The Hollywood Reporter’s Andrew Wallenstein has this extended, excellent piece on the cable-telco battle of the bundles. Buried in the article, however, is something new to me: Comcast, Time Warner and Cox will start this month testing the sale of mobile voice service as part of a new, expanded quadruple-play package.
This potentially killer combination flows from the $200 million dollar-backed consortium formed last year by Comcast, Time Warner, Cox Communications and Advance/Newhouse with Sprint-Nextel. According to the piece, Comcast and Cox will trial a mobile voice service in selected markets including Boston, Austin, Texas, and Portland, OR.
The inclusion of a pure mobile voice option is a surprise given that the cable companies have practically dismissed the idea that they might add a mobile voice option to their triple-play bundles. Instead, execs at Comcast and Time Warner have said repeatedly that they intend to pursue value-added mobile services through their partnership with Sprint, pioneering the idea of a “third screen,” which would include such things as multichannel video on phones and the ability to program PVRs remotely.
Initial plans called for the “third screen” function to operate over Sprint’s Powervision EV-DO network. The consortium is also actively participating in the AWS broadband wireless auctions at the FCC, having put up $637 million to be eligible to bid on the valuable spectrum.
Posted by Cynthia Brumfield at 10:30 PM | Print | Comments (0)
GigaOm’s Katie Fehrenbacher attended today a speech by AT&T Chairman Ed Whitacre before the National Association of Regulatory Utility Commissioners and reports that he’s as hard-line as ever about network neutrality. Here’s what he said:
“Some companies want us to be a big dumb pipe that gets bigger and bigger…No one gets a free ride. The American economy doesn’t work that way…We are not going to build this with no chance for a return. Those that want to use this will pay.”
This comes on the heels of Mike McCurry’s much-derided op-ed piece in the Baltimore Sun. McCurry claims that companies like Google don’t “want to pay a dime” for their bandwidth usage.
The “neutral” proposal that companies like Google are touting will ensure that they never have to pay a dime no matter how much bandwidth they use, and consumers who may only use their computers to send e-mail and play Solitaire get to foot the bill. That is not very neutral.
This contention (and the fact that McCurry didn’t clearly identify himself as a paid spokesperson for the telcos) got Mike at TechDirt steamed.
That’s a flat out lie. Google pays tremendously large bandwidth bills, and the more they use the more they pay. However, if McCurry is going to pretend Google “never [has] to pay a dime no matter how much bandwidth they use,” let’s see him put up or shut up. If McCurry really believes that, will he agree to pay Google’s bandwidth bills for the rest of this year?
This flurry of renewed public posturing on net neutrality coincides with the possibility, although it seems a remote likelihood, that Senator Ted Stevens (R-AK) might bring his telecom reform bill up for a cloture vote this week. There’s a lot going on in the Senate, including a defense appropriations bill and legislation that would allow for offshore drilling.
Posted by Cynthia Brumfield at 4:57 PM | Print | Comments (0)
Tiny New York-based start-up Blip.tv has hit the big time — the five-person company powers the video-sharing technology that runs CNN’s citizen journalism site I-Report. Blip.TV, a force in vlogging for the past year, announced today other commercial deals as well, although its passion is for democratizing video and giving ordinary people the power to distribute TV shows. (My favorite of Blip.tv’s new money-making ventures is the license deal it signed with the William Shatner DVD Club — I kid you not.)
Despite the prestige in landing CNN, a Turner Broadcasting/Time Warner company, as a client, Dina Kaplan, COO of Blip.tv, is most excited about the company’s ability to deliver an audience to the growing ranks of citizen journalists and TV show producers. “Blip.tv is all about grassroots media. We’re all about being part of the democratization of the media,” she said.
The community-based Blip.tv launched in May 2005 as a “service for the video blogging community to attract and maintain the wonderful people who are creating original content,” Kaplan said. She distinguishes blip.tv from the rising throng of video sharing technology providers, such as Revver or YouTube or Guba, by stressing blip.tv’s focus on original, serialized content.
