Big Divestiture of Rural Lines Coming at AT&T?

Randall L. Stephenson, AT&T chairman and CEO, has a problem Verizon also faces, namely “under-performing assets.” Among those assets are rural operations, especially given the need to upgrade substantially for broadband access services.

“We've all been trying to find a broadband solution that was economically viable to get out to rural America and we're not finding one to be quite candid,” Stephenson said during AT&T’s fourth quarter 2011 quarterly earnings call.

“The best opportunity we have is LTE,” he said. If that sounds familiar, it should.

Verizon Wireless recently launched its HomeFusion service, which will offer fixed broadband access using the Long Term Evolution network initially in Dallas, Nashville, Tenn., and Birmingham, Ala., ultimately will provide a facilities-based fixed wireless service anywhere Verizon’s fourth generation network operates. service.

So what is the broadband solution for AT&T’s rural customers? “We don't have one right now,” he said. Since fiber to the home exists, that answer essentially means AT&T has concluded the economics won’t work.

“We're going to have to either completely restructure those businesses,” he said. “ The cost structure has to change, not only the wage and benefit cost structure but just the cost structure associated with the technology, legacy TDM infrastructure out there.”

Those “fundamental changes” will be addressed “in short order,” Stephenson said. Many would not be surprised if those changes involved significant divestment of rural operations, as Verizon has done.

So some might characterize the HomeFusion service as a facilities-based way for Verizon to sell fixed broadband outside the areas where it already provides FiOS or other fixed network service. One wonders whether AT&T might also think about that approach.

What it means, perhaps, is that the Verizon Wireless national Long Term Evolution network represents a facilities-based network that can be used to sell fixed broadband connections, to many consumers, “out of region” with respect to Verizon’s fixed line service territory. And that out of region business might represent 80 percent of U.S. homes.

For both AT&T and Verizon, though, it also appears that ownership of smaller and rural exchanges simply does not make sense anymore. Whether another owner, with a different cost structure, could deploy fiber to the home or some other broadband access network, and earn an adequate return, is the issue.

Can Any Competitors Catch the iPad?

Apple's competitors in the tablet market have to be wondering whether Apple will do it again, namely create a brand new consumer device category it "owns." In truth, that has been the concern ever since the iPad was released. 


And there is reason to worry, one might argue.


Apple iPad penetration in the United States will nearly double from 2011 to 2013, from just over 12 percent of internet users to 22 percent. But other suppliers will whittle Apple's market share from 83 percent in 2011 to 68 percent at the end of 2014, eMarketer predicts, those market share figures might not provide much comfort. 

There will be 54.8 million tablet users in the United States by the end of 2012, eMarketer predicts By the end of 2014, that number will nearly double to 89.5 million. 

The adage that "there is no tablet market, only an iPad market" is no longer as true as it was a few years ago. But it still might be fair to say there is an iPad market, and then a tablet market. When one supplier has 70 percent market share, it is analogous to the MP3 player market, which wound up being an iPod market, with some other providers. 


In 2011, for example, Apple continued to hold 78 percent of the music player market. That is what "terrifies" other competitors. Apple has more than once showed an ability to dominate a new consumer electronics category. 


The mobile phone market is more complicated, as Apple does not compete in the feature phone category. In the smart phone category, Apple has about 30 percent share, globally. 


More tellingly, Apple seems to be, far and away, the most profitable smart phone manufacturer. Right now, one has to wonder whether Apple has done it again, creating a new category which it dominates. 

Apple iPad Ownership Doubles in France, Germany, Italy, Spain, U.K.

Apple iPad ownership seems to be growing just as fast in Europe's five leading economies as it has been adopted in the U.S. market.

More than 11.4 million people in those countries now own an iPad (January 2012), comScore says.

That is almost double the number of people who owned an iPad in France, Germany, Italy, Spain and the United Kingdom in February 2011. 

Sprint May End Deal With LightSquared in Mid-March

Not that it will come as a shock, but Sprint Nextel Corp. is ready to end a network-sharing agreement with LightSquared, according to Bloomberg. 

Under terms of the deal that would have had Sprint hosting the LightSquared network, LightSquared was required to get Federal Communications Commission approval to use its spectrum.


LightSquared hasn't been able to do so. Some might say LightSquared still has a chance to move ahead. But aside from experts hired by LightSquared, its executives or others with a business relationship with LightSquared, there doesn't seem to be much thinking that will happen. 


In a larger sense, the difficulties illustrate a larger issue, namely that venture capitalists and technologists sometimes vastly underestimate the highly-political aspects of the communications business. 


