Despite growing threats of online competition, some 87 percent of U.S. households nationwide subscribe to some form of multichannel video subscription service, according to Leichtman Research Group.
That is up from 80 percent take rates in 2004. As you might suspect, income plays a part in non-adoption.
The mean annual household income of multichannel video subscribers is 53 percent higher than the household income of non-subscribers.
Nationwide, six percent of homes with annual incomes over $75,000 do not subscribe to a multichannel video service, compared to 12 percent with incomes of $30,000-$75,000, and 27 percent of homes with incomes under $30,000.
Of those figures, the perhaps increasingly-important number is the percentage of homes that can afford the product, who choose, for some reason, not to buy. There is a growing sense that many such households include younger Millennial consumers, who do not appear to have the same propensity to buy the service as older users tend to exhibit.
The findings are based on a telephone survey of 1,369 households from throughout the United States, and are part of a new LRG study.
The other issue is the impact a sluggish economy might be having. Some 42 percent of surveyed individuals agree that changes in the economy have negatively impacted their household in the past year.
About 39 percent of those negatively impacted by the economy agree that they reduced spending on TV, Internet, and phone in the past year.
Also, some 32 percent of those negatively impacted by the economy agree that they will likely reduce spending in the next six months.
About 16 percent of those negatively impacted by the economy report they are likely to switch video providers in the next six months.
On the other hand, men 18 to 34 are now spending more time streaming video than watching live TV, one third visit YouTube multiple times a day, half subscribe to a YouTube channel, and two thirds shared YouTube videos in the past week, according to Generation V , a comprehensive YouTube study of consumer video trends,
The study also finds that 40 percent of women 25 to 49 have subscribed to a YouTube channel, half shared a video this past week, and one third regularly share online video with their kids or parents.
Those changes in viewership illustrate just one aspect of the range of underlying changes that are needed before over the top online video can seriously challenge traditional TV and subscription video services.
Those changes obviously include extensive availability of high-speed broadband access service good enough to support consistently high quality video experiences. Consumers have to create new habits about watching TV and video, including willingness to consume on a variety of devices and screens, with the Internet being the delivery mechanism.
At some point, the ability to view Internet-delivered video on any screen must include easy viewing on the largest screens in a home, and that means further development of in-home devices that make this possible.
Also, users will have to create new habits relating to the sorts of programs they want to watch. The traditional difference between user-generated amateur video and professionally-produced programs will have to narrow.
That could happen in a couple of ways. People could decide they prefer the over the top programming, or traditional programmers could start making their content available for over the top consumption.
Also, artists and performers could themselves start to create programming directly for over the top delivery, narrowing the gap between traditional and newer formats. YouTube, for example, is trying to bridge the gap.
YouTube formats for original programming include themes that resemble traditional video subscription networks. In other words, YouTube will deliberately try to create online versions of traditional cable TV channels, at least to the degree that “channels” and “networks” have a theme.
Revenue sources will develop rather naturally as all those elements come into existence on a significant scale.
In a sense, over the top alternatives represent the latest fragmentation of the TV audience that began decades ago with the advent of the VCR and cable TV. Online video is only the next great wave of audience fragmentation.
Monday, August 20, 2012
Subscription Video Take Rates Still at 87%
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.
Carrier Ethernet Revenue to Double in 3 Years
U.S. enterprises and consumers are expected to spend more than $47 billion over the next five years on Ethernet services provided by carriers, according to a new market research study from The Insight Research Corporation.
With metro-area and wide-area Ethernet services readily available from virtually all major data service providers, industry revenue is expected to grow from nearly $5 billion in 2012 to reach just over $11 billion by 2017.
However, year over year spending growth is expected to gradually stall and by 2017 the annual revenue growth rate will be half of what it is today, Insight Research says.
According to the study, Ethernet's central driver continues to be its ability to meet seemingly endlessly growing bandwidth demands at lower cost and with greater flexibility than competing services.
A major growth driver in years past had been the large-scale migration of wireless backhaul cell sites from TDM to Ethernet, and though still a contributory growth factor, backhaul growth will start to moderate as LTE deployments are completed.
"Wireless backhaul had been a major factor in this fast-growing telecommunications services sector, but with much of the conversion of TDM to Ethernet completed, we are forecasting that spending on Ethernet will moderate," says Robert Rosenberg, president of Insight Research. "Over the five year forecast period we project a compounded annual revenue growth rate of 17 percent, with growth slowing by 2016 to be more in the range of 12 to 15 percent.”
With metro-area and wide-area Ethernet services readily available from virtually all major data service providers, industry revenue is expected to grow from nearly $5 billion in 2012 to reach just over $11 billion by 2017.
However, year over year spending growth is expected to gradually stall and by 2017 the annual revenue growth rate will be half of what it is today, Insight Research says.
According to the study, Ethernet's central driver continues to be its ability to meet seemingly endlessly growing bandwidth demands at lower cost and with greater flexibility than competing services.
A major growth driver in years past had been the large-scale migration of wireless backhaul cell sites from TDM to Ethernet, and though still a contributory growth factor, backhaul growth will start to moderate as LTE deployments are completed.
"Wireless backhaul had been a major factor in this fast-growing telecommunications services sector, but with much of the conversion of TDM to Ethernet completed, we are forecasting that spending on Ethernet will moderate," says Robert Rosenberg, president of Insight Research. "Over the five year forecast period we project a compounded annual revenue growth rate of 17 percent, with growth slowing by 2016 to be more in the range of 12 to 15 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.
