India to Launch Major Cable TV-Based Broadband Initiative?

Of India's 100 million Internet users, about 12.5 million have broadband. India's government seems to want to change that, and seems to want to rely on cable TV networks that already reach about 90 million Indian households, Businessweek reports.

A new telecom policy that would ease foreign investment rules for cable TV providers of broadband access seeks to boost the number of broadband connections to 175 million, by 2017, reaching 600 million by 2020.

The new policy might not have immediate implications for rural broadband, though. Right now there are about 260,000 broadband connections in rural India, though 800 million people live in those rural areas, including at least 600,000 villages. 

One has to assume wireless is key to any future progress, as the cost of  building a kilometer of fixed network plant costs about $60,000 to $70,000. Those costs have tended in the past to encourage experiments with kiosks  and other methods of getting connectivity to a village. 

Separately, the Indian government is building a $4.5 billion National Optic Fiber Network (NOFN), to take broadband connectivity to the villages by 2014. But some earlier efforts have failed. 

Called Bharat Broadband, the project will connect 250,000 self-governing bodies at the village level across the country. 

Though Indian rural Internet access might be as low as two percent of households at the moment, we should expect to see enormous changes over the next 10 years.

The number of users is expected to climb from 120 million to 350 million by 2015, for example,  according to McKinsey, largely in urban areas, as you would expect. 

According to the Internet and Mobile Association of India and Indian Market Research Bureau there are 38 million people in rural India who have used the Internet at least once in their life, and this number is expected to reach 45 million by December 2012.

That would boost rural India Internet penetration  has grown from 2.6 percent in 2010 to 4.6 percent in 2012. 

At least 90 percent of Indian villages have inadequate communications facilities, according ot the World Bank. "With few exceptions, their telecommunications connection to the outside world amounts to one public telephone," the World Bank has said. 

Sprint Seeks to Buy Rest of Clearwire for $2.1 Billion

Sprint Nextel Corp. has offered $2.90 per share of Clearwire Corp. as part of its effort to acquire the roughly half of Clearwire it does not already own, Bloomberg reports. 

The $2.1 billion bid is among the most-significant early developments since the Softbank purchase of Sprint for about $70 billion. 

Many observers might speculate that Sprint needs better control over the Clearwire assets if it fact it plans to launch a disruptive attack on the U.S. mobile market, as Softbank itself did in Japan. 

Data services are likely to be the focal point for any such effort, for obvious reasons. Voice and messaging services are a declining source of revenue for most providers, and Softbank already earns perhaps 66 percent of its Japanese revenue from data services. 

Add in the possibility of enticing consumers to buy subscriptions for tablets and other devices and ultimate mobile data penetration of three hundred to five hundred percent is conceivable, a claim Verizon Wireless itself made years ago, referring to machine-to-machine services as an example. 

It already is clear that Softbank has vaulted into the top ranks of global mobile service providers, measured either by subscribers or revenue. 


Some believe, based on past evidence, that Softbank will try to disrupt the U.S. mobile market, probably using pricing in some way. 

The reason for thinking Softbank will launch a pricing war, or perhaps better stated, a “value-price” war, is that it was what Softbank did earlier in the Japanese market. 

That might lead some observers to speculate about whether the Softbank-owned Sprint will try to become the “Free Mobile” of the U.S. market.In France, the Illiad-owned “Free Mobile” has disrupted the French mobile market. 

Already, FreedomPop is trying to disrupt mobile broadband pricing, as the Illiad Free Mobile effort already has done in the French mobile market.

In 2006, when Softbank decided to buy Vodafone KK assets, it likewise was criticized in some quarters for undertaking a risky gambit.

Some will argue Softbank is taking another huge risk by entering a country where iit has no previous operating experience, and by assuming a huge new debt load, after only recently shedding a similar debt load.

Softbank argues it is a reasonable risk, and that its prior experience taking on NTT Docomo and KDDI show it can compete in a market dominated by larger service providers.

Softbank, many believe, will use the same strategy it used in Japan, which some would describe as providing a large number of complementary features or services to create a “sticky” relationship with the end user.

Others will point to the pricing strategy. In Japan, Softbank’s 2006 acquisition of the Vodafone unit was not universally considered wise. 

But in just one year, Softbank managed to boost its subscriber base from 700,000 in fiscal 2006 to 2.7 million. By the beginning of 2008, Softbank had grabbed 44 percent of Japan’s new mobile subscribers, well ahead of KDDI’s 35 percent and NTT-DoCoMo’s 11 percent.

