Data Plan Prices Will Drop 15% to 20% in Indian Market in 2016

Data service plan prices will fall by at least 15 percent to 20 percent when Reliance Jio enters the mobile market sometime in 2016, analysts at Fitch Ratings predict.

“We expect competition  to intensify as Reliance Jio  enters the market with likely cheaper and faster data-focussed tariff plans armed with sufficient spectrum and access to funds,” Fitch Ratings said.

“We expect blended monthly ARPU to fall by five to six percent to around Rs 160 (2015: Rs 170) due to a decline in data tariffs, which will more than offset the rise in data usage,” Fitch Ratings said.

Fitch expects industry revenue to grow by low single digits compared to the 2015 level of nine percent growth, driven solely by data services. That might be a significant prediction. Up to this point, voice revenues have driven perhaps 80 percent of mobile service provider revenues.

A shift to mobile data as the “sole” driver of growth would indeed be significant.

Mobile data will rise to around 25 percent to 27 percent of total revenue in 2016, compared to the 2015 level of 18 percent to 20 percent, on a doubling of data traffic volume.

But the biggest four mobile service providers will experience a drop in earnings before interest, taxes, depreciation and amortization (EBITDA).

EBITDA will narrow by 0.1 to 0.2 percent in 2016, partly a result of higher marketing spend and lower mobile data prices.

On the other hand, 2016 industry capex/revenue could rise to 19 percent to 20 percent, up from the  2015 level of 18 percent, in part because of investments to improve call drop performance.

But there should be upside as well. Lower prices tend to drive higher consumption of desired products. So more affordable mobile Internet access prices should lead to higher buy rates, and a higher volume of consumption as well.

Fitch Ratings said weaker unprofitable mobile operators  including Videocon, Aircel and Tata could exit the industry as they make operating losses and lack key spectrum assets and financial flexibility to invest in data networks and five to six operators emerge from the industry shake-out.

“The top-four--Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications--are likely to raise revenue market share to 80 percent,” said Fitch Ratings.

Fitch Ratings also lowered  telecom sector outlook to “negative” from “stable” for 2016.

The agency expects the 2016 credit profiles of the top-four Indian telcos to come under pressure amid tougher competition, larger capex requirements and debt funded mergers or acquisitions.

Comcast and Time Warner Cable Garnered 71% of Net New Internet Access Accounts Over the Last Year

Just two U.S. Internet service providers--Comcast and Time Warner Cable--got 71 percent of the three million net new high speed Internet access subscribers added in the U.S. market over the last year, according to Strategy Analytics.

In the third quarter of 2015, Comcast and Time Warner Cable led the growth in U.S. high speed Internet access subscriptions, adding 552,000 net new subscribers.  

In the third quarter, AT&T lost a net 106,000 subscribers and Verizon added only 2,000. The problems for those carriers is two-fold. Gains powered by fiber access services (FiOS and U-verse) grew, but both service providers lost digital subscriber line accounts.

In the third quarter average revenue per account grew between two percent and seven percent.

High Speed Internet Access ARPU, 3Q14 to 3Q15
	3Q14	4Q14	1Q14	2Q15	3Q15	Y-o-Y %
AT&T	$44.04	$44.13	$44.69	$45.42	$46.48	5.5%
CenturyLink	$33.87	n/a	n/a	n/a	$36.13	6.7%
Charter	$46.62	$46.86	$48.87	$49.92	$49.88	7.0%
Comcast	$43.86	$44.20	$45.36	$45.84	$45.61	4.0%
Time Warner Cable	$47.24	$47.30	$47.82	$48.04	$48.17	2.0%
source: Strategy Analytics

Separately, Leichtman Research Group reports that U.S. cable TV companies accounted for all the net growth in high speed Internet access connections in the third quarter, adding about 788,000 net accounts. U.S. telcos lost a net 143,000 accounts in the third quarter.

AT&T had a negative net rate of growth for its Internet access services in the third quarter of 2015, adding U-verse connections but losing copper connections, as has been the case for some years. Verizon added about 2,000 net connections, according to Leichtman Research Group.

CenturyLink and Windstream also lost customers, on a net basis, in the third quarter.

Collectively, the top U.S. cable TV companies have 61 percent of the installed base of customers, while the top telcos have about 39 percent of the installed base. Cable TV companies have steadily gained share in the high speed access market over the past several years.

The 17 largest cable TV and telephone providers in the United States, representing about 94 percent of the market, acquired about 645,000 net additional high speed Internet access  subscribers in the third quarter of 2015.

One More Reason We Cannot Tell What Impact Common Carrier Regulation Has on Investment

There remains significant debate about the imposition of common carrier regulation on Internet access services, in particular the effect on capital investment in new facilities. Determining any such impact is not an easy, for any number of reasons.

