Mobile TV is a Feature, not a Product, Yet

At the moment, services such as "TV Everywhere" that allow users to view some of the video they purchased as part of their subscription video services on a smart phone or tablet remain a "feature," and are not yet envisioned as revenue-generating "products."

That would not be an unusual pattern. Service provider Wi-Fi hotspot access has become a feature of a broadband subscription, whether provided by a fixed or mobile network. That seems to be the developing pattern for mobile TV services tied to another subscription.

Smartphone or tablet apps that are tied in to a cable TV show are definitely about "discovery and engagement," not advertising revenue, said Tammy Franklin, Scripps Networks Interactive senior vice president of affiliate sales and new media distribution.

For Verizon Wireless customers, unlimited U.S. domestic voice and texting essentially now are features of a mobile service, not discrete products. The basic connection fee includes both voice and texting.

House Hearing on Video Market Shows Growing Pressure within the Ecosystem

The House Energy and Commerce Subcommittee on Communications and Technology held a hearing on whether existing communication laws address the demands of new technology. Such hearings do not, in and of themselves, mean much. But it is just one more sign that pressure is building within the video ecosystem.

Many speakers noted that regulations currently in place are outdated and stem from a time when cable companies controlled a much larger portion of the subscription video market.

Some Business Problems Cannot be Solved

Put yourself into the role of CEO at either Sprint or T-Mobile USA. What is the answer to the question of how you will catch up to Verizon Wireless and AT&T? And make us believe it. 

It's tough. Tough, in fact, because there are some problems in business that are hard, perhaps impossible to fix. One of those intractable problems is market share structure in a well-developed industry. 


Typically, a rule of thumb suggests, the market leader has twice the share of the number-two provider, which in turn has twice the share of number three, and then share falls off dramatically after that. 


It might be more accurate to say that market share has a direct bearing on profit margins, as well. 


The U.S. mobile market does not have precisely that classic stable distribution. Verizon, early in 2012, had about 32 percent share, AT&T about 26 percent. 


Sprint had about 16 percent and T-Mobile USA had about 10 percent. 


That suggests, to some of us, that the market remains unstable, and would be expected, over time to move in the direction of the "classic" structure. That doesn't mean real-world markets always assume the classic structure perfectly, only that the stable structure of a market will feature dramatic differences in both market share and profitability. 


But regulators will have a say, having already firmly suggested that AT&T could not grow to 38 percent market share. 


That suggests, over time, combinations of the smaller providers. The point is that one might argue there actually is little executives at firms such as T-Mobile USA and Sprint can do to fundamentally alter the direction of the market, no matter how talented they might be. 

Google Isn't Making Any Profit From Sales Of The New Nexus 7 Tablet

Andy Rubin, Google's head of mobile, says Google is selling its new tablet "at cost" through Google's online store. "There's no margin," he said in the interview. "It just basically gets (sold) through."

In fact, Rubin says the company is eating the marketing costs for the device. Like Amazon, at least for the moment, the device is seen as a platform for creating revenue streams other ways.

But that, in general, is probably the way Google approaches its entire set of efforts in consumer electronics: creating products that drive usage and then revenue from the software and content products it creates.

That is more the "Amazon" strategy than the "Apple" strategy.

What Kind of Company is Google Becoming?

With the launch of its first tablet, a seven-inch device that seemingly is aimed more at Amazon than Apple, Google has added yet another device to the list of gadgets it now produces, ranging from smart phones to a new home entertainment system.

The new tablet, priced at $199, makes Google an even more complicated company. The $299 home-entertainment player called Nexus Q likewise further blurs Google's identity, you might argue.

Google always has said it is a software company. Its revenue comes mostly from advertising, especially from Google's search engine. That has made Google the paramount example of something we haven't seen before, namely a software company whose revenue comes from advertising, primarily.

Some of us would have said that Google might as well be called a media company, as well, with its YouTube operations and especially revenue model. What sort of company makes its money from advertising? Traditionally, only a "media" firm.

But now Google is becoming a supplier of consumer electronics as well. Ignoring for the moment all the other lines of business Google is experimenting with, it has become even harder to figure out what to "call" Google.

Google itself still says its mission is to organize all the world's information. But it also says it does "search" and products that "make the web better."

One has to conclude that Google simply is at a point where it is changing into "something else," and it is hard to describe what that "something else" actually might be.

Why Google has gone "Mobile First"

If you want some evidence about why Google has gone "mobile first" in its product strategy, a few key statistics Google announced tell the story well.


Google says it has 250 million total users, 150 million monthly users and 75 million daily users, with more usage from mobile than desktop TechCrunch says.  

