Gigabit Squared to Launch in Some Seattle Neighborhoods in 2014

Gigabit Squared plans to launch service in some neighborhoods of Seattle in 2014, featuring free 5 Mbps service for five years, 100 Mbps download/100 Mbps upload for $45 per month or a gigabit for $80 a month.

The Gigabit Squared fiber network will initially be made available to neighborhoods located within the University of Washington West Campus District, First Hill, Capitol Hill and Central Area of Seattle as part of a program called Gigabit Seattle.

Installation charges will be waived for customers signing a one-year contract for 100 Mbps service or greater.  Otherwise, a $350 installation fee is required.

Plan A offers 5 Mbps download/1 Mbps upload at no charge for five years. After five years renters or owners can convert to a 10 Mbps download/10 Mbps upload service plan for $10 a month.

Plan B offers 100 Mbps download/100 Mbps upload for $45 per month, with no installation charge with one- year contract

Plan C is a symmetrical gigabit connection costing  $80 per month with no installation charge with one-year contract.

The Gigabit Squared plans show the Google Fiber model is spreading.

Dynamic Spectrum Alliance Launches

Some 23 companies and organizations announced the launch of the Dynamic Spectrum Alliance, which will focus will be on policy and regulatory advocacy.

Dynamic spectrum sharing allows radio communications devices to transmit on any available radio spectrum assigned for such sharing.

Almost by definition, the Dynamic Spectrum Alliance will tend to be disruptive, allowing service providers to get ot market with lower barriers to entry.

That does not necessarily mean “non-licensed” or “no fee” access, but should lead to more efficient, lower cost spectrum costs.

Members include Microsoft and Ruckus Wireless, Taiwan’s Computer and Communication Research Center, Japan’s National Institute of Information and Communications Technology (NICT), the Singapore Institute for Infocomm Research, and White Space Technologies Africa.

Also members are 6Harmonics, Adaptrum, BSkyB, Carlson, Council for Scientific and Industrial Research – South Africa, Indigo Telecom, InterDigital, MediaTek, Network Startup Resource Center (University of Oregon), Neul, RealTek, StarHub, Strathclyde Centre For White Space Communications, Tanzania Commission for Science and Technology (COSTECH), Taiwan Institute for Information Industry, UhuruOne and WaveTek.

Internet Exacerbates "Competition" Issues, But Competition Still is the Key Market Change

It appears that IP messaging app WhatsApp has passed 250 million users, enough to put WhatsApp in the same league as Twitter (200 million users) and Skype (280 million), in terms of user base.

Others might say the real impact is that IP-based instant messaging services are becoming, for many users,  the primary social graph. That means a potentially important new revenue vehicle is being created.

“For whom?” is the issue, as seems always the case for service providers.

Seemingly endless amounts of speculation and argument will continue to be expended by executives, pundits and analysts about “what service providers should do.” That’s a fair enough question.

What should by now be abundantly clear is the strategic impact on service providers, no matter what they decide to do tactically (participate by buying into the business, create branded versions of such services, fight back by enhancing the value of any existing substitute products, or essentially ignore the attackers).

The analogy and historical precedent is the advent of competition within the facilities-based telecom business, even before the advent of over the top competition. A look at addressable market illustrates the primary change of strategic context.

Back in the monopoly days, a national carrier’s business case was fairly simple. Whatever other assumptions one might have made, the potential addressable market was nearly “100 percent of homes and business locations.”

That had implications for the “cost per subscriber” or “cost per customer” metrics. At very high customer penetration, “cost per customer” and “cost per passing” are fairly closely related metrics.

That is a relatively simple business exercise. Build out network, passing 10,000 new locations, and sign up 70 percent to 90 percent of those locations as customers.

All of that falls apart in a competitive environment. Assume just two strong contestants with networks, equally skilled and with some advantages (telcos with mobile or cable TV with video).

In that case, the math is quite different: build or upgrade a network and sign up perhaps half of those locations as customers. That can nearly double the “cost per customer,” based strictly on payback on network capital.

The other likely effect is an increase in marketing expense.

In other words, the effect of competition is a fundamental change in network economics and profit margin.

Over the top services pose the same sort of challenge. By now, it should be obvious that one clear implication of IP-based competition is that profit gets wrung out of any service or application that formerly was immune from such competition.

