Google "Will Discuss" Owning a Mobile Network

From time to time, speculation arises about whether any of the four leading "Internet" firms in the U.S. market (Apple, Google, Facebook, Amazon) would seriously examine ownership of a branded mobile network. Half of those firms already are in the smart phone business, three are in the tablet business and Facebook, off and on, is rumored to be considering producing its own smart phone.

So is Google, for example, looking at owning a wireless network? "I'm sure we will discuss this," says Google Chairman Eric Schmidt. That doesn't necessarily mean Google will act.

But Google appears to believe that abundant spectrum could become a reality. If that happens, the barriers to a branded Google mobile service would seem less formidable.

"The current spectrum shortage [currently facing the mobile industry] is real, but it's an artifact of a licensing and regulatory error," said Schmidt. "New technology allows there to be lots of spectrum, far more than you could use."

NFC Pessimism Grows, and Might be a Good Thing

Juniper Research has revised its forecasts for the global near field communications market, significantly scaling back its growth estimates for the North American and Western European markets. In some ways, that might be considered a "good" thing, to the extent that it follows a common pattern of technology adoption.

What is "good" about deflated hopes is that such periods seem "always" to happen, and are just a milestone on the way to eventual adoption on a fairly wide scale. So the argument is that dashed initial hopes mean the market is moving in the way one should expect: high hopes, disillusionment, and finally adoption.
The most significant change to the Juniper Research forecast is the amount of transaction activity NFC devices will drive, as the new forecast reduced the number of NFC devices in use only slightly.

By 2017, global NFC retail transaction values are now expected to reach $110 billion in 2017, significantly below the $180 billion previously forecast. 

Such revisions are not unusual in the predictions business, especially not for a brand new market that depends on many changes in the ecosystem.

Apple’s decision to omit an NFC chipset from the iPhone 5 has reduced retailer and brand confidence in the technology, leading to reduced point of sale) rollouts, for example.
This in turn will lead to lower NFC visibility amongst consumers and fewer opportunities to make payments, threatening a cycle of “NFC indifference” in the short term, Juniper Research believes.

“While many vendors have introduced NFC-enabled smartphones, Apple’s decision is a significant blow for the technology, particularly given its previous successes in educating the wider public about new mobile services” says Dr. Windsor Holden, author of the study.

The report found that Apple’s move would impact most dramatically on markets in North America and Western Europe, where transaction values would exhibit a “two year lag” on previous forecasts as retailers delay POS investments.

Conversely, retail transactions in NFC’s heartland in Japan and Korea are likely to experience little or no impact from the Apple decision.

None of that is terribly surprising. Though the 2011 KPMG Mobile Payments Outlook, based on a survey of nearly 1,000 executives primarily in the financial services, technology, telecommunications, and retail industries globally found that 83 percent of the respondents believe that mobile payments will be mainstream by 2015, even the moset astute industry observers tend to overestimate early adoption of a major new technology, while underestimating long term impact. 



Analysts at Gartner, for example, use a model of how expectations for significant new technologies running in a predictable cycle. What the cycle suggests is that expectations nearly always (always, according to the model) run ahead of marketplace acceptance.

What the Gartner hype cycle suggests is that expectations for mobile payments using near field communications are at a point where we can expect five to 10 years to elapse until NFC actually begins to make serious inroads as an adopted mainstream technology. The emphasis probably is important to note: “begins.”

In fact, Gartner's Hype Cycle now expects it will take five to 10 years before NFC is in widespread and mainstream use. Gartner's latest expectation likewise is that cloud computing and machine-to-machine applications will not be mainstream for another five to 10 years as well.

But new technologies historically take some time to reach 10 percent, then 50 percent, then virtually ubiquitous adoption. To be sure, there has been a tendency for new technologies based on digital and electronic technology to be adopted faster. But a decade period to reach perhaps 10 to 20 percent adoption is hardly unusual.

That is not much of an issue for point solutions like computers that can be used without lots of additional change in infrastructure. That is not true for highly-complex ecosystems such as payments, though.

ATM card adoption provides one example, where "decades" is a reasonable way of describing adoption of some new technologies, even those that arguably are quite useful.

Debit cards provide another example. It can take two decades for adoption to reach half of U.S. households, for example.

