Is U.S. Mobile Service Too Expensive?

Methodology really matters when conducting trans-national studies of issues such as the typical price of mobile services. A recent analysis of international mobile phone prices conducted and released by the

New America Foundation concludes that the United States has among the highest prices for mobile phone

services in the world.

See http://oti.newamerica.net/publications/policy/an_international_comparison_of_cell_phone_plans_and_prices for the argument. 

An analysis of that study's methodology, however, suggests that U.S. consumers would pay far more if they faced the pricing plans from other “low cost” countries, says George S. Ford, Chief Economist of the Phoenix Center for Advanced Legal and Economic Public Policy .Studies. See  http://www.phoenix-center.org/perspectives/Perspective10-06Final.pdf or http://www.phoenix-center.org/perspectives/Perspective09-03Final.pdf for more detail. 

PayNearMe Gets $16 Million Investment

PayNearMe, an alternative payments product from the company formerly known as Kwedit, has just raised $16 million in funding led by Khosla Ventures, with new investor August Capital and current investors True Ventures and Maveron also participating in the round. This brings the company’s total funding to $23.3 million. In conjunction with the funding announcement, Mark Britto, CEO of BOKU will join the company’s board of directors.

PayNearMe is capitalizing on the wave of services that are emerging for the unbanked, a group that includes 60 million individuals in the U.S. The “unbanked” refers to consumers who don’t have traditional bank accounts or cannot qualify for credit cards. PayNearMe allows people who don’t have or don’t want to use credit or debit cards to purchase products with cash at more than 6,000 7-Eleven stores in the continental U.S.

The funding round is further evidence of heightened interest in the payments business that also has AT&T, Verizon and T-Mobile creating ISIS, a mobile contactless payment system that will be available to 200 million potential users at launch.

PayNearMe Rings Up $16M From Khosla And Others For Cash Payments Product

Android and iPhone Top of Smartphone Wish Lists

More than 56 percent of current smartphone users are seriously considering an Apple iPhone and 44 percent an Android device for their next smartphone, according to IHL Group. Both smartphones could nearly double shipshare in the U.S. in the next 12 months. The study also reveals that only 24 percent of smartphone users surveyed are seriously considering a Blackberry and only 10 percent a Windows smartphone for their new device. Respondents were allowed to choose more than one device.

The survey of 570 consumers and 66 retailers highlights the way that consumers use their devices for social media and commerce.

'The iPhone is quickly replacing the Blackberry in the mindshare of consumers and the executive office for many retailers,' says Greg Buzek, President of IHL Group. 'The growth in the executive office of retailers and store associates is most striking.'

IHL Group

Click Rates Stabilitze

Online advertising "click-through rates" have been falling for a few years. But MediaMind Technologies says the declines have abated. The company’s analysis of data from July 2006 through July 2010 shows that annual average click rates have plateaued, at 0.9 percent.

MediaMind Technologies, the leading independent provider of integrated digital advertising solutions, released today a new Global Benchmark Report, titled “Standard Banners –Non-Standard Results.” The research shows that global Clickthrough Rate (CTR) stopped declining in 2009 and 2010 and remained fixed at around 0.09%. The full study is available here.

An increased volume of display advertising likely is the reason for the decline in click-through behavior.

As more budgets were poured into display, users were exposed to more and more ads. However, the number of ads that a user clicked on did not catch up with the number of ads that a user was exposed to, thus reducing the overall CTR.

Imagine that you are exposed to one thousand ads each year, and that you click on five of them. Your CTR is 0.5%. Imagine now that you are exposed to five thousand ads; you are probably not going to keep clicking at the same vigor, so instead of 25 clicks, you only click on 20 ads.

Therefore your CTR is now only 0.4%. Thus, as users are exposed to more ads, their CTR drops.

Have Click Rates Finally Stopped Declining? - eMarketer

EU Rejects Net Neutrality

The European Union has concluded that "network neutrality" is unnecessary at best, harmful at worst.

The EU now says it sees no problem, and will take a “wait-and-see” approach. In part, that is because the EU does not see evidence that there is market failure. More significantly, the EU seems to agree with many observers that such rules pose a danger to robust, continued investment.

“We have to avoid regulation which might deter investment and an efficient use of the available resources,” EU Telecommunications Commissioner Neelie Kroes says.

EU Punts on Net Neutrality - by Bruce Edward Walker

Apple Gets Rights to Sell Digital Beatles Music

Apple Inc. is preparing to announce that its iTunes Store will soon start carrying music by the Beatles, the Wall Street Journal reports.

