EC Makes Major Regulatory Shift

In a significant “u turn,” telecom commissioner Neelie Kroes seemingly has backed off a plan to increase the discounts offered to third parties who buy wholesale access from incumbent European Union service providers.

That is at least mildly surprising for a few reasons. At least historically, European Commission countries have favored robust wholesale leasing policies, at least in part because, unlike the situation in North America, where two facilities-based broadband access networks exist in most markets, it was expected that only the incumbent network would be widely available.

In order to reach the EU's Digital Agenda goal of at least half of EU residents able to access broadband at 100Mbps or more by 2020, the EC has been looking at how the regulatory environment can support and stimulate investment in next-generation networks.

Global Telecom Industry Has Made a Historic Leap in Serving People in Developing Regions

A high-level study sponsored by Alcatel-Lucent and conducted by the ENPC (Ecole des Ponts ParisTech) illustrates an important and historic change in global communications, especially the decades-long effort to figure out how to provide communications to billions of human beings who had not previously “made a phone call,” much less “used the Internet.”

In recent years, the concern has shifted dramatically to mobile service for the “next billion” people, or Internet for the next billion people, where in the 1960s and 1970s the issue was providing “phone service” to the “next billion” users in developing countries.

What has gone somewhat unnoticed is the truly stunning progress, globally, in getting communications services to users in developing regions, where once policy makers struggled to anticipate how that could be done with legacy technology, namely fixed networks.

Without too much fanfare, the answers have emerged organically from use of mobile and Internet technologies.

After 20 Years, Is it Time to Revisit Cable TV Regulation?

The Cable_Communications_Act_of_1984 was a milestone for the U.S. cable industry, ushering in a more-deregulated environment about the time that satellite delivery was about to transform the business from a "signal importation" business to an "add voice" business.

The subsequent Cable Act of 1992, on the other hand, represented a re-regulation of the industry in many respects, including pricing for the "basic" tier of service. Not surprisingly, the industry mainstay became the "expanded basic" tier.

But it has been two decades since that last major change in regulation of cable TV, and the industry has vastly changed since 1992. So the fact that the Senate Commerce Committee is holding new hearings on the 1992 Cable Act suggests a possible change could be coming.

"Re-transmission consent" will be one of the key issues on the table, according to Multichannel News. In part, that might be something of a response to the wider question of programming costs overall, as well as business relationships between distributors and content owners.

"We can't look to the future of video without evaluating the Cable Act's impact on the modern television marketplace and whether the legislation has achieved Congress' goals," said Chairman Jay Rockefeller (D-W.Va.)

In many ways, the Cable Act of 1992 represented the most-recent oscillation in cable TV policy, which has swung between periods of greater regulation and periods of less regulation. Based only on history, one might suggest that since the 1992 policy swing was back towards "more regulation," the next swing could be expected to be in the direction of "less regulation."

That would likely be unwelcome for TV broadcasters, among others. But it is not unusual for hearings to be held, with little substantive policy or statute changes. On the other hand, it has been long enough since that last adjustment that some change should be expected, eventually.

The difference between a cable company and a telco long ago ceased to be significant in any way except the ways those industries are regulated, for example. And network-delivered entertainment video is a business that arguably faces growing threats from outside and greater tensions inside the ecosystem.

Normally that means attackers and defenders alike will increase their agitation for "changes" in regulatory schemes.

"Interactive TV" is Here, But Uses a Mobile

Video entertainment executives in the 1980s were touting the power of "interactive TV" as a new dimension of the TV experience. Not too much came of the effort. But as it turns out, "interactive TV" now has become mainstream, but using smart phones, and to some growing extent tablets, rather than the TV remote, a cable box or other appliance.

Half of all adult cell phone owners now incorporate their mobile devices into their television watching experiences, according to the Pew Research Center's Internet & American Life Project.



Such “connected viewers” used their cell phones for a wide range of activities during the 30 days preceding our April 2012 survey:

Some 38 percent of cell owners used their phone to keep themselves occupied during commercials or breaks in something they were watching. Another  23 percent used their phone to exchange text messages with someone else who was watching the same program in a different location.

About 22 percent used their phone to check whether something they heard on television was true, while  20 percent used their phone to visit a website that was mentioned on television.

Also, 11 percent used their phone to see what other people were saying online about a program they were watching and 11 percent posted their own comments online about a program they were watching using their mobile phone.

Taken together, 52 percent of all cell owners are “connected viewers," meaning they use their phones while watching television for at least one of these reasons.