If Gartner analysts are right about the near field communications "hype cycle," we should continue to see "disillusionment" expressed about near term prospects for NFC. The reason is that Gartner now sees NFC at the "top" of its hype cycle, the point at which overly-optimistic projections face the reality of an extended period of development, before something "useful" actually emerges.

Internet TV, NFC payment and private cloud computing all are at what Garner calls the "Peak of Inflated Expectations," which is always followed by a period where the hype is viewed as outrunning the actual market. That suggests NFC soon will enter a phase where expectations are more measured.

You Can’t Easily Sell “Unified Communications” to Small Business

Service providers arguably aren’t terribly good at selling “unified communications” to small business owners, but probably not because, as UC retailers, they are especially ineffective communicators.

No, the problem is that UC is tough to explain, tough to comprehend, tough to envision, quite often.

It’s a little bit like the old adage: people don’t buy drills, they buy holes.” Some of you are veterans of the IP telephony business, and can remember what it was lke trying to sell a “hosted PBX” service to small business prospects. Most will probably say, if they are honest, that most potential buyers didn’t immediately “get it.”

There is a reason most tier-one service providers split sales into “enterprise” and “mass markets” efforts. Small businesses are more like consumers than enterprises in terms of how they buy technology products. Try explaining “hosted PBX” to a consumer who is not in the technology business. Small businesses might not be too different.

That might still be true about some of the newer features and value propositions. Datavo, a competitive local exchange carrier operating in Southern California, is the first announced user of the Metaswitch Networks “Accession Communicator” platform, which turns a hosted PBX solution into a mobile solution.

The way Datavo sells the new capabilities illustrates quite a lot about how small business customers understand value, and how little they understand industry jargon.

Really, they don’t get “unified communications.” They don’t really get “hosted.”

“The concept really is not easy to convey in a brochure,” says Rhaphael Tarpley, Datavo’s chief operating officer, in large part because customers really do not understand “unified communications,” even if “that is what they actually want and need,” says Tarpley.

“They don’t get ‘hosted solution,’ but they do understand ‘cloud’ or ‘Internet,’ and that’s the way Accession features can be sold, Tarpley says.

Perhaps oddly, the metaphors tend to be “consumer” like references. People relate to their devices and their apps. And, perhaps oddly, the idea that invoking business office features from their office phones is something made possible by a downloaded Google Play or Apple iTunes app just makes sense to people.

Prospects understand the notion that the features are enabled by a free app downloaded from iTunes or Google Play, Tarpley says. That seems familiar and tangible.

They don’t necessarily “get” the notion of invoking features from a web portal. They seem better able to understand a Google Play or iTunes app download.

The point is that it is hard to sell “unified communications.” hosted IP telephony or mobile UC to prospects who struggle to understand it. It just isn’t intuitive. But they seem to grab the "Internet" and mobile app metaphors much more easily. So don't sell "UC."

Tell prospects they can download a free app from iTunes or Google Play that allows their mobile phones to use the features of their business phone service, plus video calling, plus starting a call on the mobile and finishing on the business phone, or vice versa. Later you can tell then how you do it.

There's a Long Tail (Pareto Distribution) for App Store Developers

A small number of developers, almost entirely game companies, continue to generate the majority of revenue at the leading app stores - Apple’s App Store (iPhone only) and Google Play, according to an analysis by Canalys.

Canalys estimates that just 25 developers accounted for 50 percent of app revenue in the United States in the Google Play and Apple iTunes stores during the first 20 days of November 2012. Between them, they made $60 million from paid-for downloads and in-app purchases over this period.

That is a classic Pareto distribution, sometimes called a "Long Tail" or the "80/20" rule. The idea is that, in any market, or any natural world distribution, a small number of instances account for a highly disproportionate share of the total cases. 

In business, that might be also called the law or rule of three. It's the same idea: a small number of actors, instances, companies or objects have a disproportionate share of total instances. 

Also, Of the top 25 grossing developers, all bar one (popular music service Pandora with its Pandora Radio app) are game developers. 

Mobile Operators Say Small Cells "Essential"

About 98 percent of mobile operator respondents surveyed by Informa Telecoms and Media  believe small cells are essential for the future of their networks. There are now 46 small-cell deployments by operators, including nine of the top 10 operators by revenue globally, according to Informa Telecoms and Media.

