Visa CEO Says Mobile Service Providers Will Not Become Banks

Mobile service providers will not become full-fledged banks, Visa Chief Executive Joseph Saunders predicts, even though some are doing so, and others are looking at it.

At first blush, the notion that mobile service providers would think about becoming banks is not logical. But the burgeoning interest in mobile-facilitated commerce, with serious mobile wallet and mobile payment businesses, is the reason the idea is not far fetched.

If one assumes that large mobile service providers have to find sizable new businesses to enter as their voice, text messaging and broadband revenue streams mature, there is one over-riding concern.

Firms that earn scores of billions of dollars every year have a scale problem when considering new businesses to enter. If a firm seriously faces the challenge of replacing half its current revenue over a 10-year period, then a firm now earning $20 billion a year has to find replacement revenues of $10 billion a year.

Small business opportunities will not do the job. And most who have looked at the matter generally conclude that only a few opportunities actually have $1 billion a year potential for each and every firm that decides to participate. Among them are mobile banking, machine-to-machine services, mobile advertising and specialized services for business customers.

M2M services, including all sorts of telemetry services, could be a big and totally new business, with key utility and medical customers, for example. Specialized services for business customers, taking the form of embedding communications capabilities into key business applications, likewise is a logical and sizable opportunity.

Advertising already is a huge business, as is retail banking. Some will argue that some form of participation in payment transaction fees is interesting. Others will argue that business simply is not big enough. And that is why some believe mobile service providers, no matter what they now say, will have to consider banking, not just mobile payments.

In Africa, that already is happening. Mobile operators as banks

Keep in mind that Visa is a payments clearing network, not a "bank." Mobile service providers, if banks, would be customers for Visa, not competitors. That is not true of other participants in the mobile payments business.

Saunders also says Apple is a customer that could someday become a competitor, while PayPal already is a competitor, albeit one that also uses the Visa network to clear about half its transactions.

Visa Digital Wallet For Growth

Sprint Puts Investment in LightSquared on Hold

Sprint Nextel Corp. says it has put its investment in a partnership with LightSquared Inc. on hold, since LightSquared has not yet gotten approval from the Federal Communications Commission to redeploy its original satellite spectrum as the foundation for a terretrial Long Term Evolution mobile network.

“The companies have agreed to realigning our deployment timeline to coincide with potential FCC actions,” Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint, said. Until approval is received, “both companies believe it is prudent to pull back on expenses,” he said. Sprint Puts Investment in LightSquared on Hold

LightSquared still has not managed to convince the GPS community or military users that its proposed use of former satellite frequencies can avoid interference with GPS receivers. Sprint deal hinges on spectrum approval

Tests continue to show interference issues, though. LightSquared is not the only entity proposing to re-purpose satellite spectrum to build new broadband Long Term Evolution fourth generation mobile networks. Dish Network also is asking the FCC for permission to build a network simialr to LightSquared.

The obvious potential here is the possibility that as many as three brand new LTE networks could be built in the U.S. market, in addition to the networks Sprint, Verizon Wireless and AT&T also are building. Some will argue that is too many 4G networks, but the business models and market segments might be different.

Dish Network will have a primary interest in providing mobile broadband services that augment its moves into new forms of TV distribution. Clearwire's LTE network, as will LightSquared's proposed network, are designed as wholesale platforms for other retail providers to use. 

Google TV Gets "Surprising" Traction

Google TV has many of the same goals as Apple TV, namely to provide a simpler interface, a new way to discover great web and TV content. Google TV wants to provide a more TV-like YouTube experience, while Apple TV aims to do the same for iTunes and other content.

Google says it now has more than 150 apps which developers have specifically built for TV. Up to this point, Apple TV and Google TV have used an "add a box" approach. Google TV appliances

But Google has been aiming to make Google TV capabilities a native feature of the TV set, and seems to be getting some traction in that regard. Google TV getting traction

Google TV partners appear to include LG, Samsung, Sony and Vizio, all of whom will be featuring built in Google TV features on at least some TVs. LG Google TV


Just how soon "many" makes and models will have embedded Google TV is not so clear. It might take several years. How long before Google TV is widely available?

Apple, on the other hand, might be planning to build and sell it own TVs. Apple might build its own TVs.

Mobile Wallet is an Ecosystem: You Can't "Own" It

The concept of an "ecosystem," though sometimes misused, is quite germane in the mobile wallet and mobile payments space, simply because no single entity can "own" the entire value chain.

"Both banks and telephone companies will slowly come to this realization: No one party can “own” the mobile wallet, and the winners will be those that collaborate and cooperate," notes Brett King at ABA Journal. How 2012 will change retail banking forever

The ecosystem has been necessary even in the arguably less-complex traditional credit card business. But mobile commerce, involving credentials, offers, marketing, advertising, in-store promotions, payment and content services, are much more complex.

More Evidence Text Message Market is Changing

There is growing evidence, largely from European markets, that people are starting to use messaging formats other than text messaging, with obvious implications for the perceived value and pricing for carrier-provided text messaging services.