Some think Softbank will be willing to launch a price war, as well. 

In Japan, Softbank was willing to sacrifice voice average revenue per unit to make market share gains.Back in the 2006 to 2008 period, Softbank was willing to accept a $13 a month ARPU decline to build market share.

Spectrum will among the assets Softbank will be able to leverage. Hence the presumed need for full control of Clearwire.

Between 2000 and 2010, Global Internet Users Grew 2-3 Orders of Magnitude, Globally

Growth of global Internet users of about eight percent on 2011 might not sound like too much, given the 2000 to 2010 rates of growth. After all, Internet users in Africa grew 2357 percent between 2000 and 2010. 

In Asia, growth was a more modest 622 percent. And global growth masks much-higher growth rates in some regions and areas. India's 2011 growth rate was 38 percent; Indonesia's growth rate was 22 percent; while in the Philippines Internet users grew 44 percent. 

 

The Mobile VoIP "Problem"

Analysts at Juniper Research now estimate there will be about one billion users of mobile VoIP apps and services by about 2017. 

For some, that is an opportunity, though the magnitude of the opportunity might be questionable. 

For mobile service providers, mobile VoIP is probably more a problem than an opportunity.

"As with Skype on the desktop, only a very small proportion will pay for the service," Juniper Research says.  “Wi-Fi mobile VoIP is potentially the most damaging of all VoIP traffic, as it bypasses the mobile networks altogether."

“We forecast that mobile VoIP over Wi-Fi will cost operators $5 billion globally by 2015,” says Anthony Cox, Juniper Research analyst.

In fact, a recent forecast by Visiongain suggests 2012 mobile VoIP revenues will reach only about $2.5 billion, globally. 

“Many subscriber sign up to an OTT service without ever planning to pay a cent for it, and some industry players do not have a short-term revenue model at all,” says Cox.


Still,  researchers at Analysys have in the past predicted that, as early as 2012, mobile VoIP services would generate revenues of $18.6 billion (EUR15.3 billion) in the United States and $7.3 billion (EUR.6.0 billion) in Western Europe, compared with fixed VoIP revenues of $11.9 (EUR9.8 billion) in the United States and $6.9 billion (EUR5.7 billion) in Western Europe.



It seems doubtful those levels of revenue have been realized, though. In fact, analysts seem to have overestimated the revenue mobile VoIP would represent, rather consistently. 

In fact, though fourth generation networks and Long Term Evolution virtually require that carriers embrace IP-based voice, the business model is less certain, and could "potentially accelerate the decline in overall voice revenues," says Cox.

The question is how fast new and alternate revenue streams, such as advertising or premium features and services, can gain acceptance.

Asia-Pacific Region Will Lead Service Provider Revenue Growth

Though Brazil, Russia, India, China and South Africa have been leading economic and communications adoption growth for much of the past decade, it now appears that those nations are reaching maturity, and that growth of communications services will be lead by a new list of nations in the emerging markets.

Overall, that growth–on a percentage basis–will likely be lead by countries in the Asia-Pacific region, exclusive of China and India.

Globally, emerging markets remain crucial for global telecom service provider growth. IDC predicts that emerging markets will contribute for 53 percent of 2012’s global information and communications technology growth.

And a poll  of 675 global IT and business professionals suggests Indonesia, Vietnam, Qatar and Myanmar are the countries to lead that growth. But Israel, Iraq, Uganda and Cambodia were other countries also viewed as countries where growth could occur.

Notably, just five percent of respondents chose Brazil, Russia, India, China or South Africa as among the nations having the strongest growth, though the so-called BRICS nations have been at the top of global growth lists for some years.

Global Youth Can't Live Without Their Smart Phones

About 90 percent of Gen Y surveyed worldwide said they check their smart phones for updates in email, texts and social media sites, often before they get out of bed, according to the 2012 Cisco Connected World Technology Report. 

Global youth are remarkably consistent in those attitudes, as it turns out. 

FCC Approves Dish Network Long Term Evolution Plan

Federal Communications Commission members unanimously approved a plan to allow Dish Network Corp. to re-use its mobile satellite spectrum to build a new Long Term Evolution mobile network, one more example of how the U.S. mobile market is being challenged. 

All five FCC members have voted on the rules. Dish is required to build out at least 70 percent of the new network within six years, and will have to reserve some of its spectrum as a guard band to prevent interference with other licensed users, a problem LightSquared encountered as well. 

