Mobile Commerce 11% of E-Commerce in 1Q 2013

Mobile commerce is growing, to almost nobody's surprise, up to about 11 percent of all retail e-commerce transaction value in the first quarter of 2013, up from eight percent, year over year. 

Perhaps the more surprising argument is that offers and coupons play a role in that growth. 

Coupons and offers from firms such as Groupon had been derided as an unworkable business model over the past year or two. But some now would argue that successful coupon campaigns can help e-retailers acquire customers and drive online sales. 

By 2014 the number of mobile coupon users is expected to increase to 53.2 million a year. At roughly 10 percent, the redemption rate of mobile coupons vastly outperforms the redemption rate of print coupons, which typically is about one percent.

Mobile coupon efforts also Increase offline sales and foot traffic to physical stores.

Because they are received on phones but often redeemed offline, coupons are a perfect medium for retailers to acquire consumer data.

Coupons are essentially just another channel through which to communicate with consumers. It's useful to think of coupons less as a discounting vehicle, and more a piece of content with an offer appended.

As usual, most of those benefits flow to parts of the mobile ecosystem other than the access providers or handset suppliers. But those new values increase the value of the mobile ecosystem.

 

Telekom Austria Revenues Fall 2% in 2Q 2013

Telekom Austria's second-quarter revenues fell 1.9 percent year over year to EUR1.04 billion ($1.39 billion), as the operator saw sales fall across the majority of its European markets, including a 20 percent drop in Bulgaria.

That revenue decline is part of a wider problem for European service providers, fixed and mobile, namely a continuing slide in overall industry revenues. 

As has been the case for other service providers, Telekom Austria blamed competition and lower mandated roaming rates for the revenue woes. But as you might expect, lower retail prices forced by competition are causing Telekom Austria to spend more on marketing as well. 

At least so far, there appears little danger that every service provider in a particular country will go out of business as a result of the stresses. But one has to wonder about the outcome longer term. 

Many national regulators believe a minimum of four mobile service providers is necessary to preserve competition. But Austria only has three service providers, and at least with the current business model, one might argue there is "too much" competition to support all three on a sustainable basis. 

So something will have to give. Either the desire for four national operators is an unrealistic hope, and will lead to bankruptcy for most of the suppliers, or mergers must be allowed to happen, while service providers also must learn to adapt to a harsher business model in general, as well.

And though it has happened only on a minor scale historically, one must ask what happens if bankruptcy is the ultimate fate for all of the suppliers in a given country. The traditional thinking about such a problem is that telecommunications is so vital ("too big to fail") that the government would not allow it.

But what if the government cannot itself afford to take over and operate the national network? That would be a new question in most of Europe, since in the past one might have argued that nationalizing telecom again, so the government can subsidize losses, would be a viable option. 

Under today's circumstances, that is not possible, many of us would argue. 

Something very major would have to happen--serious restructuring of the retail service and operating cost model--to create a sustainable national network post-collapse. 

The point is that there would not be a government operator of last resort option, in many, if not most, instances. 

If no operator could create a viable business under competitive conditions, it is doubtful most governments could do so, either, except, some might argue, under a return to monopoly regulation. 

Perhaps some will argue that could work. In an Internet era, perhaps the purpose of a national network is simply high-quality broadband, not voice. 

Perhaps other service providers would adjust to a scenario where there is, in some countries, no such thing as universal interconnection for voice supplied over public networks. 

Maybe some countries will not have universal fixed network access, or even universal mobile access, even as a policy goal, as hard as that might be to envision. 

Maybe fixed networks will simply be abandoned, on a universal basis, in favor of some other access method, such as mobile-only or wirelss-only modes. 

The point is that telecommunications is a product like any other, supplied by contestants working in markets that are open to some amount of competition. But in other markets, failure of some contestants tends to lead to survival of a smaller number of providers. How far will regulators allow that process to proceed? 

And what if even that process fails? It is one thing to guarantee supply. There are fewer remedies for falling demand. 

