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Could a Twitter-Disney combination help close the digital divide on content?

Posted September 26th, 2016 in Broadband, mobile telephone, sponsored data, Twitter and tagged , , , by Alton Drew

Bloomberg has been reporting for the past few hours that Disney has retained an adviser to help the entertainment company craft a bid for Twitter. As the markets go through pre-debate jitters and are currently on a down note, Twitter is up over one percent while Disney is moving in the other direction. Twitter, while among the big social media three that includes Facebook and LinkedIn, has been struggling to define itself and grow the number of subscribers.  Today’s news comes as no surprise to me and I’m happy a media company is making a play versus your run of the mill advertising company (although Salesforce allegedly is interested in the micro-blog.

Twitter picked up a little notoriety last week when it live streamed a NFL game. I enjoyed watching it via Twitter, especially given the quality of the video. Today’s news has me thinking how minority content producers could benefit from a Disney acquisition of Twitter. According to Pew Research, 27% of blacks that use social media use Twitter versus 21% of whites. Also, blacks and Latinos show a tendency to rely more heavily on their smartphones (12% and 13% respectively) than their white counterparts (4%).

While it’s too early to say what Disney would do with Twitter as part of its portfolio, I think such an acquisition would provide Disney with basically another channel for deploying content, especially niche content such as programming produced for minority cultures. Mobile carrier zero rating or free data services could augment such a strategy by providing cost free access to minority-produced content. Not only would it be less expensive for low-income minorities to access content, but members of other communities could be introduced to another culture’s content at a reduced financial cost.

Until then, first things first. A bid will have to be made. Stay tuned.

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Let a private capital business model meet un-served, underserved broadband market

Federal Communications Commission member Ajit Pai yesterday sent a letter to the chief executive officer of the Universal Service Administrative Company, the not-for-profit entity designated by the Commission to administer the universal service program. In the letter, Mr. Pai questions apparent waste in the Lifeline program arising from certain households receiving more than one Lifeline subsidized service and the application of exceptions used to to allow additional members of household to qualify for a subsidy.

USAC administers four programs: high-cost and low-income; rural health care; Lifeline; and schools and libraries.  Universal service is premised on the principle that all Americans should have access to a baseline of telecommunications services. These principles were recently expanded by the Commission to include high-speed internet access.

To meet these goals, a federal universal service fund has been established where telecommunications providers and voice-over-the-internet service providers make contributions to the fund and telecommunications companies may apply to receive reimbursement of the expenses involved in meeting universal service goals. According to USAC, in 2014, $7.9 billion in funding were disbursed from the fund to telecommunications providers.

My bird’s eye view of the extension of Lifeline to mobile broadband here in Atlanta tells me that mobile carriers are focusing on lower income neighborhoods. Here in the West End sector of Atlanta there appears to be a table and tent pushing free phones on every other corner. Assurance Wireless, a subsidiary of Virgin Mobile  is pretty busy pushing its Lifeline wireless services here. Fraud and waste as discussed above has been a big issue with policymakers. Rather than a government program where a private company is being required to act as a social welfare agency determining whether a consumer is eligible for a government aid program and rather than telling households how many phones they should be limited to having, why not let entrepreneurs and private capital identify and sell to underserved markets for cell phones.

The technology is there where cell phones, capable of accessing the internet, can be provided to lower income consumers at prices a fraction of what it costs to get an iPhone. Technology continues to innovate where low cost phones can be provided. For example, Verizon offers smartphones at retail prices ranging from $94 to $120. Plop down the cash and for the monthly data plan fee a consumer can make calls or surf the internet.

If private capital sees returns from investing in a company that can provide handsets and data plans to low income households, private capital will make the investment. The problem is the premise that everyone should have access to the internet via mobile broadband. That premise is faulty because it assumes a value to the consumer and forces that value into Commission rule. Yes, commerce benefits from the deployment of a telecommunications infrastructure that facilitates the flow of data, knowledge, and information, but those providing and extracting this value should be ready to compensate the providers of services or invest in its deployment out of their own pockets or with funds raised in the capital or credit markets.

