PC Platforms Clearly are Shifting

Asymco created a couple of charts showing how much the computing business is changing. Up to this point, smart phones have been the biggest new factor. But tablets are destined to be a bigger portion of the market in the future. 

Another way of looking at matters is the post-2007 market share for Android and Apple computing platforms, compared to "WinTel."

Telecom Italia Considers Spinning off its Network

Telecom Italia's chief executive said the idea of spinning off its fixed network  had become "interesting" and that talks with a state-backed financing body over joint broadband projects were under way. "There is a dialogue that continues," Marco Patuano said. 

"The possible separation of the access network into another company is an option that both Telecom and Cassa Depositi e Prestiti are looking at with interest," Patuano said. 

In April, Telecom Italia first suggested a separation of the network, an asset valued at an estimated 9-15 billion euros ($11.6-$19.4 billion).

Telecom Italia and Fastweb, controlled by Switzerland's Swisscom AG, also have signed a memorandum of understanding to develop a  fiber access network in Italy, the companies said.

The two companies will share costs and investments in infrastructure construction, but "will retain total freedom and autonomy in the development of their own network platforms, technology decisions and commerical offerings."

Fastweb has pledged to invest  EUR 400 million investment plan to bring fiber optic technology to 20 percent of Italian companies and homes by 2014.

FCC Will Push for Spectrum Sharing in 3.5 GHz Band to Support Mobile Small Cells

The Federal Communications Commission will, by the end of 2012, initiate formal steps to authorize spectrum sharing in the 3.5 GHz band, potentially adding about 100 megahertz worth of spectrum intended to be used to support mobile network small cells. 

The set of frequencies between 3550MHz and 3650MHz is currently used in radar systems but could be shared with other wireless services. It would possibly be a complex undertaking.

However, in order for the government to keep using the spectrum for radar systems, other uses would have had to be blocked for about 200 miles inland from all U.S. coastlines, leaving out a majority of the country's residents, PCAST said in its report. A spectrum-sharing system could dramatically shrink or eliminate those exclusion zones, the group said.

Because of its high frequency, the 3.5GHz band would be better suited to fixed wireless Internet service than to mobile, according to Farpoint Group analyst Craig Mathias. 

“Sharing is a long-term process, and we are at day one of a long journey,” analysts at  Rysavy argue. Currently, there are three sharing models:

• Geographic sharing, in which a wireless carrier may use a federal agency's frequencies only in certain geographic areas;

• “Temporal” sharing, in which a wireless carrier may use a federal agency's frequencies only during certain times of the day or year; and

• Technology-based sharing, in which wireless carriers and a federal agency would each use a cognitive, or “smart,” radio device that can search wide swaths of a spectrum band for “quiet,” or unused, frequencies over which to transmit and receive data.

Such operations can be complex, many would note. 

Canadian Competition Bureau sues Big Three Telcos

The Canadian Competition Bureau is taking legal action against Canada’s big three mobile service providers,  along with their main industry association, to force them to stop what it alleges is misleading advertising that promotes “costly premium texting services” that slam consumers with hidden fees.

Rogers Communications Inc., BCE Inc., Telus Corp., and the Canadian Wireless Telecommunications Association are being sued for consumer refunds and possibly $31 million in fines.

Apple IPhone 5 Will Cost U.S. carriers $10 Billion in Device Subsidies

Stifel Nicolaus analyst Christopher King estimates that U.S. mobile service providers will wind up incurring about $10 billion in device subsidies as they sell iPhone 5 devices.

If so, those sales would likely affect operating margins for both companies during the entire second half of 2012.

“Given our assumption of approximately $425 in carrier subsidies per handset, we believe the U.S. carrier market could be on the hook for more than $10 billion over the last three and a half months of the year alone, entirely due to the new iPhone launch,” he said.

If you wonder why service providers have a "love-hate" relationship with the iPhone, that's why.

