Mobile Advertising Lead by Google, Apple, Millennial Media

Google and Apple currently are the two biggest mobile ad companies in the business, according to new estimates from IDC, but the market remains fragmented.

No single company has more than 19 percent of the market.

 Mobile Ads: Google, Apple, And Millennial

Online Video Will Change Lots of Things, Including Peering and Transit Pricing

Most observers who regularly follow such things have noted for some time that online video consumption is growing so fast that it will inevitably affect the way ISPs--wireless and wireline--price the use of access facilities. Bandwidth caps, higher fees and other changes to terms and conditions are conceivable.

But the new peering dispute between Level 3 Communications and Comcast also points out the coming changes in backbone interconnection agreements as well. Online video is extremely asymmetrical. Unlike voice or chat, where the volume of traffic is about equal in both directions, video is unbalanced in the downstream path.

That's why cable and satellite networks have been built the way they are, to favor delivery of lots of downstram bits, but few or much-fewer upstream bits. Broadcast TV and broadcast radio are other networks historically designed for media delivery, not two-way communications.

Broadband networks mostly have been designed around asymmetrical traffic flow.

Voice and similar radio networks, on the other hand, always have been designed around symmetrical traffic flow.

Asymmetrical bandwidth has not been a particular cost driver for media delivery networks. But asymmetrical traffic always drives carrier interconnection costs, pricing arbitrage, and revenue models in the communications business.

If one network imposes hugely unequal traffic load on another, the receiving network gets paid for that unequal use of facilities. But if video content gets as big as most observers think it will be, unbalanced traffic will occur on a scale never seen before. So will payments by "sending" networks to "receiving" networks.

That means higher costs for "sending" networks and higher revenue for "receiving" networks. To put matters another way, the historic value of access networks is about to be shown, and access network operators will get a revenue boost. If you think "carrier compensation" fights have been interminable before, just watch. Inter-carrier compensation is about to get more complicated than we've ever seen it.

Online Ad Spending Will Pass Newspapers by 2013

Magna Global predicts that worldwide, online ad spending will overtake newspapers in a little over two years. In 2011 the U.S. ad market is looking fairly weak—though positive, at least—while online is expected to rise 11.6 percent in the United States.

Worldwide ad expenditures will rise 5.4 percent in 2011, mostly thanks to the continuing growth in emerging markets and stabilization in developed markets.

TV advertising will command a 40 percent share of all ad dollars and gain 7.5 percent annually through 2016. But online advertising will overtake newspapers as the second largest ad spending category by 2013 by taking in $117 billion at that point.

Online video will capture $4.7 billion in global ad revenues, and should rise by 19.6 percent each year through 2016. By that point, online video will account for $11.4 billion in global ad spend.

Mobile advertising is smaller, at $2.7 billion, and will grow at a similar pace to online video. Within five years, web publishers should see about $6.6 billion from mobile advertising.

read more here

Federal Reserve Predicts High Unemployment Through 2012

The Federal Reserve Open Market Committee recently updated its forecasts for 2011 and 2012, including higher than previously-forecast unemployment ranges.

The new central tendency (removing the highest and lowest forecasts to get a feel for the "median") for 2011 is 8.9 percent to 9.1 percent, compared to earlier projections of 8.3 percent to 8.7 percent. Using the midpoint of the ranges, the new forecast is a full half-percent higher than just five months earlier.

The 2012 numbers are even worse, with a new range of 7.7 percent to 8.2 percent, up from 7.1 percent to 7.5 percent, an increase of 0.65% from midpoint to midpoint.

By traditional and formal measures, we are in an economic recovery. But the stubbornly-high unemployment might suggest an extremely-unusual assessment of business risk and growth prospects, or some structural change in the economy, or both.

The former is easier to deal with than the latter.

The American Spectator : Pessimism Revised

Verizon iPhone in 2011

According to a report to clients issued Monday by Kaufman Bros.' Shaw Wu, Apple got the terms it wanted from Verizon for the version of the iPhone expected to be released by the carrier in early 2011.

