Would Regulators Allow T-Mobile USA and Sprint to Merge?

CEO Dan Hesse apparently believes regulators at the Department of Justice and Federal Communications Commission would be open to wireless industry consolidation if the resulting combination created more competition for Verizon Wireless and AT&T Mobility. 


That line of thinking might obviously include Sprint merging with T-Mobile USA, as difficult as that might be, for reasons of incompatible air interfaces, at least until Long Term Evolution displaces much of the legacy air interface (CDMA and GSM). 


"I actually believe that Washington would be receptive to consolidation to provide more balance to the big two," he said. Others might not be so sure. A big issue when the AT&T purchase of T-Mobile USA was considered was the degree of competition in the U.S. mobile market. 


To be sure, there remains continuing sentiment that the U.S. mobile market is not "stable" over the long term. 



Is the share of market now characteristic of the U.S. market sustainable? Many would say "no." Among the common observations is that two of the top four national providers have market share two to three times greater than two of the others.


Many observers would say a market with four national providers is about one too many for a sustainable and stable market. But even without more merger activity among any of the top four providers, will any single U.S. provider be allowed to gain 50-percent market share?


In principle, one is tempted to say "yes." But regulatory intervention to prevent such an outcome probably would happen before that happened. 

Some observers think the U.S. mobile market already has become substantially non-competitive.


The Department of Justice, for example, recently opposed the acquisition of T-Mobile USA by AT&T, citing a standard methodology for determining the competitiveness of markets.

One of the ways to measure market concentration is the Heffindahl-Hirshman Index or HHI, often used as a measure of market concentration. The HHI is the square of the percentage market share of each firm summed over the largest 50 firms in a market. Here is the pre-merger market HHI which already suggests that the market is uncompetitive. HHI is the problem

For some of us who just want a quick rule of thumb that tells you when there is potential antitrust concern, 30 percent market share tends to work.That has been the figure cable TV executives in the United States have worried about, and which the Federal Communication Commission at one point set as the limit of subscriber market share for any U.S. cable operator. Both AT&T and Verizon Wireless already have market share that exceeds that figure.

 

The Justice Department will generally investigate any merger of firms in a market where the HHI exceeds 1,000 and will very likely challenge any merger if the HHI is greater than 1,800. With a HHI over 2,300 any deal will be heavily scrutinized and most likely rejected. Even a merger between T-Mobile USA and Sprint, with a resulting 28 percent market share, would probably not be allowed on the same antitrust grounds.

The competitive equilibrium point in the mobile industry seems to when the market shares of the top three providers are 46 percent, 29 percent and 18 percent, argues Chetan Sharma says. In any country, that "rule of three" seems to hold.

That roughly corresponds with a rule of thumb some of us learned about stable markets. The rule is that the top provider has twice the market share of the contestant in second place, while the number-two provider has about twice the market share of the number-three provider.

That suggests the U.S. mobile market still has room to change. At the moment, Verizon Wireless has perhaps 34 percent share, while AT&T has about 31 percent share. Classic theory would suggest the ultimate market share could approach a market with the top-three providers having a market share relationship something like 50:25:12.

That would have highly-significant implications for the four current providers that today represent 93 percent of all subscribers. One of the leading contestants reasonably could hope to grab half of the available market, while two of the contestants could face significant losses.


All that assumes regulatory action did not occur before that market structure was obtained, though.

Why Google Needs "Mobile First" for Search

Profit margin might be one reason why Google "needs" a device play to support its mobile search business. “On a tactical level, while we estimate mobile queries account for just 20 percent of searches, we believe they are growing four times to five times as quickly as desktop queries, Goldman Sachs analysts say.


"We estimate Google pays Apple roughly 75 percent revenue share to be the default in the Safari search bar, which we estimate accounts for roughly one third of all mobile queries,” Goldman Sachs says and GigaOm reports. 


In principle, Google could boost its profit margins on mobile search advertising by shifting more traffic (search queries) to its own devices, for example. 

Promotional Pricing Adds Uncertainty to Cable, Telco Revenue Gains

By offering reduced triple play pricing, cable operators are successfully softening subscriber gains made by satellite and telco video competitors. What is not clear is what might happen when those offers expire and consumers start paying the list prices.

IHS Screen Digest, for example, expects that the third and fourth quarters of 2012 will likely see the resumption of cable video subscriber declines as promotional pricing comes to an end for new customers.

At the same time, IHS Screen Digest expects that cable operators will continue to make significant gains in broadband subscribers, and to a lesser extent, voice subscribers.

The same observation about what happens when promotional pricing ends might also be made about cable gains in broadband access as well, as there are some signs firms such as Comcast are offering new subscribers free service for six months, while telcos such as CenturyLink are offering “half price for six months” offers.

On the other hand, there is a general perception that cable access services remain in stronger demand than telco digital subscriber line services. AT&T U-verse, for example, only recorded a net gain of 103,000 customers in its first quarter of 2012.

Verizon, for its part, added 193,000 new FiOS subs and a loss of 89,000 DSL subscribers, vision2mobile reports.