Mobile Calling Falls for First Time in U.K. Market
Overall time spent using voice communications fell by five percent in 2011, Ofcom, the U.K. communications regulator, reports. “This reflects a 10 percent fall in the volume of calls from landlines, and for the first time ever, a fall in the volume of mobile calls (by just over one percent, in 2011,” Ofcom reports.
Text-based communications are surpassing traditional phone calls or meeting face to face as the most frequent ways of keeping in touch, for U.K. adults, Ofcom, the U.K. communications regulator, says.
The average UK consumer now sends 50 texts a week, more than doubled in four years, with over 150 billion text messages sent in 2011.
Almost another 90 minutes per week is spent using social networking sites and e-mail or using a mobile to access the Internet.
According to Ofcom, 96 percent users 16 to 24 are using some form of text based application on a daily basis to communicate with friends and family; with 90 percent using texts and nearly three quarters (73 percent) using social networking sites.
By comparison, talking on the phone is less popular among this younger age group, with 67 percent making mobile phone calls on a daily basis, and only 63 percent talking face to face.
Text-based communications are surpassing traditional phone calls or meeting face to face as the most frequent ways of keeping in touch, for U.K. adults, Ofcom, the U.K. communications regulator, says.
The average UK consumer now sends 50 texts a week, more than doubled in four years, with over 150 billion text messages sent in 2011.
Almost another 90 minutes per week is spent using social networking sites and e-mail or using a mobile to access the Internet.
According to Ofcom, 96 percent users 16 to 24 are using some form of text based application on a daily basis to communicate with friends and family; with 90 percent using texts and nearly three quarters (73 percent) using social networking sites.
By comparison, talking on the phone is less popular among this younger age group, with 67 percent making mobile phone calls on a daily basis, and only 63 percent talking face to face.
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.
SIP Trunking Saves 33%
Among enterprises, use of SIP trunking has provided an average 33 percent cost savings over legacy access methods, a study conducted by Webtorials, and sponsored by Sonus Networks, has found.
For 73 percent of respondents, “saving money” was among the key drivers for adoption. But roughly half indicated that ability to use “SIP-specific” features also was an adoption driver.
SIP Trunking, by contrast, is still in the early stages of deployment. In fact, roughly two-thirds of the respondents reported either "Significant Use" or "Extensive Use" of VoIP, while only about one-third of the respondents reported either "Significant Use" or "Extensive Use" of SIP Trunks. Among those using SIP Trunks, significant cost savings have been realized, with an average savings on the order of 33%, Sonus Networks reports.
Some 68 percent of respondents indicated their decisions are driven "mostly by cost savings" or "about equally" by cost and capabilities.
VoIP (89 percent), Unified Communications (69 percent) and video conferencing (65 percent) are the most important types of media to be controlled using SIP.
For 73 percent of respondents, “saving money” was among the key drivers for adoption. But roughly half indicated that ability to use “SIP-specific” features also was an adoption driver.
SIP Trunking, by contrast, is still in the early stages of deployment. In fact, roughly two-thirds of the respondents reported either "Significant Use" or "Extensive Use" of VoIP, while only about one-third of the respondents reported either "Significant Use" or "Extensive Use" of SIP Trunks. Among those using SIP Trunks, significant cost savings have been realized, with an average savings on the order of 33%, Sonus Networks reports.
Some 68 percent of respondents indicated their decisions are driven "mostly by cost savings" or "about equally" by cost and capabilities.
VoIP (89 percent), Unified Communications (69 percent) and video conferencing (65 percent) are the most important types of media to be controlled using SIP.
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.
Leading French Mobile Ops are Between a Rock and a Hard Place
French mobile service providers are between a rock and a hard place. Facing significant competitive pressure that is hitting gross revenues, the incumbent mobile service providers also need to reduce costs to maintain profit margins. But they do not have complete freedom where it comes to those cost cuts.
The French Ministry for the Digital Economy has warned French telecom service providers they may make no job cuts as they restructure to meet the competition.
Iliad, which launched its “Free Mobile” service in January 2012 in France, has been wrecking havoc on its competitors France Telecom, SFR and Bouygues Telecom.
Precisely how the French service providers can make cuts, without touching personnel costs, is a key question, since presumably regulators also do not want any slackening of network capital investment.
Small wonder that many mobile service providers are looking to unload other international assets, in part to reduce debt burdens. But one also wonders whether reducing debt loads is part of an effort to slice operating costs as well.
The French Ministry for the Digital Economy has warned French telecom service providers they may make no job cuts as they restructure to meet the competition.
Iliad, which launched its “Free Mobile” service in January 2012 in France, has been wrecking havoc on its competitors France Telecom, SFR and Bouygues Telecom.
Precisely how the French service providers can make cuts, without touching personnel costs, is a key question, since presumably regulators also do not want any slackening of network capital investment.
Small wonder that many mobile service providers are looking to unload other international assets, in part to reduce debt burdens. But one also wonders whether reducing debt loads is part of an effort to slice operating costs as well.
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 Broadband Access One Market, or Many?
It isn't always easy to figure out what a "product" is, for purposes of plotting that "product's" life cycle. Is landline voice "one product," or a series of products that have been offered over the years? Similarly, is "Internet access" one product, or several?
The answer matters, as we can assume any product, including broadband access, will have a product life cycle. But we have to agree on what “the product” is, before we can figure out how to understand the life cycle.
