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Technology, Media & Telecom

2018 Outlook Providers Lay The Groundwork For 5G, IoT, Network Automation

Capital Markets

S&P Global - Data Services

Disney Ups Its Bid For Fox Assets To $84.97 Billion


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Technology, Media & Telecom
2018 Outlook Providers Lay The Groundwork For 5G, IoT, Network Automation


The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Feb. 22 2018 — With major technology upgrades on the near-term horizon, 2018 will be a major year of transition for network operators as they prepare for 5G wireless, rapid expansion of Internet of Things services and traffic, and the evolution to autonomous networks.

Here is a quick rundown of technology and network expansion trends that we at Kagan, a media research group within S&P Global Market Intelligence, expect to occur this year:

Cable operators use distributed access as their platform for edge computing and virtualization

As we have noted, 2018 is expected to be the year that Comcast Corp., Mediacom Communications Corp., and others in the North American market move from lab and field trials of their remote PHY and remote MACPHY, or RPD and RMD, platforms to general availability. Equipment vendors are all ramping up production of their node units to meet what is expected to be a major year of deployments in 2019. We expect Comcast to pursue its goal of using distributed access architecture, or DAA, to dramatically reduce service group sizes from an average of 300 to 400 homes to less than 100. Other operators in North America and Western Europe will quickly follow suit.

The move to DAAs sets the stage for cable operators to not only expand the bandwidth they can offer end customers by reducing service group sizes, but also to push more edge computing capabilities closer to subscribers. Current optical nodes are nothing more than Layer 1 and Layer 2 platforms, focused primarily on converting radio frequency signals to optical and vice versa. RPD and RMD nodes introduce Layer 3 capabilities, as well as a road map to edge computing for more localized media processing and decision-making for applications beyond high-speed internet. With these more intelligent nodes, cable operators can better deliver IoT and wireless services.

Managing an expanded network of intelligent nodes, however, will introduce new challenges, which cable operators are hoping to address by virtualizing their existing cable modem termination system, or CMTS, functions. By centralizing service orchestration and control, cable operators can potentially reduce the time to deployment for their new distributed infrastructure, as well as the operational costs associated with these new architectures.

For cable operators, virtualization brings scale. By virtualizing and distributing the data and control planes from previously centralized and self-contained hardware platforms, operators can ultimately rely on more generic equipment, while also preparing their networks for the anticipated deluge of traffic from IoT and 5G services.

Operators implement early use cases for artificial intelligence and network automation

Very few subscribers will ever praise their service provider's customer service. Poor customer service has always been a fundamental challenge for major operators, regardless of the service. But with advances in AI and tools for network automation, operators can fundamentally change the customer experience. Major operators, including AT&T Inc., Comcast, and Bell Canada will implement a combination of AI and network automation tools as part of their overall network virtualization efforts.

2018 will see the roll out of AI capabilities for the express purpose of providing proactive data management as operators move toward full network automation. For operators, the following use cases and applications will see the light of day this year:

  • Machine learning and proactive network maintenance, or PNM, to regularly poll active electronics and detect and troubleshoot issues before they impact end subscribers.
  • Software defined networking, or SDN, and network functions virtualization, or NFV, to provide far more visibility into individual and collective network elements to proactively alert network operations centers, or NOCs, about potential hiccups.
  • Virtualization of customer premises equipment, or CPE, to allow for customer self-installation and management without having to call customer service to initiate a new service.
  • Monitoring of traffic flows and data usage combined with algorithms to automate speed boosts when customers increase their data consumption.

Comcast, via its X1 service and platforms, is beginning to roll out a number of these capabilities in its effort to reduce truck rolls and improve the overall customer experience. 2018 will see the expansion of these efforts across a much broader range of network operators, including AT&T, Verizon Communications Inc., NTT DOCOMO, British Telecom, and others.

With new technology options, fixed wireless will expand

For years, fixed wireless services, whether WiMAX, 3G or early fixed LTE, have been focused on a narrow range of primarily rural target markets. But with fixed and mobile broadband, clearly the CapEx focus for the vast majority of the world's network operators, the fixed wireless access market in 2018 is set to expand quickly.

With 5G on the road to standardization, 2018 will see the expansion of fixed LTE services to residential subscribers to address the approximately 30% of potential broadband households around the world where fixed-line options are simply too expensive to deploy. Though there will be limited deployments of fixed wireless in North America — primarily limited to rural portions of AT&T and Verizon footprints — operators in the Middle East and Africa, South America, and Eastern Europe will rely on fixed LTE to provide an alternative to their competitors' fixed broadband services. In many cases, these mobile operators are limited by regulatory restrictions from accessing fixed networks. Thus, their only option for expansion is via fixed LTE.

