T-Mobile USA Reports Third Quarter Subscriber Gains

Mobile share will shift, based on mergers

T-Mobile USA reported third quarter 2011 service revenues of $4.67 billion, slightly down from $4.71 billion in the third quarter of 2010, but net customer additions of 126,000 in the third quarter of 2011, a 176,000 improvement from net customer losses in the second quarter of 2011 of 50,000 and slightly down from 137,000 net customer additions in the third quarter of 2010. T-Mobile Gains Subs

Given the distractions of the still-unsettled acquisition of the company by AT&T, that is a reasonable performance. T-Mobile USA attributed the gains to its smart phone offers, value pricing, a wider selection of 4G devices and the 4G network itself.

T-Mobile USA served 33.7 million customers at the end of third quarter of 2011, compared to 33.6 million customers at the end of second quarter 2011 and 33.8 million customers at the end of third quarter 2010. 


The gains came from prepaid customer additions of  312,000 in the third quarter of 2011, an improvement from 231,000 net prepaid customer additions in the second quarter of 2011, and 190,000 net prepaid customer additions in the third quarter of 2010.

Post-paid contract customer losses, including connected devices were 186,000 in the third quarter of 2011, an improvement from 281,000 net contract customer losses in the second quarter of 2011. Net contract customer losses were 54,000 in the third quarter of 2010.


Those results point up one key element of T-Mobile USA positioning in the broader mobile market. With AT&T and Verizon Wireless claiming leadership of the "premium" positions, and several firms including Leap Wireless and MetroPCS claiming the "value" positions, both T-Mobile USA and Sprint must fight to figure out where they fit. 


In a sense, both T-Mobile USA and Sprint are being squeezed from the top and the bottom, in terms of their segments in the market. 

The End of SEO as We Know It: Mobile is the Reason

Lots of observers note that traditional search is changing with the advent of social networks, mobile apps and other ways for people to find things without engaging with a traditional search engine application. Some would say that Apple's Siri voice recognition app is just the latest example of that trend.


That has implications for content marketers as well, a least in terms of how much time and effort to spend to search engine optimization, for example. 


In the future, it is argued, people often will bypass search altogether. Ask Siri to "find the closest Italian restaurant" and the result is based on your current location and data from Yelp. 


Clawing your SEO way to the top spot on Google for "Philadelphia Italian restaurant" won't matter.


At the very least, the importance of presence on local content sites will grow. As a result, savvy small businesses that don't rely on e-commerce will spend even more time optimizing listings on Foursquare, Yelp, Facebook Places.


Yelp recommendations are currently embedded in Siri responses, so Yelp optimization matters more than SEO, some will argue. Siri: This Is the End of SEO as We Know It | Inc.com

The choices brands make might also change, to favor recommendation sites that are affiliated with certain app environments such as Siri. 

Why Mobile Search is Different

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Africa Now the World’s Second Largest Mobile Market

Africa is now the world’s second largest mobile market by connections after Asia, and the fastest growing mobile market in the world, according to the GSMA. Mobile penetration reached 649 million connections in the fourth quarter of 2011 (having first exceeded 50 per cent mobile penetration in 2010).

Over the past five years, the number of subscribers across Africa has grown by almost 20 per cent each year and will reach more than 735 million by the end of 2012. Africa Now the World’s Second Largest Mobile Market

Some 96 percent of subscriptions are pre-paid. By 2015, next-generation LTE networks are predicted to reach 500,000 connections in Kenya, 1.1 million connections in Nigeria and 2.5 million connections in South Africa.

War Between Flash and HTML5 is Over: HTML5 Has Won

The debate over whether supporting the Adobe Flash plug-in on mobile devices is a better way to support content apps, instead of using HTML5, seems to be over. Adobe is abandoning its work on Flash for mobile.


"Our future work with Flash on mobile devices will be focused on enabling Flash developers to package native apps with Adobe AIR for all the major app stores. We will no longer adapt Flash Player for mobile devices to new browser, OS version or device configurations," Adobe says. Flash, HTML5 war is over

Instead, the company will refocus its efforts on mobile apps and desktop content, and “aggressively contribute to HTML5.” It’s not just that HTML5 is a great opportunity for Adobe. There are some very basic reasons why the company changed course on its mobile Flash.


