4G will Grow 33% Faster than 3G, Juniper Predicts

It took nearly six years for third generation mobile services based on UMTS/HSPA to reach 100 million subscribers but it will take Long Term Evolution just four years to reach the same milestone, say researchers at Juniper Research.

The number of LTE subscriptions worldwide will grow at a cumulative average growth rate of 404 percent from 2010 to 2014 and reach 136 million subscriptions by year-end 2014, Juniper forecasts.

You might think this has something to do with spectrum efficiency, more efficient coding, signal propagation or some other technology attribute, but if the forecast proves accurate, it will be more a result of a changed mobility market than anything else.

When 3G networks were launched, the expectation was that new data services would fuel revenue growth. That largely failed to happen, at least early on. What is different now is that mobile broadband is approaching mass market status.

Mobile broadband demand is growing about 30 percent a year, while video usage is growing only a bit slower.

DPI Raises Consumer Ire, Should it?

"Network bandwidth is a finite resource, especially so in wireless networks, so it is reasonable and indeed expected that carriers will manage their network bandwidth to assure sufficient quality of service for all subscribers," says Brian Wood, Continuous Computing's VP. That tends to mean use of deep packet inspection, and that tends to raise hackles in some quarters.

The problem is that Internet access, and Internet backbones and servers, are shared resources. There is a "tragedy of the commons" problem if a few users have behavior patterns dramatically different from those of the typical user, because all networks are engineered statistically.

Nobody builds a network that provisions bandwidth on a "nailed up" basis, because nobody could afford to do so. Instead, bandwidth is "underprovisioned," on purpose. Network architects assume that not every user will be putting load on the network, all at the same time.

That works remarkably well most of the time. What causes problems are unexpected loads that haven't been engineered into the network.

"Without traffic management, a few 'bandwidth hogs' can easily degrade the user experience of many other users on the same network," says Wood. That might especially be true in the access network, but the entire Internet transmission  network, including all the servers, are shared resources.

"For consumers, DPI-based traffic management ensures that subscribers get the quality of service that they expect, or at least that they pay for," says Wood.  So, for example, a business user might opt to pay a slight premium for a guaranteed level of service (e.g., guaranteed minimum bandwidth) while a frugal college student might go for a cheaper "best effort" rate plan.

Basically, DPI or other traffic shaping mechanisms are about fairness: making sure most users get reasonable performance most of the time. The other advantage is the ability to learn or be instructed by a user on what activities are most important, so those activities get the highest priority during congested periods.

DPI can be viewed as an automated away, or a self-learning kind of way, for the network to provide those kinds of benefits, says Wood. "It's all a matter of filtering out the stuff that, based on past behavior or the behavior of similarly-profiled individuals, is deemed to not be of value and, instead, prioritizing the stuff that is deemed to be of value."

Behavioral tracking is an issue, though. "Cookie-based tracking seems to be a generally-accepted practice with web sites these days, but there was great concern when cookies were first introduced," says Wood. There are end user advantages, of course, such as sites "remembering" who you are and what your preferences are.

Behavior-based tracking has raised more concern. Deep packet inspection is deemed by some as intrusive and too personal, says Wood. The same sorts of concerns are raised about DPI-based ad insertion.

"What's interesting to me, though, is that Google has been offering Gmail for free to users in exchange for content-based advertisements being displayed next to their emails, and I haven't heard of any uprising against Gmail," he says.

Subscriber notification, how subscribers are notified, and whether those subscribers have any say in the matter, seem to be the key sticking points here, he muses. "Nobody likes the idea of being monitored without their consent, especially if they feel like information gathered through such monitoring will be used in an attempt to profile or manipulate them in the future."

But behavior-based marketing seems to work well for Netflix and Amazon, Wood notes. The difference seems to be one of perception. Lots of people are afraid technology will be used "on" them, rather than "for" them.

Consumer Spending on Internet Access, TV and Mobility is Stable, Poll Suggests

Cutbacks in home communications and entertainment services have yet to emerge as a measurable trend, despite the ongoing recession, say researchers at Pike & Fischer, who recently polled 600 consumers nationwide about their spending on phone, Internet and multichannel video.

Scott Sleek, Pike & Fischer director of broadband advisory services, says the firm conducted the survey because it has been hearing so much "doom and gloom" from service provider executives.

But the study indicates respondents say they would rather keep Internet, video and voice services in their budgets than any other type of expense, including gym memberships, personal care products and apparel.

But the results also point to customers becoming more aware of ways to spend less on those services. That suggests average revenue per user is, or will soon become, an issue for service providers.

"We found very consistent consumer behavior," says Sleek. "We found no evidence of downgrading, for example."

"What I found interesting was that when we asked what people planned to do with their phone and TV services, most said they were planning absolutely no changes," says Sleek.

"Of course, neither are they upgrading, buying more premium channels or adding faster Internet tiers, either," he notes. That is "better than a lot of people thought would happen," he adds.

