Verizon CEO Says Market Can Sort Out Tough Issues

Ivan Seidenberg, Verizon CEO, said at a Council on Foreign Relations meeting that there was a danger of government regulatory overreach of several types in the current environment.

" I always worry about unintended consequences of government reaching into our business," Seidenberg said. "But I believe the players in the industry--like Google, like Microsoft, like the Silicon Valley players, as well as AT&T, and us and the rest of the industry--we're creating a better dialogue."

Seidenberg also thinks the industry has to do a better job of self-policing, though, more on the model of the advertising industry. That would lessen the need for very-detailed rules crafted "in advance" of a particular problem occurring, rather than a focus on fixing such problems as actually do arise.

"In the telecom business we need industry to do a better job at policing behavior, because, in the final analysis, government could never possibly regulate every condition, in every single circumstance that could ever happen, and do it efficiently," Seidenberg said.

Seidenberg thinks one of the key problems with proposed "network neutrality" rules that would prohibit virtually any sort of packet prioritization is that it makes very hard the task of providing different types of service to customers who may want it, at the lowest-possible prices.

 "Most people think a carrier wants to charge for every minute on a linear basis in perpetuity, infinity," he said. But "we don't really want to do that."

"What we want to do is give you a chance to buy a bundle, a session of 10 megabits or a session of 30 megabits," he says. "The problem we have is five percent or 10 percent of the people are the abusers that are chewing up all the bandwidth."

"So what we will do is put in reasonable data plans, but when we now go after the very, very high users, the ones who camp on the network all day long every day... we will throttle and we will find them and we will charge them something else," he says.

"We don't want to have a linear pricing scale," he said. "We do want to find a way to give the majority of people value for bundles, but we have to make sure we find a pricing plan that takes care of that 10 percent that's abusing the system. And it's that simple."

"And therefore you have to have rules, give us discretion to run our business," Seidenberg said. "Net neutrality could negate the discretion to run your business."

"Anytime government, whether it's the FCC or any agency-decides it knows what the market wants and makes that a static requirement, you always lose," he said.  Seidenberg noted that although access speeds might be higher in Korea or France, household penetration in the U.S. market is higher than in any country in Europe, he said.

"Japan may have faster speeds, but we have higher utilization of people using the Internet," said Seidenberg.  "So our view is, whenever you look at these issues, you have to be very careful to look at what the market wants, not what government says is the most important issue."

"If you look at minutes of use, the average American uses their cell phone four times as much as the average European," Seidenberg says. But what about penetration rates?

"If you look at Europe, they publish penetration rates of 150 (percent), 160 (percent), 170 percent meaning that people have more than one phone, two phones, three phones," he notes. Seidenberg suggests the high roaming rates are the explanation.

"My guess is you probably have two or three different phones to carry to use in different countries because your roaming rates are so high," he adds. "So my point is it's a fallacy to allow a regulatory authority to sit there and decide what's right for the marketplace when it's not even close."

In fact, Seidenberg argues that the U.S. market is more advanced in ways that count.

"Verizon has put more fiber in from Boston to Washington than all the Western European countries combined," he notes. Also, "if you look at smart phones, they have exploded this market in the U.S. market."

"Ask any European if they're not somewhat envious of the advancements of smart-phone technology in the United States," he says.

The FCC is "overreaching in regulations," he says. "It's a real problem to have well-intentioned people in Washington regulating the business as they understood it to be in 1995. Bad idea."

"I don't think there is no role for government," he says. "I just worry about, when you allocate capital and you look at consumer behavior, that is not a strength of, I think, everyday transactional activity of government agencies, particularly federal government agencies."

On the technology front, Seidenberg pointed out that the opportunities for distributed, remote or cloud-based applications is growing very fast.

"But here's the thing about the iPad that's very interesting," Seidenberg said. "We look at it as a fourth screen."

"Now, the interesting thing about the iPad, from how Verizon looks at it, from a network person, first of all, it has no hard drive, right?" he said. That means lots of need to get applications from the network, sort of reversing the trend of the client-server era to put more processing and storage at the edge of the network. That has postive implications for a firm such as Verizon.

Seidenberg also does not think the FCC should attempt to take spectrum away from broadcasters and reallocate it for mobile use, Seidenberg says, although Verizon has said it generally supports FCC plans to reallocate spectrum for mobile use. "I think the market's going to settle this," he said.

