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IHS Screen Digest Does Think People are Substituting Online Video for Cable TV

The number of multichannel subscription TV households in the United States declined by nearly 380,000 in the second quarter of 2011 as traditional cable and satellite video providers continued to lose subscribers because of economic factors and lower-priced Internet video solutions, according to new IHS Screen Digest findings from information and analysis provider IHS.

The noteworthy angle here is that IHS does believe over-the-top online video is having an impact. Most observers say customers are "cutting the cord" to save money, or because they are not so interested in TV, but not specifically to watch online alternatives. IHS thinks the substitution is happening.

Total U.S. TV subscriptions in the second quarter—the latest time in which full figures are available— decreased to 100.9 million, down from 101.4 million in the first quarter.

Overall, the loss of approximately 378,000 households during the period was much greater than the increase of 345,000 seen in the fourth quarter of 2010. The decline also reversed much of the gains that occurred in the first quarter this year when some 461,000 subscriber households had signed on to new services. The last time a loss of this magnitude took place was a year ago in the second quarter of 2010, when the industry dropped approximately 249,000 subscribers.

US Pay-TV Subscriptions Decline by 380,000 in Q2

How Much Effort Should Some Service Providers Put into Voice Innovation?

Voice services represent a troublesome issue these days, in most developed markets, for service providers. In the landline segment of the business, subscribers are abandoning their subscriptions and relying on mobile service for voice. Users also are talking less and per-unit prices are falling.

In the mobile segment, users in markets with high costs are figuring out ways to use alternate subscriber information modules to spend less, are switching to less-costly VoIP services or substituting text and instant messages where a voice call is another way to accomplish a task.

The troublesome issue is what to do, and how much to do, to innovate in voice. You might think those are easy questions, but they require investment, so the issue is “how much” a service provider ought to spend on a service that many would argue already is well past the peak of its product life cycle.

The typical advice for firms is to launch new products that will replace lost revenues as older products begin to decline. Some might argue that mobile service is that replacement product.

But there is an investment corollary to the product life cycle. At some point, a rational provider should stop investing in a declining product. Some people argue that innovation will extend the life of voice, or even create new markets for voice.

Others might bluntly argue that it isn't really worth the effort, though few might say so in public. The argument that "not much can be done" is weakest for business voice products, strongest for consumer voice products. In the consumer space, it might be tough to compete with Skype, Google Voice, MSN and others.

Consider "videoconferencing." Up to this point, appliance-based approaches have not made inroads, compared to use of Skype. That doesn't mean change is not possible; simply that in the consumer segment, Skype is hard to beat as a platform for consumer videoconferencing.

Innovation opportunities are strongest for IP telephony in the enterprise and business markets, many would say.

Another big issue is whether VoIP and IP telephony are replacement products for legacy voice, or only the latest version of the voice product. The earlier analogies would have included each generation of voice provided by a new generation of switches.

In other words, was voice provided by an analog switch a different product than voice provided by a digital switch? Or was the use of digital switches “merely” the next generation of an existing service? Your answer will determine whether you think of IP telephony as a “new product” or simply the “latest version of voice.”

Your decisions on investment might vary accordingly. To be sure, at some point, a complete transition to IP telephony and VoIP will be necessary. But there still is room for strategic choices that are "minimalist" in terms of investment, and other strategies that are "maximalist." 

Every voice provider will supply IP-based voice, it is clear. What is discretionary is the amount of effort a service provider wants to put into creating new applications around IP voice, in the context of pressing needs for investment in other areas such as mobility, broadband, video, machine-to-machine apps, mobile banking and payments, mobile advertising and vertical market applications for some key business segments. 

The decision will be easier for contestants that do not have realistic prospects of creating brand new businesses too far afield from basic data access, video entertainment and voice services, and primarily compete in the land-line segment of the business.

The point is that it is one thing to say "innovation is good." It is. But innovation is required across every product category, and resources will be limited, so choices have to be made. Different actors will choose different levels of commitment.

