Big Data is at Heart of Internet of Things

It is likely that big data, one of the big “hype” concepts just a few years ago, will find practical application as an integral part of developing Internet of Things and machine-to-machine applications that essentially gather data and then analyze it for application in real time, or near real time, to control the operation of devices, people and systems.

“IoT isn’t just about gathering data; it’s about using it to make better decisions — that’s the value of IoT, Verizon argues. “Regardless of whether the output is manual or highly automated, analysis of the data must be integrated into business processes. If the data is not actionable, by you or a third party, it’s not IoT.”

India Eliminates Fixed LIne Termination Rates, Cuts Mobile Termination 30%

Indian regulator TRAI has eliminated fixed line termination rates and cut mobile termination charges by around 30 percent. Notably, the reason for the fixed line termination charges for landline calls is that the fixed line voice business is in decline.

TRAI hopes the end of the 0.20 rupee ($0.003) termination rate for both landline-to-landline and landline-to-mobile calls will stimulate usage and subscriptions, and also lead to more investment in fixed networks.

TRAI also expects to reduce mobile network interconnection charges from 0.20 rupees to 0.14 rupees. That move is intended to stimulate mobile calling.

Those changes in the Indian market are not unusual. U.S. fixed network voice lines have been dropping since 2000. Globally, fixed voice lines have been dropping since about 2006.

Comcast's Next High-Growth Rate Business Will be Mobile

One way of illustrating the potential value of Comcast’s entry into the mobile business can be gleaned from looking at current revenue contributors, with their growth rates.

Of total 2014 Comcast revenue of $68.8 billion, $44.1 billion, or 64 percent, was generated by the cable communications business. Operating cash flow contribution from the cable communications segment was about six percent.

About 37 percent of revenue was generated by the NBCUniversal segment, which grew about 7.5 percent, overall. Operating cash flow from NBCUniversal was about 18 percent.

The main point is that gross revenue and operating cash flow from cable communications is tough, from a growth standpoint.

The consumer part of the cable communications business (triple play services) is growing primarily because of high speed access.

Video revenue for 2014 was up about one percent. Voice revenue was static at about 0.4 percent growth. High speed access was where the gains primarily were made, with growth of 9.5 percent.

Business services contribute about nine percent of cable communications segment volume, at about $4 billion in 2014. But business services grew at a 22 percent rate in 2014. In fact, it might be correct to say the newest product segments in the cable communications segment (business services in general, and mid-market services in particular) have the highest growth rates.

Comcast estimates it has reached about 25 percent penetration of the small business addressable market, but only about five percent of the addressable mid-market opportunity, according to Neil Smit Comcast Cable president and CEO.

So mid-market revenue “is growing at a increasing rate relative to SMB,” said Smit.

In 2013, Comcast “had literally zero penetration in the mid sized sector,” said Michael Angelakis, Comcast vice chairman and CFO.

The point is that Comcast has seen the fastest growth rates for successive new products.

That suggests the possible upside from Comcast adding a whole new product line in mobile services, especially if Comcast can position the service first as a way for Comcast customers to view their content, but then secondarily as a way to use voice, messaging and mobile Internet access.

Commenting on capital investments Comcast has made in Wi-Fi infrastructure, the emphasis has been on support for the video business.

“The real goal has been that our customers can access their video any time anywhere whether in the home or outside the home,” said Michael Angelakis, Comcast vice chairman and CFO. “If Wi-Fi can also develop into a different type of service then that’s an added benefit to the Wi-Fi investment.”

But Comcast’s Wi-Fi network now includes 8.3 million hotspots, said Brian Roberts, Comcast Chairman and CEO. “We think we are working on how we monetize that asset and bring it to market.”

“As you know we have MVNO relationships with Sprint and Verizon,” Roberts said, hinting at ways mobile service could be offered, but with much traffic offloaded to the Comcast fixed Wi-Fi network.

Adding mobile service would not only allow Comcast to offer a full quadruple play, but also would add a brand new product line with proven customer demand, but allow use of the new Wi-Fi hotspot network to lower costs.

80% of Smartphone Data Consumption Globally Now Uses Wi-Fi

Globally, Wi-Fi accounted for 80 percent of mobile and tablet data consumption, compared to data consumed on the mobile networks, at 20 percent, according to a new Mobidia report.

That explains the wide gap between reported “mobile data consumption” and actual end user data consumption on their smartphones.

Globally, smartphone and tablet users used in excess of 10 GB of data in December 2014, according to Ovum, up from about seven gigabytes in January 2014. That represents a 51 percent growth rate.