In particular, Flash suffers a performance hit as video resolution grows. 

Will Cloud Lead to Use of Fewer Applications?

Could a widespread shift to cloud computing actually reduce the number of applications used by enterprises or consumers? In an enterprise context, at least, that might happen.

Over time, many companies’ IT landscapes have become cluttered with obsolete IT systems and applications that no longer deliver full value to the business, but still are used. In survey of IT executives conducted by Capgemini, 85 percent of respondents said their application portfolios were in need of rationalization.

A shift to cloud delivery would logically help solve those sorts of problems, as it would be easier to buy and use only the apps an enterprise really needs, today, instead of what those enterprises thought they needed in the past. Applications in a cloud environment

In principle, cloud-delivered apps for consumers might be created and managed in the same way, as it is relatively easy to update and change apps without lots of grief on the part of end users. Since latency can be a key issue for many cloud-delivered apps, there is an advantage for app providers that optimize cloud apps for latency performance, and that should often include stripping out bloat.

What Role for Mobile Video?

According to Yankee Group researchers, 34 percent of respondents who watch video on their mobile phone at least once a week say they watch user-generated videos. 


That isn't to say they wouldn't watch professionally-produced video as well, but those options are not generally easily available. 


These videos from sites like YouTube or Facebook are by far the most popular content. YouTube just recently announced it is receiving 200 million mobile views of its videos daily, a 300 percent increase from last year. The next most popular, TV show clips, are cited by just 20 percent of respondents. 


So how big a business could mobile video, in the form of a channel for the sorts of programs people now watch on cable, telco or satellite systems, get to be? Content providers ultimately will have to decide how much to support streamed or multicast video for mobile consumption. 


The current hope is that revenue from the existing linear business (cable, satellite and telco TV) will continue to grow steadily, while incremental and significant new revenues can be earned from over-the-top delivery as well. Whether consumers will accept that state of affairs is a growing issue. 


The whole assumption behind "TV Everywhere" efforts is that consumers get mobile access as part of their fixed-network video service. But if subscription costs keep rising four to seven percent a year, there is just some point at which consumers will be unable to afford the fixed-network product, much less pay more for mobile access.


The probable future disruption of the video business might not be caused so much by the availability of new delivery channels and devices as by a consumer revolt over high prices. So how could mobile video work in a future environment where willingness to pay hits a wall?


Fundamentally, providers would have to adjust either the "value" part of the equation or the "price" part, or both. If consumers can get "what they really want," while paying no more than what they already pay, we could see a significant shift to "on demand only" delivery modes. 


Mobile might then become a significant channel for subscribers with high needs to watch professionally-created programming, including sports and news, where they are. Those are the two "real time" genres with an "event" character. Movies can be watched on a highly time-shifted basis. Sports and news really are better when consumed "live and in real time."


Mobile is arguably the best platform for that, in terms of immediacy, if not "screen size" parts of the experience. 




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U.S. Broadband Adoption Up to 68%

Some 68 percent of American households used broadband Internet in 2010, up from 64 percent in 2009. Only three percent of households relied on dial-up access to the Internet in 2010, down from five percent in 2009, according to the National Telecommunications and Information Administration. Another nine percent of households had people who accessed the Internet only outside of the home.

So is that a good thing, or not so good? It depends on how you look at the data. The main reasons respondents cited for not having Internet access at home were a lack of interest or need (47 percent). 


In other words, about half of households that do not buy or use broadband access services do not have interest in using the Internet, or have no need to do so. About 24 percent of respondents who do not buy broadband say it is too expensive. 


And 15 percent of households do not own computers. Individuals without broadband service at home relied on locations such as public libraries (20 percent) or other people’s houses (12 percent) to go online.

All told, approximately 80 percent of American households had at least one Internet user, whether inside or outside the home and regardless of technology type used to access the Internet.

