TelcoTV

Is Three Screen Convergence a Pipe Dream?

Bernie — Mon, 17 Nov 2008 16:15:58 -0500

The TelcoTV Conference, which concluded last week, had its fair share of three screen convergence discussion. The idea of delivering a converged and integrated video/entertainment experience to the TV, PC, and mobile device is all the rage right now. But I walked away thinking, that at least in the U.S., three screen convergence still remains a dream, except to AT&T and Verizon. Those two seem to be the only companies in the U.S. with a legitimate shot for achieving its promise. They intend on leveraging it as a differentiation strategy over cable and DBS competitors. But where does that leave everyone else? Are all other carriers left on the three screen sideline, while AT&T and Verizon battle soon to be wireless enabled Cox, Comcast, and other cable companies? Forget the digital divide, are we now confronted with the “convergence divide?” Admittedly, TelcoTV’s own panel, “The Realities of Convergence for Small Carriers” created more questions than answers. But that’s not from lack of effort. The panel's outcome is illustrative of the marketplace reality – no clear convergence answers except for all but the largest of carriers. The remaining majority of telcoTV carriers lack the necessary ingredients – scale, a complementary wireless network, and deep enough pockets to pay for the complicated integration. Maybe the bigger question is, does anyone really care? Is this whole concept of content anywhere and on any device important to anyone but the marketers and analysts who promote it?

Let’s assume for a second, that it does “have some legs.” Seems to me, this is ripe territory for partnership. Why can’t Sprint and/or T-Mobile partner with the multitude of wireline IPTV carriers who are not AT&T or Verizon, and jointly develop and market a three screen converged product portfolio? Wouldn’t it make sense for all involved (assuming Sprint is interested, which they may not be, given their existing efforts with the cable industry)? The combined effort would allow Sprint/T-Mobile to more effectively compete with AT&T and Verizon’s three screen push. The same could be said for the existing smaller IPTV providers who will want to differentiate themselves from their video competitors (or maybe keep up with them). There is certainly enough overlap between Sprint/T-Mobile footprints and the IPTV operators who lack a wireless network. Unfortunately, partnering for wireless service has had mixed success. There are a few success stories out there, but most wireline carriers who are anxious to partner with wireless carriers find themselves looking for an elusive dancing partner. The MVNO model hasn’t quite panned out. Perhaps adding video to the mix will make up for the apparent lack of interest in developing wide scale win-win mobile wireless partnerships.

I realize I’m over simplifying the partnership process. The reality is it’s quite complicated and often messy. Adding video to the mix may not even be viable, given the system integration challenges among hundreds of different IPTV provider networks. The business model hasn’t historically been pretty either. There’s a reason why we haven’t seen a great model emerge, where wireline carriers who lack spectrum and a wireless network, partner with an existing wireless carrier to offer wireless services. And do so in a fashion where they can both make a little money at it, while maintaining respective ownership and control of the customer experience (although there are some promising partnerships on the horizon, including Crossroads Wireless). It’s one of those things that make perfect logical sense on paper, but reality proves otherwise. It's not an encouraging picture for three screen convergence evangelists.

Telcos Are Reinventing TV

Bernie — Wed, 12 Nov 2008 14:54:02 -0500

The TelcoTV Conference kicked off this morning with keynote addresses from both AT&T and Verizon. Dan York, Executive Vice President of Content for AT&T and John Harrobin, Senior Vice President for Marketing and Digital Media for Verizon both offered glimpses into their respective company’s three screen entertainment strategy. A recurring theme throughout both presentations was that telcos are reinventing the television experience, and doing so more effectively than their cable competitors. “Telcos are at the center of reinventing TV,” said Harrobin. “Telcos are best positioned to mine content assets and maximize value,” through the integration of mobile, broadband and TV, and are executing that vision better than cable, said Harrobin.

“We’re redefining ourselves as a communications and entertainment company,” said York. “But entertainment is more than just video,” he said. York painted a picture where entertainment involves integrating all services and platforms with an entertainment portfolio. “Putting entertainment in the bundle is not enough,” said York. “This goes beyond putting three services on one bill.” The emphasis of telcos beating cable at their own game couldn’t have been louder. I counted five instances of “more than cable” references in York’s 30 minute speech alone. Harrobin alluded to the “death of linear television” and suggested that telcos are better positioned to leverage the future of television which will be more focused on VOD and web integrated video experiences. “The magic happens when we connect the three platforms of mobile, broadband and TV,” he said.

