"Untethered" Hasn't Displaced "Mobile," But is Growing

The living room and the bedroom are the most popular places Europeans use their tablets, CCS Insights reports. 

At least so far, tablet users are using tablets in place of laptops and netbooks around the home.

Almost 80 percent of  4,500 respondents to a survey said they're using their tablets in the living room. In the UK and France, nearly seven in ten use it in the bedroom, while almost four in 10 Europeans log-on in the kitchen.

If you add in the use of mobile phones on at-home or at-work Wi-Fi networks, it is obvious that "untethered" use of devices, applications and networks is becoming a bigger percentage of total usage.  

How Does Google Fiber Compare, as an "Overbuilder?"

It is difficult to say what level of customer success Google will have to achieve, overall, in Kansas City, Kan. and Kansas City, Mo. to make Google Fiber a sustainable proposition. The difficulty lies partly in the service suite, partly in the pricing and partly in end user behavior and competitor response.

Many overbuilders offer a triple-play package of voice, Internet access and video entertainment. Google Fiber sells only broadband access and video entertainment. So where some overbuilders have three potential revenue items, Google Fiber will rely on just two.

Also, Google Fiber is offering a "free" access service in addition to the for-fee 1 Gbps service, and it remains unclear how the balance of "subscribers" will work out. Other overbuilders count only paying subscribers, but Google will have some as yet undetermined number of non-paying customers as well.

Also, Google Fiber will likely earn less gross revenue from its video services than most overbuilders, simply because it has elected to offer a more-affordable package that costs less than the typical video entertainment service. 

Other overbuilders arguably might expect to achieve 10 percent to 15 percent video penetration, and perhaps 10 percent to 15 percent broadband access penetration, plus some additional share of voice service customers. The new math consists in getting a high enough sale of service "units" to boost revenue into the $100 a month range, on average. 

Granted, some overbuilders have done better than that. But it is pretty tough these days, with established telco, cable and satellite competitors, to do much better. 

Google clearly will be able to hit such minimum thresholds if a customer buys the 1 Gbps access service plus video. But not all customers will do so, and Google also has the operating cost of providing free broadband to some percentage of homes. 

For its part, Google likewise is trying a different tack to its actual construction activities, essentially trying to use a pre-registration program to estimate where initial take rates will be the highest. 

Basically, Google has residents "voting" for Google Fiber by pre-registering and making a payment of $10. 

Each of of the potential "fiberhoods" then has a minimum threshold of pre-registrations that qualify the fiberhood for construction. Until the threshold is reached, construction is not contemplated. 

Google has had to create different thresholds for different fiberhoods, and now has tweaked the algorithm just a bit to account for some inaccuracies in the databases Google built from a variety of sources about the actual number of potential residences in a fiberhood. 

So Google now adjusts the "potential homes passed" part of the algorithm to deduct vacant lots, abandoned homes and also adjust for large apartment buildings, as distinct from single-family homes.

The changes slightly affect 73 fiberhoods, boosting the percentage of sign-ups in some of the fiberhoods and therefore slightly increasing the likelihood that some fiberhoods will qualify for actual construction. 

Some 40 out of 74 fiberhoods now qualify. In Kansas City, Missouri while  75 out of 128 fiberhoods have now reached their goals as well. 

Depending on neighborhood, it appears that between 20 percent and 35 percent of homes passed is the goal Google is pursuing. If all those pre-registrants actually wind up buying a paid  service, then Google would quickly achieve an impressive penetration level for an overbuilder. 

Illiad “Free” Disrupts French Mobile Market; Can it Work Elsewhere?

It is no mean feat for a new competitor to muscle its way into a market dominated by three large providers, or to do so quickly. To the consternation of France’s leading mobile service providers, that is what Illiad’s “Free Mobile” service has done.

In about six months, Free Mobile has garnered about 3.6 million customers, and has gotten
5.4 percent of France’s roughly 67 million mobile subscribers, in less than six months. One would expect the rate of growth of slow, but that’s a singular achievement.

Free Mobile now is the fourth-largest mobile service provider in the French market, after Orange, SFR and Bouygues Telecom. To be sure, Free Mobile still is about a third the size of
Bouygues Telecom, which has 11 million subscribers.

