FCC Rules ISPs Are A Utility

The internet is now classified as a regulated utility and net neutrality is enabled.  Certainly, for content creators and consumers, content must now flow freely and equally to your devices.  But what was the problem and do these regulations really solve them.  Weren't we getting access to all our content already?  Did you really see that certain content was not getting to you? 

While nothing will change immediately, what will not be a surprise will be how many lawsuits will arise to fight this new law before it can initiate.  Given how long it takes decisions to get through the court system, it should be tied up for quite a while.  The greatest example is the Janet Jackson Super Bowl example regarding on air decency.  That case took years to finally decide that there was no fine to be levied.  Still it clogged up the courts.  So too will this new internet regulation law.

The hope is that during that time that new innovation arises to improve speed and efficiency of broadband, new competitors grab a share of the marketplace via a wired and wireless approach, and that the fast pace of change in this industry makes the law irrelevant before it has time to take effect.  My biggest concern is that regulation only slows down innovation and growth, doesn't drive a competitive marketplace, or lower prices.  Yes, net neutrality as a concept is a good thing; all content should be able to reach its destination as fast as possible.  But wrapped in other regulations, the internet as a communication highway only gets hurt more. 

Net Neutrality Vote

Lately, our cell phone provider has been sending us messages telling us that we are reaching our covered monthly limit on our internet usage.  And the culprits tend to be our kids who forget to turn on their WIFI on their cell phones to watch You Tube or Netflix.  Truth is there are a limited number of providers for broadband service and so prices continue to rise.  Cable operators have done the best job of delivering high speed broadband service across a majority of the nation.  Telephone companies have managed with DSL service but it doesn't deliver the same speed as cable.  In some markets, FIOS and U-verse have overbuilt larger cities with alternative high speed service, many with fiber right to the home.  And some regional providers like RCN, WOW, and other also offer cable, broadband, and phone. 

But newer competition is rare.  The biggest entrant so far has been Google Fiber, starting first in Kansas City and expanding into a few other markets.  After that you have cell phone companies with data plans that get quickly used up on video consumption.  I know from firsthand experience.  Their speed is also no match to cable yet but the hope is that they can become a better provider. 

Today, broadband, like food, water and shelter, is being treated very much like a utility and so the government seems determined to regulate it as one.  Hence the vote today by the FCC to reclassify broadband service as such and assure that that all content delivered across the internet is delivered identically, whether a video stream or email message.  That is net neutrality.  But the concern of big government regulation in business is that it limits new entrants, innovation, and disruption. 

Consumers have very little choice in deciding what broadband service provider to use.  Where we live determines who is capable of supporting us.  Cable operators still strike franchise agreements to exclusively cover cities and towns.  More competition is needed.  New spectrum needs to be opened up.  Investments in technology to increase speed and capacity should be encouraged.  Net neutrality laws may seem like a short term fix but not a long term solution.  And as we continue to become a more connected universe, it is the long term that is more at stake. 

They Said What?!?!

I believe that I need to constantly remind my kids that they should be mindful of what they say, write, and do for their actions will follow them throughout their lives.  Treat others as you wish to be treated and you should be ok.  It is that same advice that most of us should have learned in kindergarten that has been forgotten by many today.

What you say in an email, on a tweet, in a video, and yes even in person resonates loudly. Mistakes are made with the likely response to forgive but not forget.  But lately common courtesy and mindful manners have been forgotten.  Just this week, two such examples can be found.  First comes Keith Olbermann who sadly uses Twitter to diss someone who raised money for charity, simply because of his dislike for their college, Penn State.  It was both unnecessary and uncalled for.

The other misspeak comes from the Pope in what he obviously thought was a private e-mail exchange.  In it he disparaged the Mexican people by characterizing the increased drug trafficking in his native Argentina as the "Mexicanization" of the country.  And while the e-mail was meant to be private, the Pope, like my kids, needs to be reminded that nothing is private anymore.  Every email, every selfie, every post has the ability to be shared over and over again.  Nothing is private once it is shared with another.