Apple iOS tablet users consumed about 12 GB, while Android tablet users consumed about nine gigabytes in December 2014, Ovum says.

Apple  iOS smartphone users consumed an average of about 11 GB of data in December 2014, just ahead of Android smartphone users with 10 GB. Consumers on Long Term Evolutin networks consumed even more data.

By December 2014, 4G Android smartphone users consumed 13 GB each month, dramatically higher than the 5GB/user/month of 3G Android smartphone users that month.

“Wi-Fi has cemented its position as the dominant wireless access technology, with cellular playing a vital yet supporting role, Mobidia says, based on the results of a study conducted for Mobidia by Ovum.

“Wireless Internet access” is much more than “mobile access,” it is fair enough to note. Fixed wireless, satellite access and untethered access (Wi-Fi) are widely-used forms of Internet access beyond that used by mobile devices, connected to the mobile network.

It might also be fair to say that untethered access--which has been seen as a competitor to mobile access--might actually be emerging in precisely that way. “Cable operators, Internet giants, Wi-Fi-first startups and every cafe with a wireless router are all providers of wireless service,” Devicescape argues.

So a “wave of disruption” is coming, Devicescape argues.

Though it is reasonable to point out that Devicescape builds a business on the strength of Wi-Fi, especially the ability to create unified services out of a patchwork quilt of independent Wi-Fi hotspots, the notion that mobile service providers “must” or “should” incorporate Wi-Fi access into the overall fabric of connectivity choices is reasonable enough.

That, in fact, is assumed to be a key feature of future fifth generation mobile networks, and for simple reasons. Generally speaking, mobile network connectivity is best outdoors, less effective indoors, while Wi-Fi arguably operates best indoors, least effectively outdoors.

So mobile service providers must become “connectivity providers” using any available network resource, not “mobile access” providers, one might argue.

In part because as much as 70 percent of smartphone data is accessed using a Wi-Fi connection, mobile service providers must embrace connectivity by any available means, Devicescape argues.  

Devicescape calls that shift a move from “mobile” to “connectivity,” as users do not so much care about whether their access is provided by the mobile or the Wi-Fi networks. They only want to remain connected, at the best price, one might well argue.

That noted, Devicescape argues that 29 percent of mobile users never connect to their home Wi-Fi, while 53 percent keep Wi-Fi turned off when out and about. As a result, as much as 91 percent of public hotspot locations go unused.

Mobile Drives 72% of Webpage Views in India

Mobile continues to drive Internet access subscriptions globally, accounting for 72 percent of all India webpage views in 2014, for example. 

Globally, mobile devices account for about 80 percent of all traffic, such as sessions, many would argue. 

But overall data volume still is driven by fixed devices. How much longer that might be the case is an issue. Experts still disagree about how to measure the relative weight of mobile and fixed access, in part because usage varies so much by region and country. 

Digital, Social & Mobile in 2015 from We Are Social Singapore

Was 2014 an Aberration, or the New Normal?

Was 2014 an aberration in the U.S. mobile business, or a harbinger? The answer matters.

From 2010 to 2013, U.S. mobile data pricing (per unit sold) declined by only single digits year over year. In the first nine months of 2014, data pricing dropped by 77 percent, according to industry analyst Chetan Sharma.

The other key inputs to the business model shows escalating numbers as well. Average (mean) mobile data consumption increased to about 2 Gb a month. Sharma notes it took 20 years for consumption to reach 1 Gb per month usage levels.

The increase to 2 Gb took about a year.

In addition to plunging prices (less revenue per unit sold) and higher usage (more network cost), marketing costs have grown as competition has become more intense.

Overall U.S. operating expense rose 20 percent, year over year. Income was flat while earnings grew three percent.

Among the positives, total revenue grew 21 percent to almost $400 billion.

Among the negatives, voice revenue declined 15 percent, messaging by 16 percent and tablet subscriptions by four percent.

So was 2014 an aberration? In some ways, it has to be. Can mobile data pricing (per unit sold) continue to drop at breath-taking rates? Some might note the other key figure is the amount of incremental new buying that happens as per-unit rates drop.

Sharma argues that Internet access will not grow fast enough to offset voice revenue losses. Neither will device sales revenue or wholesale revenues grow fast enough, even in conjunction with mobile data revenue growth, grow enough to offset sharp declines in voice. That, in a nutshell, is the strategic challenge mobile operators face.  

Us wireless market_q4_2014_update_feb_2015_chetan_sharma_consulting from Chetan Sharma

Google Wallet to be Pre-Installed on AT&T, T-Mobile US, Verizon Android Devices

Google now is working with Softcard, the mobile payments service owned by AT&T Mobility, T-Mobile US and Verizon Wireless. As part of a new agreement between the mobile carriers and Google, the Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the U.S. market  later in 2015.