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Another Reason Why Handset Suppliers Have Gained Value in the Mobile Ecosystem

The mobile user experience keeps getting more complex as mobile operators add spectrum bands, even though most users do not directly encounter any of the particular issues. The reason is that it is harder to maintain connections moving from cell to cell and network to network as new frequencies must be added.

Voice and Internet connectivity issues also become marginally harder as hanset antennae have to accomodate more signals at different frequencies. Also, mobile Internet handsets have to conduct all sorts of signaling operations to support social networking, email and other applications. And then there is the simple matter of different air interfaces.

New fourth-generation Long Term Evolution networks will make the problem worse, especially for "world phones" that are supposed to work in many regions of the world.

When GSM, the first "digital" air interface was firs used in Europe, there was only a single frequency band at 900 MHz band. Than an 1800 MHz band was added, then 2100 MHz.

In the United States, the 850 and 1900 MHz, 1700 and 2100 MHz bands are used. That has lead to "quad band" and "tri-band" devices. And now LTE frequencies will have to be added.

In Europe LTE will likely start on 2600 MHz and potentially also be used on 1800 MHz and 2100 MHz bands, with some use at 800 MHz.

In Japan, LTE will be used on 2100 MHz with an additional band likely to follow. In the United States, the situation is even more divergent. Verizon uses a 10 MHz block in the 700 MHz range.

Some other operators might launch LTE in the 1700 and 2100 MHz bands. Finally, there are rumors of Clearwire jumping from WiMAX to LTE in the 2600 MHz band but with TD-LTE.

So global roaming capabilities of devices will be challenging. So how does this all work out on the consumer end user front? First, cost becomes an issue. Battery life is affected. In some cases, there are form factor issues and reception issues, as the physical placement of the antenna makes a difference.

The potential band and technology combinations for GSM, CDMA, UMTS and LTE are huge, as air interfaces also are different between operators in the U.S. market. All of that means there also are volume manufacturing issues, as devices have to be customized to a certain extent, by operator and by intended region of operation.

All of that means some devices will work better, quite apart from the obvious user interface issues, because of hidden requirements such as the networks each device is intended to work with, signaling operations and even the physical placement of elements within each device.

More-efficient producers will have an advantage as well, as the complexity of these decisions will mean there is an advantage for manufacturers and designers that can leverage the customizing process.

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A Decade After the Bubble, Another Round of Spectrum Auctions

It has been roughly a decade since European mobile operators placed big spectrum bets on "third generation" mobile broadband, and then largely watched as killer apps failed to emerge, customer use of the new networks remained sluggish, and executives ruefully noted they had overpaid for spectrum.

Now European mobile operaters are about to embark on a new round of broadband spectrum investments for fourth-generation mobile networks. You can expect them to try to be more-prudent investors this time around. In the 2000 round the German government, for example, raised 50 billion euros, or about $67 billion, on 3G licenses. Some anticipate the government will raise five billion to 10 billion euros this time around.

We'll see. The difference between the 2000 auctions and the current 2010 round is that Internet access has emerged as the "killer app" for mobile broadband, and the difference between 3G and 4G is that 4G looks to be a potential replacement for fixed-line broadband.

"With LTE, mobile phone networks will become a real alternative to cable or DSL (broadband telephone connections)," says Herbert Merz, head of the German hightech association Bitkom.

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Value Chain Conflict Takes Contradictory Forms

Struggles over value and revenue in the Internet ecosystem take the form of "network neutrality" debates in the United States, and oddly enough may take the reverse form in the European market. In the U.S. market, the effort is to induce the government to bar revenue sharing, where in the European market there may be pressure to get governments to compel revenue sharing.

Telefónica, France Telecom and Deutsche Telekom all say Google should start paying them for carrying bandwidth-hungry content such as YouTube video over their networks.

César Alierta, chairman of Telefónica, said Google should share some of its online advertising revenue to compensate the network operators for carrying the technology company’s bandwidth-hungry content over their infrastructure.

Alierta says that if no revenue sharing agreement was possible between the internet search engines led by Google and the network operators, regulators should supervise a settlement.

“Let’s see the development of digital society in terms of the winners and the victims," says Stéphane Richard, France CEO. "And today, there is a winner who is Google, there are victims that are content providers, and to a certain extent, network operators."

"We cannot accept this,” says Richard.

René Obermann, Deutsche Telekom’s chief executive, likewise says Google and others should pay telecoms groups for carrying content on their networks. “There is not a single Google service that is not reliant on network service,” he says. “We cannot offer our networks for free.”

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Will Apple Make History?

