If Zero Rating Leads Rapidly to Full Use of the Open Internet, is that a Problem?

The debate over zero rating is complicated because it spans domains; tactics for increasing Internet access and use, and also highly valued principles.

On one hand, some think Internet.org is a proven way to dramatically increase sampling of the Internet by people who have not used it before, as well as a bundle of value that has proven to create significant sustainable demand for Internet access services.

Some matters are incontestable: if one’s objective is to quickly encourage people to try the Internet and its apps, Internet.org has proven it works.

It also is true that Internet.org raises some thorny issues about “permissionless innovation” and the notion of curated apps.

No doubt, Internet.net curates apps. It perhaps is not, as the Electronic Frontier Foundation argues,

And “neutrality” actually is not the central issue. Curation is the issue.

As EFF notes, the  “guidelines are neutral as to the subject matter of the site.” In other words, no category of apps, or type of content, are excluded.

On the other hand, Internet.org knows full well there are severe bandwidth limitations in its target markets. To improve end user experience, Internet.org deliberately wants apps curated so that they work reasonably well even in a very challenging bandwidth environment.

In other words, Internet.org wants the apps to work even on inexpensive feature phones, on slow data networks. So yes, apps have to “ask permission” in terms of being architected to work on bandwidth-limited networks.

Specifically, that means stripping out images greater than 1Mb in size, videos, VoIP calls, Flash and Java applets and JavaScript.

EFF would prefer a uniformly rate-limited or data-capped free service. “We have confidence that it would be possible to provide a limited free Internet access service that is secure, and that doesn't rely on Facebook and its partners to maintain a central list of approved sites,” EFF argues.

The matter is complicated. Keep in mind that nobody gets paid anything as part of the Internet.org program. All apps and app providers can participate. The program works.

Against that, EFF suggests a program that simply offers free access.

Ignoring the philosophical objections to curation, it is not so clear that simple “no charge” access is sustainable. That is not to disparage the effort; simply to acknowledge that large numbers of mobile service providers have not yet done so.

We do know, on the other hand, that time-limited programs such as Internet.org has organized, with “free access” ending at some point, have worked to significantly expand the base of regular Internet users.

Globe Telecom in the Philippines found the number of data users on Globe’s network doubled, after offering Facebook on a zero rated basis for about a year.

The portion of Globe’s prepaid subscriber base who were active on mobile data expanded from 14 percent in September 2013 to 25 percent in November 2014, Facebook and Globe say.

In other words, the mobile Internet customer base nearly doubled.

Globe’s Free Facebook campaign (and similar internet outreach efforts by other players in the market), led to a six million increase in the number of active mobile internet users in the Philippines as a whole.

Both EFF and Internet.org support rapidly getting people to use the Internet. Globe Telecom found “free Facebook” did so.

There are philosophical issues and principles at stake, to be sure. But Globe Telecom’s experience might suggest the disagreement is more about tactics. Rather quickly, people migrate off the promotions and to the open Internet.

An Embarassment of Riches for High Speed Access in Singapore

M1 has become Singapore's first operator to offer a 10 Gbps service over the national fiber network, the “Next Generation Nationwide Broadband Network.”

M1 has also launched a 1Gbps service aimed at small and mid-sized businesses, priced at S$996 (US$796) per month for up to 10 access points and public Wi-Fi provisioning.

Separately, MyRepublic has launched the nation's first 1Gbps no-contract fiber service as part of plans to expand its presence in the market.

MyRepublic will offer the no-contract gigabit  service to consumers at S$69.99 per month. A two-year contract sports a price of S$49.99.

The total fixed network broadband market, based on current accounts, is a bit over 11.5 million, total, including all platforms (fiber, digital subscriber line, cable TV).

The existence of the Nationwide Broadband Network means any service provider can buy wholesale access at speeds up to 10 Gbps and resell service in Singapore.

The total fixed network broadband market, based on current accounts, is a bit over 11.5 million, total, including all platforms (fiber, digital subscriber line, cable TV). The

Millimeter Wave Spectrum Potentially Available for Communications is Truly Prodigious

It sometimes is hard to comprehend just how much useful communications spectrum exists in the millimeter wave bands (3 GHz to 300 GHz), even if some blocks already are allocated and even if  high attenuation has key network architecture implications.

“You can take all of the useful spectrum we now use from DC to 30 GHz and drop it into the lower end of the millimeter-wave region and still have 240 GHz left over,” said Lou Frenzel of Electronic Design.

“The unlicensed band at 60 GHz contains more spectrum than has been used by every satellite, cellular, WiFi, AM Radio, FM Radio, and television station in the world,” some would say.

