Pandora on Mobile Illustrates Service Provider Bandwidth Paradox

Pandora says it is introducing a 40-hour-per-month limit on free mobile listening for its users, something that Pandora says will "affect less than four percent" of its total monthly active listeners. The average listener spends approximately 20 hours listening to Pandora across all devices in any given month.

The direct issue for Pandora is licensing fees. The key issue for access providers is more complicated. By definition, "interesting and valuable apps" are the reason people want to use the Internet. So apps create the demand for Internet access services, especially broadband access.

But with the advent of video as the dominant media type affecting global Internet transmission requirements, access revenue and profit margin are an obvious key issue for access providers, who argue they are not being compensated properly for the value of their access and transmission facilities. 

It might be correct to say that access providers worry they will not be fairly compensated in the future. By most estimates, tier one access providers are making healthy profit margins on access services. Smaller providers have a much-bigger problem. 

The bigger issue really seems to be application revenue, particularly the issue of whether application providers, especially those providing lots of video, might in the future also pay some sort of "access fee." 

That would be a major switch from the traditional one-sided business model where retail end users paid for the full price for use of the network. In the proposed two-sided model, access providers would be paid  both by end users and third party business partners, as is the case in much of the media and content business (cable TV subscriptions, for example, where revenue comes largely from end user "access" with significant "program network carriage fees" and some "advertising" revenue as well). 

The paradox for an access provider is that Internet apps both create the business opportunity and represent a major cost driver. That obvious tension might not, by itself, be too big a challenge. The bigger problem really is that legacy revenues that underpin the business are going away. 

In that sense, it is not so much that Pandora or YouTube are breaking the business model, but rather than the shrinking voice and messaging businesses are forcing service providers to recover most of their costs from Internet access services. 

In that sense, it is not the "Internet apps" that are the problem. It is the declining revenue from other major sources. 

To be sure, some might say the additional problem is that the past value chain is being disrupted. In the past, the "access" was embedded in the "application" provided by a service provider. In other words, voice was the app the customer wanted, and the cost of network access was embedded in the retail cost of using voice.

These days, "voice" increasingly is a separate app from "access." But that might just be another way of saying the real problem for access providers is the legacy revenue disappearing, not the mismatch of value and revenue earned by participants in the Internet value chain. 

Entertainment video is helpful, but actual profit margins in video entertainment have fallen dramatically, by perhaps 50 percent over the last decade or so. 

Pandora says per-track royalty rates have increased more than 25 percent over the last three years, including nine percent in 2013 alone and are scheduled to increase an additional 16 percent over the next two years. So Pandora has to cover the costs. 

Pandora notes that users can listen for free for as many hours as desired on desktop and laptop computers; pay $0.99 for unlimited listening on mobiles for any month when usage exceeds the limit; , or subscribe to "Pandora One" for unlimited listening and no advertising.

No Consumer Demand for 1-Gbps Internet Access?

Time Warner Cable's Chief Financial Officer Irene Esteves continues to get coverage every time she speaks in an investment or other conference about the state of consumer demand for 1-Gbps access, seemingly prompted in virtually every case by Google Fiber's Kansas City 1-Gbps network and service. Esteves repeatedly has said that Time Warner Cable does not see the demand for such speeds. 

Some will be tempted to argue this is a typical effort by a quasi-monopolist to dismiss a competitor's better and disruptive offering, and rather incorrect, since people in Kansas City do seem to be buying Google Fiber. 

A few might say the statement is an effort to stave off, as long as possible, or perhaps indefinitely, the need to invest major new sums in access technology. 

Others will note that since Time Warner Cable faces Google directly in Kansas City, the question is rather an obvious question for investors to ask. There is some truth to all such interpretations. 

On the other hand, to understand the comment that "we just don't see the need of delivering that to consumers." one has to unpack the statement and put it into context. 

Esteves is not necessarily dismissive of Google Fiber.  "We're in the business of delivering what consumers want, and to stay a little ahead of what we think they will want," she said, and seems always to say when asked about the state of demand for 1-Gbps access. 

A fair way to rephrase might be "At the moment, at the prices we would have to charge, we believe few customers would want to buy 1-Gbps access." The statement is highly conditional. 

