Comments Off

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.

Comments Off

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.

Comments Off

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.

Comments Off

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.

Comments Off

Verizon to FCC: We are a media company. Leave us alone

Verizon sent another clear signal this morning to regulators and the financial markets.  We are transitioning from a broadband company to a media company.  Suppose Verizon takes it another step and also declares that they, say five years from now, will get out of the broadband access to the internet business and settle for being a channel solely for their own branded content or content that they get a license to retransmit solely on their servers?  Such a move would get them from under the Federal Communications Commission’s Title II/net neutrality rules while opening the door to smaller internet service providers to fill the broadband access to the internet market vacuum.

First, the news.  Today, The Wall Street Journal reported that Verizon Communications Inc., agreed to buy AOL, Inc., for $4.4 billion.  The purchase will be made with cash on hand and the issuance of commercial paper and make Verizon a player in the digital media content market.  According to The Journal:

“The acquisition would give Verizon, which has set its sights on entering the crowded online video marketplace, access to advanced technology AOL has developed for selling ads and delivering high-quality Web video.”

Verizon goes on to say that its principal interest in the purchase is access to AOL’s ad tech platform probably for use with Verizon’s mobile video service scheduled to launch this summer.  The service will offer snippets of video content, live sports, concerts, and on-demand programming.

Verizon and AT&T believe video content will drive demand for their wireless services as consumers, particularly millenials, (who have passed Generation X-ers as America’s largest consumer group), prefer get their content anywhere on the go, unlike their more sendentary Baby Boomer elders.

Verizon can also leverage its relationships with content providers.  For example, according to the article:

“Verizon already has relationships with many media providers because of its FiOS TV service, which is available in 5.6 million U.S. households. And it has shown prowess in mobile video already, including through a partnership with the NFL that allows it to stream some games over phones.”

It sounds like Verizon is ready to step up to being what I consider all broadband providers to be: media companies.  Regulatory wise, I think Verizon and AT&T could circumvent the FCC’s net neutrality rules by making the declaration that not only are they media companies, but they are no longer in the business of providing access to the 67,000 interconnected networks known as the internet.  Verizon instead should declare that it provides IP-access solely to its website of original and licensed content.  If you want to see “Game of Thrones”, you’ll use a broadband access provider that connects you with HBO’s website.

A broadband internet access service, according to Section 8.2(A) of the FCC’s net neutrality rules is “a mass retail service by wire or radio that provides capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communication service, but excluding dial-up Internet access service.  This term also encompasses any service that the Commission finds to be providing a functional equivalent of the service described in the previous sentence, or that is used to evade the protections set forth in this Part.”

If Verizon describes in its service agreement that access to its particular content found on its website does not include access to the other endpoints found on the remaining 67,000 networks, should that take them out of the FCC’s net neutrality stranglehold?  I would hope so.  Yes, the FCC and the grassroots groups will still utter in their last gasps that even if this new media model held that Verizon’s subscribers would still need consumer protections, but in my opinion those protections would come under contract law and a better equipped Federal Trade Commission since Verizon and any other broadband provider opting for a new media model would fall in the category of edge provider.

Let’s shake it up a little, Verizon.  This is the right step toward bringing well needed disruption into the media market.