AT&T Gets Unwanted Attention Over iPhone

No mobile service provider wants the attention AT&T is getting about how unhappy iPhone users are about their ability to use their devices, and the industry as a whole does not need such attention at a time when it faces possibly major reregulation by the Federal Communications Commission that could affect industry revenues right at the point that the industry is racing to upgrade its broadband capabiltiies.

One can argue one way or the other about the state of AT&T's 3G network, but there seems little question that Apple iPhone user behavior is so strikingly different from that of other smart phone users that every carrier has to be concerned about what happens as more devices like the iPhone are sold to end users. If most of them start to behave like iPhone users, carriers are likely going to have serious bandwidth problems.

Apple iPhone users consume two to four times as much network data volume as other smart phone users, according to traffic measurement company Comscore. And it also appears that users of the 3G version use 100 percent more data than iPhone users on the 2.5G networks.

So the business problem is fairly clear. An AT&T data plan of $30 a month for just about any smart phone has dramtically different revenue implications. Most smart phone users put light loads on the network for that $30, while Apple iPhone users put heavy load on the network, for that same $30.

Some think the mere expedient of building new 4G networks will solve the problem. It will help--a lot. But even that is not a permanent solution, in and of itself, if other smart phone users start to behave as iPhone users do, and all of them start consuming more video.

Alcatel-Lucent studies show that Web browsing consumes 32 percent of data-related airtime but 69 percent of bandwidth, while email uses 30 percent of airtime but only four percent of bandwidth.

One suspects this situation cannot continue. Either there will be changes to unlimited data plans, such as higher prices, as well as other ways of better matching network load to service provider revenue. Customers won't be happy about that.

But carriers might have to resort to plans that differentiate between the load different applications--especially video--place on the network and charge accordingly. Mobile networks simply do not have the ability to supply the same amount of bandwidth that wired networks do.

As more users switch to smart phones, and start to consume video and Web applications more intensively, push will come to shove. Some observers think many users will start to use their smart phones more than their wireline-tethered PCs for Web application access. Something has to give here.

And one way things could change is if significant shifts of market share were to occur, spreading the iPhone demand over more networks than AT&T's. All the carriers will keep investing in their networks, and all will be under competitive pressure to keep access costs as low as possible. Despite all that, demand might outstrip supply. So change is inevitable.

http://www.nytimes.com/2009/09/03/technology/companies/03att.html?_r=1&hp

Qwest Upgrades to 100 Gbps, But Worries About Future Price Impact

Qwest Communications is enhancing its nationwide network to deliver speeds of up to 100 Gigabits per second to its customer edge sites. This build-out has begun on Qwest’s network and is planned through 2010, though no further details are publicly available at the moment. But potential customers can expect that 100 Gbps local access to the backbone will be available in markets where Qwest already offers Ethernet-based "iQ Networking" and "QWave" data networking services.

But Pieter Poll, Qwest CTO, says he is concerned that, after a few years, optical component limitations could impair its ability to keep its cost per bit in line with customer expectations. The basic issue is that customers consume 40 percent more bandwidth every year and expect prices to remain flat.

That means Qwest has to continue reducing its cost per bit by more than 40 percent every year to keep up, Poll told Telephony Online. And Poll worries that Moore's Law, which generally governs development in the electrical domain, will not be possible in the optical domain.

“In the optical environment, you have basic physics issues in how you can integrate to bring costs down," he says. "There is no Moore’s Law in the optical world."

If that observation proves correct, Qwest wil have to look for cost reductions elsewhere. Operations, marketing, overhead, sales and other costs might have to be cut if the gains cannot be made in linear fashion on the optical network element front.

One suspects optical suppliers will do better than Poll now forecasts, but the challenge appears to be real.

1.3 Exabytes of Mobile Video Consumed in 2017

Portable laptop and netbook users will consume 1.3 exabytes of video content per month by 2017, a sixty-fold increase over 2009, says Coda Research Consultancy. If that forecast proves correct, mobile video will account for nearly 75 percent of all mobile traffic.

The top region for video consumption will be Asia Pacific, which will account for just over half (53 percent) of all video traffic globally. In contrast, Europe will account for 26 percent of all global video traffic, and North America 14 percent.

The Asia Pacific region will be so prominent because mobile broadband will be for many the primary or exclusive way of getting access to the Internet, the company says.

The report shows that two thirds of global traffic using by portables will be on Long Term Evolution (LTE) networks by 2017.

