U.K. Service Provider Revenue Shows Need for New Lines of Business

Industry trends in the United Kingdom illustrate just how important new revenue sources already have become, in a business some of us expect will lose fully half its current revenue over about a decade’s time.You might argue that U.K. service provider revenue has been largely flat since about 2006, for example.

Total U.K. telecom service revenue declined for the third successive year in 2011, falling by £0.8 billion (1.9 percent) to £39.7 billion, Ofcom, the U.K. communications regulator, reports.

In large part, that might be because household spend on communication services fell from £110.50 in 2006 to £97.62 in 2011, representing a monthly decline of £12.88, or £154.56 per year. Average monthly household spend on telecoms services fell to £65.04 in 2011, a £3.02 a month (4.4 percent) fall in real terms.

Retail revenues increased by £0.1 billion to £31.0 billion during the year, despite a £0.2 billion increase in fixed internet revenues. Neither of those changes is particularly large in magnitude, but the key figure is the increase in fixed network Internet revenues, since broadband access has been the most-recent “new service” added to fixed network menus.

A similar rise in corporate data service revenues and a £0.1 billion increase in retail revenues from mobile voice and data services were offset by a £0.5 billion fall in fixed network calling and access revenues.

Much of the shortfall came from the wholesale segment, as revenues fell by £0.9 billion (8.9 percent) in 2011. That illustrates the near-term impact regulatory changes can have. The European Commission, for example, recently has mandated reductions in wholesale roaming charges for mobile services. 

Gmail by Text Message in Ghana, Nigeria, Kenya

Google has launched Gmail SMS in Ghana, Nigeria and Kenya. Users in those countries now can send and receive emails as SMS messages using a mobile phone, regardless of whether or not your phone has an Internet connection of any kind.

Gmail SMS works on any phone, even the most basic ones which only support voice and SMS.

AT&T to Offer Family Mobile Data Plans in August 2012

AT&T is introducing family mobile data plans, as expected, starting in late August 2012. As Verizon Wireless already has done, AT&T is executing a bit of a historic shift in retail packaging.

Where once it was voice and texting services that were offered on a usage basis, now under both Verizon Wireless and AT&T plans, both domestic texting and voice services are unlimited and usage insensitive.

Instead, it is mobile broadband that becomes the primary usage-sensitive service, using the same “bucket of use” concept long used for voice and text messaging services.

That shift reflects the historic shift of revenue opportunities within the mobile and fixed network businesses. For starters, there now are growing numbers of over the top voice and messaging options that do not require purchase of a “voice” or “texting” plan from a service provider. That means voice and messaging revenue is going to decline, over time.

Also, as consumers shift their communications patterns from voice to text and other Internet mechanisms, actual consumption of voice is declining. Overall time spent using voice communications, for example,  fell by five percent in 2011, Ofcom, the U.K. communications regulator, reports. “This reflects a 10 percent fall in the volume of calls from landlines, and for the first time ever, a fall in the volume of mobile calls (by just over one percent, in 2011.”

In other words, for the first time ever, fewer phone calls are being made on both fixed and mobile phones, Ofcom reports.

At the same time, where usage of voice is flat to declining, usage of bandwidth is climbing as much as 50 percent a year.

Under such circumstances, capital investment increasingly is dictated by broadband products, not voice or messaging, so revenue recognition also must shift to match the drivers of capital investment, as well.

As was the case for family plans for voice and data, the new plans will, over time, lead to accounts adding more revenue-generating devices. For the new Verizon and AT&T plans, that will mean more data devices to be added to plans, especially tablets. But the new plans also will encourage users to convert to smart phones as well.

The actual revenue impact will be hard to discern, at first, as the plans are constructed in ways that make them revenue neutral, for the most part. Only over time, as more mobile broadband cards and tablets get connected will the changes in data revenues be clearly seen.

Twice as Many Mobile Broadband as Fixed Broadband Accounts in Service Globally

Fixed wired broadband subscriptions reached 314 million in the Organization for Economic Cooperation and Development countries at the end of 2011.


Wireless broadband subscriptions reached 667 million, up from 590 million in June 2011. 

The overall share of DSL subscriptions continues to decrease (55.8 percent), to the benefit of cable (30 percent) and fiber-to-the-home subscriptions that now represent 13.7 percent of the total number of fixed broadband subscriptions, OECD says.

Precisely what all that means is not as obvious as it might seem. Some have questioned the methodology, and have for some time. The ranking "per capita" obviously is affected by typical numbers of people living in a household, for example.

 

PayPal Acquires card.io

PayPal has acquired card.io, a San Francisco-based company that provides technology for developers to capture credit card information by using the camera on a smart phone.

Card.io’s client include Uber, LevelUp, TaskRabbit, Lemon and 1-800-Contacts. Developers pay $0.15 for every card they scan.

Using the camera is an easy way to free users from the need to type in strings of digits when they want to enter card information.

Netflix is Cannibalizing Video on Demand

According to researchers at Parks Research, Netflix is gaining momentum, especially in terms of the value-price relationship. While Netflix doesn't lead in terms of picture and sound quality, it clearly is viewed as providing better value for money.

TiVo, PayPal, TRA Tighten Link Between Ad Message and Purchase

The traditional quip about advertising is that "half of it is wasted; I just don't know which half." But the entire movement of advertising these days is towards targeting, tracking and measurement of return on that investment.

Now TiVo, PayPal and TRA will be working together to provide not only a tighter link between message and action, but also a better way to measure those results. TiVo is working with PayPal so users can easily click to buy products they see in TV ads.

Users who like an advertised product can do so with a few clicks of their remote after they set up their accounts. Such ads are not ones that typically run during broadcasts but instead pop up during various interactions such as when shows are paused.

Separately, TiVo has purchased TRA, which supplies a platform that directly links information from the same households as to what viewers watch and what they buy. The idea is for PayPal to use TRA to matche television exposures from 1.5 million TV homes with specific purchase transactions, which then are anonymized.

The result, again, should be better data on advertising effectiveness.