In the first quarter of 2012, Comcast added 439,000 high-speed Internet customers while Time Warner Cable picked up 214,000 residential broadband subscribers.

One might argue that cable operator promotional pricing has more impact in the video area than in the broadband and voice areas, though, in part because broadband and voice are growth areas for cable operators, while video is a declining product.

By 2016, IHS Screen Digest expects that the cable subscriber market share will have shrunk by 6.9 percent from 2011, with satellite making gains of 3.6 percent and telco video share growing 42.5 percent.

But cable will grow broadband subscribers by 18.6 percent, and voice subscribers by 19.7 percent, IHS Screen Digest says.

Total combined revenue from video, broadband and voice will therefore grow by 11.5 percent during the same period, from $81.3 billion to $92.8 billion. IHS Screen Digest argues. That continued trend of revenue growth also is what virtually all observers expect for telcos as well, at least those such as AT&T and Verizon that can rely on robust wireless revenue gains.

Bobsled by T-Mobile Shows Over the Top Issues

Since April 2011, more than 10 million calls have been made on the over the top Bobsled Calling application made available by T-Mobile. 


Of the millions of Bobsled calls made to phone numbers, 80 percent originate from outside the United States, though messaging seems to be a U.S. phenomenon. Although Bobsled Calling has seen significant international usage, Bobsled Messaging users are predominately U.S. based, with 90 percent of messages sent domestically.


Usage statistics also show one of the key present realities of over the top apps sponsored by communications service providers, namely that usage might often be by "non-customers."


Of the more than one million Bobsled Calling users, 95 percent are not T-Mobile wireless subscribers, T-Mobile says.


That should suggest one key strategic difference between a carrier-offered app or service, and an over the top app, namely that in some cases the OTT apps do not necessarily cannibalize current customer use of carrier services, but essentially are an "out of region" service that gets used by non-customers. 


Bobsled Messaging is now available for download free of charge on all Android-powered smartphones and tablets through the Google Play Store on Android and can be accessed through any browser-enabled device. 


The Bobsled Calling application also is available for download from the iTunes App Store. 


That might suggest one as-yet misunderstood way service providers can approach OTT apps, especially those which are functional substitutes for current "paid" services. In many instances, OTT is a way of extending service to non-customers or non-subscribers.


That means OTT can be an out of region growth strategy similar in principle to the ways service providers have grown by launching service outside their legacy service territories. 


In Bobsled's case perhaps five percent of users might be using the app to reduce spending on T-Mobile USA services. The other 95 percent are not T-Mobile USA customers. That suggests there is a large incremental revenue opportunity among non-customers. 

DirecTV to Offer 10 Mbps Satellite Broadband

DirecTV has announced partnerships with ViaSat and Hughes' HughesNet to offer satellite-delivered broadband access services across the United States at speeds of 10 Mbps or more. That might be significant to the extent that it means virtually any rural household will have immediate access to 10 Mbps broadband access, without the need for additional construction or capital investment. 


The move by DirecTV illustrates the use case for satellite-delivered broadband, namely its ability to rapidly and efficiently provide broadband access in rural areas at vastly lower cost, immediately, to isolated households.


Not all policy advocates will be completely happy with potential speeds or retail pricing. But it is hard to argue that there are more-efficient ways to invest capital for the purposes of providing broadband access to the three percent or so of the "hardest to serve" households in the United States. 

Verizon Wireless Expects Slight Revenue Dilution From Family Mobile Data Plans

One major reason Verizon Wireless is launching family or multi-device mobile data plans in the summer of 2012 is that “we have kind of constrained the marketplace now around connecting more devices because everybody thinks, well, if I connect that device, I now have to buy an additional data plan with that that has its own tiered pricing with it,” Fran Shammo, Verizon Communications CFO says.

“If I can add as many devices as I want and share that data plan, that is a lot more efficient from a family share perspective, from a small-business perspective,” Shammo says. “And I think at least where I sit and I look at that, I say to myself, okay, there is a large ramp of devices out there that, especially when you think about families, they are not connecting those devices because
of the incremental cost in the model we have today.”

But Verizon believes it is “not going to take a huge revenue dilution” when it launches the plan. That probably means a belief that average revenue per unit might dip, but that more units will be sold.

1/3 of New Netflix Customers are Returning Subscribers

Netflix CFO David Wells says about a third of "new" subscribers joining Netflix actually are former subscribers who are returning. 


"Rejoined or folks rejoining the service still remain about a third of our new subscribers that are coming in," Wells says. "We've said before that the brand hit will take years to recover from and I think that's still true, with the bulk of the recovery coming in the full year and I think we still feel that way,"

Telcos and Cable are Not "Platforms"

The fight over the TV is really a fight over the next massive consumer platform that is coming up for grabs. Of platforms there are few: Google owns search, Amazon owns digital retail, Facebook owns social, and Apple owns consumer devices. Microsoft owns, well, nothing at the moment, despite its handsome revenue stream from Windows and Office, argues James McQuivey of Forrester Research.

