AT&T Says it Will Build 1-Gbps in Austin

AT&T says it is prepared to build an advanced fiber optic infrastructure in Austin, Texas, capable of delivering speeds up to 1 gigabit per second, provided it gets the same terms and conditions as did Google Fiber.

AT&T says it means by that the same geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives Google Fiber has gotten. 

What is not so clear is whether Austin is willing to do so, given AT&T's different regulatory status, existing cable TV franchise and so forth. But Google insists the deal it has with Austin is non-exclusive, and involves no economic incentives. 

Intriguingly, AT&T says doing so in Austin would not materially affect its announced 2013 capital investment plans. 

AT&T might do what Google does, polling neighborhoods and setting minimum thresholds for take rates before agreeing to build. So, in principle, AT&T could do its own polls, find out where a critical mass of potential customers exists, and then spot build in those neighborhoods, just as Google will do. 

Austin, Texas is a Google Fiber City

Austin, Texas is becoming a Google Fiber city, the Google Fiber Blog finally says.

Google Fiber for Austin, Texas: One More Premature Press Release

We will know with absolute certainty today, April 9, 2012, that Google Fiber is officially coming to Austin, Texas.

But there has been another premature leak, as Gig.U first posted a congratulatory message, then pulled it back down.

"Today, Google announced it will add Austin, Texas to the Google Fiber project, joining Kansas City, Kansas and Missouri as American communities that have the power to bring next generation networks home," the  Gig.U press release said.

WhatsApp Says "No Acquisition Talks" with Google

WhatsApp says it is not in talks with Google about a purchase by Google, after reports indicated that might happen. Of course, as always is the case, discussions could have ended because the two sides could not agree on a valuation. Facebook might step in, or Google could reassess its offer, reigniting discussions.

Some say the recent denial by Verizon Communications that it was in talks to buy all of Vodafone was an example of such an occurrence. Verizon really had been offering to buy all of Vodafone, with partner AT&T poised to take the balance of Vodafone’s assets aside from the Vodafone Verizon Wireless stake. But according to one line of thinking, Vodafone rejected the offer.

Stickiness and engagement would be the primary value, not the revenue. The reason is that if mobile data revenue is about $300 billion annually, global text messaging is about half of that amount, then the legacy revenue stream is about $150 billion annually.

If WhatsApp earns $1 a year from each non-Apple users, and an annual fee of $1 from others, with about 100 million users in total, and if you assume half the users are on iOS devices, then you might estimate 50 million users paying $1 a year, as recurring revenue. That would imply something like a price-earnings ratio of 20, an “Internet multiple.”

The point is that WhatsApp has value not so much as a revenue generator, but as an app with high stickiness, as most communication apps have proven is the case. WhatsApp and other over the top messaging apps stand to destroy much of the $150 billion in global text messaging revenue, not so much to  take market share.

Telecom Italia Mulls Merger

Telecom Italia SpA, Italy’s biggest phone company, said it’s examining a possible merger with Hutchison Whampoa's H3G unit, a combination that would eliminate a competitor offering the cheapest wireless services in the country.

H3G, which uses the "3" brand, is the smallest of Italy’s four facilities-based carriers, with 9.5 million customers. 

“As we have been predicting for some time, the European telecommunications market is set to enter a period of consolidation," says Yankee Group VP of Research Declan Lonergan.

Most of the existing players are under considerable financial pressure financial pressure. Many of the largest operators are carrying large levels of debt. So don't look for Telecom Italia to borrow money to finance the transaction. 

European mobile operators are also seeing their revenues decline due to the combination of difficult economic circumstances, regulatory measures and cannibalization of traditional voice and messaging services by IP-based apps, Lonergan notes.

The issue is whether Italian communications regulators will allow the market to shrink from four national providers to just three. 

"Broadcast" Fox Network Could Become a "Cable Network"

The Fox Network , currently offered as a local broadcast TV station, could become a cable channel if U.S. courts rule that Aereo is lawful, COO Chase Carey has said.  

Given the financial stakes, Fox and other broadcast networks logically will threaten the gravest losses possible to sway opinion.

Television station owners continued to have substantial success in 2012 in growing an increasingly important source of revenue: the fees paid by cable and satellite systems to carry local channels.

While the fees account for less than 10 percent of total station revenue, broadcaster affiliate payments have been growing rapidly. 

CBS-owned stations, for example, almost tripled their fees, from 45 cents a month per subscriber in 2011 to $1.22 in 2012, according to the Pew Research Center. 

SNL Kagan estimates that by 2018, broadcaster affilliate revenue will be more than 20 percent of TV stations’ ad revenues, more than double what it is now.

One reason local broadcast stations have pushed so hard for higher fees is that they have to share some of that income with their networks (ABC, CBS, Fox and so forth) in the form of "reverse compensation." That's a big change. 

“We used to be paying them (local broadcasters) and now they’re paying us (the programming network),” said the CBS chief executive, Les Moonves. 

Within the next five years, Moonves estimated that CBS alone would bring in at least $1 billion a year in affiliate fees from network-owned stations and reverse compensation from non-owned affiliates.

If you want to know why broadcast networks are fighting to block Aereo ane Aereokiller, money is the reason. 



Granted, it would challenge federal regulators who have given the broadcasters their licenses, were Fox Network and other "broadcast" networks go "cable only" (including telco and satellite distribution). But the financial damage Aereo, Aereokiller or others could inflict would be substantial.

Just look at the double digit growth of affiliate revenue and you will get the picture. 

Right now, the legal picture is extremely clouded. Aereo and Aereokiller are two firms that have gotten conflicting legal decisions about whether their services are lawful. In New York, a federal court has affirmed Aereo's legality. In California, the federal court has rendered the opposite opinion, ruling that Aereokiller infringes broadcaster copyrights. 

Both Aereo and Aereokiller create networks of individually-used off-air antennas and then streams that content to customers. Obviously, broadcasters fear a loss of affiliate payments typically paid by cable, telco and satellite TV video subscription services.

In 2013, for example, the Fox Network will earn $472 million from affiliate local broadcasters and video distributors. 

5 million U.S. Households are "Zero TV"

Some five million U.S. homes now are  zero TV households, meaning that although they may or may not own a TV, they don't use them. according to the Nielsen Co.

The number of such households is up from two million in 2007. 

In 2012, the cable, satellite and telecom video entertainment service providers added just 46,000 video customers collectively, according to SNL Kagan. That is down from net additions of about 974,000 new households added in 2011. 

So while there are 100.4 million homes using "TV," or 84.7 percent of all households, TV-using homes are down from the peak of 87.3 percent in early 2010. 

While 75 percent of the "zero TV" households actually own a physical TV set, only 18 percent are interested in hooking it up through a traditional pay TV subscription.

Of course, some of you already are rhetorically asking "what is a TV?" and "what is a television experience?" 

The point of course is that people can watch on PCs, smart phones and TV screens without using a broadcast TV service or a subscription TV service of the traditional sort. Those are going to be increasingly important questions in the decade to come, for many stakeholders.

At least some younger people might already have lost the appetite for traditional TV altogether. Others might, or might not, eventually acquire the habit later in life. But it is clear enough that "watching a video or a movie" is losing its direct association with a particular purchase and viewing mode.