Will Mobile Supply 90% of Internet Access by 2020?

If, by 2020, about 90 percent of humans can buy Internet access from a mobile broadband network, it is safe to predict that Internet access will largely be provided by mobile service providers. 

If availability is as robust as Ericsson believes, service providers will have ample incentives to create service plans most potential users can afford. 

Facebook Lite Launched

It has been quite a long time since any developer really needed to worry about writing really-efficient code.

It has been a long time since any major app has had to be designed to work with limited bandwidth, storage and computing power.

In markets where gigabits of storage cost only cents, few worry about device clock speed and fixed network Internet access inexorably pushes toward gigabit per second ranges, Wi-Fi really is becoming nearly ubiquitous and Long Term Evolution networks are highly available, the notion that efficiency really matters is a bit foreign.

But efficiency is a big issue and a big cost element in markets where reliable access is limited to 2G networks, 3G coverage is spotty at best and there are no fixed networks, while people use feature phones or lower-end smartphones.

Efficiency means better user experience and lower end user costs in many markets where cost is a big issue.

So it is that Facebook has created Facebook Lite , a new version of Facebook for Android that uses less data and works well across all network conditions, said Vijay Shankar, Product Manager for Facebook Lite.

“More than a billion people around the world access Facebook from a range of mobile devices on varying networks,” he said. “In many areas, networks can be slow and not able to support all the functionality found in Facebook for Android.”

Facebook Lite enables a reliable Facebook experience when bandwidth is at a minimum.

The Facebook Lite app consumes less  than 1MB so it is fast to install and quick to load. It includes Facebook’s core experiences like News Feed, status updates, photos, notifications and more.

Facebook Lite is available in countries across Asia, and soon will be launched in parts of Latin America, Africa and Europe, Shankar said.

Were consistency an issue, one would expect to hear complaints about creation of a two-tier Internet.

Smartphones will Represent 70% of All Mobile Phones in Service by 2020

By 2020, 70 percent of all mobile phones in service globally will be smartphones, Ericsson now predicts. Video continues to be the key growth factor, with 60 percent of all mobile data traffic forecast to be from online video by 2020.

Global mobile subscriptions are growing by 1.5 percent quarter-on-quarter in the first quarter of 2015 and around five percent year over year, with Asia driving much of the growth.

India grew the most in terms of net additions (26 million), followed by China (eight million), Myanmar (five million), Indonesia (four million) and Japan (four million).

source: Ericsson

source: Ericsson

Ultimately, Dish Network and T-Mobile US are Sellers, Not Buyers

Some might reasonably argue that, no matter what happens with Dish Network and T-Mobile US (acquisition or not), both assets ultimately belong to owners that structurally must be  “sellers” not “buyers.”

Sprint likely also remains a strategic seller, not a buyer, even if the potential unwillingness of its owner to sell is an issue.

The obvious strategic buyer is Comcast. But a combined Dish Network and T-Mobile US presents some problems.

Comcast does not need, and likely does not want, the satellite TV assets Dish Network owns. So it might want to spin them off. To whom that could be done is the issue. Dish CEO Charlie Ergen is correct that Dish Network is an asset that dwindles, over time. Any potential buyer would have to deal with that, as well.  

Some might argue a combined T-Mobile and Dish is a far more attractive asset, in the sense that it combines T-Mobile US facilities with Dish Network spectrum.

But that same argument would hold for Sprint--facilities and lots of spectrum--as well. And there would not be the need to spin off the satellite TV assets. But Sprint seems not to be for sale. T-Mobile US is for sale.

A bigger Dish Network arguably is more attractive for a firm such as Comcast, even with the need to dispose of the satellite TV assets, because of the enhanced spectrum holdings.

But, under different conditions, Sprint would provide the same benefits to Comcast.

In one clear sense, Dish Network might be acquiring T-Mobile US to escape the satellite TV niche, and also to set up a more attractive eventual exit.

Wi-Fi Gaining Traction in Sri Lanka

Wi-Fi hotspots might be a more important platform for Internet access across South Asia than many presently believe.  

Chanuka Wattegama, board director of the Information and Communication Technology Agency in Sri Lanka, said Sri Lanka has a low-cost Wi-Fi project that offers the first 100MB for free each month.

About 40 percent of users manage to stay under the 100 MB mark, he said. Perhaps paradoxically, some larger mobile operators seem to believe highly available Wi-Fi helps theire business, while smaller providers fear the low-cost Wi-Fi service is a threat.

The M Hotel Singapore  |  10-11 September 2015

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Can Legacy Telcos Survive, Long Term?

Some would argue there are regulatory and other obstacles to investment in high speed access infrastructure in many emerging markets. Policies that effectively favor incumbent service providers might be a frequent complaint on the part of competitive providers.

Some of us would argue the problem is far more complicated than that. Rights of way, for example, can be formidable obstacles.

Business models are likely the biggest issues. Where some might argue the issue include disincentives for incumbents to invest, which is true enough, it might be reasonable to argue that new providers might ultimately emerge, in a sort of service provider product cycle.

To be blunt, there are growing signs that the traditional service provider business model is too costly to survive, long term, where competition is unleashed. That is not an easy challenge to finesse, if one is a policymaker.

In at least some instances, the implications might be that most legacy telephone providers will go away, as they simply cannot maintain present revenues, and have cost structures too high.

