Why Video Subscription Fees Are "So High"

Licensing fees paid by cable, satellite and telco distributors to program suppliers increased 8.2 percent in 2011 to around $33.5 billion, and likely will grow eight percent for each of the next several years going forward, surpassing $39 billion by 2013, according to Nomura Equity Research.
Just ffour media conglomerates account for 75 percent of this fees, with the Walt Disney Company representing 24 percent of all licensing fees, principally because of ESPN.

Notable: Disney distributes ESPN, which has far and away the highest carriage fees in the business, generating about $4.69 in licensing fees per subscriber, per month, the study shows.
Time Warner, which owns  HBO, TNT, TBS and CNN, represents 21 percent of affiliate fees; Comcast, owner of Bravo and the USA Network, accounts for 16 percent; and News Corp. represents 14 percent of fees.

Re-transmission fees paid to broadcast network affiliate stations totaled nearly $400 million in 2011 and should reach $750 million in 2012, as well.


Obviously, all those fees get passed along to consumers, as Paidcontent notes.

Why "Interactive TV" is Dead

Tablets are displacing PCs and smart phones as the “couch computer” of choice, according to Forrester Research. But even before tablets began to assume that role, it already was clear that "interactivity" with TV was an experience using the Internet. 


One might argue that answers the question about prospects for "interactive TV." Simply, users have voted for "interaction" with TV content using the Internet, mobile devices, Web and apps. There are therefore vastly limited opportunities to build "interaction" into TV content that do not lean on mobile devices, tablets and PCs as the vehicles for interaction. 


Some 85 percent of US tablet owners use their tablets while watching TV, and according to Nielsen, 30 percent of total tablet time is spent while watching TV. 


 Tablets also turn TV into a “dumb” device, Forrester argues.


About 18 percent of respondents surveyed by Forrester say they connect their tablets to their TVs. So much for "smart TVs."


Some 32 percent of tablet owners say they won’t buy a small (less than 24”) TV in the future, apparently because the tablet itself now displaces the small TV.


Consumers are using tablets as personal TVs where they had none before, such as in the kitchen, bathroom, and airports, for example.


The larger point is that "interactive TV" already has become a mass market activity, just not in the way its proponents originally had expected. 

How 4G is like 1G

In one crucial respect, fourth-generation mobile networks using Long Term Evolution represent a return to the global situation for first-generation mobile networks. Though global mobile networks were never completely identical, since multiple frequencies always have been used, LTE is the first generation of networks since the first to offer better prospects for global roaming.


In the second and third generations of technology, there were clear "islands" based on distinct air interfaces. LTE will unify the air interface to a greater extent than has been possible for some time, for example. Time division and frequency division interfaces still will exist, as well as a number of different global frequency bands. 


The main groups of frequencies will include:



700 MHz (US Digital Dividend, various bands) 170 devices
800 MHz (EU Digital Dividend, Band 20) 72 devices
1800 MHz (Band 3) 75 devices
2600 MHz (Band 7) 94 devices
800/1800/2600 MHz 57 devices
AWS (Band 4) 72 devices


But there are "backwards compatibility issues" of some magnitude, though. Some 217 existing  LTE devices also must operate on either HSPA, HSPA or 42 Mbps DC-HSPA networks. Also, 91 LTE devices support 42 Mbps HSPA technology, the Global Mobile Suppliers Association says. 



Some 108 LTE devices support EV-DO networks, as well. 

How Much Can be Done to Improve User Experience for Fixed Network Broadband Users?

Under current Federal Communications Commission rules, fixed network broadband providers cannot prioritize packets, even if such optimization would be beneficial for users of some applications, including any real-time services. That especially is true for users of online video, videoconferencing, voice and gaming, as well as business applications such as remote database access.


But an analysis of data aggregated from 45 U.S. rural communications service providers suggests that rural users behave in ways similar to urban users. There is no significant rural-urban divide in terms of how users behave.

Video streaming was the dominant broadband-enabled application among eight applications studied by Calix. Video streaming accounted for 67 percent of down stream Internet traffic and 13 percent of upstream traffic in the studied networks.

In terms of upstream traffic, business services generated the most, accounting for 53 percent of all upstream traffic.

As other reports consistently show, a small percentage of very-heavy users account for a disproportionate amount of usage. About five  percent of users account for 50 percent of Internet traffic, the Calix report found.

Many would argue that service providers use distinctive usage cases to create customized service packages, at least to the extent current Federal Communications Commission rules allow.

Video and real-time services arguably offer the most-logical opportunities for retail packaging and network management, consistent with existing FCC rules. “A package that targets a superior video streaming experience may offer the service provider the opportunity for an up-sell, and the subscriber with a better experience,” Calix argues.

But what cannot be done, at least on fixed networks, under FCC rules, is to offer a service that prioritizes video bits for such users, as useful as that would be, from an end-user perspective. Nor is it clear that service providers can create “carve outs” for heavy video entertainment users that allow consumption without affecting a usage cap. 


Mobile service providers have more leeway, at least for the moment, to create packages tailored to game users, users of video entertainment or possibly other users of real-time business services.
Report data was drawn from actual Internet traffic monitored in U.S. service provider networks from the fourth quarter (October through December) of 2011.

To download the report,click here

50 GBytes Consumer Per Person, in 5 Years

"In five years a consumer is moving toward a 50 Gigabyte per month usage level," says Leap CEO  Doug Hutcheson. That doesn't mean all, or most of that usage will occur over a wireless network, though.


That figure represents aggregate usage across all networks, using fixed, wireless and public or third-party Wi-Fi access. By way of comparison, AT&T estimated in 2011 that a typical household consumed about 18 Gbytes a month. 


Analysts at  iGR research suggest that by 2016 U.S. end users will, on average, consume about 2.6 GB of mobile data per month. 

If correct, that would imply wireless consumption would be about five percent of total bandwidth consumed by a "typical" user. 

Global Consumers' Distrust Advertising, Trust Word of Mouth

Some 92 percent of consumers around the world say they trust earned media, such as word-of-mouth and recommendations from friends and family, above all other forms of advertising, an increase of 18 percent since 2007, according to a new study from Nielsen. 


You might say such attitudes account for the greater interest in earned media (stories in mass media)  and owned media (sometimes called "brand publishing"). 


Online consumer reviews are the second most trusted form of advertising with 70 percent of global consumers surveyed online indicating they trust this platform, an increase of 15 percent in four years, Nielsen says. 


Nielsen’s survey of more than 28,000 Internet respondents in 56 countries shows that 47 percent of consumers around the world say they trust paid television, magazine and newspaper ads, confidence declined by 24 percent, 20 percent and 25 percent respectively since 2009. 


Still, the majority of advertising dollars are spent on traditional or paid media, such as television. In 2011, overall global ad spend saw a seven percent increase over 2010, according to Nielsen.

Amazon Appstore Gets In-App Purchasing

The Amazon Appstore has added in-app purchasing APIs, allowing developers to offer digital content and subscriptions, in-game currency, expansion packs, upgrades, and magazine issues for purchase within apps, Amazon says. 



In-app purchasing has become a primary way developers make money on their apps, and Amazon needs to keep pace with Apple and Google, which also support in-app purchases.