AT&T Expects Toll-Free Data Plans in a Year

AT&T CEO Randall Stephenson says "toll free" data plans, which would exclude certain types of content from counting toward a customer's monthly data allotment, likely will catch fire in the next 12 months. 


In fact, he says content providers already are asking about whether they can partner with AT&T to do so. "I think you'd be stunned if we weren't getting those phone calls," Stephenson says.  "The content guys are asking for it."


Amazon pioneered that basic concept when it got deals to buy download bandwidth on behalf of customers buying book content for their Kindles. 


And given the extreme bandwidth consumed by video, expected to the application which drives bandwidth consumption the most, that is a likely development. 

Will Apple Become an MVNO?

There are more than a thousand mobile virtual network operators (MVNOs) in operation globally, as of May 2012, according to Wireless Intelligence.


MVNOs are most prevalent in mature markets where market penetration has surpassed 100 percent, and has been especially prevalent in Europe.


Europe, in fact, has about 66 percent of all MVNOs. The Asia-Pacific region has 125 MVNOs while North America has 90 MVNOs. 


One has to wonder what the situation will be in another decade, when it is conceivable many application providers might have launched new types of MVNOs, perhaps based solely on mobile broadband, perhaps tightly integrated with devices and possibly using different revenue models.


The nearly-continual speculation about whether firms such as Apple, or Google or Amazon might someday want to launch their own MVNO services are examples of that sort of thinking. 

Apple's next big move will be to provide wireless service directly to its iPad and iPhone customers, according to veteran wireless industry strategist Whitey  Bluestein, who argues the business model will be different. 


As would be the case for other application or device manufacturers, the service would be part of a business model that relies on revenues from sales of content, other products, advertising or commerce. 

Has the Social Media Bubble Popped, or is the Real Bust Coming?

Whether we have been in a new Internet bubble like that of the years leading up to 2001 is a matter of huge dispute. Some might argue, based on the Facebook initial public offering, that the bubble already has popped. Others might argue the bursting bubble is yet to come. 


The argument that Facebook being the worst IPO of the last decade is a harbinger, but not the bursting bubble. That will happen only when valuations of most other firms with a social element also crash and burn. 


To be sure, some have been sounding the alarm for a year or more. "We’re now in the second Internet bubble," said Steve Blank, a serial Silicon Valley investor. 


The signals were that "seed and late stage valuations are getting frothy and wacky, and hiring talent in Silicon Valley is the toughest it has been since the dot.com bubble."


"The most telling indicator [of a bubble] is the $1 billion-dollar valuation," Gartner's vice president Ray Valdes recently argued about Facebook's purchase of Instagram. "Two- and three-person Silicon Valley startups [are] getting venture capital funding within days or weeks, rather than months, for stuff that is more of a feature than an actual product," he noted. 


Some of us would argue the bubble hasn't burst yet. You'll know when it does; it won't be a debate. 

Verizon 300 Mbps Will Cost $205 a Month

Verizon's new 300 Mbps high-speed access service, to be launched on June 17, 2012, reportedly will cost $205 a month, when bought on a two-year contract, according to the Verge. 


Non-contract service adds $5 a month to the cost, and customers who do not buy a bundled phone line will pay another $5 a month. 

When Will Twitter Reach $1 Billion in Ad Revenue?

Researchers at EMarketer Inc. have said that in 2014, Twitter will reach $540 million in ad sales, which make up virtually all of its revenue, up from $139.5 million last year. The obvious question is how long it might take before Twitter reaches $1 billion in annual revenue.


The answer might be important if you think Twitter is a valuable service that needs a big revenue source to continue to operate. 

NimbleTV Wants to "Outsling" Slingbox

In some ways, Slingbox has been a key motivator behind thinking about "TV Everywhere" and other services that allow consumers to view at least some of the programs they have purchased as part of a video subscription service on their PCs, tablets and smart phones.


With TV Everywhere, customers must first buy the video subscription, and only then add on the streaming feature, which, depending on revenue model, is either an additional feature or an incremental fee service. 


A new service called NimbleTV, which is said to be testing in the city of New York, apparently allows full placeshifting of the full package of television channels that a customer buys through a video subscription service. 


