Sprint Wants to Shut Down its Long Distance Voice Business in September 2015

Call it a sign of the times. Sprint has asked the Federal Communications Commission for permission to get out of the long distance voice business by Sept. 15, 2015.

During its fiscal fourth quarter of 2014 (the first quarter of 2015 on a calendar basis), Spring had long distance voice service revenues of $264 million, down from $289 million in the same period in 2013.

On an annual basis, the long distance voice business might generate less than $1 billion, while requiring operating, marketing and capital expense arguably greater than that.

That, at least, is what one might infer from the fact that Sprint is simply going to shutter the business unit, rather than selling it.

IN 1997, for example, Sprint reported spending $1.2 billion on marketing and promotion, for example.

The issue, of course, is whether there are any buyers. There might not be.

Once upon a time, the long distance voice business was an industry segment in its own right. The former AT&T, MCI and Sprint were, at one time the three leading contestants.

But AT&T was sold to SBC, MCI was absorbed by Worldcom, and then those assets taken over by Verizon. And now Sprint is simply going to shut down its international long distance business.

As recently as 1989, it was still possible to refer to the long distance voice business as “booming,” at a time when long distance voice generated $60 billion in revenue.

Call it a product life cycle: long distance has largely become a feature, not a product, in the domestic U.S. market.

Satellite Communications Market is Bigger--Perhaps Much Bigger--Than it Used to Be

It’s too early to say anything definitive about how much demand might exist for new high throughput satellite services, medium earth orbit and proposed low earth orbit satellite constellations. But the market “is bigger than we originally thought,” said David Burr, O3b Networks VP.

“Our customers are growing faster than they thought they would, or that we thought they would,” says Burr. “Many of our customers have doubled the amount of capacity they buy from us in less than a year (and O3b Networks has only been commercially available for less than a year).”

“There is lots of untapped business,” Burr said.

In large part, one might argue, that is because consumer Internet traffic now drives global capacity demand, in every segment of the transport business. And just about every trend in the global Internet applications business is driving bandwidth demand.

For starters, most applications use more bandwidth than they used to consume, a direct result of the shift to a highly-visual and image and video capable Web. In substantial part, the demand growth results from increased end user consumption of video entertainment of all types, from YouTube to video advertising to other streaming video features and sites.

At the same time, the shift of most apps to cloud delivery means most apps now require wide area network connectivity.

In the mobile business, the shift from 2G to 3G and 4G networks has dramatic implications for end user bandwidth consumption.

Cisco Visual Networking Index

Consider that a typical feature phone might use about 22 megabytes a month, where a 4G phone often consumes 2 gigabytes per month. All that end user data has to be backhauled or trunked to Internet points of presence.

Summary of Per-Device Usage Growth, MB per Month
Device Type	2014	2019
Nonsmartphone	22 MB/month	105 MB/month
M2M Module	70 MB/month	366 MB/month
Wearable Device	141 MB/month	479 MB/month
Smartphone	819 MB/month	3,981 MB/month
4G Smartphone	2,000 MB/month	5,458 MB/month
Tablet	2,076 MB/month	10,767 MB/month
4G Tablet	2,913 MB/month	12,314 MB/month
Laptop	2,641 MB/month	5,589 MB/month

Source: Cisco VNI Mobile, 2015

“That’s a key opportunity,” said Burr.

Beyond that substantial market, as nearly the entire global mobile phone base shifts to use of 3G and 4G networks and devices, there are the other traditional revenue segments for any satellite operator, namely trunking for enterprises and government entities as well as telcos.

The maritime segment, for example, has been a traditional customer segment for satellite services, as are energy industry offshore drilling platforms, said Burr.

At the moment, “trunking” is the main revenue driver for O3b. But in five years time, IP trunking (wide area network connections) should be about an equal contributor, alongside enterprise services, government services and mobile backhaul.

Burr does not think it is part of O3b’s roadmap to add low earth orbit capabilities in the future, but certainly will be exploring ways to add new features, such as satellites that support greater numbers of fully steerable beams, allowing O3b to focus its footprint where paying customers require the connections.