Unlike viral video-oriented YouTube, blip.tv is a platform for people who want to create ongoing shows and build an audience. One of the most popular vloggers or TV show producers on blip.tv is Josh Leo, a young man from Grand Rapids, MI. “Josh Leo is the perfect example of the power of this new medium. He can get 100,000 people watching one episode of this show” with no marketing or promotion expense, Kaplan said. “It’s a pretty powerful force.”
Blip.tv does not require viewers to give up ownership of their video (although CNN’s I-Report does) and does scan submissions for copyrighted content that has been posted without the owners’ permission, which is a thorny problem for YouTube and other sites.
Despite its noble desires, Blip.tv is a commercial enterprise. In addition to selling technology licenses to corporate clients, Blip.tv sells advertising. The TV series approach provides a better foundation for selling advertising, Kaplan said, because “it’s much easier to sell than a one-off show” such as the viral videos on YouTube.
With low costs and a small staff, Blip.tv is already profitable. The company generated profits shortly after its initial angel investor funding a few months ago. Blip.tv doesn’t release traffic statistics, but Kaplan claims that the user numbers are growing at a rate of 32% to 33% per month, while the number of posts are increasing by 34% to 35% per month.
Kaplan’s not worried that the video publishing market is getting overcrowded. She likens the boom in Internet video to the rise of cable networks. “I think there will be a lot of winners in this space. Just as there are networks such as Bravo and Discovery and on and on…there’s room for multiple channels on the web.”
Posted by Cynthia Brumfield at 3:37 PM | Print | Comments (0)Incumbent telco Verizon released its Q2 06 earnings report this morning showing accelerated switched access line losses, strong broadband and wireless growth and middling year-over-year revenue and net income changes. And for the first time ever, Verizon offered some data on the performance of its fiber-to-the-home FiOS initiative.
Taking the financials first, Verizon’s year-over-year adjusted revenue (taking into account Verizon’s acquisition of MCI and comparing the data for both companies combined for both time periods) ticked up by 2.3% to $22.7 billion, while net income dipped 2% to $1.87 billion.
Line losses increased during the quarter, with Verizon losing 1.02 million access lines, up from its Q1 06 line loss of 830,000. During the company’s earnings call, CFO Doreen Tobin conceded that line losses will just go on and on. “Given the increased technology substitution, I think it’s fair to say access lines will go down,” she said.
Comcast was fingered as a key contributor to Verizon’s access line loss (AT&T also blamed the nation’s top operator for its market share erosion) given that the cable company ramped up its VoIP deployments during the first half of 2006. “We did see increased competition in those areas that Comcast turned up,” Tobin said.
Offsetting the loss of voice customers was the continued strong growth in broadband. During the quarter, Verizon added 440,000 net new high-speed customers, a run-rate 58% higher than the net adds in Q2 05, wrapping up Q2 06 with 6.1 million broadband customers.
Of these, 375,000 were FiOS-based high-speed customers, marking the first time that Verizon has revealed this statistic. During the earnings call, Tobin said that this reflected approximately 12% penetration of FiOS-capable homes, a strong showing in a short period of time.
Verizon is still withholding hard data about its FiOS TV services but promises to reveal more in the months ahead. Tobin did say that penetration of FiOS TV is 7% at three months, and 10% at six months, following initial deployment. Around 4.5 million homes were passed by FiOS plant (not all capable of receiving high-speed or video services) by the end of Q2 06.
The telco hopes to gain more traction with FiOS TV as it adds new bells and whistles to the service. Tobin said that one new feature that will be introduced next month is “home media DVR” that provides access to all video recordings and photos and music stored on PCs to any digital set-top in the house.