Almost by definition, what Free Mobile has achieved qualifies as a market disruption: Free Mobile has, in six months, altered the market dynamics of a business that has been relatively stable for quite some time.

As often is the case, Free Mobile chose to attack the market using a “same service, lower price” model, offering service plans of €2 per month, or a plan with mobile data service at €20 per month, that set off a price war in the French mobile market, the Wall Street Journal reports.


Free Mobile relies on a “bring your own device” or “buy your own device at full retail price” to offer lower-cost plans without contract, since it does not have to subsidize handsets. That approach isn’t new. Most smaller mobile mobile virtual network operators that lease capacity from other carriers also do so.

What is quite different is the dramatic and sudden market share Free Mobile has gained, essentially equalling the share held by all other French MVNOs, combined, in less than six months.

The issue, perhaps, is whether the Free Mobile approach is exportable to other mobile markets in developed countries. To be sure, Free Mobile is losing money on its mobile operation at the moment, and plans to plow effort into rapidly gaining more market share, before it turns its attention to profitability.

Wi-Fi might plahy a role. Free Mobile parent Illiad operates a fixed network business as well. And Illiad now has a “potential network” of about four million consumer Wi-Fi hotspots available to offload mobile data traffic.

The Wi-Fi hotspots are embedded in the “Freebox” Internet gateways of its DSL and fiber-to-the-home customers throughout France.  Up to this point, the “shared” Illiad Wi-Fi hotspot network has promised sharing of broadband access with other Iliad customers.

Now, Free Mobile customers with one of its standard plans will be able to configure their phones to automatically connect to any Wi-Fi hotspot in the Freebox community, gaining unlimited data access and VoIP calling. That could potentially help Free Mobile in the area of operating costs.

The issue, though, is whether it is possible to replicate Free Mobile’s approach in other developed markets. In the U.S.l market, Clearwire might have done so, but didn’t succeed.  Dish Network might try.

In the Spanish mobile market, where market leaders moved to a “no handset subsidy” approach, customer losses have compelled at least a momentary retreat back to the older pattern. At least so far, it appears the Free Mobile approach requires a consistent “no handset subsidies” approach, as well as a deep-rooted structuring of operating costs to compete at disruptive retail prices.


French mobile market share, late 2010

Google Tweaks its "Build by Demand" Algorithm

Google has a famously "data driven" culture, so it was not terribly surprising that Google is using a "build by demand" approach to its construction effort. Basically, Google has residents "voting" for Google Fiber by pre-registering and making a payment of $10. 

Each of of the potential "fiberhoods" then has a minimum threshold of pre-registrations that qualify the fiberhood for construction. 

Google has had to create different thresholds for different fiberhoods, and now has tweaked the algorithm just a bit to account for some inaccuracies in the databases Google built from a variety of sources about the actual number of potential residences in a fiberhood. 

So Google now adjusts the "potential homes passed" part of the algorithm to deduct vacant lots, abandoned homes and also adjust for large apartment buildings, as distinct from single-family homes.

The changes slightly affect 73 fiberhoods, boosting the percentage of sign-ups in some of the fiberhoods and therefore slightly increasing the likelihood that some fiberhoods will qualify for actual construction. 

Some 40 out of 74 fiberhoods now qualify. In Kansas City, Missouri while  75 out of 128 fiberhoods have now reached their goals as well. 

"Not Much Happening" in U.S. Broadband? Really?

The National Broadband Plan, which was released two years ago, says that there should be a minimum level of service of at least 4Mbps for all Americans. "Since then, not much has happened," some would say. 

But the Federal Communications Commission says "we found that the average speed tier that consumers were  subscribing to increased from 11.1 Megabits per second (Mbps) to 14.3 Mbps, an almost 30 percent  increase in just one year," in its Measuring Broadband America report. "The actual increase in experienced speeds by consumers was even greater than advertised speed, from 10.6 Mbps to 14.6 Mbps, representing an almost 38 percent improvement over the one year period."

You can make your own assessments of whether anything has happened in the last two years. 

FCC Might Limit Spectrum Holdings to Regulate Competition

The Federal Communications Commission could overhaul the way it measures competition in the wireless industry, The Hill's Hillicon Valley reports. Those measures could include both quantitative limits (total amount of spectrum) as well as qualitative standards (how much of the "best" spectrum any single carrier owns or controls). 

