“When you say it’s gonna happen now. Well, when exactly do you mean?”
– The Smiths
Let’s face it. None of us like paying the cable companies hundreds of dollars for a bunch of channels we hardly watch, let alone having them set against a backdrop of pre-defined viewing schedules. Even with DVR’s it’s insanity writ large.
While our options are growing daily – Hulu, Netflix, Vudu, etc. – these OTT providers have not offered a compelling enough value proposition for a real revolution in the cable industry.
Yet, consumers continually ask: “When will someone (hell, anyone!) develop a solution that provides the breadth of cable, the flexibility of OTT and at a price point that doesn’t take us back to where we started?
Well, maybe… just maybe, I have a solution.
The concept of virtualization at the service provider level is nothing new. We’ve seen this in many instances in the mobile space for example, with Amp’d, Virgin Mobile, Boost and others becoming Mobile Virtual Network Operators (MVNO’s) – albeit with mixed success. Therefore, it was only a matter of time before this trend moved into the cable space.
Recently, Intel announced plans to create a virtual cable company or VMSO (Virtual Multiple System Operator), initially in partnership with Virgin, but now solely on its own initiative after the parties decided to part ways. While the move by Intel is laudable, they have unfortunately shown a propensity to mis-calculate when entering new markets with other eco-system partners (consider wireless operators reluctance to embrace Intel’s WiMax standard and its impact on companies such as Clearwire as just one example). Thus, while they have kicked off the concept, I think Intel is the wrong horse to bet on to move this initiative forward.
So who do I think could make a real run at a VMSO??
Well… How about T-Mobile…
It may sound crazy, but when you get right down to it, it makes sense, so hear me out.
First, T-Mobile needs to reinvent itself. Even with its history of innovation and attractive high-speed data network, the prospect of remaining the 4th competitor in a mobile market largely owned by AT&T and Verizon is a difficult proposition to maintain. Just ask its parent Deutsch Telekom.
Second, the Company has $4Bn burning a hole in its pocket courtesy of the break-up fee it received from AT&T last year. That’s a lot of money waiting to be deployed in a manner that will drive T-Mobile into new areas of sustainable growth.
Third, as a carrier, it understands the necessary peering and distribution relationships that will be necessary to distribute its services to consumers across other mobile networks in a high-availability fashion – not just the “best-efforts” basis that cable is provided under today.
Finally, the Company already has a growing mobile DTV offering through its white label partnership with MobiTV. While they currently remain one-step away from the programmer relationships, the T-Mobile TV offering has helped the Company understand what it means to offer video services to consumers, what’s sticky and how to monetize the offering.
Essentially, T-Mobile stands a solid chance of creating a new kind of “cable” company. One that operates in the 21st century and has the necessary infrastructure and know-how to provide live and on-demand video programming the way consumers want it – wherever they are, whenever they are.
So what would such a T-Mobile VMSO service look like? Here are a few suggestions:
– Cross-platform distribution: Viable replacement of traditional cable/DTH service in the home, with identical and authenticated functionality across mobile devices
– Personalization: Learning platform that is able to suggest programming based on viewing history and preferences through social integrations.
– No Bandwidth Caps: A unique aspect of such a service would be T-Mobile acquiring/leasing un-used wireless spectrum in real-time from other wireless carriers. The technology for frequency hopping exists and under the right pricing regime, T-Mobile could theoretically offer its VMSO service with just an annual bandwidth fee, as opposed to the current monthly tiered structures offered to consumers today.
– Socialization: Integrations with various social services – GetGlue, Facebook, Twitter, etc. – to enable sharing/commenting on content and provide data hooks in support of hyper-personalization.
– Revised Bundling and Pricing: While I’m not talking true a la Carte (though that would be nice), T-Mobile would not be burdened with legacy cable business models, thereby allowing for new pricing and bundles that are more consumer friendly and speak to today’s programming consumption patterns. Further, since the consumer would be purchasing directly either the receiver box or the mobile device, T-Mobile has a much reduced subscriber acquisition cost (SAC), giving it greater flexibility in terms of product pricing.
These are just a few examples of what T-Mobile could do in this space if it wanted to.
Now, I’m not suggesting that they abandon their traditional wireless telephony and data business. Quite the contrary! I simply believe they have an opportunity to create something unique and potentially disruptive to the television industry that wouldn’t require (a) the build-out of an entirely new network and lead to yet another “me-too” video offering that we’re all tired of; or (b) a legally dubious offering such as those provided by Ivi.tv, Nimble.TV or Aereo.
Consumers have said they want this now? So tell me. How soon is now?
