U.S. MVNOs Have Less than 6% Market Share

The mobile virtual network operator business in the United States isn't all that big, according to the latest data published by the Federal Communications Commission.

Basically, no more than six percent of retail connections are supplied by MVNOs. 

Bharti Airtel Is Now World’s 3rd Largest Telecom Company

Bharti Airtel has passed China Unicom to become World’s third-largest telecom company in the world, based on subscribers. Airtel now has 303 million subscribers, while China Unicom has 299 million subscribers, according to WCIS (World Cellular Information Service).

WCIS is a global telecom research tool powered by data analysis firm Informa Telecoms and Media (ITM) Research.

Out of 303 million customers of Bharti Airtel, 228.25 million are based in India, and the rest are from 17 countries in Africa, Sri Lanka and Bangladesh.

Globally, the largest telecom company is China Mobile, with  626  million customers. Vodafone is second largest,  with 440 million customers.

India Mobile Ops Raising Data Prices

Higher revenues are what many expect for Bharti Airtel, which is investing $1 billion to upgrade its networks for 3G services.

Bharti Airtel has hiked mobile data prices for 2G and 3G services by 13 percent to 18 percent for its prepaid customers. The 3G charges for 1GB have been raised to Rs 299 against Rs 255 earlier valid for a period of 28 days.

Separately, Idea Cellular raised its own mobile data prices about 18 percent.  

Further, Bharti Airtel 2G charges for 1GB plans have been raised to Rs 199 compared with Rs 176 valid for a period of 28 days.

Nokia will be a major supplier for the 3G upgrades.  

NTT Docomo Earns 15% of Revenue from Non-Traditional Sources

NTT Docomo earns 15 percent of its revenues from non-traditional sources, the largest proportion of any telco worldwide, and largely earned from various “Smart Life” apps and services.

Revenues from Docomo Smart Life businesses, which provide consumers with advice, information, security, cloud storage and other lifestyle services, grew 22 percent to 421 billion yen (US$3.5 billion) in the year ending March 2015.

Those initiatives are important because Docomo has seen its revenue from telecom services decline every year since 2006, making Docomo a key test of how a mobile service provider can create brand new revenue streams to displace declining legacy revenues.

In part, that growth has been fueled by third party content providers on the “dmenu” portal.

Suppliers grew from 700 in March 2012 to 3,000 in March 2016.

Monthly users of dmarket grew to 20 million by March 2016, up from 1.5 million in March 2012.

Beyond dmarket, Docomo has also deployed other value added services including navigation, local information, NFC-based wallet and information services, credit card and carrier-billing-based payments, translation apps, health and wellness services, insurance, pet and child tracking. DOCOMO also provides an i-concierge service as well.

However one wished to describe the strategy--moving up the value chain, creating a platform or becoming an app enabler--Docomo is a pioneer for other mobile service providers also forced to explore growth strategies based on brand new services.

Global IT Spending Under Pressure, Currency Largely the Reason

Communications services will remain the largest information technology spending segment in 2015, rising to nearly $1.5 trillion, according to the latest forecast by Gartner.

But this segment is also experiencing the strongest decline among the five IT sectors. Price erosion and competitive threats are preventing revenue growth in proportion to increasing use within most national markets.

Also, global IT spending is on pace to total $3.5 trillion in 2015, a 5.5 percent decline from 2014, Gartner says, largely an effect of a stronger U.S. dollar.

In constant-currency terms, the market is projected to grow 2.5 percent.

"We want to stress that this is not a market crash. Such are the illusions that large swings in the value of the U.S. dollar versus other currencies can create," said John-David Lovelock, research vice president at Gartner. "However, vendors do have to raise prices to protect costs and margins of their products, and enterprises and consumers will have to make new purchase decisions in light of the new prices."

Worldwide IT Spending Forecast by Sector (Billions of U.S. Dollars)

	2014	2014	2015	2015
	Spending	Growth (%)	Spending	Growth (%)
Devices	693	2.4	654	-5.7
Data Centre Systems	142	1.8	136	-3.8
Enterprise Software	314	5.7	310	-1.2
IT Services	955	1.9	914	-4.3
Communications Services	1,607	0.2	1,492	-7.2
Overall IT	3,711	1.6	3,507	-5.5

Source: Gartner (June 2015)

86% of Enterprises Plan to Have SDN Deployed by 2016

A survey of 153 medium and large businesses found nearly 80 percent planning to implement SDN technology in the data center  in 2017, Infonetics Research, a unit of IHS Inc., said. More than six in 10 of the respondents were either conducting or planning to launch SDN lab trials this year.

SDN investments have been growing about 192 percent, according to Infonetics Research. Some 86 percent of polled enterprises planned to have SDN live by 2016, a 2014 survey suggested, while SDN investments are predicted to grow 15 times by 2019.  

