After 10 Years of Big Bandwidth, Where are the New Apps?

After a decade of fiber-to-the-home access, what do service providers have to show for it? Not as much as you might think, suggests Benoît Felten, Yankee Group principal analyst.

"Surprisingly perhaps, considering the decade’s worth of experience some Asia-Pacific countries have with FTTP, they face many of the same issues surrounding FTTP that have been prevalent in the West," says Felton.

The business model, for example, is no less an issue than in other markets. "Finding a sustainable business model" is as important for private players in the Asia-Pacific markets as you can guess it is for service providers elsewhere. High bandwidth provided at low cost might be great for consumers, but is challenging for providers.

Government subsidies and support in some markets is part of the answer for some providers, though.

Service innovation also is an issue. FTTH provides "more" bandwidth. But does it stimulate new applications and businesses that did not exist before? The answer, so far, seems to be "no." That is not to say broadband is unimportant as an enabler of economic activity.

But it is fair to say even after a decade of having FTTH, there is little to point to except online gaming, in terms of new and widely-used applications. "Even in Japan and South Korea, there aren’t that many disruptive or innovative services available to end-users, with the exception of online gaming," Felton says.

"While there’s been a vibrant development of Internet activities, especially in South Korea, this hasn’t necessarily resulted in the kinds of services that are generally expected, such as health care or connected communities," says Felton.

Sustainability, especially in a market context, remains an issue as well. While things have been slowly improving for early deployers, especially NTT, which announced at the conference that its average revenue per user  for FTTP services has increased from 4,800 yen to 5,590 yen between 2006 and 2009, the revenue from fiber-grade services that actually benefits the telco remains limited.

Regulators, on the other hand, must continually monitor the degree of competition in the access market as well, and Felton notes that NTT has 75 percent market share in the fiber access market, but only 30 percent or so in the digital subscriber line market.

Asia-Pacific is still by far the most advanced region of the world when it comes to fiber to the premises deployment and adoption. Asian FTTP adoption is estimated at 40 million subscribers, compared with just eight million in North America and 3.5 million in Europe.

The Korea Communications Commission and KT have ambitions to upgrade to a national target of 1 Gbps connectivity. That's an important national goal, but such government-lead policies arguably are not replicable in other markets that must rely on normal supply and demand constraints.

In some "state-lead" markets, the advantage for incumbent operators is an easier business case. In Malaysia, the government has decided to co-finance a fifth of the cost of an urban deployment of FTTP. As you would expect, Telecom Malaysia customers are able to buy service that is quite attractive compared to what one would find in a market where such subsidies are not available, says Felton.

In Australia and New Zealand, deployment models involve heavy government intervention, both in funding and investment structure establishment.

The biggest anticipated growth of this second wave is China. The Chinese government itself is not directly involved in the FTTP push, but all of the competing Chinese telcos are state owned, which imposes different constraints on their investment decisions compared to private players.

The somewhat discouraging news is that, after 10 years, FTTH has not produced unambiguously new and lucrative applications. That doesn't mean such applications will not develop, but simply that a private market cost-benefit analysis might suggest it still isn't so smart to charge ahead with a robust FTTH program at all costs.

Gulf Oil Illustrates Bigger Problem: People are Starting to See Govt. as Anti-Business

For over a month, Pres. Barack Obama watched the oil spill spread over the Gulf of Mexico with the same powerless horror as other Americans. Finally, lampooned by his countrymen for his impotence, he was spurred into action. He attacked the only available target—BP—and, to underline the seriousness with which he takes this problem, he gave his first Oval Office address on the subject.

The address got poor reviews; the attack on BP better ones. This week the firm bowed to pressure, and announced that it was, in effect, handing over $20 billion to the government to pay for compensation and clean-up, as well as cancelling the payment of any dividends this year and setting up a fund—of a mere $100m—to compensate unemployed oil workers.

This may do Mr Obama some good. Whether it will benefit America is more doubtful. Businessmen are already gloomy, depressed by the economy and nervous of their president’s attitude towards them. This episode will not encourage them.

