Mobile Serves 88% of India Internet Access Accounts

As of 29th February, 2016, the top five fixed network high speed access service providers were BSNL (9.91 million), Bharti Airtel (1.71 million), MTNL (1.11 million), Atria Convergence Technologies (0.91 million) and YOU Broadband (0.52 million), according to the latest data from the Telecom Regulatory Authority of India.

But most consumers buy from mobile providers.  As of 29th February, 2016, the top five mobile Internet access providers were Bharti Airtel (35.22 million), Vodafone (26.44 million), Idea Cellular (22.20 million), Reliance Communications Group (15.52 million) and BSNL (10.00 million).

In other words, fixed networks supported about 11.5 percent of Internet access accounts. Fixed wireless served about four tenths of one percent. Mobile accounted for 88 percent of the accounts.

source: TRAI

source: TRAI

AT&T, Globecomm to Offer IoT Connectivity Bridging Mobile and Satellite

Globecomm will be AT&T’s IoT partner for satellite connectivity services, enabling AT&T to leverage DirecTV’s satellite portfolio to connect Internet of Things (IoT) devices,  machines and sensors to the Internet.

The new service will allow IoT devices to operate on mobile networks  when a signal is available, and then automatically switch to satellite when mobile service is unavailable, including tractors on farms, generators in the desert or oil pipelines in remote regions, AT&T says.

In 2015, AT&T signed more than 300 deals with companies to connect devices across multiple industries, including manufacturing, energy, automotive, shipping, healthcare, home security and smart city sectors, AT&T says.

The company has been particularly aggressive in the automotive area, signing deals with major manufacturers in the U.S. and Europe.

93% of Indonesian Inrternet Users Get Online Using Smartphones

Fully 93 percent of Indonesia’s 88 million internet users access the internet from smartphones, according to researchers at GfK.

A GfK survey found that besides smartphones, 11 percent  of Indonesia’s users go online with desktops and five percent  use tablets.

“Our study reveals that Indonesia has a very active online population who spend an average of 5.5 hours a day accessing an average of 46 apps and web domains with their mobile device each day,” said Guntur Sanjoyo, managing director of GfK in Indonesia.

Indonesians spend an average of 32 hours per month each using apps. That’s compared to 27 hours by Brazilians, 20 by Germans and 17 by the Dutch.

Of the 32 hours that Indonesians spend using apps, 19 are spent using communication and messaging apps. This is roughly the same amount of time that German and Dutch people spend each month using all of their apps.

In other words, Indonesian smartphone users spend about 60 percent of their app time on messaging,

Three apps – all messaging apps – used by Indonesians are BBM, WhatsApp and the Korean/Japanese Service Line.

The top three app categories in terms of time spent using them for all countries are messaging, social and then gaming.

Apps that offer ways to overcome traffic jams, a huge problem for commuters in the Indonesian capital of Jakarta, are also very popular in the region.

Motorcycle taxi app GO-JEK is among the top 15 of apps in terms of time spent. And GO-JEK was only launched in January 2015. Shopping, financial and banking apps are rather less used.

source: GfK  

Vodafone M-Pesa Mobile Money Has 25 Million Active Users

Vodafone’s M-Pesa mobile money business has exceeded 25 million active users across Africa, Asia and Europe, Vodafone says.

Across markets in Africa, Asia and Europe, active customers of M-Pesa increased by 27.1 percent in the year ended 31 March 2016, boosted by market launches in Albania and Ghana and supported by a network of more than 261,000 agents in 11 M-Pesa countries.

In India, M-Pesa enables Indian customers to pay for goods on Ebay, for taxis with TabCab and to book train tickets on India’s national railways.  Enterprises including Walmart are using M-Pesa in India to improve cash management and business efficiency, Vodafone says.

Can Telcos Become Platforms?

Telcos can become “Integrated Digital Service Providers” (IDSPs) that function as platforms, Accenture argues, essentially getting out of the “communications” business.

