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AT&T makes another media play

Posted May 16th, 2016 in AT&T, media and tagged , , by Alton Drew

AT&T today announced that it will acquire Quickplay Media Inc., as part of its plan to support streaming of DirecTV content over any device. AT&T already has an existing relationship with Quickplay. The company provides the platform for AT&T U-verse TV. Subject to a pre-merger review, the acquisition is expected to close in mid 2016.

The acquisition provides another example of convergence 2.0 as legacy companies such as AT&T and Verizon take their infrastructure to a media level.

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Verizon makes it clear. They are a media company

Verizon’s Craig Silliman published a blog post discussing the appropriate regulatory framework for the application of net neutrality principles. He reiterated the broadband provider’s support for no blocking, no throttling, no paid prioritization, and a general conduct standard for protecting consumers and competition. What I found interesting was Mr. Silliman’s description of Verizon’s media efforts. In Mr. Silliman’s words:

“We have invested billions in businesses that depend on the ability to reach customers over the networks and platforms of others. We invested in digital ad technology through our $4.4 billion purchase of AOL and own content through properties like the Huffington Post, MapQuest, and TechCrunch. We have an expanding presence in the digital media and entertainment space; Verizon Digital Media Services helps content companies deliver their services in digital form to any screen or device, anywhere in the world.”

To me, Verizon sounds more like a content delivery network. A content delivery network is a large distributive system of servers deployed in multiple data centers across the internet. The goal of a CDN is to serve content to end users with high availability and high performance.

Akamai, a company that touts itself as the global leader in content delivery services, might vehemently disagree with me about Verizon being a content delivery network given Verizon’s position as a gatekeeper to end-user customers. End-users don’t use Akamai to get on to the internet. Access is that functionality that pulls Verizon into the Federal Communications Commission’s sandbox.

As Verizon continues to evolve in the media space, however, it increasingly distinguishes itself from T-Mobile and Sprint whose claim to broadband fame is strictly as a mobile broadband access platform.

Although Verizon has expressed its willingness and the importance of complying with net neutrality principles, should those principles intrude into its content delivery operations? If yes, then should content delivery services provided by edge providers like Akamai also fall under the Commission’s transparency principles? Why should Verizon’s content delivery components be treated differently from Akamai’s content delivery services? Verizon’s evolution will force the Commission to address these questions.

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By pursuing STEM education and digital media opportunities, minorities can add value to broadband

Posted August 30th, 2015 in Broadband, edge providers, Internet, media and tagged , by Alton Drew

A recent article in the Times-Pucayune has me thinking (again) about the approach inner city communities take to developing their economies.  It has me questioning the entire “community activist” approach to bringing jobs and businesses to an area.  In the article the heads of a number of non-profits and a small business participated in a panel discussion on economic development post Hurricane Katrina.

The panelists raised concerns about billions of public and private sector  coming into the New Orleans area while black businesses were relegated to the sidelines with hardly any of this new capital flowing to them.  If the article caught the sentiments of the panelists correctly, the emphasis of the panel appeared to be on creating more public policy that would ensure more public and private funds go to black-owned businesses.

What I didn’t pick up from the article was any discussion on what value black-owned businesses in New Orleans would bring to an investor; whether these businesses could generate sizable returns on and growth of capital to satisfy an investors.

One area of growth is digital media.  According to an article in The South China Morning Post, an unprecedented amount of capital is flowing to online media outlets like BuzzFeed.com, Vice Media, and Vox Media.

One thing for sure is that it won’t be barbershops, beauty salons, convenience stores, package stores, or fast food restaurants.  These types of businesses make up what you see in black communities.  They have low barriers to entry and are very competitive industries.  They are also what I call “echo effect” industries which most people also call service industries.  These industries pop up to serve people who people who work in what I call the “impact” industries.  In San Francisco, an echo effect industry is a dry cleaners.  The impact industry is Google or a data analytics firm where its workers are creating intellectual property and earning the higher incomes that come with it.

In black communities it’s tough for these impact industries to get started because the first investment in intellectual capital hasn’t been made.  For example, in Delaware only 19% of African American students are enrolled in STEM-related courses. Getting students into these courses is necessary if entrepreneurship in the tech area is ever to grow in the African American community itself.

