AT&T suggests Dish and DoJ are collaborating

With AT&T’s WarnerMedia and Dish arguing over a distribution deal, one AT&T executive has suggested Dish and the Department of Justice are collaborating to reverse the green light on the Time Warner acquisition.

The conspiracy theory is hitting new highs here. AT&T is effectively accusing Dish of actively working to create a no-deal situation in negotiations with WarnerMedia over rights to air HBO content. Although having HBO and Cinemax channels go dark on the Dish service would have a negative impact on business, it does coincidentally work well for the Justice Departments case appeal against the Time Warner merger.

WarnerMedia have been in negotiations over the right to air content, with it claiming it offered to extend the previous contract while negotiating but Dish declined. As a result, HBO content has disappeared from the Dish service.

“Dish’s proposals and actions made it clear they never intended to seriously negotiate an agreement,” said Simon Sutton, HBO President and Chief Revenue Officer, in a statement to Reuters.

With the appeal based on the grounds the AT&T acquisition of Time Warner would offer it undue control and influence in the industry, stagnant negotiations certainly add credibility to the objections from the Department of Justice. Manipulating the playing field however, as AT&T is accusing Dish of, is a serious no-no when it comes to the courts.

“This behaviour, unfortunately, is consistent with what the Department of Justice predicted would result from the merger,” said a representative of the Department of Justice. “We are hopeful the Court of Appeals will correct the errors of the District Court.”

“The Department of Justice collaborated closely with Dish in its unsuccessful lawsuit to block our merger,” WarnerMedia responded. “That collaboration continues to this day with Dish’s tactical decision to drop HBO – not the other way around. DOJ failed to prove its claims about HBO at trial and then abandoned them on appeal.”

The $85 billion acquisition of Time Warner proved to be a messy affair for AT&T. While some would have expected some resistance from the industry, the objections of President Trump seems to have encouraged the Department of Justice to chase down every lead, and make life as difficult as possible. The Department of Justice’s appeal against the approval of the deal, is effectively built on the assumption Judge Richard Leon didn’t know what he was talking about.

Publicity stunt? Monopolistic ambition? Nefarious schemes? Whatever the basis of this story, more fuel has been added onto one of the longest running sagas in the telco industry.

Don’t listen to the moaners, phones are great – Three

Three has launched a new marketing campaign designed to counter all the moaning about how bad phones are for you.

In a new campaign, simply named ‘Phones are Good’, the telco imagines how historical moments would have been different if smartphones had been around. From Henry VIII on Tinder, to the Titanic with GPS, it’s a bit of fun which indirectly encourages people to use the internet more, playing directly into Three’s USP.

“At a time when we are being told to get off our phones, Three’s customers are actually using them three and a half times more than other providers,” said Shadi Halliwell, Chief Marketing Officer at Three. “That’s because, unlike others, we understand how real people use their phones.

“And although we shouldn’t be on our phones 24/7, if it weren’t for our mobiles how would you find love lounging on the sofa? Buy new shoes while sitting on the toilet? Or get a chicken cooked, seasoned, garnished and delivered to your door at the drop of a hat? As the Best Network for Data, it is our duty to challenge the cynics, and help everyone see that Phones Are Good.”

As you can see from the video below, it’s a creative way to get Three’s message across, and quite entertaining.

While Three is suggesting all these wonderful ideas on how mobile phones could have changed the course of history, there is of course the other side of the coin…

  • If the Mesopotamians had used MyBuilder.com for its reviews of local tradesmen, their grain storage units would have never leaked and beer would not be a thing
  • The Spanish Armada of 1588 could have been successful in its mission to conquer England if Sir Francis Drake was taking numerous selfies for the perfect Instagram post instead of gazing onto the horizon
  • Had a clumsy Chinese chef been following a YouTube recipe he might not have dropped a natural coagulant called nigari into a pot of soybean milk and created Tofu
  • Juliet might never have fallen for Romeo had she done a bit of Facebook stalking beforehand (admittedly this didn’t really happen)
  • If Percy Spencer had been using a calorie counting app, he would have never had that chocolate bar in his pocket and invented the microwave
  • Finally, without the power of Twitter the US might have a logical and caring human being in charge…

Of course, the revolutionary impact of mobile devices, not just the smartphone, is countered with negatives. Instead of talking to that lonely women on the bus, we stare at cats playing the piano and or toddlers biting siblings fingers. But, we more connected to family members on the other side of the planet. There’s always rough with the smooth.

