Why 15% Non-Internet User Base is Not a Long Term Problem

A stubborn 15 percent  of U.S. adults do not use the Internet, according to the Pew Research Center.

The size of this group has changed little over the past three years, despite recent government and social service programs to encourage internet adoption.

Two observations: perhaps we sometimes forget that people have the right to exercise lawful choice. If people do not want to use the Internet, as much as we might think they “should,” they have the right to refuse, for any reason.

At some point, in any business or endeavor, the last increment of progress is so costly it is rational to consider not bothering to achieve it, and allocating effort and resources to some other important problem where the input will achieve greater results.

The other observation is that we have seen such technology laggard behavior before. Such problems fix themselves, assuming the innovation is widely perceived to have value.

The point is that the 15 percent of people who do not use the Internet may not wish to use it, and that the number of non-users will likely fall to insignificance over a relatively short period of time, if only because “using the Internet” will take so many forms that people may not even recognize.

Traditionally, some non-users have said they simply do not want to use the Internet.

A 2013 Pew Research survey found 34 percent of non-users did not go online because they had no interest in doing so or did not think the internet was relevant to their lives.

Some 32 percent of non-internet users said the internet was too difficult to use.

Cost was also a barrier for some adults who were offline and 19 percent cited the expense of internet service or owning a computer.

One might argue that the “owning a computer” will be a minimal problem in the future, since all smartphones will provide that function, as will tablets. With the spread of Wi-Fi, private and public, we also can reasonably assume that the cost of access will cease to be a real problem.

The latest Pew Research analysis continues to show that internet non-adoption is correlated to a number of demographic variables, including age, educational attainment, household income, race and ethnicity, and community type, as most would expect.

Seniors are the group most likely to say they never go online. About 39 percent of people 65 and older do not use the internet, compared with only three percent of 18- to 29-year-olds.

Over time, that implies non-use will be a status three percent or fewer people actually have. We can assume that free Wi-Fi will be plentiful enough that the cost of access will not be a real barrier. Nor will devices, as smartphone adoption will be nearly universal.

Rural Americans are about twice as likely as those who live in urban or suburban settings to “never” use the internet.

Racial and ethnic differences are also evident. One-in-five blacks and 18% of Hispanics do not use the internet, compared with 14% of whites and only 5% of English-speaking Asian-Americans – the racial or ethnic group least likely to be offline.

Despite some groups having persistently lower rates of internet adoption, the vast majority of Americans are online.

Over time, the offline population has been shrinking, and for some groups that change has been especially dramatic.

For example, 86 percent of adults 65 and older did not go online in 2000; today that figure has been cut in half.

And among those without a high school diploma, the share not using the internet dropped from 81 percent to 33 percent in the same time period. The other issue is whether mobile apps “count” as Internet use, since many population groups over-index for smartphone usage.

The point is that, over time, the percentage of people who do not use the Internet will naturally drop nearly to zero. Chasing the last increment of change, when change will come even if we do almost nothing, might not be the best use of resources and effort.  

Sri Lanka to Provide Google Project Loon Internet Access

Sri Lanka has become the first country to support deployment of Google Project Loon-based Internet access.

The initiative is reportedly going to offer free access across the entire country.

Whether that is correct or not is unclear to some of us. Some reports suggest a wholesale network is envisioned, with mobile operators and other ISPS able to buy access.

Though that does not necessarily work against the notion of "free access," it suggests access will not ordinarily be provided free of charge by all potential ISPs, though some likely will try to do so.

Many details remain unclear. Project Loon recently has been testing Long Term Evolution 4G access, havind concluded that direct use of the Wi-Fi protocol was impractical.

The extent of 4G across Sri Lanks might be an issue. Involvement of mobile operators therefore would seem to be imperative, but nothing so far has been released about mobile operator participation.

The other logical approach would be to use 3G protocols rather than 4G.

“The entire Sri Lankan island--every village from (southern) Dondra to (northern) Point Pedro--will be covered with affordable high speed internet using Google Loon’s balloon technology,” said Sri Lanka Minister of Foreign Affairs Mangala Samaraweera.

Officials also said local ISPs will have access to the balloons, reducing their operational costs.