Some might argue that “Internet access” is the product, with successive new generations of products simply reflecting better ways of supplying “Internet access.”
That view would make dial-up, slower speed DSL or cable modem services and now 300 Mbps services products one category. Product managers might not agree, and for good reason. One can plot the rise and fall of "dial-up" Internet access quite distinctly from the adoption of high-speed access services.
The precedent, one might argue, is “voice service.” Over time, the industry has evolved through various types of switching and access technology, but the product category always has been “fixed network voice.”
In a business sense, we can count the number of subscribers served by specific switch technologies, but the business-relevant distinction has remained “total number of lines in service” (access lines in service).
Using that analogy, all forms of Internet access represent one product category. But few are likely to accept that definition so readily.
For starters, there is the simple matter of lead applications for various types of Internet access.
The "killer app" for “dial-up Internet access” was email. That isn't exactly true for the early generations of broadband services, which tended to shift the lead apps to visual Web apps.
Now, streaming video and audio seem to be the lead applications, even though a variety of apps are used by most broadband customers. But as we push to speeds routinely above 20 Mbps, it is likely new lead apps will develop.
Also, there is the matter of mobile broadband access, which arguably gets used in different ways than fixed access. Are those examples of two distinct markets, or one market with segments?
The answer might matter since, In many developed markets, the “fixed network Internet access” product is reaching saturation, where every consumer who wants the product already is buying it. To refresh product lines, and earn more revenue, service providers are relying on faster speed services that sell for higher prices.
But the faster-growing segment is mobile broadband. China, for example, has seen fewer fixed broadband subscribers over the past year, instead of growing.
In other words, fixed broadband accounts actually declined, as users apparently decided to spend their money on mobile broadband, rather than fixed broadband.
Chinese Internet users reached 530 million over the past six months, but the broadband subscriber base actually shrank as mobile became the most popular way for users to get online for the first time, a report by the Chinese government suggests.
Of those users, some 380 million were fixed broadband users, down from 396 million in December 2011, and 388 million were mobile internet users, up from 356 million.
So “mobile broadband access” appears to be a substitute and new product, with a different life cycle, than fixed broadband.
The answer matters, as we can assume any product, including broadband access, will have a product life cycle. But we have to agree on what “the product” is, before we can figure out how to understand the life cycle.
Some might argue that “Internet access” is the product, with successive new generations of products simply reflecting better ways of supplying “Internet access.”
That view would make dial-up, slower speed DSL or cable modem services and now 300 Mbps services products one category. Product managers might not agree, and for good reason. One can plot the rise and fall of "dial-up" Internet access quite distinctly from the adoption of high-speed access services.
The precedent, one might argue, is “voice service.” Over time, the industry has evolved through various types of switching and access technology, but the product category always has been “fixed network voice.”
In a business sense, we can count the number of subscribers served by specific switch technologies, but the business-relevant distinction has remained “total number of lines in service” (access lines in service).
Using that analogy, all forms of Internet access represent one product category. But few are likely to accept that definition so readily.
For starters, there is the simple matter of lead applications for various types of Internet access.
The "killer app" for “dial-up Internet access” was email. That isn't exactly true for the early generations of broadband services, which tended to shift the lead apps to visual Web apps.
Now, streaming video and audio seem to be the lead applications, even though a variety of apps are used by most broadband customers. But as we push to speeds routinely above 20 Mbps, it is likely new lead apps will develop.
Also, there is the matter of mobile broadband access, which arguably gets used in different ways than fixed access. Are those examples of two distinct markets, or one market with segments?
The answer might matter since, In many developed markets, the “fixed network Internet access” product is reaching saturation, where every consumer who wants the product already is buying it. To refresh product lines, and earn more revenue, service providers are relying on faster speed services that sell for higher prices.
But the faster-growing segment is mobile broadband. China, for example, has seen fewer fixed broadband subscribers over the past year, instead of growing.
In other words, fixed broadband accounts actually declined, as users apparently decided to spend their money on mobile broadband, rather than fixed broadband.
Chinese Internet users reached 530 million over the past six months, but the broadband subscriber base actually shrank as mobile became the most popular way for users to get online for the first time, a report by the Chinese government suggests.
Of those users, some 380 million were fixed broadband users, down from 396 million in December 2011, and 388 million were mobile internet users, up from 356 million.
So “mobile broadband access” appears to be a substitute and new product, with a different life cycle, than fixed 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.
Hosted IP PBX Services Will Grow 300% to 2016
U.S. spending on unified communications technologies will increase by an average of 10 percent per year, led by spending on hosted IP telephony services, which will almost triple between 2011 and 2016, estimates InfoTrack.
Separately, Infonetics Research predicts the number of seats for hosted business VoIP and unified communications services is on track to more than double between 2012 and 2016. Note that forecast includes both hosted IP telephony and UC.
Among U.S. enterprises, defined as firms with 500 or more employees, spending on hosted IPT will grow at an average rate of 27 percent, which is almost two times faster than the average increase among U.S. SMBs (firms with fewer than 500 employees), InfoTrack says.
But over the next five years, the growth of SMB spending on UC apps will be more than twice the rate of U.S. enterprises, which represents the mirror image of what we project happening in the hosted IPT sector," said Ken Dolsky, Senior Program Director for InfoTrack.
As always, one has to keep the size of the installed base in mind when pondering such forecasts. Other researchers, including Parallels, have estimated that small and medium business hosted IP telephony penetration is still relatively small.