Wu writes that he is 'picking up that iPhone economics to Apple are likely to be favorable, similar to that offered by AT&T. That should mean an iPhone should not cost more when built for Verizon than for AT&T.

Apple has cut a sweet deal with Verizon for the iPhone

Sprint Nextel to Spend Up to $5 Billion to Upgrade Its Wireless Network

Sprint Nextel Corp. will spend as much as $5 billion to upgrade its 2G and 3G networks over the next three to five years, allowing Sprint to use a single set of base stations to support those networks, instead of multiple base stations.

Today, Sprint uses separate equipment to deploy services on 800MHz spectrum, 1.9GHz spectrum and, through its relationship with Clearwire, 2.5GHz spectrum. Under the terms of the new contracts, Alcatel-Lucent, Ericsson and Samsung will install new network equipment and software that brings together multiple spectrum bands, or airwaves, on a single, multimode base station.

As part of the plan, 800-MHz spectrum, very useful for in-building signal propagation, will be available for voice services, allowing better voice quality inside structures.

The plan does not appear to include the iDEN cell sites, which will be phased out, while iDEN users are migrated to the CDMA network. This phase out is expected to begin in 2013, Sprint says.

Sprint expects to save at least $10 billion to $11 billion over seven years because of decreases in energy costs, roaming expenses and the number of cell sites, among other items.

Sprint said it has negotiated contracts with Alcatel-Lucent SA, Ericsson AB and Samsung Electronics Co. for the project.

read more here

Video Apps May Define 4G Behavior

Of 10 potential applications 4G networks will affect the most, about six are directly related to video while at least three others are related to latency.

No surprise there. Some worry that will put strain on end user budgets. It certainly will encourage purchase of bigger usage buckets in some cases.

But anybody who has been relying on mobile broadband for mission-critical apps for any length of time already has likely figured out how to match usage profiles, devices, use cases and cost to avoid massive overage charges.

You don't watch lots of video using your 3G card, you use your fixed connection. In fact, it might make more sense to watch video almost always on your smartphone data plan and fixed connection, rather than on a PC dongle.

Users are rational. They will be rational about how they use 4G dongles as well.

Light Reading Mobile - 4G/LTE - Top 10 Apps LTE Will Super-Charge

Will Video Kill the Internet?

All observers would agree that online video dramatically changes bandwidth consumption, by a factor of 10 to 100 times. That leads some observers to worry that increasing video consumption will crash the networks.

It is a fact that Netflix's 16 million subscribers now watch enough online video that Netflix traffic alone accounts for 20 percent of all Internet traffic during the typical American evening, according to Sandvine.

But assuming markets are simply allowed to work, higher spending by end users to watch video online, whenever they want, as much as they want, will be tempered by their own rational decisions about how to consume video so as to optimize their own spending.

If a user today wants to watch programs delivered by multichannel video services on a TV screen, whenever they want, they can pay for digital video recroder services that allow them to do so, at one price point.

If they want to do roughly the same thing online, with less choice, viewing on their PCs or paying for services or equipment to sent that video to TV screens, they will pay different or additional amounts of money.

The point is that consumers will make rational choices about "what I want, when I want" viewing. If the price of viewing online climbs, as a rational observer would assume it must, over time. then the attractiveness of a linear format with DVD storage becomes quite obvious.

People will decide the value of a multichannel video service with DVD capabilities offers quite a value, compared to an online alternative. that offers only some of the content.

That's the part of the online versus offline versus linear delivery discussion that does not typically get factored in. Consumers will make different and rational choices when the cost of viewing on demand using various channels becomes explicit.

Will Netflix Kill the Internet? - BusinessWeek

Mobile Broadband Pricing Suggests it Is Not a Commodity

Some might look at how mobile broadband gets priced, on a cents per megabyte basis, and conclude that the pricing is somehow irrational or confusing. Some might say the pricing actually illustrates the fact that mobile broadband is not a commodity subject to uniform pricing across all use cases and devices.