Ultimately Three is attempting to push the advantages of the internet and encourage more people to consume more data. As the telco which sells itself to the more digital-enthusiastic users, using the internet more benefits it. It sells itself on data volume more than anything else.

The idea of the smartphone contradicts all the lessons of politeness and paying attention which we were taught as children. Perhaps the next thing we should be worried about is virtual reality. Parents have been telling children all around the world sitting too close to a TV screen is bad for your eyes, yet VR places a screen inches in front of your face.

Netflix back in the cash with 36% revenue growth

Last time Netflix reported its quarterly financials it disappointed investors. Three months later its back to its blistering best with revenues of $3.9 billion.

The year-on-year growth of 36% represents a strong quarter for the streaming giant, capturing 6.9 million additional subscriptions, the vast majority of which came from international markets. Net income stood at a healthy $403 million, compared to $130 million in the same period of 2017.

“Overall, this was a strong quarter for the company,” said independent analyst Paolo Pescatore. “Normal service has been restored.

“This was a key quarter for the company following the challenges of the prior one which was a one off and largely down to seasonality. More importantly strong growth in its overseas market is encouraging.”

Back in Amsterdam during this year’s IBC, the international markets were highlighted as critical to Netflix’s continued growth. This is not to say the US market has hit a glass ceiling, but with the current penetration (58 million subscribers) and intense competition for attention, this is not a market Netflix can use to continue the momentum investors have become accustomed to. For Maria Ferreras, VP of EMEA Business Development at Netflix, new markets, new content and new partnerships are key.

On the content side of things, the localisation strategy will have to be accelerated. Creating local content, using local production companies and journalists, is key for engagement, though with new rules in the European Union, the focus will have to be razor-sharp. The new rules will eventually require subscription streaming services to devote a minimum of 30% of their catalogue to European works, while some member states will force Netflix to reinvest the revenues realized in those markets back into local production. This is generally the Netflix strategy, though it might have to accelerate timelines.

In terms of localisation, this is not just on the content side; partnerships with regionalised pay TV providers, ISPs and mobile operators will continue to play a more prominent role. Such partnerships offer a faster route to the customer than organic marketing can, and there are already dozens of examples around the world. Examples from this quarter include the first mobile bundle in Japan with KDDI and an expanded partnership with Verizon to pre-install the Netflix app on Android phones.

“All of its rivals are now making huge bets on video and it cannot afford to be left behind,” said Pescatore. “It now needs to rely more than ever on its extensive cable and telco relationships.”

For the next quarter, Netflix is again expecting good things. Revenues are expected to grow 26% to roughly $4.2 billion, with the team targeting an additional 9.4 million subscriptions. The international markets will be the primary generator of this growth, expected to add an additional 7.6 million subscriptions, though only growing revenues by 10%. With offers and partnerships playing a strong role in creating this momentum, lower revenue growth is to be expected.

Netflix is the premier streaming service worldwide and it doesn’t look like it is going to lose that position anytime soon. Amazon’s own content business is making progress as well, while Disney is bound to offer some resistance, but Netflix is still dominant. New partnerships in the international markets and an increased focus on regionalised content will only add to the momentum. 26% growth over the next three months is a big ask, but the signs are all positive.

TIP 2018: what’s in it for Facebook?

At the Telecom Infra Project Summit 2018 we spoke to the Facebook execs behind the initiative to find out why they decided to get involved.

When Facebook first started talking about getting involved in in the telecoms industry via TIP and even developing novel wireless technologies such as Terragraph, it felt like a frustrated OTT going through the motions to light a fire under the sector. Facebook’s vested interest was clear: the better and more ubiquitous the connectivity, the more people will use Facebook.

