May 2015

In its $4.4 billion deal to buy AOL, Verizon isn't just picking up Huffington Post and TechCrunch -- they are also getting more than 2 million dial-up customers. And those dial-up customers are the most profitable part of the company. In the 1990s, AOL helped ease millions of Americans online with a massive amount of free trial CDs aimed at hooking users into its walled garden version of the Web. As faster broadband service became available, dial-up subscriptions fell quickly. But AOL still has 2.16 million dial-up customers in the US, according to the company's first quarter earnings report in 2015. And they bring in a shocking amount of money -- an average of nearly $21 per month in revenue per subscriber. Not all of those users are actually paying for the service: Those figures include "subscribers participating in introductory free-trial periods and subscribers that are paying no monthly fees or reduced monthly fees through member service and retention programs," according to the company's earnings statement.

In Securities and Exchange Commission filing, AOL said its average subscriber has been paying for dial-up service for almost 15 years. For some AOL subscribers, dial-up may be their only option. Millions of Americans, many of them in rural areas, still lack access to wired high-speed Internet access in their homes, according to the Federal Communications Commission. And AOL's subscriptions are sometimes packaged with other services geared toward older or less tech-savvy users -- such as tech support, computer security services and digital estate planning help. Still, AOL's dial-up subscriptions are on the decline -- falling 11 percent in the first quarter compared to the same period last year, according to the earnings statement. But the company is squeezing more out of each subscriber -- with revenue actually up 7 percent per user compared to this period last year.

Is the wireless business really so competitive that Verizon needs to become a video provider, too? In short, the answer may well be yes. Given the high fixed costs of running a wireless network, carriers around the globe are looking for ways to avoid being just a “dumb pipe.” With a hyper-aggressive T-Mobile and a reinvigorated Sprint, both AT&T and Verizon are seeing pressure on the core business of delivering bits and bytes to mobile devices.

The US market is largely saturated with smartphones at this point, and while customers are adding additional devices, such as tablets, those aren’t game-changers and also tend to be less profitable than the phone business. Meanwhile, both AT&T and Verizon lost core smartphone customers amid the intense push, especially from T-Mobile. What AT&T and Verizon do have is a scale that Sprint and T-Mobile lack. That allows them to get into businesses its smaller rivals can’t afford. If it plays its cards right, it can offer a bigger collection of services than either Sprint or T-Mobile and, in doing so, make it much tougher to compete.

When former President Bill Clinton takes center stage at Univision’s upfront presentation, it will mark more than just one of his many paid appearances. The relationship between the Clintons and Univision is deep -- from owner Haim Saban’s unabashed support for Hillary Clinton’s election effort to a partnership between Univision and the Clinton Foundation, to the network’s newscasts that have bashed Republicans and, most recently, praised Hillary’s new position on immigration -- putting her squarely in line with the network’s stance on the issue. The importance of Univision for the Latino electorate and 2016 is hard to overstate. It is by far the biggest Spanish-language media network in the United States when it comes to revenue, ratings and stations owned. In some markets, such as Los Angeles, the Univision-owned local newscasts are in the top one or two by ratings. On big nights for the Hispanic community, such as President Barack Obama’s remarks on immigration in November, Univision raked in 4.8 million viewers, more than any other network.

During the July sweeps summer 2014, Univision boasted the No. 1 spot in prime time among 18-to-49-year-old viewers for the second year in a row. “You have to go to Univision to get to Latino voters,” said Gabriela Domenzain, a liberal strategist who was a founding producer on Univision’s Sunday news show “Al Punto” and who ran Obama’s Hispanic media outreach in the 2012 election. Univision and the Clinton Foundation joined forces in 2014 for a multi-year early childhood initiative dubbed “Pequeños y Valiosos” (or “Young and Valuable”). The relationship proved of immediate value to Hillary Clinton, whose face was featured in five of seven slides on Univision’s website promoting the initiative in February 2014.

[Commentary] One of the next topics for Seattle (WA) Mayor Ed Murray to address is whether taxpayers in Software City should support a new broadband network. Mayor Murray is giving earnest consideration to the perennial question of whether the city should build and operate a municipal network. A feasibility study is due later in May. If costs aren’t prohibitive, this might be an opportunity for Seattle to show leadership by creating a new public utility in the spirit of the Federal Communications Commission’s recent decision that classified broadband is an essential service. But any attempt to create the broadband equivalent of Seattle City Light should be planned from the start as a citywide service, providing the same quality to everyone in the jurisdiction.

What’s missing from the current menu of options -- and the discussion of broadband in general -- is universal service, ensuring that everyone has access to a service that’s now considered essential for work, education and entertainment. A city broadband network may be worthwhile if it offers something unique and of great public value. Leveling the playing field and providing top quality service to everyone would meet this criteria.