Thursday, May 18, 2017

The Duolpoly Dilemma (part III)

There are about 1600 small operators in the US.

"The NTCA–The Rural Broadband Association is the premier association representing more than 800 independent, community-based telecommunications companies that are leading innovation in rural and small-town America."

"NCTC has grown to serve over 850 cable companies across the United States."

These (mostly) small companies are facing some grim future. USF Reform changed some of their economics. But trends in the telecom sector have also hit their economics.

2016 National Health Interview Survey (NHIS) indicate that 50.8% of American homes did not have a landline
telephone but did have at least one wireless telephone. [source] More than half of homes do not have a landline now. It tipped.

"Over half of U.S. cord cutters (51.8%) canceled their pay-TV service subscriptions in 2015 and 2016, according to new market research TDG (The Diffusion Group)."

"Just over 1 in 5 broadband households (22%) have no legacy pay-TV subscription, representing roughly 22 million homes, according to TDG."

“TDG observed long ago that incumbents were going to have to make a choice: either resign themselves to being a ‘dumb-pipe’ provider, or invest in using IP, change the TV experience, and become the go-to source for all things video,” he said. Comcast with Xfinity went for a better CX (customer experience). Just about everyone else buried their head in the and.

Tele-Health is a big opportunity. Huge! I tell you. Just huge. Except: "A third of senior citizens in the U.S. say they never use the internet. That's according to a new survey from Pew Research Center that looks at how digitally connected adults over 65 are. Seniors make up 15% of the U.S. population, about 46 million people.

Getting people to adopt not just Internet but broadband and the IP enabled life is a challenge.

Gigabit has reached 56M households in the US, according to Telecompetitor. There are almost 126M households in the US. That is a lot of digging, fiber strands and CAPEX! Verizon spent $1.3B on fiber to be deployed in the next 3 years.

It was expensive for telcos to get into TV just as TV declined. Whoops!

DSL can't compete against DOCSIS 3.0. Cable is winning the broadband game - at the expense of telcos, especially RLECs. Smaller MSOs were already getting cherry picked by DISH and DirecTV. They had to double down on Internet -- but at a considerable expense.

In almost every pie - TV, voice, broadband, cellular - it is saturated. The only way through is Innovation. You have to make the Customer Experience so much better.

It isn't even just CAPEX. It is Strategy of where can you grow especially in a take away game filled with Me-too products (VoIP, TV, SD-WAN, cloud). Where is the opportunity? Where can growth come from? What skills do we have in house that can be leveraged?

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