Can Voice Input Become a Platform?

Voice now is a growing consumer interface; a rival method for search and e-commerce; an input method replacing keyboards and screens. Whether voice input becomes a platform, and how that platform gets monetized, is among the next set of issues.

source: eMarketer

What 5G Fixed Wireless Means to Verizon

As it looks to launch 5G fixed wireless service out of region, Verizon seems convinced that video services are an important part of the value proposition. Among U.S. tier-one service providers, Verizon sees the greatest upside from attacking other fixed network service providers outside its core fixed network footprint.

There are obvious reasons. Verizon has the smallest fixed network footprint , and believes it can expand its network to reach as many as 39 million U.S. homes outside the core Verizon fixed network geography using 5G fixed wireless.

Comcast passes (can actually sell service) about 54 million homes. Charter Communications passes some 50 million home locations.

AT&T’s fixed network passes perhaps 62 million U.S. homes. Verizon, on the other hand, passes perhaps 27 million locations.

What that means is that Verizon has a clear interest in using 5G fixed wireless to expand its addressable market by more than 35 million U.S. homes (up to perhaps 39 million) that it cannot reach today, giving Verizon a fixed network footprint that is comparable to its key rivals.

AT&T Now is a "Modern Media Company"

This slide from the AT&T quarterly earnings call tells you quite a lot about how AT&T sees itself, and how differently it sees itself from its past. AT&T is said to be “a modern media company.” The building blocks of that business include content, advertising, distribution networks and high-speed networks.

Sure, AT&T has business (enterprise) operations and assets in Latin America and Mexico. Its single biggest revenue generator still is consumer mobility. But all those assets are infrastructure to support content, advertising and distribution, AT&T now emphasizes.

source: AT&T

Honolulu

It’s summer, so I was reading the book Honolulu (really enjoyed it). The protagonist is a Korean picture bride, and my maternal grandmother was a picture bride.

That got me to thinking about when my maternal grandfather immigrated to Hawaii.

Here is the Port of Honolulu record of his arrival, in 1905, on the steamship Korea, at age 15.

He worked in the cane fields, like everybody else. Probably hated it, like everybody else. 

Eventually he became the now stereotypical Korean corner grocer (some things do not seem to have changed much). 

Grandma met him for the first time on the docks. 

"People" Versus "Households" Can Make a Huge Difference

Fewer people in the U.S. market subscribe to linear video subscription services than in the past, that is clear. But there are some possible subtle qualifications worth noting. Traditionally, linear video subscriptions were purchased by “households,” much as traditional voice services were purchased.

Over-the-top subscriptions are purchased by people, as are mobile subscriptions, the key import being that the universe of potential OTT video subscriptions is far larger than the potential universe of linear video accounts.

So comparing OTT subscriptions and linear video accounts is not exactly an “apples to apples” exercise.

Overall, 186.7 million U.S. adults will watch linear TV (cable, satellite or telco) in 2018, down 3.8 percent over 2017, according to eMarketer. Whether that corresponds in a linear way to subscriptions is not so clear, since most U.S. households are multi-person.

According to eMarketer, the number of cord-cutters (adults “who have ever cancelled pay TV service and continue without it”) will climb 32.8 percent in 2018 to 33.0 million. Again, it is a nuance, but if a single household with three residents “drops service,” it is conceivable that the number of people reporting they are cord cutters is three, not one.

source: eMarketer

Headline Numbers on Linear Video Hide Other Trends

By now, nobody is surprised to hear that linear video subscriptions continue to drop or that over the top subscriptions are growing. In aggregate, there are more U.S. paid streaming accounts than linear accounts in service.

Net changes in revenue and accounts are harder to describe, as every quarter and year, some new accounts are added on both linear and streaming ledgers, partly because of churn (customers switching providers), sometimes because of moves (accounts are cancelled at one location but possibly added at another location), temporary suspensions.

In fact, linear revenue might actually be growing, even as accounts dwindle.

Netflix has some 55 million U.S. accounts, while Amazon Prime has some 90 million subscribers. All the largest linear video providers together have about 92.2 million accounts.

But since linear subscriptions represent many times more revenue than a typical linear video subscription, revenue losses are happening, even for firms such as AT&T that sell both linear and streaming video, and even when the net change in streaming accounts offsets the loss from linear accounts.

source: Statista

Total revenue is another story, as monthly subscription revenue earned by a linear account can be an order of magnitude greater than the revenue from any single OTT streaming account.

source: Ovum (Informa)

Among the bigger issues is the rate of decline of linear subscriptions, which seems to be accelerating. Net changes (including new accounts and customers switching providers) typically mean the gross losses are less than headline numbers might indicate.

In 2017, for example, the major U.S. providers lost about 1.5 million accounts, up from some 760,000 in 2016, according to Leichtman Research Group.

The big swing was that streaming services owned by the linear providers gained 1.5 million accounts, nearly the amount lost by the two satellite services.

In that case, the net losses by linear providers were about zero, even if the switch was from higher-revenue linear to lower-revenue streaming accounts.  

source: cg42

source: UBS

For Regulators and Suppliers, Competition and Investment are Inversely Related

Communications regulators and service providers always face a cruel tradeoff: over the long term, investment that boosts revenue tends to be inversely related to the amount of competition.

So regulators always face policy tradeoffs. Regulators can emphasize investment or competition, but arguably not both--at high levels--equally and simultaneously. Up to a point, competition creates incentives for investment. But only up to a point.

The reasons are obvious enough. If regulators take a wholesale-based approach, with one network serving all retail providers, the facilities provider’s incentives to invest are limited by government policy. By definition, all retail providers get access at the same rates and terms and conditions. So, as competition increases, incumbents who generally build the wholesale facilities lose ever more market share.

Facilities-based competitors find that incentives to invest increase as the number of competitors is effectively limited (by merger, less wholesale market entry), since contestant market share increases. And that means higher gross revenues and generally higher profit margins.

Also, investment in internet access facilities is something of a zero-sum game.

Internet access providers long have known that there is no linear relationship between data consumption and revenue earned for providing that access. On the other hand, there is a somewhat linear relationship between cost per bit and data consumption.

New data from the U.K. Department for Digital, Culture, Media & Sport shows that although mobile customer spending on mobile internet access is roughly flat between 2012 and 2016, data consumption and cost per bit show a relatively inverse and linear relationship.

As mobile data consumption increased by an order of magnitude over those years, the cost per bit dropped by an order of magnitude.

The business model implication is clear: increasing end user data consumption does not lead to revenue increase.

source: Department for Digital, Culture, Media & Sport