Verizon/AOL Deal

Twenty years ago America Online (AOL) was pretty much how most of us accessed the internet.  It seemed like everyday we got AOL CDs in the mail, even if you already had AOL.  For $19.99 per month you dialed on to the service and cruised the internet at 56 Kbps (yes, that is a “K”!).  When we received a new email a male voice announced “you’ve got mail!”  So exciting!!


In 1996, AOL made a deal with Microsoft to have AOL bundled with its Windows software.  In 1997 AOL acquired Netscape, whose Navigator browser was used by over 90% of web surfers back then.  By 2000 AOL was so huge they acquired Time Warner for $183 billion (yes that’s a “b”).

Things went down hill from there.  From a high of 27 million subscribers in 2002 AOL was down to about 5 million at the end of the decade.


The synergies promised from the AOL/Time Warner merger were never realized and eventually Time Warner spun off AOL (the corporate equivalent of kicking your parents out of the house because they’re not pulling their own weight.  But, it had to be done, for our own good.)  AOL would somewhat diversify its business by evolving into a content provider.  They acquired Huffington Post as well as Tech Crunch and Engadget.  They also turned to advertising providing high quality video content for the web.  They made some acquisitions like which enable their customers to target their advertising.  In spite of their best efforts, AOL wasn’t the advertising juggernaut that Google is.

However, if you’re a telco like Verizon and in the midst of a price war declared by your smaller competitors, You have to think that content and advertising vehicles are an attractive means of alternative revenue streams.  Sure customers can access the network cheaper but at least Verizon will have content and can generate advertising revenue.  What can the smaller carriers provide with their lower rates (and lower margins)?  Exactly.  That’s why Verizon paid a 23% premium for AOL at $4.4 billion.  15 years ago, that would have been an unthinkable statement.


Google – Project Fi

Google announced on Wednesday the launch of Project Fi, a low cost wireless plan where for $20 per month, subscibers will get unlimited talk and texts, including international coverage in more than 120 countries, and another $10 per gigabyte of data used each month.  If you don’t use all of the data on your plan, you will receive a credit on your next bill.  Subscribers will be able to seemlessly connect via cellular or Wi-Fi and can seemlessly transition between the two wirelelss networks.  The services will initially be offered only with the Nexus 6 smartphone, so for the time being it won’t work on your iPhone or Galaxy.

Sounds great, so how do I sign up? Well, not so fast.  First you have to register at the Google Project Fi website.  Once registered, you may received an invitation from Google to subscribe.  Getting an invite depends on where you live since Google will be working with T-Mobile and Sprint for the cellular coverage.  So if you live in a rural area, don’t hold your breath waiting for an invite.  However, in more densely populated areas where T-Mobile and Sprint have coverage, you can expect to receive an invite.  And if Google can deliver on its promise to be able to seemlessly switch between the cellular network and Wi-Fi it will compensate for any coverage gaps Sprint and T-Mobile have.

Will Google pass AT&T and Verizon as the nation’s #1 wireless provider? Doubtful, but they are indeed changing the game between the pricing plan and the seemless switching of wireless networks.  AT&T has already reacted by reinstating their rollover plan, where you can rollover unused data on to your next month.  It also allows Google to offer everyone cheap wireless internet access where they can access Google’s services and apps.

Hola Mexico!

On Monday, AT&T announced they were acquiring Nextel Mexico for about $1.8 billion.  This comes a week after AT&T completed its acquisition of Iusacell.  The combination of Nextel Mexico and Iusacell would give AT&T 12.5 million subscribers making it the third largest mobile carrier in Mexico behind Telcel (71 million) and Movistar (18.3 million).

Why the sudden fascination with Mexico.  The U.S. mobility market is saturated.  There are more cellphone subscriptions in the U.S. (over 327 million) than there are people (about 317 million).  The mobility market in the U.S. has become what the wireline market was in the late ’90s and early 2000s – a zero sum game.  The only way to grow is to steal customers from other carriers.  It’s only going to get worse in the U.S. as Google has announced its entry into the market via MVNO agreements with Sprint and T-Mobile.  Cablevision also announced their entry into the mobility marketplace leveraging its extensive public Wi-Fi network.  With new entrants into a competitive marketplace in the midst of a price war, it only makes sense to look elsewhere for growth.  In Mexico, there are still less cell phone subscriptions than people (about a 90% market penetration).  However, AT&T will be competing against an 800 lb. gorilla in Telcel.  They are owned by America Movil, with almost 250 million subscribers in 18 countries.  Oh, and they are owned by Carlos Slim Helu, the richest man in the world.

The Sony Cyber Attack: What Have We Learned?

1. Nothing
2. The Hacking is the New Extortion

Hackers are sort of like the Don Fanucci character from the Godfather Part 2.  Don Fanucci was a thug who made living extorting money from the local merchants in New York’s “Little Italy” section of lower Manhattan.  They are not huge sums of money, so the merchants pay him rather than face his wrath.  Don Fanucci attempts to extort money from a young Vito Corleone and his associates, Tessio and Clemenza.  Young Vito convinces Tessio and Clemenza to pay less than what Don Fanucci requested to “wet his beak” and make a counter offer he couldn’t refuse.


Fast forward roughly 100 years and hacking is the new extortion.  Hackers, like Don Fanucci will request a small amount of money from businesses or else all hell will break loose.  Like most of the merchants, the companies will typically perform a cost benefit analysis and come to the conclusion that it makes business sense to comply with the hackers demands.