| Verizon Selected Metrics | 2Q05 | 3Q05 | 4Q05 | 1Q06 | 2Q06 |
| Total access lines (mil.) | 50.70 | 49.69 | 48.80 | 47.97 | 46.95 |
| Change | (0.80) | (1.01) | (0.89) | (0.83) | (1.02) |
| Broadband Customers (000)* | 4,142 | 4,530 | 5,144 | 5,685 | 6,125 |
| % of total lines | 8.2% | 9.1% | 10.5% | 11.9% | 13.0% |
| Quarterly adds (000) | 278 | 388 | 614 | 541 | 440 |
| FiOs Homes Passed (mil.) | 1.5 | 2.5 | 3.0 | 3.6 | 4.5 |
| FiOS Data (000) | na | na | na | 264.0 | 375.0 |
| Penetration of Capable HH | na | na | na | na | 12% |
| Customers (mil.) | 47.4 | 49.3 | 51.3 | 53.0 | 54.8 |
| Video Customers, DBS (000) | 250 | 300 | 349 | 415 | 485 |
| Total adjusted revenue (bil.) | $ 22.17 | na | na | $ 22.97 | $ 22.68 |
| Operating Income (bil.) | $ 3.44 | na | na | $ 3.94 | $ 4.01 |
| Net income (bil.) | $ 1.91 | na | na | $ 1.63 | $ 1.87 |
| Cash Flow (bil.) | $ 6.0 | na | na | $ 6.10 | $ 5.40 |
| Verizon Wireless Subs. (mil.) | 47.4 | 49.3 | 51.3 | 53.0 | 54.8 |
| Net Adds (000) | 1,921 | 1,918 | 2,046 | 1,683 | 1,815 |
| Penetration | 19.2% | 19.9% | 20.5% | 20.8% | 21.5% |
| *Includes FiOS data customers for Q1 06 and Q2 06. | |||||
| Source: Emerging Media Dynamics, Inc. analysis of company data. © 2006. | |||||
Posted by Cynthia Brumfield at 2:02 PM | Print | Comments (0)
Business Week has this concise piece on YouTube and the narrow straits it walks in finding a viable business model. The issue, of course, is how to monetize YouTube with ad revenues (which would undoubtedly be gargantuan) without running deep into serious copyright infringement liabilities.
Although lawyers agree that YouTube should be protected by copyright law as long as it responds to content owners’ requests to take down their works, it entered uncharted territory when it recently began adding ads next to search results. The law prohibits a site from benefiting financially from infringement, but the company argues that it’s protected since it doesn’t sell ads against individual videos. Still, the courts haven’t set clear boundaries. “There has to be some way to make money with advertising that doesn’t deprive you of the safe harbor. But where that line is, no one really knows,” says Fred von Lohmann, a lawyer for the Electronic Frontier Foundation.
The piece lays out an astonishing statistic: YouTube accounts for 60% of all online video viewing. Meanwhile, according to this Guardian Unlimited article, which cites Alexa statistics, YouTube has now surpassed MySpace in traffic. YouTube has a 3.9% share of global internet visits a day compared with 3.35% for MySpace.
Posted by Cynthia Brumfield at 11:13 AM | Print | Comments (0)
The city of Boston is pursuing a decidely unique approach to mounting its muni-broadband services. Instead of contracting out the initiative to a commercial third-party, Boston has instead decided to set up a non-profit foundation that would run a common carrier network of sorts, allowing multiple providers to compete over the infrastructure. Yesterday, Mayor Thomas M. Menino named Pamela Reeve, former CEO of software company Lightbridge, to head the search for a non-profit willing to build the massive network.
Reeve is charged with raising $16 million to $20 million in donations to build the system. She will approach businesses, hospitals, universities and the like asking for contributions. Hmmm….although innovative in its approach, positioning something as crucial as a major communications service as a charity, so to speak, seems just a little pie-in-the-sky, kind of like putting 21st-century broadband applications on par with United Way contributions.
City Councilor John M. Tobin is quoted as saying
“My major concern is the raising of funds,” he said. “There’s a lot of people out there trying to raise money, for gun buyback programs, for summer jobs. We need to be out there telling people why this is so important for the city.”
Although Boston did raise $35 million to wire the city’s schools for broadband a few years back, that, at least, was a feel-good cause likely to bring out good corporate citizens. When it comes to a city-wide network that may or may not have direct benefits for any single contributor, businesses and institutions may not be as inclined to open their pocketbooks.
