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Showing posts from September, 2018

Could Edge Computing Change Smartphone Design and Cost?

Edge computing is almost always touted as a necessity in the 5G era to support ultra-low-latency services, the typical examples being support for autonomous vehicles, remote surgery or even prosaic requirements such as supporting channel changes on video screens supporting ultra-high-definition TV (4k, 8K, virtual reality).
But are there are other possibilities? Consider the advent of the Chromebook, a “PC” that essentially conducts all computing activities at a remote cloud data center. The advantage is lower-cost customer premises equipment (CPE).
Sure, one needs a screen, power supply, keyboard and some amount of on-board memory and processing. But not so much. It often is said, with a good measure of truth, that a Chromebook is a device supporting a browser, and not much more.
So can edge computing support a similar approach to the design of smartphones, essentially creating a device that resembles earlier efforts to create network-centric computing devices? Maybe, some think.
Cou…

U.S. Device Adoption is Near Saturation

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Use of communications-dependent devices obviously has direct implications for communications service demand. So it matters that U.S. consumers now are reaching--or already have reached--saturation levels of device use.
Not to belabor the point, but device and account saturation strongly suggests that demand for new services and apps has to be created, beyond current levels of functionality for devices and connections.
That is one reason why many believe 5G is going to be different than all prior generations of mobile platforms. It will be the first platform where brand-new value, and therefore new revenue opportunities, will be created by enterprises. Consumer demand for phone functions and connecting other devices is fairly well saturated.
source: Pew Research Center

Why Nobody Releases Gigabit Take Rates, Yet

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Not one U.S. internet service provider publicizes the take rates it gets for gigabit internet access. Historically, no ISPs have done so for their fastest tiers of service, either. The reason, as you might suspect, is that it is highly likely take rates for such tiers of service are rather modest, and tend to be purchased by businesses rather than consumers.
Eventually that could change, but only when purchases of gigabit access service is the mid-tier offer.
Back in the days when cable TV operators first were rolling out consumer Internet access at speeds of 100 Mbps, it was virtually impossible to get subscriber numbers from any of the providers, largely because take rates were low.
In the United Kingdom, then planning on upgrading consumer Internet access speeds to “superfast” 30 Mbps, officials complained about low demand. In fact, demand for 40 Mbps was less than expected.
So “gigabit” internet access remains mostly a marketing platform, not an indicator of what services people act…

U.S. Internet Access is Not "Expensive"

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One always can get a good argument about whether internet access markets in the United States are getting less competitive or more competitive. What often gets lost in such discussions are facts. Everyone is entitled to an opinion; but not their own facts.
And there are several ways to look at internet access services, in the United States or anywhere else. For starters, there is a difference between mobile access and fixed network access. Most studies of internet access globally tend to focus on “fixed network” access, even when, in many markets, most people only use mobile internet access.
Availability is one important metric: can consumers buy service? Take rates are a different matter. Even where available, not every consumer wants to buy a fixed network service. Nor do consumers tend to buy the fastest service available. Instead, they compare value with price, and almost always buy services that are “good enough,” and neither the fastest nor slowest options available.
Speeds also…

Cable TV Operators Gradually Start to Compete with Each Other

Historically, cable TV companies do not compete directly with each other in the same geographic areas. That is changing a bit, though. In the United Kingdom, if Comcast completes its purchase of Sky, Sky and Liberty Global (Virgin) will compete head to head, for the first time in the U.K. market.
That is something that has happened in telecom markets, both mobile and fixed, and some have wondered how long it would be until cable companies began to compete in such a manner as well. We appear to be one step closer, in the U.K. market.
In the U.S. market, such head-to-head competition is more likely to come as cable TV companies get into the mobility business, as has been the case for U.S. telcos generally. Even when firms such as AT&T, Verizon and CenturyLink mostly have not competed against each other in the fixed network area, there has been no way to limit competition when mobile networks operate ubiquitously across the country.
That means AT&T and Verizon, for example, were e…

