Analysis of media issues, politics and current events.
Remember those scenes in movies where a devised plot gets portrayed in the clichéd visual symbolism of setting up dominoes? Each component is lined up and readied so, when put into motion, it will topple the others and spring the ultimate trap.
Well, the telecom and entertainment companies seem poised to flick those dominoes. As the Internet has replaced the traditional communication and entertainment distribution infrastructure, the owners have become frustrated by less control and greater public resistance to the content delivered over their networks (revolt over cable rates, decline in mobile minutes use, DVD sales, piracy). Knowing that their revenue models could be permanently damaged if not destroyed, all signs seem to say they are about to execute their plan to shift their revenue model and future revenue strategy to data rates, bandwidth and locking viewers to content. This plan is underway now with the first domino knocked over…
Domino One: Companies are capping their unlimited plans.
Customer overages in voice used to be a nice hunk of change for telecoms. Now people use less voice call time. And with Wi-Fi and workaround technology like Google text and iMessage text, SMS messaging plans are less the revenue cash cows they once were.
In the face of declining overages to voice and text, a revenue bright spot: data. People still want their email, movie streams and Facebook updates–even without using cheap Wi-Fi to move that data. A revenue opportunity that AT&T CEO, Randall Stephenson, openly admitted to regretting and missing out on by providing unlimited data plans for phone users on products like the iPhone.
Because they (telecoms) see their revenue future in all the bandwidth demands users will have as they stream work, telephony and entertainment communications into their homes and devices, companies are now phasing out the free bandwidth era. AT&T scraped unlimited data a few months ago. Verizon Wireless just announced the same. Comcast already has capped its data plan. And even though they raised it to 300 GB last week, it’s rumored to likely to start charging for use beyond that cap (instead of what it used to do: threaten to cancel your Internet account).