Will 60 Million U.S. Households be Using Peer-to-Peer Payments in 2014?

Javelin Strategy & Research expects 60 million American households to be using person-to-person payments by 2014, a forecast some might find aggressive. PayPal, which launched in 1999, has offered P2P payments using the Web, initiated by use of a PC, for some time. 

Since then, PayPal has extended that capability to smart phones. But what will it take for millions of households to acquire the habit? That's the rub, some would say. 

As with many other new behaviors, it helps if the transactions are the sorts of activities that a user frequently has to conduct. That is one reason transit payments seem to make a lot of sense. Other apps often seen as driving such behavior, such as paying a friend when a restaurant bill is split, might not happen so often. And that will raise the hassle factor, and lower the perceived value. 

Then there is the question of business model. Lots more people will adopt the behavior if there are no transaction fees. But some services do require payment of a fee. 

Popmoney charges 95 cents per payment to send. If a request for money is made and the money is delivered, the same charge applies. Dwolla charges 25 cents to receive money in amounts greater than $10. 

Is that a big barrier? For some it might be. In developing markets the use case is much more clear. Where it is very time consuming, or dangerous, to send money to an organization or a person, mobile P2P transfers offer high value, with or without a transaction fee. 

In developed markets, the value might be relatively slight, and any transaction cost might be viewed as unacceptable by many users. Bill payment might provide some insight. Lots of people pay bills using e-banking. But those transactions generally do not impose fees, so the barrier to adoption is low, and users can see the advantage of not paying a check cashing fee, paying for postage and getting mail to a postal drop-off location. 

Most people probably can point to instances where e-payments requiring a significant fee (several dollars, for example) don't happen, though lots of other payments, not requiring a transaction fee, are made. 

 

Areas of Potential Verizon, Cable Company "Lessened Competition" are Few, Really

The Department of Justice has been concerned about potential lessening of competition if Verizon, Comcast, Cox Communications, Time Warner Cable and Bright House Networks were allowed to fully sell each other's services. 

With the caveat that many of the areas of overlap, shown in this map in purpose, are areas of high population density, the potential danger was largely concentrated in Verizon's fixed network footprint in the U.S. Northeast, with the addition of some areas of Southern California and the Tampa, Fla. area. 

According to J.D. Power, LTE "Works Better" than 2G, 3G, WiMAX

Wireless customers who use 4G LTE-enabled devices experience fewer data-related issues, especially with slow connection speeds, than do customers who use 3G and other 4G-enabled devices, according to  J.D. Power. In many ways, that is logical. The salient feature of 4G is that it is faster than 3G. 

The study finds that the number of data-related problems, especially those related to slow connection speeds, is significantly lower among customers using 4G LTE-enabled devices than among those using devices with older 3G or 4G technology standards, such as WiMAX and HSPA+.  

For example, among customers with 4G LTE-enabled devices, the problem incidence for excessively slow mobile Web loading is 15 problems per 100, compared with the industry average of 20 PP100. If you have used either HSPA+ or WiMAX, you might agree. 

Perhaps oddly, though, the overall problem incidence for excessively slow mobile Web loading is even higher among customers with WiMAX and HSPA+ technology (22 PP100 and 23 PP100, respectively). 

There are no substantial differences in problem rates for other data-related issues between 4G LTE and WiMAX and HSPA+ technologies, such as Web and email connection errors.

The analysis was based on 10 problem areas that affect the customer experience (in order of importance): dropped calls; calls not connected; audio issues; failed/late voicemails; lost calls; text transmission failures; late text message notifications; Web connection errors; email connection errors; and slow downloads. 

Network performance issues are measured as problems per 100 (PP100) network connections, with a lower score reflecting fewer problems and better network performance. Carrier performance is examined in six geographic regions: Northeast; Mid-Atlantic; Southeast; North Central; Southwest; and West.

Is the FCC Ignoring its Own Data to Justify More Regulation Over Broadband?