Finland's largest carrier, Sonera, for example, recorded a 22 percent decline in texting on Christmas Eve in 2011, versus the same night in 2010.

It isn't that people are communicating less. They are just using different methods of communicating. Text Messaging Declines

Hong Kong also apparently saw a similar decrease on Christmas, dropping 14% from the same day in 2010. Netherlands service provider KPN provided an early warning when it announced significant declines in messaging volume earlier in 2010. KPN text message declines

Dutch telecoms regulator, OPTA, which shows a significant decline in the number of SMS sent in the Netherlands in first half of  2011 compared to the previous six-month period.

The country's largest operator, KPN, has also reported declining year-on-year messaging volumes over the last few quarters due to what it calls "changing customer behavior."

Wireless Intelligence says text messaging volumes are falling in France, Ireland, Spain and Portugal as well.

According to OPTA, the total number of SMS sent in the Netherlands stood at 5.7 billion for the first six months of the year, down 2.5 percent from 5.9 billion in the second half of  2010, even though total text messaging revenue rose slightly (0.6 percent) to EUR378 million during the period.

That should not come as a surprise. The number of over the top messaging alternatives has been growing for years. But there is a "network effect" for messaging, as there is for any other communications tool. Until a user is fairly sure that nearly everybody he or she wants to communicate with can be reached by a particular tool, adoption is slower.

But there always is a tipping point, where the expectation changes from "I doubt this person uses this tool" to "there is a good chance they use this tool." Finally, there is the point of ubiquity, when the assumption simply is that "everybody" uses the tool.

Also, the history of text messaging and email are instructive. Though most cannot remember a time when it was so, email and messaging services once upon a time ere not federated. In other words, you could not send messages across domains.

History also tells us what happens after federation: usage explodes. With alternative messaging platforms, we still are not in a "full federation" mode, where anybody can send messages to any other user, irrespective of what device, operating system, service provider or application they prefer to use. That day will come, though.

When it does, usage of text messaging is going to fall sharply, unless it is a feature people can use for no incremental charge.

Google Chrome Gets Faster, Safer

Google has released a Beta version of its Chrome browser that is supposed to be faster, and more secure, as well.


"One of the things people like best about Chrome is that it loads web pages quickly," Google's Chrome blog says. "To get you where you want to go even faster, Chrome will now start loading some web pages in the background, even before you’ve finished typing the URL in the omnibox." 

"If the URL auto-completes to a site you’re very likely to visit, Chrome will begin to prerender the page."

Pre-rendering reduces the time between when you hit Enter and when you see your fully-loaded web page--in some cases, the web page appears instantly.


On the security front, improvements to Chrome’s Safe Browsing technology should help protect you from additional types of malware attacks. Google Chrome Blog

Previously, Chrome focused primarily on protecting you from sites that would exploit your computer with no user interaction required. Now, we’re seeing an increase in malicious websites that try to convince you to download and run a file that will harm your computer. Some websites even pretend this malicious file is a free anti-virus product.


To help protect you against malicious downloads, Chrome now includes expanded functionality to analyze executable files (such as “.exe” and “.msi” files) that you download. If a file you download is known to be bad, or is hosted on a website that hosts a relatively high percentage of malicious downloads, Chrome will warn you that the file appears to be malicious and that you should discard it.


I've just loaded it and it does seem to execute faster. I'm amazed. 

Who Are the Top 10 Power Influencers in Mobile?

 

Thanks, Traackr. Hat tip to Forbes.

See this 10 most influential or Traacker

The Digital Living Room

Over the last several decades, virtually all changes in consumer use of television have shifted consumption in the direction of non-linear consumption.

You can argue about whether the shift to "interactive television" has happened, or what that actually means.

Does Social Messaging Displace Text Messaging?

The data is impressionistic, but one user has discovered that ability to send Apple iOS 5 "iMessages" does reduce the amount of text messaging.

Apple's iMessage is a service that seeks to replace text messaging, and in at least this case, seems to do precisely that.

The iMessage service sends messages (text, images or video) using any broadband access mechanism, defaulting to text messaging if the recipient cannot receive such messages. It probably is important to note that the biggest potential effects would be seen where one iOS 5 user sends lots of messages to other iOS 5 users.

 What iMessage cuts text messaging

Apps Consume Much More Bandwidth than Web Sessions

A recent test of app data consumption suggests that using a mobile app rather than a browser to view the same content has vastly different bandwidth consumption implications.

The test compared PC and tablet web browsers to view the Wall Street Journal home page, with an iPad Wall Street Journal app to reach the same home page.

The data consumed using the Web browser on the iPad and on a PC to access the WSJ home page was similar, both averaging around 2.2 megabytes in total consumption (sent and received).  The same test was run accessing the The Weather Channel site, which revealed similar results (around .9MB in total consumption).

Although the iPad Web browser consumed slightly more data than the PC web browser for TWC, the difference was not enough to warrant further investigation, says Greg Wolf, a principal with NetForecast who conducted the test. However, using the iPad apps to read the WSJ and TWC tells is a very different story.

