Showing posts from November, 2014

UK Telecom Market On Verge of Major Consolidation

After BT began moving towards an acquisition of either Telefonica SA’s O2 or EE, the wireless carrier co-owned by Orange SA and Deutsche Telekom AG, a Vodafone reaction was virtually certain.

Vodafone arguably cannot allow BT to amass that much revenue scale and bundling capability without the ability to match future BT offers and market share, as the U.K. telecommunications market would lurch towards a two-tier structure with BT possibly able to climb up to the top of the market share standings on the basis of new product bundles, while the other providers are left to compete with product offers less broad.

The example is the U.S. market, where most consumers buy a bundle of services including high speed access, voice and video entertainment, while some also add mobile service quadruple plays. The standard market offer, in that case, becomes the bundle itself, and less the discrete product components.

Bundling also deters customer churn, a key value in zero-sum markets where one servic…

EC Wants to Raise $393 Billion Investment Fund for Instructure, Including High Speed Access

How much leverage can the European Commission gain from a €21 billion loan fund for infrastructure projects? The answer to that question is the key to a new proposal by EC President Jean-Claudaine Juncker to spark total investment of about €315 billion ($393 billion) in an effort to ignite economic growth.
At its heart is a new €21 billion fund that would give the European Investment Bank the ability to loan a multiple of that amount.
The new European Fund for Strategic Investments (EFSI) would be a partnership with the European Investment Bank, receiving € 16 billion from the EU budget, combined with € 5 billion committed by the EIB.
Key to the claim of an eventual lending capability of $393 billion is a multiplier effect of 15 on the initial funding. In other words, the availability of the “seed funds” backed by the EC would encourage other private lenders to contribute up to €252 billion in private loans.
The effort will strike some as reminiscent of the search for “shovel ready” p…

Hard to Say Whether LTE Boosts Revenue for Mobile Operators

Long Term Evolution, in some cases, is boosting mobile service provider revenues in a direct way, as was hoped. In many other cases, LTE provides indirect revenue value, even when 4G prices are not formally higher than 3G data access prices.
Bharti Airtel, for example, now has started offering an LTE data plan which is even cheaper than the equivalent 3G plan.
But South Korean operators are generating significantly increased revenue from their 4G customers. EE, in the United Kingdom, likewise seems to be generating incremental recurring revenue from 4G services.
In France, Free Mobile introduced a 4G offering at no additional charge to its existing 3G service, forcing rivals to lower their 4G tariffs.
3UK is allowing customers to migrate to 4G without switching from their 3G contracts and will continue to offer unlimited data allowances. Telefonica Movistar in Spain also is offering 4G at the same price as 3G.
Of 65 LTE mobile operators surveyed by GSMA, almost half of them have used the …

EU Reconsiders Network Neutrality

One of the problems with  “network neutrality” continues to  be that nobody agrees about what we are talking about. Now there is a potential change in European Union policies regarding “network neutrality” that essentially recognizes that it cannot be defined in a way that all 28 EU members would accept.
A new document issued by the EU president in fact suggests the “removal of the definitions of ‘net neutrality’ and ‘specialized services’” from any future policy documents.
The proposal suggests that, instead of defining network neutrality, policies only point to the objectives of net neutrality. It isn’t clear how a government agency can create or enforce a policy about a practice that is not defined, some might argue.
The inherent difficulty of the subject is further illustrated by the handling of traffic management principles--which always mean the potential for managing traffic flows to protect overall network performance under conditions of congestion. “Clear principles for traff…

"Don't Worry" Said the Spider to the Fly

"'Will you walk into my parlor?' said the spider to the fly, in the poem by Mary Howitt. Will you carry me across the river, the scorpion asked the frog. You know the stories: the spider eats the fly; the scorpion stings the frog.
Google’s Project Loon, intended to supply Internet access is not competitive with other Internet service provider businesses, some might claim.
“Loon isn’t disruptive,” said Mohammad Gawdat, Google’s X VP said. “This is outside the infrastructure you are currently building.” But Google, he said, plans to launch Project Loon commercially in 2016, “covering every square inch of the planet.”

