Vivotech to Abandon NFC Terminal Business

No new business lead by start-ups ever seems to reach fullness and fruition with some failures. So it is that contactless reader and NFC software vendor Vivotech has become an early casualty of the contactless mobile payment business.

NFC Times reports that the firm plans to cease operations and sell at least some of its assets. Sources say Vivotech is in talks to sell its reader business to PAX Global Technology, owner of Shenzhen, China-based PAX Technology, a maker of point-of-sale terminals. 


Vivotech’s software business, though, might be retained.

Some would argue that Vivotech simply was too early, a common problem when whole new industries are being born.

In part, the problem seems to have been that the original business was built around sales of NFC-capable terminals, but that point-of-sale business has suffered from margin compression.

Software and services used for payments and other features, such as tracking and redeeming mobile offers, now are viewed as adding more value.

Vivotech had shipped nearly one million terminals globally over the past several years.

Triple Digit Increases in Social Media, Video Consumption During Olympics

Social media traffic, including Twitter traffic, has grown two orders of magnitude during the London Olumpics, Allot Communications says.  


Twitter peaked at 137 percent of typical use during the opening ceremony and grew to 413 percent by day three of the games.

QQIM, the Chinese instant messaging service, grew over 300 percent by day three of the games.

Instant Messaging increased 182 percent, on average, during the opening ceremony, Allot says.

WhatsApp posted a 430 percent increase during opening ceremony.

Online video peaked at 217 percent during the first official day of competition, growing to 408 percent of typical levels by day three of the London Olympics.  

Facebook traffic posted an 87 percent increase during the first two days of the games and moved up to 162 percent by day three of the Olympics.

YouTube traffic grew 40 percent during the first official day of competition and moved up to 153 percent of typical levels by day three of the games, Allot says.  

Is Google Fiber Planning To Expand Beyond Kansas City?

Though it might seem unlikely, a few observers might think Google Fiber really could be something Google wants to pursue, beyond Kansas City, Kan. and Kansas City, Mo.

So far, only Dow Drukker, senior vice president of CapStone Investments, has been willing to speculate somewhat seriously on the possibility.

“Initial Indications Google Fiber Is Likely Expanding Beyond Kansas City.
"We saw an ad for an Inside Sales position in Mountain View, Calif. for selling Google Fiber to small businesses," he says. The ad said the job would entail building a team to sell a national broadband network, Drukker says.

That indicates, at least to Drukker, that Google likely plans to build a 1-Gbps fiber access network in
additional cities.

Some of us continue to believe that would be a waste of capital on Google's part. More likely is an effort to sell Google capacity on its own backbone network, or an effort to resell local access capacity wholesaled from partners, if anything.

Tethering is Lawful, No Fee Can be Levied, FCC Rules

A new Federal Communications Commission consent decree with Verizon Communications settles a dispute about whether it is lawful for Verizon to charge a special fee for its users who want to use their Android smart phones as personal hotspots, using some of its 700 MHz spectrum.


The FCC decision concludes that tethering is a lawful end user activity, and no mobile service provider has a right to block access to mobile apps that turn an Android smart phone into a personal Wi-Fi hotspot, based on provisions relating to the acquisition by Verizon of 700 MHz spectrum.


The rules do not seem to apply to Sprint, T-Mobile USA or AT&T, though, as a practical matter, AT&T smart phone users, for example, can use their Android devices as personal hotspots, without additional charge, if they buy certain mobile data plans. Sprint continues to levy a discrete fee for the personal hotspot feature. 


The FCC also said that Verizon can charge an additional tethering fee for those customers who are on an unlimited data plan. 

How Can Cable and Telcos Replace 1/2 of Current Revenues in 10 Years?

One fundamental assumption I make about cable and telco service provider revenues in developed markets is that such firms must plan on replacing about half their current revenues over the next decade or so. The reason is simply historical observatiion.

In developed markets, that already has happened at least once in the telco business as well as the cable TV business. And it seems likely a second wave of revenue source replacement is underway.

That isn’t to say that both cable and telco service providers in developed markets will have to replace about half their current revenues every 10 or so years, “forever.” I just can’t see that far. But it might be reasonable to assume both telcos and cable will have to do so at least once over the next decade.

In 1977, U.S. telcos earned about half their revenue from long distance services. But as long distance revenues shriveled, mobile services arose to take the place of long distance revenue that was lost.

The most-recent quarterly earnings report from Comcast shows the same sort of trend in the U.S. cable industry, where Comcast video revenues have shrunk to about 52 percent of total Comcast revenue, while other access network services now contribute 48 percent, and are growing.

At some point, Comcast will earn less than half its revenue from its legacy video entertainment business. And that is to focus only on Comcast’s “local access” business.

In fact, including the NBC Universal contributions, it already is true that Comcast earns less than half its total revenue from cable TV distribution. In fact, cable TV video distribution operations now account for only 33 percent of total Comcast revenue.

Telcos already have been through one such transformation, as overall revenue now has shifted from “long distance” to wireless, at least for the tier one U.S. providers. The next set of transitions will see the revenue contributions from mobile voice and text messaging dwindle in favor of new sources.

