iPhone 7 Succeeds Through Timing

Analysts concern over the iPhone 7 and the lack of new products coming out of Apple never figured that the new phone could bring real growth.  But given the recent battery problems coming from leading competitor Samsung and its Galaxy smartphones, Apple could gain valuable market share.  Consumers may become worried that their Galaxy phone may explode and cause personal injury.  And airlines are banning the phone from flights for fear that they may lead to fires on board the plane.  And so the consumer next step is to switch phones and why not get the latest iteration this Friday.

Already wireless companies are reporting huge preorders for the iPhone 7.  T-Mobile says that sales are reaching record levels.  Sprint has said that sales are higher.  Apple has told us that they will not release weekend numbers.  Still it looks like the rest of the year for iPhone sales could be very strong. Such news may not have been so likely if not for the Samsung Galaxy issues.  Apple's timing couldn't have been better. 

Its Time For Cable Operators To Transform Their Business

For cable operators to worry about the number of cable subscribers is old school.  It is time that they re-examine their business model and transform themselves for the 21st Century.  If you ask a cable operator what their business or mission is, the most likely response may be that they are the conduit for entertainment, communication, and data.  Unfortunately subscriber numbers are falling, growth across their businesses are slowing and they are consolidating to find greater efficiencies.

It is time for cable operators to be greater than the sum of their parts.  Just as Google has renamed itself Alphabet to become more than just a search engine, cable operators need to be more than just a conduit to bring wire and wireless to the home.  They need to make their mission Smart Home Makers.

As a Smart Home Maker, the business becomes more than just bringing a wire to the home, it involves being a full service provider from smart door locks to home security and video surveillance, from HVAC partnerships to data cloud security.  From full home wiring to high performance wireless streaming.  Cable and broadband become just another piece of being the Master of the Client's Domain.  Along with training to the homeowner, the cable operator becomes the key player in growing the smart home universe.  And the revenue comes from installation to maintenance and monthly service packages.

NAB Wants To Leverage Merger To Reform Broadcast Rules

The National Association of Broadcasters (NAB) hopes to gain rules reform for broadcast ownership by tying its attempt to the Charter -Time Warner Cable merger efforts.  And the NAB hopes it has some leverage to suspend merger talks till it gets its own reforms.  While the link may not be apparent, the need for new rules is.  Still, it is unlikely that the FCC will pay attention to such a move.

Consolidation in the cable industry makes sense, especially given the connectivity issues to create efficiency for wire and wireless speed and usage.  Separately, broadcast ownership rules should also be reviewed given the changing relationship between broadcaster and viewer.  The rise of broadband applications have created new opportunities that compete head on with broadcasters. 

So if the NAB feels the need to argue for more reforms given the changing landscape, they should.  But their argument should in no way be linked to what the FCC is reviewing to allow Charter and Time Warner Cable to merge. 

The Future Of AT&T

Where once AT&T was better known by the moniker of Ma Bell, today no such branding exists.  The break up of its telephone monopoly decades ago, the rise of cellular, and stiff competition from one of the few Baby Bell children, once known as NYNEX  and now as Verizon, that has created a very different voice landscape.  AT&T now finds itself needing to be more strategic and innovative.

That move actually started last year when AT&T announced its plans to acquire DirecTv.  With approval expected, AT&T CEO Randall Stephenson sees a change into a stronger data driven broadband entity.  Per the Deadline Hollywood article, it appears to include more investment in wired broadband via fiber optics and "wireless broadband to about 13 million homes, mostly in rural America."  How the DirecTv merger helps them get there remains to be seen.  While Stephenson likes the content offered on DirecTv, like the NFL Ticket, he may be limited in how he can distribute it.  I believe that Verizon actually owns the mobile license to the NFL.

What remains to be seen by AT&T is more clearly the synergy and growth that the DirecTv acquisition creates for the company.  Can it lead to growth of the cable platform and a wider rollout of triple play offerings?  Are there economies of scale in call centers, truck rollouts, marketing budgets, etc. ?  Clearly Stephenson seems quite optimistic in what he has to work with and how it "will transform his company into a juggernaut in the fast-growing streaming video market." I'm hoping he is right and that he can create a nationwide competitive broadband platform against cable franchise markets and other cellular networks.  We will wait and see. 