Nobody yet knows how big the MEO and LEO business might eventually be. But the shift of nearly all global traffic to IP, and the eventual ubiquity of mobile Internet access connections, suggests the market potential is quite a bit larger than ever has been the case in the past.

In Game of Giants, Minnows Proliferate (No Offense to Minnows)

The telecommunications business is full of niche services and service providers, ranging from competitive local exchange carriers that only sell to business customers in some buildings, as well as many hundreds of wireless broadband providers operating largely in rural areas.

Webpass is among the specialized Internet service providers targeting consumers and businesses in some buildings, in a growing number of metro areas.

In Boston, netBlazr is a provider of residential Internet to “select large multi-tenant buildings.” Those sites contain 100 or more dwelling units per building.

Webpass offers business Internet connections from 10 Mbps to 1000 Mbps and residential Internet connections at 100, 200, or 500 Mbps in some buildings in San Francisco, Oakland, San Diego, Miami, Chicago, and Boston.

Of course, advertised speeds are about marketing more than end user experience, some would argue.

“We aim to provide ample bandwidth for all tasks our users wish to perform, including browsing, voice chat, video chat, and HD streaming video,” netBlazr says. “For the standard plan, we aim for a minimum of 12 Mbps available during all hours.”

That is deemed sufficient for streaming a high definition movie while supporting web browsing as well, says netBlazr. That actually is not unreasonable, in today’s environment.

In specific tests conducted by the Federal Communications Commission to mimic basic web browsing—accessing a series of web pages, but not streaming video or using video chat sites or applications—the total time needed to load a page decreased with higher speeds.

However, the performance benefit diminishes beyond about 10 Mbps, as latency and other factors begin to dominate.

For single users buying speeds faster than 10 Mbps,  consumers are unlikely to experience much if any improvement in basic web browsing from increased speed.

But higher speeds may provide significant advantages in a multi-user household, of course, where a basic rule of thumb is 10 Mbps for each expected concurrent user.

In the End, Consumer Demand Matters

Sustainability matters. And that applies to business models for fixed network Internet access service, in rural parts of the United States as well as Europe.

According to a recent survey, 83 percent of rural customers sell Internet access at 10 Mbps or greater, up from 66 percent in 2013.  But only about a third of customers actually buy service at 10 Mbps or higher.

In the European Union, about 68 percent of homes are able to purchase fixed network access at a minimum of 30 Mbps.

At 89.6 percent, rural fixed broadband coverage also stayed at its 2013 level, but availability of NGA technologies in rural areas increased from 18.1 percent in 2013 to 25.1 percent of rural homes passed by high-speed networks in 2014, according to the

EC Digital Agenda Scoreboard  

Some 45 percent of rural service providers who responded to the survey said optical fiber serves at least half of their customers.

About 85  percent of survey respondents indicated they had a long-term fiber deployment strategy.

Fully 74 percent of those respondents with a fiber deployment strategy plan to offer fiber to the node to more than 75 percent of their customers by year-end 2017.

About 67 percent plan to offer fiber to the home to at least half of their customers over the same time frame.

High speed access is purchased by about 70 percent of service provider customers.

About a third buy service at 10 Mbps or faster. About 10 percent buy service at 6 Mbps up to 10 Mbps. About nine percent buy service at 4 Mbps to 6 Mbps.

Population density in most member service areas is generally one to five customers per square mile. But low density, and very long access loops, does not seem to account for the relatively low speeds most customers are buying. Fully 83 percent seem to be able to buy it.

1.4 Billion Mobile Subs in India by 2020

There will be 1.4 billion mobile subscribers in India by 2020, resulting in penetration of 100 percent, according to Ericsson.

The appendix reveals that the GSM/EDGE (2G) subscriber base is expected to peak in 2015 and expected to decline thereafter as subscribers migrate to 3G services.

Third generation (WCDMA/HSPA) subscriptions are expected to grow from over 120 million in 2014 to around 620 million by 2020, with the proportion of WCDMA/HSPA subscriptions in the total subscription base reaching 45 percent.

Fourth generation LTE subscriptions are likely to reach more than 230 million, forming around 17 percent of the total subscription base by 2020.

Second generation GSM/EDGE networks presently have the widest reach in India, with 95 percent population coverage.