As we explained earlier, a big part of this involves efforts to make telecoms infrastructure cheaper to buy, roll-out and maintain. In that respect TIP is a direct threat to the traditional big kit vendors, not only because tower networking costs probably equate to lower profits for them, but a major aim of TIP is to expand the whole telecoms ecosystem, thus creating additional competition for them.

In a couple of small media gatherings at the event we spoke to Jay Parikh, Head of Engineering and Infrastructure at Facebook, and VP of connectivity Yael Maguire. Parikh explained that TIP is not just a product of Facebook’s own connectivity needs but also of conversations he was having with operators two or three years ago in which they implored Facebook to get involved.

The biggest mutual problem faced by Facebook and the operator community is the exponential growth in traffic over networks combined with the increasing difficulty and cost of providing it. “We were worried that innovation was slowing down,” said Parikh, in reference to the collective concern felt at the time, one which the big kit vendors were failing to sufficiently address.

In response to persistent questioning about the return Facebook expects to get on its significant (but unspecified) investment, Parikh insisted that this isn’t a short term thing for his company. The strategic objective is to catalyse the telecoms industry and ROI will be gauged by the presence of novel connectivity innovation, as opposed to direct financial considerations.

It’s easy to be sceptical any time a company claims to be doing something for the greater good, but equally this would be a strange area for Facebook to diversify into if it was only looking for a new profit centre. Having said that the world’s dominant etailer now makes much of its profit from its cloud business so you never know.

Parikh kept his cards pretty close to his chest regarding any TIP financial metrics but it’s relatively easy to believe that a cash-rich Silicon Valley company might be prepared to spend money a bit more speculatively than a traditional outfit. Facebook considered its own fortunes to be intrinsically allied to those of the global telecoms industry, so helping it innovate is viewed as sufficiently self-interested by itself, for now at least.

When asked what the top priorities are for Facebook from TIP, Parikh cited the connectivity insights programme, which aims to give operators additional data to help operators make informed decisions derived, in part, from anonymised Facebook user data. Rural access work is also important as Facebook seeks its next billion users, and Telefónica’s work in Peru was cited as an example of this.

The third priority is Terragraph, which is positioned as an alternative to fixed wireless access delivered over unlicensed 60 GHz spectrum, of which there is plenty, with an emphasis on backhauling wifi. This is a key concern of Maguire’s, who noted that average video speeds are declining across the board thanks to the aforementioned imbalance between demand and supply.

Maguire explained that Terragraph started as a project designed to look into the viability of using the 60 GHz spectrum for backhaul. At such a high frequency there are a bunch of propagation challenges, with even oxygen itself contributing to signal degradation. But it turns out that if you get the precise line of sight alignment right and don’t try to transmit any further than 200m, then it can be used in much the same way we’re talking about FWA over mm wave for 5G.

In keeping with Facebook’s general tone on this stuff Maguire played down any direct antagonism between Terragraph and mm wave FWA, insisting they just wanted to offer up alternatives. I was also keen to stress that this technology is specifically intended for high bandwidth wireless backhaul. “It’s not a solves all problems technology,” he said.

So, in summary, Facebook says it’s not looking for any immediate return from its involvement and investment in TIP. Instead it expects to benefit from the telecoms industry innovating as a faster pace than it would have if Facebook hadn’t decided to get involved. Aside from justifiable scepticism about any company being so sanguine about immediate, demonstrable ROI there’s little reason not to take Facebook at face value on this, while also keeping a watchful eye out for mission creep as things progress.

AT&T will launch Netflix competitor next year

In an SEC filing, AT&T has confirmed it will launch a new streaming service focused around HBO content to challenge the dominance of Netflix and Amazon Prime.

While details are relatively thin for the moment, though AT&T Entertainment boss John Stankey formally announced the new offering at the Vanity Fair New Establishment Summit in Los Angeles confirming the Time Warner assets would form the foundation of the streaming platform, with some third-party content building out the breadth and depth.

“On October 10, 2018, we announced plans to launch a new direct-to-consumer (D2C) streaming service in the fourth quarter of 2019,” the SEC filing states.