AT&T charges smartphone users 8 cents per megabyte for 200MB of data, but 3G USB modem and MiFi users pay 18 cents per megabyte for the same 200MB. Corporate smartpone users pay 2 cents per megabyte ($45 per 2GB), but USB and MiFi users fork over just 1 cent per megabyte ($60 for 5GB). And AT&T charges pay-as-you-go tablet users $15 per each additional 200MB of usage, but it charges pay-as-you-go smartphone users $10.24 per additional 1MB -- that's 128 times the price per megabyte.

T-Mobile charges smartphone users less per megabyte than it does tablet and USB/MiFi users. You pay 5 cents per megabyte for the basic smartphone data plan ($10 per 200MB) but 10 cents if you use one of the other devices ($25 for 250MB). It makes sense that the company's unlimited data plans' pricing favors smartphone users ($30 versus $40), as tablets and laptops are likely to eat up more data than smartphones. "But when you're paying for a set amount of data, the 2:1 cost difference doesn't make sense," InfoWorld says.

The same situation occurs at the other leading mobile carriers as well. Some would argue that is irrational, since the "access" is a commodity. Others would counter that the different pricing suggests the access is not a commodity, and that value, hence price, varies according to the usefulness of access when used in different settings and in different ways.

The price of a beer is different when you pick up a six-pack at the grocery store, when you buy one beer at a restaurant and a different price on an airplane. The beer might be identical; the use case is not.

The same thing is true of mobile broadband: its value and price does vary based on the use case, the types of devices and the applications the bandwidth supports. Even within each use category, prices will vary based on the amount of data the user expects to consume, and the preferences a provider might have for encouraging or discouraging some forms of usage.

Some of us would argue that the variegated pricing actually shows that mobile broadband is not a "commodity," anymore than various use modes for voice, video or messaging actually are.

The strange, unpredictable pricing of 3G data plans

Consumer Reports readers say AT&T wireless service got worse this year

Consumer Reports reportedly says its latest survey of consumers suggests AT&T's investments have not prevented user perception that service quality has gotten worse over the last year, not better.

Consumer Reports: AT&T is the worst carrier

ESPN Finds Few Cutting Cord on Cable

Video cord cutting, where consumers disconnect a cable, satellite or telco video service, has happened in 0.28 percent of households in the United States in the last three months, ESPN has found. Offsetting those losses, though, 0.17 percent of households that had been broadcast-only signed up for multichannel video service.

“So the net amount of cord-cutting for one quarter was just one-tenth of 1 percent,” said Glenn Enoch, the vice president for integrated media research for ESPN.

ESPN Finds Few Cutting Cord on Cable - NYTimes.com

Google Chrome OS Netbook to Launch?

Google could be about to launch the first netbook running their new Chrome operating system, as they host an event in San Francisco tomorrow promising 'exciting news'.

Chrome OS is designed to be a 'cloud' operating system, designed to be lightweight, quick to start up, and based around online applications rather than the traditional desktop programs most operating systems rely on.

Engadget reports that Google will initially only be releasing 65,000 of the machines, mostly going to Google's "friends and family."

So how big a change could the new operating system represent? Perhaps every user will have a different view. One might argue that device operating systems are less important than they used to be, simply because much of the important stuff people do now is a web interaction of some sort.

Still, many users will continue to have one or several important apps that require use of a Windows or iOS environment, typically related to work requirements. For lots of other users without these constraints, the choice might be an iOS environment (driven less by OS considerations than the fact that desire to use Apple devices drive the purchase) or Windows or some other OS that offers a lower device purchase cost (whether directly related to the OS cost or not).