The Phoenix Center for Advanced Legal & Economic Public Policy Studies provides yet one more reason why it is nearly impossible to gauge such impact.

As a mandatory condition of the AT&T deal to buy DirecTV, the Federal Communications Commission  required AT&T to build out fiber to home connections  to 12.5 million customer locations within four years after the deal closed.  

The FCC would rationally fear that its reclassification of broadband Internet access as a Title II telecommunications services will reduce investment incentives, counter to the mandate of Section 706 to promote availability and adoption via infrastructure investment.  

By mandating that AT&T engage in aggressive wireline investment as a condition of its acquisition of a DBS satellite provider (a ridiculous proposition on its face), the Commission virtually ensures that investment will grow by whatever amount it takes to install 12.5 million new fiber-to-home connections by AT&T.

That’s one way to ensure investment. But the investment tells us nothing about the direct impact of common carrier regulation on supplier incentives.

Sprint Spins Off Device Financing to New Mobile Leasing Solutions Company

Sprint spends $10 billion every year on devices. Hence the value of its shifting of device funding to a newly-formed Mobile Leasing Solutions.

Sprint will sell to, and then lease back, devices from Mobile Leasing Solutions. That will result in $1.1 billion in cash proceeds at closing.

The cash proceeds are part of approximately $1.2 billion in total consideration that are expected to be exchanged for approximately $1.3 billion of leased device assets, Sprint says.  

The transaction, which is expected to close in the first week of December, will immediately improve the company’s liquidity position and the funding comes at an attractive cost of capital, which is well below Sprint’s alternatives in the high-yield debt market, the company says.

“Providing mobile devices to customers is the biggest use of cash in the carrier model and with this new structure we have more closely aligned Sprint’s cash flows with those associated with leasing devices to our customers,” said Sprint CFO Tarek Robbiati.

Mobile Leasing Solutions, LLC was formed by a group of equity investors including SoftBank and has secured debt financing from several lenders including international banks and leasing companies.

Brightstar Corp. through its Financial Services Business provided support in structuring the transaction, including assisting in the formation of Mobile Leasing Solutions, LLC which is utilizing Brightstar's Lease Management and Tracking System.

Brightstar has also been contracted to provide reverse logistics and device remarketing services, which will include a forward purchase agreement that is being finalized with Foxconn, thus minimizing the downside risk of future changes in device residual values.

Who Will Defect to Sprint Because of New "Half Off" Offer?

This chart tells you why some analysts are queasy about Sprint's new half off offer for current subscribers of T-Mobile US, Verizon or AT&T mobile services. 

Some might note that the half-off offer had initially be restricted to consumers on AT&T and Verizon networks. 

The latest offer adds T-Mobile US. 

So some might argue that the likely impact will potentially be felt most by T-Mobile US, the reason being that customers of AT&T and Verizon who found the half-off offer compelling already would have taken advantage of the offer. 

Mobile Represents 94% of Internet Accounts in India

In India, fixed networks support about six percent of Indian Internet access connections, while mobile supports about 93.5 percent of such connections. Since growth rates for mobile Internet are vastly higher than for fixed networks, it is self evident that mobile is the primary platform for Internet access in India.

There were in October 2015 some 375 million Internet users in India, according to the

Internet and Mobile Association of India.

According to the Telecom Regulatory Authority of India, there were in March 2015 about 15.5 million broadband fixed line Internet access accounts and some 3.6 million narrowband accounts, for a total fixed network Internet access base of about 18.9 million.

In March 2015 there were about 83.2 million mobile broadband customers (3G, mostly) and some 199.6 million narrowband mobile consumers (2G), representing some 282.8 million mobile Internet customers.

So fixed Internet access represents about two percent of the narrowband Internet access accounts. Mobile represents 98 percent of narrowband Internet access accounts.

Fixed broadband accounts represent about 16 percent of total Indian broadband Internet accounts. Mobile represents about 84 percent of broadband Internet access accounts.

source: TRAI

source: eMarketer

PTC16 is Coming in January 2016

PTC16 is coming! 


PTC'16: A Truly Unique Industry Experience from PTC-TV on Vimeo.

Moore's Law Not Broken, Intel Says

Moore's Law is not exhausted, Intel says. That matters for all matters related to computing power and storage and the cost of computing and storage.

Moore’s Law, formulated in the 1960s by Intel chairman emeritus Gordon Moore, predicts that the number of transistors on a chip will double roughly every 18 months to 24 months.

That trend has enabled better, faster, smaller and cheaper tech products, and it has allowed miniaturization to proceed so that the gap between circuits is now only 14 nanometers, or 14 billionths of a meter. That has been an issue, though.