“This is another benefit of the AT&T/Time Warner merger, and we are committed to launching a compelling and competitive product that will serve as a complement to our existing businesses and help us to expand our reach by offering a new choice for entertainment with the WarnerMedia collection of films, television series, libraries, documentaries and animation loved by consumers around the world. We expect to create such a compelling product that it will help distributors increase consumer penetration of their current packages and help us successfully reach more customers.”

HBO, Turner and Warner Bros content will create an interesting proposition, though this of course relies on a successful merger with Time Warner. As it stands, District Court for the District of Columbia Judge Richard Leon has given the green light for the deal, though the Department of Justice is appealing the decision, suggesting Judge Leon did not appropriately consider the implications of the merger. It looks to be a done deal, though the DoJ is being as awkward as possible.

The question which remains is whether the Time Warner content will be enough, even with its library of titles and additional third-party content. Netflix and Amazon Prime are surging ahead of the competition in terms of subscriptions, 130 million and 100 million respectively, though Disney’s new streaming service could be an interesting offer with the 21st Century Fox programming assets. Hulu might not be on the same scale as these three, but with 20 million subscribers it is certainly a platform worth considering. AT&T is entering a very competitive market.

What this does also offer AT&T is potential entry to the international content market. This is where Netflix is targeting future growth, suggesting at IBC 2018 competitiveness in the US market won’t bring the growth figures investors consider appropriate.

The Time Warner acquisition has been one of the biggest talking points of the industry for the last 18 months, though one of the big questions is whether AT&T can effectively manage a business in such a different vertical. The traditional telco approach to risk and expansion will not work here, for this venture to be a success AT&T will have to be a lot more aggressive and embrace the concept of the fail-fast business model.

With the cards now laid out on the table, it won’t be long before we find out whether AT&T has the capability to effectively diversify outside of the traditional telco battlefield.

Even Snapchat is getting into the original content game

With social networking services seeking to improve the quality of content they host by making their own, even ephemeral messaging service Snapchat has felt compelled to act.

Snapchat has been teasing the idea of creating its own video content for at least a year, but this somewhat counter-intuitive move has taken a while to become reality. There is presumably only a very specific type of video content that is best consumed via a mobile messaging apps and now we finally get to see what that is.

“Today, we’re excited to debut Snap Originals – exclusive shows created by some of the world’s greatest storytellers, with new episodes released every day,” said the announcement. “Our first slate of Snap Originals includes Co-Ed, a new comedy from the Duplass Brothers; Class of Lies, a mystery thriller from one of the minds behind Riverdale; and Endless Summer, a docuseries following rising stars in Laguna Beach — from Bunim/Murray, the creators of Keeping Up with the Kardashians.

“Snap Originals will also feature new Show Portals, letting you swipe up and step inside a scene from a Show to experience it for yourself. Snap Originals will also have Lenses, Filters, and other fun ways for you to share the show experience with your friends.

You can see the promotional video below. It indicates that Snapchat is trying to do some novel things that play to the strengths of video consumed via a smartphone. This trend also reinforces the consensus that video-driven mobile data consumption is growing exponentially and will continue to do so for the foreseeable future.

 

Microsoft looks to take Xbox experience onto mobile

Microsoft has announced the launch of Project xCloud to take the world of Xbox gaming onto mobile.

The idea is a relatively simple one. Gaming is traditionally a better experience on consoles which are specifically designed for gaming, but Microsoft wants to take this experience into the mobile world of tablets and smartphones. Trials will start next year and will allow gamers to take the same content from games built for the Xbox console and PC onto their smartphones, using a Bluetooth enabled handset or an under-development touch overlay.

“The future of gaming is a world where you are empowered to play the games you want, with the people you want, whenever you want, wherever you are, and on any device of your choosing,” said Kareem Choudhry, Corporate VP of Gaming Cloud at Microsoft. “Our vision for the evolution of gaming is similar to music and movies – entertainment should be available on demand and accessible from any screen. Today, I’m excited to share with you one of our key projects that will take us on an accelerated journey to that future world: Project xCloud.”

Compatibility with existing and future Xbox games has been enabled by building out custom hardware in Microsoft data centres. The team have architected a new customizable blade that can host the component parts of multiple Xbox One consoles, as well as the associated infrastructure supporting it. The custom blades will be scaled out through the Azure cloud regions over time.