The WSJ on average consumed 47MB of data when downloading a daily issue, while TWC consumed on average 7MB just to display the main menu.

 In other words, the WSJ iPad app consumed 21 times more data than accessing the WSJ homepage using a Web browser, and the TWC app consumed over 7 times more data than accessing the TWC main menu using a Web browser.

Putting aside the obvious fact that the experience of using a native iPad app is designed to deliver a richer, multimedia experience, the point here is that this experience comes at a price. App data consumption much higher than web sessions

Video and Cloud Killer Apps for 4G?

Some observers do not believe there will be any "killer app" for Long Term Evolution and 4G networks. But in a survey of 150 mobile industry executives, "video" and "cloud computing" are candidates for such status, if there are any consensus candidates.

About half of the respondents seem to think 4G mobile service is just "faster" access.

2012 in mobile

Apple TV: a Content Device Needs Content

Content businesses use technology, but are not fundamentally about technology. Back in the days of analog television, three decades ago, a couple of delivery systems, such as laser discs, provided much-better image quality. Laser disc lost out in the market to VCRs, which offered visibly-worse image quality.

But there were two distinct advantages: lower device cost and much-greater content selection. All other things being equal, consumers will tend to choose wide content choices over video quality, and lower-cost devices over higher-cost devices.

But all would-be video providers have to convince content owners to license content. And that will remain a key challenge for any would-be developers of new TVs and video playback and purchasing systems.

An Apple television foray makes sense. People could use any Apple device to buy TV shows, movies, music or games through iTunes and then play their purchases across all Apple's products.

But, so far, it does not appear that Apple has been notably successful at convincing content owners to license TV programming for sale through iTunes. Apple television

9% of U.S. Consumers Have Abandoned Video Service

About nine percent of U.S. respondents to a Deloitte survey say they have stopped buying video entertainment subscriptions from cable, telco or satellite providers, while another 11 percent report they are considering doing so.

Perhaps the important finding is why people are considering doing so. The 11 percent who report they are considering abandoning subscription TV services say they now can watch almost all of their favorite shows online.

One would guess that, as typically is the case when product substitution occurs, that the first “switchers” are users for whom the existing solutions have low value, compared to product price.

The classic example is the person who doesn’t watch much television in the first place and does not have children or other family members who do enjoy television, making a $100 a month fee “high” in relationship to value.

In the case of the "typical end user," video cord cutting seems to be more of a barrier than some might think. Highly-motivated end users might put up with quite a lot of hassle to avoid buying video. For most, such efforts will be too much bother. 9% of U.S. Consumers Have Abandoned Video Service - Carrier Evolution

Mobile Payments, Commerce Big in 2012?

There's an unusual finding in Chetan Sharma's most-recent survey of 150 mobile service provider and suppler executives looking at what will be hot in mobile in 2012. The respondents believe mobile payments and mobile commerce will be more popular consumer applications than location services and music, and will be only modestly less popular than messaging.

That is almost shocking. The only way to make sense of the findings is that "commerce" is broadly defined to include checking product availability and prices from a mobile, browsing shopping sites on a mobile device, or looking for a particular store.

The clue is that there appear to have been separate questions asked about use of near field communications, for example. Still, the fact that mobile payments and mobile commerce are considered the second most popular consumer application of 2012 is instructive, even if most observers might agree that the bulk of that activity will take the form of commerce rather than payments.

The other noteworthy finding is that many of the executives expect Amazon will enter the mobile market in a more-direct way in 2012. Mobile executives views on 2012

Western Europe Mobile Churn Will Grow in 2012

Mobile customer churn will increase in many European Union markets in 2012, analysts at Yankee Group now predict. “Value” is expected to be a key driver for much of that churn, one might conclude, with potential winners among the ranks of service providers with a “value” orientation.

During 2012, several European Union countries will slide into recession and governments will press ahead with tough austerity measures, Yankee Group believes. The most affected countries will include Greece, Italy, Spain, Portugal and Ireland, but others, including the U.K. and France, will also be impacted.

“As they did during the last recession, customers will optimize their mobile consumption behavior in an attempt to minimize monthly spend,” say Yankee Group researchers.

During the first year of the recession between the fourth quarter of 2008 and the fourth quarter of 2009, monthly churn increased by 0.14 percentage points. That might not sound like much, but leads to about a 17-percent increase in churn rate over a year’s time.

During 2012, similar switching behavior will contribute to another increase in churn rates. Western Europe Mobile Churn Will Grow in 2012 - Carrier Evolution

Lower Mobile ARPU in Latin America

The current strategy used by virtually all mobile service providers to combat declining voice average revenue per user is increased data revenue. So far data revenue growth has slowed the decline of blended ARPU, but it hasn’t stopped the bleeding entirely, in South American markets.

Excluding Venezuela and Argentina, voice ARPU in Latin American markets are declining at about two percent per quarter, according to Yankee Group analysts.

