Showing posts from 2015

With Fixed Network Revenues Cut in Half, U.S. Service Provider Strategies are Diverging

In 2002, the U.S. telecommunications industry’s gross revenues were $385 billion (including cable and satellite TV), and its net revenues (after interconnection costs, program content, and handset subsidies) were $315 billion.
By 2013, wireline gross and net revenue both had fallen by more than 50 percent compared to 2002.
Disruption of that magnitude is bound to affect core business strategy in ways that likely will lead to firms taking disparate paths forward. Vodafone started out as a “mobile-only” company that now operates both fixed and mobile networks.
Verizon started out as a fixed line provider that by 2016 should generate 85 percent of Verizon earnings (EBITDA).
In 2014, mobile contributed 70 percent of Verizon revenue, so that expectation is not out of line. In the first quarter of 2015, mobility contributed $22.3 billion in revenue and $10 billion in earnings. The fixed segment generated $9.5 billion in revenue and $2.2 billion in earnings (EBITDA).
AT&T had a similar prof…

105% Increase in U.S. Internet Access Speeds Over Last 12 Months; Cable TV ISPs Drive Almost All the Increase

With the caveat that mobile and public Wi-Fi now play growing roles in the U.S. Internet access function, the Federal Communications Commission now illustrates the power of the cable TV hybrid fiber coax network where it comes to rapidly increasing Internet access speeds, compared to use of telco digital subscriber line.
“When DSL is used to provide broadband service, the maximum advertised download speeds among the most popular service tiers has remained generally unchanged since 2011,” the FCC reports.
“In contrast, when cable is used to provide broadband service, the maximum advertised download speeds among the most popular service tiers has increased from 12-30 Mbps in March 2011 to 50-105 Mbps in September 2014.”
“We find that, over the course of our reports, the average annual increase in actual download speeds by technology has been 28.2 percent for DSL, 61.2 percent for cable, and 19.2 percent for fiber,” the Measuring Fixed Broadband report says.
“Generally, speed tiers at 15 M…

Words Matter

Words matter. YouTube says T-Mobile US is throttling its video. T-Mobile US has not directly responded, but T-Mobile US does process video, as part of its Binge On program, for bandwidth efficiency, in ways that can reduce image quality. The trade-off is that viewing Binge On video does not count against mobile data usage.
YouTube is not part of Binge On, so some think the issue is that T-Mobile US has not yet figured out a way to identify YouTube video content, one way or the other.
So is video encoding, for better bandwidth efficiency, at the risk of lower image quality, throttling or only processing?
Some might argue, oh by the way, that processing media types for better performance (lossless) is a good thing. Image degradation that is not asked for, or wanted, is not a good thing. But Binge On partners have agreed to have their video processed as part of the program.
Nor, some would argue, should content providers be prohibited from coding that actually boosts image quality or load…

Why IoT is Necessary

There is an easy way to illustrate why there is so much interest and effort in the mobile industry around “Internet of Things.” Simply, every other major product category is mature, or declining.
The next wave of products to drive revenue growth must be discovered or created, and IoT seems the best candidate for such growth.
Though we might not have always seen telecom products as having life cycles, that appears to be the case.
First fixed network voice, then messaging, then “talking” have experienced either declining usage, or declining revenue, or both. Now linear video entertainment also seems to be past its peak. The only two services that so far have defied decline are mobile service and Internet access, both of which continue to grow.
Mobile service revenues, which had been the growth driver for more than a decade, not have reached maturity in Europe, for example.
source: 451 Research

Will Reliance Jio Content Services be "Managed" or "Internet" Services? Why it Matters

As part of its effort to position itself as a “digital content” provider, not a mobile service provider, Reliance Jio has planned to emphasize video streaming and other content-related services.
To make that positioning work, Reliance Jio has planned to sell content that includes use of the bandwidth to consume it, on the model of cable TV services or the delivery of Amazon book content to mobile data-equipped readers without a separate mobile data charge.
In present beta tests with employees, Reliance Jio is giving “employees access to numerous applications for free,” including Jio Beats (a music app), Jio Drive (a cloud service to store digital content), and Jio Play (entertainment app) featuring movies, for example.
One wonders whether a storm of controversy (unwarranted, some will argue, as has been the case of opposition to Free Basics) will erupt over the practice of allowing “no extra charge” access to content.
Much could hinge on whether the content access is a managed service

There is a Private Interest Corresponding to Every Public Policy. Always.

With the caveat that there are some important and foundational elements embedded in ongoing debates about what network neutrality, should, and does mean, many of the arguments around programs such as Free Basics, or sponsored data or even any third-party-supported access and usage inherently are arguments about sources of perceived advantage in the Internet ecosystem.
That is unavoidable, as every public policy decision inherently has implications for commercial advantage, favoring some in the ecosystem to the perceived detriment of others in the ecosystem.
That is why at least some seem to object to Free Basics or any sponsored data programs. Whatever the stated public policy rationale, it often seems as though the sub rosa objective is to restrain some other major participant from making further gains.
We should not object to contenders fighting for their own interests. That’s life. But it sometimes seems as though the veiling of “interests” as “good public policy” is a problem only …

LIke it or Not, Oligopoly Often is the Only Possible Market Structure

Once upon a time, fixed network telecommunications was thought to be a “natural monopoly,” akin to roads, bridges, sewer services, water and electrical services.

