Will the "Bell System" Survive?

"Will the Bell system survive?" asks Allan Ramsay. He argues that a "massive transfer of wealth from Bell to VoIP is underway." We can disagree about how large the wealth transfer is, what VoIP is, or whether voice is on its way to becoming a feature, and not a revenue driver at all. 


It is not a question the Federal Communications Commission appears to think relevant, though. 

Will the Bell System Survive? A Massive Transfer of Wealth from Bell to VoIP is Underway - MumbaiHunGama Info Articles:

What Does "Effective Competition" Actually Look Like?

The U.S. Federal Communications Commission seems to be implying that U.S. wireless markets are "not competitive," though the inference is hard to glean from the FCC's own study on the U.S. wireless market. See the document at (http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-10-81A1.pdf)

What "effective competition" looks like varies from market to market, from economist to economist. How many competitors a market must have to be deemed "competitive" is in this case a political question, not an economist's question, though.

There are some businesses where there is no "effective competition" because the market has "natural monopoly" characteristics. You can think of electrical power, waste water, highways and roads (generally speaking), water systems and national defense as clear examples.

Telecommunications once was deemed to be a "natural monopoly," but most regulators around the world now agree that is true only in part. In triple-play markets, for example, effective competition, but not "perfect" competition can occur, in an economic sense, with as few as two players, even though the U.S. market has many more than that in major metro markets, and typically at least two providers even in the rural markets.

In the real world, there are very few examples of major facilities-based competition beyond two major players, although in a few markets there are three facilities-based fixed line providers. As researchers at the Phoenix Center have suggested, in the fixed line triple play markets, imperfect though workable competition does in fact exist with one one dominant telco and one dominant cable provider. 


See http://www.phoenix-center.org/FordWirelessTestimonyMay2009%20Final.pdf, or http://www.phoenix-center.org/pcpp/PCPP12.pdf or www.phoenix-center.org/PolicyBulletin/PCPB11Final.doc.

The problem is what the level of effective competition actually is in the communications market. Presumably the FCC believes three to five competitors in a single market is not enough.

U.S. fails to describe wireless industry as competitive - Yahoo! News

What People Do With Their iPads

A new survey by Changewave Research of iPad owners suggests that the device is being used just about as Apple expected it would: as a content consumption device able to support the types of "content creation" most people do, namely send emails.

It isn't clear whether this usage profile is much different from what most consumers would do with their netbooks, notebooks or desktop PCs, but so far the iPad is not being used as a "content creation" or "work" device, as most would have expected would be the case.
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Smartphones a New Mass Medium

Smartphone subscribers are still a small slice of the mobile handset market, about 20 percent, inching towards 25 percent, by some estimates, and as high as 30 percent, by other estimates.

By 2013, predictions are that smartphone penetration in the U.S. market will be more than 50 percent, most seem to believe.

It is worth noting that 10-percent penetration is the point in the consumer electronics business when a popular device really accelerates, in terms of penetration, and smartphones are well past that point.

Also, to the extent that smartphones represent a new medium, and that nearly every huge mass medium has been sustained by advertising, it takes no genius at all to predict that advertising and marketing will be a big business in the future (click on image for larger view). 

To the extent that smartphones increasingly will be venues for rich media (video and audio) as well as text, it isn't unfair to describe smartphones as a new "medium," as the Internet, TV, radio and other media are.

Smartphones are "phones," it is true. But they also are a new media format. And hence, the foundation for a new media business.

Your Customers Are Mobile, Are YOU?

Google's Views on How to Save the News Business

"Google is killing the news business," many say. Though that might overstate the case, there is no doubt but that the Internet is reshaping business ecosystems in many ways, typically altering not just distribution formats but also profit margins.

But some argue Google also depends on a vibrant "news" and "journalism" business for its own good, "is trying to bring it back to life."

The company’s chief economist, Hal Varian, likes to point out that perhaps the most important measure of the newspaper industry’s viability—the number of subscriptions per household—has headed straight down, not just since Google’s founding in the late 1990s but ever since World War II (click image for larger view). 

In other words, there are some trends in the "news" business that were in place long before the Internet, including a shift first to television news and now Internet news.

This Atlantic magazine piece is long, but it is the Atlantic's forte, after all. It also is authored by James Fallows, an engaging writer. It is worth a read.

How to Save the News - Magazine - The Atlantic

It's Inevitable: US is Going to be Greece

Structural financial problems at the state and local government level are inevitable, and have been for some time. Forget all the old arguments about the size of government or the appropriate level of taxes. There now are obvious structural problems that must be addressed, and are not matters of political preference. Local governments face similar problems as state governments do with unfunded pension obligations.

This can cannot be "kicked down the road."

Kellogg Management School analysis of State pension obligations

TeliaSonera: Slow uptake of LTE blamed on no handsets - FierceWireless:Europe

TeliaSonera is thought to have only attracted around 1,000 customers to sign up for its new fourth-generation "Long Term Evolution" network, and the company says lack of handsets are a major reason adoption has been so slow.

The LTE network is said to provide coverage to almost 400,000 residents in Stockholm and Oslo. Ridiculously low adoption is based in part on the fact that, up to this point, TeliaSonera has chosen to launch service with no voice handsets. That has meant that the only thing a 4G network could be used for was PC connections.

As important as that application is for some users, it apparently provides no incentive for most users to switch from 3G to 4G. It remains to be seen whether 4G networks wind up being mostly about "faster downloads" or whether there really are distinctive applications that come to be seen as providing the value of 4G service.

TeliaSonera: Slow uptake of LTE blamed on no handsets - FierceWireless:Europe: