PowerTalk

In recent weeks, we’ve heard from a number of cable companies like Comcast (CMCSA), Charter Communications (CHTR), Time Warner Cable (TWC) and others. All in all, it’s been a message that reinforces the increasing degree of what I call the Connected Society - WiFi, the Cloud, high speed Internet and on demand programming. Mix in the shift toward smartphones and tablets, and we find the notion of appointment TV viewing is nearly gone save for sporting events. 

Those cable companies are battling with mobile operators, such as AT&T (T), Verizon (VZ) and others for consumer dollars. As they do this, the operators have made it more expensive for consumers to utilize their services even though new technologies have made it cheaper for those companies to deliver said services. Just this past December, Charter Communications instituted a price increase on its high-speed Internet service. At Comcast, price increases on video service and customers upgrading to HD packages and digital video recorders (DVRs) helped boost the company’s first quarter profit by 17%.

For those wondering why I’m up on all of this, the growing Connected Society is a key  part of my Always On, Always Connected PowerTrend

Joining me on PowerTalk to discuss why this and what it means is Susan P. Crawford author of the new book “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.” Ms. Crawford is a law professor who served as special assistant to President Obama for science, technology and innovation policy. 

It’s a terrific conversation and not only is Susan an ace on the subject matter but doesn’t pull any punches. Some of the key insights that Susan and I discussed on this edition of PowerTalk include:

  • How after years of deregulation and a wave of mergers, there has been little to competition nor adequate oversight when it comes to high-speed Internet access.
  • Verizon Wireless and AT&T, who together account for about two-thirds of U.S. wireless subscribers, can raise prices with impunity and often appear to act in lockstep. Their average revenues per household or per user continue to climb. By comparison, in Europe, where wireless carriers face much more competition, average revenues per user have fallen by 15% over the last few years.
  • Despite high-speed Internet access offerings from AT&T and Verizon -- Uverse and Fios, respectively -- those two companies have stopped expanding these offerings and are focusing on their wireless services. As Susan points out, this leaves the cable companies and Comcast in particular in the cat bird seat when it comes to high speed Internet access and related services. The industry leader, Comcast continues to invest in network infrastructure to ensure product leadership in video and high-speed internet, as well as the expansion of new services that generate attractive returns like business services and XFINITY Home.
  • From an investor’s perspective, Comcast has several competitive moats about its business especially since the purchase of NBC Universal, While many see Comcast’s competitors being the other cable companies as well as AT&T and Verizon, Susan points out and I agree with her that post Comcast’s acquisition of NBC Universal its real competitors are companies like The Walt Disney Company (DIS), a content company that owns theme parks and ABC; Viacom (VIA), which owns CBS; and News Corp. (NWS).

 

Direct download: 05-08-13_SUSANCRAWFORDPOWERTALK.mp3
Category:general -- posted at: 3:10pm EST