Those of you familiar with the evolution of computing technology over the past few decades are aware of the way historians describe the key "eras" of that history. We begin with mainframe computing, transition to mini-computers, then to personal computers, then to a period we generally call the "Internet" or "Web" era and now seem to be at the beginning of the next era, for which we do not generally agree on a name.

The point we like to make is that, in each era, and eras do not break cleanly and neatly into 10-year periods, there are some firms which dominate the business in terms of market share and influence. What we also have seen, though, is a different set of leaders in each era.

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The leaders of one era do not lead the next era. Again, this is a matter of relative influence and character, not an indication of enterprise death, though that has happened in some cases. So the interesting question right now is what companies, or what sorts of companies might arise to challenge even firms that are dominant today, such as Google.

All of this matters to companies in the communications business because each era of computing has created new requirements and opportunities for providers of computer communications. Generally speaking, as computing has migrated into the fabric of everyday life, the need for communications has grown steadily.

Arguably the biggest change in volume of devices requiring communications came with the "Internet" era, when virtually every computing appliance began to require communications.

Today, we can point to smartphones as the latest wave of computing devices that require communications.

To be sure, executives in the business are well aware of the historical implications of changing eras. And the fascinating question right now is  whether any company that has been a leader in any of the previous eras can make the transition to leadership in a subsequent era. The question is interesting simply because it has not ever happened.

But then there is Apple. And one way to make Apple "fit" into the typology is to remove it from the ranks of 1980s leaders, and then place it into the era of mobile Internet computing. Or one can leave Apple where it logically is categorized, and then assume that it is a candidate to make history, by becoming one of the dominant firms in the coming era.

That, in any case, is why some observers might believe Apple is better positioned than Google, as fearsome as Google seemed two or three years ago, as a possible "leading" firm in the era that is coming. Already there is some thinking that "desktop search," as key as it has been to Google's prominence, will be challenged in the era to come by "mobile applications."

It might seem odd to say Apple is a more-likely candidate to lead the next wave of computing than Google. The "safe" answer is to say neither will be a market leader in the next era. But Apple could make history, in more ways than one.

Apple always has been a believer in the power of "closed" ecosystems, at a time when the rest of the world has shifted to "open" systems. Observers who think "network neutrality" is important because it is seen as related to the preservation of an "open" applications environment could well be "barking up the wrong tree" entirely.

"Video Will Replace Voice and Text" for Business Communications in 5 Years"

Video will become the new business norm for communication and collaboration over the next five
to 10 years, says Henry Dewing, Forrester Research analyst. In fact, says Dewing, "video will replace voice and text communications as the preferred method of communication in business and personal life."

Those of you accustomed to technology projections might agree that the direction is right, but the timing is probably wrong. Still, three years ago, most buyers and users perceived the predictions of impending video traffic as all hype, says Dewing. But a combination of technology maturity, end user demand and competitive pressures are driving interest.

As often is the case, the initial business case starts with saving money on travel costs. "Every business case for video starts with time and travel savings and describes the more effective communication possible with video, but the real value is in improving the way firms operate and conduct business with their clients to build competitive advantage without breaking the bank, says Dewing.

But if you are familiar with the business case for IP communications and IP telephony, it was the same there. People understood they could save money. But all the other advantages remain a bit unclear.

Hard dollar savings like travel costs are being used to pay the bills for all types of communications and collaboration solutions, he says. "Many businesses we speak with struggle to define the value of video beyond travel savings from implementing videoconferencing," he notes.  "The value of digital signage, video blogging, broadcast state-of-the-company speeches, and even video-enabledcollaboration is still fuzzy in the minds of IT planners today."

The hurdles might be even worse than that. Business owners might not be able to measure the "soft" advantages from collaboration very well, if at all, as generally is the case with IP communications, where, no matter what anybody tries to say, still is seen as a cost-reducing innovation.

Business video use will ramp steadily over the next five years as employees who experience video at home will demand it at work. After successful deployments at work, employees will demand more video solutions and make video a standard mode of communication, Dewing says. Follow-on deployments will occur rapidly when use is easier, when resolutions deliver more lifelike images, and when reliability makes video dependable.

"Go Screw Yourself, Apple" Flash Evangelist Says

Apple doesn't support "Flash"-authored applications, favoring HTML5, a move that obviously harms Adobe's efforts to maintain an "open" standard for authoring Web video. Apple prefers HTML5 at least in part for technical reasons: it makes easier the task of inserting video-based advertising into video content.