Dish has said that provision would be a "game changer" for Dish that would make the proposed LTE network "risky." 

Some observers have argued all along that Dish would simply sell its spectrum at some point, and not bother getting into the mobile business. Others are not so sure, given Dish's largely saturated video entertainment business and CEO Charlie Ergen's comments that, if he had to do it all over again, he might not choose satellite delivery as his way of attacking the video entertainment market. 

FreedomPop Launches Wireless Fixed Service

FreedomPop, which already has launched its mobile broadband service, now is launching a "fixed" service offering 1 Gbytes of free data in nearly all of the the 80 largest urban markets across the United States. 

Orders for the new modems will be filled in January 2013, it appears. 

The services requires a refundable $89 deposit that covers the cost of the modem. 

FreedomPop is trying to disrupt U.S. broadband pricing, and in addition to the free allotment of 1 Gbyte, compared to the free 500 Mbytes offered with the mobile version of the plan. 

If early reports are correct, the fixed service will offer perhaps shocking prices of 10 Gbytes for $10 a month. Users who are comfortable with speeds that some will compared to lower-speed digital subscriber line, and who do not watch lots of video, might find that a very-attractive offer.

The mobile service features higher tariffs, as typically is the case for mobile broadband. A 2-Gbyte plan would cost $17.99 per month. After that, each additional 1MB costs just $0.01 (which works out to $10 per 1GB). 

That works out to about $28.99 per month for 4GB of data, $34.99 for 5GB and $59.99 for 10GB, all with the same $0.01 charge for each additional megabyte you go over your plan. Most users will consider that a mild overage charge, indeed. 

What Percentage of U.S. Household Income Does Apple Get?

In 2011, the average amount U.S. households spent on Apple products was $444, according to Morgan Stanley analyst Katy Huberty, Reuters reports. Some might find that a "large" number, while others might consider it a rather small percentage of total spending. What is clear is that "average" households are spending more on Apple products.

In 2010 the "average" household spent $295 on Apple products. Back in 2007, U.S. households spent  $150. If you assume median U.S. household income of $50,054, that suggests some households are spending a modest amount on Apple products, about 0.9 percent of household income. 

Compare that with other spending percentages, based on an average American household income of $63,000.

Dry cleaning, storage of clothing, rental of clothing, jewelry and watch repair represent 0.5 percent of spending.

Tobacco products might represent about 0.8 percent. 

Entertainment, including such items as sports equipment, photographic equipment and supplies, hunting and fishing equipment, bikes, boats, balls and other sports equipment, might represent . 0.8 percent. 

Alcoholic beverages might consumer about 0.9 percent of income. Admission fees constitute about 1.3 percent of income. Vacation lodging represents 1.4 percent of income.

Spending on hobbies, toys and pets takes about 1.4 percent of income, while television, radio and audio equipment, cable TV subscriptions claims two percent of income.
Gifts represent 2.2 percent of income. 

Some might say U.S. residents spend "too much" on Apple products, but that is a subjective call. Looking at the other common spending categories, one could easily argue that purchases of Apple products are not uncommonly high, and that there are lots of other places spending might be shifted to account for Apple spending. 

Netflix ISP Ranking Shows Modest Differences Between ISPs

Google Fiber is now the most consistently fast ISP in America for watching Netflix streamed content, according to Netflix. But keep it in perspective: Netflix streaming only happens so fast. 

Is Sprint Moving to Take Over Clearwire?

Many observers were convinced Softbank would not have taken control of Sprint without a clear path to own Clearwire as well, and that might be the impetus for a Sprint bid to buy the remainder of Clearwire it does not already own. Reuters reports that Sprint is in talks with Intel Corp. and Comcast Corp. to buy out their stakes in  Clearwire.

Intel and Comcast own a combined basis roughly 12.4 percent of Clearwire's total shares. Aside from plans Sprint might now have for a new assault on the U.S. mobile market, something most expect Softbank to attempt,   the U.S. market is showing other signs of instability or attempted disruption.

There are growing signs that the U.S. mobile service provider market is unstable, in terms of market structure, and on the cusp of changes that could include a significant wave of provider restructuring, despite the failure of the AT&T bid to buy T-Mobile USA.

"What is clear for now, in our view, is that the current strategy, indeed the entire current business, isn't working," said Craig Moffett, an analyst at Sanford C. Bernstein. Moffett seems to be referring to the whole business operated by regional U.S. wireless carriers.