That "sell through" approach is intended to sidestep any copyright issues, as users must first buy  a video service, and then are using NimbleTV only as a virtual digital video recorder. The big issue could arise later, if NimbleTv succeeds, and then wants to be able to sell a Comcast service to a customer where the local provider is Verizon or Time Warner Cable. 


You might think video distributors would fear services such as NimbleTV or Slingbox, but Time Warner Cable actually gives a Slingbox, free, to customers who buy its $100 broadband access service, on the assumption that such users are heavy streaming video consumers. 


Also, Sling is owned by EchoStar, the sister company to Dish Network. 


NimbleTV also seems to be offering the content providers and distributors a revenue share, so there is incremental revenue involved the key stakeholders. 


Placeshifting, of course, has been the key value of Slingbox. As with any copying and viewing of network content, copyright law can become an issue, though courts have ruled that a consumer who only slings content to himself or herself at a different location is not violating copyright. 


NimbleTV itself says the service 'is based on the simplest idea: customers should be able to access the TV they pay for wherever they happen to be." As NimbleTV takes a "sell through" approach, meaning customers buy the content first, then are able to use NimbleTV.


"We also stand behind the idea that providers and content producers should be paid, so we view NimbleTV as a solution that’s both consumer friendly and industry friendly," the company says. 


Those of you with a technical bent might be wondering how NimbleTV will manage a process that conceivably could require capturing and storing an enormous amount of content, in real time, 24 hours a day, for every single customer. 


In other words, does NimbleTV "actually" capture and save in the cloud each unicast subscriber stream? Undoubtedly not. It is probably hoping to get contracts with each major provider in a local market, and then revenue share with those providers.


That will "solve" the content capture and storage problem. In essence, NimbleTV would store a "single" instance of each program, and then grant access only to those channels a subscriber has as part of his or her programming service. 


In other words, if it gets permission from the leading cable, satellite and telco providers in New York, it can capture and store "one copy" of each network program, but allow users to watch only  programs on channels each subscriber already has purchased from a supplier. 


Also, the service is geographically "tagged," so that today beta test customers get New York programming to a New York address, according to  BTIG Research.


NimbleTV hopes to escape legal problems by acting only as an agent for each subscriber, for "private performance" purposes. Also, NimbleTV will operate on a "single stream at a time" basis. 


In appears NimbleTV will capture distributor video centrally, at a data center, and not at a local subscriber location, where the content then is uploaded over the subscriber's own broadband connection. 


The destabilizing potential might come if a subscriber in one region wants to subscribe to a service package from a provider in another region. It isn't completely clear whether the video distributors and content owners will continue to work with NimbleTV if it were to allow a person in Denver to buy a service offered locally in Miami, for example. 


But NimbleTV is another example of how cloud-based architectures are potentially enabling new services that could start to challenge today's video ecosystem. And that could happen even with the support of the content owners and distributors who might ultimately be affected. 

Should Mobile Service Providers Embrace Over the Top Voice?

Telecom service providers face big challenges when deciding what to do about over the top applications. In some cases, especially in highly-competitive markets where over the top apps have gained significant share, it will make sense to compete with carrier-owned over the top apps. 


In other cases, OTT will make sense, but as a way of getting customers in out-of-region markets. In other words, a mobile service provider might launch a branded app, but mostly to gain revenue from OTT users who are not already "customers." In that scenario, OTT apps are less a response to in-region competition, and more a growth strategy for out of region.


In other cases, "not competing" might be seen as a safer approach. 


AT&T CEO Randall Stephenson, for example, thinks data-only pricing plans for mobile handsets are "inevitable."  As with "naked DSL (digital subscriber line) plans, AT&T would sell mobile broadband without voice service and then let users choose their own VoIP and messaging providers. 


"I don't think we'll see a big flash cut, but you'll see that propagate into the marketplace," Stephenson said, citing a 24-month time frame for doing so.


AT&T might guess, probably correctly, that such plans will appeal to a segment of the customer base. Keeping a "data only" customer is better than losing the whole account. 


