High, Low, Medium: South and Southeast Asian Have All 3 Types of Markets

If India represents one sort of Internet access market (big, underserved, rural access issues), and Singapore, Hong Kong and Taiwan represent others (small, well served, urban), then Colombia represents a country with characteristics more akin to Malaysia and Thailand (mix of urban and rural, underserved area but rapidly improving, and moving up on information and communiations technology sophistication.

Colombia was the fourth nation to support the Facebook “Free Basics” program, for example, and in 2016 won the GSMA “Spectrum for Mobile Broadband” award, for example.

And since 2013, Colombia has been in the process of joining the Organization for Economic Cooperation and Development, the 34-nation group founded by nations with advanced economies, but also including “emerging” countries.  

source: ITU

Ecosystem Value of "Access" is Declining

One hard reality of the access provider (we used to call this “telecom” ) business is that ecosystem value in the “access networks” portion of the business is going to be under increasing and persistent pressure over the next couple of decades, at least in developed nations.

Google Fiber, other independent Internet service providers, municipal Wi-Fi and mobile Internet access to an extent are going to reduce demand for traditional Internet access provided by fixed line providers.

So lower revenues and lower profit margins are almost certainly going to be on-going pressures within the access business.

Not only are new providers having lots of success in the market, notably cable TV providers and more recently perhaps Google Fiber, independent ISPs and a growing number of municipal networks, but we are far from exhausting what could happen in the future with new or rival platforms.

Mobile 5G is noteworthy, as it might well offer gigabit speeds, especially in a fixed wireless configuration. And it is difficult to say whether other retail suppliers or lower-cost platforms could emerge.

In contrast, there are at least some other markets where fixed network operators are, at least for the moment, increasing subscriber accounts. 

As is the case in many mobile markets, subscriber account are growing as additional subscribers are added and ass mobile Internet access revenues begin to scale up.

America Movil, for example, arguably performed better in the first quarter of 2016 in its fixed networks segment, compared to the mobile segment.

Who Can Most Easily Build a Platform?

All discussion of “platforms” revolves around business strategy, and the ability to create advantage in the ecosystem.

In some cases, platforms have been built on operating systems, devices or applications. Almost never--if ever--have big platforms been built on “functions.” Microsoft, Apple iOS and Android; iPhones and Facebook are examples of the former.

But Amazon is an example of the latter: a platform built on a function, namely a retail transaction function.

You might also argue that Google Play and the Apple App Store function as platforms,  inseparably from a device.

By extension, suppliers have tried to create platforms built on data center tenancy (Telx), proximity and geography.

The degree to which platforms can be created, to some extent, based on an access provider’s customer base, and knowledge of customer location and device choices is an important question for access providers.

The question is a big one because it is not completely clear whether platforms are most successfully build on apps, devices or access. Most would likely argue that platforms have been  most successfully built on apps, devices or a transaction capability.

And that is the problem access providers face. Consider entertainment video, historically dominated either by application (broadcasters) or access providers (cable TV, telcos).

In the Internet era, app, device and transaction providers have been able to establish franchises as well. Netflix, iTunes and Amazon Prime provide examples.

Now Amazon is making a big push to aggregate all subscription video on demand services in the United States, making Amazon Prime a one stop shop.

And that illustrates how difficult it might remain for access providers to compete, as platforms, with apps, devices and transaction providers.

How Big Can Telco Cloud or Platform Become?

Whenever major new technology transformations begin, it is virtually always the case that leading incumbent suppliers begin to cast their “legacy” or present offerings in terms that mimic or co-opt the concepts of the emerging technology.

So it is that we now hear much more about use of network functions virtualization and related trends, both as a way to reduce cost and create a growth platform. All the terms suggest that a telecommunications network built on NFV not only costs less to build and operate, but also offers flexible service creation and delivery.

The bigger question is whether that service creation capability can used with other assets to create a sort of operating system, digital services enabler, platform or telco cloud, with the emphasis on how assets can be leveraged in the same way as any other platform, attracting developers and services built on that platform.

