Telstra Structural Separation Moves Ahead

Telstra will be structurally separated into wholesale network services and retail businesses as part of new legislation related to creation of a new National Broadband Network for Australia. As part of the new law, Telstra will sell its fixed-line access assets to the NBN as well.

Many practical details remain to be ironed out, and it is too early to make a firm judgment about how the structural separation will affect Telstra's market and financial position. But the separation ought to provide some evidence, over time, of how important "network ownership" is for a major tier one telco.

Generally speaking, most executives of tier one service providers continue to believe that access network ownership confers business advantage. Ownership means service providers can create more advanced facilities on their own accord, without the restriction of leasing only such capabilities as a third party might be willing and able to supply. Comcast is free to create and sell 50 Mbps broadband access connections whenever it wishes to, because it does not have to rely on a third party to create such features. Wireless providers can upgrade to fourth-generation networks on their own schedule, rather than waiting for third parties to build such networks.

Also, to the extent that a single network can be used to support multiple services (the whole idea between IP networks), ownership of a broadband access network allows creation and offering of many complementary services ranging from voice to entertainment video, business services and conferencing, for example.

Smaller competitors, on the other hand, frequently deem widespread wholesale access to be the underpinning for their business operations, since they cannot afford to build their own access networks on a widespread basis.

So at least in principle, the coming NBN ought to allow many more retail service providers to try and grab some share of the consumer and smaller business markets. In principle, that should lead to Telstra having less overall market share.

In June 2010 Telstra's share of the total Australian communications market was just over 60 percent, but virtually all observers expect Telstra's share to decline in 2011 and 2012.

Optus is perhaps the major contestant Telstra faces, as Optus has market share between 21 percent and 22 percent.  Vodafone and Hutchison have merged their Australian businesses and could be a stronger competitor as well. Optus has built and operates a number of hybrid fiber coax access networks in Australia and is not likely to decommission them, suggesting that Optus will use the NBN access facilities at some point to expand into new geographies.

Optus competes in the mobile segment as well, operating a wireless 3G network that reaches more than 97 percent of the Australian population.

Historically, one might argue, the competitive benefits of robust wholesale access have been most clear in markets where the former telecom monopoly represents the only fixed-network access capability in a region. One might argue that the benefits arguably are least when at least two strong facilities-based access networks exist in most markets.

Despite concern about Telstra's strong position in the market, its declining market share, across virtually every fixed-line and mobile service, suggests that the move to a NBN framework will not fundamentally change the Australian marke's dynamics. At least immediately, the NBN will spur many new entrants.

But communications always is a scale-dependent business. Over time, the normal market dynamic is for disparate smaller operators to combine in an attempt to gain more marketing scale. The NBN will not change that dynamic. One might predict an initial flurry of new entrants into the wireline markets, followed by a period of consolidation where market share concentrates in a smaller number of viable players.

Nor will the Telstra structural separation necessarily settle the argument about the strategic importance of access access ownership. One might argue that Telstra's retail unit's success now will be judged solely by its retail effectiveness, not the advantage of its network asset ownership. That will be true to some extent. The problem is that Telstra's market share has been declining for some time.

A continuation of that market share shift would not conclusively prove that access network ownership was important, and that Telstra "needed" those assets. At the same time, it is perhaps unreasonable to expect Telstra's market share to tumble without end.

At some point, Telstra's share should stabilize. That would not, in and of itself, "prove" that the access ownership ultimately was unimportant. In the U.S. market, where strong telco and cable competitors face each other in nearly every local area, the two players dominate consumer markets, roughly splitting new markets and gradually taking share in each others' legacy markets as well. There are a few markets where a third fixed-line contestant operates, but those scenarios are relatively rare, and no third provider typically has market share anywhere near what the local telco and cable operator have.

There are some market segments where a third provider has significant share. Satellite entertainment video provides one example. Also, looking just at the "voice services" market, mobile providers collectively have more than 50 percent voice market share, across all network access types.

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Online Video is Killing the DVD Business, Not Cable TV

The DVD industry rose to a breathtaking level nearly as fast as any entertainment medium in history. The basic technology for the product was created in the early 1990s. DVDs were not available in the US until 1998, but it only took another five years for them to outsell VHS products.

After a short and spectacular run, the reign of the DVD is coming to an end, though. Global DVD sales dropped nine percent in 2009, for example.

