Whether or not that’s true is certainly arguable. What is not arguable is that usage-based pricing is better for cable operators and for wireless carriers. Comcast Corp. (NASDAQ: CMCSA) last week said that it planned to drop its 250-gigabyte data plan and introduce a new pricing scheme that would allow its customers to consume 300 gigabytes of data at a base rate and pay $10 for each 50 gigabytes customers use above that limit. The usage-based plan could squeeze streaming video providers like Netflix Inc. (NASDAQ: NFLX) that have built their entire business models on essentially unlimited bandwidth. Streaming a 2-hour movie in HD consumes about 4 gigabytes.

It’s probably only a matter of time before other cable providers like Time Warner Cable Inc. (NYSE: TWC) and Cablevision Corp. (NYSE: CVC) adopt similar plans. Wireless carriers AT&T Inc. (NYSE: T) and Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), appear set to announce shared data plans that will allow more than one device to share usage on a single data plan. The carriers already charge more for usage above the plan limit.

Genachowski appears to believe that usage-based plans will level the playing field between the cable operators and the wireless carriers. Time Warner Cable experimented with a usage-based plan in 2009, but decided not to adopt the plan because customers hated it. Customers will still hate the plans, but without FCC backing customers no longer have any heavyweight help.

Comcast and the other cable companies will argue that the 300-gigabyte limit affects a small number of very high usage customers. They will also argue that by adopting a usage-based plan the vast majority of customers will pay less. But the data plan will also include internet access from computers, smartphones, and tablets, as well as Wi-Fi access from the local coffee shop.

Comcast has not yet announced pricing for its usage-based plan, but the odds of prices actually dropping don’t seem particularly good. Especially because the company is throwing in another 50-gigabytes of usage.

Cable companies need to prevent customers from “cutting the cord” and choosing to use their wireless data plans to drive home entertainment. An Internet TV box that really works is their biggest nightmare.

But if the cable guys and the wireless carriers can grab enough wireless spectrum and do enough cross-licensing deals and keep the content creators happy, the cost to consumers will not fall. The cable and wireless industries will appear to be competitive, but they’ll really operate an oligopoly and some small carriers and cable companies will be allowed to stick around to make things look good by providing service to low density markets. If the FCC really wants competition in the wireless business, then the agency better stick up for consumers, not cable or wireless providers.

Paul Ausick

AT&T Inc. (NYSE: T) has been talking about a similar plan for at least a year now, while Sprint Nextel Corp. (NYSE: S) and T-Mobile USA, which is owned by Germany’s Deutsche Telekom AG (OTC: DTEGY), still focus on family plans that offer limited 4G data for up to two phone lines, which is not the same thing.

The carriers see the shared data plans as a new opportunity for growing revenues. The new iPad from Apple Inc. (NASDAQ: AAPL) with its high-resolution retina display can chew through a standard 2 Gbyte data plan in just a couple of hours of streaming video.

At its investor meeting yesterday, Verizon had this to say:

As [subscribers] start to migrate into 4G, they will have to come off of unlimited and go into the data share plan. And that is beneficial for us for many reasons, obviously.

And that “obviously” means that more subscribers will purchase the more costly cellular-enabled tablets and use more data, boosting monthly payments to Verizon Wireless. With only Verizon and AT&T likely to offer the plans, at least at the beginning, subscribers should not be looking forward to any great bargain. The shared data plans are not intended to be a public service.

Paul Ausick

T-Mobile USA is the fourth largest wireless carrier in the country, trailing Sprint Nextel Corp. (NYSE: S), AT&T Inc. (NYSE: T), and Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD). T-Mobile’s failed $39 billion merger with AT&T left the carrier with a couple of big problems: fleeing customers and no answer to either AT&T’s or Verizon Wireless’ rollout of their 4G networks.

T-Mobile’s 33 million customers are not enough to threaten either Verizon Wireless or AT&T and neither MetroPCS nor Leap would do a lot to change that. Each has fewer than 10 million subscribers. Sprint, with 56 million customers of which about 60% are lower-margin pre-paid customers, could tie up with either MetroPCS or Leap, both of which claim pre-paid subscribers as a majority of their customers. But neither T-Mobile nor Sprint could swallow the other, which is the only combination that could threaten Verizon Wireless or AT&T.

A merger between T-Mobile and MetroPCS would not really solve either of T-Mobile’s biggest problems. The largest benefit would be the addition of a lot of pre-paid customers, which could put a lot of pressure on Leap and the other pre-paid providers. But as a counterweight to the two big players, this deal doesn’t offer much.

