Growing App Privacy Issues as "You are the Product"

Privacy issues related to user data are bound to grow as data about users becomes the actual revenue foundation for all applications offered to users "for free." Without the data, there is no way to create a revenue stream. 


Put another way, a "free app's business" is you; your data; your preferences, habits and interests. 


A Wall Street Journal examination of 100 of the most popular Facebook apps found that some seek the email addresses, current location and sexual preference, among other details, not only of app users but also of their Facebook friends. 


One Yahoo service powered by Facebook requests access to a person's religious and political leanings as a condition for using it, the Wall Street Journal found. 

The most common types of information the 100 apps asked for included: 

Age Range (101 apps)

Facebook ID (101 apps)

Full Name (101 apps)

Gender (101 apps)

List of Friends (101 apps)

Locale (101 apps)

Networks (101 apps)

Profile Photo (101 apps)

Email Address (70 apps)

Actions and Scores Publishing (53 apps)

Birthday (34 apps)

Content and Comments Publishing (34 apps)

Data When Offline (21 apps)

Current Location (14 apps)

Liked Pages (13 apps)

News Feed (12 apps)

Friends' Birthdays (12 apps)

Photos (9 apps)

Friends' Current Location (9 apps)

"About Me" (8 apps)

Education History (8 apps)

Interests (8 apps)

Status Messages (8 apps)

Activities (7 apps)

Friends' Education History (7 apps)

Friends' Photos (7 apps)

Friends' Work History (7 apps)

Facebook Chat Integration (6 apps)

Hometown (6 apps)

Work History (6 apps)

Friends' Hometown (6 apps)

Friends' Status Updates (6 apps)

Religion and Politics (5 apps)

Website URL (5 apps)

Friends' "About Me" (5 apps)

Friends' Website URLs (5 apps)

Events (4 apps)

Groups (4 apps)

Friends' Relationships (4 apps)

Friends' Activities (4 apps)

Friends' Events (4 apps)

Friends' Interests (4 apps)

Relationship Preferences (3 apps)

Relationships (3 apps)

Check-Ins (3 apps)

Videos (3 apps)

Friends' Relationship Preferences (3 apps)

Friends' Religion and Politics (3 apps)

Friends' Check-ins (3 apps)

Friends' Groups (3 apps)

Friends' Liked Pages (3 apps)

Friends' Notes (3 apps)

Friends' Videos (3 apps)

Games Activity (2 apps)

Notes (2 apps)

Notifications (2 apps)

Page Management (2 apps)

Friends' Online Presence (2 apps)

Facebook Messages (1 app)

App Notifications (1 app)

Check-in Publishing (1 app)

Event Management (1 app)

Event RSVPing (1 app)

Friend List Management (1 app)

Friend Lists (1 app)

Friend Requests (1 app)

Friends' Games Activity (1 app)

Sports Programming Will Be a Key Driver of Video Service "Cord Cutting," Eventually

Sports content rights have for decades been a growing issue for video service distributors. But the problem is growing, according to Bernstein Research senior analyst Craig Moffett. 


Moffett says carriage fees for Disney’s ESPN and ESPN 2 alone account for 20 percent of the cost of a typical wholesale-priced cable subscription. ESPN collects, on average, $4.69 per subscriber, according to SNL Kagan. 


And since revenue for a content rights owner represents cost to a distributor, those costs simply are passed along to customers. 


Also, though the national networks like ESPN and regional sports channels account for about 50 percent of the cost of the average cable, satellite or telco TV service bill, Moffett argues, though representing about 20 percent of viewing hours consumed. 


To be sure, sports enthusiasts might not mind paying. But lots of consumers watch live sports programming sparingly. Some don't watch at all. When overall prices are moderate, that isn't an issue. As monthly fees keep rising, prices will become an issue. 


It isn't clear how far the cost run-up can continue before a growing number of consumers start voting with their wallets and disconnecting cable, satellite or telco video services, unless the current bundling practices change. 


To be sure, few consumers have any idea about wholesale costs, nor should they. But the executives who run the  video subscription business, and its programming suppliers, always have argued that consumers actually fare better when they "pay for channels they don't watch," compared to "buying only the channels they want." 


The argument is not without merit. It is possible that consumers who watch perhaps a dozen channels or so would wind up paying as much, or more, for a la carte channels. Studies are relatively inconclusive, but it is possible that a move to full a la carte pricing might not save most end users money. 


 Nor is it clear how high prices must rise before there is a significant end user rebellion, rather than the modest abandonment we have seen so far. 