Posted by Cynthia Brumfield at 10:21 AM | Print | Comments (0)Controversial and innovative VoIP provider Vonage issued its first set of quarterly earnings results as a public company this morning, showing continued strong growth in subscribers and a sequential slow-down in its heavy quarterly losses. Vonage predicts it will continue to lower losses on a quarterly basis to the point that it now expects to achieve adjusted operating profits as early as the first quarter of 2008.
Year-over-year revenues jumped by 141% to $143 million in Q2 06 while net losses increased 17% to $74 million. On a sequential basis, however, losses slowed, ticking up by only 1.8% from the $72.8 million loss in Q1 06. But loss from operations was down 11% sequentially, from $82.4 million in Q1 06 to $73.6 million in Q2 06. (Vonage, however, highlighted the decline in the adjusted loss from operations, which doesn’t include depreciation, amortization and non-cash stock compensation expenses. This metric dropped 18% sequentially.)
During the quarter, Vonage added a 255,936 net new customers, a run-rate up 23% year-over-year. By quarter’s end, Vonage served a total of 1.85 million subscribers, more than double the total at the end of Q2 05. Monthly revenue per line grew by 4% to $27.70 while Vonage held the line on costs.
Marketing costs per gross subscriber addition edged up 1% to $239 and the direct cost of providing service to each line dropped by 5% to $7.52 per month. Margins increased, with the direct margin as a percent of total revenue advancing from 55% in Q2 05 to 66% in Q2 06.
Despite all these gains, and the prospect of continued loss reduction, Vonage is still vulnerable due to its stand-alone status. Cable operators are stepping up their own VoIP service launches and pushing the value of triple-play service packages. Moreover, other stand-alone VoIP providers, such as Skype and SunRocket, are promoting new low-cost service plans that promise to slow Vonage’s growth.
However, during the company’s earnings call, CEO Mike Snyder said that Vonage hasn’t yet felt these competitive impacts. He contended, moreover, that cable’s introduction of voice services helps Vonage. “Some of their marketing development benefits us because it accelerates the adoption of VoIP,” Snyder said.
In fact, Vonage doesn’t plan to drop prices to meet the growing competition. Founder, Chairman and Chief Strategist Jeffrey Citron said the game plan calls for adding value and not lowering prices. “Since we’ve stopped changing our price almost seven quarters ago, we’ve seen not only price stability across those six quarters, we’ve managed to increase our ARPU levels,” he said. Now, “it’s our job to start figuring out how to generate value to those customers.”
| Vonage Key Metrics | |||
| 2Q05 | 2Q06 | % Change | |
| Operating Revenues | $ 59,435 | $ 143,378 | 141% |
| Operating Expenses* | $124,388 | $ 217,006 | 74% |
| Loss from operations | $ (64,953) | $ (73,628) | 13% |
| Net loss(2) | $ (63,623) | $ (74,136) | 17% |
| Gross subscriber line additions | 262,310 | 377,005 | 44% |
| Net subscriber line additions | 207,950 | 255,936 | 23% |
| Subscriber lines | 847,849 | 1,853,253 | 119% |
| Average monthly customer churn | 2.10% | 2.30% | 10% |
| Average monthly revenue per line | $ 26.6 | $ 27.70 | 4% |
| Average monthly telephony services revenue per line | $ 25.8 | $ 26.40 | 2% |
| Average monthly direct cost of telephony services per line | $ 7.9 | $ 7.52 | -5% |
| Marketing cost per gross subscriber line addition | $ 236 | $ 239 | 1% |
| Employees | 1,397 | 1,602 | 15% |
| CPE Subsidy | $ 28.00 | $ 24.68 | -12% |
| Direct Margin % Total Revenue | 55% | 62% | 13% |
| Adjusted SGA as % Total Revenue | 56% | 40% | -28% |
| *(excluding depreciation and amortization of $3,133, $1,426,) | |||
Posted by Cynthia Brumfield at 9:23 AM | Print | Comments (0)
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