Production yields for 14-nanometer chips have been difficult and are behind where Intel wanted to be. But yields are improving. "14-nm is harder than we thought, but we do not see a long-term difference in what we were able to see in the past and what we can achieve in the future,” said Bill Holt, Intel EVP.

So Intel is comfortable the linear trend associated with Moore's Law can continue.

Comcast Stream TV Usage Does Not Count As "Usage" for Internet Access Customers, Nor Should It

“Stream TV” is a managed video service sold by Comcast. For that reason, Comcast high speed Internet access customers are not charged for usage when they watch Stream TV content, any more than they are charged data usage when watching linear TV.

Consumer managed services that happen to use IP are exempt from all network neutrality rules. That applies to carrier voice or messaging, as well, for example.

In some quarters, zero rating is viewed as a violation of network neutrality rules, not in the sense of violating the rule about “best effort” access, but because, some say, zero rating does not “treat all bits equally,” in a business model sense.

For such reasons, some object to T-Mobile US allowing access to all compliant streaming audio or streaming video services without any charges against a mobile Internet service plan bucket, despite the obvious consumer benefits.

Some might argue network neutrality does not--or should not--apply to business models, pricing, terms and conditions for Internet access services.

Will Cloud Services Be Bigger Revenue Driver than Ads, for Google?

Google, most would agree, is viewed as a laggard in the enterprise cloud infrastructure market. But Urs Hölzle, the head of Google’s cloud business, believes it is possible that, within the next five years, the Google Cloud Platform revenues could surpass Google's advertising revenue.

That would be a huge development. Google was the first technology business to have an advertising business model. But many have asked “what comes next.” 

Coud services might be part of the answer.

source: Business Insider

Will Internet Content Business Eventually Face Regulation?

Historically, content businesses in the United States have tended to develop in “vertically integrated” form, and then are subjected to regulation to prevent full integration. That is why there are ownership restrictions on movie studies owning theatrical exhibition assets, or limits on TV networks owning local broadcast TV stations.

Online content markets are too new to have developed major political pushback against integration.

But content ecosystem roles are evolving in ways that mimic older forms of vertical integration, and might eventually lead to new restrictions on such integration. For that moment, that remains a distant probability.

In the older model, while some degree of multi-role ownership is permitted, roles were fairly separated. TV networks were mostly relegated to program development, while others handled distribution.

The emerging online markets have yet to take full form. But one notable trend is that, in most cases, ecosystem contestants are attempting to operate in multiple roles. Google might mostly be a platform, but it also has become a distributor and an access provider. So far, Google has made fewer strides toward a content producer or packager role, compared to Amazon, but that seems to be on the horizon.

Netflix and Amazon mostly are distributors, but also partly content developers. Verizon and BT mostly have been distributors and access providers, but are moving into other roles in content packaging.

Such blurring of ecosystem roles also is characteristic of any unstable industry, especially those undergoing technology change and business model evolution. Typically, contestants first move into the adjacent roles. Content creators (studios and producers) look at packaging (Hulu).

Packagers move into content creation (Amazon or Netflix). In fact, in an online delivery context, the roles of packaging and distribution fuse, in many cases. Netflix both packages and distributes.

In the case of Amazon producing its Kindle devices, a further move into user interface also has occurred. In an online ecosystem, the role of “platform” likely also must be added, something Facebook and Google best exemplify.

Apple would occupy the primary role of user interface, but also became a packager and distributor with iTunes.

As always, vertical integration makes sense for a content business. Just as inevitably, at some point, regulators step in. That will be quite messy.  

source: Jeffrey Funk

You Can't Sell Internet Access to a Person Who Doesn't Know Why They Care About Internet Apps

People have to know why they want to use the Internet before it makes sense to consider buying Internet access, especially when disposable income is hard to come by, according to Chris Weasler of Facebook.


Is access the only barrier to India Internet adoption? from PTC-TV on Vimeo.

India Mobile Market is Unusually, Though Not Uniquely, Difficult

Some mobile markets are more challenging than others. Consider India, for example. Less spectrum than generally is available, low average revenue per user, higher spectrum and infrastructure costs are among those obstalces, according to Rajan Mathews of the Cellular Operators Association of India. 



India Mobile Market is Unusually Challenging from PTC-TV on Vimeo.

How Much Can Rural Indians Afford to Pay for Internet Access?

Professor Rekha Jain frames the issue. 



How Much Can Rural Villagers Afford to Pay for Internet Access? from PTC-TV on Vimeo.

Sprint Promotion Offers New Subscribers 50% Lower Than What They Now are Paying AT&T, Verizon or T-Mobile US

In a promotion aimed at grabbing price leadership from T-Mobile US, Sprint has launched a promotion simply offering service at half of Verizon, AT&T and T-Mobile US rate plans.