To Fix Anything, You Must be Able to Define "What is Broken?" In Mobile Payments, We Don't Know, Yet

Lots of consumer innovations and products fail. Some might say the failure rate is 50 percent to 90 percent or even higher. Given that track record, one would have to be skeptical about prospects for any of the proposed new mobile payment, mobile commerce or mobile wallet systems. Even if any of those efforts ultimately do manage to change the shopping, buying or paying experience, most of the current iterations will not survive.

So having a clear understanding of precisely what is to be fixed might be worthwhile. Some of us have argued that the retail, in-store payments process, in fact, is "not broken." Retailers would prefer not to pay as much as they presently do to conduct the transactions. Payment processors would like to protect those transaction revenues.

But "paying for things" doesn't seem, in North America, to be something that causes consumers lots of difficulty. Nor is the ultimate potential reshaping necessarily clear. Up to this point, there has been a clear emphasis on changing the "retail" payments process. But retail shopping is clearly under serious pressure from online alternatives.

Best Buy is moving away from the "big box" business model as online competitors continue to chip away at the formerly-successful business model. Some might question the long-term potential of the moves, as many likewise would question whether Barnes & Noble can survive as an operator of retail locations as well.

That is not to say all retailers are destined to disappear. But many "big box" approaches might not work as well as they have in the past. Some might argue the only long-term model is the "Apple Store," where the object is to showcase merchandise and explain, educate or demonstrate its use, not "sell" it. That will have "payment process" implications, as many customers might "purchase" in new ways other than standing in front of a cashier operating a traditional point of sale terminal.

But there are other implications for mobile commerce as well. If fewer retailers are selling products, and fewer customers are "buying" in many retail settings, what does that mean for all the effort going into mobile payment terminals, applications and systems? Will the mobile device assume an important new role as a device to show the product catalog?

Will the mobile increasingly become the checkout terminal? At a broader level, how might the "shopping experience" change?

Beyond that, what is "broken" about the commerce, shopping, payment or marketing experience? Unless something is broken, there is no "fix." And if past experience with technology provides any clues, those proposed remedies need to provide a consumer experience that is about 10 times better than the current process.

Also, any proposed new process and experience will involve some amount of end user behavior change. So the pain of enduring the present state of things has to be greater than the pain of adopting the new solutions. It is not yet clear any of those preconditions exist.

It is not enough to say a new way of doing things is "better." It must be an order of magnitude better, and in consumer or end user terms, not in terms of how fast, how powerful, how different the new experience is said to be. Though hard to measure, it is the experience itself that must be an order of magnitude better.

LG Flexible E-Paper is Coming

People think e-paper, flexible thin displays that mimic paper, will be important for e-reading apps. As often happens, though, people might find other uses for the technology. In some cases, it might not be the flexibility but the thin or light display that emerges as the value driver.

Some of us have been thinking it would be an ideal medium for point of sale displays, or digital signage, for example.

Content a Bigger Issue for Mobile, Other Businesses

Content is becoming a bigger deal for "screens" of all types. Mobiles already are used by 69 percent of smart phone users every day. Also, consumer and business content consumption patterns appear to be changing as tablet and e-reader ownership grow.

The share of adults in the United States who own a tablet of some sort nearly doubled from 10 percent to 19 percent between mid-December 2011 and early January 2012. That’s a doubling of mass market adoption in just 30 days, from a significant base.

The ownership of e-readers also surged from 10 percent to 19 percent over the same time period. Tablet ownership doubled in two months, in fact. 

Though iPads seem to be used for a variety of purposes, content consumption seems to be a dominant business application, though significant percentages of business users also say the tablet displaces some amount of smart phone use as well.

Web browsing, reading and news consumption are the top three usage contexts identified by professionals worldwide.

Whether tablet ownership “revives” the print newspaper and magazine market remains to be seen. But it already is pretty clear that tablets and e-readers are changing the function of “reading.”

The survey suggests that tablet computing is transforming patterns of content consumption. iPad-owning IT and business professionals are rapidly migrating away from newspapers and printed books, toward digital alternatives.

Nearly three quarters of iPad owners say that owning an iPad has reduced the frequency with which they purchase newspapers and books. Whether that helps or harms print content providers remains to be seen.

More than 61 percent of U.S Internet users research travel online prior to booking, a story in MediaPost reports. And there is evidence that the amount and types of content on travel-related sites make a difference.

Brands that invest in "content curation" (collecting third party content)  register longer average user time on site and more return visitors, according to L2. Brands recruiting local staff to provide tips can increase user time on site by 16 percent.

Also, users on brand sites with "curated itineraries" (essentially, content about other travelers who have gone to a specific venue, or used a specific travel method or provider) spend 12 percent more time browsing.

