Tuesday, July 30, 2019

Do Mobile Operators Risk Losing 40% of Revenue in 3 Years?

With the caveat that some firms are much-better positioned than others, the typical mobile service provider in Asia risks losing 40 percent of its present revenue over a roughly three-year period,  according to equity analysts at DBS Group Research. 


A decline in voice and text messaging revenues, plus new competition, are the key challenges, DBS Group Research notes. 


That arguably also is true for U.S. service providers, with an added twist: the substitution of mobile services for fixed network voice alternatives. 

That has crucial and important business strategy implications. A possible loss of 40 percent of legacy revenue in three years would be catastrophic for almost any firm, in any industry. My own rule of thumb is less dire: a loss of 50 percent of legacy revenue every decade.

In the U.S. market, since 1994, you can see this process at work, as use of mobile services and internet climb, but at the expense of landline voice. That seems to be the case everywhere, these days. 


It might be fair to note that rarely have we seen legacy revenues fall as fast as a loss of 40 percent in three years. But a loss of 50 percent over 10 years is to be expected. Some of us would say that from now on, it would be reasonable to expect such attrition of legacy revenues every coming decade, as well.

That, in a nutshell, is why some of us believe there is no alternative for connectivity service providers but to find new revenue sources. We have seen the diversification moves Singtel connectivity revenues has made. To be sure, connectivity revenues are key. But the range of revenue sources is much broader than mobile or fixed access services. 

These days, former cable TV provider Comcast gets as little as 20 percent of total revenue from subscription TV services. AT&T likewise has begun a diversification into content ownership, on the Comcast model. 

The big question is whether any surviving tier-one service provider (there will continue to be many niches) can lead if it continues to rely nearly exclusively on connectivity revenues.

Monday, July 29, 2019

People Underestimate the Difficulty of Reducing Energy, Water Consumption





If you have ever done a personal audit of your own energy footprint, or your own water footprint, you know how difficult it actually is to reduce consumption.

What Percentage of U.S. Homes Cannot Buy, or Do Not Buy "Broadband?"

One often has to be careful about statistics related to broadband (25 Mbps or faster) internet access. There are some very common confusions. 

Sometimes the issue of “supply” is conflated with “demand.” It is one thing to say a consumer “cannot buy” a service because it is not available. It is something else to say a consumer chooses not to buy a particular product. 

Sometimes the confusion is definitional. The U.S. Federal Communications Commission defines “broadband” as 25 Mbps, minimum downstream speeds. That is not to say internet access is not available, or purchased. “Broadband” simply means a product offering speeds of at least 25 Mbps.

Such statistics often only refer to terrestrial networks using cables (cable hybrid fiber coax, telco fiber -o-home, fiber to curb or digital subscriber line). Satellite access most often is not enumerated, even when available virtually everywhere in rural areas from two suppliers or more. 

Sometimes one sees a confusion of “people” and “locations.” Homes are one thing, the number of people living in homes is another thing. In the United States, the average number of people in each home is about 2.5 (2.3 by some estimates). Since cabled or fixed internet is sold to “locations,” citing “people” is not as accurate. 

The reverse is true when counting mobile internet access. There, it is “people,” not places, that matter. 

There are a few other nuances. There is a difference between estimated homes and “occupied” homes. And some reported homes are boats, trailers or rooms in houses or apartments. 

With the caveat that I have not read the full report, NPD says in a recent report that 19 million rural residents do not have access to broadband internet. 

If one assumes 2.5 people per household, that in turn implies 7.6 million households that might have internet access, just not at potential speeds of 25 Mbps. NPD also is said to argue that 100 million total people “do not have access to broadband.” 

Since NPD also is reported to argue that “vast majority” of these underserved people are in rural areas, the numbers are off. The most-obvious reason is that reporters are confusing “households” (locations) with “people” (residents of those homes). 

Differences are an issue, but saying X households lack “broadband” is not the same thing as saying X households lack  internet access. Many homes that do not buy “broadband” do have access, just not at 25 Mbps. 

The other obvious qualification is that such data deals only with service purchased from terrestrial providers. 

Virtually all rural households can buy internet access at official “broadband speeds” from at least two satellite internet access providers, at speeds up to 100 Mbps. 

NPD estimates that 31 percent of people do not have broadband service (25 Mbps download speed at a minimum). Qualifications are necessary. Such statements omit service from satellite providers that absolutely meets the broadband definition, and can be purchased by virtually every rural household. 

