SoftBank Raises Sprint Bid

Though SoftBank had said it would not alter its original bid to buy Sprint Nextel Corporation, SoftBank has raised its offer for Sprint. Essentially, the offer funnels more cash to shareholders, and less to Sprint in the form of additional capital.

Sprint’s Special Committee and Board of Directors have unanimously approved an amended merger agreement and again have unanimously recommended to stockholders to vote for the revised SoftBank transaction.

Under the amended Merger Agreement, SoftBank will pay an additional $4.5 billion of cash to Sprint stockholders at closing, bringing the total cash consideration available to Sprint stockholders to $16.64 billion.

The cash available to stockholders has increased by $1.48 per share, from $4.02 to $5.50, based on the June 7, 2013 share count.

Sprint also says it has ended talks with Dish Network about that firm's rival bid for Sprint. Perhaps significantly, one significant shareholder Paulson, now seems willing to vote for the sale of Sprint to SoftBank. That could tip the votes in favor of the SoftBank bid. 

But expect another, and higher, bid from Dish Network. Though T-Mobile USA offers a fallback position, Dish Network seems to believe Sprint, with its Clearwire spectrum assets, are a better fit.

And Dish is highly motivated. The billions worth of valuation for its Long Term Evolution spectrum will fall dramatically if it cannot be used as part of a viable operating network, with significant market share.

SDN Will Follow "Big Data" Through the Peak of Hype

Software defined networks already have started down the path of “hype” that is a normal part of the adoption process for any new technology.

Big data is the trend that will precede software defined networking along the typical hype cycle, many would argue. The point is that SDN value is going to vastly disappoint many would-be users, for quite some time.

That typically happens with most new technologies that ultimately prove to have value. In the meantime, there will be the normal jockeying for position, with the odd result that some of the touted advantages (multivendor support, lower cost of network elements) will emerge only within specific ecosystems.

Apple Could be a Dangerous Mobile Service Provider

A new global survey conducted by Accenture suggests Apple might be a formidable Internet service or mobile service provider.

The global survey of mobile users by Accenture finds that 31 percent of all respondents surveyed prefer that their device supplier also supply their communication needs, including Internet access service.

In fact, 40 percent of Apple owners prefer all communications needs to be met by Apple.  

A majority of mobile Internet users prefer device makers over their mobile provider as their unified provider of communication needs. Mobile providers actually rank third in preference.

This preference is exceptionally strong in emerging markets, where more than 40 percent of mobile Internet users prefer mobile device or OS makers to fulfill all their communication needs, compared to only 17 percent who prefer the mobile provider.

In emerging markets, fully 42 percent of respondents would prefer that their device supplier also provide communications and Internet access.

About 28 percent of all respondents do not care what entity provides their Internet access, as long as those needs are met. The study indicates how big the opportunity for new ISPs might be.

Only 21 percent of all respondents indicated that their mobile service provider was their “preferred supplier.”

Accenture’s Mobile Web Watch 2013 study surveyed nearly 31,000 consumers in 26 countries.

That means mobile service providers potentially could be disrupted, as Google Fiber now is disrupting consumer expectations of fixed network services.

Fixed network Internet service providers, whether they will admit it or not, are feeling a disruptive challenge from Google Fiber, simply because Google Fiber is resetting consumer expectations about what a state of the art Internet access service looks like.

All prior offers are challenged on both the value and price front, by Google Fiber’s $70 a month 1 Gbps symmetrical service, which provides two to three orders of magnitude more bandwidth in the downstream direction, and three orders of magnitude more bandwidth upstream, than other offers, at prices that are close to what users already pay for vastly slower services.

Users Willing to Pay for Faster Internet Access, Global Study Finds

A global survey of mobile users by Accenture finds that the speed of mobile Internet connection was important to 97 percent of all respondents. That is not too surprising, given the overwhelming prevalence of 2G and 3G network connections globally.

About 78 percent of respondents said there is some room for improvement in mobile Internet access speeds. For ISPs, the equally important finding was that 63 percent of all respondents said they would pay additional monthly fees for mobile Internet service.