Can FCC Lawfully Do Anything; Should it Do Anything, About Time Warner-CBS Feud?

"I am ready to consider appropriate action if this dispute continues," said U.S. Federal Communications Commission Acting Chairwoman Mignon Clyburn about the Time Warner-CBS contract dispute.

But it isn't clear what actual authority the FCC actually has about a contract dispute between two entities. Some might question whether the FCC should act, even if it had any actual authority. 

Some might see an analogy to binding arbitration for two parties to a major industry contract dispute, with a strike. But it isn't clear the analogy actually applies. 

As inconvenient as it might be for some consumers to miss CBS programming for a period, such contract disputes are just that: contract negotiations. 

Nor is it actually so clear that consumer welfare, if that were viewed as the grounds for intervention, and were lawful, is necessarily best served by such intervention.

As odd as it might seem, consumers already are starting to vote with their wallets that the current value-price relationship for video subscription services finally is moving past irritation to abandonment. 

And nobody disputes the notion that Internet delivery is coming, and appears to be what consumers might prefer. 

As a practical matter, a widespread shift to Internet delivery will only come when the current product is so broken there is massive resistance to buying video subscriptions.

In that sense, even an extended blackout would ultimately provide more value to consumers by perhaps allowing the current distribution method to become even more unpleasant. 

It is logical for content owners to want to maximize their revenues, and it is rational for a retailer to take action about price hikes it knows its customers eventually will refuse to pay. 

Maybe the best long term policy, in terms of consumer welfare, is to allow the ecosystem stresses to play out. Eventually, the business is going to change, in any case. The only issue is when, and how. 

Has U.S. Mobile Market Revenue Reached its Peak?

Virtually all products have a life cycle. That implies that even industries have life cycles. In the developed world, the fixed network voice business passed its peak revenue in 2000, even though revenues and users arguably continue to grow in the developing world.

Mobile has been the global growth driver, both in terms of revenue and subscribers, for more than a decade. But that pattern already seems to have cracked in Western Europe, where revenue is expected to decline between 2010 and 2020.

And though the U.S. mobile industry has done nothing but grow (in terms of subscribers and revenues), for decades, one might reasonably assume growth is not infinite.

Growth drivers already have shifted away from voice and text messaging to broadband services.

But competitive dynamics will play a huge role in shaping future industry results. Sprint and T-Mobile US plans to disrupt the U.S. market, one might reasonably conclude, will, as a logical corollary, halt revenue growth, and then lead to a first-ever decline, if French market and EU markets provide any useful guidance.

When a market is highly saturated, competition virtually always takes the form of price competition that tends to lead to lower average revenue per account, and therefore to a smaller market overall, measured in terms of revenue.

So even though the U.S. mobile market has grown steadily for decades, revenue likely will slow, then reverse, if T-Mobile US and a SoftBank-lead Sprint manage to take market share from Verizon Wireless and AT&T Mobility.

As much as executives at Verizon and AT&T will not want comparisons to the French mobile market after the launch of Illiad’s “Free” service, that is among the likely outcomes for the U.S. market.

To wit, the French mobile industry reached peak revenues in 2010, and has been declining since then. To be sure, the French mobile market has “grown,” as measured by subscribers, or at least accounts, as measured by subscriber identity modules.

By the end of March 2012, the mobile penetration rate had reached 106 percent of the population and the number of mobile subscribers had reached 66.8 million. But mobile revenue has declined.

In the third quarter of 2010, revenue was EUR 5 billion. By the fourth quarter of 2012, despite steady subscriber growth from 60.5 million to 66 million, revenue slipped.

In five Western European countries (Spain, Italy, France, Germany, United Kingdom), aggregate mobile revenue will decline will decline between 2010 and 2020.

Global telecom revenue growth has been slowing for some time, in most markets other than emerging countries, it is safe to say. It also is safe to say the worst-hit region globally is Europe, where service providers with significant exposure to Europe reported worse results in 2012 than they did in 2011, according to Ovum analyst Adaora Okeleke.