So whatever tactical response a service provider chooses to make, it will be within the context of radically-different gross revenue and profit margin assumptions.

India Illustrates Principle: Competition is Good, Excessive Competition Is Not

Mobile and fixed network service providers sometimes point out that excessive competition or excessive regulation actually can depress willingness to invest and upgrade networks. And mobile service providers have learned the hard way that overpaying for spectrum likewise can create stress that limits investment into network infrastructure.

That seems to be the case in the Indian mobile market, where Indian service providers will invest a substantially lower percentage of their revenue back into their networks, compared to service providers in China, Indonesia and the Philippines, according to research from ratings agency Fitch Ratings.

Mobile Internet Access is Big with Users 18-34; VoIP Much Less So

When asked what was most important in choosing their next mobile service provider, younger European users 18 to 34 reported they value “more data,” not more texting allowances or bigger voice buckets of use, a survey by Analysys Mason suggests.

The survey also suggests that use of mobile VoIP isn’t as common as sometimes thought.

In fact, Analysys Mason concludes, the conditions for mass market adoption of VoIP on smartphones “do not currently exist.”

Still, VoIP services are most popular with the youngest age group, with more than 10 percent of those under the age of 35 using a VoIP service, Analysys Mason says.

Nor has IP-based messaging fully displaced text messaging, though the process is underway, one might argue.

“Operators will note that despite the high penetration levels of IP-based alternatives, full messaging service substitution has not yet occurred,” says Stephen Sale, Analysys Mason principal analyst.

On the other hand, a bigger bucket of voice usage was the top desire of users in every age bracket other than 18 to 34.

The 18 to 24 and 25 to 34 age groups have widely contrasting approaches compared with older smart phone users, particularly in relation to VoIP, IP messaging and social media services such as Skype, WhatsApp Messenger and Facebook. That won’t surprise you.

More than half of surveyed smart phone respondents 18 to 24 year in the United Kingdom, for example,  use IP-based messaging.

The survey of 6610 consumers 18 or older in France, Germany, Poland, Spain, the United Kingdom and United States also found that only 20 percent of those 65 and over do so.

Text messaging is used by 91 percent of those 18 to 34 but only 67 percent of those 65 and over.

That isn’t to say mobile VoIP or IP messaging are not threats anywhere. In some markets, there seems to be quite a lot of substitution, in others the problem still is rather minimal.

But the survey results do show the wisdom of making Internet access the variable cost portion of a mobile bill. That is the service people increasingly value, above voice and texting, at least in terms of usage quotas.

Criteria for choosing next mobile service

Question: "Which of the following factors would most attract you to your next mobile tariff/contract?" n = 1073

UPC Bumps Top Speed to 500 Mbps, Responding to Reggefiber 1 Gbps

ISPs facing disruptive offers, such as Google Fiber, will have to respond, even if not countering such offers head to head. In the Netherlands, Liberty Global’s UPC operation in the Netherlands faces a competitor--Reggefiber--already offering a symmetrical 1-Gbps service.

“We had to address it head on,” says Bill Warga, Liberty Global VP. technology. By bonding more than 16 6-MHz channels, UPC was able to create a 500 Mbps service.

“We had to build a special modem because (DOCSIS) 3.1 chips aren’t out yet,” he said. “That was a reaction but that tells you how quickly in a marketplace that something can move.”

UPC’s most popular product is the 25 Mbps service costing 25 euros.

AT&T's Europe Interest is "Internet Access"

AT&T is looking to Europe for expansion in large part because U.S. regulators have signaled they will not let AT&T get any bigger in the U.S. market, because the U.S. mobile market is nearly saturated and because Europe, though arguably as saturated as the U.S. market is, holds more promise for broadband access revenue growth.

Chief Executive Officer Randall Stephenson has said Europe is ripe for high-speed Internet access innovation, for example. 

The GSM Association, for example, argues that the United States "has opened up a large lead in deployment of next-generation technologies."

By the end of 2013, nearly 20 percent of U.S. connections will be on Long Term Evolution networks, compared to fewer than two percent in the European Union. 

Average mobile data connection speeds in the U.S. are now 75 percent faster than those in Europe and by 2017 will be more than twice as fast.

Mobile investment in the United States has outpaced that in Europe, with capital expenditure in the U.S. growing by 70 percent since 2007 while declining in the EU.

All of that creates conditions for revenue growth, AT&T seems to believe.