You might justifiably argue that the idea of “dumb pipe” scares telecom and cable TV executives, but not really for reasons often supposed. The notion implies, though it often is unstated, that dumb pipe means “low margin, commodity” access.
The problem is that the notion is partly true, and partly untrue. “Share Everything,” the new Verizon Wireless pricing policy, makes voice and text messaging a “flat-fee price of admission” to use the mobile network. Internet access, on the other hand, becomes a variable-fee feature based substantially on usage.
The point is that dumb pipe is a part of the business, not the whole business, nor is it the only business service providers already are in. But it is pointless to argue about whether dumb pipe is a business access providers must be in: they must, and will.
But that doesn't ever mean it is the only business they are in. Also, though there always is thinking and some action about access providers becoming app providers, historically, nearly all the money comes from apps that are closely tied to the core access function and network. That probably won't change.
Thursday, June 21, 2012
What Business Are AT&T and Verizon in, Really?
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Verizon Wireless "Share Everything" Might be Controversial to Some, but is Indeed "Revolutionary"
Some don't think there is anything revolutionary about Verizon Wireless "Share Everything" plan. Some would disagree. Some might not remember, but there used to be a difference between a U.S. domestic mobile "long distance" call and a "local" call. There used to be a difference between a domestic U.S. landline call.
But then AT&T introduced "Digital One Rate." Industry pricing changed dramatically. Keep in mind, there was skepticism about Digital One Rate when it was launched, as well.
Dan Hesse, Sprint Nextel CEO, was CEO of AT&T Wireless Services back in 1998, not many will recall. That was the month Hesse was able to act on a vision he had strenuously to sell to his superiors: that wireline minutes of use could be shifted to wireless, saving at&t money on access fees by doing so.
The Digital One Rate plan was not primarily aimed against other wireless carriers at all, but rather at reducing a significant cost of doing business on the AT&T long distance side of the house.
At the time, Hesse pointed out that "we're taking a chunk out of revenue usually going to our competitors," meaning by that the Regional Bell Operating Companies that at&t had to pay access fees to.
The point is that major packaging initiatives can have unanticipated consequences. Digital One Rate was just a way to save AT&T long distance operations money on terminating traffic charges paid out to local carriers.
But then AT&T introduced "Digital One Rate." Industry pricing changed dramatically. Keep in mind, there was skepticism about Digital One Rate when it was launched, as well.
Dan Hesse, Sprint Nextel CEO, was CEO of AT&T Wireless Services back in 1998, not many will recall. That was the month Hesse was able to act on a vision he had strenuously to sell to his superiors: that wireline minutes of use could be shifted to wireless, saving at&t money on access fees by doing so.
The Digital One Rate plan was not primarily aimed against other wireless carriers at all, but rather at reducing a significant cost of doing business on the AT&T long distance side of the house.
At the time, Hesse pointed out that "we're taking a chunk out of revenue usually going to our competitors," meaning by that the Regional Bell Operating Companies that at&t had to pay access fees to.
The point is that major packaging initiatives can have unanticipated consequences. Digital One Rate was just a way to save AT&T long distance operations money on terminating traffic charges paid out to local carriers.
But you might argue that Digital One Rate had more impact on the market, and consumer welfare, than did the Telecommunications Act of 1996, the first major revamp of U.S. telecommunications law since 1934.
Something similar might be said about the impact of family plans for voice and text messaging, which were adopted essentially for the purpose of turning teenagers into mobile users. It worked.
"Share Everything" might have similar unanticipated, and many expected, consequences.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Poll Finds People are "Addicted" to Their Smart Phones
Nearly 60 percent of surveyed smart phone owners report they don’t go an hour without checking their phone, but you probably already knew that. Younger folks were the most "addicted," as 63 percent of women and 73 percent of men ages 18 to 34 say they don’t go an hour without checking their phones, a survey conducted by Harris Interactive, and commissioned by Lookiout, has found.
Some 54 percent said they check their phones while lying in bed: before they go to sleep, after they wake up, even in the middle of the night.
