How Comcast and AT&T Strategies Compare

It would not be stretching an analogy to say that, in the U.S. market, Comcast and AT&T have broadly similar strategies. Both are the most clearly committed to diversifying their roles within the internet and content ecosystems, and particularly focusing on ownership of content creation assets.

In its second quarter, for example, Comcast earned about half its revenue from consumer triple-play services, its “legacy.”

In its second quarter, AT&T earned perhaps $29 billion from traditional mobile and fixed communication services, about 75 percent of total revenue.

Roughly 25 percent of revenue was contributed by the video distribution and partial results of Warner Media for the second quarter. So it speaks volumes that AT&T now says it is a “modern media company.”

One has to suppose that the goal is to shift as much as half of revenue from voice, mobile communications or even internet access to content ownership and content distribution.

It is worth noting that in the consumer services segment (exclusive of consumer mobility), about 71 percent of AT&T segment revenues now come from video entertainment, not voice or internet access.

The point is that content and related assets now are viewed as key by both Comcast and AT&T, essentially as a means to occupy different roles within the content and communications ecosystem.

And, eventually, the revenue profiles of Comcast and AT&T might not be too dissimilar. Where Comcast is diversifying away from its legacy video services position, AT&T is increasing its exposure in those areas.

Where business services and mobility are significant revenue contributors for AT&T, Comcast is growing in those segments. And where Comcast is a content creation company, so AT&T now is a content company, in part.

That fundamental "take market share from the other guy" strategy has not changed too much over the last two decades. Basically, telcos upgraded to broadband to trade market share with the cable competitors. Cable has grown by taking telco voice and internet access share in the consumer segment, and now is encroaching on business customer share.

Carrier Wi-Fi, Shared Spectrum Change Use Cases, Business Models

Carrier-grade Wi-Fi and spectrum sharing provide different value to actors within the ecosystem, changing the boundaries between private and public networks in new ways.

For mobile service providers, carrier-grade Wi-Fi mostly will be a way to incorporate unlicensed local networks as a core part of mobility infrastructure. Best-effort Wi-Fi mostly will remain a way to offload traffic from the mobile network.

For cable TV operators, carrier-grade Wi-Fi is a way to reduce the costs of entering the mobility business.

For business, government and other organizations, spectrum sharing will create new options for supporting private mobile networks that essentially compete with Wi-Fi as a local and private network platform.

Some entrepreneurs will see ways to create new wholesale venue communications businesses, offering indoor coverage to mobile service providers.

Fixed wireless internet service providers will see spectrum sharing as a way to remain relevant as bandwidth demands rise far above the traditional capabilities possible with legacy spectrum.

And a few large and well-heeled application and transaction providers might see new opportunities to build new access networks that better support their advertising, subscription or transaction business models.

Since the advent of the competitive era in telecom, and the rise of computing as a core use case, a distinction between “public” and “private” networks was created. In the consumer space, the “private” network is house wiring. In the business and enterprise space, private means the indoor or campus local area network.

In the 5G era, there will be additional changes. For the first time, enterprises and organizations will be able to create private mobile networks using 4G or other air interfaces. Such private networks might be used to support sensor networks or improve indoor coverage.

Speculation about the ultimate roles of private and public networks--especially the possibility that private networks might one day challenge public network roles--has bubbled up periodically over the past two decades.

Current practice suggests private networks increasingly act as extensions of the public network, though. That has been the case for mobile traffic offload (smartphones using Wi-Fi, as the best case).

With the rise of carrier-grade Wi-Fi and sharing mechanisms (the ability to aggregate mobile and Wi-Fi or other unlicensed spectrum), there is an important but slight shift of Wi-Fi roles. Essentially, Wi-Fi becomes core mobile network infrastructure, even if not owned or operated by any specific mobile service provider.

source: PwC

The ownership of assets might remain, but the use cases shift. There are some new revenue implications. If most of the value provided has an indirect revenue driver, there are some new direct revenue options.

source: PwC

Some venues might be able to provide wholesale access to any commercial mobile service provider, on the model of multi-tenant distributed antenna systems.

But one aspect of each use case does not change too much: private networks tend to be non-revenue-generating; public networks have to generate revenue. In common parlance, private networks provide valuable features at no incremental cost; public networks provide revenue-generating services.

