In Europe, Fixed Network Voice-over-Broadband Grows 400%

In the fourth quarter of 2011, voice over broadband apps accounted for 52 percent of all fixed access traffic, compared to 47 percent in the fourth quarter of 2010, Analysys Mason says.


The growth has been triggered, in large part, by tariff reductions for mobile calls, according to  Analysys Mason. The consequence is that the volume of fixed network calls made to mobile devices has skyrocketed. 

So at least in Europe, voice usage on the fixed networks are, in many cases, lead by broadband voice, not use of the public switched telephone network. That appears not to be the case in other regions, though. 

U.S. Launches Antitrust Probe of Cable and Online Video Practices

It is perhaps not a surprise that the Department of Justice is "investigating" whether there are antitrust implications to cable TV operator retail packaging policies, as they might pertain to restraint of trade. Those questions are bound to emerge.

Lots of people might ask whether a cable operator can create an extension of a video subscription service that includes some of the content a customer already has paid for, and make it available on other screens, then exempt the Internet usage from the consumer's bandwidth cap. Some might say it is obvious a retailer can do so. Others would say it stifles rival streaming services.

Some might ask whether it should be lawful for a service provider to require a "sell through" purchase at all, where cable TV service has to be purchased before some or all of that content can be purchased for Internet delivery. Again, some would say this is done for all manner of products, all the time, and that it is not, in and of itself, restraint of trade.

But I find this one passage, in a Wall Street Journal story about the antitrust probe, one of the most-ironic passages I've ever read in the Wall Street Journal: "Having invested billions of dollars building their networks, some pay-TV companies have shown little inclination to get out of the business of packaging television channels and become mere conduits for other companies' data. Some major entertainment companies also have an interest in preserving the current model of television viewing because they want cable companies to take bundles of their channels, rather than just cherry-picking the most popular ones."

What I find so ironic about the story is the blinding "duh" element. Of course cable operators, having invested billions and decades building their businesses, do not want to voluntarily relinquish that business to become low-value "dumb pipes."

Of course content owners do not want to change a lucrative distribution model that creates advertising value and helps them launch new channels.

Let me be clear: as a consumer I would prefer to have a choice, either to keep buying video subscription services they way they are, or to buy only some channels, or to buy only some programs and have them delivered over the Internet.

But that doesn't mean I expect those entities to voluntarily, and without compensation, agree to have those businesses destroyed. The Wall Street Journal passage reads like something written by people who have no idea about how business operates, or worse, written by people who actually think it is unusual for a business or industry to want to hang onto a successful revenue model.

Market Capitalization Isn't Everything, But Neither is it Meaningless

Market capitalization of a public company is not the only way to measure influence in a market, or even current revenue (Instagram comes to mind). But such comparisons sometimes are instructive when trying to understand where a market could be headed.

As a means to illustrate what Amazon has done to the retail market, consider that Amazon, generally considered the world’s largest e-commerce company, has a market cap of $100 billion.

That is more than the market cap of Macy’s, J. C. Penny, Nordstrom, Gap, Abercrombie & Fitch, Costco, Dillard’s, Barnes & Noble and Sears, altogether.

Amazon's market capitalization does tell you how dominant it is in the online e-commerce business, though.

Sprint "Touch" Might Feature McDonald's, Barnes and Noble, Macy's, Target, Best Buy

McDonald's, Barnes and Noble, Macy's, Target and Best Buy are said to be among retailers who will work with Sprint's rumored new mobile wallet, "Touch."

Things Change Fast in the Mobile Payments Space

This graphic shows Sprint as a partner with Google Wallet, and there are growing rumors that Sprint is launching its own "Touch Wallet." Best Buy, Macy's, Target and Barnes and Noble are rumored to be retailers who will support the Touch Wallet. Mobile payments remains a complicated ecosystem, indeed.

Fiber to the Home Still is About Difficult Investment Conditions

The European Union wants its leading fixed network service providers to connect 50 percent of region households to high-speed broadband by 2020, using fiber to the home technology.

By "high speed," the EU means internet speeds of 30 Mbps or above for European citizens, with half European households subscribing to connections of 100Mbps or higher.

As always, the issue is how to get from here to there. Europe also features high reliance on wholesale access to existing copper access infrastructure, at prices competitors naturally want to keep low, and if possible, decrease.

Service providers who will be borrowing the money to invest obviously think that is detrimental to the business case for new fiber.

France Telecom expects a payback payback time of 30 years to 40 years, far exceeding the three-year to five-year payback expected of application investments.
A business plan with a payback of five years or less has to assume retail penetration of at least 30 percent, and ih many cases also with triple-play service offerings. Any payback analysis is of course highly dependent on the assumptions, ranging from capital cost per location passed, as well as service revenue per location, among other things

That indicates the risk France Telecom and other providers are facing. Those time frames are so long they typically only can be considered by very capital intensive utility firms that operate in monopoly style markets, as fixed network providers used to assume was the case.

These days, the fixed network business faces competition from other facilities-based suppliers, mobile and satellite networks.

"Share Everything" Plan Should You Buy?

As always is the case when mobile retail service plans are revamped in major ways, each account owner, and customers of other service providers, will have to do a bit of work to figure out whether the new plans are better than the existing plans any user is buying.

As always, the answer is that whether the new plans are better, roughly the same, or worse, for any given customer depends on how users on any account want to use mobile services.

For some Verizon customers who don’t use all their voice minutes and text allowance, the new plans, featuring unlimited domestic calling and texting, might not actually offer any new value, except theoretically. Such users might even pay slightly more.

Heavy voice or texting users might like the plans, and might save a bit of money.

Heavy data users might pay measurably more, but also can buy plans that match their usage.

If shared data plans have similar market impact to family voice and texting plans, the decision context will change. The big decisions will not be "choosing a new plan" for the same services and devices, but "adding new devices to the account" and "upgrading feature phones to smart phones." Those decisions, it is true, will increase recurring bills, but mainly because adding incremental new devices costs less than it would have in the past.

In all likelihood, that was part of Verizon Wireless thinking all along. To the extent possible, the new plans would aim to be revenue neutral for customers who do not plan to change the number of devices on any single account, or upgrade devices from feature phones to smart phones.

For accounts where the incremental costs now are more attractive, the decisions will more likely hinge on whether it now makes sense to spend a little more, to get more.