Will FCC Allow Massive Merger to Protect Net Neutrality Gains?

Publication of the new Federal Communications Commission mandated network neutrality rules opens the way for court challenges, and the first lawsuit has been filed.

There are many potential ironies. Consider the present situation the FCC faces with respect to the Comcast acquisition of Time Warner Cable. On one hand, since Comcast is upgrading 21 million--virtually all--of its residential locations to gigabit levels of service, plus offering 2 Gbps to 18 million of its customers, Comcast already is the biggest Internet service provider in the United States, with the most gigabit-capable networks.

Adding Time Warner Cable would allow Comcast to extend that lead. Even before that announcement, and before changing the definition of broadband, Comcast arguably is the largest U.S. Internet service provider, and arguably the provider with the greatest share of faster-speed connections.

By about 2007, average advertised cable TV high speed access speeds were 2.5 times the average telco digital subscriber line speeds, while cable peak speeds were three times faster.

The gap since has widened, principally because Comcast is upgrading all its locations to gigabit speeds by the end of 2015, and because more cable operators will be adopting DOCSIS 3.1, which will enable gigabit speeds.

To be sure, many ISPs, including AT&T and CenturyLink, many independent ISPs and Google Fiber, are upgrading to gigabit speeds as well. But those roll-outs are coming neighborhood by neighborhood, and at a measured pace. All will be playing catchup to Comcast.

In other words, Comcast’s share of the gigabit access market will be very high, given its installed base of potential connections (21 million homes), where the other contestants would be lucky to be able to market to hundreds of thousands of homes.

In recent years, cable TV companies also have been getting 83 percent share of net new high speed access connections.  

So if the FCC approves the merger, it will sanction unusually high levels of concentration by one service provider, arguably in the most-crucial product segment of all.

Under normal circumstances, one would be skeptical.

But there is another twist. If the FCC does approve the merger, it could likely win network neutrality agreements from Comcast that would stand, even if the FCC’s network neutrality rules later were struck down.

And some believe the rules will be invalidated. “The FCC may have violated the Constitution’s separation of powers in its attempt to ‘modernize’ the 1934 Communications Act.

By reclassifying broadband as a telecom service and then selectively and arbitrarily forbearing from most of Title II, the agency has effectively rewritten the Act — something only Congress can do through legislation,” said Berin Szoka, President of TechFreedom.

There also will be procedural objections. “The agency failed to open a new comment round after scrapping its initial, more modest proposal, in favor of the President’s Title II plan,” said Szoka.

So might the FCC try to protect some net neutrality gains by sanctioning a merger that will violate most of the market share rules the FCC and Dept. of Justice normally apply when screening and evaluating mergers at the top of telecom markets?

Access Platform Decisions Still are Controversial

Debates about when, how or why to deploy fiber to the home have been relevant for decades. Among the bigger juxtapositions: fiber to the home versus fiber to the curb or fiber to the neighborhood; FTTH versus hybrid fiber coax; and more recently, the value of fixed versus mobile investments.

Those debates were relevant because payback is relevant, and it has been no secret that the FTTH business model has been difficult, especially in competitive markets, and particularly so in markets where there are rival facilities-based competitors.

By about 2020, the challenges will grow worse, as fifth generation mobile networks promise end user bandwidth up to 10 Gbps, with one millisecond latency.

In Vietnam, where perhaps only 1.5 percent of locations have access to FTTH, the Fiber to the Home Council Asia-Pacific has urged service providers to invest heavily.

In addition to retail broadband services, telcos could profit from backhaul bandwidth and connectivity for mobile operators, especially those venturing into Long Term Evolution, said Dr. Bernard Lee, FTTH Council Asia Pacific president.

Some might say it is a bit of over-investment to build a ubiquitous residential network only so that network can be used for mobile backhaul.

With so much changing in the access business, statistics alone will not drive business investment decisions.

When more access, at higher speed, is required, service providers will look at all the ways platforms can be deployed, the cost, timetable and also revenue implications of doing so.

In most markets, ubiquitous fiber to home might not be the wise choice. Mobile operators have joined cable TV operators in making that argument. And Verizon seems now almost to regret having made that choice.

What Will ISPS Do When They Cannot Upgrade to a Gigabit?

Though it isn’t yet clear how Internet service providers are going to compete against competitors able to offer much faster speeds, we are going to get more evidence as Time Warner Cable in the Charlotte area are upgraded, in large part to counter Google Fiber and AT&T gigabit access services.