So the "right" response to over the top competition can vary. In some markets, branded OTT apps might be the right tactic, especially when there is perceived upside from out of region sales. In other cases a "go slow" approach might be preferable. 

Amazon Bets Right on Kindle Pricing

Some observers understandably have worried that Amazon faces financial risk by pricing Kindle Fire devices at cost, or slightly below cost. The contrast is provided by Apple, which makes healthy margins (30 percent or so) on its devices.


But Amazon has a different business model. It wants to populate the market with Kindles that drive content sales. Apple creates content capability only to sell devices. 


The early evidence suggests that Amazon made a good bet. Device sales are driving higher content purchases. 

Verizon Buys Hughes Telematics, a "Real" M2M Business

Verizon Communications is acquing Hughes Telematics, a supplier of automotive location-based services including sensor and telemetry services, vehicle diagnostics, GPS tracking and emissions monitoring system for wireless fleet vehicle management.


A majority owned subsidiary of HTI, Lifecomm, also plans to offer mobile personal emergency response services through a wearable lightweight device with one-touch access to emergency assistance.


The transaction will expand Verizon's capabilities in the automotive and fleet telematics marketplace and accelerate growth in key vertical segments, including emerging machine-to-machine (M2M) services.


This is important for Verizon since machine-to-machine services are expected to be a key growth driver for mobile service providers. Also, M2M services such as these are the "real" M2M revenue sources, though many consider services for  "connected devices" such as tablets to be part of the "M2M" business.


That definition is used by the GSM Association, for example. Some of us consider connected devices and M2M to be separate markets. 

Video Gets Watched on PCs at Work, on Tablets at Home

Tablet video viewing rises on weekday mornings as people prepare for the day and commute to work, then falls off during work hours as PC viewing picks up. 


On weekday evenings, tablet video surges as people watch streaming video to end their day. 


A third of tablet video plays occur between 7pm and 11pm, while only about 17 percent of PC plays take place over that same window. Ooyala says. 


It is only an incipient trend, but a trend, nevertheless: tablets are becoming a prime time vehicle for watching video. 

AT&T Mulls Upgrading Rural Lines Without New Fiber

AT&T has about 15 million lines in rural areas that company management might have preferred to sell, but the company apparently cannot find buyers. So AT&T now is considering a plan to upgrade those lines, Bloomberg reports. 


In a possibly-significant move, AT&T apparently is looking at ways to upgrade the all-copper lines without installing new optical fiber in the transport portions of the access network, using IP Digital Subscriber Line Access Multiplexers. 


Two decades ago, before mobility became the growth engine for the global telecom industry, it might have seemed inevitable that fiber "to where you can make money" was the future. These days, the problem is that the "fiber to where you can make money" equation has changed for the worse. 


If AT&T can figure out how to upgrade all-copper lines using only new DSLAMs, that would be a major innovation, as the business case for U-verse or fiber to the home in its rural areas is beyond challenging. 

“Extreme” Shoppers Use Mobiles Throughout Purchase Process

Among consumers with a smartphone or tablet, 50 percent used a mobile device to compare prices while shopping, 44 percent looked for a coupon, 33 percent  "liked” a retailer on Facebook, and 17 percent bought a product using an app, a new study by GfK shows.

In addition, nearly one-fourth of mobile-enabled shoppers have used brick-and-mortar stores for "showrooming,” checking out a product in person, and then purchasing it online.

Younger adults – ages 18 to 34 – are the primary drivers of these mobile shopping behaviors; these consumers are more than three times as likely to report using a smartphone or tablet for shopping (34 percent compared to 10 percent), compared to those ages 50 to 64.    

Mobile Bandwidth is Different from Untethered Bandwidth

Traffic from wireless devices will exceed traffic from wired devices by 2016, Cisco forecasts. It is a shocking prediction, but has to be put into context.

In 2016, wired devices will account for 39 percent of IP traffic, while Wi-Fi and mobile devices will account for 61 percent of IP traffic. In 2011, wired devices accounted for the majority of IP traffic at 55 percent, Cisco says.

