Showing posts from February, 2015

U.S. ISP Profit Squueze Now is Likely

The decision on Feb. 26, 2015 by the Federal Communications Commission to preempt state laws prohibiting municipal broadband networks is but one example of growing competition in the U.S. high speed access market that arguably already was getting more competitive, thanks largely to Google Fiber.

Consumers will benefit, at least in the near term, as the actual presence of a third provider in a growing range of local markets both increases speeds and lowers prices.

Consider what is doing. It now is selling gigabit connections, with voice service, for $40 a month, submarining even Google Fiber pricing of $70 a month for gigabit high speed access.

Cumulatively, all the coming new competition, plus declines in mobile high speed access, are going to mean service providers must reduce their operating costs.

From 2010 to 2013, U.S. mobile data pricing (per unit sold) declined by only single digits year over year.

But in the first nine months of 2014, data pricing dropped by 77 perce…

Will Customers Pay for Two High Speed Networks--on Different Platforms--to Support Dual Routers?

If you have lemons, make lemonade, an old adage suggests.
For a high speed access provider with access to both cable TV hybrid fiber coax and wholesale fiber-to-home access, that might mean trying to add value to an offer by bundling access to both networks as part of a single high speed access subscription.
It’s unusual, but few service provider anywhere in the world have such access as does StarHub in Singapore.
So Starhub now is testing the notion that having two high speed connections, supplied by different networks, has value for Wi-Fi coverage, and therefore makes the Starhub “two connections” offer distinct in the Singapore high speed access market.
Essentially, StarHub is trying to wring more value out of a legacy HFC access network, now that it also has wholesale access to the fiber-to-home network in Singapore. Bandwidth really isn’t the angle.
It easily can be argued that there is actually little advantage gained  when a StarHub subscriber buys a S$69 per month gigabit acces…

Net Neutrality Rules Will Pass Today

The unknowns are the precise details, and even those won't be available for a few weeks. The rules would not take effect until 30 days after publication. 

Then there will be a short stay of the rules, as lawsuits are filed. Then, in all likelihood, the rules will take effect until the lawsuits are heard and decided. 

How much uncertainty will be created in the U.S. telecommunications business is an issue. 

Despite Robust Mobile Revenue Growth, Axiata Profit Drops 80%

An eight-year robust revenue growth streak has ended abruptly at mobile services supplier Axiata. The issue now is whether the dip is cyclical or structural.
In many key respects, Axiata Group now faces business issues identical to those faced by other mobile service providers, namely robust growth in mobile data revenues, offset by losses of voice and text messaging revenue.
But slower economic growth, foreign exchange issues and investments played a role in Axiata 2014 results as well.
Not even robust mobile data revenue growth of 50 percent was enough to overcome business headwinds faced by Malaysia-based Axiata Group in 2014, which had a full-year 7.9 percent decline in net profit on a 1.9 percent growth in revenue, where the target had been 10 percent.
Axiata has an 84-percent dividend payout ratio, so any dip in revenue has key implications for profits.
Total data revenue grew 31.5 percent year over year.
Slow economic growth, currency issues and heavy capital investment were note…

Cablevision Makes "Big Shift:" Now is a Connectivity Company, not a "TV" Company

Cablevision Systems Corp. now says its most important product is Internet connectivity. The corollary is that, at some point, “I would suggest that we'll probably be agnostic about the video and not about the connectivity,” said James Dolan, Cablevision Systems Corp. CEO.

In other words, Cablevision has become more agnostic about linear video and over the top streamed video. Cablevision also is clear that high speed access is the foundation of the coming business.
“Connectivity has surpassed video as the primary product for a company like ours,” said James Dolan, Cablevision Systems Corp. CEO. “The consumer values the connectivity product more than they do the video product at this point.”
That is a “big shift,” said Dolan. If given a choice of linear video or Internet access, consumers “almost overwhelmingly will take the data product.”
And though it remains to be seen whether the current vision is the ultimate vision, Cablevision does not currently seen its Freewheel Wi-Fi- based p…

An Illustration of Scale Benefits in Mobile

​Historically, North American mobile operators have invested twice as much capital per subscription as their global counterparts, according to analysts at ABI Research.
For 2015, ABI Research forecasts North America capital investment per subscription to be US$63. In comparison, Western European operators will invest US$34.
On the other hand, an argument can be made that U.S. mobile capex actually has been declining, on a per-account basis, for quite some time.
“In absolute terms, network investment has fallen quite sharply since 2004, and only rebounded partially in 2010 and 2011,” according to TMF Associates. “As a percentage of revenues, capex has fallen even further, and has roughly halved in the last decade.”
North American mobile operators invest 39 percent of capital on radio access networks. About 26 percent is targeted at in-building access.
ABI Research predicts North American and global mobile capital investment per subscription will decline, however, after a peak at US$224 bi…

