Mobile Broadband Changes "Broadband"

U.S. broadband adoption seems to have flattened markedly since about 2010. For some, that might represent a problem. But something else is happening. For a growing number of U.S. consumers, wireless broadband has become the preferred way of using broadband and the Internet, much as wireless has become the preferred way of using "voice."

In 2010, some noted a digital divide between white Americans and Hispanic Americans. Back then, it was noted that 45 percent of Latinos had a home broadband connection, compared with 65 percent of whites.

At the same time, 52 percent of black Americans had a home broadband connection.

But much has changed. mobile broadband is used by two thirds of all adult Internet users. Also, as many note, for many users, the smart phone and tablets have started to displace the desktop PC as the computing device used most often. That shifts demand, to a large extent, from fixed modes to mobile modes.

Many expect that multi-device data plans will enhance and encourage that shift, boosting use of tablets for mobile broadband access.

26% of U.S. Internet Users Might Buy a Tablet This Year

Recent studies by Ipsos MediaCT examining penetration and ownership of tablet PCs shows dramatic increases in buying of tablets.

In fact, tablet ownership is now 16 percent among 18 year olds and has increased across all demographic groups.

Ipsos expects more than a quarter of U.S. online consumers could purchase a tablet before the end of 2012.

Samsung Galaxy S3 Will Test the "Big Screen" Theory

The Galaxy S3, which tracks the user's eye movements to keep the screen from dimming or turning off while in use, and features a giant 4.8-inch screen, is launching in 28 European and Middle East countries. The U.S. launch will probably come in July 2012.

The Galaxy S3 is deemed by some observers to be the single device best positioned to compete with the Apple iPhone, including the upcoming version of the Apple iPhone.

The smartphone, running on Google's (GOOG.O) Android operating system, boasts a 4.8-inch (12.2 cm) screen, one of the largest on smartphones ever, and much bigger than the 3.5-inch display on the iPhone 4S.


In the first quarter of 2012, Samsung sold 44.5 million smart phones, giving it 30.6 percent market share. Apple sold 35.1 million iPhones, taking 24.1 percent market share.

Will Developing World Mobile Innovations Come Back to Developed Regions?

Innovation traditionally has taken established paths. New technology has been made available to people in developed nations, while the rest of the world getting access as markets scale and prices come down.

Likewise, technology has been developed in universities, commercialized for enterprises, then migrates into the mid-market, then small and medium business. Eventually, consumers might adopt, as well.

But those diffusion pathways are changing. These days, it is very likely that innovations are created in the universities, then popularized first in the consumer markets, before being adopted later by businesses of all sizes.

In similar fashion, technology innovations can be created in the developing regions and then find their way back to developed regions.

So Nokia looking to use Kenya to debut a free classifieds service (think a mobile-phone version of Craigslist), complete with a first-ever feature that lets people shop using voice commands to browse for goods.

In fact, the traditional model of developing new products is quietly reversing course. Call it "trickle-up innovation," where ideas take shape in developing markets first, then work their way back to the West.

"If it's radically innovative and reduces costs, it's going to get looked at and will accelerate," says Michael Chui, McKinsey Technology analyst. Consider almost anything related to mobile phones.

For the average developing market mobile user, a mobile feature phone costs a few months’ salary. Using the devices can represent over 10 percent of their monthly income, UNICEF believes.

Batteries can be hard to recharge locally, so long battery life is necessary. Handset cost and low recurring costs, including apps that require very little bandwidth, also are necessary. All of those innovations would be helpful in developed markets as well, though.

The Long Road to Streaming TV

As haltingly slow as the process is, we continue to glacially create all the infrastructure required to enable streaming delivery of television at a revenue-significant level. Better broadband is the first requirement, as is the consumer habit of watching TV on lots of devices connected to the Internet.

Better ways of aggregating content, providing navigation and ease of use also are needed. In many ways, Xbox now provides some of that functionality. Boxee and Roku are other examples.

But content availability remains the biggest blockage. AT the moment, online content still does not feature most of what consumers expect when they buy video entertainment services. To be sure, a growing number of consumers decide to live without traditional video services. But those consumers remain a small percentage of all consumers.

Still, even once the infrastructure to support robust video streaming is in place, there will be key obstacles, namely content availability.

