The in-flight connectivity market should see annual retail revenue from commercial passengers hit $3.8 billion by the end of the 2020s, Northern Sky Research said Monday. With service providers struggling to balance services with profit, the too-crowded market is crying out for consolidation, NSR said: This year could be "crucial" for the market as revenue is expected to grow by more than 40 percent.
The U.S. economy will take a $2.4 billion annual hit if the Trump administration imposes 25 percent tariffs on connected devices and printed circuit assembles in a third tranche of duties against Chinese imports, said a CTA study released Friday and by Trade Partnership Worldwide. An earlier study said duties on $50 billion worth of Chinese imports, coupled with Chinese retaliation, would reduce U.S. GDP by nearly $3 billion (see 1805010062). Tariffs of 25 percent on IoT-critical connected devices imported to the U.S. from China would cost the U.S. economy $1.8 billion yearly, said the new study. “This single tariff line captures products needed by data centers to make the internet work, networking equipment that most businesses need to connect to the internet and operate office networks, as well as products that consumers need to access the web and enjoy its content.” Without tariffs, CTA forecasts smart speakers will grow to a $3.8 business in terms of 2019 factory sales, with unit shipments of 44.4 million. The association estimates 25 percent tariffs will reduce shipments by 5.3 million units. Bluetooth earbuds, which CTA forecasts will be a $1.4 billion business in 2019 on 14.2 million in factory unit shipments, would take a $588 million revenue hit. Unit shipments would be cut 1.7 million. The Coalition for a Prosperous America stands behind the administration’s plan to “consider” raising the third tranche of duties to 25 percent from 10 percent, and backs software levies, commented the conservative think tank Thursday in docket USTR-2018-0026. Well more than 1,200 comments were posted in the docket Friday, the vast majority opposed to tariffs. BSA|The Software Alliance didn’t comment. Wilson Electronics was burned in the first two tranches of tariffs on RF components and semiconductors it imports to make cellphone signal boosters in Utah, it commented Friday. Now, Wilson supports imposing 25 percent tariffs in the third tranche on finished boosters imported from China under the same heading as connected devices because Chinese competitors use “extremely aggressive pricing tactics to undercut Wilson’s sales." Tariffs on Audio-Technica's Bluetooth headphones and wireless mic systems would "have a significant negative impact on our business," commented its Vice President-Operations Richard Sprungle.
Cord cutters are expected to climb 33 percent this year to 33 million, and U.S. adults watching traditional pay TV are expected to decline 3.8 percent to 186.7 million, eMarketer said Tuesday. It said with a number of operators having integrated Netflix into their channel lineups, more such pay-TV/over-the-top partnerships are expected and they -- plus other strategies -- could help slow the pay-TV losses though they won't stop them. Kagan said virtual MVPD revenue should hit $2.82 billion this year and top $7.77 billion by 2022. It said virtual MVPD revenue per subscriber is about a third of traditional cable services but is growing and expected to top $37 a month this year, up 19 percent from 2017.
The full FCC voted to adjust application fees to reflect a 3.7 percent increase in the consumer price index, said an order in Tuesday’s Daily Digest. The FCC "expects that this Order will become effective before October 1," the order said.
The 12 items on Thursday's FCC meeting agenda are the most in almost 10 years, bringing Chairman Ajit Pai's average to more than seven monthly agenda items, far outpacing recent predecessors. Pai is pursuing free-market, deregulatory policies aggressively, said most we queried, though some believe Pai is trying to overload critics. Pai pitched the commissioners' meeting as a "summer blockbuster" on high-band 5G spectrum, cable leased-access reversal, satellite broadband, intercarrier compensation, rural broadband, telecom legacy discontinuance streamlining aimed at spurring wireline broadband, and other items (see 1805160051).
The top 95 percent of pay-TV providers lost roughly 305,000 net video subscribers in 1Q vs. a loss of about 515,000 subscribers in Q1 2017, said Leichtman Research Group Thursday. The top six cable companies lost about 285,000 video subscribers, widening from a loss of 115,000 subscribers; satellite TV service’s lost subscriptions widened to 375,000 from 340,000; but the top phone providers’ losses narrowed to 50,000 from 325,000 (the fewest since Q3 2015). Internet-delivered services including Sling TV and DirecTV Now added 405,000 subscribers, up from 265,000 net adds in the year-ago quarter. The top pay-TV providers now have about 91.9 million subscribers -- with the top six cable companies having 47.8 million video subscribers, satellite TV services 31.1 million subscribers, the top phone companies 9.2 million subscribers and the top Internet-delivered pay-TV services 3.8 million subscribers. Since the industry’s peak, traditional services have lost about 7.2 million subscribers, while the top publicly reporting internet-delivered services gained about 3.8 million customers, said LRG Principal Bruce Leichtman. The internet-delivered category doesn’t include PlayStation Vue, Hulu with Live TV or YouTube TV, which don't publicly report subscribers.