If the average household has 2.5 people in it, then 100 million people works out to about 40 million households. It is hard to square such numbers with the claim that  the vast majority of underserved households are in rural areas. 

If 7.6 million represents “the vast majority,” it is hard to see how the total universe could be 40 million households. The official press release issued by NPD Group claims 31 percent of U.S. households do not “currently buy” a broadband service, defined as 25 Mbps. 

And the issue of demand cannot be ignored, either. Many households choose--for whatever reasons--not to buy internet access service of any type. That is a demand issue, not a supply issue. 

Gaps exist, to be sure. Up to this point, and possibly always, rural internet access speeds are, on average, slower than found in urban and suburban areas, for reasons directly related to the cost of network infrastructure. So some of the gap is supply related. But not all of the gap is supply constrained; some of the gap is produced by differential demand for the product in urban and rural areas. 

That gap also exists with respect to buy rates. “Rural Americans are now 12 percentage points less likely than Americans overall to have home broadband; in 2007, there was a 16-point gap between rural Americans (35 percent) and all U.S. adults (51 percent) on this question,” according to the Pew Research Center. 


You might think the differences are completely based on the supply of service, but demand also is an issue. 

“Rural residents go online less frequently than their urban and suburban counterparts,” says Pew Research Center. “Roughly three-quarters (76 percent) of adults who live in rural communities say they use the internet on at least a daily basis, compared with more than eight-in-ten of those in suburban (86 percent) or urban (83 percent) areas. 

Some 15 percent of rural adults say they never go online, compared with less than one-in-ten of those who live in urban communities (nine percent) and those who live in the suburbs (six percent). 

The point is that some reports, and news stories about those reports, often are misinterpreted. Fixed internet access is not “all” internet access. “Broadband” is not synonymous with “internet access.” And homes are not the same thing as “people.”

It simply is not believable that “31 percent of U.S. households do not have a broadband connection.”

There are only about 122 million total U.S. households, according to U.S. Census Bureau statistics. That implies 38 million U.S. homes not buying internet access running at a minimum of 25 Mbps.


A more reasonable estimate would be that seven million to possibly nine million locations cannot buy 25 Mbps service from a terrestrial supplier, though virtually 100 percent can buy from at least two satellite providers.

How Much Bandwidth Do SMBs Now Need?

How much bandwidth do small and mid-sized businesses believe they need? 

Smaller entities with less than 100 employees tend to have a sweet spot between 50 Mbps and 500 Mbps. All that has implications for the value of telco or internet service provider internet access for businesses.

Where cable companies supply DOCSIS 3.1 service, or telcos have fiber to premises, demand for fixed wireless will be muted. Fixed wireless will have most potential benefit for telcos who cannot justify fiber to premises at specific locations. 

So telco fixed wireless in many cases will be a necessary, but not sufficient precondition for competing with cable company services.

Wednesday, July 24, 2019

Is U.S. Internet Access Unaffordable?

Whether a product is affordable or not often depends on one’s standpoint and assumptions. The average price of a broadband internet access connection--globally--is $72..92, down $0.12 from 2017 levels, according to comparison site Cable. Other comparisons say the average global price for a fixed connection is $67 a month. 

Looking at 95 countries globally with internet access speeds of at least 60 Mbps, U.S. prices were $62.74 a month, with the highest price being $100.42 in the United Arab Emirates and the lowest price being $4.88 in the Ukraine. 

According to comparethemarket.com, the United States is not the most affordable of 50 countries analyzed. On the other hand, the United States ranks fifth among 50 for downspeeds. 

Another study by Deutsche Bank, looking at cities in a number of countries, with a modest 8 Mbps rate, found  prices ranging between $50 to $52 a month. That still places prices for major U.S. cities such as New York, San Francisco and Boston at the top of the price range for cities studied, but do not seem to be adjusted for purchasing power parity, which attempts to adjust prices based on how much a particular unit of currency buys in each country. 

The other normalization technique used by the International Telecommunications Union is to attempt to normalize by comparing prices to gross national income per person. There are methodological issues when doing so, one can argue. Gross national income is not household income, and per-capita measures might not always be the best way to compare prices, income or other metrics. But at a high level, measuring prices as a percentage of income provides some relative measure of affordability. 

Looking at internet access prices using the PPP method, developed nation prices are around $35 to $40 a month. In absolute terms, developed nation prices are less than $30 a month. 