Cable modems and DSL were the leading broadband technologies for home Internet adoption, with 32 percent and 23 percent of households, respectively, using these services. Broadband Adoption Rises

Ofcom Warns of "Low Interest" in Super Fast Broadband

Ofcom chief Ed Richards has warned that cash-strapped U.K. consumers lack enough incentive from access providers to upgrade to "superfast" broadband packages. In other words, "prices are too high."


"For superfast broadband, subscriber numbers are still low, perhaps because the nearest thing we have found to a ‘killer app’ so far is the demands of the multi-user household," Richards said. "The fact that we cannot identify specific ‘killer apps’ beyond bandwidth hungry teenagers is in some ways beside the point." Ofcom boss warns of low interest in 'superfast' broadband

That argument illustrates an important, and sometimes overlooked, aspect of national broadband plans. Some supporters of faster broadband think the "problem" is availability. But there is a mounting amount of evidence that "availability" is not the problem.

For whatever reason, including compelling applications or prices, where super fast broadband is available, and a workable definition is access at 50 Mbps or 100 Mbps at the moment, demand has tended to be low, even in some markets, such as Singapore, where prices are low, by global standards.


Time Warner Cable in early 2010 had about nine million high-speed access customers. It had about 20,000 customers for its fastest DOCSIS 3.0 service, which depending on configuration can support speeds up to about 43 Mbps per 6 MHz channel in the downstream direction, or more, if more bandwidth is made available.


All that means is that few customers are willing to pay $100 a month or more to get really-fast broadband access running at speeds of about 50 Mbps maximum. Low demand for 50 Mbps?


Fiber access does not sell itself, BT has found. As it begins to market its new fiber-based access services, BT has found that consumer demand for 40 Mbps Internet access is less robust than some had anticipated.

"Cardiff has been given a head start by Openreach but some fiber-enabled parts of the city are proving to be a bit slow out of the blocks to take up the opportunities fibre presents," said Richard Hall,BT Openreach NGA Deployment Director for Wales. BT UK Frustrated by Lack of Superfast FTTC Broadband Uptake

"With the notable exception of Whitchurch, residents are proving slow to take advantage of the technology on their doorstep and so we are working with the local council to raise awareness and drive demand," he said.

In the U.S. market, service providers have not fared much better with sales of 50 Mbps or faster services, which largely remain products bought by business customers. Another typical U.S. market issue also could be a factor. Customers in these areas already can buy fast service from Virgin Media.

Telecom Service Provider Revenue to Hit $2.17 Trillion in 2015

Global Telecom Service Provider Revenue Forecast

In the 10 years from 2005 to 2015, telecom service provider revenue has shown and will continue to show year-over-year growth every year except in 2009, according to Infonetics.

Following a 4.1 percent increase in 2010 over 2009, telecom service provider revenue will grow 7.6 percent in 2011, to $1.86 trillion. Infonetics revenue forecast


Telecom carrier revenue is forecast by Infonetics to grow to $2.17 trillion in 2015, driven by mobile broadband. Keep in mind that those are global figures and that growth will vary from region to region.


Is it possible that U.S. service provider revenue could double in just the next five years? Insight Research Corp. thinks so. The firm reports that predicts that, between 2011 and 2016,, North American carrier revenue will  rise from $287 billion to $662 billion, representing 11 percent compound annual revenue growth.

That rapid growth, on a compound basis, would lead to a doubling of industry revenue in five years. That doesn't mean providers in every segment will benefit equally. But a forecast that large would have to assume that most of the growth would have to occur at the largest firms, which represent 80 percent of total industry revenue.

The smaller providers cannot reasonably contribute enough aggregate revenue to tip the needle at such a large scale, even with even-higher rates of growth than 11 percent, compounded.

Global carrier revenue is expected to achieve a nine percent compound annual growth rate  from 2011 to 2016, growing to a total of $5.13 trillion, according to Insight Research Corp.

The forecast explicitly assumes that North American service providers successfully will grow new revenues at a rate fast enough to compensate for weakening voice revenues, for example.
See Insight Research findings here 

How Far Can Sports Programming Costs Escalate?

