Showing posts from September, 2017

Is the Mobile Business Model Nearing an End? What Replaces It?

There are many reasons to expect a rather massive consolidation in the global telecom industry over the next decade. The cost of networks keeps rising, with every mobile generation. We soon will reach market saturation, when virtually every person who wants to use mobile phone service, for example, already does so.
Essentially, we are reaching a point where customers are spending about as much as they feel appropriate for the set of services now offered (business or consumer).

There are hopefully major new revenue opportunities coming, but we should also expect most mobile operators and fixed operators to need to replace about half their revenue every decade, from now on.

Those are a few of the big changes to come. There are others.
The 5G era is going to be different from all others in the history of telecom, for several reasons. Traditionally, scarcity has been the paramount business constraint.

Bandwidth was scarce and therefore expensive. Regulatory strategies were designed to keep…

Abundance is Going to be a Scary Thing

The 5G era is going to be different from all others in the history of telecom, for several reasons. Traditionally, scarcity has been the paramount business constraint.
Bandwidth was scarce and therefore expensive. Regulatory strategies were designed to keep matters that way, using monopoly or oligopoly market structures; expensive licensed spectrum; franchise or other market entry rules.
In the competitive era, where in most countries mobile competition has been the primary expression of competition overall, scarcity has remained a fundamental assumption. In most markets, less than 500 MHz of total spectrum has been available for all mobile operators to use.
Wi-Fi bandwidth helps, but even including all mobile and Wi-Fi bandwidth, less than a gigaHertz generally has been available for terrestrial applications.
All of that is going to change in the 5G era, which has to have mobile executives in many markets worried about the outcome. The reason is that multiple tools--small cells; new m…

Why So Many are Skeptical about "Moving up the Stack"

Generally speaking, as much as service provider executives talk about "moving up the stack" to avoid becoming a "dumb pipe," there is justifiable skepticism about whether that is possible, in many settings. History suggests it is hard to do, hard to do well, and almost never has resulted in significant revenue upside.
There are a few salient exceptions--mobile banking in some markets and video entertainment services in a growing number of markets.
But much depends on where a particular actor sits in the value chain, and what part of the industry that actor occupies.
If the core business is undersea capacity, it is easy to see why skepticism about such moves up the stack is worth attempting. When the core business is "pipe," moves "up the stack" are unlikely to be easy, and might actually be dangerous, as it is so far outside the core competence of the providers.
On the other hand, such efforts already have proven most successful for retail suppli…

M2M Data Networks are REALLY Different

Some idea of the character of machine-to-machine (sensor) applications can be seen by the typical amount of data that has to be transmitted by sensors. It may remind you of paging systems, should you recall them.

Sigfox says that sending GPS location requires about six bytes, temperature just two bytes. Object status might require only a single byte, the same amount of data consumed to report speed.
That shows just how optimized a low power wide area network is for low power consumption. Where one might think kilobytes are required to report at least some types of information, other simple status updates might take even less than that.
Such networks are optimized for uplink communications only, not duplex. So sensor transmitters can be turned off when not actively uploading data. Also, many sensor apps only require that a particular sensor be turned on for a few seconds a day, says Marc Olivier, Sigfox VP.
IoT networks optimized for mobile networks feature much-higher bandwidths. M2M n…

Why Telco OTT Partnerships Rarely Succeed

“Moving up the stack” is about as key a concept in the telecom business as “dumb pipe” likewise is notable. “Up the stack” is a phrase that means an access services company (cable TV, satellite, telco, capacity supplier) moves from being a supplier of “pipe” services (network access and transport) to being an application provider.
In other words, such a firm returns to its roots. Recall that, historically, telcos made their business by providing voice communications. Communications (voice, originally) was the value and the business driver. To do so, telcos had to build networks.
They did not necessarily want to do so, but the product (communications) could not be sold without doing so. The same has been true with most products telcos sell. The product consumers and businesses often buy is some application with value, and the network is required to use those apps.
Broadly speaking this is now true for most consumer and business applications. What matters is the app and the value it prov…

5G Use Cases: Few to None Involving Voice

With the caveat that I find “e-book” formats unpleasant and unnecessary, IHS has produced an “e-book” examining 5G use cases. Actually, it is more akin to a slide deck, so if you want a really quick and high level issue of timelines and concepts, that is what you will find.

One point is worth noting, when looking at 5G: it is all about connecting computing devices. Asked whether any serious work really is being done on “voice,” as part of the 5G standards effort, Reza Arefi, Intel director of spectrum strategy, simply says “no.”

Dean Bubley, founder of Disruptive Analysis, also notes that voice was an afterthought when 4G standards were created.

That speaks volumes about the expected use cases and revenue drivers for 5G. source: IHS Markit

Will 5G Fixed Wireless Be the First Important New 5G Revenue Source?

Will the first significant 5G “new revenue sources” come from 5G fixed wireless? Many of us believe that will prove to be the case. As 5G new radio (5GNR) is deployed, mobile operators, in some instances, will be able to supply gigabit internet access to customers who in the past could only get such speeds from a fixed network connection.

Assuming tariffs are comparable to fixed network prices, 5G fixed wireless might, for the first time ever, allow mobile operators to cannibalize fixed connections. In other cases, 5GNR might mean some operators with mobile and fixed assets will be able to supply gigabit internet access to consumers in areas where fiber to the home is not financially viable.

What Happens to Typical Usage When 5G Replaces 4G?