Somet 55 percent of the mobile operator respondents are most interested in public access deployments over the next 12 months, while 35 percent say enterprise applications are of high interest.

Some 49 percent of operators said their greatest concern surrounding outdoor metro deployments are the planning issues (finding suitable sites, power), followed by backhaul challenges, noted by 35 percent of respondents as a challenge.

The survey also found that Wi-Fi was deemed to be complementary to small cells with deployments of both expected to take place in parallel.

In practice, it sometimes will be hard to clearly delineate a small cell access from Wi-Fi hotspot access. Vodafone Greece provides its customers with a free data service when connected to certain public access small cells in retail locations. In that scenario, the network might be “mobile,” but the charging is that of “free public hotspot.”

“Our research shows that operators now regard small cells as essential to the future of their networks,” says Dimitris Mavrakis, principal analyst at Informa Telecoms & Media.

Millennials are Gadget Nuts

The November 2012  Scarborough Research study that surveyed 210,000 US consumers ages 18 to 29, illustrates what gadget nuts they are.  High-definition televisions had the highest rate of ownership among this group at 73 percent, followed by smartphones at 61 percent. 

And while only 17 percent of Millennials owned a tablet, it topped the list of gadgets that they planned to buy in the next year, at 11 percent.

These digital natives have taken to the hyper-connected world of social media with enthusiasm, says eMarketer. 

Beyond simply logging on to view their feed, six in 10 respondents had visited a friend’s page or profile during the previous 30 days, while 52% had commented on a friend’s post and 49% had updated a status. Those participation levels easily outpaced email and messaging activities, performed by 48% of respondents.

A March to April 2012 survey from the Pew Research Center’s Internet & American Life Project found that those ages 18 to 29 were more likely than any other age group to engage in real-time mobile activities ranging from coordinating social gatherings to reviewing a business or restaurant.

How Syria Turned Off the Internet, Why UN Must Not Gain Control

On 9 November 2012, between 1026 and 1028 (UTC), all traffic from Syria to the rest of the Internet stopped., according to CloudFlare.

The Syrian Minister of Information is  reported as saying that the government did not disable the Internet, but instead the outage was caused by a cable being cut. He's lying. 

The exclusive provider of Internet access in Syria is the state-run Syrian Telecommunications Establishment. Their network AS number is AS29386. The following network providers typically provide connectivity from Syria to the rest of the Internet: PCCW and Turk Telekom as the primary providers with Telecom Italia and TATA for additional capacity. 

When the outage happened, the BGP routes to Syrian IP space were all simultaneously withdrawn from all of Syria's upstream providers. The effect of this is that networks were unable to route traffic to Syrian IP space, effectively cutting the country off the Internet.

Syria has four physical cables that connect it to the rest of the Internet. Three are undersea cables that land in the city of Tartous, Syria. The fourth is an over-land cable through Turkey. In order for a whole-country outage, all four of these cables would have had to been cut simultaneously. "That is unlikely to have happened," CloudFlare says.

CloudFlare diplomatically says they "don't believe our role is to take sides in political conflicts." 

"However, we do believe it is our mission to build a better Internet where everyone can have a voice and access information," CloudFlare also says.

Indeed. And that's why allowing governments to control the flow of information on the Internet is such a bad idea. 

Half of EU Homes Can Buy 30 Mbps or Faster Internet Access

About half of all European Union households can buy high-speed Internet access of at least 30 Mbps, a study conducted by Point Topic, and commissioned for the European Union, finds. 

Docsis 3, generally capable of providing 30 Mbps service, reaches 37 percent of homes.  VDSL, which is included in the DSL figures, is available for purchase by 21 percent of homes, while fiber to the home is available to 12 percent of homes.

The study also estimated that 95.7 percent of EU homes can buy service of at least 2 Mbps. Digital subscriber line (DSL) networks reach about 92 percent of households. Cable modem service reaches 42 percent of homes.  Fixed wireless (WiMAX) has reach of under 15 percent.

As you would expect, rural areas are much less likely to have the ability to buy access of at least 30 Mbps. About 78 percent of rural EU homes have access to standard broadband at 2 Mbps but only 12 percent have access of at least 30 Mbps.