In fact, “the primary goal of Europe’s telcos is to stabilize their performance,” said Steven Hartley, Ovum telco strategy analyst. As is the case for other service providers facing maturing legacy revenue streams, European service providers face the challenge of growing new revenues in emerging markets faster than revenues decline in their core European markets.

And the problem there is that average revenue per user will be lower in the new markets. So European carriers are losing high gross revenue and higher margin customers while trying to gain lower gross revenue, lower margin customers.

Ovum forecasts that global telco revenue growth will slow to a compound annual growth rate of two percent between 2012 and 2018. Most of the actual growth will happen in emerging markets, while revenue is likely to stay stuck in a declining mode in Europe.

The reaction of Canadian mobile operators to a rumored entry by Verizon Wireless into the Canadian market likewise suggests mobile operators know precisely what would happen should a powerful new competitor try to shake up an existing market, namely significant market disruption.

The bottom line is the the U.S. mobile market, despite continuous overall revenue growth for decades, is likely to stall, then reverse, to the extent that T-Mobile US and Sprint are able to take market share from Verizon Wireless and AT&T.

Security Concerns About Mobile Commerce Might be Quite Wrong

Though many have been cautious about prospects for mobile commerce and payment systems because of security issues, some think smart phones actually will prove to be far more secure than most password-protected operations.

That might not allay all concerns, but does suggest we are yet early in the process of figuring out how mobile commerce actually provides huge value, and supports huge ecosystems of value. 

As it is starting to appear, smart phones are becoming a more valuable part of any multifactor authentication process, as the smart phone is the device most people carry with them always, and is a logical device for biometric assessment. 

Leaders and Managers: Followers Create the Former, Power the Latter

For the typical person involved with any sort of work-oriented organization, the difference between managers and leaders will be a subtle thing, if most people even can describe the two types of roles precisely. 

Some might say the difference is between informal and formal forms of management. The president of the United States "leads" by formal mechanisms. He or she has power, the authority to command, by virtue of holding an office. 

CEOs, priests, legislators, judges or any other officials you can think of who have power by virtue of holding an office provide other examples of formal power. 

Anybody who has been in combat knows there is another type of authority, exercised informally, irrrespective of rank. That is a classic case of "leadership," which might be said to be an informal source of power, not granted by rank or office. 

Other examples often occur in voluntary organizations, where some people exercise leadership by personal traits or charisma that are unrelated to any formal title or official role. 

One can "manage" without charisma or personal authority, because of the "bureaucratic" grant of authority of office. 

One cannot "lead" without the ability to inspire informal assent to one's leadership. Paradoxically, leaders are those whom followers designate, and not those whom the formal structures of power designate. 

Managers and leaders are not identical concepts. 

In a formal sense, one must follow legitimate orders of a manager, executive, judge or other official because that person has the legal or institutional authority to issue an order to you.

Leaders get followed because people trust the leader's authority, expertise and personal and charismatic traits. In some cases, a leader has no formal grant of authority save that granted by the followers. 

And the two types of authority can be mixed, in most cases. Conceptually, one can lead without managing, in the specific sense of exercising genuine authority without formal designation (think of sergeants, petty officers or corporals in small group combat, especially when the lieutenant has been killed).

 It is possible to manage without leading (we do what you say because you have the power to order us to do those things). One can be a "poor" manager, but still be a manager, in terms of formal authority. 

In some cases, a manager might also be a leader (we follow because we believe in you, not just because you have the right to command). 

In other cases, followers designate their own leaders. That is why successful commissioned officers rely on their non-coms. 

You might argue the most successful authority figures are those who have both legal power and the informal assent of those they lead. "Office" confers power. It does not confer active assent or enthusiastic and creative support.

Volunteer organizations routinely rely on informal leadership; they have to. Large enterprises normally are managed. 

Market Disruption is a Game Verizon Can Play as Well

One often tends to think that big market disruptions are caused by small, upstart firms. History might suggest something quite different.

