The Reason Why Video Entertainment is The Only Service To Increase Prices

Over the past several decades, it would have been a reasonable question to ask why entertainment video service prices grew faster than inflation, while retail prices for communications services (voice, texting, Internet access) declined, either on a price-per-unit basis or in terms of absolute price per unit.

The answer is simple: entertainment video is about the purchase of content, not access to content.

Compared to voice, texting or Internet access, entertainment video is more akin to fashion than a utility service. And that means retail price is not a direct function of production cost.

That is clear in the latest Federal Communications Commission report on content prices in the U.S. linear video market.

However, given diminished consumer appetite for the traditional “big content bundles” and a shift to over-the-top or on-demand viewing, it will be necessary for most, if not all, providers to “just say no” to content providers and restrict the size of bundles.

That is going to shift the way content gets to market, with increasing amounts of programming moving through new services such as Netflix and Amazon Prime.

According to a new FCC report, the average monthly price of expanded basic service (the combined price of basic service and the most subscribed cable programming tier excluding taxes, fees, and customer premises equipment charges) for the communities surveyed grew by 2.7 percent over the 12 months ending January 1, 2015, to $69.03, compared to a decrease of 0.1 percent in the consumer price index.

That is to say, linear video prices rose by an order of magnitude more than the overall level of consumer prices.

This compares to a compound ten-year average rate of increase from 2005 to 2015 of 4.8 percent in the price of expanded basic and a 1.5 percent increase in the CPI.

To be sure, linear video providers have argued in the past that prices are up in large part because the number of channels offered in bundles has grown.

The price per channel (price divided by number of channels) for subscribers purchasing expanded basic service decreased by 1.8 percent over the 12 months ending January 1, 2015, to 46 cents per channel.

Over the 10 years from 2005-2015, the price per channel has declined by 1.4 percent on an average annual compound basis.

In the past, consumers might not have had as much choice. In the future, they will. Prices are going to come down. Still, the issue is whether entertainment video might still outperform voice, texting or Internet access, in some cases, in terms of absolute revenue contribution, price per unit or profit margin.

source: FCC

Google Will Go "Mobile First" for Search

The business strategy known as mobile-first is affecting Google’s continued development of its search business.

Google is going to create a separate mobile index within months, becoming the main or “primary” index that the search engine uses to respond to queries.

A separate desktop index will be maintained, but will not be as up-to-date as the mobile index, it is expected.

Gigabit Era for Mobile: Telefónica and Telia Make Strides

The gigabit era for mobile Internet access is coming faster than many believe.

New improvements in 4G platforms will boost 4G network speeds to a gigabit per second on Telefónica networks in Spain, while Telia plans to launch 5G in 2018, supplying gigabit speeds--and possibly multi-gigabit speeds--as well.

Telia plans to launch commercial 5G services in Sweden and Estonia in 2018, and recently demonstrated 5G operating in a real world environment over a live network.

The system used 800 MHz of spectrum in the 15 GHz band and achieved peak rates of 15 gigabits per user, and a latency below three milliseconds.

Separately, Telefónica, Nokia, and Qualcomm Technologies, Inc. have demonstrated download speeds of up to 800 Mbps on Telefónica’s Long Term Evolution 4G mobile network. That is part of work the company is taking to boost peak speeds on its 4G network to a gigabit per second over the next few years.

The test used Nokia radio network equipment and a test terminal equipped with the Qualcomm Snapdragon X16 LTE modem.

To achieve the new throughput, two radio carriers were used, allowing mobile terminals to simultaneously download data from two frequency bands.  MIMO 4x4 technology (Multiple-input Multiple-output) also was used, multiplying the number of data flows that a mobile terminal can use with a given cell.

Also, the new 256QAM modulation (Quadrature Amplitude Modulation) also was employed. Taken together. All of these technologies will be introduced into the Telefónica Spain radio network.

Are Webscale App Providers Shaping Core Telecom Platform Trends?

Webscale Internet companies (Google, Apple, Facebook, Microsoft and Amazon) now are exerting a “markedly increased influence” on markets for communications service. Analysts at Heavy Reading now think the webscale players also increasingly are shaping the market for networking hardware, software and services.

That will be a contentious point of view, even if many telecom industry execs and others think that is true, to some extent.