Some 30 percent of respondents admitted that they check their phones during a meal with others. About 24 percent said they check their phones while driving.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Samsung Will Lead Smart Phone Unit Sales for 2 Years
Fitch Ratings expects Samsung Electronics to maintain its leading position in smart phone unit sales over the next two years.
Samsung’s market share of smart phone unit sales has risen to 31 percent from just three percent two years ago. In 2011, the company sold 96.7 million smartphones (Apple: 91.3 million), and 45 million in the first quarter of 2012 (Apple: 35.1 million). Apple’s unit market share increased to 24 percent from 16 percent, but Nokia plunged to eight percent from 38 percent.
In large part, the unit sales lead is possible because Samsung has a wider range of handset models than Apple, enabling a more effective penetration of both developed and emerging markets.
Samsung also is the undisputed leader for key smartphone components – including display, processor and memory chip technologies – reinforcing the likelihood that its future smartphone models will be equipped with cutting-edge technology, Fitch Ratings says.
Android operating system market share, which stood at 56 percent in the first quarter of 2012 suggests that the perceived gap in terms of user-preference between Apple’s iOS and Android’s OS has narrowed significantly.
Samsung has amassed a record 10 million pre-orders for its latest Galaxy S3 model, which was launched on a global basis in June 2012. Fitch forecasts that Samsung will sell around 400 million mobile handsets during 2012, of which 220 million will be smartphones (2011: 330 million handsets, including 97 million smartphones).
Samsung’s market share of smart phone unit sales has risen to 31 percent from just three percent two years ago. In 2011, the company sold 96.7 million smartphones (Apple: 91.3 million), and 45 million in the first quarter of 2012 (Apple: 35.1 million). Apple’s unit market share increased to 24 percent from 16 percent, but Nokia plunged to eight percent from 38 percent.
In large part, the unit sales lead is possible because Samsung has a wider range of handset models than Apple, enabling a more effective penetration of both developed and emerging markets.
Samsung also is the undisputed leader for key smartphone components – including display, processor and memory chip technologies – reinforcing the likelihood that its future smartphone models will be equipped with cutting-edge technology, Fitch Ratings says.
Android operating system market share, which stood at 56 percent in the first quarter of 2012 suggests that the perceived gap in terms of user-preference between Apple’s iOS and Android’s OS has narrowed significantly.
Samsung has amassed a record 10 million pre-orders for its latest Galaxy S3 model, which was launched on a global basis in June 2012. Fitch forecasts that Samsung will sell around 400 million mobile handsets during 2012, of which 220 million will be smartphones (2011: 330 million handsets, including 97 million smartphones).
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Smart Phone Ownership Predicts Tablet Ownership
There will be 69.6 million tablet users in the United States by the end of 2012, and 133.5 million tablet users by 2015, eMarketer estimates. People with smart phones are showing themselves to be eager adopters of tablets, according to comScore. According to the research, 24 percent of smart phone users had used a tablet in the three-month period ending April 2012, an increase from 10 percent recorded a year earlier.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Microsoft Launches its Own NFC-Enabled Wallet for Windows Phone 8
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Both Research in Motion and Nokia will "Disappear" in 2013, Analyst Says
Research In Motion and Nokia will not exist in 2013, according to 24/7 Wall St. Five years ago, RIM was the only smartphone company of any size, and it had almost the entire corporate market. But it made a fatal mistake in failing to adapt its technology for consumer use.
RIM once owned the smartphone market. Its BlackBerry products were used largely by businesses. It is hardly worth repeating the story of how RIM was late to the consumer market, where it has been pounded relentlessly by Apple and an army of Google Android phones from manufacturers as diverse as China’s HTC, South Korea’s Samsung and Motorola in the U.S.
The pace at which the company fell apart was even more extraordinary than its rise, says Douglas McIntyre of 24/7 Wall Street. Revenue and net income jumped from $6 billion and $1.3 billion, respectively, in fiscal 2008 to $20 billion and $3.4 billion in fiscal 2011.
