How Many Linear Video Subs Did Dish Network Lose in Recent Quarter?

Parsing numbers sometimes is a challenge when looking at subscriber gains and losses in the consumer telecom business.

An illustration: how many subscribers did Dish Network gain or lose in its second quarter of 2015? And did HBO lose linear video subs when it launched HBO Now, the stand-alone streaming service?

Dish Network reported losing 81,000 video subs in the quarter, about double the loss of 44,000 subs in the same period of 2014.

But its actual loss of satellite TV customers may have been more like 151,000, according to MoffettNathanson.

The reason is that Dish Network included gains from the over the top Sling TV service in its basic subscriber count.

Dish Network gained 70,000 Sling accounts in the quarter.

When we launched Sling TV, Dish Network expected to get subscribers from three categories, cord-nevers (people who never have bought any subscription video product), cord-cutters (former linear video subscribers) and supplementers who buy linear video and also Sling TV.

“The vast, vast majority of the subscribersthat we take on do not currently have Pay-TV at the time they subscribe to Sling TV,” said Roger Lynch, Sling TV CEO.

That suggests most of the Sling TV net adds are not coming from the ranks of linear video subscribers. But the combined figures also obscure the extent of Dish Network linear video subscriber losses.

HBO says less than one percent of HBO NOW subscribers are former HBO linear subscribers who dropped the linear service to subscribe to HBO Now.

As with Dish Network's Sling TV service, it appears that new subscribers to the over the top subscribers are not cord cutters. 

They are, as Dish Network hoped would be the case,  “cord nevers,” those who never have purchased cable TV.

A broader shift from linear to streaming still is coming. But, at the moment, the linear providers seem to be succeeding at attracting brand new consumers to their OTT services. 

Linear to OTT Video Inflection Point Grows Nearer

By some reports and studies, ESPN lost 3.2 million customers in less than a year, and the company recently said ESPN could be sold direct to consumers in the future, all signs that a fundamental change in the linear TV subscription business is closer.

Disney says such reports are wrong, though acknowledging some slippage. That is intended to reassure investors, and others, that the ESPN business model remains intact.

Big and fundamental changes in markets rocked by changing technology tend to happen rather slowly at first, then reach an inflection point where everything changes rather quickly.

That is one reason why some believe Netflix will not be challenged, once the inflection point is reached. “Netflix is the most powerful content aggregator in the world today,” said Charlie Ergen, Dish Network CEO. “And there's nobody that's even close.”

That illustrates one element of inflection points. Contestants sometimes think “we have time” to jump in one the inflection point clearly has been reached. The problem is, by that point it is too late. The leaders will zoom and dominate the new market; late entrants will struggle and generally fail.

Just how close we are to the inflection point still is not clear, but Netflix continued growth, subscriber losses in the linear business and what is happening to the fabled ESPN franchise are indicators the inflection point is coming closer.

To be sure, in its third quarter of 2015 report, ESPN owner Disney reported stronger revenue and earnings per share, net income and cash flow.

In fact, the number of subscribers for ESPN overall actually grew, but apparently not at the flagship ESPN network itself.

“ESPN has experienced some modest sub losses, although those have been less than reported by one of the prominent research firms and the vast majority of them, 80 percent, were due to decreases in multichannel households with only a small percentage due to skinny packages,” said Bob Iger, Disney CEO.

It is true that 83 percent of all U.S. households watched ESPN in the first quarter. But that’s the thing about inflection points. Once reached, everything changes, fast. In other words, 80 can become 20 in a rather quick period of time, compared to all the slow, grinding shifts that happened before the inflection point.

New IP Networks Must Offer Equivalent of Legacy Special Access and Rates, FCC Says

Former incumbent telcos have regulatory burdens not faced by other contestants in their markets. One example: The Federal Communications Commission has imposed new rules on former incumbents that want to replace their legacy networks with new IP networks.

Specifically, the FCC said former incumbents are free to replace legacy copper networks with fiber-based  IP networks, so long as no current service is discontinued, reduced, or impaired.

At least on an interim basis, the Commission also voted to require the offering of replacement services to competitive providers (wholesale customers) at rates, terms and conditions that are reasonably comparable to those of the legacy services.

The FCC is looking at special access rules more generally in a current proceeding, and could make such rules permanent, or establish other rules offering former incumbent carriers more flexibility.

The special access rules matter for wholesale customers as their business models often are built on special access rates that are perceived as advantageous by the buyers. Infrastructure providers, of course, would prefer the freedom to create new tariffs for IP-based fiber network services, while retiring the legacy networks and services.

Incumbent carriers still need approval from the FCC before shutting off copper networks in cases where they intend to reduce or discontinue service.

