O2 Network Crashes, O2 Really Doesn't Know Why

The O2 mobile phone network in the United Kingdom crashed July 11, 2012, and company executives said they didn't actually know why it happened.

Separately, In France, the France Telecom mobile network had a national outage of the voice and text messaging network affecting 28 million users on July 6 and July 7, 2012.

Of course, millions of U.K. customers (O2 has 23 million customers in the United Kingdom) were affected. But that's not even the most important fact about the outage.

O2 said it did not know when the problem would be fixed, in part because it wasn't exactly sure what was happening, in the core of the network, to block calls and access, other than that it appeared to be a signaling issue.

Viacom Pulls its Content from Online Sources

Perhaps it has occurred before, but some of us cannot remember a programmer yanking its content from online sources, depriving all potential users of access, in order to put more pressure on one distributor.

But that is what Viacom has done, removing full episodes of shows like "SpongeBob Squarepants,"  "iCarly," "Jersey Shore" and "The Daily Show" from online sites. DirecTV had been telling its customers how to watch online.

Viacom obviously is hoping that move will prevent DirecTV customers from watching some of their favorite shows online, while the dispute remains unresolved.

There are potentially significant ramifications for DirecTV, Viacom, other distributors and programmers, not to mention potential online alternatives.

Consider the oddity of a video services provider telling its customers where they can watch the same programming they pay for on online sites, for no additional charge. Strategically, that is the disruption many fear, and many expect, at some future date, in any case.

Other distributors, of course, face the same programming cost pressures as DirecTV, though they doubtless would not mind gaining defecting DirecTV customers, should the blackout become permanent, something virtually nobody expects.

All other programmers, especially those with less market power than Viacom, have to worry that a DirecTV "victory" would put more pressure on the programming networks to control their own costs, so the upward cost pressures for distributors can be braked.

You might say it is equally odd for a programming network to "want" to control its own costs, to stave off asking distributors for contract rate increases. But all programming networks are starting to face a business climate where the health of the entire industry is becoming a real question.

Global Text Messaging from Twilio

Twilio, the cloud-based service which provides any app provider the ability to add text messaging capabilities, announced global text messaging (short message service, or SMS) capabilities that allow apps to connect users on over 1,000 mobile networks, globally, in 150 different countries.


Twilio SMS is now also multi-lingual, with support for a variety of languages, such as Arabic, Chinese, Japanese, Greek, Russian and dozens more. 


Twilio allows application developers to integrate voice and text communications directly into virtually any app that uses the Internet. 


Twilio already supports international voice calls, but the task of getting agreements with many separate mobile service providers was complicated. 

Mobile Payment Provider LevelUp (Scvngr) Tries to Disrupt Pricing

Price disruption is both a possibility and likelihood when new entrants try to reshape a large existing industry, and it appears credit and debit card payments are no exception. 


LevelUp, a mobile payment app provided by Scvngr, says it will drop all "interchange fees," the percentage of gross revenues paid by merchants to card processors as a transaction fee.


It remains unclear whether the gambit will succeed. But if it does, and other competitors start to match the pricing, the importance of marketing, loyalty and advertising revenues as a driver of the former payments business will grow. 


That sort of disruption is quite familiar to service providers in the communications business, where per-minute prices for use of voice services, or per-message pricing for short message service (SMS, or texting) has been dropping for decades. 


As access providers already have discovered, new revenue streams must be created to replace lost legacy revenues, and that will happen in the credit and debit card payments business, using mobile mechanisms, if the LevelUp strategy works very well. 


While it has been common for competing providers to offer lower interchange fees, LevelUp appears to be the first to try and abolish the fees entirely, thereby gaining business advantage, compared to rival processors.


Scvngr previously had charged merchants two percent interchange fees for each payment, but it says that it will drop the fee to zero. 


That raises the obvious question of how Scvngr will rebuild its revenue model. Marketing services apparently are viewed as a viable new model. 


According to Seth Priebatsch, Scvngr CEO, LevelUp will run special campaigns for merchants, probably or typically running promotional campaigns for merchants, who will pay a fee for a customer taking advantage of the offer. 


It appears that Scvngr still is responsible for paying an interchange fee to the issuing banks that use the LevelUp platform, though. But Scvngr says its fee deals are affordable enough to allow trying such an approach. 


Such pricing disruption seems a perennial feature of the way new competitors try and disrupt pricing in a market, and has been a feature of applications and service competition in the messaging and voice markets for quite some time. 

Gartner Says Cloud Adoption in Europe Will Trail U.S. by At Least Two Years

European privacy rules, multicountry business processes, a deep euro crisis and a lingering recession will conspire to delay cloud computing adoption in Europe by at least two years when compared to the U.S., according to Gartner, Inc. Gartner said that although interest in cloud is high in Europe, the diversity of Europe’s 44 different nations will result in slow cloud adoption in this region.

