What is going on in the brick-and-mortar retail space is much like…

what is happening in the cable industry.  DISRUPTION by new entrants.  It started with Amazon (and e-commerce) in retail and Netflix (and other streaming services) in home entertainment.

 

In the 1980s/90s, retailers like Macys and JCPenney built-out their footprints at mall locations across the country.  At those locations, they largely sold the brands of unaffiliated merchandisers.   Consumers spent a lot of time at the mall to shop.  All was good in the retail space.

In the MVPD industry in the 1980s/90s, cable firms provided access to content owned by third-parties.  If consumers wanted to watch a live-sporting event, their favorite show, the nightly news, they turned on the television.  There were 90+ million MVPD households.  All was good in the TV business.

All was good because, in each industry, the relationship between the owners of “the box” and the owners of “the stuff” made available through the box was one of mutual dependency.  If you built it, “they” would come.  But, there was a change, a technological one, which shifted the preferences on how consumers shopped and watched programming.

In response, MVPD providers are consolidating, creating their own content, and providing different packaging options for consumers (e.g. skinny bundles and online access).  Retailers are merging and closing locations, creating their own merchandise, and expanding their online presence.    

http://fortune.com/2017/03/17/jcpenney-stores-closing/

It's time for the details on infrastructure policy

Seven years ago this Friday (3/17/2010), the FCC released the National Broadband Plan that outlined ways the government can influence the build-out of the broadband ecosystem, including ensuring robust competition that maximized innovation and investment, efficient allocation of government managed or owned assets to encourage network upgrades and competitive entry, support deployment of broadband to high-cost areas and ensure its affordability to low-income households, and reform laws and policies to maximize benefits in education, health care,  and government operations.  At the time, approximately 200 million individuals had access to broadband (4 mbps) at home.   (See: https://www.fcc.gov/general/national-broadband-plan ). 

In it's 2016 Broadband Progress Report, the FCC reported that nearly 10% of Americans (34 million) still lacked access to fixed broadband at speeds of at least 25 mbps. The difference in the unserved percentage by market density ranged from 39% in rural areas to “just” 4% in urban areas. 

In his recent address to Congress, President Trump reiterated a commitment to infrastructure spending.  While no details were presented on broadband, it is assumed that some federal money will be allocated and there will be efforts to reduce regulations/laws that have limited private sector network build-outs.  Hopefully, some policy ideas will be floated soon in order to get market reactions.  

Time can often kill a deal, but this time it may help one

On Wednesday, newly appointed FCC Chairman, Ajit Pai, stated that he would allow an independent review by commission attorneys of his decision not to examine the proposed AT&T-Time Warner merger because there are no broadcast license transfers in the $85B deal. 

Assuming the position stands, that leaves the DOJ as the sole regulatory agency reviewing the merger.  And, it is likely that, with the passage of time (last 6-months or so), the deal is much more likely to get approved in the months ahead, in spite of President Trump’s disdain for the deal when first announced.  What has changed?  Believe it or not, there are greater consumer choices for distribution and content and the providers continue to chip away at the stranglehold traditional Pay TV operators (AT&T) have had in the vertical chain.  Choices from Hulu, Apple TV, Amazon Prime, Netflix, SlingTV, PlayStation Vue and now YouTube TV are formidable competitors, so let them duke it out in the marketplace.