Jeff Kagan: Winners in Wireless Networks by Neil Savage

In sports, there are always winners and losers. Same with business. Same with life. Maybe you've tasted the sweet, succulent success of being a winner before, but there's a pretty high chance you've choked on the bitterness of defeat, too. Don't really know where we're going with this opening. Thought we might have had an angle, but it sort of fizzled. Instead, let's just cut straight to RCR's article by Jeff Kagan. His opinions on the victors of the industry follow:

If we asked who the winners in wireless on the handset side eight years ago were, we would have said BlackBerry and Nokia. Today’s leaders are Apple iPhone and Google Android on phones like the Samsung Galaxy. The wireless world completely changed over the last few years. So what can we expect on the network side going forward?

Things change quickly on both the handset and network sides. Yesterday’s leaders are now struggling for survival. While Apple, Google and Samsung have roughly 90% market share, all the others squeeze into the last 10%. Today the next largest is Microsoft Nokia, which has only single-digit market share. BlackBerry has roughly 1% from what I hear.

Changes at the networks
With that kind of transformational change going on with handsets, let’s consider the networks.

Networks have gone through as much chaos and change, as well. Ten years ago the competitors were AT&T Mobility, Verizon Wireless, Sprint and T-Mobile US. They were all going through changes and challenges, but they were all competing well in the 2G, pre-app world.

Then, over the next few years, things started to change. AT&T Mobility and Verizon Wireless continued to grow to 3G then LTE, while Sprint and T-Mobile US didn’t. That meant two competitors were rapidly growing while the other two were not.

Now the wireless world is changing once again. Growth will come from new and different areas. AT&T Mobility and Verizon Wireless are still on the right track, but now it seems so are Sprint and T-Mobile US. What that means is all four are growing, but in different ways.

What’s important to remember is there is a split forming in the industry. Both AT&T Mobility and Verizon Wireless are on one side of this split. They offer a variety of wireless and wireline services. On the other side is Sprint and T-Mobile US, which are straight wireless plays.

So what changes can we expect going forward with wireless networks? Let’s take a closer look at these top four carriers.

Acquisitions in Wireless: 10 Years in an Infographic by Neil Savage

Everyone loves a good infographic. Also, everyone loves cell phones. And finally, everyone loves mergers and acquisitions (well, aside from the people who get laid off because of them). So most everybody should love the nice, neat display showing the last 10 years of wireless consolidation. Brought to you by Fierce Wireless, the chart takes a look at the rise of the Big Four as they gulped up regional carriers; together, Sprint, T-Mobile, AT&T and Verizon account for 90% of the market, and lots of that growth happened at the expense of other carriers.

Interesting to note the relatively low amount of mergers/acquisitions seen by T-Mobile and Verizon over this time frame. Even more interesting, as Fierce Wireless reminds us, is back in 2005, only one out of every two Americans carried a cell phone. Now it's like every one American has two cell phones.

Verizon Discusses Small Cells, AOL by Neil Savage

Couldn’t snag tickets to the JPMorgan Global Technology, Media, and Telecom Conference this week? You know, the TMT conference hosting more CEOs than any other TMT investor conference in existence today? Yeah, we were too busy to get there, so good thing they’re posting the transcripts of some of the Q&A sessions, like this one with Fran Shammo,  EVP and CFO of Verizon Communications. The edited transcript in its entirety can be found here, but we highlighted some important dialogue regarding small cells and AOL:

[On Small Cells]

Phil Cusick, JP Morgan Analyst: You've talked about small cells a few times. How do you think about building those? Do you want to build and manage your own small-cell networks? Do you want to own the fiber in that territory? Or you're just as happy to have somebody else do it?

Fran Shammo: Yes, we lease a lot of fiber today. There are a lot of—there is a lot of competition actually in the fiber world. So we actually don't own a lot of the fiber that we have; we lease it. We own the electronics on both ends of it. But these are long-term leases, and we've done this for years, so this is nothing new to us. We don't need to own all of the small cells. We just entered into an agreement up in Boston for a 400-site densified antenna system that someone else built out, got all the zoning, has all the fiber. So we are leasing that from them. So there's a lot of alternatives out there today to create capacity, and it doesn't mean that I have to own and build and control everything. I can do that through third parties. I mean, it's similar to towers. I don't own my towers, but I still run my network off those towers. As long as I get the protections in the agreements that I need for the  longevity, then it's a perfect solution for us.

[On AOL]

Phil Cusick: Since you bring up AOL, you want to start with the driver for buying that, and what that means about your future video strategy?

