Global Telecom Investment Grows in 2012, Lead by Mobile

Infonetics Research expects worldwide service provider capital investment to climb in 2012, then level out in 2015 and 2016 at around the $345 billion mark.

Global telecom carrier capital spending grew three percent to $301 billion in 2011, up from 2010 levels, according to Infonetics Research. Spending on every type of network equipment grew in 2011, with the exception of TDM voice, which continued its steep decline.

Telecom service provider revenue grew six percent to $1.8 trillion worldwide in 2011 over 2010, Infonetics also says Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.

"We’re expecting a telecom capex hike in 2012 as operators around the world ramp their spending like crazy to launch LTE networks, modernize their mobile networks, and carry out national wireline broadband initiatives,” says Téral.

Clearwire, Sprint, and T-Mobile USA in the United States;NTT DoCoMo and Softbank Mobile in Japan and KT, LGU+, and SK telecom in South Korea will be among the carriers expected to increase their capital investments in 2012.

China also recently allocated $58 billion for further investment in telecom infrastructure.

Meanwhile, Europe's Big Five have increased capital investment two  percentage points for the first time in five years.

In Latin America, operators increased capex 25 percent in 2011, led by América Móvil and Telefónica.

Cord Cutting, in the Form of Broadcast-Only Service, Is Growing

GfK Media now suggests that the number of U.S. households opting for over the air broadcast service is growing a bit faster.


"In 2012, we see homes with broadcast-only reception increase at a statistically significant level (two percent or more) for the first time in over five years," GfK Media says.


In fact, some 17.8 percent of TV homes report broadcast-only reception, compared with levels of 14 percent to 15 percent levels seen over the last five years.


That means that around 21 million homes rely only on over-the-air broadcast rather than a subscription TV service.


And broadcast-only levels are even higher among minority and lower-income homes, as well as with younger householders; all have seen an increase in broadcast-only reception in the past year, GfK Media says.


"Our data show that only one third of broadcast-only homes actually did cut the cord – they cancelled pay TV service at their current household - and only one sixth of those broadcast-only homes report some type of online service connected to their TV set," says Allan Fromen, GfK Media VP.


In other words, 66 percent of the new "broadcast only" users were not formerly cable, satellite or telco TV customers. 


About a third of the new broadcast-only users formerly had a subscription TV service, and more than 70 percent of those consumers said cost-cutting was the reason they abandoned subscription TV service.

Europe Mobile Operators Will Merge, Because Scale Matters

Economies of scale always are important in the global telecom business, which is one reason why firms tend to become bigger, and fewer, over time. A consolidation process has been underway in most regions and countries since at least 2001, but many believe Europe will be the focus of much activity in the years ahead, in large part because scale economies have not yet been maximized.


With the mobile market saturated, and average revenue per user dropping, scale is nearly always seen as one way to arrest the negative impact on service provider revenues. Simply, if organic growth is difficult, a service provider can buy growth by acquiring new customer bases and revenue streams outside the existing market.


Of course, volume alone does not "cure" declining average revenue per user problems. But greater scale allows service providers to operate more efficiently, wringing costs out of operations. On the other hand, one typical way of compensating for declining ARPU is to increase sales volume. Selling more units helps keep total revenue in line, even when ARPU is lower. 


European mobile data use has so far failed to compensate for the sharp decline in mobile voice revenue, according to Wireless Intelligence research. A 2011 study found that mobile ARPU across the 27 European Union (EU27) countries had fallen by 20 percent over the last three years, dropping from EUR25 in 2007 to EUR20 in 2010 on average. 


The drop was caused primarily by ongoing declines in the average per-minute price for voice calls, which dropped from EUR0.16 to EUR0.14 in the EU27 mobile markets over the period.


Over the past decade, smaller service providers have been buying other companies, and larger tier-one service providers have been making cross-border investments to boost scale. 


But Yankee Group Research VP Declan Lonergan isn't so sure the consolidation process will proceed as much as some believe, though. "There will certainly be more sharing of networks, joint-procurement partnerships, and even acquisitions of fourth-placed operators by market leaders within individual markets," he says. "But it would be naive to think national regulators will stand by and watch all of the work they have done to foster competition during the past twenty years be swept away by a wave of consolidation."