According to Muhunthan Canagey, head of local authority the Information and Communication Technology Agency, Google is expected to finish sending up the balloons by next March 2016.

The agreement between Google and the Information and Communication Technology Agency of Sri Lanka (ICTA) did not immediately detail any other commercial agreements, such as whether the services will be sold at wholesale to retail ISPs and mobile service providers, and if so, on what terms.

But it will be tough to compete with “free,” if Sri Lanka’s government itself provides free access at speeds comparable to mobile Internet access.

There are 2.8 million mobile Internet subscribers and 606,000 fixed line Internet subscribers among Sri Lanka's more than 20 million population.

Up to 33% of All Cable TV Locations Might be Able to Buy Access Exceeding 1 Gbps by 2017

It sometimes is hard to immediately grasp the importance of new protocols in the broader telecommunications business, and DOCSIS 3.1 is no different.

The latest generation of a standard used extensively by the global cable TV industry supports access bandwidth up to 10 Gbps over standard hybrid fiber coax networks used by cable operators.

New research by IHS Infonetics suggests cable operators globally will have at least 33 percent of residential subscribers able to use by DOCSIS 3.1-enabled headends by April 2017.

That means an ability to provider bandwidth exceeding a gigabit, where the headend deployments are matched by modems supporting the standard, and where sufficient bandwidth is available to do so.

Facebook to Discuss Faster Internet Access At Spectrum Futures

Facebook will provide its views on the importance of rapid increases in Internet access globally, as well as what it is doing to support faster Internet access across the South Asia, Southeast Asia and global markets at Spectrum Futures, to be held in Singapore Sept. 10-11, 2015. 

Chris Weasler, Facebook global head of spectrum policy and connectivity planning, or Kevin Martin, former chairman of the Federal Communications Commission, will provide the update. 

The M Hotel Singapore  |  10-11 September 2015

Why Facebook cares about Internet access across Asia REGISTER NOW Spectrum Futures 2015 will look at platforms and policies to connect the next two billion Internet users in South Asia and Southeast Asia. Spectrum Futures 2015 brings together regulators and service providers from throughout the Asia-Pacific region to allow the exchange of ideas about key policies to help emerging markets like India, the Phillipines, Thailand, Indonesia, Cambodia and Myanmar connect to their populations to the Internet within the next decade.

VISIT THE SPECTRUM FUTURES WEBSITE FOLLOW US ON

Hard to Tell How Much Market Share in Cloud Computing the Big Four Actually Have

Will the cloud infrastructure or cloud apps businesses be characterized by the same “winner take all” pattern that seems to be true of most consumer Internet apps? Perhaps not, as cloud computing is an enterprise service, purchased by businesses and other entities, not mostly by end users directly.

Perhaps the question is more narrowly whether the cloud infrastructure market will have a winner take all structure over the long term.

The answer might be harder to glean than first appears. On the surface, four providers seem to hold commanding market share leads, namely Amazon, Microsoft, IBM and Google.

The problem is that each firm counts different revenue sources within its “cloud revenue” total. Amazon likely is the biggest supplier of pure-play infrastructure as a service. Others might be bigger on software as a service or platform as a service, particularly Microsoft and IBM.

That is why some believe Amazon actually has a bigger market share than generally believed, in the core computing as a service market.

IBM has cloud revenue of $7.7 billion, but a big chunk of that comes from "hybrid cloud," which involves companies buying both hardware and software. Its more comparable "as-a-service" business is will only pull in $3.8 billion.

Microsoft boasts cloud revenues representing a $6.3 billion revenue run rate. Most of that revenue likely comes from Office 365, however. While that clearly is SaaS revenue, it is not computing as infrastructure revenue.

“The cloud infrastructure services market is quite clearly bifurcating with a widening gap between the big four cloud providers and the rest of the service provider community,” said John Dinsdale, a Chief Analyst and Research Director at Synergy Research Group. “

source: Business Insider

Carrier-Grade Wi-Fi Might Have Greatest Revenue Value as Wholesale Platform

Extensive “carrrier grade” public hotspot networks now are seen as providing substantial value for mobile and fixed network operators, but the perception of value is shaped by the legacy strengths and weaknesses of the contenders.

