Hulu, unlike its bigger rival Netflix, still depends on commercials for a substantial part of its income, and on Wednesday put on a presentation for advertisers hoping to maintain their interest in sponsoring the platform as it undergoes ownership and design changes.

Hulu announced it now has 26.8 million paid subscribers, and an additional 1.3 million free promotional accounts (many through a partnership with Spotify), totalling over 28 million customers overall. That is an increase of roughly three million since January.

Hulu is still a fraction of the size of its rival Netflix, which has 60.2 million U.S. subscribers and 148.8 million overall worldwide.

The past 12 months have been disruptive for Hulu because of ownership changes. Disney inherited an additional 30% ownership stake from its acquisition of Fox and bought out minority partner AT&T, which itself had acquired a 10% interest in Hulu when it merged with Time Warner (Entertainment). As of this month, Disney controls 67% of Hulu, with Comcast-NBC owning the remaining 33%. Comcast-NBC is said to be looking to sell its minority stake in Hulu, presumably to Disney, giving the owner of ABC and ESPN full ownership.

At the same time, Disney is working towards launching its own streaming platform, Disney+, this November, leading some to wonder what will become of Hulu. The answer came today — both platforms will continue, with an undisclosed price break for those agreeing to subscribe to both Disney+ and Hulu.

Originally a partnership between three of the four major American TV networks, Hulu was the original home for online streaming of current network TV shows. But as those networks drift apart to run their own ventures, Hulu appears to be investing in more original programming to hold viewer interest, but remaining open to advertising — a smaller Netflix with ads.

With so many new streaming services launching, Hulu is positioning itself to reduce customer alienation and try to increase subscriber engagement.

Subscribers will be gently introduced to a new user interface by this summer, with the option of switching back and forth during the test phase, to improve usability.

Peter Naylow, Hulu’s senior vice president and head of ad sales, also announced advertising limits and changes, including:

• No ad breaks over 90 seconds
• Viewers will not see the same ad more than twice per hour
• The same ad will not be seen by viewers more than four times per day
• Advertisers can sponsor ad-free viewing of individual episodes
• Binge viewers may see personalized special offers from sponsors
• Easter Eggs will be scattered on the platform, offering viewers obviously fake shows that, if selected, activate special offers from Hulu and “brand partners.”
• Static ads will appear when viewers pause playback.

For $11.99/month, subscribers can continue to avoid all advertising on the Hulu platform entirely.

New original shows

To maintain viewer interest, Hulu’s partnership with Marvel will give subscribers two new live-action shows: “Marvel’s Ghost Rider” and “Marvel’s Helstrom,” scheduled to debut in 2020. Other Marvel productions will be found on Disney+ (which will cost $6.99 a month or $69.99 a year).

Other productions:

• A new slate of cooking shows
• Made-for-Hulu movies based on Liane Moriarty’s “Nine Perfect Strangers” and “The Dropout” — the story of Elizabeth Holmes, the founder of Theranos, starring Kate McKinnon.

Frontier Communications has no plans to upgrade most of their legacy copper DSL internet customers this year, leaving customers in many markets stuck at speeds as low as 1-3 Mbps.

Frontier CEO Dan McCarthy told analysts in a late afternoon conference call Tuesday that around one million homes have access to Frontier’s 100 Mbps DSL service, and six million can sign up for DSL at or above 25 Mbps. McCarthy considers those customers valuable targets for marketing campaigns because most are not Frontier customers. For the rest of Frontier’s legacy copper areas that cannot access those speeds, Frontier will have little to offer in 2019.

“I don’t think you’re going to see us do a lot of significant copper upgrades this year,” McCarthy admitted. “Our big focus is really future proofing kind of the [California, Texas, and Florida] fiber markets. So, we’re spending the money to upgrade th[ose markets] to 10 Gbps capability.”

Frontier reported another quarter of poor results late yesterday, widely missing analyst expectations. Frontier’s share price lost 26.8% of its value overnight in heavy trading. Over the last 12 months, Frontier’s share price has dropped by 77%.

Analysts remain deeply concerned about Frontier’s customer defections, which have persisted for several years and show no signs of ending. Even more daunting, Frontier’s high debt levels are still a problem. A major tranche of Frontier’s debt comes due for repayment in 2022, and there are concerns Frontier may not be able to cover it, which could force the company into bankruptcy. In February, Bloomberg News ranked Frontier No. 1 on the list of deeply distressed debt issuers in North America.

