Connected Car Market Will Happen; How is the Issue

By 2022 there will be 1.8 billion automotive machine-to-machine Internet connections, including 700 million connected cars and 1.1 billion aftermarket devices for services such as navigation, usage-based insurance, stolen vehicle recovery (SVR) and infotainment, a new study conducted by Machina Research, and sponsored by Telefónica Digital, suggests. 

What people now do is multitask, using their smart phones, tablets or other devices as the “interaction platform,” is that is what they want to do. The connected car market might face similar challenges. 

People might decide all they want is for the autos to allow connection of smart phones to in-car peripherals such as screens. 

Think of “car phones” and you will see the problem. People like being able to communicate easily from wherever they are. 

But a dedicated car phone no longer makes sense. People just use their mobile phones. 

Machina Research predicts that by 2020, 90 percent of new cars will feature connectivity, growing from less than 10 percent today. 

In part, that is because connectivity will be necessitated by regulatory mandates such as the European Commission’s initiative eCall, which calls for a system to be fitted to all new vehicles by 2015, meaning emergency services will automatically be contacted and given the vehicle location in the event of a serious accident. 

But there are lots of issues if the communications are hard-wired into the auto itself. 

 Among the issues for automobile suppliers are ways to keep auto communication systems up to date, as new air interface standards are introduced, and as autos are built for global markets where air interfaces and networks are disparate. 

In other words, technology life cycles are different in the mobile and auto industries. Mobile networks tend to change every 10 years or so. Autos will be used for 15 to 20 years. 

Some requirements are obvious. Auto communications must be multi-mode, since autos might have to use 3G in some markets and can use 4G in other markets, with various flavors of 4G also an issue. 

So the car communications systems will have to roam. Largely unresolved are the business model issues, such as who pays for the connections. 

That’s another reason why allowing people to connect their own smart phones makes sense. 

Connected car sounds like a good idea. But so did “interactive TV.” People now “interact” while watching TV. They just don’t necessarily want to interact with the content directly, using some dedicated feature of the TV or the content.

In similar fashion, a connected car market likely will develop. Precisely how remains a very open question. Car phones seemed like a good idea at the time, as well.

Mobile Operating System Disruption is Possible, but How Often Can it Occur?

Apple and Samsung had 62 share of the 141 million U.S.-owned smart phones in the March to May 2013 period, comScore reports.

Apple had 39 percent of the installed base, while Samsung had 23 percent. HTC had nearly nine percent while Motorola had nearly eight percent and LG had nearly seven percent.

Though some will question how much benefit Google yet has reaped as a result of its Android initiative, Android ranked as the top smart phone platform in May 2012 with 52 percent market share.

Apple ranked second with 39 percent market share, followed by BlackBerry with nearly five percent, Microsoft with three percent.

And we sometimes forget how rapidly operating system preferences have changed. Until 2010, Symbian lead globally. At the beginning of 2008, Android wasn’t a commercial platform.

By 2010, Android had become the clear market share leader (sales, not installed base) globally.

For new challengers, including Tizen, Firefox and even Windows Mobile, such sudden changes offer hope that, under the right circumstances, a new operating system can disrupt the existing market.

On the other hand, challengers also must confront the size of the content and application ecosystems that the leaders have managed to build.

Mobile operating system disruption can happen, as we already have seen. The issue is how often, and under what conditions, such disruption is possible.

How Fast Will Asia Reach First World Levels of Broadband Access?

How long will it take for Asia to Reach "First World" levels of broadband access adoption and speed? The answer, of course, depends on where we look. Some would say a few nations in Asia already have surpassed most nations in North America and Europe.

But that's the point: Asia is too varied a place to describe in "average" terms, as it arguably includes both the nations with the fastest access as well as some nations with very low access speeds or adoption. 

 Hong Kong has average access speeds of 54.1 Mbps, while South Korea has average speeds of 48.8 Mbps. 

Malaysia, with an average peak connection speed at 18.2 Mbps, represents the average country. 

But Asia is a continent of wide dynamic range, where it comes to access speed. Africa, Europe, South America, and the Pacific (which includes Australia and New Zealand) all have a rather even distribution; consequently they have a median and an average that are both located near the middle. 

 In Asia, median (half of country speeds are higher, half are lower) and mean (arithmetical average) are not closely correlated. 

That tends to happen when a sample includes widely-disparate numerical values. 

 "Average" data consumption is that sort of distribution, as it is typical for a small number of users to consume very large amounts of data, while most users consumer relatively little.

So it is difficult to predict when "Asia" will reach "First World" levels of adoption or speed. Some nations in Asia already have surpassed most developed nations. Some are comparable, and some lag. 