HP Thinks it "Must" Offer its own Smart Phone

HP CEO Meg Whitman offers a simple explanation for HP's belief that the company "has to" sell its own smart phone.

"We have to ultimately offer a smartphone because in many countries of the world that is your first computing device," says Whitman. "You know, there will be countries around the world where people may never own a tablet, or a PC, or a desktop."

"They will do everything on the smartphone," Whitman says. "We’re a computing company; we have to take advantage of that form factor."

The logic is sound enough, but whether HP is simply too late is the issue. It's hard to imagine how HP comes up with a differentiated offer or a big enough application store on its own.

HP seems almost forced to try to leverage an existing mobile OS and developer community, such as Android operating system ecosystem, or possibly the Windows Phone platform, though the applications community for Windows now is much smaller than that of Android.

But going with Android means taking on the likes of Samsung. Having stumbled with its Palm acquisition, HP is unlikely to want to make the same mistake by buying Research in Motion.

Whitman makes a cogent argument for why HP has to be in smart phones. What remains to be seen is how HP can pull that off.

200,000 Time Warner Cable RGUs Exposed to Google Fiber Threat

Time Warner Cable's CTO Irene Esteves says Google's Kansas City 1-Gbps Internet access and TV service bundle doesn't pose a huge threat to the cable operator's overall business. Of course not. What Google Fiber does threaten is about 200,000 revenue generating units Time Warner Cable presently sells in the Kansas City market.

Of the 300,000 homes that Google Fiber is expected to pass in the area eventually, Esteves estimates that Time Warner Cable has 100,000 Internet and 100,000 video subs at risk.

If you assume that half the broadband customers in the Time Warner Cable service area buy high speed access from Time Warner, while half buy from AT&T, and if broadband penetration is 70 percent of homes, then you might assume Time Warner Cable's risk would be about 35 percent, or roughly 105,000 customers, which just about matches the Time Warner Cable figures.

If Google Fiber takes share equally from AT&T and Time Warner Cable, and if initial take rates are about 18 percent, one would expect losses of about nine percent for both incumbent service providers. That implies a potential Time Warner Cable loss of perhaps 9,000 high speed access customers.

If half the high speed access customers also buy the video service, then Time Warner Cable also potentially faces the loss of about 4,500 video accounts as well.

Among the other competitors in the Kansas cities market are DirecTV Group, Dish Network Corp., AT&T and SureWest Communications.

Apple's iPhone 5 Won't Work on 4G in Much of Europe

Apple's iPhone 5, launched to great fanfare in the United States on Wednesday, will not work on superfast mobile broadband networks in much of Europe, potentially confusing consumers and setting back the development of 4G services in the region.

Some carriers will benefit. Only Deutsche Telekom and Everything Everywhere in the UK will initially be able to offer the fastest internet access to iPhone 5 users in their markets, because they are the carriers holding the right frequencies.

The iPhone 5 is not compatible with 4G services on the 800MHz and 2.6GHz bands deployed across much of western Europe, including Spain, Italy and France.

Mobile Carriers Might Overcount Data Usage by 5% to 7%

U.S. mobile service providers might overcount end user data usage  by five to seven percent, a new study suggests. University of California Los Angeles computer science researcher Chunyi Peng probed the systems of two large U.S. mobile networks representing 50 percent of all U.S. mobile subscribers.

The researchers used a data-logging app on Android phones to check the data use that the carriers were recording. The carriers were found to usually count data correctly, but they tended to overcount—and hence potentially overcharge—when a person used applications that stream video or audio, and particularly when coverage was weak or unreliable.

1/3 of U.S. Survey Respondents Want an Apple iPhone 5

About a third of survey respondents to a recent Toluna QuickSurveys poll say they want an Apple iPhone 5. The survey also indicated that 56 percent of BlackBerry users are looking to replace their smart phones and 32 percent of Android users are also looking to switch devices. 

Must Telcos Embrace Over the Top Partners?

