Rogers Launches "Suretap" Mobile Payments

Rogers is launching its "suretap" mobile payments service, using near field communications, using NFC-enabled Research in Motion devices (BlackBerry 9900 and 9360), using a “CIBC Mobile Payment" app. Perhaps only in Canada would the lead devices be Research in Motion handsets, not Androids.

Sprint Strategy Could Change if Acquired by Softbank

Sprint's positioning in the U.S. market could change if Softbank manages to acquire Sprint. Consider that Softbank has been known as a carrier with deep experience in "innovative" mobile services including mobile payments, content and the use of analytics to shape consumer experiences.

Japanese and South Korean carriers are considered global leaders in mobile payments and analytics, and Softbank undoubtedly would try to leverage its experience at Sprint. That could mean a bigger profile for Sprint in both mobile payments and mobile commerce, as well as mobile advertising.

Sprint and T-Mobile USA have had different strategies in recent years, but a Softbank change of ownership could shift the profile even more.

Sprint has been a bigger player in the wholesale market. T-Mobile USA has been a bigger player in the "value" segment of the market. Sprint has emphasized "simplicity" with a value twist.

In buying MetroPCS, T-Mobile USA has deepened its exposure to the prepaid segment of the market. It isn't clear whether Softbank would necessarily want to go that direction, as it might make more sense to move in the direction of "software and application innovation." To the extent that Sprint wants to participate in the value segment, it has subsidiary brands for that purpose.

Neither Sprint nor T-Mobile USA initially had access to the Apple iPhone, so neither carrier might have been said to be competing for the iPhone customer, arguably a "premium" segment of the market.

That changed recently when Sprint got rights to sell the iPhone. T-Mobile USA still hasn't gotten such rights. So the more logical direction for Sprint, in the event of a Softbank acquisition, would be in the direction of a premium positioning.

Global Voice Divide Has Closed, Broadband Divide is Closing, As Well

Without minimizing the issues involved, the concern about availability of advanced communication services in undeveloped regions is an “issue,” but not a “crisis.” 

In other words, mobile broadband, fixed broadband and advanced voice and messaging services are not as prevalent in “developing” countries as in “developed” nations. 

But the gaps rapidly are being addressed by mobile service providers, device manufacturers and application providers. 

It wasn’t so long ago (three decades ago, for example) that policy makers seriously were perplexed about how to provide basic phone service to billions of humans who “had never made a phone call.” 

These days, we have an answer. Mobile networks and services have largely erased that “voice access” problem, and the answer to broadband access will be “mobile networks” as well. 

In fact, the global mobile access and mobile broadband “divide” is closing rapidly, one might conclude from the latest data from the International Telecommunications Union. The Measuring the Information Society 2012” report also shows that developing countries now account for lion’s share of mobile growth,

Indeed, in the mobile sector, developing countries now account for the lion’s share of market growth. Mobile subscriptions registered continuous double-digit growth in developing country markets, for a global total of six billion mobile subscriptions by end 2011. Both China and India each account for around one billion subscriptions.

Mobile broadband continues to be the service with the sharpest growth rates. Over the past year, growth in mobile-broadband services continued at 40 percent globally and 78 percent in developing countries.

In fact, there are now twice as many mobile broadband subscriptions as fixed broadband subscriptions worldwide. The price of ICT services also dropped by 30 percent between 2008 and 2011, the report finds. The biggest decrease in fixed- broadband Internet services, where average prices have come down by 75 percent. And the bulk of those changes have come in the “developing” regions and countries. That isn’t to say broadband is “affordable” in most developing areas.  At the end of 2011, the price of a monthly fixed-broadband package represented over 40 percent of monthly gross national income per capita, the report indicates.

In developed nations, the retail price of broadband access amounted to about 1.7 percent of monthly gross national income per capita, in developed economies.

The ITU has set the targeted cost of an entry-level broadband subscription at less than five percent of GNI. And as has been the case for voice services, mobile services will provide the answer, for the most part.

By 2011, nine of the top 20 telecom markets globally in terms of revenues were developing country markets, including Brazil, China, India and Mexico, while developing countries collectively accounted for 35 percent of world telecommunication revenue.