But many predict huge adoption of Internet services in Asia over the next decade, as Asian Internet adoption rates already are the highest in the world. 

DirecTV wins LTE Spectrum in Columbia, Brazil

DirecTV Group has spent $45 million to acquire fourth generation spectrum in Brazil. DirecTV plans to use the spectrum to expand its Long Term Evolution business in Brazil.

And although the idea might meet with some skepticism elsewhere, DirectTV plans to use LTE to create a dual-play dual-play offer of entertainment video and broadband Internet access, using LTE as a rival to either digital subscriber line or cable modem services.

DirecTV's Sky Brasil subsidiary acquired 12 regional blocks of 2.5 GHz spectrum in Rio de Janeiro and Sao Paulo, as well as in Amapa, Bahia, Goias and Parana, Rio Grande do Sul, and Santa Catarina. DirecTV already had been selling wireless broadband in Brasilia.

DirecTV has four million video customers in Brazil.

Nor is the Brazil expansion the only wireless broadband effort DirecTV has launched in Latin America. DirecTV also has won LTE spectrum in Columbia.

In some ways, DirecTV’s business model is reminiscent of the way early LTE networks were launched, with “modem only” service initially, before LTE phones actually were available.

In DirecTV’s case, though, the focus on Internet access only is deliberate. LTE’s value is that it enables Internet access, not that it is a “mobile phone” network.

As with most to all observations about service provider strategy, the question of whether LTE can be a competitor to DSL or cable modem or satellite Internet access has to be answered in context.

In some markets, LTE will indeed prove to be a primary way for some service providers to provide Internet access. In other cases the business case will be less strong. But DirecTV's moves also illustrate that LTE is not "just" a fourth generation "mobile" technology.

It also can be a primary Internet access platform.

Two New Mobile Operators Authorized in Myanmar, Illustrates Asia Pacific Mobile Growth

Telenor and Ooredo (Qatar Telecom) each have won new mobile licenses in Myanmar, competing against existing providers Myanmar Posts and Telecommunications (MPT) and Yatanarpon Teleport Co.

The awards double the number of mobile service providers in Myanmar and are part of a government plan to dramatically boost mobile phone penetration from the current level of nine percent up to levels more typical of other South Asia nations.

In some ways, the Myanmar move is part of a broader trend, namely the emergence of the Asia Pacific region as the biggest communications market on the planet, measured in terms of subscribers, with the fastest growth rates.

Since the mid-2000s, it has been clear that the Asia-Pacific region will feature the greatest single concentration of communications customers and revenue mass of any region in the world, over the coming years.

So any supplier with ambitions to grow globally has to succeed in the Asia-Pacific region. That is a bit of a change from where growth drivers have been seen for much of the past decade.

Asia already by the mid-2000s was home to almost half the world’s fixed telephone subscribers. It had 42 percent of the world’s Internet users, and with 1.4 billion mobile cellular subscribers, it also had the largest mobile phone market share, according to the International Telecommunications Union.

By mid-2008, China and India alone had over 600 and 280 million mobile cellular subscribers, respectively, representing close to a quarter of the world’s total.

The Asia-Pacific region was the world’s largest broadband market with a 39 percent share of the world’s total at the end of 2007.

Telecoms retail revenue in the emerging Asia–Pacific (APAC) region was predicted to grow at a compound annual growth rate (CAGR) of seven percent between 2011 and 2016, according to Analysys Mason.

Both new service providers must build networks providing a minimum of 75 percent geographic coverage for each region and state, for voice services, five years after the effective licence date.

France Telecom (Orange) and Marubeni Corporation, bidding together, was selected as the alternate licensee, should Telenor or Ooredo not meet the requirements.

The license awards came as Myanmar’s Parliament unanimously voted to delay the process, in view of a proposed bill to revise the country’s telecommunications law, including a provision requiring all applicants to have local partners.

The new telecom bill would require all foreign companies bidding or operating in Myanmar to have a local partner.

Apparently, none of the winning bidders, or the The Orange-Marubeni consortium, have local partners.

Myo Swe, the member of parliament who proposed the vote, said the "industry risked being monopolized" if the winners were announced before a telecommunications law was in place.

Myanmar, with 60 million people, has mobile penetration of less than nine percent.

The 15-year wireless licenses take effect in September 2013 and would represent the largest foreign investment in Myanmar since a semi-elected government took power in 2011, ending decades of military rule.

In a way reminiscent of the 1980s cable franchising wars in the United States, applicants were campaigning for themselves across Myanmar, especially in the commercial capital of Yangon, the Wall Street Journal reports.