Big Data is at Heart of Internet of Things

It is likely that big data, one of the big “hype” concepts just a few years ago, will find practical application as an integral part of developing Internet of Things and machine-to-machine applications that essentially gather data and then analyze it for application in real time, or near real time, to control the operation of devices, people and systems.
“IoT isn’t just about gathering data; it’s about using it to make better decisions — that’s the value of IoT, Verizon argues. “Regardless of whether the output is manual or highly automated, analysis of the data must be integrated into business processes. If the data is not actionable, by you or a third party, it’s not IoT.”

India Eliminates Fixed LIne Termination Rates, Cuts Mobile Termination 30%

Indian regulator TRAI has eliminated fixed line termination rates and cut mobile termination charges by around 30 percent. Notably, the reason for the fixed line termination charges for landline calls is that the fixed line voice business is in decline.
TRAI hopes the end of the 0.20 rupee ($0.003) termination rate for both landline-to-landline and landline-to-mobile calls will stimulate usage and subscriptions, and also lead to more investment in fixed networks.
TRAI also expects to reduce mobile network interconnection charges from 0.20 rupees to 0.14 rupees. That move is intended to stimulate mobile calling.
Those changes in the Indian market are not unusual. U.S. fixed network voice lines have been dropping since 2000. Globally, fixed voice lines have been dropping since about 2006.

Comcast's Next High-Growth Rate Business Will be Mobile

One way of illustrating the potential value of Comcast’s entry into the mobile business can be gleaned from looking at current revenue contributors, with their growth rates.

Of total 2014 Comcast revenue of $68.8 billion, $44.1 billion, or 64 percent, was generated by the cable communications business. Operating cash flow contribution from the cable communications segment was about six percent.
About 37 percent of revenue was generated by the NBCUniversal segment, which grew about 7.5 percent, overall. Operating cash flow from NBCUniversal was about 18 percent.
The main point is that gross revenue and operating cash flow from cable communications is tough, from a growth standpoint.
The consumer part of the cable communications business (triple play services) is growing primarily because of high speed access.
Video revenue for 2014 was up about one percent. Voice revenue was static at about 0.4 percent growth. High speed access was where the gains primarily were made, with growth of 9.…

80% of Smartphone Data Consumption Globally Now Uses Wi-Fi

Globally, Wi-Fi accounted for 80 percent of mobile and tablet data consumption, compared to data consumed on the mobile networks, at 20 percent, according to a new Mobidia report.
That explains the wide gap between reported “mobile data consumption” and actual end user data consumption on their smartphones.
Globally, smartphone and tablet users used in excess of 10 GB of data in December 2014, according to Ovum, up from about seven gigabytes in January 2014. That represents a 51 percent growth rate.
Apple iOS tablet users consumed about 12 GB, while Android tablet users consumed about nine gigabytes in December 2014, Ovum says.
Apple  iOS smartphone users consumed an average of about 11 GB of data in December 2014, just ahead of Android smartphone users with 10 GB. Consumers on Long Term Evolutin networks consumed even more data.
By December 2014, 4G Android smartphone users consumed 13 GB each month, dramatically higher than the 5GB/user/month of 3G Android smartphone users that month.

Mobile Drives 72% of Webpage Views in India

Mobile continues to drive Internet access subscriptions globally, accounting for 72 percent of all India webpage views in 2014, for example. 

Globally, mobile devices account for about 80 percent of all traffic, such as sessions, many would argue. 

But overall data volume still is driven by fixed devices. How much longer that might be the case is an issue. Experts still disagree about how to measure the relative weight of mobile and fixed access, in part because usage varies so much by region and country. 

Digital, Social & Mobile in 2015 from We Are Social Singapore

Was 2014 an Aberration, or the New Normal?

Was 2014 an aberration in the U.S. mobile business, or a harbinger? The answer matters.

From 2010 to 2013, U.S. mobile data pricing (per unit sold) declined by only single digits year over year. In the first nine months of 2014, data pricing dropped by 77 percent, according to industry analyst Chetan Sharma.

The other key inputs to the business model shows escalating numbers as well. Average (mean) mobile data consumption increased to about 2 Gb a month. Sharma notes it took 20 years for consumption to reach 1 Gb per month usage levels.