“Simple linear projections indicate nominal voice ARPU won’t stop declining until late 2017,” Yankee Group says. “By then regional voice ARPU would be just over U.S.$5.80, about 40 percent less than it is today.” Lower Mobile ARPU in Latin America - Carrier Evolution

"Voice as a Feature" is Business Customer Future

For the last decade and a half, at least, communication applications increasingly have been decoupled from network access and also are starting to be available across a range of devices used by a single person.

Another way of saying that is to note that “application-specific networks,” built to deliver a single lead application, no longer are the norm. Instead, virtually all major networks now are “multi-service” networks.

In some ways that has helped service providers, who now can sell multiple anchor products on a single network (voice, video and data). On the other hand, modern networks also fundamentally separate “access” from “applications,” meaning “over the top” competition now is easy.

That of course also has the added danger of removing service providers from direct customer relationships on a wider range of products, services and experiences.

According to analysts at the Ericsson Consumer Lab, traditional communication verticals such as telephony and video conferencing will continue to exist as profitable businesses. "Voice as a Feature" is Business Customer Future - Carrier Evolution

Broadband is Cable's New Anchor Service

Many have been making the argument that all fixed line networks will be foundationally based on broadband access services in the future. Recently even some cable TV executives have been saying that is the case. Recent U.S. cable operator revenue growth figures suggest the trend is well underway.

That is not to dismiss the importance of the legacy video revenue, any more than it makes sense to dismiss the continuing importance of voice revenues for mobile or fixed network communications providers. But growth rates point to where all the networks are going.

It's all based on broadband.

Kindle Fire Has Changed Tablet Market

The Kindle Fire has changed the tablet market.

Up to this point, the issue has been to create a device, and an application ecosystem, to rival the Apple iPad. That still is true, but what is new is that the tablet market now has at least two "lead" devices, including the Apple iPad and the Kindle Fire, each representing a distinct segment within the tablet market.

Granted, some will continue to view the Kindle Fire as a capable "e-book reader," while the Apple iPad is a "real" tablet. Others will continue to argue that niches and segments exist within the tablet category.

But rumored movement by Google to create a "reference" tablet that will compete in the tablet space might take the form of a tablet positioned about the Kindle Fire, not the Apple iPad.

That, at least, is what some component suppliers now believe.

Google executive chairman Eric Schmidt has said the company plans to launch a high quality tablet device "within the next six months."

The sources believe that Google will launch the own-brand tablet in March to April of 2012, featuring a seven-inch panel and Android 4.0 with a price less than $199 to compete against Amazon's Kindle Fire. Google tablet PC believed to be targeting Kindle Fire

Why Do People Use Landline Voice?

From a fixed network service provider perspective, there are some perhaps-worrisome findings in a recent survey by KPMG International of 9,600 consumers in 31 countries, even though the survey also suggests most people have landline voice service.

Some 80 percent of respondents to a global survey say they have landline voice service, which some (including KPMG International) might say that shows the resilience of demand for fixed line voice service.

That isn’t the only logical conclusion, though. The survey also suggests 52 percent have a voice landline because it is necessary to get their Internet connection.

That might suggest that in many cases, purchase of the first product (voice service) is necessary to buy the second product (Internet access). KPMG International survey

Such “product tying” can continue to work so long as consumers have no other alternatives.

But some also would say actual demand for fixed network voice lines cannot be determined with any precision when “sell through” is required. I other words, some people might buy landline voice because they have to, to get Internet access.

Though such tying practices increasingly are rare in many markets, product pricing generally aim to provide incentives to consumers for buying both products, or a triple play, together.

The good news is that lots of customers are rational buyers. They say they buy voice service because it is more reliable than mobile or Internet voice, or because landline is more effective for some applications.

Business users likely can provide better examples of those values than many consumers can do, and it is the business markets where one might argue the value of fixed-line IP telephony is most germane.

The worrisome results could lie in the great number of people who say they buy “out of habit,” since habits can change, or who report that they buy landline voice to get Internet access.

Over the past 12 months, around four percent of respondents to a KPMG International survey seem to have eliminated their landlines but more than 80 percent still believe their landline is important.

Also, globally, more than 80 percent of respondents indicated that they have a landline service, with the highest concentration found in Asia Pacific (83 percent) and the lowest (76 percent) in Europe, the Middle East and Africa (EMEA).

Almost a quarter of all respondents from Europe,the Middle East and Africa have no landline at all, versus 17 percent in Asia Pacific and 22 percentin the Americas.

Many respondents also seem to hang on to their landline for reasons of comfort. Some 45 percent said a landline felt more reliable. This may represent a massive opportunity for operators that can leverage this ‘stickiness’ to launch additional services over landlines that drive new revenue streams and models, KPMG International says.

The KPMG data also found that the propensity to maintain a landline depended on the age of the consumer. Only 72 percent of people aged 16-24 report having a landline, versus about 88 percent of those over 45 years of age.

The survey was conducted in the summer of 2011 and included 9,600 consumers across 31 countries. All surveys were conducted online, except in Nigeria and Saudi Arabia where telephone interviews were conducted. All respondents had to own either a laptop or notebook computer, tablet computer, smart phone or mobile phone.

