Unplugging from Legacy Media

First, Landline Phones

The great unplugging movement has begun. The first wave started in the late 2000's when more and more people realized that most of the phone calls they were receiving on their legacy landlines at home were telemarketing calls. At the same time, most folks found that the majority of their phone time was spent on cells or smartphones. So why pay $30 -$40 (or more) per month for the landline? Alas, the landline started to become unplugged. In late 2009, it was estimated that 25% of all households were cell-phone-only (CPO). Today the CPO estimates range from 40%-50%. Traditional landline providers are leaving the business (or have begun spinning it off) in favor of wireless distribution-only. Granted, most of this landline termination has been occurring in the residential/consumer market. Most students graduating from college have never been tethered to landlines. As they enter the real world, their primary "addresses" and communication links will be their wireless phone numbers and SMS text portals. But how far off is the unplugging of corporate landlines? Theoretically, small businesses do not need landline services with a plethora of wireless and ViOP (think Skype) options available.

Second, Cable/Satellite Television

The next unplugging wave is now hitting the cable-television and satellite-service companies. With high-speed broadband now reaching 60% of all US households, video streaming is catching on in a very big way. Monthly cable bills (not including internet services) are reaching the $60-$90 range (even more with premium programming services). Consumers are now pulling the plug with increasing frequency. Roku seems to be the video streaming device of choice. About the size of a deck of cards, the device plugs into your flat-screen TV via an HDMI connection and receives your household WiFi signal. Roku offers up to 100 "channels" free of charge. These channels include popular programming options like Netflix, Hulu Plus, Amazon Plus, Crackle, BBC, PBS as well as all four major US networks. The Roku unit retails for $60-$90. Most popular TV programs can be viewed 24 hours after they air on cable or the networks. The quantity of older, archival programming available is amazing. Also, new "streaming-only" content providers are developing original programming. Netflix just announce their first original programming effort last week. Add a high-tech HD over-the-air antenna to receive local stations (UHF/VHF) and you end up with about 70% of the programming you would receive on the cable or satellite services for nominal fees!

The negative impact of video streaming on the cable and satellite providers will be huge over the coming years particularly in terms of lost ad and subscription revenue. Local television affiliate stations may slowly become superfluous as major content providers stream their programming directly to the consumer via the internet/wireless distribution channel. Social media may take on a whole new look and feel as it migrates to the HD television screen. Imagine a streaming Facebook channel. Also, marketers will establish their own streaming channels (or apps) with info commercials and original programming that feature their products. Look for new, streaming-only content providers to grow rapidly in this space. Also, as the baby-boom generation moves into living on a fixed-income during retirement, they will definitely opt for the video streaming as a low-cost alternative to expensive cable and satellite subscriptions.

Third, Broadband Internet Service

The third area of unplugging will affect landline broadband service providers selling internet connection to residential customers. The lower-cost alternative will be a broadband wireless internet connection via the newer 4G LTE wireless platform offered by Verizon, ATT, Sprint, etc. Most android-based smartphones can transmit a wireless high-speed hot spot to other devices (iPads, laptops, video, game consoles and streaming devices, etc.). At the moment, the subscription cost for such a "hot spot" smartphone feature is $30.00 per month ($10-$20 less that a landline broadband connection). The beauty of the hotspot feature is that you can take it with you, anywhere. Your internet connection is not shackled to your home. And, the hot-spot connection often is much faster than your traditional wired connection at home. Look for more broadband wireless frequencies to be sold by the US government allowing for even faster wireless connectivity. This will increase the migration (unplugging) away from traditional "wire-connected" broadband services.

What will unplugging from legacy media mean for marketing services agencies, digital/internet agencies and social media firms... in terms of revenue, strategic planning (internal and for clients) and staffing? More to come on that in the next few updates.

Newsletter Update: 2/8/12

"Unplugging from Legacy Media"

Contact:

Eric Kercheval

Email: eric@ekassoc.com

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Minneapolis, MN 55401

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