While cable companies can count on quarterly boosts in the number of customers signing up for broadband, Frontier shareholders have become accustomed to reading about subscriber losses. The company lost 38,000 broadband subscribers in the last quarter, including in its fiber to the home markets. Most of Frontier’s losses are Charter Spectrum and Comcast’s gains. Frontier also reported landline and video customer losses.

Although continued traffic growth would seem to indicate companies like AT&T and Verizon will need to continue major spending initiatives to keep up with demand, technological advancements and upgrade programs have made networks more efficient than ever, allowing AT&T and Verizon to report cost declines as much as 40% annually.

Wireless One’s Dave Burstein spoke with Andre Fuetsch, AT&T’s chief technology officer about current telco cost trends. Feutsch said a lot has changed with AT&T’s networks over the last several years.

“We’ve gone from 10 gigabits to 100 gigabits to now 400 gigabits on our fiber,” Feutsch told Burstein. “MIMO and massive MIMO are extremely productive. Yes, I think 40% per year is a reasonable estimate of how our costs are going down. AT&T’s leadership in open white box and SDN will continue to drive that number higher, which is needed as network demand increases.”

Burstein notes Verizon similarly estimated their costs were also falling about 40% annually.

“I have been able to confirm that the 40% Verizon efficiency savings figure is on target if not exact,” Burstein said. “You can replicate my thinking. Traffic has been growing 40% per year. Sales have been roughly flat for the similar time period. If productivity growth hadn’t been a similar 40%, profits likely would have trended down. In fact, they have been flat or slightly increasing.”

While AT&T has been embarked on a costly major fiber network buildout in its local phone service territory, Verizon has been focused on rebuilding and modernizing its core network. The “One Verizon” project is retiring a large percentage of the 200,000 legacy routers, switches, and other hardware in use across Verizon’s network and installing about 20,000 very efficient network box replacements. Verizon estimates its first year cost savings are about 50%.

Although network traffic growth, expansion, and upgrades come at a cost to carriers, technological improvements are covering much of those costs by making networks more efficient and capable of carrying much more data than ever before. When companies talk about their network investments in terms of justifying rate increases, that clearly does not tell the full story.

Charter Spectrum’s broadband-only customers run up more than double the amount of broadband usage average customers subscribing to both cable TV and broadband use, and that consumption is growing fast.

“Data usage by residential internet customers is rising rapidly and monthly median data usage is over 200 GB per customer,” Charter CEO Thomas Rutledge said on a morning quarterly results conference call. “When you look at average monthly usage for customers that don’t subscribe to our traditional video product, usage climbs to over 400 GB per month.”

Last week, Comcast reported its average broadband customer also used over 200 GB a month, but did not break out the difference between those subscribing to cable TV and those who do not. If Comcast’s broadband-only customers are consuming a comparable amount of data, they could be nearing half of their monthly usage allowance (1 TB), in markets where Comcast caps its customers’ usage. But because that is only an average, it means many more Comcast customers are likely nearing or now exceeding Comcast’s data cap, exposing them to hefty overlimit penalties.

Spectrum does not impose any data allowances on its customers — all usage is unlimited.

Charter officials also reported their average mobile customers use “well under 10 GB a month.” The fact Charter did not get more specific about mobile usage is important because the new product is getting scrutiny from some on Wall Street concerned it will have a hard time becoming profitable because of its wholesale agreement with Verizon Wireless, which provides the 4G LTE service for Spectrum Mobile.

Subscribers have been primarily drawn to the $14/GB plan, which includes unlimited talk and texting, because it offers a very low entry price for a full-function wireless plan. But a customer only needs to use more than 3 GB of service per month to find their bill higher than what they would pay subscribing to Spectrum Mobile’s $45 unlimited usage plan. If Charter executives said the average mobile user consumed 5 GB of data, analysts could deduce what the average customer bill probably looked like. To maximize profits, Charter needs customers to select an unlimited data plan and keep data usage low to assure it can cover the wholesale costs Verizon Wireless charges the cable company for wireless connectivity.

