Showing posts from 2017

As Device, App, Platform Providers Move Down the Stack, Can Telcos Move Up?

The biggest business problem telecom service providers face is use of the internet, and internet protocol, as the core of the network. The issue is not technology, but the business model. By separating use of the network from ownership of the network, telecom has lost the ability to “control” applications running on the network, fears voiced by many notwithstanding.

That loss of control means inability to generate revenue.

“The role that telecom operators have played in accelerating digital business and service models for external industries, as well as their own initiatives to refocus business models, have not translated into new value for the operators themselves,” says a report by the World Economic Forum. “They now account for a smaller portion of the overall industry profit pool than five years ago and this share is forecast to fall even further.”

source: WEF
Telecom service provider share of the broader internet profit pool (including all other segments of the ecosystem, such as d…

2018 Global Telecom Revenue Trend is Unclear

Whether the global telecom industry will see revenue growth or revenue decline in 2018 is unclear. Analysts at the Economist Intelligence Unit expect a two percent decline in global revenue in 2018. Others expect slight growth, overall.
Older forecasts have tended to predict continued revenue growth. The issue is whether trends  are breaking, in an industry that has seen only growth for over a hundred years.
Fixed line voice accounts peaked between 2000 and 2003 in most developed markets, for example. Long distance revenue peaked in the U.S. market about 2000 as well. Mobility drove growth for the past few decades, globally but account saturation in developed markets has generally been reached.
According to the Organization for Economic Cooperation and Development, 2008 broke the growth trend as that apparently saw peak revenue, at least on a short term basis (seven straight years).
The hope, of course, is that big new sources of revenue will emerge in the 5G era, particularly related…

The Most Fateful Decision Made by Telecom Two Decades Ago

It has been nearly two decades since there was any serious debate in telecom circles about the choice of a next generation network, when the respective roles of internet protocol and asynchronous transfer mode  were evaluated.
The debate was resolved in favor of IP. Few decisions ever made in telecom have had greater implications. The reasons were almost stunningly simple: ATM proved to be too costly; less flexible; less compatible with the growing need to support IP-based end user devices, apps and services.
The biggest change is that where support for voice had been key, the new requirement was support for computer communications. In essence, the network was to become one giant computing network.
Traditionally, the debate had been about how to ensure quality of service. That was the ATM advantage. QoS for computing communications was a completely separate matter. But it seemed obvious enough that future networks would have to be optimized for computing, not voice, in any case. That c…

How Many Consumers Pay "Retail" for Internet Access?

It always is complicated to determine the actual cost of fixed or mobile network internet access prices. 

Absolute retail prices are one thing. Which products consumers typically buy is another matter. In other words, retail prices only matter if most people pay full retail. 

 And the whole point of bundles--multi-user or family plans, triple play or quadruple play--as well as promotional prices, is to give consumers discounts over the posted single-product rates. 

 What really matters, when assessing “typical cost,” is to look at the plans most people buy, not simply tariffs. 

It simply does not matter what the “most costly plans” happen to be, if few consumers buy them. Likewise, it does not matter what the “single product” price is if most consumers buy a bundle with effectively-lower real prices. 

 Access providers and consumers like triple play packages for different reasons. For access providers, such packages reduce churn, increase value and boost average revenue per account. 

 That …

AI, Deep and Machine Learning Matter, But How Much For Typical Telecom Professional?

It is difficult to explain why deep learning, machine learning or artificial intelligence is relevant for nearly all who work in the telecom industry, beyond the ranks of data scientists working at or with chip, app and platform suppliers creating services and products used directly by network operators.
That is not terribly unusual. Machine learning already is an underpinning of most major consumer internet apps (content, social networking, search) as well as a growing range of business apps.
That is similar to the way consumers have learned to use cloud computing, without knowing how their apps are based on use of the cloud. But that “invisibility” also makes hard the challenge of figuring out whether “most in the industry” actually need to know very much about machine learning, deep learning or AI.
“I have very little to say that would be of interest to a telecom audience,” one data scientist working on machine learning and deep learning told me, for example. He probably is quite ri…

Do Bananas Cost Too Much?

