Optus HFC Sold to NBN: Sometimes "Less" Competition is "More"

SingTel Optus has been providing services in Australia for quite some time. But with the launch of the Australian National Broadband Network, which will supply wholesale access services to all retailers who want to compete, SingTel Optus has decided it would not be able to compete, long term.

So it is selling its business to the NBN, with 400,000 HFC network customers, and also will decommission parts of the network, following the Australian Competition and Consumer Commission’s final approval of the AU$800 million HFC asset deal.

That puts a major cable operator out of business, which might be deemed "bad" for competition. But SingTel Optus, which seemed already to have put a halt to further expansion, likely would have begun to lose customers at some point to NBN-using competitors.

That would have raised operating costs per customer, as more and more assets would have been stranded. Ironically, the loss of SingTel Optus, a facilities-based competitor, arguably will not deter competition, as the former SingTel Optus customers presumably will be sold to one of the retail providers, eventually.

Still, it is somewhat odd to see a facilities-based cable competitor essentially put out of business by a monopoly access provider.

Viacom, DirecTV: Time Warner Cable, Hearst Agree to Terms

After a nine-day blackout, Viacom Inc. and DirecTV Group Inc.  reached a long-term deal to restore Nickelodeon, Comedy Central, MTV and other Viacom channels to DirecTV's system. Separately, Time Warner Cable and Hearst Corp. settled their contract dispute, returning Hearst broadcast channels to Time Warner Cable systems.


Terms of the agreements, as usual, were not released. But a reasonable person would say that Viacom got less than it wanted, while DirecTV paid more than it might have preferred.

FCC Sees "Striking" Broadband Access Improvements

The Federal Communications Commission reports “striking across-the-board-improvements” in U.S. broadband access services in its July 2012 “Measuring Broadband America Report.”

The study focuses on three primary improvements in residential broadband service over the last year, beginning with accurate delivery of advertised performance. Five ISPs now routinely deliver nearly one hundred percent or greater of the speed advertised to the consumer even during time periods when bandwidth demand is at its peak, the report says.

In the August 2011 Report, only two ISPs met this level of performance. In 2011, the average ISP delivered 87 percent of advertised download speed during peak usage periods; in 2012, that jumped to 96 percent, the report says. .

Performance also is more uniform, across providers. The 2011 study showed wide variances between top performers and bottom performers in meeting advertised speeds.

On average, customers subscribed to faster speed tiers in 2012 than in 2011. This is a result of both upgrades by ISPs to their network as well as some migration of consumers to higher speed services.

During the testing period for the August 2011 Report, the average speed tier was 11.1 Megabits per second. In the latest report, speed increased to 14.3 Mbps, an almost 30 percent increase in just one year.

The actual increase in experienced speed by consumers was even greater than the increase in advertised speed. End user experienced speeds rose from 10.6 Mbps to 14.6 Mbps, an  improvement of about 38 percent over the one year period.

The report expresses optimism that the U.S. market is moving toward the goal of equipping at least 100 million homes with actual download speeds of at least 50 Mbps by 2015, and 100 Mbps by 2020.

The August 2011 Report showed that the ISPs included in the Report were, on average, delivering 87 percent of advertised speeds during the peak consumer usage hours of weekdays from 7:00 pm to 11:00 pm local time.

The July 2012 Report finds that ISP performance has improved overall, with ISPs delivering on average 96 percent of advertised speeds during peak intervals, and with five ISPs routinely meeting or exceeding advertised rates.

On average, during peak periods, DSL-based services delivered download speeds that were 84 percent of advertised speeds, cable-based services delivered 99 percent of advertised speeds, and fiber-to-the-home services delivered 117 percent of advertised speeds.

This compared with 2011 results showing performance levels of 82 percent for DSL, 93 percent for cable, and 114 percent for fiber.

Peak period speeds decreased from 24-hour average speeds by 0.8 percent for fiber-to-the-home services, 3.4 percent for DSL-based services and 4.1 percent for cable-based services. This compared with 0.4 percent for fiber services, 5.5 percent for DSL services and 7.3 percent for cable services in 2011.