But research group NPD recently reported that RIM’s U.S. market share was 44 percent in 2009 but only 10 percent in 2011.
RIM cannot survive as a standalone operation, McIntyre believes, a view that probably now represents the overwhelming consensus of industry watchers.
In Nov. 2011, Ericsson sold its half of the Sony Ericsson mobile phone business, but surviving provider Sony now faces a smart phone industry dominated by Apple and Google’s Android.
Nokia likewise will fail, he argues, though some would say Microsoft's backing might make a difference.
RIM once owned the smartphone market. Its BlackBerry products were used largely by businesses. It is hardly worth repeating the story of how RIM was late to the consumer market, where it has been pounded relentlessly by Apple and an army of Google Android phones from manufacturers as diverse as China’s HTC, South Korea’s Samsung and Motorola in the U.S.
The pace at which the company fell apart was even more extraordinary than its rise, says Douglas McIntyre of 24/7 Wall Street. Revenue and net income jumped from $6 billion and $1.3 billion, respectively, in fiscal 2008 to $20 billion and $3.4 billion in fiscal 2011.
But research group NPD recently reported that RIM’s U.S. market share was 44 percent in 2009 but only 10 percent in 2011.
RIM cannot survive as a standalone operation, McIntyre believes, a view that probably now represents the overwhelming consensus of industry watchers.
In Nov. 2011, Ericsson sold its half of the Sony Ericsson mobile phone business, but surviving provider Sony now faces a smart phone industry dominated by Apple and Google’s Android.
Nokia likewise will fail, he argues, though some would say Microsoft's backing might make a difference.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Wednesday, June 20, 2012
Mobile Broadband Growth Dwarfs Fixed Access
By the end of 2011, six million U.S. households will depend on a wireless or mobile platform (including 3G or 4G) as their only means of accessing the Internet, according to Strategy Analytics.
That means seven percent of U.S. homes are wireless-only for broadband, up about 430,000 homes over 2010 levels.
These “mobile-only” customers typically connect to broadband using 3G or 4G-enabled smartphones or PC dongles, and are unable or unwilling to use a wired broadband service such as cable, DSL or fiber, Strategy Analytics says.
Nearly half of all adults (47 percent) go online with a laptop using a Wi-Fi connection or mobile broadband card (up from the 39 percent who did so as of April 2009) while 40 percent of adults use the internet, email or instant messaging on a mobile phone (up from the 32 percent of Americans who did this in 2009), the Pew Internet and American Life Project reported in 2010.
Since then, mobile Internet access has grown, especially among minority Americans. But the trend is increasingly common, for lots of people.
When asked what device they normally use to access the internet, 25 percent of all smart phone owners say that they mostly go online using their phone, rather than with a computer.
While many of these individuals have other sources of online access at home, roughly one third of these "cell mostly" Internet users lack a high-speed home broadband connection, Pew researchers say.
In other words, about eight percent of broadband users might rely exclusively on mobile broadband (a third of the respondents who “mostly” rely on mobile broadband).
That means seven percent of U.S. homes are wireless-only for broadband, up about 430,000 homes over 2010 levels.
These “mobile-only” customers typically connect to broadband using 3G or 4G-enabled smartphones or PC dongles, and are unable or unwilling to use a wired broadband service such as cable, DSL or fiber, Strategy Analytics says.
Nearly half of all adults (47 percent) go online with a laptop using a Wi-Fi connection or mobile broadband card (up from the 39 percent who did so as of April 2009) while 40 percent of adults use the internet, email or instant messaging on a mobile phone (up from the 32 percent of Americans who did this in 2009), the Pew Internet and American Life Project reported in 2010.
Since then, mobile Internet access has grown, especially among minority Americans. But the trend is increasingly common, for lots of people.
When asked what device they normally use to access the internet, 25 percent of all smart phone owners say that they mostly go online using their phone, rather than with a computer.
