The high costs of the cloud
How great is it that high-definition video is now portable? Thanks to cloud computing, superfast 4G networks and tablets with high-resolution screens, we can watch thousands of movies and TV shows in lush, beautiful clarity wherever we go.
In a way, that is pretty great, as the millions of people who have bought the new iPad with retina display and LTE connections have already seen. But in another way, it’s going to quickly become not so great: As hi-def video – or rather, the data bandwidth to deliver it – becomes a commodity for more people, that commodity will start to become much more expensive. Not just for consumers, but for the companies that will increasingly need more wireless spectrum and wired infrastructure to handle the surge in data demand.
Call it the curse of the cloud. The proliferation of online video services and portable devices to watch them on have added congestion to data networks even as wireless carriers impose fees on its biggest data users. According to Bytemobile, video accounted for half of all mobile data traffic in February, up from 40 percent only a year earlier.
And that was before the arrival of the new iPad, which has four times as many pixels as the iPad 2. More pixels can enhance hi-def video but requires more data. Demand for wireless data will rise even higher once more LTE smartphones – including, most likely, the iPhone 5 expected this year – start streaming video and other high-bandwidth content on them. If carriers are overwhelmed by the demand, as AT&T was with its notoriously unreliable 3G networks, wireless service will grow more spotty over time. But we’ll be paying more for it.
We’re already seeing some of this happening with the LTE iPads. Just ask the guy who used his brand new iPad to watch NCAA games while attending NCAA games, blowing through his 2GB allotment in less than two days. Or the USA Today columnist who says he did the same just by downloading apps. Meanwhile, complaints were surfacing on message boards that AT&T’s LTE networks were dragging in some urban areas as people played with their new iPads.
It won’t be just iPads and the next generation of iPhones taxing wireless networks. Apple is the first to offer an LTE tablet to the masses, but LTE Android tablets will follow, as will more LTE phones powered by Android, which runs on 51 percent of the world’s smartphones. Verizon, AT&T and Sprint have been building out their 4G networks for years, but Verizon recently warned that despite that effort, demand will outstrip LTE capacity as early as next year.
In Super Bowl streaming deal, Verizon scores again
What a delightful week this is turning out to be for Verizon. First, archrival AT&T decides it will ditch its $39 billion bid for T-Mobile USA (as if they weren’t grinning madly in the halls of Verizon’s Art Deco building down on West Street) and then they get a piece of this NBC deal to stream the Super Bowl. No doubt, in the greater scheme of things the AT&T news trumps the streaming deal — but every little thing helps in the crazy competitive telecoms world.
Here’s the upshot: For the first time NFL postseason games — including the Super Bowl — will be streamed live online over NFL.com and NBCSports.com and over mobile devices through an app supplied by Verizon. This is NBC’s deal; Fox tells us they have “no similar plans” while we’re CBS declined to comment on whether they would do a streaming deal..
The advantage for Verizon is clear: It’s just one more differentiator. (Verizon has really been on a roll lately. Beyond the events mentioned above, they swooped in to buy a ton of cable spectrum for $3.6 billion and made headlines with their plans to take on Netflix with a streaming service).
For NBC, the thinking is they can add an online audience to their already huge TV football audience. Joe Football Fan will watch the Super Bowl and all of its $3 million-plus commercials on the big TV screen at the same time he is watching the streaming coverage on his phone or PC, which will include a bunch of extra stuff such as additional camera angles, sideline updates and in-game analysis. In other words, it will be complementary.
At least that’s the plan. And it’s likely to work out just fine for NBC. When it comes to the Super Bowl, football fans crave all the information they can get, and having access to the game on your mobile phone while your sitting in a loud, crowded living room party would, frankly, be helpful.
There is a risk, of course. Perhaps this is just one more step toward cord-cutting, or allowing viewers to watch their favorite shows without the cost of subscribing to a cable distributor. If the NFL — the NFL! — is available in real time online, then can every third-rate sitcom be far behind?
Comcast, which controls NBC, has obviously concluded the risk is very small. They’ve been streaming games on Sunday nights and, as the Associated Press reports, their broadcasts haven’t been hurt.