What will happen to mobile network customer usage patterns when 5G becomes mainstream, boosting average mobile speeds per device up into the hundreds of megabits per second range?
Past experience suggests overall usage will grow, as there is a correlation between faster speeds and greater data consumption. In India, that was the case when 3G speeds were widely available. The same happened when 4G replaced 3G. The reason is simple enough.
When higher speeds are available, a single minute of usage transfers more data on a faster network than on a slower network. Also, with faster speeds comes better user experience, generally, which creates an incentive to spend more time interacting. Both those trends will lead to higher usage.
source: Nokia
source: GSMA
Even with network offload from mobile to Wi-Fi, it is likely that 5G will keep more traffic on the mobile network, for several reasons. If tariffs create no disincentive to offload, users will simply stay "on the mobile network" …

LTE Reaches 32% Market Share, But Here Comes the Next Network

Long Term Evolution 4G now has about 32 percent share of the mobile market, according to 5G Americas. In part, that explains the intense work going on to create 5G. New mobile generations appear about every decade or so, and follow a rather standard product life cycle, from birth to decline.
For better or worse, and despite some skepticism about whether “we need 5G,” 5G will come. Though 4G still is in its growth phase globally, it already is mature in developed markets, and the successor already is coming.
The simple reasons is that, eventually, any specific mobile platform runs out of things to sell to human users. So new platforms, with new features, are needed to drive a new wave of growth.
source: 5G Americas
The adoption rate seems to be exceeding many earlier projections. The main point, however, is that mobile networks continue to follow a clear product life cycle.
source: Telegeography
source: Geile/Lyon

56.6 Million Potential OTT Video Subscription Customers

Some over-the-top subscription video suppliers (Netflix) are thrilled around the declining demand for linear video services, as it is the business problem that creates their revenue streams.

Legacy suppliers are worried because they face a decline of their large existing businesses, as well as the danger that if they create OTT streaming alternatives of their own, they will simply accelerate abandonment of linear services.
This is a familiar problem. Telcos faced the problem when pondering the way to respond to the rise of OTT voice and messaging services. Sure, they could create and heavily market their own OTT services, but only at the risk of cannibalizing their existing high-margin, high average revenue per user legacy services.
Still, as the abandonment of linear services grows, so does the opportunity to create new OTT services--mobile, especially--that cater to the swelling numbers of consumers who have no appetite for $100 a month linear services.
In 2017, in the U.S. market, t…

AT&T to Launch Mobile OTT Service in 2018

AT&T plans to launch its own mobile-centric, over-the-top streaming solution that is access provider agnostic, with a planned commercial launch in 2018.
AT&T is going to build on its DirecTV Now service and then have it available as “the primary service” in a home.
Operationally, customer acquisition costs could be lower than linear services. Provisioning costs will absolutely be lower. There will be no need for truck rolls, drop cable installation, decoders and outlet installation. There will be virtually nil trouble tickets created because customers have decoder problems.
Also, in the same way that DirecTV allowed AT&T to sell linear video virtually nationwide, for the first time, so mobile streaming service will be available nationwide, without the specific need to add new facilities, as the service will use a “bring your own broadband” approach.
At least initially, the mobile OTT offer will aim to please potential customers who do not wish to buy a traditional linear v…

New Telecom Infra Project Team Effort on Fixed Wireless, Backhaul, Smart City Use Cases

Facebook’s work on “Terragraph,” a fixed wireless  network using millimeter wave spectrum, multiple input, multiple output radios (MIMO), mesh networking and open source licensing now forms the foundation for a new development group called the Millimeter Wave (mmWave) Networks Project Group, co-chaired by Deutsche Telekom and Facebook.
Lead applications include:
Fixed wireless access Mobile backhaul Smart city applications
The mmWave group will use data and lessons learned from Facebook’s Terragraph solution, a proof-of-concept system that overcame the signal range and absorption limitations that previously confined the 60GHz frequency to indoor use, Telecom Infra Project says.
The proposed architecture has many similarities to a “fiber to light pole” design, where highly-distributed radio sites (small cells) are the “access” network launch points. Verizon’s deep fiber design calls for extending the fiber trunking network to nearly every light pole, potentially.
The mmWave network architec…

Disney Plans to Cannibalize Itself

As the video entertainment market shifts to over-the-top distribution methods, content providers will face a problem telcos are well aware of, namely revenue issues caused by product substitution.

Much of the cost to Disney of launching its new streaming services will come from increased operating costs, as it will have to market itself, instead of relying on its distribution partners to do that. UBS has estimated that cost at about $806 million annually.

That is not even the biggest cost, though. As many legacy product providers often find, new products often simply cannibalize existing products.
When an internet service provider using digital subscriber line shifts to newer platforms such as fiber to the home, it loses a DSL account for every existing customer it converts to a fiber access. So net gains are the issue, as a telco trades lost DSL accounts for new fiber accounts.
That problem is obscured a bit by the fact that few telcos in the U.S. market have completely replaced thei…

U.S. TV Antenna Households Increase to Nearly 16 Million Homes

One sign that consumers are unbundling their video entertainment purchases is the increase in purchasing and use of over-the-air antennas, presumably then combined with subscriptions to one or more streaming services.
A study sponsored by Ion Media and conducted by Nielsen shows the number of broadcast-only homes has increased 41 percent over the last five years, to 15.8 million households.
That shift, in turn, is part of a larger rearrangement of buying preferences in the video entertainment business, which has consumers shifting buying to over-the-top streaming services, reducing or halting the buying of linear services and use of streaming services.
The report finds that broadcast-only homes have a higher percentage of young viewers (median age 34.5) than total TV households (39.6).
Some 39 percent of broadcast-only homes have children in the household, compared to 34 percent of total TV households.
The new reliance on over-the-air antennas is part of a range of other trends includi…