Third generation networks cover more than 35 percent of the Indian population at the end of 2014, and is expected to cover approximately 90 percent by the end of 2020.

About 40 percent of the population will be covered by LTE networks by 2020, Ericsson predicts.

Adoption of smartphones by older age cohorts generally is required to boost LTE adoption, and use of smartphones is growing in India.

The proportion of people aged over 50 who use smartphones quadrupled between 2013 and 2015, from a small base, Ericsson says. In the same period, there was a three hundred percent increase of mobile data users in the 31 to 40 age cohort.

On average, Indian smartphone users spend over three hours a day on their devices and 25 percent of them check their phones over 100 times a day, Ericsson says.

Around one third of the time spent on smartphones is used for apps, primarily chat, social media, and gaming.

Some 65 percent of mobile broadband smartphone users in India prefer video streaming to downloading videos on handsets.

The number of smartphone subscriptions is expected to reach over 750 million by 2020, up from 130 million in 2014.

As a result, monthly mobile data consumption is expected to increase 18-fold by the year 2020 over current levels.

Does Anybody "Need" a Gigabit? Now?

Do U.S. consumers really “need” gigabit Internet access? Not really. But that doesn’t matter. Speeds continue to be pushed higher, as “gigabit” now is a marketing reality, if not an adoption certainty, yet. Where consumers have a choice of buying gigabit and lower speed services, ranging from 40 Mbps to 300 Mbps, many choose to do so.

By 2020, perhaps 60 percent of U.S. households will be able to buy high speed access at a minimum of 100 Mbps, for example. The issue is whether many leading ISPs will simply build to the gigabit standard, or whether some other intermediate step (100 Mbps or 300 Mbps) will be taken, prior to upgrading to a full gigabit.

Again, the issue is not “consumer need,” but “marketing push.” Google Fiber has succeeded in changing market expectations.

source: Technology Futures

Perhaps shockingly, U.S. residential high speed access rates have increased about as fast as Moore’s Law would predict, as crazy as that seems for a “construction dependent” business such as fixed network access.

That is why forecasts of gigabit service, on a widespread basis, by about 2020 are based on historical precedent, not simply immediate trends. To be sure, “availability” and “purchase” are different matters. Networks might make gigabit speeds available, but that does not automatically mean consumers will buy service at such speeds.

The value-price relationship will matter. Where 100 Mbps or 300 Mbps is available at a perceived better value-price relationship, consumers will buy those services, even when it is possible to buy a gigabit service.

source: Technology Futures

EC High Speed Access Relies to Shift to VDSL

Three decades ago, had you taken a poll of telecom industry executives about whether fiber to the home would be adopted faster in Europe or the United States, you likely would have gotten more votes for Europe.

Whether one would get the same results in 2015 is a more open question. The latest study conducted by IHS suggests that VDSL continues to be the fastest-growing high speed access technology, and has been since 2013.

In 2013, says IHS, when companies in many study countries refocused their broadband deployment strategies towards upgrading existing copper networks rather than investing in fiber to the home.

Growth in overall high speed access coverage “can be primarily attributed to an increase in very-high-bit-rate digital subscriber line (VDSL) coverage, which grew by over seven percentage points in the year, reaching 37.6 percent of EU households by the end of 2014,” IHS says.

“VDSL coverage grew significantly in a number of markets,” Fellenbaum said. “Most significant increases were recorded in Denmark, Austria, and Iceland, all reporting increases in VDSL coverage exceeding 30 percentage points.”

Fiber to the home also increased, of course. At present, FTTH is available to about 18.7 percent of European households.

In 2014 Lithuania and Latvia remained the two countries with the highest FTTH coverage, reaching nearly 95 percent of households in Lithuania and 83.2 percent of households in Latvia.

The strongest growth in FTTH in 2014,  coverage compared to 2013, was recorded in Portugal and Spain, where FTTH coverage increased by 16.1 and 22.1 percentage points respectively, reaching 65.8 percent of Portuguese and 44.8 percent of Spanish homes.

Technology Futures suggests some 60 percent of U.S. homes will have access at a minimum of 100 Mbps by about 2020. The difference in markets is that many of those homes will be served by cable TV operators using the new DOCSIS 3.1 standard, able to supply a gigabit over hybrid fiber coax networks.

