In a nutshell, the gap between bandwidth consumption and revenue is the key problem faced by mobile service providers. The reason is simple enough. Everybody agrees the future industry revenue model will be driven by data services, not voice.
And though service providers will sell a mix of simple connectivity services and other value-added features and services, access will remain a huge, perhaps the biggest single revenue source, even in the future.
Given user resistance to paying higher prices for bandwidth, service providers will struggle to close the gap between rising supply of bandwidth and slower-growing ability to price the additional capabilities in any linear fashion.
That is one reason why offloading access from the mobile networks to the fixed landline network is so important, and why a developing rationale for landline network services providers is "wireless offload." Especially as high-bandwidth video becomes a bigger part of the end user demand, it will be necessary to offload as much of the load as possible to fixed networks.
With Android's latest mobile operating system, known as Froyo, apps are synced wirelessly between a user's desktop web browser and phone, music is streamed from a home PC to your handset over 3G, and instructions, such as map directions, search terms, web pages and potential all kinds of other stuff, can be sent to a handset from a desktop browser.
The Federal Communications Commission, whether it is wrong or right, is signaling that it may try to undo what consumers and providers, operating through their own willing to pay, have voted with their wallets, arguing essentially that concentration in the wireless market is now a problem.
The problem is that AT&T and Verizon Wireless have grown for logical reasons. They have more capital to spend to grow their businesses, Sprint shot itself with poor customer service and T-Mobile USA simply has not invested in its business to the same degree the other contestants have.
FCC may try to set new rules to “protect” the smaller companies in the cellular business, but, if they need protection, it is because they have been badly run or have not spent enough money to win over customers.
It is true that AT&T and Verizon have the ability to bundle other products to create triple play and quadruple play offers. Sprint and T-Mobile USA do not have similar ability. But that hasn't stopped Dish Network and DirecTV from taking share from the leading fixed line providers in the multi-channel video markets.
Google declares war on Apple, setting up about as big a contest between "open" and "closed" development approaches as one could imagine. Not since 1985 have we seen images and philosophical differences such as this.
One still gets the feeling we are still a bit early for mass adoption of Internet-delivered, TV set displayed video, though we are lots closer than we used to be. But this is an entertaining video, anyhow.
To be sure, Google has assembled quite an ecosystem, Sony, Logitech, Intel, Dish and Best Buy. But it probably is worth remembering that Apple itself describes Apple TV as "a hobby." The point is that lots of companies over the last 10 years have tried to create a mass market appliance that captures Web video and delivers it to the main household viewing screen.
That doesn't mean it will not happen. Someday it will. The issue is whether Google TV can crack the code, or whether content rights agreements still have further to go. Some people will appreciate being able to watch YouTube videos on a high-definition TV. But most people probably do not want to spend several hundred dollars for the ability to do so.
What it seems people do wish to do is watch YouTube and other video on a handheld device, including smartphones and devices such as the iPad, as well as PCs.
Google CEO Eric Schmidt says “we’ve been waiting a long, long time for this day." The issue is whether we'll still be waiting.
Sony will provide the one-stop experience with Sony Internet TV built into an HDTV or a a set-top box with a Blu-ray Disc drive. Logitech plans to offer set-top box that will “seamlessly” add Google TV to current HDTV sets.
Dish Network will be supporting the ecosystem as well, allowing subscribers to add web video to their regular multi-channel video options.
Android and Chrome devices are expected to allow communication between Internet-connected TVs and Android or Chrome-based mobile devices. Users should be able to push content on the phone to the TV.
Best Buy will provide a venue for selling all the new boxes.
Location-based local search and information services will be used by nearly 1.5 billion mobile users by 2014, according to Juniper Research. Total revenues from all mobile location-based services are expected to reach $12.7 billion by 2014.
It's difficult to know whether Google TV can stoke the market for Internet-aware TV viewing, but the company has assembled quite an ecosystem. It's difficult to know whether Google TV can stoke the market for Internet-aware TV viewing, but the company has assembled quite an ecosystem.
A few mobile services providers are taking clear steps to insert themselves a bit more forcefully into the handset operating system and device business, as Verizon Wireless, Orange and Korea's SKT introducing LiMO-based handsets in 2010. .
For Verizon, LiMo is expected to help create sales volume for high-end mobile Web devices with a Verizon brand. As with the moves by carriers to create a carrier-centric applications community, the move represents an effort to gain more clout in the important device and application space where other partners now dominate.
The LiMO smartphone software platform, unlike the vendor controlled Android, Symbian and Windows, is largely driven by carriers. Therefore, it fits neatly with other operator initiatives to swing the balance of power in mobile services their own way, notably the new Wholesale Applications Community (WAC).