One new rule requires providers to directly notify retail customers—including consumers and businesses—of plans to retire copper networks at least three months in advance," the FCC said.
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H Sama Nwana, Executive Director, Dynamic Spectrum Alliance, United Kingdom; Jeffrey Yan, Director, Technology Policy, Microsoft Corporation, Singapore; Rajan Mathews, Director General, Cellular Operators Association of India, India; Peter Stanforth, CTO and Co-founder, Spectrum Bridge, Inc., USA; and Apurva Mody, Chairman, WhiteSpace Alliance, USA, will speak about TV white spaces at the Spectrum Futures conference, Sept. 10 and 11, 2015, in Singapore.

Other confirmed speakers will discuss spectrum sharing between LTE operators, spectrum sharing between Wi-Fi and LTE, new access platforms and the critical role spectrum plays for coming 5G networks. At the same time, the intimate relationship between applications (Internet of Things), core networks (SDN. NFV, cloud computing, fog computing) and all access networks will be examined. In the coming next generation network, clearly separating spectrum and mobile networks from Wi-Fi and fixed network access, core networks and cloud infrastructure, will be nearly impossible.

FCC Clarifies TV White Spaces Rules, Keeps 30-MHz Spectrum Reserve for 600-MHz Auction

The Federal Communications Commission has modified its existing Part 15 rules related to use of license-exempt spectrum, allowing TV white spaces devices (fixed and portable), as well as wireless microphones, to use channels in the 600 MHz and television broadcast bands.

Separately, the Commission also declined to increase the “spectrum reserve” beyond 30 MHz for the upcoming auction.

The Commission’s Part 15 rules permit devices to operate on unused TV channels, generally known as “TV white space” spectrum.

Following the upcoming 600-MHz incentive auction, there may be fewer white space frequencies in the television band for use by such devices.

The new rules--largely technical--allow for more robust unlicensed use and promote spectral efficiency in the 600 MHz band.

The rules allow use of the duplex gap and guard bands, and channel 37, on a shared non-interference basis with medical telemetry and radio astronomy.  

The rules permit sharing of spectrum between white space devices and unlicensed microphones in the 600 MHz band, and expand the location and frequency information in the white space databases and update database procedures.

The Commission also set new transition periods for the certification, manufacturing and marketing of white space devices and wireless microphones that comply with new rules.

The Federal Communications Commission reaffirmed its decision to set aside a spectrum reserve of up to 30 megahertz of spectrum in next year’s 600-MHz incentive auction, though some including T-Mobile US had requested a larger set-aside.

Non-nationwide providers as well as nationwide providers who currently hold less than one-third of available high-quality low-band spectrum in a given license area will be eligible to bid for the reserve spectrum.

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H Sama Nwana, Executive Director, Dynamic Spectrum Alliance, United Kingdom; Jeffrey Yan, Director, Technology Policy, Microsoft Corporation, Singapore; Rajan Mathews, Director General, Cellular Operators Association of India, India; Peter Stanforth, CTO and Co-founder, Spectrum Bridge, Inc., USA; and Apurva Mody, Chairman, WhiteSpace Alliance, USA, will speak about TV white spaces at the Spectrum Futures conference, Sept. 10 and 11, 2015, in Singapore.

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Could U.K. Fixed Line Voice Fall 50%?

It is hard to say where fixed network voice adoption would stand, were most consumers not buying voice as part of a multi-product bundle.

To be blunt, one way to get people to buy something they might not want, is to make the purchase of that product a prerequisite for buying a product in high demand.

Most observers might agree that fixed voice services are bought at a higher rate because they are bundled with Internet access and entertainment video, which now are the key services supplied by a fixed network.

In other cases, voice adoption is bolstered because consumers on telephone networks must buy voice to get Internet access.

Some might say the requirement to buy voice to get Internet access artificially boosts voice purchasing.

But in other markets where such requirements are not in place, bundled services have been quite effective at stemming fixed network subscription losses as well.

Some 80 percent of United Kingdom households now have fixed broadband, while 60 percent access the Internet routinely on their mobile devices. For the percentage of consumers purchasing a DSL-based service from a telco, that automatically means a voice line purchase.

Customers who buy cable TV operator Internet access might not have to do so. Perhaps 26 percent to 30 percent of U.K. households use cable TV for Internet access.

Fixed broadband connections in the United Kingdom were reported in 78 percent of households in 2015, compared to 73 percent in 2014.

The proportion of households with fixed telephony and mobile telephony remained stable, at 84 percent for fixed and 95 percent for mobile in 2015. Many would argue the continuing fixed adoption would not be as high as 84 percent without bundling.

In fact, even with bundling, in some markets, fixed line voice service is being abandoned.

In 2013, About 41 percent of U.S. households used mobile phones exclusively for voice service, a study by the National Center for Health Statistics found.

For the same period of 2014, mobile-only households had grown to about 44 percent.

That might suggest that, absent a mandatory provision to buy voice to get Internet access,  fixed voice adoption might be as low as 40 percent in the United Kingdom.

In other words, up to half of present voice consumers in the United Kingdom might choose not to buy, were it not a requirement for getting Internet access.