SingTel ads appeared on phone booths in Yangon while billboard ads appeared elsewhere.

Digicel was confident enough to have already begun hiring local staff in country.

Regulators Can Set Stage for Mobile Innovation, GSMA Argues

The crucial and strategic requirement for robust wireless, mobile or broadband economic, social and financial results at any given time will vary. Sometimes compelling applications are key. At other times a breakthrough device is the most-important enabler. At other times access to investment capital is the gating factor.

At times viable business models need to be developed, and consumer demand always is ultimately decisive.

But at other times, regulators must act first, before any of the other principal challenges can be tackled. That always is the case for services using spectrum, whether non-licensed, such as Wi-Fi or TV white spaces, or licensed services such as mobile services.

And that is a point the GSM Association now makes. To spur further advances in mobile services, “there is a need for creating a transparent and stable regulatory regime that engages all stakeholders in policy making,” the GSMA now argues.

In other words, stakeholders need stability so they can make long-term investments.

That also means more clarity about license renewals. Incumbents obviously want a presumption of renewal, rather than having to face new rounds of auctions.

“There is a need to create a robust spectrum management approach,” GSMA argues. That would include spectrum availability and pricing, as well as the ability to trade or share spectrum, among other foundational elements.

GSMA also wants timely release of spectrum and release in larger blocks. As you might expect, GSMA prefers the larger blocks because that allows providers to amass contiguous blocks of spectrum, and also reduces operator spectrum licensing cost.

As you would expect, the GSMA also argues the importance of “regulatory costs of doing business.”  GSMA argues taxes should be aligned to global benchmarks and should not have undue effect on demand (“sector specific taxes,” for example).

GSMA also argues that regulators “need to revisit commitments to the Universal Service

Obligation Fund (USOF),” in part because they may not be needed as much as in the past, and also because of “unprecedented” service provider margin pressure.

GSMA also argues that in the Asia-Pacific region, for example, regulators across the region should harmonize frequency plans for new spectrum, such as that to be created by the switch to digital television, which will free up spectrum across the region.

GSMA supports a  2x45 MHz band plan in the 698-806 MHz range, as a majority of countries already have committed to doing so.

Asia Will Lead M2M Deployments and Revenue by 2020

Asia will by 2020 be the foremost region of the world using machine to machine (M2M) technologies, a study sponsored by the GSM association predicts.

“The mobile industry continues to develop at an unprecedented pace and nowhere is this more evident than in Asia, a region that continues to experience tremendous growth and by 2020 will lead the connected devices and M2M market, both in terms of the number of devices and in terms of revenues,” said Michael O’Hara, Chief Marketing Officer, GSMA.

Machine to machine services will add up to $22 billion in economic productivity in China by reducing traffic congestion and therefore saving time, for example.

In India, M2M will, by 2017, help power the equivalent of 10 million homes by cutting power theft and improving efficiency. India loses 24 percent of the electricity it generates every year, costing the country $17 billion, with power theft accounting for around half of these losses.

Remote monitoring, disease management, and preventive medicine for the elderly could reduce Japan’s healthcare spend by $10 billion in 2017, and much of that benefit will come from M2M-based health care operations.

The Reason for "Mobile First" or "Mobile Mostly"

"Mobile first" or "mobile mostly" have become watchwords for application providers for one very good reason. People are using smart phones and other untethered or mobile devices for a growing percentage of their Internet and application activities.

Looking only at search, some analysts expect mobile search volume to surpass desktop or PC search volume by about 2015. 

Mobile vs. PC Local Search Volumes (BIA/Kelsey Forecast)

The ISP Speed Claim Dilemma

ISPs face marketing issues no different than other providers of goods and services, namely that consumers generally have some expectations about what features and what prices constitute a reasonable offer.

That means every provider wants to appear to have an edge of some sort, and at a minimum, to supply the baseline of features consumers expect.

ISPs have one additional problem, namely that their product is essentially intangible. As with any other intangible product or service, a consumer cannot fully evaluate product claims until after the product is purchased.

But it still is reasonable to argue that most consumers considering the purchase of an Internet access service will evaluate the advertised speed and the advertised price. That means there will always be pressure to advertise the highest possible speeds.

But consumer protection agencies and regulators do not tend to like exaggerated claims. That is why more attention now is focused on how closely ISPs are able to deliver on speed claims. And there might be more work to do on that score in Europe than in the United States.

Actual European Internet access speeds are about 74 percent of advertised speeds during peak hours, a new study sponsored by the European Commission has found. Recent studies by the U.S. Federal Communications Commission have found that U.S. ISPs deliver actual speeds about 96 percent of advertised speeds.