Tech wrap: AT&T, T-Mobile pull plug on mega-merger
AT&T said it had agreed with Deutsche Telekom to drop its $39 billion bid to buy the German company’s U.S. wireless unit amid increasing regulatory obstacles to the planned deal. AT&T said in a statement on Monday that it will enter a roaming agreement with Deutsche Telekom. AT&T’s plan to buy T-Mobile USA, first announced in March, has met with opposition from the U.S. Department of Justice and the Federal Communications Commission.
The upstart wireless company that is being bankrolled by Philip Falcone’s $5 billion Harbinger Capital Partners hedge fund could run out of money during the second quarter of 2012, according to the company’s financial statement. LightSquared, which registered a $427 million net loss during the first nine months of this year, may not be able to “continue as a going concern” unless it can raise additional capital and financing, the statement reviewed by Reuters said.
Prince Alwaleed bin Talal, the Saudi billionaire and an investor in some of the world’s top companies, has bought a stake in microblogging site Twitter for $300 million, gaining another foothold in the global media industry. The Twitter stake, bought jointly by Alwaleed and his Kingdom Holding Co investment firm, was a secondary market transaction, meaning that Alwaleed and Kingdom bought the Twitter shares from existing shareholders, rather than making a direct investment, according to a person familiar with the matter.
The precipitous decline in the price of Research In Motion stock has left the market capitalization of the BlackBerry maker below the value of its cash, receivables and other current assets. Shares in the Canadian smartphone maker fell another 4 percent, to less than $13, on the Nasdaq on Monday. They have lost more than half their value since the day before reporting second quarter earnings back in September. The fall gives RIM a market capitalization of less than $7 billion. RIM last week said it had current assets – which include short-term investments and discounted inventory – of $7.2 billion.
Zynga shares fell as much as 13 percent below their IPO price, in their second trading session, as investors worried about the online game publisher’s growth prospects. “Investors aren’t interested in Zynga – not at these prices,” said Sterne Agee analyst Arvind Bhatia. “The demand post-IPO is what drives the stock price and it’s just not there.” With these latest losses, Zynga has a market value of $7.8 billion, down from $8.9 billion when it went public.
Cablevision Systems Corp said Monday that it would dismiss a lawsuit it filed earlier this month against Verizon Communications Inc for allegedly misleading consumers about the speed of Cablevision’s Internet services. In the lawsuit filed December 6 in Brooklyn federal court, Cablevision accused Verizon of running a deceptive advertising campaign based on a study from the Federal Communications Commission showing that the company only delivered up to 59 percent of its advertised Internet speeds during peak hours.
Tech wrap: Twitter sings about new site
Twitter revamped its website to make the microblogging service easier to use and to help companies better showcase their brands. The new version of Twitter features a redesigned look that the company hopes will make it easier to find interesting content on the service, as well as technological improvements that it said will speed up the service. It also features a revamped profile page, in which a company can highlight specific feature, such as videos or photos. Previously, the profile pages displayed a chronological list of the company’s most recent Tweets.
Apple’s next iPad will be available in February, Business Insider’s Jay Yarrow writes, citing Citi analyst Richard Gardner. The new iPad will feature a screen with twice the resolution of the current model, Yarrow adds.
Verizon Wireless blamed technical problems for an outage on its recently launched high-speed, 4G network, which prevented some U.S. customers from accessing the Internet for about 24 hours. It is at least the second outage since Verizon launched its 4G data service. Trade publication FierceWireless said the company had a major service disruption in April.
Zynga CEO Mark Pincus said the social networking games company can double the number of its paying players, but he and other executives sidestepped questions about player retention and churn rates at an IPO roadshow luncheon in Boston. At the end of September, Zynga, known for popular games such as FarmVille and Mafia Wars, had about 6.7 million unique players. Paying players account for less than 3 percent of Zynga’s total number of players.
Google does not work with nor does it support Carrier IQ, the software maker which has been accused of violating millions of mobile phone users’ privacy rights, according to Executive Chairman Eric Schmidt. “Android is an open platform, so it’s possible for people to build software that’s actually not very good for you, and this appears to be one,” Schmidt said.
Nintendo denied a report that Shigeru Miyamoto, widely seen as the world’s most influential games designer, would step down from his current position and take a smaller role in the company. Wired magazine had quoted the 59-year-old creator of popular games franchises including Super Mario Bros and The Legend of Zelda as saying in an interview that he wanted to retire and work on smaller projects, passing the torch to younger designers.