You might argue that it actually takes a large and dominant firm to truly disrupt a big market. Apple, for example, did not just revolutionize "mobile phones." It changed the relationships of power and value within the mobile industry, shifting power to handset providers and away from access providers.

Some would argue it will take a firm as big as Google, able to launch Google Fiber, and offer symmetrical 1-Gbps high speed Internet access, at $70 a month, to change the U.S. ISP business. 

In similar fashion, you might argue it took an industry as large as the mobile phone business to rapidly bring voice communications to billions of people who still do not have access to fixed network voice. 

And even though lots of firms are trying to disrupt the U.S. mobile business, one might argue it will take firms as big as Sprint and T-Mobile US (or Apple, Google, Amazon, Facebook) to really shake things up. 

So the notion that a big incumbent cannot disrupt a market is false. Consider what Verizon might do in Canada, where regulators want Verizon to enter the market, and the Canadian mobile carriers with 90 percent market share are vigoruously opposing the move. 

The point is simply that big markets get disrupted by other big firms, not start-ups. One is tempted to point to Skype as a countervailing example. But that analogy also is complicated. One might argue that landline voice has been disrupted most by mobile.

International calling has been affected by Skype, but there also are other pressures, such as rapidly declining international and national long distance rates, even before Skype launched. In fact, it was competition by big long distance companies such as MCI and Sprint that caused the drop in long distance prices, long before Skype was thought of. 

That is why it really matters when firms such as T-Mobile US, Google, Apple and Sprint get serious about challenging the prevailing market structure. That is typically what it takes to disrupt a market. But add Verizon to that list of names. 

How Strategic is Ownership or Operation of an Access Network?

For a very long time, one vital "core competence" for a fixed network telco might have been said to be its right to operate a monopoly access network. By definition, a legal barrier of entry to all other competitors is a rather notable advantage. 

But the value of that advantage is challenged under competitive conditions. When there are at least two ubiquitous fixed networks, or two or more broadband networks, plus mobile, fixed wireless and satellite access providers, one might argue the uniqueness of any access network is lessened, and presumably therefore the value of owning any single set of network facilities.

Few competitors would argue that network ownership is an insignificant source of advantage. But contestants might disagree about the extent of value, in a competitive market. And that also speaks to new questions about "core competence," which also relates to strategic business value.

What is a telco's core competence? It is a tougher question that sometimes seems to be the case. A core competence is not just "something we are good at," but a unique attribute that provides significant business advantage.

Some would say the three key attributes include: 

1. It is not easy for competitors to imitate.
2. It can be reused widely for many products and markets.
3. It must contribute to the end consumer's experienced benefits and the value of the product/service to its customers.

For that reason, the question now is asked with reference to network sharing agreements that have become more common in the mobile business. 

To be sure, one might argue such network sharing is and also somewhat involuntarily agreed to in the fixed network business, where mandatory wholesale policies and steep wholesale discounts are a feature of the regulatory landscape. 

But network sharing, where two or more competing mobile service providers agree to share towers or radios, for example, provides the more-challenging questions about the strategic value of networks. 

The Czech units of Telefonica and Vodafone could be on the verge of entering into a network-sharing agreement that is said to lower Telefonica's costs by more than CZK 4 billion (€155 million) over 15 years.

The natural question is the value of a mobile access network. Does it provide a unique advantage? Some service providers that have outsourced towers or even operations of the radio network seem to be saying that the network does not, in fact, provide unique value. 

One wouldn't want to stretch the argument too far. The use of the radio network also implies use of the spectrum, which might not be a completely unique asset, but certainly is not easy for competitors without spectrum to emulate, and is reused widely for all of a mobile service provider's products. 

One might argue that spectrum also contributes directly to an end user's experience. In those senses, spectrum, more than tower networks, might be said to provide a core competency. But that would be a rather "passive" source of advantage. 

Rights to use spectrum mean only that a service provider using licensed spectrum can afford to buy it. No particular operational or marketing skills are inherently involved. 