While many of these individuals have other sources of online access at home, roughly one third of these "cell mostly" Internet users lack a high-speed home broadband connection, Pew researchers say.
In other words, about eight percent of broadband users might rely exclusively on mobile broadband (a third of the respondents who “mostly” rely on mobile broadband).
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Smart Phones are Changing the Gaming Business
Smart phones are changing the broadband Internet access business, the computing appliance business and the software business. Now smart phones seem also to be changing the gaming business.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
How Big Will Mobile Payments Business Be in 2012?
Predicting how much new revenue can be created in any new business, even one expected to be quite large, in an exercise in assumptions. One has to estimate the volume of activity, and then the revenue for each action, to derive an estimate for total industry revenue. Mobile payments are no exception.
Worldwide mobile payment transaction values will surpass $171.5 billion in 2012, a 61.9 percent increase from 2011 values of $105.9 billion, according to Gartner.
To illustrate what that could mean in terms of payment transaction fees, if all those gross purchases produced a 1.75 percent transaction fee for a transaction provider, a revenue stream of about $3 billion would result.
The number of mobile payment users will reach 212.2 million in 2012, up from 160.5 million in 2011.Gartner also predicts. Spread over the entire planet, that isn't a huge amount of revenue for all the potential providers.
But the business is just starting.
Worldwide mobile payment transaction values will surpass $171.5 billion in 2012, a 61.9 percent increase from 2011 values of $105.9 billion, according to Gartner.
To illustrate what that could mean in terms of payment transaction fees, if all those gross purchases produced a 1.75 percent transaction fee for a transaction provider, a revenue stream of about $3 billion would result.
The number of mobile payment users will reach 212.2 million in 2012, up from 160.5 million in 2011.Gartner also predicts. Spread over the entire planet, that isn't a huge amount of revenue for all the potential providers.
But the business is just starting.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
WCS Spectrum Compromise Avoids LightSquared Issues
The joint AT&T and Sirius XM proposal regarding use of spectrum in the 2.3 GHz Wireless Communication Services (WCS) spectrum band seemingly avoids an issue LightSquared was unable to address, namelhy interference between a high-power Long Term Evolution mobile network and an adjacent low-power satellite service.
AT&T has owned its WCS spectrum since 1997, but there have been concerns about whether WCS licensees could peacefully co-exist with neighboring licensees in the Satellite Digital Audio Radio Service (SDARS) band, just as there were interference issues with LightSquared and neighboring GPS applications.
Apparently, AT&T and Sirius XM now are satisfied that a 10-MHz guard band will prevent any service-impairing interference, clearing the way for AT&T to use its spectrum. Only an engineer could tell you why the WCS interference issues could be resolved by instituting a 10-MHz guard band, where LightSquared could not do the same.
One suspects that the difference is transmitted power levels required for the higher-frequency LightSquared LTE signals. Since higher-frequency signals do not propagate as well as lower-frequency signals, the proposed LightSquared network presumably required higher power levels, and therefore, more interference risk, compared to power levels for the WCS signals.
AT&T has owned its WCS spectrum since 1997, but there have been concerns about whether WCS licensees could peacefully co-exist with neighboring licensees in the Satellite Digital Audio Radio Service (SDARS) band, just as there were interference issues with LightSquared and neighboring GPS applications.
Apparently, AT&T and Sirius XM now are satisfied that a 10-MHz guard band will prevent any service-impairing interference, clearing the way for AT&T to use its spectrum. Only an engineer could tell you why the WCS interference issues could be resolved by instituting a 10-MHz guard band, where LightSquared could not do the same.
One suspects that the difference is transmitted power levels required for the higher-frequency LightSquared LTE signals. Since higher-frequency signals do not propagate as well as lower-frequency signals, the proposed LightSquared network presumably required higher power levels, and therefore, more interference risk, compared to power levels for the WCS signals.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
What Causes Mobile Shoppers to Abandon Airline Ticket Purchases?