Whether that is possible, and to what extent, remains the big question. Some already predict that new service revenue could reach 10.5 percent of total by 2021. That is helpful.

But some might note that such amounts are going to be less than service providers stand to lose in legacy revenue by that point. And that's the problem: revenue creation lags service creation.

There's no argument about the need for greater efficiency and virtualization, at the very least as a way to attack operating and capital investment costs.

source: HP Enterprise

The “idea of telco cloud is that CSPs need to embrace and use all the wonderful technologies that have emerged in Enterprise IT--standardization virtualization, standardization--ultimately manifest in cloud as a transformative service delivery and consumption model,” Hewlett Packard Enterprise executives have argued.

That is the least-controversial part of the big idea. Agility, as such, is less the idea.

The stretch is using the software-defined network to create service opportunities built on extending use of the platform to third party developers and service providers.  

As intriguing as the idea of telcos as platforms might be, it remains unclear how big an opportunity that might be.

Analysys Mason, for example, calls for telcos to shift to a platform-based model.

“Platforms are the key to success in the digital economy,” Analysys Mason analysts argue.To be clear, that means creating a role something like that possessed by Apple, AirBnB, Alibaba, Amazon, Facebook, Google, LinkedIn, Rakuten, salesforce.com, Uber, Xbox and others.

Platform providers build ecosystems around their core business. Apple and Google have thousands of developers and hundreds of accessory manufacturers continually creating complementary products for each ecosystem.

So the task to envision how any access provider similarly can create a platform--presumably for managed services of some type-since it seems unlikely an access provider actually can become a platform for Internet OTT apps.

The attractiveness of the idea cannot be denied.

For years, the largest communications service providers have relied on wireless service to offset declines in landline voice while still providing modest revenue growth. “Those days may finally be coming to an end,” said Bala Thekkedath, Hewlett Packard Enterprise marketing director for the Communications Solutions Business unit. “With over-the-top players having jumped into the game, the economics of wireless services will never be the same.”

In other words, the legacy revenue models are going away, and something--or many things--that are very big must be created to replace the lost revenues.

Or, we should be clear, “telcos” and “access provides” will have to become smaller businesses, as measured by provider revenue. That is not to say the function is in any way diminished, only that the revenue and profit margin to be wrung from supplying that function might have to shrink.

Will Internet Access Revenues Grow Fast Enough to Offset Voice Revenue Declines in India?

Bharti Airtel, Idea Cellular and Reliance Communications experienced flat voice revenue and struggled with  data revenue growth in the first quarter of 2016, illustrating the “demand side” of the Internet access supply problem, as well as the ongoing difficulties in the key voice business.

Simply, demand for Internet access, though growing, might not be growing fast enough to offset perhaps-accelerating losses in voice revenue. That fundamental problem is faced by most mobile operators in most markets.

According to a report published by securities firm Kotak, "4G uptake has been slow and is unlikely to help the surprisingly slow momentum of data volume growth."

Kotak analysts expect Bharti Airtel’s  India wireless revenue to grow 3.6 percent sequentially.

Goldman Sachs analysts are more optimistic, expecting Airtel total revenue to grow 6.1 percent year over year.

Credit Suisse expects average revenue per user to dip two percent in 2016, to Rs 194 from Rs 198, year over year.

Idea Cellular is expected to report a  41 percent to 54 percent fall in consolidated net profit for the quarter, at least in part because of spending on spectrum.

Goldman Sachs, however, expects consolidated revenue to grow nearly 12% on-year toRs 9,390 crore, helped by strong subscriber additions and overall growth in wireless business.

Morgan Stanley expects Idea to report 5.2 percent quarter over quarter growth in revenue, as well as 6.6 percent sequential growth in earnings (EBITDA).