But there is a caveat: that willingness to pay is based on the assumption that the new service is an order of magnitude (10 times) faster than their current connection.

For mobile service providers hoping to monetize their Long Term Evolution investments, that is good news. Sort of. It depends on where a service provider is operating.

In mature (developed nations) markets, the willingness to pay extra for 4G is lower (57 percent of all respondents in these markets), except in Italy (71 percent) and Finland (70 percent)

In emerging markets, three-quarters (76 percent) of mobile Internet users would pay more for 4G; customers in Brazil and Russia (83 percent in each country) are willing to pay more.

The more important issue, though, is not what people say they might do, or will do. What matters is what they actually do.

On that score, one might argue that even if consumers in developed markets are not so apparently willing to pay more for 4G, many likely are paying more, if only because of the well-known observation that users of faster networks consume more data.

According to Federal Communications Commission data, users of satellite Internet access services, which arguably face the toughest bandwidth challenges, consume orders of magnitude less data than users of digital subscriber line, cable modem or fiber to home networks.

Currently, a 4G connection generates 19 times more traffic than a non-4G connection, Cisco notes. In part, that is because many 4G connections are used for residential broadband routers and laptops, which have a higher average usage.

But the other issue is simply that when users have access to faster networks, they consume more data. A smart phone on a 4G network is likely to generate 50 percent more traffic than the same model smartphone on a 3G or 3.5G network, Cisco says.

The survey also showed that almost all respondents (96 percent) said the quality of network is important, closely followed by its area of coverage (95 percent).

About 94 percent of respondents said the cost of data is slightly less important than quality, coverage, or connection speed, and even less, 89 percent, cited customer service as being important.    

Accenture’s Mobile Web Watch 2013 study surveyed nearly 31,000 consumers in 26 countries.

Global Mobile Devices and Connections by 2G, 3G and 4G

Although 4G connections represent only 0.9 percent of mobile connections today, they already account for 14 percent of mobile data traffic, according to Cisco.  In 2017, 4G will represent 10 percent of connections, but 45 percent of total traffic, Cisco estimates.

4G will be 10 Percent of Connections and 45 Percent of Traffic in 2017

Apple to Launch iTunes Radio

Apple is launching “iTunes Radio,” a free Internet radio service featuring over 200 stations and an incredible catalog of music from the iTunes Store, available in the fall of 2013.

“Featured Stations” curated by Apple and genre-focused stations that are personalized will evolve based on the music users play and download. To begin with, iTunes Radio will base its personalization experience on user listening history and past purchases from iTunes.

In addition, if you’re listening to a song you like from iTunes Radio or your music library you will be able to have a station built around those songs.

Users will be able to create and customize stations based on artists, songs, or genres.

Rwanda LTE Coming by Government-KT Corp. Joint Venture

Rwanda is building a new fourth generation Long Term Evolution network in a 25-year joint venture with KT Corporation of South Korea. KT Corp. is contributing $140 million in investment. 

The Rwandan government is contributing 3,000 kilometers of long haul optical fiber, spectrum and a wholesale-only operator licence. Additional financing will be added in the form of debt and vendor financing. 

The project aims to provide LTE broadband coverage to 95 percent of Rwanda’s 12 million population within the three years.

More than half the population of Rwanda now uses mobile phones. There were in March 2013 about 6,039,615 mobile subscribers, representing a penetration rate of about 57 percent.

The country's largest mobile company, MTN Rwanda lost 2,088 subscribers between the same periods, according to RURA with 3,452,182 active lines down from 3,454,270 in January.

With over 3.4 million subscribers, MTN remains the dominant player controlling more than half of the total market share with Tigo in second spot. 

The newest entrant, Airtel Rwanda, boasts a rise in subscriber base of 781,162 in March from 570,739 in January 2013. 

Rwanda’s mobile penetration at the start of 2012 was about 40 percent (4.3 million people), with Internet access penetration at seven percent, according to the Rwanda Utilities Regulatory Agency. By the end of 2012, mobile adoption had grown to about 5.7 million people.