Spectrum at 28 GHz, 38 GHz, and 70-80 GHz looks especially promising for next-generation cellular systems, many would argue.

The bandwidth available in the 70 GHz to 80 GHz frequency band, a total of 10 GHz, is more than the sum total of all other licensed spectrum available for wireless communication in the United States, for example.

Some four bands in the upper millimeter wave region have been opened for commercial applications.

Of the four bands, the 59-64 GHz band (commonly referred to as V-band or the 60GHz band) is governed by FCC Part 15 for unlicensed operations. The band us suited to very short range point-to-point and point-to-multipoint applications.

The 92-95 GHz band (commonly referred to as W-band or the 94 GHz band) is also governed by the FCC Part 15 regulations for unlicensed operation, though for indoor applications only.

The 94 GHz band may also be used for licensed outdoor applications for point-to-point wireless communication per FCC Part 101 regulations.

However the band is less spectrally efficient than the other three bands due to an excluded band at 94 to 94.1 GHz.

The 71 GHz to 76 GHz and 81 GHz to 86GHz regions (commonly referred to as E-band or the 70 GHz and 80 GHz bands), are reserved by the U.S. Federal Communications Commission for licensed operation, as the most ideally suited millimeter wave band for point-to-point wireless communication applications, some would traditionally say.

With new spectrum sharing techniques developing, it is not so clear how access might eventually evolve across the millimeter wave region.

What is clear is that a prodigious amount of new communications spectrum is available, albeit with signal attenuation issues.

source: University of Notre Dame

Quite a Lot Can Change in 25 Years

Quite a lot can change in 25 years. So it is with the cable TV market. In 1993, the Federal Communications Commission ruled that the U.S. cable TV market (linear subscription TV) was not generally competitive, allowing local franchising authorities to regulate rates for basic cable tiers of service.

In 1993, cable operators had 95 percent market share. By 2013, cable TV share had dropped to 54 percent.

From 2012 to 2013 the number of subscribers dropped from 101 million to 100.9 million, with most of the losses coming from cable TV operators.

Satellite TV market share was 34 percent, while telephone company providers had gained 11 percent market share.

The FCC now is considering whether, given the state of the linear video market, the opposite general conclusion should hold, namely that cable TV should be presumed to operate in effectively competitive markets.

Furthermore, most observers believe linear video already has passed its peak, and will, with greater speed, begin to falter even more as streaming alternatives come to market.

Under such conditions, it likely does not make sense to regulate a declining market too actively.

Facilities-Based Competition Offers More Room for Innovation, Typically

Among the reasons U.S. retail communications service providers do not like the new common carrier regulation of consumer Internet access, both mobile and fixed, is that common carrier regulation introduces huge amounts of uncertainty in what otherwise would be rather simple pricing and packaging decisions.

The argument is pretty simple: any single pricing or packaging decision can, under the common carrier rules, be challenged at the Federal Communications Commission, potentially opening an inquiry that could take a year to resolve.

Obviously, given the speed at which most communications markets evolve, that introduces huge amounts of delay, even when the review process eventually allows a service provider to proceed with a change.

There are other potential implications. In the United Kingdom, Ofcom the U.K. communications regulator, says it will not rule out ordering a structural breakup of BT, into a wholesale-only network services arm, and a retail provider operation.

Such structural separation is a feature of the communications framework in Singapore, New Zealand and Australia.

Proponents of structural separation favor the perceived positive impact on competition. Opponents tend to focus on the possible limits on innovation. When all providers are buying wholesale access and features from one supplier, it is harder to differentiate.

One example of facilities-based competition comes in the U.S. fixed network high speed access market, where Google Fiber and Comcast, on their own networks, can create disruptive offers that would not be possible if they were buying wholesale access, just as all other retail services suppliers do.

XCom Global Offers Free Internet for Nepal Earthquake Aid Workers.

XCom Global, Inc., a provider of low cost wireless Internet access rental services for international travelers, is offering free Internet access to relief workers who are heading to Nepal to aid in disaster recovery.

XCom Global will supply its World Wi-Fi hotspots at no charge for relief workers.

Relief workers who would like to request a rental device should contact XCom Global at 1-877-520-8242 or make a request via the link on the company website: https://www.xcomglobal.com/wi-fi-disaster-relief.

Rental units will be shipped to them in advance of their departure from the U.S. at no charge.

XCom Global also has expanded Long Term Evolution coverage in Asia-Pacific.

In addition to Japan and South Korea, LTE connectivity is now available in Thailand, Taiwan, China and Australia.