Currently, the test experience is running at 10 Mbps, though the team are keen to bring this down while still maintaining the same experience for gamers through advances in networking topology, and video encoding and decoding. The idea is to ensure these games can be played on 4G networks, though getting the bitrate down might be a tough ask considering the depth and interactivity of the content on consoles such as Xbox.

One thing is very clear; gaming is just another aspect of the mobile world which is pressing the case for 5G.

Microsoft has an ambition to ensure this content will be able to meet consumer experience demands on 4G networks, though this is a selfish view on networking. These games are incredibly immersive and will place additional strain on the network. For the telcos, the issue is not the singular demands of browsing, video or gaming, but the sum of all the parts. Gaming is just another item which has been thrown on top of the teetering pile of network strain. The efficiency gains of 5G will soon become a necessity, not the buffering-free cat video gains of today.

Looking at the gaming industry, growth is gaining momentum fast. Research from Newzoo suggests mobile gaming will generate $70.3 billion across 2018, accounting for roughly 51% of the industry total. This equates to 25% year-on-year growth, compared to 4.1% growth on consoles, such as Xbox, which is expected to account for $34.6 billion. Mobile’s share of gaming is expected to increase to 59% by 2021, taking $106.4 billion. Asia will account for the majority of this spend, though the gains will be experienced in every region.

An excellent example of the surge of mobile of gaming is Fortnite. While this might be a title most play through consoles or on PC, the most recent update for the game saw 60% surge in data traffic over normal peak traffic levels on Verizon’s broadband network, as well as a 5-8% jump on mobile.

The tsunami of mobile gaming titles over the last 4-5 years has improved the accessibility of gaming for the general public, though the complexity of these games in also growing. While this segment of mobile content might have been simplistic to start with, think of Candy Crush, more in-depth games are becoming increasingly popular with the general public. The proportion of games which require constant connectivity is also increasing. Should the Microsoft project prove to be successful, both in terms of operation and adoption, these trends will only be accelerated.

Gaming is no longer a niche, and pretty soon it will start to weigh heavily on the network.

Facebook eyes up the connected home space

Facebook has seemingly taken its first steps towards the connected home market with the launch of Portal.

As it stands, Portal is being marketed simply as a video calling product, though with partnerships with various content streaming channels and a tie-in with Amazon’s Alexa, the future could see Facebook enter the fray as a competitor in the smart home hardware segment.

Two products will be released to start with, Portal and Portal+. Portal will feature a 10-inch 1280 x 800 display, while Portal+ is a larger model with a 15-inch 1920 x 1080 pivoting display. Powered by AI, Facebook claims the smart camera automatically pans and zooms to keep everyone in view, while smart sound features minimize background noise and enhances the voice of whoever is talking. How effective the AI remains to be seen, however now the idea of smart communications products have been normalised in the home it won’t be too long before some pretty impressive products will start hitting the market.

Such a venture could prove to be a very useful gander for the Facebookers, as diversification is going to need to happen sooner or later. With younger demographics searching elsewhere for their social media fix, Snapchat and Facebook-owned Instagram benefiting, pressure will soon start to mount on the advertising business.

Shareholders are used to exceptional year-on-year growth figures, but it wouldn’t be a surprise to see these flatten; people are becoming less engaged by the platform, therefore spending less time exposed to adverts, while recent figures have shown key markets are not boosting total subscription numbers. Sooner or later a threshold will be hit; only so many adverts can be placed in front of users. Perhaps this is where the Portal products can help.

Unlike the other internet giants Facebook hasn’t really done an exceptional job of diversification. It has added more advertising products (i.e. different ways to engage users on the platform), but this isn’t genuine diversification. If the audience for the core product declines, Facebook’s business suffers; it doesn’t matter how many products there are if no-one is one the other side of the screen to see them.

Google or Amazon however have supported their core business with outside bets. Think of the cloud computing businesses they own, or the content platforms, or ventures into the grocery sectors. These are ventures which diversify enough to ensure negative impacts on the core business do not have a significant impact, however, close enough to lean on the brand and expertise.