As part of the deal, Google also is acquiring “some technology and intellectual property” from Softcard.

Google does not appear to have bought Softcard, nor do the mobile carriers appear to have sold the business to Google.

On the other hand, since October 2014, when Apple launched Apple Pay, both Google Wallet and Softcard, which have failed to get much traction, seem to have concluded they need to move faster to counter Apple Pay.

Cable TV Firms Will Not be Able to Replace Lost Linear Video Revenues with High Speed Access Gains

For the past decade, U.S. telco and cable TV revenue sources have been a game of musical chairs: give up the chair you have and hope you can grab another when the music stops.

And everybody is playing. Telcos have relied on mobile services to replace lost fixed network voice revenues.

Cable TV companies have grown by adding voice, high speed access and business segment customers.

Mobile companies have grown by adding tablet accounts on top of phone accounts, while adding Internet access revenues to displace dwindling voice and text messaging revenues.

But it can be a difficult game if the new revenue sources are smaller than the lost revenue sources, or if profit margins are significantly less robust. And that might be a growing issue.

“Gross margin dollars will be lost in video, and will not be replaced by faster growth in broadband,” said Craig Moffett, Moffett Nathanson analyst.

That might be why firms such as Comcast and Cablevision Systems Corp. are planning--or have launched--mobile services. The best way to add incremental revenue is to add one more new service to the bundle.

Comcast and Cablevision are using, or are expected to use, their own public Wi-Fi hotspots as the foundation of their mobile services.

U.S. Mobile Market Structure Will be Shaped by Dish Decisions

As competitive as the U.S. mobile market has become--despite frequent protests that the market essentially is a duopoly--it almost certainly is going to become more competitive.

Strategically, Comcast is expected to enter the market, at some point. Cablevision Systems Corp. already has done so, though as a niche provider with greatest potential impact in its limtied home operating area. Comcast almost certainly will have to enter as a national provider.

Dish Network either must enter the market as an operator, or forfeit the rights to spectrum that presently accounts for as much as 80 percent of its total market value.

And then there are the other contenders, including Google, which it is believed soon will be entering the mobile market, and Apple, a perennial potential actor in the market as well.

But the biggest current question mark is what Dish Network will do.

Since nobody believes Dish will allow scores of billions in equity value to evaporate, Dish’s Long Term Evolution spectrum has to be put into service. That might consist of partnering with an existing carrier (normally assumed to be Sprint, T-Mobile US or Verizon) to create a wholesale-only operation, or a branded retail offering, or selling the whole spectrum portfolio or the whole company.

So the shape of competition--and the structure of the U.S. mobile market--rests on which alternative Dish ultimately pursues. Both Comcast and Google are expected to enter the market as retail providers, though each might pursue something of a niche approach.

If Dish decides to partner with one of the existing leading national operators, and become a wholesale provider, it will enable third parties, but not directly increase or decrease the number of national providers.

Should Dish decide to become a full branded retail provider, it might take a niche approach, heavy on video entertainment. But the manner of entry matters.

Some speculate Dish will try and buy T-Mobile US. In that case the U.S. market structure is not changed. Others believe Dish will partner with a network owner, but become a retail service provider, in which case the number of potential leading contenders in the market increases from four to five.

But Dish might also simply sell itself, in whole or in part, monetizing its spectrum holdings, but leaving the market structure unaffected. Some will argue the odds of a buyout that large, by either AT&T or Verizon, is extremely unlikely, given the debt loads both leading carriers now carry.

At some later point, such a purchase by Verizon--not AT&T--is possible, but not at the present time.

AT&T presumably already would have acquired DirecTV, which makes additional video assets superfluous. Nor does AT&T appear especially interested in investing much more capital in the U.S. market, given its Mexico market expansion or other potential growth moves outside the U.S. market.

Verizon must wait to get its debt burden reduced significantly before it can afford to consider an acquisition of all of Dish. A more limited buy of some significant spectrum assets is more feasible, but Sprint might be a seller of spectrum assets as well.

Complicating the analysis is the nature of potential Sprint and Dish Network spectrum assets. Some of Dish Network’s spectrum is in the 700-MHz band, while much is in higher bands near 2 GHz.

Some of the potential partners--especially Sprint and T-Mobile US--have plenty of spectrum in the 2-GHz range, so either have little need for additional spectrum in those bands themselves, but might be happy to earn revenue supporting Dish Network network operations.

