London 2012 Summer Olympics Streaming Stats

After a slow start on Friday and Saturday, Sunday was the day that the streaming of Olympics video  In the United States accelerated, with several networks reaching 34 percent of overall bandwidth, while volume grew by more than 100 percent over the initial two days of events,  Procera reports.

How Big are Google Fiber Subsidies?

Google says it aims to make a profit offering Google Fiber services in Kansas City, Kan. and Kansas City, Mo., despite offering symmetrical 1-Gbps broadband access at $70 a month, and free access at 5 Mbps for a minimum of seven years (users of the free service pay the
$300 drop installation and connection fee). 


Some have wondered whether Google Fiber can achieve its goals, and if so, what the "secrets" of its cost savings might be. It appears there are some savings, though it is not by any means clear how important those savings might be. 


Google gets free central office space; free power; no charge for access to the City’s assets and infrastructure; no charge for rights of way, permits and inspection fees; settlement-free interconnections with anchor institutions; free marketing and direct mail, and even free office space for Google employees. 


Some might argue that Google has shifted much of the cost of its business to the Kansas City taxpayers, some would argue. Some of those savings mostly affect the one-time cost of network construction. 


The free facilities will save some money, and the ability to avoid paying for power likewise will help control operating costs. Google also will presumably gain some benefit on the marketing front. 


Still, none of those categories would seem to offer a decisive cost advantage. Also, Google Fiber is talking on some costs for which it will receive no revenue, especially the free 5 Mbps it plans to offer for seven years. 

O2 Mobile Network was Swamped by Tweets During Olympic Bike Race

O2's mobile network was to blame for a disruption of timing  reports in the Olynpic cycling race, after a surge in tweets from spectators' smart phones disrupted transmissions from cyclists reporting their positions on the course. 


"There was a capacity issue with Box Hill at the weekend," an O2 spokesperson said. 


The London Organising Committee of the Olympic and Paralympic Games (LOCOG) was picking up race data from location-reporting transmitters on the bikes. This data was then supposed to be sent to the Olympic Broadcasting Service (OBS), using the O2 network. 


But congestion of the data network apparently prevented many of the reports from being sent. 

Growing Interest in Image Capture for Mobile Banking and Payments

Though much legitimate attention now is paid to communications methods such as near field communications or barcode scanning as a way of enabling mobile payments or other financial transactions, image capture might be getting much more attention for a wide range of banking and payment operations.

PayPal, for example, has acquired card.io, a San Francisco-based company that provides technology for developers to capture credit card information by using the camera on a smart phone.


And virtually all the leading U.S. banks now are using or adopting image capture technologies that allow a mobile phone camera to take a picture of a financial record as part of a transaction, says Jim DeBello, Mitek Systems CEO. Depositing a check remotely is one example of how image capture can be used to facilitate a transaction. 


For any consumer, the value is pretty simple and obvious: a check deposit can be made remotely, with no need to go to a physical location, stand in line and wait to make the deposit. 

Insurance companies are interested in image capture for similar reasons of convenience, but perhaps more for creating instant rate quotes for consumers who snap a picture of their driver's license and auto vehicle identification number, and get an automated rate quote, for example. 


Many retailers also may want to use image capture to allow users to make remote payments, as they now use electronic banking services. In other cases, a retailer might want to enable use of image capture for providing an instant quote to a potential customer.


A consumer might be able to take a picture of a current credit card statement and then have a potential new supplier make an automatic quote for switching the account. 


Some 60 million U.S. consumers have a checking account, but use no other banking services, says DeBello. That means it might be possible to encourage those users to adopt new services, or use new products, if doing so were as easy as taking a picture. 


Perhaps a prepaid mobile user could take a picture of an existing prepaid card and add more value to the account. 


For virtually any company that normally has to process large amounts of paper, the image capture capability could streamline transactions of many types. 

"Computers" Hardly Matter for Apple, Anymore

Apple doesn't call itself "Apple Computer" anymore for a very good reason. It makes its money, and profit margin, selling phones, as Wings of Reason illustrates. 

Is "Mobile First" Now Affecting Financial Returns?

Is "mobile first" now affecting application and device provider financial returns? You might argue so. 


 “What we’re seeing is that the non-mobile-centric Four Horsemen, Amazon and Facebook, aren’t seeing the same big profits as the two mobile-centric ones, Apple and Google," says  Yankee Group Research VP Carl Howe.  

Facebook’s overall revenue in the second quarter of 2012 hit U.S.$1.2 billion, up 32 percent and beating estimates, but the company posted a net loss of U.S.$157 million vs. income of U.S.$240 million posted a year earlier. 

Amazon, for its part, announced a 96 percent drop in net income, to U.S.$7 million, primarily due to investments in and subsidies for its best-selling Kindle Fire mobile device, 


But Google and Apple, which you might argue have head starts in terms of their "mobile first" strategies, are doing better, financially. 