Dish Could Become Your Next Broadband Provider

It has been well known that Charlie Ergan, CEO of Dish Network,  has wanted to get more instrumental in the wireless and cellular marketplace.  He amassed an interest in LightSquared only to watch that company go bankrupt.  At the same time, he has been buying wireless spectrum over the years.  Most recently, he announced an OTT platform called Sling TV to offer a low cost content bundle to consumers.   And now he has announced his next move.

According to the NY Post, " is planning to take on Verizon and AT&T by creating a wireless video and data bundle, sources said."  And by using this wireless spectrum, Dish could potentially offer a triple play of services, video, data, and phone, to compete head on with MVPDs like Comcast, Charter and others.  The timing seems appropriate given that the AT&T-DirecTv merger could be approved by the FCC, limiting his appeal with the Dish satellite platform.  Already, Dish has lost about 300,000 video subscribers and given the rise of cord cutting, even more in the future.   With the demand for wireless access rising and competition limited, Dish's entry in the space, both as a delivery platform and content aggregator could make them appealing. 

The future media landscape clearly lies in mobile and Ergan's push in wireless makes enormous sense.  With few competitors and customers feeling price conscious, the chance to break in and disrupt seems opportune.  Lately, there has been much movement in this space, from the AT&T DirecTv merger to Verizon buying AOL.  I wouldn't be surprised, given Ergan's style, to look at more content acquisition as well. 

Will FCC Approve Cable Mergers?

The FCC is back on the clock but no decisions will happen in 2014 regarding the two mergers on the docket, Comcast acquiring Time Warner Cable, and AT&T acquiring DirecTv.  Per Business Week, it is unlikely that any such approval or disapproval will happen till March at the earliest. 

Consolidation offers great cost efficiencies but it can also hurt competition and lower prices.  Given the high barriers of entry in the industry and limited competition due to franchise approvals in every community, consumers have already experienced limited choice for cable or satellite.  These two mergers do little to worsen the already limited playing field.

The FCC may be less concerned with cable and more concerned with broadband access.  Still, there is limited competition with buyer and seller in this market as well.  DirecTv doesn't even offer a broadband business and Comcast and Time Warner do not compete against each other.  Comcast would control a vast majority of the US market seeking to access cable and broadband.  But I don't believe it will stop these mergers from occurring.  Opening spectrum, encouraging new entrants to enter the space, and supporting investment in new wireless and broadband technologies to improve connectivity and speed are what consumers really want. 

Does Wireless Need Net Neutrality?

Net neutrality has been a hot topic.  While the FCC attempts to revise its rules, many are still unclear what it all means.  In essence, net neutrality for the internet means that all web sites would have equal access to consumers accessing them, whether the data is light use email or heavy use video streaming.  Netflix, leading the way with heavy usage, has made deals with cable companies to assure that it gets premiere broadband access.  And while they can afford it, many argue that lack of net neutrality favors big business at the expense of start up web companies.

But as net neutrality rules are being reworked, you would be surprise to hear that these rules have been strictly toward wired broadband connections.  The mobile space has been mainly unregulated in the broadband space.  According to the NY Times, that exemption is being reviewed.  "On Tuesday, the Federal Communications Commission will hold a round-table discussion to examine whether proposed net neutrality rules should cover mobile broadband."  With so many consumers accessing the web through their cellular connections verse a WIFI one, it is hard to believe that the two platforms were being treated differently. 

Technological change as wireless carriers have upgraded their systems has led to such a move. And again, according to the NY Times, "Now, with advanced LTE networks complete, a growing portion of consumers use mobile as their primary method of connecting to the Internet, meaning a wireless exemption would leave those consumers without net neutrality protection."  And as younger consumers cut the cord on cable connections, their cellular subscription becomes their primary communication, information, and entertainment portal."  If my children didn't have access to WIFI inside the house, they would definitely be using their cellular connection.  In fact, I sometimes check that their smartphones are still connected to the WIFI so that our cell bill doesn't get impacted.

Does wireless need net neutrality?  All broadband, whether wireless or wired, should be treated similarly.  While I oppose to much government regulation and prefer an open economy to manage supply and demand, broadband has become as essential a basic right as shelter, food, and the right to education.  I would prefer that the FCC spend more time lowering the barrier to entry to enable more companies to compete in the broadband space.  The rise of competition is the best means to assure consumers right to choose a source for their broadband connection. 

