ESPN, the cable sports channel majority-owned by Walt Disney Co., has had discussions with at least one major U.S. carrier to subsidize wireless connectivity on behalf of its users, according to people familiar with the matter. Under one potential scenario, the company would pay a carrier to guarantee that people viewing ESPN mobile content wouldn't have that usage counted toward their monthly data caps.
Such a deal would mark a significant development in the wireless business, creating a new model for media and telecom companies to share the costs of bringing bandwidth-guzzling services to consumers. Another way media companies could compensate carriers is by sharing advertising revenue with them.
"We are actively exploring those opportunities and looking at every way to bring value to our customers," Verizon Wireless Chief Executive Dan Mead said.
For content providers like ESPN that generate revenue from showing ads on mobile phones and tablets, the new approach would ensure that carriers' monthly data caps aren't artificially restricting the potential of their business. While the lion's share of advertising dollars still flow to television, digital platforms including mobile devices offer huge growth potential.
Subsidizing wireless-data usage would make sense for companies like ESPN whose content has seen a surge of mobile-phone viewing. Many companies don't yet face the problem of their users running into the monthly data caps, which start at one gigabyte per month for the lowest-priced plans. The average U.S. mobile subscriber used 0.659 gigabytes of data per month in the last quarter of 2012, according to Nielsen.
But mobile-data usage is growing rapidly. Some 41 million Americans were watching video on a mobile phone each month as of the fourth quarter and were averaging five hours and 23 minutes of usage per person per month, according to Nielsen. That compares with 33.5 million viewers and four hours and 54 minutes of usage a year earlier.
ESPN has expanded aggressively into digital platforms in the past several years to complement its TV business. It now has 45 million digital users, including about 16 million that access ESPN content exclusively from mobile devices. The mobile offerings include a website with news and streaming video and a host of mobile apps, including WatchESPN, which streams the live signals from ESPN's TV channels over the Web. ScoreCenter, its top mobile app, has been downloaded more than 40 million times. Over the last three years, ESPN's average users per day on mobile Web and apps has more than tripled, from 3.2 million in 2010 to more than 10.3 million so far this year.
As noted in the 10K, "Infinera provides optical networking equipment, software and services to communications service providers across the globe. Optical networks are deployed by Service Providers facing significant demands for transmission capacity prompted by increased use of high-speed Internet access and 3G/4G mobile broadband."
I have a hard time understanding the appeal of watching video on your phone. There's that TV ad lately where these guys sit around a park watching TV on a smartphone. One guy questions whether it's the same as watching at home and they give the guy a miniature beer, and then a guy takes out some miniature nachos he roasted.
I can't even remember who puts out the ad, I believe it's a cell phone provider touting that you can stream unlimited data with their service.
What's weird is that their ad comes across as a self-parody.
But, anyway, the bottom line is that where there's a market, even if it is a market of nitwits, then someone ought to be able to make money providing product to that market.