In fairness, Amazon does, as a matter of strategy, emphasize big investments that provide strategic value, even if it hits quarterly earnings. You might argue that is simply what happened in the second quarter. 

Facebook frankly admits it has to create a mobile strategy, but has yet to do so in practice. 

Some People Just Don't Want to Buy Cable TV

Would lower prices-even prices 50 percent lower-convince you to buy a product you really did not want? That seems not to be the case for some 33 percent of survey respondents who have abandoned their video entertainment subscriptions, according to TechBargains. 


Prices arguably are getting to be a major irritant for most consumers who buy video entertainment services. But not for all. Some consumers simply do not see value in buying video entertainment services at all, no matter what the price. 

 

Global Handset Shipments Decrease for the Second Consecutive Quarter

As important and as robust as mobile subscriber growth has been over the last decade, it is not invulnerable to economic stress. In fact, on a global basis, mobile handset shipments have declined for two consecutive quarters. 


An economist, tracking any nation's economic performance, would say that set of data marks the beginning of a recession. 


“Handset shipments have not seen a sequential year over year decline since the global economic crisis of 2008-2009," says ABI Research senior analyst Michael Morgan.


Of course, handset purchases often are affected by consumers waiting for hot new models to be released, while some might also note that the second quarter is a seasonally slower quarter.


Apple, for example, experienced a 26 percent quarter over quarter decline in shipments in the second quarter, as consumers withheld purchasing an iPhone in anticipation of the new model to be released in the late third quarter. 


Research in Motion and Nokia experienced 14 percent and 30 percent quarter over quater declines respectively. To some extent, those dips might partially be explained by customers waiting for the next major product families from each of the suppliers, and in part by a shift of demand away from both suppliers. 

North American Mobile Capex to Grow in 2013

North American mobile operators will hike capital investment in 2013 to support fourth generation inetwork construction, ABI Research estimates. But some think 2013 might market a peak of mobile capital investment on a global basis.

Mobile capital investment fluctuates from year to year, based on network upgrade plans, economic conditions and competitive threats, and investment has been building since about 2008, partly because of 4G network constructiion and partly because operators were cautious during the Great Recession that began in 2008.

“North American mobile cellular capital expenditure is expected to hold its ground in 2012 year-on-year, with expenditure of around $10 billion”, says Jake Saunders, VP for forecasting at ABI Research. “In 2013, mobile capital expenditure is likely to surge 4.9 percent to $10.5 billion.

Service providers are in many cases also shifting investment from older networks to 4G. Verizon Wireless, for example, has announced an end to the  expansion and capacity enhancement of its 3G network, in favor of building out its 4G LTE coverage.

Mobile operators, as typically is the case, squeezed capital expenditure during the economic downturn in order to protect cash flows and maintain profits. What normally happens is a catch-up phase where deferred investment gets made.


Wireless Intelligence notes that total global mobile capex peaked at $204 billion in 2008, at the beginning of the financial crisis, accounting for 21 percent of total revenues.

However, capex then fell to $197 billion (19 percent of revenue) by 2010, as operators reacted to the crisis. In developed mobile markets operators reduced capex by eight percent in 2008 and by six percent in 2009, increasing capex again in 2010 as many operators began investing in LTE.

The typical investment slowdown in tougher economic times boosts free cash flow, at least temporarily.

The reductions in capex over the last few years saw operating free cash flow grow to $200 billion (19 percent of revenue) by 2010, up from $133 billion (11 percent of revenue) in 2007.

This means that global operator cash flows are now roughly at the same level as capex. In 2011-12, Wireless Intelligence has predicted operator capex to remain stable at 16 percent of total revenue in developed markets and 23 percent in developing markets. OFCF will account for close to 20 percent of total revenues in both regions.

New Zealand Mobile Operators Eye December 2012 Decision on Mobile Payments Venture

New Zealand mobile service providers say they will decide by the end of 2012 whether to create a mobile payments joint venture. 


Bank-owned Paymark, Vodafone, Telecom and 2degrees had said they wanted to form a mobile payments business in April 2012, based on use of near field communications. 


Another mobile payments trial was launched in the spring of 2012. 

Google Fiber Could Get 20% Penetration of Some Kansas City, Mo. Neighborhoods, Quickly

Within just two days, more than 20 percent of the eligible neighborhoods on the Missouri side of Kansas City already have already reached Google’s thresholds for activating home drops. If all those households actually wind up subscribing, Techcrunch reports.


Each neighborhood can have a different threshold, ranging from five percent of homes to 25 percent of homes.


Google Fiber could hit at least 20 percent penetration relatively quickly. In the neighborhood with the highest rate of interest, Google Fiber has reached about 18 percent of homes. 


You can track progress online. 


Things apparently aren’t moving quite as fast in Kansas City, Kansas, though, where the median household income is significantly lower than on the other side of the city.