But you have to put those figures into context. Cisco clearly is pointing out the growing role played by untethered (no wired connection) and mobile (a mobile network connection) appliances as generators of bandwidth demand. 

Globally, mobile data traffic will increase 18-fold between 2011 and 2016, Cisco says. Mobile data traffic will grow at a compound annual growth rate (CAGR) of 78 percent between 2011 and 2016, reaching 10.8 exabytes per month by 2016.

Also, global mobile data traffic will grow three times faster than fixed IP traffic from 2011 to 2016. 

Global mobile data traffic was two percent of total IP traffic in 2011, and will be 10 percent of total IP traffic in 2016.

One of the key observations is the difference between tethered Wi-Fi and mobile access. If 61 percent of all traffic is created by untethered and mobile devices, while 10 percent of demand is driven by mobile devices, then it is fairly obvious that Wi-Fi-based use of the fixed networks could represent half of all bandwidth demand, down about five percent since 

In other words,untethered devices--including mobile devices in Wi-Fi mode--become the key drivers of overall Internet demand.

What remains a bit less clear is how device roles will change as video consumption on untethered and mobile devices begins to underpin total consumption. 

At the end of 2011, 78 percent of IP traffic and 94 percent of consumer Internet traffic originated from PCs.

By 2016, 31 percent of IP traffic and 19 percent of consumer Internet traffic will originate from non-PC devices).

One suspects the portion of traffic created by untethered devices of all sorts will be higher than that in many developed regions. 

As in the case of mobile networks, video devices can have a multiplier effect on traffic

An Internet-enabled high-definition television that draws 30 minutes of content per day from the Internet would generate as much Internet traffic as an entire household today.

U.S. Cable Operators Get 75% of First Quarter 2012 Broadband Adds

The seventeen largest U.S. cable and telephone providers acquired 1.3 million net additional high-speed Internet subscribers in the first quarter of 2012. 

The top cable companies have more than 45.3 million broadband subscribers, and top telephone companies having over 34.6 million subscribers.

The top cable companies added about 980,000 subscribers, representing 75 percent of the net broadband additions for the quarter, compared to the top telephone companies.

The top cable broadband providers have a 57 percent share of the overall market, with about 10.7 million more subscribers than the top telephone companies, compared to 8.9 million more a year ago

Broadband Internet Provider	Subscribers at End of 1Q 2012	Net Adds in 1Q 2012
Cable Companies
Comcast	18,582,000	439,000
Time Warner^	11,136,000	227,000
Cox*	4,530,000	30,000
Charter	3,802,000	147,000
Cablevision	3,007,000	42,000
Suddenlink	982,600	31,200
Mediacom	887,000	36,000
Cable ONE	463,443	12,361
Other Major Private Cable Companies**	1,941,000	16,000
Total Top Cable	45,331,043	980,561
Telephone Companies
AT&T	16,530,000	103,000
Verizon	8,774,000	104,000
CenturyLink	5,643,000	89,000
Frontier^^	1,746,000	11,000
Windstream	1,363,800	8,500
FairPoint	318,510	4,375
Cincinnati Bell	257,200	(100)
Total Top Telephone Companies	34,632,510	319,775
Total Broadband	79,963,553	1,300,336

Netflix Enables Wi-Fi-Only iOS Mode

Updated player on iPhone

The latest version of the Netflix mobile app for iOS devices allows users to disable mobile network use to watch Netflix content. The new video player for iPad, iPhone, and iPod Touch has a more consistent look and feel across PC and mobile devices.

Netflix also has added an option to its features settings menu so users can choose to allow streaming from Netflix only when connected to a Wi-Fi network.


That feature will help users manage their bandwidth buckets, while also allowing mobile use of the Netflix streaming feature.


People are smart enough to figure out they should watch streaming video when at home, using their fixed network bandwidth.


That is increasingly congruent with user behavior, as more users are watching their tablets and even smart phones during the standard "prime time" video viewing hours.

Will 25% of U.S. and Western Europeans be Paying with NFC by 2017?

Juniper Research projects that more than 25 percent  of U.S. and Western European mobile phone users will use their near field communications-enabled mobile phones to pay for goods in-store by 2017, compared with less than two percent in 2012. 