Nor will the wave of consolidation necessarily reduce the amount of competition in national markets. Longergan believes "all European countries will still have at least three competing operators five years from now, along with at least two viable MVNOs." 

Verizon Boosts FiOS Speeds

The majority of existing Verizon FiOS customers will pay $10 to $15 more per month to double or triple their Internet speed, under new service plans Verizon has announced.

The new speeds, available in a range of double- and triple-play bundles, plus stand-alone service, feature tiers with download/upload speeds of 50/25, 75/35, 150/65 and 300/65 megabits per second, Verizon says.  

Three of those speeds  75/35, 150/65 and 300/65 -- are twice as fast as those previously offered, Verizon notes. In addition, Verizon will continue to offer its entry-level speed of 15/5 Mbps.

The two highest downstream speed offers, of 150 Mbps and 300 Mbps, as well as the new 65 Mbps upstream speed, are said by Verizon to be the fastest, mass scale U.S. residential Internet speeds available in the market.

Existing FiOS customers can upgrade to the new bundles and enjoy the faster speeds anytime, with no upgrade fee.


The latest upgrades are simply more evidence that, despite criticism, Internet service providers continue to upgrade speeds for U.S. consumers.

For LTE, Spectrum Matters

Sprint's LTE network is faster than its old WiMAX network. 


It's a bit faster than T-Mobile's HSPA 21, and it's about 25 times as fast as Sprint's 3G network. 


But it doesn't quite match AT&T's and Verizon's LTE speeds in cities where they have more spectrum, PCMag.com says. 

No Surprise: Mobile Voice Volume Growth Has Gone Negative

People have been talking less, texting more, for some time. 

No Surprise: Tablet Users Prefer Ad-Supported Free Apps

Nobody who is familiar with consumer media behavior will be at all surprised by a new study commissioned by the Online Publishers Association that  has found 54 percent of tablet users prefer free, ad-supported apps over paid ones, up from 40 percent a year ago.


Consumers often say they "hate" or "dislike" ads. But given a choice between ad-supported, no incremental cost content, supported by ads, or paying for that same content, people will tend to prefer the ad-supported versions. 


The study also found 19 percent of users prefer to pay more for apps with no ads, down from 30 percent in the 2011 survey. You might say that as use of apps has grown, people are exhibiting the same sentiments they typically do, when confronted with ad supported or "for fee" content. 

Who Dies First, Nokia or RIM?

Both Research in Motion and Nokia now are mobile device suppliers in trouble. But some would argue Nokia is more likely to survive than RIM. 


One of the most important things playing into Nokia’s favor is its partnership with Microsoft. Microsoft has been trying, largely without success, to make a big market share move in the mobile device market, and is betting heavily on Nokia to help it.


For that reason, some think Nokia is more likely to survive than Research in Motion.

Can Microsoft "Freeze" the Tablet Market?

Back in the "old days," suppliers often would try to "freeze" markets by announcing upcoming new products, in the hope that buyers then would hold off purchasing a rival's product, until the supplier "pre-announcing" had time to get its own model to market. 


It used to work. So some now speculate on whether Microsoft is trying to freeze buyers by announcing its own branded tablet. Some of us doubt that old tactic will work. There simply are too many tablets available, and too little distinctiveness, for many to wait.


Unless, of course, the wait is a couple of months for a brand-new version of the Apple iPad. Both installed base and "plan to purchase" forecasts suggest Apple has a commanding lead in the tablet space, and that any Microsoft move in unlikely to shift much demand away from Apple, no matter what Microsoft does.


There could be some benefit with respect to other tablets running Android, though. 
 

23% of U.S. Internet Users Already Own a Tablet

Today’s tablet users represent  31 percent of Internet users, up from 12 percent in 2011. Moreover, tablet ownership is expected to reach 47 percent of Internet users by 2013, according to a study conducted by Frank Magid Associates and sponsored by the Online Publishers Association. 


Accessing content and information was found to be the dominant activity on the device (94 percent), followed by accessing the internet (67 percent) and checking email (66 percent). 


The study also revealed that tablet users’ primary content-related activities include: watching video (54 percent), getting weather information (49 percent), and accessing national news (37 percent) and entertainment content (36 percent).


