Should Mobile Service Providers Embrace Over the Top Voice?

Telecom service providers face big challenges when deciding what to do about over the top applications. In some cases, especially in highly-competitive markets where over the top apps have gained significant share, it will make sense to compete with carrier-owned over the top apps. 


In other cases, OTT will make sense, but as a way of getting customers in out-of-region markets. In other words, a mobile service provider might launch a branded app, but mostly to gain revenue from OTT users who are not already "customers." In that scenario, OTT apps are less a response to in-region competition, and more a growth strategy for out of region.


In other cases, "not competing" might be seen as a safer approach. 


AT&T CEO Randall Stephenson, for example, thinks data-only pricing plans for mobile handsets are "inevitable."  As with "naked DSL (digital subscriber line) plans, AT&T would sell mobile broadband without voice service and then let users choose their own VoIP and messaging providers. 


"I don't think we'll see a big flash cut, but you'll see that propagate into the marketplace," Stephenson said, citing a 24-month time frame for doing so.


AT&T might guess, probably correctly, that such plans will appeal to a segment of the customer base. Keeping a "data only" customer is better than losing the whole account. 


So the "right" response to over the top competition can vary. In some markets, branded OTT apps might be the right tactic, especially when there is perceived upside from out of region sales. In other cases a "go slow" approach might be preferable. 

Amazon Bets Right on Kindle Pricing

Some observers understandably have worried that Amazon faces financial risk by pricing Kindle Fire devices at cost, or slightly below cost. The contrast is provided by Apple, which makes healthy margins (30 percent or so) on its devices.


But Amazon has a different business model. It wants to populate the market with Kindles that drive content sales. Apple creates content capability only to sell devices. 


The early evidence suggests that Amazon made a good bet. Device sales are driving higher content purchases. 

Verizon Buys Hughes Telematics, a "Real" M2M Business

Verizon Communications is acquing Hughes Telematics, a supplier of automotive location-based services including sensor and telemetry services, vehicle diagnostics, GPS tracking and emissions monitoring system for wireless fleet vehicle management.


A majority owned subsidiary of HTI, Lifecomm, also plans to offer mobile personal emergency response services through a wearable lightweight device with one-touch access to emergency assistance.


The transaction will expand Verizon's capabilities in the automotive and fleet telematics marketplace and accelerate growth in key vertical segments, including emerging machine-to-machine (M2M) services.


This is important for Verizon since machine-to-machine services are expected to be a key growth driver for mobile service providers. Also, M2M services such as these are the "real" M2M revenue sources, though many consider services for  "connected devices" such as tablets to be part of the "M2M" business.


That definition is used by the GSM Association, for example. Some of us consider connected devices and M2M to be separate markets. 

Video Gets Watched on PCs at Work, on Tablets at Home

Tablet video viewing rises on weekday mornings as people prepare for the day and commute to work, then falls off during work hours as PC viewing picks up. 


On weekday evenings, tablet video surges as people watch streaming video to end their day. 


A third of tablet video plays occur between 7pm and 11pm, while only about 17 percent of PC plays take place over that same window. Ooyala says. 


It is only an incipient trend, but a trend, nevertheless: tablets are becoming a prime time vehicle for watching video. 

AT&T Mulls Upgrading Rural Lines Without New Fiber

AT&T has about 15 million lines in rural areas that company management might have preferred to sell, but the company apparently cannot find buyers. So AT&T now is considering a plan to upgrade those lines, Bloomberg reports. 


In a possibly-significant move, AT&T apparently is looking at ways to upgrade the all-copper lines without installing new optical fiber in the transport portions of the access network, using IP Digital Subscriber Line Access Multiplexers. 


Two decades ago, before mobility became the growth engine for the global telecom industry, it might have seemed inevitable that fiber "to where you can make money" was the future. These days, the problem is that the "fiber to where you can make money" equation has changed for the worse. 


If AT&T can figure out how to upgrade all-copper lines using only new DSLAMs, that would be a major innovation, as the business case for U-verse or fiber to the home in its rural areas is beyond challenging. 

“Extreme” Shoppers Use Mobiles Throughout Purchase Process

Among consumers with a smartphone or tablet, 50 percent used a mobile device to compare prices while shopping, 44 percent looked for a coupon, 33 percent  "liked” a retailer on Facebook, and 17 percent bought a product using an app, a new study by GfK shows.

In addition, nearly one-fourth of mobile-enabled shoppers have used brick-and-mortar stores for "showrooming,” checking out a product in person, and then purchasing it online.

Younger adults – ages 18 to 34 – are the primary drivers of these mobile shopping behaviors; these consumers are more than three times as likely to report using a smartphone or tablet for shopping (34 percent compared to 10 percent), compared to those ages 50 to 64.    

Mobile Bandwidth is Different from Untethered Bandwidth

Traffic from wireless devices will exceed traffic from wired devices by 2016, Cisco forecasts. It is a shocking prediction, but has to be put into context.

In 2016, wired devices will account for 39 percent of IP traffic, while Wi-Fi and mobile devices will account for 61 percent of IP traffic. In 2011, wired devices accounted for the majority of IP traffic at 55 percent, Cisco says.

But you have to put those figures into context. Cisco clearly is pointing out the growing role played by untethered (no wired connection) and mobile (a mobile network connection) appliances as generators of bandwidth demand. 

Globally, mobile data traffic will increase 18-fold between 2011 and 2016, Cisco says. Mobile data traffic will grow at a compound annual growth rate (CAGR) of 78 percent between 2011 and 2016, reaching 10.8 exabytes per month by 2016.

Also, global mobile data traffic will grow three times faster than fixed IP traffic from 2011 to 2016. 

Global mobile data traffic was two percent of total IP traffic in 2011, and will be 10 percent of total IP traffic in 2016.

One of the key observations is the difference between tethered Wi-Fi and mobile access. If 61 percent of all traffic is created by untethered and mobile devices, while 10 percent of demand is driven by mobile devices, then it is fairly obvious that Wi-Fi-based use of the fixed networks could represent half of all bandwidth demand, down about five percent since 

In other words,untethered devices--including mobile devices in Wi-Fi mode--become the key drivers of overall Internet demand.

What remains a bit less clear is how device roles will change as video consumption on untethered and mobile devices begins to underpin total consumption. 

At the end of 2011, 78 percent of IP traffic and 94 percent of consumer Internet traffic originated from PCs.

By 2016, 31 percent of IP traffic and 19 percent of consumer Internet traffic will originate from non-PC devices).

One suspects the portion of traffic created by untethered devices of all sorts will be higher than that in many developed regions. 

As in the case of mobile networks, video devices can have a multiplier effect on traffic

An Internet-enabled high-definition television that draws 30 minutes of content per day from the Internet would generate as much Internet traffic as an entire household today.