That might strike some observers as a bit aggressive, given the "glacial" progress Isis and Google Wallet seem to be making with their NFC mobile wallet efforts. And those two initiatives are not the only NFC-based efforts. Nor can anyone be sure other potentially-powerful efforts will not emerge.


Some might argue other marketing-related applications are likely to achieve that sort of usage, though. 


In other markets, Telefonica and consortia of Western European mobile service providers also are trying to get regulatory clearance to launch their own programs. Project Oscar in the United Kingdom, owned by Everything Everywhere, Telefónica UK (O2) and Vodafone UK, is among them.

Consortia in Germany, Sweden, Denmark and Hungary are working on platforms of their own.  In the Netherlands, Travik is seeking approval, while in Scandinavia “4T” is seeking to launch, as well.

In Singapore, the Singapore IDA is spearheading creation of a mobile payments system as well. The French “Cityzi” mobile payments venture likewise was created by mobile service providers, but with key participation by banks and retailers, according to Juniper Research.

Assuming most of those efforts actually launch in 2013, some will assume it is a bit of an optimistic forecast that a quarter of all smart phone users will be using NFC by 2017, a relatively quick three years later.

It is not, perhaps, impossible, but will strike many as unlikely. At least in the U.S. market, there is quite a bit of skepticism about both Isis and Google Wallet, and even some opinion that NFC will not emerge as the most-important enabler of mobile payments.

Mobile payments will reach $171 billion globally in 2012, a 62 percent  increase over last year's total of $105.9 billion, according to research firm Gartner Inc.

That increase corresponds with a 32 percent rise in mobile payment users expected this year. The number of users is expected to hit 212 million users, up from 160.5 million in 2011.

But Web or WAP access is expected to make up 88 percent of mobile payments in the U.S. market as late as 2016, when NFC usage is expected to increase, Gartner believes.

Apple's Supply Chain Becomes a Weapon

The way that Apple has fostered its relationships with suppliers and manufacturers over the past few years has led to this moment, a time where products like the iPhone, iPad and MacBook Air are not only made using the best materials and manufacturing processes available in the world, they’re also less expensive to make and generate far more profit than competing devices, TNW argues.


That's an important observation. In past decades, one might have argued that Apple makes above-average profits because of its brand. In other words, users paid an "Apple tax" that corresponded to the perceived higher value of an Apple product.


Now, Apple might actually be able to sell at high margin, using the best materials, and set prices at retail that take advantage of a decade-long effort to optimize its supply chain. 


So now Nokia finds it has to price its latest smart phone at $200 less than the iPhone, even when its cost of components is higher than Apple's cost for components, the Wall Street Journal notes. 

How to Model Broadband Consumption With Few Data Points

“Nearly all communications traffic, including Internet traffic, can be approximated with high accuracy by the log-normal distribution,” says Phoenix Center Chief Economist Dr. George S. Ford. That’s important, as it means we generally can predict overall end user behavior when we actually know only a couple of key data points.

Among the practical implications are estimates of what is likely to happen when  a broadband service provider imposes a monthly usage cap of 250 gigabytes. The log-normal distribution suggests how many customers would hit the limit.

The log-normal distribution also generally allows some estimation of how consumption will vary across the entire customer base, knowing only the consumption of the top one percent, and the consumption of the top 10 percent of users, an analysis by Dr. Ford suggests.

The point is that “averages” (the arithmetic mean) don’t tell an observer very much when any service has an asymmetric distribution, as always seems to be the case for Internet consumption by consumers.

Cisco’s Visual Networking Index reports that the top one percent of users accounted for more than 20 percent  of Internet traffic and that the top 10 percent of users accounted for 60 percent
of traffic.

That means a Pareto distribution, which would ideally show that 20 percent of instances account for 80 percent of the impact would also likely hold.

Ford notes that Comcast’s 250 GByte  per month usage cap on its residential broadband
customers, taken with Comcast’s own statements that 99 percent of its residential customers will not approach that cap suggests that only one percent of Comcast’s residential users consume 250 GBytes per month or more.