Average peak period download speeds varied from a high of 120 percent of advertised speed to a low of 77 percent of advertised speed. This is a dramatic improvement from last year where these numbers ranged from a high of 114 percent to a low of 54 percent.

In 2011, on average, ISPs had a six percent decrease in delivered versus advertised download speed between their 24 hour average and their peak period average. In 2012, average performance improved, and there was only a three  percent decrease in performance between 24 hour and peak averages.

Comcast will Launch a 305 Mbps Broadband Access Service in Verizon FiOS Areas

Comcast is planning to offer a 305 Mbps downstream tier sometime before the end of the year in markets where Verizon sells FiOS, DSLReports reports.

That is significant not only because it suggests Comcast wants to be competitive with Verizon FiOS, but also because it suggests the agency agreements Comcast and Verizon want to sign, giving each company the right to sell the other company's products, will not reduce competition.

Even if you think the upgrade is designed to reassure Department of Justice officials said to be skeptical about the agency agreements, any such move will force Comcast to market competitive services where it already competes with Verizon. Those are the very areas where some worry competition will be less, if the marketing agreements are approved.

Sprint Launches Integrated Insurance Solutions: This is What "Machine to Machine" (M2M) Looks Like

Sprint will market "usage-based insurance" (UBI) services designed specifically for the auto insurance industry, in a prime example of what machine-to-machine (M2M) services look like, why they add value, and how they can become a primary revenue growth driver for mobile service providers.

Sprint says it is the first wireless carrier to offer a low-cost turnkey trial program for insurance carriers to start their own trials and pilot programs.

"Integrated Insurance Solutions from Sprint" will give insurance carriers the ability to offer customers personalized discounts based on their driving habits, the company says.

The vehicle is fitted with a small device that easily plugs into the diagnostic port. It captures vehicle information and driver behavior data which is transmitted over the Sprint wireless network.

A cloud-based system analyzes the data with driver scoring software that enables insurance carriers to improve driver risk assessments, reduce costs and improve profitability.

M2M services use mobile networks to support applications where sensors communicate with servers, for some business purpose. As person-to-person accounts reach saturation, and "everybody uses a smart phone," M2M is expected to provide a key way of creating new services using mobile networks, without the need to sell additional mobile connections to people.

LTE Is Not Changing Mobile Service Provider Pricing Models?

Launching a new network sometimes can represent a chance to change retail packaging and pricing, and those changes can be quite significant. Fixed network service providers did not make much incremental revenue from dial-up Internet access services, with the exception of some additional line sales, as was the case for home fax lines or teenager lines.

The shift to broadband created a fundamental new category of consumer services essential for triple-play bundles, which Verizon says now are purchased by fully 70 percent of its customers.

Some have argued that new networks such as WiMAX or Long Term Evolution offer service providers a chance to create packages that are different, including "on demand" or "casual" pricing such as "service by the hour or day," for example.

Analysts at Ovum say mobile service providers selling LTE are "failing to deliver innovative pricing models."

That lack of new charging models  is a missed opportunity for operators, Ovum argues.

“We looked at the LTE pricing strategies of operators in Europe, Asia-Pacific, and theUS, and were disappointed with our findings," says Nicole McCormick, Ovum senior analyst.

“LTE provides operators with the opportunity to experiment with new and innovative pricing models, which allows them to find the best way of deriving revenues from the premium service," she says.
“However, most operators have not grasped this opportunity."

She points to "unlimited access" plans and "large buckets" as examples.

Some of us might disagree. Clearwire has offered access by the day, week or month, but not many seem to have bought it.

And now both AT&T and Verizon Wireless have reshaped wireless pricing by essentially offering consumers fixed prices for voice and texting (unlimited for domestic terminations), with variable pricing for mobile broadband.

