Apple Genius Bar Seems to Pay Dividends

The conventional wisdom suggests that "good customer service" is a business asset. The conventional wisdom might be right, at least for Apple. 

Nearly 60 percent of Apple product owners said they are somewhat or much more likely to make another Apple purchase following their tech support experience, according to NPD Group. The positive tech service also helped change consumer perception of Apple, NPD says. 

Some 31 percent of survey respondents said they had a much more positive view of Apple after their service, NPD reports. 

That service left almost all of the 40 percent of Apple owners who took their Apple devices to the Genius Bar very happy. 

Nearly 90 percent of consumers who used Apple’s tech service said they were extremely or very satisfied.

Price help. Some 88 percent of Genius Bar consumers said their service was free. 

Coquitel Uses Mesh Wireless for Isolated Communities

Unlicensed spectrum and self-configuring “mesh” radios continue to be an attractive option for bringing voice and data communications to isolated communities.

Coquitel is about to provide such service to 10 Puerto Rico communities with a potential customer base of 150,000 people. Cooquitel was built with open source software and inexpensive hardware designed by Village Telco, a nonprofit organization in South Africa.

The mesh network will use unlicensed spectrum and is based on Village Telco’s “Mesh Potato," a weatherproof 802.11g wireless access and VoIP connection point designed for unstable electrical power conditions.The design principles are simple enough. The system is designed to support “pay as you go” affordable and simple to bill communications.

The idea is to make the process of setting up service as simple as creating a nw wordpress blog.

The costs are intended to allow a break even point in six months, and should be capable of being used by any business person, without special training.

In fact, it runs on about three watts, and can be powered by solar or battery power. Costing about $80 each,  the Mesh Potato  Mesh Potato is intended to be mounted outdoors, on a pole or the roof of a house. Users can connect to it with a standard ATA telephone connection or over Wi-Fi.

The unit also is designed to accept direct 240V current or any input between 10 volts and 40 volts DC, meaning the MeshPotato can be powered by a car battery.

The Mesh Potato uses an omnidirectional antenna with a maximum power of 20db (100mW), so it can operate within most countries’ wireless regulations and arguably works best in a local community with multiple user locations.

As always, backhaul is the key issue for the self-organizing network.

MasterCard, Everything Everywhere Announce NFC Mobile Payments Effort

MasterCard has signed an exclusive five-year deal to develop a mobile payments system for Everything Everywhere over the next half decade, using near field communications. 

After the initial payment capability, the plan is to then extend that platform into the usual mix of loyalty cards, money transfers and online payments using the smart phone as a point of sale device. 

Orange, one of EE's consumer brands, earlier had launched "Quick Tap," a mobile payments system that has had little success. 

One of the first products to launch through the partnership will be a co-branded pre-paid solution for mobile devices that allows customers to make payments using NFC at more than 100,000 retailer locations in the United Kingdom.

Strategically, the venture aims to enable consumers to have the same simple shopping experience whether they're paying in-store, online or using their mobile device. 

How Should We Regulate Declining Industries?

UBS researchers remind us of some salient facts about the U.S. fixed network voice business, namely that both the total number of lines in service, as well as profitability of voice services are dropping. 

Where at one point there were almost 100 million fixed network voice lines in service, there now are perhaps 50 million in service, about half of which are supplied by U.S. cable companies.

Mobile substitution accounts for much of the change. But the changes also should warn us about the growing risk of investing in the fixed network business. The issue is whether the evidence so far shows conclusively that investing in the fixed network at typical rates (14 percent to 19 percent of revenue) is sustainable and even rational in the long term if aggregate revenue does not grow. 

To be sure, up to this point telcos have added enough new revenue in the form of entertainment video and broadband access to basically offset voice losses. But telcos are reaching, if they have not already reached, saturation of the broadband access business. 

Telco share of video markets still is growing. But even there, there will be some upward limit on market share, and strategically, there is concern about the health of that business over the long term as well. 

It might have made sense to regulate telcos one way when the assumption was that they were spinning off large monopoly profits. That no longer is a reasonable assumption. 