Lee Brimelow is a Platform Evangelist at Adobe focusing on the Flash, Flex, and AIR developer communities, and has a succinct comment on what he thinks of Apple's position: "Go screw yourself Apple."

That's one way of assessing the threat Apple's approach to video applications causes in some quarters.

"Any real developer would not in good conscience be able to support this," Brimelow argues, calling the Apple move "hostile and despicable."

A move like this clearly shows the difference between our two companies, he says. "All we want is to provide creative professionals an avenue to deploy their work to as many devices as possible," he says. "We are not looking to kill anything or anyone."

The clear implication is that Apple is trying to "kill" Adobe's Flash business.

"This is equivalent to me walking into Macy’s to buy a new wallet and the salesperson spits in my face," says Brimelow. "Chances are I won’t be buying my wallets at Macy’s anymore, no matter how much I like them."

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U.S. Broadband by Satellite Fared "Relatively Well" During Recession

U.S. providers of broadband access by satellite services did roughly as well as fixed-line providers during the recent recession, Northern Sky Research says. "After a year of uncertainty, the majority of signs indicate the sector made it through the worst economic crisis since the Great Depression relatively well," researchers at NSR say.

"North America set a milestone by becoming the first region to top one million subscribers, and Western Europe will likely exceed 100,000 subscribers well before the end of 2010, says NSR.

According to Hughes Network Systems November 2009, the company was adding about 17,000 gross subscribers a month. Wildblue, now part of ViaSat, added roughly 8,333 new customers a month in 2008, for a total gain of 100,000, and about the same number, it appears, in 2009.

Satellite broadband access providers saw that few consumers and businesses were willing to give up their broadband service in difficult times, NSR also says, as was the case in the fixed-line market as well.

Satellite services tend to get brutal complaints about speed, cost and customer service on some discussion boards and forums, but for many consumers, satellite broadband might be the only current option. Faster speed services are coming, though, as a new generation of high throughput satellites will provide higher-speed connections.

It seems unlikely the faster speeds will silence all complaints, but should help.

Globally, NSR projects that broadband VSAT networking, satellite broadband access, and broadband trunking and backhaul services will generate nearly $8.8 billion by 2019, which is a 135 percent increase over 2009.

Global satellite broadband access will add the most new revenues, some $4.1 billion between 2009 and 2019, to become the leading market segment and bypass traditional broadband VSAT networking in revenue terms as of 2013. Traditionally, commercial customers ordering up private satellite networks have been the revenue driver, so the switch to consumer services is a big change.

Manassas Pulls Plug on "Broadband Over Powerline" Service

The Manassas City Council unanimously voted to discontinue offering its municipal broadband over Powerline access service. The Manassas service had been touted in the past as an example of how municipally-provided broadband service could succeed, as well as a proof of concept of the idea of using power lines as the access mechanism.

The shutfown affects about 520 residents and businesses who currently subscribe to the service, which will end in three months.

The council cited three reasons for the decision. First, customer penetration had been declining. Also, the service was costing more than it took in as revenue, and a determination that meter reading services do not require broadband access.

Observers note that the business case never proved as robust as expected. "It's costing a little more to maintain the system than we projected in the budget," Manassas Director of Utilities Michael Moon said. "The original projections were that the customer base would be double this."

The city has been running the service since the private operator, COMtek, found it also could not make a profit on the system.

In January 2009, there were 637 residential and 51 commercial BPL subscribers in Manassas. In February 2010, those numbers had shrunk to 457 residential and 50 commercial subscribers.

 The Utilities Commission said that the total revenue brought in by BPL for fiscal year 2010 was almost $186,000, but the expense of keeping up the City-owned system was costing the ratepayers a little more than $351,000, resulting in a net loss of almost $166,000.

"In October 2003, the Manassas City Council was told that it could expect as much as $4.5 million in revenue from awarding a 10-year BPL franchise," said American Radio Relay League CEO David Sumner. "Instead, six months later, BPL had turned into a money pit for the City of Manassas. Anyone thinking of investing in BPL would do well to learn from the Manassas experience."

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"Digital Divide" is Closing

Policy advocates and policymakers have worried about a "digital divide" in U.S. Internet usage, as much as global policymakers have worried about the difference between communications use in developed and developing regions.

But a new study by eMarketer suggests that the U.S. digital divide is closing fairly rapidly. By 2014, in four years, Internet usage rates by Americans of black ancestry will just about equal rates of U.S. "whites" today, while Hispanic American use of the Internet will rise to within six percentage points of the current U.S. average usage by "white" Americans.