“TWC Maxx” will feature speed boosts as much as six times over current levels, for no increase in price.

Customers who subscribe to “standard” service (up to 15 Mbps) be boosted to speeds as high as 50 Mbps.

“Extreme” customers buying high speed access at speeds “up to 30 Mbps” will be boosted to , “up to 200 Mbps.”

“Ultimate” customers, with access to speeds “up to 50 Mbps” will get speeds “up to 300 Mbps.”

Time Warner Cable also is upgrading its digital video recorder features, allowing customers to simultaneously record up to six different programs, and the ability to save 150 hours of high-definition (HD) programming on its 1TB (terabyte) hard drive, which is twice the storage of the largest prior model.

Customers will also have access to an all-digital lineup and an expanded On Demand library that has reached 19,000 titles, growing to more than 30,000 by the end of the year.

So you can see some elements of a possible strategy, when an ISP cannot afford to upgrade all the way to match the headline offers from Google Fiber and another ISP. Speed will be upgraded, often at no extra charge, to close the gap in practical terms, even if it remains impossible to match headline speeds.

Then other key elements of the bundle experience also are upgraded

Something similar will have to be considered as the number of ISPs offering much-faster speeds continues to grow. A number of contestants, such as fixed wireless providers, satellite providers and some small telcos, simply will not be able to match gigabit speeds.

In many cases, even large telcos will not desire to do so, and the financial return is deemed too small, or even negative.

Increasingly, we are going to find out just what it takes for many ISPs to compete against other ISPs offering gigabit speeds, when that offer cannot be matched.

All be watching to see how successful such efforts might be. After all, the actual end user benefit can be obtained at speeds far below gigabit or even hundreds of megabit speeds. In fact, at the moment, user experience, on a single user or per-user basis, beyond 10 Mbps to 15 Mbps, is negligible to non-existent.  

Will the Fixed Network Be Relevant, and if so, How, by 2030?

There are a few questions which might engage many observers of the telecom business.

The first: will cable TV companies emerge as the dominant suppliers of fixed network services? In the U.S. market, for example, cable companies have the dominant market share in both video entertainment and high speed access, with a substantial position in voice services.

The second question: will “dominance” mean much, if and when mobile networks are able to match fixed networks for features and functionality, such as headline speed?

A third question is whether higher cost telcos will continue to invest aggressively in their fixed networks if financial returns are better in mobile and international arenas, especially if no amount of investment allows them to “catch” cable operators?

Some insight on the answer to the first question has been provided by Comcast, which is upgrading all 21 million customer locations to gigabit access speeds by the end of 2015. Comcast also plans to make 2 Gbps service available to 18 million customer locations as well, by the end of 2015.

In fact, some have argued that U.S. cable TV companies eventually would emerge as the dominant fixed line suppliers of communication services for consumers, as telcos--with higher fixed and operating costs--simply could not compete.

In many ways, that already has happened: telcos no longer are dominant providers of fixed network services for consumers.

At the end of 2012, incumbent local exchange carriers (telcos) had 34 percent share of the consumer voice market, 14 percent of the high speed access market and 10 percent of the video subscription market.

In fact, some might argue that cable TV operators are destined to dominate consumer high speed access. Others might argue a long-term duopoly, nationally, will exist, with Comcast and AT&T having dominant market share in different markets.

Some might argue that AT&T and Verizon have cost structure issues that will continue to hamper their fixed network operations. That is one good reason why effort and investment have shifted to mobile operations.

Telcos might not be able to match Comcast’s 2 Gbps high speed access offer easily, as they will find 1 Gbps challenging on a sustainable basis. The issue is the business model, not the technology. In competitive markets, the low-cost provider tends to win Telcos are almost never the low-cost providers.

The second question might be more meaningful sometime after 2020, when fifth generation mobile networks are commercialized. If performance matches present plans, end user bandwidth will be as high as 10 Gbps and latency as low as one millisecond.

At that point, it might reasonably be argued that the mobile network is superior to fixed for nearly any imaginable application. To be sure, prices, terms and conditions of service will matter greatly.

But, for the first time, it might be reasonable to say the mobile network actually outperforms the fixed network.

The third question also is germane. It seems unlikely most telcos will be able to match the speeds, the deployment timetable or investment cost, not when better returns are available in mobile and internationally.

Under such conditions, would a rational strategy not entail harvesting the fixed network, while putting most new investment elsewhere?

