Best Available Screen Challenges to the Wireless Lovefest

              With growing momentum, wireline incumbent carriers have achieved general consensus that copper-based technologies should reach end of life, the sooner the better.  The incumbents emphasize how wireless can satisfy consumers’ desire for tetherlessness, free to roam and motor without loss of voice and data connectivity.

            So far so good.  We should not dismiss clear comparative disadvantages in a wireless replacement, but who wants to stand in the way of “progress?”

 

            Nevertheless, you might want to join me in assessing the consequences of a wireless-only environment, particularly for a future marketplace that combines voice and data services.  We might welcome the added versatility of voice access via a single handset anytime and anywhere.  But what about the incumbents’ less visible campaign to make wireless the predominant and likely only option, particularly in many rural locations lacking access to fiber optic, or hybrid copper/fiber, broadband services.  If wireless voice evaporates, so would wireline Digital Subscriber Line data service and any other type of data delivery via now “abandoned” telephone company copper.

            A compulsory migration to wireless data services presents a far less attractive value proposition.  We might tolerate mobile video access via a small screen, but how would you feel if a larger, higher resolution screen was available?  Do incumbents really want to force consumers to abandon the best available screen at home, the high definition and soon to be ultra-high definition television set, so that the meter can continue to run on small screen wireless devices?

            I assume that consumers would rather watch video content on the largest screen available with the best resolution.  I also assume that wireless data subscriptions will continue to offer metered access to rather skimpy amounts of monthly data downloading and streaming at rates far in excess of wireline options on a per downloaded gigabyte basis.  One more assumption: just as wireless subscribers migrate to home Wi-Fi options to avoid running up the meter, future wireless broadband subscribers will not tolerate being bound to a wireless-only option that could result in triple digit monthly bills.

            Please correct me if I have wrongly assessed the copper retirement scenario.  I see a quite viable—if unstoppable—glide path toward a mostly wireless voice marketplace.  I’m not sure whether cable television operators really care much about offering wired voice telephony.  

            What I have problems envisioning is a wireless data marketplace that denies consumers options for using the best available video display screen, the opportunity to replace vastly more expensive wireless streaming with unlicensed options like Wi-Fi and substantial narrowing in the cost of broadband access between wired and wireless options.  Are incumbent telephone companies unintentionally bolstering the prospects for a non-mobile broadband monopoly controlled by cable television operators, or does 5G wireless make unmetered broadband a distinct possibility?

Out of Pocket Costs for Over The Top Applications Like Standalone HBO

            When one accesses HBO via cable television and other multichannel video programming distributors (MVPDs”), the subscription price covers both content and conduit.  With HBO’s announcement that it will offer standalone access, without proof of an MVPD subscription, consumers now will see a price point for only the content.  Curiously this unbundled price may exceed the current rate of about $15 a month offered by MVPDs that includes carriage.

            How can this be?  Are MVPDs underpricing, or ignoring carriage costs?    Does a $15+ standalone price ignore the cost savings when consumers and not HBO bear the cost of carriage?  Is broadband carriage of an additional bitstream so insignificant in cost that it’s not worth metering or charging?

            These questions do not have easy answers, in part because outsiders, including researchers like me, have no access to cost information.  We know that bandwidth intensive applications, such as streaming video, can have a significant cost, particularly at busy hours when a carrier might have to invest in more bandwidth and switching facilities to accommodate demand.  However, we also know that unless and until Internet Service Providers (“ISPs”) reduce their unlimited or 250+ GigaByte monthly allowances, subscribers incur zero cost when they have to bear the cost of carriage for delivery of HBO.

            So the cost of broadband carriage will have no significant impact on consumer decision making about bundled or unbundled HBO access unless and until using an Over The Top (“OTT”) application for unbundled access to content only triggers additional charges.  Put another way, if consumers can “binge watch” HBO, Netflix and other content sources without exceeding their monthly data allowance, then having to bear the cost of carriage is insignificant.

            Who bears the cost of carriage has become a significant matter in recent weeks for content providers, like Netflix, content distributors, like Level3, last mile ISPs like Comcast and consumers.  Most wireless consumers on metered data plans, have no more than a few GigaBytes available per month. Device shifting HBO from the television set, or even the PC with wired broadband access, to mobile tablets and smartphone would likely trigger a higher data charges, or migration to an “unlimited” data access tier.

            The possibility exists that MVPDs like Comcast can punish HBO and its standalone subscribers by reducing wireline data allowance.  Rather than meddle with HBO traffic, by throttling or degrading service, all Comcast has to do is raise subscribers’ incremental cost of video streaming and other OTT applications from zero.