Entities lobbying Capitol Hill and federal agencies on broadband infrastructure issues more than doubled in Q4 compared with the same period in 2016, disclosure filings released through our deadline Tuesday show. Overall lobbying spending by telecom companies and associated groups increased during Q4, though three of the top four carriers -- AT&T, T-Mobile and Verizon -- reported expenditures dropped or remained flat. Tech sector firms' lobbying priorities during the quarter included lawmakers' focus on extremist online content and legislation aimed at curbing online sex trafficking (see 1801230061). Partial figures on Q4 spending were available Monday (see 1801220057). Tech lobbying spending reached a recent high (see 1801230068).
Roku added 48 percent more “active” user accounts in Q3 than a year earlier, said CEO Anthony Wood Wednesday on the company’s first earnings call since it went public Sept. 28. “If Roku were a traditional cable company or a service operator, we would be the fourth largest in the country,” he said. “Streaming is mainstream, and a huge market. We believe every TV will one day run a streaming OS.” Momentum in licensing to TV makers made Roku the top U.S. streamer, “based on streaming hours,” said Wood. Streaming hours for Q3 were up 58 percent from a year earlier to 3.8 billion, said Chief Financial Officer Steve Louden. Q3 revenue jumped 40 percent to $124.8 million, as the operating loss narrowed to $7.9 million. Roku shares ended Thursday up 55 percent at $29.19.
AT&T remains confident it will close on Time Warner by year's end, despite word DOJ is considering challenging the deal, analysts said Thursday. That close could come by month's end, analyst David Barden of Bank of America emailed investors Thursday. The Wall Street Journal that day reported the agency is discussing possible settlement terms. BOA said it's standard for the agency to work along multiple fronts for merger reviews. BOA said new DOJ antitrust chief Makan Delrahim is positioning himself to have the last word on any conditions, and the company expects any conditions to be reasonable. It said the time Delrahim is taking has to do with coming up to speed on the takeover rather than with material issues. Wells Fargo's Jennifer Fritzsche emailed investors the issue might be more about Justice increasing leverage in negotiating conditions than a serious intent to block the deal, saying the DOJ would face an "uphill battle" in court trying to block the vertical merger. If the department does push back, that might indicate horizontal mergers -- like Sprint/T-Mobile -- might not fly with the administration, Wells Fargo said. DOJ didn't comment. AT&T said when the agency reviews any transaction, "it is common and expected for both sides to prepare for all possible scenarios. For over 40 years, vertical mergers like this one have always been approved because they benefit consumers without removing any competitors from the market. While we won't comment on our discussions with DOJ, we see no reason in the law or the facts why this transaction should be an exception." Time Warner closed down 3.8 percent to $94.70. BOA said AT&T Senior Executive Vice President-External and Legislative Affairs Bob Quinn indicated this week DOJ wouldn't likely approve consolidation of two national wireless carriers without creation of a fourth facilities-based player, since that would likely face political and career antitrust staff opposition. BOA said an MVNO-based cable provider also wouldn't fit that bill of a facilities-based operator. AT&T didn't comment on that.
CTA predicts 2017 holiday tech spending will be up 1 percent to $96.8 billion from 2016 vs. 3.8 percent in Q4 2016 and negative 1.8 percent in 2015. Steve Koenig, senior director-market research, told us Wednesday at the group's conference (see 1710110063) that "what makes robust tech spending growth challenging for 2017 is the comparison to a very solid 2016 season." Smartphone volume will be "mostly flat against a backdrop of lower prices," Koenig said. “We’re even seeing on an annual basis, not just holiday, very moderating growth” in screen devices, he said. Data mining will play a more prominent role, and consumers will see more targeted marketing, said Koenig. A much-requested gift will be smartphones (8 percent), and 128 million adult gift givers plan to buy communications devices including smartphones (27 percent).