Showing posts from September, 2014

Will PayPal be Bigger than eBay?

That PayPal now is thought to be a business eventually larger than eBay, its parent, could explain why eBay is spinning out PayPal as a separate company. Pressure from activist investor Carl Icahn is an important trigger for why it is being done now, however.

The spinout also shows how synergies between firms sometimes are not as great, nor as strategically important, as initially claimed.
Auctioneer eBay bought PayPal in 2002, at a time when the immediate issue seemed to be that PayPal increasingly was the preferred payment mechanism for eBay shoppers.
More than a decade later, the synergies arguably are less obvious than originally thought. Over time, PayPal’s revenue has outgrown its eBay activity.
PayPal has more than 152 million active registered accounts, with growth of about 15 percent year-over-year.
Revenue over the last 12 months grew by 19 percent over the prior year period to approximately $7.2 billion, eBay says.
PayPal facilitates one in every six dollars spent online toda…

Will Facebook be an Internet Service Provider in 21 Countries by 2018 or 2020?

Facebook believes it will be able to provide Internet access to 21 countries in Latin America, Africa and Asia sometime as soon as 2018 to 2020. Whether Facebook would do so on its own, or perhaps in partnership of some sort with other entities is not yet clear.

But Facebook “becoming an Internet service provider” might be as disruptive for Internet service providers in those 21 countries as Google Fiber has been in the United States.

Facebook hopes to begin testing the first examples of solar-powered aircraft (drones) for Internet access in 2015, over U.S. territory.

Facebook also believes the commercial deployment of such unmanned aircraft to provide Internet access would not occur until three to five years after the completion of successful tests, according to Facebook Connectivity Lab Engineering Director Yael Maguire.

As currently envisioned, such aircraft would fly at altitudes up to 90,000 feet. Maguire claims there are currently no regulatory issues for planes flying above 60,000…

Is Low Customer Satisfaction a Result of Deliberate Strategy?

Sean Bergin, a founder of AP Telecom, just related a story that might explain why consumers rate their Internet service providers and video service providers so harshly. He explained that he used to spend $4,500 a month on his own phone, each month. That went on for years.

Finally, he found an alternative provider with a monthly recurring cost about half that much. That isn’t the point of the story, though. The point is that “not once” did his former service provider ever reach out to him to suggest ways to reduce his bills, offer a small token of recognition, or anything else, for a consumer account that big.
To be sure, anybody with knowledge of the economics of the consumer business would understand how difficult it is to create touchpoints of any sort with the “best” consumer accounts, to say nothing of the typical account.
Still, that anecdote probably explains why Vodafone is losing 100,000 customers a month in Australia, Bergin says. In 2011, Vodafone lost 500,000 customers. In …

"Follow the Money"

Rule number one when analyzing the telecom business is to “follow the money.” What service supplier executives, regulators, supplier executives or policy advocates might say provides clues about where value is perceived or business models are anchored.
Consider the issue of mobile roaming charges within the European Union. EU. A survey commissioned by the European Commission shows that 28 percent of those who travel in the EU switch off their mobile phone when going to another country.
Only about eight percent of travelers within the EC zone, who also reside in the zone, use their phones abroad in the same way as at home. About 33 percent of traveling EC area residents never use their phones at all when traveling outside their home countries, but within the EC.
Some 94 percent of Europeans who travel outside their home country limit their use of services like Facebook, because of mobile roaming charges, the survey also suggests.
About 47 percent report they would never use email or soci…

"Hybrid" Access Networks Continue to Make Sense

Historically, times of technology transition result in “hybrid” approaches. Once upon a time, sailing ships were outfitted with steam boilers as well.
Decades ago, building on pair gain technologies originally developed to support what we know as “T1 or E1” service, engineers began experimenting with Asymmetrical Digital Subscriber Line, essentially a modification of the method used for T1 service.
Initial results were not so promising. Some thought it never would be possible to make ADSL workable in real-world operating environments, even if some techniques worked in the laboratory.
Of course, once upon a time, engineers at Bell Laboratories also believed it was impossible to deliver 20 channels of analog video using a single pair of lasers. But systems delivering at least 80 channels of analog video eventually were developed.
Once upon a time, engineers doubted a high definition TV signal could be delivered in just 6 MHz of bandwidth. At the time, 45 Mbps or so was thought to be necess…

Is There a Grand AT&T Video Strategy?

Otter Media, a venture between The Chernin Group and AT&T, has purchased a majority stake in Fullscreen, a global online media company. That investment is a concrete step in the direction of creating the ability to deliver entertainment video over the top and on demand.

Otter Media was established by AT&T and The Chernin Group to invest in, acquire and launch over-the-top (OTT) video services.

Fullscreen, founded in January 2011, works with more than 50,000 content creators who engage 450 million subscribers and generate four billion monthly views.

But that move is only part of what AT&T is doing in entertainment video. AT&T obviously would like higher take rates for U-verse video. But AT&T also wants to buy DirecTV as well.

All that should raise questions about the possible grand strategy. Could DirecTV eventually become AT&T's "standard" linear video platform, while the fixed and mobile networks become the platforms for on-demand, streamed video?


Eventually, all ISPs Will Have to Shift Bandwidth from "Linear Video" to Internet Access

Why is high speed access the strategic foundation of future fixed network business models? That is where the enduring value lies. No matter how important mobile becomes, there are some applications and features a fixed network can provide better than any other alternative, including mobile networks.
Consider only end user demand for video entertainment. If one assumes that a typical television viewer watches four hours a day, and that, someday, that will shift largely to over the top delivery, huge new bandwidth demands result.
And the demand grows with image quality. With standard definition as the baseline, high-definition, 4K and eventually possibly-higher resolutions will put huge stress on access networks.
Before compression is applied, 4K video requires four times the bandwidth as HDTV. In some cases, the bandwidth required to support HDTV was about eight to 10 times that of a standard definition signal.
In other words, 4K video, delivered over the top, might require 20 Mbps to 45 M…