Showing posts from July, 2017

An Industry You Might Not Recognize is Coming

A world and an industry you might not recognize is coming.

New Censtorship Threats to Internet

Though the relationship is not entirely linear or always obvious, commercial freedom is related to political freedom.
Consider network neutrality. The original thinking by the U.S. Federal Communications Commission was that internet freedom (commercial freedom of app and content providers) required “no blocking” of all lawful content.
Ironically, some might argue, later extensions of network neutrality actually work to suppress the commercial freedom of some entities to promote the “freedom” of others (app providers “win,” access providers “lose”)
Now court decisions are highlighting another problem: actual blocking of content that might be lawful in one country, because it is unlawful in another (or potentially in another country).
The Google v. Equustek Solutions case in Canada started out as a “simple” trademark case, in which Equustek claimed that another company was infringing on its trademarks online.
But a Canadian court ruled that Google (not a direct party in the case) had to…

By 2020, Most Software Products will Use Artificial Intelligence

By 2020, almost every new software product and service will incorporate artificial intelligence features, Gartner predicts.
Though it remains unclear how much business impact might eventually be derived, some early adopters already find AI contributes.
Amazon uses robotics to automate “picking and packing” activities in its warehouses, McKinsey notes. The “click to ship” cycle time, which ranged from 60 to 75 minutes with humans, fell to 15 minutes after applying robotics, while inventory capacity increased by 50 percent. Operating costs fell an estimated 20 percent, McKinsey argues.
Netflix uses AI to personalize recommendations. Netflix found that customers, on average, give up 90 seconds after searching for a movie. By improving search results, Netflix projects that they have avoided canceled subscriptions that would reduce its revenue by $1 billion annually.
Baidu and Google spent between $20 billion to $30 billion on AI in 2016, McKinsey says.
Healthcare, financial services, and p…

An Industry You Will Not Recognize, Within a Decade

You might not recognize the telecom industry within a decade.
The industry is likely to earn less revenue than at present. The only issue is how much less will be earned. So the industry will contract.
There might be 85 percent fewer telecom companies in business. There might be only five global carriers. Revenue growth might not be lead by new subscribers or even any of the access services (voice, messaging, data).
Services sold to humans might not drive revenue growth, either. And where growth has been driven by consumers, growth might in the next phase be driven by enterprises.
The changes will come fast.
No matter how you look at it, “eras” in the telecom industry are coming faster, and ending just as fast.
Consider voice: the era of traditional voice lasted more than a century. The “VoIP” era arguably lasted 25 years. The era we now are in will not even be characterized by “voice.”
Going forward, the internet, mobility and over-the-top apps are the ways to understand where we are…

Edge Computing a Mobile Operator Opportunity?

Many telcos have argued that owning data center assets would be a good way to complement connectivity services. Some have found the synergies less than truly compelling. The issue now is whether mobile edge computing will be different.

AT&T hopes so, thinking that its existing real estate portfolio (central offices, macro towers and small cells will provide locations for edge computing.

So AT&T will outfit those facilities with high-end graphics processing chips and other general purpose computers, to create new edge computing facilities.

AT&T believes it could someday embed these systems in everyday items like traffic lights and other infrastructure as well.

The point is that edge computing could provide a way for telcos to leverage existing assets to create new roles in the computing fabric and ecosystem that some might argue have eluded them in the centralized computing era.

Will Most IoT Connections Use Fixed Network Access (Wi-Fi and other)?

In the past, long-range, low-power networks have had leading share of market (55 percent) for machine-to-machine applications, with short-range solutions such as Wi-Fi having perhaps 35 percent share, with mobile networks having about 10-percent share.

How that might change as internet of things use cases proliferate is one issue. Maravedis, for example, believes that mobile platforms ultimately will have the largest share. Others believe low power wide area networks will do better than that, connecting perhaps 16 percent of IoT devices, while mobile networks connect some seven percent of devices.

That suggests most IoT devices will use other methods, such as Wi-Fi. That matters, in part, because it means most IoT connections might not increase the amount of revenue earned by access providers in a direct way.

source: Maravedis

source: Analysys Mason

Short-range connection technologies will continue to represent the overwhelming percentage of internet of things connections through 2022, …

As Big as it Seems, Mobile Industry is Shrinking

Many observers, and many other parts of the internet ecosystem, believe and act as though the "telecom" or "mobile" industry is a powerful, dangerous gatekeeper. Ironically, those views come at a time when the mobile industry arguably has past its peak, in terms of industry revenues, and faces huge challenges that likely will lead to most suppliers leaving the market (being acquired, for the most part).
Some will see such consolidation as a sign of growing power. In actuality, such moves will highlight industry stress.
We now are five years past “peak revenue” for the global mobile business, some would argue.

