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Showing posts from October, 2013

"Coverage" Limits Telco TV Gains

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Coverage is a major factor enhancing or limiting video service provider market share. 
In fact, coverage limitations are the biggest barrier to telcos taking more market share from cable operators.
Cable TV companies operate in virtually every city and town in the United States. 
Satellite providers likewise cover nearly 100 percent of the surface area of the entire country.
Telco TV providers do not yet have ubiquitous coverage, though where they do operate, providers such Verizon have gotten about 35 percent market share, where the cable provider might get 39 percent or 40 percent share, with satellite providers getting the balance of accounts of homes that do buy video entertainment.
To be sure, AT&T and Verizon are now the fifth and sixth biggest subscription video entertainment providers in the United States, trailing Comcast, Time Warner Cable, DirecTV and Dish Network.
Still, because telco TV is not ubiquitously offered, U.S. phone companies have about 10 percent  market shar…

Netflix is Bigger than HBO and Comcast, on One Measure

With the important caveat that average revenue per account and profit margins are disparate, Netflix is, by at least one or two measures, bigger than HBO , and also is bigger than Comcast on one measure.
Netflix is bigger than Comcast when measured by paying subscribers, and Netflix is bigger than HBO in terms of gross revenue and subscribers.
Comcast is far bigger than Netflix in terms of average revenue per user, while HBO is vastly more profitable, in terms of profit margin. 

HBO probably has margins in the 33 percent range, while Netflix margin is in the five percent range. Also, Comcast has average account revenue above $80 a month. Netflix has average revenue per user of about $10 a month.

Comcast third-quarter 2013 results showed the firm lost 129,000 video subscribers, ending the period with more than 21.6 million video customers. Netflix has about 30 million U.S. subscribers.
Comcast also lost 348,000 video subscribers through the first nine months of 2013, as well.
Comcast now h…

Netflix on Comcast X1 Platform "Not a High Priority," Comcast Says

Comcast EVP Neil Smit says getting Netflix onboard its X1 platform, making Netflix an app on the set top box, "is not a high priority" for Comcast.

"Our customers can receive Netflix in a number of ways, so it’s not really a high priority for us," said Smit. "We’re open to putting apps on our X1 platform. We have, for example, Facebook and Pandora there now."

But at this point, Netflix does not seem likely to get such treatment from Comcast. Some might speculate that Comcast has designs for a streaming video service of its own, at some point, so that might explain some of the apparent reticience. 

Nor does Comcast want to use the Netflix content delivery network, either, said to be a condition for Netflix doing such deals.

AT&T to Bid for Vodafone?

If you think regulatory scrutiny of AT&T’s effort to buy T-Mobile US was contentious, just wait until AT&T tries to buy either Vodafone Group or EE in the United Kingdom, a move that reports  suggest is under active consideration at AT&T.
AT&T reportedly also considered a purchase of Telefonica, but Spanish regulators quickly moved to signal disapproval.
In recent days Mexico’s America Movil encountered opposition by an independent KPN  shareholder group to its bid to buy the remainder of KPN it did not already own.
Both America Movil and partner AT&T were rebuffed in 2007 in an effort to buy Telecom Italia, as well.
Opposition could arise from national regulators, company poison pill defenses or independent foundations set up to ward off unwanted takeovers.
Combined, Vodafone and AT&T would be the largest telecom firm on the planet, with a market capitalization exceeding $250 billion and large-scale operations in the U.S. and across Europe.
That level of scale m…

Will Access Networks Lose Value in Mobile Business?

Two decades is a very long time in the communications and application ecosystem. That is long enough to make a transition from “no Internet” to “dial up Internet.” A couple decades is enough time for Internet access to move from dial up to broadband, or from video-constrained to video-capable.
Two decades is long enough for new business models to be created, as from “streaming is very difficult” to “streaming is commonplace or dominant.”
Two decades also is sufficient time for value in the networks ecosystem to undergo huge change. Precisely what changes might occur remains to be seen. But it is not unreasonable for some to suggest that the relative value of core and access networks could change.
Historically, both access and core networks were scarce. In the 1980s, core networks became less scarce, as firms such as MCI, Sprint and others built their own long haul networks.
In the 1990s, access networks become less scarce. as mobile networks became more commonly-used assets. In the first…

When Customers Like Your Service Less, the More They Use It

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For reasons that probably are intuitive, customer satisfaction tends to increase as the length of customer relationship with a particular product or service provider increases. Unhappy customers will leave, and therefore no longer register "unhappy" responses about a customer service operation.