In many markets, that clearly is not true. There is at least some room for facilities-based competition, though the number of viable contestants will be limited.

So fixed and mobile telecommunications are best thought of as oligopolistic, where only a few leading suppliers actually can exist in a market.

There are key implications. It likely never will be possible for more than a few facilities-based competitors to survive in any market.

That naturally will lead to thinking about regulatory policies based on robust wholesale obligations. The downside: robust wholesale tends to depress both investment by the existing carrier, and market entry by new carriers.

So the issue is not monopoly versus widespread market entry, but between monopoly and the best-possible (sustainable) level of competition among a limited number of contest…

Why Amazon Cares about Drone Delivery

There is a very simple reason why Amazon is interested in commercial drone delivery services. For parcels weighing less than five pounds, the thinking goes, Amazon could potentially cut delivery costs up to an order of magnitude, compared to using UPS Ground, or “only” about nine times less than same-day shipping, or five times less than U.S. Postal Service one-day shipping.
Such changes also illustrate channel conflict. By internalizing delivery cost, and using a new platform. Amazon slices its distribution costs dramatically. Of course, that means less business for one of its traditional delivery partners.
Channel conflict dangers never fully disappear, in any business.
source: Business Insider

How Much Advantage Does Quad Play Provide?

Just how much advantage--beyond the free cash flow--AT&T will derive from DirecTV remains unclear. In some large part, one’s optimism or pessimism is driven by one’s beliefs about the coming power of quadruple play offers.
Many are skeptical of consumer demand for bundles of fixed services and mobility, while others, including cable TV operators, believe quad plays will drive both customer acquisition and loyalty.
To be sure the actual benefit of triple play offers has been driven by consumer discounts for buying the bundle, and not necessarily some new service or app potential based on the buying of voice, video and Internet access.
The issue for AT&T might be the extent to which that also extends to the quad play, while mobile services are added to fixed network services.
Count Walter Piecyk of BTIG Research among those who remain skeptical about the benefits AT&T can wring out of DirecTV. The upside?
DirecTV has 15 million customers who don't use AT&T for mobile …

OTT "Versus" Mobile Operators is a Dead Argument

“OTT versus operators is dead,” argues John Strand, Strand Consult principal. “Partnerships will flourish, if not regulated out of existence” by regulatory bodies.
His argument is quite simple: “the two players need each other, and OTTs know it.” The argument, in broad outlines, is not new. Though some access providers have attempted to create their own over-the-top voice and messaging services, that generally has not worked well.
Instead, one might argue, there is more opportunity for collaboration in all other areas, where access providers might well find it fruitful to partner with OTTs.
You might think of what is doing around the world with mobile service providers, partnering to provide “Free Basics,” a suite of Internet apps that can be used by anyone with a smartphone, or in many cases even feature phones, without a mobile data plan.
The idea is to allow people to sample the value of the Internet, on the assumption that many people will discover they want to use the …

Growing Mobile Substitutiion for Internet Access?

Fixed-line and mobile voice connections are generally perceived by consumers as product substitutes, it is easy enough to argue. Whether that can broadly be the case for mobile and fixed Internet is the bigger question.

The extent to which mobile can be a functional substitute for fixed access is a more complicated issue, in part because of the value-price relationship. Mobile Internet access historically has been slower than fixed access, while the cost to use a mobile gigabyte of data generally is far higher than use of a fixed network gigabyte.
Nevertheless, there are growing instances where fixed and mobile Internet access are more-nearly functionally the same. Such mobile substitution has grown in the U.S. market, for example
For Deutsche Telekom customers,mobile Internet access speed--since 2014--has generally been faster than what is available on the fixed network.
Some usage scenarios already are clear enough. Where the cost of fixed network Internet access is non-economical, m…

Reliance Communications Halts Free Basics, at Least Temporarily, After Government Request

The Telecom Regulatory Authority of India has asked Reliance Communications to stop the Free Basics service, at least temporarily.
"We have asked them (Reliance Communications) to stop it and they have given us a compliance report that it has been stopped," a senior government official said, the Times of India reports.
It always is hard for any firm regulated by a government entity to resist such "requests."
Free Basics, called by many a zero rated approach, allows mobile consumers to use and sample a selection of Internet apps without incurring a data plan charge, or even if they do not have a data plan.
In India and elsewhere, including the United States, regulators, policymakers and policy advocates have been arguing that zero rated apps are a violation of network neutrality principles.
Others argue the practice is a business policy, like offering coupons, discounts and other promotions.

In the United States, the Federal Communications Commission has requested more…

Internet Access by Smartphone Now Depresses Fixed Network Internet Access

As wireless substitution has been a major trend in voice communications, it now is measurably an issue for high speed access as well.
About 67 percent of U.S. adults have access to fixed network high speed Internet access, according to the Pew Research Center, down slightly from 70 percent in 2013.
Reliance on mobile Internet access appears to account for the change. More Americans are “smartphone-only” in 2015 than was the case in 2013.
Some 13 percent of adults rely on their smartphone for online access at home, up from the eight percent who did so in 2013.
The increase in “smartphone-only” adoption largely corresponds to the decline in home broadband adoption, according to Pew Research Center.
Smartphone adoption has reached parity with home broadband adoption (68 percent of U.S. adults report they use a smartphone, the same percentage as report using at-home fixed network Internet access.
The bottom line is that 80 percent of U.S. adults have either a smartphone or a home broadband …