According to the report, FCC Chairman Julius Genachowski plans to circulate an order with the other commissioners next week that would launch a review of the FCC's rules for analyzing whether any one company has accumulated too much spectrum. 

The commission is expected to vote on the proposal at its September 2012 meeting. 

T-Mobile USA, for example, has argued that the current method, which is quantitative, does not account for qualitative differences, such as ability of lower-frequency signals to penetrate walls, for example. 

"The present screen is inadequate as applied to the current wireless  market, particularly because it fails to recognize the vast difference in value between low (below 1GHz) and high (above 1 GHz) frequency bands, T-Mobile USA has argued. 

The Point is to "Be Good," not to "Feel Good"

There is a genuine difference between "being good," or "doing good," and "feeling good." Too often, we opt for the latter, instead of insisting on the former. Consider all-electric cars, something that makes us feel good and virtuous. 

There is a scientific argument to be made, though, that when electricity is generated by coal-fired plants, such vehicles do not actually make a positive contribution to carbon emissions. But it makes people feel good, even when they are not, objectively speaking, "doing good." 

Even when electricity is generated in some other lower carbon way, such as from windmills, there is no such thing as a moral free lunch. Wind farms kill birds and golden eagles. Perhaps that does not cause many qualms. But if not, neither will accidental killing of dolphins when fishing for tuna. 

The specific energy of gasoline — measured in kWh per kg, for instance — is about 400 times higher than that of a lead-acid battery, and about 200 times better than the Lithium-ion battery in the Chevrolet Volt. We should not expect batteries to rival the energy density delivered by our beloved fossil fuels — ever, many correctly would note. 

The point is simply that the important matter is to do good, not just feel good. If you want to lower carbon footprint, then lower it, objectively. Don't posture. Don't substitute "feeling good" for "doing good."

Why One-Sided or Incomplete Thinking is Necessary, and Eventually has to be Corrected

Generally speaking, executing on a strategy takes focus and concentration on a small number of things. Just as certainly, all businesses exist in environments that are complicated. So ultimately, even concentrating on "just one thing," or "just a few things," will eventually prove to be necessary but insufficient. 

Compared to the situation of perhaps four years ago, the telco strategic context needs to be considered in a broader or different context, according to  STL Partners. That is to be expected. Even a "big new idea" necessarily is incomplete as a prescription for organization success. 

So where the key point was the idea of "two-sided business models," STL now says that is something that has to be kept in context. Of course. That was true four years ago, as well. But organizations and people can only focus on so much at one time. So the unchanging requirement is to focus on a few things at a time, even if that is objectively "unbalanced" and "incomplete."

Have Tablets Overtaken Smart Phones as the Device with Star Power?

The Apple iPhone now drives revenue at Apple. But the iPad now seems to have become the product with more appeal.

While both tablet and phone historically enjoy good scores on YouGov's U.K. "BrandIndex," a measure of public's perception of well-known brands, the iPad now might have reached an inflection point.

On a couple of measures, the iPad now gets more attention than the iPhone, YouGov says. That suggests the point just about has been reached when the revenue contribution from the iPad could start to drive more of Apple's overall revenue success. 

FCC Wants New Tax for Connect America Fund

Perhaps it comes as no surprise that the U.S. Federal Communications Commission wants to create a new tax on broadband access services to support its Connect America Fund, essentially the replacement for the older Universal Service Fund.

Aside from the change of nomenclature, the emphasis has shifted from guaranteeing voice services in rural and isolated portions of the country to supplying broadband access services to such areas.

“What started as a program with important goals (making sure rural farmers can make phone calls and ensuring the poorest among us can dial 911) turned into an unaccountable corporate slush fund,” says S. Derek Turner, Free Press research director.

Today USF is an $8 billion annual program, nearly quadrupling in size since its inception, with the bulk of those revenues going to landline and wireless phone companies.

Maybe this massive growth would be no concern if USF were a model program with a sterling reputation for efficiency. “But it’s not,” says Turner.

One recent study found that 59 cents of every USF dollar raised for rural networks was spent on administrative expenses and general overhead. A 2010 audit of the rural USF program found that one out of every four dollars sent to participating phone companies was an “overpayment,” with nearly a billion dollars unaccounted for.

So some would argue that higher taxes are unwarranted.

