Telecoms as Cassandra, or Breakin' Ma Bell Part Two: Electric Boogaloo

Note: Again this blog is wholly my personal opinion littered occasionally with some "facts". If you are in the media world, or for this post the telecom world, realize that I'm still dealing with big, bad, broad concepts. For today, even the Jedi deal in absolutes.

Thank you for stopping by last week to meet (most of) our BIG NAME PLAYERS in the Domestic Media space. Today I'm going to focus on the emerging field of studio administration of their Direct to Consumer ventures and how their growth and - what y'all really care about - assumed monthly bill can be estimated using the history of mobile telecoms in the United States. BOLD PREDICTIONS AHEAD but first, a warning this is all guesswork so please do not come pillory me in 2030 when all this is WRONG and secondly, buckle up kiddos we're going to get a history lesson! Hey stop your groaning, I find this stuff interesting and we're all stuck inside anyways so let's be reckless in other ways.

While discussing distributors aka the corporate conduits of media aka how audio / video is delivered to you the consumer, I brought up the 3.5(?) telecoms. With many thanks to statista we can see the market share as it exists nowadays(ish):

How did we get here? What does these 3.5(???) telecoms have to do with the 5 Hollywood studios? HOW DOES THIS PREDICT MY 2030 NETFLIX BILL??? Patience! We're all not going anywhere for a while. So! Into that history lessons I promised / warned you about.

Back in the early 1980s, the de facto monopoly of local telephone service AT&T's Bell Corporation had just finished its Federally-mandated breakup. Whole books have been written about the breakup of AT&T's Bell System and overall it's fascinating but this post is about the ramifications. Onward ho! With the telecommunications market blown wide open, two separate events were set into motion: (1) a twenty year push of T-1000 style re-conglomeration and (2) a drive for new tech ergo new markets.

Over the next two decades, the fragments of AT&T began to merge and eat each other to gain their strengths (i.e. market share). Bell Atlantic merged with Bell's NYNEX and formed Verizon. And Southwestern Bell acquired Bell's Pacific Telesis, BellSouth, Bell's Ameritech, as well as the parent (shell, of sorts) company AT&T and reformed all those assets in the modern at&t.

Realizing that they were on a one-way date with history and worried that monopoly-busting would make a comeback, at&t and Verizon during their re-consolidations began exploring the aforementioned new market frontier: Wireless. Mobile cellphone telephony!

Now this concept was not new. AT&T's Bell Labs had been slowly and lazily developing cellular telephones since 1968. But outside of (no joke, mostly) a few prank calls back and forth with Motorola's car phones (MOTOR GET IT) there was no hurry to implement a nationwide mobile phone technology.

With the breakup of their landline monopoly, the former Bell companies jumped headfirst into developing and implementing a First Generation aka 1G mobile phone network across the United States. They called it the Advanced Mobile Phone System (AMPS) which it went live in 1983. Former AT&T long-distance competitor Sprint joined the race.

From the late 80s to the mid 90s, dozens of regional cell phone services sprung up. AirTouch Alltel, Nextel Communications, PCS, nTelos, SunCom, Unicel, U.S. Cellular just to name a few. In the early 2000s, many were bought up by the landline-funded trio of Verizon, at&t, and Sprint. One of these startups, VoiceStream, was later purchased by German-based Deutsche Telekom, received a massive infusion of foreign investment, and re-branded as T-Mobile.

In the mid 2000s with the widespread launch of 3G (when internet-capable data speeds were integrated into the cellular bandwidth), the devices like the iPhone were commercially available, and the consolidation reaching untenable growth (either from threats of Government monopoly-union busting or the free market Unnatural Yeager phenomenon), the stage was set with 4 major nationwide cell phone networks ready to collect those sweet monthly subscriber dollars (FAMILIAR FROM THE PREVIOUS POST HM?). But at what price? Which brings us to...

HISTORY LESSON OVER I PROMISE
GO HAVE RECESS
just kidding please stay indoors
WELCOME BACK NOW IT'S TIME FOR MATH


If today you the attempt to acquire a single user cell phone plan across any American telecom, excluding the odd Flag Day Sale or whatever, you'll usually land in a thin range of $35 to $45 a month per line. So even as new costly features are added or cost-reducing advances are implemented, as the actual cost of network maintenance fluctuates, each of the 3.5(!) remaining telecoms watch each other's pricing to remain competitive.

With the long history of studio acquisitions (lightly) touched upon and with a deep dive (probably) incoming, all that YOU need to know is that 5 exhaustive media content libraries exist. (6 if you want to count Lionsgate and Discovery Networks and 0.5 each.)

Therefore as (1) pre-Direct-to-Consumer contracts expire and the rights to online streaming revert to their own studios, (2) studios realize more efficient ways to monetize Direct-to-Consumer platforms, and (A BIG NUMBER 3) streaming-offering companies merge and their ventures sink or swim, we will eventually be left with 5 or 6 total streaming services, services that basically already come pre-installed on Smart TVs.

The studios in 2020 are standing on a near similar precipice the telecoms were sitting a decade and a half ago.

So let's dabble in some OVERSIMPLIFICATION OF SPECULATION aka Why We're Here. As it stands now, if you extract from the average cable bill (about $107 per month - thanks Fortune Magazine!) the average middle-man distributor cost (about $25 - Thanks Marketwatch!) you're left with $82. Divide by the 5 content libraries all watching each other like the telecoms do and we're left with what the average Joe feels comfortable paying: $16 per month.

Wait. What does Netflix charge for their premium plan?

The past is always the best predictor of the future.

Now of course throw in a 3% or so inflation rate over the next 10 years, FLAG DAY SALE style shenanigans (fewer devices / SD is cheaper!), and the unknown unknowns (anything from a meteor strike or the shocking invention of teleportation), you will come across small variations of each content library's monthly access price but using the past as a model I foresee a hydrostatic equilibrium in pricing formulating now that will remain constant for the next couple of decades.

Unless of course a single company begins subdividing their library and charging separately for them (Disney with their services Disney+ and hulu). Or live sportzball! WHAT OF THAT JON-A-THAN. And local stations! LOCAL N00Z. AND AND AND. But that's for future posts! Tune in later for...

• How did we end up with only 5 content libraries aka WHAR ROARING MGM LION?
• Woah wait up, did you say last week that at&t bought Warner Bros? WHY YES YES I DID
• Multiple Streaming Sources (Still yes that vMVPD vs VOD debate)
• That Local Franchise Ownership Thing (No Really I Will Get to THIS)
• Verizon: Wait... Didn't They Have a Streaming Service With Like MATT DAMON? (Yes... Yes they did!)
• And still so... so much more! I ain't going nowhere.