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Showing posts from December, 2012

Email Has Gone Mobile

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Since 2011, the share of email opened on a mobile device has surpassed email opened on a desktop client or using web mail, Litmussays. That is just one indicator of the role mobility has grown to assume in just a year's time. 

In June 2011, about 53 percent of email was opened on a desktop machine. By February 2012, just eight months later, mobile and desktop email openings were about equal. 



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Can Intel Web-Based TV Service Do What Nobody Else Has Done?

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Intel Corp. has been developing an Internet-based television service that essentially would be a "virtual cable operator," presumably offering the same "bundled" approach to video entertainment as offered by cable, telco and satellite-TV operators. 

Some believe the venture will launch, or at least be announced, in January 2013 at the Consumer Electronics Show.  Whether program suppliers are any more willing to license their key programming assets to Intel remains to be seen. 

Intel is trying to provide a sort of "beta test" environment by introducing the service "city by city," rather than nationally. Whether Intel can convince programmers that now is the time to infuriate all the rest of their main distributors is the issue.

At stake are relationships, already testy, with cable, satellite and telco distributors who pay programmers $41 billion a year in licensing fees. Any significant deals with Intel for a streaming service would put huge pressur…
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Time Warner Cable Takes Tough Line on Programming Costs, But How Important is Video, Anyway?

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For an industry known as "cable television," the notion that "television" is becoming steadily less important is a bit of a shock, at least in one sense.  Television revenues are shrinking as a percentage of total revenue as new sources, such as broadband access and voice services, continue to grow. The latest driver of growth, if not yet gross revenue, are business services. 

Video still drives a big chunk of revenue, though, as does voice for most telcos. But cable is losing subscribers. And since volume affects profit margins (fewer subscribers means higher per-unit costs), that means the business case is under pressure. 

Of course, for their own logical business reasons, programming networks find they have to invest more in original programming, which is highly expensive and results in demands for higher payments from cable operators. 

That means a more-intense negotiating environment than traditionally has been the case. 

Time Warner Cable and AMC Networks have te…
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How Soon Will Video Join Voice and Messaging as a Declining Service?

Sooner or later, every legacy service offered by cable TV or telco service providers will face competition from rival services or simply dwindling demand. Up to this point the material impact has been seen most clearly only in voice, where serious financial losses have been felt for more than a decade. But disruption now is being seen in the text messaging space as well.

Globally, telecom revenue is growing. But not in Western Europe, it appears. The mobile industry’s combined revenues from voice, messaging and data services in the EU5 economies (United Kingdom, France, Germany, Spain and Italy) will drop by nearly 20 billion Euros, or four percent a year, in the next five years, and by 30 billion Euros by 2020, according to STL Partners.

The obvious implication is that mobile service providers in the United Kingdom, France, Germany, Spain and Italy will have to create new revenue streams worth 30 billion Euros, just to stay where they are, by 2020.

Though the trend is not always quit…
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Can the Cable Industry Save Itself?

Sometimes an industry seemingly is incapable of saving itself. Some might say the video entertainment business could be among them. The issue is less the long term future, where consumers increasingly have the ability to buy what they want, item by item, and more the intermediate period, where rising costs might encourage quite a few consumers to stop buying.

To be sure, it is hard to see much material impact from “video cord cutting” so far.

Though some would say there is clear evidence of “cord shaving,” where customers drop premium services even while keeping “basic” video services, most “hard numbers” (subscriber counts, for example) suggest that abandonment fo video services remains a potential threat, but is not a clear present danger.

But even cable operators know that costs are rising at dangerous rates, and will make the product less attractive. Speaking about the problem of sports programming costs that threaten to undermine consumer appetite for the video entertainment prod…
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If January is Coming, So are Video Subscription Price Hikes

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Every January, it seems, providers of video entertainment raise their prices, typically outpacing the rate of inflation.

For the most part, that remains the case for 2013.

DirecTV plans to increase the prices of its programming packages by an average of 4.5 percent, starting Feb. 7, 2013, a move DirecTV attributed to  higher programming costs.

The company said the programming costs it pays to owners of television channels will increase about eight percent next year, the Wall Street Journal reports.

Dish Network will increase the priceof its core TV bundles between seven percent and 20 percent in January 2013, with most packages rising $5 a  month.

“As an industry we have seen increases in double-digit percentages,” said Dish spokesman John Hall. 

AT&T U-verse prices also are going up in 2013. 