And yet these two examples are only a small sampling of situations where we speak or act before we think.  Just as A-Rod or Bill Clinton faced with the lies they told that had to be recanted.  Apologies always come from such actions.  We forgive (eventually) but hardly ever forget.  Our digital world makes that impossible because unlike a physical letter, our digital communications are never truly erased.  It is a lesson that keeps getting relearned time and time again.  And a lesson that I hope my own kids truly understand. 

2015, The Year Of Truthfulness And Fact Checking

It seems that this year is turning out to be one where public figures are being judged by their truthfulness.  It started out with Brian Williams and fact checking around his assertions regarding certain incidents.  And while he has since apologized for his misstatements, we continue to have fun at his expense. 

But Mr. Williams may be old news as allegations around news reporting by Bill O'Reilly over 30 years ago comes to the forefront.  True or not, hasn't the statute of limitations run out by now.  Is this latest challenge meant to move the focus off of Brian Williams or is it to become a witch hunt against all other news reporters and anchors?  While we all expect our news and its reporters to be credible, we also know that there is clearly little impartiality in news these days.  Some stations lean farther and farther to the right while others push a more left agenda.  Still we hope that they are reporting facts and not lies and innuendos. 

With the latest target on Bill O'Reilly, I wonder what is truly the motive for the report.  Is it to show the public that Mr. O"Reilly has been systematically lying to the public since 1982?  Certainly that has been facing Mr. Williams that he has being stretching more than a few stories surrounding his news reporting.   Ethics should exist as a black and white benchmark to all of us. Unless Bill O'Reilly has been telling multiple "stories", this 30 year old story seems like mud throwing.

We all like to tell tall tales, some more than others, and some stories clearly taller than others.  For those whose careers put them in the public eye, egos can sometimes get in the way.  Perhaps it would be best to follow Will Rogers' advice: "Get someone else to blow your own horn and the sound will carry twice as far".

Scotty, We Need More Power

The Internet Of Things, Connectivity, Accessibility, and Always On are the buzzwords we hear these days as our smartphones and tablets and other online devices are discussed.  But what runs all these devices, heck, what runs Tesla cars and other cars that Apple and Google and others may be developing, are batteries.  The power from these charged devices let us move, connect, share, and do so many more things.  All good until the power runs out. I mean how many times has your smart phone used up all its battery before the day was over?

How far can a Tesla drive on a single charge, how long will an Apple Watch last before it needs to be plugged back in.  We are constantly seeking cords and outlets to keep our smartphones and tablets charged, hoping that they will last the full day (and perhaps longer) before running on empty.  But as we look to connect more and more devices without being constantly plugged in, we put a lot of faith in our batteries to maintain and run without failing us before we are done with them.

What seems to be needed is a quantum leap in battery capacity and perhaps even the ability to recharge without being physically plugged in.  Can outdoor usage with solar and wind help new electric cars to maintain or even add power to the existing battery?  Can the concept of kinetic movement help a smartwatch or smartphone to wind itself and power the internal battery?  Or is there possibilities from organic matter that creates generation of power?  Along the way we hear Apple, Samsung, Google, and others focusing on the batteries that inhabit all of our devices to take us to the next generation of power and capacity.  It seems to me to be the next great innovation that we need to support our reliance on being constantly connected.  Until then, we will continue to search for charging stations, power cords with the right ends, and of course electrical outlets to keep our devices charged and ready. 

TV Trying To Hasten Its Death

It seems to me that television wants to quicken its demise.  Both higher subscription fees and an increase in advertising spots only pushes viewers to seek alternatives.  The more you push us, the faster we leave.  And rather than learn from its mistakes and seek ways to pull us back in, cable television prefers to drive another stake into its own coffin.

The latest effort was unearthed earlier this week in The Wall Street Journal.  According to WSJ, "As they contend with steep ratings declines, many top cable networks are jamming more ads into programming to meet audience guarantees made to advertisers and prop up revenue despite falling ad prices." How they do it is by speeding up shows and movies and cutting extraneous seconds from programming.  With every :30 seconds or so you can produce, another ad gets sold. 

Frankly, it is not so innovative; networks have been doing this for a while.  Just try watching the end credits to see just how fast they can scroll down the page.  Need to squeeze more time out of a show, just watch how the opening of one show starts even before the prior show has finished.  At some point, you can expect that networks will get rid of credits all together.  So how can viewers watch shows the way they were created?  Subscribers can watch seasons of syndicated and new shows on Netflix, Amazon, Hulu and elsewhere without any of this gimmickry. 

