Will There Be a New Media Distribution Consensus?

By Paul Maxwell Report Archives
Cover image for  article: Will There Be a New Media Distribution Consensus?

It’s been awhile since DISH CEO Charles Ergen began accumulating spectrum to augment his ability to provide robust programming to subscribers via mobile broadband. Last week, I noted that AT&T CEO Randall Stephenson was, more or less kind of, leapfrogging Charlie and putting the strategic idea together by absorbing DirecTV. And, on the cheaper side of the immediate future, major cable MSO/ISPs Comcast, Charter (presumably with the Time Warner Cable and Bright House acquisitions), Cablevision, Cox and others already provide Internet access via Wi-Fi hotspots everywhere (and all together) and are moving to use almost any set-top box (or dongle or device) via the cloud. (Charter’s Thomas Rutledge was a mover behind the remote DVR at Cablevision.) Also at the end of last week, Investor’s Business Daily reported that Oppenheimer analyst Tim Horan was predicting that Verizon, Sprint and T-Mobile would, one way or another, find a way to partner a la AT&T/DirecTV, too.

His immediate prediction: Comcast or Charter (which is using the “spectrum” brand) would acquire T-Mobile.

Well, why not? The big get bigger and only AT&T now has both cellular and satellite coverage across the USA. And, no matter the various denials, everyone is most likely talking to everyone … except, of course, Mr. Stephenson.  He’s already poised to make the next steps to integrate a more robust distribution model.

Can using mobile spectrum for broadband really be a cheaper way to “overbuild” wired (and fibered) broadband distribution models?  We’ll see.  Place your bets by watching the next FCC spectrum auction. If it sets records (again) you can pretty well bet that a lot of folks think the technology is at hand, or at least very close.  AT&T, using DirecTV, is already marketing new bundles combining wireless and satellite.  Now, what they might do for long time customers of both remains to be seen.  (I presume calling to cancel would answer that question.)

Speaking of DISH, the Federal Confusion Commission voted to deny the credits the company believed it “earned” when it partnered with SNR Wireless and Northstar Wireless to bid in the recent AWS spectrum auctions.  DISH had said it “followed the rules.” So, can a federal agency get away with changing yesterday’s rules?  The FCC voted 5 to 0 to deny the $3.3 billion in credits if DISH did follow the rules. Is that fair?  Looked at another way, can a Federal agency rewrite the rules because it doesn’t like the outcome? More to the point, does anyone have to follow the rules?

Random Notes

My new book “The Revolutionary Evolution of the Media” continues! Go here to read it from the beginning!

Charter shareholders will vote on Tuesday, September 21st to proceed (or not?) with the planned acquisitions.  How do you think Dr. Malone will vote the shares he controls?  Gee, let’s think …

Whither Wall Street and the media sectors?  While advertising has been taking a bit of a beating, it pays to remember that subscription revenues are becoming more dominant.  And, while I appreciate Disney’s Bob Iger and his muted trepidations about ESPN’s growth, I think the whole “what-did-you-do-for-me-last-evening” view of investing is overblown.  It takes a lot of time to destroy a business model.  After all, I’ll bet somewhere someone thinks he’s still paying for a Prodigy subscription.  Still, the real question is … well, cue Ace singing “How Long?”

Yes, the basics are shifting … but all of the variations on the model being tested will tell us a lot this next year and a half.  The best buys continue to be the bundles from satellite and ISPs (don’t “MSO” and “MVPD” seem so dated now?  Therein lies the arc of the answers.).

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