STEM-related employment is expected to grow 16% between 2014 and 2024, according to the website, ChangetheEquation.org.  Non-STEM jobs are expected to grow 11% over the same period.  And right now students of color are not getting the inspiration they need to pursue the education that leads them into the more lucrative STEM careers.  Again, according to ChangetheEquation.org, African-Americans and Hispanics comprise just over 20% of those who earn computing degrees.

If black communities are to generate business ideas that capture capital and generate higher incomes in the 21st century, its leaders have to recognize the clog in the labor supply line.  That clog is caused by a labor pool that is growing to slow to meet STEM-related demand.  The community approach to generating wealth sets itself up for failure if its leadership does not take a more proactive and innovative approach to managing the community’s political economy. Falling back on arguments for revamping affirmative action alone wont lead to a revitalized economy.

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The pursuit of greater returns on capital resulted in the blurring of telecom, media, and entertainment

Part of the naivete of the net neutrality argument was how it ignored the realities of the broadband industry and the role of capital.  Broadband access to the internet has never been about the democratization of self-expression but about the commercialization of the exchange of information.  Information comes in various forms whether it is scholarly work, news, or entertainment.  As Ivan Seidenberg notes in this piece, the lines between media, telecommunications, and entertainment have been blurring for decades where the silos that once represented media, telecom, and entertainment have finally been broken down.

If investors who put their capital into these industries want to see higher returns, then acknowledging that these walls have broken down is the first step they should take.  Pushing back against government actions that fail to recognize that breaking down these walls is necessary for capital to continue flowing to and growing in these industries should be the second thing to acknowledge.

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Why can’t broadband competition proponents focus on the real picture?

The Center for Public Integrity released a post yesterday that has me questioning their economics integrity.  In the post, the Center describes how broadband providers avoid competition by arguing that the “Internet service grew out of the old telephone and cable TV systems, where only two companies owned direct lines to U.S. households.”  Sorry, but that’s only half the story.  As I shared in my comments on the post:

“Advocates for competition in the broadband access platform market need look no further than the localities that ensure that only the provider with the deepest pockets are able to get entry into a market. Onerous financial, regulatory, and technical barriers keep ouyt smaller players. Richard Bennett makes a powerful point about legacy carriers having no incentives to go beyond service territories they negotiated for or acquired when initiating services.

In addition, there is too much emphasis on the “number of carriers” narrative. This is a capital intensive business and unless new players can muster up the cash, then you won’t see a third wireline carrier entering a market.

Finally, when will “competition proponents” come out and give a definitive number for the amount of carriers in a market necessary for a declaration of competition. Two, three, or four carriers still reflects an imperfect competitive market.”

Not only are Federal Communications Commission rules not promoting broadband deployment, but local government policies are adding to the hindrance.  No one complains about whether Interstate 4 connecting Tampa and Orlando should have a duplicate interstate running along it.  The concern is whether there is enough commerce running over the highway to spur economic growth and justify widening the existing lanes.

For example, according to comScore.com’s report , 2015 U.S. Digital Future in Focus”, in 2014, mobile app usage made up the majority of digital media activity.  Traditional television ratings fell as more Americans obtained content from emerging online platforms.    Seventy-five percent of all digital consumers over the age of 18 use desktop and mobile platforms to access Internet content.

Another sign of mobile’s encroachment on the desktop is growth in smartphone use.  According to comScore, smartphone use increased 16% in 2014.

I just started watching “House of Cards” (Okay, I’m a late bloomer) so now I’m counted as one of 7 of 8 Americans watching video content online, with half of these consumers watching content online on a daily basis.

And about that commerce moving along the roadway?  E-commerce grew 14% in 2014 with businesses raking in $268.5 billion.

All this content and e-commerce activity happening while consumers allegedly are “abused” by a lack of broadband access platform competition.  Policy makers shouldn’t waste their time on making an oligopoly a larger oligopoly.  The focus should be on clearing spectrum for greater use of the internet and ensuring that the provision of data, whether in the form of video or text, is not interfered with.