gary arlen (arlen communications) - bandwidth ballet

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Gary Arlen President

Arlen Communications LLC

Prepared for

"Medientreffpunkt Mitteldeutschland 2012”

8 May 2012

New Opportunities = New Competition

Spectrum vs. Bandwidth: Airwaves and the avalanche of content transmitted to viewers

Spectrum Dilemma

Wireless carriers demand spectrum for growing mobile services

M2M systems proliferate

Cross-platform Delivery

“Over-the-Top” video, streaming, IPTV

Tablets, smart- phones as preferred viewing devices

“Non-traditional” carriers (Google, Yahoo) aggregate content and customers

© 2012 Arlen Communications LLC 2

Cisco Global Forecast for bandwidth demand, 2010- 2015

Video

64.7 Exabytes (billion GB)

Lobbyists Technology Media

A Star-Studded Array

of Powerful Providers

Have Major Financial

Stakes in Spectrum

and Multi-platform

Delivery Policies and

Economics

3 © 2012 Arlen Communications LLC

http://nab.org/default.asp

http://ce.org/default.asp

http://ctia.org/

http://www.ncta.com/

• FCC Spectrum Allocation *

Proposed Incentive Auctions for TV stations Motivated by demand for mobile/wireless bandwidth

$25 billion income to Federal Government

$7 billion to emergency wireless network

$2 billion to broadcasters for channel repacking

$15 billion for jobs programs, etc.

Voluntary Broadcaster Participation • Theory: fast cash. Reality: insufficient value in small markets

• No timetable, but “soon” – target 2015, unlikely

• Related issues – Spectrum repacking = transmitter changes – White Spaces = avoid interference

• For use by unlicensed transmitters (e.g. wireless home networks)

– Demands of public safety, security

4 © 2012 Arlen Communications LLC

* “Spectrum Grab” to broadcasters

“Channel Sharing”

• Seeks to preserve local stations and reclaim spectrum for wireless services

• Two channels would use same 6 MHz frequency • Could limit HD or 3D broadcasts • Raises Questions about:

• Must-Carry vs. Retransmission Consent • Local availability • Technical issues • Independent management of FCC rules

FCC opened rulemaking process in April


Policy Makers’ Dilemma

• Two-phase auction: – Reverse auction to reclaim TV channel space/determine supply – Standard auction to allow wireless companies to acquire spectrum

• Spectrum Allocation issue also involves • Relinquish government spectrum

• 500 MHz by 2020

• Reassign mobile satellite spectrum for terrestrial

wireless services

• Retransmission consent for cable carriage - uncertain

• Also confronting: • Mobile DTV deployment • Network neutrality (especially wireless broadband)


FCC Chairman

Julius Genachowski

Marketplace Reality • Big cable companies’ “SpectrumCo” un-built wireless

licenses sold to Verizon $3.6 billion; needs FCC approval

• Verizon plans to launch wireless Others video service by end-2012 o Would leverage FiOS wired broadband content connections o Would add to spectrum congestion; require new data pricing

• Verizon will divest other spectrum (FCC spectrum caps)

• Google’s spectrum and landline ambitions o Kansas City 1 GB to the home wireline pilot

• Lobbying juggernaut: House adopted FCC revision plan.

o Top 10 legislators got nearly $500, 000 in campaign contributions from broadcasters, telcos, wireless lobbyists.


Internet/Online Advertising has exceeding all

other platforms except broadcast TV.

But the gap is closing.

Source: Interactive Advertising Bureau, April 2012 : IAB Internet Advertising Revenue Report: An Industry Survey Conducted by PwC and Sponsored by the Interactive Advertising Bureau (IAB) 2011 Full Year Results

U.S.

Broadcast TV

Internet

And Also… • Mobile video?

Via broadcasting?

… or wireless broadband?