At very low prices, many consumers would buy 1-Gbps. At significant prices, far fewer will do so. At high prices, a small percentage will purchase. 

A corollary might be that "right now, at significant prices compared to our other offerings, few consumers we sell to would willingly pay the incremental prices to get the fastest speeds."

The "consumers don't want it" is a highly conditional statement. Time Warner Cable and all other executives know full well there is some set of circumstances that could drive very high take rates. 

Time Warner Cable's business objective is to supply any future forecast level of demand, under competitive market conditions, at a profit, without investing prematurely or wildly in ways that harm its financial prospects. 

Some might say Time Warner Cable is craven, stupid or just wrong about end user demand for 1 Gbps access. That's unfair and incorrect. Time Warner is making a highly conditional statement about demand under a finite set of circumstances. The answer will be different under a different set of specific circumstances.

More than Half of Global Internet Users Rely on Mobile

Application providers, device manufacturers, policy makers, service providers and policy advocates all have clear interests where it comes to the actual state of broadband access “supply.”

And mobile access now complicates all evaluations of “access supply.” For example, a new study sponsored by inMobi found that 50 percent of the average global mobile web users now use mobile as either their primary or exclusive means of using the Internet.

That can have important implications for any evaluations of “unserved” or “under-served”  populations, for example. If significant percentages of people prefer to use mobile access compared to fixed network access, that could skew analyses of “problems” in the broadband access arena.

In other words, it is not necessarily a “problem” if many users prefer to buy one product rather than another. At the same time, the state of any nation’s broadband access infrastructure properly would have to entail both mobile and fixed network access in any meaningful evaluation of latency, speeds or cost.

The InMobi study included more than 15,000 mobile users in 14 markets across all continents.

Will Mobile Disrupt "Search?"

Search's future depends, many would say, on how consumers behave on mobile, especially on whether "search" changes as users adapt to smart phones. One key issue, for search applications, is "what" people search for. 

Already, behavior on mobiles has shifted in the direction of "information I need right now" related to commerce (shopping, restaurants, directions to a place) and present location. For Google and other search engines, that is a potential problem. Yelp or Amazon.com become new ways to search. 

In other ways, social networks becomes new ways to "search," as well. 

How Big a Problem are Roaming Charges?

High gross revenue and high profit margin services are both good and bad for service providers. Though it is obvious why service providers might like service that offer high gross revenue and high margin, those conditions are all the incentive competitors need to enter a market. 

And, in many cases, such circumstances drive regulators to take the margin out of a business by regulating it away.

Roaming services are such an issue, even if currently representing only about six percent of total service provider revenues. Also, roaming is a bigger problem in some regions than others. The European Union and roaming between Australia and New Zealand are some examples of regions that are taking steps to curb bill shock and roaming charges.

Juniper Research predicts mobile roaming will represent more than $80 billion worth of revenue by 2017, compared to over $46 billion in 2012, despite a general trend to lower roaming charges. In 2017, roaming will represent about eight percent of operator billed revenues.

In some cases, roaming revenue might represent as much as 10 percent of revenues, though.

Informa predicts roaming revenue will grow 86 percent globally over the next five years, with revenues of $67 billion by 2015. That means roaming will account for 6.3 percent of total mobile service revenues worldwide by then. 

If operators are to capitalize on what can remain a very high-margin business, they have to stop the current trend of roamers shutting off their data roaming capabilities when traveling. B

usiness travelers often stop using their mobiles when traveling internationally, representing lost revenue, of course.

Bill shock, the unexpected surge in a mobile phone bill that often happens when a user is roaming, especially internationally, is a growing problem for service providers, for several reasons. The first reason is simply that after the first “shock,” users learn either to limit their use of mobile devices when in a roaming situation, switch providers, adopt prepaid or take other actions to prevent future shocks.

Excessive roaming charges also increase customer irritation and draw regulator ire. As in the European Union, high roaming charges not addressed by service providers themselves can lead to regulator action to force lower rates.

