Video is Important Revenue for Fixed Service Providers

The fixed network internet access business now is importantly augmented by video subscription services, which significantly boost average revenue per account. For defenders as well as attackers, video take rates have an important impact on the business model.

In the latest figures compiled by the US Copyright Office and reported and analyzed by MoffettNathanson, Google Fiber said it added a little over 15,000 video subscribers in the second half of 2016, boosting its total to slightly over 84,000 video customers in its seven markets.

To be sure, that represents a 57.8 percent annual growth rate, but from a small base. Perhaps more important, video account additions declined from the 66.2 percent year-over-year growth rate in the first half of 2016 and the 78.8 percent annual growth rate in the same period of 2015.

The data also show that video subscriber growth slowed particularly in Google Fiber's principal Kansas City market. "Google Fiber added 19 percent fewer customers in Greater Kansas City over the past six months than they did over the six months prior, and their six-month growth rate in the region slowed from 27.4 percent to 17.4 percent,” said Craig Moffett, MoffettNathanson principal analyst.

Video remains the single largest revenue contributor for Comcast, as you might expect. But even at Verizon, video service adoption was about 35 percent in the fourth quarter of 2015. In the third quarter of 2016 Verizon added video accounts at a rate about 40 percent that of Fios internet access services.

Since gross revenue for each video account can easily be larger than revenue for internet access, video has emerged as a key method for boosting account gross revenue and average revenue per account. In some cases, video drives as much as 60 percent of net additions.  

source: Comcast

Consumers Want Fresh Content, Fast Loading, Personalization

About half of consumers in Malaysia, Singapore, Thailand, and the Philippines now spend more than 16 hours online, though, surprisingly, older demographics spend even more time than that online, a study by Limelight Networks shows.

Regardless of the time spent online, consumers are doing so primarily via their smartphones.

When it comes to spending time online, social media is the most dominant activity followed closely by watching online video.

Although consumers in the LImelight Networks study have demonstrated the importance of website performance, even performance comes in second to “fresh and updated” content.

Together with a consumer predilection for “fresh and updated” content, 53 percent of respondents say they  want a personalized web experience. Most consumers (67 percent) surveyed want a website to remember them and make recommendations based on previous visits.

Nearly half (43 percent) of consumers surveyed will leave a website and go to a competitor if a web page takes too long to load. Also, some 84 percent of respondents report they expect equally fast load times on any device.

DSA Features Regulators

The  fifth annual Dynamic Spectrum Alliance Global Summit, which will take place in Cape Town, South Africa from 9-11 May 2017, will feature:

• Mr. Pakamile Kayalethu Pongwana, CEO, Independent Communications Authority of South Africa (ICASA)
• Hon. Hector Huici, Secretary of Communications and Information Technologies, The Ministry of Communications, Argentina
• Dr. Martha Liliana Suárez Peñaloza, Director, Agência Nacional del Espectro (ANE), Colombia
• Dr. Agostinho Linhares, Manager, Spectrum, Orbit and Broadcasting Division, Agência Nacional deTelecomunicações (ANATEL), Brazil
• Mr. Peter N. Ngige, Assistant Director, Frequency Planning, Communications Authority Kenya
• Mr. Mario Maniewicz, Deputy Director, Radiocommunications Bureau of the International Telecommunications Union (ITU), Geneva

AI Gets Practical for Content

The internet’s future, many believe, is intimately bound up with artificial intelligence, used in various forms. But AI already is a practical tool, used by Google to support its advertising operations.

Author Patrick Tucker argues that  “when the cost of collecting information on virtually every interaction falls to zero,”  insights gleaned from activity will transform those interactions. AI will be the enabler, allowing the sifting of huge amounts of data to glean insights and patterns.

To assess what the economic impact might be, some analysts compare AI to other innovations such as computing advances, internet access, mobility and industrial robotics. That is not to say AI will produce value in these stated industries in equivalent volumes, only to note that big and important innovations have produced estimated benefit in about such volumes.  

source: Analysis Group

What is telling, though, is the importance content as assumed in the internet apps space as well as the internet access business.

“It is increasingly clear to us that content is the driver for future growth and AI is a core enabler to connect our user with highly personalized content,” said Fu Sheng, Cheetah Mobile CEO. Though Cheetah Mobile made its mark as a supplier of mobile utility apps, it now sees content services as its growth driver. “Looking forward, we remain both focused in implementing our mobile content strategy, leveraging the big data generated by a massive user base and AI technology to connect our user with more personalized leisure content.”

In fact, Cheetah Mobile sees artificial intelligence being “a very core technology” for content, he said.  

“There is a lot of commonality between robotics, especially in deep learning and AI that may have common applications for what we want to do on the Internet space.”

Rising Content Costs Help Netflix, Hurt Linear Providers

Netflix now is among the reasons video content costs are rising. Netflix, other buyers say, is boosting content prices by snapping up content creators and spending big to do so. But rising content prices are a primary reason linear video subscription prices climb, at rates above inflation, virtually every year.

That is why “skinny bundles” are now such a big trend in the linear video subscription business. With falling demand, ever-higher prices for traditional bundles are becoming unsustainable.

That is even more important when, in the future, most subscription growth is taken either by over-the-top providers or mobile services.

source: J. Mack Robinson

source: IHS

Spectrum Sharing is Likely Value to AT&T of FirstNet

Spectrum sharing fundamentally is important because it can change the business model for existing and new potential providers of communications services, much as increased availability of unlicensed spectrum likewise allows incumbent and new service providers to create services and revenue streams. In other words, shared spectrum is important because it changes the value and cost of spectrum rights.

Many would argue that the nationwide first responder network proposed in the wake of the Sept. 11, 2001 attacks on the World Trade Center in New York have gone nowhere for 15 years because the business model was quite questionable. That FirstNet now will be built and operated by AT&T suggests that something significant in the business model has changed, as is true for several other access technologies or approaches.

In the case of FirstNet, what seems to have clearly tipped is the perceived value of building and operating a network that has great potential societal value, but a questionable financial return. The difference now is spectrum sharing, and the impact that has on potential value to offset the capital investment and operating costs.

The other new element is a $6.5 billion initial subsidy (most of which will be paid back over the 25-year contract length) to help build the network. Estimates of construction cost range as high as $40 billion.  

FirstNet, though, will have to sell its services to first responder entities, so the venture remains a huge gamble. In that sense, the tangible benefits might well be the use of 20-MHz of new 700-MHz spectrum, whenever the emergency services personnel are not using the network. That might be “most of the time,” as the network will rely heavily on small cells.

But state entities already operate their own emergency networks, and will have to be persuaded to switch to FirstNet.  That likely means a long, slow process, so AT&T planners are not likely factoring much revenue into their business models.

So FirstNet is valuable, in all likelihood, mostly as a way of gaining shared access to 20 MHz of low-band spectrum.

source: FCC

FirstNet Gets Ready to Link 10,000 First Responder Organizations

FirstNet is one of the largest public-private partnerships in the U.S. communications business, planning ot build a nationwide 4G Long Term Evolution network to be used by as many as 10,000 first responder agencies across the country