To be sure, Moffett has been saying that the U.S. mobile business is saturated since at least 2009.

Oddly enough, to some of us the new stresses resemble the earlier transition from dial-up Internet access to broadband access. In this case, the transition is from feature phone to smart phone business models.

In that earlier transition, many suppliers that had made a business of supplying dial-up access found they no longer could compete in the broadband business. Now, in mobile, it appears that the cost of supporting handset subsidies is pinching operating revenue, while the cost of building fourth generation networks likewise will hit earnings.

Of the "big four" U.S. mobile carriers, only T-Mobile USA seems to have experienced a subscriber loss.

In its second quarter of 2012, AT&T added 1.5 million net new customers. Verizon Wireless added 1.2 million net new subscribers. Sprint added postpaid net additions of 442,000 postpaid net additions. But T-Mobile USA, one the "big four" U.S. mobile service providers, lost 510,000 subscribers in the first quarter.

The immediate stress is heavy for the regional mobile providers, often using prepaid models.

Regional or prepaid service providers clearly have had a tougher 2012 than had been the case in the mid-2000s, for example. Leap hasn't been profitable since 2005, for example. MetroPCS profits dropped 63 percent during the first quarter of 2012.

A study undertaken by Tellabs suggests that mobile service provider profitability could become extremely challenging for some mobile operators within three years, with costs surpass revenues for many operators.

In North America that could happen by the fourth quarter of 2013 or as early as Q1 2013. Developed Asia Pacific service providers could see problems by the third quarter of 2014. In some cases this could happen as early as Q3 2013, Tellabs said.

Service providers in Western Europe could run into trouble by the first quarter of 2015. In some cases this could happen as early as the first quarter of 2014.

Vivendi's SFR mobile operation reportedly has been talking to Iliad (owner of Free Mobile) about a merger. SFR also apparently is in talks with French cable operator Numericable about a merger of SFR with Numericable as well, Reuters reports.

Those talks indicate that, after a period of relative stability, mobile market structure, in France and elsewhere, might be changing, because of market saturation and competition.

In many Western European markets there are four, and sometimes five facilities-based mobile  service providers. That was sustainable in an earlier period where the mobile market was growing.

But the issue has been whether four to five contestants are  "too many" suppliers for a stable market. In the United Kingdom, the formation of EE is another example, while in the U.S.market Sprint and T-Mobile USA are the contestants seen as inevitable parts of a future market consolidation.

With the recent mergers of T-Mobile USA and MetroPCS, and the purchase of Sprint by Softbank (assuming both transactions pass regulatory muster), there is once again an active discussion in many quarters about the future shape of the U.S. mobile service provider business.

What seems a safe observation, though, is that the number of successful mobile service providers will be few in number. The only question is “how few?” In many markets, there are four to five major providers, in terms of market share. But just how stable a market that is is questionable.

The Rule of Three holds nearly everywhere. While the percentage market share might vary, on an average, the top three mobile service providers control 93 percent of the market share in a given nation, irrespective of the regulatory framework.

Some might argue that scale effects account for the relatively small number of leading providers in many capital-intensive or consumer electronics businesses.

At some point, the access business can have only so many facilities-based providers before most companies cannot get enough customers to make a profit. Consolidation is the result.

The point is that mobile markets are heading for a period of greater instability and possible change than we have seen for some time.

How 4G LTE Might TransformiThe Mobile Ecosystem

Will Long Term Evolution 4G transformthe mobile ecosystem? Possibly, Business Insider says. In fact, mobile service providers hope that will happen, much as 3G was thought to be the foundation for new applications user experiences and revenue streams.

Of course, the 3G experience also suggests that it sometimes can take quite a while for those new applications, experiences and revenue streams to materialize. So what does Business Insider think could happen?

LTE is about ten times faster than 3G wireless connections. In fact, many consumers have found LTE faster than their home broadband connections, Business Insider argues. That might lead more users to evaluate substituting LTE for a fixed broadband connection. So there could be changes affecting service providers.


LTE might encourage application developers to create, and people to use,  video-based or video-enhanced applications.

These categories most notably include video sharing, video chat, augmented reality, games, and apps.

Both consumers and app developers might therefore find that 4G creates the foundation for qualitatively different experiences, not just "faster" experiences.

Advertisers might find that LTE creates more engagement and more monetization opportunities. That might mean more advertising, and more immersive experiences, more often and in new locations. Google, Facebook and others are betting big that will happen.