Historically, even content availability has not proven it can create a large market.

According to a new report released by The Diffusion Group (TDG), video-on-demand services provided by PayTV operators should be, but are not, generating significantly higher viewing and advertising revenue. Total VOD use is small, representing only one percent of all U.S. TV viewing.

By some measures, VOD is doing better. Magna Global has estimated that U.S. homes with VOD, a "category that includes both traditional multichannel VOD offerings and over the top services," will hit 70.1 million homes, about 57 percent of all TV homes at the end of 2016.

TDG attributes that failure as a reflection of VOD's inadequate advertising support and awkward program guides that limit availability and viewing of ad-supported VOD content. That also suggests the "for fee" VOD has not gotten widespread interest.

VOD in recent years has contributed about $2 billion a year worth of revenue for U.S. video entertainment providers. U.S. cable TV companies alone booked about $98 billion in 2011 revenue. That doesn't include the sizable revenue earned by satellite and telco providers as well.

The point is that VOD, as a service, has been a modest success, though it has had three decades to make its case.

Content availability is the single biggest key needed to unlock the streaming TV business. But if video on demand is any indication, even that might not be enough to create a robust streaming video business.

Platform Wars Explain Apparent Facebook Phone Interest

The platform wars are driving application providers into what might be unusual territory. In order to compete with Facebook, Google attempts to build a social network. In order to compete with Google, Facebook attempts to build a phone. Lots of device or app firms have launched their own browsers.

And the "platform wars" are occurring on a number of fronts.

The fight over the TV is really a fight over the next massive consumer platform that is coming up for grabs. Of platforms there are few: Google owns search, Amazon owns digital retail, Facebook owns social, and Apple owns consumer devices. Microsoft owns, well, nothing at the moment, despite its handsome revenue stream from Windows and Office, argues James McQuivey of Forrester Research.

But Microsoft’s Xbox 360 is already the most-watched net-connected TV device in the United States and soon, the world. With more than 70 million consoles in households worldwide, as many as half of them connected to the Internet, depending on the country, Microsoft can rapidly drive new video services into tens of millions of households, McQuivey argues.

Significantly missing from those lists of platforms are cable or telco access service providers. At least for the moment, telcos and cable operators are not "platforms."


Rumors about Facebook creating its own smart phone are not new. Now there are rumors that Facebook is considering buying mobile browser Opera, a move that would strengthen Facebook's platform status without requiring an immediate move into the actual device business.

Separately, there are rumors Facebook is hiring engineers as part of a project to create its own smart phone.

You might ask why Facebook would want to enter competition with Google, Apple, Microsoft, Mozilla and Yahoo. The answer is that, right or wrong, such a move would be viewed as a way of allowing Facebook to grow its status as a platform, much as Google, Apple and Amazon have done.

Keep in mind that Facebook also has talked about becoming an ad network, able to sell inventory outside Facebook. A browser would help, in that regard.

Google itself makes far more money from advertising on the iPhone than it does on its own Android devices, some would note. That suggests the rationale for an ad-supported company to control its own devices and use its own operating systems.

Apple Shares To $1,000?

Research firm Piper Jaffray believes Apple shares will hit a value of $1,000 in the next couple of years, based on a refresh of existing product lines and launch of Apple TV devices.

In 2012, Piper Jaffray analysts are looking forward to several “meaningful updates” to core products, including the iPhone and Mac, as well as the introduction of a TV, for shipment in 2013. Those products will, at least in the near term, prove Apple can still innovate at its accustomed high level.

Google Already Seems to Have Learned Something about Access in Kansas City

Some say Google is backing off its commitment to provide wholesale access to third parties as part of its 1-Gbps Kansas City network. Early on, Google seemed to believe it would offer third parties access, but it might be that Google already has learned how difficult it actually is to make business with an advanced fiber-to-home network.

Google might have concluded that any realistic hopes of operating the network as an money-making enterprise, as well as its hope to encourage lots of application innovation, might only be possible if Google acts as a retail provider and reaps all the revenue.

Also, if the point is to create a test bed for new applications, Google might now be concluding that it will learn more if it takes a more direct and active role in sponsoring such applications. One of the problems with operating as a wholesale provider is that you don't actually learn very much about what retail customers want, and are doing, because you don't actually have those customers.

