While there seems to be the order in the cartel controlled postpaid wireless space, things are a bit more unruly in the seamier prepaid side of the wireless shell game. The new floor for unlimited monthly voice data and text service will hover around $40/month for the rest of this year, It’s a safe bet next year’s number will be $30 or less. Proof: Sprint’s Virgin mobile unit has already lowered the bar to $40.

For the foreseeable future, postpaid wireless will rely of exclusive deals to sell the coolest new handsets as a tool to prop up ridiculous rates. Meanwhile back in Washington, the feds are distracted by another wave of “net neutrality” talks that are being happily papered over by lobby dollars that distract from the needs of real world users.

If we really want to shake up the wireless  market today, net neutrality is irrelevant. For the moment, wireless regulators need to focus on locked handsets. If handsets are unlocked, the best and brightest of them will be under $200 and usable wireless plans will head towards $20/ month. Even at those rates, there’s abundant profit potential for a lean and mean carrier.

Meanwhile, prepaid will continue to race t o zero even with mundane handsets that are locked and overpriced.

While the tech media lemmings continue to push a plethora of praise the the decidedly totalitarian Fruit Phone, consumers are voting with their dollars elsewhere. Open source makes for tremendous efficiency in the implementation an build process enabling a variety of choices versus a monoculture. This has created so much momentum behind Andriod, that it’s mobile OS dominance  has become something akin to Microsoft’s practical monopoly on the desktop.

Google’s Android platform has gone from activating 100,000 units a day in May, to 200,000 daily units as of today, according to Google CEO Eric Schmidt.

Schmidt was speaking to journalists (pictured above) at the Techonomy conference in Lake Tahoe, CA, and the technology blog TechCrunch managed to get some video of the chat (see below).

The activation growth shows impressive progress for Google’s mobile OS in the span of just a few months. Schmidt pointed to recent quarterly shipment numbers that showed Android phones outselling the iPhone in the last quarter as proof and said that he confirmed the number with Google’s own internal figures. (Mobile Beat)

While Android is open source, there are some big caveats that come with its dominance. It will be the top target for exploits. We still haven’t developed an effective way of policing them on the desktop, and many mobile users tend to be even less tech savvy than desktop users. Then there’s the fact that while the platform is open, implementation is crippled by carriers.That limits users choices on how they use their handsets and  allows carriers to continue to nickel and dime them for simple services that could be replaced by simple apps. Lastly, the Andriod project, while open is overseen by Google. Many of us will argue that this “do no evil” company is anything but. Searchzilla continues to unapologetically cook its search results to favor a political agenda along with pay for placement. Worse yet, Google’s CEO has repeatedly stated that we have no right to privacy online. It’s virtually certain that some of this attitude will be baked into Andriod if it’s not already present.

There is a silver lining. Open source projects tend to spawn forks and branches when the overseers overstep. Andriod and its inevitable variants are likely to dominate mobile for some time to come. This will put Apple back in the boutique business for mobile. In other words, if smart phones were shirts, we won’t all be forced to wear turtlenecks. It will also most likely make Google’s Chrome OS irrelevant.

Conclusion: look for the cloud in your pocket, soon,and cheap. It also means you’ll have many more choices than you have now.

RedBox is fast becoming THE phys disk video distributor in the retail sector –

Redbox makes a big move this morning in its effort to dominate the home video business. The company says it will install its $1-a-night DVD rental kiosks in 700 CVS pharmacy stores by year end, with more to come in 2011.

CVS is the USA’s No. 2 pharmacy chain, with more than 7,000 stores. Although the release from Redbox is short on details about its new arrangement with CVS, it’s easy to imagine what can happen if the drug store executives like what they see.

Redbox — which has 23,000 kiosks in stores, malls, and supermarkets – has already rattled Hollywood. The fear is that the $1-a-night rental price will lead lots of consumers to forego paying $15 or so to buy a DVD — and may also undercut the ability to keep charging $3 or more for cable or online video-on-demand.

Dare we say it? RedBox IS the number one distributor of DVD rentals in the US. At this point not even BlockBuster the legacy player comes close in total volume of disks per week. RedBox is also trialing Blu-Ray in certain markets to ascertain price points vs its $1/night DVD deal.

The world, it be a changing.