Verizon, historically not a big player in the mobile wholesale market, does have some potential obligations to support wholesale operations by Comcast and other cable operators from which it purchased AWS spectrum.

Should that happen, Verizon might want the additional Dish spectrum to support its wholesale partners, in addition to its own retail requirements, in the future.

Complicating matters further is growing ability to use unlicensed spectrum to support and augment LTE, plus additional communications spectrum that will be added, at some point, on a shared basis.

More competition is coming. It just is hard to predict precisely what form that competition will take.

Study Finds Most Don't Understand Net Neutrality

A survey of U.S. consumers has found what you might expect, namely that few U.S. residents understand network neutrality. The Hart Research Associates survey found only 25 percent of respondents claimed they knew what network neutrality is.

Perhaps not surprisingly, 73 percent said they wanted disclosure of what the rules actually are, when told that “just five members of an unelected Federal Communications Commission will decide the future of the Internet without providing an opportunity for the public to see and understand the regulations prior to a vote.”

The wording of the explanatory note, most might suggest, was not “neutral.” So it might not be surprising that 80 percent of respondents wanted full disclosure of the ruling before a vote is taken.

Just 32 percent of respondents thought regulating Internet access like telephone services would be helpful.

Business, or Consumer, Few Actually Benefit from Really Fast High Speed Access

With the caveat that a business customer’s use of bandwidth differs from the pattern typical of a consumer customer, small business customers of Cogent Communications tend to use about 12 Mbps of the 100 Mbps services bought to replace T1 connections of about 3 Mbps, said BTIG researchers.

According to Cogent, only about 12 to 24, out of perhaps 17,400 customers ever have reached 50 percent utilization of the 100 MB pipe.  Likewise, customers who buy gigabit connections have usage that does not likely differ materially from 100 MB customers, according to Cogent.  

One might well argue that consumer consumption is growing faster than business customer usage, certainly. But Sandvine data suggests U.S. median household data consumption over a fixed network connection is about 20 Gb a month. Granted “Gbps” is a measure of speed, while “Gb” is a measure of consumption, but monthly consumption of 20 Gb does not suggest most households likely are taxing their access downlinks.

To be sure, households with faster connections tend to consume more data. But that might be because households consuming more data disproportionately buy the faster connections. As more locations are able to use connections operating from 40 Mbps up to 1 Gbps, we should get a better idea of how much a “typical” user consumes, when access speeds exceed the ability of far-end servers to respond.

A study by Ofcom, the U.K. communications regulator, suggests that beyond about 10 Mbps, local access speed is not the experience bottleneck.

The study found that “access speed” matters substantially at downstream speeds of 5 Mbps and lower. In other words, “speed matters” for user experience when overall access speed is low.

For downstream speeds of 5 Mbps to 10 Mbps, the downstream speed matters somewhat.

But at 10 Mbps or faster speeds, the actual downstream speed has negligible to no impact on

end user experience.

Since the average downstream speed in the United Kingdom now is about 23 Mbps, higher speeds--whatever the perceived marketing advantages--have scant impact on end user application experience. Some 85 percent of U.K. fixed network Internet access customers have service at 10 Mbps or faster.

Investing too much in high speed access is, as a business issue, as bad as investing too little, one might argue.

Average access speeds in the United States are 10 Mbps, according to Akamai. Average speeds are 32 Mbps, according to Ookla. Another study shows that average Internet access speeds in the United Kingdom and United States are equivalent, in fact.  

The point is that, in terms of user experience, faster marketed speeds (gigabit, 100 Mbps) actually do not improve end user experience.

As someone who recently was able to upgrade from about 15 Mbps to 105 Mbps, I would confirm, as an end user, that the upgrade has made no apparent difference in my browsing experience.

For that reason, I will not be buying a gigabit access connection, which I could do. There being no apparent change in experience at 100 Mbps, I cannot see the advantage of upgrading further, to 1 Gbps.

IoT, M2M Will Lean on Platforms Using Unlicensed Spectrum

source: Verizon Communications

As important as licensed spectrum has been for development of mobile services, unlicensed spectrum is shaping up as a more-important access approach.

Verizon Communications has committed to introduce Long Term Evolution using unlicensed spectrum, even before the formal standard has been ratified.

LTE in unlicensed spectrum allows mobile service providers to bond capacity supplied by licensed and unlicensed spectrum.

The other important development is the Internet of Things, especially many machine-to-machine sensor apps that require extremely low-cost devices with long battery life, wide area communications range and low-cost network platforms as well.