Triple-Digit Mobile Broadband Growth to 2016, Globally

Qualcomm provides one way of illustrating mobile broadband growth, in terms of subscribers and connections: triple digit growth between 2011 and 2016.

Consumer Time Spent with Mobile Apps Grows 120%, Year over Year

Nielsen has released new statistics on social media usage and other matters. Mobile app usage is up 120 percent since 2011, though time spent with mobile Internet is an order of magnitude less than time spent interacting with the Internet from a PC. 

People do spent significantly more time using social apps from their mobiles and tablets, though. 
 

Wi-Fi Will Have to Get Faster

According to some estimates, 90 percent of the tablets sold in the United States use Wi-Fi connections rather than cellular.

Today, the average user carries three mobile devices, and by 2016, they will carry closer to seven, according to ZK Research. Wi-Fi networks will have to get faster, it is reasonable to assume. And most studies show a clear preference by users for Wi-Fi access when using their e-readers, notebook PCs, tablets and smart phones.  

What Will Apple Do "After" iPhone?

Gene Munster of Piper Jaffray says Apple's history of cannibalizing its own businesses will lead Apple even to cannibalize the iPhone and iPad, its current and apparently next big revenue drivers. 

Munster predicts consumer robotics, wearable computers, 3D printing, consumable computers, and automated technology might someday be the products Apple is known for creating. 

Text messaging turns 20

The first SMS was sent as a Christmas greeting in December 1992, the Guardian notes. Adoption took a while, and was not terribly widely used in all markets. In fact, text messaging began to get serous traction around the year 2000. So it was eight years before lots of people started to use the new too.. 

That's worth keeping in mind: even the most-useful consumer innovations can take some time to become widespread.

As a rule of thumb, an innovation that becomes widely used starts to grow much faster once it reaches about 10 percent penetration. But how long it takes to reach 10 percent can vary widely. 
 

Looking only at AT&T, you can see that text messaging volumes did not actually begin to build until after 2007, for example, despite having been available for more than a decade prior. 




And even in the United Kingdom, where consumers adopted the text messaging habit earlier, you can see that dramatic growth happened sometime around 2000. 

Roughly the same trend can be noted for global usage. Growth accelerated only around 2000. 

Will Service Providers Integrate Public Hotspot Access in a More Active Way?

Up to this point, Wi-Fi has been important for high-speed access providers mostly in an indirect way. Generally speaking, public hotspots have been an amenity offered to paying customers (either fixed or mobile broadband). The business value then is “stickiness,” as the perceived value of a particular offer is higher.

But that might change, with public Wi-Fi possibly becoming a “for fee” service, according to Monica Paolini, owner of Senza Fili Consulting. The extent of end user demand for such changes is unclear. Much would depend on new additional value.

But a number of developments might propel the change. Increased use of VoIP applications over Wi-Fi means low latency and jitter performance is more important, and “best effort” public hotspots might not work well enough to suit all users. A quality-assured approach would help. That might create a new level of value that service providers might be able to charge for.

Business customers might be logical customers, as has generally been the case for other third-party public Wi-Fi networks. Among other advantages, shifting traffic to Wi-Fi hotspots would help enterprise information technology managers avoid expensive data overage charges.

Business Wi-Fi provider iPass, for example, projects it will offer a vastly-bigger network by 2015. 



The advent of fourth generation Long Term Evolution networks might have other unintended consequences. Up to this point, people generally have understood that a public hotspot will offer access speeds greater than 3G.

That might not generally be true for 4G networks. That might limit the amount of traffic offloading, which, in turn, might increase congestion on the LTE networks.

Also, some lighter users, and that is likely a clear majority of smart phone users, don’t necessarily have any incentives to switch to Wi-Fi hotspot access.

Heavier users will have incentives, as use of Wi-Fi preserves data allowances. So some think a quality-assured access, even for a fee, might be feasible and perhaps necessary. By 2015, Cisco projects that as much as 46 percent of all Internet traffic will use a Wi-Fi connection.


The value could be that the service provider mixes and matches acces to provide the best performance. Part of the value might also include applying such mechanisms only when the subscriber is not in danger of exceeding a mobile data allowance. Alternately, such access decisions could be set by the consumer to apply only when the user is on a business trip or requires absolute best performance.

