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Showing posts from July, 2018

Bundling or Tying is at Heart of EC Charge Against Google (Always Is)

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The European Commission argues that by tying use of the Android OS and Google Play to a phone supplier's offering of Google's search engine and browser, Google quashed potential competition. 

But many would argue Android is not a monopoly. There are other choices, aside from Android and the iPhone OS. But few end users or phone manufacturers have chosen to use those alternatives. Tying or bundling always raises issues, though. 


source: Statista

Will Autonomous Vehicles Increase Video Consumption?

Executives at AT&T seem certain that new video screens are going to emerge as passengers start spending more time in autonomous vehicles. The argument is that if people are riding, but not required to drive, then video viewing time might well increase beyond present levels.
The biggest potential changes might come from people with long commutes, though even users of autonomous or even ridesharing vehicles for shorter trips around town would logically become potential new audiences.
Consumer behavior still is a barrier for subscription-based or pay-per-view approaches. Consider an airliner a ridesharing vehicle. How many passengers do you notice buying a video entertainment service during the flight? Not many.
Ad-supported content obviously will have a bigger potential audience, and especially for ridesharing services, rather than auto owners. The immediate problem is that the economics of substituting ridesharing for auto ownership, in most parts of the United States, do not exist.

There are Limits to How Much Mobile Data People Want to Consume

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As much as connectivity is untethered and mobile; as important as internet apps now are in the mobile value proposition; as much as consumers keep increasing their data consumption, we tend to vastly underestimate consumer behavior as a moderating influence on mobile data consumption.
An analysis of mobile tariffs and mobile data consumption by Tefficient found only a weak correlation between average revenue per user and data usage, for example.
That is not what one might expect. The analysis shows that, in most countries, mobile data consumption is 3 Gbytes per month, or less, no matter whether overall recurring charges are high or low.
That seems to fly in the face of both economics and the Tefficient data, which also shows that mobile data prices and usage are directly correlated (high price leads to low usage; low prices lead to high usage). So something else is at work.
source: Tefficient
Among the logical explanations for those findings are that mobile subscriptions represent a b…

Verizon Will Flip Mobile Economics Upside Down

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Verizon is going to flip mobile network economics upside down as it builds commercial 5G-based fixed wireless capabilities.
Make no mistake, this is a fundamental reworking of assumptions about mobile network cost and retail pricing of mobile data consumption.
The big challenge for firms such as Verizon, which want to build new 5G-derived platforms to supply fixed wireless, is that doing so will fundamentally challenge traditional thinking about the cost of wireless networks.
Fundamentally, network cost will have to be radically lower if the 5G platform, operating in fixed mode, is going to be competitive with fixed network usage and retail prices. Basically, cost per gigabyte has to drop by an order of magnitude (10 times) or more, if any 5G-based network hopes to compete, head to head, with fixed network internet access.
Ironically, the fear that service providers would not be able to afford to build and operate such networks seems to be proving manageable.
In other words, there is re…

What Else Could AT&T Have Done, Instead of Buying Time Warner?

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With the caveat that the DirecTV and Time Warner acquisitions by AT&T remain controversial in some quarters, the arguments for both remain simple enough: AT&T’s core businesses are shrinking (as is the general trend more broadly in the developed world’s telecom markets) AT&T has to generate new revenues at scale AT&T needs that revenue to generate high free cash flow, to pay its high and growing dividend AT&T has done so historically mostly by acquisition Beyond which, AT&T has to reposition itself as has Comcast, In additional areas of the internet ecosystem
AT&T needs to generate lots of free cash flow to support its dividend payouts, which historically range between 50 percent and 100 percent of free cash flow. That is hard to do on a declining base of revenues, even if AT&T did not have a strategy of constantly raising its dividend over time.