Smart Phones Reach U.S. Tipping Point

Almost half (49.7 percent of U.S. mobile subscribers now own smart phones, as of February 2012, says Nielsen. 

Shortly, smart phones will become the majority of U.S. devices, and the penetration will simply increase every year from this point forward.

That tipping point should have lots of implications for application usage, bandwidth usage, broadband revenue and implications for future mobile retail plans and packages, especially as tablet adoption also grows.

Increasing adoption of broadband-capable tablets and smart phones will mean there is more end user demand for mobile broadband plans that mimic the existing packaging of family voice and texting plans that allow multiple devices to share a single bucket of voice usage and texting. 

Nielsen says more than two thirds of those who acquired a new mobile device in the last three months chose a smart phone over a feature phone.

Why Tablets Finally Succeeded

If you look at the current media consumption habits of U.K. adults, you can see why PCs are becoming media consumption devices, and why tablets now have succeeded, when all efforts to create tablet markets have failed for the better part of a decade.

A new Ofcom report shows that media consumption is a big consumer activity, and most of the popular consumer media consumption activities increasingly can occur on a tablet or PC screen.

If you think back on the history of efforts to create mass markets for tablets, the notion was that "handwriting recognition" was a crucial capability, since it was expected that people would use tablets to "take notes," using a stylus.

In other words, tablets were conceived as "work devices." As it turns out, tablets are embraced precisely because they are convenient media consumption devices, using apps and touch, not a stylus, for interaction.

SIP Trunking, VoIP Haven't Been Outrageous Successes

How big a deal are SIP trunking and business IP telephony? Sure, those services are foundation services for any number of competitive local exchange providers. Adoption slowly is increasing. But how big a deal are those services, or unified communications, for that matter, in the grand scheme of things, for tier one service providers? You might be surprised to learn that the answer is "not much."

The penetration rate of SIP trunking in the United States is somewhere between five percent and 30 percent of all trunk lines. Some believe it’s on the lower end of this, right around five percent in the United States, about 2.5 percent in Europe and is almost non existent in Asia right now.

That isn't to deny that SIP trunking is vitally important to service providers who sell to small and mid-sized businesses, or to some enterprises and enterprise locations. It is to point out that total revenue is not large, in relation to total communications revenues.


U.S. wireless revenue in 2012 will be about $335 billion, while fixed network voice revenue will be about $132 billion, with an additional $38 billion in broadband access revenue and $6 billion in television revenue, for a total of about $176 billion in fixed network revenue, according to the Telecommunications Industry Association. 

In the U.S. market, for example, wireless now is 66 percent of total revenue; all fixed network services just a third.

So what of voice, the traditional “most important” revenue source. As it turns out, legacy voice still is, far and away, the most important revenue source.

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion.

That compares with circuit-switched voice revenue that, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP, you easily can conclude. 

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. 

But the notable point is that VoIP does not represent all that much revenue. In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.

That is worth putting in perspective.

By 2015, total U.S. telecom industry revenue might be $337 billion. If that turns out to br correct, and the Gartner forecast also proves substantially correct, then hosted IP telephony would represent less than six tenths of one percent of U.S. industry revenue, being generous.

That is not to dismiss the importance of the new revenue streams. They are vital. But neither should one ignore the dominance of legacy revenues.

Business Tablet Users are Different from Consumer Users

Are U.S. business users connecting their tablets to mobile networks? You might think not, as up to this point most tablets seem to be the Wi-Fi-only models. But business users of technology behave differently than consumer users.

For starters, many business users have their devices and services subsidized by their employers. That means business users tend to spend more, and use more "for fee" services, than consumers tend to use.

You might wonder whether those changes hold for tablet use as well. Most consumers, studies suggest, buy and use their tablets with Wi-Fi connections, and tend not to buy mobile broadband subscriptions.

But iGR says a recent survey of information technology managers in small and medium businesses in the United States suggests that might not be the case for smaller business tablet users. .

More than half of the survey respondents said they use a tablet today, and the majority of those said their company either purchase or paid for the device.

IT personnel are, by definition, “more technical” than other business personnel, so when the respondents were asked whether  they had ever activated their 3G or 4G mobile broadband connection, defined as having purchased at least one month’s service from the cellular operator, more than 80 percent said they had used the 3G or 4G service at some point, and 25 percent  had signed a contract for the service,  iGR says.

This does not mean of course that this number of tablet SMB users connect to mobile data every month, iGR says. But clearly an influential group of users are connecting in significant numbers. At the very least, the survey suggests that the majority of SMB IT users are buying tablets with the 3G/4G modem included.

LTE Drives Optical Wireless Backhaul, Globally

The demand for mobile data in the U.S. market alone will grow at a compounded annual growth rate of 56 percent in the next four years, according to iGR.