Private networks always have indirect revenue or value models. The private networks are business infrastructure, not direct revenue sources in themselves.

That is true no matter what part of the network we discuss: in-home or premises “local” networks; access networks; metro facilities or long-haul assets.

Google and Facebook own and operate their own undersea networks because it provides more value, and is cheaper, than buying access on public networks. Consumers, organizations and businesses run their own Wi-Fi networks to connect users and devices to public networks.

In some cases, app providers and others also run their own access networks, generally as a complement to public facilities (providing access in high-traffic areas that boost use of their apps), but sometimes also to prod public carriers into boosting investment in access capabilities.

Most metro networks focused on business customers try, when possible, to build their own facilities. Sometimes organizations, governments or businesses also create and operate their “own” metro transport networks as well, for internal use.

In the long-distance undersea and terrestrial networks, perhaps half of all internet traffic actually runs over private networks, not public networks.

Carrier Wi-Fi represents a different business model than traditional “best-effort” Wi-Fi. One also can argue that carrier-grade consumer internet access represents a different business model, as well, a fact well understood by partisans on both sides of the network neutrality debate.

Broadly speaking, best-effort Wi-Fi is a mobile offload use case. Carrier-grade Wi-Fi is an “extend the network indoors” use case.

source: PwC

As Important as SD-WAN is, It Will Remain a Niche Market for Service Providers

With the caveat that it likely represents the future of most enterprise long-haul transport revenues, the SD-WAN market is a specialist segment of the market, very much akin to unified communications. It is important for enterprises and suppliers to enterprises.

It is a fundamental product for sellers of long-haul enterprise networking capacity. But the global SD-WAN market is rather a smallish part of total spending on public network communications services.

As for how big a revenue stream SD-WAN might eventually represent, just assume it displaces most of the present MPLS market.

source: Aryaka

For long-haul business connectivity providers, SD-WAN is as important as MPLS is, and private line used to be. As the humorous adage goes, "it may be a one-trick pony, but it's a good trick."

source: IHS

source: ITBrand

source: Transparency Market Research

Can Voice Input Become a Platform?

Voice now is a growing consumer interface; a rival method for search and e-commerce; an input method replacing keyboards and screens. Whether voice input becomes a platform, and how that platform gets monetized, is among the next set of issues.

source: eMarketer

What 5G Fixed Wireless Means to Verizon

As it looks to launch 5G fixed wireless service out of region, Verizon seems convinced that video services are an important part of the value proposition. Among U.S. tier-one service providers, Verizon sees the greatest upside from attacking other fixed network service providers outside its core fixed network footprint.

There are obvious reasons. Verizon has the smallest fixed network footprint , and believes it can expand its network to reach as many as 39 million U.S. homes outside the core Verizon fixed network geography using 5G fixed wireless.

Comcast passes (can actually sell service) about 54 million homes. Charter Communications passes some 50 million home locations.

AT&T’s fixed network passes perhaps 62 million U.S. homes. Verizon, on the other hand, passes perhaps 27 million locations.

What that means is that Verizon has a clear interest in using 5G fixed wireless to expand its addressable market by more than 35 million U.S. homes (up to perhaps 39 million) that it cannot reach today, giving Verizon a fixed network footprint that is comparable to its key rivals.

AT&T Now is a "Modern Media Company"

This slide from the AT&T quarterly earnings call tells you quite a lot about how AT&T sees itself, and how differently it sees itself from its past. AT&T is said to be “a modern media company.” The building blocks of that business include content, advertising, distribution networks and high-speed networks.

Sure, AT&T has business (enterprise) operations and assets in Latin America and Mexico. Its single biggest revenue generator still is consumer mobility. But all those assets are infrastructure to support content, advertising and distribution, AT&T now emphasizes.

source: AT&T

Honolulu

It’s summer, so I was reading the book Honolulu (really enjoyed it). The protagonist is a Korean picture bride, and my maternal grandmother was a picture bride.

That got me to thinking about when my maternal grandfather immigrated to Hawaii.

Here is the Port of Honolulu record of his arrival, in 1905, on the steamship Korea, at age 15.

He worked in the cane fields, like everybody else. Probably hated it, like everybody else. 

Eventually he became the now stereotypical Korean corner grocer (some things do not seem to have changed much). 

Grandma met him for the first time on the docks.