Asian Consumers Want Sponsored Data

A survey of 3,500 people across seven Asian countries, including India, China and South Korea found that 62 percent would consider sponsored data packages that provide free access to specific content.

"Content providers, mobile service providers and consumers have been stuck in a no-win situation when it comes to mobile data usage," said Mary Clark, Syniverse CMO. "Consumers want to use more data along with richer mobile engagement, and operators and content providers are missing out on the revenue that this usage could deliver."

Nearly half of respondents (49 percent) said they would be willing to accept coupon offers from data-use sponsors, 42 percent would be willing to accept offers from entertainment businesses, 31 percent from restaurants, bars and cafes and 29 percent from travel firms.

The survey suggests sponsored data plans could significantly affect consumers' content consumption.

Data-intensive content, such as subscription video services (which are currently the most costly services to access), would see increases in usage of 40 percent.

Consumption of subscription-based music services by 25 percent.

Other services expected to see moderate increases include free video services, voice and video calling services over data networks, and online games.

Consumers are most willing to accept sponsorship for reduced or free data costs from entertainment providers, restaurants and travel companies.

Consumers also understand and are willing to accept sponsored messages and advertising in exchange for free access to websites, social networking and video services.

Those findings should not come as a shock. For any desired product, lower prices boost consumption.

Data-intensive content, such as subscription video services (which are currently the most costly services to access), would see increases in usage of 40 percent," Syniverse said.

Sponsored-data packages could, calculates On Device Research, lead to a $6 billion revenue opportunity for mobile operators and their partners--in Asia alone--within the next five years.

"Our analysis shows that the sponsored-data model has the potential to substantially affect consumers' behavior favorably for all parties involved," said Sam Brown, CEO of economists Strategic Economic Engineering Corp (SEEC) who worked with On Device Research to calculate revenue.

Consumers Want Shared Data, Sponsored Data Plans

Even if many policy advocates want to ban sponsored data plans, consumers overwhelmingly suggest they like such policies.

A survey conducted by Citrix confirms the pattern. Many subscribers worry about exceeding their data caps. They therefore are are quite open to sponsored data plans.

Usage of many apps would increase significantly, if users did not have to worry about the amount of data consumed.

Some 82 percent of survey respondents fear the data usage impact of mobile apps on their monthly data limit and have avoided using an app because of that fear.  

Fully 67 percent of those who watch at least one mobile video per month say they have exceeded their monthly data limit.

Adults with children say they use more data than those without children. Some 72 percent of parents believe they exceed monthly limits, while only 46 percent of childless adults say they exceed them.

The survey suggests subscribers will use more data services if they’re offered through a data plan sponsored by a content provider.

Fully 71 percent of men and 62 percent of women would engage more if sponsored data plans were available.  

Specifically, subscribers would access bank account info (39 percent), watch educational videos (33 percent), watch advertisements (28 percent), hold a teleconference (21 percent) or file an insurance claim (18 percent).

source: Citrix

source: Citrix

Growing mobile data consumption is a given, but retail service plans matter. And sponsored data is among the tools ISPs have available to boost app usage, in addition to lower prices and shared data plans.

Global mobile data traffic is set to reach 52 million terabytes (TB) in 2015, an increase of 59 percent from 2014, according to Jessica Ekholm, Gartner research director, with 3G and 4G connections growing globally from 3.8 billion in 2015 to 5.1 billion in 2018.

By 2018, mobile data consumption will reach 173 million TB.

"Mobile data traffic is soaring worldwide, more than tripling by 2018," said Ekholm.

Ekholm pointed out that retail data plans directly affect user behavior. German consumers, for example, are less likely to watch videos or consume large amounts of mobile data, compared to consumers in the United States, where data plans tend to be  larger.

When asked if they would wait until they get to a Wi-Fi area to download an app or stream content from a video app, 54 percent of Germans agreed and only 36 percent of U.S. respondents said yes.

Some 43 percent of U.S. users felt unconstrained by their data plans , while just 20 percent of German users felt the same, Ekholm said.

That is likely to change, as video usage, as a percentage of total data usage, will rise from 50 percent in 2015 to 60 percent by 2018.