Apple Gets Rights to Sell Digital Beatles Music - WSJ.com (subscription required)

Apple Drops Prices for European iAd Launch

Apple is preparing to announce European launch partners for its iAd mobile advertising product this week, but has found it more difficult to woo brands there than it did in the U.S., one report suggest.

According to a Financial Times story, the iAd's European debut has already been delayed twice, and Apple has been forced to drop its $1 million minimum spend policy in order to attract interest from the major brands it's pursuing.

Although Apple secured a solid lineup of advertisers for its U.S. iAd launch - including Nissan, Sears, and Citigroup - the actual rollout of those campaigns also appeared far from smooth. Brands and agencies have expressed frustration with Apple's insistence on handling the production of campaigns itself, leading to delays and reportedly causing some brands to withdraw their campaigns completely.

Apple Drops Prices for European iAd Launch | ClickZ

Tomorrow Apparently is Not "Just Another Day," Apple Teases

Apparently not. If you go to www.apple.com, this is about all you'll see, no matter what tab you click.

Facebook Unveils "Next Generation" Messaging

Facebook's new "Messages" feature is going to strike many observers as a unified communications tool, not an "email tool." Messages allows a Facebook user to decide how they want to talk to your friends, using text messaging, instant messages, chat, email or "Messages."

Recipients receive a message through whatever medium or device is convenient for them, and you can both have a conversation in real time. That's interesting.

"You shouldn't have to remember who prefers IM over email or worry about which technology to use," the Facebook blog says. Simply choose their name and type a message. The program appears to thread all conversations, no matter which channel is used.

"Messages is built for communicating with your friends, so it made sense to organize primarily around people," Facebook says. "All of your messages with someone will be together in one place, whether they are sent over chat, email or SMS." You can see everything you've discussed with each friend as a single conversation.

Facebook also is providing an @facebook.com email address to every person on Facebook who wants one. Now people can share with friends over email, whether they're on Facebook or not.

"Messages is not email," Facebook says. There are no subject lines, no cc, no bcc, and you can send a message by hitting the Enter key. We modeled it more closely to chat and reduced the number of things you need to do to send a message. We wanted to make this more like a conversation.

The Facebook Blog | Facebook

TeliaSonera Says LTE Subscribers Using 15 GB Per Month

Deutsche Bank analyst Brian Modoff notes that Teliasonera, the first operator to have a commercial LTE network, has seen startling bandwidth consumption statistics that contrast with consumption by users of smartphones or even PC users on 3G networks.

TeliaSonera says the average smartphone user on their network consumes 375MBytes a month of data. The average broadband user on their network, largely 3G data cards, consumes 5 GBytes a month.

But the average LTE consumer (essentially all data cards) uses 14 GBytes to 15 GBytes a month of data. That's about as much as an average fixed-line broadband customer uses in a month, and suggests that mobile broadband on an LTE network is a direct replacement for fixed-line access.

Operator Says LTE Subscribers Using 15 GB Per Month

50% of U.S. Bookstores Will Close in Next 3 to 5 Years

"I think in the next three to five years, you'll see half the bookstores in this country close," says Neil Van Uum, Joseph-Beth Booksellers president.

Barnes & Noble, the country's largest bookseller, put itself up for sale in August and has struggled for years with declining sales. It's pinned hopes on initiatives including its Nook electronic reader.

'There's a lot of fixed overhead in the book business, especially with stores as complex as ours,' Van Uum said.

None of that should be terribly surprising. Most businesses are affected by the Internet and IP technology, and retailers of content products, ranging from booksellers to airlines to movie and television producers and distributors, not to mention providers of communication services, all are cases in point.

Joseph-Beth files for bankruptcy protection

Gaming Slowly Moves to Social, Mobile Venues

Gaming increasingly is moving to mobile venues, according to NPD Group. In the first three quarters of this year U.S. video game software, hardware and accessories revenues were down eight percent compared with the same period in 2009, and in 2009 revenues were down eight percent from 2008.

Nintendo posted its first half-year loss in seven years. And Viacom announced it’s selling the once-hot Harmonix unit, developer of Rock Band and creator of Guitar Hero. Harmonix had been pulling down Viacom’s earnings for several quarters, including a $260 million write-off in the most recent quarter.

According to eMarketer, some evidence of a shift to mobile gaming is shown by the growth of ad spending in mobile games, expected to hit $192 million in 2011, up 33 percent over 2010. That isn't much, compared to total gaming spending of about $2.6 billion, but the growth rate is quite high.