Social Signals as Polling Data

The graph below compares the NBC poll with positive sentiment on Twitter. The data was collected between Dec. 27 and Dec. 30, 2011. One might note that the surprise finish by Santorum was "predicted" better by Twitter activity than by "scientific" polling.



In research Global Point has done in the past, its data tends to be about two weeks ahead of polls. Social signals and polling

The Twitter "positive" activity indicated that something was going on, that Rick Santorum was fast gaining traction.

4G, Business Access Both Benefit From Growing 10-Mbps Ethernet Trend

By some reasonable accounts, carrier Ethernet has boosted HSPA+ performance enough that it can accurately be described as “4G,” at least in terms of potential bandwidth. That might qualify wireless backhaul using Ethernet as the most-important single carrier Ethernet application, in terms of customer impact.

But a change in business customer bandwidth buying would run a close second. Many would argue that 10 Mb/s Ethernet is the new T-1.

According to Vertical Systems Group, most business buyers choose access speeds someplace between T-1 at 1.5 Mbps, to T-3, at 45 Mbps.

Carrier Ethernet is the most popular technology choice within the intermediate-speed category, Vertical Systems estimates. By 2014, Ethernet connections will exceed all other intermediate-speed options by a factor of about 2.5, Vertical Systems Group also predicts. Carrier Ethernet enables 4G

Kindle Fire Cut Into iPad Sales

As many as two million fewer iPads were sold this holiday season because of Amazon's Kindle Fire tablet, according to Morgan Keegan analyst Tavis McCourt.

That wouldn't strike many people as unexpected. Amazon says it sold more than four million Kindles in December 2011.

Selling at $199, compared to $499 for the lowest priced iPad, the Kindle Fire would be expected to take some "tablet" share, even if some observers would say the Kindle Fire is an e-reader, not a tablet. Kindle Fire Cut Into iPad Sales

McCourt now estimates sales of 13 million iPads in the quarter, down from 16 million, while boosting his projection on iPhone sales to 29 million, from 27 million. He now estimates that the company sold 4.8 million Macs in the quarter, down a hair from his previous projection of 4.9 million. iPad sales down

He estimates the Amazon Kindle Fire sold four million to five million units this holiday season, likely trimming iPad sales by one to two million units.

Is Communications Spending Growing, or Not?

As a practical matter, it often is difficult to ascertain whether consumer or business spending on particular communications services or products, though up or down in nominal terms, actually represent growth or decline. The reason is that nominal increases in spending over time sometimes reflect broader price changes in the whole economy, rather than changes in demand or spending as a percentage of total spending.

Also, even nominal spending can be deceptive. If a flat dollar amount of spending over time also is accompanied by large decreases or increases of overall income, for example, the nominal spending can disguise “real” changes.

Ignore for the moment changes in product value or features over time that also complicate comparisons. If “X” amount of spending on any product also is accompanied by significant changes in a household or national budget, for example, then the implications can be quite significant.

As a percentage of spending, a flat amount automatically will represent a larger percentage of spending.

In other words, the product of a fraction always changes as either the nominator or denominator changes. That noted, it is possible that spending patterns are changing, for the first time in decades. There is evidence that between 2007 and 2010, for example, U.S. households were spending much more on “telephone equipment,” which has to represent purchases of mobile phones. That should, in principle, lead to higher spending on mobile communication services.

There also was a predictable increase in spending on “communication services,” which probably reflects increases in video subscription rates, plus some incremental spending on mobile services for all those mobile devices people seem to be buying.

Keep in mind that those percentage increases might, or might not, represent a significant change in the percentage of household spending on services or devices.

Logic might suggest that most people do not spend much, in any given year, on fixed line phones or fax machines, for example.

So a 16-percent change on a small base might not represent much actual sales volume. A four-percent growth of spending on “information processing” equipment, which presumably includes personal computers, tablets and possibly other personal mobile devices, might represent a bigger change in dollar volume. 

On the other hand, logic also would suggest that people are spending more on tablets and smart phones, which could mean they are maintaining spending on legacy products, and adding new devices (increasing spending overall), substituting new products for older products (substituting new products for older products), or cutting back someplace else in budgets to add the new products. 

Looking back at the 1990 to 2008 period, for example, one can note “huge” increases in nominal consumer spending on communications and information technology.  

Since 1990, though, those changes also  have been more than matched by broader increases in household income, holding the percentage of household spending on communications flat over the entire period.

One might also note that such figures also are not typically “inflation adjusted” to show changes in constant dollar terms.

Since 1990, consumer spending on information and communications technology has grown from $197 billion to $545 billion, 5.1 percent of national disposable income in 1990, peaking at 5.9 percent in 2000, and falling to 5.4 percent in 2008. Those figures include both recurring spending on services and product purchases.

Spending on communications services has tripled over the same period, from $77 billion to $243 billion, and at 2.3 percent of national disposable income, up from 1.8 percent in 1990 but below its peak of 2.5 percent in 2001.