Sandvine says that audio and video streaming account for 28 percent of roaming data as observed on a tier-one European mobile network. That tends to suggest high roaming charges are an issue for traveling consumers as well as business travelers.

For example, a three-minute YouTube video uses approximately 10 MBytes of data which would cost a European mobile subscriber about 7€ while roaming in Europe.

Smart Phones Will be Half of All Devices Shipped in 2013: Ericsson Says

“By the end of 2013, more than 50% of phone shipments will be smartphones smart phones, driven by more affordable models,” says Ericsson President and CEO Hans Vestberg. Vestberg also predicts there will be more mobile Internet users than fixed Internet users in 2013, an easy prediction to make, as virtually all observers have been calling for more mobile than fixed subscribers by about 2013 to 2014.

And some might note that mobile broadband adoption has been more robust than expected just a few short years ago. 

Source: Morgan Stanley Mobile Report

Mobile Operator Data Revenues to Surpass Voice Globally by 2018

Mobile service provider data revenues will overtake voice revenues globally by 2018, GSMA forecasts.

In 2012, Japan became the first country where data revenues exceeded voice revenues. In 2013, Argentina’s data revenues will exceed voice revenues.

The United States and United Kingdom will reach the tipping point in 2014. while Kenya will reach data "majority of revenue" status in 2016. 

According to the latest report published by Machina Research, in 2020 the total number of connected devices will grow from today's nine billion to 24 billion, with half of those devices incorporating mobile technology.

440 Cities Might Drive Communications Growth by 2025

Anyone familiar with communications network economics also knows that the “easiest” places to build networks are dense urban areas, where the highest degree of resource sharing is possible.

So it is noteworthy that researchers at McKinsey & Company now predict that four billion people deemed “consumer class” will live in “developing” regions by 2025, up from around one billion in 1990.

According to McKinsey, the new members of the “consumer class” will have incomes high enough to classify them as significant consumers of goods and services, and around 600 million of them will live in 440 cities, largey in “emerging markets.”  

McKinsey suggests just 440 cities, only a few of which will be “megacities,” will account for “close to half of expected global GDP growth between 2010 and 2025.”

Likewise, 600 cities globally will generate nearly 65 percent of global economic growth by 2025.

But observers of the communications business also will know something else. As it will make sense for the largest, best capitalized firms to concentrate on the urban areas with high percentages of consumer class customers, that very concentration will leave some significant opportunities in rural and other areas where business cases are much more difficult.

So where regulators allow competition, and do not create barriers to innovation, smaller firms are sure to spring up to serve unmet needs.

Mobile Trends as Seen by TIA

The Telecommunications Industry Association’s “Mobile World Congress Primer” is a video about current mobile trends by John Jacobs TIA SVP. It looks, as you would guess, at device innovation, prospects for growth of mobile services, machine to machine services and estimates for revenue growth in various segments of the industry.

A video about the findings from the 2012 forecast will likely serve as a reasonable way of guessing what the 2013 forecast might reveal.

Access Recedes into the Background

To the extent that Google search term activity tells you anything important, one might argue that telecom, Internet, VoIP, 4G, mobile broadband are not “top of mind” these days. Instead, subjects such as WiFi, tablets, smart phones and apps are driving more search activity, and might therefore be said to be more “top of mind” than those earlier subjects.

Searches for the term “telecom" have steadily declined since about September 2004. Similarly, interest in VoIP, as judged by searches, peaked in 2005. Also, interest in “4G” peaked in June 2010. Searches for mobile broadband peaked in 2009.

Queries related to “Internet” also have declined about 25 percent since 2004.  

On the other hand, searches related to ‘smartphone” have risen since about March 2010. Searches based on “android” have grown steadily since about 2008.  

Searches related to apps also have grown since 2007. Likewise, interest in the term “WiFi" has steadily grown since 2004. Also, searches for tablet have risen since 2010.

Those changes probably are related to changes in the relationship between people, their devices and their networks. Applications and services are becoming user centric, or people centric, accessed on any number of devices and networks.

That might suggest that concerns about “access” mostly have receded, with current interest more focused on the apps and new devices.