Fran Shammo: Yes. If you think about how I've been talking about our launch of our video platform over-the-top that we are planning to launch this summer, we talked about a bunch of things; so let me just refresh what we've talked about. What we said is we were going to launch this, this summer, and it was really taking on three flavors. The first flavor being more of on-demand, when you want it, what you want to watch when you want it. And that's more or less the world we live in today. If you want to queue up something, you queue it up, you watch it; but it goes against your data bundle. That will still happen. Then you put in the multicast technology, and multicast allows us to deliver a live event to millions of customers extremely efficiently through our network. Now, keep in mind that the chipset of the multicast technology started in the fourth quarter of last year, so it's going to take about two years before you get a large quantity of customers who will have the technology embedded in their phones to enjoy that. That's going to be more of pay-per-view type thing. So if there is a World Cup game or a Super Bowl or a live concert, those types of events. Then the third thing we've talked about is where we would monetize video via an advertising model. What we think is this -- and you've seen some of the announcements we made with CBS and ESPN college sports and Awesomeness TV. We're going to bring a product to market where people can enjoy that product and they won't necessarily pay for it through their data bundle. Some people have called it the sponsored data model, but it's really going to be monetized through the advertising model. Hence we get to: why did we buy AOL? When you look at the asset set that we have, we developed the Verizon Digital Media Services; we attached upLynk and EdgeCast to that. That gave us the platform to efficiently deliver video and content, digitalize it, format it, and get it out to the end customer. Then we bought OnCue, which is the interface, the front of what the customer is going to see. So we had all the assets put together. The piece that we were missing was the ability to have an ad tech platform to insert the advertising. When we looked across the footprint for such a platform, we determined that AOL had probably one of the state-of-the-art, best-in-class platforms. That's what drove us to the AOL acquisition. So it was really around the ad tech platform and ad insertion tool that we needed to be successful with the launch. Now, there are some added benefits to bringing AOL in. First of all, they have some unique content around Huffington Post and TechCrunch; and that goes along with some of the other content that we have that can be put into this model. Then of course you have the subscription business, which obviously is not why we bought them; but it also generates all the cash flow of AOL. Then the fourth thing is we acquired a lot of talent. If you take the talent of our existing EdgeCast, upLynk, OnCue, VDMS people and put them in with AOL people, you now have a class set of human assets, if you will, who really understand this ecosystem. Having Tim Armstrong come on board to run this unit is really something that we look forward to, because he's obviously well known in the ecosystem. He's proven himself in this ecosystem, so we are really excited that he is going to come on board and run this unit. So we are extremely excited about this acquisition, and we think that this is something that we've been talking about, we said we were going after this big, and we're going after it big

Verizon Communications Buying AOL for $4.4B by Neil Savage

You've got a buyer...

RCR Wireless brings us news of Verizon purchasing former juggernaut AOL. We hear it's just to own their stable of CDs containing hundreds of hours of free internet access. From RCR:

"Verizon Communications is diving deeper into digital content with an agreement to buy AOL for $50/share, or approximately $4.4 billion. The nation’s leading wireless carrier said that AOL will boost its LTE wireless video business, its “over-the-top” video offerings and will create “a growth platform from wireless to IoT for consumers and businesses.”

While AOL is not well-known for wireless video, it has invested in a digital advertising platform. The company also owns valuable content brands, including Huffington Post, Engadget, TechCrunch and Makers.

For Verizon, this is the latest in a string of acquisitions aimed at beefing up its digital media business. Last year the carrier bought Intel Media for Internet video technology, content delivery network EdgeCast Networks, and live video encoder UpLynk.

Check out the rest of the article here."

Building a Network in Miniature by Neil Savage

Verizon is known for many things: great coverage, "can you hear me now?", and for being one of the few truly successful companies whose name is a portmanteau. Add another accolade to the list: great at explaining things. Check out Kevin Fitchard's article that explains small cells, those tiny cell sites that the wireless world is all atwitter about. Excerpt:

"There’s a reason why the devices in our pockets are known as “smart” phones. These sophisticated gadgets have brought the computing and internet revolutions from our desktops to our palms, and every year they grow more powerful. But our handsets aren’t the only things in the mobile world evolving.

Just as our phones have changed from voice-centric to data-centric devices, the networks that connect them have undergone their own transformation. The most obvious change has been the rapid migration away from 2G and 3G networks to much faster 4G LTE technologies, making a 5 or 10 Mbps mobile connection the norm in the United States. But mobile operators aren’t just upgrading the radio technologies that connect your phone. They’re also changing the fundamental design of the network to meet these new data demands."

Find the whole article here. Definitely worth a read if you don't have much exposure to small cell technology!