AT&T Launching Mobile TV

AT&T is launching its own mobile TV service, which should provide more pointers for Dish Network, also expected to launch its own service in the future.

AT&T's service requires specific device models costing between $200-$300, a TV-only data plan costing $15 a month (or $30 if a user also wantsWeb browsing). One device not supported is the Apple iPhone, which for many is reason enough not to bother.

It is doubtful AT&T expects much immediate success. Verizon does not seem to have seen healthy uptake for its Vcast service so far.

Qualcomm, which provides the technology to support the Verizon service, says only that so far the service has been a disappointment. Silicon Alley writer Michael Learmonth suggests that
perhaps 1.5 percent, or 820,000 Verizon subscribers, have ever watched TV on their phones.

In Europe, where several operators offer mobile TV, fewer than one percent subscribe.

Analysts at the Yankee Group say five percent of mobile subscribers are actually willing to pay for mobile TV, if the monthly price is $5.

As has been the case for other mobile services, sluggish uptake now does not mean the service never will be significant. Mobile service itself and texting took quite some time to become firmly embedded as a part of consumer behavior, at least in the U.S. market.

Still, some question whether there is much appetite for a limited selection of long-form TV shows in the mobile space. The issue there is whether the preferred delivery mode might not ultimately be some on-demand delivery. Content breadth is more important to users than lots of other attributes.

Right now, that thesis can't be tested as the programming selection is so limited. Only when the variety of programming is about as rich as any typical cable, satellite or telco line-up is can other possible barriers be tested, including price of the handset, price of the subscription and need for dedicated handsets.

And even those attributes can only be truly tested when there's enough ability to download or stream video "over the top."

Comcast Triple Pay Adoption 18%

About 18 percent of Comcast customers actually buy the triple play. And there seems to be some resistance to the notion, despite its fundamental importance for both cable and telephone companies these days.

Qwest executives, for example, have discovered they are leaving money on the table by not selling single play and dual play services more aggressively.

Comcast says it is going to do the same. The triple or quadruple play might be the fundamental packaging strategy.

That doesn't mean every customer is going to buy such a package. And there are lots of reasons why that could be the case. Lack of interest, lack of money, lack of one specific feature, inability to use subscriber identity modules, lack of availability of a specific handset or programming network, contract terms, sticker shock and lack of awareness all can be barriers to triple or quad play adoption.

Real-Time Services: Bandwidth is Not Enough

Real-time services are the future of private and public IP networks. Just as certainly, users are starting to recognize that raw bandwidth is not enough. Quality of experience hinges centrally on quality of service, typically requiring class-of-service mechanisms, virtual private networks and application-aware control of bandwidth parameters.

Thinking Phone Networks might provide an example. The Covad partner offers voice-optimized access and has increased its customer base using that feature by 200 percent in the past two years.

“We believe this expansion will continue as more nationwide customers appreciate the quality and reliability of Thinking Phone services made possible by Covad,” says Steven Kokinos, Thinking Phone Networks CEO.

Thinking Phone Networks’ customers utilize its voice services to connect multi-site
locations, remote workers, and home offices. The issue there is "multiple sites." It's one thing to assure bandwidth quality at a headquarters site. It is quite another to ensure that home office and distributed associates have that same level of access to quality bandwidth.

It isn't clear how well most users understand that, yet, but greater experience, followed by word of mouth and other "social" mechanisms inevitably will create a market for "real time services" bandwidth that is different from "best effort" access.

Covad’s "Voice Optimized Access" product provides the dedicated bandwidth Internet connection that powers VoIP services from more than 50 wholesale partners nationwide.

Subscriptions, Not Ads Drive Cable, Telco Video

There is a notion, incorrect, that advertising revenues will be a big contributor to telco revenue streams as those firms scale up the size of their video entertainment customer base.

Some of the understandable confusion results from glancing at cable industry statistics on overall revenue, including programming networks and cable operators.

While it is true that programming networks derive a huge chunk of their revenue from advertising, cable operators really do not benefit as much.

As this Time Warner Cable chart suggests, advertising actually is quite a small part of the overall revenue mix, and has dropped, percentage-wise, as newer businesses such as high-speed Internet access service and voice have grown.

It's a nice revenue contributor, to be sure. But arguably not more important than churn reduction and retention, in terms of overall revenue contribution. Certainly it is not more important than voice and high-speed data services, going forward.