Also, the longer a customer remains with a particular supplier, the more likely it is that the customer will have learned how to use a product, and will have fewer questions about value, billing or "how to use the product."

That is not to say the relationship between customer satisfaction and customer loyalty is especially direct. In many industries, even satisfied customers can churn at significant rates. That especially can be the case when the leading suppliers all offer comparable experience and value for money offers.

In such cases, satisfied customers might well change suppliers for a relatively modest price advantage, for example. 

That is one "hard to quantify"…

Bandwidth Matters: Sprint LTE Gets 6-8 Mbps at 1.9 GHz, 50-60 Mbps on 2.5 GHz Spectrum

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Sprint expects to have Long Term Evolution 4G network coverage of about 100 million pops, using the 2.5-GHz former Clearwire spectrum (120 MHz in most major U.S. markets) by the end of 2014. That probabnly is less coverage than some observers had expected. 

But Sprint ought to be able to dramatically increase its LTE top speeds, once it activates the former Clearwire spectrum. 

In the 1.9 Ghz band, Sprint says it is seeing LTE provide 6 Mbps to 8 Mbps on a consistent basis. 

In areas where LTE now is avaialble on the 2.5 GHz band, Sprint is seeing 50 Mbps to 60 Mbps peak speeds. The difference is simply that Sprint can use bigger channels on the 2.5-GHz spectrum.

Parenthetically, Sprint majority owner SoftBank saw its revenue jump 44 percent in the most-recent quarter, suggesting SoftBank will have capital to fuel an expected Sprint assault in the U.S. market. 

Sprint Makes Progress in 3Q 2013

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Sprint hasn't yet turned the corner on subscriber growth, largely, one might argue, because of lingering losses from its former Nextel business, but Sprint has managed to keep growing revenue, in its key postpaid "Sprint" business, for 13 or so quarters. 

In fact, a rational person might conclude that Nextel was the problem all along, as the Sprint side of the business has not fared badly. 

In most recent quarters, Sprint has added net customers even as Nextel has bled them.

The biggest single hit came in July 2013, when Sprint shut down the entire Nextel network, losing about 1.3 million customers. Still, going forward, Sprint without the drag of Nextel should surprise to the upside in the subscriber growth area. 

Granted, Sprint still is losing customers overall, and still lost money in the third quarter of 2013. But it is making progress, and has yet to unveil precisely what it plans to do with the now-consolidated Clearwire spectrum and SoftBank assets. 



Sprint Might Have an Opportunty with its Clearwire Spectrum

Sprint owns the most spectrum of any mobile service provider in the U.S. market, a fact most observers expect will play a role in an anticipated Sprint assault on the U.S. market leaders. 

Some observers, though, will note there are advantages and disadvantages for the 2.5-GHz Clearwire spectrum.

The higher frequency means signal reach is less than at 700 MHz and 800 MHz frequencies that Verizon Wireless and AT&T Wireless have in greater abundance. Signals at 2.5 GHz do not penetrate walls as well as the lower frequencies, either.

In terms of network infrastructure, that lessened propagation distance means Sprint needs 13 to 15 tower sites, at 2.5 GHz, to cover the same area as a single 700-MHz macrocell.

On the other hand, precisely because of the higher frequency, 2.5-GHz signals are capable of delivering more data, compared to 700 MHz or 800 MHz signals, using any particular coding technique. As a rough rule of thumb, 2.5-GHz networks, using the same coding, can deliver as much as …

NFC Will "Never" Lead U.S. Mobile Payments?

Virtually every banking-related or payments-related initiative in the United States has to begin with an understanding of how the U.S. market is different from others. The high use of credit cards, compared to most other markets, is one such distinction.

The ubiquity of the banking infrastructure is another example. The way consumers pay for retail purchases is another key underpinning realities.

Put simply, mobile banking is shaped by the fact that "access to banks" is not generally a problem. Nor, generally speaking, is "paying for retail purchases." So many would note one requirement for retail mobile payments success is adding new value to a process that is not fundamentally broken.

Likewise, as ecosystem participants scramble to gain influence and control over the new processes, communication methods are seen as a way of gaining such influence. Some observers have confidence in near field communications, while others think other approaches might win the day. 

You …

Tom Wheeler Confirmed by U.S. Senate as New FCC Chairman

Tom Wheeler has been confirmed by a vote of the U.S. Senate as the new chairman of the Federal Communications Commission. Some might complain about an FCC chairman who has in the past lead the major trade associations for cable TV and mobile communications.