An earlier study had found 12 percent of the U.S. Internet population using tablets, the Online Publishers Association earlier found. 


As other studies have suggested, tablets are primarily content consumption devices. Some 87 percent of tablet users use their tablets to get access to content and information, the study found.


The earlier 2011 study suggested users now are broadly familiar with app downloads. Some 93 percent of tablet users have downloaded apps and the average tablet user has downloaded 20 apps.


Some 79 percent of app downloaders have paid for apps in the last 12 months, and 26 percent of all apps downloaded are paid apps. 


On average, those who have downloaded apps on tablets have spent $53 on apps in the past 12 months. 

Vonage Says VoIP Providers Should Get Direct Access to Numbers

Vonage has asked the Federal Communications Commission to allow it and other VoIP providers direct access to phone numbers, a move Verizon and AT&T say they support, so long as VoIP providers are subject to the same rules as the incumbents are. 


Competitive local exchange carriers object, on the grounds that VoIP providers would gain business advantage if the FCC were to grant the request. As typically is the case, the changes are viewed as conferring business advantage to some contestants, compared to others. 

Canadian Broadband More Expensive Than U.S. Broadband

Canada’s broadband fees were lower than those in the United States in 2007 to 2009, but as a result of large increases in usage during the past two years, and generally small usage caps, the average Canadian broadband subscriber paid 3.9 percent more in 2011 than the average U.S. subscriber did,  PwC report says.


Differences in average prices between nations and regions are not unusual, in any segment of communications. But the study does suggest that growing usage, smaller caps and the need to upgrade to bigger tiers of service are having an impact in the Canadian market. 

Medical Personnel Conflicted about Mobile Health Apps and Services

A recent consumer survey conducted by the Economist Intelligence Unit found consumers more convinced of the value of mobile health technologies than health providers.

Roughly half of consumers predict that within the next three years, mobile health will improve the convenience (46 percent), cost (52 percent) and quality (48 percent) of their healthcare.

But 60 percent of consumers said they believe doctors are not as interested in mobile health as patients and technology companies are, PwC reports.

About 64 percent of doctors and payers said that mobile health business models are unproven. And some would say that apparent consumer interest does not translate well into actual sustained usage. The study found that more than 66 percent of consumer respondents who have used mobile wellness or fitness applications with manual data entry discontinued it after the first six months.

Some 13 percent of physicians actually discourage use of mobile health apps. Also, some 42 percent of doctors worry that mobile health options will make patients “too independent.”

Also, it appears that mobile heatth might actually reduce patient visits, which has negative revenue implications for health professionals.

Among consumers who already are using mHealth services, 59 percent said they have replaced some visits to doctors or nurses. Also, although more convenient access to their doctor or healthcare provider is seen as a mobile health advantage by 46 percent of respondents, some 43 percent believe it w2ill reduce out-of-pocket healthcare costs. That means less revenue for health professionals.

Burger King Corp. Tests Closed Loop Mobile Payment App

Burger King Corp. has launched a pilot program to test its new mobile payment application in select restaurants in the Salt Lake City, Utah, area., using a closed loop approach similar to what Starbucks does, signing up users to a branded prepaid card, then linking linking the mobile app to the card. 


The "BK Mobile Crown Card" program will be tested at about 50 restaurants in Salt Lake City, Utah area. The test will use quick response codes as the communication method between iOS and Android devices and the point of sale terminals. 


All such experiments are early versions of what might someday be more elegant in approach. The difference between scanning a prepaid card, a standard credit or debit card, and using a mobile that does the same thing, might not be so compelling that most people will want to do it. But the behavior is probably the key reason for using such approaches.


Getting people used to the idea of using a mobile as a payment mechanism is a habit that will have to be created. 

Tablet Gamers are Older

The average age of a U.S. or U.K. mobile device owner who has played a game on the device in the past month (”mobile gamer”) is 39.5, while among those only playing games on a tablet, the average age is 44.7, according to PopCap. That is not too surprising, if you assume older people can afford a tablet more easily than younger consumers. 


Some 16 percent of mobile gamers are 55 or older, while roughly two thirds are less than 45 years old.