But Microsoft’s Xbox 360 is already the most-watched net-connected TV device in the United States and soon, the world. With more than 70 million consoles in households worldwide, as many as half of them connected to the Internet, depending on the country, Microsoft can rapidly drive new video services into tens of millions of households, McQuivey argues.

Significantly missing from those lists of platforms are cable or telco access service providers. At least for the moment, telcos and cable operators are not "platforms."

88% of All Mobile Apps are Part of Android or iOS Ecosystems

Some 12 months ago, fewer than 40 percent of mobile subscribers in the United States had smart phones. In early 2012, that percentage has grown to at least 50 percent. That, in turn, is going to have implications for use of mobile apps and bandwidth consumption, at the very least. 

Much of the activity will continue to be driven by the Android and iOS ecosystems.

Of smart phone owners who have downloaded an app at any point in the last 30 days,  88 percent are part of either the iOS or Android ecosystems, Nielsen reports. 

In just a year, the average number of apps per smartphone has grown 28 percent, from 32 apps  per user to 41 apps per user. 

In addition, mobile app users are spending more time with apps than browser experiences, some 10 percent more than last year, Nielsen says. 

Some things haven’t changed, however. The top five apps continue to be Facebook, YouTube, Android Market, Google Search, and Gmail. 

Apple's iPhone screen to grow to 4 or 5 inches?

As much as many people love their iPhones, the screen size has come to seem a bit cramped as other manufacturers have introduced larger-screen models. Apple has in the past said there are reasons larger screens haven't been offered. 


The form factor for Apple's "retina display" has been among the arguments for the 3.5-inch screen. 


A new device could use a 1024 x 768 panel which is the same resolution as the company’s first two iPads and works out to 320 pixels per inch. 


That would allow a 4-inch iPhone to natively run all of the existing iPad applications that aren’t optimized for the new iPad, which is double the resolution in both directions. 


So larger screens might be coming in the next version of the iPhone, the Wall Street Journal reports. 


The new displays are said to measure four inches in diagonal, up from the 3.5 inches on previous versions of the iPhone, sources say. 


Apple has in the past defended the screen size as necessary for a good "one-handed" user experience. Those of you already using four-inch screens know navigation with a single thumb can be harder on a bigger screen. 


That might be true, but smart phones these days function as content consumption devices, not just "phones," and there, a bigger screen is better.

Smart Phones for Medical Diagnosis

Some industry verticals tend to be lead adopters of new technology, while others tend to lag. Historically, the financial sector has lead adoption of most new technologies. Medical segments tend to lag. But smart phones, sensor and apps might change that.

And that is one reason e-health tends to get attention from communications service providers. Use of a standard smart phone as a medical sensor could dramatically change the adoption profile.

That’s the vision of a team of researchers at the California Institute of Technology. Led by Nate Lewis, a chemist, the team is developing an e-nose that can sense chemical vapors and enable diagnosis, says Technology Reports.

Android Fragmentation: 682,000 Different Devices

"Fragmentation" matters to the entire Android community: users, developers, OEMs, brands and networks. Fragmentation is a primary reason why Google is changing the way it issues operating system updates. 


Fragmentation isn't always a "problem." In many ways, it offers users and developers a chance to experience great choice and variety.


The proliferation of devices with their associated screen sizes, internal hardware and custom ROMs creates some difficulties, though, as when a particular app doesn't work at all, or works poorly, on particular devices and operating system versions. 


OpenSignalMaps, for example, has identified 681,900 of discrete Android devices, and looked at models, brands, API levels (the version of Android) and screen sizes. And yes, you could say there is a great deal of fragmentation. 

As Targeted Advertising is Possible, "You" are the Business

Rethinking Personal Data: Strengthening Trust, a new report by the World Economic Forum, illustrates the growing tension between ad-supported apps and business models and end-user privacy. 


The problem, of course, is that for any ad-supported business model, end user data is the business model. "You are the business" is one way of illustrating that fact. More to the point, knowledge about your values, preferences, friends, shopping and behavior is what provides the value for advertisers and marketers. 

Nokia Browser Features Data Compression

Research in Motion long has compressed its data "in the cloud" to improve user experience. The same technique is used by some browsers, including the "Nokia Browser."


In some cases, the advantage simply is better end user experience. In other cases, the objective is to reduce end user device data consumption, which in many cases means lower mobile broadband bills.


That might be especially important in developing regions. 


The Nokia Browser compression means end users consume less data by up to 90 percent, Nokia says. 


"Today's mobile phone users want a quick internet experience but without being held back by high data costs," said Mary T. McDowell, executive vice president, Mobile Phones, Nokia.


source: Yankee Group

Google "Story of Send" Tracks Email Journey

How does an email travel from your computer to your friend’s smartphone across the country or around the world?

The Story of Send a new site that provides a behind-the-scenes look into how an email moves through the "Google" networki.  Along the way, you’ll discover everything from where Google filters for spam and scans for viruses to how Google minimizes  impact on the environment through energy efficiency and renewable power.