Ekholm said video optimization and content delivery networks, caching content closer to the consumer, would help. But contract plans that single out video traffic to allow users to reach a certain level--without touching their contract data cap--will increase usage and revenue.

That latter practice, of course, would be viewed as an impermissible violation of “network neutrality” rules in some markets, where sponsored data or free access to some apps is not allowed.

Some would say that is the problem with network neutrality rules that extend too far beyond ensuring that all lawful apps are accessible, directly affecting ISP ability to create features and plans that allow widespread sampling of the Internet or optimized performance of some apps (video, especially) that are highly bandwidth intensive.

Ekholm also noted that retail service plans directly affect usage in ways beyond the size of usage buckets. Families with children are driving mobile video usage, and one notable finding made by Gartner in a recent survey was that users on shared data plans--at any income levels--are “least concerned” about streaming video usage on their mobile data plans.

Ekholm attributed that behavior to the ability to share data across multiple devices on a single account.

Others might note that such relatively unconstrained behavior results because shared data plans effectively offer protection from overage charges as well as lowering the overall cost per bit of mobile data.

In the U.S. market, 47 percent of users 45 to 54 stream 15 minutes or more of mobile video apps over mobile networks per session.

About 40 percent users 18 to 24 stream more than 15 minutes per session. That is the impace of Netflix viewing on mobile devices, Ekholm noted.

There is a very small difference between the percentage of U.S. smartphone users that use YouTube "less than five minutes" and "30 minutes or more," she said.

"The evidence is that once customers commit to a larger plan, their usage habits change significantly, resulting in longer-term revenue benefits” for mobile service providers, Ekholm said.

India Dept. of Communications R&D Unit Unveils Solar-Powered Wi-Fi Hotspots and Trunking

Signal trunking systems using Wi-Fi protools and solar-powered Wi-Fi hotspots are among innovations developed by the Centre for Development of Telematics in India. C-DoT is a research arm of the Department of Communications. 

India will have 236 million mobile Internet users by 2016 and 314 million by 2017, according to a report by KPMG produced on behalf of the Internet and Mobile Association of India.

India also will have over 500 million total Internet users by 2017. In June 2015, there were more than 350 million Indian Internet users.

The 3G user base in India is projected to grow at a CAGR of 61.3 percent compound annual growth rate  from 2013 to 2017. 

There were approximately 82 million 3G subscribers in India at the end of 2014 and will reach 284 million by end of year 2017.

Reliance Communications Deploys 5 New Cloud Nodes in India

Reliance Communications (RCOM) has deployed Cloud Xchange (Cloud X) nodes in Delhi, Mumbai, Chennai, Bangalore and Hyderabad.

“These Cloud Xchange nodes can help government departments access 240 times the amount of compute power currently available in government data centers, and over six times the high speed storage currently available in India, said Reliance Group Chairman Anil Dhirubhai Ambani.

The Cloud X nodes are designed to support cloud networking and orchestration,  including self-provisioning of network resources and bandwidth-on-demand.  

That means infrastructure provisioning in a few clicks, as well as deployment of complex multi-tiered enterprise applications directly on enterprise networks in minutes, rather than months.

“The network must now undergo a profound transformation, from a static entity, to a dynamic, intelligent, application-aware fabric that can support multiple traffic requirements, diverse geographies and flexible pricing models,” said Bill Barney, Reliance Communications (Enterprise) and Global Cloud Xchange CEO.

The Reliance Group today is India's largest provider of data center facilities, with a total capacity of over 600,000 square feet spread across the country and 11 data centers.

Zero is a Compelling Price

As many have noted, across many products and industries, zero is a very compelling price. As many also have noted, government regulators can create, destroy and modify whole industries, while helping or harming specific actors within industries, by essentially mandating zero prices.

In the case of spectrum auctions, the very availability of spectrum creates the foundation for business models. But rules about “who can bid” also affect market entry and potential market shares.

Spectrum set-asides or discounts further shape the potential fortunes of some contestants.

Many would argue the recent classification of Internet access services as common carrier services will have direct and indirect impact on Internet access and telecommunication markets and market structure, as well.

For Netflix and other content delivery domains, one direct implication seems to be that domain interconnection costs have been affected.