Twitter Users Disrupt BBC's cycling Coverage?

Oddly enough, given concerns about broadband Internet access in London during the Olympics, the first report of any disruption has come from BBC officials who say use of Twitter, a low-bandwidth application, apparently disrupted television coverage of the cycling road races.


Apparently, updates about cyclist timing and positions were blocked when fans sent updates to Twitter while watching the race, and apparently jammed transmissions of race information.


The BBC  blamed the Olympic Broadcasting Service (OBS) for the lack of information. But the International Olympic Committee said fans sending updates to Twitter while watching the race had in effect jammed transmissions of race information.


Precisely how that can happen is not entirely clear, unless timing information was being sent using Twitter. 

WyWallet Mobile Payment Launches in Sweden

WyWallet, the mobile wallet joint venture by the four largest mobile network operators in Sweden (Telia, Tele2, Telenor and 3), has launched. The mobile wallet service is said to be the first of its kind in Sweden and will from start cover 97 percent of the mobile users in Sweden. 


WyWallet supports person-to-person money transfer, payments using text messaging, online shopping and "prepaid card top ups."


WyWallet also supports retail payments using near field communications. 


Wywallet is available on Android, iPhone and will be available for Windows Phone later in 2012.

Content Owners Wary about New Distributors, But Need Them

Hollywood studios and video entertainment service providers understandably have a wary relationship with current distributors such as cable, satellite and telco video subscription providers, as well as new distributors such as Netflix, iTunes, Amazon and others.

But there are different tensions within the ecosystem. Video service providers realize they have reached a point where higher content payments to content owners cannot continue to rise indefinitely, since those higher fee payments mean retail prices must be increased. And there are growing signs of consumer frustration over the ever-growing retail prices.

In the home video market, previously driven by sales of DVDs, sales have been falling for about three years, for the most part, even as online sales (streaming services such as Netflix) have been growing. That causes a different kind of friction between distributors and content owners.

On one hand, online delivery of movie and TV content is seen as the future, and revenue trends show the potential. On the other hand, too swift an arrival of that new business could destroy a physical delivery business that, though challenged, remains important.

That is true both of the home video business, traditionally based on sales of DVDs and to some extent by DVD rentals, as well as the bigger video subscription business.

But Netflix and even video on demand continue to grow, meaning growing tension between the legacy and new channels.


 

The digital side of the business generated $2.4 billion in the first quarter of 2012, according to the Digital Entertainment Group, representing growth of  78 percent. Subscription video on demand grew 430 percent for the first six months to $1.1 billion.

Overall U.S. home entertainment spending rose 2.5 percent to around $4.45 billion in the first quarter, according to the Digital Entertainment Group. That means home video revenue has grown for two out of three of the last quarters, a welcome change from revenue trends that had been falling for three straight years.

Since peaking at around $21.8  billion in 2004, the U.S. home entertainment industry has seen steady declines, falling  to $18.4 billion in 2011.  

And the shift top online delivery keeps growing in importance. IHS Screen Digest has  predicted that the number of movies and TV shows legally streamed and downloaded in 2012 will for the first time surpass the demand for those films and shows on physical discs.

IHS predicts that online streaming services like Netflix and Amazon Prime, Vudu and iTunes, will conduct around 3.4 billion individual U.S. movie transactions in 2012. That would be a 135 percent increase in digital home entertainment transactions over 2011. It would also surpass the 2.4 billion DVD and Blu-ray sales and rentals predicted for 2012.

And despite studio unease about Netflix, Netflix U.S. streaming revenue of $1.04 billion in the first half of 2012 might be largely responsible for the growth of content owner revenues.

Will subscription VOD ever displace content sales, in terms of profitability? Not likely, given the vast difference between margins.

The overall disc business keeps declining, with sales of physical video media dropping 3.6 percent to $3.7 billion during the first six months of 2012, while disc rentals declined 26 percent to $2.3 billion.

However, the kiosk rental business, led by Redbox, is still expanding, up 23 percent to $990 million, according to DEG.

So, like it or not, Netflix and Redbox might continue to be important partners as the future unfolds.

Surprising Findings about Mobile Payments

You might not be too surprised if told that about a third of U.S. mobile phone users have used mobile payments of some sort over the last year or so. You might not be surprised if a significant percentage of those sales were of digital goods such as games, apps or music.

But a new study found surprising behavior. Despite the popularity of digital downloads, such as apps and music, more respondents reported buying physical goods with their phones than online services, digital goods, or virtual currency, IDC reports.

That would be a significant finding, indeed, at least for remote payments made from a mobile device.

The  IDC Financial Insights study  found that mobile payments have more than doubled in popularity, reaching over 33 percent of survey respondents. Of those 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.

The findings are important for mobile payments providers and merchants, as the behavior shows increasing adoption of the mobile payment habit for products not traditionally associated with mobile device content and application purchases.