American politics and business: Obama v BP | The Economist

FCC Moves Toward "Public Utility" Regulation of Broadband

Public Utilities do some things quite well. But innovation is not one of them. And that's the problem with common carrier regulation: it often results in good quality for basic services, but with high prices and very-low innovation beyond the basic service.

Electricity, water, natural gas, and until recently local telephone and cable services were usually classified as public utilities and regulated by government. Now, however, the Federal Communications Commission wants to classify the decentralized Internet as a public utility, as FCC chair Julius Genachowski tries to get around a Supreme Court ruling blocking his Net Neutrality ambitions.

FCC takes first step towards making the Internet a “public utility”

Wireless Broadband Would Account for More than 1/2 of Losses Under Net Neutrality Rules

Network neutrality rules would reduce the growth rate of the broadband sector by around 15 percent per year, according to an analysis by the Brattle Group. The loss—$5 billion in 2011, growing to $100 billion by 2020—increases over time and represents a 2.5 percent smaller sector in 2011 and a 17.7 percent smaller sector by 2020.

Wireless broadband would bear much of the brunt of the reduction, as mobile broadband is expected to be the driving force for broadband overall starting about 2013, Brattle Group says. The share of revenue from mobile broadband lines grows over the period, overtaking revenue from wireline broadband lines by 2013. The business versus residential split is fixed at its 2008 proportions of 37 percent business and 63 percent residential.

Residential fixed lines continue to grow at eight percent per year rate until they reach 90 percent of households and thereafter grow at two percent per year. The business fixed lines grow at the same rate.

Mobile broadband is expected to be the source of most of the broadband growth over the next decade and consequently would bear the largest share of the economic burden of network neutrality regulations.

In 2008, mobile broadband lines accounted for only about a quarter of all broadband lines, but would likely account for more than half of the economic losses over the coming decade if the proposed network neutrality regulations are put into place.

Link to full analysis

FCC to Allow "Re-Purposing" of 90 MHz of Mobile Satellite Spectrum

The Federal Communications Commission has initiated a proceeding to free up 90 MHz of spectrum
for mobile broadband by removing barriers to flexible use of satellite spectrum allocated for other purposes.

The FCC already has approved the Harbinger-SkyTerra transaction, which will enable Harbinger to
invest billions of dollars in building a 4G wireless network using spectrum that includes spectrum in the mobile satellite service bands that originally were licensed for mobile satellite only. Under new rules, that spectrum can be used for terrestrial fourth-generation mobile use as well.

The FCC had already allowed some terrestrial service over MSS, allowing satellite operators to build ground-based networks over the spectrum to augment the larger satellite network. But the FCC now has lifted the satellite requirement entirely from two other MSS bands, the L-band and the band known as Big-LEO (low earth orbit), where satellite operators like SkyTerra and GlobalStar operate.

The FCC apparently is moving towards allowing satellite operators could lease out their spectrum to terrestrial operators as well, allowing them to augment or build their own mobile broadband networks. Currently, the rules allow MSS-license holders to wholesale capacity on networks they build, but the MSS operators might also be allowed to sell wholesale access to the spectrum itself.

AT&T's New Smartphone Plans Could Send iPhone And BlackBerry Sales Through The Roof

AT&T's cheaper tiers of mobile data subscriptions, especially a $15 a month entry-level plan, could boost smartphone sales by making them more affordable to a much bigger market, which in turn should drive bigger unit sales and activations for Apple, Research In Motion, and other companies that sell smartphones at AT&T.

The new plans mean an iPhone becomes a much more affordable option for kids, lower-end users, and basically anyone who was turned off by the requirement to spend a mandatory $30 per month on data access, whether you used it a lot or a little.

AT&T's New Smartphone Plans Could Send iPhone And BlackBerry Sales Through The Roof

4G/LTE Standards Advance

The International Telecommunication Union is likely to approve two 4G standards.

IMT-Advanced (International Mobile Telecommunications Advanced) is the "real" 4G, whereas current wireless technologies such as LTE and WiMax 802.16e are pre-4G, or proto-4G, technologies.

The two technologies set to make the 4G cut are LTE Advanced, proposed by the 3rd Generation Partnership Project (3GPP) , and the Institute of Electrical and Electronics Engineers Inc. (IEEE) 's 802.16m (also known as WiMax 2.0), both of which have been under consideration since October 2009.

