Consumers, Businesses Boosted Technology Spending 35% Over the Last Year

Individuals and households report at least a 35 percent increase in spending on consumer electronics products over the past 12 months, according to the latest Consumer Electronics Association report on the consumer electronics market. 

But consumer sentiment is weakening. That would normally lead to lower spending, overall. The issue is whether technology spending will diverge from that pattern, as might be the case. Apple is a big part of the story. 

AT&T has a Problem: Dividends Exceed Cash Flow

AT&T undoubtedly will announce higher earnings per share, year over year, for the first quarter of 2013.

But there is trouble brewing. In 2012, AT&T dividend payments were nearly $4 billion more than its free cash flow. And AT&T sees free cash flow being some $5 billion lower in 2013. Something has to give. 

The problems largely are attributable to the fixed network segment, which accounts for roughly 47 percent of the company's total revenues.  From 2008 to 2012, the fixed network segment's revenues declined from $67.9 billion to $63.5 billion to $61.2 billion to $60.1 billion to $59.6 billion in past years. 

Free cash flow also might have peaked in 2012, when AT&T reported $19.4 billion of FCF. In 2013, AT&T forecasts free cash flow of a bit over $14 billion, a level more consistent with 2010 and 2011 when FCF was $15.7 billion and $14.6 billion, respectively.

In 2012, AT&T spent $12.8 billion to buy back shares, and another $10 billion to pay dividends. Company-wide, AT&T increased long-term debt by $5 billion in 2012. You do the math. 

Municipal Broadband Provider Greenlight to Go 1 Gbps

Greenlight, the municipal service provider in Wilson, North Carolina, has been selling video entertainment, voice and Internet access for some time, but now plans to add 1 Gbps symmetrical service as well. 

Pricing details are not available, but at present, the 100-Mbps service sells for $150 a month. 

U.K. EE Finds LTE a Mixed Success

Major capital spending programs undertaken by service providers have implications. Such programs, even when necessary, divert cash that might have been used some other way, for example. Long term, the investments often are quite necessary. In the near term, the programs can hit earnings. 

Also, near term, investment sums can vastly outweigh the upside from new services, customer gains or boosts to average revenue per account. That seems to be the case for U.K.-based EE, which launched Long Term Evolution services using existing 1.8 GHz spectrum. 

First quarter 2013 revenues fell by 5.4 percent, year over year.  The launch of LTE services also has had other effects, such as boosting the amount of money EE now spends on device subsidies. 

Granted, it is too soon to make a full assessment. EE is early in its launch of 4G service, and LTE customer penetration is only about 1.2 percent. 

Longer term, higher LTE revenue is expected. The issue is how much higher revenues can be lifted, and how operating costs might change. 

Few think LTE will prove a "problem" longer term, as users switch to use of smart phones and smart phone apps that consume more bandwidth. That should translate into significantly higher user spending on data services. 

On the other hand, the full business case has new device subsidy and small cell implications. Those elements will offset the higher revenue. Nobody seems to think the net result will be anything but positive. But "how positive" will be a bigger issue as competition intensifies. 

Netflix Now Bigger than HBO

Netflix, which ended 2012 with 27.15 million domestic subs, added just over two million net new subscribers in the first quarter 2013 results. 

 HBO ended 2012 with 28.7 million subscribers.  That means Netflix finally has more subscribers than HBO. 

Nor is it possible to describe Netflix as a "DVD by mail" service, given the overwhelming preference for streaming delivery. These days, it is the most successful streaming service. None of which means its challenges are over. 

You might also say Netflix is the most popular "cable network" as well.  

Netflix has faced strong doubts about its prospects several times in the past. But Netflix has surmounted every set of those challenges, most crucially questions about its business model.

Some would say the next set of challenges for Netflix will involve scaling its original programming operations and managing the heavier financial requirements that will entail. There are doubters. There always are, where it comes to Netflix. 

46% of All Smart Phone Shipments in 2018 Will be "Low End"

At some point, it has been clear, there will be very little difference between "phone sales" and "smart phone sales."

As you might also guess, shipments of lower-cost smart phones will grow the most. Devices selling for less than US$250 will grow from 259 million units in 2013 to 788 million units in 2018, according to ABI Research.

Mid-range devices costing up to $400 are expected to grow from 635 million to 925 million units by 2018.

Though observers might not have thought the point would be reached so quickly, in many emerging markets, voice profits already are low enough that selling data plans will make the difference between success and failure, in some cases.

Verizon's device Payment Plan Isn't A Great Deal

People who routinely replace their devices about every year might like Verizon's device payment plan, which separates installment payments for a device costing at least $350 from the service contract. 

But users looking to save money will be disappointed. The service plan is not discounted, so the installment plans don't appear to save users any money. In fact, since there is a finance charge, people likely will wind up spending more. 

The only advantage is that users can buy another new device in a year. Most people probably will just want to buy a subsidized device and take the contract.