That is not to say rates will be identical, but the point is that almost nobody thinks "white" Americans generally are victims of a "digital divide" today, though there are more issues in rural or isolated parts of the country. In fact, most of the non-adoption factors now are of a "demand" sort rather than a "supply" sort. In other words, most people who want broadband already buy it.

If by 2015 Americans of "black" or "Hispanic" heritage have those same rates, the significance of the "divide" should be largely moot. That is not to say the issue is completely moot, but closing the last percentage or two of gap in any endeavor always is a matter of effort and reward. And since the primary issue these days is demand, not supply, some circumspection might be in order, in terms of the amount of effort expended, compared to the potential benefits. The markets, and consumers, seem to be doing a relatively good job, unaided, in terms of closing the digital divide.

Apple iAd Wants to Change "Ads that Suck"

It isn't clear whether the typical mobile ad created for Apple's new iAd network will be as immersive and interactive as the example Apple CEO Steve Jobs shows here.

But the example suggests what Apple would like to see happen: ads that are closer to entertainment than anything we've seen so far, incorporating interactive and gaming experiences, for example. To use the obvious analogy, today's ads are outside the content; in the "Toy Story" example the ads are part of the content, essentially.

The issue will be how talented advertisers will be, not so much Apple. Unless firms are willing to allow Apple to produce the "creative," as well as handle the placement, it is doubtful most ads will be this well done.

Telcordia Warns of Mobile Operator Marginalization

Broadband access is becoming a commodity, even for mobile service providers, who must figure out what else they can offer consumers once basic mobile broadband connections have become a feature purchased by the majority of mobile phone users.

The good news for mobile operators in many regions around the globe, data average revenue per user (ARPU) has quadrupled over the past six years and now is nearly half of voice ARPU.

But that product will saturate, as has fixed broadband, leaving mobile providers to look for the next wave of services and applications to sell.

"The popularity of video and other third-party over-the-top services are breaking mobile broadband networks and business models because they siphon off revenue while adding to the network's workload," says Pat McCarthy, Telcordia VP.

Since Telcordia believes that effort must include measures to differentiate3 access services, it is obvious why extending "strong" versions of network neutrality to wireless networks is so dangerous: it would close off most of the ways such differentiated service can be provided.

McCarthy says operators must distinguish between different types of traffic and prioritize them. For example, personalized end user services that generate revenue for an operator and its business partners should enjoy priority access to network resources, while zero-revenue OTT content should be managed with a tiered bandwidth management solution, he says.

Most-if not all-service providers undoubtedly would agree, a fact that illustrates why network neutrality rules or even reregulating broadband access as a common carrier service would be so devastating.

"An operator's need to manage bandwidth is the first step toward realizing a profitable business, and they must build on that capability, forming active partnerships with end users and their choice of content providers, to get their fair share of the profits," says McCarthy.

Already, mobile broadband traffic continues to grow, but revenues aren’t keeping pace, McCarthy says.

Perhaps the biggest threat of all comes from over-the-top players, McCarthy notes.  Operators will be required to make all the investments in infrastructure and provide a reliable customer experience. And yet, if they aren’t careful, they will absorb the bulk of the costs, while allowing third-party content
providers to reap the biggest profits.

Print content and video content providers say they have learned the same lesson from the music industry's experience with online music. Telecom industry executives probably have to learn their own lessons from the experiences of the fixed-line broadband experience.

None of that will be easy, as application providers largely will resist. But revenue sharing across the ecosystem is the only stable way forward, where maximum innovation and network investment can occur.

"For a time, while the priority is building out the mobile broadband infrastructure, there may be a
competitive advantage in offering a better network," McCarthy says. "But soon enough, the pipe will become a commodity, and the long-term potential revenues will be in the delivery of services, applications, and other user-demanded content."

Ecosystem conflict is inevitable as the new value chains are constructed. But service providers can help themselves by figuring out ways to leverage assets they already have, and offerng them to business partners, for example. It won't be easy, but it is necessary.

Consumers Will Decide what iPad Is, Not Apple

It isn't clear yet whether the Apple iPad is a "mobile" device used outside the home, or a "cordless" device used inside the home. The notion that the iPad is a device "between a smartphone and notebook" suggests a "mobile" device that can be used both outside the home and inside it.