One might argue that is a substantial change. Though some will object, the new plans, such as Verizon's "Share Everything," answer some crucial questions, such as how mobile service providers can earn money from voice and messaging features at a time when there are a growing number of alternatives.

One might liken the new Share Everything plan as turning the former voice and texting plans into a "network access" fee, with variable charges only for data consumption. Focusing too narrowly on creativity in "4G" models might miss those subtleties.

Giving consumers more options for data services is an arguably important area to explore and innovate around. But it also is important to avoid losing two other vitally important revenue streams, while innovating around retail broadband packaging. Share Everything does that.

Historic Switch in Demand Drivers for Fixed Broadband is Occurring

Get ready for a historic shift in the relationship between devices and broadband access accounts. Traditionally, there were more PCs owned than users of the Internet, and more users of the Internet than buyers of household broadband service.

Soon, if not already, there might be more broadband accounts in service than PCs or notebooks that use those networks. That historic reversal would mean a change in the traditional reason for buying broadband access.

Traditionally, the reason for buying broadband access services was for fast Internet access for some sort of PC. These days, there are other reasons.

Some users might want a fixed connection, solely or in part, to offload data sessions from a mobile network to a fixed network, to get access to the Internet from some other devices, such as a tablet or iPod.

Some might want broadband access to support Internet access for game playing consoles or some other video device (Roku, for example) that displays Internet video on a TV. In other words, there are many more devices, other than PCs,  that derive value from a fixed network broadband connection.

In the past, some might have argued that broadband access penetration would approach 100 percent of homes for one simple reason, namely that some users would see video content as the reason to buy broadband, rather than PC access to the Internet.

But there now are all sorts of reasons to buy broadband, beyond connecting PCs to the Internet. Connections for tablets and smart phones are only the latest reasons.

Research firm Consumer Intelligence Research Partners released the results of a study it conducted of more than 1,000 iPad buyers between December 2011 and April 2012. CIRP asked those recent buyers what they're most likely to do with their tablet and found that 40 percent of respondents indicated they surf the Web on the iPad, leading all possible activities.

A separate study sponsored by Business Insider found similar results. That reader survey got 2,242 responses. The Results aren’t really all that different from the first and second surveys. Basically, people use tablets for browsing, web-based communications and other content consumption activities.

In fact, a larger percentage and absolute number of people might soon be finding that connecting devices other than PCs or notebooks to the Internet provides most of the reason for buying fixed network broadband.

Notably, the Business Insider poll suggests 45 percent of users are doing their browsing on a tablet, 24 percent on a notebook and 17 percent on desktop PCs. About 14 percent of browsing now is conducted on a smart phone.

So you might say that 59 percent of browsing activities now occur on devices that really are not the “best” devices for content creation.

Also, as new smart phones start to push towards larger screens, such as the five-inch screen on Samsung Note, there will start to be less difference between smart phones and seven-inch tablets. The point is that much of the use case for a “computing” device these days is Internet-based content consumption.

In the United Kingdom, for example, household Internet access rose to 80 percent in the first quarter of  2012, up three percentage points on the previous year, and for the first time exceeded the penetration of PCs and laptops, according to Ofcom.

Internet access through a broadband connection stood at 76 percent of households, up two percentage points from the first quarter of 2011 but with a different mix between fixed and mobile connections.

Mobile broadband through a dongle or connection built into a laptop declined four percentage points to 13 percent of households in the first quarter of 2012, while fixed broadband household take-up rose five percentage points to 72 percent.

Three-quarters of the mobile broadband decline was among mobile-broadband-only households, while households with fixed and mobile broadband connections fell by one percentage point.

The decline in mobile broadband internet access is likely to have been substituted by the rise in fixed take-up and the increased use of Internet on a mobile phone (up seven percentage points to 39 percent).

Where once it would have been possible to model broadband adoption by tracking “PCs in the home,” that methodology increasingly would be defective. Already, a significant percentage of users rely on mobile broadband, rather than fixed, because they rely on smart phones, rather than PCs, for most of their Internet activities.