But one reason service provider executives remain nervous is that there are so many free and cheaper services available now that didn't exist five years ago. Nobody was sure what would happen, this time around.

So far, though, behavior is what one would have predicted, based on behavior in past recessions: stability of subscriptions, but some pressure on average revenue per user.

"The cable guys are worried about over the top video, but so far, it seems to be augmenting video consumption," says Sleek.

People report spending more time at home, so TV and Internet arguably are more valuable.

Energy Consumption up 250% by 2030, but Mobiles Help

Electricity consumption by "electronics" grew by nearly seven percent each year from 1990 to 2008, says Paul Waide, International Energy Agency senior policy analyst. And electricity consumption is likely to grow by 250 percent by 2030, as a majority of growth already is coming from non-OECD countries.

But use of mobile devices, which is growing rapidly, helps, as mobiles tend to be more power efficient. In fact, says the IEA, matters would be worse but for the convergence of technologies and the growth in mobile applications such as laptop computers, which draw less power.

The IEA study finds that over the next seven months, the number of people using a personal computer will pass the one billion mark. Electronic devices currently account for 15 percent of household electricity consumption but their share is rapidly rising.

Already there are nearly two billion television sets in use, with an average of over 1.3 sets in each home having access to electricity.

Without new policies, the energy consumed by information and communications technologies as well as consumer electronics will double by 2022 and increase threefold by 2030 to 1 700 Terawatt hours (TWh), says Nobuo Tanaka, International Energy Agency Executive Director

Higher efficiency technologies that are already available would half this demand, he notes. So aside from more-efficient technologies, unplugging devices when not in use, unplugging mobiles when fully charged and turning off unused applications such as Bluetooth or Wi-Fi when not needed are steps people can take to limit electrical consumption.

http://www.iea.org/Textbase/press/pressdetail.asp?PRESS_REL_ID=284

Grappling with IPTV, Online Video Economics

One of the issues service providers grapple with when weighing IPTV offerings is the financial return. Many executives who have done so say they actually lose money doing so, and others who think they will inevitably have to jump in likewise expect to lose money.

That is one reason some executives think an alternative approach, either based on streaming or downloading, might make more sense. Certainly that is what any number of video distributors are doing, or have done, with modest success.

But the economics of movie rental services might ultimately prove just about as challenging. The home video market represents about 54 percent of the U.S. film industry’s $45 billion in 2008 revenues.

Perhaps 49 percent of the revenue in turn is generated by DVD sales. Perhaps 21 percent is generated by video rentals. The issue, in part, is that profit margins are higher on sales than rentals, and higher for online-delivered products than physical media substitutes.

One wonders how long the content owners will sit by if distributors offering $1 rentals, low cost or even "no additional cost" streaming, continue to gain traction. There just isn't much margin at that price level, for anybody in the value chain.

At some point, lots of service providers without the scale economics of AT&T or Verizon Communications might conclude that online video is a "cost of doing business," not a "revenue" item.

http://seekingalpha.com/article/137502-netflix-movie-studios-pose-greatest-threat?source=feed

Social Network Ad Revenue to Stall, Blame it on MySpace

Total social network ad spending in the U.S. will drop 3 percent to $1.1 billion in 2009, from $1.2 billion last year, says eMarketer, and the falloff is almost solely attributable to what will happen at MySpace.

MySpace accounts for nearly half of all U.S. advertising spend in the social networking space. Analysts at eMarketer now forecast that MySpace advertising will fall 15 percent in 2009, compared to 2008.

MySpace booked an estimateed $585 million in advertising in 2008, but will earn just $495 million this year, down 15 percent from last year.

Facebook advertising and widget placements do not seem to be affected, eMarketer says.

Facebook advertising is expected to grow nine percent in 2009, to $230 million. Ad spending on widgets and applications also will climb $70 million in 2009, up 75 percent from the year before.

In general, U.S. ad spend on all other social network sites combined is expected to rise abou one percent to $345 million.

This is a major reversal, but perhaps to be expected, given the overall economic climate. Spending grew an estimated 33 percent in 2008 and 129 percent in 2007.

60% Unified Communications, Video Adoption by 2010?

Some 60 percent of enterprise executives polled recently by Network Instruments say they will have implemented unified communications capabilities at their organizations by 2010, while 57 percent say they will have implemented video solutions by 2010.

Some 66 percent of the 442 network engineers, IT directors, and CIOs in North America, Asia, Europe, Africa, and South America also report they will have teleconferencing solutions in place by 2010.

VoIP adoption continues to rise, as 75 percent of companies will have installed VoIP by the end of 2009,  compared to 61 percent in 2007.

One has to interpret such findings. When enterprise executives are asked whether they will deploy a given technology, it does not mean they will deploy throughout the entire enterprise. Also, plans typically slip a bit; rarely are they accelerated.

That's about the only way to make sense of survey findings that often show a third of respondents plan to do something "within the next 12 months," virtually every time a survey is taken.