The Five Businesses That Killed The DVD - 24/7 Wall St

Tablets Will Cannibalize 10% of PCs by 2014

Growing consumer appetite for substitute devices will cannibalize about 10 percent of global PC sales by 2014, while smartphones are likely to displace some additional percentage of sales, particularly in developing markets, Gartner analysts predict.

In fact, one illustration of how much device trends have changed in less than a year can be gleaned by forecasts of "emerging devices" published as recently as January 2010.

One such forecast, published by Strategy Analytics, shows no "tablet" or "media tablet" category at all. In all likelihood, tablets are going to displace a portion of the forecast notebook and netbook sales.

Growing user interest in media tablets such as the iPad also is affecting near-term sales, said Ranjit Atwal, research director at Gartner.

“PC market growth will be impacted by devices that enable better on-the-go content consumption such as media tablets and next-generation smartphones,” said Raphael Vasquez, research analyst at Gartner. “These devices will be increasing embraced as complements if not substitutes for PCs where voice and light data consumption are desired."

Video Aids E-Commerce

Web visitors are able to process information up to 30 percent more rapidly when it’s provided in a combination of video and text, rather than text alone. Additionally, 65 percent of users might be "visual learners," and more likely to digest information and learn from it, in a visual form. Most types of ecommerce, notably apparel and products suited to emotional and personal tastes, excel with visual additions.

A comScore study revealed that when video was included in the shopping experience, visitors were 64% more likely to purchase than without it, and stayed on the site for an additional two minutes.

3 Important Ecommerce Trends To Watch

Nothing is "Normal" This Year, it Seems

The traditional "Black Friday" start to the holiday shopping season seems mixed. Black Friday sales this year showed a very slight increase over last year, according to ShopperTrak. Retail sales increased a very slight 0.3 percent compared to last year with consumers spending $10.69 billion in various retail locations.

Sales on Black Friday 2009 increased 0.5 percent versus Black Friday 2008, with $10.66 billion spent.

ShopperTrak’s data suggests that earlier sales in November might have sapped some of the Black Friday spending. Sales and traffic for the first two weeks of the month through Nov. 13 increased 6.1 and 6.2 percent respectively versus the same two week period in 2009, ShopperTrak says.

As with auto buying and home buying propped up by government subsidies, shoppers might simply have pushed forward planned spending, resulting in no net new sales.

BLACK FRIDAY RETAIL SALES INCREASE A SLIGHT 0.3 PERCENT AS COMPARED TO 2009

New Home Depot iPhone App

The new Home Depot iPhone app v2.0 now offers the ability to research and purchase over 100,000 products directly from within the app, as well as use eight tools such as an Interactive Caliper, Measurement Converter, Nut & Bolt Finder, Tape Measure, Drywall Calculator, Flooring Calculator, Insulation Calculator and Interior Paint Calculator.

The app also includes an in-store product locator, how-to videos, a list function and access to user accounts. An Android version is being created as well.

New iPhone App by Home Depot

Mobile Payments Business Has Shifted Gears

According to Richard Oliver, executive vice president with the Federal Reserve Bank of Atlanta, who says he is "flabbergasted" by the development, a wide range of current and would-be participants in the mobile payments business have agreed on a framework covering business and technology matters related to mobile payments, apparently for the first time.

"Dynamic authentication" is one of the issues the participants seem now to have reached agreement about, including ways of handling "on-the-spot" generation of unique identification credentials for each transaction.

The apparent consensus developed during a series of three meetings held earlier in 2010 that included executives from software companies, processors, and merchant and wireless trade groups, carrier, bank, and card-network representatives.

All of this suggests a common recognition that the fundamentals are in place for significant development of the budding business.

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Portable Devices Top Amazon "Bestsellers in Electronics" List

Of the top-10 "best selling" items on Amazon.com's "Bestsellers in Electronics"list, the Wi-Fi version of the Kindle is number one. The Apple 8-Gbyte version of the iPod Touch is number two; the Kindle 3G is third. The 32-Gbyte version of the Apple iPod Touch is number four.

The Western Digital "My Pasport" external hard drive is number five on the list. The Garmin GPS navigation device is sixth; the iSymphony 32-inch TV is seventh.

The Canon Powershot camera stands at eighth, while the LG Blu-ray player is ninth. The Tom Tom GPS device is 10th.

It is worth noting that eight of the 10 top-selling devices is a portable device of some sort.

Amazon top-selling electronics list

Orange claims major benefits from HD Voice - Rethink Wireless

The jury is still out on whether high-definition voice provides enough real user value to alter end user behavior.