Rutledge

Rutledge stressed he expects Spectrum Mobile to be profitable with the current Verizon Wireless MVNO contract in place — the service simply needs a larger user base to overcome its current losses.

Rutledge also announced Spectrum Mobile was testing dual SIM technology, which could allow it to eventually offload more of its 4G LTE traffic to its own (cheaper) network, which could eventually include mid-band wireless spectrum and the CBRS spectrum the company is already testing for fixed wireless service for rural areas. Spectrum could also follow Comcast with its own in-home network of publicly available Wi-Fi or innovate with unlicensed wireless mobile spectrum using small cells or external antennas.

Charter executives noted that customer data demands were pushing many to upgrade to higher speed internet products.

“Over 80% of our internet customers are now in packages that deliver 100 Mbps of speed or more and 30% of our customers are getting 200 Mbps or more,” Rutledge said. “We’re also seeing strong demand for our Ultra product, which delivers 400 Mbps, and we have gigabit service available everywhere.”

The costs to continue upgrading service for broadband customers are negligible on the company’s current platform, Rutledge admits. In the future, Charter Spectrum is considering offering 10 Gbps and 25 Gbps symmetrical service to customers, and it can scale up upgrades very quickly.

“For example, in only 14 months we launched DOCSIS 3.1, which took our speeds up to 1 Gbps across our entire footprint at a cost of just $9 per passing,” Rutledge said.

Virginia officials cannot get broadband providers to reveal full details about their actual service areas, so the state now believes cable and phone companies will be more forthcoming if they can quietly share that information with each other, keeping the state government in the dark.

Virginia Public Radio reports that there are more than 600,000 residents that have no access to high-speed internet, because the state’s dominant telecom companies — Verizon, Cox, and Comcast, choose not to provide service. But the state’s efforts to fund rural broadband projects to reach the unserved have been repeatedly complicated by the lack of accurate information about who actually has access to broadband, and who does not.

“If you call them and say, “I live at this address can I get connected?’ They can tell you yes or no. They will not share that information nationally,” Evan Feinman, Virginia’s chief broadband advisor, told VPR.

State officials cannot get straight answers because telecom companies treat their service areas as confidential and proprietary business information. Broadband availability maps have been criticized as inaccurate as well, with providers volunteering the information with little, if any, independent verification. That creates problems when a would-be provider for an unserved area completes a broadband grant application that results in immediate objections from incumbent providers that claim they already offer service in the proposed project’s service area.

Feinman believes that if the state steps out of any referee roll of verifying what areas actually get service, providers will suddenly begin sharing service information with each other.

Feinman

“Comcast is interested in helping us avoid having to fund an overbuild… if they don’t bid on covering the rest of the county then they’re not interested in covering the rest of the county,” Feinman explains. “So when another ISP comes in I have high confidence that when that ISP asks Comcast ‘Hey I want to cover the rest of this county, how much of that do I need to do?’ Comcast will share that information.”

That is not the experience of other states, where providers like Charter Communications treat any disclosure of their rural broadband service areas and intended expansion areas as “highly confidential information.” In New York, companies will share information with the state, especially when state taxpayers are helping to subsidize their costs, but under no circumstances will they share service and expansion intentions with other providers, calling them competitors.

That would leave Virginia taxpayers footing the bill for rural broadband funding, without the state being a fully informed partner, able to audit projects and their service areas.

This year, Virginia intends to spend $19 million on rural broadband funding, a comparatively tiny amount for the number of residents still lacking service (New York spent over a half billion dollars), but still an increase over earlier years. But where those funds are spent may now be up to the same cable and phone companies that have never been willing to offer service in those areas before, and may not be too interested in letting someone else serve those areas either.

The stakes are high, as Feinman pointed out.

“I have conversations with corporate leaders who say, ‘Well am I going to be able to get in touch with my manager at 1 am and will he or she be able to send me a document?’ If the answer is no that community’s off the list,” says Feinman.

Virginia could follow the lead of Wall Street analysts that have conducted detailed studies by using a provider’s own website to query service availability and information for each individual address in a proposed service area. It would be a labor intensive project, but one that would put providers on record about whether they actually offer service or not.

Virginia Public Radio reports the state’s goal for universal broadband has been hampered by a lack of accurate broadband mapping. Now the state proposes to allow cable and phone companies to sort it out themselves. (1:43)