One might also note that, of Comcast’s total access operations revenue, “dumb pipe” high speed Internet access now accounts for 24 percent of total revenue.

Assume for the sake of argument that half of the business revenues also are derived from dumb pipe high speed access. That would imply a total of about 27 percent of Comcast revenue earned from dumb pipe services.

That also illustrates another facet of cable operator strategy: dumb pipe services are a crucial foundation for 48 percent of Comcast’s total revenues.
Comcast’s second quarter 2012 financial results show revenue growth in the video segment, but also lost customer share. Though revenue was up 2.8 percent, Comcast lost 176,000 video accounts.

Overall revenue of $9.9 billion included growth of total revenue per video customer of eight percent, to $149 a month. But most of that increase was from services provided by voice, broadband access and business services.

Since Comcast lost 176,000 video units, the overall growth of revenue generating units of 138,000 came from broadband and voice additions.

To be sure, video revenue remains crucial, at $5.1 billion in quartterly revenue. But high-speed broadband access now contributes $2.4 billion in quarterly revenue, and revenue from that segment grew 8.9 percent.

Comcast added 156,000 net high-speed access  customers in the quarter, for penetration of 36 percent. Consider what that statistic means, though. In the past, a telco or cable services provider would build a network that would have, as customers, perhaps 75 percent to 98 percent of all households passed by the network.

These days, no service provider gets more than a fraction of that, from any single service. That is why the triple play has become so important. The only way to earn enough revenue from a much smaller base of customers is to sell each remaining customer a wider range of services.

At the moment, it also is correct to note that, although revenue from voice and business services is growing, broadband remains the driver for most of Comcast’s revenue. Together, high speed access and video account for 76 percent of Comcast’s revenue in the quarter.

Voice revenue contributed $889 million in revenue, and Comcast added a net 158,000 accounts, to reach 18 percent penetration.

Business revenue increased 34.2 percent to $582 million, while advertising generated $552 million, Comcast reported.

But you might say the specific revenue components are fairly close to “noise,” in the broader strategic picture. The big challenge is the need to replace half of current revenues in a decade or so.

As Comcast already has shown, the way forward likely depends on “getting into new lines of business” might be the only viable strategy.

Internet Connected TVs to Reach 650 Million by 2017

The number of residential TVs connected to the Internet using Blu-ray players, set-top boxes and consoles or using native TV connections, will reach almost 650 million by 2017, Juniper Research argues. 


That is among the underlying changes that will eventually help change the attitude of content owners about many forms of "Internet direct" content distribution, as potentially unsettling as that prospect now appears. 


In fact, some might even argue that Internet-connected TV sets will be only the second most important change in consumption habits. There is an argument to be made that tablets could emerge as an even bigger enabler. 


Though the ability to view desired content on a TV will remain a mainstay of the professional entertainment video business, the ability to consume video on tablets already is clear.


In fact, if one assumes that user experience with video consumption on smart phones, PCs and tablets is becoming widespread, and in some instances a preferred consumption mode, then Internet connected TVs might be only one mode among many.


Forrester Research, for example, estimates there will be two billion PCs in use by 2016, excluding tablets. 


Forrester expects total tablets sales will growfrom 56 million in 2011 to 375 million in 2016. Given that a majority of tablets will be retired within three years of purchase, Forrester forecasts that there will be 760 million tablets in use globally by 2016. One-third of these tablets will be purchased by businesses, and emerging markets will drive about 40 percent of sales.


In other words, if a supplier wanted to reach Internet-connected users with a video entertainment product, it will make as much sense to focus on tablets, PCs and smart phones as it does to include TV set viewing, as users of those non-traditional TV screens will vastly outnumber users of traditional TV sets. 

Why Does Google Care So Much About "Speed?"

The primary reason Google has such a fundamental interest in promoting faster deployment of higher-speed access services of all types, such as the 1-Gbps symmetrical fixed network access Google Fiber is getting ready to deploy in Kansas Ctiy, Mo. and Kansas City, Kan., is that Google has a vested business interest in the speed with which Web pages get loaded.

Simply, speed means more ad inventory gets viewed. Google’s research shows that if search results are slowed by even a fraction of a second, people search less (A 400 millisecond delay leads to a 0.44 percent drop in search volume).

And this impatience isn’t just limited to search: Four out of five internet users will click away if a video stalls while loading. The average web page takes 4.9 seconds to load, and in a world where fractions of a second count, that’s an eternity, Google has argued.

So speed makes a difference for use of some applications, perhaps most. Speed makes a difference for ad-driven and commerce-driven revenue models, as well.

When Edmunds, a leading car review destination, re-engineered its insideline.com site to reduce load times from nine seconds to 1.4 seconds, ad revenue increased three percent, and page views-per-session went up 17 percent.

When Shopzilla dropped latency from seven seconds to two, revenue went up seven-12 percent and page views jumped 25 percent. Shopzilla also reduced its hardware costs by 50 percent.)

With faster access, people become more engaged, and when people become more engaged, they click and buy more, Google argues.