Showing posts with label News Corp.. Show all posts
Showing posts with label News Corp.. Show all posts

Wednesday, May 16, 2007

Ma Bell pipe dream: $1 billion in ad revenue in 3 years

Seems that everyone wants a piece of Internet-based ad revenue. Now even the companies that provide the "pipes" that carry the Internet want in on the action, including Ma Bell.

John Stankey, AT&T's president for operations support, told the Reuters Global Technology, Media and Telecoms Summit in New York that advertising could bring $1 billion to Ma Bell's top line in three years time. Stankey said AT&T can reach that revenue goal by virtue of being the biggest U.S. broadband provider, a wireless carrier and most recently, a purveyor of Internet Protocol Television Service (IPTV) via its nascent U-Verse video service.

I think Stankey's time line is far too optimistic given the slow pace of AT&T's U-verse rollout whose functionality hasn't yet been demonstrated on a large scale. Also the company's sluggishness in even upgrading large portions of its service area that must continue to use early 1990s dial up modem technology to access the Internet or the so-called "Molasses Net" -- satellite Internet service -- which AT&T is hawking via a reseller deal with satellite provider WildBlue.

Rather than the pipe providers getting into the advertising biz, the more likely scenario is the media giants like Rupert Murdoch's News Corp. and Web portals Yahoo! and Google getting into the pipes business, partnering with other companies to build their own broadband infrastructure after tiring of waiting on the telco/cable duopoly to expand their networks.

Sunday, March 04, 2007

Content providers could make a big play for the pipes

When television was a relatively new technology, mass communications theorist Marshall McLuhan predicted it would produce an electronic global village linked together by a medium so powerful that the medium itself would be as important as its content. Thus, McLuhan famously pronounced in his 1964 book Understanding Media: The Extensions of Man, “the medium is the message.”

If McLuhan were alive today, he’d surely say the same about Internet and with great emphasis. It’s become such a powerful global medium that it’s threatening to reshape TV itself along with other traditional media outlets such as radio and print publications. Because the Internet can transport all forms of communication and do so interactively, it’s arguably McLuhan’s uber medium. It’s no wonder that newspapers, television and radio are paying homage to the Internet, scrambling to get their content on it.

Given the power of this emerging medium, expect to see content providers to take a greater stake in owning Internet infrastructure directly as cable provider Comcast already does. Last year, News Corp. owner Rupert Murdoch complained about the current patchwork state of Internet access, with large numbers of people unable to obtain broadband connections to the Internet. Murdoch and other media titans could end up making plays for telcos and cable companies to speed broadband deployment in order to reach larger audiences for their content.

If they were joined by big Internet content amalgamators Yahoo! and Google, their economic power would be enormous, able to finance a crash program to upgrade the nation’s infrastructure to support near universal broadband access. It’s also quite conceivable that the debate over network neutrality in which the cable and telcos claim they should be able to charge media content providers for access to their systems (net neutrality advocates say they shouldn’t) could provoke media content providers to launch hostile takeovers of big telcos and cable companies. You want to charge us to use your pipes? Forget about it; we want those pipes!

Telcos like Verizon that are putting in fiber optic based systems that offer adequate bandwidth to easily carry all types of Internet content now and in the near future will likely be the most attractive takeover targets. By contrast, AT&T’s strategy utilizing both fiber and its legacy copper cable plant could make it a less attractive target for a media company. But Ma Bell would certainly have to be on the list by virtue of her sheer size and ownership of vast swaths of the nation’s Internet infrastructure.