In yet one more iteration of the “moving up the stack” strategy, Accenture suggests telcos can become “platform companies” that use social, mobile, analytics and Internet of Things tools  to build a business architecture and set of services that enables other businesses to rapidly develop and deploy the products and solutions needed to drive their digital strategies.

That probably sounds like “middleware” to some; “operating system” to others.

Time will tell whether any firms actually will be able to become “digital platforms,” or whether, in the end, the effort will fail.

For more than a decade, we all have heard, seen and read commentaries suggesting that “digital disruption” somehow can be turned to a traditional telco’s advantage. Not all of the advice is wishful thinking, but let us be honest: nothing has really worked all that well.

Accenture consultants argue that  “transformation begins when operators update core technologies to digital and leverage existing assets—strong and trusted brands, unique locality, established billing relationships, robust networks, and a large quantity of unique customer and usage data—to compete more effectively.”

Let us be honest: we have been saying that, in different ways, for more than a decade. One might argue that telcos simply have not had time to make the full transformation.

Others might argue the transformation is growing exceedingly unlikely, based in part on the ability of many other entities--device, app, commerce, transaction providers--to bundle their own “access” as part of their services and features. In the end, it always will be difficult to compete with “free.”

source: Accenture

Orange to Launch Mobile-Only Bank

French telecom operator Orange is acquiring a majority stake in Groupama Banque, allowing Orange to create the mobile-only Orange Bank in France at the beginning of 2017.

Orange will own 65 percent of Orange Bank, while Groupama retains a 35 percent ownership.

Through Orange Bank, Orange and Groupama will offer all essential banking services over a mobile platform, including current accounts, savings, loans and insurance services, as well as payment.

The combined ambition for the two groups is to attract over two million customers in France. Plans call for expansion to Spain and Belgium as well.

“This agreement is a major step forward in our ambition to diversify into mobile financial services as we outlined in our Essentials 2020 strategy,” said Stéphane Richard, Orange chairman and CEO.

Orange's investment is part of its ambition to diversify its business, perhaps part of a potential trend: mobile operators becoming banks. That, in turn, is part of a larger effort by European and other mobile operators to avoid becoming dumb pipes.

Sometimes You Need the Big Picture

“Sometimes you need the big picture big picture, and it is often hard to find”, says Peter Stanforth, Spectrum Bridge CTO and Co-founder.

Hear more from Peter and other executives and regulators from across the region, discuss their thoughts on what will drive Internet adoption at Spectrum Futures 2016, 19–21 October 2016 at the Marina Mandarin Singapore.

Join the conversation at Spectrum Futures 2016.

AT&T Launches "Access" Program Providing Internet Access for Low-Income Households

AT&T has launched Access from AT&T  a new program designed to provide low-cost Internet access to lower-income households.

Qualifying households will get the fastest of three speed tiers--10 Mbps, 5 Mbps or 3 Mbps--available at their address.

Internet speeds provided at 10 Mbps and 5 Mbps will cost $10 a month, and Internet speeds at 3Mbps will cost $5 a month.

At&T also waives installation and Internet equipment fees for participating households.

Access from AT&T is available to households with at least one resident participating in the U.S. Department of Agriculture Supplemental Nutrition Assistance Program, or SNAP, and located within the 21 states where AT&T offers home Internet service over its fixed network.

TRAI Calls Indian Mobile Operators a "Cartel"

The Telecom Regulatory Authority of India castigated mobile operators in the Supreme Court during argument on the validity of TRAI’s call drop penalties, calling the industry a “cartel” that is

“interested in profiteering at the expense of consumers,” said  Attorney-General Mukul Rohatgi.

"This is a cartel of four-five players in a country of a billion," Rohatgi said. "They earn huge revenues and couldn't be bothered about consumer satisfaction."

Rhetorical flourishes aside, many observers of the Indian mobile market would say that is hyperbole unrelated to the realities of the market, which is by almost any measure the most-competitive in the world.

Profit margins have suffered accordingly.  