XCom Global’s personal mobile hotspots provide secure, reliable Internet connectivity for up to 10 Wi-Fi enabled devices, have all been pre-tested to ensure that they are compatible with the specific network requirements of the local carrier.

“LTE has been slow to fully roll out across the globe, but we are implementing coverage as quickly as the markets allow,” said Joe Fennell, Chief Operating Officer (COO), XCom Global, Inc. “We are committed to providing the fastest connectivity possible. Our LTE service provides travelers with connection speeds of up to 75Mbps. As a comparison, fast home Internet connections are around 24Mbps with an average connection speed of only 5.8 Mbps.”

XCom Global’s high-speed Internet access rental service provides international travelers unlimited data usage and the freedom to wirelessly roam abroad in over 175 countries around the world. T

Travelers arrange for their coverage before they set out on their trip so they can have an affordable data connection upon arrival.

No technical expertise or unauthorized unlocking is required to receive a private and secure Wi-Fi connection using the company’s World Wi-Fi hotspots, including support for WPA2 and VPN pass-through. Customer service is available 24 hours a day.

CenturyLink Boosts Gigabit High Speed Access for SMBs

CenturyLink says it had made gigabit high speed access available to more than 115,000 additional U.S. business locations and in five additional states.

After that expansion, the gigabit service is available to nearly 490,000 small and midsized business (SMB) locations in 17 states.

CenturyLink is launching symmetrical gigabit fiber service to SMB customers in parts of Iowa, Idaho, North Carolina, Ohio and Wisconsin and expanding its availability in nine of the 12 states where CenturyLink initially deployed gigabit fiber for business customers in 16 cities in August 2014.

The nine states are: Arizona, Colorado, Florida, Minnesota, Nevada, New Mexico, Oregon, Utah and Washington. CenturyLink also provides 1 Gbps speeds in parts of Missouri, Nebraska and South Dakota.

Programming Contracts Now Shape Competition in Streaming Business

Contracts are a major impediment to distributor experiments with smaller bundles of channels that cost less, but contracts also are being used as a way of keeping Google, for example, from getting rights to National Football League content, argues CNBC financial personality Jim Cramer.

“Programmers are doing the longest contracts possible with the the NFL, to keep Google out,” said Cramer.

Eventually, that tactic will fail, others might argue. “Google will buy some rights to NFL games,” said Charlie Ergen, Dish Network CEO and chairman. “There is no reason for them not to so so.”

Getting that sort of content could provide a major boost for Google’s streaming efforts, and complicate revenue prospects for competing streaming and linear content distributors.

Though one can get a robust argument about where power lies within the content distribution ecosystem, it would be hard not to note the possibly growing power of content owners.

There are only a few things that people ever have wanted to do, using networks: Communicate, consume content, buy and sell or play. Back in the days of single-purpose networks, that meant using one network to watch TV, another to listen to radio, a third to talk.

More recently, people have used satellite TV and cable TV networks to consume TV.

Now, people use multi-purpose networks to do everything, frequently using mobile networks to do so almost anywhere they want.

Of course, there is a problem, for network owners. In the past, the network owners controlled the content or functions. Not anymore.

These days, content and apps can be provided over open networks, without any business relationship between access services provider and app provider.

That means “power” arguably is held by the owners of popular and scarce content, such as NFL games. It is an arguable point, but “content is king” might once again become the best way to describe the video entertainment ecosystem.

Telefónica Hopes to Put $1 Billion to Work as Part of Investment Fund

Telefónica has formed a limited partnership with Coral Group, creating a US$200 million investment fund to discover, create and deliver innovative products and solutions for customers in Europe and Latin America.

The investment by Telefónica Open Future to create new products resembles in some ways the Verizon acquisition of AOL. Nobody yet knows how important AOL might become, and other investments related to over the top media have not done well.

Telefónica and Coral plan to work with up to four additional communication service providers around the world, creating a fund with as much as US$1 billion to invest in new technologies and services.

Telefónica has made investments of more than US$7.5 billion in 2014 to help transform the company into a major market player in areas such as next generation networks, big data and machine learning, and the Internet of Things.

AT&T Doesn't Believe Net Neutrality Rules Will Stand

AT&T CEO Randall Stephenson told news network CNBC he is “fairly confident” the Federal Communications Commission rules on network neutrality will be changed, one way or the other.

AT&T is one of several firms that have filed lawsuits challenging the new rules, in particular the change to common carrier regulation.