Telcos and independent Internet service providers will have to switch to fiber to the home to reach such speeds, for the most part, as copper loops in the United States generally are too long to support VDSL at a gigabit.

Long Term Evolution coverage also is increasing rapidly. At the end of 2014, 4G LTE mobile broadband was available to 79.4 percent of EU households, a 20 percentage point increase compared to 2013 and the fastest growing of the followed technologies.

EU homes able to purchase fixed network access at a minimum of 30 Mbps reached 68.1 percent of homes.

Fixed broadband coverage remained the same as in 2013 at 97 percent.

At 89.6 percent, rural fixed broadband coverage also stayed at its 2013 level, but availability of NGA technologies in rural areas increased from 18.1 percent in 2013 to 25.1 percent of rural homes passed by high-speed networks in 2014, according to the

EC Digital Agenda Scoreboard  

source: EC Digital Agenda

Claro will Zero Rate Facebook, Twitter and WhatsApp

America Movil’s Brazilian mobile unit, Claro, will zero rate access to Facebook, Twitter and WhatsApp, allowing its customers to use those apps without buying a data plan, or charging usage against data plans.

Separately, European legislators likely will not support a European Union (EU)-wide ban on positive price discrimination, which allows operators to provide unlimited free access to certain services such as Facebook, Wikipedia and music streaming services, Reuters reports.

Networks Will Drive Computing Advances

Networking and networks will drive computing in the future, said Amin Vahdat, Google fellow and technical lead for networking. "Networking is at an inflection point in driving next-generation computer architecture," Vahdat said.

"What computing means will largely be dependent on our ability to build great networks over the years," Vahdat noted.

To give you some idea of how long major changes in computing architecture can take, consider that it was in 1984 that Sun Microsystems first began talking about the concept that “the network is the computer.”

As so often happens, the direction was right but the timing was early. The network, in the 1980s, could not effectively support what we now call cloud computing.

Fundamentally, the architecture was a cloud-based computing fabric, where most “computing” took place remotely, not at an end user terminal.

Yet only recently has that become a reality, with the popularity of cloud-based applications that make the network, if not THE computer, then the functional equivalent of the computer bus.

Comcast in Talks to Buy T-Mobile US?

Deutsche Telekom reportedly is in talks with Comcast about a possible purchase of T-Mobile US , a move that could vault Comcast immediately into the top ranks of U.S. mobile service providers, while imperiling Dish Network’s valuation, and its ability to monetize its significant mobile spectrum assets.

As with all such reports, there are many reasons for such information to leak. DT might actually hope it can sell for a higher price to Comcast. At the very least, having other serious bidders provides negotiating leverage.

But part of the attraction also could be Comcast’s willingness to assume full control, buying all outstanding shares of T-Mobile US. That would allow DT a full and immediate exit from the U.S. market.

There always could be regulatory issues. Dish Network might have an easier time gaining antitrust approval.

And, as always, the parties might not be able to agree on fundamental terms. Still, Comcast is a strategic buyer; T-Mobile US a strategic seller. And some have suggested a Dish Network purchase of T-Mobile US would eliminate some other eventual buyers of that whole asset, namely Comcast.

One must assume it is impossible for any of the four largest U.S. mobile firms to acquire or merge with each other, based on past regulatory decisions and views. That leaves only other third parties.

Should Dish Network decide not to bid for T-Mobile US, or should any such bid be rejected by Deutsche Telekom, Dish Network likely would have to consider a major network sourcing deal with Sprint, something the Sprint network now is specifically crafted to support.

That would still leave Dish Network requiring additional assistance on the marketing and operating fronts, however, Having a network is one thing. Creataing an effective national sales and fulfillment presence is quite another challenge.

Dish already has tried, unsuccessfully, to buy Sprint and Clearwire, nor is SoftBank likely to want to sell, so a Dish acquisition of Sprint is unlikely.

Consumers Say They Want to Pay $2 Per Channel, and No More than $38 a Month for Entertainment Video

Surveys of consumer preferences for some products are notoriously out of step with actual consumer behavior. So it is with consumer sentiments about video entertainment.