Why too are networks measuring current TV viewership beyond same day to encompass +3 or +7?  The push to increase ad load leads to current cable subscribers to DVR or TiVo content that can later be watched while fast forwarding through the commercials.  With ads accounting for 12 minutes or more of every half hour program, TV watchers can more efficiently watch their shows without this dreadful overload.

Bottom line, the cable networks are watching ratings decline as viewers are fleeing their television set.  Revenue is trying to be maintained by increasing rates to advertisers and pushing more ads into shows.  But this short term strategy is only hastening television's erosion.  Certainly content will flourish on other distribution platforms as television keeps pushing viewers away. 

Synergy Not Working For Sony

Synergy, once the buzzword for management, now seems to be a dirty word.  We've watched as companies like Time Warner have separated itself into separate pieces, Time Warner Cable, Time, Inc. and Time Warner (HBO, Turner), because synergy stopped working.  Perhaps it is because as companies got too big, they found it nearly impossible to adapt and change to changing market conditions.  The analogy has always been to ships; big ships need tons of room and time to turn while small ships are much quicker and more nimble.

That same problem has affected Sony and unable to create synergy and growth across its many different business units, they have also chosen to separate its pieces.  According to EE Times, "Sony continues apace in the process of ditching practically all of its electronics business units — PC (gone last year), TV (already a separate company), and audio and video business (scheduled be split off in October)."  What seems to be left is Playstation.  Sony, we won't recognize you anymore.

So what went wrong?  Why did synergy stop working at these companies?  Why can't hardware and software coincide?  Is it safe to say that technology is changing so rapidly and that coupled with typical human nature, preservation over sharing, business units were hard pressed to support each other, worrying instead that they would make themselves obsolete.  I believe that the creation of vertical business units that are rigidly structured to limit movement across these shafts creates an "us against them"mentality that drives destruction instead of cooperation.

The other driver might be the financial markets themselves.  Seeking to drive value for investors, hedge funds and activists pursue spin offs of assets as a means in the short run to unlock the value of business units.  Where synergy once create a 1+ 1 = 3 world, today that formula no longer proves true.  A new management philosophy might be needed to make synergy work better in future business models. 

Can Cable Television Survive The Rise Of Web Networks?

Two separate stories are tied together by the growing usage of broadband spectrum. First comes from the NY Times where Lloyd Braun's media company, Whalerock Industries is introducing a number of web networks, including Kim Kardashian and Howard Stern. According to the article, "These channels, set to arrive in the coming months and available via the web and mobile app, will offer a mix of paid and free programming". It is the rise of these a la carte online subscription services that has been the bane of cable subscribers forced to buy bundles of cable networks that they don't want.

And that leads to the second article from Broadcasting & Cable where analyst Craig Moffett tells us that his firm "has downgrade Comcast, Time Warner Cable and Charter Communications to Neutral, warning investors that it's time to reduce their exposure to the cable business." Partly due to worries from increased FCC regulation, but also because of the increased competition on the broadband platform."

The television industry, once classified as broadcast, then to encompass cable, now is redefined again to embrace programming off cable from Netflix, Amazon Prime, and perhaps in the coming years from companies like Whalerock.  The millenial audience is already embracing the stars of You Tube and elsewhere.  But that next audience, 12-18, who I have heard described as Generation Edge, who are growing up with a preference for their mobile device, smartphone or tablet, over the traditional television set. 

Will they pay for a la carte web channels?  Glenn Beck seems to have found a big enough audience willing to pay for his channel.  MLB gets paying subscribers for live baseball games, too.  I guess the question is how many of these web networks can survive and how many need a broadband aggregator service like Sling TV to derive value from smaller, but more meaningful bundles.  Cable may need to rework its subscriber packaging formula to best compete.  Regardless, there will be some cord cutting, the question for the analysts and all these companies is how much. 

Could Net Neutrality Regulation Hurt Innovation?