Unfortunately, the playing field today isn’t as level as the one the Godfather was playing on.  Today’s CEOs cannot just ambush Don Fanucci in the hallway in his apartment building like young Vito Corleone did.  A recent example is a type of malware called ransomware that the hackers used to extort businesses.  The ransomware that made headlines over the past two years was CryptoLocker which entered a business by having any unsuspecting employees open a PDF attachment to an email.  Once opened, the CryptoLocker will encrypt company files stored on hard drives and any network files it can access.  Once encrypted, the company cannot access them unless they pay the hacker a small ransom of say $500.  If the company does not pay in a timely fashion, the ransom increases to $1000.  If the company does not pay within a month, the files disappear forever.  It makes sense for companies to just pay the small ransom than it does to incur their wrath.

In Sony’s case, their hand was forced and didn’t have much choice but to comply with the hackers demands.  The demand was to not release the movie “The Interview” which was about two Hollywood stoners hired by the CIA to assassinate North Korean dictator (I’m sorry, I meant Supreme Leader) Kim Jon Un.  If the movie was released, the hackers threatened a 9/11 scale terror attack on the theaters that showed the movie.  Since the theaters did not want to take that risk and wouldn’t show the movie, Sony had no recourse but to now show the movie in theaters.

3. 80% of Cyber Crimes are Inside Jobs

There has been a lot of discussion since the digital release of “The Interview” that the Sony hack was not the work of North Korea, but was rather an inside job.  It wouldn’t be the first time, as it is estimated that nearly 80% of cybercrimes are actually performed by disgruntled employees with easy access to corporate networks.

Sounds like the plot of a great movie!

How big data can change the music industry | VentureBeat | Media | by Darius Fong, weeSPIN
Interesting article on how Big Data can help boost music sales. Revenue from music is down by about 1/2 from what it was 10 years ago.
The bottom line is that the traditional business model of selling CDs,  MP3s,  etc. no longer works, as hard as musicians and the labels try to make it work. That ship has passed. Musicians need to find alternative monetization of their music in order to make a sustainable living off of their music. And I stress musicians because we shouldn’t hold our breath waiting on the labels to do this for them.

More Movie Comparisons – 1994 Movies

It’s hard to believe that it’s been 20 years since some of our favorite movies were released.  1994 was arguably the best year for movies.

Let’s start with the nominees for the Academy Award for Best Picture

Forrest Gump – Won the Best Picture Oscar in 1994.  While there were so many other movies that also deserved to win, it’s hard to say that Forrest Gump didn’t deserve it.  I’m a sucker for Robert Zemeckis (Best Director winner) movies (like Back to the Future) and I love this movie too.  The scenes where Tom Hanks is edited into archival footage are terrific.  Bubba reciting every way to cook shrimp is another classic scene.  A lot of the dialogue from this movie have become part of our vernacular – “Life is like a box of chocolates” and “Stupid is what stupid does.”

Pulp Fiction – Hard to believe that Quentin Tarantino didn’t win best director here.  This is his masterpiece.  The movie is shot out of sequence which only amplifies the importance of each scene.  This movie set the table for other independent films to get the attention they may not otherwise had received (ie. The Usual Suspects).  Pulp Fiction was John Travolta’s comeback, and to a degree Bruce Willis.  Of course, Christopher Walken’s scene may be the movie’s best.

The Shawshank Redemption – Believe it or not, this movie was a box office flop.  One of the best movies ever made, it is the highest rated movie on IMDB.  There are too many great scenes to list here.  Tim Robbins and Morgan Freeman are excellent and Freeman’s narration is a joy to listen to.  Based off a Stephen King short story.  One bit of trivia, Clancy Brown, the actor who plays the sadistic prison guard is also the voice of Mr. Krabs on Spongebob Squarepants.

Quiz Show – Based on the real life events surrounding the “21” game show scandal in the 1950s.  Robert Redford’s crowning achievement as a director.  Excellent performance by John Tuturro and Ralph Feinnes as the contestants.

Four Weddings and a Funeral – While I’m not a huge romantic comedy fan, this movie manages to avoid a lot of the trappings that most other movies of this genre fall into.  Not too cute or sweet, actually very clever and well written.

Here are some honorable mentions:

The Lion King – Arguably Disney’s finest animation film that wasn’t made in their Pixar studio.  Hard to believe that the Golden Globe winner wasn’t nominated for an Academy Award.  The soundtrack, scored by Hans Zimmer and songs written by Elton John with lyrics from Tim Rice won both the Golden Globe and Academy award for Best Original Score.  The song “Can You Feel the Love Tonight” won both the Academy Award for Best Original Song and the Grammy for Best Male Vocal Performance.  Jeremy Irons is incredible as Simba’s evil uncle Scar.

Bullets Over Broadway – In my opinion, the last great comedy by Woody Allen.  Diane Weist took home the Oscar for Best Supporting Actress.  Don’t speak!

Speed – A great action movie with an interesting twist.  A madman placed a bomb on a city bus that will explode if the bus’s speed is below 60 MPH.  Great action scenes and Dennis Hopper is great as the villain.  The best scene is when Dennis Hopper tells Keanu Reeves not to grow a brain.

The Professional – Really interesting to see an assassin (Jean Reno) take care of a 12 year old girl (Natalie Portman) after her family is murdered.  Gary Oldman is great too.

The Crow – Based off the comic book series by James O’Barr about a rock star who is brutally murdered along with his girlfriend is reanimated to seek vengeance.  A great movie with an excellent soundtrack that unfortunately remembered for its star, Brandon Lee (son of Bruce Lee) being accidentally killed while filming.

Dumb and Dumber – So stupid it’s hilarious.  One of Jim Carrey’s best movies.

The Mask – A great movie also based on a comic book.  Another Jim Carrey tour de force performance and the debut of Cameron Diaz.

What is your favorite movie? Feel free to comment on any inadvertently left off the list.