So the "interactive TV" revolution finally has arrived. It's just that it turns out the mobile phone and tablet are the vehicles people are choosing to provide their own interactivity.

77% of Consumers Want a Smart Phone With 4.5-Inch or Larger Screens?

Consumers are demanding larger smartphone screen sizes. A recent survey suggests 77 percent of surveyed consumers prefer a device with a 4.5-inch or larger display, T-Mobile USA says.

That is one reason why T-Mobile USA is launching the Galaxy Note, which many refer to as a "tablet/smart phone."

With popular tablets now being sold in a seven-inch screen size, the 5.3-inch Galaxy Note screen puts the device somewhere in between a seven-inch tablet and a more-typical 3.5-inch smart phone screen.

Small Business Execs Will Stay Connected Using Mobile, IF They Vacation in 2012

According to the latest Manta survey of over 1200 small business owners, nearly half of those polled say they won’t have time to take a vacation this summer and almost 60 percent say they’re working more this year than they did last year. 

Some 70 percent of small businesses surveyed also are not planning to hire any new employees during the summer months (a significant drop since the 2011 poll that showed 57 percent of small business owners were planning to hire).

But those owners and executives that are planning to get away say they will still be working, thanks to their mobile devises.

Some 70 percent of small business owners will be checking their email/work documents remotely while on vacation, with 60 percent saying they are able to enjoy their vacation more because of being able to monitor their businesses via their mobile device.

Sprint Makes MVNO Business Easier

Sprint's new Sprint Single Source Enablement effort is intended to simplify the process of becoming a mobile virtual network operator, allowing "anyone from entrepreneurs to enterprises deliver their own branded wireless service with as much or as little investment as they prefer," Sprint says.

Single Source Enablement can cover all systems, processes, customer care, online Web enablement, and the warehousing and distribution of devices so an MVNO can focus almost solely on acquiring customers.

The model can be customized to meet each MVNO’s unique business needs. Specialized customer loyalty programs and other value-added products can be supported under this model, as well.

The Sprint move illustrates a key trend within the global mobile communications business, namely the growing range of business and revenue models, with some operators emphasizing traditional retail revenues, while others move to more wholesale-centric models. Sprint is doing a bit of both, though Sprint continues to make most of its money from retail operations.

One clear conclusion to be drawn from the last decade of change in the telecommunications business is that service provider strategies, which once were quite homogenous, have become more dissimilar. Some contestants have expanded outside their “home” regions, while others have not.

Some have expanded into wireless, while others have not. Many operate their own video services, while others rely on third party partners. Some want to operate their own application stores, others would not attempt to do so.

Some service providers focus exclusively on business customers, others are more consumer focused. And those differences likely will grow, in the future.

Telecommunications service providers need to adapt their business models to a wider ecosystem and make firm decisions about which revenue sources they are going to target within that broader environment, consultants at Ernst & Young have argued.

Among the changes Ernst & Young expects to see, by about 2020, is a broader divergence in business strategies, based on reliance on “wholesale” or “retail” operations.

Today, a typical “telco” service provider has a split of revenues roughly coming half from the consumer segment, with the rest divided between business and wholesale operations.

This split could evolve by 2020 into a “smart” operator with revenues dominated by products sold to retail customers or a “lean” model rebalanced toward wholesale service provision. That will, and should, worry most executives.

The “lean” or “wholesale” model assumes a service provider becomes more a “pipe or access” provider, and less a direct retail provider of services. But it also assumes that more of the retail competition will occur between providers who source their network services from a “neutral” third party.

Current regulatory models in Singapore, Malaysia, Australia and New Zealand are examples of that approach, where all fixed network contestants will buy network services from a neutral third party.

The more speculative approach, for the moment, is an increase in network services sales to application and service providers who use network access and other services to create their own products.

Though many application providers will resist the notion, video entertainment services might well want, at some point, to source network services in ways that improve end user quality of experience, for example.

“In general, telecoms revenue mix forecasts point to an increasing shift toward wholesale,” Ernst & Young argues.  

That “wholesale” emphasis will not so much resemble traditional wholesale (carriers buying and selling access or capacity to each other) so much as enterprise sales, where capacity is sold to businesses who create products using that bandwidth.

Some examples might be sales of cloud computing services to application providers, or bandwidth products used directly by application and service providers to create streaming or other real-time services, for example. Machine-to-machine communications services provide another example.

Some service providers also will find that opportunities are greater in the business customer segment than in the consumer segment.