Google and Facebook are developing new backhaul and access platforms. Google Fiber does buy industry-standard optical access networks as well.

But Facebook mostly is looking at open source platforms that can be manufactured by supplied by industry suppliers.

Clearly, there is impact in terms of buying behavior in the case of Google Fiber, and development potential in the open source efforts by Facebook.

At least some telecom industry professionals believe the webscale providers are "leading in networking innovation"; are "increasingly calling the shots"; increasingly "building out their own telecom infrastructure" and that "it's a matter of time before one of these guys buys one of the big CSPs (communications service providers).”

A Heavy Reading analyst team interviewed more than a dozen leading network infrastructure professionals at leading CSPs at the CTO, VP and director level, as well as more than 25 senior individuals in network equipment vendors at CTO, VP and director level; plus several leaders in key telecom industry associations, standards bodies and other specialist consultancies; and some of the WICs themselves.

The primary and secondary research was complemented by a Heavy Reading online survey, generating responses from 82 qualified respondents in network equipment vendors and 57 from qualified respondents in CSPs.

Keep in mind that about half the 82 vendor respondents came from individuals from one vendor company.

Around half came from vendors from whom two or more (but no more than four) respondents supplied responses. Those companies from which two or more respondents participated include ADVA, Broadsoft, Casa Systems, Cisco Systems, Ericsson, F5, Huawei, HP, IBM, Infinera, Juniper Networks, Nokia, NetScout, Vasona Networks and Radisys.

As you might expect, the online respondents identified Google as the webscale player posing the greatest threat to communications service providers.

Source: Heavy Reading

Sprint, Sprint Foundation to Make Free Mobile Service Available to One Million High School Students

Sprint and the Sprint Foundation will help change the lives of one million high school students by giving them free mobile devices and free Internet access.

The One Million Project is supported in part by device donations from handset suppliers. Sprint and the Sprint Foundation will raise funds through special events, donation drives and other activities aimed at employees and customers, as well as company-owned, dealer, and national retail stores across the country.  

Sprint will work with non-profit agencies including EveryoneOn and My Brother’s Keeper Alliance which will help to recruit community organizations such as schools, libraries, public-housing authorities, and non-profits to deliver the devices and activate the mobile internet service, usable by students for up to four years in high school.

Each student may receive either a free smartphone, tablet, laptop or hotspot device and 3GB of high-speed LTE data per month.

Unlimited data is available at 2G speeds if usage exceeds 3GB in a month. Those who receive a smartphone can use it as a hotspot and for unlimited domestic calls and texts while on the Sprint network.

AT&T Selling Gigabit Services to More than 3 Million Locations, Will Exceed 12.5 Million Locations by 2019.

With the caveat that a “passing” (customer location that can buy a service) is not an “account,” AT&T says its gigabit services now are available in parts of 32 major metro areas, with plans to reach at least 45 metros by the end of 2016 and 67 markets overall.

AT&T says it is marketing service to over three million locations, of which over 500,000 include apartment and condo units. AT&T also says it is on track to exceed the 12.5 million locations planned by mid-2019.

DirecTV Might Help AT&T Connect MDUs Out of Region

Most multi-product businesses earn disparate amounts of revenue--and profit--from each discrete product line. In a perhaps-ideal scenario, a mix of young and fast-growing “next product cycle” products as well as mature, cash-producing lines of business contribute to overall earnings, profits and strategy.

Telecom companies are no different, featuring a mix of products, customer segments and growth profiles. And, frequently, profits and revenues from one part of the business are used to subsidize the operation or growth of other segments.

So it is that AT&T’s DirecTV operations might help AT&T grow its Internet access services outside its historic fixed network footprint.

The reason: AT&T plans to serve customers living in apartment complexes outside of its fixed network service area, operating as a competitive local exchange carrier, and offering 100 Mbps Internet access, perhaps using millimeter wave spectrum and fixed wireless.

Obviously, roof rights are required, and many apartment complexes might already have business deals with DirecTV that AT&T can leverage to supply high speed Internet access as well, using fixed wireless to reach some buildings.

The strategy apparently is to use a hub-and-spoke network where a central building is connected directly using optical fiber, while nearby buildings are connected using fixed wireless.