Some believe the Federal Communications Commission deliberately is ignoring its own data to justify more regulation over the broadband business, when the facts might suggest a lighter touch is justified.

In fact, analysts at the Phoenix Center for Advanced Legal & Economic Public Policy Studies go so far as to argue that "ubiquitous availability is today an unreasonable expectation and unreasonable goal."

The Phoenix Center argues that since the FCC analysis requires an expenditure of $50,000 or more, on top of actual and accepted industry investments for a new broadband access line, to serve the last 200,000 or so U.S. locations, the reasonable and proper goal of fostering widespread broadband access descends into an improper specifying of how that access is to be accomplished, in essence. 

The economists at Phoenix Center do not argue "nothing" can be done to serve the remaining five percent or so of isolated locations. Satellite services can reach most of those remaining locations now, with improvements coming, for example. 

That is not to say any of the satellites now delivering satellite broadband are as fast as we would like, cost as little as we might prefer, or can literally reach "every" location in rural areas. Some of the spot beam transponders can become fully loaded, meaning no more customers can be added within the footprint of a particular spot beam. 

Some of the locations could be in areas where a particular satellite does not have any spot beams aimed at the ground. But the launch of new satellites by ViaSat and HughesNet does mean existing load on the older satellites will, over time, be alleviated, allowing some locations to once again buy service, while likely also allowing faster service, even using the older satellites. 

Satellite broadband isn't perfect, nor does it offer speeds as fast as fiber to the home networks. But satellite broadband is getting much better, and already is built. In many areas, that means speeds "up to" 12 Mbps or 15 Mbps can be purchased. Coverage is not 100 percent, by any means. But coverage is quite substantial, and no taxpayer or service provider expenditure of an incremental $50,000 per location, whether a person buys, or doesn't buy, is required. 

PayPal, with Discover Tie, Can Be Used at 7 Million U.S. Retail Locations

In the open-end (general purpose, as opposed to systems that support only one retail brand) mobile payments business, scale really does matter, simply because it is difficult to create a brand new habit unless people can use their new mobile payment features most of the places they ordinarily want to shop.

That’s the reason why the new business agreement between PayPal and Discover is important. Even though Discover lags behind Visa, MasterCard and American Express in terms of active account holders and users, Discover has a big network. PayPal has about 50 million active users.

And although Discover handles fewer transactions than credit-card industry leaders Visa, American Express, and MasterCard, the Discover penetration rate at retail merchants in the U.S. is 95 percent.  That means PayPal can be used at most of the places most people will be shopping, and that is a big deal, indeed.

That represents about seven million retail locations nationwide in the United States. The other angle is that the way PayPal handles the mobile payments also means merchants do not have to buy and install new point of sale gear. That’s another traditional impediment to adoption of mobile payments by merchants.

PayPal users will be able to make purchases using their phone number and a security pin code, a major advantage compared to systems that require installation of new POS terminals.

It's Hard to Figure Out What People Want

Helping people find new experiences they wouldn't otherwise know about is a value location-based apps often try to provide. But do people often want to do so? As it turns out, one app, Roamz, actually wasn't being used that way.

What Roamz creators found, instead, was that users knew what they wanted and were just looking for some guidance and some idea of what other people like. So  Roamz is "pivoting" its approach. Instead of emphasizing discovery of "new" experiences, Roamz tries to provide guidance about experiences or products about which a given user already has a use case.

In other words, it turns out that when people leave the house in the morning, they aren't terribly interested in exploring the world around them. They have to get to work.  As it turns out, "serendipity" apps and features aren't terribly useful at times when people are engaged in purposeful activities.

It reminds us of how bold Steve Jobs really was, designing products we didn't know we needed. It's very risky to do so.

IEEE Can Foresee 100X More Bandwidth Demand by 2020

According to a study by a working group of the Institute of Electrical and Electronics Engineers (IEEE), it is possible that bandwidth demand could grow by two orders of magnitude by 2020, from 2010 levels.