Though the contract details have not been made public, it would appear that traditional common carrier practices about network interconnection, which are based on amount of traffic exchanged, now have been pushed further in the direction of settlement-free peering, irrespective of traffic flows.

Paradoxically, some might argue, we now have the worst of all worlds, The best of all worlds, from a supplier perspective, is a de facto monopoly in a de jure non-regulated framework.

Conversely, the worst of all worlds, for some suppliers, is monopoly regulation in a competitive framework (de facto price controls in open markets).

Cable TV companies once were clear examples of the former, common carrier regulation of Internet access an example of the latter.

Implicitly, mandatory interconnection of Internet domains irrespective of traffic exchange volumes also provides structural business advantage for content delivery domains at the expense of customer-aggregation domains (consumer ISPs).

Government regulators often have logical reasons for tilting regulations in favor of some industry segments, protecting some segments or encouraging other segments while essentially penalizing other segments.

That might be a growing pattern in some countries which believe they can foster their domestic content and app industries by essentially restructuring business costs within the Internet ecosystem.

Mandatory interconnection really is not the issue. Divorcing interconnection from direct cost structures might be the big issue.

Verizon Adds Symmetrical 100 Mbps Tier to 25, 50, 75, 150 nnd 500 Mbps Options for Internet Access

Verizon now is selling symmetrical 100 megabits per second FiOS Internet access in New York City, Long Island, the northern suburbs and northern New Jersey.

Verizon says it is the only communications provider to offer a symmetrical 100 Mbps service in the New York metro area.

Verizon already sells symmetrical 75 Mbps and symmetrical 150 Mbps services.

The standalone 100 Mbps FiOS Internet service costs $54.99. Double-play and triple-play offers offer further savings.

When purchased as part of a triple-play bundle, the service initially costs $89.99 with a two-year price guarantee and without signing a contract. After two years the bundle price increases by $20 a month.

Triple-play bundles featuring the 150 Mbps symmetrical service sell for  $99.99 monthly. That bundle also includes a two-year price guarantee and does not require a contract.

In addition to the new 100 Mbps tier, Verizon also sells symmetrical access at  25, 50, 75,150, 300 and 500 Mbps.

Verizon also recently introduced the 100/100 mbps FiOS Internet option in the Southern California market.

61% Annual 3G Growth for India Mobile

India will have 236 million mobile Internet users by 2016 and 314 million by 2017, according to a report by KPMG produced on behalf of the Internet and Mobile Association of India.

India also will have over 500 million total Internet users by 2017. In June 2015, there were more than 350 million Indian Internet users.

The 3G user base in India is projected to grow at a CAGR of 61.3 percent compound annual growth rate  from 2013 to 2017.

There were approximately 82 million 3G subscribers in India at the end of 2014 and will reach 284 million by end of year 2017.

“With more than 300 million Internet users, India has the second largest internet user base in the world,” said Ashvin Vellody, KPMG partner. Still, Internet penetration has reached only about 19 percent.

The next wave of growth will driven by adoption of mobile internet, the report argues.

In 2014, the active Internet user base in rural India was 6.7 percent of the overall rural population of 905 million and accounted for 61 million users.

Some 4.4 percent of the total rural population used a mobile device to access the Internet, up from 0.4 percent in 2012.

But bandwidth might continue to be an issue. The report suggests 2G technologies will dominate in rural areas for at least a few more years.

In June 2014, 38 percent of active Internet users in rural areas did so using their mobile phones as the primary access venue.

"Over the Top" Will Challenge U.S. Cable TV Operator Collegiality

When and how it happens is not so clear, but moves by Comcast and other U.S. cable TV operators into the streaming media and mobile businesses are going to raise business issues that have not had to be grappled within the past.

Some might argue those issues might occur with business voice services as well. Though there no longer is any reason in law why one cable company, in area A, does not compete with another cable operators in area B, that is basically the unwritten industry rule.

Cable companies historically have not competed against each other, in their franchised territories. That isn’t so unusual in the fixed network telco business, either. Historically, only one telco was authorized in any geographic area.

In the U.S. market, since the latter 1980s, telcos began to compete head to head, in the same regions, first in the long distance industry, and then in the mobile industry.