Cameras Everywhere

Here in NY, the latest news was that a women left her baby at a subway station and casually walked away.  A good Samaritan made sure the infant was watched till police showed.  The news reports at the time indicated that no cameras were at this particular stop and so no footage available of the woman.  But hours later, other footage was found that showed the woman pushing the stroller elsewhere and she was eventually discovered.  What is particularly noteworthy is that we have become more and more used to cameras and surveillance in our lives.  At every airport, store, and even on streets, cameras seem to be almost everywhere.  And we seem ok with that.

Certainly in an age where terrorism affects us, cameras help to find perpetrators and victims.  It is used as a defense to help thwart potential crimes and we live by the notion that a good defense is a good offense.  Take for example the story a week ago of a trucker who watched a state trooper speed and talk on his cell, honked his horn and caused the trooper to pull the trucker over.  Quickly, the trucker started filming the interaction with his smartphone which led, not to a ticket for excessive honking, but to an apology from the trucker for not following the rules of the road, no cell phone while driving.  Without the video, a ticket would certainly have been the more likely outcome.

It demonstrates that we have become okay with cameras recording us in life just as we have the same ability with our smart phones to video our interactions.  Camera security is now more prevalent in our homes as wireless and remote cameras protect us from break-ins and help lead to capture. Cameras are in every store too recording us entering and leaving as well as waiting at the cash register. 

But the rise in camera coverage in almost every step we take comes with a price.  A loss of anonymity for one thing, and perhaps a bit of individual freedom.  Private may never be private anymore.  With every recording, everything we say or do becomes a permanent record.  Donald Sterling, "former" owner of the LA Clippers, certainly feels this way.  His anti-social rant was captured and shared with the county, resulting in his loss of team ownership. 

Overall, the use of cameras, both publicly and privately, tries to assure that safety and security are improved.  But it is at the cost of some personal freedoms.  And while it provides an added level of information, we also know that we can't be naive to believing that it represents all the facts either.  Technology also enables clever editing, Photoshopping, and other visual and audio tricks.  Still cameras are a tool that we as the public seem to be very comfortable knowing that we are always being recorded. 

Merger Mania Adds Another Pair

The FCC will have a busy Summer and perhaps the rest of the year too.  Not only do they get to review the Comcast Time Warner Cable and ATT DirecTv deals, they may also get the proposed Sprint T-Mobile merger as well.  Quick, hire more staff, the FCC will have their plate full.  They may have seen their webaite explode after the John Oliver call to write them regarding net neutrality.  And should a cable network consider announcing a possible acquisition target, the FCC might have to throw up their hands in defeat.

But back to the proposed plan for Sprint to acquire T-Mobile.  Facing a communication and wireless industry industry dominated by two major players, Verizon and ATT, the number 3 and number 4 players were no match.  Yes, they created choice for the consumer, but couldn't match for service and coverage.  And while a merger reduces the number of competitors, it actually helps to make them a more formidable competitor as a much larger number 3 wireless provider.  And frankly, they need all the help they can get. 

Both ATT and Verizon offer more capabilities; ATT with a DirecTv and their U-verse product, have a firm cable and broadband base and Verizon with FIOS has the same.  Neither Sprint nor T-Mobile bring that business to their mix; they benefit only by increased size.  One might hope that a future partnership with Dish could then set them up nicely and make it an even stronger competitive option. 

Some are concerned that the FCC won't like this Sprint T-Mobile pairing but I believe it is in the interest in the economy that it be approved, as should each of the above deals.  The industry has always been an oligopoly; size continues to matter to make these business able to continue to compete. 

Media Merger Mania - What Will Dish Do

Talk about being left out in the cold.  Comcast wants Time Warner Cable and AT&T wants DirecTv.  Charter gets more subscribers from the Comcast merger and ownership in a newly created cable Spinco company.  Some hope that a Sprint and T-Mobile merger will drive more wireless competition to the industry leaders.  And let's not forget Verizon who recently purchased the remainder of its wireless business from former partner Vodafone.  So what about Dish Network?

Certainly Dish tried to merge with DirecTv a decade or more ago but was denied by the FCC.  Different times indeed.  And while they would have loved to do a deal with AT&T, Dish's spectrum business seemed to produce a conflict.  Some hoped that Verizon would respond to say they were interested in Dish, but they were quick to vehemently deny those rumors. So with all the media merger mania occurring, Dish sits like a wallflower on the sidelines.

