Amazon, Content Suppliers Wrangle Over Prices

Amazon is looking to increase its cut of revenue from some subscription services available through Prime Video by 10 to 20 percentage points to as high as 50 percent, The Information reports.  

Amazon’s share from services such as HBO almost certainly parts with less of the gross amount of subscriber fees. Smaller and niche services might pay half of their sales to Amazon.

Amazon’s attention likely is focused on its share of revenues from channels that currently pay less than 50 percent to Amazon when a sale is made.

Disagreements about revenue splits are commonplace in the entertainment video business. That is especially true for streaming video services, which have difficult business model unless scale is obtained.

To be sure, garnering greater share of subscription revenue makes business sense for ecosystem partners when revenues are growing or shrinking. It matters not which way the trend is pointing.

And though the economics of linear and over-the-top subscriptions are quite different, the OTT model can make sense even for internet service providers who sell linear and OTT products. At a retail level, zero rating of video consumption, or big usage buckets, are necessary.

5G Can Improve Rural Connectivity if Spectrum is Free

It is far from clear how well 5G networks might help improve or supply quality internet access in rural, mountainous and thinly-populated parts of the United States. Almost by definition, such areas do not support sustained business models for fixed networks, and require subsidies.

That is why hundreds of independent wireless internet service providers now are the way many people in rural areas get internet access services. Those firms also tend to rely on use of unlicensed spectrum to make the business model work.

The same sort of economics work for Wi-Fi. Low entry cost, as spectrum is available at no cost, is key.

source: Saankhya Labs

One might argue that should continue to be the case in the 5G era: networks will have to be wireless, and will require unlicensed spectrum access.

It probably matters less whether the unlicensed spectrum is gotten using shared or dedicated mechanisms (Citizens Broadband Radio Service, which is shared; or new unlicensed spectrum in the millimeter wave bands). The point is that tough business models require no-cost access to spectrum.

Whether 5G networks can make a big difference in providing good rural coverage hinges on access to no-cost and low-cost spectrum.

Over the past few years, some have worried about the cost of 5G spectrum, although spectrum prices are dropping, generally speaking, in part because there is a huge increase in supply, and because mobile operators must now more carefully weigh the cost of new spectrum against expected financial return.  

Also, firm strategies now vary. Some firms believe use of unlicensed spectrum will be more important. Others substitute small cells for additional spectrum. Some need additional spectrum more urgently than others, based on present holdings.

Recent auctions of 3.5-GHz spectrum have no clear pattern, especially since the various auctions featured different amounts of total spectrum and different license allotments (bigger or smaller amounts of spectrum per license), and there always are local market drivers (some contestants have greater needs for spectrum).

The point is that supply and demand issues affect price, as always. Finland offered the most 3.5-GHz spectrum, at 390 MHz. Spain and Italy each sold 200 MHz. U.K. regulators auctioned 150 MHz.

Finland’s prices wound up at 0.04 euros per megaHertz pop (a MHz POP represents one megahertz of bandwidth passing one person in the coverage area).  Spectrum sold for 9.07 euros per MHz POP in Spain, but a whopping 0.51 euros per MHz POP in Italy. U.K. spectrum sold for 0.17 euros per MHz POP.

On the other hand, at least one Australian official worries that a recent big merger between TPG and Vodafone will reduce demand and lead to lower prices.

source: GSMA

One might simply argue that supply and demand will  work. Whatever the limits on new spectrum at 3.5 GHz, regulators simply must make more spectrum available in other bands. More supply takes care of pricing pressures. Releasing more unlicensed spectrum, spectrum sharing, spectrum aggregation and additional spectrum in the millimeter wave bands all will help ensure there is plenty of 5G spectrum and that prices will not be onerous.

Supply in the 3.5-GHz auctions will be something of an issue, in most countries, as there is not lots of spectrum available there.

source: GSMA

French regulator Arcep’s chief Sebastien Soriano announced it will be challenging to keep prices low for a 2019 spectrum auction, especially when supply cannot keep up with demand, but said it wants to find a way to do so.

Traditional government views of spectrum auctions as easy ways to raise government revenues also are issues. Policymakers have to balance the need to make lots of spectrum available with the desire to raise revenues.

As you would expect, firms that have paid high prices justify their actions by arguing the new spectrum will help reduce costs per gigabyte, as well as supporting all the new end user demands for capacity.

High spectrum prices, though, have been big problems for mobile operators. Recall the high prices paid for 3G spectrum in many countries, which nearly bankrupted several firms in Europe, the high prices paid in India and in some other countries.

More supply will help keep prices within reasonable ranges.

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How Much 5G Mobile Substitution?

AT&T is preparing to launch commercial 5G mobile service using millimeter wave spectrum and the NETGEAR Nighthawk 5G Mobile Hotspot.

AT&T says the device is the first standards-based mobile 5G device in the world able to access a live millimeter wave 5G network.