Verizon, Netflix and those darn bloggers aka Reuters
Bear with us a minute while we toot our horn (again) and point to our story on Verizon’s plans to launch an online Netflix competitor next year. Needless to say, we were pleased to get it out there first, but it’s probably unsurprising that Verizon was not ready with a press release as it hammer out deals with programmers.
So it was amusing to hear Verizon Chief Executive Lowell McAdam as he tried to squirm his way around questions about his company’s plans during an interview at the UBS conference.
“I think the jury is out but I do think there is a place for over-the-top here and it will be part of our strategy,” said McAdam.
But here’s our favorite quote and no doubt was a reference to our story yesterday — which was eventually matched by the Wall Street Journal:
“There is lots of speculation about what we are going to do and what we are not going to do.That is all just speculation by people that like to write blogs.”
First of all, we love to write blogs here at Reuters. Secondly, we never report speculation (that’s why it’s called reporting).
McAdam confirmed, as we reported, that Verizon has been thinking about this for a while and looking at other options including Verizon’s recent tie-up with Comcast, Time Warner Cable and Bright House.
yes he is horrible I was wrongfully terminated and wrote him a letter and he did nothing about it , I had proof and emails that his Management team was lying about harassing another employee, they are going to let this man perjure himself under oath. He knows this, they blocked my letters to the board of directors i do have an open letter to corporate america ( the letter the board wll never see ) to show how Verizon bullys people and are unethical according to their own code of conduct
UPDATE-PayPal tries to lure retailers to mobile app
(Updates to explain “secure element” issue. Changes in bold in paragraphs 10, 11)
Online payments firm PayPal is so keen to get mobile payments off the ground it has taken the unusual step of opening a Manhattan dummy store that demos how the app can be used (pictured at right).
It’s idea is to demonstrate the application to merchants at the “store” between now and February.
PayPal’s head of mobile payments, Laura Chambers, said merchants have given a “very enthusiastic” response to PayPal’s plans for the wallet launch next year. The eBay unit promises to reveal a pilot merchant partner by year end. But Chambers was not ready to name any merchants or even any retail sectors that are interested in supporting the app in an interview at the downtown showcase.
In the meantime it will finally launch a PayPal app for Android phones that lets users tap their phones together to exchange money. The app, which the company already showed off as early as June this year, uses a peer-to-peer version of Near Field Communication, a short range wireless technology.
Other U.S. companies such as Google and the four top U.S. mobile network operators are throwing their weight behind NFC – a technology they plan to use to allow consumers to pay for shopping by simply waving their phones at a check-out terminal in stores.
PayPal (which is owned by eBay) is for fools that don’t mind getting the shaft!!!
Tech wrap: Groupon rethinks IPO
Groupon called off an IPO roadshow slated for next week because of market volatility, the Wall Street Journal reported. The Internet coupons site is reassessing the timing for an offering on a week-by-week basis, the newspaper added, citing an unidentified source. Some on Wall Street have questioned Groupon’s financial disclosures, while others are concerned the company’s rapid growth is starting to slow in North America. Groupon CEO Andrew Mason sent a memo to employees recently that was widely reported in the media, in which he blasted critics in the press and on Wall Street.
Sprint filed a lawsuit to stop AT&T’s $39 billion purchase of T-Mobile USA in the same federal court that is to hear the Department of Justice’s case opposing the buyout. Sprint said the combination would lead to higher prices for consumers and create a duopoly between AT&T and Verizon Communications. Also, Sprint argued that if the deal goes through, a combined AT&T and T-Mobile would have the ability to use its control over roaming and spectrum, and its increased market position to exclude competitors.
Dell and China’s top search engine Baidu plan to jointly develop tablet computers and mobile phones, targeting the Chinese market dominated by Apple and Lenovo. Dell declined to give a timeline for the launch of the devices, but local media quoted sources saying that it may be as early as November. Baidu launched a new mobile application platform last week and offered a glimpse of its upcoming mobile operating system, which it hopes will serve a growing number of users accessing the Internet from smartphones and tablet computers.
Regulators in South Korea raided Google’s Seoul offices, according to a source familiar with the matter. Google said in a statement that it will work with the Korean Fair Trade Commission to address any questions it may have about the Web search leader’s business.