The average download speed across all measured countries was 19.47 Mbps during peak

hours, and this increased slightly to 20.12 Mbps when all hours were considered.

Performance varied by access network technology.

Digital subscriber line services achieved 63 percent of the headline download speed, while cable services managed to achieve 91 percent of headline speeds. Fiber to home or VDSL services delivered 84 percent of headline speeds.

Fiber to home services achieved the fastest speeds in absolute terms, at 41 Mbps. Cable

services achieved 33 Mbps, whilst DSL services delivered 7 Mbps, on average.

In the September 2012 testing period, U.S. ISPs on average delivered 97 percent of advertised download speeds during peak periods, statistically equivalent to the last report, which found that the studied ISPs were able to deliver 96 percent of advertised speeds during peak hours of use, the FCC has reported. Those results were in line with testing conducted in 2011 as well.

On average, during peak periods DSL-based services delivered download speeds that were 85 percent of advertised speeds, cable-based services delivered 99 percent of advertised speeds, fiber-to-the-home services delivered 115 percent of advertised speeds, and satellite delivered 137 percent of advertised speeds, the FCC says.

This compares to July 2012 results showing largely the same performance levels: 84 percent for DSL, 99 percent for cable, and 117 percent for fiber. These results suggest that many ISPs are meeting established engineering goals for their respective technologies.

It isn’t immediately clear why DSL networks in the U.S. market were able to deliver real-world speeds more nearly matching advertised speeds, compared to European DSL networks.

But a reasonable guess is that the gap is explainable almost entirely by ISP marketing claims.

The EC study says two countries did not achieve 50 percent of advertised speed. Those two countries primarily use DSL networks, but more importantly “advertised their services

using only a handful of very high headline speeds.”

Hungarian ISPs delivered actual speeds that were 94 percent of advertised.  DSL services also achieved over 90 percent of advertised speeds. So it appears the difference is the marketing of service, not something inherent in the networks.

Since DSL performance is directly related to loop length, experienced speeds for consumers closer to the central office will increasingly diverge from speeds experienced by consumers further away from the central office.

It makes quite a difference whether the typical speed at 1,000 meters is used as the reference, compared to 5,000 meters.

But loop length is not the only consideration for DSL or other providers. Contention ratios and the degree of sharing also will affect performance. ISPs simply need to market services that reflect all the known limits, if they want to deliver on promised speeds.

But that is the dilemma. A more-realistic set of claims might mean forfeiting an advantage to other providers.

SK Telecom Launches LTE Advanced at 150 Mbps

SK Telecom is launching Long-Term Evolution-Advanced service in South Korea, a move that will about double Internet access speeds over the existing version of LTE SK Telecom now is running.

The new network is theoretically capable of download speeds of 150 Mbps, using the amount of spectrum SK Telecom will have to support the new network.

LTE-Advanced, if enough spectrum is available, can deliver up to 1Gbps of downlink and 500 Mbps of uplink.

SK Telecom’s LTE-Advanced network will pair two blocks 0f 10 MHz to provide a 20 MHz carrier capable of 150 Mbps.In the future, SK Telecom says it will aggregate multiple 20 MHz carriers to achieve download speeds of 300 Mbps or more. To begin with, the service is available in Seoul, 42 other cities in the provinces of Gyeonggi-do and Chungcheong-do, and 103 universities. 

SK Telecom Launches LTE Advanced at 150 Mbps

SK Telecom is launching Long-Term Evolution-Advanced service in South Korea, a move that will about double Internet access speeds over the existing version of LTE SK Telecom now is running.

The new network is theoretically capable of download speeds of 150 Mbps, using the amount of spectrum SK Telecom will have to support the new network.

LTE-Advanced, if enough spectrum is available, can deliver up to 1Gbps of downlink and 500 Mbps of uplink.

SK Telecom’s LTE-Advanced network will pair two blocks 0f 10 MHz to provide a 20 MHz carrier capable of 150 Mbps.In the future, SK Telecom says it will aggregate multiple 20 MHz carriers to achieve download speeds of 300 Mbps or more. To begin with, the service is available in Seoul, 42 other cities in the provinces of Gyeonggi-do and Chungcheong-do, and 103 universities. 

Telefónica Adds Windows Phone 8 to Firefox OS Support, Wants Alternatives to Apple, Android

Telefónica is among global tier one mobile service providers that are acting to support mobile devices running on operating systems other than Apple and Android, by announcing a new program to boost sales of Windows Phone 8 devices.