On the other hand, some circumspection is probably in order. Mobile service providers were initially convinced that 3G likewise would create massive new revenue streams, apps and experiences, and for quite some time, none of that happened.

Only with the emergence of mobile email did lead applications of value to lots of people finally emerge. That was followed by mobile Internet access as a lead value. Most observers think video will play a key role in underpinning 4G-unique experiences. Others think the "personal hotspot" could emerge as a major new app as well.

News Consumption Shifting to Mobile Devices

News consumption ranks high among activities people conduct on mobile devices, a study by the Project for Excellence in Journalism has found.  

Over a third of respondents report getting news daily on the tablet and the smart phone, putting it on par with other activities such as email and playing games on tablets and behind only email on smart phones. 

None of that should come as a surprise, given the dominant role of content consumption on tablets, and the growing role of content consumption on smart phones. 

Fully 43 percent of male tablet owners consume news daily on their device versus 32 percent of female tablet owners. The gap is nearly identical on smartphones (41 percent compared with 30 percent among women).

As you might guess, younger users are heavier users. On the tablet, male news users under 50 are more likely than female news users under 50 (and both genders over 50) to check news more than once a day. 

Nearly half of male tablet news users under 50 (48 percent) get news on their tablet multiple times during the day compared to 33 percent of women under 50 and 31 percent of men and women 50 and over.

Male news users under 50 are more avid readers of in-depth news articles on the tablet. Fully 84 percent do so at least sometimes, compared to 70 percent of women under 50 and 65 percent of both genders over 50.

Computing Goes Mobile, Untethered, Content Oriented

Debates about whether tablets will displace personal computers are nearly pointless. Tablets clearly are driving sales of computing appliances as much as are smart phones.

The desktop PC market has for some time been shrinking, compared to the notebook part of the PC market, but even notebook sales probably will be displaced to a large extent by tablets  and smart phones, as well, IDC says. 

Those changes speak to changes in the ways people use computing appliances, as much as anything. As it turns out, most people do not require a PC, as much as they used to, to work or play. At work, most applications involve either light communications activities (email, messaging) and consuming content of various types, rather than creating it. 

In other words, more people most of the time, read or view documents, presentations and videos, rather than needing to create them. Tablets and smart phones work passably well for such activities. 

If Apple Does Sell an "Internet TV," How Much Would You Pay for It?

A survey conducted by AlphaWise and Morgan Stanley suggests at least some consumers are willing to pay a 20-percent premium for a hypothetical "Apple TV," compared to other standard TVs.

The survey found that 11 percent of respondents said they would be "extremely interested" in purchasing a so-called "iTV" from Apple, while 36 percent said they are "somewhat interested."

Some 46 percent of respondents said they are willing to pay over $1,000, while 10 percent are willing to pay over $2,000.

On average, respondents said they would pay $1,060 for an "iTV," which is a 20 percent premium over the $884 paid for the current average television set. Respondents ages 18 to 29 showed the most willingness to invest in an Apple television, indicating they would pay a 32 percent premium for such a device. 

With the caveat that consumers often say they will do things they actually do not, the survey suggests Apple continues to have a "cachet" for many consumers. 

The survey polled 1,568 heads of U.S. households regarding the "smart TV" market and found that just 18 percent of homes have a smart TV, while 13 percent of respondents said they didn't know whether their TV is considered "smart," the study found.

The poll also shows that those who own smart TVs connected to the Internet actually spend less time accessing Internet content through their TV than those who do not own a smart TV. That presumably suggests an "ease of use" problem that Apple likes to solve.

The question is whether the TV interface is a big enough irritant to convince lots of consumers to buy an appliance that promises much-better ease of use. The reason is that "content" is a huge part of the TV experience, and unless Apple can dramatically change that part of the end user interaction, the benefits might not be so large as Apple might hope.

It might be one thing to ease navigation between "broadcast" or "linear" TV and online sources, or to make "finding" interesting online content easier. It might not be so easy to revolutionize the TV experience if Apple cannot change the way Hollywood licenses programs. 

If a hypothetical Apple TV or iTV enables viewing and purchase of single TV shows, at reasonable prices, that would be a huge deal.  But Hollywood is unlikely to license content on such terms, at least not now. 

For that reason, some of us are not so sure Apple can transform the TV experience as much as it changed music consumption or the mobile phone experience or PC interface.