Amazon, Apple, Google Have Different Business Strategies, No Matter What They Sell

Amazon, Apple and Google sell all sorts of things, and likely will sell more types of things in the future. But even when all three firms compete directly, they have different business models. Apple makes its money on hardware, Google on advertising, Amazon on lifetime value of a customer. 


To be sure, Amazon sells lots of stuff, ranging from hard goods and electronics to books and video content. But Amazon's view of pricing always starts with "lifetime value of a customer." That frightens many observers, who worry about Amazon's profit margins. 


But Amazon wants to maximize the lifetime value of each of its customers. Apple wants to maximize the profit margin on each device it sells, Google preferring to build advertising volume and revenues. 


So Amazon might consider doing lot of things neither Apple nor Google would attempt. 

55% of Twitter Usage is on a Mobile Device

Mobile use of Twitter is growing about 40 percent a quarter, the company says. For any application or service provider that believes "mobile first" is a fundamental matter of business strategy, that's important. 

Facebook May Not be a Bank, But App is Going to Help Facebook Users Conduct Banking Transactions

Facebook is working with Australia's Commonwealth Bank to create an app that will allow Facebook users who are bank customers to make payments to third parties as well as Facebook friends using Facebook, Fortune reports. 


Engagement and traffic, not direct revenue, is Facebook's expectation for how the app will create value. To the extent that users and their connections, preferences and values are Facebook's "product," the banking capability is expected to help Facebook monetize those relationships and values in an advertising or marketing context. 

Tuenti, Telefonica’s Social Network, Launches Globally

Few tier-one global telcos have taken the over the top application opportunity as seriously as  Telefónica.  


Telefónica Digital believes it can develop significant businesses beyond  connectivity services. The unit expects to drive annual revenues of approximately €5 billion for Telefónica by 2015 with an annual revenue growth rate of 20 percent revenue growth, 


Among those efforts is Telefónica's Tuenti, a Spanish social network with 13 million users, is launching a global beta version, including a web application (www.tuenti.com), a web app optimized for mobile (m.tuenti.com), and native applications for Android and BlackBerry. Applications for iPhone and Windows Phone will be available in the coming weeks.

 

This marks the beginning of Tuenti’s international expansion, now available in six new languages (German, French, Italian, Dutch, Slovak, and Czech) in addition to the already existing Spanish, English, Portuguese, Catalan, Basque, and Galician versions. 

Telefonica’s footprint spans both mobile and fixed operations across Europe and Latin America, covering 25 countries and 309 million users,

How Big is the Unified Communications, Collaboration Market?

In 2011, the worldwide net or "true unified communications market was $2.7 billion, up 20 percent from 2010, according to Blair Pleasant, COMMfusion LLC president. Pleasant is one of the more-careful analysts where it comes to unified communications and collaboration markets. 


The problem is that "UC" includes lots of capabilities that customers might buy simply as "point solutions" or stand-alone systems that are not fully "unified," as the term UC implies. 



The "Total UC-capable market," as Pleasant defines it, includes the total end-user revenues attributed to all of the UC components, including IM/presence, unified messaging, conferencing (not including end points), call control/IP PBX, and “other,” including softphones, business process integration software and APIs, she notes. 


That might add up to about $12.2 billion in 2011, up eight percent from 2010, growing to $20.8 billion in 2016, Pleasant says. 


"These numbers don’t necessarily represent the true UC market, however," says Pleasant. "If someone purchases an IP PBX and a conferencing/collaboration product, even if they’re from the same vendor, does this constitute a UC sale?"


"Not necessarily," she says. 


To be sure, UC is vitally important to service providers and others in some parts of the communications business. But in a global market that generates $2 trillion annually, that is a relatively small segment of the business, really. 


That is not to say it is unimportant to any number of interests in the ecosystem. It is to say the business is fragmented and a specialist niche, from a "total revenue" perspective. 



The component growing at the highest compound annual growth rate is conferencing and collaboration, growing at 50 percent CAGR, she says. 

Mobile Remote Payments Activity Doubles

Mobile payments, especially of the "remote payment" variety, have more than doubled over the last year, and are used by 33 percent of consumers surveyed by IDC Financial Insights. Of those consumers that had made a mobile payment, more than half used PayPal Mobile (56 percent), with Amazon Payments and Apple's iTunes service statistically tied at about 40 percent. 


For the most part, that activity was centered around purchases of virtual goods on a remote basis, especially digital downloads of apps and music. Still, IDC notes, more respondents reported buying physical goods with their phones than online services, digital goods, or virtual currency, IDC reports. 

What Would an Amazon Smart Phone Mean?

Amazon.com Inc. is testing a smart phone, the Wall Street Journal reports, though it isn't clear Amazon definitively has concluded to market such a device. If Amazon does decide to get into the smart phone business, which one might characterize as yet one more way Amazon is trying to create a massive installed base of content consumption devices, that move could come late in 2012 or early in 2013.


The ramifications could be significant, though it also has to be noted that would-be contenders in the tablet and smart phone markets stumble frequently enough that it isn't so clear what the impact might be. 