Jaguar Financial Corp, an activist shareholder in Research In Motion, said it wants the struggling BlackBerry maker to consider selling itself or spinning off its patent portfolio, sending RIM’s share price higher. Jaguar CEO Vic Alboini said Jaguar has talked to a select group of shareholders and received broadly positive feedback for its plan. Jaguar, a Canadian merchant bank that targets underperforming companies, and its supporters hold less than 5 percent of RIM’s stock. RIM shares ended up, just over 1 percent.
Tech wrap: Is Groupon’s IPO window closing?
As the Nasdaq Composite index continued its week-long tailspin, tech investors and analysts are wondering what the stock plunge could mean for the pending IPOs of companies like Groupon and Zynga.
The coming week, which has about a dozen IPOs scheduled to price, will be a good test of the severity of the selloff, according to Nick Einhorn, an analyst at Connecticut-based IPO research house Renaissance Capital. “Less mature, less profitable companies could have a tougher time going public,” Einhorn told Reuters.
If there was to be another recession, writes Investor Place’s Tom Taulli, “the IPO market will freeze up. It will mostly be only standout companies – such as Zynga and Facebook – that will get traction. A company like Groupon, which has substantial losses, may have to delay its offering or cut the valuation.”
Groupon, which more than doubled subscribers this year to 115 million, plans to abandon the use of a controversial financial measure it once touted as a good indicator of performance, two sources with knowledge of the situation said.
Hackers competing at the world’s largest hacking convention in Las Vegas found it ridiculously easy in some cases to trick employees at some of the largest U.S. companies to reveal information that can be used in planning cyber attacks against them.
Will it be more bad news for Cisco Systems? The IT giant reports its quarterly results on Wednesday and investors expect a weak outlook after Juniper Networks and Brocade Communications Systems slashed their forecasts.
Almost half the workers in Verizon Communications’ wireline telecommunications business went on strike on Sunday as negotiations for a new labor contract failed.
The more I read about Groupon’s shady accounting practices, the bleaker their future seems. I mean, their numbers (which are NOT taking in account the percentage Groupon is to pay merchants) don’t add up. How can I trust a business that relies so much on long financial float times?
On the other end of the spectrum is BigTip, whose business model is a great deal sturdier. Plus, they don’t — pardon my French — screw over small merchants the way Groupon does. They have powerful merchant tools that allow business owners to fully customize the deals. When merchants win, consumers win, too. Whether you are a business or just someone who loves to save with coupons, BigTip is the way to go.
Verizon Strike: Service vs. Smiles and duct tape
Gosh, those Verizon guys who can’t fix anything sure are nice.
Two days after Mother Nature snapped the data cable that runs 25 feet from the street to my home — severing the home phone connection that I barely use — they rang my bell and greeted me with smiles. You heard right: smiles.
Next came a pair of handshakes with uncalloused hands, then introductions, a declaration, and a revelation: “I’m Jim, and he’s Steve. We are managers! There’s a strike!”
Me: “A strike? Really? I didn’t know that.” Jim: “Yeah neither did we, until we got the call at about 12:15 AM.” (I begin to wonder if the “Brand Spanking New” tag are still attached to their unscuffed hardhats. )
Me: “So, can this cable be fixed? (I point to the lifeless strand, hanging limp on the ground between my car and their van.) Should I expect my phone to be back on soon? ” Jim: “Well, it looks like it snapped off clean. (They discuss whether a quick fix was possible, and agree it could not). We might need a bucket truck.” Me: “So… can it be fixed today?
There is more discussion about what can be done. And what cannot. We make small talk. They speculate that the strike might be a one-day thing. (It’s not.) Its the kind of chatter I’ve never had with myriad Verizon service technicians, whose modus operandi is to roll up to the house, mount the utility pole, fix the problem, and — maybe – knock on my door to ask me to sign some kind of work order. But today that nameless guy is probably walking a picket line, and my buddies Jim and Steve are on my front steps. Thankful for their attempt, I drive away to handle Sunday chores.
When I return, the data cable is no longer on the ground. No, its now coiled up and duct-taped to the utility pole, the business end still 25 feet from my house. I made two new friends at Verizon — too bad I can’t call them on my phone.
I’m a Verizon technician currently and was also a manager for a short period of time.