Time Warner Cable Expects 9% 2008 Revenue Growth

Time Warner Cable expects its 2008 full-year growth rate in revenues to be approximately nine percent, from a 2007 base of $15.955 billion, and its 2008 full-year growth rate in operating income before depreciation and amortization to be in the range of nine percent to 11 percent, from a 2007 base of $5.742 billion.

Time Warner Cable also announced that it is increasing its expectation for full-year free cash flow growth, primarily due to a reduction in cash taxes resulting from the Economic Stimulus Act of 2008. The Company now anticipates that its full-year FCF growth rate will be at least 40 percent.

That's if the newly spun off company can get all its local franchises renewed, a time-consuming if necessary formality, and then does not have time to make any acquisitions in 2008. The odds of the company making it through 2009 without making a significant acquisition or two are fairly low, many observers think.

The company will have the borrowing power and the motivation to extend its footprint.

Qwest Launches 20 Mbps Access Service

Qwest has begun selling two new broadband service tiers for residential and small business customers. Qwest Connect Titanium offers broadband speeds of 12 Mbps downstream and 896 kbps upstream at a standard rate of $64.99 a month.

Qwest Connect Quantum providers 20 Mbps downstream and 896 kbps upstream.

Bundle and annual pricing incentives are available. The company is rolling out the service to 23 of Qwest’s top markets in ten states, reaching two million customers at the end of 2008.

Charter Introduces 16 Mbps Access Service

Charter Communications has announced a 16 Mbps broadband service in its Wisconsin markets. The new offer features upstream bandwidth of 2 Mbps for both consumer and business customers.

The new service is priced at $79.99 a month for up to 16 Mbps downstream and 2 Mbps upstream. The offer is available to the majority of its residential Wisconsin customers and comes with a $10 bundle discount available for users that also subscribe to Charter’s phone or TV services.

Charter competes against AT&T 6 Mbps digital subscriber line services. AT&T has introduced U-verse access service operating at up to 10 Mbps downstream in Wisconsin, primarily targeting Time Warner Cable markets including the Milwaukee metro area.

$200 iPhone Subsidy from AT&T in June?

When the 3G iPhone is introduced this summer, AT&Twill cut the price by as much as $200, says Fortune magazine writer Scott Moritz. That would bring the phone's cost down to $199 for customers who sign two-year contracts.

Apple is expected to have two versions of the new iPhone, an 8-gigabyte-memory and a 16-gigabyte-memory model with "list" price tags widely expected to be $399 and $499.

Such a move would create significant churn potential for rivals Verizon Wireless, Sprint and T-Mobile.

The $200 rebate or subsidy would be limited to AT&T customers and not available through Apple’s stores.

The average iPhone user however, runs up a $100 tab each month due to the higher priced data and calling plan. That would give AT&T an quick payback on its $200 outlay.

Such a move also would snare more of the ultimate iPhone market as AT&T moves closer to the eventual end of its exclusive deal with Apple. And since the iPhone has proven to be such a boost for mobile broadband, AT&T logically would believe much-wider iPhone adoption will help it get where it wants to go, in terms of mobile broadband revenues.

Rich Media: 20% of Online Ads by 2012

eMarketer predicts that spending on online rich media and video ads will account for nearly one-fifth of all online ad spending by 2012, up from 9.7% of all online ad spending in 2007.

"Video ads command higher prices than static display advertising," says David Hallerman, senior analyst at eMarketer. "That both boosts overall ad spending and draws in more dollars from traditional brand marketers, who have been reluctant to commit much of their ad budgets to the Internet."

Ongoing experiments with video ad formats and a lack of standards have, in part, kept the online video ad market from even stronger revenue growth.

Other hurdles have included limited high-quality video content to attract big advertisers and unresolved issues such as traffic measurement, which will be needed to gain the trust of the most deep-pocketed marketers.

As those problems are solved, spending will increase. eMarketer predicts that US online rich media and video ad spending will total more than $9.4 billion in 2012, which is more than four times as much as the 2007 spending level.

Windstream Doubles Access Speed

Windstream has doubled the Internet speeds available across most of its 16-state network, offering 12 Mbps service in certain areas and expanding the availability of 3 Mbps and 6 Mbps service. The company now offers 3 Mbps service to virtually all of its broadband addressable lines as a result of the network upgrade.

“Windstream experienced a four-fold increase in Internet usage in 2007 as our broadband customer base grew 28 percent year-over-year,” says Ric Crane, executive vice president and chief marketing officer.

Windstream high-speed Internet service is available at any speed – including 12 Mbps, 6 Mbps, 3 Mbps and 1.5 Mbps – for $19.99 per month for the first six months with qualifying services in participating areas.