In 2012, Comcast, DirecTV and AT&T  raised rates as well.If nothing changes, NPDexpects the average subscription video bill to reach $123 by 2015 and $200 by 2020.


Bernstein Research analyst Cra…
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Dynamic Pricing Rankles Some, but it is Just Supply and Demand

SideCar, a peer-to-peer instant ride-sharing app, plans to double its suggested donations for drivers on New Year’s Eve, effectively instituting “surge pricing.”

Uber, a similar service, used dynamic pricing in 2011, on New Year's Eve. The practice will bother some, but in principle it is simply a way of matching supply and demand. Some will say it borders on price gouging, or is, in fact, price gouging.

It's hard to say where the boundary between "gouging" (with its implication that a supplier is taking unfair advantage of buyers) and "supply and demand" (the price of a scarce commodity will rise when demand rises and supply is fixed) lies, but supply and demand fluctuations are a reason why prices for virtually any product tend to shift up or down.

Communications service providers tend not to have such flexibility, in part because regulators will only tolerate so much fluctuation, in part because users tend to prefer fixed and known pricing, even when the…
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Malaysia to Subsidize Smart Phones for Youth to Encourage 3G Use

One basic "rule" of economics is that consumption of any product or service for which there is demand can be increased by lower prices. And that is what Malaysia will do to encourage younger users to ditch their 2G feature phones for 3G smart phones.

The Malaysian Communications and Multimedia Commission, as part of its "Youth Communications Package," will subsidize  (MYR 200 or ($65 US) purchases of 3G smart phones costing no more than MYR 500 ($163 US).

The idea is to encourageuse of mobile broadband and encourage youth in rural areas to get connected.

The rebate isavailablefor buyers earning less than RM 3,000.

According to the MCMC, 89.6 percent of users polled earn less than RM 3,000. And some 87.3 percent of mobile users surveyed are still using basic or fearture phones without smart phone capabilities. The rebate is also only allowed for Malaysians between the ages of 21 and 30.
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Internet is Splintering, Irrespective of ITU Decisions

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Is the Internet splintering? The question has been relevant for parts of the last decade, and some observers might argue there are reasons why a fragmentation of the Internet could happen, or has already happened.

One recent development--an International Telecommunications Union conference that many see as leading to government censorship of content--illustrates the issue.

Some argued strongly that allowing governments to control and censor content could spit the Internet into two parts: One free and open one, the other closed and censored, depending on which country you are in.



But such legitimate concerns also have other somewhat more logical drivers as well. One might argue that even when any human being can communicate with any other human being, the original and still most-powerful value of the Internet, as a practical matter, users are functionally self-segregated, most of the time, by shared language, culture, economic relationships, friendships, application preferences, devices, …
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Dish Challenges Softbank Purchase of Sprint

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As expected, Dish Network is raising public policy questions about the wisdom of the Federal Communications Commission approving the SoftBank investment in Sprint. 

The raising of such objections is not unusual whenever a material event occurs that one or more contestants believes will be, or could be, harmful to its own financial interests, irrespective of any larger public policy interests. 

In the case of Dish, which plans to launch its own Long Term Evolution fourth generation (4G) network, the SoftBank purchase of Sprint allows Sprint to create its own LTE network faster, and to use much more of Clearwire's spectrum assets. 

A stronger Sprint means a stronger competitor to Dish, which will need to get traction in the highly-competitive LTE and mobile markets rather quickly, and will likely face Sprint as a major competitor in the "value" segment of the market.  

Dish wonders in a formal filing to the FCC whether a foreign company should "control more spectrum below…
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By 2015, 1/3 of Consumer Brands Will Integrate Payment Into Their Mobile Apps

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By 2015, 33 percent of consumer brands will integrate payment into their branded mobile apps, according to Gartner. 

That illustrates the evolution of mobile apps from a variety of information and communication purposes, consumer support or experience enhancement, to transactions. 

This the will be more pronounced for brands with retail outlets, such as those in the fashion, food and drink, grocery and entertainment sectors, Gartner says. 

Data released by IBMshows that mobile traffic to e-commerce sites in 2012represented an average of 26.5 percent of all site traffic (up from 15.8 percent in 2011) and sales from a mobile device are now at 14.1 percent of total site traffic, according to iconnect. 

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Gmail Domestic U.S. and Canada Voice Calls Free for 2013

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Users of Gmail's calling features in the United States and Canada will continue to be able to make free domestic calls through 2013, Google says.  