So what comes next for Dish?  There has been speculation that Dish could make a play for the NFL Sunday Ticket package and wrestle it from DirecTv.  That could both hurt subscribers and give an out to AT&T to terminate their acquisition efforts.  Perhaps other cable companies might be interested in acquiring Dish.  Should Charter have enough access to capital, they might consider making a run at Dish.  Whether the FCC thinks fondly of that deal is unclear.  Cablevision, who once tried their hands at satellite with Voom, might consider a Dish purchase as a means to augment their subscriber numbers as well.  That would certainly propel them into double digit subscriber numbers.  And then there are the hedge fund guys who see future value in picking up Dish for the time being.

For now, Dish sits idly by as the FCC ponders two huge acquisition issues.  But I doubt very much that Dish is being idle.  We shall wait and see what is up their sleeve. 

Broadband Has A "Need For Speed"

We expect that when we pick up the telephone that it is immediately ready to make a call.  We expect that when we turn on the TV, that a TV show appears.  We expect when we flick on the light switch, that electricity immediately comes on and our lamp turns on.  Yet when we sit in front of our computer or tablet, we must wait for our web page to refresh.  Sure it comes on and the wait may be a few seconds (or longer), but we continue to wait.  Add more devices to the stream, and delay time mounts. 

If this is you, then you are not alone.  The speed is only as fast as the internet connection that you have and coaxial cable to the home has its limitations.  As Tom Cruise said in the movie Top Gun, we have a need for speed.  Today's best wired choice is optical fiber but that is not how most of the US is wired for broadband.  "The United States ranks in 14th place behind countries like Sweden, Japan, South Korea, Romania and Macau in fiber connectivity."  In fact, " only 7.7 percent of broadband subscribers have optical fiber connections, the fastest and highest quality available." 

The capital costs to update our infrastructure must be enormous and the cable companies may have little motivation to invest unless they can gain a bigger return.  Google is investing in a few markets and Verizon FIOS as well.  Our only other hope is wireless broadband although the speed may not match as well to a wired fiber connection. 

Unfortunately for all that the US has accomplished, broadband speed does not rank us high in the world.  How then can we ramp up our connectivity speed without costing consumers an arm and a leg?  It may just take a quantum leap in building new processes for refresh and load that can handle packets of data that are only getting more and more heavy.  Till then, we can only watch and wait as the little wheel tells us our content is loading and will be ready shortly.

Amazon Seeks New Wireless Connections to Its Content

The biggest challenge facing OTT content companies like Amazon and Netflix, OTT boxes like Roku, Apple TV, and Aereo, and even smart TV manufacturers like Samsung, is that they all rely on existing broadband providers.   That means that even cable cord cutters still must get their broadband service from their cable or telco provider.  We've seen that when a customer drops cable service, the price of their broadband service rises because they no longer get the discount advantage.  I continue to say that new competition in broadband service is needed to keep price points low.  Well Amazon might just be on the same page. 

"The wireless network, which was tested in Cupertino, California, used spectrum controlled by satellite communications company Globalstar Inc. (GSAT), said the people who asked not to be identified because the test was private."  How far Amazon wants to get into this space remains to be seen although it might make sense, give the capital costs, to partner with other OTT companies to create a wireless/broadband competitor to cable and the telcos.  And while Google is building a fiber based business in Kansas City, a wireless competitor that can effectively handle video streaming would be ideal.  Certainly Dish had been trying this route in trying to acquire Clearwire.  Should GSAT have the spectrum to handle such capacity, Amazon may have found a new business model and a seamless connection from consumer directly to their content. 

T-Mobile Finding New Growth Enjoyable

It may have taken getting the iPhone approved for carriage on its service for T-Mobile to start to find new growth opportunities.  That and the introduction of new flexible pricing policies to enable earlier upgrades of phone models have been gold to a company that has been seen as an also ran to the two biggest players, Verizon Wireless and AT&T.  The result, "Total branded customer net additions of 678,000, the strongest growth in four years (and) Record low branded postpaid churn of 1.58%, a decrease of approximately 50 basis points year-over-year".  Two KPIs that challenge every subscription service, higher year over year growth and low churn of existing customers.  A win for T-Mobile on both fronts. 