MTN and Tigo’s networks each reach more than 98 percent of the population, whereas Airtel’s population coverage currently stands at 15 percent.

MTN group is Africa’s largest telecommunications operator with more than 130 million cellular subscribers in the region and in the Middle East.

Tablet Adoption Reaches 50% of Broadband Homes

It makes sense that personal devices used by people will outnumber shared devices used by households (TVs, refrigerators). 

At the moment, smart phones have become the consumer electronics product with the highest penetration, among smart phones, tablets, smart TVs, game consoles or digital media devices, according to Parks Associates.

Parks Associates predicts the number of U.S. tablet users will increase by 61 percent from 2013 to 2014.

Tablet adoption already is close to 50 percent of all U.S. broadband households, said Heather Way, Parks Associates senior research analyst.

Separately, researchers at the Pew Internet and American Life Project now estimate that about 34 percent of U.S. adults ages 18 and older own a tablet computer like an iPad, Samsung Galaxy Tab, Google Nexus, or Kindle Fire, up nearly 100 percent, year over year.

In 2012, about 18 percent of surveyed respondents owned a tablet.

As you might guess, there are differences in rates of adoption, as there were with smart phones.

As was true for Apple iPhone owners, households with higher incomes are more likely to be tablet owners. About 56 percent of households earning at least $75,000 per year own tablets, compared to 38 percent of people in households earning between $50,000 and $74,999.

About 28 percent of respondents in households with $30,000 to $49,999 in income own tablets, compared to 20 percent of respondents in households below $30,000 annual household income.

Unlike smart phones, which are most popular with younger adults ages 18 to 34, the highest rates of tablet ownership occur among adults 35 to 44. In that age bracket, 49 percent of respondents report owning a tablet.

In the 25 to 34 age bracket, 37 percent of respondents own a tablet. About 18 percent of adults ages 65 and older are less likely to own a tablet.

Tablet adoption, as did iPhone adoption, also is directly related to education. About 49 percent of adults with at least a college degree own a tablet. Only 17 percent of those who did not graduate high school own a tablet.

The findings might suggest that smart phones are “mission critical” devices, while tablets are more discretionary.

Intel Might Have to Pay 75% More for Content Than Other Video Service Providers

The problem attackers will have, when trying to disrupt the traditional TV business, is that if the content owners control the value proposition, disruption is not possible unless those content owners agree to be disrupted.

In other words, it is the content, or programming, that provides the value, not so much the delivery network. To disintermediate the distributors, the content owners will have to conclude that they can make as much, if not more money, by supporting Internet-direct suppliers such as Intel. 

For consumers, there are direct implications as well. Most people probably assume that one advantage of Internet delivery is the ability to watch content on any device, nearly anywhere, for less money.

To be sure, those value dimensions are not necessarily linked. Value could be "watch on any device," or "watch anywhere" or "watch for less money" or any combination.

But the "watch for less money" remains one of the assumptions nobody can be too sure about.  Intel, for example, is offering to pay as much as 75 percent more than cable operators do, to get the content Intel needs to provide a viable competitor to cable, satellite or telco TV offers. 

There are other elements of its business plan, of course, but it is hard to sell at a discount to the market leaders when the cost of goods might be that much higher. 

Deride it If You Must, But Capitalism Has Lifted 1 Billion Out of Extreme Poverty in 20 Years

Between 1990 and 2010, the number of people living in “extreme poverty” declined by 50 percent in developing countries, from 43 percent to 21 percent, lifting about a billion people out of extreme poverty.

And though the implications will be discomforting for some, free market capitalism is the reason for the progress.

Poverty rates started to collapse towards the end of the 20th century largely because developing-country growth accelerated, from an average annual rate of 4.3 percent in 1960-2000 to six percent in 2000-10.

That is important since 66 percent of poverty reduction within any country comes from growth.

