What Disruption Looks Like: Newspapers

So what would disruption of the global telecom industry by IP communications look like? It's a hypothetical question, for a couple of reasons. The newspaper industry, for examnple, has been in a lingering decline in readership and ad revenue for decades. Nothing spectacular, year over year: just a steady, decades-long decline.

The telecom industry has seen something like that only in the twin areas of rates per minute charged for long distance and number of wired access lines in service. The long distance data is different from what one sees in the newspaper business in that volumes have skyrocketed even as prices have dropped. There is no such elasticity in the newspaper market.

The parallel between newspaper and telco fortunes is most similar in the area of access lines, where there might even be something like negative elasticity developing: "drop the price and people buy less." But the analogy doesn't fit very well precisely because, unlike the newspaper industry, the global telecom business has developed a huge replacement business for wirelines, namedly wireless services.

In fact, global telco revenue has been climbing steadily almost without a break for more than a century.

At the same time, telcos have discovered data services in addition to voice, broadband Internet access, entertainment video, ringtones, music and game downloads and other smallish businesses. The point isn't "smallishness." The seeds of tomorrow's business already are planted.

Newspapers have done nothing of the kind.

Last year, McClatchy, a U.S. newspaper chain, acquired Knight Ridder. To help pay down debt, McClatchy sold the Star-Tribune of Minneapolis in March for $530 million. Even with an added tax benefit of $160 million, the sale price amounted to only about half of what the company paid for the paper in 1998.

And then in November, the company took a $1.37 billion after-tax non-cash impairment charge, partly to reflect a further decline in the value of its newspapers.

The company's share price recently was $12.75, down more than 80% from the 2005 peak. The decline leaves McClatchy, the nation's third-largest newspaper publisher by daily circulation, with a market capitalization of barely $1 billion.

There is one sliver of hope: McClatchy has a position in the online classified advertising market, though newspapers collectively have lost their hoped-for lead to the likes of Craig's List.

McClatchy acquired a 14.4 percent share of CareerBuilder.com, as well as a 25.6 percent stake in Classified Ventures, the parent of Cars.com and Apartments.com.

The issue is how much success McClatchy and other major newspaper chains are going to have in the local online advertising business. Compared to the telecom industry, the newspaper industry is well behind the curve in cultivating new businesses, even if small.

One is tempted to say it is a shift of consumption to the Web that is responsible for the newspaper decline, but that's not entirely correct. Newspaper consumption began its decline long before the Web existed, so one has to blame television-based news. A shift of information consumption to the Web simply is accelerating a trend already in place.

Ubiquitous Online Communications

If you needed any reminding, email and instant messaging now is quite widespread in North America, Japan and Europe, as broadband penetration also has become a typical experience. Use of social networking sites still has a ways to go, except in Canada, where usage seems unusually high.

UK Leads in Digital TV

The U.K. is well ahead of most other European countries in its use of digital media, by some measures. By the start of 2007, more than 76 percent of U.K. TV households were receiving digital TV services, a rate higher than other Western European countries, Japan or the United States, for example.

According to Ofcom, U.K. adults also spend more time on social networking sites than other Europeans. Two in five U.K. adults regularly log on to these sites, clocking up an average of 23 visits and 5.3 hours each month.

In the U.K. market, 33 percent of users send picture messages via their mobiles and 16 percent use them to connect to the Internet. About 10 percent of U.K. adults use mobiles for e-mail.

Ofcom also believes that online advertising in the United Kingdom accounted for 14 percent of total advertising revenues in 2006, passing magazine advertising for the first time and registering more than total spending on outdoor, cinema and radio advertising combined.

Advertisers in the U.K. market also spend more money per consumer on Internet advertising than any other country, at £33. According to Ofcom, this is twice as much as France, Germany and Italy combined.

Online advertising revenues generated in the U.K. market in 2006 also beat the combined totals of Germany, France and Italy at £231 per head.

More Online Video Viewing, in All Age Segments

More viewers are turning to the Internet to supplement their traditional entertainment viewing habits, says Harris Interactive. In the past year, YouTube has widened its lead as a one-stop site for online video viewing.

Search and content providers, as well as online community sites, also have gained some ground on the video viewing front while TV network sites are holding their own as well.

While the incidence of online video viewership has increased overall in the past year (81 percent versus 74 percent), YouTube is by far enjoying the greatest increase.

