Wireless Prices Lower, Usage Higher

Since 2006, U.S. mobile users have been paying dramatically lower prices, and therefore talking more, than users in Western Europe and Japan, the latest Federal Communications Commission data indicates.

And though there may be other areas where work must be done, access, usage and price no longer are problems. Nearly 90 percent of potential users have access to four or more different providers. Some 95.5 percent have access to at least three providers. Fully 99 percent of people have access to at least two different providers. And 99.8 percent of potential users have access to at least one provider. That includes people living in rural areas where service is more limited.

Approximately 99.3 percent of the U.S. population living in rural counties have one or more different operators offering mobile telephone service in the census. Nearly 57 percent of the population lives in areas with at least five competing operators.

On average U.S. mobile subscribers paid about seven cents per minute for mobile voice calls in December 2006 based on an estimate of average revenue per minute. Prices declined 85 percent from 47 cents in December 1994 to seven cents in December 2005.

In Western Europe revenue per minute averaged 20 cents in the last quarter of 2006, while in Japan users paid an average of 26 cents a minute.

U.S. mobile subscribers lead the world in average voice usage by a wide margin, with Western European subscribers averaging 150 minutes and Japanese subscribers averaging 145 minutes, compared to an average of over 700 minutes in the U.S. market.

Lower prices also have other effects of concern to wired service providers. If wireless use does not cost too much more than tethered calling, lots of users will simply abandon use of wirelines in their lives as consumers.

During the second half of 2006, 11.8 percent of U.S. adults lived in households with only wireless phones, up from 7.8 percent in the second half of 2005, and triple the percentage (3.5 percent) in the second half of 2003.

About one in four adults aged 18 to 24 years lived in households with only
wireless telephones, and nearly 30 percent of adults aged 25-29 years lived in wireless-only households.

Sky Dayton Leaves Helio

Given that Sky Dayton now has resigned as chief executive of Helio, the wireless joint venture between SK Telecom and Earthlink, one has to conclude that Dayton, at least, thinks the end is near. Shutting Helio down is a possibility, though not the only possibility. Earthlink itself is for sale and it is possible Dayton sees the larger transaction coming.

Earthlink clearly wants out of the Helio venture, but SK Telecom clearly believes in the business, hoping only to replicate the success it has had in its home market. The issue rests with SK Telecom, as the Korean firm recently invested $70 million in Helio and now has voting control of the venture.

Maybe Earthlink executives have found a way to reorganize the firm in a self-sustaining way. If so, it almost certainly would have concluded that it must stop investing in the muni Wi-Fi and Helio ventures.

Another Cable Cut in Persian Gulf

What are the odds four undersea cables are cut in a single week? Whatever those odds, it has happened. First two cables snap off Egypt. Then a separate cable in the Persian Gulf, and now yet another Middle East cable.

In the latest incident, an undersea telecoms cable linking Qatar to the United Arab Emirates was damaged, disrupting services, telecommunications provider Qtel has reported.
The cable was damaged between the Qatari island of Haloul and the UAE island of Das. The cause of the damage is not yet known.

Qtel's loss of capacity seems to be disrupting voice capacity more than Internet services. Qtel says it was operating at 40 percent over the weekend because alternative cables exist. Nevertheless, disruption to Internet and telephone services in the Gulf state is likely to continue for 10 another days or so.

Not since the December 2006 earthquake off Taiwan have so many cables been taken out of service almost at once.

Google: Microsoft "Troubling Questions"

Google is doing what it can to annoy Microsoft. Reportedly it has contacted Yahoo about potential help fending off a Microsoft takeover bid. And it certainly is going to raise antitrust and other competitive issues it hopes will be addressed by regulatory bodies.

"Microsoft's hostile bid for Yahoo! raises troubling questions," says David Drummond, SVP and Chief Legal Officer. "Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?"

"Could the acquisition of Yahoo! allow Microsoft, despite its legacy of serious legal and regulatory offenses, to extend unfair practices from browsers and operating systems to the Internet?" he asks.

"Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services?"

Mobile IS Voice

Enterprises and consumers still spend lots of money on voice services delivered over some sort of wired connection, including "plain old telephone service" as well as newer replacement services such as cable-provided "digital voice" (voice over IP) or hosted business phone services.

But wireless is where the action is moving. And while lots of different approaches to integrating wireless and wireline access are being tested and deployed, it's hard to escape the conclusion that wireless increasingly is the dominant way people "do voice," even when some amount of talking shifts to PC-to-PC format.

There will be lots more integration of features and call delivery between wireless and wired modes, to be sure. But there will be an equally large amount of wireless substitution as well, even in the enterprise customer segments.

France is Leading W. Europe VoIP

The three largest VoIP providers in Western Europe are French: Orange, Neuf Cegetel and Free. According to InfoCom's most recent report on IP-based voice, Orange also is active in the Netherlands, Spain and the United Kingdom.

All in all Orange had 3.57 million VoIP customers in these four countries at the end of June 2007 and was the largest provider of IP voice services that are a replacement for analog telephone service, with a 14 percent market share. Neuf Cegetel and Free (Iliad group) follow. BT ranks fourth while and United Internet ranks fifth.

Skype leads for PC-to-PC VoIP share, though MSN or Yahoo! each get significant usage as well. Generally speaking, consumers do not use Skype, Google or MSN VoIP services as their main phone line in place of their traditional telephone line, InfoCom analysts say.

Cable Cuts Highlight Opportunity

Several recent undersea cable cuts that interfered with Internet connections in India and the Middle East might ultimately focus attention on other ways to get call center and business process outsourcing handled. By some reports 20 to 25 percent of outsourced call centers initially were unable to do any work at all while many had only 50 percent of capacity once restoration work began and traffic was rerouted.

At some point, at least some providers and some customers will conclude that if the price is equivalent, it makes more sense to base call centers and other business process outsourcing operations on shore. The issue is how to operate them more efficiently.

Perhaps there is a role here for IP voice interconnections. Though other costs are less malleable, it ought to be possible to create highly-distributed call overflow mechanisms using "voice over private network" IP connections in ways that allow economical call center operations in lots of rural areas that are more protected from cable cuts.