Tom Silverman is a guy who has been in the music biz longer than I have been in IT. So he knows the trade and its tricks. It is refreshing to hear an insider to state that the current music model is broken —

One of the biggest problems with the old model, which has been going for 50 years, is thinking, “We’re the labels, they’re the artists, and we make money even if they don’t make money. We reduce our risk, they put their blood, sweat and tears into it, and we only give them money when we sign them and when they deliver a new album.”

In between, the only place where they get money is from their booking agent, because they’re touring. They all love their booking agent, because their booking agent gives them a check every month, or every week, and we only give them a check every year and a half when they deliver a new record — and most of that money goes to their lawyer, manager, the taxman, and making the record. Not much of it ever goes in their pocket, and that’s been true for 20 years. Unless they have a five million seller, most of that money goes into that project. Of course they don’t like the labels, because they’re not getting that reinforcement of regular cash flow. They see the labels making money, and them not making money on records.

He also considers the use of the Internet and social networking much a waste of time. Even though in this same article he admits that Susan Boyle broke thorugh on the basis of internet presence. –

No, I think you have to be out there. You have to spread the word to get exposure, but I think the problem is context. When you’re in a glutted environment, you need to differentiate yourself more than ever, so you need a great story. Story is context; it’s not content. The songs on Susan Boyle’s record are forgettable, and her performance is just okay. There are a million singers who can sing that well at least. It’s just the story that sold it. If people could learn from her, regardless of what kind of music they did — “How can I make my story so that when people hear it, they have to spread the word?” That would activate the medium more effectively than trying to get another 50,000 followers on Twitter, which doesn’t seem to do much at all.

Silverman also suggests a different management model. Using LLC’s and Silicon Valley type investment techniques. Oddly we suggested that very thing on this blog well over a year ago. And it is right.

But there are some pieces that Silverman I think is missing –

• The first is good talent is extremely common, and extreme talent is in good supply. Go into any good size church in the USA and there are probably 2 singers in the choir equal to or better than what is screamed out of Hollywood. Is that the case?

  Empirical evidence. Neil Sedaka held a contest with several radio stations as part of a record tour/sale 5-6 years ago. Thousands were screened by the radio stations. Sedaka was floored that several hundred were good enough to be considered by his measure of talent. Anecdotal I know, but good talent recognizes that in others.

  Value in many ways is a perception, especially when the goods are of a nonphysical nature. So when the perceived supply of the goods rises dramatically because consumers perceptions are altered by the sheer volume of good choice the cost curve must drop. Its supply and demand. There is a huge talent supply and only a finite consumer supply.

• The other is this one. Silverman sees it, calls it the ‘clutter the marketplace’. He is of course, right. $3k and you can foam a garage, buy mikes and stands, a 2yo PC and a midi/mixer card and have the equivalent of what a decade ago cost $500k. So anybody can be in it if they want it enough, such is modern technology.

  But again that is not the biggest issue as I see it. Look the big labels are soon to be gone. They are right now where the major studios were back in the 60’s. Then as now, every release had to be a mega blockbuster as that what the audience expected but the costs were beyond belief. The end game will be the same too. Fundamentals now are also different.

  A band, even if it does not break thru to the levels that Silverman expects which is 100k distribution as the floor. Well run the numbers at $10 per disc. $1m gross. Deduct 5% for production costs. (Yes that cheap.) Zero out distribution costs as most bands at this level would sell either direct over the internet or more likely direct at the concerts wher they make most of their money anyway So out of say $900k split 10 ways with band, light, stage men that is still $80-100k. No you won’t get overnight rich at those numbers, but that is a descent upper middle class income with unlimited upside you you do break thru.

To an extent Mr. Silverman’s lament recognized for what it is runs head long into supply chain economics. The Internet has eliminated the middle man in most cases. Producer and retailer become one. No industry is immune from it even music. And for a lack of a better analogy, iTunes IS WalMart in the music industry.

Linky

The bugler that is; to play taps over BlockBuster. The former darling of Wall Street is $900m in the hole, savaged by bad management, RedBox, home theater and a bad economy. –

Blockbuster is in discussions with bondholders to get up to $150 million in so-called debtor-in-possession financing, said people familiar with the matter. Such loans, which typically carry high interest rates, are used to help companies operate while under Chapter 11 protection. The senior bondholders, owed about $630 million, would provide the financing to protect their original investment should Blockbuster enter bankruptcy court.