Stephenson pointed out that the Commission is just one vote away from reversing the rules (a 3-2 majority now could become a different 3-2 majority in the future), and Congress also is indicating intent to act to change the rules as well.

Because of that view, AT&T is planning capital investments on the assumption the existing rules will be changed.

That could be one reason why, despite the rules, AT&T is moving ahead on gigabit access investments. The other compelling reason is simply that the market context has changed.

When a major competitor such as Comcast commits to pass 21 million locations with gigabit access by the end of the first quarter of 2016, that changes the game. Comcast already expects to be able to sell 2 Gbps services to about 85 percent of those homes.

Google Fiber was a nudge. Comcast’s move is a direct attack.

Here's a transcript of the full interview.

Virgin Media is Biggest Competitor to BT in High-Capacity Wholesale

Virgin Media is a surprisingly significant competitor to BT for high-capacity wholesale access in the U.K. market, a new study by Ofcom has found. Separately, Virgin Media is the biggest competitor to BT in the high-capacity wholesale market, especially among organizations with 100 and more employees, BDRC Continental also found.

One notable observation is that in the higher-speed Ethernet wholesale, Virgin Media has higher market share than BT.

According to Ofcom, about two percent of capacity sales are for dark fiber, and most of those sales take place in the London market. Fully 95 percent of sales are of lit services (Ethernet and wave division multiplexed services).

High-capacity leased lines are important products. Service providers make reasonable profit margins and gross revenue on such connections, while enterprises and large organizations depend on them.

Such networks are relatively expensive, as well, so there often are few alternate suppliers. That is one reason any proposed changes to the price regulation framework are highly contentious. In 1999, 2012, for example, the U.S. Federal Communications Commission suspended its special access rules, to allow pricing flexibility.

In 2012, the Commission reversed course and suspended the flexibility rules for special access.

In the United Kingdom, Ofcom, the U.K. communications regulator, is considering some deregulation of services in some areas where high numbers of competitors now operate.

The U.K. market for leased line services is worth approximately £2 billion annually at the wholesale level.

BT’s wholesale SDH/PDH revenues were approximately £0.45 billion in 2014, and declined by 24 percent from the previous year.

Revenues for wholesale Ethernet services operating at bandwidths up to and including 1Gbps were approximately £0.8 billion in 2014, and changed little from 2013.

Regulated wholesale revenues for services capable of support speeds above 1Gbps (Ethernet and wave division multiplexing) were £67 million in 2014, roughly double the corresponding amount in 2013.

According to BT’s estimates, there were still over 200,000 circuits (at sub-2 Mbps and 2Mbps) in operation in 2013.

BT forecasts a sharp decline in TI services over the period until 2019 with 2 Mbps circuits providing the only significant remaining demand.

This is consistent with BT’s plans to shut the platform that supports sub-2Mbps circuits in 2020.

As you would guess, BT forecasts significant growth for Ethernet and WDM services, in particular for Ethernet at 100 Mbps and 1 Gbps.

The expected decline in 10 Mbps services suggests 100 Mbps and to some extent 1Gbps Ethernet leased lines are increasingly viewed as entry level speeds for leased lines users.

source: Ofcom

source: Ofcom

A separate survey by BDRC Continental suggests a very high adoption of either cable modem or ADSL-based high speed access, and also high use of mobile for data connections, rather than a fixed connection.

source: BDRC Continental

About 76 percent of small businesses (10 to 100 employees) spend less than £50,000 on business communications services in the average yea.

About 70 percent  of medium sized businesses (101 to 500 employees) spend under £100,000.

About 17 percent of large businesses (501 or more employees) spend under £50,000.

source: BDRC Continental

U.S. ISP Business Has Gotten Tougher

It has been clear for some time that the operating environment faced by U.S. communications service providers would be getting tougher.

“The U.S. telecommunications industry is currently faced with pressing concerns like intense pricing competition and severe spectrum crunch,” say analysts at Zacks.

The mobile segment faces saturation, both of customers overall and smartphone-driven revenue upgrades as well, Zacks says. “Massive promotional expenditures and cut-throat pricing competition are major concerns presently plaguing the industry.”

At the same time, competition in the fixed segment of the business has heated up as well.

That is going to cause pressure on gross revenue as well as profit margins, right at a point where access providers must invest heavily in their core networks to accommodate must-faster access speeds (gigabit fixed network speeds and fourth generation mobile network investments).

At the same time, network neutrality rules already are shaping access provider revenue models, most likely in a more-limiting way. In part, the impact comes from limiting consumer access to “best effort” service and extending those rules to the mobile business.