At some point, hosted services, cloud services and all other over the top apps will raise new issues about “where” a cable company competes, and whether that means competition with another cable operator.

To be sure, operators are likely to try and maintain the old rules to the greatest extent possible. Industry collegiality virtually requires that approach.

But a nationwide mobile service will necessarily cover all or most cable TV areas, no matter who the “local” operator happens to be. In the same manner, a hosted voice service can, in principle, be sold anywhere, on “any broadband connection, not just in those areas where a given cable TV operator has a fixed network.

Right now, Comcast will sell its over the top streaming service only to customers who buy it high speed access service, supplied by Comcast’s own networks. But that’s akin to Google allowing people to use YouTube or search only when they buy Google Fiber.

“Over the top” apps are not inherently bound by geography, though they might well be confined to some countries, or barred from some countries, for other reasons.

In the past, when cable operators have thought about ways to create a “cable version” of mobile service, the approach was to federate along existing cable operator across geographies. That never really worked very well.

Any eventual successful “cable version” of Netflix is likely going to be sold across all U.S. geographies, to gain scale. Whether federating will work is the issue.

The same might  be said for any other national U.S. business services: scale requires working nationwide. Cable likely will try and federate in some way.

But it might ultimately be the case that this is unworkable. And that might mean that a few large cable companies wind up competing, more or less directly, in “new” services consumed using the Internet. That would be hugely disruptive, but might be inevitable.

SK Telecom to Support LoRaWAN

Among important mobile service provider network initiatives, 5G gets the most media attention. Methods of bonding Long Term Evolution spectrum across carriers, or bonding LTE with Wi-Fi, tend to get less attention.

But there’s also LoRaWAN, a low-power wide area network intended to support Internet of Things and machine-to-machine devices and services.

SK Telecom now is the first Asia-based mobile service provider to join the LoRa Alliance (http://lora-alliance.org),  the group working to create a new protocol to enable the Internet of Things (IoT).

LoRaWAN uses spread spectrum technology to support data rates range from 0.3 kbps to 50 kbps and provide long battery life.

SK Telecom plans to develop meters using the protocol, and launch trial services such as location monitoring and smart street light control solutions.

Sprint Testing Carrier Aggregation for its LTE Network

Sprint has promised performance upgrades of its U.S. network, and it appears carrier aggregation (the equivalent of fixed network channel bonding) is one way it plans to do so.

Sprint apparently is testing a bonded 40-MHz channelization (2×20), which will boost data speeds in more than 40 U.S.  markets.

source

Electronic SIMs are Part of a Pattern

Apple and Samsung are in advanced talks to join the GSMA push for standardized electronic subscriber identity modules (SIMs) used by mobile operators to activate service for any subscriber and device.

The GSMA wants to create a standardized and embedded SIM that would allow for instant activation or porting of devices to any network with the right frequency support, without the need to manually insert the traditional SIM.

Networks expected to support the plans include AT&T, Deutsche Telekom, Etisalat, Hutchison Whampoa, Orange, Telefónica and Vodafone.

As with much in the mobile business these days, you might attribute the move to machine-to-machine and Internet of Things devices and applications.

Many M2M modules will not be easy to activate using a manual process that requires a physical swap of a subscriber identity module. Nor will the cost of manual swaps be amenable.

In the traditional mobile phone business, the embedded electronic SIM might be a mixed blessing. While it should lower activation costs, it also will make marginally easier the task of leaving one carrier for another.

So the innovation might both help and hurt, depending on each carrier’s market position. A large carrier with lots of activations might well conclude that the advantages (lower operating cost) outweigh the disadvantages (easier churn).

Device suppliers might also see advantages, as the electronic SIMs lead to more user-friendly devices.

At the same time, we might arguably see a trend at work, whereby access providers gradually lose “control” over the user experience, the applications and perceived value, to other parts of the ecosystem.

That broad process has been underway because of deregulation, the Internet and key importance of devices.

FCC to Deny Dish Network Spectrum Discount

The Federal Communications Commission reportedly will reject $3.3 billion in spectrum discounts requested by partners of satellite-TV provider Dish Network Corp., for spectrum awarded in the recent AWS-3 auction.

