Blockbuster, Netflix, Then What?

"Blockbuster" is almost synonymous with "rent a movie." But it appears "Netflix" is more nearly synonymous with "rent a movie by mail." What isn't clear is whether either of the two movie rental players will dominate the third phase of movie distribution, the download or streaming delivery of such material. Cable companies might have hoped to dominate that niche, but "pay per view" has not yet emerged as a truly significant revenue generator, with the exception of some sporting events and X-rated material.

Well, perhaps we should say that no sizable "legal" download business yet has emerged. There appears to be lots of illegal downloading going on. The fact that no name immediately jumps out as "synonymous" with downloading indicates the field remains open. There is no "category killer" yet in place.

at&t Internet Outage in former BellSouth Areas

Users are reporting outages in the former BellSouth territory on Monday Dec. 3, apparently caused by a Domain Name Server issue. IP services are really useful. They just aren't generally as reliable as the old public switched telephone network, though. These days, end users have to spend at least some time, and some money, creating backup systems for their crucial communications and information services.

Outage reports are posted from Georgia, Florida, Louisiana, South Carolina and Mississippi.

Comcast, Time Warner Won't Bid for 700-MHz Spectrum

Google is in, Time Warner Cable and Comcast are out, at least in terms of submitting an initial bid for 700-MHz spectrum. The big issue is how many of the incumbent wireless carriers will participate in the initial round. Verizon has been seen as a certain bidder, at&t a possible bidder, T-Mobile a potential bidder as well.

Cable companies have bid for spectrum in the past, in partnership with Sprint. So far, though, financial results from the cable-Sprint collaboration in the consumer market have been disappointing, though it remains unclear how much of the sluggishness is attributable to operational or marketing issues, and how much to "core competency" issues.

Up to this point, cablers have been most successful with products that can be delivered over their own plant. Wireless is outside that realm. Wireless might also be an area where telecom companies simply have more "core competence" capabilities that force cable companies to compete where they have few natural advantages.

For the moment, cable executives seem unwilling to acknowledge that wireless services are strategic.

Consumers really don't want a quadruple-play bundle, Time Warner Cable CEO Glenn Britt insists. "I don't think the quadruple play is a big deal," he says. "So far we've not seen a great demand for that." Comcast likewise only says it continues to study the matter of wireless services closely and continuously.

Big Changes Ahead in Entertainment Market

Up to a quarter of the entertainment consumed by people in five years time will have been created, edited and shared within their peer circle rather than coming out of traditional media groups, Nokia says. This phenomenon, dubbed 'Circular Entertainment', has been identified by Nokia as a result of a global study into the future of entertainment.

The study, carried out by The Future Laboratory, interviewed trend-setting consumers from 17 countries about their digital behaviors and lifestyles signposting emerging entertainment trends.

"The trends we are seeing show us that people will have a genuine desire not only to create and share their own content, but also to remix it, mash it up and pass it on within their peer groups: a form of collaborative social media," says Mark Selby, Nokia VP.

"We think it will work something like this; someone shares video footage they shot on their mobile device from a night out with a friend, that friend takes that footage and adds an MP3 file, the soundtrack of the evening, then passes it to another friend. That friend edits the footage by adding some photographs and passes it on to another friend and so on," he says.

Other findings:

- 23% buy movies in digital format
- 35% buy music on MP3 files
- 25% buy music on mobile devices
- 39% watch TV on the internet
- 23% watch TV on mobile devices
- 46% regularly use IM, 37% on a mobile device
- 29% regularly blog
- 28% regularly access social networking sites
- 22% connect using technologies such as Skype
- 17% take part in Multiplayer Online Role Playing Games
- 17% upload to the internet from a mobile device

Major Multitasking

If you try to add up all the hours people report spend online, consuming media, sending messages and so forth, you realize that if those people have jobs or go to school, they must be multi-tasking. More important for anybody whose business touches advertising, online advertising spending lags time spent by users on their media. Over time, that gets rectified as advertisers move more money in an online direction.

Hence Google's interest in the mobile Web.

FTTH: No Business Case or No Investment Case?

British Telecom has to this point been unwilling to spend heavily on a new fiber to the home network for the UK. Even UK regulators have agreed with the thesis that clear evidence of demand, sufficient to provide a payback, is lacking.

"No one would be more delighted if a commercial incentive emerged that enabled us to fiber the nation," says Peter McCarthy-Ward, BT director. "We are not facing large numbers of people today who are constrained by their bandwidth."

BT also faces intense investor resistance. Everywhere service providers have pondered widesparead FTTH, investors have made their displeasure clear by hammering equity prices of the companies that have done so.

What does seem clear is that in cases where a national, or other units of government, do not subsidize FTTH programs heavily, the investment case is questionable, even if the strategic value might outweigh even the near-term pro forma. Investors might not appreciate the replacement of copper access networks with optical fiber networks, when the immediate outcome is simply a replacement of lost voice revenues with new service revenues made possible by the existence of the fiber.

But that's a better outcome than sustained decline, which might be the outcome if the upgrades are not made.

FTTH makes clear business sense, even if it does not always seem to make immediate investment sense, in markets where a national government is not heavily subsidizing the program.

Apple to Bid for 700-MHz Spectrum?

Technology pundit Mark Stephens insists Appls is going to bid for 700-MHz spectrum, most likely in concert with Google and possibly two additional partners brought in to lessen the amount of capital each partner has to kick in. So far, all we know is that Google will submit an opening bid at the reserve price. But Google has the ability to bring in other partners.

Perhaps Apple has decided it likes the recurring services revenue approach to life. Perhaps getting a portion of recurring revenues has whetted appetite for getting 100-percent of the recurring revenues (shared with the other partners, of course)?

Up to this point, "services" such as iTunes were simply a way to sell iPods. iPhone is the first product in Apple's history where recurring services revenue was a huge part of the business model, even though selling the devices obviously is primary. Like all other consumer products manufacturers and software providers, Apple knows that services are becoming a bigger part of the overall value proposition for any "product."

Can it be that access and services built on access are seen as a bigger part of Apple's future? One wonders. At least, Stephens does. Perhaps the other Stephens (Randall) also is wondering what is afoot. Wouldn't it be a shock if Google was not simply using the 700-MHz bid as leverage to get what it wants (openness) from the wireless service providers?