The global market for hosted PBX (hosted IP telephony) services averaged between four percent and seven percent in the largest SMB markets, Parallels noted, as recently as late 2011.
Infonetics Research separately has forecast that the global SMB VoIP services market would grow to $76.1 billion in 2015 with total subscribers of 262 million. Keep in mind that the total global telecom services business accounts for about $2 trillion in annual revenue in 2012.
So hosted IP telephony would represent about four percent of global revenues.
In the United States, it has been estimated that around 500,000 SMBs currently use a hosted PBX service, representing an $800 million market. In a U.S. telecom service business of about $336 billion in annual revenue, hosted IP telephony represents about two-tenths of one percent of total industry revenue.
However, Parallels estimates that the majority of the current in-house PBX systems will migrate to hosted mechanisms over time, representing $3.9 billion potential market for hosted PBX.
US Hosted PBX Market – Source: Parallels SMB Cloud Insights Report, 2011
Separately, Infonetics Research predicts the number of seats for hosted business VoIP and unified communications services is on track to more than double between 2012 and 2016. Note that forecast includes both hosted IP telephony and UC.
Among U.S. enterprises, defined as firms with 500 or more employees, spending on hosted IPT will grow at an average rate of 27 percent, which is almost two times faster than the average increase among U.S. SMBs (firms with fewer than 500 employees), InfoTrack says.
These days, though, estimating the size of the global market for business IP telephony services offered by service providers is a hard question to answer. For starters, IP telephony can include sales of IP private branch exchanges, unified communications solutions and services, hosted IP telephony services, access services such as SIP trunking and fees earned for managing premises business phone systems.
With all of this, the global business IP telephony market will reach $20.8 billion by the year 2018, according to Global Industry Analysts. The problem, of course, is that it is tough to make sense of global estimates, especially without knowing in some detail which specific products are included in that figure.
The global market for hosted PBX (hosted IP telephony) services averaged between four percent and seven percent in the largest SMB markets, Parallels noted, as recently as late 2011.
The global market for hosted PBX (hosted IP telephony) services averaged between four percent and seven percent in the largest SMB markets, Parallels noted, as recently as late 2011.
Infonetics Research separately has forecast that the global SMB VoIP services market would grow to $76.1 billion in 2015 with total subscribers of 262 million. Keep in mind that the total global telecom services business accounts for about $2 trillion in annual revenue in 2012.
So hosted IP telephony would represent about four percent of global revenue.
In the United States, it has been estimated that around 500,000 SMBs currently use a hosted PBX service, representing an $800 million market. In a U.S. telecom service business of about $336 billion in annual revenue, hosted IP telephony represents about two-tenths of one percent of total industry revenue.
In the United States, it has been estimated that around 500,000 SMBs currently use a hosted PBX service, representing an $800 million market. In a U.S. telecom service business of about $336 billion in annual revenue, hosted IP telephony represents about two-tenths of one percent of total industry revenue.
However, Parallels estimates that the majority of the current in-house PBX systems will migrate to hosted mechanisms over time, representing $3.9 billion potential market for hosted PBX.
At the moment, it remains the case that most business IP telephony is supplied by premises-based solutions.
So how big is the business IP telephony? It depends on who you ask, and what the assumptions are.
"In 2011, SMBs represented 46 percent of the U.S. installed base of IPT lines, but accounted for only 30 percent of the spending on UC applications,” InfoTrack says. But over the next five years, the growth of SMB spending on UC apps will be more than twice the rate of U.S. enterprises, which represents the mirror image of what we project happening in the hosted IPT sector," said Ken Dolsky, Senior Program Director for InfoTrack.
As always, one has to keep the size of the installed base in mind when pondering such forecasts. Other researchers, including Parallels, have estimated that small and medium business hosted IP telephony penetration is still relatively small.
The global market for hosted PBX (hosted IP telephony) services averaged between four percent and seven percent in the largest SMB markets, Parallels noted, as recently as late 2011.
Infonetics Research separately has forecast that the global SMB VoIP services market would grow to $76.1 billion in 2015 with total subscribers of 262 million. Keep in mind that the total global telecom services business accounts for about $2 trillion in annual revenue in 2012.
So hosted IP telephony would represent about four percent of global revenues.
In the United States, it has been estimated that around 500,000 SMBs currently use a hosted PBX service, representing an $800 million market. In a U.S. telecom service business of about $336 billion in annual revenue, hosted IP telephony represents about two-tenths of one percent of total industry revenue.
However, Parallels estimates that the majority of the current in-house PBX systems will migrate to hosted mechanisms over time, representing $3.9 billion potential market for hosted PBX.
US Hosted PBX Market – Source: Parallels SMB Cloud Insights Report, 2011
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.
Mobile Industry Will Reach Milestone Sometime After 2016
Data revenue will grow to 65 percent of total U.S. wireless service revenue as voice declines to 35 percent in 2016, according to Hugues de la Vergne, principal research analyst at Gartner. That might not seem so significant, but keep in mind that, in recent decades, voice has represented at least 70 percent of all industry revenues.
A replacement of voice revenues by data revenues at that level would be a key milestone for an industry that has for some time been grappling with the issue of how to replace lost voice revenue and profit margin.
Growing adoption of smart phones, with the new and significant data plan revenue, will play a key role, of course. Almost by definition, a smart phone activation will come with a boost in monthly revenue, from data access, of $20 to $40 a month.