Approximately two-thirds (65 percent) of U.S. online adults say they have watched a video at YouTube, compared to 42 percent at the same time last year, with the strongest gains among those over age 25.

Over 42 percent of YouTube viewers say they visit the site frequently, up from 33 percent last year. Just over two in five U.S. adults have watched videos on a TV network site (43 percent vs. 41 pecent).

While online video viewing declines with age for most sites measured, including YouTube, the incidence of online viewing on TV network and news sites remains consistent across age groups ranging from 18 to 64.

While interest in online video viewing is becoming more commonplace across older age groups, it is virtually ubiquitous among the under 30 set.

Yahoo, America Movil 143 Million Sub Mobile Search Deal

Yahoo and Latin America's top mobile phone company America Movil said on Thursday they have struck a deal to provide mobile Web services to 16 countries in Latin America and the Caribbean.

Yahoo's oneSearch service will be the default on America Movil's wireless carriers' portals. Yahoo plans to offer localized versions of oneSearch for each region, and said other Yahoo services may be added in coming months.

The partnership is the largest of the 21 search deals Yahoo has announced this year with mobile phone operators, the Sunnyvale, California company said.

Mexico City-based America Movil has 143 million wireless subscribers. Yahoo's broadest previous deal was with Spain's Telefonica SA, covering up to 100 million subscribers in several European and Latin American markets.

HD-DVD Format Wars Continue, Prices Drop

The good news for consumers is that high-definition DVD prices are falling. The bad news is that the format war still isn't over. As was the case with BetaMax and VHS in videotape recorders, consumers now have to choose between incompatible formats. Personally, I'm just going to wait until the war is over. I've been through enough of these technology standard battles to instinctively avoid buying "eight track," "BetaMax," or just about anything proprietary in the consumer electronics space. Of course, I don't care enough about video to adopt early, in any case, so I might be odd in that regard.

Sony's "Blue-ray" players are selling for under $300, while Toshiba's "HD-DVD" player is available for $200.

The edge right now seems to be on Blu-ray's side. since Thanksgiving in the U.S., Blu-ray discs account for 72 percent of the high-definition discs sold, while HD-DVD has 27.4percent of the share over that same time period. So maybe Sony can win a major format war for once.

Right now, Walt Disney, 20th Century Fox and Metro Goldwyn Mayer support Blu-ray DVDs, while Universal (GE) has sided with HD-DVD. Warner Bros. supports both players.

Studios obviously hope the new format will spark higher DVD sales, which are highly profitable, but whose sales have started to slide.

We shall see. The download market and on-demand video streaming have to be taken into account, this time around. And with users opting for increased mobile or PC screen video, it isn't an absolute certainty how big the market might be for high-definition DVDs. It's great for big screen displays. But lots of viewing now takes place on all sorts of screens where the advantage is small, if much of an advantage at all. For downloaded video, in fact, less information, which means faster downloads, probably is more important.

New Truphone Supprted Devices

Truphone's mobile VoIP service now is supported on five new handsets: the Wi-Fi-equipped Nokia N95 8G, Nokia N81, Nokia N81 8G, Nokia N82 and Nokia E51 models. Truphone also is freezing its rates until the end of February, so Truphone calls will be free to landlines in 40 countries, and to mobiles in the U.S., Canada and elsewhere, until March.

Mobile Web: Not So Useful Yet

The mobile Web might be the future for a goodly portion of user activity in the future. But it isn't quite there yet, Accenture says.

Japan Mobile Market: Different than Europe

The Japanese mobile market long has been seen as a trend-setter for mobile applications elsewhere in the world. As Accenture looks at the market, that remains the case. Japanese users simply do different things, with different levels of intensity, than users in Western Europe, for example.

Mac Users do "Think Different"

The NPD Group says consumers who own Apple Mac computers are much more likely than PC users to pay to download music. According to NPD, in the third quarter of 2007 half of all Mac users had paid to download music tracks from sites like iTunes, but just 16 percent of PC owners had done so.

And while Mac users were more likely to pay to download digital music than their PC-using counterparts, they were also more likely to purchase CDs.

“There’s still a cultural divide between Apple consumers and the rest of the computing world, and that’s especially apparent when it comes to the way they interact with music,” says Russ Crupnick, NPD Group VP. “Mac users are not only more active in digital music, they are also more likely to buy CDs, which helps debunk the myth that digital music consumers stop buying music in CD format.”