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Facebook will keynote Spectrum Futures in Singapore, Sept. 10, 2015, featuring Chris Weasler, Facebook and Internet.org global head of spectrum policy & connectivity planning.Facebook and Internet.org.

Other confirmed speakers will discuss spectrum sharing between LTE operators, spectrum sharing between Wi-Fi and LTE, new access platforms and the critical role spectrum plays for coming 5G networks.

At the same time, the intimate relationship between applications (Internet of Things), core networks (SDN. NFV, cloud computing, fog computing) and all access networks will be examined.

In the coming next generation network, clearly separating spectrum and mobile networks from Wi-Fi and fixed network access, core networks and cloud infrastructure, will be nearly impossible.

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U.K. Average Household Spending on Voice, Mobile Drops, Fixed Network Internet Access Spending Increases

There are some concrete ways to illustrate the growing tendency for advanced communications services to be priced at marginal cost.

Digital products tend, over time, to be priced at retail on the basis of the incremental cost to produce the next unit.

For a cloud-based digital app or service, that cost is very close to zero. And though the cost of access infrastructure is quite physical, and quite costly, the product purchased by the customer is, in fact, a digital product.

And it has been true for quite some time that the incremental cost of an additional unit of any app is very close to zero.That explains the prevalence of “freemium” business models, where the base product is literally “free to use.”

That poses a serious problem for any provider who makes the bulk of revenue from selling a digital service--be that voice, messaging or Internet access.

In the United Kingdom, for example, average monthly household spend on communication services has decreased in real terms over the past five years.

That despite prodigious consumption of mobility services and faster Internet access by nearly everyone.

Although stable compared to 2013, average monthly household spend on communication services has decreased in real terms over the past five years (adjusted for inflation) from £122.07 in 2009 to £117.71 in 2014, representing a monthly decrease of £4.36, or £52.32 per year.

Where it comes to core telecom services, average monthly household spending remained relatively stable at £81.30 per month in 2014, as people are buying more units and more products.

But there is a clear trend: spending on fixed and mobile voice and data fell, while spending on fixed Internet access actually grew.

Average spend on fixed voice and mobile voice and data services both fell during the year, while average fixed internet spend continued to increase, up by £1.84 per month (14.3 percent) to £14.74 as a result of increasing fixed broadband take-up and consumers switching to superfast broadband services.

The M Hotel Singapore  |  10-11 September 2015

Business models also are the biggest challenge for Internet access across South Asia. Hear regulators and service providers explain how new business models and platforms will drive Internet adoption across South and Southeast Asia, and how mobility plays the biggest role.  REGISTER NOW

U.K. 4G Users Increase by 10X in One Year

Smartphones--used by 66 percent of mobile users--have overtaken laptops as the most popular device for getting online in the United Kingdom, Ofcom says.

Additionally, over the span of a single year, fourth generation Long Term Evolution subscriptions increased by an order of magnitude.

Ofcom's 2015 Communications Market Report finds that 33 percent of internet users see their smartphone as the most important device for going online, compared to 30 percent who view the laptop as the most important device for using the Internet.

That shift to mobile Internet has been rapid. In 2014, 22 percent of survey respondents said the smartphone was the preferred Internet access device, while 40 percent preferred their laptop.That represents a net swing of 21 percent, in just a year.

A rapid shift to use of faster mobile Internet access likely is driving the change. During 2014, 4G Long Term Evolution subscriptions leapt from 2.7 million to 23.6 million, an order of magnitude increase.

U.K. users now spend almost twice as much time online with their smartphones than on laptops and personal computers.

On average, adult mobile users spent nearly two hours online each day using a smartphone in March 2015 (an hour and 54 minutes), compared to just over an hour on laptops and PCs (an hour and nine minutes).

One clear trend is that faster networks lead to people using the internet more. Smartphone users with 4G are shopping online more than those without 4G (55 percent of 4G users do this compared with 35 percent of non-4G users).

LTE users also conduct more banking more online (55 percent versus 33 percent) and watch more TV and video clips online (57 percent versus 40 percent).

Users with 4G also make more face-to-face and voice calls over the internet (28 percent versus 20 percent) and use more services such as Snapchat to send photos and videos (49 percent versus 36 percent).

And though you might not expect it, 4G users also send more instant messages using services such as WhatsApp (63 percent versus 50 percent).
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Facebook will keynote Spectrum Futures in Singapore, Sept. 10, 2015, featuring Chris Weasler, Facebook and Internet.org global head of spectrum policy & connectivity planning.Facebook and Internet.org.

Other confirmed speakers will discuss spectrum sharing between LTE operators, spectrum sharing between Wi-Fi and LTE, new access platforms and the critical role spectrum plays for coming 5G networks.

At the same time, the intimate relationship between applications (Internet of Things), core networks (SDN. NFV, cloud computing, fog computing) and all access networks will be examined.

In the coming next generation network, clearly separating spectrum and mobile networks from Wi-Fi and fixed network access, core networks and cloud infrastructure, will be nearly impossible.

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