Reliance Communications s expected to report a year over year fall of 37 percent to 70 percent in net profit, largely on reduced voice revenue.

source: GSMA

U.S. Accounts for 46% of Global Data Center Sites

The United States now accounts for 46 percent of major cloud and internet data center sites globally, say researchers at Synergy Research.

China has seven percent of the sites, while Japan has six percent.

Australia, Singapore, Germany, the United Kingdom and Brazil each represent three percent to five percent of the global market.

On average, each of the largest 17 firms had 14 data center sites.

The companies with the broadest data center footprint are the leading hyperscale cloud providers such as Amazon Web Services,, IBM and Microsoft.

Each of those four firms has 40 or more data center locations with at least two in each of the four regions including North America, Asia, EMEA and Latin America.

Google, Oracle and Rackspace also have a notably broad data center presence.

The remaining firms tend to have their data centers focused primarily in either the United States (Apple, Twitter, Salesforce, Facebook, eBay, Yahoo) or China (Tencent, Baidu).

Alibaba has now opened data centers in the US, Hong Kong and Singapore.

Half the World Colocation Market Exists in Just 15 Cities

Just five metro areas account for 27 percent of worldwide retail and wholesale colocation revenues, according to researchers at Synergy Research.

The top five metros include New York, London, Washington, Tokyo and Silicon Valley.

The next 10 largest metro markets account for another 25 percent of the worldwide market. So half the world market exists in just 15 cities.

Those top 15 metros include six in the United States, four in the EMEA region and five in Asia. .

Across the 15 largest metros, retail colocation accounted for 76 percent of fourth quarter  revenues, while wholesale sales accounted for 24 percent.

Equinix was the market leader by revenue in eight of the top 15 metros and Digital Realty was the leader in two markets.

Other colocation operators that featured heavily in the top 15 metros include NTT, DuPont Fabros, Interxion, China Telecom, 21Vianet, KDDI, @Tokyo, SingTel, Global Switch, CoreSite, CyrusOne and TelecityGroup (since acquired by Equinix).

In 2015 colocation revenue growth in the top 15 metros outstripped growth in the rest of the world by three percentage points, so the worldwide market is slowly being concentrated more in those key metro areas.

Top 15 metros with growth rates of 20 percent or more (measured in local currencies) were Shanghai, Beijing, Hong Kong, Frankfurt, Amsterdam and Singapore. Among the top five metros, Tokyo had the highest growth rate.

Amazon Dominates Cloud Computing Market, But Microsoft and Google are Growing Share 100%

Source: Synergy Research

In the public cloud business, scale matters.

Amazon Web Services (AWS) continues to dominate the cloud infrastructure services market with a 31 percent worldwide market share.

The big three followers--Microsoft, IBM and Google--collectively account for 22 percent market share.

The next 20 top-ranked cloud providers accounted for 27 percent.  

Microsoft and Google both achieved growth rates of well over 100 percent.

Outside of the big four, the next 20 cloud providers are growing at an average 41 percent per year, but in a market that is growing at over 50 percent that means that most of them are losing market share, according to researchers at Synergy Research.

Spectrum Auctions Could Mean Big Trouble for India Mobile Firms

Posting a huge operating loss of 3,100 million Norwegian Krone (around Rs 2,530 crore) for its India mobile business, Telenor executives warned that they would exit the Indian market if it was unable to secure new spectrum at reasonable rates.

At the same time, the Indian arm of Telenor looks to expand 4G footprint and said it would offer the lowest tariff for these services as part of its affordable pricing strategy.

“We are not able to compete with the current spectrum portfolio we have in the growing data market,” Telenor global CEO Sigve Brekke said. But Brekke also emphasized that the additional spectrum would have to be available at “a price that we can justify.”

Some fear widespread damage to mobile company business models if most of the spectrum India plans to auction later in 2016 is sold at or above present minimum prices.

That spectrum auction involves a huge amount of spectrum, and might prove problematic, for traditional and new reasons.