To be sure, greater income equality can contribute about 33 percent. A one percent increase in incomes in the most unequal countries produces a mere 0.6 percent reduction in poverty; in the most equal countries, it yields a 4.3 percent cut in poverty.

Still, since so much of the recent rise has occurred in China, lifting the next billion out of extreme poverty likely will be tougher.

It is easy to attribute most ills of modern life to capitalism. But those attributions are wrong, on one important dimension. If you want to eliminate poverty, free markets work better than anything else we have been able to devise. It rarely works without externalities.

But trying to cure all the externalities will fail if the growth engine itself is constrained. Without growth, we cannot solve any of our key problems. That isn’t to say growth does not create some problems: it does.

Still, without growth, almost nothing else is possible.

Will "Homezones" Compete with or Complement Other ISP Services?

Cable companies are some of the ISPs that might in the future extend Internet access using “homespots” in addition to “hotspots.” The distinction is that ISPs might require, as one of the terms of service, that some portion of at-home bandwidth be reserved for “public” access by other users.

As Fon and Devicescape have done, this would potentially create a “new” network stitched together by amalgamating formerly-private at-home ISP connections.

Homespot Connect, for example, is an Android app that allows smart phone users to connect to Telenet Telenet (Belgium) “homespots.”

Google has for some time been collecting information about U.S. Wi-Fi locations, as part of its Google Maps app. In principle, that could help Google (or users) later if mechanisms to create homespots become more common.

It remains difficult to say with precision whether such “homespot” efforts represent “competition” to mobile or fixed ISP offers.

For some users, who use public Wi-Fi instead of at-home ISP service, there is some amount of competition. But most users tend to use Wi-Fi as a complement to their paid-for ISP services.

In that sense, homespots or public Wi-Fi hotspots offer more coverage, or the ability to offload traffic, and hence mostly are complementary to fixed or mobile ISP service. In principle, that is little different than a mobile operator deploying small cells to provide more capacity in dense urban areas.

But it would be fair to say that in the future, when many subscribers have connections operating at hundreds of megabits per second to a gigabit per second, there should be plenty of bandwidth to enable those at-home connections in “homezone” fashion as well, without affecting the subscriber’s experience.

Still, it will be a matter of business logic, more than anything else, that determines whether a specific homezone network is complementary or competitive to any other ISP operations.

Will Intelligence Gathering Will Slow Cloud Computing?

It sometimes takes an outsider to tell what is happening "inside" a firm or nation. And one Canadian points out one information technology downside to what users reasonably might conclude are threats to information privacy: namely the threat to U.S.-based cloud computing services, compared to services based elsewhere.

In other words, a resident of Canada, needed to source cloud services there, might now conclude that it cannot buy from Amazon or Google or Verizon or other cloud suppliers because of the increased risk of government data acquisition or even transparency about the level of risk. 

Separately, there also are indications the European Union might now be rethinking what U.S. cloud computing risk might mean elsewhere. 

So some would-be customers will have to add intelligence risk to their decisions about sourcing cloud services. Some might conclude that they simply cannot source cloud computing from U.S. suppliers.

And though some blame Verizon or Google for cooperating with U.S. intelligence probes, some might say the bigger culprits are laws that allow overly-broad data gathering, or government agencies that either overreach, illegally use information to punish political opponents. 

After all, a single citizen or business cannot easily refuse to comply with a "lawful" request for records. Nor can citizens prevent people inside agencies from misusing data for other purposes. 

Beyond that, the issue is whether agencies now have become in some way institutionally corrupted, and whether U.S. citizens have allowed that corruption to happen, directly or indirectly.

The issue of "liberty" and other countervailing trends (legitimate needs to provide protection from terrorism) now pose issues the nation has not resolved. And some would say another complicating factor is the growth of the administrative state. That makes effective citizen control much more difficult.

For perhaps the first time, the next generation of computing architecture (cloud and mobile) now is significantly affected by political concerns. And that potentially is going to slow the growth of cloud computing, unless the political problems are addressed. 