In fact, more mobile data will be used in the first five weeks of 2016 than was consumed in all of 2011.

The corresponding growth in mobile backhaul means a CAGR of nearly 58 percent between 2011 and 2016. In other words, about 9.6 times as much mobile backhaul will be needed in 2016 as in 2011.

Microwave backhaul traffic is expected to grow at a CAGR of 68 percent from 2011 to 2016. But fiber is king: mobile backhaul traffic over fiber experiences the strongest growth in backhaul traffic, rising at a CAGR of nearly 85 percent.

So iGR thinks optical fiber will represent about 70 percent of all backhaul by about 2016.

Telcos "Don't Get it?"

Do telecom executives really not understand what is happening in their business? That often is the argument, and one could point to any number of indicators.

In some cases, there are tactical issues, such as inability to mine end user data in real time, and apply it to change operations. One might argue there sometimes are cultural issues. Perhaps there is no such thing as a very-large organization that actually is capable of moving rapidly and efficiency as a matter of course. So inertia remains an issue.

On the other hand, are there scenarios where "knowledge" does not provide any particularly useful clues to "action and change." The divested AT&T, one might argue, never "solved" the problem of declining long distance revenue and rates, no matter what it tried. In the end, neither AT&T nor MCI found continued existence as an independent and successful provider was possible, or the best course.

"It’s well understood that OTT (over the top) players are challenging the telecoms status quo, but many telcos don’t fully appreciate just what a big deal this is, said Mike McConnell, CTO and executive solution consultant for Huawei Technologies.

It might be true that for many app providers, the actual "product" is the user base, and what can be done, once there is a user base, to create revenue. For telcos, the services are the product.

The practical implications are that the "freemium" model--giving away something of significant value free--makes sense, as part of the process of building a user base. That would not come naturally for a communications service provider. Perhaps it cannot or should not be a preferred course of action, some would argue.

But that illustrates the problem. It might frequently be the case that executives in fact know full well what they face, but have no convenient solutions, any more than AT&T or MCI, as experienced as the managements of those companies were, could find winning solutions.

1.1 Billion Smart Phones, Tablets, PCs to Ship in 2012

About 1.1 billion smart phones, communications-capable tablets and PCs will be shipped globally in 2012, according to IDC. 

By 2016, IDC predicts shipments will reach 1.84 billion units, more than double the 2011 figure, a compound annual growth rate of 15.4 percent for the five-year forecast period.

The universe of smart connected devices, including PCs, media tablets, and smartphones, saw shipments of more than 916 million units and revenues surpassing $489 billion dollars in 2011, according to the International Data Corporation (IDC). 

Apple Has Presence in Half of U.S. Homes

Half of all U.S. households own at least one Apple product, according to a CNBC survey. 


That’s more than 55 million homes with at least one iPhone, iPad, iPod or Mac computer. And 10 percent of non-owning homes will buy an Apple product in 2012. 


Homes that own least one Apple, own an average of three Apple devices.


You would be hard pressed to think of any other brand name electronics product with that level of adoption.  

If Reviews are Accurate, Starbucks, PayPal Lead Mobile Payments

The Apple App Store does not provide detailed breakouts of which specific apps are getting the most activity. On the other hand, Apple does report user review data. By that indicator, at least within the iOS ecosystem, Starbucks and PayPal are getting most of the attention, in the mobile payment area, at least on iTunes.

More Xbox Live Users Watch TV than Play Games

Xbox Live Gold members in the US are now spending an average of 84 hours per month on Xbox Live, with entertainment app usage up more than 100 percent year over year. Globally, this has led to a 30 percent increase in the total hours spent on Xbox Live around the world.


The result of this increased Xbox Live activity means that for the first time on Xbox, entertainment usage has surpassed multiplayer game usage. According to Microsoft, Xbox Live members in the US are now spending more time watching TV, listening to music, and watching movies than they are playing multi-player games. 


That's one angle about the "post-PC era." We still use PCs to work. But much of what we want to do with "computing" devices is consume content. The growing availability of devices that bring such latent demand to the surface illustrates the trend. 


That might be why Apple finally was able to break through resistance and create a new tablet market, despite well over a decade of attempts to create demand for "tablet PCs." The big change is that tablets now are viewed as content consumption platforms, not "PCs." 

At Least Among Top Sites, iPad Apps are "Better" than Android Versions

It is no secret that most developers prefer the iPad ecosystem to the Android ecosystem, for the simple reason that the sales volume is higher in the iPad realm. An anecdotal survey of top apps by PC Magazine tends to confirm that the top sites are developing "first" for iPad. 


Google Play might help, eventually, but right now the problem is just that iPad gets the first attention, and in some cases Android apps are developed for smart phones, not tablets.


