Showing posts from December, 2016

Why Mobile Video Might be So Important

Most U.K. consumers now buy at least parts of a bundle of services (internet access, voice, video, mobile), EY study found. Some 93 percent of U.K. broadband households now have some form of bundle, EY found. That same study also found that TV and mobile bundles score best in terms of satisfaction and loyalty.
That is an indicator of why Verizon, focusing more on becoming a mobile advertising platform for video services and app, and AT&T, which is more intent on becoming a force in mobile content delivery, are working on mobile content delivery systems. If the U.K. preferences wind up being seen in the U.S. market, then the “best possible” bundle will be video entertainment plus mobile service.
At the moment, the most-popular U.S. bundle likely is “internet access plus TV.” That is a preference parallel to “mobile plus TV,” with one twist. Where the most-popular fixed network bundle arguably is TV-and-internet, the most-popular mobile package could naturally become “mobile voice, …

Business Model, Not Technology, is Key to Mobile Substitution for Fixed Net Internet Access

As much as platform capabilities underpin mobile substitution for internet access, fundamental changes of business model are more important. In the U.S. market, for example, the packaging is quite different.
Mobile broadband is priced according to usage, generally in the form of buckets of use. Fixed internet access is priced based on speed (faster speeds cost more), but usage allowances are big enough that usage effectively is “unlimited.”
In other words, mobile retail packaging is based on usage, while fixed access is packaged on “speed tier.”
That poses a key problem for mobile service providers who want to encourage users to substitute mobile access for fixed access: packaging has to replicate what consumers presently expect. That means a shift away from “usage-based pricing” and towards “speed-based pricing” to a large extent.
Some glimmers of that already can be seen. As the tier-one mobile operators move to encourage consumption of video services on mobile devices, they increasing…

What "EBITDA" Instead of "GAAP" Profit Tells You

Without wanting to be unduly bearish, the global “telecom” industry is less healthy than it appears. Consider only the shift that has to be made in describing “profit.” According to Ericsson, global revenue will climb about 2.4 percent each year to 2018, with growth of earnings “before interest, taxes, depreciation and amortization” of one percent to 2018.
That shift from “generally accepted accounting principles” to EBITDA tells the story: the global telecom industry no longer is “profitable” in the GAAP sense.
Companies that operate in capital intensive, such as telecom, “do not give investors accurate depictions of performance through the EBITDA margin,” says Investopedia. In other words, in capital-intensive telecom, EBITDA is inaccurate as a measure of operator performance.
That is why “generally accepted accounting principles, or GAAP, do not include EBITDA as a profitability measure, and EBITDA loses explanatory value by omitting important expenses,” the site says.
Revenue is im…

Mobile is Least-Favored Retail Payment Method, Survey Finds

Retail mobile payments have developed rather more slowly than many have predicted would be the case. The basic objection has been that switching from existing retail payment methods to mobile payment adds too little value to drive rapid switching. That seemingly remains the case.
Security and privacy remain the top stated consumer concerns, though an argument might be made that the real reason is that the innovation simply does not yet add enough value to be worth the “bother.”
When asked about which forms of payment they find most secure, cash topped the list of responses to a survey conducted by Walker Sands. Some 46 percent indicated that was a concern.  Credit cards were cited by 27 percent as “most secure,” while debit cards were seen as most secure by 22 percent of respondents.
Mobile payments ranked last each of the past two years, at one percent, in terms of “preferred method of payment.”
The majority of consumers cite security (61 percent) and privacy (58 percent) as the two pr…

OTT ARPU Might Matter More than Number of Accounts

The decline of the U.S. linear subscription TV revenue might happen slower than you think, for a number of reasons. Between 2016 and 2019, for example, though the number of over-the-top subscriptions will grow--boosting the number of active accounts by perhaps 12.7 million units, according to eMarketer--revenue will not change as quickly.

To be sure, OTT account volume already has surpassed linear account volume. U.S. linear subscriptions in 2016 represent about 93.8 million subscriptions. Assuming linear accounts do not grow, or decline too fast, that might mean OTT, already the share leader in terms of total accounts (93.8 million 2016 linear accounts and 187 million OTT accounts), will represent as much as 68 percent of all video entertainment subscriptions.

But average revenue per account is highly disparate. Where a U.S. linear around drives between $80 and $120 a month in revenue, an OTT subscription might drive $7 to $11 per account, per month. In other words, linear accounts c…

Will Connected Car be the "Next Big Thing?"