17 Mobile Service Providers to Launch FireFox OS Smart Phones

The complicated smart phone ecosystem, which as participants constantly maneuvering for advantage within the ecosystem, will get a bit more complicated in 2013, as Mozilla releases its new Firefox smart phone operating system, and as European mobile service providers start selling devices using the new operating system. 

Mozilla says the Firefox OS will in initially be used by devices sold by 17 mobile service providers, interested in seeing an OS and device alternative to Apple and Google.

Those service providers include América Móvil, China Unicom, Deutsche Telekom, Etisalat, Hutchison Three Group, KDDI, KT, MegaFon, Qtel, SingTel, Smart, Sprint, Telecom Italia Group, Telefónica, Telenor, TMN and VimpelCom and Telstra.

Manufacturers of the phones so far include Alcatel, LG and ZTE, with Huawei joining later in 2013.

WebRTC Winners and Losers

Mozilla, AT&T and Ericsson are demonstrating a Web Real-Time Communication (WebRTC) proof of concept at Mobile World Congress 2013. The demonstration uses Ericsson's Web Communication Gateway, the Mozilla Social API and WebRTC support in Firefox, and the AT&T API Platform to enable the Mozilla Firefox browser to sync with a user's existing phone number and provide calling services without any plugins to download.

WebRTC is an open Web framework that is being standardized by the World Wide Web Consortium (W3C), and is intended to support communications functions such as voice,  video calls and text messaging using only a Web browser. It includes the fundamental building blocks for high quality communications on the web such as network, audio and video components used in voice and video chat applications.

And that probably provides all the information you might require to figure out why varous contestants might disagree about the value or role of WebRTC.

Among other things, WebRTC allows browser communication across browser brands.

As you might guess, observers disagree about the impact. As you might guess, there are ways WebRTC could develop that make it more useful for web developers than for telecom developers, which is another way of saying WebRTC could be more useful for web app providers than for communications providers.

One vision is that what gets created is “HTML5 with the ability to quickly add voice, video, chat and without the need for a browser plugin or extension,” notes Dan York. senior content strategist at the Internet Society.

The API originally was proposed proposed by Google, and is supported Mozilla and Opera, which might indicate some of the perspective on potential winners and losers.

Native video chat or video conferencing would likely be early applications for WebRTC, for example, since WebRTC would provide high quality, low delay, encrypted calls from one WebRTC browser to another, with no need for a plug-in. As you might guess, Microsoft has its own ideas about how to implement WebRTC, for that reason.

Gaming and social experiences are other areas where WebRTC could provide value.

There could be many winners and losers, ranging from equipment and technology suppliers to contestants in the advertising value chain. As often is the case with developing Web technologies, access providers benefit indirectly, or are potentially harmed.

PBX Market Dipped in 2012

"Following two years of modest growth, the PBX market had a tough 2012,” says Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research, part of a report to be released in early March 2013. It appears economic conditions played a role, as sales were depressed 10 percent in the Europe Middle East Africa region, which has been suffering from a recession.

Overall, the global PBX/KTS (private branch exchange and key telephone system) market represented $8.1 billion in 2012 sales, down four percent from 2011.

In 2012, the related unified communications segment grew eight percent, year-over-year, however. And IP PBX licenses (not including the value of hybrid licenses) grew 11 percent in 2012

North America and the Asia Pacific region saw net positive revenue gains in the PBX market in 2012, though, growing a modest two percent in North America and one percent in Asia Pacific, over 2011 levels.       

Cisco maintains its lead in global PBX/KTS revenue for the sixth consecutive quarter, while Avaya and Siemens also were in the top three suppliers for the year.

Just three suppliers in the enterprise telephony market posted year-over-year revenue gains in 2012: Cisco, Mitel, and ShoreTel.

Kenya-Based Safaricom Will Halt Feature Phones Sales to Focus on Smart Phones

Safaricom, the Kenyan mobile service provider, will soon phase out sales of feature phones to concentrate on selling smart phones.

“Safaricom is soon going to stop selling the cheap feature phones in all our retail outlets, as we try to skew the Kenyan market towards smartphones," said Nzioka Waita, Safaricom director.

The move shows increased confidence that cheaper smart phones will change end user demand preferences. 

