Can Netflix Pull Off the Next Great Transformation?

Netflix has been viewed as "toast" so many times it might be easy to argue that Netflix now will run into trouble as it starts to spend serious money on original or at least high-quality new content deals.

The argument is that Netflix simply cannot afford to do so. Deals such as the recent agreement allowing Netflix to stream "Mad Men" are the sort of thing that will add "billions of dollars" to the company cost structure.

"Simply put, Netflix is in over its head," some will argue. If it does not collect impressive content with frequency, its brand -- its image -- takes a serious hit. But, as it attempts to keep up the pace required to retain its top spot in the hearts and minds of streamers, it spends itself into a future it cannot afford.

Perhaps Netflix has run into a wall it cannot climb. But that has been said, repeatedly, about Netflix in the past. To be sure, content owners recently have concluded that Netflix has grown "too powerful," so it won't be easy for Netflix to keep getting access to content at lower rates.

Some would argue that if Netflix owned the infrastructure or technology that makes streaming possible it would have something. "But, it doesn't." Of course, some service providers that do own lots of technology and infrastructure, such as Dish Network and Echostar, disagree. Dish Network CEO Charlie Ergen recently has mused that, if he were starting today, he might choose the Netflix model for distribution, instead of building, launching and owning fleets of satellites.

Netflix faces challenges, of course. But so do all video distributors. Netflix has faced concern in the past, and successfully defied all the naysayers. That is no guarantee it can continue to do so. But the company has beaten the odds for quite some time. And some might argue that Netflix or YouTube could emerge as the next generation of video distributors, ultimately.

Netflix Is Spending Itself Into a Future It Can't Afford - Seeking Alpha

Mobile's Evolution

The evolution of mobility, as seen by Vodafone.

HTC Market Value Passes Nokia

HTC Corp., Asia’s second-largest maker of smartphones, passed Nokia’s market value.

The 5.3 percent gain of HTC shares in Taipei trading yesterday took the Taoyuan, Taiwan-based company’s market value to $33.8 billion, exceeding the $33.6 billion value of its competitor. Nokia climbed 1.1 percent to 6.26 euros. HTC shares closed unchanged today.

HTC stock tripled in the past year as smartphone shipments grew at more than twice the pace of the wider market for mobile handsets.

HTC Market Value Passes Nokia as Smartphones ‘Change Mindsets’ - Bloomberg

Smartphone subsidies hit Canadian mobile profit margins

While rising smart phone penetration has led to higher average revenue per user, and increased mobile data revenue at the three main Canadian operators (Bell Mobility, Telus Mobility and Rogers Wireless), a Wireless Intelligence study found that, in most cases, operational expenses also have increased, resulting in a contraction of profit margins (earnings before interest, taxes, depreciation and amortization).

Opex costs are higher in large part because of increased handset subsidy costs for new smart phone customers and retention of existing customers who upgrade to smart phones.

That might not be the case in markets where handsets are not subsidized, typically in exchange for a two-year contract.

The study suggests s that the cost of acquisition per subscriber at Bell rose 13.4 percent between 2009 and 2010 and by 3.9 percent at Telus over the same period. There were similar trends in retention spending, which (as a percentage of service revenue) increased by 2.4 percentage points at Bell and 0.7 percentage points at Telus year-on-year, and by 7 percentage points at Rogers in Q4 2010. Opex also increased at all three operators during the period.

High-cost smartphone subsidies impacting operator margins - GSMA Mobile Business Briefing

Mobile Financial Services Up 54%

The report found that In the fourth quarter of 2010, 29.8 million Americans accessed financial services accounts (bank, credit card, or brokerage) using their mobile device, an increase of 54 percent from the fourth quarter of 2009, according to comScore.

Some 18.6 million users accessed their financial accounts via mobile browser in Q4 2010, up 58 percent from the previous year, 10.8 million accessed their accounts via applications, up 120 percent. SMS (text message) represented the smallest access point for financial service audiences with 8.1 million users, up 35 percent.