Basically, the story is one of large increases in consumer value. Consumers are spending more on communications and information technology, but a steady percentage of disposable income. Yet consumer value has grown exponentially in the intervening years, one might argue.

The problem is that changes in product quality are not reflected in retail price metrics. That is a common “problem” where we look at software and computing devices, where a constant dollar amount buys more processing power and features every 18 months to 24 months.

U.S. communications expenditures as a share of national disposable income has been flat since 1997, but users have added over 100 million broadband and video connections and over 100 million wireless connections, according to the Bureau of Economic Analysis.

Such potential changes bear watching. It would be a very-big deal indeed if typical consumer spending on communications services and mobile devices were to deviate from their historical patterns in a markedly upward direction.

One might argue we already have seen a slight upward trend, measured as a percentage of total household spending. The other angle is that communications spending always will represent a very-small fraction of overall household spending, dwarfed by housing, food, medical care and other categories, for example.

Ultrabooks, Not Tablets, will be Center Stage at CES

The upcoming Consumer Electronics Show will likely be dominated more by "ultrabooks" than tablets, though some might say "ultrabooks" are the latest iteration of the notebook form factor and user interface, not a "distinct category" of devices.

That's okay. People clearly are getting used to devices that boot up fast, and a slim notebook that boots fast is a definite improvement. Others would note that "ultrabooks" draw inspiration from the Apple Mac Air, and that's okay as well.

Among the advantages tablets demonstrate to most users is that they boot up fast. CES


.

People Like Siri, but Don't Use It

By my non-scientific survey of family members who use iPhone 4s, Siri is deemed interesting, but it doesn't get used. I find the same thing to be true of Google's "voice search" on my Androids. I think the speech-to-text function works remarkably well. I enjoy having the feature.

But I typically still type in Google search terms. I can't explain why all of us seem to be using text input where speech input is available. In my case I've had the feature for two years, and never have abandoned text entry when searching.

You might argue that Siri is a better, more natural way to "ask questions," rather than "a way to search." But it doesn't seem to have changed behavior much.

 

Growing Roles for Devices for Mobile Commerce, Content

A January 2012 Apple event will focus on the Apple iBooks platform, observers are speculating.

Robust Kindle Fire sales over the month of December (Amazon already has said it sold four million of the devices before the end of December 2011) illustrate both the role of content consumption and mobile commerce as lead applications for tablets and other mobile devices.

Separately, Apple says it will hold a media event in late January 2012, with speculation that it has something to do with either advertising or content. That would illustrate the growing content consumption role of devices in general, with a strong tie to mobile commerce.

The Kindle Fire interface, for example, features tabs for “Newsstand, Books, Music, Videos, Docs, Apps, Web.” That is perhaps the most-logical way to organize a content consumption device.

But each tab is a gateway to commerce, namely, the ordering of new content to put in user libraries.

Kindle Fire users seem quite happy with the product, in general, according to analyst Gene Munster.

Piper Jaffray analyst Gene Munster said half of the 8,529 Fire reviews he surveyed gave the tablet 5 out of 5 stars, compared with 48 percent of those polled who gave the tablet a 5-star review on 13 December and 47 percent who gave the tablet a 5-star review on December 8, 2011.

The point is that both content consumption and commerce are becoming defining features of most mobile devices. We have been fond of saying mobile phones have become "computers."

It might be more appropriate to say they have become content consumption and mobile commerce platforms.

Google+ Keeps Growing, Despite Skepticism

A reasonable person could have argued, and many did argue, that the "world does not need another social network" when Google+ launched.

Many predicted Google+ would fail. That doesn't seem to be happening. According to Experian Hitwise, Google+ not only has grown significantly since the summer 2011 launch, but has hit a record new peak of visitors in December 2011.

One hears almost nothing, in early January 2012, about Google+ "failing" to get traction.

Sprint Grants LightSquared 30-Day Extension

Sprint Nextel Corp. has given LightSquared a 30-day extension to a Dec. 31, 2011 deadline to get Federal Communications Commission clearance to operate its network. It isn't quite clear what the extension means, as Sprint could simply grant additional extensions. Nor do most believe LightSquared can get FCC approval that quickly. GPS industry interests are adamant in their claims that LightSquared will cause interference with some GPS receivers.

Getting FCC clearance is a condition of a 15-year spectrum-and-equipment-sharing deal between the two companies, allowing LightSquared to use the Sprint national network, and giving Sprint rights to user LightSquared spectrum. Sprint Grants LightSquared gets 30 more days

Tumblr Changed Blogging

If you have been blogging a while, you probably noticed Tumblr. Tumblr, though perhaps a better platform for visual content than for text content, nevertheless seems to have changed the way most of us think about blogs.

Expectations have shifted from text to images, while the use of "tiled" layouts also have become an issue. Tumblr made a difference It remains unclear to me whether Tumblr formats, though much better looking, as a rule, are as workable as more-linear text formats for text-rich content.

Most Tumblr content tends to consist of shorter text elements, with better use of images. That works fine for many purposes. I'm not so sure it works as well for content that is mostly narrative in scope, where search is helpful and when it might be useful to know, quickly, what other users have consumed.