Scarcity remains a valuable attribute of spectrum-based and wire-based networks, in many or most cases. But just how valuable is a new question, as mobile operators start outsourcing or divesting assets related to spectrum, such as radio networks. 

Windstream Earnings Illustrate Rural Telco Problem

Windstream Corp. has a top line problem, namely that its growth product segments are not increasing fast enough to offset weakness in legacy product lines.

That isn’t unusual in the fixed network business. But there is one particular matter of note: the big part of the decline is shrinking intercarrier compensation, not direct end user revenues.

That illustrates a strategic problem for rural telcos, namely the smaller percentage of support service providers will earn from regulatory-driven sources. That, in turn, is a big issue because there are few other sources of end user income (consumers or businesses and organizations) in rural areas.

Without the historic levels of regulatory support, most telcos would not be viable, in their current form.

In the second quarter of 2013, Windstream business service revenues were $913 million, a two percent increase, year-over-year.

Consumer broadband service revenues were $120 million, a six percent increase year-over-year. Still, consumer revenues overall declined three percent.

Strategic revenue, which consists of total business and consumer broadband revenues, grew three percent year-over-year and represents 71 percent of the company’s total revenues.

Wholesale revenues in the second quarter were $151 million, a decline of 13 percent from the same period a year ago due to lower intrastate access rates as part of intercarrier compensation reform implemented in July 2012, Windstream says. Lower switched access revenues from declining consumer voice lines also was an area of weakness.

But with the exception of strength in business services and consumer broadband, total revenues and sales were $1.51 billion, a decline of two percent year-over-year.

Windstream, which began as rural wireline provider spun off from Alltel Corp. in 2006, has been remaking itself as a data services and broadband provider for business and consumers, as traditional landline revenue continues to dwindle.

There are wider implications here for rural carriers, namely that shrinking regulatory revenues are starting to pinch. The long term problem is that there really are not consumer-generated revenues available to had, in much mass, in rural service territories.

Video Cord Cutting Not Yet at the "Disruption" Phase

One rule I have consistently relied upon when assessing new technology adoption is to assume there is a quantum process at work.

In other words, only after a longish period of gestation, or an accumulation of small changes that leave markets largely intact, does there occur an “eruption” or inflection point after which the market rapidly changes.

Another way of putting matters is that forecast qualitative changes do not occur in some predictable linear fashion. In fact, big changes are non-linear. Observers watching for change tend to see small, incremental changes for a longish time. But big transformations normally look that way, right up to the point where the quantum change happens.

That is the “knee of the the inflection point,” where rates of change suddenly change in a non-linear fashion.

One practical implication for competitor strategy: a contestant has to be careful to structure operations to ride out a longish pre-change period. In other words, hitting the market too early is as dangerous as coming to market too late.

And the thing about quantum change is that, once the shift happens, it is too late for new competitors to get in, as the market reforms so quickly.

That will happen with the video entertainment market. Right now, it is just “drip, drip, drip,” with the observable small incremental changes happening at a low level. At those rates of change, it will take decades for anything meaningful to happen.

But that won’t be what happens. There will come a point in time, which we have not yet reached, when drastic change happens, very fast, with big shifts in consumer behavior and spending.

Right now, we are in a phase of gradual buildup of pressure in the video entertainment business that will, one day, lead to a quantum shift in the business.

AT&T and Verizon are adding video customers, to be sure. Those two telcos have added about 233,000 and 140,000 customers, respectively.

At the same time, the whole market has contracted by about 380,000 video customers. None of that is cataclysmic.

Those figures are perhaps statistically significant, but not yet evidence that the quantum shift has begun.

When the shift happens, scores of millions of accounts will shift in only a few years time.

Groupon Another "Netflix?"

Groupon is starting to remind me of Netflix, which has had to survive a few bouts of deep skepticism in the past about a business model that could not survive. Likewise, Groupon has been "left for dead" by many observers. Like Netflix, it defies skeptics. 

In its second quarter of 2013, Groupon "significantly exceeded our operating income expectations, and delivered our strongest quarter ever in North America, due in part to accelerated billings growth of 30 percent," said Eric Lefkofsky, CEO of Groupon.