Comcast also indicated that its median customer consumes about 8 GBytes to 10 GBytes per month.

The log-normal distribution could well inform many other sorts of policies, such as what amount of consumption a “typical” user requires.

“My approach to approximating usage patterns may be useful for variety of policy issues,” says Ford. “ For example, when addressing universal service for broadband, the level of service that qualifies as ‘broadband’ will have to be parameterized.”

Knowledge of the usage distribution may aid in establishing these service level definitions that can be described as “reasonably comparable to those services provided in urban areas, for example.

Twitter Use Highly Correlated with Smart Phone Use

Twitter usage is highly correlated with the use of mobile technologies, especially smart phones, according to the Pew Internet & American Life Project.


About 20 percent of smart phone users also are Twitter users, with 13 percent using the service on a typical day. 


By contrast, Internet users who own more basic mobile phones are roughly half as likely to use Twitter overall (nine percent do so), and just three percent of these more basic phone owners are “typical day” users.


Indeed, this correlation between Twitter adoption and smart phone ownership may help to explain the recent growth in Twitter usage among young adults. 

Those ages 18 to 24 are not just the fastest growing group when it comes to Twitter adoption over the last year, but also experienced the largest increase in smart phone ownership of any demographic group over the same time period.

Marketers Think Tablets Will Change How Content is Presented

A survey of 212 global marketers showed that popular belief holds that there will be some big changes in all aspects of content over the next 12 months, from design, to copy, right though to delivery.


Of those interviewed, 45 percent think tablet consumption will have a very high impact on design of content, while 35 percent think it will have high impact, the IDG Connect survey finds. 

Experiences that were once almost exclusively the preserve of the consumer space are suddenly applicable to the business landscape.  Now everything has the potential to become three dimensional.

This trend is already impacting the world of fiction publishing. Take Papercut for example; available through the App Store, this is being billed as an “enhanced reading experience” for iPad and includes three short stories interwoven with animation, interactivity and sound. As readers proceed through the text additional text appears without the need for page turning. 

Europe Risks Becoming a "Digital Desert"

Alcatel-Lucent Chief Executive Officer Ben Verwaayen said Europe’s phone companies risk turning the region into a “digital desert” by shying away from investing in networks.


Verwaayen says a combination of regulatory barriers and economic crisis are contributing to the problem.


In an interesting twist, given the "warnings" about the United States "falling behind" in some key communications capabilities, be that broadband access, the speed of broadband access, smart phone ownership, messaging or other advanced applications and services. 


But innovation and technology leadership changes over time, whether the issue is consumer behavior, supplier prowess or advanced technology adoption. 


Telecommunications companies in the U.K., Germany, Italy and France have been reluctant to invest as much as their counterparts in the U.S. and Asia in faster mobile-phone and fixed-line networks because of Europe’s sovereign debt crisis and regulatory decisions deemed unfavorable by Verwaayen. As a result, Europe is falling behind, he argues. 

“Five years ago in the U.S., you knew that leaving L.A. meant going into the desert, meanwhile Europe was ahead,” Verwaayen said. “Five years later that has reversed. The creation of value has come back to the U.S.”


Five years ago, U.S. firms had five percent share of the smart phone operating system market. Today, U.S. firms have 64 percent share. 

Cricket Will Test Consumer Willingness to Forego Subsidies on iPhones

We are about to get a clear test of consumer willingness to pay full retail prices for “hot” devices such as the Apple iPhone. Cricket Communications will be the first prepaid service provider in the U.S. market to offer iPhone to its customers.

Beginning on Friday, June 22, 20012, Cricket will offer iPhone 4S and iPhone 4 with its $55 per-month, all-inclusive unlimited talk, text and data plan. The issue is that consumers will have to pay full retail prices for their devices.

The Apple iPhone 4S will be available for $499.99 for the 16GB model and iPhone 4 will be available for $399.99.

That is significant as mobile service providers just about everywhere are looking for ways to reduce the amount they spend on handset subsidies, hopefully without placing themselves at a disadvantage in the continual task of attracting new customers, most of whom have to be taken away from another service provider.

So Cricket’s sales volume will be a key indicator of consumer willingness to buy devices without major subsidies.