Almost all of the brands are at least represented on Google Play, and some display more apps per brand on Android than on the iPad. But the Android tablet apps often simply are not as aesthetically pleasing, because, so far, developers haven't put in the work to make them more palatable. 

Amazon Launching 9-inch Kindle Fire with full HD Resolution?

With rumors growing about three new Amazon Kindles, promised for later in 2012, perhaps the key development would be a larger-screen Kindle Fire, since the Apple iPad dominates the 10-inch screen market, at the moment, while the Amazon Kindle Fire has been the most successful seven-inch model. 


The rumored nine-inch Kindle Fire is rumored to sport a high-definition screen with resolution of 1920 by 1200 pixels. If the rumors prove correct, we can lay to rest the older argument that tablets "must" have a specific screen size. 


Another rumor has Apple preparing its own seven-inch model, as it appears users are figuring out what to do, and why, on devices with varying screen sizes. 


One size, apparently, does not fit all. 

Facebook, Amazon, Apple Share One Important Trait

Apple, Amazon and Facebook share one trait. None of those firms has been accused of focusing excessively on quarterly results, staying focused on the longer-term process of creating value, something that is exceedingly difficult in an earnings-obsessed market.


Obsessing about short-term results, in fact, has likely destroyed much more shareholder value than it has created, says Henry Blodgett.


And, in many cases, it is the CEOs who have largely ignored Wall Street and focused on executing a long-term vision--like Amazon's Jeff Bezos--who have created the most value over the long haul.


Like Jeff Bezos, Mark Zuckerberg focuses his time on Facebook's product, not its business or finances. He has a clear vision for the company, which he has articulated time and again for anyone willing to listen. Facebook's focus is refreshing. 

Comcast Launches Cloud-Based VoiceEdge" Service

Comcast Corporation has launched Comcast Business VoiceEdge, a cloud-based voice and unified communications solution. VoiceEdge is a fully  managed service that eliminates the need for expensive on-site equipment such as PBX and key systems and provides a predictable monthly cost. 


Additionally, Business VoiceEdge delivers a common user experience, high definition (HD)-quality voice service, and a full suite of unified communications features that help today’s multi-site organizations and mobile workforce communicate more efficiently. 


Business VoiceEdge is now available across most of Comcast’s Northeastern Division, which includes 14 states from Maine through Virginia and the District of Columbia, as well as Chicago. Nationwide rollout across Comcast’s entire service is targeted by the end of 2012.

Don't Discount Telecom Legacy Revenue

There are some interesting conclusions one might draw about the relative importance of several service provider products in global telecom markets, and in the United States, in the latest communications industry revenue forecast published by the Telecommunications Industry Association.


The most-obvious take away is the dominance and importance of wireless services. Globally, about 63 percent of all revenue, from all sources, is driven by wireless, the report says. 


About 25 percent of total revenue is produced by fixed line voice services. Fixed network broadband produces about 10 percent of total revenue. IPTV is about one percent of total revenue.


What might strike you about the latest report is the non-existent discussion of the impact of over the top VoIP services. The reason is simple enough: dispute all the time and energy people expend talking about VoIP, it isn't a significant revenue stream for larger service providers, on a global basis. 


That isn't to deny its importance for some specialized app or service providers. But it doesn't much "move the needle" on global service revenues. 

Why does Apple Care About SIMs?

Apple has reportedly offered its design for a new and smaller format for subscriber information modules (SIM cards) to other mobile device makers that are part of the ETSI (European Telecommunications Standards Institute) without asking them to pay for it. 


Apple loves to control the entire experience of its products, and when it comes to the iPhone and now iPad, the biggest uncontrollable element is a customer’s wireless carrier. And having a say in the SIM card, in theory, pushes Apple closer to the long-term goal of controlling every aspect of its mobile devices, some might argue.

Also, credentials loading remains a competitive issue for would-be leaders of the mobile payments business, even though it would seem to be a mere technical detail. Mobile service providers prefer to use the subscriber information module, for the obvious reason that they control it.


Google Wallet uses a separate memory element, while many banks tend to prefer the use of a memory card.


For a bank, the slide-out memory card means all the credentials could be moved to a new phone as easily as sliding the memory card into the new device. That enhances the ability to retain a seamless relationship even when phones get replaced.


For Google, the embedded function provides more leverge for Google-compliant devices. SIMs are no "mere" technology issue.

NTIA Proposes Spectrum Sharing

The National Telecommunications and Information Administration (NTIA) has recommended that a huge chunk of spectrum used by 20 government agencies be made available to commercial mobile operations, but on a shared basis. The thinking is that clearing chunks of spectrum will be expensive and time-consuming. It would be easier to share the spectrum in some way,  the proposal suggests. 