Telefónica Weighs Major Investment in BT

Telefónica appears to be angling for a deal giving it 20 percent ownership of BT, while returning O2, the asset formerly representing BT’s mobile business back to BT.
BT got out of the mobile business in 2002, which BT had started in 1985, as a short term measure to shed debt. BT was not the only firm to be forced to do so.  
One of the most surprising telecom asset sales of the past couple of decades would seem to be AT&T’s sale of its cable TV assets in 2002 after assembling them in 1998 through 2000, and the spin off of its mobile assets in 2001 (after acquiring the McCaw Cellular business in 1994).
Given the current thinking about the strategic value of high speed access, the dominance of cable-based high speed access, mobility as the growth driver within the broad telecommunications business, and the contribution video entertainment services are making as part of the triple play bundle sold by telcos, the asset dispositions by AT&T an BT might appear to have been untimely,…

LTE: A Race Nobody "Wins"

Some might argue it is a waste of much time to argue about which region or nation is "ahead" or "behind" on some measure of communications usage, performance or investment. The reason is that the metrics always change, and that there are multiple relevant metrics.

There is, in other words, no sustainable advantage. 

One often hears it said that "the United States is behind Europe on high speed access speeds and prices." It depends on whether one compares the plans people actually buy, for example, no matter what existing plans are offered. 

It does not matter what the typical lowest, median or most-expensive plans actually are, if most people do not buy stand-alone high speed access plans, as is the case in the U.S. market, where most buy triple-play packages. 

Among the other issues are variations in national prices for all products and services. On a percent of monthly income, or yearly income basis, U.S. high speed access costs as little, or less, than sim…

U.S. Mobile Spectrum Prices Quadruple Since 2006

U.S. mobile spectrum prices have quadrupled since 2006, one sign of the growing need for mobile data resources. In 2006, prices were 56 cents per potential customer (MHzPop). The current auction for AWS-3 mobile spectrum already has reached levels of $2.10 per "MHzPop" (price of one megahertz of bandwidth per potential customer).

The price per MHzPop is derived by multiplying the number of available megahertz of bandwidth covered by a license by the number of people in the area covered by the license.

If a license of 15.0 MHz reached a million people, with a bid price of $11.4 million, the price per MHzPop is $11,400,000 divided by (1,000,000 people x 15 MHz), or 76 cents per MHzPop.

To put the current bids into perspective, the $34 billion staked so far represents about a year’s worth of capital investment by AT&T Mobility, Verizon Wireless, T-Mobile US and Sprint, put together.

So far, one can only speculate about why prices have been so robust, as the identities of bidd…

Zero Rating is a Normal Part of Content Services, on Internet, or Not

Ironically, zero rating of Internet apps--opposed by some because it favors some apps over others--is a standard practice in other parts of the media and content universe. Consider newspapers, magazines, broadcast television and broadcast radio, which are zero rated.
Some argue zero rating is unfair because it favors some apps over others. One could make exactly the same argument about TV and radio stations, newspapers, books or magazines. Ownership of broadcasting licenses, or simply editorial discretion, favors some content providers over others.
How regulation of Internet access fosters or hinders application and software innovation is a legitimate policy concern. But there are huge private financial interests intrinsic to the policy concerns.
Zero rating is about revenue models, for example. Many app suppliers subsidize content consumption by selling advertising, and not charging end users directly. Zero rating is another form of doing that, especially where an app provider and a s…

U.S. Cable TV Companies Gain 83% of Net High Speed Access Customers

The largest U.S. cable TV companies accounted for 83 percent of net high speed access  additions in the third quarter of 2014, continuing a trend that has been in place for some time.
Of some 700,000 net new subscribers, cable TV companies added 580,000 net new customers, according to Leichtman Research Group.
The largest U.S.  telephone companies added about 120,000 net high speed access subscribers in the third quarter of 2014, a figure complicated by customers adding fiber connections and dropping all-copper digital subscriber line connections.  
Those figures are based on tracking of performance by the 17 largest U.S. cable TV and telephone companies that represent about 94 percent of all subscribers in the market.
Those suppliers now account for 86.6 million subscribers, with cable companies having over 51.2 million broadband subscribers, and top telephone companies having nearly 35.4 million subscribers.
The telco performance requires some explanation. Where copper facilities have n…