The increase to 2 Gb took about a year.

In addition to plunging prices (less revenue per unit sold) and higher usage (more network cost), marketing costs have grown as competition has become more intense.

Overall U.S. operating expense rose 20 percent, year over year. Income was flat while earnings grew three percent.

Among the positives, total revenue grew 21 percent to almost $400 billion.

Among the negatives, voice revenue declined 15 percent, messaging b…

Google Wallet to be Pre-Installed on AT&T, T-Mobile US, Verizon Android Devices

Google now is working with Softcard, the mobile payments service owned by AT&T Mobility, T-Mobile US and Verizon Wireless. As part of a new agreement between the mobile carriers and Google, the Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the U.S. market  later in 2015.
As part of the deal, Google also is acquiring “some technology and intellectual property” from Softcard.
Google does not appear to have bought Softcard, nor do the mobile carriers appear to have sold the business to Google.
On the other hand, since October 2014, when Apple launched Apple Pay, both Google Wallet and Softcard, which have failed to get much traction, seem to have concluded they need to move faster to counter Apple Pay.

Cable TV Firms Will Not be Able to Replace Lost Linear Video Revenues with High Speed Access Gains

For the past decade, U.S. telco and cable TV revenue sources have been a game of musical chairs: give up the chair you have and hope you can grab another when the music stops.
And everybody is playing. Telcos have relied on mobile services to replace lost fixed network voice revenues.
Cable TV companies have grown by adding voice, high speed access and business segment customers.
Mobile companies have grown by adding tablet accounts on top of phone accounts, while adding Internet access revenues to displace dwindling voice and text messaging revenues.
But it can be a difficult game if the new revenue sources are smaller than the lost revenue sources, or if profit margins are significantly less robust. And that might be a growing issue.
“Gross margin dollars will be lost in video, and will not be replaced by faster growth in broadband,” said Craig Moffett, Moffett Nathanson analyst.
That might be why firms such as Comcast and Cablevision Systems Corp. are planning--or have launched--mobi…

U.S. Mobile Market Structure Will be Shaped by Dish Decisions

As competitive as the U.S. mobile market has become--despite frequent protests that the market essentially is a duopoly--it almost certainly is going to become more competitive.
Strategically, Comcast is expected to enter the market, at some point. Cablevision Systems Corp. already has done so, though as a niche provider with greatest potential impact in its limtied home operating area. Comcast almost certainly will have to enter as a national provider.
Dish Network either must enter the market as an operator, or forfeit the rights to spectrum that presently accounts for as much as 80 percent of its total market value.
And then there are the other contenders, including Google, which it is believed soon will be entering the mobile market, and Apple, a perennial potential actor in the market as well.
But the biggest current question mark is what Dish Network will do.
Since nobody believes Dish will allow scores of billions in equity value to evaporate, Dish’s Long Term Evolution spectrum…

Study Finds Most Don't Understand Net Neutrality

A survey of U.S. consumers has found what you might expect, namely that few U.S. residents understand network neutrality. The Hart Research Associates survey found only 25 percent of respondents claimed they knew what network neutrality is.
Perhaps not surprisingly, 73 percent said they wanted disclosure of what the rules actually are, when told that “just five members of an unelected Federal Communications Commission will decide the future of the Internet without providing an opportunity for the public to see and understand the regulations prior to a vote.”
The wording of the explanatory note, most might suggest, was not “neutral.” So it might not be surprising that 80 percent of respondents wanted full disclosure of the ruling before a vote is taken.
Just 32 percent of respondents thought regulating Internet access like telephone services would be helpful.

Business, or Consumer, Few Actually Benefit from Really Fast High Speed Access

With the caveat that a business customer’s use of bandwidth differs from the pattern typical of a consumer customer, small business customers of Cogent Communications tend to use about 12 Mbps of the 100 Mbps services bought to replace T1 connections of about 3 Mbps, said BTIG researchers.
According to Cogent, only about 12 to 24, out of perhaps 17,400 customers ever have reached 50 percent utilization of the 100 MB pipe.  Likewise, customers who buy gigabit connections have usage that does not likely differ materially from 100 MB customers, according to Cogent.  
One might well argue that consumer consumption is growing faster than business customer usage, certainly. But Sandvine data suggests U.S. median household data consumption over a fixed network connection is about 20 Gb a month. Granted “Gbps” is a measure of speed, while “Gb” is a measure of consumption, but monthly consumption of 20 Gb does not suggest most households likely are taxing their access downlinks.
To be sure, hous…