Instead of clearing the 1755 MHz to 1850 MHz block of all government transmitters, the NTIA recommends that federal agencies and mobile operators share the airwaves, splitting use of the bandwidth. 


There are 3,100 individual spectrum assignments in that 95 MHz block, suggesting the complexity of moving users around. The details of how that sharing might work are in a report being sent to the Federal Communications by the NTIA. 

Better Display is Driving iPad Sales, Study Finds

Prospective buyers of Apple’s latest iPad tablet are mainly interested in the high-resolution Retina display new to the device, according to a survey from Baird.


According to the results of the online survey, 24 percent of U.S. respondents plan to purchase the new iPad in the next three months, with 29 percent of international respondents planning to purchase it.


When asked about reasons for purchasing the new iPad, 28 percent cited the better display as the top reason, followed by the processor at 26 percent and Long Term Evolution (LTE) wireless capability at 17 percent.


Among existing iPad owners, 48 percent indicated they plan to purchase the new iPad, with 35 percent of those already owning an iPad 2.

Sprint Will Get, Can Make Money on LTE iPhones, Analyst Says

There is some disagreement in some quarters about how well Sprint will fare, financially, as it steps up support for the Apple iPhone. Guggenheim Securities’s Shing Yin thinks Sprint will get rights to sell an Long Term Evolution version of the iPhone, and also expects the deal will not prove burdensome. 


Bernstein Research’s Craig Moffett, on the other hand, cut his rating on Sprint to "sell," based on a fear an LTE iPhone could increase prospects for bankruptcy at Sprint. 


Yin doesn't think that will prove to be a problem. He argues that Sprint would never have agreed to an expensive “take or pay” contract with Apple to buy millions of devices, unless Sprint knew it would get rights to sell the LTE version, he argues. Sprint Can Handle an LTE iPhone

Mobile Click-Throughs Keep Growing, Now will Conversions Do the Same?

Mobile click-throughs from paid search are up on mobile devices, but apparently not conversions, according to an analysis by Marin Software. 


In 2011, advertisers grew their share of search budget on mobile devices from 3.4 percent to 8.7 percent. Marin Software expects that, by December 2012, mobile devices will account for 25 percent of all paid-search clicks and 23 percent of search budgets. 


During the same period, tablets may account for 45 percent of all mobile paid-search clicks in the United States. 
Smartphones and Tablets Changing Paid Search

Why "Telecommuting Died 15 Years Ago"

We sometimes think technology adoption is mostly about how attractive the new technology is, and what it does for the people who use it. As it turns out, that often is not the case. Sometimes, other societal forces can scuttle even a technology that offers demonstrable benefits. 


Honestly, it had not occurred to me that so much about "telecommuting," from an enterprise perspective, had such hurdles to face. 

This story about telecommuting adoption frankly was an eye opener. 

Family Plans Drive Mobile Service Provider ARPU, Churn Trends

Family plans arguably are the single most important driver of North American mobile service provider average revenue per user (or "unit") as well as customer churn. In coming years, it would be reasonable to expect family plans to drive adoption of mobile broadband subscriptions as well, both directly and indirectly. 


The reason is simply that, on average, 46 percent of subscribers are on family plans in 2011, compared with 48 percent in 2009, according to a new survey conducted by PwC. The dip in family plan subscribers might be attributed to a growing percentage of consumers signed up on prepaid plans, which offer lower recurring prices, but typically do not allow use of "family plans."



The direct impact will come as family data plans convince more users that smart phones now makes sense, and are affordable. The indirect impact will flow from the incentives family plans provide to use more data-capable devices, more often.


Family plans historically were important because they drove mobile services in the “teenager” market, the last remaining untapped demographic once adult adoption had nearly saturated. These days, family plans are a major contributor to retention. 


In the next evolution, family plans likely will play a key role in getting consumers to use mobile broadband for their tablet devices.
While family plans can be a slight drag on average revenue per user, they are an effective means of deterring churn since they require the conversion of an entire set of devices and customers in order to effect a change.

“We also believe that family plans may also yield significant secondary benefits, particularly in terms of lower rates of bad debt and reduced per-user customer care costs,” PwC says in its report.

So far, fewer than 30 percent of responding companies include the use of wireless cards, wireless data dongles, or embedded devices such as tablets as part of postpaid family plans, but PwC thinks that will change.  

As carriers begin to offer more incentives for multi-device data plans that resemble the existing voice and messaging buckets of service, PwC expects the percentage of users on family plans to increase in 2012.

About 44 percent of the survey respondents said average revenue per family plan subscriber ranged from $51 to $60. In the 2010 survey, 50 percent of respondents cited an average revenue range from $51 to $60 for family plan accounts.