Light Reading Asia - 4G/LTE - CommunicAsia 2010: Two Techs Set for 4G OK - Telecom News Analysis

AT&T's New Data Plans Will Save Most People Money

BillShrink co-founder & CEO Schwark Satyavolu says AT&T's new data pricing plan is a good thing. Customers will now have the option to save hundreds of dollars over the course of their 2-year contract, and it's just an issue of figuring out how much data you use.

Plus, the cheaper plans could send iPhone and BlackBerry sales through the roof.
However, pricing could be an issue in the future if data usage continues to increase at the rate it has been over the past year and a half.

Here's How AT&T's New Data Pricing Plans Will Save Most People Money

Will Reclassification Derail FCC's Broadband Plan?

Some at the top level of the Federal Communications Commission may believe a new legal framework for its authority over broadband services will help keep its ambitious National Broadband Plan afloat, but some cable industry policy pundits wonder if the move might produce the opposite effect.

The FCC's reclassification effort could 'totally sidetrack the Commission from getting some pieces of the broadband plan done,' warned Steve Morris, VP and associate general of the National Cable & Telecommunications Association.

Light Reading Cable - Broadband - Will Reclassification Derail FCC's Broadband Plan? - Telecom News Analysis

Title II: Regulated Dumb Pipe is the Polcy: Consumer Welfare is the Issue

Since the greatest service provider fear is that of being reduced to a "dumb pipe" provider of commodity access service, it is drop dead simple to see why most facilities-based providers will oppose the Federal Communications Commission attempt to regulate broadband access as a common carrier access service with no permissible traffic shaping.

Application providers are right to fear unfair business advantage, which would be the case if ISPs decided to block lawful applications or apply differentiated quality measures to their own Internet traffic, while denying such prioritization and quality measures to business partners or competing applications.

Any number of issues present themselves, ranging from the legal (whether the FCC has authority to proceed as it intends) to the likely impact on investment in new and upgraded access facilities (less investment, not more) to impact on innovation.

Some would say the FCC is attempting to regulate "ex ante," before a problem exists, rather than tackling any issues as they arise. The factual record suggests only two examples of blocking, sufficiently chastening the entire industry into agreeing that indeed, all lawful applications must be allowed.

The big problem is how networks can be managed under conditions of congestion so as to preserve quality of experience, and there the difference between traffic shaping and "blocking" is technically quite difficult to separate. All voice networks, for example, use blocking techniques at times of peak congestion to preserve service quality. Data networks have many more options.

Some types of lower-priority traffic might reasonably be slowed down to allow higher-priority traffic types to get preferential treatment, especially video and voice traffic that are highly suscepitble to delay.

Such measures also are crucial for new services of the sort businesses routinely enjoy, where users can buy features allowing them to set their own priorities for some types of applications. In a regime where absolutely no prioritization is allowed, it would not be legal for an ISP to create and sell a service that provides higher continuity for tele-medicine, video or voice services, for example.

"Dumbing down" access networks by prohibiting any packet prioritization automatically prevents creation of quality-assured services, even if end users want them.

link

U.S. Online Spending up 11% in 2010

U.S. online ad spending looks to be up nearly 11 percent from 2009.

Does Anybody Really Believe a "Small" Number of Title II Rules Will Hold, Long Term?

The Federal Communications Commission's press release on opening its notice of inquiry on Title II common carrier classification of broadband access services will leave many service providers a bit queasy. For starters, the rules almost certainly will apply to cable companies, which never have been regulated, in any way, as "common carriers."

Secondly, even if the FCC promises some lighter-touch "third way," once Title II rules are established as the framework, there is no formal barrier to later changes in rules that would apply more than a "small number" of Title II rules. Nobody familiar with government logic and practice will feel safe that the promised forbearance will hold over the long term.

Taxes and rules get instituted in modest ways, for specific purposes, and then never "sunset." Over time, in the case of taxes, amounts keep creeping up. Over time, in the case of administrative or legal requirements, old rules continue to drift out of date with changed circumstances.

