Why Maps Matter to Apple

Apple's recent introduction of its own "maps" app didn't go as well as Apple, or its users, would have preferred. 

The reasons why Apple wanted to control its own app are clear enough, though. 

Most people use map apps (about 89 percent of respondents to a Yankee Group survey say they have done so). 

More important, though, are the potential advertising implications. Mobile ads associated with maps or locations are estimated to account for about 25 percent of the roughly $2.5 billion spent on mobile ads in 2012, according to Optus Research, up from 10 percent in 2010. 

That is expected to grow as the number of location-aware software apps grows. But more than ad revenue, Apple is going after the map market to have more control over a key asset in the widening smartphone war. 

Maps are related to "location," and location is the key to the value of mobile advertising and promotion. 

Google Maps is used by more than 90 percent of U.S. iPhone users. So engagement is an issue as well. 

Many Telcos are Delveraging, Softbank Will Have to Load Up on Debt to Buy Sprint

Most leading telcos in Western Europe now are attempting to delverage and clean up balance sheets. But Softbank, which had debt load issues of its own, and cleaned them up, now faces the possibility of taking on a bigger debt load again to buy Sprint and control Clearwire.

It's a risk Softbank appears to be willing to take in pursuit of growth Softbank cannot find in its home market.

Mobile Service Providers Will Lose $54 Billion Worth of Text Messaging Revenue by 2016

Ovum forecasts that by 2016 mobile operators will have lost $54 billion in text messaging (short message service, or SMS) revenues from over the top social messaging services on smart phones.

That would be more than double the $23 billion mobile service providers are expected to have lost by the end of 2012. 

Ovum analysts believe that collaboration with handset manufacturers is imperative if operators are to remain relevant and competitive in the messaging industry.

Service providers in Europe and Asia-Pacific will be affected the most, Ovum says. What remains unclear is whether Rich Communication Suite (RCS) will allow operators to slow the rate of displacement. 

About 75 percent of Dutch smart phone owners have WhatsApp installed on their device, with more than 80 percent of these using the app at least once per day, Ovum notes. 

This translates into a presence of more than 5.5 million smart phones in the Netherlands. Among iPhone users, WhatsApp has about 90 percent penetration. 

Can Rural or Small Mobile Companies Really Compete?

It remains a challenging prospect for any smaller or non-dominant mobile service provider to compete with the likes of AT&T, Verizon Wireless, Sprint or T-Mobile USA, for lots of reasons. Still, some 62 percent of independent telcos surveyed by the National Telecommunications Cooperative Association say they are now providing wireless service to their customers.

Of course, in a scale business, the respondents worry about competition with the larger mobile companies, of course. 

Some 92 percent of respondents cited competition from national carriers as their chief concern. Negotiating roaming agreements also remains challenging, with 69 percent of respondents saying that negotiating data roaming and in-market roaming agreements with other carriers is moderately to extremely difficult.


About 38 percent of the respondents not currently offering wireless service indicated 
they are considering doing so.  Some 53 percent have previously considered offering 
wireless service and deemed it not feasible, while nine percent have never considered offering wireless services. 


Survey respondents serve an average (mean) of 9,968 wireless subscribers with an average of 38 cell sites.  A few larger respondents skew these numbers upwards, though. 

The median number of wireless subscribers is 1,601 and the median number of cell sites is nine.  

The average customer’s monthly wireless bill is between $50 and $60, and the typical 
customer uses just over 600 minutes monthly

NTT Docomo to Launch Global Mobile Wallet in 2013

NTT Docomo will be launching its mobile wallet service on a global basis in 2012, in partnership with Japan's MasterCard, allowing NTT Docomo customers to make purchases at merchants supporting MasterCard's PayPass terminals.

The service will leverage a new generation of mobile phones that support both near field communications and the embedded Sony FeliCa chips used to power NTT Docomo's  existing Osaifu-Keitai service.

Want More Efficient Spectrum Use? Don't Tax It

Efforts to repurpose spectrum (either using intra- or inter-firm transfers) face a number of significant hurdles, including primarily the need for government approval. That often means concessions that essentially are a tax on the process of moving spectrum from lower-value purposes to higher-value purposes.

In its Taxation by Condition:  Spectrum Repurposing at the FCC and the Prolonging of Spectrum Exhaust, Phoenix Center economists. discuss how the regulatory process often acts like a “tax” on private transactions in the form of value-extracting mandatory and voluntary conditions.  

Conditions are a form of a tax (or operate in the same manner as a tax) in that they reduce the value of the transaction to the parties involved.  

When viewed as a tax, the implications of the regulatory process become readily apparent.  When you tax something: (1) you get less of it; and (2) you can affect what types of transactions you get.  

“Taxing” efforts to move spectrum to higher-valued uses is a particular bad policy when facing a spectrum shortage, the  Phoenix Center argues.

"PayPal is not a Mobile Wallet Company"

With the caveat that "what a thing is" is different from "what a thing does," and with the further caveat that marketers and public relations personnel have the job of trying to shape and define companies and their products, it is perhaps noteworthy that a PayPal "spinmeister" argues that PayPal is "not a mobile wallet or mobile payments company."

To be sure, that is completely true in the "what a thing is" sense. PayPal has been in the payments space for a long time. It can be used in a "mobile wallet or mobile payments" application. 

In part, any PayPal insistence that it is "not just" a mobile payment or mobile wallet" company is correct. But the language might arguably also be called an attempt by PayPal to separate itself from many other firms that provide some of the same functions as PayPal.

That tactic is an old one. Whether true or not, marketers often try to use language to position products and companies as "more comprehensive" or somehow "qualitatively different" than those of competitors. 

But there might be something else at work, as well. PayPal's real objective is to extend its operations and revenue from the online space to the "real world" retail space. 

"We are on the brink of another game changing revolution that will change shopping more in the next few years than the Internet changed retail because it will affect all our purchases," says Anuj Nayar, PayPal  senior director, global communications. 

"At PayPal we have had a digital wallet for 14 years, we are just updating it to let our customers shop wherever they want, not just online."

So the possible importance here is a shift of much market thinking from "payments" or "mobile" to "commerce." 

U.S. Mobile Customer Data Consumption Up 104%

Americans used more than 1.1 trillion megabytes (MB) of data from July 2011-June 2012, which was an increase of 104 percent over the previous 12 months according to CTIA - The Wireless Association. 

The survey also revealed that smart phone adoption continues to grow impressively. As of June 2012, smart phones made up 131 million (or 41 percent) of the almost 322 million wireless subscriber connections. 

The number of tablets increased to 22 million, which is almost 17 percent of all wireless connections. In addition, there was an almost 10 percent increase in prepaid subscribers, from 68.4 to 74.9 million or 23.3 percent of the 322 million U.S. wireless subscribers.

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

*

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.