Gaming Dollars Flowing to Social, Mobile Spaces - The eMarketer Blog

Social Media Now Saturated?

Forrester Research estimates that 58 percent of U.S. online adults use or visit social networking sites monthly, compared to 90 percent using email monthly and 37 percent watching any type of video.

However, Forrester believes this 58 percent engagement rate represents a saturation level for social activities. Beyond this are online users who are by their nature are unlikely to use social networking because it isn't relevant or interesting.

"In the real world, a minority of individuals are creators -- writing, composing, or snapping pictures for anything other than personal enjoyment," says Forrester Research analyt Augie Ray.

The implications might be that marketers who use social networking now have to steal attention from other marketers, as the total number of users might not be growing much.

As social media growth stagnates, companies need to be more engaging

Signaling is the Issue for Smartphones, Bandwidth for PC Dongle Connections

Nearly everybody has an issue with data bandwidth from time to time, at some locations, at some times of day, experienced as sluggish response times, inability to make a connection, or a dropped connection.

In part, that is because only 15 percent of mobile cell sites handle about half of all traffic. If you happen to be in one of those cells at the time of peak load on a weekday, you might encounter congestion. It isn't so much that the "whole network" isn't properly designed, but rather than demand is concentrated at a relatively small number of sites. No matter how much bandwidth a network has, in aggregate, it will be limited in terms of how much bandwidth it can make available in a single coverage area, at one point in time.

Nor is the only problem bandwidth demand. The peak data usage is driven by data cards and embedded laptops, and relatively secondarily by smartphones. But signaling load is an issue as well. In fact, it is more likely that smartphone signaling will cause congestion of radio assets than actual bandwith demand, says Chetan Sharma, mobile analyst.

In fact, signaling traffic is growing faster than the raw data traffic due to smartphones, as they are not very efficient with application signaling, Sharma says.

The smartphone signaling is over eight times as intensive as data card signaling traffic, and signaling consumes over 50 percent of the available network resources.

read more here

What is Impact of Lower Latency on Usage?

In the consumer smartphone market, lower latency seems to correlate with higher usage of bandwidth, according to analyst Chetan Sharma. Basically, each succeeding generation of mobile technology (second generation to fourth generation) shows lower latency and higher available bandwidth, as well as higher end user data consumption, with the biggest step change coming in the transition from 3G HSPA to 4G LTE.

As a rule, says Sharma, a four-fold improvement in overall performance leads to better user experience and if the pricing is right will have a two times impact on consumption with the introduction of each new network technology.

Those findings make intuitive sense. Broadband has become so popular in part because the latency is so much lower, compared to dial-up services.

read more here

Why "Per-Capita" Measures Often Are Inaccurate

Dr. Genevieve Bell, Intel Fellow, is an anthropologist who studies how humans react and adapt to changes around them and how technology needs to adapt to humans and their needs in different habitats. Sometimes "habitat includes such mundane things as household size.

In India only five percent of the households are "single-person" households while France and Germany have over one third households in the single-person category. So why is that significant? If one makes any sort of cross-country comparison between India and either France or Germany, and the comparison involves anything measured on a per-household basis, there are going to be potential anomalies.

Something measured on a "per-household" basis will not capture the significant differences per-capita magnitude unless adjusted for radically different household sizes.

Netflix Coming to Android

Android devices have not, up to this point, had the Netflix app that iPhone, Windows Mobile and Windows Phone 7 devices have had.

The hurdle has been the lack of a generic and complete platform security and content protection mechanism available for Android. The same security issues that have led to piracy concerns on the Android platform have made it difficult for Netflix to secure a common Digital Rights Management system on these devices.

Since Netflix has work on a device-by-device basis, Netflix says it soon will be releasing an app for at least some Android devices.

Prepaid 101 Primer

Gene Retske,the editor of "The Prepaid Press," (http://www.prepaid-press.com/) penned a number of tutorials over a seven-year period explaining the basics of the prepaid calling card business, which he now has collected into book form.

"Prepaid 101" is, as its name suggests, an introduction to the prepaid calling card business that covers subjects rangting from the business model to marketing, and originally were written from 2003 to 2008.

Prepaid 101, structured as a series of short articles, is highly digestible and is recommended for people just getting into the prepaid calling card business, or for companies that need to train people about the calling card business. The book is not "heavy on the technology" and puts everything into a business context.

Also, readers will find they can easily skip sections that do not pertain to their immediate jobs, such as sections on PC operating systems or broadband access. The book does touch on prepaid wireless, for example, but the central intent is to teach readers about the prepaid calling card business.