As the FCC ponders enacting tough new laws on equal access to the internet, many wonder if government interference and tight regulations will instead choke the technology and limit growth.  Many look at other utility companies and the effect regulation has had to stifle innovation.  There are arguments on both sides depending on who benefits from FCC involvement.  Still, one hates to see a free economy hampered when government controls the business decisions surrounding the internet's development and evolving growth.

Is the current internet broken that net neutrality laws are necessary to fix?  Or can competition from wire and wireless providers create a better industry to drive innovation and growth.  While the current industry may be deemed too much an oligopoly, the FCC might better spend its time enabling companies to invest in alternative infrastructures.  Google, for one, is slowly building alternative internet pipelines in certain markets.  Opening new spectrum for wireless internet is another opportunity to enhance market competition.  Push tax benefits for those companies that make investments that improve the accessibility and reliability of networks. 

Laws and regulations that restrict do little to drive growth in the marketplace.  Time and time again we have seen our public utilities challenged with a heavy government hand that slows decision making to a crawl and limits the ability to upgrade and support new technological improvement.  More should be done to propel our internet infrastructure to 21st century standards, but regulation does not seem to be the right move. 

Is Programmatic Advertising Killing Sales Jobs?

There is no doubt speed, effectiveness, and efficiency with technology that makes programmatic advertising a win for buyers and sellers of media.  Programmatic has been the buzz word of late, which fairly simply automates the purchasing and trafficking of advertising into available spots.  It is most connected to the digital world but continues to creep into traditional television advertising models.  In essence it removes human interaction from the equation and it is a disruptive technology.  

As a result of all this automation, media companies are able to cut back on employees.  In fact, AOL announced a couple weeks ago, ahead of its quarterly earnings, that it was laying off "150 employees Friday, or 3% of its staff.  The bulk of the layoffs, or close to 100, were in sales, a result of the company's surging growth in so-called programmatic ad sales, according to a person with direct knowledge of the situation who was not authorized to speak on the record", according to USA Today.

AOL is not alone in these efforts and this is not the first time that technology has replaced labor.  Look no further then the assembly line that once required huge numbers of factory workers and now can be done with machines.  But it is a first for media, that less ad sales people are needed to drive the revenue for the business.  Will it replace humans completely, the answer is obviously no.  The key differentiater is creativity and the ability to develop innovative advertising programs that ad buyers want.  Content partnership, product integration, and cross marketing integration still requires the human touch.  But buying and placing a digital ad or 30 second commercial can more easily and efficiently be done without the hard sell or human negotiation.

The key success behind programmatic advertising seems to be the research that lives across all the data and the ability to decipher it in meaningful ways to best choose which media and in what combination makes for the best campaign.  And post advertising, the proof will be in the results the campaign generates.  Who is engaging with the content, when are they consuming, why are they interested can now all be captured digitally.  And that information, across set top boxes, web platforms, credit card information, and more are being absorbed, analyzed, and released.  Ask the right questions and your ad can reach exactly the type of person you seek to create engagement with.  And with hopefully a higher percentage that you are reaching only those likely to be interested in the first place.  Bottom line, successful financial results means that programmatic ad buying will then become the new norm. 

Target Ticket Follows Redbox Instant To Close

Building a streaming aggregator is not an easy task.  It takes content deals, it takes customers, and it takes a solid infrastructure to manage the end to end delivery.  It doesn't take much for it to go wrong.  And it takes a sound strategy and firm execution to be successful.  Netflix and Amazon Instant have easily become the standouts of success.

Sling TV has just launched and word is that they are facing some difficult technological issues managing its streaming activity.  And while they push forward, Target Ticket, a streaming service created by Target to compete against other retailers like Walmart, has decided to shut down.  Never heard of Target Ticket, you are probably not alone.  I am a frequent visitor to Target and can't recollect ever seeing any marketing in-store or in their circulars. 

Their demise means that consumers that purchased digital product will have to switch to CinemaNow to continue to get access.  But with content that CinemaNow does not have rights to, customers will get credits instead.  That certainly is the biggest challenge when owning digital content that you don't have direct ownership of.  So what is next?  How long till CinemaNow, Walmart's Vudu service or even UltraViolet or another streaming service decides it can no longer compete with Apple and Amazon?  The loss of Target Ticket may simply be a precursor for more to come. 