On one hand, the auction will release up to 2,000 MHz of spectrum, across a wide range of frequencies useful for communications purposes.

The problem is that some observers believe the service providers cannot possibly afford to buy all that spectrum, at suggested prices.

Some speculate that sold spectrum--assuming virtually everything is purchased--will amount to about US$83 billion, increasing mobile service provider debt loads as much as 185 percent.

At such levels, the auctions would represent more than 25 percent of the country's national budget for the financial year 2016-17, and more than double the combined revenues generated (around $38 billion) by all telecom companies during the financial year 2014-15.

In fact, of the projected $85 billion in potential revenues, the sale of 700 MHz spectrum alone is estimated to represent around $64 billion. It would not be unheard of for some spectrum to remain unsold whenever an auction is held.

It is possible the proposed spectrum auction in India might result in quite a lot of the spectrum, even desirable spectrum, remaining unsold.

Spectrum deemed useful both for coverage (700 MHz, 800 MHz, 900 MHz) and capacity (1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz) now are scheduled for sale.

To the extent that spectrum constraints contribute to call drop problems, the new capacity will help. But observers now warn that minimum prices are set at high levels, implying high prices for purchased spectrum.

In fact, some mobile service providers have called for postponing at least some parts of the auction, altogether.

Excessive prices been a problem in the mobile industry before. Overpayments for 3G spectrum nearly bankrupted a number of tier-one service providers in Europe, for example.

Business model stress might be a big problem in the wake of the auctions. For Telenor, it could mean selling its business.

FCC to Re-Regulate Special Access, Include Cable TV for the First Time

The U.S. Federal Communications Commission is considering a major change in regulation of special access services, extending wholesale obligations for the first time to cable TV and fiber to premises connections, using a principle of “technological neutrality.”

The rules have not yet been made public, but in addition to bringing cable TV facilities under the mandatory wholesale regime for the first time, the order is expected to reintroduce price regulation of special access services. Many believe wireless backhaul is the main reason the new approach is being taken, essentially to “protect” prices for backhaul circuits for mobile carriers who do not own fixed network assets.

The problem, some argue, is that such wholesale rules always have some clear consequences.

By forcing carriers to provide competitors wholesale access to special access facilities, one provider takes the risk of investing in the facilities, while other competitors then are able to lease use of those same facilities at regulated rates.

That creates disincentives for access investment, many would argue.

Will Others Take Proposed Telco Platform Role?

At the risk of sounding unduly skeptical, when something doesn’t make sense, maybe that is because it simply “doesn’t make sense.” More positively, perhaps an ecosystem has simply not had enough time to develop.

Analysys Mason, for example, calls for telcos to shift to a platform-based model.

“Platforms are the key to success in the digital economy,” Analysys Mason analysts argue.To be clear, that means creating a role something like that possessed by Apple, AirBnB, Alibaba, Amazon, Facebook, Google, LinkedIn, Rakuten, salesforce.com, Uber, Xbox and others.

Platform providers build ecosystems around their core business. Apple and Google have thousands of developers and hundreds of accessory manufacturers continually creating complementary products for each ecosystem.

So the task to envision how any access provider similarly can create a platform--presumably for managed services of some type-since it seems unlikely an access provider actually can become a platform for Internet OTT apps.

Presumably that means telcos become a platform for managed services. That, in turn, probably suggests a “business-to-business” role, rather than a “business-to-consumer” role.

That assumption is driven by the idea that most consumer apps can be delivered and accessed directly by end users using Internet delivery. It is hard to see how any access provider becomes a platform for an Internet app or service, which are themselves platforms.

A managed service, on the other hand, might well require, or benefit from, platform services. Most industrial Internet of Things apps, autonomous vehicle systems and health monitoring services might provide examples.

It is becoming a common recommendation. Telcos can become “Integrated Digital Service Providers” (IDSPs) that function as platforms, Accenture argues, essentially getting out of the “communications” business.

