March 24, 2011
Wireless duopoly coming: What news organizations have at stake
AT&T’s recent bid to buy T-Mobile could radically transform the US mobile landscape by creating a virtual duopoly. This means the mostly-mobile future of digital media would be primarily in the hands of Verizon and AT&T. This situation, coupled with gaping loopholes in FCC regulations that largely exempt wireless carriers from net neutrality requirements, offers potential good news and bad news for the news business…
By Amy Gahran
There’s ample debate about whether the FCC or Dept. of Justice will eventually approve this particular merger. But in the long run the wireless industry will almost certainly consolidate further. Ultimately, a duopoly of some kind is the most likely outcome, since that would provide at least a pretense of competition.
Here’s why that might be good news for the media/news business:
High-speed wireless broadband rollouts would probably accelerate. In order to continue to meet booming consumer demand for data-intensive mobile services (such as streaming video to cell phones and tablets), carriers need to upgrade their networks to faster “4G” technologies (LTE, Wimax, HSPA+, etc.).
This is a costly undertaking, but it’s likely to happen faster and more comprehensively if carriers can leverage economies of scale. Bigger carriers with more customers are in the best position to get this job done.
US carriers have no choice but to massively upgrade their networks. Their existing systems are already creaking under the weight of current demand—and that situation will only get worse. Overburdened wireless networks hurt the quality and speed of service for all mobile customers, not just the data hogs. So it’s good news for consumers if 4G networks can be rolled out more quickly across the US.
This, in turn, is good news for organizations (including news organizations) that provide content and services to mobile users. Serving your mobile audience is becoming paramount, since in the next few years most US web access is expected to happen from mobile devices, according to Gartner. Ultimately, media is only as good as its delivery. If wireless networks can manage to keep pace with consumer demand, that opens more markets and opportunities for media companies and advertisers.
Then, there’s the bad news…
Wireless carriers effectively can control what your mobile audience can access. The FCC’s Open Internet Order passed last December exempted wireless broadband providers from most net neutrality requirements.
The rules prohibit “paid prioritization” (carriers requiring content providers to pay a fee to ensure that their content gets delivered at an acceptable speed). But the rules do leave the door open for carriers to charge their customers (mobile users) to receive acceptable network speed—either for all content, or perhaps to access specific types of services, or for specific sites.
Which means that if your news organization is offering a rich digital media experience, carrier decisions could effectively render your content unappealing, or even unusable.
This wouldn’t even necessarily just affect smartphones and tablets. Over the coming years, as next-generation wireless broadband technology gets rolled out, it’s possible that many consumers might decide to ditch their wired cable modem and DSL home broadband connections with all-wireless service. So a company like AT&T could, and probably will, be streaming movies over the air that people will watch on their TVs, not just on their iPads. And increasingly wireless carriers will also be providing internet/web access to laptop computers. (They already are, via Mifi devices, USB sticks, and tethering plans.)
Think it can’t happen? Look at what’s been happening to landline phones.
If consumers could save money by going with one wireless provider, rather than a wireless phone service plus a wired broadband connection, they’d probably do it—if the service was reliable and good enough, and if today’s TV channels morph into tomorrow’s wireless channels, which seems likely.
Furthermore, Verizon is already suing the FCC to get the new “net neutrality lite” rules overturned in court. So it’s possible that the current scant requirements for wireless carriers—including the ban on paid prioritization—might evaporate.
In this case, carriers would almost certainly implement new fees to content providers. And, based on how hard AT&T was pushing for paid prioritization last summer, they’d probably be leading that charge.
These issues are all moving targets, but it’s important for news organizations to follow the interplay between wireless industry consolidation, 4G network rollouts, and the effects of net neutrality rules.
Like it or not, wireless carriers wield increasing power over the media business. Knowledge of that shifting landscape should inform your strategy for what kinds of content and experiences you offer in the coming years.
The News Leadership 3.0 blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.
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Tags: mobile, business, strategy
Comments
thats a nice post very informative its a great news for wireless technology
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By rostovka, 03/28/11 at 10:16 am
I’m quite eager about the future of the wireless mobile market, particularly with the news of the AT&T/T-Mobile deal, and the potential Verizon/Sprint deal.
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