97% of U.S. Homes Use Broadband, Ofcom Says

Only three percent of U.S. households do not use some form of broadband, a new study by Ofcom suggests. 


About six percent of households appear to use mobile only, while four percent use both fixed and mobile broadband. 





Ofcom data

Mobile Broadband Revenues Nearly Equal Fixed Line Revenue in 2010

It is not news that text messaging rivals voice as a typical communications method, or that more people are using mobile broadband. What might be new is the extent to which both types of services drive service provider revenues, not just activity. Texting now dominant?

By some measures, service providers now make nearly as much money from mobile broadband services as they do from fixed broadband. Ofcom analysis Over time, mobile broadband is likely to become even more important, if for no other reason than that mobile broadband is sold on a per-device, nearly a per-user basis, while fixed broadband is sold per household.

Granted, fixed mobile connections generate more revenue per line. But mobile units will outnumber fixed connections by such a margin that aggregate revenue will continue to shift in the direction of mobile services.

How Big Does a Distributor Have to Be?

How big does a video content distributor have to be, to gain the upper hand in licensing deals with content owners? The answer matters where it comes to any potentially big changes in video entertainment distribution.

Up to this point, even the largest U.S. cable operators, though able to win volume discounts, have not had the dominant role in the business relationship, at least in recent decades, one might argue. The largest programmers, with the "anchor" channels, essentially have been able to dictate placement on programming tiers and force bundling of multiple networks.

In other words, contracts generally forbid sales of channels a la carte, which would represent one potential source of innovation. So far, Comcast, Time Warner Cable, AT&T, DirecTV, Dish Network, Verizon and others have lacked leverage.

But then there's Google, Apple and Amazon. Apple's iTunes customer base arguably got to be so large that music publishers had to do business with Apple, on the general terms Apple wanted. That includes such basic matters as retail pricing, royalty rates and ability to "unbundle" discs and sell songs one at a time.

Video content owners "learned" from that experience and do their best to avoid ceding power to the newer distributors. But some might argue that some distributors have potential to grow so large that the potential audience simply cannot be ignored.

Some might argue that, over time, content owners "must" lose power to the huge new distributors. In that view, Amazon, Apple and possibly some others will amass audiences so large that the distributors will gain the upper hand. Who "owns" video distribution?

Certainly many would argue that perpetual annual price increases for video entertainment services at their current  rate are unsustainable. And one almost-certain way to put a brake on costs is for distributors to gain the ability to say "no" to programmer demands.

Network economics would change, of course. If programmers cannot "force" distributors to buy channel bundles, and distributors do not restrict channel bundles so rigidly, programming choices could explode.

Though telco, cable and satellite distributors might not prefer to sell smaller packages of channels, or simply programs, newer distributors might well prefer to sell that way. Think iTunes rather than a Comcast video subscription.

Many lightly-viewed networks would no longer be viable. Many shows would have a harder time getting exposure to an audience. But new promotion methods would arise. YouTube Channels might become more important venues for specialty networks.

Some might question the long-term viability of the channel metaphor. But channels are akin to "genres" of music. People have favorite artists and songs. But they also have preferences for genres. The same will be true for video and movies. Both channels and a la carte can coexist.

Cable operators, though, are not likely to be as supportive of a la carte access to discrete programs as will Amazon and Apple, who have device and business ecosystems well suited to a la carte buying. Apple and Amazon have numerous other ways to make money than by selling advertising.

Video distributors make money on subscriptions and advertising, and both revenue streams potentially are disrupted by a la carte sales.

But the question remains: how big does a distributor have to be before content providers must be on the platform? In music, the answer has been "as big as Apple." So far, nobody in the video distribution business has yet reached that scale, apparently.

But there are lots of potentially-huge channels. In the online world, Apple, Amazon and Google might come to mind. In the physical world, Wal-Mart, Target or Best Buy already have tried to make a move. So far, though, all we have seen is cracks. The old order is not yet crumbling.

Time Warner Cable Takes Stand on Sports Programming Cost

Madison Square Garden Co.'s sports networks won't be available for Time Warner Cable Inc. subscribers in 2012, meaning New York Knicks and Rangers games apparently will not be available on Time Warner Cable systems in the New York area. The unusual inability to come to terms is significant.

Though programmers and content providers obviously would prefer to be paid more, every year, for access to their content, distributors are in a bind as programming costs continue to drive retail end user prices higher, reducing demand for the product. More affordable packages?

And since sports programming generally is considered to be a principal driver of programming cost increases, the carriage discussions have an added significance. Apparently, as important as Knicks and Rangers games are in the New York market, Time Warner Cable is "drawing a line in the sand" against what it sees as ever-higher programming costs. Programming cost squeeze

The gamble is not without risk. Few cable, satellite or telco video distributors would be willing to risk losing anchor programming such as ESPN, considered a staple of video service packages.