That suggests overall family plan revenue is declining. But it is possible, perhaps even likely, that family data plans will reverse the trend, even as more “lighter users” are added to such family plans.

In general, family plans still appear to be an effective way to increase the length of subscriber relationships and reduce churn, as churn continues to trend down for family plan customers.

The PwC survey results reflect the participation of eight US companies, including three of the four largest wireless operators by revenue and subscriber base, as well as four major Canadian wireless companies, including the three largest. 

Tablets Invade Prime Time TV Viewing Hours

Ooyala data now suggests that people are watching more shows, movies and other videos on their iPads during prime-time TV hours, a behavior that at one time would have defaulted to PCs.

"Our data suggests that explosive tablet sales (fueled largely by Apple’s iPad) will increase the share of tablet video viewing by over 500 percent in the next year alone," says Jay Fulcher, Ooyala CEO.

About a third of daily video plays occur between 7PM and 11PM, hours that could otherwise be spent in front of cable TV or out at the local movie theater, Ooyala says.

In fact, Americans are now watching more online movies than DVD content, Ooyala suggests.

"Tethering" and "Multi-Device" Mobile Plans

"Tethering," the ability to use a mobile device such as a smart phone to then share access with one or more other devices has been a contentious issue. Though supported as a native function on Android devices, tethering often is disabled by mobile service providers anxious to sell one more feature.

Consumers or industry observers sometimes object that this amounts to charging a customer more than once for something they've already bought, a point of view that also has been raised with respect to use of mobile VoIP.

That particular objection someday will be obviated, though, as mobile service providers introduce multi-device mobile data plans that allow a single account to share a single usage bucket across a range of devices supported on a specific account.

In some ways, service providers already are moving to make the argument moot. As more mobile service plans include a specific usage cap, it will matter less how any particular data plan is used. At some level, it matters not whether a 2-Gbyte bucket of usage attached to a single account is used directly by a smart phone or by a tablet that uses a Wi-Fi personal hot spot feature of that device. Either way, the usage is paid for.

Some might argue the growing base of 4G-equipped tablets will be activated for such use on a widespread basis only after multi-device plans are created.

According to industry analyst Chetan Sharma, about 90 percent of tablets sold in the United States towards the end of 2011 were Wi-Fi only. Even most units capable of using a mobile broadband account likely were not used in that way, most end users preferring to rely on simple tethering or available Wi-Fi access instead.

A multiple-device data plan, similar to a shared bucket of voice minutes or text messages, usable by a number of devices on a single account, will change the economics, though. At that point, the perceived cost penalty (one more dedicated mobile data account) will recede.

European Mobile Operators are Cutting Smart Phone Subsidies

European mobile service providers in several European markets are looking to reduce the high level of subsidies they currently offer to new and upgrading smart phone customers.


In Spain, Vodafone appears to be ending the practice of subsidizing smart phones for new customers, following a similar announcement by market-leader Movistar (Telefonica) earlier in the month.


Vodafone Spain plans to offer free finance programs for the purchase of new handsets and introduce a scheme to buy back old phones from upgrading customers.


Operating costs are the clear reason for clipping the subsidies. When a service provider subsidizes a $600 device to the tune of perhaps $400, it essentially is making a loan to the subscriber until the full amount is recovered.


What remains to be seen is the impact of subsidy changes on the rate of innovation in handsets and applications, if, as some would suspect, the end of subsidies slows down the rate at which consumers replace their handsets, and might reduce the rate at which they buy some of the more-powerful and latest devices.


There is some evidence to that effect.

Mobile Broadband Significantly Boosts Service Provider ARPU

Although mobile broadband ARPU (average revenue per user) has not completely offset declines in voice revenue for mobile operators at the global level, it has gone some way to stabilise falling blended ARPUs for those operators who have deployed mobile broadband networks and built up a high level of smartphone penetration within their customer base, Wireless Intelligence reports.

A global study of the difference in blended ARPU between mobile broadband operators and those operators that do not provide mobile broadband services shows that the latter group have seen their average blended ARPU decrease at twice the rate of that of the former over the past five years.

Blended ARPU, mobile broadband operators and non-mobile broadband operators, 2005–11
Source: Wireless Intelligence

2011 Appears to Have Been an Inflection Point for Streaming Movie Rentals

It looks as though 2011 was an inflection point for U.S. users watching movie content. 


Online movie viewing was fairly negligible from 2007 2010, but seems to shifted to a different and higher profile in 2011, according to IHS Screen Digest.

It isn't clear how much the new Netflix emphasis on streaming has contributed to the new trend.
But Netflix streaming accounts now outnumber disc rental accounts.