But different retail packaging likely will play a key role. New shared data plans offered by AT&T and Verizon Wireless are intended to lift overall revenues while creating a usage-based data revenue model, while encouraging users to add tablets to their accounts for mobile broadband access.
What remains unclear is the extent of demand for such plans. Some think the entire industry eventually will move in that direction, as was the case with some earlier packaging innovations, including the mobile industry's abolition of domestic long distance with AT&T's Digital One Rate, or the adoption of family plans for domestic voice and texting.
But that is far from a universal view. T-Mobile USA, for example, has argued that the plans are not advantageous for consumers. And there are many subtleties. Most believe that the new plans primarily will encourage smart phone adoption, and secondarily tablet mobile connections.
Some of us might argue it is possible that the big secondary effect will be to lift personal mobile hotspot service sales, not the additional mobile network connections for tablets. The reason is that a personal mobile hotspot capability solves the same problem as a paid mobile connection for a tablet, and also has additional value.
When the personal hotspot capability is provided by the smart phone, there is no need to carry another device, such as a dongle or discrete hotspot device. Also, the personal hotspot conveniently can connect multiple devices, where a dongle connects only one device.
But that isn’t the only potential way data revenues might grow. As the number of devices with mobile network modems increases, so will the number of instances where it makes sense to have mobile network broadband.
The issue is whether that also will lead to demand for multi-device data rate plans, as Gartner believes.
The disagreement about adoption probably will not be decided, one way or the other, for some time. The reason is that the current structure of the shared data plans does not offer significantly better economics for users, compared to what they already can buy.
There are some marginal advantages and inducements to add tablet devices, for example, but the price advantage might not be so obvious to most users, or valuable.
But Gartner believes multi-device rate plans will be a key driving factor in the expansion of U.S. data revenue from $81.4 billion in 2011 to $151.9 billion in 2016.
Voice represents something on the order of 72 percent percent of total mobile service provider revenue, according to ABI Research estimates.
Messaging represents about 21 percent of total revenue, so declining messaging revenue is less a problem than lost voice revenue.
Mobile Internet revenue still is growing, in every market, so there is more time to react to the eventual maturation of that market, which at the moment only represents about six percent of total mobile service provider revenue globally, by ABI Research estimates.
The rate of mobile data revenue growth is important because voice revenues are declining. ABI Research also forecasts annual mobile voice revenues to reach $580 billion in 2010.
From 2011 on, rising subscriber saturation will increasingly erode mobile voice revenues, not just in developed markets but also in a number of emerging markets. By 2014, mobile voice revenues will have contracted by 9.6 percent.
While mobile operators have received a substantial boost from value-added services such as messaging and mobile Internet, competition is squeezing margins for a variety of services and carriers. Total mobile data services should generate $169 million in 2009 and will grow at a compound annual growth rate of nine percent until 2014.
By the end of 2009 the declines in annual average revenue per user (ARPU) will have been felt most severely in Asia-Pacific (-8.7% to $105) and Africa (-7.8% to $134). ARPU in 2009 in North America will have contracted, but only by -0.6% to $526).
All that means mobile service providers will have to work to resist voice revenue erosion while simultaneously growing data revenues.
A replacement of voice revenues by data revenues at that level would be a key milestone for an industry that has for some time been grappling with the issue of how to replace lost voice revenue and profit margin.
Growing adoption of smart phones, with the new and significant data plan revenue, will play a key role, of course. Almost by definition, a smart phone activation will come with a boost in monthly revenue, from data access, of $20 to $40 a month.
But different retail packaging likely will play a key role. New shared data plans offered by AT&T and Verizon Wireless are intended to lift overall revenues while creating a usage-based data revenue model, while encouraging users to add tablets to their accounts for mobile broadband access.
What remains unclear is the extent of demand for such plans. Some think the entire industry eventually will move in that direction, as was the case with some earlier packaging innovations, including the mobile industry's abolition of domestic long distance with AT&T's Digital One Rate, or the adoption of family plans for domestic voice and texting.
But that is far from a universal view. T-Mobile USA, for example, has argued that the plans are not advantageous for consumers. And there are many subtleties. Most believe that the new plans primarily will encourage smart phone adoption, and secondarily tablet mobile connections.
Some of us might argue it is possible that the big secondary effect will be to lift personal mobile hotspot service sales, not the additional mobile network connections for tablets. The reason is that a personal mobile hotspot capability solves the same problem as a paid mobile connection for a tablet, and also has additional value.
When the personal hotspot capability is provided by the smart phone, there is no need to carry another device, such as a dongle or discrete hotspot device. Also, the personal hotspot conveniently can connect multiple devices, where a dongle connects only one device.
But that isn’t the only potential way data revenues might grow. As the number of devices with mobile network modems increases, so will the number of instances where it makes sense to have mobile network broadband.
The issue is whether that also will lead to demand for multi-device data rate plans, as Gartner believes.
The disagreement about adoption probably will not be decided, one way or the other, for some time. The reason is that the current structure of the shared data plans does not offer significantly better economics for users, compared to what they already can buy.
There are some marginal advantages and inducements to add tablet devices, for example, but the price advantage might not be so obvious to most users, or valuable.
But Gartner believes multi-device rate plans will be a key driving factor in the expansion of U.S. data revenue from $81.4 billion in 2011 to $151.9 billion in 2016.
Voice represents something on the order of 72 percent percent of total mobile service provider revenue, according to ABI Research estimates.
Messaging represents about 21 percent of total revenue, so declining messaging revenue is less a problem than lost voice revenue.