Even if some observers seem always to complain about how much internet access costs, that is a bit like complaining about bananas costing too much. Costs now have gotten so low (consumer or business internet access) that it is cumbersome to even bother using a metric such as cost per kilobit (kilobits per second).
We moved more than a decade ago to cost per megabit per second. Now we are moving to measuring in hundreds of megabits per second. In the future we will measure in terms of gigabits per second.
Around 1995, the cost of buying a business connection supporting a kilobit per second might have been US$1.50 to $1.75. In other words, a 56 kbps connection might have cost as much as $98 a month.
By about 2006, even consumer internet access costs had dropped to about two cents per kbps. So a 10 Mbps connection might then have cost the same as the 56 kbps connection of 1995. In 2017, U.S. 100 Mbps connections cost about the same as a 56 kbps connection of 1995.
As speed has grown and a…

New Role for Fixed Network: Backhaul and Feeder Functions

Going forward, communications infrastructure is going to take a perhaps-predictable path, many will argue.
At a high level, retail communications--globally--has become “mobile.” Though the role of fixed networks as a retail platform will remain more significant, dwindling retail revenue will force changes, including a huge need for lower-cost infrastructure, as revenue potential will be less robust.
source: Ericsson
Investment and revenue growth, on a global level, will shift to developing regions. The fixed network increasingly will take on the role of backhaul and trunking mechanism for mobile and wireless networks.
And despite the historic preference of fixed network operators for “smart” infrastructure, much of the global transport and access platforms will become simpler, with more intelligence at the edge, and less in the core.
For that reason, fixed networks will have to cost less.
At the same time, dwindling legacy revenues will force service providers to create big new revenue…

Will U.S. Fixed Wireless Access Revenue Be Bigger than U.S. Consumer Satellite Revenue by 2021?

Will the U.S. fixed wireless business generate more consumer service revenue than the U.S. satellite industry by about 2021? Possibly, if fixed wireless grows as much as some predict, and if one does not double count AT&T revenue.
Keep in mind that both fixed wireless and satellite are tails on a big telco dog. Total U.S. mobile service revenuesare on the order of $256 billion annually, with fixed telco revenues perhaps $100 million and cable TV revenues roughly $60 billion, representing annual industry revenues of at least $455 billion. Others might prefer higher figures.
Any industry segment with annual revenues in the single-digit billions represents a fraction of a percent of total industry revenues.

U.S. fixed wireless revenue will double from $2.3 billion to more than $5.2 billion, according to the Carmel Group. Accounts also will grow from four million at the end of 2016 to eight million by 2021.

source: The Carmel Group

Depending on how one chooses to count revenue, the fix…

Why Price Anchoring and "Price Per User" Might Explain Antipathy to Linear Video

In the internet era, where the expected price is "free," prices north of zero might be one reason why many people complain about linear subscription video prices. There is a big difference between $10 a month for Netflix and $80 for linear video, even if the products are not full product substitutes.
It is hard to tell whether perceived value or price anchoring are bigger drivers of dissatisfaction with linear TV services, even if the stated reasons for unhappiness tend to center on “customer service” issues, in addition to price.

People often complain about price increases for cable TV services that go up more than the general level of inflation. Yes, that is an issue. But consumer prices have been climbing since 1970 or so.

source: Bureau of Labor Statistics

I cannot remember a time (over three to four decades) when consumers actually reported “liking” their cable TV services. Most often, they tend to rank them very low, when compared to most other consumer products.

These …

IoT Networks Will Be Many-to-One

The architecture of coming internet of things networks is going to be radically different from the voice, consumer internet or business data network architectures. Those networks were built to support “point to point” communications from any node to any other node.
Irrespective of the access mechanism (mobile, Wi-Fi, other), the fundamental networking architecture of a sensor network (and therefore of  the internet of things) is “sensor to server,” not “point-to-point,” as was the architecture of the voice network or the early internet. source: Aeris
That is going to have consequences. The IoT networks will be the inverse of the point-to-multipoint satellite TV, cable TV, radio and TV broadcast networks.
In contrast with point-to-point, any-to-any networks, these broadcast or multicast networks are optimized for one-to-many communications in the downstream direction.
IoT networks will be optimized for many-to-one communications upstream to servers. If there are scores of billions of dev…

How Big Will Satellite IoT Be?

All executives from mid-size to enterprise firms in agriculture, surveyed by Vanson Bourne on behalf of Inmarsat, believe they will be using  internet of things apps and services within about five years.
Some 85 percent of executives in transportation industries believe they will be using IoT apps and services within five years, and nearly that many in the energy business. In the mining business, perhaps 65 percent of respondents believe they will be using IoT in five years.
You are not likely surprised by such findings. Given the hype around internet of things, it would be a rare executive who thought it “sounded right” to project no use of such capabilities.
Neither are you likely surprised that Inmarsat might sponsor such research. No less than other segments of the communications industry, satellite firms argue they will be relevant for IoT, largely because of coverage capabilities. Basically, that is the newest form of the “no one platform is best for all scenarios” argument.
It …