** Editor’s note:  Please print the first two pages of the attached document prior to reading.  **

Greetings from rainy Dallas and Chicago.  Pictured is Saturday evening’s view of the Trinity River which flows through Dallas. While we are thankful for reservoirs that are full, we are equally hopeful that the weather forecast for a rain-free week is achieved.

There has been no shortage of news affecting the telecom and wireless industries.  First, as many expected, a three-way merger between Charter, Time Warner Cable, and Bright House communications was announced on Tuesday.  Many if not most of you are versed on the details of the transaction ($78.7 billion value for Time Warner Cable and an additional $10.4 billion for Bright House Networks; 48 million homes passed and 23.9 million customers across 41 states; TWC shareholders will end up with 40-44% of the value of the new Charter), but if you need additional details, the news release is here.

The release is big win for Time Warner Cable shareholders who found themselves without FCC approval after a year of waiting.  This transaction looks like it will be approved by the FCC and the states that the new Charter serves.  As the map of the combined company shows below, there will continue to be a substantial presence in the upper Midwest, Southeast, and Texas.  The combined presence will bolster business presence and allow the new company to serve a larger footprint.

The map shows just how dispersed Charter’s footprint was prior to the announcement.  Outside of St. Louis, there were few MSAs were Charter set the rules.  Now, they will be the largest broadband provider in North and South Carolina, Kentucky, Ohio, Texas, Maine New York, Hawaii, MIssouri and Wisconsin.  They will have a substantial presence in California, Colorado, Michigan, Tennessee, Alabama, and Florida.  That’s 15 more states with substantial presence than Charter had prior to the transaction.  For advertisers, this is very welcome news.  It also sets the stage for further territory swaps that could broaden/ tighten their territory clusters even further.  Overall, it’s an opportunity for broadband growth to flourish and for content delivery concentrations to improve.

Beyond the Charter/ BHN/ TWC news, last week was one of chipset maker consolidation with Broadcom agreeing to be acquired last Thursday by Singapore chipset producer Avago for $37 billion or about 4.5x 2014 revenues (more details here).  Many of us remember Freescale Semiconductor’s acquisition by NXP Semiconductors for $12 billion last March. This transaction improves Avago’s relationship with Apple (Broadcom is a major chipset supplier).

On top of these two announcements, it is rumored that June will begin with Intel’s largest acquisition in their history – buying Altera for $54/ share or $17 billion (more details from the Wall Street Journal report here).  This would allow Intel to more tightly integrate future chipsets with Altera’s Field Programmable Gate Arrays (FPGAs), something that would strengthen Intel’s near lock on chipsets for the server industry.  More to come on Monday or Tuesday or whenever the deal is announced.

Finally, there’s the acquisition of Liquid Web by the folks at Madison Dearborn (full release here).  Best wishes to Jim Geiger and the rest of the management team as they continue to strengthen Liquid Web’s value proposition and distribution partnerships.  More on Liquid Web’s offerings here.

It’s (Still) and Android World – May 2015 Edition

This week’s Sunday Brief is a favorite for many, and is definitely one of our favorite ones to produce.  Since 2009, we have been tracking changing handset offers from each of the major wireless carriers.  We have moved from handset exclusivity to homogeneity, from basic phones to smart phones (and wearable devices such as watches), from 3G to LTE networks, and from heavy carrier subsidies to Equipment Installment Plans (EIP).

These changes have come quickly and have created an expectation of change among the smartphone population.  Many of you have asked me “What will happen when the pace of smartphone feature/ network change slows down?”  It’s impossible to tell, but if printers and personal computers are any indicator, the end game is not pretty.

Before diving into the most recent snapshot, a few notes about our methodology as it has changed from November’s assessment.  We have changed our AT&T view to show the 24-month pricing for all handsets (AT&T’s most commonly advertised rate is a 30-month purchase plan).  This allows a better comparison between AT&T, Verizon, and T-Mobile.

We have also changed our tiers to correspond to the EIP monthly payment levels:  1) $20+, 2) $10-20, and 3) Less than $10.  All handsets have been obtained through an examination of each carriers’ websites and do not include refurbishments or specials (or the new Nokia 620 device).