Phones Will Remain the Signature "Mobile" Device Through 2015

Smart phones will be the signature mobile device globally over the next five years, says Leif-Olof Wallin, a research vice president at tech analysis company Gartner. And Gartner thinks Microsoft will be the big winner, representing 20 percent of the market in 2015. 





While the global mobile market as a whole is shrinking, smartphone adoption will continue to explode.

Mobile U.K. Shoppers Still Prefer to Buy Using a PC

U.K. Internet users are comfortable using mobile devices for researching and browsing products, but they still prefer to turn to a PC when it’s time to buy, a study by Kenshoo and publishing and events company Figaro Digital indicates. 

That study mirrors in key ways the findings of a Google study that suggests as many of 90 percent of people use multiple devices when shopping, for example.



The preference for purchasing using a bigger-screen PC is pronounced when looking even at research activities such as clicking on paid search ads. 

Some 11 percent of all paid search clicks in the United Kingdom in the first quarter of 2012 came from mobile devices (not including tablets), the Kenshoo study suggests. Another 5.8 percent of paid search clicks came from tablets. 

Computers accounted for the lion’s share, at 82.8 percent, according to U eMarketer. 

But actual transactions are more likely to be conducted on a PC. More than nine in 10 said they preferred to buy using a PC, compared to three percent who would rather to do so on a smartphone and two percent on a tablet.

Why it is Difficult to Understand Mobile Payments

Some markets are hard to understand because the concepts are new or because a particular market is intertwined with other markets that also are changing. You might argue that unified communications has been that sort of market. 

But it also appears that mobile payments is that sort of business as well. At some basic level, the value proposition is unclear. Paying using a mobile device instead of cash or a debit or credit card doesn't always have immediate resonance as something that is 10 times better than existing methods of paying for retail purchases.

But part of the uncertainty is probably because retailing is changing. "Mobile commerce" is starting to show signs of merging with the broader "e-commerce" business, which in turn is starting to show signs of merging in a bigger way with physical retailing. 

In other words, m-commerce is merely another form of e-business or e-commerce. Mobile payment is part of the broader m-commerce business. So it might ultimately be the case that the specific value of "mobile payments" is clear only when the other parts of mobile commerce also are clear. 

But there is movement. Look back a decade. What was mobile commerce, really? Ringtones, initially, then downloaded songs and wallpaper. 

But mobile commerce now is viewed as something else, namely a way to use user location and analytic data, often in real time, to enable retail sales, also often in near real time. In some ways, that builds off of e-commerce, using new devices such as smart phones and tablets. 

In other ways, mobile commerce is both an extension of e-commerce and a bridge between physical and virtual retailing. If mobile payments doesn't make absolutely blinding sense, it might be because, right now, the value isn't so great. 

The value should become clearer as the broader mobile commerce trends, and the melding of physical and virtual retailing become clear as well. 

Illiad's "Free" Business is Hammering Rivals

Illiad's "Free" mobile service was intended to disrupt the French mobile market, and it seems, at least for the moment, that Illiad is succeeding. 

French conglomerate Bouygues posted sharply lower first-half profits for its second quarter of 2012, largely because of price competition from Free, which has caused the other leading mobile firms in France to cut prices. 

Bouygues also cut its annual profit forecast for its telecoms division unit by roughly 12 percent as a result of the expected competition, Reuters reports. 

Martin Bouygues, Bouygues chief executive, directly blamed Free Mobile for his company's woes.
"The difficulties we are experiencing are due to competition and the low prices charged by Free,"  the Bouygues CEO said. 

France Telecom, using the brand name "Orange," warned that it expects average revenue per user to fall by 10 percent at its domestic mobile unit Orange France in 2012, as operators engage in a price war following the entry of new low-cost operator, Iliad Group’s Free Mobile, in January. 

2.4 Billion Enterprise Smart Phone Subscribers in 2017

ABI Research estimates that by 2017, 2.4 billion employees globally will be using smart phones, growing about 17 percent a year and representing nearly three times more smart phones than used in 2012. 

Many hundreds of millions of those devices will be brought to work by people who want to use their own personal devices. So mobility suppliers and enterprises need to think in terms of serving all those employees with tools, apps, and services, even if not using company-issued devices, ABI Research says. 

Android has the dominant leadership position among the global workforce expected to grow to 56 percent by 2017.