What causes customers to leave before buying? It's a question every online retailer should, and often does, ask. Here's a study by WorldPay about mobile commerce in the airline industry, lots of stats about user behavior in different countries, and detail on "shopping cart abandonment."
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Tuesday, June 19, 2012
Grim Stats for RIM, Nokia
![[WINNERS]](http://si.wsj.net/public/resources/images/MK-BV080_WINNER_NS_20120618161504.jpg)
The last year has been decidedly bad for Research in Motion and Nokia. In the first quarter of 2011, Android had 36 percent share. In the first quarter of 2012, Android had 59 percent share. In the first quarter of 2011, Apple's iOS had 18 percent share. By the first quarter of 2012, iOS had 23 percent share. Nokia dropped from 26 percent to seven percent. RIM dropped from 14 percent to six percent.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Consumer Spending on Mobile Internet Access Will Approach Fixed Access by about 2016
Global end user spending on mobile Internet access spending will almost reach fixed network levels of spending by 2016, PwC now projects.
Spending on mobile access increased from 26 percent of total global Internet access spending in 2007 to 40 percent in 2011, and will account for 46 percent in 2016. Another way of looking at those figures is that mobile access revenue earned by service providers will be about half of all global revenue in that category.
Global end user spending on fixed network and mobile Internet access will increase to $493.4 billion in 2016, a 9.3 percent compound annual growth rate.
Mobile broadband subscribership soared in 2011 and mobile access spending jumped 30.5 percent, says PwC.
Spending on mobile access increased from 26 percent of total global Internet access spending in 2007 to 40 percent in 2011, and will account for 46 percent in 2016. Another way of looking at those figures is that mobile access revenue earned by service providers will be about half of all global revenue in that category.
Global end user spending on fixed network and mobile Internet access will increase to $493.4 billion in 2016, a 9.3 percent compound annual growth rate.
Mobile broadband subscribership soared in 2011 and mobile access spending jumped 30.5 percent, says PwC.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
Is Netflix Competing with HBO?
Does Netflix compete more with video on demand services, "premium" video channels such as HBO or online video? A new study from Parks Associates suggests Netflix competes rather directly with both premium channels and video on demand services.
You might also argue that Netflix does compete with other "for fee" online services, but probably not with "no incremental charge" online video.
“Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies,” said Brett Sappington, Parks Associates research director.
“Parks Associates research shows consumers know the quality of the OTT service is not comparable to pay-TV quality, but the cost-benefit comparison is enough to affect their purchase decisions,” Sappington says.
Parks Associates found 16 percent of U.S. broadband consumers, when watching movies on VOD, consider instead using an online subscription service as an alternative. Similarly, 17 percent of those watching TV programs on a premium channel like HBO consider using Netflix instead.
"Netflix is competitive against VOD and premium channels because it has a decisive edge in cost,” said John Barrett, Parks Associates director. “But there are times when the consumer will sacrifice quality for other considerations.”
The point, you might argue, is that Netflix already competes, in some cases, with both premium channels and video on demand.
You might also argue that Netflix does compete with other "for fee" online services, but probably not with "no incremental charge" online video.
“Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies,” said Brett Sappington, Parks Associates research director.
“Parks Associates research shows consumers know the quality of the OTT service is not comparable to pay-TV quality, but the cost-benefit comparison is enough to affect their purchase decisions,” Sappington says.
Parks Associates found 16 percent of U.S. broadband consumers, when watching movies on VOD, consider instead using an online subscription service as an alternative. Similarly, 17 percent of those watching TV programs on a premium channel like HBO consider using Netflix instead.
"Netflix is competitive against VOD and premium channels because it has a decisive edge in cost,” said John Barrett, Parks Associates director. “But there are times when the consumer will sacrifice quality for other considerations.”
The point, you might argue, is that Netflix already competes, in some cases, with both premium channels and video on demand.
Gary Kim was cited as a global "Power Mobile Influencer" by Forbes, ranked second in the world for coverage of the mobile business, and as a "top 10" telecom analyst. He is a member of Mensa, the international organization for people with IQs in the top two percent.
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