Virtually every telco in the world sooner or later will have to deal with over the top competition, even if the immediate threats are seen in some "developed" markets, the simple reason being that broadband Internet access makes such competition technologically possible for the first time. 

“Operators need to be more realistic and recognize that the OTT community is a meaningful threat to revenues,” says Nicole McCormick, Ovum senior analyst 

“The erosion of messaging revenues is already a reality in markets such as China and South Korea, and this is a harbinger of similar changes elsewhere," says McCormick. "Operators need to re-evaluate their business models, and decide on the degree to which they should compete or collaborate with content providers and OTT players.”

That also means virtually every service provider sooner or later has to have a strategy about dealing with over the top competition. One common strategy is to essentially fight OTT competition by adding more value to legacy services, using a combination of packaging, pricing and features. 

The less taken path, at least so far, is to actively embrace OTT services. That might not be so rare in the future, though it might be more common for service providers to craft ways of structuring access plans, rather than sponsoring OTT apps directly. 

Some service providers might craft access plans that exempt use of some specific OTT apps from a user usage allocation, for example. Apple FaceTime usage might be one example, but others will try to do similar things with messaging or entertainment video, perhaps offering unlimited usage or generous usage in exchange for payment of a specific app fee. 

Tablets are "Transforming" Content Consumption, Study Finds

Tablets are transforming the way content is consumed and challenging the usage patterns for personal computers, according to J.D. Power and Associates, confirms. 

U.S. tablet owners spend 7.5 hours per week browsing the Internet, watching videos, listening to music, and reading books on their device, compared with spending 9.6 hours per week on a personal computer for the same activities.

Tablet owners who also have a smartphone spend 40 percent more time browsing the Internet on their tablet than on their smartphone. Similarly, they spend 56 percent more time using gaming apps on their tablet than on their smartphone.

All of that suggests the reasons why it would be reasonable to expect a decline in PC sales over the coming years. PCs will be used for work tasks and content creation. Tablets and smart phones will increasingly be used for content consumption. 

Smart Phone Sales Have Been a "Replacement" Market since Before 2010

Smart phone shipments have largely been a replacement market since at least 2010, when roughly two thirds of smart phones were shipped to users who were replacing a smart phone, rather than users who were getting a smart phone for the first time.

In facgt, NPD DisplaySearch has downgraded its 2012 forecast of new purchases from a range of 220 million to 230 million to the new estimate of 177 million. Those figures represent devices sold to new smart phone buyers. 

The volume of replacement phones sold to users who already have smart phones is expected to increase significantly, reaching 567 million in 2012, and nearly double that number by 2016, according to Hiroshi Hayase, NPD DisplaySearch VP.  

Smartphone Shipment Forecast

Source: NPD DisplaySearch Smartphones: Displays, Designs and Functionality

Google Announces Kansas City 1-Gbps Construction Schedule

The Google Fiber Blog now confirms that 180 fiberhoods throughout Kansas City will be wired with ultra high-speed Google Fiber, and also says that includes residents in 89 percent of Kansas City, Kan. and central Kansas City, Mo. fiberhoods.

The first fiberhood to receive Fiber will be Hanover Heights in Kansas City, Kan. Hanover Heights actually qualified within two hours of availability and presently has the highest percentage of homes within a neighborhood that are pre-registered to get Google Fiber. 

Google also now has a rough construction schedule. 

Google Announces Kansas City 1-Gbps Construction Schedule

The Google Fiber Blog now confirms that 180 fiberhoods throughout Kansas City will be wired with ultra high-speed Google Fiber, and also says that includes residents in 89 percent of Kansas City, Kan. and central Kansas City, Mo. fiberhoods.

The first fiberhood to receive Fiber will be Hanover Heights in Kansas City, Kan. Hanover Heights actually qualified within two hours of availability and presently has the highest percentage of homes within a neighborhood that are pre-registered to get Google Fiber. 

Google also now has a rough construction schedule.