Consider what has happened in the voice business, even the mobile segment. Mobile has displaced the fixed network as the way most people want to use voice services. Some consumers are starting to do so for Internet access, already.

About seven percent of U.S. residents own a smartphone but do not buy fixed network high speed access service at home, and therefore rely on their smartphones for access. That data point provides some evidence about consumer ability to substitute mobile access for fixed Internet access.

About 15 percent report they have a limited number of ways to get access to the Internet aside from using their phones, according to a study conducted by the Pew Research Center.

Today nearly 66 percent of U.S. residents own a smartphone and 19 percent rely to some degree on a smartphone for online access.

It could get worse for service providers.

Separately, a U.K. survey found that 33 percent of mobile phone users claim they do not use voice at all.

“Voice” or “making phone calls” were not on a list of the top 10 most-used mobile phone features in a recent poll of 1,000 people in the United Kingdom, conducted by Oxygen8.

Granted, the online poll appears not based on a randomizing process, so likely is not representative of the “typical” user, but the results are a surprise, nonetheless.

The point is that very big questions loom for fixed network service providers. It isn’t clear that the telco role is stable. It isn’t so clear that telcos “ought” to invest in fixed networks, when other alternatives, especially those where they might challenge other fixed networks, are feasible.

Could Cable Use LTE-LAA to Create Its Own Mobile Network?

If new protocols will allow Long Term Evolution networks to run over unlicensed Wi-Fi spectrum, using licensed assisted access, there is no reason to believe that same technique could not be used by a cable operator with a huge footprint of public Wi-Fi hotspots. 



Comcast is the foremost example of a firm that could leverage LTE-LAA to run most of its access operations using the already-deployed public hotspot network. 

By Definition, Universal Service is "Underfunded," Likely to Lead to Tax Hikes

Among the many unknowns surrounding high speed access investment, taxes, fees, consumer prices, terms and conditions of service raised by new common carrier regulation of Internet access, there are similar unknowns about another change declared by the Federal Communications Commission, namely the redefining of “broadband” to a minimum of 25 Mbps downstream and 3 Mbps upstream.

To point to just one potential issue, about 20 percent of rural U.S. households lacked access to Internet access of at least 4 Mbps downstream. Under the new definition, 53 percent of rural U.S. homes lack access to broadband.

The redefinition has to affect universal service funding, eventually.

For starters, more households now be found to lack “broadband” capability. And many Internet service providers once deemed to be providing broadband will find themselves suddenly not providing broadband.  

That means ISPs will have to invest more. Also, the amount of money allocated for USF purposes might now be viewed as too small to upgrade many more millions of locations.

In other words, the fees charged to Internet access customers to support universal services now will climb.

On one hand, it is reasonable enough to point out that average or typical U.S. Internet access offers are bounding ahead. Comcast, for example, now will be offering gigabit access to nearly 21 million households--virtually its entire footprint, by the end of 2015.

At the same time, it also will sell a 2-Gbps services to 18 million of its households, also by the end of 2015. Rarely in Internet history has a leap so high been made so fast.

On the other hand, one might argue that the changing definition, intentionally or not, is one way an agency can create a bigger problem for it to solve.

The implications for service providers of the Comcast attack are fairly significant. One has to wonder whether most telcos will be able to respond in kind.

It is entirely possible that a great many telcos will simply have to content themselves with offering high speed access that is not the best in the market.

It would not be surprising to see some telcos shift more assets to mobile and international expansion, as investing in domestic fixed network assets becomes ever more unrewarding.

Oddly enough, if the intent of some government action is to ensure competition those acts tend also to dent the attractiveness of investment, at least by a major class of competitors.

Comcast now has shown the fruitfulness of Google Fiber’s strategy to create incentives for other ISPs to invest faster in higher speed access. The number of customers able to buy Google Fiber will remain quite small, for quite a long time.

Comcast, on the other hand, immediately is able to sell gigabit services to 21 million U.S. homes, and 2 Gbps to 18 million.

AT&T cannot react so fast. Verizon may not wish to. Small telcos have big decisions to make as well.

On the other hand, the net effect of all that gigabit marketing will be to increase sales of services in the 50 Mbps to a couple hundred megabits per second. In truth, no consumers, when web browsing, are really going to experience benefit beyond about 10 Mbps to 15 Mbps, in any case.

Perhaps downloading operations are the one area where visible benefit is gained, though.

Nigerian Mobile Internet Adoption is 59% of all Mobile Users

The Mobile Africa report, released this week, finds that many Africans access social media, including Facebook and Twitter, using their mobile phones.