Bharti Airtel and Idea Cellular both posted higher year-on-year net profit in the fourth quarter ended on March 31, 2015.

But Bharti Airtel posted its first sequential profit fall in six quarters while missing estimates. Keep in mind those results include profits from international markets as well, not just India.

Idea, the country's third largest, met the lower end of analyst estimates.

The standout theme for both was the struggling voice business, which accounts for more than 80 percent of overall revenue.

Revenue per minute for Airtel and Idea continued to drop sequentially, dropping in the first quarter of 2015by 2.4 percent and three percent, respectively.

In fact, one might argue, so hyper-competitive is the market that suppliers do not have incentives to invest more heavily. Some believe the situation will worsen as Reliance Jio enters the market.

In 2011, for example, mobile firms in India did not recover their cost of capital. But some might argue earnings have at times in the past been in line with global norms.  

source: PwC

source: PwC

source: PwC

On the other hand, operating profit margins for the top five mobile providers in 2014 were in some cases in the low 30 percent range. Operating profit, of course, is not net profit, after all other business costs. Net profits in the 2014 telecommunications business were about 11 percent, according to Investopedia.  

Others would argue competition in the U.S. mobile market has had precisely that impact.

The analogy is investment by AT&T and Verizon in copper facilities and legacy voice, rather than next generation mobile networks. Simply, the money gets invested where the revenue, growth and profit lies, not in those parts of the business that are declining and provide low to negative profits.

The point is that profiteering is probably not a fair characterization of the Indian mobile operator business. In fact, low profits would explain behavior better than "profiteering."

Facebook Will be ain Internet Access Platfom Enabler or Supplier

Does Facebook’s mission of connecting the world extend beyond social applications and messaging? It is hard to come to any conclusion but that Facebook does see physical connections as part of its eventual portfolio.

First off, Facebook is starting a new business unit to build “new hardware products to advance our mission of connecting the world,” says Mark Zuckerberg, Facebook CEO.

Also, Facebook's 10-year roadmap clearly indicates that a variety of access platforms are planned, ranging from unmanned aerial vehicles to satellites to lasers to “terrestrial solutions” and “telco infrastructure.”

That does not necessarily mean Facebook everywhere and always--or even primarily--will operate as an Internet access provider. There may well be cases where that happens, but a range of roles--wholesale, backhaul, access platforms or networking gear--are conceivable.

Some will not be happy about that roadmap, but Facebook’s initiatives in the data center networking space already show some of the likely approaches the firm will take.

By commercializing open source servers and creating new data center architectures, Facebook is showing a way for cloud operations to be created and run at lower cost.

But that also means Facebook has become a “competitor,” if indirectly, to suppliers of server hardware, software and platforms. It might be more accurate to say Facebook allows data center operators to build their own servers, instead of buying them from commercial suppliers.

In other cases, Facebook is likely to become a significant supplier of Internet backhaul, wholesale services or perhaps even retail services in some cases, if partners do not come to the table with business models that rapidly and affordably supply Internet access in hard-to-reach or hard-to-serve areas, at retail prices all consumers--everywhere--can afford.

In Africa, Facebook supplies its own satellite access, because other providers do not do so at prices Facebook finds compelling. The unmanned aerial vehicle and fixed wireless networks Facebook also is developing provider other examples of the emphasis on lower-cost Internet access.

It is not clear that Facebook prefers to operate as a retail Internet access provider. It might well prefer to work with retail ISPs as a platform or backhaul provider. But the movement into connectivity” goes well beyond present roles as a major supplier of social networking and messaging platforms.

U.S. Streaming TV Viewers Spend 42% of Their Time Using Streaming Services

U.S. consumers who use streaming services now spend about 42 percent of their television time watching such services, rather than linear TV, a study sponsored by Adobe and conducted by the Diffusion Group has found.

Of that time, 65 percent is spent watching subscription video-on-demand content, 30 percent  is spent watching free streaming services, while five percent is spent watching transactional streaming services (video on demand).

