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Minorities should seek a bigger slice of new media pie

The digital divide argument, that there is a disparity between non-whites and whites when it comes to broadband access, is losing its mojo for me. While broadband access for minority households via hard line may fall behind that of white households, since the mid 2000s, access via mobile wireless devices by minorities has been on par or exceeded that of whites. Stroll into the Starbucks near I-285 and Cascade Road and see every Black American patron connecting their lap tops to WiFi while checking messages on their smart phones. Even our kids have at least two wireless devices and we parents brace ourselves annually for our teenager’s request for the latest phone even when the one they currently own is still pristine.

Plenty of politicians and civil rights groups have been pushing for greater access to high speed broadband, making the argument that more broadband facilities should be deployed in communities of color especially since Black Americans and Latinos have been spearheading the “cut the cord” movement and going 100% wireless over the past 15 years or so. Minority leadership is demonstrating, however, that it has not been paying attention to changes in business models that would provide entrepreneurs in communities of color exposure to more lucrative opportunities versus following the same consumption of end-use product model that has been plaguing communities of color for decades.

Broadband access providers such as AT&T, Comcast, and Verizon are leveraging their customer data in order to attract advertising dollars. Verizon’s recent disclosure that it lost 307,000 subscribers in the first quarter of 2017 in part due to competition from Sprint and T-Mobile has some analysts on Wall Street wondering if Verizon is up for merger. Bloomberg has reported that the wireless company has considered Comcast, Walt Disney, or CBS for corporate marriage.  Ironically the aforementioned companies are content providers who could probably do well leveraging Verizon’s wireless infrastructure to get content out including use of the company’s spectrum.

While Black Americans and Latinos are, unfortunately, known primarily for providing entertainment content, both communities should consider exploring creating and investing in content storage and content delivery systems. Constructing these facilities in neighborhoods with large numbers of Blacks or Latinos means access to short term and long term employment. High tech labor will be needed to design, construct, and operate server farms and other facilities that result from the decision to do more than buy another cell phone or activate some unlit fiber from the old MCI days.

This is an opportunity for a young Black or Latino entrepreneur or engineer to break from the herd mentality and not wait for permission from the Jesse Jackson posse on whether or not it should be done. One would think that the old heads from the civil rights movement would have the capital or access to capital that would assist outside-the-box minority entrepreneurs in getting capital, but since these leaders have not demonstrated that they even understand the emerging business models in communications, this may be a closed avenue.

In the end, the minority entrepreneur should be prepared to abandon the collective mindset that has communities of color thinking only about the next smartphone and form new, smaller, leaner, profit seeking collectives that generate ideas of value and use these ideas to create their own data and media companies.

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FCC overlooks the word proprietary

The Federal Communications Commission refers to customer data as “proprietary” in its privacy order set for vote this coming Thursday. Webster’s New World Dictionary defines proprietary as something belonging to an owner like a patent, trademark, or copyright. By placing the qualifier “proprietary” on customer data, the Commission gives the impression that the data is compiled by the consumer for possible placement into the stream of commerce and by transferring this data can receive something in return. Is the consumer doing this; getting something in return for putting her data out there?

The relationship between a consumer and her broadband internet access service is one where she provides certain personal information along with a network access fee to her broadband provider and in exchange receives access to the internet. An informed consumer is aware that sharing some personal data is part of her total cost for receiving access to the internet via her broadband provider. The best way to ensure privacy of her data is to not buy access service to begin with but public and social policy currently promotes universal deployment of and access to broadband so discouraging her purchase is not a policy option.

In my view, the consumer has created a negative externality by providing property, in this case her personal information, for free. The rate the consumer pays for broadband access overcompensates the service provider given the value the broadband service provider receives. What the Commission should encourage is a pricing regime where consumers can charge for the use of their proprietary information. This way, the prices paid for access provide a better reflection of what is actually being exchanged.

The Commission may find that with this market solution concerns of privacy will be abated as the consumer exercises more control over her market relationship with the broadband service provider. Allowing for consumers compensation for providing data may create a ripple effect in the internet eco-system. Go onto Facebook and you see consumers sharing a lot of personal information for free. Advocates for consumer empowerment should like this approach but these so called advocates would lose too much control of the consumer protection debate if consumers were to enjoy this type of market freedom over compensation for their data.

Bottom line, if the Commission is truly concerned about protecting proprietary consumer information, it should give the consumer the front line tools to protect her data and in a market system, that front line tool is the ability to be compensated for one’s property.

