Virgin Mobile USA to Offer iPhone on June 29, 2012

Virgin Mobile USA announced today it will offer iPhone to its prepaid customers beginning Friday, June 29. Virgin Mobile USA will offer iPhone 4 and iPhone 4S with its "Beyond Talk" unlimited data and messaging plans as low as $30 per month on the Sprint Nationwide Network.

Here's why the move is important. Up to this point, the "prepaid" mobile service providers have been unable to sell the Apple iPhone, with some obvious implications for customer attraction and retention. Since Virgin and MetroPCS now sell the iPhone, some of that disadvantage is removed.

To be sure, consumers at Virgin Mobile USA and MetroPCS will have to pay full retail for their devices, but as some will note, at $50 a month, a consumer sort of "breaks even" after six months of service.

The more-important implication, though, will be seen in consumer willingness and ability to pay full retail for devices, getting service providers out of the device subsidy game. Virtually all global mobile carriers would prefer to be in that situation, and we might now get a true test of consumer willingness to pay full retail for their coveted devices.

The iPhone will be available without a contract and with no fees for activation or roaming. New and existing customers can purchase iPhone atwww.virginmobileusa.com, RadioShack, Best Buy and select local retailers.

Gaming Revenues Shifting Away from Consoles

U.S. video game sales totaled $24.75 million in 2011, mostly on traditional content to be played on dedicated gaming consoles, NPD Group data indicates. 

But spending is slowly migrating from console games to non-traditional and more-casual game formats, according to eMarketer.

Between 2009 and 2011, revenues for computer and console games shrank from $10.6 billion to $9.3 billion, for example. 

Games delivered by mobile apps, social networks, downloads and other channels were the newer formats. 

DirecTV, DishGetting Justice Department Scrutiny Over Programming Contracts?

DirecTV  and Dish Network Corp. have received requests from the U.S. Justice Department about pricing contracts with television networks, part of a broader probe into whether subscription TV distributors are preventing the emergence of  Internet-based competitors, according to Bloomberg. 


Ultimately, many of us would argue, the older subscription TV paradigm cannot be challenged unless content owner contracts allow competitors access to the professionally-produced programming consumers are used to getting from their subscription TV providers.


Just as obviously, neither content owners nor distributors will do anything to jeopardize the existing economics of the business. So the wild card is government intervention to force change. 


The Justice Department sent civil investigative demands, which are similar to subpoenas, to DirecTV and Dish, the two largest U.S. satellite-TV providers. 


The government wants information about "most- favored-nation" provisions, which give distributors companies favorable pricing and terms. Those contracts also restrict Internet delivery rights. 


Regulators are concerned that the conditions are preventing smaller startups and Internet-video distributors from obtaining programming rights. If DoJ finds the most-favored nation clauses are anti-competitive, and bars them, there is at least a chance of disruption in the video market. 

Global Video Business Will Be More Fragmented in 2016

Granted, it often is tough to glean much of value from global and aggregate figures, for business prospects in any particular country. 


The global subscription video market, which has been shared between cable and satellite providers, will see a significant amount of share taken by telcos by 2016.


Video services revenue on a global basis was $261 billion in 2011 and is forecast to grow to $371 billion by 2016, Infonetics Research estimates. 


Globally, the top 20 subscription-TV revenue leaders accounted for 50 percent of the revenue, while the top 20 subscriber leaders represented just 30 percent of subscribers. 


In the U.S. market, satellite share has been relatively stable at about 32 percent to 33 percent, while telco market share is growing. 


Whether "telco" share continues to creep up, or is transformed, remains a question. Many observers long have anticipated that, one day, U.S. telcos would simply both U.S. providers. In essence, telco share could, in that scenario, rise to more than 40 percent of the U.S. market. 

Is Voice a Product or a Feature?

It appears the Australian National Broadband Network is setting wholesale pricing policies that will raise new questions about the ways voice services can be packaged for sale to consumer customers. 


Each wholesale connection apparently costs a retailer $24, and both broadband and voice are included and required at that price. In other words, a retail provider "must" buy both broadband and voice capabilities from the NBN.

That raises an interesting question. Will re?"tailers sell voice and broadband separately, or as a bundle? And if they do, will consumers reset their expectations about the features a broadband connection "typically" provides, and what it costs?

In other words, is domestic voice a "feature" or a "product?" There are growing signs in the U.S. market that service providers are starting to consider shifting retail packaging from "voice as a product" to "voice as a feature." The new Verizon Wireless "Share Everything" plan moves in that direction, with voice and text messaging essentially becoming part of a basic "use the network" connection fee. 

Charter Communications is reported to be considering ending all sales of consumer voice as a stand-alone product. Apparently, in the future Charter voice will be a product that only can be purchased as part of a bundle including something else, the obvious candidates being broadband access or video entertainment. 

That's a half step towards making voice a feature of a network connection fee. Just how far the trend might go is not yet clear. But a reasonable person might argue that making voice services a feature, rather than a product, is the "best" way to assure future voice revenue. 

Charter Move Shows Why Fixed Network Voice Will Not Ever Go to "Zero"

Since the number of fixed network voice subscriptions has been dropping for at least a decade, some might suspect that there is no end to the decline. Some of us have argued that there is some equilibrium point that will be reached, when the number of subscriptions actually stabilizes. 


A new policy by Charter shows why that will be the case. Apparently, Charter is going to stop selling voice subscriptions as a discrete product, and will in the future only sell voice in conjunction with at least one other service, either entertainment video or broadband access. 


"Going forward, we will not offer Charter Phone as a standalone product," a Charter spokesman apparently has confirmed. 


If you think about it, that also is how Verizon Wireless will price its "Share Everything" services. use of the Verizon Wireless network requires a basic subscription that includes unlimited U.S. domestic voice and texting, with variable payments for mobile broadband service. 


The point is that if voice becomes a feature of a broadband access service, the number of voice accounts in service will drop only so far as broadband access or entertainment video. 

Are Telecom Profit Margins "Excessive?"

Gross revenue is never the same thing as "profit." But many businesses are so capital intensive that actual profits are slim. In fact, though it often is believed that oil industry profits are out-sized, they actually aren't, according to the U.S. Census Bureau, Standard & Poors and the American Petroleum Institute. 


Oil and natural gas industry profits were about 6.7 percent in the third quarter of 2011, for example. 


Telecom service provider profit margins aren't that much different. Verizon has a six-percent profit margin while AT&T has about an 11 percent margin.