The uncomfortable proximity of convergence (part two of “From Broadcasting to Multicasting: The Mobile Phone and ‘the Future of Television'”)

The following post contains the second of six installments of my essay-in-progress From Broadcasting to Multicasting: The Mobile Phone and “the Future of Television.” For part one, as well as an introduction to this project, click here.

The uncomfortable proximity of convergence
Although the “jurisdictional conflicts” that have surrounded mobile television are “complex and multisided” (Altman 2005, p. 22), the factors that initially provoked them may nevertheless be conceptualized in rather straightforward spatial terms. In brief, the primary adversaries in these conflicts were groups that in the 2000s found themselves in close and oftentimes uncomfortable proximity to one another, first within the marketplaces in which they operated, and then later within the progressively cramped quarters of the nation’s radio spectrum.

As Carolyn Marvin (1990) argues, the public launch of a new medium often involves the rearrangement of physical and/or social spaces, and may alter the literal and figurative distances between groups engaged in negotiations over “power, authority, representation, and knowledge.” “New media,” she writes, “intrude on these negotiations by providing new platforms on which old groups confront one another. Old habits of transacting between groups are projected onto new technologies that alter, or seem to alter, critical social distances” (p. 5). Marvin’s observations about new media and the uneasy proximity they may engender pertain specifically to relationships between and amongst a medium’s various cohorts of users. But they are equally relevant to institutions’ and entire industries’ “habits of transacting.” The introduction of a new medium may destabilize the customary terms governing competition and collaboration within various markets, altering the balances of power that such customs typically maintain. For this reason hegemonic institutions often find it in their best interests to actively or indirectly impede the dissemination of innovations that threaten to radically rearrange the spatial arrangements of media markets (Winston, 1986).

Between the 1980s and the 2000s, the distances separating participants in telecommunications and media markets contracted quite dramatically in the United States. These entities’ new proximity recalled a much older arrangement of the “spaces” of American telecommunications and media markets, namely that which existed during the first two decades of the twentieth century, when the infrastructure and the institutions of telephony, telegraphy, and broadcasting were all thoroughly integrated. The reunification of the American telecommunications and media industries was a gradual process, but was sped along in the end by digitalization, and specifically by the refinement of methods for distributing digitized voice communications, Internet Protocol packets, and video over the same wired and wireless networks. The technological integration of media and telecommunications distribution infrastructures encouraged and facilitated the flow of capital, intellectual property, personnel, expertise, and business models between companies that for decades had collaborated under a collection formal and informal rules that had been quite specific about their roles and about the limits of their jurisdiction. But as these flows have intensified, and as cross-industry mergers have grown more common, these rules have become more easier to ignore, rendering customary distinctions between, for instance, phone companies, cable television multiple service operators, and Internet service providers fuzzy.

As infrastructural integration gained momentum in the 1990s, prominent libertarian cyberboosters and high-tech industry executives prophesied the imminent and inevitable reunification of the telecommunications and media markets (Gilder 1990, 2000; Gates 1995). However, industrial convergence was not, as its most vocal proponents insisted, a logical and necessary outcome of infrastructural integration, but instead a product of legislative intervention. The comprehensive policy reforms enacted by the United States Telecommunications Act of 1996 formally ended the enforced segregation of telecommunications and media markets. Though it would be a number of years before viable cross-industry competition occurred, by the mid-2000s companies such as Comcast and AT&T offered “triple play” packages that bundled together voice, video, and broadband Internet services.

In addition to removing policy obstacles to cross-platform competition, the reforms of the 1990s created conditions amenable to the re-consolidation of United States telecommunications markets, which since the break up of the Bell System monopoly in the 1980s had been compartmentalized by region and by technology (Fotheringham and Sharma 2008, p. 200). Amongst the biggest beneficiaries of these reforms were mobile communications companies, and in particular the operators of nationwide mobile phone networks. In the 1990s the United States’ major mobile network operators embarked on an acquisition spree, swallowing up smaller regional competitors, long-distance and local fixed line telephone companies, and retail Internet service providers. By the mid-2000s, the mobile communications retail market was dominated by four major networks: Verizon Wireless, AT&T Mobility, Sprint Nextel, and T-Mobile. The first two of these networks were subsidiaries of massive telecommunications conglomerates with portfolios that included fixed line and mobile telephone services, wholesale and retail Internet services, and, by the mid-2000s, multichannel television services.