Mobile Internet revenue still is growing, in every market, so there is more time to react to the eventual maturation of that market, which at the moment only represents about six percent of total mobile service provider revenue globally, by ABI Research estimates.
The rate of mobile data revenue growth is important because voice revenues are declining. ABI Research also forecasts annual mobile voice revenues to reach $580 billion in 2010.
From 2011 on, rising subscriber saturation will increasingly erode mobile voice revenues, not just in developed markets but also in a number of emerging markets. By 2014, mobile voice revenues will have contracted by 9.6 percent.
While mobile operators have received a substantial boost from value-added services such as messaging and mobile Internet, competition is squeezing margins for a variety of services and carriers. Total mobile data services should generate $169 million in 2009 and will grow at a compound annual growth rate of nine percent until 2014.
By the end of 2009 the declines in annual average revenue per user (ARPU) will have been felt most severely in Asia-Pacific (-8.7% to $105) and Africa (-7.8% to $134). ARPU in 2009 in North America will have contracted, but only by -0.6% to $526).
All that means mobile service providers will have to work to resist voice revenue erosion while simultaneously growing data revenues.
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.
Dunkin Donuts Launches Own Mobile Payment App
Dunkin’ Donuts has launched its first-ever mobile application for payment and gifting for iPhone, iPod touch and Android smartphones. With the new Dunkin’ App, paying for food, beverages, and merchandise at Dunkin’ Donuts restaurants throughout the U.S. is as simple and speedy as scanning a smart phone using a mobile Dunkin' Donuts Card in-store or at the drive-through, according to Mobile Commerce.
The "mGift" feature also allows users to send virtual gift cards using text message, email, and Facebook Connect.
The "mGift" feature also allows users to send virtual gift cards using text message, email, and Facebook Connect.
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.
Consumers Not So Hot on Network Connected Tablets, Apparently
According to Engadget, AT&T has ended its subsidies for tablets sold with mobile data plans. You can make your own decisions about why the program is ending, but there might be a parallel with the earlier carrier experiments with subsidized netbooks.
You might argue the value-price relationship is not perceived as adequate. You might argue that with pervasive Wi-Fi, people don't quite so often "need" a network-provided data plan. You might argue people prefer devices other than the ones AT&T had been offering.
You can argue all of those could be reasons for lukewarm customer interest. You might also argue that AT&T doesn't want to incur the financing cost.
Whatever your choice of reasons, there still does not seem to be a big move by consumers to pay for tablet mobile connections, even though some predict that will happen. Wi-Fi-only devices typically outsell units equipped for 3G access, for example.
The ratio of Wi-Fi-only tablets tablet sales with carrier network connections, for example, is highly skewed to Wi-Fi-only devices.
You might argue the value-price relationship is not perceived as adequate. You might argue that with pervasive Wi-Fi, people don't quite so often "need" a network-provided data plan. You might argue people prefer devices other than the ones AT&T had been offering.
You can argue all of those could be reasons for lukewarm customer interest. You might also argue that AT&T doesn't want to incur the financing cost.
Whatever your choice of reasons, there still does not seem to be a big move by consumers to pay for tablet mobile connections, even though some predict that will happen. Wi-Fi-only devices typically outsell units equipped for 3G access, for example.
The ratio of Wi-Fi-only tablets tablet sales with carrier network connections, for example, is highly skewed to Wi-Fi-only devices.
Consumers appear to avoid getting tablet mobile service plans, preferring to run tablets on Wi-Fi networks.
With nearly 50 million tablets in the U.S. market, carrier-networked devices constitute roughly eight percent of the total.
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.
Sunday, August 19, 2012
Barclays Expands ‘Pingit’ Service to Africa
Barclays has launched an international version of its "Pingit" mobile person to person payments system in Kenya.
Barclays launched Pingit in February 2012 for its 11.9 million current account customers, who download the bank's Pingit app to their smart phone and can make instant money transfers to anyone with a U.K.-based mobile phone and a current account with any U.K. bank.
In the U.K. market, the app works on Apple iPhones, Blackberry and Android devices. Users call the recipient's mobile number using the Pingit app, key in an amount between £1 and £300 and hit send. The money is moved between the two current accounts using the Faster Payments service, and takes as little as 30 seconds.
Barclays plans to launch launch the mobile-to-mobile service in Kenya, adding service to a number of other African countries, including South Africa, later in 2012.
Barclays also will launch in Spain, Italy, Portugal and France in 2013.
The bank estimates the service, which will be available to customers and non-customers, will reduce the cost of sending money to Africa by at least half.
Barclays will charge a commission on the currency exchange but no fee to use the service.
That suggests a £100 transfer will cost less than £3. Traditional money transfer providers typically charge both a fee and a spread on currency, which could mean a £5-£10 charge on a £100 transfer.
Barclays launched Pingit in February 2012 for its 11.9 million current account customers, who download the bank's Pingit app to their smart phone and can make instant money transfers to anyone with a U.K.-based mobile phone and a current account with any U.K. bank.
In the U.K. market, the app works on Apple iPhones, Blackberry and Android devices. Users call the recipient's mobile number using the Pingit app, key in an amount between £1 and £300 and hit send. The money is moved between the two current accounts using the Faster Payments service, and takes as little as 30 seconds.
Barclays plans to launch launch the mobile-to-mobile service in Kenya, adding service to a number of other African countries, including South Africa, later in 2012.
