Showing posts from November, 2017

AT&T Defends Time Warner Acquisition Effort

AT&T defense of Time Warner acquisition. 

Verizon to Launch 5G Fixed Wireless in 2018

Verizon Communication says it will launch fixed wireless residential broadband services in three to five U.S. markets in 2018, starting with Sacramento, Calif. That move is the among the first of an expected wave of fixed wireless deployments to use 5G platforms (or, perhaps properly, pre-5G platforms).
Importantly, the commercial rollout will, Verizon hopes, demonstrate the cost advantage of using 5G fixed wireless instead of fiber to the home to provide internet access at speeds up to a gigabit per second.
By some estimates, fixed wireless access networks feature capital investment about half that of fiber to the home, and perhaps less than half the cost of a connected location.
That is crucial, if U.S. telcos are to reverse a decade-long erosion of internet access market share to cable TV companies. Not since about 2007 have telcos had more internet access market share than cable companies
A reasonable goal might be to boost market share from about 40 percent to 50 percent. Fixed w…

Data Consumption Grows 100 Times, Access Revenue Doubles

One clear danger for mobile service providers is the gap between increased investment in network capacity and revenue earned when supplying that additional capacity. By some estimates, as data consumption grows 100 times, revenue merely doubles.  
Unlimited data plans do not help, either, since, by definition, such plans do not allow incremental revenue to be earned when incremental usage happens.
Consumption of video is a prime driver of increased consumption and therefore a driver of network investment. Not only does video drive overall traffic consumption, but video standards are pushing to high-definition and ultra-definition versions that consume even more bandwidth than standard-definition video.
source: Openwave Mobility

How Can an ISP Create a "Fast Lane" if the Internet Already is Dark?

With the anticipated and breathless worries about the coming of “internet fast lanes” if common carrier regulation of internet access services are removed, it might be helpful to remember that the technical ability to create quality of service tiers of service, (the dreaded internet fast lanes) extending all the way to end users, might not actually exist.

The reason is encryption. To do anything on a selective basis to a packet, an ISP essentially needs the ability to identify the owner of a packet and the media type of a packet.

With so much traffic already encrypted, that is impossible at least 70 percent of the time, already. According to Openwave Mobility, about 75 percent of traffic already is encrypted.  

By perhaps 2018, 90 percent or more of all packets will be encrypted, Openwave predicts.

Google QUIC and Facebook Zero Protocol (0-RTT), for example,  represent 27 percent of the traffic in mobile data networks already. source: Openwave Mobility

Additionally, new protocols such a…

Fixed Networks Becoming Unsustainable

It is becoming clearer that the fixed network telecom business is losing its ability to sustain itself, as it becomes harder to generate core revenue.   
In other words, one might argue, the core business model is failing. That is why firms such as Frontier Communications now are in danger of bankruptcy, and why the Indian mobile business is rapidly consolidating.
A difficult business model is why Verizon and AT&T (and other telcos and internet service providers) are looking to fixed wireless as an alternative to fiber to the home.
Observers now speculate on whether Windstream and its facilities unit Uniti might also face bankruptcy.
The task for regulators therefore is what to do: encouraging investment at a time when that investment is growing difficult, while not placing new and unnecessary barriers on the industry, even while, by traditional antitrust metrics, industry concentration is high.
The problem is that if industry revenue and profitability continues to drop, more conce…

Global Telecom Revenue to Shrink 2% in 2018

Global  telecom revenue in the 60 biggest markets will fall by two percent  in US dollar terms, to US$1.2 trillion, in 2018, despite account growth, according to the Economist Intelligence Unit.
Average revenue per user (ARPU) will fall by 2.3 percent for mobile operators, and by 11.5 percent for fixed line providers.
At the same time, operator investment will grow three percent.
Regional variations will mask the global trend.
In Latin America, total revenue in U.S. dollar terms for both fixed and mobile telecom will fall, despite mobile subscription and penetration rate growth. In other words, subscription growth no longer automatically grows revenue.
The clear exceptions will be Asia and Africa where subscription growth will be robust enough to compensate for lower ARPU. Across the Middle East and Africa, the mobile penetration rate will increase from 111 per 100 in 2017 to 115 in 2018, while in Asia it will rise from 101 to 104, the Economist predicts.

Net Neutrality is About Freedom

One big problem with “network neutrality” discussions is that the concept often is stretched so far it makes no sense. Recall that the original idea was “freedom.” The notion of “permissionless innovation” is key to internet creativity. But that freedom was intended to apply to all parts of the value chain.
Freedom was for users: people were to be free to use all lawful applications. Freedom was for app providers, who would be free to innovate and create new value, functions and capabilities.
But freedom also was for access providers. That was why internet access services were not regulated as common carrier services. As with other parts of the ecosystem, the idea was to allow permissionless innovation for data services and apps of all types.
In recent years, advocates have acted as though the only part of the ecosystem allowed freedom were app providers, not consumers or access providers.
Along the way, the concept has been stretched beyond recognition. When the Federal Communications…

Revenue Per Bit Remains the Biggest ISP Problem

For transport and access service providers, video is a problem and a curse. Video has the absolute lowest revenue per bit, and therefore potential profit per bit, of any traffic type. Video also dominates data volume on global networks, but has revenue per bit perhaps two orders of magnitude (100 times) less than voice, for example.
Those reductions in price per unit sold would be nearly catastrophic in any business, and tell you most of what you would need to know about the direction of network capital and operating costs to achieve sustainability.
At the same time, those catastrophically-lower revenue per bit measures also tell you why surviving tier-one service providers must (not “should”) find big, new revenue sources.
Text messaging has in the past had the highest revenue per bit, followed by voice services. More recently, as text messaging prices have collapsed, voice probably has the highest revenue per bit.
Video always has had low revenue per bit, in large part because, as a…

S&P 500 "Telecom" Index Will Add Content Firms

In a move that illustrates the changes in the “communications” business, the telecommunications segment of the Standard and Poors 500 index will be recreated, including advertising, broadcasting, publishing, movie and entertainment as well as app firms supplying entertainment.
The change will happen in September 2018, with the firms to be added to the index announced in January 2018.
Several developments drive the change. First, the universe of U.S. telecom firms had essentially dwindled to just AT&T, Verizon and CenturyLink.
Also, the changes will add numerous higher-growth segments to the indices, which have been low-growth and therefore relatively less attractive to investors.
Some might also say the changes also reflect the importance of media, content and video businesses to the “telecom” industry. Those revenue sources are important, for a growing number of  tier-one service providers, to add new revenue drivers with higher margins, to fuel revenue growth and replace lost vo…

What, and How Much, Should AT&T Do About its Access Network Investments?

At least some might point to stock performance of T-Mobile US, compare that to AT&T, and draw the conclusion that AT&T would be better off putting its capital into network upgrades, not content acquisitions.
The "problem" with such suggestions is that they are mistaken. AT&T does not have a gap to close with respect to its mobile network performance, versus T-Mobile US.
Perhaps an argument might be made that AT&T should further accelerate the moves it already is making to boost its 4G network, and create 5G networks. But AT&T is among the firms most active in doing so, and if there are such criticisms, one rarely hears them expressed.
To the extent there is a clear issue, it is the fixed network, and the issue there is market share with respect to cable TV firms and independent ISPs, not T-Mobile US.
Arguing that AT&T should focus on its "access" assets, rather than new revenue sources, mistakes a growth strategy based on taking market share…