out Gigabit along with AT&T, TWC and others. Yet the majority of FTTH projects are not from the top ISPs. They are from the smaller, more nimble providers in communities.
On the product side, it hasn't been the Big Boys (Top 10 ISPs). [BTW, here is an interesting map of the ISPs by state majority.]
The Big Boys are working on ways to compete with Netflix and Sling TV, especially Ma Bell. AT&T is really trying to design a bundle that will appeal to a large swath of the market by trying Hulu, Amazon Prime, HBO and now a wireless receiver. Frontier is rolling out a Tivo that can DVR streaming content. Showtime is bundling with Hulu now too for additional OTT options for cable cutters. Nothing wrong with testing out different options and avenues.
In a twist, start-up firm Insensi is debuting the ILY Family Phone to re-invent the home phone for the elderly and children. It is eight-inch touchscreen device without a browser for video and voice calls and some messaging among family.
One of the most creative ILECs is Frontier. Yeah, I know, I am surprised and sad at the same time. Frontier just announced a bundle with Nest. They are going Google and Home Automation, which is where AT&T, Bright House and others in the Duopoly see the quad play going. Own the Home.
I remember when Powell was FCC Chair -- oh, those dark days - it was all about the converged living room. Years later, with the help of manufacturers, your TV with Xbox can watch you!!! Now that is converged.
There are lots of ways to skin the cat to provide a valuable bundle to your customers. Copying what others are doing isn't likely to get you to stand out. Be inventive. It's okay to fail. Just learn and try again and again.
]]>Frontier with SMS on landlines and a Tivo that records streaming TV is a way to capture the triple play bundle. AT&T is bundling Amazon Prime and HBO (as a TV replacement). At least, this recognizes the shift from a cable TV package that the telcos have been emulating since they crossed into TV to the way people are consuming TV shows now. However, it isn't that much different that what we have now -- tv, broadband, phone. Maybe we are stuck in that model.
The Quad Play of tv-Internet-phone-and -cellular either never took off or was sold wrong. (I don't see that Quad play in B2B either where there are quite a few CLECs with an MVNO deal.) The new Quad Play is with home security and automation.
B2B bundling options are more open. You can bundle voice, Internet, UC, Office365, backup, and a whole host of AAS services - SaaS, DaaS/VDI, IaaS, PaaS, and so many other AASes. You can go up the OSI stack from glass to app (fiber to the home to Office365). It is more challenging on the residential front. Not impossible, just right now that hasn't been undone yet.
So much talk about cloud and desktop as a service (nGenx was a sponsor) at the show, but that doesn't translate to the residential bundle well. There is something profound there but I just haven't had the light bulb go off yet.
]]>And Verizon just put in a bid to buy AOL for about $4.4B in cash. (No idea where that cash is coming from. VZ has $121 Billion in debt. It just paid the FCC almost $10B for AWS-3 spectrum.)
What will VZ do with the content like Huffington Post and TechCrunch? Some say spin it off for a billion.
Speculation is that VZ just wants to the video and advertising pieces of the business to go with their super-cookies and mobile plans. It is an interesting move. AOL dialup will give it some cash flow. AOL advertising platform will get it some more revenue -- and allow it to compete against Google.
When you sell off wireline and towers and bet everything on mobile, you have to go all in. That means IoT / M2M, Smart Grid, mobile device management, apps/ecosystem, content, advertising (super-cookies). Maybe AOL fills in some of those gaps, plus ads video to the OTT pie that the Duopoly is chasing after.
With a $4.4B price tag, VZ gets back $550M in subscription revenue per year and $984M in AOL properties ad revenue, according to the latest Q1 2015 numbers from AOL. I didn't know that AOL was pushing $624 million in quarterly revenue!!!
This should keep VZ distracted for a coupe of quarters.
Interesting stats from the article
70% of Americans connect to the Internet over broadband. The average U.S. broadband speed is 11.4 Megabits per second.
A 2009 study from the Pew Research Center says 32% of dial-up users said they couldn't afford to upgrade. Most of the rest said broadband either wasn't available -- or they just didn't care to change.
]]>Bundling is a tactic that the content bullies use to force 7 ESPN's on you or the Speed channel or other nonsense. ESPN - owned by Disney/ABC, just one of the 6 - yes 6 - companies that own most of the media content - requires cablecos to carry all 7 ESPN channels AND that two have to be in the general package, so that they can bill for every subscriber that the MSO has.
Frontier demonstrated that FiOS TV was unprofitable, when it took over VZ territories in 2011.