Consider the U.S. market, where rival cable TV companies slowly have managed to capture the leading market share in high speed access, while retaining the biggest share of the linear video business, a decent share of voice accounts, and rapidly-growing share of the business communications market.

Cable operators also are readying an eventual assault on the mobile business as well. To be sure, the outcome is not foreordained. The point is that cable TV operators are attacking with a lower-cost model that is structural. And some of us would argue that in a competitive market, the lowest cost provider tends to win.

In France, Illiad has shown the power of the strategy, and also the danger for incumbents.

In most markets, though, there are not rival terrestrial fiber access networks, as exists in the U.S. fixed network telecom industry.

So regulators have built competitive frameworks on wholesale access to incumbent networks. Some would argue that is likely the only viable solution, but still leaves the infrastructure owner clear incentives not to make life easy for its wholesale customers.

That is why some believe rival facilities-based networks are a more-sustainable way to promote competition.

Beyond that suggestion, structural problems with weighty political implications might remain.

Perhaps the incumbent telephone company model is unsustainable long term. It was designed for monopoly conditions, and therefore has a legacy cost structure that perhaps can be trimmed only so much, for legal and institutional reasons.

If so, in any future competitive market, enabled by relatively radical changes (either a full structural separation or enabling viable lower-cost infrastructure based competitors to enter the market, the lower cost new competitors eventually will win.

There are implications for regulation, as the present “national network” might go away, to be replaced by a new constellation of providers who cannot easily afford all the “universal service” requirements of the old legacy providers.

Neither will the new providers, because they operate with lower costs, support the same number of jobs, at the same pay rates as legacy telephone companies.

They will tend to operate at lower profit margins, hence will generate less surplus for authorities to tax.

Taken altogether, a huge and unsettling shift will be coming, in at least some markets, as competition intensifies.

Across the globe, incumbent profit margins and profits are tightening or declining. That might be one sign they cannot actually survive a broader competitive market, over the long term.

5G Networks Might Launch in 2020; Big New Revenue Ecosystems Not So

Ignore for the moment the realities that we do not know yet how to define fifth generation mobile networks; the fact that in many markets 3G has yet to be fully commercialized, to say nothing of 4G; or that many other essential parts of an idealized 5G ecosystem are complicated in their own right (big data, new network architectures, commercial acceptance of new IoT services and apps).

With some supporters aiming to launch commercial 5G networks as early as 2020,  some might question whether the benefits will be tangible so soon.

Most of the new applications supported by 4G networks actually were envisioned when 3G was launched. By that reckoning, it might take a decade before new 5G-enabled apps and services are widely used.

Sometimes it is hard to determine, in advance, the ways in which networks deliver value, long past the time when they “should” be eclipsed or retired. Telenor, for example, plans to shut down its 3G network in 2020, before its 2G network is turned off in 2015.

The reason is that 2G is seen as working fine for many developing Internet of Things or machine-to-machine applications that do not require much bandwidth, where the 3G network is simply a slower version of 4G.

Such uncertainties are almost certain to affect 5G as well, particularly as some see 5G as the underpinning for Internet of Things businesses which in their own right are complicated to create.

New 5G networks might actually launch in 2020. It seems doubtful the new applications and revenue streams will emerge, in a substantial way, that soon. We saw the same lag in 3G.

An Era Potentially Passes With Possible Dish Network Purchase of T-Mobile US

Dish Network and T-Mobile US owner Deutsche Telekom might not yet agree on much, other than that John Legere, T-Mobile US CEO, would remain CEO if Dish Network were to buy T-Mobile US.  

Important details, such as a purchase price and the mix of cash and stock that would be used to pay for any deal remain unresolved, according to a report in the Wall Street Journal.

Still, if a deal can be reached, Dish Network will have answered a key question, namely the issue of what Dish Network really intends to do about its mobile spectrum assets.

Gone would be the option whereby Dish Network simply sells off its spectrum, a prelude to an eventual sale of the remainder of Dish Network, which would not likely fare well in a market where bundles are the foundation of the consumer business and linear video revenue decline has accelerated.

Dish Network would become, for the first time in its history, a facilities-based triple play provider whose revenues are de-leveraged from entertainment video. T-Mobile US currently earns about $31 billion annually from mobile services. Dish Network earns about $15 billion, nearly all from video services.

Dish Network does sell satellite Internet access to about 591,000 customers, but the revenue is relatively insignificant. At $480 annually, Internet services might generate about $283 million a year.

So, for the first time, Dish Network would earn two thirds of its revenue from non-video sources.

For T-Mobile US, the transaction would bring much additional spectrum, get Deutsche Telekom out of the U.S. mobile market and likely make T-Mobile US among the first U.S. mobile firms to move significantly into mobile-delivered content services.

Though the structure of the U.S. mobile business would not change, the shape of the U.S. video entertainment business clearly would be different.

For the first time, most major providers in any part of the former linear video business, the mobile or fixed line communications business would be in the “triple play” or “quadruple play” bundled services business.

That had been true for the leading fixed providers for some time. But assuming AT&T’s purchase of DirecTV is approved, and if Dish Network does buy T-Mobile US, only Sprint would remain among the major firms without a linear video business component.

That should matter less as time passes and the linear video business declines.

But it is worth noting that the three to four decade period in which “satellite TV” existed as a market category would pass, just as the former “long distance company” category disappeared earlier.

As had happened earlier for telcos and cable TV companies, the era of “single product” strategies in consumer markets will have passed in the satellite entertainment business as well.