"Our customers want the best products available and we are excited to bring iPhone to our pre-paid consumers with an industry leading $55 per-month service plan," said Doug Hutcheson, Leap Wireless president and chief executive officer.

iPhone 4S and iPhone 4 will be available in Cricket company-owned stores and select dealers in nearly 60 markets, online at www.mycricket.com/iphone and over the phone at 800-853-7682.

Cloud Adoption in Europe Will Slow Because of Euro Crisis, Other Issues

Sometimes end user demand and supplier readiness are not the primary near-term issues that can accelerate or delay adoption of new technologies.


European privacy rules, multi-country business processes, a deep euro crisis and a lingering recession will conspire to delay cloud computing adoption in Europe by at least two years when compared to the U.S., according to Gartner analysts. 


Gartner said that although interest in cloud is high in Europe, the diversity of Europe’s 44 different nations will result in slow cloud adoption in this region.


"The opportunities for cloud computing value are valid all over the world, and the same is true for some of the risks and costs," said Paolo Malinverno, vice president at Gartner. "However, some of cloud computing’s potential risks and costs — namely security, transparency and integration — which are generally applicable worldwide, take on a different meaning in Europe.”


The continuing economic crisis within the countries using the single European currency has deep IT implications, because increasing uncertainty about the euro is causing major investments to be put on hold. 


This is slowing down decision making and will dampen spending. 

How Big Will M2M, Connected Device Markets Be?

So what precisely does this forecast by the GSM Association actually mean? It isn't obvious. The GSMA uses a definition of the "machine-to-machine" (M2M) market that includes "sensors" such as meter readers with mobile broadband connections used by tablets and other non-phone devices.


Some say tablets, though "connected devices," are not M2M connections, which should properly include only sensor applications where machines literally are talking to other machines. 


The revenue per connection implications are fairly significant. Where a tablet connection could represent $10 to $60 worth of incremental revenue, a true M2M connection might represent $2 for each connection. 

Revenue Impact of Multi-Device Data Plans is Not Yet Clear

“Multi-device” or family data plans, which allow numerous devices to share a single bucket of broadband access, are coming to the U.S. market. Precisely how consumers will react is not yet clear.

In the case of family voice plans, there was a net increase in users per account, so even if average revenue per user declined for the additional lines, service providers earned more revenue overall.

What will happen in the case of multi-phone households is not so clear, since there is a strong likelihood users will sign up for plans to support their tablets, especially single-user accounts.

What might happen in existing multi-device accounts is not so clear. Depending on how the plans are constructed, there could be some revenue losses if the subsidiary devices on an account were moved to a family data plan, instead of separate data plans for each device.

The big trade-offs will likely come in the multi-device family accounts, where the upside will come from additional new devices, especially tablets, being added to plans, with the risk of some diluted revenue from the older smart phone mobile data plans attached to each discrete phone.

The big upside is smart phone adoption. Though about half of U.S. mobile users already have smart phones, nearly half do not. Family data plans could convince more of those non-adopters to upgrade to smart phone service, meaning they also would likely want data access. The effective lower prices for new users could provide new incentive to upgrade sooner rather than later.

KPCB Internet Trends - 2012

Globally, Mobile IS Telecom

Mary Meeker's "Internet Trends" presentation always contains interesting graphical nuggets. 


This one simply illustrates the extent to which mobility now has become "the telecom business." 


Three years ago, there already were about 4.5 mobile lines in service for every fixed line, and that ratio no doubt has continued to tip in the favor of mobile in the intervening years. 


Observers who casually chide fixed network operators for not investing more heavily in fiber to wherever those firms can make money are not paying attention to the fundamental realities that further investment in fixed network assets will be much more risky than it ever has been in the past, simply because "everybody" knows the revenue and growth are in the mobile networks.


"Stranded assets" are investments that aren't generating any revenue. These days, a good percentage of any further fixed network investment is going to be stranded. That makes companies nervous, and it should. 


A rational executive would invest "mobile first."