Sprint’s comparison is a little trickier as well due to their leasing plans.  As a reminder, with leasing, there is no residual value for the consumer after the lease term expires (the difference in the monthly rate roughly equates to an acceptable residual value).  Sprint also bundles their plans with their Unlimited offerings which may or may not be the same as traditional EIP plans.  All devices where the lease is promoted have been designated with an (L).  As you can see, the list has grown significantly from last November’s look.

With those caveats, here’s the snapshot:

The first observation most will have over this chart is the “sameness” for Apple products.  With the exception of Sprint’s leasing option, they are equal to the penny.  In the subsidy-driven world, the carriers began to promote Apple devices more heavily, especially during the Holidays and Back to School seasons.  This will be a tougher in a world where $1-2 month in savings does not move the needle as much as a weekend special with $100 off any device.

The carriers are making up for new phone sameness with reconditioned iPhone “while they last” promotions.  T-Mobile and Verizon have become more aggressive in their selection of reconditioned iPhones on their websites, and the savings is usually $6-12/ month (30-45% off new).  While they are not included in the chart above, the rise of reconditioned devices is a real trend that leads to the “when the music stops” question described earlier.

On the topic of sameness, look at the pricing for higher end smartphones between T-Mobile and Verizon.  Same devices (with the exception of Verizon’s Droid line), and very similar prices (note that there are some circumstances where Verizon’s EIP rate is lower than T-Mobile, likely a reflection of purchasing power than anything else).  With T-Mobile aiming their “Never Settle” guns at Verizon, it should not be a surprise that this is the case, but the similarities are nonetheless striking.

What is interesting is that AT&T is able to command pricing premiums to Verizon for popular Android handsets.  As a reminder, we are looking at the AT&T Next 24-month pricing which requires that customers pay at least 18 months at the advertised rate before upgrading.  The corresponding rate plan is for 24 months.   AT&T advertises a 30 month plan which requires 24 months of payments prior to upgrades.   Look at the Samsung Galaxy S6 Edge – Verizon’s pricing is $4.86/ month lower than AT&T.  The same holds for the Samsung Galaxy Note Edge – nearly $7 lower.

For comparison, look at the Nov 2015 listing (page 2) which shows AT&T’s 30-month Next pricing vs. Verizon’s 24-month Edge pricing.  That should give you some idea that this is not a fluke – AT&T is commanding a small EIP premium.

While we have highlighted this in previous Android World columns, it’s worth noting that inventory obsolescence is heightened with EIPs. Have a look at the pricing differences between three generations of the LG flagship line (LG 2, 3, and now 4).  At Sprint, there’s $3 in monthly costs between three generations.  At AT&T, it’s about $7.50, and Verizon does not carry the LG G2 any longer (interestingly, the LG G3 is sold out at T-Mobile).  It used to be easier to clear the shelves of older generation devices with limited-time “free” promotions.  Now it’s not so easy, and, while the Android World assessment reflects on-line as opposed to in-store offerings, generational inventory is a big issue for the carriers in a monthly payment plan environment.

With the announcement of Google’s “M” operating system at their I/O conference last week (which we will cover in detail during June), the world was reminded of how important the Android ecosystem has become.  Thinking about how the chart above translates into the retail store environment, it’s easy to see how operating systems are driving layouts.  On one side, the Apple allure.  On the other side, the Samsung brand, with LG/ HTC/ Droid/ others fighting for recognition.  In the back, it’s Blackberry and Microsoft/ Nokia.  We have settled in to a duopoly, at least for now, with applications integration, network performance, and plan promotion driving carrier differentiation.

Wait six months, and it’ll all change again.  It’s still an Android world, but other forces are about to change buying decisions.  More on that in next week’s column.

Until then, if you have friends who would like to be added to The Sunday Brief, please have them drop a quick note to sundaybrief@gmail.com and we’ll subscribe them as soon as we can (and they can go to www.sundaybrief.com for the full archive).  Also, if you decide to use the findings of the Android World column, if you could link back to the www.sundaybrief.com web address that would be greatly appreciated.  Thanks again for your readership, and have a great week!