Others will say that probably is a combination of experiences that might prove exceptional useful as U.S. communications policy adapts itself for an IP-based communications environment that transcends historic regulatory boundaries, faces new forms of competition and calls for major investments in next generation infrastructure.




4 or 3: the Most Important Number in the Mobile Business

The most important numbers in the global mobile service provider business are "three" and "four." The reason is that national communication regulators generally have held that four contestants is the minimum necessary to provide the benefits of competition for consumers. 

But in most markets, over the next half decade, there is likely to be significant consolidation in the mobile business, with many markets moving from four providers to three suppliers. That will be a serious issue for most regulators.

Hutchison Whampoa Limited, for example, wants to buyTelefonica's 02 Ireland unit.

The acquisition would quadruple the market share of Hutchison's subsidiary, 3 Ireland, to 37.5 percent, behind market leader Vodafone.

The European Commission already has said it is concerned about a reduction of competition in Ireland, as the deal will cut the number of mobile phone operators from four to three. That was an issue Hutchison faced in its acquisition of Orange Austria…

Intel Media Preparing to End Effort to Create Sreaming Service?

Intel Media has been trying to build a Web-based subscription TV service for several years, and originally had promised to launch late in 2013. But Intel seems not to have gotten traction with the content suppliers it would need to build a service analogous to cable TV. 

Intel recently had said it was looking for partners, including Samsung, Amazon, Liberty Media, and Netflix, but a report suggests Intel Media has failed at that effort as well, and is exploring a sale of its assets to Verizon Communications, which already owns part of the Redbox Instant streaming service operated as a joint venture with Redbox.

Qualcomm earlier had launched a mobile video service called MediaFLO, but wound up closing the service and then selling the spectrum to AT&T after abandoning the effort. 

MediaFLO did better than Intel, at least in terms of securing content rights. In the U.S. market, for example, MediaFLO offered a set of 14 basic channels:
2.FLO (6 am to 10 pm) — Original made-for-mobile rep…

Google Photos, Hangouts Enhanced

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Google Hangouts and Photos have been enhanced. Google Photos already has been automatically backing up photos taken on Android phones and syncing to Google Drive. 

New are full size backups and background sync for Google+ on Apple iOS. 

Google Photo now also recognizes and groups objects--over a thousand different objects at the moment--ranging from sunsets to snowmen, grouping them in user libraries.

Auto Enhance improves each photo added to Google , and users can dial the enhancements up or down. If users already processing your images elsewhere, they can choose to exempt an album entirely.

Google also has added editing apps. For editing on the go, use Snapseed and its new HDR (high dynamic range) Scape filter. 

More sophisticated editing can be done using Analog Efex Pro, part of the Nik Collection ($149). 

Hangouts for Android now supports location sharing and SMS. Users can send a map of their current location, send and receive text messages.


Broadcasters can nowschedule Hangouts On Ai…

15 Percent of 3G/4G Tablet Owners Pay for Data Plan

About 30 percent of tablets come equipped with mobile network capability. About 15 percent of tablets presently have a mobile data plan. That will grow. But between personal hotspots and home wi-fi, many do not need a separate data plan.
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Time Warner Cable Upgrading to 100 Mbps in Some Markets

Time Warner Cable, which upgraded its top Internet access tier in Kansas City, Mo. to 100 Mbps, is also upgrading customers in Lost Angeles to 100 Mbps.

Residential customers in Los Angeles who subscribe to the Ultimate 50 tier are being automatically upgraded to Ultimate 100 at no extra cost. 

Ultimate 50 residential customers in New York City and Hawaii will be upgraded by year’s end. 

By early 2014, all customers in these markets will have access to Ultimate 100, with more TWC markets to follow in 2015.

Credit Google Fiber with the new incentives for Time Warner Cable to upgrade speeds.

If There is a Spectrum Bubble, Does it Martter?

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Spectrum is not the only cost input for a mobile service provider, nor is it the largest cost input. As a rule of thumb, operating expense might be in the range of 45 percent of revenue, while all network related capex might be in the range of eight percent of revenue. So spectrum acquisition costs are not a huge driver of overall costs, typically.


What really matters is revenue. Still, the cost of spectrum matters in an environment where service provider costs threaten to exceed revenues earned from such spectrum.
Depending on the country and the population density and terrain, a fully functioning 3G network, for example, might cost between several hundreds of dollars per customer, to a few thousands of dollars per customer.
Spectrum costs are a fraction of that. Assume a service provider has 20 MHz of spectrum in an area of three square miles, paid for whether all of the capacity is being used or not (spectrum reuse is necessary to avoid signal interference).
Assume people reached by …