MetroPCS’s shares are up 20.4% at $7.90, after posting a new 52-week low of $6.32 earlier this morning. The prior range was $6.38-$18.79. Leap Wireless’ shares are also up 20.4% at $6.19 in a 52-week range of $4.68-$17.66.

Paul Ausick

Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), wanted the additional spectrum to accommodate future growth. That was no particular show-stopper as other wireless companies have been allowed to accumulate spectrum against prospective future needs. SpectrumCo, jointly owned by Comcast Corp. (NASDAQ: CMCSA) and Time Warner Inc. (NYSE: TWX) among others, and Verizon Wireless had also agreed to a cross-licensing deal where the two cable providers would be able to bundle Verizon Wireless’ service and the wireless carrier would be able to sell the cable companies’ content in a bundle.

Smaller rival wireless providers like MetroPCS Communications Inc. (NYSE: PCS), Sprint Nextel Corp. (NYSE: S), Deutsche Telekom AG’s (OTC: DTEGY.PK) T-Mobile USA division, and Leap Wireless International Inc. (NASDAQ: LEAP) complained about the hoarding of spectrum. As a result, the Federal Communications Commission (FCC) is considering requiring Verizon Wireless to divest some of its current spectrum before the deal is approved. A report at Bloomberg News cites “people familiar with the matter” for the information.

The FCC and the US Department of Justice, which must also approve the deal, want to maintain competition in the wireless and cable markets to protect consumer choice and prevent monopolistic pricing. But depending on how much spectrum Verizon Wireless must shed, there may be only one potential buyer — big rival AT&T Inc. (NYSE: T), which has stayed out of the fray so far, probably because it has equally big plans now that its $39 billion deal for T-Mobile has been killed.

The cross-licensing deals are also being investigated by the DoJ to determine if they threaten competition. The threat to competition and monopolistic pricing for consumers may be greater here than in the actual spectrum purchase. The nationwide reach of wireless networks and consumer demand for mobile resources opens up a whole new profit potential for Comcast and Time Warner. At the same time Verizon gets to offer programming that makes the company’s network a more attractive option, particularly if it can undercut competitive pricing.

The nuts and bolts of this acquisition and its fallout are nearly impossibly arcane. But the government’s decision will touch nearly everyone in the US. And that’s why the deal is so important.

Paul Ausick

What’s killing shares today is the same thing that drubbed MetroPCS Communications Inc. (NYSE: PCS) and Leap Wireless International Inc. (NASDAQ: LEAP): subscriber growth is either weak or non-existent. Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD) and AT&T Inc,. (NYSE: T) are adding subscribers, especially to wireless offerings, but even they are not growing as fast as before. Sprint Nextel Corp. (NYSE: S) and T-Mobile USA, a division of Deutsche Telekom AG (OTC: DTEGY) face the same problems.

It’s worse for the smaller guys, though, because they either cannot offer the hottest products, like the iPhone from Apple Inc. (NASDAQ: AAPL) or because they’re stuck with a lot of legacy wireline business that is continuing to erode. CenturyLink Inc. (NYSE: CTL), which reports earnings on Wednesday, is expected to post EPS of $0.58, down more than -22% from the same period last year and down about -6.5% sequentially. CenturyLink, though much larger than Frontier or the others, owns a lot of wireline business.

Frontier’s residential subscriber number dropped from 3.34 million in the first quarter of last year to 3.04 million this year. Wireline revenue was also down, from $589 million to $535 million. Business services revenues also fell, from $591 million to $585 million, and the number of business subscribers also fell, from about 333,400 to 302,100. The number of broadband subscribers rose, as did the number of video subscribers. Consequently the revenue figures per customer rose as well. Just not very much.

Growth prospects for Frontier and the other small players are quite dim as they are spectrum-limited and face stiff competition from the big players. Worse, perhaps, is that there is not likely to be any competition among the big players to pick up these smaller competitors. If anything, Verizon and AT&T would prefer to abandon their dwindling wireline businesses. But CenturyLink is still absorbing its acquisition of Qwest and none of the others can — or probably should — to add to their wireline holdings.

Frontier’s shares are down about -58% just after noon today, at $3.67 after posting a new 52-week low of $3.49 earlier today. The prior range was $3.81-$8.97.

Paul Ausick

Comcast posted EPS of $0.45 versus an estimate of $0.42. Revenue grew nearly 23% year-over-year to $14.89 billion, again higher than the consensus estimate of $14.43 billion.

The cable companies are losing subscribers to Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD) and AT&T Inc. (NYSE: T) both of which offer high speed wireline broadband service in addition to voice and mobile services. And the competition is about to get even keener.