Beyond fixed LTE, a growing number of operators — both fixed and mobile — are trialing WiGig, or 802.11ad, as a last-mile alternative to expensive fiber-to-the-home deployments. WiGig, which operates on unlicensed spectrum in the 60 GHz frequency range, can deliver speeds of up to 8 Gbps from a distance of up to 10 meters. For most operators, the goal is to deliver 1 Gbps consistently to anywhere from six to eight homes from a single access point located around 50 meters away. Using beamforming technologies, a series of relay points, operators can deliver fiber to a neighborhood pedestal and then use a WiGig mesh network to deliver fiber-like speeds without the expense of trenching fiber to each individual home.

Watch: S&P Global - Data Services

Technology, Media & Telecommunications
Disney Ups Its Bid For Fox Assets To $84.97 Billion


The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Jun. 21 2018 — Walt Disney Co. on June 20 submitted a new bid for 21st Century Fox Inc.'s assets valued at approximately $71.17 billion in equity, or $84.97 billion including assumed debt.

The new bid is $38 per share, a step up from Disney's previous $28-per-share offer made in December 2017, and more in line with Comcast Corp.'s $35-per-share all-cash bid from June 13. In the merger release, Disney said, "Since the original agreement was announced, the intrinsic value of these assets has increased, notably due to tax reform and operating improvements."

Disney's new bid allows Fox shareholders to choose cash or stock, something the management of both companies believe is a better deal than Comcast's proposal. There is a collar on the stock consideration that will ensure that 21st Century Fox shareholders receive a number of Disney shares equal to $38 in value if the average Disney stock price at closing is between $93.53 and $114.32.

The previous Disney bid for the Fox assets had a seller's multiple of 12.8x and a buyer's multiple of 9.0x. The new bid puts the seller's multiple at 15.4x cash flow and the buyer's synergized multiple at 10.8x cash flow.

After six months of integration planning, Disney's management team is confident in its outlook as the company has made progress toward meeting regulatory requirements in countries around the world.

On the investor call to discuss the bid, Disney Chairman and CEO Bob Iger said the combination would allow for the creation of more appealing content while also expanding Disney's direct-to-consumer offerings and international presence, especially in Europe, India and Latin America. He also cited the acquisitions of Pixar, Marvel and Lucasfilm as recent evidence of Disney's ability to effectively integrate cultures across corporations.

Iger said that vertical-integration concerns with Comcast are significant because the Philadelphia-based company is the leading provider of broadband in the U.S. Disney feels it has a much clearer path to the merger, as it is not a leading provider of video or broadband distribution.

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Jun. 20 2018 — Steve Piper shares his Q1 2018 analysis and power market insights along with guidance from our Power Forecast solution on the Market Intelligence platform. The next guidance report will be released around mid-July 2018.

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Technology, Media & Telecommunications
Bidding War Over Fox Could Spur Titans To Take A Look At Paramount Pictures


The following post comes from Kagan, a research group within S&P Global Market Intelligence.

To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Jun. 15 2018 — Potentially boosting its international portfolio and massively increasing the company's film and television library, Comcast Corp. on June 13 announced a $35-per-share cash bid for most of 21st Century Fox Inc., a 25% premium to the $28 per share offered by Walt Disney Co.

Kagan estimates that the Comcast offer values the Fox filmed entertainment division at $17.76 billion, nearly $4 billion more than the value placed on it in Disney's original bid. The transaction places the most value on the regional sports networks at more than $19 billion, or 24.2% of the total offer, with filmed entertainment coming in a close second at 22.4%.

While 21st Century Fox has close to a 16% share of the box office year-to-date, it has done better in prior years when big franchise films were in release. Comcast's NBCUniversal Media LLC would benefit greatly by adding the Fox studio to its portfolio. NBCU currently has less than a 10% share of the box office versus Disney's more than one-third share for its films.

The question is, who is next? Long-struggling Viacom Inc. missed a chance to sell a 49% stake in Paramount Pictures Corp. to Dalian Wanda Group Corp. Ltd. in 2016 at a valuation of $8 billion-$10 billion, an impressive number given the fact that the filmed entertainment division had negative operating income before depreciation and amortization of $328 million in fiscal 2017 and negative $407 million in fiscal 2016.

With the much-publicized showdown between Shari Redstone and Les Moonves over the future of Viacom, a sale of Paramount Pictures, all of Viacom or even a piecemeal sale of Viacom assets at high prices could help resolve this simmering feud.

Economics of TV & Film is a regular feature from Kagan, a group within S&P Global Market Intelligence's TMT offering, providing exclusive research and commentary.

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