It easily can be argued that wholesale access and data offload will provide the most-concrete value, for some time, and perhaps over the longer term as well. The former generates new revenue, the latter offers cost reduction.

Excluding wholesale and offload, survey respondents to a Maravedis survey indicate that carrier-grade Wi-Fi has the biggest immediate potential for advertising revenue, followed by access fees.

Over time, location based services and video content are seen as bigger revenue opportunities. Support for carrier voice seems to be a widespread expectation, but the relatively low expectations for revenue might flow from several obvious aspects of the voice business model.

First, voice is driving a declining amount of revenue, so voice over Wi-Fi might not actually boost revenue for many, if any, contestants. On the other hand, cost reduction, especially for mobile virtual network operators, is a more-tangible possible benefit.

In fact, churn reduction might be the most-direct form of benefit, the survey, sponsored by the Wireless Broadband Alliance, suggests.

As Access Speeds Climb, Middle Mile, in Many Cases, Remains the Chokepoint

Revenue scale, or market potential, has been, and likely always will be a major issue for Internet service providers in areas with low population density, especially when population areas are highly isolated.

That basic problem exists for remote villages across South and Southeast Asia, Africa and elsewhere, including remote locations scattered across many parts of the Americas.

Bandwidth availability, at lower cost, essentially is a barbell, concentrated at the in-home or in-building level on one end, and then the major wide area network backbones on the other end.

In the middle are the access and regional networks, where ability to share costs is lower, and where free to low-cost local distribution (Wi-Fi, Bluetooth) is not possible. 

Those issues will not change fundamentally as Internet service providers ramp up local access network speeds.

EPB in Chattanooga, for example, says it eventually will offer 10 Gbps over its network, something the DOCSIS 3.1 protocol already incorporates as well. That suggests we are heading for eventual local access bandwidths up to 10 Gbps.

While that might allow a greater match between access and in-building distribution speeds, and where it is possible for backbone capacity on the major routes to scale rather gracefully, the middle mile, where business models are stretched, will become even more stretched.

As always, any significant bandwidth change anywhere in the end-to-end chain has repercussions in the rest of the network.

In-home or in-office distribution has not been a major issue for many decades, as local distribution tends to be the part of the network with the greatest capacity and the lowest cost to supply.

Backbone wide area network bandwidth on the major routes, historically, has been easier to supply, as the costs are shared very broadly across the complete set of potential customers. And sharing means lower cost.

All that means the access, middle mile and regional networks will continue to face upgrade issues, as we might well assume that local distribution within a premises or building will not be an issue, while the cost of adding lots of capacity to wide area networks is relatively simple.

As always, the access plant --with the least possibilities for sharing--is where the majority of cost lies.

Middle mile communications network costs are similar to costs faced in the airline industry, where the big city hubs are most efficient, and small towns the most-costly type of facilities.

The same economic problem exists in both industries: some lower-density locations represent difficult business models, since the destinations lack user scale, and therefore revenue scale.

Is Post-PC Era of Computing Now Creating "Post-PC" Device Profiles?

Tablet shipments (perhaps not directly “sales”) declined seven percent, year over year, in the second quarter of 2015, according to the latest analysis by IDC.

Tablet shipments of 44.7 million units also represented a decline of nearly four percent sequentially.That might indicate a faster rate of decline in the recent quarters.

Perhaps the "post-PC era" really means post-PC, with tablets being a form factor derivative of PCs, or acting as PC substitutes.

Perhaps smartphones really are the emerging example of human interaction with computing in the post-PC era of computing. Eventually, a wide range of devices and sensors likely will tell the story, with "cloud computing" enabling connectivity as a core feature of a modern appliance.

"Beyond the decline, we're seeing a profound shift in the vendor landscape as the top two vendors, Apple and Samsung, lose share in the overall market," said Jean Philippe Bouchard, IDC Research Director for Tablets.

