Articles by Mark Lowenstein
We have operated under the assumption for many years that spectrum is a scarce resource, sort of like high-priced housing markets where demand outstrips supply of 'buildable land'. Carriers pay billions of dollars for a precious few megahertz of additional capacity. Pricing of data services, still hovering at $8 per GB, sends a "use the network but not too much" type of message. The projected growth in video usage has us running to Wi-Fi. Fifty percent of the valuation of Sprint and Dish Network is attributed to their spectrum assets, while conversely, Wall Street analysts are bearish on AT&T and Verizon because their share of subscribers far outweighs their share of aggregate network capacity.
As of mid-2015, in my view, we have an upside down industry structure. In wireless, there is almost too much competition. Margins at Verizon Wireless and AT&T are shrinking. Sprint is unprofitable and continues to struggle. T-Mobile has been successful in taking share and setting the tone of the industry to take share, flirting with profitability from one quarter to the next.
Over the past couple of weeks, we've witnessed two deals in the ever-consolidating communications and media industries: Verizon-AOL, and Charter acquiring TWC and Bright House Networks. The broadband business now looks like the wireless business, with Comcast and Charter owning some 60 percent of the market and four (rather than two) players splitting most of the remaining 40 percent. I think this is a good opportunity to take a closer look at Verizon, and what might be next for the company.
We don't need another MVNO offering a minor variation of the current model. There is a dizzying array of options out there already between four national 4G operators, plus nearly ten substantial MVNOs/sub-brands (Virgin, Boost, Cricket, MetroPCS, StraightTalk, etc.). Google's proposition at this point, based on what it has said publicly, looks to me like the Apple TV of MVNOs: a viable entry into a crowded field lacking the compelling value proposition that characterizes so many of its other products. Here are seven ways that I think Google could make its MVNO better.
My view is that the AWS-3 auction results will lead to some pretty important changes in the makeup of the wireless industry.
On the eve of CES and as we usher in 2015, I'd like look at some industry sectors where I think mobile could have a greater impact. First though, some context around the concept of 'disrupt': In my view, there are three "types" of impact that mobile has had on business.
When I think of the many aspects of our daily lives that mobile has helped to improve or simplify--navigation, finding a restaurant, comparison shopping, fitness tracking, all manner of personal information management--the grocery shopping experience is one that has been virtually untouched by mobile.
At the time of this writing, the AWS-3 auction has passed the $30 billion mark, with weeks possibly still to go. We could be looking at a $40-$50 billion auction, which is 4-5x Wall Street's initial consensus expectations. And what are the government's plans for this money? From what I understand, about $7 billion is earmarked for the FirstNet public safety network, with the remainder going to the Department of the Treasury to help pay down the deficit. Yes, you read that right.
The recent developments in mobile payments are a classic example of a rising tide lifting all boats. As soon as Apple Pay became active, the curiosity factor drove more than 1 million iPhone users to launch their long-neglected Passbook app, download their credit card onto their device, and try out the service. Then, all of the sudden, CurrentC (the brand of Merchant Customer Exchange), and SoftCard (the brand of the AT&T/Verizon/T-Mobile JV), from whom we'd heard zilch in about a year, sprung to life. That you couldn't ring up your Huggies purchase at CVS with your iPhone became this week's #firstworldproblem.