Over the Top Video Now Generates $11 Billion in Subscriber Fees Globally

The global OTT video market reached nearly US$ 11 billion in 2013 revenue. The global video subscription business (cable, satellite, telco TV) is an order of magnitude larger.



Netflix now has 40 percent of the United Kingdom over the top streaming video market, according to ABI Research. 

Net Neutrality Isn't Dead, Because Religion Isn't "Dead"

Some think the network neutrality rules promulgated by the Federal Communications Commission are "dead." That actually is not true.

Whether one believes it is a good idea or not, the U.S. Congress gave the FCC (and also state public utility commissions) broad powers to regulate Internet access in the name of encouraging broadband deployment. 

If the FCC can reintroduce net neutrality rules on the ground that they  “encourage the deployment … of advanced telecommunications services,” as the Telecommunications Act permits, then the rules could be reinstituted.

That not so fine point is just one overlooked fact surrounding the whole debate. The other mostly overlooked fact is that even the old rules had little if anything to do with "blocking" lawful content. The FCC has made abundantly clear all lawful content is permitted. 

The issue at hand for network neutrality is whether any quality of service mechanisms are possible, or whether the only form of Internet access is "best effort."

And that is the problem: network neutrality for some people seems to be a religious issue, not a matter of policy 

Deutsche Telekom Finds Carrier Wi-Fi Does Not Reduce Mobile Network Demand

Deutsche Telekom, like other mobile service providers, hopes that carrier Wi-Fi will reduce demand on its mobile networks. The problem: it doesn't seem to work. 

In other words, the technique doesn't work: demand on the mobile network is not reduced, at least in tests conducted in Rotterdam and Hamburg, where carrier Wi-Fi, it was hoped, would reduce demand on the 3G and 4G networks.

In fact, the test showed very little change in mobile network demand, and in some cases an increase in demand on the mobile data network.


The reasons require some application of economics principles, namely that behavior (demand) changes when there is a change in supply. It is likely people behaved differently, consuming more data, when they knew Wi-Fi was available, but also did not reduce their mobile usage.  

Also, it appears applications and devices behaved differently when WiFi was available, conducting app updates, for example, when in the Wi-Fi zones, without affecting mobile network usage. 

Deutsche Telekom has partnered with Fon to increase its Wi-Fi coverage in Germany, hoping that will help Deutsche Telekom manage its data infrastructure costs. 

NTT Docomo has found other problems, such as excessive interference in Tokyo, for example, that appear to limit the usefulness of outdoor carrier Wi-Fi services. 

Other studies suggest small cells, especially indoor cells, will be necessary.

Some might argue the amount of offloaded data is not the issue. Customer experience advantages, or cost of delivering capacity might be the more important values, some would argue. Hetting Consulting argues the real advantage is simply capital investment in mobile networks. 

$15 a Month Discount for Unbundled Mobile Service Plans is the Right Number

You might wonder why AT&T gives customers who choose not to buy bundled phones a $15 a month discount on recurring costs of service. That amount fairly closely tracks the amount of the device subsidy for a customer on a bundled plan.

A report by the Organization for Economic Cooperation and Development suggests that, in those those countries where both bundled and “buy your own device” options exist, such as in France or the United States, the bundled option (including discounted smartphone) was, on average, between $10 and $20 a month more expensive than the “buy your device separately” option.

Looking at recurring costs, one can see the potential impact of device subsidies on recurring costs. A $600 device, sold at $200, implies a $400 subsidy. At $20 a month, that further implies 20 months to recoup the cost of what is in essence an installment plan.

Take that $20 out of the monthly cost and U.S. service plans cost the same as European plans. AT&T’s $15 a month discount for “access only” service tracks that figure closely.

The OECD report, however, concludes that, in broad terms, service pricing is only slightly affected by the presence of bundled discounts for popular smart phones.

Will U.S. Mobile Price War Survive a Sprint Acquisition of T-Mobile US?

Some observers now are worried about a "price war" in the U.S. mobile industry, with T-Mobile US launching cost of service attacks that AT&T, Verizon Wireless and Sprint have responded to in different ways. 

All the carriers have matched T-Mobile US no-contract plans to some extent, and all have embraced forms of "faster device upgrade" programs.

Given the generally robust revenue growth Verizon Wireless and AT&T Mobility have seen in recent years, some equity analysts naturally fear a protracted price war will harm earnings for Verizon and AT&T, even if T-Mobile US currently seems to be benefiting. 

What SoftBank will do at Sprint is the big unknown. Virtually all observers have expected that Sprint would launch its own attack on the U.S. market, presumably involving an assault on prevailing pricing.

But with T-Mobile US now doing the attacking, with success, the room for SoftBank to do so is made more difficult. Some might argue that is why there is talk about an acquisition bid by Sprint for T-Mobile US. 

Certainly, Deutsche Telekom wants to sell T-Mobile US entirely. So a willing seller is likely to attract motivated buyers. But regulation and antitrust concerns are likely to loom large. U.S. antitrust authorities have made clear a preference for four suppliers in the market, not just three. 

So some think a clever bid would structure the acquisition in a way that also enables Dish Network to enter the market as a new provider, keeping the market at four national providers. 

SoftBank and Sprint likely would have to take other steps to persuade regulators that the T-Mobile US assault also would continue. 

So in any outcome, even if analysts think the only way to stop a ruinous price war is for Sprint to acquire T-Mobile US, the price war is unlikely to abate. 

Comcast, Charter Probably Will Team to Buy Time Warner Cable

With Charter Communications maneuvering to buy Time Warner Cable, Time Warner itself has signaled a preference for an acquisition by Comcast.



But that would be risky, in regulatory terms, as Comcast already is the largest U.S. cable company, with market share just above 30 percent, and gobbling the number-two U.S. operators would likely trigger a negative antitrust response.



So Charter Communications hopes Comcast will join Charter in a joint bid, with a prior agreement on how Time Warner Cable assets would be divided. 



Cable operators have experience with joint bids, and have in the past done precisely that. 



For Comcast, such an approach has benefits. For starters, Comcast would not acquire all of Time Warner Cable, just the New York assets. So while Comcast would get bigger, it would not get substantially bigger. That might mollify regulators and antitrust authorities.



Also, the New York market would have strategic value for Comcast, which would then be able to expand its business customer operations in a market with high business customer potential. 



Owning the metro New York assets also would better position Comcast for an eventual bid to buy Cablevision Systems, which operates on Long Island. 

Will Apple Transform Mobile Payments?

I have in the past argued that the one technology company that could really shake up mobile payments was Apple. At least so far, though, Apple has not made a move, for sensible reasons. 



Apple's services approach has always been structured in ways that help Apple sell devices in the consumer market, and it hasn't been so clear how an industry-leading mobile payments capability necessarily would create a new device market. 



One might argue such a capability would help Apple sell more iPhones and iPads, but that is a different matter, something more incremental, and not the foundation for a whole new product category Apple can re-imagine and reinvent. 



But that might be changing, as there now are reports Apple is looking at creating a service handling payments for physical goods and services on its devices. Apple's iTunes and Apple Store already process remote payments, though indirectly, linking credit or debit cards to iTunes accounts. 



But Apple perhaps senses the growing role of commerce in providing both direct revenue and indirect business benefits is reaching a point where it could make a big difference. 



Consider the fact that, for the first time in history, major technology leaders have revenue models anchored on advertising (Google) and retailing (Amazon). Now "payments" creates the revenue model for firms such as Square. 



Now we might see whether Apple can transform retail payments and thereby create a major new revenue driver for a technology firm.