AT&T is buying DirecTV for a couple of reasons and one is to get more bargaining power on TV content. (Another is the presence of DTV in Latin America.)
ESPN sues Verizon over its plan to create slim bundles of cable channels.
No idea how Sling TV by DISH isn't being sued (unless DISH has better contracts with the content guys).
Cablecos had the least profitable service - TV - and used their extensive network to move into the profitable circles of Internet access and voice. It is all gravy on their networks - even after DOCSIS upgrades.
Meanwhile, telcos like VZ, Frontier, CenturyLink and ATT, went from highly profitable voice and data on copper to spending billions on fiber and other network upgrades to support TV. They had to buy TV head-ends and other equipment to even offer TV. Then negotiate content/carry contracts. For a service that was less profitable than legacy services. Oops!
When the studios pay $100 million for a movie or $1 million per episode for an actor on a sitcom, they intend to recoup those cash outlays twofold. When NBC bids billions for a multi-year Olympics coverage or the networks pay the NFL $6 Billion per year, they expect a return on that spend.
And you wonder why they get mad about piracy or have gates up on websites or don't let you unbundle channels that no one watches or you can't buy it a la carte. The whole business --- especially Disney -- is about make it once and sell it over and over and over. Think about how many times a Disney film is released and re-released in theaters and on DVD.
]]>Charter was the first company to make a play for TWC. Now reports are in that Charter is chasing Bright House. Comcast is still waiting for its three-way deal with TWC and Charter to pass regulatory. The FCC paused the clock again today.
The history of cable is consolidation. WOW! and Knology. Comcast is a mashup of many cable including Adelphia (in a convoluted deal with TWC in 2006).
But convoluted is the way cable systems merge. See the Washington Post-Cable One deal details here or the History of AT&T's cable assets. This activity results in many cable companies with a rather small number of subscribers (2 million and less, way less!) spread over many states. For example, Cable One services 730,000 customers in 19 states with cable television.
TWC and Bright House have an incestuous relationship that dates back to BHN's origins.
"Bright House Networks has been an odd duck among cable companies since it was created from cobbled-together systems originally owned by Vision Cable, Cable Vision, TelePrompTer, Group W, Paragon and others. In the 1990s and early 2000s, Time Warner effectively ran the cable systems still owned by the Newhouse family. After the AOL-Time Warner merger, Advance/Newhouse decided to take back control of the management and operations of its cable systems, relaunching them under the Bright House Networks brand." [source]
The WSJ has good detail about the TWC-BHN deal.
Comcast, TWC and BHN all owned SpectrumCo that acquired some spectrum that it sold to VZW in a deal that meant VZW would co-market cable services for them. Like Sisters. And the cable sisters even booth together at expos. (If AT&T and VZ had a booth together, lawyers and rumors would be flying.)
I think these inter-connected relationships will likely have to be taken into account along with the resulting buying power and market share. That leads to me guessing this merger is not going to go through. Comcast is already twice the size of TWC and more than 5x the size of Charter. Should the the largest ISP in the US have 30M while the number 2 has at most 9M (if Charter gets BHN's 2 million and some of TWC)???
AT&T's acquisition of DirecTV is still in limbo as well. It might be that the FCC and DOJ have to take a long look at the consolidation and power of these ISP-and-TV providers. Right now Comcast, DirecTV, DISH and TWC have the most negotiation power with the content people like Disney, Viacom, and Fox. TWC does the content buying for BHN, using its 2 million plus subscribers for added leverage. That goes away with the Comcast-TWC deal. And Comcast did not really address that in its filings. Hence, the Comcast deal.
AT&T U-Verse and VZ FiOS TV have less than 6 million TV subs. CenturyLink and Frontier have less than BHN. The buying power would be skewed too large I think. Even if AT&T gets to buy DTV, it would reach 26M subs - about the size of Comcast now. Comcast also owns NBCU - a large content provider.
"The Newhouse family has evidently seen the writing on the wall, hiring Wall Street investment bank UBS to advise whether it makes sense to sell. If Bright House does decide to hang out a "for sale" sign, Time Warner Cable has the right to bid first." [source] The Newhouse family also owns a lot of magazine and newspaper interests. "Advance Publications, Inc., is a privately held communications company that, directly or through subsidiaries, owns Condé Nast Publications, American City Business Journals, the Golf Digest Companies, and newspapers in more than twenty-five American cities."
"Advance serves as the holding company for the family's 31% stake in cable entertainment company Discovery Communications." [wiki] What a mix of ownership, like a small Time-Warner.
I feel sorry for the employees of Comcast, TWC, Charter, BHN and DTV - job uncertainty! Ugh!
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