Mobile Web Use Explodes

As is always the case, the highest growth rates for any product or service come when growth starts at a low base. And that seems to be the case for mobile Web usage, which over the last year has grown faster among users 65 years old, or older.

Over the last year, users 65 or older adopted mobile Web behaviors at a 67 percent rate.

The other trend of note is rapid growth at the other end of the demographic scale. Users between 13 and 17 increased their mobile Web usage by 45 percent. That means teens are buying smart phones, or having smart phones bought for them.

Casual Use Biggest PC-Based Mobile Broacband Segment?

Mobile broadband services used by PC owners likely will follow the pattern seen recently in the U.S. mobile phone business, where prepaid payment plans have grown at the expense of postpaid plans.

By 2011, only 40 percent of PC mobile broadband users will be on long-term monthly contracts, says  Dean Bubley, Disruptive Analysis principal. Most will use prepaid, casual use or “free” access, he predicts.

In fact, the strongest growth probably will come in the casual use segment.

High Social Media Use Also Means High Email Use, Nielsen Finds

At least in principle, as consumers and workers get access to unified communiations tools, there is a chance behavior will change. When a user can get a message in one media format and reply in another format, people might start using the tools they like best, and thereby decreasing use of other message formats.

Researchers at the Nielsen company, for example, guessed that as people began using social media, they would use less email, for example. To test that thesis, Nielsen broke the online population into four groups.

The first three are terciles of social media consumption in minutes, says Jon Gibs, VP, Media Analytics.  The fourth is a group that doesn’t use social media at all.

Nielsen then looked at each segment’s time of web based email consumption over the course of a year.
Finally, Nielsen subtracted the email consumption of those that do not use social media from those that do, basically to show a lift over possible external forces.

As it turns out, Nielsen found the opposite of what it guessed it would find.

"It actually appears that social media use makes people consume email more, not less, as we had originally assumed, particularly for the highest social media users," says Gibs.

In part, that might be because social media sites like Facebook can be set to send messages to user inboxes every time someone comments on a post, depending on user preferences.

But it also is likely that high users of social media are, well, "social." They might use any number of media to keep in touch with friends and associates.

$350 Billion to Build 100 Mbps Symmetrical Broadband Throughout U.S.

Based on an average cost per dwelling of about $2,700, including capital and operating expense (construction and so forth), the Federal Communications Commission estimates it will take about $350 billion to bring 100 Mbps service to about 111 million to 116 million U.S. homes.

Internet Users are Unique, Treat Them That Way

As this chart suggests, there are distinct Internet end user segments, some of which only require moderate bandwidth, others which require more bandwidth, better latency performance and more upstream bandwidth, if not symmetrical bandwidth.

The issue for any facilities-based service provider is that the whole network has to be built to accommodate the most advanced users, even if much, or most, of the demand is from less-demanding users.

Still, given that such investment must be made, there is increasing room to personalize and tailor broadband access and applications to individual users who actually behave in unique ways.

Though the concern expressed by many supporters of strong forms of network neutrality rightly is focused on protecting legal applications from anti-competitive behavior, there clearly are other values that conflict with the  proposed solution for discrimination, which is that no bits, from any providers, can be prioritized.

In fact, prioritizing bits represents a primary tool for personalizing end user services and applications so that those favored applications are optimized for each user. Surely there are ways to ensure non-discrimination without precluding the creation of personalized services that benefit from end-user specified preferences.

Is Mobile Broadband a Commodity?

Most industry observers tend to think and behave as though "voice" were a commodity, and there is some truth to the notion, at least on the wholesale, carrier-to-carrier or carrier-to-enterprise level. I would dispute the notion that voice, in all its permutations, actually fits the definition of a commodity, but for the moment let's look at mobile broadband.

Is mobile broadband a commodity? Can it replace a fixed broadband connection. As this chart suggests, the answer largely is "no." A mobile service easily can displace a single consumer voice line or simple Internet applications such as email. But it isn't so clear email access is what people generally mean when thinking about mobile broadband.

At the other extreme, high-quality linear entertainment video is virtually impossible to replicate in the mobile domain, so IPTV, for example, has no direction equivalent in the wireless domain. Other applications are somewhere between "mostly" substitutable and "not" substitutable.

The point is that a product probably isn't a full "commodity" if full substitution is not possible, or is possible, but without fully interchangeable value. So far, mobile broadband does not seem to be a "commodity" fully capable of replacing a fixed broadband line.

There are many reasons, including vastly different speeds, usage caps and pricing. Then there is the demographic element. It is easier to consider substitution when a single-user household is concerned, hardest when multi-member families are concerned.

The value of a fixed broadband connection grows with the degree of bandwidth sharing and total number of devices to be supported. One fixed broadband connection might make more sense than five mobile broadband connections, for example.

The other angle is that linear multi-channel entertainment video is just a discrete application delivered over a fixed broadband connection, and there is as of yet no mobile substitute. So despite outward appearances, mobile and fixed broadband are not fully-exchangeable substitutes, and hence not true commodities.

Monetizing Broadband: Something has to Give

Inevitably, Verizon Communications Chief Technology Officer Richard Lynch would get attention in mentioning that the broadband industry “will see a pricing paradigm shift” because Internet service providers “cannot continue to grow the Internet without passing the cost on to someone.”

Lynch's remarks would come as no surprise to anybody who follows revenue-per-bit trends in the broadband access business. It has been clear for some time that, as access bandwidth increases, revenue is not keeping pace.

Service providers have some room to deal with the widening gap, by adding new revenue-producing services and applications, managing cost and so forth. But there is not unlimited room to juggle cost elements.

At some point, higher bandwidth, which customers want to buy and service providers want to sell, will require investments with a more-linear payback mechanisms.

That likely means new ways of pricing bandwidth consumption. That probably doesn't mean a shift to fully-metered usage, as consumers do not like it, and such an approach undoubtedly would depress consumption and therefore stifle new applications and services.

But there are lots of other, more-palatable alternatives, namely "buckets" of usage analogous to the ways people now buy voice services or text messaging. Bigger buckets will cost more money; smaller buckets will cost less.

And if network neutrality rules are not onerous, service providers might be able to create service tiers with quality of service mechanisms, much as business customers are able to buy, though basic "best effort" plans likely would coexist.

“We are going to reach a point where we will sell packages of bytes,” Lynch says. Those packages might also offer differentiated quality of service.

Consumption at "off peak" hours might be offered at prices lower than equivalent consumption at peak hours, for example. Whether optional packages could be offered that allow end users to prioritize some applications, as businesses do, will not be clear until after new network neutrality rules are clarified. And that is going to take some time.