The talks don’t necessarily mean Blockbuster will file for bankruptcy. Blockbuster is pursuing other options, and troubled companies often negotiate bankruptcy loans as a precautionary measure and still reach deals with creditors to restructure debts outside of court.

On a separate front, Blockbuster is talking with possible strategic partners about a new cash infusion, a person familiar with the matter said. Under that scenario, a group of lower-ranking bondholders owed $300 million would likely convert their debt to equity, this person said.

One potential investor could be NCR Corp., which provides the company with Blockbuster Express-branded vending machines, this person said. It remained unclear what other possible investors Blockbuster had sounded out. Blockbuster and NCR declined to comment.The movie-rental chain faces possible bankruptcy as its debt has mounted amid stiff competition.

Moves of a company that is looking for operating capital through the bankruptcy proceedings hoping for a white knight buyout. That will only work if there is a desirable level for a pennies on the dollar deal. The problem for BB is that its floor rent is tied to a cost structure of 2-3 years ago in a commercial real estate market that is selling square footage at 50% discount.

The other problem for BB is that the nature of the competition matrix has not changed and will increase over time. Home theater systems are getting cheaper all the time. RedBox is expanding at a furious pace and will be offering Blu Ray rentals shortly. Even the Pay-per-View market is holding up well as the customer seems satisfied with the pricing. Add it all up and the BB market is not looking good for a B&M model.

Another loser in the Whack-the-MIddleman sweepstakes.

Linky.

I’m guilty of spending a great deal of time ranting about how we lost competition over the last mile as access transitioned from dial up to broadband. News  of  new competitor Allied Fiber reminds me that there is also a largely uncompetitive market in the backbone:

Newby, who was the chief strategy officer at colocation provider Telex, is pretty impassioned about his plan to bring wholesale fiber to places where existing backhaul providers may not go. It’s a plan similar to Google’s experimental fiber network for consumer broadband, but enacted on a much larger scale, and for businesses. Newby believes that in underserved areas where Allied Fiber will have a presence, the cost of bandwidth will be driven down significantly because Allied will be willing to sell access to the long haul network, at competitive rates, to anyone who wants them — something the incumbents aren’t inclined to do. (Gigaom)

In the late 90’s, there was a tremendous fiber backbone land rush, with start ups investing billions to carry the explosive traffic they expected the booming Internet would generate. Low operating costs, and lots of demand from a growing number of last mile access  providers who fought intensely for subscriber dollars seemed to insure success.  Unforeseen by most was the ability of the duopoly to kill a competitive market with intense lobbying combined with limiting bandwidth demand  by constraining last mile access and a little help from a recession

Instead of investing in infrastructure, the telco and cable duopoly was obsessed with mergers and acquisitions. Nearly all of the new investment by duopoly players during this time was focused on enlarging geographic footprint. While objections were raised, every large merger was approved by a woefully negligent government. Aided by a recession, new multiplexing technology and regulatory manipulation, the duopoly was able to overwhelm most of the start ups . Their assets were bought up for pennies on the dollar by a handful of incumbents whole control the backbone today.

In our current anti-competitive environment a new access provider faces challenges that extend beyond the last mile. Even when a new competitor manages to overcome the local loop roadblock, it will likely be disadvantaged by inflated back haul costs from an incumbent.

Lets hope that Allied fiber not only open new markets in the under served areas, but also helps level the paying field in the rest.

Theaters and studios are complaining about flat revenues at the box office. –

Movie Tickets Reach the $20 Mark

For the first time, a major Hollywood film will hit the $20 threshold at the box office, as movie-theater owners test the public’s ability to absorb ever higher ticket prices.

Several theaters will charge $20 per adult ticket to IMAX showings of the animated 3-D family film “Shrek Forever After,” the fourth “Shrek” installment from DreamWorks Animation. The theaters include the AMC theater in Manhattan’s Kips Bay neighborhood, AMC Loews 34, AMC Loews Lincoln Square and AMC Empire 42nd Street.

The increases weren’t officially announced, but were reflected in prices posted Wednesday on movie-ticketing Web sites such as Fandango.com and tracked by BTIG LLC media analyst Richard Greenfield.