US Movie transactions: online vs disc
Units: billions

Data source: IHS Screen Digest

More Consumers Cord "Shaving"

"Cord cutting," the abandonment of video entertainment services by consumers who might substitute online video, broadcast TV or "no TV" for their former subscriptions are a continuing concern for all video subscription providers.

Most studies continue to show that the threat has not become a serious reality. Just 3.7 percent of the 1,000 Americans surveyed by Altman Vilandrie & Co., for example, reported actually cutting the cord and stopping their subscription to TV service.

But 20 percent of consumers say they now "shave," spending less money on cable TV service compared to the previous year, thanks to the wealth of online video.

At least 20 percent of those under 44 say they have "seriously considered" cutting the cord, however, the survey also found. More Consumers 'Shaving' Cable

Longer term, this is going to be a bigger problem, though. At some point, a combination of more content available online, higher subscription prices and more content licensing by content owners will start to tip the scales. Major change will not happen, though, until the owners of the most-popular network TV fare decide to make their content available without requiring "sell through," where a consumer has to buy a full video subscription first, before becoming eligible to watch streamed video on other devices, inside the house or outside the home.

Google Files for Patents on Ability to Deliver Ads that Incorporate Noise, Temperature, Light Indicators

Mobile devices are interesting to marketers of all types because of the feedback and context such devices can provide, compared to any other medium.

The mobile capabilities of note for for advertising include all the sensors a mobile phone can include, building on location, but possibly including other background factors such as local temperature, ambient sound and light.


Google, in fact, has filed for U.S. patent 8,138,930, describing ways that a phone, or other device, can detect local temperature as well as the ambient sound and light levels, all of which could aid message targeting.

Many Small Businesses Don't Need a Website?

Though a branded website might once have been an essential marketing tool for most small businesses, some now argue it is less essential. It might go too far to say it is "unnecessary." But it might be true to say that, in some cases, where a firm is active on social media, a branded website requires less support, because it is less important.

Social media is the reason. Yes, you do need something for potential customers to bring up in their browsers when they type in "yourcompanynamedotcom."

But small businesses that are active on other sites with social capabilities might well find that they can get their messages out on third party sites, about as effectively as on their own sites.

According to a Citibank study, that is precisely what many small businesses are doing. Although the vast majority (70 percent) of business owners use their company website for marketing purposes, more than 40 percent of small business owners now use social media channels (including Facebook, Twitter, LinkedIn) to reach consumers.Those tactics are not exclusive, but simply indicate the expanded range of options small businesses now possess.

Only 6% of iPad App Sessions Use Mobile Broadband

Only about six percent of Apple iPad sessions appear to use a mobile broadband connection, according to Localytics. Recent estimates indicate that a larger proportion of new iPads are being sold with the ability to use mobile broadband. But it still appears that most people, most of the time, use Wi-Fi.

Anecdotal reports suggest one of the reasons why Wi-Fi seems to dominate tablet use: users simply run through their data allotments too quickly when watching video on their tablets. Also, few users so far seem to want to spend the extra money on one more mobile broadband connection.

When a user owns multiple mobile devices, all of which benefit from mobile broadband, and when all require a mobile broadband plan, costs become significant fairly quickly. The fixed network broadband model of "one connection, many devices" seems to make more sense than the "each device, a separate connection fee" model now used by mobile service providers.

Google says "Write for People," Not Algorithms

Google search executive Matt Cutts recently made a telling statement about the "problem" of search engine optimization, or more precisely, the abuse of SEO.

Cutts said that sites would be penalized if they “throw too many keywords on the page, exchange way too many links, whatever they’re doing to go beyond what a normal person would expect.“ For some of us, that is a welcome development, as too much attention has been paid, in recent years, to writing to suit Google and other search algorithms, not people.

Write for people, not the search engines. Over the coming years, Google will reward that sort of behavior. It's a welcome change. Now we can get back to writing for other human beings, without the distractions of all the SEO optimization stuff we are "supposed to do."

LTE Phone Shipments To Reach 67 Million Units In 2012

Global Long Term Evolution fourth-generation network device shipments will grow ten-fold in 2012, to reach 67 million units, up from 6.8 million units in 2011.

Strategy Analytics says the growth will be driving by adoption in the United States, Japan and South Korea, especially driven by Verizon Wireless, NTT Docomo and SK Telecom. The growth comes after a several year period where the paucity of LTE phones has limited uptake of service on the 4G networks.

Surprising New Data on Telecom Revenues

There are some interesting conclusions one might draw about the relative importance of several service provider products, in the latest communications industry revenue forecast published by the Telecommunications Industry Association. The most-obvious take away is the dominance and importance of wireless services.

U.S. wireless revenue in 2012 will be about $335 billion, while fixed network voice revenue will be about $132 billion, with an additional $38 billion in broadband access revenue and $6 billion in television revenue, for a total of about $176 billion in fixed network revenue.