So it is that the LoRa Alliance, including firms such as IBM, Cisco and Microchip Technology, as well as telecom operators Bouygues Telecom, KPN, SingTel, Proximus, Swisscom, and FastNet (Telkom South Africa), supports the use of LoRa spread-spectrum radio protocol for use in wide area networks and the Internet of Things.

LoRa (Long Range) is a low data rate, long-distance communication protocol used by Semtech Corp. to provide industrial, home and building automation networks. LoRa supports devices with a range of up to 50 kilometers. The long range means that large areas can be covered by relatively few base stations.

Just as significantly, LoRa devices are expected to operate for as long as 10 years without a battery swap.

That is part of the reason supporters believe LoRa has value for many IoT and M2M applications.

Separately, SigFox uses an ultra-narrow-band platform for machine-to-machine communications and IoT, also operating in unlicensed spectrum.

The base stations are said to operate over ranges of three to 10 kilometers in urban areas and up to 30 to 50 kilometers in rural areas.

To be sure, mobile service providers have numerous tools available to them to increase network capacity, ranging from exclusive spectrum resources to traffic offload to network architecture to improvements in air interface technology.

So despite the importance of licensed spectrum, other sources of leverage, including unlicensed spectrum and network elements, technology and architectures, are becoming equally important.

And at least as Verizon Communications positions the matter, the cost of acquiring new spectrum is growing, while the cost of network enhancements is dropping.

Without question, mobile service providers prefer to supply capacity by gaining the use of new spectrum, largely because that has been “an extremely cost effective means of adding capacity,” according to Tony Melone, Verizon Communications CTO.

But Moore’s Law and manufacturing volume matter. So the cost of relying on a technology-driven solution (smaller cells, better radios, antennas and modulation protocols) are going down every year, Melone also said.

That probably does not mean capacity gains are equivalent, using either “new spectrum” or “network technology” approaches. It likely remains the case that additional spectrum remains a cheaper way to gain new capacity.

source: Verizon Communications

But Long Term Evolution, eventually 5G, antenna technologies and interference management techniques are playing a crucial role.

“All of these technology solutions will drive improvements in bits per hertz and cost per bit,” Melone said.

The latest technique is use of LTE protocols over unlicensed spectrum. “With our key suppliers we are active in the standards process and will likely deploy a pre-standard version in the not too distant future,” said Melone.

Unlicensed spectrum might play a key role supporting Internet of Things networks especially focused on industrial, agricultural, utility and environmental sensor applications.

Such applications typically require low power platforms of low cost, but able to transmit messages at reasonable distances.

SigFox claims to have a network providing 80 percent coverage of France and has signed up operators in the Netherlands, Spain, UK and Russia, and is working on satellite connections as well.  

The point is that, if one assumes the next big leap in mobile and untethered communications will be to support machines, not people, then unlicensed spectrum is likely to play a bigger role.

Has T-Mobile US Finally Changed U.S. Mobile Market Share?

T-Mobile US might, by the end of 2014, caught Sprint in terms of total number of subscribers. Possibly early in 2015 T-Mobile US could pass Sprint, with T-Mobile US becoming the third largest mobile service provider.

Market share shifts of that type, at the top of the market, do not happen very often. 

Will Apple Get into Connected Car?

It isn’t yet clear what Apple might be up to in terms of connected car activities. Some think Apple will build an automobile, while others think Apple only wants to unify as much of the in-vehicle communications and applications experience as possible.

Whatever the reason, Apple has us all talking about the possibilities, which might be a signal sent about future huge product categories beyond the watch. Whatever the long term thinking, that possibility will help Apple attract and retain key employees attracted by the opportunity.

Despite the apparent fact that consumers do not really seem to understand what a connected car is, analysts are forecasting huge sales for connected car products and systems.

Transparency Market Research predicts the connected car market will reach $132 billion by 2019.  

DirecTV Boosts 2014 Revenue, Earnings, Free Cash Flow

Even if one believes streaming services are about to begin taking more market share in the subscription TV and video business from linear providers, that does not mean every provider is losing customers, market share, or revenue.

In its most recent quarter, DirecTV grew Latin America full year revenues three percent, to $7.1 billion, largely by adding 903,000 net new subscribers.

Full year U.S. revenue grew five percent  to $26 billion, driven by average revenue per user growth of 4.7 percent and annual subscriber growth of 99,000 accounts.

Full year 2014 earnings per share Increased 12 percent, while free cash flow grew 21 percent to $3.1 billion.

What AT&T, in the process of acquiring DirecTV, cares about is the free cash flow, even more than the incremental revenue and the ability to sell entertainment video, plus its other mobile services, nationwide.