Verizon Wireless’ $3.6 billion bid for additional wireless spectrum from SpectrumCo LLC, a joint venture of Comcast, Time Warner Cable, and privately-held Bright House Networks and Cox Communications Inc., is about to change the landscape. The additional spectrum is what the other wireless carriers and the Federal Communications Commission are examining with a fine-toothed comb, but the cross-licensing agreements that give Verizon and Comcast and Time Warner Cable the ability to sell each other’s products are, perhaps, the bigger deal.

Although the FCC has not yet ruled on Verizon’s acquisition, the companies are acting like the deal is done. A Verizon-Comcast cross-licensing deal in San Francisco adds digital TV to its standard triple-play offer. AT&T, which offers its wireline U-verse high-speed service in San Francisco, has no comparable offer.

Similar deals between Comcast and Verizon are already in place in Portland, Oregon, and Seattle and Spokane, Washington. Verizon and Time Warner have launched a similar bundle in Raleigh, North Caroline, Kansas City, and Columbus and Cincinnati, Ohio. Subscribers can bundle cable services with Verizon Wireless mobile phone service and get the same deal from either the cable company or Verizon.

Cable-like companies such as Netflix Inc. (NASDAQ: NFLX), Dish Network Corp. (NASDAQ: DISH), and DirecTV (NASDAQ: DTV) will also find the going getting tougher. Netflix is at the mercy of content providers like Comcast and Time Warner, which are likely to drive Netflix’s costs higher while lowering their own. Verizon could throttle network speeds for Netflix streaming videos, and although the carrier would eventually be stopped, it might be too late for Netflix. The satellite companies, likewise, could find themselves paying more for content.

As for AT&T’s U-verse and Verizon’s FiOS, neither is as valuable nor has as well-defined a growth path as wireless services. Comcast’s Xfinity broadband service will disappear eventually and be subsumed by the Verizon wireless network.

People want mobility and that means wireless services. At first, the deals between Comcast and Verizon and Time Warner and Verizon will be appealing because the companies will be offering free or low-priced smartphones as well as the convenience of a single provider for all of a customer’s communications needs. But as smaller competitors like MetroPCS Communications Inc. (NYSE: PCS), Leap Wireless International Inc. (NASDAQ: LEAP), and even T-Mobile USA, the US arm of Deutsche Telekom AG (OTC: DTEGY) fall by the wayside, large markets will have at most two choices, Verizon or AT&T, and small markets will not get even that.

The new cross-licensing services launched too late to have any impact on first quarter results, but the deals should make some kind of showing on second quarter results. The smart money says that the deals will be winners.

Comcast’s shares are down -2.7% this morning at $29.76 in a 52-week range of $19.19-$30.88.

For those interested in the Verizon-SpectrumCo deal, the FCC web site has all the relevant documents under Docket Number WT 12-4. To date 539 comments have been filed and thousands of pages of documents.

Paul Ausick

The main beneficiary of the consumer spending will be the service providers like AT&T Inc. (NYSE: T) and Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), with expected revenue of $82.8 billion in 2012. Games and apps makers like Zynga Inc. (NASDAQ: ZNGA) are expected to post revenues of $26.1 billion in the year, while music services like Pandora Media Inc. (NYSE: P) are expected to pull in about $16 billion and mobile video services lag with just $2.8 billion in projected revenues.

Spending on advertising is expected to help companies like Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), and Millennial Media Inc. (NYSE: MM) with advertising platforms.

In the US, mobile advertising is expected to produce about a third of all global ad revenue, about $4.2 billion. Amazingly perhaps, in-app advertising is expected to account for $1.2 billion in 2012 revenues, compared with just $556 million in mobile Web display advertising. US consumers are expected to spend $6.7 billion on mobile apps in 2012, about 20% of the total that US consumers will spend on mobile media in 2012.

Music providers like Pandora, which follow a hybrid advertising-subscription model, nab about 11% of the total global market for mobile media and advertising, with projected 2012 revenues of $16.3 billion.

The laggard here is video, which accounts for little of either direct revenue or ad spending. Google’s YouTube set the bar at ‘free’ and it has been difficult for any other service to break that precedent. Mobile video claims 271 million users, but generated ad revenues of just $223 million globally in 2011.

Total global ad spending in all media, from newspapers to Web-based (excluding mobile) was estimated at around $460 billion in 2011. Mobile ad spending equals less than 1.5% of that total, but the percentage grows to 2.4% on projections for 2012 ad spending. Mobile advertising remains incremental to other types of ad spending, but its importance is growing and, as with most other technology-based revenue streams, early entrants have a major advantage.