At least in principle, the use of a 5G hotspot, on a millimeter wave network,  with retail pricing plans that are comparable to a fixed network plan, allow a mobile 5G network to compete with fixed networks.

As a practical matter, that might not happen in ways that make mobile 5G an effective substitute for fixed service. As has been the case for 4G, some users will find 5G a functional substitute; others will not. In the 4G era, perhaps 20 percent of U.S. households are mobile only for internet access.

And at least some observers believe such mobile substitution could reach 30 percent to 40 percent by about 2022.

source: Deloitte

67% Use Connected Devices; 64% Say They Do Not Depend on Them

Even though 67 percent of people surveyed by Clutch own a connected device such as a smart refrigerator, oven, or TV. But 64 percent say they do not depend on their connected devices to accomplish daily activities, a survey by Clutch has found.

On the other hand, 64 percent of people use their connected devices daily, typically to access important personal information regarding health, home, and news.

Nearly 40 percent of those surveyed say access to important information is the primary benefit of using a connected device, Clutch says.

Some 36 percent say they do depend on their devices to get through their daily lives. About 35 percent own a wearable device and 27 percent own a digital assistant such as a Google Home or Amazon Echo.

source: Clutch

What is the Difference Between Edge and Fog Computing?

New concepts, including fog computing and edge computing, which in many ways appear to be similar, can be hard to define. And, sometimes, the explanation of differences can increase, rather than decrease, confusion.

Fog computing is the harder concept, some would argue, as it often is described as a framework or standard for edge computing. “Edge” computing includes both computing on an edge device as well as computing “close to” the edge device, but not at a traditional remote cloud data center.  

source: Win Systems

The phrase local area network almost always occurs when “fog” is defined. And that is where some confusion can occur. In a traditional sense, the local area network is a privately-owned, indoor or campus-wide network separate from the public “access” network.

But in a more general sense, some might refer to the “local” area network as some intermediate point in the access, feeder or distribution portions of a public network (downstream of a central office, for example).

Some might say the fog concept involves computing where it makes most sense (remote cloud data center, computing somewhere in the access network, at a premises server or on an actual end user device.

For me, that works best. In cases where a former central office becomes an “edge computing center,” that is computing within the fog architecture. But so is edge computing at some other intermediate location between a single end user device or appliance and the place where the wide area network is encountered.

Just “where” that computing location occurs in a fog framework is somewhat indeterminate. So the phrase “local network” will cause some confusion, sometimes. Are we meaning the traditional “inside the building” private network, or what we know as the public network “access” network.

In the fog framework, that can mean either of those uses. Edge computing might occur at a server on the premises, outside the premises, or at the edge device itself.

Will New Indoor Connectivity Specialists Develop in 5G Era?

In the communications business, distinct distribution strategies always have been needed to serve the different consumer, small business, mid-sized organization, enterprise and carrier segments of the business.

Channel strategies have relied on mass media advertising for the consumer segment, augmented in the case of mobility by retail stores. Small businesses often are reached the same way. Mid-sized businesses use channel partners (business phone systems, local area networks). Enterprises and services for other communications carriers are sold using direct sales forces.

In the indoor mobile coverage or Wi-Fi access use cases, distributed antenna systems (DAS) have been feasible, but only for very-large sites, such as AT&T Stadium in Dallas, a stadium of 3.1 million square feet. That venue requires 1,700 DAS antennas and 1500 Wi-Fi access points.

Most business and organization locations are far smaller than that, and likely cannot support indoor connectivity strategies based on DAS. About 95 percent of U.S.  commercial real estate sites feature less than one million square feet.

source: NAICS

And since tier-one service providers have--for good reasons--stayed away from their own investments in infrastructure for small organizations and businesses, there remain niches for in-building coverage that are larger in the 5G era, when many more small cells will be used.

Some believe new shared investment approaches between integrators and property managers are needed. Others might argue the opportunity for new types of in-building connectivity services providers will emerge. And at least some believe “do it yourself” private networks might actually become a major trend, illustrating the concept that infrastructure and service suppliers often compete as much with their own customers as with rival suppliers.

“Small cells were conceived as a way to improve the mobile operator business model, but they may now become weapons for challengers to MNOs, particularly broadband players with established backhaul such as cable operators,” Rethink Research says.

By 2022, enterprise units will account for almost half of all small cell deployments, up from seven percent in 2014, argue researchers at Rethink Research.

The installed base will reach 14.8 million sites in 2022, up from 185,000 in 2014.  

Neutral host networks, owned by enterprises, third party specialists, perhaps cable operators and private network operators, might find commercial traction in larger buildings and campuses that are part of the broad mid-market segment of the commercial real estate market.

You might think of these potential new businesses as “indoor connectivity” providers. In some instances, and probably on a local or regional basis, new mobile virtual network operators could emerge whose specialty is indoor coverage.