On a larger level, the move provides one more illustration of how fast advanced mobile technology mobile technology has changed the communications landscape globally, in just a few short years. 

Consider that as recently as 2008, some estimates had fixed broadband connections outnumbering mobile broadband by about a four to one margin.

In 2012, the ratio was reversed, and there were four mobile broadband connections in use for every fixed connection. That sort of change--that fast--does not happen in the communications business very often.

The number of mobile broadband subscribers around the world surpassed that of fixed broadband at the end of 2010, in appears. So mobile broadband went from a 20 percent of market state to a 50 percent of market state in just two years, by some estimates.

After about another three years, mobile broadband grew to represent 80 percent of all broadband connections, by some measures. That is a breathtaking change, in terms of the speed of the change.

By 2015, it is anticipated that there will be 3.1 billion mobile broadband subscribers compared to 848 million fixed broadband subscribers. Safaricom seems ready to prove that forecast is accurate.

IBM to Double Investment in Mobile, as Part of "Mobile First" PlanI

International Business Machines Corp., the world’s biggest computer-services provider, will double its investment in mobile technology in 2013, not including acquisitions it could make. IBM also has dubbed the initiative "MobileFirst," a move that, at this point, should not surprise anybody.

According to analysts at the Yankee Group, enterprise workers rank smart phones and notebooks about equally, as key tools for their work. 

To be sure, the direction does not mean "mobile only." And some firms will not design their strategies around "mobile first," either, where it comes to content creation. 

Content consumption is another matter, though. Consumers are migrating away from PC-based Internet usage and are increasingly using mobile devices as their default gateway to the Internet, according to  International Data Corporation. That shift to "mobile first" Internet access is especially pronounced in the U.S. market. 

In fact, perhaps for the first time, the number of people using PCs for Internet access is shrinking, even as PC access grows elsewhere in the world. That doesn't necessarily mean the number of fixed access lines drops, only that PCs are not the devices using those connections. 



Other studies back up those contentions. The use of mobile devices to access the Internet is becoming the medium of choice, with 69 percent of all Internet users surveyed doing so daily, according to Mobile Web Watch 2012, a study of consumers in Europe, Latin America and South Africa conducted by Accenture..

In addition, consumers are using multiple devices to connect to the web, including smart phones (61 percent), netbooks (37 percent), and tablets (22 percent), the Accenture study suggests.

The study found that emerging economies such as Brazil, South Africa and Russia also have rapidly adopted mobile devices (more than 70 percent, on average) to access the Internet, Accenture says.

What Happens When a Problem is Solved?

Among serious broadband scholars, the broadband rankings argument is as much dated as it is silly, argues economist George Ford of the Phoenix Center for Advanced Legal and Economic Policy Studies.  

The defects of such rankings have been analyzed over the years, many times, by the Phoenix Center Ford says, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here and here

Most serious scholars of broadband policy have long abandoned the discussion, he says. "Nevertheless, those more interested in revolutions than facts keep hanging on to these comparisons," says Ford.

All of that raises a question: what happens when a public policy problem actually is solved? Does institutional momentum simply propel organizations along, even if the original problem is solved, or being solved, or solved well enough that we should spend time on other pressing problem?

One sees this rather frequently in other areas, where government programs, for example, continue to operate long after the original problem has been fixed. Many private charitable organizations find the answer is to adopt a new mission, and solve some other related problem. That makes sense. If a particular disease has become quite rate, perhaps it makes more sense to try and eradicate a different disease. 

The issue with broadband rankings not only is that it is difficult to do properly, but that it might even be a problem that is fixed, mostly fixed or being fixed. That isn't to say broadband should not, can not or will not get better. Most observers are certain it will keep getting better. 

The point is that some legitimate problems exist, but that essentially incorrect charges of major and wholesale problems do not help, simply because it is largely a waste of time to spend significant resources trying to fix what already has been repaired. 

Granted, not everybody will agree when the repairs are finished, on a subject as complicated as Internet access. But the perfect should not be the enemy of the good. 

Is Value of Mobile Broadband Destined to Decline?