@ lamely37, I am very much like you in the sense that as a technician I do my job, service my customers and am not an FMLA abuser. It was unfortunate how Verizon screwed it’s managers a while back especially their pensions/benefits. Unfortunately, you as well as I know, that when you took the management position, you had no protection. If you did, you and others would have fought to keep what they were trying to take.
I agree about the FMLA abuse but unfortunately that’s a govt program be mad at them. You also forgot to mention that while FMLA time is excused it counts against your retirement so the abusers will be working long after their 30 years in order to collect their full pension.
@ ForReal, I and most union members are not against making contributions to our benefits but the company is being unreal with their demands. Lets look at your gripe about merit increases based on performance. For years I’ve been installing FIOS service. I am not one of the technicians (bosses favorites) that gets cushy work or gets teamed up. Trust me there are plenty of techs that do. 95% of the time I get new non existing FIOS installations (and my area is all aerial). Anyone who’s had new FIOS service installed can testify to how involved (labor intensive) and timely (4-6hrs optimal, without problems) it is. Earlier this year the flavor of the month became our job productivity and we complained to no avail because the techs that do the cushy work looked like superstars. Guess what, nothing happened. There is absolutely no way that work can be distributed on an even keel for what I do. We work in very dynamic environment and there is also too much back alley dealing going on between the managers with regards to our work distribution. In addition our productivity reports are based on an average so all it would take is a few bad days during the course of a month to affect our monthly totals. Sorry, but I don’t think it’s fair I get screwed out of a raise when I bust my butt everyday.
Lastly, Verizon Execs love to complain about their losses in the wire-line business. You need to make a distinction when it comes to that end of the business. Verizon has two outside plant networks, the old copper plant (POTS DSL T1 etc..) and it’s new FIOS network (Voice/Data/Video). Now I agree that when POTS (Plain Old Telephone Service) and DSL (Digital Subscriber Line) were Verizon’s bread and butter that wireless and competition (cable/VOIP) were eroding the business but that hasn’t been the case for a while now. The Telecomm end of the company is continuing to be viable as a revenue source that’s why Verizon pumped BILLIONS into establishing, expanding and migrating it’s customers onto it’s FIOS network. Earlier this year at a meeting our third level manager stated that the company was making a profit on FIOS. My work location services 2 counties and we average 200 new installations a day and our area is no where near saturation. How many companies have invested BILLIONS in their infrastructure and are seeing profits in only 4 years during a recession?? Now think about it FIOS is a great product with the addition of another income stream (Video) and Verizon markets the hell out of it. Even with that who makes it happen and ultimately successful the people on the ground not the managers. If we(associates) weren’t placing the plant, fielding the calls, making the sales, provisioning the services, setting up the equipment on and in homes, making repairs then it’s all a nice dream. Verizon needs to remember that. Also, you can’t blame unions for the 9.1% unemployment in this country, what you need to be doing is getting out there and voting. Business drives job creation but its hard for business to thrive when your government has flawed monetary policy, financial and trade regulations that make it more lucrative for business to exist/operate outside the US.
Tech wrap: Fake Apple Store defiant
Customers at an apparent Apple Store in the Chinese city of Kunming berated staff and demanded refunds after the shop was revealed to be an elaborate fake, sparking a media and Internet frenzy. Staff were also angry at the unwanted attention after more than 1,000 media outlets picked up the story and pictures of the store from the BirdAbroad blog. Apple declined to comment on the fake store or others like it dotted around China.
Apple was in early talks to join the bidding for Hulu, the online video site that Walt Disney Co, News Corp and its other owners have put up for sale, Bloomberg cited two unidentified sources as saying.
Verizon Wireless signed up 1.3 million fewer iPhone customers than AT&T and Verizon Wireless customers spent less per month than expected in the second quarter, disappointing Wall Street. While Verizon Wireless added three times more net subscribers in the quarter than AT&T, it only activated 2.3 million Apple iPhones compared with 3.6 million activations at AT&T.
Facebook won a dismissal of a second lawsuit by the Olympic rowing twins Cameron and Tyler Winklevoss, who have sought to increase their $65 million settlement with the social media company and its founder Mark Zuckerberg.
RIM said it has bought Swedish video editing company JayCut and hinted the operation will work on features for its PlayBook tablet computer. JayCut joins Stockholm-based design company The Astonishing Tribe, which was bought by the Canadian smartphone and tablet maker in December to improve user interface.