In June 2013, nearly 50 percent of Groupon North American transactions were completed on mobile devices, compared with about 30 percent in June 2012, Groupon says. 

More than 50 million people have now downloaded Groupon mobile apps worldwide, with more than 7.5 million people downloading them in the second quarter alone.

We are in a New Phase of the Smart Phone Market

You know you are in a new phase of any market when older questions don't make as much sense. Remember the discussion and speculation several years ago about whether any other manufacturer could build a device to rival the iPhone?

Would that question still be salient today? No, some of us would say. Probably not, all of of us might say. 

That is the reality behind the numbers that show convergence of sales and profit between the Samsung Galaxy line of devices and the iPhone.

Canaccord Genuity is out with its quarterly look at the "value share" in the smartphone market. Samsung has dramatically narrowed the gap with Apple.

Vodafone Opts for Content, Value to Differentiate 4G

Whether there is a new “killer app” for Long Term Evolution remains an unknown possibility. Up to this point, it is fair to say, “faster access” has been the value proposition. Some with longer memories will recall that among the advantages of third generation networks was the creation of a platform for new services, though.

For the first half decade or so after widescale deployment, such new apps did not actually emerge. So the issue is whether, or when, such new apps might emerge for 4G.

Vodafone, it appears, wants to try a little harder to change the value proposition using content and retail pricing and packaging, rather than speed or better coverage, which might be said to be the more traditional value pitches for a mobile broadband or mobile data service.

“While the presumed emphasis on 4G has always been on coverage and network speeds, Vodafone has opted to focus on the content deals and tariff options behind its offer,” says Emeka Obiodu, Ovum principal telco strategy analyst.

There might be another way of looking at the LTE strategy as well. Most service providers, when it is possible to claim it, tout their better coverage or speed. That often comes with a “premium” positioning, as is characteristic of Verizon Wireless in the U.S. market.

To be sure, Vodafone would not concede that it does not have coverage advantages. But it does not seem to be “leading” its marketing with those advantages, and instead is emphasizing content and value.

Obiodu argues that Vodafone wants to avoid the mistakes of the initial 3G introduction, when it was too focused on building and marketing the best network, only to see other competitors emphasize the value proposition, the Ovum researcher says.

“So this time, Vodafone is focusing on getting the commercial proposition right,” he argues.

“We expect the deals with Spotify and Sky Sports to appeal to a lot of customers.”

The focus is on business model innovation. Doubling the data package, and content access are ways of changing the value proposition, convincing customers to spend an additional £5/month, instead of just selling a faster network.

That probably will be important over time, as virtually all the contestants are able to sell faster 5G service, eliminating the distinctiveness of “speed” and, if nothing else changes, drawing attention only to matters such as price.

Stickers Make LINE Money

Who'd have thought a business model could be built on "stickers!"

LINE Corporation’s revenue for the quarter was JPY 12.8 billion, up 348.9 percent over the same quarter of 2012 and 45.3 percent over the previous quarter. 

Revenue sources included in-game purchases (53 percent), sticker purchases (27 percent), official accounts, and sponsored stickers, LINE says. 

Telefónica Reportedly Will Shut Down Over the Top Voice App Tu Me

Telefónica reportedly will shut down Tu Me, its over the top free messaging app, on Sept. 8, 2013. Some had questioned the logic of competing against the likes of Skype and WhatsApp with a branded single-carrier app.

The shutdown of Tu Me might confirm the thinking that such an approach is difficult to impossible. T-Mobile’s Bobsled and Orange’s Libon remain active, so the matter is not completely resolved.

At least in part, the original thinking behind Tu Me was that availability of the app would allow users who were not Telefónica subscribers to communicate with Telefónica customers, eventually perhaps driving incremental calling revenue, as SkypeOut does.

At the time of its launch, some suggested Telefónica was a standout among service providers that “got it.” Such observations frequently have proven wrong.