AT&T iPhones "Out of Contract" Can Be Unlocked

AT&T now allows customers "in good standing" to unlock their out-of-contract Apple iPhones. You might argue that is good news for mobile virtual network operators that cannot get rights to sell the iPhone. In some limited cases, that might be correct. 


But AT&T says the unlocked devices will not work on the Verizon Wireless network. Nor does it appear MVNOs using CDMA (Sprint, Verizon, others) will be able to support the device, either. 


The unlocked devices will work on U.S. GSM networks, but only in voice mode and slower EDGE network connections on the T-Mobile USA network. 


So it doesn't appear the change in policy will mean much danger for AT&T. Of course, users can buy unlocked devices directly from Apple, if they don't mind paying between $649 and $849, and then putting up with any hassles service providers might impose when trying to use those unlocked devices. 

Square Wants to Solve "Commerce" Problems, not "Payment" Problems

"Square's mission is to reinvent commerce on both sides of the counter," says Keith Rabois, Square COO. "We actually look at all of those pain points [small businesses face] and try to rank order them in terms of how much friction is there for that small business person, how much of a disadvantage do they have."


"We will try to find the solution for them over time," but "it won't all happen overnight," Rabois says. Square's big success so far has been built on one particular pain point, namely the cost and difficulty for a very-small business, or a home-based business, or a retailer selling goods in a non-traditional venue, of accepting credit and debit cards. 


But that point of view also means Square might not be looking at "mobile payments" in the sense of using a mobile phone as a replacement for a plastic card. That process, many would argue, simply is not broken, in North America.


One might argue that the next big opportunity is not low-cost merchant point of sale terminals but business management software and apps, the sorts of tools that allow merchants to figure out whether they should change operating hours, change pricing on products and adapt offers to changes in weather. 


You also might note that where some mobile wallet, payment or commerce apps and platforms try to provide value for customers, Square has, up to this point, tried to focus squarely on value for merchants. 


In addition to "what problem are you trying to solve," would-be firms in the mobile commerce space also must ask "whose problem am I trying to solve?" 

U.K. DSL at 50 Mbps to 100 Mbps, in May 2012

U.K.'s Origin Broadband is launching new broadband access services offering "faster than 40 Mbps service" starting in May 2012.


The  £35.50 per month version of the service will run VDSL2, allowing some consumers to get speeds up to 100 Mbps, depending on how far they are physically located from the Origin optical transceiver (cabinet, typically). 


Short access loops are the key to higher speeds using digital subscriber line technology. That is one reason European service providers often are less keen on investing lots of their own money in fiber to the home: in dense urban areas in Western Europe, DSL works just fine, compared to fiber services, at the the moment. 


In North America or Australia, which have less dense population, and consequently longer access loops, DSL has not perform as well. The cable industry's  marketing argument that DSL is "old" technology is clever, but not entirely correct. 


Access loop length is the issue for all versions of DSL, since signal attenuation for any baseband signal is an issue. Of course, signal attenuation is an issue for all communication systems, but cable systems can use repeaters (amplifiers) on their copper network. 


DSL, in its consumer broadband form, tends not to use repeaters, at least in urban areas. 

Distance to Cabinet	Downstream	Upstream
147 m	106 Mbps	22 Mbps
171 m	121 Mbps	27 Mbps
183 m	98 Mbps	9 Mbps
245 m	104 Mbps	21.6 Mbps
248 m	107 Mbps	27 Mbps
269 m	98 Mbps	27 Mbps
392 m	81.5 Mbps	19.8 Mbps
416 m	96 Mbps	30 Mbps
490 m	76 Mbps	24.2 Mbps
612 m	56 Mbps	22 Mbps
857 m	32 Mbps	8.5 Mbps
1372 m	22 Mbps	1.7 Mbps

"If Facebook Were Built Today, It Would Be a Mobile App"

 "Mobile is the epitome" of social, Pearce claimed. "If Facebook were built today, it would be a mobile app," says James Pearce, Facebook head of mobile developer relations. 


Facebook, for example, currently has 425 mobile users, compared to 825 million total users.


But those millions are fractured among native apps running on specific mobile platforms and browser-based mobile Web apps. Surprisingly, according to Pearce, Facebook's mobile Web app usage outweighs that on Android and iOS combined.


That's one reason why Facebook hopes HTML5 will get huge traction. HTML5 would solve the mobile handset fragmentation problem, allowing Facebook and its partners to create apps without worry about device incompatibility issues. 


That's one reason Facebook is supporting  the Core Mobile Web Platform Community Group, of the W3C, which brings together developers, carriers, phone makers and browser developers. But you might guess, rightly, that if HTML5 wins, other distribution channels might lose. 