Despite the bravado and hype of York and Harrobin’s comments, there is an argument to be made for their hypothesis. TelcoTV operators are being more innovative with video and are executing a better three screen strategy than their cable and DBS competitors. But realistically, what choice do they have? They have to be more innovative and offer a more compelling mix of features to compete with well entrenched cable and DBS competitors. The same could be said for cable’s assault on telco’s core service – voice. Cable is offering more innovative voice offerings than their entrenched telco competitors. It’s a factor of the marketplace. Competition is always a catalyst for innovation.

J.D. Power: TelcoTV Beats Cable

Bernie — Wed, 01 Oct 2008 21:16:28 -0400

The latest J.D. Power rankings for television service has AT&T U-verse and Verizon FiOS beating cable companies in customer satisfaction. There’s a sense of irony here, because according to J.D. Power, cable companies have been beating phone companies in telephone satisfaction. Payback I guess. AT&T U-verse led the pack, with the highest ratings in three of the four regions, including North Central, West, and South. Verizon FiOS ranked highest in the East region. WOW was the highest rated cable company, finishing second in the North Central region. DirecTV was the highest rated DBS provider, finishing second in the East.

Like the cable companies ratings in voice, telcoTV providers are probably on somewhat of a honeymoon with subscribers. Being the new kids on the block with new features and aggressive promotions tends to leave a “good taste” in the mouth of consumers. These ratings will mean much more after a few more years of competition in many more markets than today.

NCTC Eyeing Telcos?

Bernie — Mon, 08 Sep 2008 10:07:16 -0400

I got word last week that the National Cable Television Cooperative (NCTC) may be relaxing some of its membership rules to allow IPTV providers to join. NCTC is one of the original aggregators of video content. Small cable companies formed NCTC to pool subscriber counts and get access to programming at rates that they could not get on their own. NCTC’s legacy has historically been tied to small cable companies. In the past ten years, small telephone companies wanted in on the video action as well and began joining NCTC to get access to cheaper programming. But those same telcos also competed with NCTC’s historical membership. The scuttlebutt is that the competitive threat posed by telcos caused NCTC to institute a new member moratorium in 2005. That moratorium created an opening for more telco focused content aggregators including NRTC and Telechannel.

Word now is NCTC is revisiting the moratorium. Telephony Online asked my opinion of this development, for which I commented that I wouldn’t be surprised if they allowed IPTV providers into the membership. NCTC, like any organization, needs sustainable growth, and telcos represent that growth. This issue is far from resolved and NCTC is being very vague about exactly what their new membership rules will be. I suspect that many NCTC members wouldn’t be keen on relaxing the moratorium, which creates somewhat of a conundrum for the organization itself. Keep existing members happy with the status quo, or think long term and open your doors to a growing market segment. Makes for some interesting board meetings I’m sure.

There are two events we’re involved with that are squarely focused on these and other telcoTV and IPTV issues. First is the TelcoTV Conference and Expo, coming up in November in Anaheim. TelcoTV is the premier event for the discussion of issues like this, and offers the largest solely focused exhibition of telcoTV solution providers of any conference in North America. Second, is a webcast we’re hosting on Thursday Sept. 11th, IPTV Content: Putting the Pieces in Place, sponsored by Avail Media. We’ll be discussing the importance of IPTV content and clarifying the different content rights issues. We’ll also have representatives from ESPN and Wealth TV to share their views on these important issues. I hope you can join us for both.

No Slowdown in TelcoTV

Bernie — Wed, 27 Aug 2008 09:01:43 -0400

Recent days have seen a flurry of new launches for video services by both AT&T and Verizon. Markets like Jacksonville, Florida, South Bend, Indiana, and Hampton, Virginia are all now able to receive video from the local phone company in addition to cable and DBS options. And it’s not just the large players either. Smaller telcos across the U.S. continue to launch IPTV services. Avail Media, an aggregator of content and IPTV solutions for smaller telcos, announced 20 new affiliates this week. The competitive posturing continues as well, with all kinds of promotions being offered to entice people to switch services. I live in the D.C. area and noticed a commercial from Comcast the other day promoting free DVR for a year – a direct response to Verizon FiOS’ ongoing free multi-room DVR promotion. The ongoing battle lines seem to be intensifying. Should be fun to watch.

Avail Media Launches New VOD Affiliates

Bernie — Tue, 08 Jul 2008 09:41:02 -0400

Avail Media announced the launch of several new affiliates for its VOD service. The new affiliates include Clarksville Utilities, NuVision, FTC Diversified Services, LigTel, Guam Telecom Authority, Kentucky Telephone, and Lafayette Utilities System. "With Avail On Demand, we are now able to provide our subscribers with a wide variety of content from both major motion picture studios and independents," said Dent Adams, COO, FTC Diversified Services in a Avail Media press release.