NBC Mishandling Brian Williams Apology

It is my humble opinion that NBC and the PR team at NBC are mishandling the fallout of the Brian Williams misremembering crisis.  That he "conflated" the episode in Iraq may have been the least of his problems, but using a vocabulary word that few know didn't help his effort at a half-asses apology.  And as Mr. Williams takes some time to withdraw from all public appearances, including a scheduled visit to The Late Show With David Letterman on rival CBS, it begs the question, could this PR nightmare been better handled.

I believe that NBC is using the wrong playbook.  To me, the better way to have handled this outcry would be to face it straight on with minimal delay.  I cite case book examples in the world of business from Tylenol, Coke and even Netflix to illustrate how a fast response can avert a greater disaster.  Tylenol did it by quickly recalling all product, apologizing and announcing efforts to use different packaging to demonstrate safety was their highest priority.  Coke tried a new coke formula but was quick to pull from market and announce the return of its classic formula.  And Netflix thought it could divide the company into two entities, DVD and streaming; they heard the backlash and were quick to stop the split and respond directly.

Yet the team working with Brian Williams has chosen to not follow these examples.  The apology was not to the point and direct; rather, muddled by shades of gray.  Had he then stayed out in the public, talking directly to anyone who wanted to hear his apology and how he was contrite and eager to demonstrate his trustworthiness, I believe this incident would have been minimized and Mr. Williams would have retained his good standing among the public.  Withdrawing from appearances, removing himself from his own nightly news program, has only added to the problem.  And it may now be too late for him to fully recover his good stature and high ratings. 

Are We Being Watched And Listened To?

I most recently met a colleague who had taped over the camera on her laptop.  She was concerned that the device could be accessed without her knowledge and she could be watched without knowing it.  Her concern may be a valid one; Cameras have become a way of life, whether used for traffic enforcement, shoplifting, security.  And we seem to be ok with it.

The latest concern is that the next generation of smart TVs from Samsung may also be listening to us as well.  With a capability to use verbal commands to instruct the television set what functions to initiate, comes some interesting news.  But buried deep in the privacy policy for their set is a notice that the set will also share all communication that it hears.  Surprising, it shouldn't be.  Business Insider also tells us that "the Siri dictation feature is sent to servers that reside in the US and that Apple, its related companies and agents have access to the contents of what is dictated."

Privacy may simply be a thing of the past.  As more and more devices connect to the internet, our actions and our words get more easily captured.  What others decide to do with it, whether to use for safety and security, advertising, or to uncover private and personal information remains to be seen.  But what should not be a surprise is that someone is watching and listening to us.  And so we become more responsible for our actions.  

Will Apple Get into The Subscription Video Business?

Just Monday, I mentioned Sony's plan to create an OTT video subscription service through their Playstation platform called Vue.  We also heard about Dish's plan as well with their service, Sling TV.  And of course there is Amazon Prime, Hulu, Netflix, and others with either linear or on demand streams of TV and movie content.  Now, it may be Apple's turn.

According to re/code, "Industry executives say Apple is in talks with TV programmers about deals that would allow Apple to offer an “over the top” pay-TV service".  Given their purchase last year of Beats and its music subscription service, the idea of video subscription is not far-fetched.  Apple has been thinking about such a move for quite a while.  And Apple already does quite well with video rental and purchase through its itune store.  Why not a subscription OTT service, too.

The decision to move in such a direction may lead to two possibilities, build from scratch or purchase another existing business.  Verizon tried with Redbox Instant and failed miserably.  They are trying again with the purchase of Intel's OnCue service last year.  One doubts if that acquisition will follow the same path as Redbox Instant.  It doesn't look good.    Maybe Apple sees an opportunity buying Dish and not only getting Sling TV but access to all that spectrum.  With so much cash in reserve, Apple could perhaps even buy Netflix.  A hostile bid perhaps, but who knows.

Building from scratch and negotiating license fees with today's cable and broadcast networks is a more difficult and circuitous path.  The timing might finally be right to try again but the ROI might take some time to grow.  But regardless of which path Apple chooses, the timing to add a subscription video business to its mix seems timely and right to do. 