Some think the wholesale approach would have been more interesting, as GigaOm tends to argue. But some might say the realities of the fiber to the home business now are clearer. As other triple-play service providers can well attest, offering such services in a competitive market, and Kansas City already has strong, entrenched cable and telco providers, is difficult.

If Google only wanted to create a "test bed," and didn't mind losing quite a lot of money, a wholesale approach might be feasible.

Utopia, an open access network operated by 16 municipalities in Utah, is among those entities trying to prove that a wholesale model can work, commercially.

Google might not believe it can learn as much, much less turn a profit, without offering and managing a retail service, allowing it to work with partners to test new services directly.

Lies, Damn Lies and Statistics

The federal government calculates the deficit in a way that makes the number smaller than if standard accounting rules were followed (in trillions). Deficits are far worse than the Federal government reports, in other words. 


For only the fiscal year of 2011, the actual deficit was $5 trillion, not $1.3 trillion, as the executive branch reports. The same was true in 2010. 


Decades ago, some policy advocates would have argued that "deficits don't matter." These days, when governments at virtually every level, all over the world, are borrowing money to finance current deficits, that isn't true any longer. Deficits do matter, and everywhere. 

Communications Both Helps, Hinders "Work"

Dealing with on-the-job distractions is a constant part of every marketing professional's day, according to a new survey by The Creative Group.

Ad and marketing executives surveyed say the longest they can work on a task without being interrupted is 30 minutes, on average, according to the study. 


As you might guess, it also takes some time to get back to whatever task it was that any respondent was working on, before the interruption.
The most common culprits of on-the-job distractions are people stopping by to chat and phone calls, cited by 27 percent and 26 percent of ad and marketing execs, respectively.

Such distractions, one might argue, are the downside of “always connected”  communications. In a sense, one value “presence” features offer is the saving of time wasted trying to find and communicate with people. The flip side of all our enhanced communications, though, is the risk of even more interruptions, from more channels, than ever before.

That is probably why many professionals who work away from the office say they get more actual work done. Approximately 69 percent of the employees surveyed by Cisco cited higher  productivity when working remote, and 75 percent of those surveyed said the timeliness of their work improved.

Of course, communications are essential for those telecommuting workers, just as it would be for at the office workers. But communications can aid or hinder “work,” it can be argued. 

Groupon, Facebook Moves Show Complexity of Advertising Ecosystems

Groupon is said to be testing its own mobile-assisted mobile payments service, using a dongle that provides cred card swiping capability for a smart phone. Separately, Facebook now is rumored to be exploring a purchase of mobile browser Opera.

Both moves show the complexity of the mobile ad business these days. PayPal, a traditional online payments supplier, now is getting into the offline retail point of sale business. But that is only part of the effort. PayPal sees targeted advertising and loyalty programs, as well as in-store promotion as parts of the changing mobile commerce business.

In that business, the actual payments process is only part of the overall range of operations that are potential parts of the mobile shopping business.

That's why Groupon might be beefing up its actual payments capability, while Facebook might get into the mobile browser or even mobile phone business. Platforms are better able to maximize the value of an advertising or loyalty business.

Is Facebook Going to Get into the Mobile Browser or even Phone Business?

Rumors about Facebook creating its own smart phone are not new. Now there are rumors that Facebook is considering buying mobile browser Opera, a move that would strengthen Facebook's platform status without requiring an immediate move into the actual device business.

Separately, there are rumors Facebook is hiring engineers as part of a project to create its own smart phone.

You might ask why Facebook would want to enter competition with Google, Apple, Microsoft, Mozilla and Yahoo. The answer is that, right or wrong, such a move would be viewed as a way of allowing Facebook to grow its status as a platform, much as Google, Apple and Amazon have done.

Keep in mind that Facebook also has talked about becoming an ad network, able to sell inventory outside Facebook. A browser would help, in that regard.

Google itself makes far more money from advertising on the iPhone than it does on its own Android devices, some would note. That suggests the rationale for an ad-supported company to control its own devices and use its own operating systems.

Could White Spaces "Revolutionize" Access?