Is Telecom Italia Going to Structurally Separate Itself?

A unit of Cassa Depositi & Prestiti may invest three billion euros in a partnership with Telecom Italia that would structurally separate the Telecom Italia network from the retail services unit. Since 2008, Telecom Italia has operated its network as a functionally separate entity with extensive wholesale operations. 


The new rumor suggests that Telecom Italia is prepared to go the next step and fully separate the network operations part of its business, Bloomberg reports.


Telecom Italia's "Open Access" unit, which has the network infrastructure and employs a 19,000 people in maintenance and operations, might be in play, whether the recent report is true or not (Telecom Italia denies the rumor).


CDP also  says it “isn’t aware” of the proposal. What might be more true is that Telecom Italia is seriously considering structurally separating its network assets business from its retail telecom services business. 


Italy lags Europe in terms of broadband penetration with only 49 percent of households connected against a European average of 61 percent, according to Eurostat data.


Some observers in Europe believe competition will not be sufficient to create conditions for faster broadband investment. Carriers actually argue that current regulations actually discourage that investment. 


The rumored Telecom Italia move might be a way that the telco could essentially give the problem to somebody else. Since 1995, Telecom Italia has operated only fixed networks, as its mobile operations were spun off into a separate company. 


Debt reduction seems to be driving the thinking. Other European telcos are divesting assets as well, in order to trim debt and prepare for investments in mobile services. 

Automatic Mobile Phone Public Hotspot Access?

Some 37 communications companies around the world have signed up to test Hotspot 2 Wi-Fi roaming and billing. 


Aircel, AT&T, Boingo Wireless, BT, BskyB (The Cloud), China Mobile, Deutsche Telekom, DOCOMO InterTouch, Everything Everywhere, FON Wireless, Gowex, Indosat M2, HK CSL, KDDI, iBAHN, KT Corporation, Meteor Network, NTT DOCOMO, Oi Wi-Fi, Orange, PCCW Mobile, Portugal Telecom TMN, SK Telecom, Shaw Communications, Smart Communications, Softbank Mobile, StarHub, Swisscom, Talk Talk, TeliaSonera, Telefonica, TIM Brasil, Time Warner Cable, Tomizone, True Corp., Trustive and TTNET are among the firms participating. 


The Wireless Broadband Alliance says the trials of "Next Generation Hotspots" will test interoperability and performance of new gear that will give users easier access to a far greater number of public Wi-Fi access points around the world.


The trials will take place in the fourth quarter and employ the first generation of Wi-Fi "Passpoint" equipment which the Wi-Fi Alliance today announced it will start approving. The WBA expects the first NGH deployments to take place in H1 2013.


Next Generation Hotspots will allow users to gain access without the need for user names and passwords, while also allowing operators to establish relationships with each other so their users can access a wide variety of hotspots in their own country and around the world. 
HotSpot 2 might also have the potential to be disruptive, though, some might argue.


It has  been some time since anyone seriously argued that public Wi-Fi hotspots could be a  viable alternative to mobile infrastructure. But at least to some extent, HotSpot 2 could create WiFi networks extensive enough, and easy enough to use, that some contestants could offer Internet access either as a non-mobile but outside the home service, or simply offload mobile traffic to the hotspots, as most of the mobile operators hope to do. 

The Difference Between Operating System and Device Share

There's an important difference between "smart phone" device share and operating system market share. Operating system share arguably tells you less than device share. Apple and Samsung, for example, are winning handset share.


Operating system share arguably tells you less, since Android and Microsoft operating systems are multi-vendor, while Research in Motion and Apple iOS are single vendor. 


That could change if Research in Motion succeeds in splitting its services business from its handset business, or if Nokia's ownership changes. 

PayPal Goes "Mobile First"

PayPal has decided to consolidate all PayPal product groups into one global product organization led by Hill Ferguson, who was previously in charge of the mobile organization. "Mobile is simpler by definition," says David Marcus, PayPal president.


Some of us would say PayPal is only the latest application provider to go "mobile first" in its product strategy. That's sound thinking.


Consider that many mobile users prefer mobile Internet access and apps to fixed network usage. Hispanics in the United States, for example, "over-index" for mobile application usage. Almost 50  percent of U.S. Hispanic Internet traffic is driven by mobile devices, for example, according to Troy Brown, one50one founder and president. 


According to industry research firm Nielsen, in the US, Hispanics on average spend 20 percent more time on streaming video over mobile than the rest of the population (four hours and 20 minutes per month versus three hours and 37 minutes).