Source

$20 for a ticket. Are they out of their minds?? I will grant that IMAX if done right is worth a reasonable premium but no $20 worth. I can go down to BestBuy 6 months after the fact and buy that movie in Blu-Ray for $24.99. So I spend a marginal overhead for the film vs a single ticket experience. But I just acquired the right to view the thing as many times as I want.

The Suits wonder why the movie going public does not show up any more. Why should they? The prices are too high. Beside with many going to personalized home theatre the rationale for going to a movie house is gone. Buy the flick, or rent, at view at your schedule. But the math is pretty simple — $80 for a family of 4 vs waiting a little and spending merely a $1 from RedBox. Pretty dang clear to me.

How about you?

Update: It appears that the source article was in error. Or should I say that several AMC theaters were in error in how they reported pricing for Shrek. We pass along this as a corrective action.

With the FCC’s broadband baseline set at a paltry 4MBPS, Europe’s recently announced 30MBPS standard should be sounding alarms.  There’s much more to the story than just the minimum acceptable broadband speed arbitrarily set by bureaucrats. The back story is competition and the role it plays.

European broadband has been lead by healthy competition in the most unlikely of places like France and the UK. That open market that includes last mile line sharing for  competition has raised the standard urban connections to some of the world’s most robust at some of the world’s lowest prices. Competition has forced the old school telcos to upgrade infrastructure and streamline operations. New networks cost considerably less to run. And ….. we hear no whining about the need to recover investment in decades old infrastructure.

With the sea change that has made free and accessible information and media the fuel of economic development critical to economic security, broadband competition should be a top priority. At the risk of bending Third Pipe editorial policy on political posts, I have a question for the Obama administration: While you are so eager to emulate all failed aspects of European socialism, why do you shy away from emulating what the Europeans are doing well?

The grand master plan for European broadband is out, and one target leaves the United States in the digital dust—a goal of 30 Mbps “or above” for all Europeans by 2020. So says the European Commission’s Digital Agenda for Europe, which also wants 50 percent of EU households subscribed to links of 100Mbps or more by that year.

….Needless to say, Europe isn’t jealously comparing itself to the United States, high-speed Internet-wise. Here our supposedly bold and fearless Federal Communications Commission thinks it’s cool by setting a pokey universal broadband goal of 4Mbps, sans fiber, which the agency says costs too much. (ARS Technica)

Oh its not about their security or selling YOUR data, though that it is the cause. Their problem is they have spawned a new generation of Facebook wannabees –

Diaspora: Personally Controlled, Do-It-All, Distributed Open-Source Social Network

The vid above is for the upstart Diaspora. Another that is starting up is Appleseed. Both are running forward as Open Source projects. Interestingly, Diaspora has already raised nearly a $100k of Angel financing thru individual contributions to the effort.

What sets these two fledglings from Facebook? One is philosophy. They believe the user should be in control of their data. That is a FOSS core concept of its existence. The second is approach. Whereas Facebook used the central server farm approach, these two firms are going to take a distributed approach. My understanding being your data stays on your machines and the option to share is local. The protocol having many of the attributes of torrents but much more sophisticated.

If they can get these tools off the ground and accepted (and hopefully a merged api) I see a much broader use for the tool. How? Maybe financial transactions. Companies passing annual reports to the SEC for example in the accepted BRXML format. Or how about micropayments? The coke machine taking your dollar transfer to it from your cellphone using the api and a validation code from PayPal where the dollar came from.

But we have to walk first. So lets see now much impact one or both of these platforms have on Facebook. Its a shame really. Facebook had an excellent business model that could have been monetized differently without the privacy issues. A bad business decision is going to lay them low. Better competition will put them under.

As in the traditional reverie of the fallen. This time it is Movie Gallery and its two subs Game Crazy and Hollywood Video will be closing down operations. –

Citing people familiar with the matter, the Journal said that the company, which operates the Hollywood Video chain, will liquidate all of its stores over the next couple of months.

The company employed about 19,100 people when it filed for bankruptcy. According to the online edition of the newspaper, Movie Gallery notified employees on Friday of the added closures.

It is the second largest movie rental chain behind Blockbuster. This is the second bankruptcy filing for the company.

Is this any relief for BlockBuster? Some. But the Hollywood Video chain was not across the street from every BB store like McDonalds vs Burger King. The fact is the B&M video rental industry is on the way out. BB can only hold out so long before office costs exceed income.

Linky.