That accounts for the much-higher profile the technology industry now pays to wooing decision-makers and other influencers in Washington, D.C., for example. 

iPad 3...Only Issue is U.S. LTE Support

Verizon, has been installing LTE equipment in U.S. Apple retail stores ahead of the iPad 3 launch, cult of mac reports. 


Apple faces LTE issues for reasons related to the vast array of frequencies used around the world to support existing Long Term Evolution fourth generation mobile networks. 


As Apple resisted developing a CDMA version of the iPad for quite some time, preferring to build only models supporting the global GSM frequencies and networks, so it now will have to contend with an arguably more varied global landscape for LTE spectrum. 


Just in the United States, Apple would have to create different models for AT&T and Verizon Wireless, for example.


There's a third international model which does double duty on 3G and  CDMA/GSM model .


Manufacturing cost is the real implication. But there isn't much any firm can do, long term. Networks using Long Term Evolution are the future, globally. 

Tablet TV Viewing to Reach 3 Hours Per Month in 2014: Will It Matter for VOD?

Tablet TV viewing will reach 186 minutes per month in 2014, according to Juniper Research.
The increase will be most apparent in North America where there is already significant mobile TV usage, and where internet TV services such as Hulu and Netflix are extremely popular, Juniper Research says.

The number of users of streamed mobile TV services on smart phones also will increase by 2.8 times between 2011 and 2016, Juniper Research says.

In a perhaps-significant prediction, Juniper Research forecasts that subscriptions, not on-demand viewing,  will make up the vast majority of mobile TV revenues. Video on demand has had three decades to make its case, and still is a relatively small revenue contributor.

According to a new report released by The Diffusion Group (TDG), video-on-demand services provided by PayTV operators should be, but are not, generating significantly higher viewing and advertising revenue. Total VOD use is small, representing only one percent of all U.S. TV viewing.

By some measures, VOD is doing better. Magna Global has estimated that U.S. homes with VOD, a "category that includes both traditional multichannel VOD offerings and over the top services," will hit 70.1 million homes, about 57 percent of all TV homes at the end of 2016.

But note the conflation of traditional VOD and over the top services and apps. Some of us would not classify over-the-stop streaming as VOD, just as time-shifted viewing on a digital video recorder is not VOD, and Netflix streaming is not VOD.

Still, even availability is not the same thing as "usage." Hundreds of TV channels are available on cable, satellite and telco subscription video services. That doesn't mean those channels are viewed by most people. Much as fixed line voice service is available to most homes, but isn't necessarily purchased by all those homes, so too for-fee or ad-supported VOD is available relatively widely, but isn't used much.

TDG attributes that failure as a reflection of VOD's inadequate advertising support and awkward program guides that limit availability and viewing of ad-supported video-on-demand content. VOD hampered

Some of us might argue that "inattention" not withstanding VOD never has gotten much traction in the U.S. market and that the problem is lack of interest and demand on the part of consumers.

Service provider lack of attention to ad-supported VOD is the problem, TDG argues.

According to Bill Niemeyer, TDG senior analyst, "operators have failed to take advantage of VOD to build subscriber satisfaction, generate ad revenues, and head off competition from over-the-top (OTT) providers like Netflix."

Niemeyer estimates in the fourth quarter 2011, Netflix U.S. subscribers watched 80 percent more streaming video hours than were viewed in the same period on all U.S. PayTV VOD.

Some of us might argue that marginal failures to market and support VOD could be an issue. But there is a reason service providers do not market VOD so intensively. VOD simply does not contribute significant revenue for a service provider.

VOD in recent years has contributed about $2 billion a year worth of revenue for U.S. video entertainment providers. U.S. cable TV companies alone booked about $98 billion in 2011 revenue. That doesn't include the sizable revenue earned by satellite and telco providers as well.

The point is that VOD, as a service, has been a modest success, though it has had three decades to make its case.  Whether viewing on tablets will change that remains to be seen.

Small Business Tablet Adoption 34% in 2011

Small business adoption of tablets has jumped from nine percent in 2010 to 34 percent in 2011, indicating that the iPad is the fastest growing technology among the U.S. small and medium-sized business market, a study by The Business Journals has found.

About 75 percent of small business owners report said they are "very or somewhat familiar" with the device.

Godfrey Phillips, vice president of research at The Business Journals, says the adoption is fueled by smaller business executives and managers needing access to their business information and data, anytime and anywhere.

But smart phones and cloud computing also are among the trends that also correspond to that need.

"The iPad, as well as smartphones and cloud computing, are all part of this new trend and are experiencing significant growth as a result of that need," he said.

The study found that iPad users in the small business community are tech-savvy and financially successful. They also are highly educated, with 72 percent having a college education. The segment's annual household incomes averaged $176,000. Their companies are also well-established, having existed for an average of 28 years and averaging $9.2 million in annual sales.