But some level of commitment is necessary. Consider the matter of “turning off the public switched telephone network.” At some point, as fewer and fewer customers are using the legacy voice network, the costs of supporting the network will grow to the point that it simply makes no sense to keep using it. At that point, we’ll have to shut down the PSTN, as mobile operators in the past have had to shut down analog mobile networks. The only issue is when it will be needed, and when to get started, much as set a date for turning off the analog TV network.

In fact, at its June 29, 2011 meeting, the Federal Communications Commission’s Technology Advisory Council ("TAC") received a report from its "Critical Legacy Transition Working Group" projecting that by 2018 only six percent of U.S. households will still retain a traditional copper wireline local exchange access line as their primary voice service, not having "cut the cord" and replaced their wireline phone with wireless or some other "new" technology.

By 2014, the United States will have fewer than 42 million voice access lines in service, the TAC predicts. By 2014,  U.S. consumers will use 31.6 million VoIP lines accounting for 42.5 percent of all U.S. voice access lines. TAC report highlights

Based on that projection, the Working Group proposed that the TAC call on the FCC to "target 2018 as the end of the PSTN."PSTN sunset

This will be a politically sensitive issue, as lots of participants in the ecosystem will be hurt by such a move. Some service providers and some suppliers whose business depends on the existence of the legacy PSTN will be harmed. Suppliers of gateway products, for example, explicitly assume the existence of the PSTN and the need to launder traffic and messages between IP and PSTN domains.

For some, the issue is whether 2018 should be the date. But no matter when the full transition happens, the practical issue will remain: how much effort should particular firms put into their voice innovation efforts?

The answer will depend on how much revenue a provider thinks that investment will yield.

Bad News: Your Company Name and "Scandal" in the Headlines

Lightsquared executives might be right that there is nothing untoward about its relationship to White House officials. Lightsquared might be right about not receiving any special treatment. But it has a bigger problem that GPS interference now. The words "scandal," "Solyndra" and "LightSquared" now are being mentioned in the same headlines and sentences.

It no longer matters why. It no longer matters whether it is "fair." It is becoming a political reality that bodes ill for LightSquared.

Words you never want to hear

LightSquared is "Disappointed," It Might Wind Up Very Disappointed

LightSquared is "disappointed" that it now is embroiled in a political mess, but it is a growing problem that seemingly now overshadows the technical issues about interference with GPS that it had been fighting.

“It’s just very disappointing that people are not seeing the facts here, and [that] this has become a real political issue,” said PhilFalcone, a senior executive at the hedge fund firm Harbinger Capital, LightSquared's chief backer.

Technology executives in the past have not understood the powerful role the Federal Communications Commission and other regulatory influencers have in the communications business. That's one level of issues. What now has happened is that LightSquared has become embroiled in a larger story including Solyndra. Once these sorts of things get started, they tend to grow.

Objections from the GPS and military interests were big enough problems. Now there is a larger problem, namely a potential political scandal of some scale.

"I kinda scratch my head every single day and say I can’t believe this is happening,” said Falcone.

LightSquared "disappointed"

LightSquared Hints at Interference Fix

The Federal Communications Commission said LightSquared's plans for terrestrial dominance need more tests. Seems their signals, even after they've been switched to a different part of the wave spectrum, may still interfere with GPS systems.

But LightSquared said it has new equipment that will make everything work. But they're not saying what the equipment is or who created it or what it does or even where it's located.

LightSquared has enough problems. It shouldn't seem to be hiding anything, from anybody. Perception is really important when a firm suddenly finds itself in the middle of a growing political mess.

LightSquared Hints at Secret Technology

Seven States Join Suit Against AT&T - T-Mobile Deal

The Justice Department says seven states have joined its antitrust lawsuit seeking to block AT&T Inc.'s proposed $39 billion acquisition of rival T-Mobile USA. Joining are state attorneys general from New York, Washington, California, Illinois, Massachusetts, Ohio and Pennsylvania.