Certainly the other carriers are paying attention to T-Mobile's differentiated approach to upgrades and contracts.  They are already changing their plans while charging customers more upfront to upgrade earlier.  How consumers embrace this new pricing plans will determine the ongoing growth of these companies.  Clearly T-Mobile is out to take away market share and prove that they can compete with product and service. 

Strike Two For Dish Network - No Clearwire

Dish Network has been swinging but unfortunately also missing the ball.  Strike one was losing a bid for Sprint to Softbank and strike two is losing its bid for Clearwire to Sprint.  "The developments pose a dilemma for Dish Chairman Charlie Ergen as he tries to create a national wireless broadband service. He has been amassing airwave spectrum rights but has said that he needs additional licenses. He had hoped to secure that by acquiring a large minority stake in Clearwire –  and by acquiring Sprint."  So what to do next?  Does Dish Network have another swing left and who might it be?

Some are speculating that Dish may still have their eyes on Lightsquared, although that spectrum space has been questioned for its interference issues.  Others are speculating that dish may reach out to another wireless provider, perhaps T Mobile, to gain a national footprint.  And still others think the best course of action is for Dish Network and DirecTv to merge into a more powerful satellite competitor.  One wonders if this third scenario might raise the anti trade issues of a single consolidated satellite company, but if Sirius and XM could make it work, so should these two.  For me, I think the next step is a wireless play and perhaps a T-Mobile and Lightsquared combination may create synergies similar to what Sprint and Clearwire brought to the table.  For now, the next move seems to be Ergens.

Clearwire Big Winner As Sprint Raises Offer

Regardless of whether Dish or Sprint buy Clearwire, it is clear to me that Clearwire and its shareholders are the big winner.  Dish may have wanted the company but they also forced Sprint to raise their offer.  "Clearwire’s board of directors said it has endorsed the new Sprint bid, which values Clearwire at about $14 billion."  So what is Dish to do next, up their bid for Clearwire, go back and bid again for Sprint?  Should Sprint acquire the remaining shares of Clearwire, they will hopefully be able to utilize that spectrum to better compete against Verizon and AT&T in the wireless space.  And a bigger Sprint may be a better acquisition target.

Some rumors that Dish may follow up and partner with Google to raise its bid.  Certainly Google would also like to enjoy the uses of that spectrum for its broadband needs as well.  And Dish and Google might just find some other useful synergies as well.

How To Stop Cord Cutting And Raise Revenues

Want to hear an old idea that keeps popping up.  An idea that wants households to spend more and depress the growth in online streaming.  It is called broadband usage fees and it means that heavier streaming users would pay more, depending on the number of bytes fed through the system.  Think utility bills like electricity, gas, and water; this time for broadband.  "Some Wall Street analysts have suggested that cable operators could eventually start charging subscribers or broadband video providers based on broadband usage."  And John Malone, Chairman of Liberty Media, seems fully behind "'various tiers of connectivity,' possibly with built-in video offerings or bundles." And I am sure that these fees are hoping to encourage cable customers to retain their cable subscription and take advantage of lower cost bundles of broadband service.

Current streaming is already clogging the broadband pipeline and cable operators are charging more for higher speeds.  Not happy with unleaded, pay more for ultra supreme.  But consumers who find themselves charged by actual usage will want to have a counter attached to their system to keep track of how much cost is flowing out.  Hit your peak before the end of the month and you might feel the need to turn off broadband till the new billing cycle starts.  And don't forget to password protect your home WIFI; no one wants to pay for non-family members.

It harkens back to the day when we feared making a long distance phone call for an extended length of time. It took some time before we moved to an all you can call phone bill.  And no one wants to move backward.  We can only hope that through technological innovation and more competition, broadband access becomes ubiquitous and the cost of a stream so low that usage fees won't matter.

Dish Network Pushing Hard For Wireless

Two interesting articles in the news.  The first article from Reuters was that Dish Network has raised their bid for Clearwire while simultaneously trying to buy Sprint as well.  The second article, in the business section of The Wall Street Journal, talks about cord cutters not only dropping their cable subscription, but their wired internet subscription as well.  "Hundreds of thousands of Americans canceled their home Internet service last year, surveys suggest, taking advantage of the proliferation of Wi-Fi hot spots and fast new wireless networks that have made Web connections on smartphones and tablets ubiquitous."