Gmail's voice feature was introduced in 2008 and was said to support such free calling for an introductory period, and has been extended every year, about this time, since late 2008. 

Since Google incurs real termination costs for delivering those calls, there cannot be any assurance that the policy will continue indefinitely. 

Nor, apparently, does Google necessarily think providing voice services is necessarily a great way to make money. Voice generates lots of traffic. It is a very "sticky" application. Voice usage adds one more dimension to a social graph. 

Knowledge of how voice gets used makes it easier to understand a user's social context and interactions. Given the huge value advertising, especially targeted, personalized advertising and marketing has for Google, voice therefore has strategic value. 

Google arguab…
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South Korean Mobile Ops Launch “joyn”

SK Telecom, KT and LG Uplus in South Korea are launching “joyn” services to combat inroads being made by over the top messaging services. At first, each carrier will operate joyn as a service available only to users of its own network, but interoperability between the three carriers is expected in 2013.

Joyn, the brand created to support  Rich Communication Services (RCS), allows customers to make Internet-based voice calls and video calls and send chat messages as well. Joyn supports individual and group messages of up to 5,000 characters,, Yonhap news service reports.

In South Korea, KakaoTalk is among the rival services mobile service providers must contend with.

The service is initially available on 22 different types of Android phones, and can be downloaded from each operator’s app store for free. SKT says it will announce extended Android support and an iOS version early in 2013.

Messages to non-users will be sent as text messages, as is the case with Apple’s iMessage service, whi…
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Asia-Pacific Middle Class Growth Will Drive Communications Revenue Growth

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Between 2009 and 2020, the amount of consumer spending in the Asia-Pacific region will nearly have doubled, and will represent the largest single regional volume of spending, outstripping Europe, North America, Central and South America and the Middle East and Africa. 

That will have important ramifications for providers of communication apps and services, creating much larger markets than ever have been seen in those regions. 

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36% of U.S. Households Might be "Wireless Only"

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Some 35.8 percent of U.S. homes did not use or buy fixed network telephone service during the first half of 2012, an increase of 1.8 percent since the second half of 2011, according to the latest survey and report by the Centers for Disease Control. 

In addition, 15.9 percent of U.S. adults received all or almost all calls on wireless phones despite also having a fixed network telephone service.

The only thing that would have been surprising about the latest survey is if the wireless substitution trend had stopped or reversed. CDC does not that the rate of substitution has slowed to 1.8 percent over the first six months of 2012.

CDC says that is the slowest rate of increase since 2008. 

At current rates of change, in about a decade, about 70 percent of U.S. adults would be "wireless only."

As has been the case in earlier CDC studies, four demographic groups primarily account for the "wireless only" preferences. Younger adults aged 25 to 34, adults living only with unrel…
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"Broadband Access" is More Nuanced, These Days

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Evaluating use of the Internet and broadband is getting more complicated by the day. For starters, mobile now represents a majority of Internet access activities. And it sometimes is hard to comprehend just how fast that has happened.

Consider that, in the G-20 countries, mobile broadband went from negligible to a majority of all access connections in just five years, between 2005 and 2010, according to Business Insider.

In five more years, in 2015, mobile G-20 Internet connections will be about 80 percent of all connections, Business Insider estimates. That has some clear implications for the way we evaluate “broadband” penetration. For starters, “mobile” access might be more important, more of the time, than fixed modes.

Traditionally, the reason for buying broadband access services was for fast Internet access for some sort of PC, at a fixed location. These days, there are other reasons beyond “PC access,” and many more situations where “mobile broadband” is preferred.

Some users m…
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When Cutting Price Won’t Help

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It is a truism of economics that price and sales are directly and inversely related . In other words, lower the price of a product and consumers tend to buy more; raise the price and consumers buy less. In fact, the whole point of some public policy policies (taxes, rebates, subsidies, penalties, credits, tolls, fees) is to dampen demand for some products or encourage demand for some products.


Communications markets are not exempt. Raise prices and people can be expected to consume less; drop prices and people theoretically buy more. But that only works up to a point.

Demand for the product, and ability to supply it, has to exist. And that is getting to be a problem for some communications or entertainment products.

Demand for streamed versions of items in the Netflix catalog is growing; demand for disc rentals is shrinking. Presumably Netflix could drop prices for “DVD only” versions of the product. But consumer preferences are shifting, and it is not clear whether even significant pri…
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