That is worth keeping in mind as some argue affordability of U.S. fixed network internet access is a big issue. According to BroadbandNow, less than half of U.S. households have access to fixed network internet access at prices of $60 or less per month. The implication is that this is a problem. 

Maybe it is not a problem, if the average global price of a fixed network internet access connection is $73 a month. 

The important caveat is that comparing fixed network internet access prices across regions and nations requires normalizing for purchasing power; picking plans to compare; and adjusting for differences in retail plans (such as usage limits, if any). Absolute price, for any particular set of analyzed plans, is one thing. Price per gigabyte might be quite another. 

And since much of the world’s people use mobile internet access, it is not so clear how valuable measures of fixed network cost actually are. 

With global broadband speeds growing by 23 percent on average between 2017 and 2018, one might expect similar shifts in pricing. However, the average price of a broadband access plan globally remains stable, decreasing by 1.64 percent between 2017 and 2018, for example, according to comparison site Cable.


The point, some might argue, is that U.S. fixed network internet access prices actually are not too expensive, when compared with prices in other developed nations. ]

Saturday, July 20, 2019

Internet Access Speeds Grow At Least 23% Year Over Year

Average internet access speeds are growing virtually everywhere in the world, though the estimates of “average” vary significantly.

The average global broadband speed measured between May 2018 and May 2019 was 11.03 Mbps, up 20.7 percent over the previous year, according to Cable.co.uk. 

Other studies suggest much-higher average speeds. Speedtest says average global fixed network speeds are 59.5 Mbps in June 2019. Speedtest says the world’s average download speed on fixed networks was 46.12 Mbps in 2018. 


Hootsuite data suggests early 2019 speeds on fixed networks was about 54 Mbps. 

A logical source of difference is the role played by mobile internet access, since most people globally use the internet from a mobile device. And mobile device speeds historically have been slower than fixed network speeds. According to Speedtest, in mid 2019 the average mobile access speed was 27.4 Mbps. 

The average global broadband speed measured during the period from 11 May 2016 to 10 May 2017 was 7.40 Mbps, according to Cable.co.uk. 

The average global broadband speed measured during the period from 30 May 2017 to 29 May 2018 was 9.10 Mbps – a rise of 23 percent. The average speed measured in the period from 9 May 2018 to 8 May 2019 was 11 Mbps, says Cable.co.uk. 



Friday, July 19, 2019

Where Blockchain Will Appear Earliest in the Connectivity Business

For most of us, blockchain and artificial or augmented intelligence are specialized capabilities we do not buy or use as discrete purchases or apps, but are experienced as features of some product we do use or buy.

That will likely be the way we experience AI and blockchain in our communications products and services as well. According to STL Partners, there are six key areas where blockchain, for example, has value for connectivity providers:

* Tracking and registry: Recording information and data in an immutable and transparent way, whereby no party has asymmetric power over the data
* Data access / transfer: Enabling ease of transferring data between multiple parties
* Identity /authentication: Managing identities and permissions for authentication or verification
* Transactions: Enabling (real-time) payments and transactions
* Settlements: Revenue settlement by recording movement of goods/revenues or use of services/assets
* Token exchange: Virtual currency/tokens with intrinsic value traded between multiple parties.

The most-mature applications are tracking and registry as well as authentication, STL believes.



Thursday, July 18, 2019

Does WISP Market Share Explain Satellite Broadband Share?

Market share held by wireless internet service providers might explain why the number of satellite broadband accounts is not higher than its supporters believe can be the case. 

Satellite broadband and fixed wireless operators traditionally have targeted rural homes and small businesses as their primary market, in the past said to include as many as 35 million locations. But estimates vary widely. Some say 80 million people live in rural areas, others say 46 million do, using the U.S. Census Bureau methodology. 

 Satellite broadband providers seem to have three million subscriptions, though some estimates (wrong, in my opinion) suggest that  6.76 percent of U.S. internet subscriptions are provided by satellite. 

Assume there are 139 million U.S. housing units. That implies nine million U.S. satellite broadband subscribers. No estimate I have seen--ever--suggests there really are nine million U.S. satellite broadband accounts. 

HughesNet believes 18 million homes are its market opportunity. Rental units alone might represent 6.6 million units, although not locations, as some of those units are in multi-family complexes. 

According to Urban.org, 13 million homes are owned by rural residents. So one might conclude there are about 19.6 million rural dwelling units (not necessarily locations, which would be smaller by some measure). 

Those figures roughly accord with HughesNet estimates of market opportunity. 