Service provider executives are not dumb for refusing to embrace some business models that make sense for over the top app providers. As their experience with VoIP has shown amply enough, just because Skype or WhatsApp can build a business offering free voice or messaging, that does not mean a telco or cable company can do so.

As it turns out, Tu Me could not get traction, at least, not enough traction to create a huge user base that might have enabled a sustainable revenue model. As Tu Me might illustrate, service providers cannot always compete successfully against over the top apps with their own branded versions of such apps.

Do Apple iPhone Sales Mean Apple is the Same Company as it Was in PCs?

Apple, in its days as a supplier of personal computers, never had much market share, compared to machines of the Windows ecosystem. And while Apple still makes the argument that profit, not sales volume, is its top concern, Apple's recent smart phone sales are starting to remind some of us of Apple's past, when another ecosystem gobbled up the sales volume, installed base, and influence.

The Android ecosystem is approaching 80 percent market share. Apple's iOS still is significant, to be sure. But even Apple's profits seem to be dipping, as Samsung's profits climb almost to parity with Apple. 



Though it might have seemed far fetched not so long ago, Apple is facing a replay of its experience with PCs, where it lost leadership to Microsoft early on, and survived only a niche supplier. That isn't to say necessarily will repeat itself, but the numbers should provoke concern. 

Some would say Apple's iPhone business, as originally constructed, no longer works. The high-end is saturated, so Apple needs to introduce a low-cost iPhone, even if that risks further weakening of its average selling price and pressure on profit margins. 
 

 

Unlicensed Spectrum Can Dramatically Reduce ISP Breakeven Points

You'd undoubtedly be correct--or at least in very good company--if you predicted that mobile data access would be the primary way most people without Internet access will use it over the next 10 years. 

But some of us also would argue that other methods will play a significant role, including public-private partnerships, Wi-Fi hotspots, non-profit or fixed broadband access services as well. 

Some of us also would argue that the only way ubiquitous coverage for all potential users, including those with little ability to pay commercial rates, will hinge on creating lower cost alternatives ot mobile or fixed network service.

That is no slam on mobile or fixed ISPs. It simply is a recognition that the cost structures for telcos and mobile service providers might not allow for very low cost access, and reasonable usage buckets, for users with little disposal income. 

For that reason, some of us believe shared spectrum and unlicensed spectrum will be necessary parts of the overall Internet access ecosystem in many regions where consumers are underserved, or not served at all. 

By reducing government licensing and spectrum purchase requirements, at least some ISPs would be encouraged to create sustainable access services that would be absolutely unfeasible if those ISPs had to buy licensed spectrum or comply with the full set of regulations telcos and mobile service providers must obey.

Google Starbucks Wi-Fi Deal Will Represent a $50 Million or Greater Annual Investment by Google

Based on industry pricing, the Google deal to supply Wi-Fi services at 7,000 Starbucks locations could represent at least a $50 million a year investment by Google, based on what it is paying Level 3 Communications to supply and manage the access, according to estimates from D.A. Davidson telecom analyst Donna Jaegers.

That level of investment does not include money Google will spend to upgrade the Starbucks Digital Network experience, either. 

Consider that the sort of long-range investment Google previously has made in access capabilities, ranging from metro Wi-Fi to Google Fiber.

Cable Companies Earn More Than 25% of Metro Ethernet Revenues

U.S. cable TV operators earn more than 25 percent of Ethernect access revenues overall, and will earn perhaps as much as 33 percent in the near future, Heavy Reading says. 

Wholesale Ethernet is substantially outgrowing retail, expanding as a share of MSO Ethernet from 10 to more than 20 percent, including resold telco capacity and traffic delivered on their own facilities.

As you would guess, cable operators also are moving up the stack by adding more application-based, vertically-oriented services, expanding further into the enterprise space and downward into the smaller business segments.

By 2016, according to Insight Research, U.S. enterprises and consumers will spend over $44 billion on carrier Ethernet services, growing the market from $4 billion in 2011 to nearly $11.1 billion by 2016.