Mobile Financial Service Audience (Accessed Bank, Credit Card or Brokerage Account) 3 Month Avg. Ending Dec-2010 vs. 3 Month Avg. Ending Dec-2009 Total U.S. Mobile Subscribers Ages 13+ Source: comScore MobiLens
	Total Unique Audience (MM)
	Q4 2009	Q4 2010	Percent Change
Accessed Mobile Financial Services*	19.3	29.8	54%
Accessed via Mobile Browser	11.8	18.6	58%
Accessed via Application	4.9	10.8	120%
Accessed via SMS	6.0	8.1	35%

Number of U.S. Mobile Financial Account Users Surges 54 Percent to 30 Million in Past Year

Will Hotspots Kill LTE?

For as long as public Wi-Fi has been an issue, some have argued that public Wi-Fi would compete with 3G mobile broadband. These days, that same argument might be made about Wi-Fi cannibalizing fourth generation networks as well.

"With most of the public WiFi hotspots in the U.K. being offered by fixed operators, there is a potential value shift from mobile to fixed networks," says Telco 2.0. "As the hotspots grow and critically, once they become interconnected, there is an increasing risk to mobile operators in terms of the value of investment in expensive ‘4G’ and LTE spectrum."

It's just a guess at the moment, but I suspect the concern about cannibalization will be no more correct for 4G than it has proven to be for 3G. Wi-Fi used to be a radio tail to a fixed line network. These days, it might also be a radio tail to a radio network (mobile hotspot). There will continue to be application scenarios for fixed access, fixed access using a radio tail circuit, fully mobile broadband and untethered but not mobile access.

People will use "all of the above." In some markets, where a smartphone purchase also requires a minimal data plan, that will be even more true.

Public Wifi: Destroying LTE/Mobile Value? - STL Partners / Telco 2.0 Research

Infrastructure as a Service $10.5 Billion in 2014

Cloud infrastructure as a service (IaaS) is more likely to be purchased by an enterprise, while small businesses are more likely to buy "applications as a service." Still, the market for all types of cloud services is seminal. Today there is no standard, "one size fits all" offering and no single provider successfully addresses all segments of the market, according to Gartner. That is what one would expect in a new market.

Worldwide IaaS revenues were about $3.7 billion in 2011 and will reach $10.5 billion in 2014, Gartner now forecasts.

"We are still at the beginning of the adoption cycle for cloud compute IaaS," said Lydia Leong, Gartner research VP.

Cloud IaaS is the capability provided to the consumer to provision processing, storage, networks and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications.

Gartner Maps Out the Rapidly Evolving Market for Cloud Infrastructure as a Service

Dish to Compete with Netflix?

YouTube to Create Channels

YouTube is getting ready to launch new "channels" featuring premium content, around topics such as arts and sports. YouTube is looking to introduce 20 or so "premium channels" that would each feature five to 10 hours of professionally-produced original programming a week.

YoutTube also is planning to spend as much as $100 million to commission the creation of original content for the premium channels.

Google to Revamp YouTube With 'Channels' - WSJ.com

Plan to Address LightSquared GPS Interference Issues Due June 15

Signal interference issues are not uncommon for any services using over-the-air spectrum. LightSquared, as part of its waiver to operate a hybrid satellite and terrestrial 4G network, has to work with other users of satellite spectrum that could face interference from the planned LightSquared network.

The Pentagon is among users concerned about LightSquared interference with GPS applications, for example.

The LightSquared L-Band terrestrial base stations broadcast on the adjacent frequency to the GPS satellites. The worry is that the much stronger signals from the earthbound LTE radios will stop terrestrial GPS receivers from locking on to the weaker signals from space. That is a well-founded concern.

By June 15, 2011, a working group report on such interference and how LightSquared will address the issues must be submitted. Typically, such interference issues are rectified using frequency filters or adjusting power levels or both. It might be difficult to reduce transmitting power from a terrestrial cell site enough to avoid interference with relatively-weak GPS signals, though. So filtering would seem to be the logical solution.