Think about app stores, and you see the issues. That could be one reason why neither Apple nor Google have joined the effort. 

NFC Has Hit the "Trough of Disillusionment"

Google Wallet co-founding engineer Rob von Behren has left Google for payments startup Square. It isn't unusual for engineering personnel to change jobs. He had been working on Google Wallet since 2009. 


But there will now be suggestions of two types. The first is that Google Wallet "is in trouble." The other suggestion might be that near field communications "is in trouble." One might argue that neither really is the case. 


Rarely does an important new technology succeed the first time, or succeed right away. Apple's success with the iPad follows more than a decade of manufacturers trying to create a big new market for tablets, with almost no success. The Apple iPod is more nearly an example of an innovation that breaks the rule and becomes a nearly-instant success. 


But that's unusual. Almost always, a foundational technological approach takes time to show its significance. For that reason, many have been warning that it was "inevitable" that near field communications would pass the peak of its hype cycle and enter a period of disillusionment, which one might argue now is happening. 


That does not mean NFC will "fail," merely that it could be an important technology that ultimately will prove to be a mass market success. But that could take some time. Just how much time is not so obvious. 


But most important new technologies, especially when they involve change in a big and well-established ecosystem, take some time to mature. In part, that can happen because a value chain is complicated enough that lots of different contributors must be put into place to offer a full and robust solution. 


But in technology, the "best" solution, technologically, does not always "win." The perhaps classic examples are VHS and Betamax standards for videocassette recorders. Betamax was "better" in technology terms such as image quality. But VHS was "good enough" to satisfy market demand. 


If we assume NFC now has entered a period where the hype has crested, that might only mean that the typical hard work to construct a workable ecosystem can now proceed. That might also occur simultaneously with market success for other approaches that are good enough right now to win in the market. 


What cannot be predicted is whether the good enough solutions will preclude the "better" solutions, or whether it will simply take NFC the typical time most important technologies require to become mass market realities. 

Some Problems Cannot be Fixed: are Voice and Messaging Those Sorts of Problems?

IP-based social messaging services on smart phones cost telecom operators $8.7 billion in lost text messaging revenue in 2010, and $13.9 billion in 2011, Ovum estimates. 


The decline, representing nearly six percent of total messaging revenue in 2010 and nine percent in 2011, is expected to continue. Optimists will argue that over the top social messaging represents an opportunity. Pessimists, or perhaps realists, will argue that there isn't all that much service providers can do except slow the rate of revenue descent. 


That might seem defeatist, but there already are prior examples. Telcos were not able to arrest dramatically-falling long distance calling rates over the past few decades. Telcos have not been able to reverse the trend of declining local voice lines for about a decade.


Text messaging appears to be the next service to enter a "mature" phase, as well. The point is that a product late in its life cycle is not that big an opportunity, except for the last remaining consolidator of such services. 


Much the same argument--that incumbents should embrace it fully-- has been made about VoIP services. But, with some exceptions, it has proven difficult for incumbents to embrace VoIP in ways that are revenue neutral. 

For example, VoIP service provider revenues will reach $18.9 billion, in the U.S. market, by about 2015, according to the Telecommunications Industry Association.

That compares with circuit-switched voice revenue that, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service, the data suggests.

But the notable point is that VoIP does not represent all that much revenue. In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

Why Family Mobile Data Plans are Coming

There are a couple of good reasons why U.S. mobile service providers will offer multiple-device mobile broadband plans, at some point relatively soon. Historically, plans of this sort have been quite effective at encouraging the addition of incremental users and devices. 


Family plans worked well to create incentives for parents to outfit their children with mobile phones, by lowering the incremental cost of adding the next device. Family plans also discourage churn. 


In the past, family plans have lowered barriers to use of voice and text messaging services, but mobile broadband has to be bought for every discrete device on the plan, with no advantage to the end user for volume purchases. 


As users, especially the higher average revenue users, adopt and use multiple devices benefiting from mobile broadband access, the attractiveness of "family" data plans will grow. A big surge in tablet ownership in the December 2011 holiday and Christmas season illustrated what you might have expected, namely that wealthier households own and use more tablets and other gadgets. 


According to the Pew Internet and American Life Project, adults over the age of 18 tend to own and use many mobile and portable devices. That is especially true for tablet users and e-reader users, who are more likely to own mobile phones, desktop PCs and e-reading devices, for example. 

25% of Households Worldwide Now Have Wi-Fi

At the end of 2011, 439 million households worldwide had installed home Wi-Fi networks, equivalent to 25 percent of all households, according to Strategy Analytics. 


