Google Antitrust Action Coming?

It looks increasingly likely to some observers that Google is about to get a taste of the antitrust scrutiny Microsoft has had to deal with. The Justice Department probably is going to bring an antitrust suit against Google, experts are beginning to say. The Wall Street Journal has reported that DOJ has hired renowned antitrust lawyer Sanford M. Litvack to take a closer look at Yahoo's deal to outsource search to Google.

Welcome to Microsoft's world. 

Millennials Drive Parental Purchases

Millennials (16-27 year olds) in Europe and the Middle East have huge influence on buying of broadband and TV services purchased by their parents, even when the Millennials do not live at home with their parents, a survey conducted by Motorola indicates. The majority of respondents stated that they influence the broadband (83 percent) or TV services (84 percent) purchased by their parents, even if they do not live at home.

The new study of over 1,200 Millennials from five countries in Europe and the Middle East also found that young adults are passionate about being in control of their rich media content and are heavily influencing older generations. So while it is important to understand and meet the needs of Millennials as the future drivers of demand, it is worthwhile to remember that Millennials also drive current buying.

About 66 percent would be interested in pausing TV in one room and restarting it in another. This compares to 86 percent of respondents in the United States when Motorola surveyed U.S. respondents earlier this year. And though lots of attention now is directed at delivering high-quality video using the Internet and then displaying that content on a TV, almost one in three (32 percent) prefer to watch programs on their PC rather than TV set.

Significant numbers of respondents want to be able to access full-length movies and their favorite shows using a mobile device, possibly by side loading. About 81 percent of respondents indicated strong interest in having the ability to move content from a set-top at home to a mobile device.

About 75 percent indicate that watching movies while travelling also is appealing. But there is an apparent appetite for shorter items as well. About 62 percent would be interested in watching 15-minute mobile versions of 30-minute TV programs and 61 percent would be interested in three-minute versions of their favorite shows on their mobile devices.

“Technology is the lifeblood of this generation. Millennials feel that their personal lifestyle would change dramatically without internet access. It is not surprising therefore to see their influence on technology purchasing for the home,” said Joe Cozzolino, corporate vice president and general manager, Motorola Home & Networks Mobility EMEA. "By understanding the needs and desires of this generation, Motorola is able to design and customize solutions for our customers that enable them to deliver rich media experiences to today’s and tomorrow’s consumer.”

Some 63 percent of respondents acknowlede that their demands and expectations for rich media experiences are higher than those of their parents, partcularly in the area of interacting with what is on the screen:

Over half of those surveyed would like to be able to interact with their TV and accessing information about the content they are watching. About 68 percent would be interested in learning about and possibly purchasing items featured in TV shows, with the highest appetite coming from the UAE where 81 percent of the sample expressed interest in doing so.

High-definition TV is popular throughout all markets surveyed, especially in Germany and the UAE with 53 percent and 58 percent saying they "love" HD content

About 43 percent of respondents have an HDTV set; the United Kingdom having the greatest market penetration with 54 percent owning an HDTV set. Of the 57 percent of total respondents who do not presently have an HDTV set, only a quarter said they did not want to get one.

DVRs: Consumers Really Love Them

More than 80 percent of U.S. digital video recorder users surveyed by Consumer Analysis Group say they could not live without their DVRs. Respondents also said that DVRs were the second-most-indispensable item of household technology, behind only the mobile phone.

The number of DVR households in the United States will pass 30 million in 2008 and climb to 48 million in 2012, says Consumer Analysis Group. At that point more than 40 percent of U.S. households will have a DVR.

The average DVR owner surveyed watched 4.7 hours of television per day, over one hour per day more than the 3.7 hours viewed by adults surveyed in June 2008 by The Media Audit, says eMarketer. 

DVR user TV viewing generally rose with age. Respondents under 30 watched an average of 3.7 hours daily, while middle-aged TV viewers had the TV on for as long as 5.4 hours, eMarketer notes.

U.S. Broadband Will Break 90% This Year, Among Internet Users

At current growth rates, broadband penetration among active U.S. Internet users should break 90 percent by the end of 2008, predicts Leichtman Research. Overall, broadband penetration is 57 percent of U.S. households, but was well over 80 percent of Internet users at the beginning of the year.

TW Telecom Sees Some Weakness

TW Telecom hasn't yet reported its quarterly results, but has warned that although it continues to experience strong sales, it has experienced pressure on its revenue growth in the first half of the year, caused by disconnects by customers in the mortgage industry and from very small customers, as well as economy-related pressure in its Midwest region. 