Sports cost per channel 2008

The major sports networks combined pay about $3.1 billion a year for the rights to the 16-game National Football League season, up 35 percent from their last deal. Although the NFL's contracts with CBS, Fox, NBC and ESPN still have two years to run, the league would like to have new deals wrapped up by the end of this season, in February. 


Sports programming costs matter greatly for leagues, sports networks, video distributors, consumers and the future of online video. 


The biggest question is how much further sports programming costs can rise, since those costs are passed along almost directly to end users, who are starting to show resistance to the annual price hikes on video service. 


The three broadcast networks could end up joining ESPN in paying 10-digit dollar figures per season in their next contracts. Testing the limits of rising sports programming rights fees - Los Angeles Times:

Video costs keep climbing

"It's not for the faint of heart," said Fox Sports Chairman David Hill when asked about the next round of NFL negotiations.


Already, ESPN and the regional sports channels are the most expensive basic cable channels on the dial — often costing distributors such as DirecTV Inc. and Comcast Corp. three times more than what they pay for news or entertainment networks such as USA, TNT and Discovery. Distributors worry that continuing to pass along sports costs to their customers could drive more away.

Netflix Found a Weak Link in Video Entertainment; Will Sports be Next?

Sports programming might someday lead to a major change in the way people buy video entertainment, perhaps representing a more significant change than broadband-delivered streaming services. 

To be sure, we commonly think it will be a technology change that enables some disruption of the video entertainment business, whether that is peer-to-peer, streaming, mobile devices or 4G mobile networks. Those things could help, certainly. But video is a different sort of business than many others. 

As the National Football League controls its "programming," so movie studios and TV networks control their content. While there are lots of other sources of sports programming, the NFL is a "unique brand" in the content realm. Unless NFL football becomes far less interesting, the NFL has a "moat" around its business. 

But disruption will occur at the weakest link in the entertainment video value chain. And some might argue that sports programming is a weak link, as "premium channels" have been disrupted by Netflix, another "weak link." 

Some might argue that Netflix has the potential to disrupt the TV business, but that is a theoretical possibility. What Netflix arguably already has disrupted are "premium video" channels such as HBO. Netflix is not a full substitute for HBO, in part because HBO has original programming, and in part because even when that programming is available to Netflix customers, quite some time has passed. 

So why could sports become another weak link? Cost.


The reason is the sheer impact of sports programming on the overall cost of a typical video subscription. Sports programming might be 20 percent of the viewing on a day-to-day basis but it may be 50 percent of the cost that the consumer pays, according to Dish Network Chairman Charlie Ergen.

Consider the business from the standpoint of a sports programming network. In most markets, any single content provider has four different customers buying an important sports channel. Once streaming services take hold, there will be additional providers buying sports programming.

As great as that is for the sports programming network, it isn’t so great for distributors or consumers.

The sports providers often require, for example, that sports channels are packaged on the tier with the most buyers. But not every video subscriber, or even every household, is populated by sports enthusiasts who value sports programming.

In theory, a daring video provider could make a decision to segment an audience, essentially choosing to give up “sports enthusiasts” by refusing to carry expensive sports programming.

That might cut distributor content costs a substantial amount. Ergen suggests as much as 50 percent. Such a provider would risk losing perhaps 20 percent or 30 percent of the sports enthusiast audience.

But such a provider would be significantly more attractive to the other 50 percent, or 60 percent or 70 percent of the customers who might willingly give up ESPN and other channels, to get a serious break on recurring monthly subscription fees.

Here’s the “money” quote: “If the economy continues to struggle along, that's probably a valid long-term strategy,” says Ergen.

“We almost went there last year with FOX Sports,” Ergen says.

In a daring bit of strategic thinking, Ergen says “I think that there's a limit to where sports cost can go and at some point, it's not going to be in 90 percent of the homes at some point if the costs go too high.”

Consumer demand for video programming really is not completely elastic. At some point, the value simply will not match the retail price in a satisfactory way.

To be sure, given a choice, every service provider would prefer the widest possible variety--”something for everyone.” But if push comes to shove, and price begins to be a barrier, a “sports free” service, offered at significantly lower cost, is going to be attractive to a significant portion of the audience.