Yes, telecommunications networks may increase in value with an increase in end-users accessing it, but spreading the cost of facilitating access by one consumer who probably brings no value communications wise to other consumers is an externality that I view as negative. Not only will we see fraud in the current government-based universal service, but a taking of consumer property via the taxes paid by consumers to support universal service.

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No response to Wheeler’s response on wireless

There was no appreciable response to Federal Communications Commission chairman Tom Wheeler’s comments at the CTIA show in Las Vegas mentioning that the FCC may reconsider the distinction between fixed broadband and wireless broadband as it draws closer to issuing new rules on net neutrality or the Open Internet.

The goal of the Open Internet proceedings “is to establish rules of the road for Internet openness that will provide certainty in the market place and facilitate the continuation of the virtuous cycle of investment and innovation”, Mr. Wheeler said.

Consumers are increasingly relying on mobile broadband, noted the chairman, and acknowledged the wireless industry’s position that mobile broadband carriers face constraints that their fixed broadband cousins do not.

AT&T(T:NYSE); Sprint (S: NYSE); and Verizon (VZ: NYSE) saw their share values fall today but it wasn’t clear from media headlines whether the fall was in response to the possibility that fixed and mobile may be treated the same under net neutrality rules or his policy of challenging wireless broadband company mergers such as the attempted AT&T-T-Mobile combination or the more recent attempt by Sprint to acquire T-Mobile.

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An emerging Africa means America must deploy broadband quickly

Last week, President Barack Obama hosted fifty leaders from the African continent.  The United States is recognizing Africa as an emerging market.  According to an article in The Economist, Africa’s population will double by 2050 and it will be a young population.

This young population is also taking advantage of mobile technology where, for example, farmers are applying mobile telephone technology to connect them to weather and crop information that can hopefully lead to increased profits.

President Obama is correct in his assessment that the American economy is based on ideas and innovation and that ideas and innovation depend on development of human capital.  The African economy is going to need ideas and information in order to create knowledge that can be applied to problem solving, product creation, and service delivery.

Part of the reason why I was excited by Time Warner’s Howie Hodges’ presentation at the Congressional Black Caucus Leadership Institute conference a couple weeks ago was the result of him mentioning virtual data rooms.  Virtual data rooms or VDRs are replacing the physical data rooms that law firms and investment banks use to share and access information involving merger and acquisitions or bankruptcy proceedings.

According to Inc.com,  the virtual data room industry market, which was valued at $628 million in 2012, is expected to balloon to $1.2 trillion in 2017.   VDRs operate on the edge of the Internet and as repositories of digitized information, I see them playing an increasing role in global markets especially as trade between America and African countries increase.

An edge provider industry expected to grow this quickly should not be at risk of becoming collateral damage from Title II or common carrier regulation.  As these providers receive increasing requests to provide more services, they will have to respond not only to demand but to increasing competition.  They will have to be nimble.  They can’t run the risk of being forced to buy access services out of tariffs or wait for the FCC or a state regulator to approve new services or facilities because an advocacy group believes that strategic partnerships are taboo.

Africa’s emerging markets and their adoption of mobile broadband technologies for their agricultural and financial transaction markets signal the need for America to service the Continent’s needs for innovation and knowledge that only the American knowledge economy can provide.

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Cyber-ghettos: Not so much the streets as it is the buildings

Jamilah King posted an in-depth article addressing how carriers such as AT&T and Verizon have created cyber-ghettos via their wireless service offerings. Unfortunately this admittedly in-depth article is a poorly veiled attempt to argue for net neutrality; a concept that has never considered how best to promote broadband adoption in minority communities much less increase economic activity. Net neutrality will only drive up the cost minorities pay for access to the Internet as higher compliance costs are passed through in the prices for mobile devices and wireless broadband access.

The article started off well, giving an ample description of the downside of access to the Internet via mobile versus fixed
wire connections. I was hoping that the article would focus on how the disproportionate reliance on handheld wireless
devices hinders our ability to produce content and create other ideas that could be sold for income, especially in a challenging economy such as ours. All I got was more whining about AT&T’s alleged bogey-man status.

It raises the question, however. Is the digital divide being compounded by the marketing of wireless devices toward blacks and Latinos thus giving the market the false sense that minorities are only interested in entertainment?