Verizon Could Offer "Drip-Casting" Video

And engineer can tell you that there always are trade offs in communications. And since peak-hour congestion is a growing problem, it comes as no surprise that mobile service provider executives are looking at ways to create incentives for off-hours consumption, much as they offer off-peak calling.

Now called "drip casting," the technique is what engineers call "store and forward." The idea is that when a consumer wants to watch a movie, the carrier could offer incentives to order ahead of time, instead of "now," allowing the carrier to stage delivery of the bits over time, at times when the network isn't congested and can more easily handle the load.

The value exchange could be as simple as "use drip casting and the data won't count against your data cap." Drip-casting

Video content distributors also use the concept, though not for reasons of bandwidth efficiency. Tivo, or any other digital video recorder, essentially "catches" data when it actually is transmitted and then stores it for later viewing. It's a variation of the basic technique, which is that transmission of data and consumption of that data occur in non-real time.

The other angle here is that the plan is a bit of a shift in the direction of value-based charging, where the "price" or "rate" for some use of the network varies based on the value of the sessions, or the timing of the sessions.

In this case, consumers receive the value of a big download that isn't charged against their data plan, while the service provider receives the value of alleviating strain on the network.

U.S. Consumers Reducing Entertainment Spending?

From 2000 to 2008, adjusted for inflation, U.S. consumers have been reducing the amount of money they spend on out of home entertainment. That obviously has implications for providers of video entertainment products, negative for out of home venues but positive for in-home options. 


The issue is that Blu-ray, so far, has not grown fast enough to offset declining DVD product purchases. In the technology transition from tape to DVD, the new format seemed to have higher value, boosting sales of physical media and gjrowing the category. 


That has not yet happened with the transition to Blu-ray, and an obvious conclusion would be that the successor product to DVDs is not Blu-ray but online delivery. 

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Ultraviolet Initiative Illustrates Business Issues

UltraViolet, the digital rights management initiative and "content locker service" backed by Warner Bros., Universal, Sony and Paramount illustrates some long-standing issues in the video content business, as well as an application of traditional thinking to a new channel, namely "cloud-based" applications and channels.


In many ways, Ultraviolet also illustrates why, though we keep getting more options for online delivery of content, in the movie and TV business, the range of options will be shaped and controlled, at least in terms of pricing and availability, by the willingness of content owners to make their content available online. 


The key implication might be that, in the case of popular movie and TV content, consumer access and pricing might not be subject to all of the retail pricing trends we have seen in the music and print content business, with one key exception.


One might argue that the pricing declines we have seen in print and music products now consumed online is due to a change in packaging, in large part. Music used to be as "albums," while print content has been sold as a bundle known as a newspaper or magazine. 


Online delivery unbundles those products into discrete songs and stories. If you assume there is a significant difference in value and pricing for a bundle of 10 to 12 songs, compared to buying one song, you also can see the analogy to pricing changes for buying one story as opposed to a whole newspaper or magazine. 


Also, you might say that in the case of print content, one version of a story that has to be bought also faces pressure from other versions of a story that might be available for free. The other bit of context is that movies traditionally have been a "fee-based" product, where print content typically has been an advertising-supported product.


Broadcast television has been more like print, in terms of end user pricing, while cable, telco or satellite TV pricing has been more like that of  movie products. 


UltraViolet is an effort to solve a couple of problems. 

UltraViolet will allow buyers of Blu-ray physical media to view those assets online, at no extra cost. For starters, the initiative is an attempt to preserve the value of existing channels even as the industry adapts to a new distribution channel. That is the thinking about nearly all content licensing schemes, as well as the system of staged release windows for access to movie content.

On the other hand, UltraViolet also is an effort to try and supply consumer demands for online viewing on any device, with declining sales of DVDs, which have been a key channel and revenue generator for decades.


To be sure, the original hope had been that the Blu-ray physical format would be the successor to DVDs in the era of high-definition television. That almost certainly will occur at some point, but the issue is whether collective Blu-ray revenue ever will match the heights of DVD sales in an era where online delivery will be common. 

UltraViolet further is an effort to create a revenue model for streaming, essentially by generating all the revenue when the physical product is purchased. That is similar to what cable operators are trying with TV Everywhere, essentially making purchase of the traditional video entertainment subscription as a prerequisite for using the no-incremental-cost TV Everywhere features.

It is something of a reverse "freemium" model, which gives away one product and then generates revenue on sales of add-on products. The Ultraviolet model does the reverse, making revenue on the classic product and then adding a "no additional fee" feature. The studios hope UltraViolet will help with the DVD sales drop

On the other hand, DVD sales have dropped precipitously over the last decade. The music industry faced roughly analogous issues, as have newspapers. 


As content migrates onto the Internet, there is a tendency for retail prices to fall. This price compression has affected major music label revenue from recorded music in part because of the ability consumers now have to buy songs one at at time, instead of bundled in the form of albums, which contain 10 or 12 songs and can be sold at a correspondingly higher price. 