Comcast Boosts Business Class Access Speed

Comcast has boosted its "Business Class" Internet access speed from 8 Mbps downstream and 1 Mbps upstream, to 16 Mbps and 1 Mbps, respectively. The increase, offered in all Comcast markets, comes at no extra cost. Prices for the MSO's Business Class Internet service range from $59 to $89 per month.

Unmanaged bandwidth is getting cheaper and faster all the time, despite the fears some have had that a strong duopoly in the U.S. market would inhibit such moves. The task now remains for providers of quality-assured bandwidth to make the case for why managed bandwidth is more important, has value, and is priced accordingly.

Fixed Mobile Convergence Drives Quad Play

Fixed mobile convergence might be shaping up as a key driver of "logical" quadruple play bundles. Of the top values cited by respondents to a Compete survey in early 2008, three of the four most important features involved integration of home (fixed) phones and mobiles.

Another significant finding: 97 percent of consumers were most interested in the broadband Internet service component of the bundle.

These two top findings suggest that FMC is as big a deal as many say, and that broadband has emerged, at least among technology-savvy users, as the single most important service delivered by a wired network.

The new survey also is interesting in suggesting that consumers finally are figuring out conditions under which a wireless service is a "logical" part of a bundle.

In past years, people seem to have better understood or accepted the idea that a voice service and Internet access service "go together." They now are comfortable with the idea that video and Internet access go together, or that voice and video can be bought in a package.

Wireless and wired voice service seems to have been less obviously a logical bundle for most consumers. But the ability to integrate the mobile and landline phone obviously is resonating in a new way.

Compete says interest in bundles increased 55 percent from July 2007 through March 2008.

More than four out of 10 respondents say they would either be "likely" or "very likely" to consider purchasing mobile phone service from their telecommunications provider.

Stronger FiOS Growth than DSL at Verizon

Verizon digital subscriber line growth in the first quarter was up sequentially about six percent, a fact that leads some to conclude that DSL adds are slowing. There's some truth to that, caused primarily by growing saturation of the broadband access market.

FiOS account additions were up to 23 percent, sequentially, though. Some customers logically are upgrading from DSL to FiOS, though.

Some observers might argue that Verizon's churn rate is up. That's obviously caused by current DSL customers upgrading to FiOS. Excluding the internal upgrades, the churn rate for DSL services hasn't budged, Verizon executives say.

In the most-recent quarter FiOS net subscriber counts were up by one million, year over year, while net DSL subs were up about 170,000.

Unlimited Mobile Plans Are Revenue Accretive

Despite fears of a new and devastating price war caused by unlimited calling plans, the opposite seems to be occurring.

Quite to the contrary, the new plans seem to be encouraging users to trade up, and add more-capacious data plans as well, at least at Verizon Wireless.

"In the first quarter our unlimited plan accounted for 13 percent of our single line retail post-paid adds, says Denny Strigl, Verizon Communications COO. "That compares to about four percent choosing the $99 or above tiers before the plan was launched." Lots more users seem to be trading up to the more-expensive plans, in other words.

"We’re seeing good growth in high tier voice plans," says Strighl. There are churn benefits, which was the impetus for the plan. What might have been unforeseen is the increase in usage of data services and aggregate growth of customers moving up to the $90 plan from lower-revenue plans.

"Additionally, a high percentage of the new customers who choose an unlimited plan also choose our select or premium data packages," says Strigl.

"In March, which was the first full month after the launch, our average daily disconnects declined six percent from previous months and that is at the voice access tier $79 and above," says Strigl.

It appears that there are more users willing to trade up than there are heavy users finding they can save money by trading down, in other words.

$6.6 Billion U.S. Mobile Media Revenues by 2012

U.S. mobile media and entertainment revenue will grow to $6.6 billion in 2012 from $3.1 billion in 2007, according to Analysys Research.

Analysys said that most of the growth will not happen until after 2010, when the technical and market environment for mobile media and entertainment is expected to improve.

Up to this point, mobile TV, music and other content has been patchy in coverage, limited in content and expensive.

That is less true globally, Analysys says. Total spending on mobile media services by consumers and advertisers worldwide will grow to more than $102 billion in 2012 from about $47 billion in 2007.

"Relative growth in consumer spending on mobile media applications will be surpassed by advertisers, as they look to exploit the maturing cellular content channel as a means to deliver their marketing and advertising messages to key target segments," said David Kerr, vice president at Strategy Analytics.