In case you hadn’t noticed, in the U.S. market, wireless now is 66 percent of total revenue; all fixed network services just a third.

Globally, the trends are even more lop-sided, as mobile revenue is, by some measures, 4.5 times bigger than fixed-line revenue, already.

The other observation is that, as vital as all the new revenue streams are, legacy voice continues to be the most-important source of revenue for fixed-line service providers. With the growth of broadband access, entertainment video and VoIP, that might come as a surprise.

So what of voice, the traditional “most important” revenue source. As it turns out, legacy voice still is, far and away, the most important revenue source.

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion, in the U.S. market.

That compares with circuit-switched voice revenue that, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. But the notable point is that VoIP does not represent all that much revenue. In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.

Consumers Actually Not Too Keen on "Smart Utility Metering"

Many proposed new services just never seem to get traction with consumers. "Smart utility meters" seem to be running into that issue as well. One of the primary goals of the smart grid movement is to empower consumers with greater control over their use of energy in the home.

There's just one important problem. Up to this point, many customers have been less enthusiastic about smart meters than the utilities originally anticipated, and in fact smart meters have been the subject of significant consumer opposition in some service territories, according to Pike Research.

Meanwhile, utilities and their vendors have struggled to identify the appropriate user experiences and business models for home energy management and smart energy devices.

But a new survey by Pike Research found that 47 percent of consumers would be “extremely” or “very” interested in home energy management products and services that would allow them to monitor and control energy usage in their home.

About 45 percent of survey respondents stated that they would be interested in connected smart appliances that would help them manage their electricity consumption more efficiently.

You just have to square those apparently favorable "opinions" with the demonstrable "actions" that indicate consumers oppose the methods used to enable those features they claim they want.

Some of us might suggest a simple explanation. So far, the emphasis on "smart meters" is on benefit for the utility. There often is an implied benefit for the user in terms of "managing" their own usage, but only after an investment in new appliances.

That means, In many cases, users might not see the actual benefits without major new investments in home technology. Without those investments, the smart meters provide consumption information, but perhaps with spending implications too slight to bother with.

That's not unusual. Supplier "good ideas" do not automatically translate into massive end user adoption. People have to see the value, and the value has to be really significant before they will change their behavior and spend more money.

Will Telcos and Cable Companies Really Compete with Apple and Google?

One hears more talk these days that telcos and cable companies are competing with, or about to compete with, the likes of Google and Apple. It’s a catchy headline. But is it a serious reality? Maybe.

Some would say service providers are moving to develop new services ranging from mobile advertising to new messaging technologies to counter competing and often free services from Apple and Google. Google Wallet and Isis are direct competitors, for example. Will Telcos and Cable Companies Really Compete with Apple and Google?:

Essentially, contestants in the communications and entertainment ecosystem are finding they increasingly must compete not only with other competitors within a portion of the ecosystem, but even to a certain extent with partners in the rest of the ecosystem.

That’s the sense in which there is validity to assessing how much, and where, telcos and cable companies might actually find themselves competing with traditional partners in the value chain.

There are growing examples of at least potential conflict between participants in different parts of the Internet ecosystem. Google says it is launching a line of consumer devices, and already owns Motorola Mobility. So the app provider is in the device part of the ecosystem. Apple likewise in both the apps and device parts of the ecosystem.

There perhaps is a latent possibility that Apple could wind up in additional roles. Some have speculated that Apple could launch its own mobile service, not so much to grab voice revenues but to complement its device and application experience in new ways. Others think Apple would be foolish to do so.

The point is that such a move would not be entirely unthinkable. In the telecom portion of the ecosystem, there likewise is movement into applications, even over the top applications. What might be more intriguing are more radical moves. At least in principle, would any access provider seriously consider abandoning its access role for some other spot in the ecosystem. That hasn't ever happened.

Sure, service providers exit some geographic operations. Some have abandoned the network operator  function, though remaining in the retail access business. Some might divest wired network operations to focus on mobile-only operations.

But not telco or cable operator has taken the rather drastic step of abandoning access provider roles for some other position in the ecosystem. And that would be the fullest expression of the notion that a telco or cable company actually competes with Apple or Google.

Historically, in fact, telcos have gone the other way, progressively abandoning producing their own devices and apps, for example. The old AT&T system included both network operations, retail services, phones and manufacturing of network gear. Since 1984, the movement has been almost exclusively in the direction of shedding network equipment, consumer equipment, research and development and app creation.

Now, for the first time, we might be seeing signs of movement back in the other direction, to some extent. It wouldn't be surprising to see service providers enter the over-the-top applications business in a bigger way, for example.