SDN benefits are expected to include lower capital expense, lower operating costs and higher productivity. Automated disaster recovery and support of hybrid cloud operations also are drivers.

The ability to  monitor application traffic patterns in the network is expected to lower capital expense.

SDN used to automate provisioning of application services and networking hardware such as servers and switches, lowering operating costs.

Companies planned to apply SDN in automated application deployment, optimized network traffic flow and moving virtual machines is expected to boost productivity.

Despite Cloud Growth, Enterprises Also Invest in Own Data Centers

Even as cloud computing continues its inexorable march, most mid-size and large businesses also are planning to increase spending on their mission-critical data center facilities in the near future, says 451 Research.

Nearly 90 percent of data center operators surveyed in North America and Europe had plans to increase data center facility spending, according to 451 Research, which said

Nearly 25 percent of survey respondents said they planned to increase spending on data cetners within the next 90 days.

Enterprises are consolidating smaller data centers into larger centralized centers.

Insane GoPro Video

In and out of that rock eye at 100 miles per hour. 

Messaging Revenue to Drop 42% by 2021

Mobile service provider messaging revenue will decline 42 percent to less than $53 billion by 2021 as over the top alternatives displace the need for texting.  

The global base of active over-the-top (OTT) messaging users increased by over 40 percent during 2014 with the average user sending over 900 messages per user per month, over eight times more than the average user of text messaging services, Strategy Analytics said.

At the same time, predictions for OTT messaging revenue, at least in terms of subscription revenue, show that OTT messaging cannibalizes some amount of activity, but in other ways simply destroys the revenue source.

“By 2021 we forecast global revenue for OTT messaging services to approach $13 billion  in revenue,”  said David Kerr, Strategy Analytics SVP.

Can Internet of Things Make Telcos "Platforms?"

However one assesses the possibility of succeeding, some argue major telcos have to become platforms.

That would be a profound challenge under any circumstances.

A computing platform is, in the most general sense, the environment within which computer software is designed to run within, obeying its constraints, and making use of its facilities.

The notion of “platform” therefore is a shortened form of the complete term “computing platform.”

Conceptually, there are different levels of abstraction. Hardware architecture, operating system or runtime libraries provide examples.

You see the problem. Historically, computing has been one business and set of functions, communications a separate business. Becoming a platform” necessarily means moving “up the protocol stack” and into a different industry, fundamentally.

Platforms can include pure hardware such as embedded systems, browsers, applications, software frameworks, cloud computing, virtual machines or virtualized version of a complete system, including virtualized hardware, OS, software and storage.

Internet of Things could well be a place where a former “telco” could create a new role, as a platform for development. Whether “telcos” can become generalized “platforms” might be another matter.

Some might argue that, to the extent it is possible, mobile service providers already are moving in that direction. Connected car and connected healthcare provide examples.

“As the US market focuses on the next stage of its evolution--from voice to text to data and now to constant connectivity and what you do with it—competition for market share and retention of subscribers takes center stage,” said Susan Welsh de Grimaldo, Strategy Analytics director of  wireless operator strategies.

The U.S. mobile business has entered into a new phase, evolving from voice to text to data and now to constant connectivity and what you do with it, according to Strategy Analytics Wireless.

With fewer new subscribers to sign up for mobile service for the first time, carriers have focused on transitioning consumers to smartphones, 4G LTE and monetizing their data use. Now carriers are focusing on adding value and content.

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The reasons are simple enough: by 2020, adoption will have reached 128 percent. Growth will be hard to manage based solely on adding new “human” accounts and customers.

That is why mobile service revenue will grow just 0.2 percent to reach US$197 billion in 2020, up slightly from $195 billion in 2015.

Mobile data revenue might grow only  3.3 percent.

Dept. of Justice Will Not Block AT&T Purchase of DirecTV or Impose Conditiions

AT&T’s $48.5 billion acquisition of DirecTV has not raised antitrust issues, and is expected to receive Department of Justice clearance, Bloomberg reports.

The merger still needs approval from the Federal Communications Commission, which could demand concessions of its own, however.

AT&T already has publicly committed to expanded investments in rural high speed access as part of the deal. Beyond that, it would not be unusual for AT&T and FCC staffers to have informally discussed some voluntary concessions with FCC staff, were they deemed necessary by either party.

In substantial part, that clearance is structural. DirecTV is a satellite-TV provider and AT&T is telecommunications and mobile company. DirecTV is a leading video entertainment supplier.

But DirecTV has about 21 percent market share. AT&T has about six percent share. So the combined company should have about 27 percent share. That degree of concentration is not typically an issue. Once a firm reaches 30 percent, thinking tends to change.

In the past, no firm has been allowed to garner more than 30 percent share in the linear video, telephone or mobile business. 

DirecTV has virtually no high speed access customers, though it co-markets satellite high speed access provided by third parties.

Nor does DirecTV compete in the voice or mobile services businesses.