“And there certainly becomes a time when a deal doesn't make any sense and a sports offering might not make sense, and that's been the case for us in New York,” says Ergen. “It could happen in other places.” Sports programming could drive change

Verizon to double data amounts for 4G smart phones

Customers buying smart phones running on the Verizon Wireless Long Term Evolution 4G network will get double the data buckets for as long as they keep their level of service.

For example, someone who subscribes to the 2GB for $30 plan will receive 4GB instead. For $50 you can get 10GB instead of 5GB, and for $80 you can get 20GB instead of 10GB per month.

Existing customers (those who have upgraded their service or purchased a 4G smartphone within the last 14 days) will have to request the change. Verizon to double data amounts for 4G smart phones

Verizon Wireless apparently says the bigger data plans will stay in effect so long as users keep a smart phone plan.


The nice thing about a brand-new wireless network is that, at first, there aren't too many customers to clog up the pipes, allowing service providers to do these sorts of deals. 

Dish Will Launch Mobile Video Service?

Dish Network will use the S-band wireless spectrum it acquired via its $2.775 billion purchases of DBSD North America and TerreStar Networks to push a mobile video strategy to complement its wired video delivery service, according to Dish Chairman Charlie Ergen. Dish's Ergen: Spectrum will enable mobile video play

"So the way I look at it is, we believe that the wireless business is a place where, if we're in the video business, we need to be more than fixed, we need to be a mobile video as well," Ergen said. 


Though it also remains possible that Dish Network might look at other wireless services as well, some of that thinking might hinge, in part, on what happens with the AT&T bid to buy T-Mobile USA. 


If approved, it is expected there will be required divestitures, and that could be something Dish Network might be able to take advantage of. If the merger is not approved, there are other possible opportunities that could arise. Some of those possibilities could include the ability for Dish Network to rather quickly acquire market share in the mobile broadband and voice business, for example.


Though that might not have seemed so logical in the past, much is changing in the consumer services business. Cable TV operators, for example, increasingly are talking about broadband access as the core service, with a corresponding lessening of emphasis on video services. 


Ergen still believes there is an opportunity for stand-alone video services, as cable operators increasingly seem to be embracing the value of a "lead with broadband access" strategy.


Having said that, Ergen said the other macro trend is that people continue to use more data. And the key point is that such data could be video, could be voice, could be lots of other things. 


"So I think that strategically, we believe we have to be in something other than a standalone video business as a company, and we are in the transition of being able to do that," said Ergen.  "hat's going to take some time and that is unclear where that is going to be a smart business decision or not."


That's a rather more candid assessment than many CEOs might make, but Ergen is a straight shooter. The larger issue is that the traditional telecom and video entertainment businesses are unstable in a new way. Broadband is becoming the lead offer for cable operators as they continue to lose market share to telcos and satellite, while wireless now is the lead offer for telcos. 


Even "bundles," which have driven growth for more than a decade, though still important, are losing some marketing emphasis in favor of concentration on the lead offers. For Dish Network, a new lead offer might emerge in the future. 

American Express files virtual currency patent

American Express has filed a patent for a system and method for using loyalty rewards as a currency. The patent describes a system for "spending loyalty points over a computerised network to facilitate a transaction."

The patent describes how a loyalty program participant can use an existing transaction card to purchase an item over a network, while at the same time offsetting the cost of that transaction by converting loyalty points to a currency value credit and having the credit applied to the participant's financial transaction account.

Alongside current account conversion, the patent says currency credit from converted loyalty points may also be applied to "stored value cards, online digital wallet accounts and the like". Further, currency credit may also be applied to other accounts to effect a gift or donation. American Express files virtual currency

A single patent filing, by itself, does not always mean the firm filing the patent has an immediate offer, product or service planned. But it rarely indicates a given firm, filing a patent, in uninterested in businesses using the patented process.

Richard Branson invests in Square

Richard Branson has invested in Square, the mobile payments service that uses a free dongle to turn a smart phone into a payment processing terminal.

Mobile payments forecast

Richard Branson invests in Square