"These pressures continue," the company says. TW Telecom says it also is seeing potential extension of the impact of the slowing economy into its Southeast region and certain individual markets in other regions, based on results to date for the quarter. 

In addition, the company warns it may experience an increase in very small business customer churn in the third quarter due to the  disconnecting non-paying customers.

TW Telecom  expects continued long term revenue growth, but with possible further downward pressure in the near term. 

Business Transformation Now Crucial, Says IBM

The challenges communications service providers face also seem to be seen as crucial by midmarket CEOs. Recent surveys of telecom industry executives have found them focusing top attention on changing business models. It now appears that sentiment is widely shared.

In a global marketplace, it's all about change, say midmarket CEOs recently surveyed by IBM. About 74 percent of midmarket CEOs "plan to substantially change their business models over the next three years, versus 69 percent of the overall sample," IBM says. The big takeaway? Nearly 70 percent of CEOs say they have to change their business models. 

"They told us that this is partly because they are finding it increasingly difficult to differentiate their companies through products

and services alone, and partly because technological advances have given them many more options," IBM says. 

Of those executives that plan to substantially change their business models, 33 percent are focusing on enterprise model innovation,   addressing new markets and customer segments. 

Another 22 percent of midmarket CEOs are engaging in revenue model innovation. One respondent, for example, is focusing on “new services to existing customers” and “new ways to sell and price,” while a second aims to shift from a “transaction-based” pricing regime to a “fee-for-service” model that is “more value-based.”

Similarly, 23 percent are undertaking industry model innovations. The vast majority of these respondents plan to redefine the industry

in which their companies are operating. Surprisingly, however, 39 percent of this group aims to create entirely new industries, IBM says. 

Mid-market CEOs also say they are struggling to keep up with an environment where consumers are now dictating the pace of change, where formerly they were the ones in control. “Change in the organization is not happening fast enough. The gap is widening,” one Dutch midmarket CEO told IBM researchers. 

In 2004, market factors (such as variations in customer purchasing patterns, growing competition and industry consolidation)

dominated the boardroom agenda. Today, however, midmarket CEOs have to focus on a much broader range of concerns, IBM says. 

Market factors remain their top priority, but access to people with the skills they need, regulatory compliance, technological factors and globalization also weigh heavily on their minds. Regulation is a source of particular anxiety. About 37 percent of midmarket CEOs think it will bring major changes, compared with just 30 percent of the total survey population.

Globalization is creating many more challenges for mid-market enterprise executives. Rather than being able to concentrate their efforts on a few specific issues, midmarket CEOs must now cover a much wider front and cope with much greater uncertainty. They must “master complexity,” as one respondent put it.

Mid-market CEOs plan to channel more than 22 percent of their budgets into meeting the needs of information omnivores. Most companies are focusing on the development of “the next generation of products” and services, and “how to attract” these customers, as one respondent put it.

Markets Have Changed; Regulatory Tasks Must Follow, FCC Says

Predictably, the Federal Communications Commission's decision to remove some mandatory reporting by some leading telcos (AT&T, Verizon, Qwest, Frontier and Embarq) is seen by some public policy advocates as a blow to consumer welfare. Under new rules, and after a two-year phase-in, those carriers can stop reporting network reliability, customer satisfaction and infrastructure investment data. 

AT&T, Verizon and Qwest will continue to file price, revenue, and total cost information necessary to achieve the goals of price cap regulation, though. But the FCC argues that some data, used in a monopoly environment to monitor customer welfare, are not needed in competitive markets, especially when the rules are not applied universally, on cable operators, for example. 

Though one can disagree about the thesis that competition itself forces contestants to maintain and improve the quality of their offerings and the quality of their customer service, market forces arguably already have forced all contestants to ramp up the quality of their service. Consumers have choice, and are exercising their freedom to abandon providers and choose others. 

That is not to say markets now are perfectly competitive. Nor can one argue that markets always will remain robustly competitive. The outcome of competitive markets is that winners get stronger and losers go out of business. Over time, the inevitable logic of competition is therefore less competition. So the need for oversight does not disappear. 

But it does not make sense to burden competitors with reporting requirements that have real costs, when monopoly markets no longer exist, and the abuses that the rules originally were intended to prevent, are prevented by consumers with choice.

Reporting imposes real costs on businesses. Many smaller firms, with no market power, report that their annual reporting costs for Sarbanes-Oxley compliance alone cost between three quarters of a million and a million dollars a year. That isn't to say Sarbanes-Oxely was anything but a well-intentioned attempt to prevent abuses. Still, burdening companies with compliance costs is not an unalloyed good thing. It raises costs of doing business at a time when costs are a major concern in the communications business, precisely because of intense competition.