According to NPD’s consumer panel data, unit-volume sales share for Apple computers increased from nearly six percent in 2006 to almost nine percent between January 2007 and October 2007.

Overall, more than 32 percent of Mac users report purchasing CDs in the third quarter of 2007, compared to just 28 percent of PC users.

In addition to purchasing CDs and downloading music, Mac users are also more likely to listen to music and watch videos on their MP3-players and computers.

While 34 percent of Mac users had uploaded music to their MP3 players, just 16 percent of PC users had done the same. Mac users are also much more likely to listen to music files on their computers (56 percent) than are PC users (31 percent).

Qwest Really Isn't Interested in IPTV

Qwest Communications International Inc. no longer will pursue cable franchise agreements with Colorado cities or build community-wide TV service in areas where it's recently won franchise approval. That's more confirmation of Qwest's strategic direction in video, which is to rely on its partner DirecTV for linear TV services.

Though Qwest plans to upgrade its broadband capacity in 10 major markets and 10 smallers ones in the company's 14-state service area, that is solely for the purpose of broadband-based services other than entertainment video.

Qwest still supports the idea of statewide television franchises. But it won't seek such a franchise.

Nokia N96: N95 in a New Shell?

This image, from Mobile-Review.com, strike some people as looking like an N81, but larger. To others it resembles an N95. No specs available yet, it seems.

Digital TV Transition: Not Y2K

In February 2009, all over-the-air analog TV broadcasting will be shut off. Some observers are concerned that consumers aren't acutely aware of the coming changes, resulting in massive disruption of the TV experience on the day of the analog broadcasting shut off.

Maybe not. The only potentially-affected customers are those who rely solely on over-the-air signal reception. Customers of cable, satellite or telco TV services won't have to do anything. To be sure, cable, satellite or telco TV providers will have to supply a new digital decoder if one is not already in place. But the point is that the providers will take care of their own customers, and that's 85 percent to 90 percent of all TV viewers.

Of those customers who have over-the-air connections, those who have bought TVs with digital tuners will not notice anything other than universally-better pictures. So the real issue lies with a single-digits number of viewers who have analog-only tuners.

By the time the transition nears, every mass market electronics retailer will have taken steps to push the sale of digital decoders. So this will not be anything like a feared "Y2K" event.

Low Awareness of Google Apps?

In a recent survey, NPD asked PC users whether they had heard about online, browser-based office productivity applications like Google Docs & Spreadsheets or other similar Web-based apps.

About 94 percent say they never have heard of Web-based productivity suites. About half of one percent have substituted Web-based productivity suites for desktop software such as Microsoft Office.

Google Docs and Spreadsheets perhaps is the most visible of the Web-based suites. But apparently a long ways from being a mainstream application.

EComm: The Trillon Dollar Market

I usually don't "plug" conferences. But EComm, to be held in March, is an exception, in part because it is a "bottoms up" meeting being organized by people in the IP communications business, not by a well-established conference producing organization.

The other reason is that I am primarily a "content" person, most interested in the intellectual capital being created at such meetings, not the important but more pointedly commercial aspects of trade shows. I respect the folks over at STL (Telco 2.0) for this reason as well.

Lee Dryburgh, who is pulling this together, shares a perspective on what is happening in the trillion-dollar-annual-revenue telecom business. "The first wave of the democratization of communications was market liberalization," Dryburgh notes. "The second wave was VoIP."

"Yet VoIP as a standalone product is not viable long term (consumer attraction is drifting away from "standalone telephony") and VoIP is unlikely to ever be highly profitable," he insists. "In short, VoIP is something 90s which has had little consumer success since."

"The third chapter onwards is far more exciting and profitable," Dryburgh believes. "It is this chapter onwards that eComm seems to track, promote and highlight."

"The third chapter takes VoIP as one building block of many to be fused together into "application experiences"; largely social applications or business efficiency products (or both)."

I happen to agree with him, and lots of us do. You should really check this out:

http://www.ecommedia.com

(I apologize for this not being a hot link, but I have never been able to figure out how to do that, despite following the instructions. Just a dumb end user problem.)

Or click on the new "Related Article" field at the bottom of the post. I've had to play with the HTML, which, as a Mac person, I really hate. I need to enhance it a bit, but that might take me a year...really....

If the future of the global telecom industry is a concern you share, be there.