UltraViolet aims to support DVD sales while providing something of the value provided by rental services as well, including Apple and Netflix. Ultraviolet

In principle, mobile-focused entertainment video has the same context as TV-focused entertainment in many ways. Movie products, which have been sold as discrete products, are less threatened than the bundled products we know as cable, satellite or telco TV.


Those products are susceptible to the same dangers as unbundling in the music business when sales shifted from collections to songs, or newspapers and magazines to stories. 










DVD sales dip

Computing Product Life Cycles

If you study consumer adoption of technology professionally, or just enjoy learning about product life cycles, this is useful, tracking adoption of various computing devices. It sure looks as though the PC is entering the peak of its product life cycle, doesn't it? PC product life cycles





Another way of visualizing PC lifecycles

International Long Distance Prices Decline 5% in 2011

"Prices in international long distance only go down," says Telegeography VP Stephan  Beckert. The only issue seems to be the rate of decline.

But that wasn't anything unusual in 2011. International long distance rates have been dropping since about 2000, though there are regional variations.

The declines are a serious issue for retail service providers, who are seeing increasing amounts of traffic "growth" siphoned off by Skype.

As a percentage of overall global bandwidth, though, video and Internet traffic now is what drives capacity requirements, not enterprise data or voice.

Will Mobile and Fixed Network Broadband Prices Start Increasing?

Scarcity, which many would say has been a key reason network owners have had business advantage, has generally been declining over the last several decades, as regulators have allowed competition for the first time, as public firms have been privatized, as cable, satellite and wireless firms have entered markets and as new technology has lowered costs.

But some would argue that a degree of scarcity is returning to both mobile and fixed markets, which could have important ramifications for the extent of competition and therefore pricing in broadband access markets.

In some markets, the capital requirements of competing in a fiber to customer environment, or fourth generation mobile network business, might actually reduce some competition, as some contestants find they cannot afford to make capital investments of their own.

You might well expect telecom executives to say that “scarcity” does convey business advantage, and that network owners are behaving rationally in making access to their networks as “scarce” a possibility as they possibly can.

In fact, analysts at HSBC argued early in 2011 that “a degree of pricing power is (at long last) becoming apparent in the telecoms sector, at least in Western European markets, thanks to scarcity emerging as a factor on both the fixed-line and the mobile sides of the industry.”

In fixed line, the capital required in the shift from copper-based infrastructure to fiber
platforms is reasserting the importance of scale at the expense of the un-bundlers, and resulting in a more benign pricing environment,” HSBC said.


Meanwhile, in mobile, the finite nature of mobile spectrum has already led operators to begin rationing capacity based on price.

Scarcity is the reason telecom always had been a monopoly in the past. It was deemed too expensive to build more than one network. In essence, that remains the thinking, in countries where there are robust mandatory wholesale requirements.

“We believe that this vital ingredient has been largely missing in both the fixed line
and mobile elements of the sector over the last decade, but is now making a reappearance; as a consequence, we think that telecoms should – at long last – begin to enjoy a measure of pricing power,” HSBC has argued.

The new element is the need to upgrade copper networks to optical fiber access, an undertaking expensive enough, with financial returns risky enough, to make would-be competitors think very hard about building their own networks. In fact, even regulators seem cognizant that the capital investment decisions are highly risky, encouraging rather new thinking about allowing investors to reap more of the rewards of their investments.

The point is that if scarcity does re-emerge in access, prices and revenue should improve.

Social and Mobile are Hard to Separate

The U.S. domestic social network audience represents 66 percent of U.S. Internet users in 2012, according to eMarketer. So it is safe to say that social networks are a foundation application for most Internet users.

Increasingly, it also is correct to note that social networking is a lead mobile application as well. Social networking increasingly is used on mobile devices.

Mobile social media usage across the five leading European markets (France, Germany, Italy, Spain and the United Kingdom) grew 44 percent in 2011, with 55.1 million mobile users in those countries accessing social networking sites or blogs using their mobile devices during September 2011.

In September 2011, 55.1 million EU5 mobile users made use of social networking sites or blogs on their mobile device, representing 23.5 percent of the total mobile audience. 

Nearly half – 46.8 percent – of this audience reported accessing social networking sites on a daily basis.

Mobile social media consumption might be even higher in the U.S. market., according to comScore, which reports that 72.2 million Americans used social networking sites or blogs on their mobile device in August 2011, an increase of 37 percent in the past year. 

The study also found that more than half read a post from an organization, brand or event while on their mobile device.

“Social media is one of the most popular and fastest growing mobile activities, reaching nearly one third of all U.S. mobile users,” said Mark Donovan, comScore SVP.

In August 2011, more than 72.2 million people accessed social networking sites or blogs on their mobile device, an increase of 37 percent from the previous year. Nearly 40 million U.S. mobile users, more than half of the mobile social media audience, access these sites almost every day, demonstrating the importance of this activity to people’s daily routine.

Some might say that the Internet is social; social is mobile; mobile is Internet.