Competition Not Lowering Retail Cable Rates

Bernie — Mon, 07 Jul 2008 22:34:56 -0400

A recent survey sponsored by the Alliance for Community Media and the National Association of Telecommunications Officers and Advisors indicates that despite growing competition for incumbent cable operators, retail cable rates are actually rising. Sixty-six percent of the survey respondents said basic cable rates have increased in their communities, even after the arrival of competition. The survey focuses on the trend of statewide cable franchising bills, which the survey sponsors oppose, citing the loss of control by local communities for franchising issues. Only 1% of the respondents indicate lower cable rates as a result of new competition, which is coming mainly from telcoTV operators like AT&T, Verizon, and hundreds of independent telcos. Multichannel News offers more details on the survey results.

Having a market research arm at Telecompetitor’s parent, Pivot Media, I’m certainly not one to bash survey results. But I would argue that this issue needs more time before firm conclusions can be drawn. Competition between cable and telco simply hasn’t been present long enough in a sufficient number of markets to conclude that retail rates have not been impacted. I would also argue that while retail rates may not have dropped, their rate of ascent surely has been slowed by the arrival of competition. Additionally, perhaps a more accurate measure of competitive impact may lie with digital cable rates, since telcoTV offers are more closely aligned with digital tiers.

AT&T Brings U-Verse to Tulsa

Bernie — Mon, 07 Jul 2008 00:00:00 -0400

AT&T announced the launch of its integrated U-verse bundle, which includes AT&T U-verse TV, AT&T U-verse High Speed Internet and AT&T U-verse Voice in Tulsa, OK. The service will also be available in Jenks and Owasso, OK. AT&T will make U-verse services available to more homes throughout the area on an ongoing basis.

DirecTV: TelcoTV Gains are Unsustainable

Bernie — Thu, 29 May 2008 22:52:11 -0400

Chase Carey, CEO of DirecTV, says that they've felt the competitive impact (certainly not as much as DISH Networks) from telcos and their video offerings. But he's not too worried, because those gains, by his estimation, are unsustainable. Carey asserts that the discounts and promotions offered by telcos to grab video market share can't be continued, and that consumers are getting savvier about triple play bundles and the promotional pricing tied to them. There's certainly some truth to that, but its funny hearing it from a DBS industry that historically had very high (maybe the highest) subscriber acquisition costs when they were in the thick of taking market share from the cable industry. Maybe it's too early to tell, but it appears that strategy worked for them, since they now collectively have roughly one third of the video subscription market. Why then, can't telcoTV players follow suit? Carey offered his comments at a Lehman Brothers Wireless and Wireline Conference in New York City on Thursday. Carey said he's quite comfortable with DirecTV's position relative to its competitors. He says DirecTV is faring quite well and their successful HD market lead is paying dividends.

AT&T Expanding U-Verse Differentiation Attempts

Bernie — Wed, 02 Apr 2008 12:54:10 -0400

AT&T is making another assault on the “me too” scenario faced by telcoTV providers in the U.S. TelcoTV providers are constantly trying to create some differentiation between their video service and that of their cable and DBS competitors. Otherwise, all you have is a “me too” video service, with very little distinction from what’s already available in the marketplace. With that in mind, AT&T announced the launch of AT&T Online Photos from Flickr, which allows the viewing of Flickr based photos and slideshows on the AT&T U-verse platform.

According to AT&T, they are “the only video service provider to offer an integrated online photos channel... at no extra charge." The photo service channel is located on channel 91 of U-verse’s channel line-up. AT&T also offers a variety of other differentiating applications, including AT&T U-bar, which provides customizable weather, stock, sports and traffic information; YELLOWPAGES.COM TV, which lets customers search for local businesses and other information via their TV screen; and AT&T Yahoo! Games. Of course AT&T is not alone with this strategy. DirecTV has offered differentiated programming offers with interesting applications, particularly with sports programming. Their NFL Sunday Ticket and NASCAR Hot Pass programming and feature packages create considerable differentiation, and thus competitive advantage with select audiences. Cable has their fair share of differentiation attempts as well. It all adds up to an interesting experiment in trying to create the right mix of features/applications, pricing, and customer service that creates a compelling experience. The right experience drives positive retention, expanding growth, and growing ARPU – a winning proposition for any competitor.