97% of U.S. Homes Use Broadband, Ofcom Says

Only three percent of U.S. households do not use some form of broadband, a new study by Ofcom suggests. 


About six percent of households appear to use mobile only, while four percent use both fixed and mobile broadband. 





Ofcom data

Mobile Broadband Revenues Nearly Equal Fixed Line Revenue in 2010

It is not news that text messaging rivals voice as a typical communications method, or that more people are using mobile broadband. What might be new is the extent to which both types of services drive service provider revenues, not just activity. Texting now dominant?

By some measures, service providers now make nearly as much money from mobile broadband services as they do from fixed broadband. Ofcom analysis Over time, mobile broadband is likely to become even more important, if for no other reason than that mobile broadband is sold on a per-device, nearly a per-user basis, while fixed broadband is sold per household.

Granted, fixed mobile connections generate more revenue per line. But mobile units will outnumber fixed connections by such a margin that aggregate revenue will continue to shift in the direction of mobile services.

How Big Does a Distributor Have to Be?

How big does a video content distributor have to be, to gain the upper hand in licensing deals with content owners? The answer matters where it comes to any potentially big changes in video entertainment distribution.

Up to this point, even the largest U.S. cable operators, though able to win volume discounts, have not had the dominant role in the business relationship, at least in recent decades, one might argue. The largest programmers, with the "anchor" channels, essentially have been able to dictate placement on programming tiers and force bundling of multiple networks.

In other words, contracts generally forbid sales of channels a la carte, which would represent one potential source of innovation. So far, Comcast, Time Warner Cable, AT&T, DirecTV, Dish Network, Verizon and others have lacked leverage.

But then there's Google, Apple and Amazon. Apple's iTunes customer base arguably got to be so large that music publishers had to do business with Apple, on the general terms Apple wanted. That includes such basic matters as retail pricing, royalty rates and ability to "unbundle" discs and sell songs one at a time.

Video content owners "learned" from that experience and do their best to avoid ceding power to the newer distributors. But some might argue that some distributors have potential to grow so large that the potential audience simply cannot be ignored.

Some might argue that, over time, content owners "must" lose power to the huge new distributors. In that view, Amazon, Apple and possibly some others will amass audiences so large that the distributors will gain the upper hand. Who "owns" video distribution?

Certainly many would argue that perpetual annual price increases for video entertainment services at their current  rate are unsustainable. And one almost-certain way to put a brake on costs is for distributors to gain the ability to say "no" to programmer demands.

Network economics would change, of course. If programmers cannot "force" distributors to buy channel bundles, and distributors do not restrict channel bundles so rigidly, programming choices could explode.

Though telco, cable and satellite distributors might not prefer to sell smaller packages of channels, or simply programs, newer distributors might well prefer to sell that way. Think iTunes rather than a Comcast video subscription.

Many lightly-viewed networks would no longer be viable. Many shows would have a harder time getting exposure to an audience. But new promotion methods would arise. YouTube Channels might become more important venues for specialty networks.

Some might question the long-term viability of the channel metaphor. But channels are akin to "genres" of music. People have favorite artists and songs. But they also have preferences for genres. The same will be true for video and movies. Both channels and a la carte can coexist.

Cable operators, though, are not likely to be as supportive of a la carte access to discrete programs as will Amazon and Apple, who have device and business ecosystems well suited to a la carte buying. Apple and Amazon have numerous other ways to make money than by selling advertising.

Video distributors make money on subscriptions and advertising, and both revenue streams potentially are disrupted by a la carte sales.

But the question remains: how big does a distributor have to be before content providers must be on the platform? In music, the answer has been "as big as Apple." So far, nobody in the video distribution business has yet reached that scale, apparently.

But there are lots of potentially-huge channels. In the online world, Apple, Amazon and Google might come to mind. In the physical world, Wal-Mart, Target or Best Buy already have tried to make a move. So far, though, all we have seen is cracks. The old order is not yet crumbling.

Time Warner Cable Takes Stand on Sports Programming Cost

Madison Square Garden Co.'s sports networks won't be available for Time Warner Cable Inc. subscribers in 2012, meaning New York Knicks and Rangers games apparently will not be available on Time Warner Cable systems in the New York area. The unusual inability to come to terms is significant.

Though programmers and content providers obviously would prefer to be paid more, every year, for access to their content, distributors are in a bind as programming costs continue to drive retail end user prices higher, reducing demand for the product. More affordable packages?

And since sports programming generally is considered to be a principal driver of programming cost increases, the carriage discussions have an added significance. Apparently, as important as Knicks and Rangers games are in the New York market, Time Warner Cable is "drawing a line in the sand" against what it sees as ever-higher programming costs. Programming cost squeeze

The gamble is not without risk. Few cable, satellite or telco video distributors would be willing to risk losing anchor programming such as ESPN, considered a staple of video service packages.

On the other hand, regional or "specialized" sports packages, at least in this case, are viewed by Time Warner Cable as a place to start changing the conversation. Some might argue the conversation is long overdue. Sports programming costs an issue

No MSG on ime Warner Cable

Apple iPhone Gets 66% Share at AT&T Retail Stores

It looks like the Apple iPhone dominated sales of devices at AT&T stores in December 2011. Apple iPhone rules at AT&T

Cable Bills "Tripled" in 10 Years?

The problem with measuring price changes for all sorts of products is that, quite often, products change. That can lead to an "apples to oranges" comparison that actually misses the mark. One might argue that such misunderstandings are inevitable, now that SNL Kagan has produced figures arguing that the "average cable bill" has grown from about $40 a month in 2001 to $78 in 2011.


There are a couple of obvious issues. Those are nominal prices, not adjusted for inflation. Using a rough rule of thumb about prices doubling every decade, a $40 inflation-adjusted price in 2001 would be about $80 in 2011, which is about what SNL Kagan says is the case.


Beyond that, there is the other problem also experienced by PC suppliers, namely that performance increases are not captured by the retail sales data. The 2011 channel line-up is, generally speaking, much more extensive than in 2001.


Whether that actually provides value for end users is another question. But the "product" itself is different. Also some will compare the "total bill" for all services in 2001 with the total monthly bill in 2011, and argue for a "tripling" of bills. That also is erroneous.


In 2001 arguably few subscribers were buying triple-play packages of voice, video and data. In 2011 that was more the norm than the exception. So the price for a three-service package is compared to what essentially was a one-service package in 2001. 


One easily can argue that nominal cable retail prices have climbed. But it also is true that consumers are buying a different mix of "products," including high-definition services and devices, digital video recorder service and service at more outlets, for example. Cable bills

A Tablet Christmas

If you based your conclusions on Apple and Android activations, Christmas day was "tablet and smart phone day," according to Flurry data. Apple iOS, Android activations

It would be reasonable to assume that the Kindle Fire represented much of that activity. Amazon says it sold more than four million Kindles during the month of December, for example. That means 59 percent of activation events could have been for the Kindle Fire alone.