After a review of $13.3 billion of winning bids by two small companies backed by Dish, FCC officials concluded that the two entities didn’t qualify for the small-business discounts, the Wall Street Journal reports.

FCC Chairman Tom Wheeler is said to have circulated a draft order denying the discounts to the FCC’s other four commissioners.

Aside from forcing Dish to pay more for its spectrum, the denial of bidding discounts will not likely affect strategic thinking at Dish, but will force Dish to come up with the full $13.3 billion amount of the bids, rather than the lower $10 billion amount the discounts would have provided.

At the same time, though, there are rumors that Dish Networks talks with T-Mobile US parent Deutsche Telekom about an acquisition of T-Mobile US by Dish Network, are faltering.

Perhaps not surprisingly, the two parties do not agree on how to structure the deal, and how to value it. Charlie Ergen is known to be a fierce negotiator, while Deutsche Telekom likely prefers a deal weighted mostly to cash, rather than stock.

Observers speculate that it is possible other bidders could emerge, especially Comcast Corp., Altice SA and Sprint Corp.

Any bid by Sprint might seem doomed to failure, given the consistent antitrust rejection of any proposed combinations of any of the leading four U.S. mobile companies, including a proposed Sprint bid to buy T-Mobile US that was specifically rejected.

The other possibilities would likely face lower hurdles. Deutsche Telekom reportedly has approached Comcast about a potential bid.

U.S. Smartphone Demand Drops 8% Year Over Year

U.S. smartphone demand is declining, with an eight-percent drop in smartphone demand in June 2015, compared to June 2014, according to researchers at Argus Insights.

“The smartphone market may have reached a point of saturation, as consumers are failing to demonstrate the same amount of interest as they were during the same time just last year,” Argus Insights says.  

After an initial boost in demand just as Samsung’s flagships were released, consumers became less and less interested, the researchers note.

Demand for the Galaxy S6 and S6 Edge began to drop shortly after their release. Samsung’s flagship phones failed to challenge Apple for more than a month, even with the aid of promotions.

New Galaxy S6 and S6 Edge customers are becoming less satisfied as time goes on while their more obscure handsets are boosting brand delight.

Smartphone manufacturers have yet to present novel features to greatly improve the consumer experience, and until this happens, consumers continue to flock to iPhones, Argus argues.

If Data Center is Operating System, WAN is the Data Bus

Sam Johnston, who just left his job as Equinix director of cloud and information technology services, describes a modern data center as an operating system for an enterprise.

In that analogy, as enterprises might run apps on desktop or mainframe operating systems, so they can connect to services like Office 365 and AWS.

Others at Telx might have used the shopping mall analogy (Johnston says has used that analogy at times, as well), where the data center becomes the place where software as a service is obtained.

“For the enterprise CIO, they should look at the data centre as an operating system, only rather than installing best-of-breed applications like Office and Photoshop, they simply connect to services by installing best-of-breed applications.

If the data center is the operating system, then others might therefore liken the global backbone network to the bus, which connects all the internal components of a computer, such as CPU and memory, to the motherboard.

The cloud analogy of course then becomes an external, wide area bus, replacing the

internal data bus (local bus).

At some level, that illustrates the fusion or blurring of the lines between information technology (computing) and communications. At a physical level, the global wide area network has become the data bus, in part.

The cloud data centers assume the function of operating systems, to an extent.

Parenthetically, Johnston is off to a new venture involving the “consumption and application of information technology to solving business problems.”  

Google Fiber to Offer No Cost, No Install Fee to HUD-Assisted Housing Residents

In case you though marginal cost pricing (near zero) is a growing trend in the Internet access business, consider what Google Fiber is going to do.

All  Google Fiber markets are launching programs to connect residents in select public and affordable housing properties no cost and with no installation fee.

This initiative is part of ConnectHome, a program to bring Internet connectivity to more school-aged children and families living in Housing and Urban Development-assisted housing in 28 communities across the country.

Google initially is focusing on Atlanta, Durham, Nashville and Kansas City, but will extend the program to every other current and future Google Fiber market.

The fundamental challenge of the Internet age is that is is very hard to compete against suppliers that give away the products a given industry sells. That is near zero pricing or marginal cost pricing and the trend is extending into the physical realm, not being relegated to digital products and services.