The "cordless" use case is different: the iPad ultimately winds up being a media consumption device mostly used around the house as a shared device, where a mobile phone or a netbook or notebook tends to be a "personal" device used by discrete people.

Imagine something that lies around on coffee and end tables, on kitchen counters and gets picked up and used for various reasons on a casual basis, but which is a "shared" device rather more like a cordless phone  or remote control. That implies a lower price than currently is the case, but everybody expects that to happen.

Nobody can say for sure whether these, or even other undiscovered use cases will eventually emerge. In the near term, the iPad might wind up being used as a game platform, an e-book reader, a video consumption device and an educational content platform, at least if user consumption matches the current supply of applications in the App Store.

According to App Store analytics company Distimo, out of 2,385 iPad-only apps, 833 of them are games, about 35 percent of all the iPad-only apps currently available in the App Store.

The other popular categories are ‘entertainment’ with 260 apps, and ‘education’ with 205 apps.

But the emphasis on games and entertainment also is true of the iPod as well. In fact, 70 percent of the most popular applications on the iPhone are published in entertainment and education categories, compared to 40 percent on the iPad.

About  83 percent of applications on the iPad are offered on a paid basis, while 73 percent of all applications are offered "for fee" on the iPhone. The average price of all paid applications that are solely compatible with iPad is $3.61 compared to $3.55 for applications compatible with iPhone.

Medical applications are most expensive on both the iPad ($9.39) and iPhone ($10.73). On the contrary, Education ($9.10), Healthcare & Fitness ($4.41), Music ($6.86) and Sports ($4.95) applications are significantly more expensive on the iPad.

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"Most Mobile Ads Suck," Says Steve Jobs

You can count on one thing whenever Apple does something new: it will always say the old way of doing things "sucks." And that's what Steve Jobs, Apple CEO, says about most mobile advertising, in introducing  iAd, a new mobile advertising platform that will be built in to the new iPhone operating system, iPhone OS 4.0.  In typical Steve Jobs fashion, the Apple CEO said "we think most of this kind of advertising sucks." 


Apple tends to reshape just about every market it enters, so its entry into mobile advertising has to be noted. Just as signficantly, iAd is expected to provide a monetization vehicle for many developers of free apps for the Apple App Store, driving the apps business, not just marketing. 


"When you look at ads on a phone, it's not like a desktop," says Jobs. "On a desktop, search is where it's at." 


"But on mobile devices, that hasn't happened," says Jobs. "Search is not happening on phones; people are using apps."


"And this is where the opportunity is to deliver advertising is," he argues.


"The average user spends over 30 minutes every day using apps on their phone," he says. "If we said we wanted to put an ad up every three minutes, that's 10 ads per device per day." Assuming 100 million devices in the user base, that's one billion ad opportunities per day, Jobs noted.


"This is a pretty serious opportunity, but we want to do more than that," says Jobs. "We want to change the quality of the ads too."


"What we want to do with iAds is deliver interaction and emotion," says Jobs, and he undoubtedly is thinking about video and audio. Apple will keep 40 percent of ad revenue, and give developers whose apps host the ads 60 percent of ad revenue.

Studios Throw Blockbuster Video a Lifeline

It is not unheard of for one or more content providers to favor one channel, or even one contestant within a channel. As a rule, theatrical exhibition gets priority for new movie releases, with a standard set of release windows for other channels. In recent decades, the home video and DVD windows have changed the most, since home video and DVD channels now represent the single-biggest source of revenue, by channel.

But there are stresses in the channel as the revenue from home video and DVD, especially DVD purchases, is declining. In the once-hugely-important, and now simply important video rental channel, Blockbuster, historically the single most important video rental channel, and now the largest remaining place-based retailer, is struggling to survive, and seems to be getting a lifeline thrown to it by some of the leading stuidos.

Blockbuster recently got an exclusive deal with Time Warner, and apparently now has distribution deals with the Twentieth Century Fox Home Entertainment and Sony Pictures Home Entertainment that give Blockbuster an advantage: new release rentals will be available at Blockbuster, and not through Netflix or Redbox, about a month earlier.

Basically, that means Blockbuster will be able to rent new hit movies and releases on the same day they become available for purchase. Since each form of distribution satisfies part of the fixed demand for any new title (most people view a movie only once), it makes a difference in terms of sales volume that one channel partner has a month advantage.

The unusual new arrangement with Blockbuster shows just how important a distribution channel it is deemed to be. So appparently concerned are studios about the company's survival that some are giving Blockbuster a significant sales advantage over the rival video rental distributors.

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