Revenue Upside and Cost Reduction Will Drive Networks towards Edge Computing

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There are three major reasons why edge computing is going to reshape networking architectures: revenue, cost and functionality.
On an internal level, network cost and functionality are shifting towards use of edge computing to support access networks in the 5G era. For starters, centralizing radio processing further into the network reduces radio cell site costs, in addition to improving flexibility.
On the revenue side, core networks will evolve towards edge computing to reduce latency, a primary requirement for creating new applications that require one-millisecond or just a few milliseconds latency. source: Nokia

Disintermediation in the Subsea Business

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“Disintermediation” is a term some attendees at the PTC Academy event in Bangkok, Sept. 20 and 21, 2018, heard for the first time. The term simply means that product and service providers go direct to end users and customers, rather than using distributors.
Since communications service providers are distributors, that has key implications. Think “over the top” and you get the point: apps go direct to customers and end users with no direct business relationship between the app/platform and the user.
To an astonishing degree, market demand for wide area communications has shifted away from telcos and to application and platform providers.
The amount of undersea traffic carried by the largest U.S. application and platform providers grew to 339 Tbps between 2013 and 2017. International capacity supplied by internet transport companies grew to 350 Tbps.
“15 years ago, 100 percent of my clients were telcos,”  said Sean Bergin, APTelecom president. “Now 80 percent of my customers are OTTs,”
so…

Intel Follows Pattern: Replace 1/2 of Current Revenue Sources Every Decade

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One rule of thumb I use when looking at business model change is to assume that a tier-one service provider will have to replace half its current revenue with new sources every decade. And that might be a reasonable rule for suppliers of apps, platforms, devices and components as well.
Im 2012, for example, Intel earned nearly 70 percent of revenue from “PC and mobile” platforms. By 2018, PC/mobile had dropped to about half of total revenue. By 2023 or so, Intel should generate 60 percent or more of total revenue from sources other than PC/mobile.
source: Trefis
If you hear executives talking so much about innovation and new services, that is why: companies need to replace half their revenue every decade, and do so in every decade, from now on.
source: Intel
The good news is that, as tough as that sounds, firms have shown they can do so.

Verizon as Disruptor

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As accustomed as we might be to seeing Google, Netflix, Amazon, Facebook, cable TV companies, wireless internet service providers, metro fiber specialists or T-Mobile US as market attackers and share takers, we are unaccustomed to seeing either AT&T or Verizon in such roles.
But Verizon is about to take that role, in fixed networks.
Verizon is launching Verizon 5G Home, its 5G fixed wireless service, on October 1, 2018 in parts of Houston, Indianapolis, Los Angeles and Sacramento, providing the first U.S. real-world test of customer demand for 5G fixed wireless.

And Verizon has specific business reasons for doing so. Simply, footprint, or homes passed, in its fixed networks business is a key driver for Verizon. Simply put, Verizon has far fewer homes passed than its major fixed network competitors.

source: GSMA Intelligence
Comcast has (can actually sell service to ) about 57 million homes passed. Charter Communications has some 50 million homes passed.
AT&T’s fixed network represe…

Would a U.S. Mobile Market with Merged T-Mobile/Sprint be Stable?

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Assume a merger between Sprint and T-Mobile US is approved by U.S. regulators, and the tier-one mobile service provider business becomes a contest of three relatively equally-situated contestants, in terms of market share. Is the market stable, long term?

I would argue it remains unstable, even with new T-Mobile US at 31 percent share, AT&T at 30 percent share and Verizon at 36 percent (share of accounts). The rationale is partly strategic and partly historical.
The immediate rationale for the merger is that a bigger T-Mobile US will be better able to compete with Verizon and AT&T, and the rearranged market would arguably feature three firms with roughly similar mobility market shares. But that virtually certainly creates a new market that is as unstable as the four-provider market that is replaced.
source: GSMA Intelligence
The strategic rationale for an unstable market is that, if one assumes the “service provider of the future” owns both fixed and mobile assets, then new T-Mob…