The hands-down value of a mobile network, compared to a fixed network, is mobility. And given the dramatic surge of mobile adoption over the last four years, at least some fixed network executives naturally will be worried about the long term value of any fixed broadband network.

As recently as 2008, some estimates had fixed broadband connections outnumbering mobile broadband by about a four to one margin.

By 2010, just two years later, the number of mobile broadband subscribers around the world surpassed that of fixed broadband.  By 2012 mobile broadband subscriptions outnumbered fixed subscriptions about three to one.

By 2015, it is anticipated that there will be 3.1 billion mobile broadband subscribers compared to 848 million fixed broadband subscribers, meaning mobile will outnumber fixed about five to one.

One might argue that change has happened so fast that most people have not yet had a chance to figure out what it means. For one thing, mobile now has become the dominant way people access the Internet globally. On the other hand, mobile access also has meant that access speeds are relatively slow, compared to fixed access.

But there is a line of thinking that widespread 4G could change value propositions and market shares even more. 4G Americas reports that 150 operators worldwide have now launched commercial LTE services in 67 countries, 50 of which were launched in the past five months.

"4G Americas expects more than 100 LTE network launches in 2013, the group 4G Americas says. The group expects  63 million LTE connections at the end of 2012, with subscriptions doubling in 2013 to 134 million LTE connections.

With 4G access speeds now replicating, in many cases, digital subscriber line speeds, some service provider executives will be seriously looking at ways to use LTE as a primary access network, displacing the fixed network.

Up to this point, raw speed and price per bit have been major advantages for fixed networks. But 4G could be disruptive, encouraging more service providers to substitute LTE for fixed network access.

Oddly enough, the use case, if not the value proposition represented by a mobile network, might be changing, and in an unexpected way. At the same time LTE threatens to open a new front in the mobile substitution process (as mobile voice has displaced a significant amount of fixed network voice), the ways people behave might arguably be strengthening the value proposition for fixed access.

Oddly enough, the changes enhance the role of the fixed network role, compared to the role of the mobile network.

Ironically, as valuable as fully mobile access is, people often do not use the mobile feature as much as one might suppose.

In fact, as early as 2010, hugely significant percentages of total device access used the fixed network (Wi-Fi) rather than the mobile network,  Analysys Mason has argued.

Proportion of mobile network traffic that is generated indoors, by region

Ironically, just as 4G is starting to narrow the gap between mobile broadband and fixed broadband, users-perhaps reacting to the higher cost of mobile broadband-have been shifting their smart phone usage to the fixed networks. That works because most “mobile device” Internet access happens at home, with a significant percentage at other locations where it is possible to default ot Wi-Fi access.

That is not to say people would behave in just the same way if prices per bit were the same, on both fixed and mobile networks, and if usage allowances could be shared as easily on mobile networks as on fixed networks. All other things being equal, people probably would not care which network was used, if the cost of fixed data usage, and mobile data usage, were roughly equivalent.

The point is that, given the current circumstances, people are shifting most of their smart phone Internet access activities to the fixed networks, and appear to be doing the same with their tablets. One easily can argue that mobile service provider shared data plans are precisely an attempt by mobile service providers to narrow the value-price gap with fixed services.

At the same time, one might argue that fixed networks now account for half to 80 percent of all mobile device access, in addition to supporting all the other devices people traditionally have used on their fixed network services.

If, in a few years, as much as 90 percent of mobile Internet access uses a fixed network connection, one might also argue that most of the value of mobile broadband is devalued.  

One might argue that could, or must, lead to lower per-bit prices for LTE access, and higher per-bit prices for fixed services, since it is the fixed services that supply 90 percent or more of the value of all Internet access.

In that sense, saying that the value of the wired networks is backhaul, whether for for small cells, macrocells or Wi-Fi, does not devalue the fixed network, but highlights its new role.

In a large sense, the access network always has been about backhaul, if “access” to network resources can be described as backhaul. Also, in a large sense, all access methods, no matter what the final “tail” circuit might be, have simply been ways to connect an end user device to the resources of the core network.

In an odd way, that could be more true than ever in a world where most devices are either mobile or untethered, and even in a world where mobile broadband is reasonably fast, even compared to many other terrestrial alternatives.