According to a survey of more than 3,100 consumers in the United States and Canada, respondents preferred buying channels on an à la carte basis. That should come as no surprise: choice is a powerful consumer impulse.

On the other hand, consumers also indicated they would pay no more than $38 for 17 channels, in other words, about $2 a channel, according to the Digitalsmiths Corp. Q1 2015 Video Trends Report.

In the Digitalsmiths survey, the top three networks consumers said they wanted were ABC, the Discovery Channel and CBS. Really? That reminds some of us of the surveys taken over decades that showed surprisingly high interest in public broadcasting stations that never seemed to match actual behavior.

That noted, the success enjoyed by Netflix could offer any number of suggested implications. Consumers clearly are willing to pay about $8 a month for streaming access to a wide variety of TV shows and movies. But how much more they are willing to pay for is the question.

More than 46 percent of respondents said they use Netflix, while Amazon Prime usage hovered around 19 percent. Hulu and Hulu Plus were viewed b about 11 percent of respondents.

Most of the respondents who reported they buy over the top streaming services spend between $6 and $11 per month. Many of us would consider that a likely floor, rather than a ceiling.

Spending in the $9-to-$11 category grew from just over 19 percent in 2014 to 22 percent in the first quarter of 2015. In other words, there seems to be demand for higher spending, if providers can create the right packages.

At question, though, is appetite for large packages of “channels.” Consumers might, or might not, continue to value “big bundles” of channels, compared to less-expensive smaller bundles, in the future.  

Cablevision Systems Corp., for example, appears to believe it could well lose 20 percent to 25 percent of its basic cable subscribers--those buying its standard “big bundles”--in about five years. Those customers might choose rival over the top streaming services or downgrade to smaller bundles.

Global Mobile Service Revenue Drops for 3rs Straight Year

Global mobile service revenue fell two percent in 2014 year over year, to $781 billion, according to the IHS Infonetics. That marks the third straight year of global revenue decline.

“Hobbled by mobile saturation and continuous weak consumer spending across the board, the mobile services market in EMEA dropped 14 percent in 2014 from the prior year,” said  Stéphane Téral, IHS research director for mobile infrastructure and carrier economics.

As always, aggregate statistics hide regional divergences. Mobile services revenue grew seven percent between 2013 and 2014 in the Caribbean and Latin America region.

Revenue was flat in North America and Asia Pacific (China slowed).

Overall, mobile broadband revenue rose nearly 33 percent year over year in 2014, but voice and messaging declined at double digit rates.

For the second year in a row, voice revenue and usage decreased in 2014

IHS forecasts global mobile broadband revenue to grow at an 11.7 percent compound annual growth rate from 2014 to 2019.

High Speed Access More Profitable Than Video by 7:1 Margin, Cablevision Says

Make no mistake, high speed access is far and away the most-profitable service sold by the firm to its consumer customers.

Speaking at the Guggenheim TMT Symposium in New York, James Dolan,  Cablevision Systems Corp. CEO said that the company's high speed access services outperform its linear TV services “hugely” in terms of profitability.

"The video product itself has lost a tremendous amount of margin," he said. "Dollar for dollar, the data product outperforms the video product seven to one at our company in terms of profit.”

Dolan believes the number of customers paying for the traditional big bundle of TV channels is going to shrink by about 20 percent to 25 percent over the next five years, as programmers themselves go direct to end users, over the top alternatives gain popularity and distributors create and market smaller video bundles.

"Connectivity has really become our number one product," Dolan said.

KT Launches Giga LTE for Gigabit Download Speeds

KT Corp. plans to  commercialize the world’s fastest mobile network, called “Giga LTE,” that apparently provides that speed by bonding both Wi-Fi and LTE capacity, the Korea Herald reports.  

Giga LTE supports a maximum download speed of 1.17 Gbps, about 15 times faster than the LTE and four times faster than the LTE-Advanced. Presumably the system uses some form of carrier aggregation.  

Giga LTE also provides upload speeds 10 times faster than LTE-A, and relies on use of Samsung smartphones including the Samsung Galaxy S6 and S6 Edge.

“Another five to six more high-end and mid-end Samsung handsets, compatible with the Giga LTE, will be released in the latter half of 2015 along with some LG Electronics handsets, Korea Telecom says.