Comcast Drops Bid for Time Warner Cable

As had seemed increasingly likely, the Comcast effort to acquire Time Warner Cable now has been abandoned, Bloomberg reports. 

Comcast has not formally confirmed the rumor, but with the Federal Communications Commission signaling opposition, and the probsbly frank private meetings recently held by Comcast and Time Warner Cable with antitrust officials, it has seemed very likely the bid wouild be abandoned.

It appears that has happened. What happens next depends, in part, on what course Time Warner Cable might choose for itself. Other bids from Charter Communications are expected, but Time Warner could decide not to sell, but become an acquirer.

It does appear that history did repeat. The staff of the Federal Communications Commission had called for a hearing by an administrative law judge on the proposed acquisition.

In 2011, AT&T and T-Mobile USA dropped a planned $39 billion merger after the Justice Department filed an antitrust lawsuit to block the deal and the FCC issued a hearing designation order on the deal.

It appears the call for a hearing has had the same impact as the same sort of call did for the AT&T effort to buy T-Mobile USA.

How Long Before Comcast Ends Effort to Acquire Time Warner Cable?

If history provides any guidance, the Comcast bid to acquire Time Warner Cable is going to be withdrawn. The staff of the Federal Communications Commission has called for a hearing by an administrative law judge on the proposed acquisition.

In 2011, AT&T and T-Mobile USA dropped a planned $39 billion merger after the Justice Department filed an antitrust lawsuit to block the deal and the FCC issued a hearing designation order on the deal.

That would still leave Time Warner Cable “in play,” and another bid by Charter Communications is generally expected. In all likelihood, a successful Charter bid would create a new number-two U.S. cable TV company by customer market share.

Verizon and AT&T See Slight Impact from Marketing Wars, Apparently

With first quarter financial reports now in from both AT&T and Verizon Communications, it is possible to say that both firms seem to be holding up rather well, despite the heavy marketing pressure in the mobile segment of their businesses.

Churn rates are stable, average revenue per account is stable and gross revenue is up, though operating income dipped, year over year.

For the quarter ended March 31, 2015, AT&T's consolidated revenues totaled $32.6 billion, up 0.3 percent versus the year-earlier period.

More to the point, however, AT&T had first quarter mobile revenues of $18.2 billion, up 1.8 percent over the same quarter of 2014.

Some might point profits that were down 12 percent to $4.4 billion, but that is largely an accounting artifact, caused by the continuing shift of revenue to “Mobile Share” no-subsidy plans that result in higher device revenues but lower recurring service revenues.

Churn rates suggest AT&T and Verizon are not suffering as much as observers might have guessed from attacks by T-Mobile US and Sprint.

AT&T, for example, reported its best-ever first-quarter churn at 1.02 percent, down from 1.07 percent for the first quarter of 2014.

Still, margins are under slight pressure, in part because operating costs are higher. Compared to the first quarter of 2014, AT&T operating expenses were $27.1 billion versus $26.2 billion; operating income was $5.5 billion versus $6.3 billion; and operating income margin was 16.7 percent versus 19.3 percent.

Verizon grew total revenues 6.9 percent year-over-year, with a 35 percent operating income margin.

Verizon’s first-quarter 2015 operating income reached $8.0 billion, an 11.2 percent increase compared with the first quarter of 2014.

Verizon consolidated operating income margin was 24.9 percent in first-quarter 2015, compared with 23.2 percent in first-quarter 2014. Cash flow from operating activities increased to $10.2 billion in first-quarter 2015, compared with $7.1 billion in first-quarter 2014.

Verizon added 565,000 net retail postpaid connections in the quarter and had postpaid churn of 1.03 percent.

One might conclude it is difficult to ascertain the impact of current mobile marketing wars on the mobile business.

The issue: where is the account growth at T-Mobile US coming from, if not from AT&T and Verizon?  

Google Mobile Serivice "Project Fi" Launches

It is doubtful Google would name its new mobile service “Project Fi” if it were really aiming for a service with large numbers of customers. Instead, Google calls it a “program” that is “similar” to the Nexus hardware program.

In other words, Project Fi is a smaller scale effort to demonstrate what can be done. Google confirmed that Sprint and T-Mobile US will provide mobile connectivity for Project Fi.

Among the project objectives is pioneering what should be standard when the fifth generation mobile network standard is finished: the ability to connect to the best-available network, “right now.”

Project Fi will automatically select the best network, whether a Wi-Fi hotspot or a specific 4G LTE network.