With the Portal products, Facebook could make a play for the focal point of the smart home. This has a couple of interesting benefits, one of which will be controlling the gateway and therefore access to the consumer. By operating a window to the consumer, the owner of the window can charge access to gaze through. Partnerships are already in place with the likes of Spotify Premium, Pandora, and iHeartRadio, as well as Food Network and Newsy. This is a business model which could certainly be successful should Portal offer scale.

It is a simple, but effective idea. The window owner would also have the opportunity to launch new services and products which be installed as default, offering an entry-point to the data economy, in the same way Google dominates the mobile OS space with Android.

The focal point of the smart home is still an on-going battle, though Amazon and Google do seem to be winning with their smart speakers. The telcos have a chance with the router, though the proactive nature of the internet players is wrestling the ecosystem behind the speakers. However, today’s generations demand screens. Amazon has been trying to launch its own smart device with a built-in screen for months, though a difficult relationship with YouTube has not helped the situation.

Should Facebook be able to launch a video-orientated product, with high-enough specs, deep connections to the smart home ecosystem and smart enough AI applications, it could make a dent in the market. No-one has really produced a product which grips onto the space, and priced at $199 and $349, it isn’t out of the question for the Portal and Portal+.

Unsurprisingly, Facebook has made a point of security. AI applications are stored on the device, meaning data will be processed locally not transferred to the cloud. It’s almost as if Facebook has accepted it has a terrible reputation for data collection and management, and is offering an alternative to trusting the team with your personal information.

The big question is whether people trust the Facebook brand enough to give the business such prominent influence over so many different aspects of their lives. Even with a physical cover for the camera lens, users might be sceptical, though if there is ambition for additional services, there is a lot of work which will need to be done. The brand is not in a very good position when it comes to credibility and trust.

Another area which might prove to be a stickler for the product is that you have to have a Facebook account for it to work. This might not prove to be an issue at all in the long-run, though considering there will be people who don’t have and don’t want a Facebook account, or people who have intentionally deleted theirs as a result of recent scandals, it might be immediately ruling out a number of potential customers.

Netflix dominates the internet, but keep an eye on gaming geeks – Sandvine

Netflix currently accounts for an incredible proportion of global internet traffic, though the gaming segment is starting to throw its weight around.

According to research unveiled by Sandvine, The Global Internet Phenomena Report, Netflix now accounts for 15% of the total downstream volume of traffic across the entire internet. This is an astronomical number when you consider the service only has 130 million subscribers, a large number but some would perhaps has thought higher, while there are roughly 1.7 billion websites on the internet. Video on the whole accounted for 58% of the traffic meandering along the digital pavements.

Netflix, and video on the whole, dominating trends is not a new idea. This is something the telcos have been preparing for, though the gaming segment has been rarely discussed. Gaming has traditionally been reserved for very niche demographics, though with more content providers targeting mobile applications, the target audience has been increasing substantially, as has the depth and scale of the games themselves.

Looking at the contributions to the bottleneck, in Europe two of the top ten owners of downstream traffic volume are relating to gaming; PlayStation and Steam (focused on PC-based gaming). PC games can be as much as 100 GB in size, owning to consumer demands to make more larger and more immersive environments, though telcos would be wary of the continuing momentum for mobile games. With data becoming cheaper for the consumer and devices becoming more powerful, content developers are being encouraged to introduce mobile games which are more on par with those on other platforms. The sheer breadth, depth and variety of these titles on the app stores is quite staggering.

This of course will stress networks, especially considering many users of these games will use them when out and about, not connected to home broadband or public wifi. Ensuring these mobile games meet the demands of the consumer will be critical, as it may well soon become another stick to hit connectivity providers with.

Another interesting statistic to emerge from the data is the level of encryption. Sandvine estimates 50% of internet traffic is now encrypted, though this might be a conservative guess. The estimate only accounts for sources which are encrypted consistently, the number might well be higher, and it is certainly increasing. For consumers, this is a promising trend set against a backdrop of data privacy scandals and breaches, though it is an added complication for the telcos.