Research from Google indicates that African-Americans over-index versus other segments in accessing video-sharing websites via their smart phones (49 percent versus 43 percent).

Anecdotally, we at one50one see a much higher percentage of African-American and Hispanic audiences watching live performances on their mobile devices, says Brown.

Smart Phone Sales Could Drop $40 Billion by 2016 if People Use Their Own Phones at Work

Paradoxically, what is good for enterprises and small businesses might not be so good for mobile handset providers or mobile service providers.


The growing number of workers that bring their own smart phones into the mobile workplace means enterprises and other businesses do not have to buy devices for their workers. And if employers reimburse workers for service charges related to their personal devices, employers do not have buy additional mobile subscriptions.


So ARCchart estimates smart phone sales could drop by $40 billion by 2016. The ARCchart study shows the complex impact of people using their own devices for personal use and work, instead of using one device for work and another for personal use. 

17% of Mobile Owners Do "Most" of Their Online Activities on the Mobile

About 17 percent of mobile phone owners do most of their online browsing on their phone, rather than a computer or other device, the Pew Center Internet & American Life Project reports.


Most do so for convenience, but for some their phone is their only option for online access. That has obvious implications for the evolution of the broadband access business in the United States. What might now be only a convenience could later change into a preferred behavior, particularly for some users who have access to fourth generation networks and do not watch much online video. 


Some 88 percent of U.S. adults own a cell phone of some kind as of April 2012, and more than half of these cell owners (55 percent) use their phone to go online. That, the researchers say,  represents a notable increase from the 31 percent of mobile device owners who said that they used their phone to go online as recently as April 2009.


Also, 31 percent of these current cell internet users say that they mostly go online using their cell phone, and not using some other device such as a desktop or laptop computer. That is a significant number, since adoption of most products and services often assumes a faster adoption curve once 10 percent of users are reached. 

Virgin Mobile USA to Offer iPhone on June 29, 2012

Virgin Mobile USA announced today it will offer iPhone to its prepaid customers beginning Friday, June 29. Virgin Mobile USA will offer iPhone 4 and iPhone 4S with its "Beyond Talk" unlimited data and messaging plans as low as $30 per month on the Sprint Nationwide Network.

Here's why the move is important. Up to this point, the "prepaid" mobile service providers have been unable to sell the Apple iPhone, with some obvious implications for customer attraction and retention. Since Virgin and MetroPCS now sell the iPhone, some of that disadvantage is removed.

To be sure, consumers at Virgin Mobile USA and MetroPCS will have to pay full retail for their devices, but as some will note, at $50 a month, a consumer sort of "breaks even" after six months of service.

The more-important implication, though, will be seen in consumer willingness and ability to pay full retail for devices, getting service providers out of the device subsidy game. Virtually all global mobile carriers would prefer to be in that situation, and we might now get a true test of consumer willingness to pay full retail for their coveted devices.

The iPhone will be available without a contract and with no fees for activation or roaming. New and existing customers can purchase iPhone atwww.virginmobileusa.com, RadioShack, Best Buy and select local retailers.

Gaming Revenues Shifting Away from Consoles

U.S. video game sales totaled $24.75 million in 2011, mostly on traditional content to be played on dedicated gaming consoles, NPD Group data indicates. 

But spending is slowly migrating from console games to non-traditional and more-casual game formats, according to eMarketer.

Between 2009 and 2011, revenues for computer and console games shrank from $10.6 billion to $9.3 billion, for example. 

Games delivered by mobile apps, social networks, downloads and other channels were the newer formats. 

DirecTV, DishGetting Justice Department Scrutiny Over Programming Contracts?

DirecTV  and Dish Network Corp. have received requests from the U.S. Justice Department about pricing contracts with television networks, part of a broader probe into whether subscription TV distributors are preventing the emergence of  Internet-based competitors, according to Bloomberg. 


Ultimately, many of us would argue, the older subscription TV paradigm cannot be challenged unless content owner contracts allow competitors access to the professionally-produced programming consumers are used to getting from their subscription TV providers.


Just as obviously, neither content owners nor distributors will do anything to jeopardize the existing economics of the business. So the wild card is government intervention to force change. 


The Justice Department sent civil investigative demands, which are similar to subpoenas, to DirecTV and Dish, the two largest U.S. satellite-TV providers. 


The government wants information about "most- favored-nation" provisions, which give distributors companies favorable pricing and terms. Those contracts also restrict Internet delivery rights. 


Regulators are concerned that the conditions are preventing smaller startups and Internet-video distributors from obtaining programming rights. If DoJ finds the most-favored nation clauses are anti-competitive, and bars them, there is at least a chance of disruption in the video market.