Some 82 percent of adult video streamers subscribe to some type of online subscription video service.

Netflix is used by 70 percent of adult video streamers, followed by Amazon Prime at 33 percent and Hulu Plus at 21 percent.

Some 88 percent of adult video streamers use free online video services. YouTube is by far the most popular free online video service, and is used by 83 percent of adult video streamers, followed by Hulu at 23 percent and Crackle at 19 percent.

"Telecommunications" Will be a Commodity LIke Sugar; Big Changes Necessary

It has been a tough couple of decades for much of what we used to know as the “telecommunications” industry, but it is likely to get much tougher. Several cases in point:

• With the death of monopoly regulation, profit margin is being wrung out of the business
• The Internet has become the biggest part of the “next generation network”
• Wi-Fi now is becoming the biggest part of the “access network”
• Value is migrating up the stack to “application layer”
• App layer will relatively easily move “down the stack” to vertically integrate experience

None of those trends are helpful to traditional “telecom” providers. That, in turn, is why some believe “telecom” industry incumbents should not be more-heavily regulated. The basic thesis: it does not make sense to place more burdens on a declining industry, and that is what legacy “telecommunications” happens to be.

“Wi-Fi has long since passed cellular as the dominant connection platform,” says Craig Moffett, partner at MoffettNathanson. “We’re going to move to a model where cellular is going to be what you roll onto when you have to.”

Says Moffett: “We’re going to think about Wi-Fi as the first network and cellular as the second network, rather than the other way around.”

If you think about Uber, it is a way of unleashing latent resources using a new business model. The analogy to Wi-Fi is fairly clear, as well. As Wi-Fi has become a major method of offloading mobile network traffic, so Wi-Fi is emerging as a new platform for supporting untethered communications that have a mobile component.

The other angle is that value always has resided in the applications people want to use, not the access method. Under monopoly regulation, people purchased the ability to make calls. Access was necessary to enable that value.

That remains the case. People want to use apps, and therefore need Internet access. In one sense, it is not as though value is migrating to the “application layer.” Value always resides in the application layer.

All the other layers enable the app layer. With the rise of IP networks, with access separated from apps, the sources of value simply become transparent, where they once were hidden.

In other words,  access is becoming commoditized in a new way because the apps and access are separate products for the first time.

We sometimes speak of “value shifting up to the application layer” in the new ecosystem. In truth, value always resided in the app layer.

It is simply that, under monopoly regulation, the access providers also had a monopoly on the valued app (voice).

“If you understand that Apple and Google want to control your experience of the cloud, you can understand why they would like to ‘uberize’ the entire wireless space so their brand dominates your cloud experience,” says Francis McInernery, partner at North River Ventures.

That is why “low cost” now matters so much in the access business. Though a reasonable strategy for a tier-one provider is to own some of the valued apps supplied over the access networks, access itself is becoming a commodity.

And that means the business model has to evolve towards “much lower costs.”

One knows that is true, experientially, when users understand they can switch between access platforms without endangering “experience.” That is the definition of a commodity: a product that has ample substitutes with fully-functional qualities (sugar, flour, gasoline, electricity), leading to easy substitution and hence, lower value, leading to lower prices.

To anticipate an objection, long haul transport is is one sense, not a full commodity. Capacity across the Atlantic cannot easily be a functional substitute for capacity across the Pacific, or between points within any single region.

Access networks still are geographically distinct, and thus "capacity" is not, strictly speaking, a commodity in the sense that buying trans-Atlantic capacity solves a trans-Pacific capacity problem.

But within any local area, the access function is much more susceptible to substitution. People can buy or use mobile, fixed network, cable TV, independent ISP or Wi-Fi access from multiple suppliers, with roughly equivalent experience.

Managed Voice over Wi-Fi Should Improve ARPU, Study Suggests

It stands to reason that a voice over Wi-Fi (offload) would boost profit margins for any mobile carrier voice service, at least marginally, as the carrier benefits from a lower cost per bit profile, as access is shifted to the fixed network.