Top 20 telecommunication markets, by revenue, 2010

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Smart Guys Disagree About Whether Internet Really Can Handle Voice Well

The "Internet" never was intended to be the "next generation network" for all communications, despite its apparent suitability for any number of communications tasks.

And though there is a clear and important distinction to be made between the "Internet" and private IP networks, some will dispute the long term efficacy of trying to provide isochronous "real time" services (voice, fast twitch gaming and video telephony, for example) using IP.

Martin Geddes and Dan York, for example, disagree about the ultimate suitability of IP-based networks for real time services, for reasons related to the very protocols themselves. York, for example, thinks newer protocols such as WebRTC will work just fine. Geddes disagrees.

The disagreement boils down to a fundamental difference of opinion on how well IP-based networks can be made to work. In a sense, it is a philosophical debate (with real world protocol implications) over how well real-time services can be made to work over networks that simply never were architected with "real time" services in mind.

Those of you with an engineering bent will understand this as a "class of service" issue, but also fundamentally a protocol and architecture issue as well. Those of you with some memories of past debates will recognize that the "connectionless" and "connection-oriented" approach to networking is a subject that has not fully gone away.

Smaller U.S. Telecom Firms Face Tough Revenue Growth Prospects

An analysis by Fitch Ratings will confirm what you might expect: smaller U.S. service providers are encountering problems generating organic revenue growth. 

In large part, that is because sales of legacy products are slowing. That, in large part, also accounts for the recent merger and acquisition activity wtihin the U.S. cable TV business, Fitch Ratings says. 

"Operators are faced with maturing product and service portfolios and unrelenting competitive pressures," Fitch Ratings notes. As always is the case, when organic growth becomes difficult, public companies will look out of region for acquisition targets, essentially substituting acquired customers and revenue for growth in the existing territories. 

Fitch Ratings says such "grow by acquisition" strategies will be more important in the future. It's hard to disagree with that forecast. 

Softbank Purchase of Sprint Could Have Other Ramifications

A Softbank purchase of Sprint potentially could have further ramifications elsewhere in the U.S. markets beyond its obvious potential for change in the retail wireless space. Sprint, for example, does own a national long haul network that essentially has been harvested as a cash cow, without major investments of the sort a company might make if that assets were "core" and strategic, many would argue. 

So speculation about what might be possible, in the wake of a successful Softbank bid for Sprint, naturally will occur. Some will argue the long haul asset could be sold. The issue then becomes "who would buy," and what would that mean?

Level 3 Communications has been an asset purchaser for quite some time, so Level 3 inevitably would be thought a potential acquirer. CenturyLink, which owns the former Qwest backbone, also would be viewed as a candidate, as CenturyLink also has been a buyer of assets. 

In that event, CenturyLink could migrate customers off the older Sprint backbone and onto the former Qwest network. In addition to an arguably better value proposition for customers, CenturyLink would be able to leverage its own access footprint to lower costs.

And CenturyLink might also be able to secure wholesale access to the Sprint and Clearwire wireless assets on terms more favorable than what is currently possible. 

Enterprise "Bring Your Own Device" Trend is Mostly About Mobile Devices

Cisco's Internet Business Solutions Group recently found that 95 percent of survey respondents work for entities that allow employee-owned devices in some form in the workplace. And most of those devices are mobiles.

In addition, the average number of connected devices per knowledge worker is expected to grow from 2.8 this year to 3.3 by 2014.

Some 84 percent of organisations provide some level of support for employee-owned mobile devices, while 36 percent provide full support for any device, including smartphones, tablets and laptops.

Illustrating the trend toward mobility, 78 percent of white-collar workers in the United States use a mobile device for work, and 65 percent require mobile connectivity to do their jobs.

Amazon CEO Jeff Bezos Confirms Strategy: No Profit on Kindles, Money From Content

Amazon CEO Jeff Bezos recently confirmed Amazon's hardware strategy, namely that it sells devices at "no profit" in expectations it will create new revenue streams based on the sale of content.

"We sell the hardware at our cost, so it is break-even on the hardware," Bezos said. Apple does the reverse, selling content at minimal or low profit as a way of selling more devices, where it makes its money. 

Softbank in Advanced Talks to Acquire Sprint Nextel

Sprint Nextel Corp. hopes a majority investment by Japan's Softbank will help resolve Sprint's debt issues and provide liquidity to finance additional acquisitions in the U.S. mobile market. The deal could flounder if issues related to Clearwire are not resolved, though, as Softbank appears to want control of Clearwire as well.