They also use mobile for medical applications and banking, among other purposes. Lower cost mobile-capable handsets are one reason for growing mobile Internet usage. “Feature” phones that can access the Internet are now selling for less than $20, far below the $100 threshold deemed important for smartphone adoption.  

Nigeria has well over 140 million mobile phone subscribers and close to 82 million mobile Internet users, according to monthly subscriber data that has just been released by the Nigerian Communication Commission (NCC).  In other words, Nigerian mobile Internet adoption is 59 percent of all mobile users.

Must ISPs be in the Apps Business?

There are many business analogies between video entertainment and Internet app ecosystems, with similar underlying ecosystem tensions.

In both ecosystems, distribution partners widely worry that they are being relegated to low profit margin “dumb pipe” status, while value is created, and revenue gained, by the app providers.

In the video ecosystem, that is why over the top streaming services such as Netflix are viewed ominously by linear video subscription providers.

In the Internet ecosystem, all apps are, by definition, provided over the top. Distributors might try and create managed services (carrier voice or linear video subscriptions are the best examples) they actually own and deliver, but all “Internet” apps are logically separated from the underlying access.

In the video subscription ecosystem, there long has been an argument about whether distribution or content “was king.” In times past, one or the other views has tended to reflect reality.

The Internet analogy is whether Internet service providers or Internet apps have power in the ecosystem. Most might agree that the app providers have the scarcity value and end user brand names that represent value.

The recommendation, in the video ecosystem, has been that distributors need to own content assets. So Comcast owns NBCUniversal. So far, ISPs have made smaller investments in Internet apps and firms, often through incubators or investment funds.

But it might be hard to point to a big success, so far, in the Internet ecosystem, for ISPs seeking to create valuable assets in the apps sphere.

On the other hand, some might point to Google Fiber as an example of an app entity going the other way and directly displacing incumbent ISPs altogether. It is reasonable to argue that displacing the whole ISP function would be horrifically expensive for even the biggest app providers.

It would be less implausible to argue that leading app or device suppliers might well displace much of the value of a mobile service provider, at less cost, using a wholesale access mechanism, in conjunction with Wi-Fi, for example.

In other words, app providers are in a better position to keep and extend value towards the access function, than access providers are to keep and extend value towards the app function.

For ISPs, the danger is dumb pipe status. But for some ISPs, that might prove quite sustainable as a business model.

At the moment, one would have to conclude that “apps are king.” If that remains the case, ISPs will want to participate, as equity owners, in apps. That might happen through the creation of managed services or simple ownership of app firms outright (Singapore Telecom might be the best example of this strategy).

The point is that, long term, the access function might remain margin challenged, when not directly gross revenue challenged (as when Google Fiber competes directly with other ISPs).

To the extent that the video ecosystem provides an analogy, ISPs might want to own more of the content moving through the pipes. Many app providers see this as a danger, for obvious reasons. But ISPs might have no choice, at all. Value might continue to reside in the apps, not the access.

If so, then ISPs have to be part of the apps business.

Sprint Launches International Free Calling, Texting, Mobile Internet Plan

Sprint is giving customers the ability to travel to major areas in Latin America, Europe and Japan and roam with up to 2G speeds to read emails and surf the web at no additional charge, as part of its new International Value Roaming feature.

When on the plan, customers also can send unlimited text messages for no extra charge and they can call anywhere in the world from these countries for 20 cents per minute.

Argentina, Brazil, Chile, Costa Rica, El Salvador, Germany, Guatemala, Japan, Mexico, Nicaragua, Panama, Russia, South Korea, Spain and the United Kingdom are countries included in the plan.

Customers can easily add International Value Roaming to any Sprint domestic plan atwww.sprint.com/internationalroaming or by visiting a Sprint store.

Customers also can use Sprint’s “Wi-Fi Calling” feature to make free calls from over 200 countries back to the United States.

Wi-Fi Calling is available at no additional charge when calling a United States,  U.S. Virgin Islands or Puerto Rico phone number.

Wi-Fi Calling is available on iPhone 6, iPhone 6 Plus, iPhone 5c, iPhone 5s and select Android devices.

Some will say the new Sprint feature is a reaction to T-Mobile US, which recently added no extra charge no extra charge calling, texting and Internet access in 2013.  