White spaces broadband is viewed by many as an important new challenger in the broadband access business.  There are a couple of ways white spaces can be viewed. Some might see it as a potential replacement for mobile broadband, while others might see it as a replacement for fixed broadband.

It is too early to say where, or how much, either of those positions might be true. One can note any number of would-be challengers that have garnered attention over the last couple of decades.

Wi-Fi itself was once seen as a potential challenger to mobile networks. Power line technologies have been discussed for decades as a new broadband access platform. Before Sprint was born, frequencies used for educational TV (MMDS) were seen as the foundation for a new sort of "personal communications service" that would be different from "cellular telephone" service.

Metropolitan broadband using wireless techniques have been seen as rivals to telco or cable TV access services. Other wireless techniques such as that used by Ricochet Networks also were tried in the first decade of the 21st century.

The point is that any number of attempts to create new and successful broadband networks have been tried over the last couple of decades. Judging by market share, none of them have gained significant share in the market, and most have failed to get traction in the way initially forecast.

Public Wi-Fi has become important, but more as a feature of a fixed broadband or mobile broadband network, than as an alternative to cable modem, digital subscriber line or fiber to the home service.

It remains to be seen whether white spaces will fare any better than earlier efforts.

Is Apple Changing, or Not?

The inevitable question for Apple, post Steve Jobs, is whether Apple can continue to create new markets on the scale it has done in the past. It isn't an easy question to answer, if only because Apple's product roadmap tends to stretch out a ways.

So any "post-Steve" initiatives will take some time to emerge. Some might argue Apple is changing under CEO Tim Cook.

Adam Lashinksy seems to be in that camp. Jon Gruber is not.

But it wouldn't be unusual to argue that, over time, Apple's performance will regress toward the mean. The only question is how long it might take for that to happen, and how great a reversion might occur. But companies, like products, have life cycles.

Apple isn't likely to escape its own life cycle indefinitely. The next "big thing" Apple attempts might not tell the story.

If it turns out that "television" is that next big product opportunity, we might not start seeing the first real "post Steve Jobs" initiatives until one more major product category is tackled, after TV.

The reason is simply that Apple's roadmap stretches out a significant way into the future, and that Steve Jobs was an unusual leader. Few business executives in the last century have stamped their own sense of "what the market wants" on a company, rather than "responding to what the market wants."

The prevailing mantra of "listening to the customer" was not how Apple revolutionized existing markets, and created new markets. The view has been that people could not adequately determine their own desire for products and experiences with which they had zero familiarity. Few business leaders will have the "arrogance" or "insight" (depending on how one wishes to view the matter) that Steve Jobs did.

That is not to say Jobs did not form a company culture with distinctive characteristics. But neither does the impact of a distinctive  company culture remain constant over long periods of time. HP, 3M, IBM, AT&T and all other sufficiently-large firms also have cultures.

You might question whether the core values and cultures have been maintained, in business-driving ways, over time. People, companies, products and countries evolve over time. It seems unlikely Apple will "forever" escape that aging process.

"Hybrid" Behavior in Consumer Use of Digital Financial Management

While consumers are beginning to embrace digital financial management, they remain hesitant to dive in completely, taking a "hybrid" approach.

More consumers receive their statements online than through the mail, but more than 25 percent of consumers "double dip," receiving both paper and electronic statements, Javelin Strategy & Research says.

That sort of behavior is typical when major new technologies start to displace older ways of doing things. When steam engines began to displace sails as the propulsion for ships, ship owners outfitted sailing vessels with boilers, in part because, early on, the economics of steam power were not as good as sails.

Most fixed communication networks use a hybrid of older copper media, with an overlay of optical fiber media, and a mix of digital signaling and IP transmission.

In a similar way, people now use a mix of bank visits, ATM machines, PCs, tablets and smart phones to check balances or conduct transactions. That "hybrid" behavior will continue for some time, as behaviors shift and more users are able to use newer methods for seeking information and conducting transactions.

Some 40 percent of mobile-device owners will tote a tablet by end of 2012. About 72 percent of U.S. adults with mobile devices will tote a smartphone, up from 45 percent in 2011. More than half of mobile-device owners (111 million) will use mobile banking on an annual basis, up from 30 percent in 2011, Javelin predicts.