U.S. Household Worth Declines by $149 Billion

Household wealth in the United States dropped in the second quarter of 2011 for the first time in a year, hurt by falling share prices and declining home values.

Net worth for households and non-profit groups decreased by $149 billion, a 1 percent drop at an annual pace, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington.

U.S. Household Worth Declines by $149 Billion

The Top 20 U.S. Android Apps

The top 20 Android apps

Visa, Mastercard to dominate mobile money?

In developed markets, their moves into the mobile payments space have been defensive, in an effort to prevent newcomers from eroding their market share.

In the emerging markets matters might be different. Even in these early days of industry fragmentation, it isn’t difficult to foresee a time when the card payments companies such as Visa and MasterCard will dominate.

In developing markets, Visa and MasterCard are taking different approaches. Visa and MasterCard have taken slightly different approaches thus far.

MasterCard has been busy setting up bilateral partnerships and joint ventures in different markets, such as The Philippines (Smart Hub) and Latin America (Telefónica/ Movistar). Its JV with Smart Hub will power the technical payments platform for its partnerships.

It has also launched a virtual debit card linked to a mobile wallet in Kenya (Airtel). The JV with Telefónica is particularly interesting given that no one has yet made serious inroads into the Latin American market.

Visa has gone a different route in purchasing Fundamo outright. Fundamo is the market leader in mobile payment platforms by deployments.

Visa, Mastercard to dominate mobile money?

FCC Testing White Spaces Databases

The Federal Communications Commission is testing the ability of white spaces databases to accurately correlate locations where unused TV spectrum can be used by unlicensed devices, while protecting TV broadcasts from interference.

White spaces are unused spectrum between TV stations and are considered prime real estate because signals in this band travel well, making the band ideally suited for mobile wireless devices, says Julie Knapp of the FCC.

Among the applications envisioned for such white spaces are "Super Wi-Fi", wireless broadband networks, support for video devices and services and machine-to-machine communications.

Generally speaking, there will be much more spectrum available in rural areas than in urban areas. That should spark interest by service and application providers who want to build their businesses in rural areas. There will be spectrum available in urban areas as well, but there also are many more bandwidth options in dense, urban areas.

FCC Announces Public Testing of First Television White Spaces Database

France's mobile firms bid on 4G spectrum

France's four main operators submitted bids for frequencies to build fourth-generation mobile telephone networks.

Orange, Bouygues Telecom, SFR and Free all submitted bids for spectrum in the 2.6 gigahertz range, France's Arcep telecommunciations regulator said.

The frequencies, primarily for use in urban areas, were up for bidding at 700 million euros ($972 million), with the results expected in mid-October 2011.

Bids for the 800 megahertz frequencies, more adapted for use in rural regions but carrying a higher price tag of 1.8 billion euros, close on December 15, 2011 with licenses to be awarded in early 2012.

AFP: France's telecom majors in 4G frequency auction

SK Telecom launches SIM cards that add NFC to existing phones

Korean mobile network operator SK Telecom has announced it will make available near field communications-enabled subscriber information modules that enable existing mobile phones to be turned into NFC devices by simply replacing the existing SIM with one of the new NFC USIMs.


The new NFC USIM will be available in October 2011 and SK Telecom will release a developer API at the same time. The new SIM is expected to cost $30 to $40.

The company plans to launch the product out in October 2011 for enterprise customers in Korea. This will be followed by roll out in overseas markets including China to accelerate the spread of mobile payment infrastructure.

SK Telecom launches SIM cards that add NFC to existing phones

Mobile now accounts for over 10% of all sales on eBay UK

More than 10 percent of all purchases on eBay UK now take place through a mobile device. And the UK is leading the way for mobile commerce, with more people buying and selling goods via mobile on eBay than in any other European country.

On eBay UK an item is sold via mobile on average every second, more than 85,000 each day. In August 2011 alone, over two million items were bought through mobile, including twice as many men as women.

Mobile now accounts for over 10% of all sales on eBay UK

Twollars: A Virtual Currency for Twitter

Twollars are a new virtual currency for Twitter apps.