Barclays also will launch in Spain, Italy, Portugal and France in 2013.
The bank estimates the service, which will be available to customers and non-customers, will reduce the cost of sending money to Africa by at least half.
Barclays will charge a commission on the currency exchange but no fee to use the service.
That suggests a £100 transfer will cost less than £3. Traditional money transfer providers typically charge both a fee and a spread on currency, which could mean a £5-£10 charge on a £100 transfer.
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.
Friday, August 17, 2012
FaceTime Now a Reason to Buy AT&T "Mobile Share"
The large mobile service providers are not without significant persuasive tools where it comes to inducing customers to buy important new service plans that protect legacy voice and messaging revenues while tying mobile bandwidth consumption to retail prices.
One of those tools is use of Apple's FaceTime video calling feature. AT&T has announced it will limit how iPhone users can use FaceTime over AT&T's 3G and 4G networks when Apple's new iOS 6 software launches.
Users will not be able to use FaceTime over 3G or 4G unless they sign up for one of AT&T's new shared data plans. Users with an individual data plan will only be able to use FaceTime over Wi-Fi.
One suspects both Verizon and AT&T will have to do much more before usage of the new plans really becomes the norm. Right now the actual savings for switching to the new plans are fairly subtle, and therefore not so compelling.
More value will be needed, ultimately, and that probably will include a much clearer value-price relationship. Right now, a rational consumer would be hard pressed to identify significant savings or clear additional value.
One of those tools is use of Apple's FaceTime video calling feature. AT&T has announced it will limit how iPhone users can use FaceTime over AT&T's 3G and 4G networks when Apple's new iOS 6 software launches.
Users will not be able to use FaceTime over 3G or 4G unless they sign up for one of AT&T's new shared data plans. Users with an individual data plan will only be able to use FaceTime over Wi-Fi.
One suspects both Verizon and AT&T will have to do much more before usage of the new plans really becomes the norm. Right now the actual savings for switching to the new plans are fairly subtle, and therefore not so compelling.
More value will be needed, ultimately, and that probably will include a much clearer value-price relationship. Right now, a rational consumer would be hard pressed to identify significant savings or clear additional value.
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.
Telco Reinvention Trend Requires Enough Capital to Buy Way Into New Markets
Telco and cable revenue trends in the U.S. market continue to illustrate a fundamental principle some of us believe is foundational for both telcos and cable companies working in developed markets.
And that fundamental reality is that any service provider in a developed market must plan for a business environment where perhaps half of all current revenue has to be replaced by new sources over about a 10-year period. The corollary is that that rate of adaptation might have to be conducted more than once.
That might sound like a radical assumption, but it is precisely what happened in the U.S. service provider market when long distance revenues, which had driven industry profit, began a long descent. In 1997, long distance still represented about half of all industry revenues. But a decade later, mobile revenue had taken the place once held by long distance, representing in 2007 nearly half of U.S. communications service provider revenues.
Keep in mind that this “rule” applies most directly to service providers in developed markets. In developing regions, where service uptake still is growing, those challenges will take longer to develop.
The most-recent quarterly earnings report from Comcast shows the same sort of trend in the U.S. cable industry, where video revenues have shrunk to about 52 percent of total Comcast “cable operations” revenue , while other services now contribute 48 percent, and are growing.
In fact, including the NBC Universal contributions, it already is true that Comcast earns less than half its total revenue from cable TV distribution. In fact, cable TV video distribution operations now account for only 33 percent of total Comcast revenue.
That’s an example of the same process: the need for suppliers in competitive and mature markets to replace large amounts of revenue from lost legacy revenues.
Telcos already have been through one such transformation, as overall revenue now has shifted from “long distance” to wireless, at least for the tier one U.S. providers. The next set of transitions will see the revenue contributions from mobile voice and text messaging dwindle in favor of new sources.
There is an important caveat: it is much easier for a large service provider to make these sorts of transitions, than for a small provider to make such a fundamental transition.
There are examples of former “rural” telcos repositioning them as business service providers. Windstream and Frontier Communications provide obvious examples.
Warwick Valley Telephone Company, for example, calls itself a “cloud communications” company. It might be more accurate to say “unified communications” revenues, but cloud or unified communications revenues were $3.3 million in the second quarter of 2012, an increase of 169 percent from $1.2 million in prior year period, against total revenues of $6.9 million, WVT says. In other words, “cloud computing” revenues now were about 47 percent of total revenues, in the second quarter.
The increase in revenues of over $1 million is primarily attributable to the consolidation of financial results for the acquisition of Alteva and organic unified communications services revenue growth, partially offset by a decline of nearly $1 million in “telephone segment” revenues, the company says.
That’s important because the results were achieved by a major acquisition. “As a percentage of consolidated revenue, the UC segment contributed 47 percent of revenues in the second quarter as compared with 21 percent in the same period of the prior year and 46 percent in the first quarter of 2012,” WVT says.
The “Telephone” segment contributed 53 percent of revenues in the second quarter of 2012 as compared with 79 percent in the second quarter of 2011 and 54 percent in the first quarter of 2012.
The point is that some service providers will be able to dramatically recast themselves by making strategic acquisitions.
Tier one service providers are moving away from primary reliance on voice services, towards wireless data, video and other services and products. Cable operators are shifting to business voice and data services, and away from entertainment video. And smaller rural telcos are becoming business services specialists.
And that fundamental reality is that any service provider in a developed market must plan for a business environment where perhaps half of all current revenue has to be replaced by new sources over about a 10-year period. The corollary is that that rate of adaptation might have to be conducted more than once.