Amazon Might Want Some Radio Shack Stores

What a shame that Radio Shack couldn't figure out a way to rebound from a dying business strategy and re-emerge as a leader again in a new mobile world.  But stuck with a name that reflects old technology, and a marketing campaign that fell flat, Radio Shack is on the verge of bankruptcy.

But others may benefit from the Radio Shack failure.  Amazon has watched as Apple has used a retail strategy to build stronger customer relationships and grow business.  Microsoft is also starting to venture into the retail world.  And now it might be Amazon's turn to create a retail presence.  By opening up stores using some of the Radio Shack footprint, Amazon would be able to let customers better interact with its product line, especially as its products are not currently getting much market share.  They could push better the Amazon brand and value and let consumers interact with its devices, including the Kindle, Fire tablet, and of course its Fire smartphone.  It would also provide a point of purchase for service issues as well as marketing events.

The challenge of acquiring Radio Shack locations might be the initial size of some stores.  In many malls, they occupy a much smaller square footage than say an Apple store and thus would limit foot traffic.  But that might be a short term problem as they renegotiate leases with malls for larger spaces.  Having a retail presence seems a strong strategic move to compete better in the product marketplace. 

Broadband To Be Considered A Utility Service

As our President faces the last 2 years of office, he no longer has to worry about reelection, rather about his legacy.  And so, as it pertains to the world of the web, he is pushing all out for full net neutrality.  Like water, electricity, and gas and oil to the home, Obama and the FCC want to regulate broadband service just as fiercely. 

Net neutrality assures that no matter what the content, whether a simple email message or full HD video, the internet would treat both pieces of data exactly the same, transmitting them at the same speed as everything else.  No blocking of content, no throttling or slow down of speed of certain data.  All will be treated exactly the same.

But it is that same heavy use of government oversight and regulation that can also slow down or even stop a free economy from doing what it does best, innovate to create new solutions to old problems.  With such freedom comes new opportunities, new industries, and new businesses.  But add government to the mix and while data is free, innovation may be what gets throttled instead.  That is certainly the line that broadband providers like Comcast and others fear buy a heavily regulated broadband industry.

Content creators and other users of the web hope that net neutrality assures that their work gets equal access and that they do not have to resort to paying broadband providers to get into the HOV lane.  Netflix agreed to pay providers to assure that their subscription service wasn't penalized; they would love to not have to pay for play. 

Is there a middle ground that assures equal access without over regulating the process?  Ultimately, a solution is needed.  Broadband access has become more essential to the home then ever before.  Some might even rank it above heat and water.  Still, at the end of the day, what is most needed is to lower barriers to entry in broadband platforms and encourage more competition.  That is ultimately what will enable consumers to find the best possible value for the best price. 

More OTT Aggregators Coming

As cable prices continue to rise, consumers eager for more provider alternatives will soon have multiple ways to watch TV networks without a cable subscription. Certainly shows from different cable networks end up coming to Hulu, Amazon, and of course Netflix, but they tend to be from past seasons and not the current one that is airing on the respective network.  But now these networks are making distribution deals with OTT services to offer their networks across streaming platforms.

Recently, Dish announced its own OTT service called Sling TV.  And now we have Sony, working through its Playstation division deliver its OTT streaming service, dubbed Vue.  According to Gigaom, "Sony announced in recent months that it has struck agreements with CBS, NBC and Fox as well as Viacom, Scripps and Discovery for Vue."  That means that networks like HGTV, Food, Discovery Channel, MTV and others will be included in this service.  Most interesting, NBC, owned by Comcast Cable, will also offer both its broadcast network as well as its cable channels including Bravo, CNBC, USA, and more.

Given the threat of cord cutting and the desire to be accessible to the next generation of consumers, the move to streaming is a necessary one.  Certainly the cable companies need to also create an authenticated streaming version of their entire cable line-up, accessible through streaming and available inside and outside the home, to best compete with competitors like Sling TV and Vue.  At the same time, the networks need to not lose their relevancy against other OTT providers like Netflix who value the show over the network and are pursuing their own original programming strategy.  Otherwise, these same networks will fear a complete erosion of not only their license fee model, but eyeballs to their network and the ad dollars they charge.