Nokia Ditches Barcelona

Nokia apparently will not be exhibiting at Mobile World Congress in Barcelona in February 2010. MWC is generally considered the paramount global mobility event, so the move probably is one more indicator of potential change of marketing emphasis by equipment and software providers.

It is no surprise that nearly all communications trade shows and conferences have been under pressure for a couple of years as the recession has forced travel cutbacks, as tier one carriers and enterprises have clamped on severe travel restrictions and some enterprises actually seem to be looking to "prove" that videoconferencing actually saves money by reducing travel expenses.

One way to demonstrate such a business case is to force employees to use videoconferencing and other conferencing tools while restricting travel.

Such changes have been occurring rather broadly on the wired network side of the business for a decade or more. In part, global consolidation means suppliers have fewer customers to sell to. Using direct sales channels typically makes more sense in concentrated markets, compared to fragmented markets.

But other changes have occurred as well. Quite aside from those changes, online communication channels obviously have reduced the need for indirect marketing venues, and have allowed for more use of direct channels. Many firms are shifting spending from legacy channels to their own Web channels, for example.

The deep global recession has had an effect as well, but that is a temporary trend. What remains to be seen is the longer term change of marketing techniques and approaches based on use of Web and IP technologies. Among the bigger changes are a shift from "push" to "pull" marketing, for example.

Mobile Video the Next Big Thing?

Mobile video is considered by many to be among the next big things in mobility use and service provider revenue.

It likely also will be a big driver of consumption calculators, bigger data plans and at-home or Wi-Fi connections.

The reason is physics. Video requires two orders of magnitude worth of bandwidth compared to most other applications. That's a 100 times greater load placed on a network and a user's bandwidth cap.

Some people think Wi-Fi is a transitional access technology, to be replaced by mobile broadband connections. That's not likely. In the business world, Wi-Fi is replacing Ethernet wired networks on a permanent basis.

In the consumer space, Wi-Fi is replacing wired connections as well. And in the public space, Wi-Fi is getting much more use by mobile handsets, where the original connected device was a PC. As video consumption grows, users quickly are going to figure out they can reduce pressure on their bandwidth caps by using Wi-Fi as often as possible, and especially for video streaming or downloads.

Mobile video might be the next big thing in any number of ways.

Online and Mobile Video Still Incremental to TV

It still appears that online and mobile video consumption is incremental to regular TV viewing, The Nielsen Company says.

“Although we have seen the computer and mobile phone screens taking on a significant role, their emergence has not been at the cost of TV viewership,” says Jim O’Hara, The Nielsen Co. president. The reason is that consumers simply are increasing the total amount of video they consume.

“The entire media universe is expanding so consumers are choosing to add elements to their media experience, rather than to replace them,” O'Hara says.

Nielsen data also shows Americans are using DVRs more than ever, watching one hour more of timeshifted TV each month than a year ago. Currently, 30 percent of homes in the U.S. have DVR devices.

During the second quarter of 2009, the number of people watching mobile video increased 70 percent from last year and people who watch video online increased their viewing by 46 percent compared to a year ago. In addition, the average American TV consumption remains at an all-time high (141 hours per month) compared to the same time frame last year.

Online usage is relatively flat since last year, though more people are viewing video online than ever before. But adults 18 to 24 watch more than five hours each month.

Short form video (such as YouTube clips) still makes up 83 percent of online video viewing, while name-brand TV network content comprises the majority of mobile video viewing.

Mobile video viewing continues its upward trend, with over 15 million Americans reporting watching mobile video in the second quarter of 2009, an increase of 70 percent versus last year and the largest annual growth yet seen, Nielsen says.

Service Provider Finds Online Portal Really Works

Telecom service providers need to be more active about using Web channels to build awareness of, and purchases of, new services, says Michael Philpott, Ovum practice leader, says.

As matters now stand, most service providers have few on-going consumer touch points, except for the monthly bill, and one might question whether that is the right time to engage a customer's attention in a positive way.

“Often the main points of customer contact for the broadband service provider is when the customer first signs up from the broadband service, and when something goes wrong, with only the odd e-mail flyer in-between,” says Philpott.

"Those few service providers that still have a successful Internet portal are starting to innovate around that as a way of entertaining, helping, communication with and up-selling services to existing clients," he says.

One pilot by a tier-one player in the U.S. market found that such a strategy increased its marketing success rate over traditional methods by 200 percent.

That service provider also found a 615 percent increase in Web traffic fror a music service, as well as a 55 percent increase in new security subscriptions, plus a 20 percent in security service churn.

Impressive numbers, indeed.