How Big is the Cloud Computing Opportunity, for Telcos?

One frequently hears these days of high service provider interest in cloud computing as a potential driver of service provider revenue, and the thinking is not without merit. Likewise, one also hears that data centers and content delivery networks are logical opportunities that leverage what service providers already do. All that makes sense.

The hard part is figuring out how big the opportunity might be, what other opportunities might exist, and then making hard decisions about which initiatives to pursue. No organization can pursue an unlimited number of growth opportunities, in other words. So the issue is whether cloud computing offers enough revenue upside to be worth spending time and resources to chase the opportunity.

To be sure, if we are indeed moving to a next wave of computing architecture based fundamentally on cloud computing, then there will be much greater reliance on remote data and computing resources and bandwidth. That's the general notion.

The added “secret sauce” is that use of mobile and untethered devices will be an integral part of the architecture. And that has upside for mobile service providers as well. But is the revenue upside substantial enough for a tier-one service provider to chase, compared to all other potential growth alternatives?

Will Apple Become a Service Provider?

Will Apple become a service provider? As complicated a move as that might be, some think it is not "unthinkable."

Complicated and fast-evolving ecosystems often feature some amount of “jockeying” between contestants in formerly-distinct parts of the ecosystem. Google becoming a mobile operating system supplier and a handset manufacturer provide examples. Now Microsoft has become a branded supplier of tablets, potentially competing with its operating system licensees.

In prior years, we have seen any number of over-the-top application providers becoming suppliers of voice or text messaging services, voice mail or video apps, for example.

The nagging concern many mobile service providers logically have is whether one or more application or device suppliers might one day decide to become service providers in their own right. Historically, one might have argued that doing so would not make much sense.

Channel conflict is the issue. If you want all service providers to sell your devices, it might not make sense to compete with those distributors. But the ecosystem is a very complicated place these days.

In fact, it might be complicated enough that Apple might eventually decide to become a mobile virtual network operator, or perhaps even consider owning its own network, not so much for the voice revenues, but for the ability to optimize its network for support of mobile devices. It would not be an easy decision.

But if streaming video becomes important, Apple might want the same level of control over quality of experience as cable, satellite and telco TV providers already have.

Are Consumers Buying Full Price iPhones?

BTIG Research says its random and admittedly limited channel checks suggest there is not yet any indication that large numbers of people are anxious to buy a full-price Apple iPhone, to avoid a service contract.

Of course, it does not appear that Virgin Mobile, which has begun selling such full-price iPhones, has swung serious marketing effort at the new program.

Until a full marketing push, it will be hard to assess demand. And it might not be the case that the market demand will come largely from traditional "prepaid" customers. In fact, the demand might actually turn out to be customers that in the past would have opted for a traditional postpaid plan, have the money to pay full retail, but simply want the lower month recurring charges.

So far, it is too early to conclude much of anything about the actual level of demand.

Anyfi Networks Helps Fixed Networks Support Wi-Fi Access

Anyfi Networks thinks it can help fixed network service providers add a "mobility" or "untethered" capability outside the subsciber's home, using software.

"By remotely upgrading your home gateways with our patent pending software you can transform your existing infrastructure into a mobile broadband network, license exempt and Wi-Fi compatible, literally overnight," Anyfi says.

"Anyfi.net Simple"  lets a fixed-line broadband operator extend the home Wi-Fi user experience outside the home, the company says. "Since devices always authenticate against the home gateway the connection is automatic and completely secure," Anyfi Networks says.

"The trick is combining Wi-Fi with IP, Internet Protocol, to break the tie between logical network and physical infrastructure, much in the same way as Voice over IP separates your phone service from the physical line. You can think of it as Wi-Fi over IP," the company says.

Anyfi claims that a fixed-line operator having a high density of broadband subscribers in certain urban areas could actually become mobile operators overnight, just by upgrading the modem software remotely, transforming the infrastructure into a radio access network.

Anyfi says that the ability to offload mobile traffic to any Wi-Fi access point depends on a business relationship between the "home" ISP and the operator of the remote Wi-Fi hotspot. In other words, Anyfi does not enable access to Wi-Fi hotspots whose owners do not agree to cooperate.

Deutsche Telekom, Sprint to Back Firefox Phones

Deutsche Telekom and Sprint will support a new Firefox smart phone platform to turn up the heat on Google and Apple in the mobile software market, starting in 2013. Smart, Telecom Italia, Telenor and Etisalat also are backing the Firefox platform.

Mozilla Foundation, creator of Firefox Internet browser, said phone makers ZTE and TCL Communication Technology will roll out the first Firefox phones using Qualcomm's Snapdragon processors in early 2013.

Whether the support will manage to create a serious alternative remains a question. You might argue that telcos generally have had little to no success creating viable alternatives to either Apple's iOS or Android, so far.

A combination of forces are at work, including consumer preferences, not just operator support, and so far, customers simply have preferred both Apple and Android devices. You might also argue that consumers do not actually buy "operating systems," but rather the full bundle of values any device represents.

Still, some might argue the Firefox devices will be less costly for consumers, so some demand could exist in the "lower cost device" end of the market.

NFC Has to Solve Problems People Didn't Know They Had

Mobile payments solves a problem nobody, or few people, really have, one sometimes hears. It might be reasonable, even for its supporters, to argue that adoption will take some time, given the complexity of the required ecosystem.

In fact, the question of "what problem is getting solved?"  has many potential answers. With specific regard to near field communications, one might suggest that it is not yet clear which specific problem NFC "solves."

Many might argue that, in developed regions, the payment process in fact is not "broken," making NFC-based mobile payments less a needed substitute and more a feature or capability that adds value in some other way.

It is possible that the ultimate answer will be that NFC solves a problem people don't know they have, as Apple has created products that people did not "know" they needed.

Square Processes $11 Million Worth of Transactions a Day

Square processes at a rate of $5 million a day (up from $3 million in 2011, and $4 million in March 2012), Sybase says. Others say Square processes $11 million a each day.

Assuming Square gets a 2.75% cut of all of the $11 million in payments processed per day, that’s around $300,000 in gross revenue per day, or a $110 million annual revenue run rate.