The German spectrum auction has ended, raising about half the expected revenue. Observers think the credit crunch and huge overspending in the 3G auctions helped ratchet down amounts contestants were willing to spend.
A total of €4.38bn ($5.5bn) was spent on the new spectrum blocks, while analysts at KPMG had forecast income of €8bn for the government as a result of the sales.
As you might expect, the three largest mobile operators, O2, Vodafone and Deutsche Telekom's T-Mobile, each won two paired 5 MHz chunks of spectrum in the 800MHz band, prized because of its propagation characteristics, allowing greater coverage at lower cost, including better signal strength inside buildings.
Sprint Nextel Corp. has issued a 'next generation network' request for proposal for its CDMA third-generation mobile network in the United States, and Long Term Evolution (LTE) has emerged as a potential technology choice.
The RFP does not appear to affect the Clearwire network presently using WiMAX, but the "legacy" CDMA network that underpins Sprints current 3G network that operates in the 800 MHz and 1900 MHz frequency bands.
"Will the Bell system survive?" asks Allan Ramsay. He argues that a "massive transfer of wealth from Bell to VoIP is underway." We can disagree about how large the wealth transfer is, what VoIP is, or whether voice is on its way to becoming a feature, and not a revenue driver at all.
It is not a question the Federal Communications Commission appears to think relevant, though.
The U.S. Federal Communications Commission seems to be implying that U.S. wireless markets are "not competitive," though the inference is hard to glean from the FCC's own study on the U.S. wireless market. See the document at (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-10-81A1.pdf)
What "effective competition" looks like varies from market to market, from economist to economist. How many competitors a market must have to be deemed "competitive" is in this case a political question, not an economist's question, though.
There are some businesses where there is no "effective competition" because the market has "natural monopoly" characteristics. You can think of electrical power, waste water, highways and roads (generally speaking), water systems and national defense as clear examples.
Telecommunications once was deemed to be a "natural monopoly," but most regulators around the world now agree that is true only in part. In triple-play markets, for example, effective competition, but not "perfect" competition can occur, in an economic sense, with as few as two players, even though the U.S. market has many more than that in major metro markets, and typically at least two providers even in the rural markets.
In the real world, there are very few examples of major facilities-based competition beyond two major players, although in a few markets there are three facilities-based fixed line providers. As researchers at the Phoenix Center have suggested, in the fixed line triple play markets, imperfect though workable competition does in fact exist with one one dominant telco and one dominant cable provider.
The problem is what the level of effective competition actually is in the communications market. Presumably the FCC believes three to five competitors in a single market is not enough.
A new survey by Changewave Research of iPad owners suggests that the device is being used just about as Apple expected it would: as a content consumption device able to support the types of "content creation" most people do, namely send emails.
It isn't clear whether this usage profile is much different from what most consumers would do with their netbooks, notebooks or desktop PCs, but so far the iPad is not being used as a "content creation" or "work" device, as most would have expected would be the case. link
Smartphone subscribers are still a small slice of the mobile handset market, about 20 percent, inching towards 25 percent, by some estimates, and as high as 30 percent, by other estimates.
By 2013, predictions are that smartphone penetration in the U.S. market will be more than 50 percent, most seem to believe.
It is worth noting that 10-percent penetration is the point in the consumer electronics business when a popular device really accelerates, in terms of penetration, and smartphones are well past that point.
Also, to the extent that smartphones represent a new medium, and that nearly every huge mass medium has been sustained by advertising, it takes no genius at all to predict that advertising and marketing will be a big business in the future (click on image for larger view).
To the extent that smartphones increasingly will be venues for rich media (video and audio) as well as text, it isn't unfair to describe smartphones as a new "medium," as the Internet, TV, radio and other media are.
Smartphones are "phones," it is true. But they also are a new media format. And hence, the foundation for a new media business.
"Google is killing the news business," many say. Though that might overstate the case, there is no doubt but that the Internet is reshaping business ecosystems in many ways, typically altering not just distribution formats but also profit margins.
But some argue Google also depends on a vibrant "news" and "journalism" business for its own good, "is trying to bring it back to life."
The company’s chief economist, Hal Varian, likes to point out that perhaps the most important measure of the newspaper industry’s viability—the number of subscriptions per household—has headed straight down, not just since Google’s founding in the late 1990s but ever since World War II (click image for larger view).
In other words, there are some trends in the "news" business that were in place long before the Internet, including a shift first to television news and now Internet news.
This Atlantic magazine piece is long, but it is the Atlantic's forte, after all. It also is authored by James Fallows, an engaging writer. It is worth a read.