When a voice session begins while connected to Wi-Fi, Project Fi will seamlessly transition from Wi-Fi to mobile networks so sessions are not interrupted.

Project Fi also uses cloud-based phone numbers, allowing customers to talk on any number of Internet-connected devices, not just phones.

Google also will test a “simple” approach to service plans, offering just one plan. For $20 a month customers get talk, text, Wi-Fi tethering, and international coverage in 120+ countries), with a flat $10 per GByte for mobile  data while in the U.S. and abroad.

:Since it's hard to predict your data usage, you'll get credit for the full value of your unused data,” Google says. “You only pay for what you use.”

Project Fi is in an “early invite” stage, using the Nexus 6 device.

If you live where we have coverage in the U.S., request an invite at fi.google.com to get started.

Mobile Internet Access Generates at Least $1.1 Trillion Globally, Every Year

Globally, analysts at Boston Consulting Group estimate a mobile Internet ecosystem annual revenue of $2.9 trillion a year. If spending percentages globally reflect the average of 13 countries--39 percent of total mobile ecosystem spending--that would imply mobile Internet access revenues globally are about $1.1 trillion annually.

Smartphone users in the U.S. currently spend an average of $1,450 per year on their phones, data plans, apps, and content, BCG estimates.

If 41 percent of mobile ecosystem spending is for apps and content, 42 percent is mobile access and devices 12 percent, then U.S. mobile consumers spend $594.50 annually on content and apps.

Mobile Internet access, at 42 percent, represents $609. Devices represent about $174 a year in spending.

Revenues generated by the mobile Internet ecosystem in 2013 amounted to $682 billion in 13 countries (Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, South Korea, Spain, the United Kingdom and the United States) that account for approximately 70 percent of global gross domestic product.

Internet access revenues range widely from about 18 percent of total ecosystem revenues in Japan up to about 58 percent in Brazil, and an average of 39 percent across the 13 countries. About 34 percent of mobile ecosystem revenue us earned, on average, by app and content providers.

52 Mobile Operators Have Deployed LTE-Advanced, 58% at 300 Mbps

LTE-Advanced supporting downstream capacity between 150 Mbps and 300 Mbps, with 50 Mbps on the uplink, now are commercially deployed by 52 operators.

Some 30 of the networks support the maximum 300 Mbps downlink speed, operating in 20 countries: Australia, Austria, Belgium, Estonia, Finland, Germany, Greece, Hong Kong, Jersey, Norway, Portugal, Romania, Russia, Singapore, Slovenia, South Korea, Spain, Switzerland, United Arab Emirates, and the United Kingdom.

Altogether, 64 operators have commercially launched LTE-Advanced systems, using frequency aggregation, in 39 countries, the Global mobile Suppliers Association says.

Some 116 operators, representing about 30 percent of LTE operators, are investing in carrier aggregation technology worldwide.

Globally,  393 operators have commercially launched LTE networks in 138 countries, according to data in its latest Evolution to LTE report. 107 operators commercially launched LTE service in the past year. GSA forecasts there will be 460 commercially launched LTE networks by the end of 2015.

Globally, some 858 devices (about 30 percent of all LTE devices) support speeds up to 150 Mbps, while 69 devices (small cells, routers, MiFis, smartphones and tablets) support 300 Mbps.

There also are 13 deployed LTE-Advanced networks in commercial use or trial supporting 450 Mbps, in Angola, Australia, Finland, Japan, Portugal, Qatar, Turkey, South Korea, Switzerland, UAE and the UK.

Networks Claim Verizon Skinny Bundle Violates Programming Contracts

It was inevitable that contract disputes would break out in the wake of the Verizon Communications decision to restructure programming options, creating “skinny bundles” that have optional content packs.

The reason is that standard contract clauses normally call for ad-supported networks to be carried on the “most popular” tiers of service. The new skinny bundles likely will not be the “most popular” tier of service.

The new packages start with a base package of about 35 channels, selling for $55 a month, but also including two of the optional channel packs, including themes such as children’s programming; sports; news; lifestyle; entertainment or popular culture.

So far, ESPN, NBCUniversal and Fox have said the new format violates their programming contracts with Verizon. Verizon says it is not going to back down, and is within its rights.

Verizon is not the only distributor to offer skinny bundles, but the other suppliers so far have been over the top providers. Make no mistake, this is a huge issue. If Verizon wins, we should expect to see more similar moves in the linear TV business, with a further shift in the fortunes of linear TV networks and distributors.

The Verizon Custom TV offer is the first offered by a linear TV distributor.