2017 is upon us and the pace of change in the Communications and Media space (formerly known as disparate Telecom, Cable and Media industries) shows no signs of slowing down.
The three big trends to watch this year are the continuing Mergers & Acquisitions, Network Investment/Competitive Landscape, and the Internet of Things (IoT). At the top of that list is AT&T’s Time Warner purchase and how the new administration will involve themselves. From a competitive standpoint, we’ll examine the state of the networks as 4G LTE reaches parity and the market impacts that will exist until 5G emerges with standards and pilot cities. The final trend is one that you cannot miss if you ever use LinkedIn – Internet of Things (IoT). We’ll take a look at IoT and examine where we forecast companies investing in 2017.
Mergers and Acquisitions
The vision has been clear for a while, communications and media companies are consolidating with the end-goal of being able to deliver personalized content on any screen at any time. AT&T-Time Warner continues to take shape with limited risk from the AT&T side (potentially still feeling the pain from T-Mobile breakup costs). Positioning itself as a vertical integration, the merger may end up looking like the Cingular merger several years ago with Time Warner may operating as subsidiary for a couple of years. However, if history repeats itself, all paths lead to one AT&T.
Knowing the end-goal, there is no clear chicken or egg in this scenario. Media companies may make targeted buys of delivery channels or vice versa. The logical next question is what happens with Sprint and T-Mobile? Long thought to be a perfect match, expect to see many rumors on their union. Alternatively, they both are potential targets for media organizations looking for a delivery channel. The model of Content and Delivery will come together and they will be a part of it one way or another.
How will Verizon move forward with Yahoo! to close the acquisition – will they accept the original purchase price after the 2 data breaches, negotiate a new price or back out of the deal? Very few people seem to think that they will rescind on the deal that involves 1B accounts and an Ad platform. The original offer is still the best value for an Ad platform around.
The smart money is that all other major deals, starting with Sprint and T-Mobile, are in a holding pattern until there is a signal on how the Trump administration will view the AT&T Time Warner deal.
Network Investment and the Competitive Landscape
Mobile networks continue to get closer to full network performance parity among the top 3 service providers and this has started a price war that seems likely to continue for the foreseeable future. The byproduct of this will be increased churn and reduced ARPU; all carriers will look for ways to gain subscriber share and retain their existing base.
Network investment will be made to squeeze any additional speed and capability out of the 4G networks while the 5G standards are agreed upon and wireless pilots begin. Regardless, the networks will co-exist for some time to ensure coverage.
As Smart Cities emerge, there is a conflicting trend of municipalities investing in network infrastructure to provide wireless coverage that can compete with the network investments of carriers. Determining who shoulders the cost of connectivity and the realized benefit will determine the pace at which smart cities move forward.
The network improvements have bolstered subscriber adds for the challengers. At the end of the day, subscriber adds are what will drive these carriers to continue to invest and improve their networks. T-Mobile has closed the performance gap on 4G LTE service with Verizon, and they will continue to invest in the strength of their network. T-Mobile has continued to win the subscriber add war of late with their ‘un-carrier’ message coupled with improved network performance. Look for other carriers to spend more on data and analytics (and ultimately marketing) to address this challenger in 2017.
Internet of Things (IoT)
IoT is still in adoption infancy, especially when compared to the massive market it is forecast to become. The challenges here are that most organizations are examining how to incorporate products and programs, and what to do with data. There are use cases for all sorts of programs, but we have not seen great widespread adoption as of yet. The real substance of IoT is the Machine Learning and Data opportunities, or challenges, depending on where you sit.
Smart Cities and others try to strike a balance between Privacy and Security and retaining users without a big brother feel. This means computing and analysis closer to the edge. There will be cottage industry to help configure and secure the network and set the thresholds of what data or images get sent back to a centralized point.
Consumer oriented products like Amazon’s Alexa and Google Home made a splash at the holidays, and we know of at least one hospitality customer that has piloted Alexa in their properties. This is significant in that it continues to allow manufacturers to collect more data and further refine their products, while exposing additional potential customers to the products in their neighbors’ homes.
In 2017, we continue to see additional focus on pilots and efforts in the business IoT market, however we plan to increase capabilities around Machine Learning and data management as the precursor to more connected devices. Leading organizations should be examining their analytics teams and their re-skill plans to ensure they are ready for the next set of challenges.
2017 is the year of transformations – emerging technologies will get closer to replacing their predecessors and the marketplace will continue to consolidate into larger organizations seeking to offer a truly personalized experience transferrable to any screen. At the end of the day, customers will continue to get greater value and communications and media organizations will need data and analytics to make informed decisions on the churn created by this competitive environment.
If you want to learn more or talk further about the trends covered here, please reach out to:
Ken Christensen, Principal
Media & Communications Industry Lead
Email | +1 (404) 526.6205