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Caribbean creatives can benefit from zero rating services

Posted October 13th, 2016 in Broadband, capital, content providers, data plans and tagged , , , by Alton Drew

As a native of the Caribbean, my attention has been turning toward global trade in telecommunications markets, primarily between the United States and the Caribbean. While I have a bias toward the English-speaking nations in the Eastern Caribbean having family in that sub-region, and I was born and raised in St.Thomas, it doesn’t mean that I don’t have love for the Spanish, French, and Dutch speaking islands. I just haven’t learned the languages yet. So, paciente, por favor.

Caribbean Export recently published an outlook on Caribbean trade in 2016 and 2017. It takes $500,000 to $2,000,000 for an artist to break into mainstream music markets. Population sizes on smaller island nations force Caribbean music artists to attempt expansion into North American, Asian, and European markets. The survey points out that online streaming is one approach used by artists to sell back catalogs and new music, with 25% of revenues accounted for online. According to Caribbean Export:

“The move to online consumption of music has some significant benefits for emerging artistes.  Online streaming and sales allow the artiste to understand what types of music and artistes are popular in which markets.  This can demonstrate which market may be most relevant for them to target with their music … The Information Technology revolution of the 1990s and the advent of social media have presented a wider reach to artistes today than has ever been possible.  In the age of the Internet, success is possible where an artiste with a quality product can inspire people to share their product, thereby creating millions of impressions. In other words, the sheer accessibility provided by the Internet means that an artiste can release content directly to a global audience, but it is important to stand out.”

The global Caribbean Diaspora numbers approximately 10.7 million with four million of those immigrants living in the United States. Mobile broadband, online streaming and social media can get an artist’s content in front of this audience quickly as discussed before. I believe what can also help is a free data approach combined with other strategic partnership initiatives. For example, where a carrier like Verizon can offer free access to a Caribbean artist website without a subscriber incurring a charge against their data cap, the consumer enjoys the benefit of exposure to new music which may lead to additional sales for the artist. The subscriber is also incentivized to explore other offerings via her smartphones, offerings she hopefully will be willing to pay for.

Another benefit from this type of global trade is the creation of demand for more infrastructure deployment. Increased content and new content delivery systems will need additional fixed line and wireless platforms to run on.

The Caribbean Diaspora should look at advocating for and investing in the development of online streaming for Caribbean artists as a type of remittance program. Greater support for these artists results in greater revenues eventually returning to our homelands with the benefits of infrastructure development both in the Caribbean and here in the United States.

 

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FCC does not recognize the value cable creates for content

Recently the Federal Communications Commission released a plan for increasing the number of ways consumers can navigate video content. The Commission wants cable companies to provide pay television subscribers with a free app that allows the subscriber to access their video content. The Commission believes that at an annual amount of approximately $231 for set top boxes, households are getting hosed and that additional choice is needed in order to reduce this financial burden.

The Commission appears to be ignoring the capital side of set top box equation. No where in his plan does Commission chairman acknowledge the billions cable companies spend on obtaining licensing to programming or creating their own content.  To extract value from this content, cable companies charge consumers a positive premium for using platforms necessary for accessing the content including set top boxes. The Commission is blatantly circumventing the ability of cable companies to extract the value of the content by requiring that cable companies provide consumers with apps that allow the consumer to avoid monthly fees altogether.

The Commission believes it is correcting some type of market failure by providing consumers access to content at a reduced cost, but by interfering with a market transaction, the Commission is creating an environment that sends a false signal to content providers and navigation technology providers. Device makers may think twice about investing resources into developing hardware where the use of free apps freezes the hardware provider out of the market. Small, non-cable affiliated app developers may have second thoughts as well, especially going up against deeper pocketed cable companies or internet portal companies such as Google who can leverage its advertising revenue to provide video navigation apps for free.

In addition, with the requirement that cable companies provide free apps and the expectation that established internet portals will enter the video navigation application market, smaller entrepreneurs will have a harder time accessing capital as investors view their business model as a source of lower returns.

Sending skewed market signals and reducing small app developer access to capital doesn’t make for good video marketplace policy.

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Ted Cruz’s voice on broadband

Posted July 25th, 2016 in Broadband and tagged , by Alton Drew

Ted Cruz caught a little media heat for not endorsing Donald Trump for president of the United States. His snub may provide additional ammo to a party establishment that have never really cared for the U.S. senator from Texas. Mr. Cruz, however, has been a consistent voice against additional or onerous regulation of broadband services. He reiterated his opposition to more regulation during his convention speech which was refreshing to hear given that neither Hillary Clinton or Donald Trump have spoken at any length on the importance of broadband, especially for economic development.

I don’t pretend to be a Ted Cruz fan, but if the Democrats were to take the Senate and the Republican establishment continues its snub, then an important voice in opposition to more broadband regulation would be made even less relevant.