One might argue this is another instance where T-Mobile US and Sprint are attacking the market with additional value, while AT&T and Verizon try and maintain either a premium position (higher price, better quality) or at least an industry-standard (about what you’d expect in terms of price and value) position.

Amazon AWS Revenue Grows 40% Year over Year

Amazon's AWS cloud infrastructure business is the fastest-growing billion dollar enterprise IT business in the world, Amazon execs now say. 

Amazon EC2, which provides on-demand computing resources, grew 93 percent between the fourth quarter of 2013 and fourth quarter of 2014.

Data transfer volume for Amazon S3 grew 102 percent over the same time period. 

Revenue appears to have grown 40 percent, year over year. 

When Will T-Mobile US Become the 3rd Biggest U.S. Mobile Company?

The only question many observers have is how soon Sprint, now the third-largest U.S. mobile service provider, is passed by T-Mobile US. Some think that could happen in the first quarter of 2015. Others think it might take until the second quarter.

But most think the change will happen. 

Sprint executives are right that it doesn't matter much whether Sprint is third or fourth, for the moment. The difference in subscriber counts won't be so large. 

But if T-Mobile US growth rates continue at anything near present rates, that gap will widen. At some point, quantitative change becomes qualitative change. 

And such changes of market share, at the top of any mobile market, and driven by organic growth, are quite rare. 

True, market share does change substantially when there are major acquisitions in a market. But a market share shift driven principally by organic growth is a more dangerous trend. Instead of a reshuffling of ownership, which is what a merger represents, an organic growth shift means consumers are shifting demand. 

Near term, perhaps the change in market share means little. Longer term, it could be quite significant. 

ISPs Risk Consumer Ire in Fighting Gigabit Marketing Wars

It always has been difficult to conduct marketing campaigns whenever a service provider is upgrading or introducing network-dependent local access services. Major metro area cable TV network builds (new builds or rebuilds) often take three years.

So what is the marketing team supposed to do about it mass media efforts when, by definition, a sizable number of would-be customers will contact the firm about buying, only to be told the service is not yet available “in your neighborhood.”

It is a messy process, more expensive and almost certain to generate consumer ire. That is why some firms, in the midst of such construction projects, end to eschew mass media marketing in favor of lower-key programs that can be targeted neighborhood by neighborhood.

Some firms might be taking different risks, though, touting gigabit services using mass media outlets.

Doing so, when the company knows the new services initially will be available only in some neighborhoods, is bound to generate ill will. In such cases, the firms appear to be taking such risks to tout the magnitude of upgrades, part of the access marketing wars that are building across the United States.

It will not help that Comcast, arguably the leader in U.S. high speed access, will upgrade virtually all customer locations for gigabit access by the end of 2015, with 18 million out of 21 million locations able to buy 2 Gbps service.

That is about as big a deal as was Google Fiber’s “symmetrical gigabit for $70 a month” offer.

But the downside, for would-be competitors, is the risk of increased potential customer ire, since most of the offers--Comcast being the big exception at the moment--being targeted only to high-demand neighborhoods.

"Back to the Future" for FreedomPop "Premium Voice"

It is back to the future for FreedomPop, which has introduced a “better calling experience”

called “Premium Voice technology.” So is it a fancy new Internet Protocol tweak? No, the service uses a second generation network, much as 4G networks often rely on 3G for voice services.

That sort of thing--finding a new use for stranded assets, or encouraging customers to use resources off peak--happens often in the telecommunications business.

One reason some mobile service providers, such as Sprint and T-Mobile US, are so supportive of allowing customers to make free voice calls, send free text messages and use mobile Internet access on Wi-Fi is that doing so frees up mobile network bandwidth, even if it risks sacrificing some revenue.

One reason telephone companies used to feature highly-discounted calling during the evenings and on weekends was that the network was lightly loaded at those times.

On the other hand, FreedomPop also has been among the leaders in the mobile space at combining Wi-Fi and mobile network access, a feature likely to be fundamental by the time fifth generation networks are commercialized.

The Premium Voice capability essentially involves sensing when the IP connection is unstable, and switches a call over to Sprint’s 2G network.

Some believe 5G will be built as an extension to 4G, while others think the break might be more discontinuous. If we are less than 10 years away from launch, either pattern could occur.

But some might argue all the fundamental building blocks (extremely low latency, extremely high bandwidth, ability to use any network, software defined networks, network functions virtualization, big data capabilities, small cell technology, better antennas, exploitation of new millimeter wave frequencies and so forth already are clearly coming.