Initially for a period of one year, Telefónica will enhance marketing activities in support of its Windows Phone 8 devices in the U.K., Germany, Spain, Mexico, Brazil and Chile.

Telefónica also is supporting devices running the Firefox operating system. In any part of the Internet ecosystem, there are natural tensions between participants, over revenue shares, influence or control.

Mobile service providers naturally believe app providers and device providers have too much influence, compared to the service providers, in large part because of end user affinity for certain apps or devices, which gives app or device suppliers leverage.

The long term issue is whether mobile service providers, who do have much sway over packaging and pricing, can really shift consumer preferences in a significant way, where it comes to device choices. People want what they want, when they want it, how they want it and why they want it.

And though it would be a very-serious step, tensions within the ecosystem sometimes can break out in more serious ways. Channel conflict is a perennial problem in technology businesses.

Branded ISP operations by Apple or Google could be an example of how natural tensions could become inflamed to a more significant degree.

Singapore is Looking at Authorizing 189 MHz of White Spaces Spectrum

Singapore’s Infocomm Development Authority now is working on the framework for enabling use of former broadcast TV spectrum (TV white spaces) in Singapore, making Singapore among the first nations (United States, Canada and United Kingdom also are among the early movers) looking to commercialize use of TV white spaces for Internet access services.

The U.S. Federal Communications Commission  is allowing white spaces operations on a license-exempt basis, with the management of such devices through a database.

The Office of Communications in the United Kingdom is adopting a similar approach. IDA is also considering adopting the same approach to facilitate the initial deployment of white spaces in Singapore.

The IDA also seeks input about whether some white spaces spectrum should be licensed, however, allowing those licensees to gain more certainty about spectrum for services that require something more like a traditional mobile service.

The IDA has allocated the VHF spectrum between 174 MHz and 230 MHz and the UHF spectrum between 494 MHz and 790 MHz for white space operations. A total of 21 MHz in the VHF band is available, including 181 - 188 MHz, as well as 209 MHz to 223 MHz.

There is more spectrum in the UHF band, including 502 MHz to 518 MHz, 614 MHz to  622 MHz, 630 MHz to 710MHz, 718 MHz to  742 MHz, 750 MHz to  774 MHz and 790 MHz to 806 MHz, representing a total of 168 MHz.

In all, 189 MHz will be made available, a huge amount of spectrum in highly-desirable frequencies.

IDA also is inviting views on allowing operation of white space devices in the 694 MHz to 806 MHz band until IDA allocates these frequencies for IMT deployment, set for 2020.

What Does Network Element Unbundling Promote?

Unbundling of network elements (either of full loops or parts of local access networks) has been touted as a reasonable way to enhance competition in markets where only one broadband access network dominates. Many will argue it has, in some markets, done so. 

But there also is new thinking that unbundling of network elements, and allowing competitors wholesale access to those network elements, at healthy discounts, has had a downside: namely reducing next generation network investment.

Perhaps oddly, some in the U.S. policy community have advocated adopting unbundling policies prevalent in the European Union, precisely at the point that the EU is moving away from some of the features of such policies, such as the amount of wholesale discounts, for example. 

Some of us might argue the shift in thinking is because new problems emerge in new periods of communications policy. Solutions to older problems might actually be problems in newer periods. 

In essence, that is why new questions are being raised in markets where widespread unbundling policies are seen as having succeeded in promoting competition. It is hard to solve new problems with yesterday's solutions, especially when the older solutions are directly related to the reasons the new problems exist.

Competition remains an issue, but is not the chief issue. The main problem is that the risk of investing lots of money in next generation networks is higher than ever before, because the returns from such investments are smaller and more uncertain that similar investments have been in the past. Investors dislike higher risk and uncertainty. 

The new issues are the ways unbundling and investment are related. U.S. regulators have supported mandatory narrowband service unbundling, but not mandatory broadband access unbundling. 

European policymakers, on the other hand, have applied mandatory wholesale rules to broadband and narrowband services.

The implementation of unbundling requires European regulators to make a challenging decision on access prices, balancing short-term consumer benefits (from low prices) and long-run benefits from investment and innovation, argue Martin H. Thelle and Dr. Bruno Basalisco of 
Copenhagen Economics.

"Several European fixed telecom incumbents have refrained from investing aggressively in next generation access networks due to regulation affecting the business case for 
fiber investments," they say. 

The problem is that the "unbundling approach does not suit the challenge of promoting investment in fiber-based infrastructure," they say.

Unbundling has created retail competition, but has not been effective at creating incentives for investment in next generation networks, said Roslyn Layton of the Center for Communication, Media and Information Technologies, Aalborg University Department of Electronic Systems.