Some of us now do virtually all of our "work" on the web, or using the Internet. I recently realized that the only times I will ever "work" on a PC of any sort is long enough to edit one or two blog posts on an airplane. At all other times, I am connected to the Internet or I don't use the PC. That's just an illustration of the fact that, these days, "doing things with PCs" means "doing things on the Internet."

But that also means the device OS is much less important than it used to be, and removes barriers to adoption of new operating systems. Aside from the fact that using an iPad has more to do with coolness than functionality at this point, many will say a key feature is the "instant on" capability, eliminating the time spent waiting for the OS to load. Aside from everything else, that probably is going to be a more-important feature, going forward, for smartphones, tablets and PCs.

If, every time you power up a PC, tablet, or smartphone, you have to wait, it is a reminder that there is something about that device which is annoying. For users who don't have to power up, and power down, their devices frequently during the day, that irritation might not happen so often. For some, who might frequently have to do so (flying, changing planes, sitting in conference sessions where they want mobiles turned off, using wireless microphones where the devices really have to be off or there is signal interference, or just users who don't like the devices being "on" for other reasons as they move about...such as the danger of disabling a hotel room key card), "instant on" will be a welcome feature throughout the day, simply because devices get turned off and on frequently.

The point is that changing an operating system does not require so much thinking as it used to. That, in turn, makes other attributes of the experience more important.

Google Chrome OS netbook to launch on Tuesday? | Metro.co.uk

Netflix Now Competes with HBO, Showtime, Starz

Virtually everybody believes that online video competes with multichannel video services, for user engagement and time if not yet so much revenue.

The corollary is that Netflix competes with Blockbuster, Redbox But one might argue Netflix increasingly also competes with the "premium" networks such as HBO, Showtime and Starz.that historically have made a business out of showing movies.

Netflix soon will have as many subscribers as Starz and Showtime put together. At the very least, Netflix growth is going to cap premium channel growth. One can argue about how much Netflix competes with the "basic" channel subscriptions most Americans buy.

So far, one might argue that is a lesser, hard to quantify level of competition. Right now, Netflix has largely vanquished its DVD rental competitors and might be viewed as cannibalizing the premium channels next.

iPad Faces Pricing Challenge

Two thirds of people who are thinking of buying an iPad in the next 12 months are expecting to pay less than the current lowest retail price, according to Strategy Analytics. About 66 percent say they will pay less than $500 or €500, and half of those say they want to pay less than $300 or €300.

Strategy Analytics surveyed nearly 5000 consumers across the United States and four major European markets as part of the study.

One might draw several conclusions. Consumers already are conditioned to expect price declines for any digital appliance over time. They already expect to see "newer" models, every year or so, that maintain current prices for models with new features, but also expect current models to be sold at lower prices.

But the findings might also illustrate demand for lower-cost alternatives. Given Apple's historic emphasis on selling at premium prices, that would also suggest there is a relatively-big market for lower-cost tablets. Though the analogy is not exact, one might point to an eventual market where Apple has less share, but more share at the high end of retail pricing, while Android devices have more of the market overall, and dominate in the "value" and mid-range parts of the market.

Already we are seeing a proliferation of (mostly Android-based) tablets arriving on retailers’ shelves, often at iPad-undercutting prices. Staples is offering a 10″ Viewsonic, Android 2.2 device at $400.

iPad Faces Pricing Challenge

Wireless Now the Majority of Broadband Connections

The Organization for Economic Cooperation and Development reports that Korea (95 percent), Sweden (76 percent), Japan (75 percent) and Norway (73 percent) have the highest wireless broadband penetration in terms of subscribers per 100 inhabitants.

Among the countries which have been able to report complete data, standard mobile broadband subscriptions usually represent the majority of wireless broadband connections.

Satellite and terrestrial fixed wireless subscriptions represent a small share of wireless broadband subscriptions. Its penetration rate is slightly higher only in the Czech Republic (6.5) percent, the Slovak Republic (three percent) and Ireland (two percent).

Broadband Portal - Press Release (June 2010 data)