The broad trend in the information technology business, and for many consumer products, is that more value is generated from services rather than the core products. That is likely going to be true in the auto business as well, with revenues and profits shifting from hardware (cars) to software, from products (vehicles and accessories) to services.
Mobility services, though perhaps shrinking as a percentage of total ecosystem revenues, might well increase as a percentage of ecosystem profits. That is one reason some tier-one mobile operators are so focused on connected car services.
For AT&T and Verizon, the carrot is that the United States is expected to be the single largest connected car market in 2022.

source: pwc
source: pwc

source: pwc

Softbank OneWeb Investment Poses Challenges in Every Rural Market

Softbank’s big investment in OneWeb, taking a 40-percent stake for $1.2 billion, almost assures that the proposed low earth orbit satellite constellation will launch. There are some other direct and potential consequences, especially a change in the business models of some or all other existing internet service providers.
The revenue model for fixed networks has been getting worse for decades, as customers for voice desert, leading to a stranded asset problem that worsens. Also, in most parts of the world, most people get internet access using their mobile phones, not the fixed network.
In the United States, internet access has become a product segment dominated by cable TV companies. Video entertainment always has been a tough business for smaller cable operators or telcos, as they do not have the scale required to drive costs out of the business. And linear TV is, by every estimate, mature and declining.
You might think OneWeb, which plans to blanket every inch of the earth’s surface…

What Seems to Have Been Key Business Model Issue for Google Fiber?

To the extent that Google Fiber has found its business model unattractive, the issue remains “why?” Any number of issues could have been contributors, ranging from take rates to construction cost. But take rates are the most-likely source of trouble for the business model, both for the core internet access product and video services.

Expectations for Google Fiber once were much higher. A 2013 survey found that about a third of households had subscribed . A 2014 survey commissioned by Bernstein Research conducted a door-to-door survey of five Kansas City neighborhoods where Google Fiber was being sold, finding  take rates as high as 75 percent, in some neighborhoods.

In Wornall Homestead, the highest household median income neighborhood ($116,000 annual income) Bernstein surveyed in 2014, it found that 83.1 percent of respondents were taking Google Fiber service. About 15 percent were subscribing for the “no charge” 5-Mbps service, but all the rest were buying the gigabit service.


Canada Wants 50 Mbps Internet Access in Rural Areas

As has been obvious for some time, internet access now is the primary “basic” function of a fixed communications network serving consumers. So it is that the Canadian Radio-television and Telecommunications Commission (CRTC) has “declared that broadband access Internet service is now considered a basic telecommunications service for all Canadians.”
As a practical matter, that now means the CRTC is shifting its regulatory focus from wireline voice to broadband services, including shifting universal service funding from voice to internet access. In addition to focusing the annual $100 million universal service fund from voice to internet access, the CRTC also is creating a new fund that will invest up to $750 million over and above existing government programs, for a period of five years.
The CRTC also has set targets for the basic telecommunications services requiring speeds of 50 megabits per second  downstream and 10 Mbps upstream for fixed broadband Internet access services.
As you wo…

Alphabet Now is a Big Spender on Federal Government Lobbying

It is common for telecom attorneys--in the context of any discussion of spending by AT&T on lobbying--to make jokes about "that's all they spent?" But lobbying is big business for any number of industries and associations whose members are directly affected by federal government decisions. Most recently, internet application firms have climbed into the top ranks of spenders, a reflection of the new importance national policies affect the core technology business.
Alphabet spent about $16.7 million lobbying the U.S. Federal government in 2016, a level that likely exceeds spending even by heavily-regulated telcos such as AT&T. Other leading technology firms also were in the top ranks of spending on lobbying, even if people more often assume it “must” be AT&T that is spending the most. AT&T and other access services firms also spend a significant amount at state levels as well. Some argue that lobbying spending is even more intense in the defense, pharma and …

Windstream to Discontinue DSL Service for a Few Accounts

Windstream plans to discontinue local exchange and digital subscriber line (“DSL”) services for some 300 residential and small business customers in the states of Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, New Mexico, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Texas, Utah, Washington and Wisconsin, because “the services are being provided on equipment that is at the end of life, it is no longer supported by vendors and replacement would be cost prohibitive.”
It would be wrong to imply too much more than that Windstream has concluded it simply cannot earn a profit from serving those 300 customers. Any consumer customers served by Windstream in those “out of market” areas virtually certainly do not generate a profit.
Few competitive local exchange carrier operations using leased access could do so, either, which is why so few CLECs (except for cable TV companies) serve consumer a…

400 Million M2M Modules to Exceed 400 Million in 2021?

Mobile machine-to-machine module shipments--including modules using the narrowband Internet of Things (NB-IoT) platform--will exceed 400 million in 2021, ABI Research forecasts.
DT, Vodafone, China Mobile and China Unicom, for example are planning NB-IoT network availability as early as 2017,
Tracking, as well as simple thing monitoring and control, will be the primary application segments for NB-IoT, ABI Research estimates. Those apps likely will include parking and supermarket checkout apps.
KPN, Orange, SK Telecom, and Softbank also are building rival LoRa networks first, though not on an exclusive basis, as those carriers likely also will support Category M Long Term Evolution or NB-IoT standards.
North American mobile operators are focusing on Cat M platforms. Longer-term forecasts for M2M deployment have been robust. As typically is the case, the forecasts will prove too optimistic in the near term, but possibly even too conservative longer term.
source: Connected World
source: M2…