A more conservative estimate is that perhaps two percent to three percent of U.S. homes are the primary target for satellite broadband. That would include the most-isolated areas, where there are no terrestrial fixed networks using cabling. In many rural areas that are slightly more dense, wireless ISPs already operate. And, of course, there are many parts of rural areas served by cable operators or telcos. 

A big issue is the presence of fixed wireless ISPs. According to Broadband Now, some 148.4 million U.S. residents are covered by fixed wireless ISPs. Assume an average household size of 2.5. That implies some 59 million rural locations already are reached by fixed wireless ISPs. 

834,331
17.0%
44 Fixed Wireless Providers
366,426
48.9%
21 Fixed Wireless Providers
40,764
74.8%
2 Fixed Wireless Providers
6,263,384
91.2%
69 Fixed Wireless Providers
1,608,108
53.3%
42 Fixed Wireless Providers
16,268,529
42.1%
136 Fixed Wireless Providers
4,759,559
89.3%
98 Fixed Wireless Providers
174,393
18.5%
4 Fixed Wireless Providers
43,004
6.9%
9 Fixed Wireless Providers
3,224,633
16.2%
46 Fixed Wireless Providers
1,177,132
11.5%
33 Fixed Wireless Providers
187,234
13.2%
9 Fixed Wireless Providers
1,567,481
93.8%
55 Fixed Wireless Providers
11,378,292
87.6%
159 Fixed Wireless Providers
5,825,665
87.7%
96 Fixed Wireless Providers
2,272,673
73.3%
115 Fixed Wireless Providers
2,709,060
92.7%
77 Fixed Wireless Providers
1,642,070
36.8%
57 Fixed Wireless Providers
1,264,577
27.5%
24 Fixed Wireless Providers
347,651
25.9%
16 Fixed Wireless Providers
1,489,981
25.0%
32 Fixed Wireless Providers
1,123,939
16.9%
30 Fixed Wireless Providers
4,355,976
44.3%
97 Fixed Wireless Providers
4,487,969
82.2%
83 Fixed Wireless Providers
1,029,983
34.2%
25 Fixed Wireless Providers
5,156,799
84.0%
102 Fixed Wireless Providers
770,579
75.2%
43 Fixed Wireless Providers
1,755,440
93.5%
60 Fixed Wireless Providers
2,878,685
97.9%
47 Fixed Wireless Providers
95,994
7.2%
15 Fixed Wireless Providers
32,158
0.4%
13 Fixed Wireless Providers
1,797,525
83.2%
50 Fixed Wireless Providers
5,645,759
28.9%
43 Fixed Wireless Providers
1,210,033
12.0%
36 Fixed Wireless Providers
330,862
47.7%
23 Fixed Wireless Providers
5,205,438
44.9%
99 Fixed Wireless Providers
2,624,729
67.6%
72 Fixed Wireless Providers
3,475,190
87.0%
84 Fixed Wireless Providers
1,652,257
12.8%
61 Fixed Wireless Providers
1,254,222
34.7%
13 Fixed Wireless Providers
484,007
9.9%
19 Fixed Wireless Providers
591,266
70.2%
27 Fixed Wireless Providers
1,411,141
21.4%
50 Fixed Wireless Providers
23,591,297
87.5%
239 Fixed Wireless Providers
2,924,461
98.0%
49 Fixed Wireless Providers
477,239
75.6%
15 Fixed Wireless Providers
59,868
57.6%
5 Fixed Wireless Providers
2,191,700
26.2%
49 Fixed Wireless Providers
3,200,222
45.2%
81 Fixed Wireless Providers
1,224,923
65.4%
18 Fixed Wireless Providers
3,405,642
58.6%
72 Fixed Wireless Providers
513,567
86.8%
36 Fixed Wireless Providers

It the WISP figures are close to correct, much of the rural internet access opportunity for satellite operators already is satisfied, as WISPs have taken most of the available market. 

The point is that the potential satellite market is sharply reduced by market share taken by competing WISPs. So there might be only two percent to three percent of rural locations that WISPs cannot reach. 

That would imply a potential satellite broadband market of 2.8 million to four million homes. If U.S. satellite internet providers already serve perhaps two million locations, the bad news for satellite broadband providers is that the market is approaching saturation, where every potential customer already buys. 

"Tokens" are the New "FLOPS," "MIPS" or "Gbps"

Modern computing has some virtually-universal reference metrics. For Gemini 1.5 and other large language models, tokens are a basic measure...