Top Five Worldwide Tablet Vendors - Preliminary Results for the Second Quarter of 2015 (Shipments in millions)

Vendor	2Q15 Unit Shipments	2Q15 Market Share	2Q14 Unit Shipments	2Q14 Market Share	Year-Over-Year Growth
1. Apple	10.9	24.5%	13.3	27.7%	-17.9%
2. Samsung	7.6	17.0%	8.6	18.0%	-12.0%
3. Lenovo	2.5	5.7%	2.4	4.9%	6.8%
4. Huawei*	1.6	3.7%	0.8	1.7%	103.6%
4. LG Electronics*	1.6	3.6%	0.5	1.0%	246.4%
Others	20.4	45.6%	22.4	46.7%	-9.3%
Total	44.7	100.0%	48.0	100.0%	-7.0%

Source: IDC Worldwide Quarterly Tablet Tracker, July 29, 2015

Intermodal Competition and Investment for Europe?

Quite often, when an executive says something “cannot be done,” what they really are saying is that “my firm, with its present business model and cost structure, technology base and intellectual property assets, cannot do it.”

Some other entity, with a different set of assets, business model and assets, might well be able to figure out how to do something others consider “impossible.”

Looking at communications policy in the European Commission region Strand Consult owner John Strand notes there is a fundamental institutional conflict between the  the Directorate General for Competition (DG Comp) and the Directorate General for Communications Networks, Content & Technology (DG Connect), in terms of fundamental approaches to promoting a sustainable long term competitive environment that also provides incentives for robust investment.

Strand has argued before that current policy is not working, in that regard.

He further argues that while one agency attempts to foster investments, the other deters them.

DG Connect, he argues, “in many ways has a realistic view of the challenges in the EU and the solutions.”

In practice, that means DG Connect is in favor of supplier consolidation, while DG Comp is not in favor of consolidation.

Perhaps there ultimately will be resolution by another means. Without suggesting that all markets globally are the same, since they increasingly are divergent, it is possible the EC could see more investment and more competition irrespective of the efforts of the two regulatory bodies, though Strand believes a resolution of the conflicting policies would be better.

We can disagree about the proper balance of incentives and controls to achieve the goals of robust investment and equally robust competition.

But as a simple historical matter, the cable TV industry, operating outside the common carrier framework, created the basis for robust facilities-based competition, “outside” the purview of the traditional “telecom” ecosystem.

That might yet be a direction within some parts of the EC as well, as Liberty Global pursues a greater role in communications, on its own facilities, not purchased wholesale from a former incumbent telco.

The potential, in other words, is for greater investment--and competition--provided across industry boundaries, instead of within them.

That sometimes has been called an intermodal approach, rather than an intramodal approach. Liberty Media is on the cusp of  bringing intermodal competition to the EC.

Verizon to Sell "HBO Now" Streaming Video Service

Verizon Communications will sell the Home Box Office “Now” streaming service as part of a new marketing deal.

HBO’s Internet-only service will be made available to more than 100 million Verizon Wireless customers as well as Verizon Communications fixed network customers who buy high speed access but not linear version of HBO or linear video service.

HBO content will also be coming soon to Verizon’s upcoming mobile video platform, Go90.

HBO Now costs $14.99 a month, after a 30-day no-charge introductory period.

The deal is an example of how some observers and providers hope the over the top business will develop, namely with large linear video distributors also emerging as key distribution partners for over the top versions of today’s linear channels.

Hybrid Business Model Favored by TV Distributors (No Surprise)

TV operators and content owners say they favor a hybrid business model approach (subscription plus pay per view) to over the top content delivery, says MPP Global. Some 60 percent of surveyed distributors say they prefer the hybrid OTT model, also used by Amazon Prime and Hulu.

The hybrid model has already been adopted internationally by Amazon for its Amazon Instant Video service, as well as by Hulu for its online streaming service in the United States.

Many consumers no longer want “all you can eat” packages but instead prefer tailored and personalized bundles of content and channels they have hand-picked, MPP Global says.

Among the popular options are “skinny” TV packages that cost less.

Some distributors also are experimenting with limited-time passes. Sky, for example, offers passes for a day, a week or month for its OTT platform, Now TV.

Hybrid models have appeal because they offer a glide path from linear TV to over the top consumption; unlimited access to buying of specific items; as well as access durations shorter than the traditional month-at-a-time pattern.

At a high level, the hybrid approach will make sense since it offers the hope of a gradual, not too disruptive switch from linear to on-demand packages and business models.

Historically, hybrid models have been highly successful, allowing legacy providers to adapt gradually to a new replacement technology platform.