A new analysis by ACG Research suggests that is the case.Looking at a business case for a developed country service provider with mature VoLTE penetration, ACG Research suggests managed Wi-Fi voice quality also helps, as it encourages users to make heavier use of voice over Wi-Fi mechanisms.

The results suggest that average revenue per user is maximized when the quality of VoWi-Fi is high (resulting in increased usage) and data offload is easily available (resulting in lower cost per bit).

In the first scenario, the service provider’s network features 10 percent use of untrusted VoWi-Fi and no use of trusted Wi-Fi.

This results in a low adoption of VoWi-Fi due to quality and user experience issues.

In the second scenario, the service provider’s network uses 30 percent trusted VoWi-Fi and seven percent untrusted VoWi-Fi, resulting in VoWi-Fi penetration that is higher than VoLTE.

This combination delivers $19.91 billion EBITDA (24 percent higher as compared to the first scenario) and a monthly APPU of $19.91 (35.5 percent higher as compared to the first scenario) with both ramping to Year five.

As VoWi-Fi grows the cost per voice minute drops, reaching a value of $0.0072. In the first scenario the service provider’s network is dominated by VoLTE penetration, resulting in the cost per voice minute being 19.5 percent higher than the second scenario.

EU Files Antitrust Charges Against Google

The European Union has opened an antitrust action against Google, formally charging Google with abusing the dominant position of its Android mobile operating system.

European Union antitrust regulators argue that by requiring mobile phone manufacturers to pre-install Google Search and the Google Chrome browser, the U.S. company was denying consumers a wider choice of mobile apps and stifling innovation.

The Commission also alleges that Google has breached EU antitrust rules by preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code.

Also at issue are Google’s alleged practices giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google search on their devices.

Google is already facing EU charges over the promotion of its shopping service in Internet searches at the expense of rival services.

To some, the action is reminiscent of similar charges against Microsoft. In 2003, the EU ordered Microsoft to offer both a version of Windows without Windows Media Player, as well as supplying the information necessary for competing networking software to interact fully with Windows desktops and servers.

In March 2004, the EU ordered Microsoft to pay €497 million ($794 million or £381 million), the largest fine ever handed out by the EU at the time.

Telefonica Looks for Other O2 Options in United Kingdom

source: Informa

It is starting to appear that regulators will not allow the proposed merger of Three and O2 in the United Kingdom, a prospect that now has Telefonica looking at other options  for its U.K. business.

Among the other options conceivable in the event of a merger denial are selling to another buyer or spinning O2 off as an independent company.

And some speculate that Liberty Global, owner of the Virgin Media cable TV assets in the United Kingdom, will be interested.

Any successful acquisition by Liberty Global would be a further move by major cable TV operators into the core mobile services business.

In the Netherlands, Liberty Global already is working with Vodafone to sell mobile services to its cable TV customer base. In the United States,

Comcast now says it will bid on 600 MHz mobile spectrum, while Comcast and other cable TV companies already have the right to resell Verizon Wireless services, with the eventual option to create a mobile virtual network operator business that uses wholesale Verizon assets to create a branded retail operation.

The switch in plans by Telefonica shows the big role regulators now are playing in global communication and Internet ecosystem markets.

In recent days, regulators have been active shaping communications markets, creating network neutrality rules that boost or limit business models, changing spectrum licensing rules in ways that permit more intensive use of existing licensed spectrum and freeing up more spectrum for use both licensed and license exempt.

But antitrust regulators also appear to be taking a more prominent role, essentially killing mergers that would have directly affected mobile market structures in the United States and European Union, while preparing to stop a big merger in the U.K. mobile market.

And antitrust investigations directly affecting software suppliers are underway in the European Community.

Actions by private actors matter, but so do ground rules set by regulators that directly affect market structures and potential costs and opportunities within various portions of the broader Internet ecosysetm.