That might sound like a radical assumption, but it is precisely what happened in the U.S. service provider market when long distance revenues, which had driven industry profit, began a long descent. In 1997, long distance still represented about half of all industry revenues. But a decade later, mobile revenue had taken the place once held by long distance, representing in 2007 nearly half of U.S. communications service provider revenues.
Keep in mind that this “rule” applies most directly to service providers in developed markets. In developing regions, where service uptake still is growing, those challenges will take longer to develop.
The most-recent quarterly earnings report from Comcast shows the same sort of trend in the U.S. cable industry, where video revenues have shrunk to about 52 percent of total Comcast “cable operations” revenue , while other services now contribute 48 percent, and are growing.
In fact, including the NBC Universal contributions, it already is true that Comcast earns less than half its total revenue from cable TV distribution. In fact, cable TV video distribution operations now account for only 33 percent of total Comcast revenue.
That’s an example of the same process: the need for suppliers in competitive and mature markets to replace large amounts of revenue from lost legacy revenues.
Telcos already have been through one such transformation, as overall revenue now has shifted from “long distance” to wireless, at least for the tier one U.S. providers. The next set of transitions will see the revenue contributions from mobile voice and text messaging dwindle in favor of new sources.
There is an important caveat: it is much easier for a large service provider to make these sorts of transitions, than for a small provider to make such a fundamental transition.
There are examples of former “rural” telcos repositioning them as business service providers. Windstream and Frontier Communications provide obvious examples.
Warwick Valley Telephone Company, for example, calls itself a “cloud communications” company. It might be more accurate to say “unified communications” revenues, but cloud or unified communications revenues were $3.3 million in the second quarter of 2012, an increase of 169 percent from $1.2 million in prior year period, against total revenues of $6.9 million, WVT says. In other words, “cloud computing” revenues now were about 47 percent of total revenues, in the second quarter.
The increase in revenues of over $1 million is primarily attributable to the consolidation of financial results for the acquisition of Alteva and organic unified communications services revenue growth, partially offset by a decline of nearly $1 million in “telephone segment” revenues, the company says.
That’s important because the results were achieved by a major acquisition. “As a percentage of consolidated revenue, the UC segment contributed 47 percent of revenues in the second quarter as compared with 21 percent in the same period of the prior year and 46 percent in the first quarter of 2012,” WVT says.
The “Telephone” segment contributed 53 percent of revenues in the second quarter of 2012 as compared with 79 percent in the second quarter of 2011 and 54 percent in the first quarter of 2012.
The point is that some service providers will be able to dramatically recast themselves by making strategic acquisitions.
Tier one service providers are moving away from primary reliance on voice services, towards wireless data, video and other services and products. Cable operators are shifting to business voice and data services, and away from entertainment video. And smaller rural telcos are becoming business services specialists.
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.
Hard to Calculate Total Cost of Ownership, Return on Agility
"In the many meetings with customers in which I have done a deep dive on their architecture and applications to help them create an accurate cost picture, I have observed two common patterns: 1) It is hard for customers to come to an accurate Total Cost of Ownership (TCO) calculation of an on-premise installation and 2) they struggle with how to account for the “Return on Agility”; the fact that they are now able to pursue business opportunities much faster at much lower costs points than before," says Werner Vogels, Amazon CTO.
Amazon's TCO white paper attempts to quantify the return.
Capacity vs. Usage Comparison
Amazon's TCO white paper attempts to quantify the return.
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.
Can Mobile Banking Hit 25% of U.S. Homes by 2017?
Is it plausible that there could be 109 million mobile banking users in 2017? Yes, using some optimistic assumptions.Is it possible 25 percent of all households could be using mobile banking in 2017? Yes, using some perhaps optimistic assumptions.
If you assume there are about 135 million households in existence and that adoption mirrors the adoption of online banking, then 25 percent household adoption is possible.
If adopted as fast as online bill paying was, though it is likely mobile banking adoption will be lower than 25 percent in 2017.
Mobile banking adoption is highly driven by the number of younger consumers, the number of bank accounts they might use and the percentage that will choose to use at least one mobile banking feature, such as checking a balance or transferring funds.
If you assume 90 percent of consumers have bank accounts, and that 80 percent of Millennials, 60 percent of Gen X consumers, 40 percent of Baby Boomers and 20 percent of all others use mobile banking, then some 109 million consumers could be using some form of mobile banking. According to netbanker, 25 percent of U.S. households will use mobile bank access by about 2018, based on the adoption curve for online banking from 1995 to 2005.
source: netbanker
Mobile adoption Est. pop 2012 2017 Banked Total Mobile Bankers Gen Y 75,000,000 39% 80% 90% 54,000,000 Gen X 40,000,000 28% 60% 90% 21,600,000 Boomer 75,000,000 15% 40% 90% 27,000,000 Senior 35,000,000 8% 20% 90% 6,300,000 225,000,000 108,900,000source: http://snarketing2dot0.com
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.
Subscribe to:
Comments (Atom)
-
We have all repeatedly seen comparisons of equity value of hyperscale app providers compared to the value of connectivity providers, which s...
-
It really is surprising how often a Pareto distribution--the “80/20 rule--appears in business life, or in life, generally. Basically, the...
-
Financial analysts typically express concern when any firm’s customer base is too concentrated. Consider that, In 2024, CoreWeave’s top two ...