Users might also see value if they are allowed to apply their own policies, such as watching video only on Wi-Fi, but IP voice always over the best available connection.

Price-sensitive subscribers might also want an automatic switch to Wi-Fi access at all times.

The point is that there are growing reasons to integrate and manage public Wi-Fi, private Wi-Fi and mobile network access in a more deliberate way.

EC Proposes Higher Wholesale Access Prices

European Commission telecom regulators apparently are circulating a draft proposal creating a new regulatory framework intended to spur faster investment in next generation fiber to the home networks. The general outlines appear consistent with approaches taken earlier by U.S. regulators that had to balance “investment” and “competition” incentives to encourage more investment in fiber to home facilities.

Among the key proposed changes is an increase in prices network owners can charge competitors who lease access circuits, network elements and infrastructure, as well as a suspension of mandatory wholesale price rules for the new fiber to home networks.

The rules would first raise revenue for the incumbents leasing capacity to rivals, and then allow setting of commercial rates for future access to the fiber to home facilities. Both moves would aim to bolster incumbent finances while creating clearer incentives for investing in fiber to home networks.

The plan illustrates once again how telecom regulators can directly affect competitor revenue and cost assumptions and business plans.

Under the new plan,, monthly rental access prices per customer would range between eight and 10 euros by the end of 2016. That would mean higher charges paid by competitive carriers  in 10 EU countries including the Netherlands, Austria, Poland, Hungary and Estonia, which currently offer rates below eight  euros.

On the other hand, Ireland, which currently has the highest monthly cost at 12.41 euros, Finland, Britain and Luxembourg would have to bring their prices down.

The EC has been looking at wholesale rates as part of a wider effort to create incentives for investment in faster fiber to home networks. The investment problem, up to this point, has been that incumbent carriers have seen little reason to invest heavily under circumstances where the fiber network rates are highly regulated.

Of particular concern are rules that set wholesale access rates too low, thereby reducing the revenue earned from selling competitors wholesale access to those new networks.

The very same argument occurred in the U.S.market, for precisely the same reasons, with essentially the same format adopted.

In the U.S. market, after a period of mandatory and significant wholesale discounts, wholesale access to copper and all fiber facilities was deregulated, allowing market rates to be set by contracts, rather than relying on mandatory price rules.

The issue in the U.S. market, as in the EC, was that incumbent carriers argued they could not upgrade to fiber facilities because the steep discounts did not allow them to earn a reasonable return on invested capital.

In North America and Europe, it increasingly seems as though regulators can have “more competition” or they can have “ more investment,” but not both, in the fixed network realm.

In order to reach the European Community’’s “Digital Agenda” goal of at least half of EC residents able to access broadband at 100Mbps or more by 2020, the EC has been looking at how the regulatory environment can support and stimulate investment in next-generation networks. The draft proposal is the result of that investigation.

Essentially, regulators have two fundamental choices: mandate aggressive wholesale rules to spur competition, or allow service providers to “keep” the potential revenue from investment in new facilities by relaxing wholesale obligations.

In the U.S. market, after an extensive experiment with mandatory wholesale access with hefty discounts, triggered by the Telecommunications Act of 1996, regulators had to make a choice.

The major facilities-based access providers essentially signaled that they were not going to make major investments in new optical infrastructure so long as mandatory access with hefty discounts remained policy, especially when a rival broadband network, already operated by a local cable operator, already was in business, without any mandatory access obligations at all.

Eventually, to the chagrin of competitors, the Federal Communications Commission reversed course, allowing incumbents to charge market-based rates, in return for heavier investment in new optical access.

Historically, European regulators, operating in markets where there had not been robust deployment of cable broadband, favored heavy use of wholesale access.

But in a significant “u turn,” European Community telecom commissioner Neelie Kroes backed off a plan to increase the discounts offered to third parties who buy wholesale access from incumbent European Union service providers.

Clearly, such a plan would have further reduced carrier incentives to invest in new fiber plant. For competitors, the new rules also would raise operating costs, making it harder to compete.

But that's the dilemma regulators face: encouraging competition by mandating lower wholesale rates also decreases incentives for facilities owners to invest in new optical plant.