More Impoper "Leaking" of Personal Data

A bipartisan group of 24 senators want to know why the Environmental Protection Agency leaked the personal data of more than 80,000 farms and livestock facilities to environmental groups. 

But some might argue there is a partisan angle to at least some of the "leaks." When the government intentionally leaks something that helps its perceived agenda, that's okay. 

When the leaks are not seen as helping, then leaking is a crime. 

Poll Shows Apple Losing "Cool"

A new poll suggests there is some truth to the notion that Apple has lost some of its "cool" lately. Last year, 81 percent of those under 30 years old said they viewed Apple favorably.

This year, that number was down to 71 percent. 

According to a poll, 83 percent of adult respondents have a favorable view of Google. Some 72 percent have a favorable view of Apple and 60 percent have such a view of Facebook. 

The poll results are said to be similar to last year's results, with one possible exception. 

U.S., Internet Surveillance Denial: Because It is Secret, Nothing Can be Divulged

Director of National Intelligence James R. Clapper Jr. described PRISM--the intelligence gathering effort-- as “an internal government computer system used to facilitate the government’s statutorily authorized collection of foreign intelligence information from electronic communication service providers under court supervision.”

Perhaps that tells you something. LIke "trust me." Clapper says a warrant is issued every time  NSA or other intelligence agencies seek information under Section 702 of the Foreign Intelligence Surveillance Act. 

But the secret court orders also are one-time blanket approvals for data acquisition and  surveillance on selected foreign targets for periods of as long as a year.

The problem is that nobody outside can tell how much other information is garnered. Nobody claims all that other data is destroyed. Nobody can assure the public that all gathered data is narrowly targeted. 

The National Security Agency also has requested a criminal investigation into the leak of highly classified information about secret surveillance programs run by the National Security Agency. 

"I can't tell you anything, but you don't have to worry." And if you try to find out, you will be prosecuted. 

Vodafone, China Mobile Abandon Race for Myanmar Telecom Market License

Vodafone and China Mobile, acting together, were among a dozen companies or consortia that made the final list of contenders to bid for a telecom license in Myanmar.

But Vodafone and China Mobile Vodafone and China Mobile have abandoned the effort to obtain one of two new telecommunications licenses Myanmar is making available.

The winners are scheduled to be announced by June 27, 2013. Among the applicants are consortiums led by Singapore Telecommunications, India's Bharti Airtel, MTN Dubai, Jamaica's Digicel Group, and Japan's KDDI and Sumitomo Corp.

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Malaysia's Axiata Group, Norway's Telenor, Millicom International Cellular, Qatar Telecom and Vietnam's Viettel Group also made the shortlist.

The Myanmar government plans to award two new telecom licenses, each with initial terms of 15 years, to the two licenses already awarded.

Only 5.4 million of Myanmar's 60 million-strong population had a mobile subscription at the end of 2012, a mobile penetration of just nine percent.

But the two telecom giants seems to have concluded that the conditions under which the licensees would have to operate make the business case too marginal. Building new networks from scratch, fast, would seem to be an obstacle.

The Myanmar government wants to increase the percentage of the population owning a telephone to between 75 percent and 80 percent by 2015 to 2016. That’s a lot of potential revenue growth in a very short time.

Also, retail prices might have to be quite low.

Myanmar has one of the lowest per-capita gross domestic products in Asia, standing at $855 last year compared with $5,851 for Thailand, according to International Monetary Fund estimates.

Beyond that, some would cite a potentially-significant amount of political risk, given Myanmar’s historically tightly-controlled government, fear of dissent and potential nationalism issues were a foreign-owned company to become too successful.

Whether the Vodafone-China Mobile doubrs are simply a matter of financial return, based on market conditions, or something else, perhaps government requirements that made the business case worse, is not yet clear.

A statement from Vodafone confirmed that the two operators had decided “not to proceed with the process as the opportunity does not meet the strict internal investment criteria to which both Vodafone and China Mobile adhere.”

The bad news is that whatever convinced Vodafone and China Mobile that the business case was marginal, might also be issues for at least some of the other contenders.