By definition, stipulating “best effort access” automatically rules out any revenue models or plans that involve quality of service mechanisms.

What is so far unclear are the longer-term implications of regulating Internet access as a common carrier service. Already, there are indications the extension of net neutrality thinking to carrier interconnection, which logically and historically is unrelated to consumer access policies, is affecting service provider practices.

Specifically, it is not so clear that traditional compensation principles based on the amount of traffic exchanged between networks will remain the case. The amount of settlement-free peering, even when traffic exchange is highly unequal, might result, with implications for business models of “eyeball” domains and “content delivery” domains.

At the same time, the lawfulness of some retail charging policies, especially zero rated apps (akin to toll free calling), is under challenge.

The consumer impact could be substantial, as well.

The net effect of net neutrality rules is that “brute force” bandwidth upgrades will remain the dominant way of providing quality of service, compared to potential alternative network management methods.

Still, the direct impact of the new rules in unclear. Capital investments to upgrade access speeds are dictated as much by competitive concerns as anything else. And with Google Fiber, independent Internet service providers, Comcast, other cable TV companies, AT&T and CenturyLink all upgrading to gigabit speeds, there is market pressure to match those upgrades.

So the issue is whether the U.S. access provider market is robust and profit rich, or becoming less robust and less able to afford investment in new facilities.

On that score, there is some disagreement about growth prospects for future telecom global revenue. Some predict slow but rather steady growth. Others think a slowdown could happen.

Common carrier regulation might have significant long-term effect on investment decisions, since many ISPs will have a harder time growing revenue, creating new products and innovating.

The net neutrality rules adopted by Federal Communications Commission  in February 2015 make high-speed broadband access a public utility service under Title II of the 1934 Communications Act instead of section 706 of the 1996 Telecom Act.

The reclassification is “a radical change” and means the “FCC can now strongly regulate the ISPs,” Zacks says.

Much remains unsettled, as the FCC rules are under court challenge. But the net impact of a number of FCC decisions, including the redefinition of “broadband” to reflect a minimum of 25 Mbps downstream, has effectively removed many providers and services from the “broadband” domain (think satellite TV, fixed wireless and some telco services).

Conversely, with the upgrades to gigabit services in much of the market, more capital spending will be required, on the part of fixed network providers. It isn’t so clear that there is a near-term fix for satellite and fixed wireless providers, as spectrum is the primary constraint for those suppliers.

High throughput satellites will help. And TV white spaces might be an essential tool for fixed wireless providers.

But the main point is that the operating environment has gotten more difficult for most ISPs.

Price-Value Seems to Deter Switch to Fiber to Home in Vietnam

In Vietnam, DSL is currently the technology of choice, with 4,472,036 people connected in this way. A total of 280,127 subscribers use FTTH  services. But growth of fiber to home customers is substantial, and although the overall numbers are small, cable TV  access could be a factor at some point.

Since 2014, uptake of fiber to home subscriptions has accelerated, although digital subscriber line remains the overwhelming access technology, at about 4.6 million units in 2014, compared to some 403,000 fiber to home accounts.

Significantly, availability is not as great an issue as retail cost or perceptions of price compared to value. Though fiber to home services cost more than digital subscriber line, in major metro areas, the price difference is not too wide.

FTTH costs about US$16.60 a month, and DSL only costs a bit less, in Hanoi and Ho Chi Minh City. But FTTH speeds might be only 12 Mbps. In other words, the FTTH performance advantage, compared to DSL, might be so great.

A survey of business users found FTTH take rates of about seven percent in Hanoi and Ho Chi Minh city.  

The Vietnamese Government has set itself the target of achieving seven million broadband subscribers across Vietnam by the end of 2015 and wants this figure to rise to more than 19 million by 2020. What remains unclear are the access platforms to be used to reach those goals.

In Vietnam, to showcase another big change, huge new deployments of fixed network infrastructure using optical fiber have recently been made, and where fixed network high speed access adoption has grown over 1,000 percent since 2005.

Still, with costs for home passed, using GPON-based fiber to home platforms, still above $1,500 per location, fiber to home costs will be prohibitive in many instances. In 2011, most fixed network high speed access connections in Vietnam were supplied using asymmetric digital subscriber line (ADSL), a copper-based technology.

In Vietnam, DSL is currently the technology of choice, with 4,472,036 people connected in this way. A total of 280,127 subscribers use FTTH  services.

The Vietnamese Government has set itself the target of achieving seven million broadband subscribers across Vietnam by the end of 2015 and wants this figure to rise to more than 19 million by 2020. What remains unclear are the access platforms to be used to reach those goals.