In yet one more iteration of the “moving up the stack” strategy, Accenture suggests telcos can become “platform companies” that use social, mobile, analytics and Internet of Things tools  to build a business architecture and set of services that enables other businesses to rapidly develop and deploy the products and solutions needed to drive their digital strategies.

That probably sounds like “middleware” to some; “operating system” to others.

Time will tell whether any firms actually will be able to become “digital platforms,” or whether, in the end, the effort will fail. Once upon a time some thought mobile operators could emerge as primary “app stores.” Instead, it is the leading device ecosystems that operate the most-powerful app stores.

And even if a B2B IoT platform role does emerge, it might not be access providers who are the inevitable platform providers. Ericsson, for example, has launched an IoT accelerator service, much as it also earlier launched operations outsourcing services for telcos.  

The IoT Accelerator is a combination of Ericsson products and services, with an integrated marketplace for collaboration and monetization.

Scheduled for a global launch at the end of the third quarter of 2016, and to be offered as a service, Ericsson initially is targeting larger industrial and public contracts.

Ericsson says the IoT Accelerator will  help its customers overcome the cost and complexity barriers of trying to build their own platform up-front.

The spur to such thinking is simply the declining fortunes of the access business.

Telco 2.0’s generic model of revenue decline for converged telco in advanced market is not comforting. It suggests a steady decline in overall revenues from 2016 forward.

We can dispute the shape of the curve, but few might disagree with the direction of the change. Legacy revenues will be challenged, requiring a search not only for new products to sell, but perhaps even a changed role within the ecosystem.

Aggregate revenue could drop 13 percent between 2016 and 2021. Virtualizing more operations obviously helps if it can reduce operating or capital expense. But the bigger problem is simply that revenues to be derived from all legacy products are shrinking.

source: Telco 2.0 Research

The Next 4 Billion Internet Users Will be Connected Using Wireless

There’s a very simple reason some of us spend so much time thinking about and working on ways to use wireless platforms to expand Internet access: it is the way the next four billion Internet users are going to get access.

“The next four billion (Internet users) will come online through some form of a wireless connection,” said Chris Weasler, Facebook global head, spectrum policy and connectivity planning.

“We have a number of different projects underway to address connectivity,” Weasler said. New access technologies and architectures have to be more affordable, Weasler said.

One example is Aquila, the solar-powered unmanned aircraft that Facebook expects and hopes will provide a new way to do backhaul. It “could be used by mobile operators, Wi-Fi operators” or others, Weasler said.

Facebook also has Identified bands of spectrum where Aquila  would not interfere with existing spectrum users, also would work for UAV platforms that are expected to provide quite a lot of bandwidth.

To that end, Facebook “got an agenda item” from the International Telecommunications Union’s latest World Radiocommunications Conference, potentially allowing exploration of ways to use the 20 GHz to 40 GHz bands for backhaul.


source: areppim

Mobile will not be the sole wireless access technology. But it will be the most often used by consumers.

More Evidence that a Fixed Wireless Renaissance is Underway

Here’s one more sign that fixed wireless is undergoing a renaissance in the U.S. market: Verizon will first introduce 5G as a fixed wireless service.

With Google, Facebook and AT&T exploring, testing or intending to deploy fixed wireless  for Internet access networks, the fixed wireless industry is on the brink of major redefinition. AT&T alone has said it would use fixed wireless to serve 13 million locations.

Others such as Starry, also are hoping fixed wireless emerges as a major platform for providing Internet access.

In 2012, there were perhaps 2,000 to 2,500 fixed wireless Internet service providers supplying Internet access to two million to three million subscribers in the United States, according to the Wireless Internet Service Providers Association.

So just about any serious deployment of Google, Facebook or AT&T fixed wireless would immediately reshape the U.S. fixed wireless business.

At 13 million connections, AT&T alone would represent 87 percent of all U.S. fixed wireless installed base, even if Google Fiber and Facebook added zero new accounts in the U.S. market.