The firm predicts that the total worldwide number of Wi-Fi households will reach nearly 800 million in 2016, a penetration rate of 42 percent.

Wi-Fi Households – Penetration of Total Households: 17 Selected Countries in 2011

Wi-Fi Household Penetration %						2011
South Korea						80.3%
United Kingdom						73.3%
Germany						71.7%
France						71.6%
Japan						68.4%
Canada						67.8%
Italy						61.8%
USA						61.0%
Spain						57.1%
Australia						53.8%
Czech Republic						31.6%
Mexico						31.5%
Poland						28.0%
Russia						22.9%
China						21.8%
Brazil						20.4%
India						2.5%

Consumer Mobile App Revenues to Pass $50 billion by 2016

Juniper Research has projected that annual revenues from consumer mobile applications will approach $52 billion by 2016 as consumer smart phone adoption accelerates in tandem with the emergence of a mass tablet market. The forecast might raise some pertinent questions.


Just what will that new revenue stream indicate about the emerging role of tablets in the device universe, and what, in turn, tablet apps might mean for the devices we know as "personal computers." Much will hinge on how that new revenue is created. Some will consist of content purchases. Some will be provided by in-app purchases of digital and physical goods. Some of the revenue will come from advertising and promotion. Other revenue will be generated by app sales (software purchases). 


Some of those shifts will affect the way PCs are designed and used, more than the others. Kip Cassino, Borrell and Associates EVP argues that by 2016, most computers available to consumers are going to look and act just like today’s iPhones and iPads. That means they will be able to communicate like cell phones, they will all have built-in GPS, and they will feature cameras and touch-screen interfaces. 


Most importantly, Cassino argues, they will depend on apps instead of expensive, bundled software  In fact, what we now call computers will have largely faded from the scene, except for some business and gaming applications. Personal computers will be replaced by mobile devices of one sort or another, Cassino argues. 


You don't have to agree with the time frame to agree with the direction of the user experience Cassino describes. 

Windstream, Frontier Make More Money from Business Customers than Consumers

Windstream Corp. defines itself as "a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. 

Frontier Communications says it is "a provider of  voice, broadband, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications for medium and large businesses in 27 states."

What you might say about those statements is that they are as much "aspirational" as a description of where each firm gets most of its revenue right now. 

At December 31, 2011, Frontier had 3,103,800 residential customers and 309,900 business customers. 

Business revenue tells the story, though. For the six-month period ending Dec. 31, 2011, Frontier earned $692 million in business customer revenue, and $544 million in consumer revenue.  

For Windstream, results were even more pronounced. Business revenue in the fourth quarter of 2011 were $888 million, while consumer revenues were $118 million. 

That is not to say a "typical" independent or rural telco will have an opportunity to create that sort of revenue distribution. Both Frontier and Windstream benefit from a presence in some mid-sized markets as well as rural areas, so the opportunity to sell services to businesses is greater. 

But results at both firms show a strategy that will work for the larger independents, namely an out-of-region emphasis on business customers and revenue, compared to in-region customers. 

India Will be World's 2nd-Largest Mobile Broadband Market in 2016

India will become the world’s second largest mobile broadband market within next four years with 367 million mobile broadband connections, second only to China, which will have 639 million mobile broadband subscriptions in service, the GSMA predicts:


The U.S. market, in contrast will have 337 million mobile broadband connections by 2016. 


Mobile broadband connections currently stand at a bit more than 10 million HSPA connections across the country. That number is expected to grow by 900 percent to 100 million connections in 2014. 



Tablets are a new factor in some markets. So is Long Term Evolution, though not in the Indian market.

Is Skype a Service, App or Feature?

According to Reuters,  Facebook and Google separately are considering some form of deals with Skype.


Facebook apparently has had preliminary discussions about buying Skype, while Google is said to be considering a joint venture. 


Not to be silly, but is Skype a "service," a "product" or a "feature?" To be sure, Skype generates something on the order of $900 million in revenue, the last time we had access to published information, in 2010. At that revenue run rate, Skype said it lost a bit of money, though, so it is a "revenue neutral" business, in a literal way, or at least used to be. 


That isn't to say all consumer "VoIP" services or business IP telephony services have similar issues. 

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion, according to the Telecommunications Industry Association. 

Still, to keep matters in perspective, "legacy" circuit-switched voice revenue, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. But the notable point is that VoIP does not represent all that much revenue, in an overall sense.

In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.

Skype revenue might or might not actually create earnings.