And then there is the other possibility we usually do not consider, as in the case of putting old legacy networks to new users, or monetizing otherwise stranded assets.

Does Amazon Prime Have to Catch Netflix?

Google was the first, and so far perhaps the most successful software company to build a big business using an advertising revenue model. But content has played a significant role for Apple, which uses content to create value for its device sales, and Amazon, which uses content as a value driver for its subscription shipping program, Amazon Prime.

So while it is useful to note how well those, and other providers, will be in the coming subscription streaming business (market share or revenue, for example), “success” will be a more nuanced issue.

Consider a finding that Amazon Prime subscribers in the United States are more likely to use Netflix than Prime Instant Video, according to Strategy Analytics.

About 63 percent of Amazon Prime subscribers used Netflix in the previous month compared to 59 percent who used Prime Instant Video. In other words, slightly more Amazon Prime customers used Netflix streaming video more than the Amazon Prime service.

So is that a problem, or not? “Amazon is needlessly ‘losing’ users to Netflix when, in fact, it should be eating into their user base,” says Leika Kawasaki, Strategy Analytics digital media analyst.

On the other hand, says Kawasaki, Amazon is taking “significant steps” to boost value.

Still, “in contrast to countries such as the UK and Germany, Americans are more likely to subscribe to Amazon Prime for free two-day shipping than for Prime Instant Video,” said Kawasaki.

So whether Amazon Prime needs to best Netflix in narrow terms (which firm has more customers, or which firm makes the most money) might not be the most significant issue.

Amazon Prime streaming might be viewed somewhat as Apple views its own content services: as a means to an end. For Apple, content helps it sell more devices. For Amazon, content is both a product and a way to sell more products.

Some consumers probably view Amazon Prime as a value added feature of a two-day free shipping “product,” and not as a stand-alone streaming service.

Given the disparity in catalog, it is hard to see why a rational consumer would directly compared Amazon Prime and Netflix strictly as sources of content. Netflix wins. Period.

On the other hand, Amazon Prime is a vehicle to upsell more video content, as well as a value to boost its free shipping program.

In that view, Amazon Prime does not have to be too close to Netflix, in terms of viewers or direct revenue.

Nor does it necessarily matter that more people with Amazon Prime subscriptions watch Netflix.

They might be heavier video consumers than average. They might rationally recognize that the Netflix catalog is more varied. And, in most cases, they might simply view Amazon Prime as a value add for a shipping service, not a full competitor to Netflix.

Is Distribution or Content Still King? It's Changing, Again

There is a very old debate in the video entertainment industry about whether ecosystem power is held by distributors or owners of content.

A perhaps interesting illustration of how the power could shift is illustrated by current negotiations between Apple and Disney about content rights. Disney owns ESPN, for example, considered an anchor for a streaming video service.

Disney’s negotiating is familiar. Disney wants Apple to carry more Disney channels in exchange for a carriage agreement. That is what typically happens in any negotiating session between major networks and distributors.

In this case, it remains unclear whether Apple, as a distributor, or Disney, as a content supplier, has the stronger hand. Both are powers in their own right, within the broader Internet ecosystem.

Perhaps the situation of the channels that will not be asked to be part of a new streaming service (featuring perhaps 25 channels is instructive) illustrates the changing nature of the equation.

Though I generally argue that “content is king,” at least in recent years, in past times I have argued that “distribution was king.” But that was a time when cable TV operators--only one in each market--were the sole distribution agents.

As satellite TV came on the scene, preceded by smaller hotel and satellite master antenna TV operators, as well as mostly unsuccessful MMDS operators, the number of important distributors grew. Most recently, cable TV operators, Google Fiber and now the streaming services have added to the number of distributors.

That arguably has titled power back to the content owners.

But the Disney-Apple and Sling TV services offer a way of revising  the nature of the argument. Perhaps the generally-unused adjective “important,” used to modify “channel” or “network,” is the new key.

In a world where either a la carte or skinny bundles gain share and importance, it is the small, niche channels that lose power. They won’t be included in the 20-channel or 30-channel bundles. So they lose bargaining power because the distributors do not want to carry them.

The anchor services such as ESPN will continue to hold considerable power, as they are the “must have” channels. All the smaller channels will lose value.

So “important content” is king. Not all content will continue to have the same status as in the past. And, for some time, the power of distributors is going to grow, as new streaming sevices struggle to break free and assume dominance of the distribution business.

So it isn’t going to be easy to say that “content” or “distribution” clearly is king.