The main exception is Orange, which is an enthusiastic supporter, and the carrier claims the service gets customer satisfaction ratings of 90 percent, helping boost average revenue per user and reduce churn.

That example might suggest that HD voice primarily will find its initial niche in the mobile market, rather than the fixed-voice market.

Orange claims major benefits from HD Voice - Rethink Wireless

Will “ChromeBooks” Succeed First in the Enterprise?

Given the cannibalization of netbooks and the usurpation of the “second machine” position by the iPad and other tablets, could Chrome-based netbooks wind up being used in enterprise settings rather than as consumer machines.

Some think so. Corporate IT departments could deploy thousands of low-cost machines that could be updated quickly and cost effectively. And consumers might not respond too well to Chrome OS netbooks unless those devices are priced in the $250 range, since a more-traditional netbook can be gotten for $300 or so, and even some laptops will be priced in that range.

Others might just say it is too late for Chrome-based netbooks, since tablets will become the popular second PC device for lots of people.

Has Google Missed Its Window For “ChromeBooks

YouTube Looking to Acquire Movie Rights

In an effort to gain access to premium content for YouTube, Google reportedly is negotiating a deal to obtain the digital rights to the Miramax library, which has over 700 films, including 'Pulp Fiction' and 'No Country For Old Men.'

Walt Disney Co. (DIS) is expected to close a deal to sell Miramax to Filmyard on December 10. Google is talking to Filmyard about gaining access to the Miramax library.

With Netflix also dramatically stepping up its efforts to secure content rights, it should be clear that a bigger shift to online video will occur only partly as better access connections and applications are created, and primarily as content owners are willing to license their content for online distribution.

The need content distributors will have to monetize their investments virtually ensures that a future online distribution ecosystem will include "for fee" access. People will change the name on provider payments, but users will pay for access to professionally-produced content, directly or indirectly. What isn't so clear now is whether access to that content will necessarily be "less costly."

When switching from multichannel video service to some form of over-the-top viewing, one also has to factor in the additional cost of bandwidth on a recurring basis, and the business interests of ISPs who might already be making money from multichannel video as well. They won't have much incentive, if any, to allow substitution of over-the-top viewing in ways that cannibalizes the existing business.

Netflix, YouTube Blazing the Trail in Web TV -- Seeking Alpha

Latest Harris Poll Shows Continuing Changes in Voice Line, Video, Mobile Downgrades and Cord Cuttin

The latest Harris Poll survey of actions Americans have taken to save money shows consumers still are cutting back on spending on cable TV service, wireless or fixed-line voice over the last year.

Compared to October 2009, more consumers report they have reduced spending, or changed providers of,  cable TV, wireless or fixed-line voice as in October 2009.

There is some small evidence of less cutting in areas such as purchasing of generic products, brown bagging a lunch,going to the hair stylist or cutting magazine subscriptions, for example.

The latest survey suggests more consumers now have dropped landline service, compared to October 2009, a finding that would surprise very few observers, one suspects. In the mobile service area, a logical conclusion is that people are keeping service, but adopting other measures to reduce cost, such as switching plans, switching providers or moving to cheaper prepaid service.

Video Advertisers Looking for Alternatives

Forrester Research and the Association of National Advertisers surveyed 104 US advertisers representing nearly $14 billion in measured media budgets, and 62 percent said that TV advertising is less effective than it used to be. Were the emergence of online, social and mobile alternatives not available, the declining effectiveness of traditional ads would lead to a search for more-effective alternatives.

Advertisers want more accurate measurement and the option for more targeted and clutter-free ad inventory. Meanwhile, U.S. marketers are willing to explore alternatives to the 30-second TV commercial as they shift budget from TV to social media, banners, and search.

More forward-looking marketers are ready to experiment with online video ads, branded entertainment, and interactive TV.

What a Twitter News Service Might Look Like

What a Twitter news service might look like.

Gartner Says Cloud Computing As Important as E-Business

“Cloud computing heralds an evolution of business no less influential than the era of e-business,” says Stephen Prentice, Gartner VP and fellow. Individuals and businesses will be able to choose how they’ll acquire or deliver IT services, with reduced emphasis on the constraints of traditional software and hardware licensing models, says Prentice.

“The potential benefits of cloud are a shift from ’capacity’ on demand to ‘capability’ on demand, a reduced cost of computing resources and a shift from technology use to ‘value’ consumption,” says Rakesh Kumar, Gartner VP.

Gartner Says Cloud Computing Heralds An Evolution of Business, No Less Influential than the Era of E-Business