Paul Ausick

China’s factory output rises slightly in March, but still not at levels of expansion. (Reuters)

Vodafone (NASDAQ: VOD) buys Cable & Wireless for $1.68 billion. (Reuters)

A bribery probe of Walmart’s (NYSE: WMT) Mexico operations could cause some top management departures. (Reuters)

Christine LaGarde will need to give emerging markets more say in IMF policy. (Reuters)

The CEO of Motorola (NYSE: MMI) made $47 million last year. (Reuters)

According to Strategy Analytics, apps used on smartphones now carry ads, which could be critical to bringing marketing dollars to smartphones. (Reuters)

Avon (NYSE: AVP) falls well behind competitors in online sales. (WSJ)

New funds raised for EU bailouts have restrictions on how they may be used, which could fuel market skepticism about their effectiveness. (WSJ)

Spain wants other nations to join sanctions against Argentina for the takeover of YPF (NYSE: YPF). (WSJ)

Results at Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP) are expected to be helped by high oil prices. (WSJ)

Audi expects a surge in sales in both China and the U.S. (WSJ)

Japan auto sales should rise rapidly now that the effects of the earthquake have nearly disappeared. (WSJ)

U.S. TV networks continue to lose viewers. (NYT)

China hopes to increase its direct investments in Germany. (NYT)

A Nature Climate Change report says climate change will affect corn prices over the next three decades, which will cause alterations in the businesses involved with oil distilled from the grain. (NYT)

U.S. regulators may ease swap rules. (FT)

A smartphone powered by Intel (NASDAQ: INTC) to go on sale soon. (FT)

ECB President Mario Draghi says he will not go along with a call from the U.S. and IMF to do more to help resolve the EU debt crisis. (Bloomberg)

Netflix (NASDAQ: NFLX) earnings will remain under pressure as it tries to expand in both the U.S. and abroad. (Bloomberg)

Douglas A. McIntyre

The nation’s largest wireless carrier, AT&T Inc. (NYSE: T) reports earnings next week and the consensus estimate calls for EPS of $0.57 on revenue of $31.85 billion. AT&T has more than 100 million subscribers to Verizon Wireless’ total of about 93 million. Verizon Wireless, a joint venture with Vodafone Group plc (NASDAQ: VOD), added 734,000 retail subscribers in the first quarter.

Conventional wireline subscriber numbers continue to fall, down -17.7% year-over-year to 9.3 million. High-speed digital fibre optic connections now total 11.7 million, up nearly 31% year-over-year.

Revenue from data contracts rose 21% to $6.6 billion and the average revenue per user rose 16% to $23.80. As a percentage of services, Verizon’s data services now comprise nearly 43% of revenue, up about 5% from the same period a year ago.

The rise in data services is directly tied to the rise in smartphone usage. Verizon reported that nearly 47% of the company’s retail wireless subscribers now use smartphones, up from about 32% in the same period a year ago. More than 72% of wireless phones sold in the quarter were smartphones.

As more customers switch to smartphones and more expensive data plans, Verizon and the other wireless carriers will continue to see revenues rise. At some point, though, when the market for smartphones is saturated, the giants will get some pressure from smaller carriers (and each other) provided that regulators don’t allow the giants to gobble up all the available wireless spectrum.

Paul Ausick

General Communications is also undercutting AT&T’s voice and data plan pricing. The company is offering 3-Gbytes of data and unlimited voice minutes plus unlimited texting for $70/month with a 2-year contract. The 16-Gbyte iPhone 4S costs $150. The similar AT&T plan for voice and texting costs $70/month plus $30/month for 3 Gbytes of data. AT&T’s price for the same iPhone is $200.

Another regional wireless carrier, nTelos Wireless (NASDAQ: NTLS), which provides wireless services in Virginia, West Virginia, and surrounding areas, also announced today similar deal, with identical pricing for the iPhone 4S, and an unlimited data plan for $70/month with 600 voice minutes or $100/month for unlimited voice minutes.

One of two things could be happening here. General Communications and nTelos could be following the Sprint Nextel Corp. (NYSE: S) model of heavily subsidizing the iPhone and pricing the data plan substantially lower than its competitor in order to lure subscribers. Or the wireless carriers have struck a breakthrough deal with Apple.

Both General Communications and nTelos are also offering an iPhone 4 for $50, again $50 less than the best price at AT&T. Could Apple be testing the market for a low-end iPhone? Or is the company just getting rid of excess inventory in advance of its expected launch of an iPhone 5?

The former seems like the best bet. Apple does not have competitor to low-cost Android phones and has shown no interest in developing one. But if it can sell older models for competitive prices, that’s a bonus for the company. Besides, it’s hard to believe that either General Communications or nTelos would be willing or able to eat the additional $50/phone for a sustained period of time.

Paul Ausick