North American FTTH: Good and Bad News

The number of North American households connected directly into optical fiber networks grew by 13 percent over the past year, indicating that telecommunications companies of all sizes are continuing to upgrade to next-generation fiber to the home technologies, according to the Fiber to the Home Council. 


The Council 900,000 households across the United States, Canada, Mexico and the Caribbean were upgraded to FTTH service since April 2011, as the total number of North American homes subscribing to all-fiber connections topped eight million. FTTH is now being offered to 19.3 million homes on the continent, the Council says. 


In the United States and Canada there are about 161 million fixed network access lines, so FTTH represents less than 12 percent of potential lines in service, and less than five percent of subscribers. 

Legacy Revenue Still Drives Business Results in Global Industry

The most-obvious take away from the latest data on global telecommunications published by the Telecommunications Industry Association is the dominance and importance of wireless services. Globally, about 63 percent of all revenue, from all sources, is driven by wireless.


About 25 percent of total revenue is produced by fixed line voice services. Fixed network broadband produces about 10 percent of total revenue. IPTV is about one percent of total revenue.


What might strike you about the latest report is the non-existent discussion of the impact of over the top VoIP services. One reason might be that over the top VoIP actually doesn’t generate much revenue, one way or the other, for an incumbent service provider or an over-the-top app provider.


In 2010, operators made on average only $13.21 per user per year from mobile VoIP services. In other words, VoIP turns out not to be such a great product for incumbent service providers. That isn't true for all fixed network providers, though. 


U.S. cable operators have found that voice services using VoIP technology have been a major revenue contributor, in fact the fastest-growing new revenue source, in recent years. Growth in consumer voice has leveled off, though, so attention now will switch to business voice customers. 

Legacy revenue still drives the business, one might easily conclude. 

Telecom Conventional Wisdom Often is Wrong

 In the global telecom business, conventional wisdom” sometimes is quite wrong. SIP trunking, hosted IP telephony and VoIP provide examples. The conventional wisdom is that SIP trunking saves end users money, that hosted IP telephony is a bigger business than Centrex was, or that VoIP is a business tier-one telcos “need” to aggressively pursue. But all three might be “wrong.”


The point is that business strategy and activities have to be based on correct assumptions, and that many common assumptions are incorrect. Consider the conventional wisdom that SIP trunks save businesses money when used to support IP telephony traffic. But there now are arguments that this might not always be true.


Depending on whose research you look at, the penetration rate of SIP trunking in the US is somewhere between five percent and 30 percent of all trunk lines. Zeus Kerravala estimates penetration is right around five percent in the United States, with Europe being about half of that and adoption being almost non existent in Asia at the moment.


The reason, some would argue, is that SIP trunking does not always save enterprises money, especially if the traffic mix changes to video telephony, or when enterprises own lots of distributed phone systems that are not fully depreciated. 

Smart Phone Penetration 56% in 2013?

If current trends continue to hold,  the number of U.S. consumers with a smart phone will more than double from 93.1 million at the end of 2011 to 192.4 million by 2016, when 58.5 percent of the total U.S. population will have a smart phone, eMarketer projects. 


One obvious caveat is that current adoption trends are driven by heavily-subsidized smart phones. Logic suggests an end to such subsidies would drastically reduce the smart phone adoption rate.


A more likely development is reduced subsidies for high-end phones, with a shift of end user demand to the more-subsidized smart phones, which undoubtedly would  not be the high-end devices. 

New iPad Drives 10% of all iPad Traffic

After about three weeks, the new Apple iPad apparently was driving 10 percent of all iPad traffic, Chitika reports. 


That might imply one of two things, either that after less than three weeks the new iPad has gotten about 10 percent share of the iPad market, or that users of the new iPad are using bandwidth at a higher rate than owners of the older models. 


Most people would instinctively guess it is the latter, not the former, which accounts for the bandwidth intensity. 

The Lumia 900 Becomes Amazon’s Best Selling Phone

Even though the Nokia Lumia 900 just launched a day ago, the phone quickly skyrocketed to the top of  Amazon’s best sellers list.  The Lumia 900 appears at the moment to be the best-selling device sold by Amazon. 


Part of the instant popularity likely comes from Amazon’s price of $50 with a two-year service plan. That’s $50 less than AT&T’s price and $150 less than the previously most popular phone from Amazon, the Droid RAZR MAXX.

AT&T to Spend More Heavily on Lumia than iPhone Launch

AT&T appears to be gambling that it can achieve market advantage by offering the Nokia Lumia 900 for the period in which AT&T has an exclusive.


AT&T reportedly is going to spend as $150 million to help launch Nokia's Windows Phone Lumia 900, more than it spent to launch the iPhone. Is it a gamble? Some would say so. Microsoft's operating system does not register much more than three percent market share in the U.S. market,  though many expect the tie-up with Nokia might make a difference.


But the Lumia might have key market share and operating cost implications. It might require less spending on AT&T's part in the form of device subsidies. Also, Nokia and Microsoft have limited enough market share that the possibility of upside arguably is far greater than the downside. 


We will see. Consumers will be weighing a lower retail price for the device with the different user interface, as compared either with the Apple iPhone or Android devices. 


Device exclusivity, for a time, remains a key carrier objective. But it remains to be seen whether any future devices, other than the original iPhone, will ever have the length of time where exclusivity holds. Nor is it clear any devices since the iPhone have had similar perceived value.