Wouldn't it be ironic if faster mobile access both allowed mobile networks to compete with fixed networks, and, at the same time, value shifted to the fixed networks?

Users Now Create Their Own Access

In the latest sign that the distinction between public and private networks has blurred, the Federal Communications Commission now has decided private use of consumer signal boosters requires service provider approval for operation.

Signal boosters are used indoors, typically, to boost indoor mobile phone signal strength. Sometimes they are used in cars for this purpose, as well.

But the FCC now has decided that the signal boosters can interfere with wireless networks and cause interference to a range of calls, including emergency and 911 calls. So the FCC now has adopted new rules stipulating that use of such devices is contingent on non-interference to licensed mobile service provider signals.

Under the FCC’s new rules, users will need to register their booster with the customer’s wireless provider. Unless the mobile service provider agrees, the booster cannot be used.

Though aimed at preventing signal interference, the new rule illustrates the changing nature of access. Increasingly, users are weaving together a mix of access networks and techniques to create their own services, combining public and private access methods.

Wi-Fi networks are the best example, but the signal booster issue also is part of the same trend. What that might mean, or should mean, for other efforts, such as municipal broadband , will be hotly debated.

But there is no doubt that, in a genuine sense, end users now stitch together their own access networks and services, blurring and blending the lines between public and private. It is likely to get murkier over time, not clearer, what the precise mix of methods might wind up being. 

Widespread use of Wi-Fi is a prominent example. But potentially new allocations of spectrum for use on a non-licensed basis could be a big factor as well. New proposals for 5 GHz Wi-Fi  provide one example.

For a decade and a half, some observers have argued that Wi-Fi networks could emerge as alternatives or replacements for the mobile network. The speculation seemed to peak in 2002 and 2003, when there was lots of speculation about potential community or metro Wi-Fi networks. These days, Wi-Fi generally is seen as a complement to the mobile network.

Some might argue that the mobile network now is secondary, in some cases, to Wi-Fi networks.

Olivier Baujard, Deutsche Telekom's chief technology officer, says that in the Netherlands, “mobile” phones actually are used more as untethered devices. where 45 percent of traffic is from home, 45 percent is from work, and only 10 percent is while "walking, driving a car, taking a bus, or things like that." In other words, the mobile network is the access mechanism only about 10 percent of the time.

The ability to substitute Wi-Fi for mobile connections is less robust in areas of lower density, though. Buit Wi-Fi covers most of the places where people are, most of the time. Some 80 percent of the time, people connect to the mobile Internet from their home, office, or other indoor location—all areas that are addressable by Wi-Fi. Cisco says.

The other angle is that most of the apps people use are not specifically tied to “mobile,” on the go use cases. According to Cisco, about 66 percent of all smart phone application use involves email, web browsing, gaming, productivity tools or video calls that do not intrinsically involve a “mobile” use case.   

In addition, 80 percent of people's data traffic comes from just three cell phone towers--one near home, one near work, and one someplace in between, the Deutsche Telekom executive said.

Is 100-G About to Drive a New Wave of Core Network Spending?

"After ending 2012 on a flat note, things are looking up for the optical market in 2013," says Andrew Schmitt, Infonetics Research principal analyst for optical at Infonetics Research. "Our conversations with equipment providers continue to trend positive, particularly in North America where 100 Gbps spending is about to ramp. The general consensus remains that an optical cycle for equipment in the core is emerging, what we call the 'optical reboot.'"

"Meanwhile, there are positive rumbles in the EMEA region, where 2012 ended with a spending flourish and carriers are cutting dividends to plow capital into general capex," Schmitt says.

The preliminary indication for China is that 2013 also will be a huge year for 100G as well. China is about half of the global 40 Gbps wave division multiplexing equipment market, and 2013 will be the peak year for 40G worldwide, Schmitt says.

The global optical network hardware market grew two percent in the fourth quarter of 2012, quater over quarter, but was down 13 percent year over year.

For the full year 2012, total optical equipment spending was down 10 percent worldwide

The SONET/SDH optical segment fared much worse, falling 30 percent in 2012.