And there are the regulatory clearances to sort through as well. Despite regulator concern that the U.S. mobile market already is overly concentrated, it is about to become more concentrated, albeit mostly as relates to the shares of market held by T-Mobile USA, which gobbled up MetroPCS, and possibly now a Sprint "sale" to Softbank. 

The big question is whether regulators would eventually allow Sprint and T-Mobile USA to be merged. Some think the concentration analysis used by the Department of Justice and Federal Communications Commission would prohibit even a merger between Sprint and T-Mobile USA, even though that would create a number-three supplier with nearly equivalent subscriber share. 

Many would argue that three carriers is a sustainable number of leading carriers in the U.S. market, and have argued that for years. An analysis by economists at the Phoenix Center argues that the effective use of any available amount of spectrum is more efficient, for example, when there are fewer providers.

Mobile Revenue is Slowing in Western Europe, But Why?

There are growing signs that the mobile service provider business is facing a structural slowdown in Western Europe. Researchers at Analysys Mason, for example, say Western Europe's fixed network and mobile service providers now see declining revenue.

Consumers also are allocating a smaller percentage of their incomes to communications services.

Separately, STL Partners reports that the mobile industry’s combined revenues from voice, messaging and data services in the United Kingdom, France, Germany, Spain and Italy will drop by nearly 20 billion Euros, or four percent per year, in the next five years, and by 30 billion Euros by 2020. says.

There is a reason to suspect that use of over the top applications for voice and messaging have something to do with the declines. That is at least partly true.

More than 45 percent of customers with a smart phone use some form of instant messaging  or over-the-top (OTT) messaging app in addition to (and in some cases instead of) traditional text messaging (SMS), according to Analysys Mason. The data was collected from more than 1000 smartphone users in France, Germany, Spain, the United Kingdom and the United States.

In addition, 20 percent of consumers use a VoIP app, and 20 percent of those consumers use it more than traditional voice services.

About 20 percent of the respondents ussed the “WhatsApp Messenger” at some point over the 60 days of usage that were tracked as part of the story.

But it would appear that many users make very light use of over the top voice or messaging, and very few consumers have abandoned carrier voice and messaging completely. Just 1.7 percent  of the panel used IM or OTT messaging without using carrier text messaging at all.

And Analysys Mason says that only 16 percent of all panelists in the study use VoIP apps at all. The perhaps unwelcome implication is not that carrier services are suffering from a shift of demand to rival services, but that a possibly more worrisome trend is developing, namely that people are simply choosing to use mobile services less than they have in the past.

10 Telco Myths

Telco 2.0's "10 misleading myths" in telecom. 

Western Europe Fixed and Mobile Service Revenue is Dropping

Researchers at Analysys Mason say Western Europe's fixed network and mobile service providers now see declining revenue. Consumers also are allocating a smaller percentage of their incomes to communications services. 






Retail spend per capita per month by service type, USA and Western Europe, 2010 and 2011 [Source: Analysys Mason, 2012]

Verizon Wireless to Turn of Its 2G and 3G Networks by 2021

Verizon Wireless plans to decommission its 2G and 3G networks by 2021, says Aparna Khurjekar, Verizon vice president of global strategy for M2M. 

Western Europe Mobile Revenue Will Drop 4% Per Year to 2020

The mobile industry’s combined revenues from voice, messaging and data services in the United Kingdom, France, Germany, Spain and Italy will drop by nearly 20 billion Euros, or 4% per year, in the next five years, and by 30 billion Euros by 2020, says STL Partners.

You can call that an example of the product life cycle. You can point to the impact of competition. But at that rate, those mobile service providers will lose half their current revenue within a decade. 

Forecast Mobile Telco Revenues in Euro 5 Economies

Sprint Waiting on Any Potential MetroPCS Offer

Sprint Nextel Corp. seems to be holding off on any immediate counterbid for MetroPCS Communications, at least in part because it wants to spend more time examining the particular terms for the planned sale to T-Mobile USA, Bloomberg reports. 

Also, Sprint might have some months before it would have to submit a formal offer. Sprint might be betting that MetroPCS could drop in value before a formal bid.