25% of U.S. video viewing is on “other platforms” including tablets (Source: Parks Associates, April 2012)


• Using existing TV stations

• Need wireless telco cooperation to put

receiver chips in subsidized handsets

Mobile Content Venture

http://www.mobile500alliance.com/index.html

Speaking of tablets and 2-screen TV

• Smart TVs with hundreds of apps

• “TV Everywhere” (cable companies) with authentication

• Ultraviolet Studio control via the cloud

• YouTube’s $100 million original production fund + studio deals

• Facebook studio deals © 2012 Arlen Communications LLC 10

Cross-platform and multi-platform deliver expands


Again: the Divas are ready for marketplace battle

Trying Again

Facing the Era of Cord Cutting • “Over-The-Top” delivery: relies on broadband • “Cord Cutting” and “Cord Trimming”

• Reducing cable services: availability of online video • 5% - 9% of cable churn now • Streaming services carry TV shows: (owned by NBC, ABC, Fox)

• Will grow as more VOD rights are cleared • Fueled by and

• Cable MSOs acknowledge: their core business may become data, not video packaging • Comcast introduces • Time Warner Cable envisions “Pandora-like model”

• Wreaks havoc with core financials • Hulu commercials generate 50% revenue of network advertising


OTT: Where the Shows Are TV set-makers have deals with video aggregators to make their

programs available directly to ’Net-connected “Smart TVs”

13 (c) 2012 Arlen Communications Inc.

Source: Parks Associates, Arlen Communications, companies, 2011

As for “Hybrid TV”…. • Has not yet clicked in the U.S. • Broadcast TV delivered via Internet facilities

o Some startups:


Proprietary hardware that lets TV stations stream

personalized TV to authenticated connected devices.

Investment from NAB and CEA. 50 initial markets.

Tiny OTA antennas to pick up all local broadcast station,

transmit via IP to home or mobile devices $12.99/month.

Uses DVR copyright case to avoid retransmission

consent. Being sued by broadcasters.

And also: Broadcast TV via the Internet:

Even Comcast has patent to let set-top box surf the Web

Broadcaster

Approval

?

http://www.fiercecable.com/pages/detail-comcasts-set-top-patent-application

http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-beyond-digital.html

Social TV and Simultaneous Viewing

• 80% of U.S. tablet and smartphone users have the devices nearby while watching TV

• Social TV most popular during events • 13 million during CBS Grammy (music) awards • 12.2 million during Super Bowl • 3.8 million during Academy Awards (older audience) Source BlueFin Laboratories, March 2012

• Advertisers are developing games, T-commerce

• Enhanced pricing for commercials, with direct-marketing implications


Simultaneous Use of Tablet While Watching TV

Source: Nielsen April 2012

29%

9%

13%

20%

14%

15%

20%

7%

10%

23%

17%

24%

29%

9%

15%

19%

16%

12%

12%

7%

13%

24%

19%

26%

Never

1/mo or less

Several times/month

Several times/week

Once a day

Several times/day

USA

Germany

UK

Italy


Identifying the Global Appeal of Interactivity Consumer opinion about the ability to interact more personally with content (rank “appealing” or “very appealing” in 5-level survey)

Source: IBM “Beyond Digital” report, April 2012; Data from 2011 Digital Consumer Survey









Viewers of all ages are connected, multi-tasking

and comfortable with Internet-delivered video

Source: IBM “Beyond Digital” report, April 2012; Data from 2011 Digital Consumer Survey http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-beyond-digital.html








More Policy Factors • Privacy and security

• U.S. standards are now weaker than in Europe

• Network neutrality • Challenges as media/carrier companies have

more control of content on their infrastructure

• Bandwidth management • Related to ‘net neutrality and competitive pricing

• © Copyright • Antitrust

• Ownership caps, Spectrum caps


Digital Outlook Different industries are finding new ways to

collaborate, but legacy turf-wars will persist

Technology providers are increasingly guiding the process of delivering entertainment and information

• Relying on

• “TV Everywhere” is the mantra, especially for young audiences

“Media malaise” persists:

What happens next? © 2012 Arlen Communications LLC 20

“The Cloud”

Thank You

.


Gary Arlen Arlen Communications Inc.

7315 Wisconsin Avenue Suite 805E Bethesda, MD 20814 USA

www.arlencom.com 301 656 7940

[email protected]