          AT&T Dividend Payout Ratios (Dividends as a Percent of Free Cash Flow) source: Seeking Alpha
Among the…

Millimeter Wave Could be Revolutionary

It is easy to underestimate the impact of commercialized millimeter wave spectrum. Since supply and demand always matters in any market, the sheer amount of millimeter wave spectrum, as well as its cost, is going to enable new business strategies.
The impact will be intensified as well by other related developments (small cells, spectrum sharing, massive multiple-input multiple output radios, better modulation techniques) that will greatly expand spectrum availability and also lead to lower prices for spectrum.
Though it is generally underestimated, millimeter wave spectrum and the other associated technology trends will enable wireless networks--for the first time--to directly challenge fixed networks for internet access customers, with features that are at least as good as fixed networks (and sometimes better), and with retail pricing that also is comparable.
Conversely, that is going to be a key business model challenge for tier-one operators of fixed access networks, which might we…

Amazon Alexa, Echo Enable Voice-Controlled Speakerphone

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Amazon's Alexa app and Echo voice appliances can be used to make (no incremental cost) voice calls to other Alexa users and devices, showcasing one more way voice over Internet Protocol has become a substitute for legacy calling.  
Alexa also can call “most phone numbers in the United States, Canada and Mexico” as well, essentially turning the Echo device into a voice-controlled speakerphone.
As is common with VoIP services, there are some limitations. There is no support for “911” emergency calls, premium-rate numbers (“1-900” numbers or other toll numbers, abbreviated dial codes (“211,” “411,”), dial-by-letter numbers (e.g. “1-800-FLOWERS”) or international calls to countries other than the United States, Canada and Mexico.
Of course, there is more than substitution going on. As legacy carriers move to replace their own calling services with IP platforms, some amount of former legacy voice then might be counted as part of the “VoIP” category.
But the largest impact is substitution…

U.S. Rural Customer Coverage Might Change in Big Ways in Future

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The extraordinarily high cost of reaching the couple percent of most-isolated U.S. households is one reason why alternatives ranging from 5G to fixed wireless to Google Loon, Facebook Aquila, Google Wing or new constellations of low earth orbit satellites really have to be looked at, as much as existing incumbents might prefer that not be done.
It would not be uncommon in rural areas for fiber to home networks to cost $17,400 per location, according to CostQuest Associates, which produced a recent report that makes the case for federal subsidies for broadband infrastructure.
“The capital investment per customer location, for conduit and poles, is approximately 5.6 times higher in rural areas as in suburban areas,” CQA estimates. “For fiber optic cable, the capital investment is approximately 4.2 times higher in rural areas as in suburban areas.”
The issue is whether any of the newer platforms, including 5G, fixed wireless, unmanned aerial vehicles or constellations of balloons or low …

Can Most Telcos Replace 1/2 of Revenue in 10 Years?

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AT&T first quarter revenue trends over the past three years have been worrisome. And that is why moves such as the Time Warner acquisition, and potentially the AppNexus buy, are so important.  
In the first quarter, over the last three years, revenue has fallen. And though free cash flow held up in 2016 and 2017, it dipped in the first quarter of 2018.
AT&T is not different from most other service providers in developed markets, in the sense that every legacy revenue stream is shrinking. With markets saturated (fixed and mobile services and customer segments), it is somewhat obvious that revenue growth has to be sought elsewhere.
So though debt levels are a clear issue, most tier-one service providers who hope to prosper over the next decade or two virtually must spend significant resources in the effort to create brand new revenue drivers, with scale.
Time Warner helps AT&T, in the near term, much as NBCUniversal has helped Comcast. The AppNexus acquisition is a more risky…

Is Business Connectivity Spending Growing?

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The 5G era might represent a significant change in telecom market dynamics. Where consumer demand for internet access arguably has driven revenue growth for the past couple of decades, growth might shift to enterprise and business users.
The reasons are several. Though nearly all connectivity markets are competitive, and face pressures to reduce prices, almost continually, cloud computing and internet of things arguably will increase demands for business connectivity, virtually across the board.
On the other hand, substitution effects never can be discounted. Nor can we discount the growing ability to substitute lower-cost computing platforms for higher-cost platforms, which means quality goes up even as costs remain flat or even decrease. That means spending levels do not always linearly relate to demand.
And it always is difficult to tell whether U.S. business spending on telecommunications is growing or shrinking, in part because different forecasters use different definitions of w…