Encryption of course protects the consumer from wandering eyes with nefarious intentions, but it also prevents the telcos from keeping an eye on what is going on. Without visibility into what type of traffic is traversing the algorithmic piste, the telcos cannot tailor the delivery and enhance the experience for the consumer. The blame of poor experience might be thrown towards the telcos, but with encryption trends heading northwards, they are relatively helpless.

AT&T launches online advertising marketplace Xandr

Two multi-billion dollar acquisitions and a funny name later, the AT&T content business vision starts to become a bit clearer.

AT&T has announced the launch of Xandr, its new content business unit which will combine current capabilities (e.g. AT&T AdWork and ATT.net), the Time Warner and AppNexus acquisitions, as well as distribution partnerships with Altice USA and Frontier Communications into a notable advertising entity. While the initial plan is to capture a slice of the digital advertising bonanza which has been fuelling the monstrous growth at Facebook and Google, long-term ambitions are a lot grander.

“Xandr is a name that draws inspiration from AT&T’s rich history, including its founder Alexander Graham Bell, while imagining how to innovate and solve new challenges for the future of advertising,” said CEO Brian Lesser. “Our purpose is to Make Advertising Matter and to connect people with the brands and content they care about. Throughout AT&T’s 142-year history, it has innovated with data and technology, making its customers’ lives better. Xandr will bring that spirit of innovation to the advertising industry.”

In the first instance, Xandr will combine the distribution and data capabilities of AT&T, with content catalogues from Time Warner, Frontier and Altice USA and the technology platform of AppNexus to make a more complete advertising offering. With its 170 million subscriber base of mobile, broadband and OTT products, and the data collected on these customers, AT&T believes it can offer a hyper-targeted advertising solution and more effective ROI, to rival the likes of Facebook and Google.

But this is only the first step of the business. In the long-run, AT&T hopes there will be an opportunity for advertisers to bring their own data, augment this with the AT&T customer insight to provide an even more targeted and efficient proposition. These are the foundations of what the business hopes will eventually become an advertising marketplace, where all distributors, content owners and advertisers can combine. AT&T will enrich these offerings with its own data, and even offer tie-ins to Insight Strategy Group and Advertiser Perceptions in order to understand the dynamics between consumer sentiment and the advertising experience. We might have been waiting a while for this move in the content space, but it certainly is an in-depth one.

The partnerships with Insight Strategy Group and Advertiser Perceptions are certainly interesting ones as well. Understanding the dynamics between sentiment and advertising can aid advertisers in placing the right type of advert, in front of the right consumer, at the right time. Its a science which leans on art, but has the potential to be very useful.

The AppNexus acquisition was only completed in August for $1.6 billion, having announced the intention to buy the business in June. Through AppNexus, AT&T has been able to bolster its capabilities with an advertising marketplace, which provides enterprise products for digital advertising, serving publishers, agencies and advertisers. With AT&T’s first-party data, content and distribution the offering becomes more complete, as the focus turns to creating a platform that makes linear TV buying more automated and data-driven. Of course, part of this deal relies on the successful acquisition of Time Warner, which is proving to be more difficult business.

That said, while this is a good idea from AT&T to provide additional value to the content ecosystem, there will be complications. AT&T will have to convince competitor media companies to put their premium inventory on its network, while regulation could prove to be a hurdle as well. With data privacy a hot topic in the technology world right now, shifting around sensitive information and augmenting in such a marketplace might raise some concerns from privacy advocates.

Some have questioned whether AT&T’s venture into the content world, but this does look like to be a comprehensive strategy, incorporating several promised aspects of the digital economy. There are of course significant hurdles for the business to overcome, but it is a creative idea, perhaps one which would have been more likely to emerge from other segments of the technology world. More importantly, it is an opportunity for AT&T to provide value above connectivity.

The telcos will always have an important place in the digital economy, providing the connectivity cornerstone, though this runs the risk of utilitisation, slipping down the value chain. Using data for the purposes of advertising has always been a sensitive issue, though should AT&T be able to negotiate the red-tape maze, Xandr will enable AT&T to secure ‘UnTelco’ revenue. This is a case of a telco using what it has to add value to a parallel segment, as opposing to disruption and attempting to steal a limited amount of revenue. Its creating additional revenue streams and value.