Public Wi-Fi Business Model is Changing

About 10 years ago, there were serious debates about whether public Wi-Fi hotspot networks could become a viable alternative to mobile broadband services. That might sound odd now, but it was a somewhat serious issue back then.

The more-immediate problem for public Wi-Fi businesses, though, was the business plan itself. It proved tough to entice enough users to pay for such "out and about" connections.

What ultimately happened was that public Wi-Fi access became, in part, a niche service for traveling workers and in part a retention tool for major cable and telco broadband providers.

In its latter configuration, fixed broadband customers got "no extra charge" Wi-Fi hotspot access as an amenity for being a customer. The indirect business model was enhanced customer retention.

These days, another evolution is occurring. In addition to helping service providers retain their existing customers, public Wi-Fi now is becoming a way to defray mobile network investment, shift huge amounts of traffic to the landline network and create more-affordable ways to support bandwidth-intensive services such as video.

To some extent, Wi-Fi hotspot availability also creates a platform for service creation, in particular services mobile operators want to support, but not too much. Mobile VoIP is one example.

AT&T, for example, allows mobile VoIP on the iPhone, but only from hot spots.

Verizon Wireless, on the other hand, takes the opposite approach and only enables use of its embedded Skype application on the wireless network, not Wi-Fi.

Either way, public Wi-Fi allows creation of services in a way that competes less directly with mobile voice, for example.

The point is that the public Wi-Fi business model is changing, again. Where one might have argued that the business model was "fixed broadband customer retention and acquisition," the additional, and possibly more-important model, is as a major wireless access method and service platform.

Half of Fixed Broadband Users Consume Less than 2 Gbytes Per Month

A new study by the Federal Communications Commission confirms that "heavy users" are a distinct minority of users, and that half of all users consume less than two gigabytes a month. A small percentage of all users consumer very-large amounts of data, sometimes as much as a terabyte, the report says.

The most data-intensive one percent of residential consumers appear to account for roughly 25 percent of all traffic. The top three percent of users consume 40 percent of all bandwidth.

The top 10 percent of users consume 70 percent of all fixed broadband data, and the top 20 percent of users consume 80 percent of all data.

While half of all users consume less than 2 GByes per month, the last six percent of users consume more than 15 GBytes each month.

The average Internet user has been online for 10 years and spends roughly 29 hours per month online at home, double the amount in 2000.

Overall, per-person usage is growing about 30 percent to 35 percent per year.

There are four distinct use profiles among U.S. consumers, each with different usage
characteristics, the report suggests.

For these four use profiles, actual download speed demands range from 0.5 to 7 megabits per second. The report says 80 percent of broadband use today is by users in three profiles, and that those customers require actual download speeds of no more than 4 Mbps.

The FCC analysis shows that average (mean) actual speed consumers received was approximately 4 Mbps, while the median actual speed was roughly 3 Mbps in 2009 (half the connections ran faster, half ran slower).

FCC report here

Developers Will Get 95% of Chrome Web Store Revenue

If you are a developer looking for a really-attractive revenue split, the coming Chrome Web Store plans to give app developers 95 percent of revenue from application sales made through the store.

That rather stunning revenue split if one sign of Google's commitment to rapidly populating its store with Chrome apps. Most other stores give developers 70 percent of revenues.

Chrome Web Store Slated For October Launch, Google Taking A Mere 5% Cut Of Revenue

2.6 Billion Wi-Fi Consumer Devices by 2014

There will be an installed base of over 2.6 billion Wi-Fi enabled consumer devices by 2014, according to a report published by Strategy Analytics.

"Consumer demand for the 'everywhere web' will drive Wi-Fi adoption in mobile Internet devices," according to Peter King, Director of the Connected Home Device service at Strategy Analytics. "Even where 3G or 4G technologies are available, Wi-Fi will still be a preferred access route for many, as hot-spots and home networks proliferate."

2.6 Billion Wi-Fi Consumer Devices by 2014

Alcatel-Lucent book details $100 billion development 'shift'

Alcatel-Lucent has published a new book detailing its views on how telecom and service provider opportunities will develop in the future. You can order a copy here http://www.theshiftonline.com/.

The book contains predictions and advice such as the finding that users will pay 25 percent to 35 percent more for a service with three capabilities operating simultaneously, compared to a service with one capability, something network-based development can enable.

More than 50 percent of consumers are comfortable sharing sensitive profile information, such as location, presence and online behaviors, with their mobile provider.

Nearly 50 percent of commercial developers would use network-based APIs and are willing to pay twice as much for APIs bundled together versus those sold separately. Enterprise IP
developers will pay up to three times more.

A third of U.S. advertisers would use network services that enable them to deliver advertisements across social media sites based on user interests and behaviors.

Alcatel-Lucent book details $100 billion development shift

U.S. Consumer Broadband Speeds Double Every Four Years, Prices Down 23%

Despite arguments by many observers that U.S. fixed-line broadband access services are not competitive, it is a curiously "uncompetitive" market where speeds double every four years, for more than a decade, growing 20 percent a year over the last 13 or so years.

Prices are a harder thing to measure, given the changes in the basic product over time. In other words, what a consumer pays today for a broadband connection is not an "apples to apples" comparison, given the doubling of speed every four years. The "product" a consumer can buy today, for any nominal price, is a different product than was purchased four, eight or 12 years ago.

Nevertheless, the American Consumer Institute notes that, between 2004 and 20009 alone, Internet access pricing declined 23 percent.

Another academic study suggests cable modem prices grew 0.8 percent, while digital subscriber line prices grew five percent, between 2004 and 2009. At the same time, cable modem speeds increased 85 percent while DSL speeds increased 80 percent, that same study found.

On a cents-per-bit basis, cable modem prices declined 45 percent, while DSL cost dropped 42 percent. Over that same period of time, the consumer price index grew 14 percent.

Fuel prices increased 26 percent, food increased 15 percent, housing increased 13 percent, medical care prices increased 21 percent and education increased 32 percent.

It is a strange "uncompetitive" market indeed that has doubled "quality" (speeds) every four years while prices overall have declined 23 percent.

Some observers have suggested that the Google-Verizon agreement on how to handle network neutrality is a concession by Verizon that fixed-line broadband actually is "uncompetitive," or at least not as competitive as wireless broadband is. Some observers might argue that Verizon has conceded nothing of the kind.

The FCC study, one might argue, suggests that despite the apparent lack of competition in the fixed-line broadband market, the data suggest consumers are indeed reaping the benefits of competition.

Rich Media, Social Apps Spur Mobile Ad Activity

Social networking is the fastest-growing content category across mobile applications and browsers. Rich media advertising is a beneficiary.

Through its Talk2Me features, iVdopia noted a nearly 80 percent rise in campaigns that used the social rich media ad unit to direct consumers to multiple social networking sites as a call to action within the ad.

A Social Twist to Mobile Ads