Light Reading Mobile - 4G/LTE - LightSquared GPS Fix Could Cost 'Billions' - Telecom News Analysis

When Rick Short, director of marketing communications for Indium Corporation, began thinking about his social media strategy, he started with keyword research. He identified 73 of the most important keywords his prospective customers would search for. Then he created 73 different blogs that focused on each keyword and assigned a dozen employees to write those blogs.

Once the blogs took off, customer contacts increased 600 percent in a single quarter. And everyone who contacted a blog author, commented on a blog post or downloaded a white paper opted in to the company’s customer database.

Not many companies can, or will, make that level of commitment. But the results are instructive.

Social Media Examiner: Your Guide to the Social Media Jungle

9 in 10 Marketers Use Social Media

Some 93 percent of marketers use social media to market their businesses, according to a new survey from SocialMedia Examiner. About half of marketers engaging in social networking (49 percent) have less than one year of social media marketing experience. Another 39 percent have been using it for one to three years, with 11 percent having more than three years of experience and only two percent having no experience.

In addition, study data indicates more business-to-business companies have been using social media longer (52.6 percent reported one year or more) than their business-to-consumer counterparts (46.2 percent indicated one year or longer of usage).

In 2010, only 31 percent of marketers were using social media for one or more years. Now that number has grown to 50 percent.

9 in 10 Marketers Use Social Media

Speeds and Feeds Might Still Matter, for Marketing 4G

"Speeds and feeds" have ceased to be much of a deal in the mobile handset, tablet and PC markets. "What you can do" with any device seems to have become more important. But there still is one area where "speeds and feeds" seem to matter, at least in terms of marketing platforms: 4G networks.

BTIG Research conducted more than 1,000 speed tests in New York City to determine which was faster: the ThunderBolt, running on Verizon Wireless’ 4G LTE network, or the EVO 4G, running on Sprint’s 4G WiMAX network, both operated in mobile hotspot mode.

The analyst found that Verizon’s offering was consistently and significantly faster than Sprint’s 4G phone. Sprint disagrees, arguing that its own third-party tests in New York do not support the BTIG results, and also that a lightly-loaded network, as the new Verizon LTE network is, will tend to perform better than a network loaded with a fair number of users and devices.

In truth, typical users might not benefit or suffer from any of the U.S. 4G networks all that much, since the end user experience is dependent on lots of things other than the raw capabilities of the local access connection.

Verizon 4G LTE ‘blows away’ Sprint’s WiMAX in 1,000 speed tests | BGR

5.5 Million More WiMAX Users in 2011

About 3.7 million new WiMAX or other fixed broadband subscribers were added in the fourth quarter of 2010, and 5.5 million will be added throughout 2011, according to Maravedis. The subscriber base for WiMAX and LTE reached 17.25 million and 320,000 respectively at the end of March 2011. The WiMAX subscriber increase represents a 32.7 percent jump quarter-over-quarter, from 13 million reported at the end of the fourth quarter 2010.

Maravedis anticipates that 59 FDD-LTE and 3 LTE TDD networks will be operational worldwide by the end of this year. 'There will be 305 million LTE subscribers by 2016, of which 14 percent, or 44 million, will be TD-LTE users and the rest (86 percent, or 261 million) will be FDD-LTE.

4G Digest

Deutsche Telekom Uses LTE as a DSL Substitute

Observers often disagree about the extent to which Long Term Evolution or other 4G networks are feasible alternatives to fixed-line broadband access networks. Deutsche Telekom apparently will do precisely that, lighting an LTE network and using it in fixed mode to provide broadband access to fixed locations.

will use this initial LTE network rollout to offer a DSL replacement-type service to areas of the country where there is poor broadband coverage. The service offers speeds up to 3 Mbps on the downlink and up to 500 kbps on the uplink. The monthly charge for the service is €39.50 (US$56.60) with a minimum contract length of 24 months. A Wi-Fi/LTE router from Huawei can be rented for €4.95 (US$7) per month.

Light Reading Mobile - 4G/LTE - Deutsche Telekom Goes Live With LTE - Telecom News Analysis