Virtually all analysts who follow revenue and profit trends in the global telecom business will agree that, despite growth in some regions, at a global level revenue and revenue growth have become key issues. Indeed, revenue is the paramount industry issue, heading into the 5G era.

The signs are quite evident. Operator average revenue per user is declining, glo…

We are 5 Years Past "Peak Mobile"

We now are five years past “peak revenue” for the global mobile business, some would argue.

Virtually all analysts who follow revenue and profit trends in the global telecom business will agree that, despite growth in some regions, at a global level revenue and revenue growth have become key issues. Indeed, revenue is the paramount industry issue, heading into the 5G era.

The signs are quite evident. Operator average revenue per user is declining, globally.

Competition is one reason. Over the top product substitution is another source of pressure. Regulatory intervention such as caps on retail and wholesale voice and data charges and on mobile termination rates also are an issue.

source: Juniper Research

There are other issues, though. As always seems to be the case, later users tend to spend less than earlier adopters. That puts pressure on overall ARPU.

The decline in certain regions is exaggerated because of the depreciation of local currency bundles against the dollar (eg in Latin Am…

How Big a Gamble are 5G Networks? Big.

Just how big a gamble are 5G networks? Big, according to Juniper Research. “Unlike 4G, there is no discernable use case that will encourage operators to roll out 5G networks,” Juniper says.

Beyond that, in the early going, most of the 5G revenue might well come from customers replacing 4G accounts with 5G, with some revenue lift, but no net increase in subscriptions.

So great is the risk that private investors might not make the move to 5G without subsidies. “Juniper anticipates that increased investment from governmental bodies will be needed to encourage the development of these networks, with the exception of North America.”

Juniper Research forecasts that total operator billed 5G revenues will rise to $269 billion by 2025, from $850 million in 2019, the anticipated first year of services. That represents a 161 percent compound annual growth rate over the first seven years of 5G services.

What that portends, in terms of new service revenues, is unclear, as most of that revenue will…

Verizon Counts on Millimeter Wave to Lead 5G Capacity Race

Verizon is not the only tier-one mobile service provider pushing fast into 5G. But it has very-specific reasons for wanting to do so. Having been the first U.S. mobile provider to launch the Long Term Evolution 4G network (Sprint earlier had opted for WiMAX), Verizon now finds it has pushed revenue opportunities just about as far as it can with 4G.
Verizon, additionally, given its large subscriber base, is generally recognized to be capacity challenged, in terms of spectrum assets, compared to other key competitors who have more spectrum and fewer customers.
So Verizon has huge motivation to lead in 5G, both to crank up revenue opportunities and also to add capacity that, in the U.S. market, will come from new millimeter spectrum of various types.
And Verizon arguably has a lead in such spectrum resources, in some cases. That especially is true for millimeter wave assets.
Still, in the 4G area, Verizon is capacity constrained at the moment, and seems to be angling for dominance in 5G …

Enterprise Executives Have High Hopes for IoT

Though of course we might all be wrong, and enterprise managers with us, enterprise internet of things almost uniformly believe IoT will improve service operations, increase visibility into operations, enable new business models, and create new product and service offerings.  
Boeing workers now use IoT wearables and augmented-reality tools on wiring-harness assembly lines, which has resulted in up to 25 percent improvement in productivity, McKInsey reports.
Some 98 percent of executives surveyed by McKinsey reported that most companies within their industry include enterprise IoT initiatives in their strategic road maps.
Also, 92 percent of survey respondents believed IoT would have a positive impact over the next three years, either by improving operations or by allowing companies to develop new products with embedded IoT capabilities.
Some 62 percent of respondents believe that enterprise IoT’s impact will either be very high or transformative.
But just 48 percent said that company le…

Is "Telecom" a Stable Segment of the Equity Market?

One way of looking at the traditional telecom segment of the total public market is that it is, in some ways, too small to constitute a “sector” in its own right, like transportation, industrials or health care, especially when considered on a “single country” basis.
Consider the U.S. market, which essentially consists of AT&T, Verizon, CenturyLink, T-Mobile US, Sprint, and a handful of other firms with significant market capitalization.
Some funds include a wider basket of companies, on a weighted basis. But most of the market value is driven by a handful of firms. Verizon, for example, has a market cap of about $177 billion. AT&T has a market cap of about $223 billion.
CenturyLink has a market cap of about $13 billion. Sprint is worth perhaps $35 billion. T-Mobile US is worth about $50 billion.
Comcast is valued at about $186 billion, but the access business is valued at perhaps 61 percent of that, or perhaps $113 billion. Charter is worth about $92 billion.
The point is that…