Nor will the actual language provide much comfort. The FCC says it wants to fundamentally alter broadband access regulation, but will "forbear," at its own discretion, from applying all the common carrier rules, "other than the small number that are needed to implement fundamental universal service, competition and market entry, and consumer protection policies."

Not many observers think, over the long term, that the number of rules will remain "small." Where else in federal government action have you seen rules become less numerous over time?

Once Title II is the new framework, any number of steps, including price regulation, entry regulation and other rules are possible. In a nutshell, what was best about the old, highly-regulated monopoly system was service quality and universal access. What was worst was high prices and low rates of innovation.

Under competitive conditions the effect of common carrier regulation is mixed. We are likely to see both low prices and low innovation, plus less investment.

Verizon already earns 70 percent of its cash from operations, not wireline, and the balance continually is shifting to wireless. With lower likely return from wired operations, rational operators will simply starve the wired networks and invest more heavily in wireless.

The problem is that wireline service as a whole is becoming less profitable, and providing less revenue. You don't help matters by making it less profitable, and creating less revenue. You only accelerate its decline.

Facebook 2009 Revenue Was Almost $800 Million

Facebook’s revenue in 2009 was nearly $800 million, and the company turned a part of it into a solid net profit, according to Reuters. That's a big deal for a company that, for the longest time, had no obvious long-term revenue model.

The number is significantly higher than earlier estimates of $500 million revenue in 2009, and even the projected $710 million revenue in 2010. Facebook, as usual, declines to comment on any of these numbers, but sometime in 2009. Facebook seems to have became cash-flow positive.

Facebook 2009 Revenue Was Almost $800 Million [REPORT

How Does iPad Affect Smartphone Browsing?

For people who keep track of statistics such as smartphone operating system market share, device behavior and trends, the iPad and other tablets are going to complicate matters. Should these devices be tracked with smartphones, with PCs, or as a separate category.

Some might argue a tablet is like a smartphone, and should be included in smartphone stats, if the same operating systems are used for both the tablet and smartphone devices. Others will argue that will distort the smartphone data.

So far, it seems iPad usage is someplace between PC and smartphone usage, perhaps suggesting it might be a separate category.

"Among the 14 percent of our iPhone client users who use an iPad, their average session length is 12 percent longer than the average iPod Touch or iPhone users," says Kate Sellers Blatt, iPass director. Some other data suggest iPad owners use the Internet more than they do on their smartphones, but still far less than on their PCs.

Morgan Stanley estimates that iPad browsing activity already is greater than BlackBerry or Android smartphone activity, on a global basis.

If casual and anecdotal evidence is any indicator, most people use their iPads quite heavily in indoor environments, on couches, for example. Mobile devices also are used indoors, sometimes as much as half the time. But there are some indications iPad use is indoors as much as 90 percent of the time.

For the moment, I think it is more useful to consider tablets a separate category from smartphones or PCs, at least for tracking purposes.

Quantcast Blog

Google Might Try to Act More Like Apple

Google is reported to be planning a unified user interface that will be imposed across Android products, ending the fragmentation that dogs the system, but also restricting partners' development of their own user experiences. That shift in philosophy would pull Google closer to the way Apple operates.

The top priority for the next Android update, codenamed Gingerbread, reportedly is to homogenize the user experience and address criticisms of fragmentation. This could severely curtail the freedom of licensees to create their own user interface overlays, most famously, Motorola's Motoblur and HTC's Sense.

It's probably a toss up at this point which approach is better. Apple has proven that absolute uniformity of experience is no barrier to wild acceptance. On the other hand, a uniform approach to user interface will tend to dampen the pace of innovation to a degree.

Google does have a big stake in preventing Android fragmentation, which makes it much harder for developers to create applications guaranteed to run on any Android device with a specific version of the operating system. On the other hand, the HTC "Sense" user interface is quite a differentiator, so handset suppliers might not like the restrictions on their freedom of movement.

As with all engineering decisions, there will be trade offs. A uniform UI is better for software developers, but arguably worse for hardware developers. Most consumers seem to indicate by their buying preferences that a standard UI is, if not a "good" thing, then at least no barrier.

In the battle between "open" and "closed" approaches to development, "closed" seems to be getting more traction these days.

Google risks OEM wrath with unified Android UI plan - Rethink Wireless