The United States’ four major mobile network operators benefitted from massive economies of scale and, in the case of Verizon Wireless and AT&T Mobility, cross-platform synergies, such as the ability to bundle their mobile services into their parent companies’ “triple play” packages (Fotheringham and Sharma 2008, p. 15). However they came into existence at a particularly challenging time for the mobile communications industry. Since the early 1980s, the United States’ population of mobile phone subscribers grew from just over 90,000 to more than 200 million (FCC, 2010a). By the early 2000s, however, the mobile communications retail market began showing the first signs of saturation (Nuechterlein and Weiser 2005, p. 260). With a dwindling number of potential new customers available to them, mobile network operators turned their attention to luring subscribers away from their competitors. The fierce competition that ensued sent voice call revenues – “the flywheel” of the industry’s growth over the previous two decades (Fotheringham and Sharma 2008, p. 206) – into decline, placing mobile network operators – and their voice-centric business model – in a “precarious” position (Charny, 2004; Nuance Communications, 2006).

To stave off the industrywide slowdown predicted by many telecommunications analysts, mobile network operators diversified, introducing an array of premium-priced data services in the early 2000s that included text messages, web browsing and email, adult services, video games, and music and ringtone downloads. In conjunction with the rollout of these services, operators invested heavily in network upgrades, including the construction of third-generation (3G) mobile networks designed to provide faster data transfer rates. The first of these premium services to pay off was text messaging, which generated $2.5 billion for the mobile telecommunications industry in 2004. But network operators had their eyes on the even bigger potential windfall represented by multimedia services, and mobile television in particular. Mobile television services had recently been introduced by mobile network operators in Europe and Asia, and even in their embryonic stages these services made a significant impression upon telecommunications analysts. Between handset sales, subscription and data transmission fees, premium pay-per-view charges, and advertising, mobile television presented network operators, but also chip makers, consumer electronics manufacturers, and media companies, with an impressive range of revenue opportunities. Optimistic analysts predicted that mobile television could replace voice communications as the mobile phone’s “killer app” (Goot, 2003; Hellweg, 2005), and forecasted that it would generate between $6 and $27 billion annually by the end of the decade (Reardon, 2006).

For mobile network operators locked in cutthroat competition with one another over shrinking voice margins, mobile television’s multiple revenue streams represented a promising solution to the dilemma of how to maintain growth in a decelerating marketplace. As reported by the technology website CNet, by 2004 enthusiasm for mobile television had grown to the point where some mobile industry executives were publicly claiming that mobile television’s revenues would “save the cell phone industry” (Charny, 2004). But mobile television also represented a potential bridge to a future in mobile network operators would no longer be solely or even primarily be in the business of voice communications. By adding television packages to their lists of services, as the majority of the United States’ mobile network operators did starting in 2003, they began the process of reinventing themselves as fully-diversified entities that would compete in multiple markets, as opposed to exclusively with one another.

Continue to part three: “The future of broadcast television is mobile”

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About fymaxwell
Max Dawson is a Los Angeles-based media consultant and professor.

5 Responses to The uncomfortable proximity of convergence (part two of “From Broadcasting to Multicasting: The Mobile Phone and ‘the Future of Television'”)

  1. Pingback: “The future of broadcast television is mobile” (part three of “From Broadcasting to Multicasting: The Mobile Phone and ‘the Future of Television’”) « fytelevision

  2. Pingback: Emergent technologies, residual protocols (part four of “From Broadcasting to Multicasting: The Mobile Phone and ‘the Future of Television’”) « fytelevision

  3. Pingback: “Real TV, now on your phone” (part five of “From Broadcasting to Multicasting: The Mobile Phone and ‘the Future of Television’”) « fytelevision

  4. Pingback: Conclusion: Vapor to vapor (part six of “From Broadcasting to Multicasting: The Mobile Phone and ‘the Future of Television’”) « fytelevision

  5. Pingback: Essay: From Broadcasting to Multicasting: The Mobile Phone and “the Future of Television” (part 1) « fytelevision

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