S&P Wonders How Long U.S. Telecom Companies Can Maintain Current Dividends

Standard & Poors believes many U.S. telecommunications companies, traditional wireline
companies in particular, face industry trends that will ultimately hurt free operating cash flow generation and could make it challenging to maintain their aggressive financial policies.


"Returning cash to shareholders through dividends and share buybacks and the pressure to satisfy equity investors lessens their ability to pay back debt and maintain or reduce leverage," said Standard & Poor's credit analyst Allyn Arden. 


"These companies may need to adopt more conservative financial policies and reduce leverage to be able to maintain their current ratings down the line," Arden warns. 

An "uh oh" Moment for Online Advertising Proponents

The standard argument about online advertising volume, for decades, has been that, over time, "eyeballs" (audiences) lead to advertising. It's a reasonable argument. So the next challenge is that, if online audiences and proportional advertising to those audiences begin to hit a 1:1 relationship, it is hard to argue that lots more revenue growth is possible, in the near term.


To get more ad revenue, online sites would have to grow their audiences. According to Mary Meeker, online share of advertising spend now is very close to online's share of media audience. 


That would suggest it is unreasonable to expect online advertising revenues to grow very fast, or much more beyond present levels, unless audience attention really shifts lots more. 


The one place where there is a clear gap is the mobile venue, where advertising dramatically lags attention, by about an order of magnitude.


It takes no special insight to predict that attention now will be focused squarely on mobile advertising, as it remains the channel where revenues most lag attention. Conversely, print is the medium where spending is vastly overdone, in terms of audience attention. 


The "bad" news is that we should be watching for signs that online advertising revenues begin to decelerate, in terms of growth. 
 
KPCB Internet Trends - 2012
 

Internet Will Be Four Times as Large in Four Years, Cisco Says

Annual global Internet traffic in 2016 will be four times the volume of 2011, Cisco says.


The annual Cisco Visual Networking Index Forecast predicts annual global IP traffic of 1.3 zettabytes – (a zettabyte is equal to a sextillion bytes, or a trillion gigabytes). 


The projected increase of global IP traffic between 2015 and 2016 alone is more than 330 exabytes, which is almost equal to the total amount of global IP traffic generated in 2011 (369 exabytes). 


The growth will be driven by:

1. An increasing number of devices: The proliferation of tablets, mobile phones, and other smart devices as well as machine-to-machine (M2M) connections are driving up the demand for connectivity. By 2016, the forecast projects there will be nearly 18.9 billion network connections―almost 2.5 connections for each person on earth, ― compared with 10.3 billion in 2011
2. More Internet users: By 2016, there are expected to be 3.4 billion Internet users ― about 45 percent of the world's projected population according to United Nations estimates.
3. Faster broadband speeds: The average fixed broadband speed is expected to increase nearly fourfold, from 9 megabits per second (Mbps) in 2011 to 34 Mbps in 2016.
4. More video: By 2016, 1.2 million video minutes―the equivalent of 833 days (or over two years) ―would travel the Internet every second.
5. Wi-Fi growth:  By 2016, over half of the world's Internet traffic is expected to come from Wi-Fi connections.

Tim Cook Talks About Apple

Portions of Tim Cook, Apple CEO, talk at "AllThingsD" conference. 

Skype Carries 100 Billion Minutes a Quarter

Cheap and free Internet calls have driven Skype usage in the first quarter of 2012, jumping 40 percent to 100 billion minutes of calls in the first quarter, up from the first quarter of 2011, according to Microsoft. Skype also has about 250 million registered users. 


What isn't so clear is how much gross revenue Skype makes, though it is reasonable to guess it now is in the low single-digit billions per quarter. Skype never has made much in the way of profit, and that probably hasn't changed.


Skype illustrates a major issue for service providers, namely that new Internet-enabled products displace traditional usage, but do not come close to generating the same level of revenue or profit as the older services. Essentially, the legacy market essentially becomes an important feature or capability, but not a "business" in the same sense. 


Mobile service providers now worry about the health of their messaging business, which in some markets is showing the same trend as was seen in the VoIP market: traffic shifts and revenue declines. As was the case with voice, the new messaging providers earn revenue that is an order of magnitude less than the legacy services they are displacing.