On the other hand, regional or "specialized" sports packages, at least in this case, are viewed by Time Warner Cable as a place to start changing the conversation. Some might argue the conversation is long overdue. Sports programming costs an issue

No MSG on ime Warner Cable

Apple iPhone Gets 66% Share at AT&T Retail Stores

It looks like the Apple iPhone dominated sales of devices at AT&T stores in December 2011. Apple iPhone rules at AT&T

Cable Bills "Tripled" in 10 Years?

The problem with measuring price changes for all sorts of products is that, quite often, products change. That can lead to an "apples to oranges" comparison that actually misses the mark. One might argue that such misunderstandings are inevitable, now that SNL Kagan has produced figures arguing that the "average cable bill" has grown from about $40 a month in 2001 to $78 in 2011.


There are a couple of obvious issues. Those are nominal prices, not adjusted for inflation. Using a rough rule of thumb about prices doubling every decade, a $40 inflation-adjusted price in 2001 would be about $80 in 2011, which is about what SNL Kagan says is the case.


Beyond that, there is the other problem also experienced by PC suppliers, namely that performance increases are not captured by the retail sales data. The 2011 channel line-up is, generally speaking, much more extensive than in 2001.


Whether that actually provides value for end users is another question. But the "product" itself is different. Also some will compare the "total bill" for all services in 2001 with the total monthly bill in 2011, and argue for a "tripling" of bills. That also is erroneous.


In 2001 arguably few subscribers were buying triple-play packages of voice, video and data. In 2011 that was more the norm than the exception. So the price for a three-service package is compared to what essentially was a one-service package in 2001. 


One easily can argue that nominal cable retail prices have climbed. But it also is true that consumers are buying a different mix of "products," including high-definition services and devices, digital video recorder service and service at more outlets, for example. Cable bills

A Tablet Christmas

If you based your conclusions on Apple and Android activations, Christmas day was "tablet and smart phone day," according to Flurry data. Apple iOS, Android activations

It would be reasonable to assume that the Kindle Fire represented much of that activity. Amazon says it sold more than four million Kindles during the month of December, for example. That means 59 percent of activation events could have been for the Kindle Fire alone. 

No Killer App for Verizon LTE?

One year after its launch, Verizon Wireless's 4G LTE network has failed to capture the imagination of the cell phone-buying masses, who still prefer the slower-connecting Apple iPhone by large margins, argues Paul Kapustka of Sidecut Reports.

With data-download speeds up to 10 times faster than previous technologies, it might seem that Verizon's "fourth generation," or 4G wireless network, would be a hot commodity in a mobile device-crazed world, says Kapustka.

But lack of a compelling new "4G-only" application is one possible reason why Verizon had sold fewer than 2 million 4G LTE-capable smart phones during the first nine months of 2011. he argues. Some of us also would argue that 3G is quite good enough for most smart phone users, at the moment.

By way of comparison, more than four million people bought the new Apple iPhone 4S the first weekend it went on sale, from Verizon as well as from AT&T and Sprint, Kapustka argues.

But we should not underestimate sales, either. Verizon sold more than a quarter-million units of its first 4G LTE phone, the HTC ThunderBolt, in just two weeks after its mid-March 2011debut. Those sales arguably were made to “early adopters” who had a reason to buy.

No Killer App for Verizon LTE? - Carrier Evolution

No Significant Cord Cutting Yet, But Maybe Serious Cord Avoidance

You can typically get a good argument about the imminent danger of video cord cutting (people giving up their entertainment video subscriptions) just about any day. Lots of observers warn about people substituting online and other sources for their TV and movie viewing, but a substantial number also would argue that there is a relatively insignificant amount of that sort of activity at the moment.


So far, the numbers seem to be on the side of doubters. Keeping matters in perspective, Comcast Corp., lost 442,000 video subscribers in the first nine months of 2011, fewer than in the same period last year. But Comcast also has about 22.4 million video customers and 49.4 million accounts if you include buyers of Comcast voice and high-speed broadband products.


Time Warner Cable Inc. lost 319,000 over the same period, according to the Wall Street Journal. Losing cable customers

But at the end of the third quarter of 2011, Time Warner Cable had 11.7 million video customers and 26.2 milliion buyers of its video, voice or broadband products.


Also, losses at cable companies are mostly defections of customers to rival satellite or telco providers, rather than outright defections from the ranks of video service providers. So the actual amount of abandonment arguably remains fairly low. No Significant Cord Cutting Yet, But Maybe Serious Cord Avoidance - Carrier Evolution

Verizon says LTE outages are IMS related

Recent multiple outages on the new Verizon Long Term Evolution network were caused by software bugs in the IMS core, according to Verizon Wireless VP of network engineering Mike Haberman. Verizon says IMS is culprit behind LTE outages

All three outages were caused by problems in Verizon’s service delivery core, the IP Multimedia Subsystem (IMS) which is used for signaling on the LTE network.

While IMS has been around for some time, Verizon’s is the first implementation in an LTE network and it has continued to be a problem spot ever since April 2011, when a software bug originating deep within the IMS core led to a complete failure, kicking LTE customers off both Verizon’s 3G and 4G networks nationwide.