That means much of the material covers the "costs" of setting up a prepaid business, the setting of calling rates, terms and conditions, as well as marketing and sales strategies, including such details on what to put on the front and back of the physical cards.

A 20-year veteran of what was then Southern Bell, Retske worked both in sales and marketing before starting his own firm in the international callback business in 1992.

Along the way he wrote "The International CallBack Book" and "A Guide to Competitive International Telecommunications."

Were Reske writing a new series of tutorials in the second decade of the 21st century, he might pay more attention to new products that use a prepaid charging mechanisms, such as game network subscriptions, mobile phone or Internet access subscriptions. Along the way, as the industry itself has changed, Retske has been covering subjects such as prepaid gift cards.

It also is likely that  Retske would be writing tutorials about prepaid wireless. These days, prepaid wireless is a bigger part of the overall prepaid business.

"Prepaid 101" can be ordered directly from Solvox, www.prepaid101book.com.

Not Every Mobile Operator Now Experiences Data Congestion; Only 60%

Bandwidth is one of those issues upon which one always can seem to find an argument. One always can get an argument about whether access is fast enough, cheap enough or good enough; whether bandwidth demand is growing at unmanageable levels or just growing. Virtually all retail service providers report a highly-skewed consumption pattern, with a small percentage of users consuming disproportionately.

Others maintain that even if such really-heavy patterns exist, it doesn't affect overall performance or experience very much.

But a new survey of 30 global mobile operators suggests that more than 60 percent of global wireless service providers do experience data congestion today, with 20 percent reporting that data congestion is severe at specific times.

The study, conducted by Telespirience on behalf of Amdocs, probably won't end the debate.

Service providers in the Middle East and Africa report that this overload poses serious consequences for their brand reputation and has led to an increase in customer complaints around service quality; Asian and American operators say it is contributing to churn.

Data demand is driven by smartphones and laptops with mobile broadband: In the Americas and Europe smartphones are driving data demand, accounting for more than 40 percent of total data consumption.

In Asia, the Middle East and Africa, laptops with mobile broadband is the key driver. A further factor fuelling demand is flat-rate data tariffs where “bandwidth hogs,” although comprising only an estimated two to three  percent of the customer base, are consuming approximately 30 percent of the network’s capacity, contributing to further service degradation for the overall user base.

About 75 percent of wireless service providers surveyed say end-to-end quality of service has the single greatest impact on their bottom line, partly because of increased customer support costs and customer churn.

Wireless service providers see building out additional network capacity as essential, with 97 percent of those surveyed reporting they intend to roll out Ethernet to alleviate congestion. Respondents said that the gap between the growth in demand for capacity as compared to revenues received for data services was a matter of concern, though.

"Wireless service providers face a 'perfect storm' with data demand doubling year on year, yet revenues are static due to flat-rate pricing," said Teresa Cottam, research director of Telesperience.

To be sure, there are all sorts of reasons for moving to fourth-generation platforms that only secondarily involve an immediate need for bandwidth. Most observers believe 4G networks will cost less to operate, on a delivered bit basis. To the extent that revenue never seems to scale linearly with additional bandwidth, that is a huge advantage.

read more here

Telecom and Video Cutbacks: What Happens When Economy Turns?

The hard thing about managing or forecasting in turbulent times is, as Cisco management likes to say, "managing the transitions." It is not news that media, entertainment and communication spending has been sluggish, at best, for many segments of those businesses over the past couple of years.

According to Harris Interactive, about 20 percent of U.S. adults say they have cancelled or cut back on cable television service (22 percent), mobile phone service (17 percent) or cancelled their landline service and are only using their cell phone (17 percent).

The hard part is trying to figure out when cutbacks triggered by a tough economy will abate, and whether behavior returns to its older pattern, or not. In past recessions, consumer behavior has resumed its "pre-recession" pattern once the recovery was firmly under way.

This time around, of course, nobody is too confident. There is much concern that a new "age of austerity" has begun, so that even when the economy does improve, behavior will not be as it was, in terms of spending. At the same time, most of us would agree that user preferences and tastes are changing. Aside from the economic effects, people might be deciding they want to spend their money in different ways than they have in the past.

Aside from those largely incremental changes, though, some of us believe the danger of "black swan events," unpredictable and unforeseen events with large magnitude effects, is higher than used to be the case in the past, though at all times "black swan events" have occurred.

Uncertainty? You betcha. 

Harris Interactive: Americans Still Cutting Back on the Small Things to Save Money