Aside from the obvious matter of greater competition in the mobile device market, any such move by Amazon would change strategic thinking at rival firms. It might go without saying that a robust content or app ecosystem now has become an important part of the value proposition for tablets and smart phones. 


An Amazon entry into the smart phone business would heighten that aspect of the competitive landscape. Where Google and Apple have been competing in both "apps" and content, Amazon would add a new potential niche of sorts for content-driven competition. 


In fact, that might be one of the more-important implications. Where mobile service providers have competed on the basis of value and price for a basket of features anchored by voice and text services, handset suppliers have competed on the basis of application richness.


Amazon conceivably could create yet another approach or segment of the market oriented around content consumption, with a heavy slant on books, magazines and printed content, rather than music or video. 


For Amazon, the fact the voice communications and messaging are available would be only a part of a value bundle anchored by content consumption.


For service providers, the bigger concern might be that any such Amazon move could prompt a response by Google or Apple, Facebook or some other entity that similarly might change the traditional mobile services context. What any of those competitors could do is redefine "what" mobile service "is," and what features are part of mobile service. 

Perhaps 56% of U.S. "Tweens" Have Their Own Mobile Phones

There are relatively few human beings left in the United States who do not have their own mobile phones, a new study suggests.

One measure of the popularity of mobile phones is the near-ubiquity of mobile usage among “tweens” between eight and 12. Some 56 percent of respondents surveyed by ORC International say they have purchased cell phones for their young children, ranging from a high of 62 percent in households earning over $100,000 a year and a low of 41 percent in households under $50,000 a year.

Some 81 percent of parents of tweeners put their child on a contract-based mobile phone plan and 15 percent use a prepaid cell phone service. Some 84 percent of parents added a tween user to an existing family plan, the study found.

These days, communications is an attribute of many devices, but especially mobile phones that arguably have become the preferred way people use voice communications. And other data reinforces the notion that teenagers overwhelmingly use mobile communications as their primary communications method.

The Pew Internet and American Life Project, for example, shows 54 percent of people 12 to 17 send text messages. Only 38 percent say they “call.”

DirecTV to Drop 26 Viacom Channels?

Contract negotiations between video service providers and programmers often go right to the brink of "channels going dark" before new carriage agreements are reached, and that might be the case for on-going discussions between DirecTV and Viacom.


Viacom’s distribution agreement with DirecTV is set to expire at midnight on Tuesday, July 10. Viacom says it has been negotiating for months but hasn't reached an agreement on a new contract. 


In part, that might be because Viacom claims DirecTV wants lower ratse than Viacom receives from any other distributor in the industry. 


So it remains possible that nearly 20 million DirecTV subscribers will be without 26 Viacom channels, including Nickelodeon, MTV, Comedy Central, BET, VH1, CMT, Spike TV, TV Land, if a new agreement is not reached. 


Most often, though, some last-minute accommodation is reached. Still, the escalating number of disputes between distributors and programmers illustrates growing financial tension within the video subscription business. 


At least some consumers are finding they don't value subscription video as much as they used to. In other cases, especially with a growing percentage of Millennials, the value isn't high enough to convince them to subscribe, even when those consumers can afford to do so.

But affordability is a growing problem. Bernstein Research Senior Analyst Craig Moffett has argued that "after the necessities of food, shelter, transportation and healthcare each month, the bottom 40 percent of U.S. households have already exhausted all of their disposable income."

"There is," he says. "nothing left for clothing, for debt service, for cable or for phone."


That will put increasing pressure on service providers to hold the line on retail pricing or even reduce it. That will require any number of changes. Service providers can create modified and cheaper tiers of service, can drop whole channels, pay programmers less or cut some marketing expenses. 


Ultimately, the need to limit channels, and therefore operating costs, will be become a necessary step, unless programmers decide to yield on per-subscriber fees. In order for some networks to do that, the networks themselves will have to stop paying program creators as much as they presently do, as well. 


Up to a point, programmers and distributors will not want to upset a business model that has worked very well. But if the business model starts to crack, historically unusual steps will have to be taken.

T-Mobile USA Wrongly Slams Verizon Wireless "Share Everything"

The Verizon Wireless ’s "Share Everything" plans are "costly, complicated and punitive,"  T-Mobile USA argues. Using T-Mobile USA's own comparison, those complaints seem overblown. T-Mobile argues users can save "up to" $40 a month, for a customer who pays full retail for their new device. Under a standard contract plan, the savings might be $20 a month.


The same logic applies for plans with two or three users on a single account. For a three-device (smart phone) account, monthly savings for a user on contract, with subsidized phones, is only about $10 a month. Roughly the same difference exists for two-device accounts, with T-Mobile USA users saving about $10 a month, compared top a Verizon Wireless Share Everything plan.


That wouldn't strike some of us as especially "costly." Nor does it seem "complicated" or "punitive." There is a small difference. But not much.