Does Dish Network see the same trend?  Along with a satellite business, Dish must certainly believe as well that owning a wireless universe could make them a stronger competitive threat to cable.  And as long as the Wi-Fi cost to the subscriber is seen as a good value,  a likely disruptor to the wired world. 

For light users of video streaming, a Wi-Fi solution is seen as far cheaper than a cable and wired broadband subscription.  But wireless providers may not be willing to support the heavy streaming user with an "all you can stream" solution at one low monthly price.   Those users may indeed find more value staying with their cable and broadband provider.  That is until a company can build out a scalable solution of wireless that can be offered at a lower cost and with higher connectivity speeds.  And that is likely the direction Dish may seek to take in buying up companies like Sprint, Clearwire, and Lightsquared. 

Internet Connectivity Everywhere At A Cost

For almost all of us, we are on the grid.  Wherever we go, we are found.  We can track our iPhone, but our iPhone also tracks us.  We can drive anywhere we want, but our EZ Pass tells others which check points where passed and how much to charge us.  And we can be constantly connected to the internet, whether through our TVs, phones, laptops, and yes, our cars.

Sirius has had a pretty exclusive connection to us in our cars with satellite coverage and a wide assortment of music, news, sports, and more to entertain us.  But the rise in internet connectivity has enabled competitors to enter this space as well.  "But Pandora is making a huge push to get into the car, a move that dovetails with ubiquitous wireless access that makes it easier to listen to its service.
'Internet-enabled radio in the car has already begun,' Pandora Chief Executive Officer Joe Kennedy said in an interview. 'It will grow as a snowball, initially small but growing exponentially.'"  And ultimately, more competition means lower prices to consumers.

Interestingly, according to the article, Sirius and Pandora each face different cost structures with Pandora paying out far greater royalty payments.  And to complicate the cost issue even more..."Traditional radio pays nothing at all to SoundExchange, although it pays composers to air their music."  

Wireless connectivity is big business these days and the above growth is just one indication why Dish Network wants to buy Clearwire and compete in the space.  Because at the end of the day, to be connected, we as consumers must also pay for access to wireless along with the services themselves.  And with more desire to be "always on and connected", wireless connectivity is moving more and more away from an all you can eat model toward a usage fee, with heavy users paying more to be connected. 

Dish Network Wants To Be Your Broadband Provider

Dish Network has  a plan of action.  First, get FCC approval to use its wireless spectrum and second grow the business.  With that in mind, Dish has declared its intentions to move quickly by counter bidding on Clearwire to wrestle control from Sprint.  "Under the proposed deal, Dish Network would buy about 24% of Clearwire's spectrum assets for $2.2 billion, and Clearwire would build and manage a wireless network for Dish. Dish would also provide up to $800 million in additional financing to the struggling Clearwire."  So while counter-offering Sprint, a successful bid would also mean that Sprint and Dish would become partners in the ownership of the wireless entity.

What is Sprint going to do?  Given that they too are being purchased by Softbank.  And is this the best move for Dish?  Given some of the issues facing Clearwire, "Clearwire's frequencies are difficult to use", should Dish look to partner more closely with another wireless provider like Sprint itself or Nextel.

What Dish does know is that two way communication is key.  Google is building a wired market for broadband such as in Kansas City, but for Dish, the strategy is a wireless infrastructure to compete.  And ultimately for the consumer, more competition for wireless and broadband access is good news in keeping prices competitive. 

Dish Network Goes Cellular

Dish Network has plans for wireless and the FCC has approved them.  What those plans are remain to be seen although it certainly makes Dish a bigger competitor in the cable and mobile space.  Whether they use the spectrum for broadband to their customers or to build a new cellular phone competitor remains to be seen.  "The rule would allow Dish to use the airwaves for a ground-based cellular network. It may partner with another cellular company to build a network from the spectrum." With Sprint looking to buy out Clearwire, this could add a wrinkle to the conversation.

Gaining full support from the FCC must be a great holiday present for Dish as it opens up brand new business opportunities.  It might also be a present to broadband and cellular consumers wishing that there was more competition in the wireless space.  With the door finally open for Dish to proceed in mobile, we must wait to see how fast their business plan can be executed.