Mobile, Cable Markets Destined to be Concentrated

There's a good reason antitrust regulation exists in principle, though we might disagree about when and how to apply it. The reason is that a robustly competitive communications market will resolve itself into a stable pattern over time, with few leaders.

If you think about it even casually, there is a reason for that pattern. Over time, people gravitate to products and providers they prefer. That's why Apple consistently gets 60 percent to 70 percent of tablet sales. 

In the fixed network communications or video business, there are slightly different dynamics, since the market originally was a highly-regulated monopoly business, with one authorized provider. Only since 1985 has the U.S. market been "competitive" in a legal framework sense,  to growing degrees. 

That highly unequal outcomes have been seen would not be surprising to anybody who studies market structure. In a highly capital intensive and competitive market, few entities really can risk the amount of capital required to compete. In a roughly $1.8 trillion global telecom business, annual capital spending of about $345 billion is typical. 

The U.S. cable industry alone invests about $13 billion a year in a business generating about $98 billion annually, or about 13 percent percent of revenue. 

AT&T and Verizon in recent years have been plowing about 14 percent to 16 percent of revenues back into capital investment. 

The point is that "not so many" contestants can afford to spend that amount of money, every year, on capital investment. There are genuine economies of scale in the telecom and cable TV businesses and those advantages manifest themselves over time. 

So whether you look at the India mobile communications business or the U.S. cable TV business, there are a few firms leading each industry. At some important level, that will "always" raise antitrust issues. 

It has been clear for a couple of decades that no U.S. cable TV company would be allowed to gain more than 30 percent installed base of video customers. Thinking roughly along those lines seems also to have driven antitrust thinking about the proposed AT&T purchase of T-Mobile USA, as well. 

At some point, at least in the U.S. markets, the leaders in mobile, video or fixed network services will be forced to diversify into other lines of business simply because they have reached the limits of success in their original businesses. 

Rank	MSO	BasicVideoSubscribers
1	Comcast Corporation	22,294,000
2	DirecTV	19,966,000
3	Dish Network Corporation	14,071,000
4	Time Warner Cable, Inc.	12,653,000
5	Cox Communications, Inc.1	4,756,000
6	Verizon Communications, Inc.	4,353,000
7	Charter Communications, Inc.	4,341,000
8	AT&T, Inc.	3,991,000
9	Cablevision Systems Corporation	3,257,000
10	Bright House Networks LLC1	2,079,000
11	Suddenlink Communications1	1,250,000
12	Mediacom Communications Corporation	1,059,000
13	CableOne, Inc.	622,000
14	WideOpenWest Networks, LLC1	460,000
15	RCN Corp.1	333,000
16	Knology Holdings	256,000
17	Atlantic Broadband Group, LLC	254,000
18	Armstrong Cable Services	239,000
19	Midcontinent Communications	229,000
20	Service Electric Cable TV Incorporated1	217,000
21	MetroCast Cablevision	169,000
22	Blue Ridge Communications1	168,000
23	WaveDivision Holdings, LLC1	159,000
24	General Communications	142,000
25	Buckeye CableSystem1	133,000

Advertising and Commerce are Business Models for Many Apps, Just not Facebook, at the Moment

For applications and services that do not envision a "subscription" revenue model, and assuming "donations" is not feasible, either advertising or commerce (selling things) consistently are viewed as the best alternatives. 

Of course, what is necessary might not be sufficient. In other words, successful apps and services not using a "subscription" revenue model will mostly have to rely on either advertising, or commerce, or both. But not every firm that tries, will succeed.

So far, Facebook might be considered by some a firm that has not yet "succeeded" with its advertising or commerce models. That doesn't mean Facebook will fail, only that it has not yet clearly succeeded. 

According to the survey by youth marketing agency The Beans Group, 91 per cent of 16- to 24-year-olds in the United Kingdom say they are not interested in buying products or services directly through Facebook. 

The apparent  lack of confidence in Facebook commerce likely is a surprise to some brand marketers.  Ant Stone, content marketing manager at STA Travel, says: “We are making an assumption that everyone is on Facebook or Twitter and we want to provide the same sort of services that we provide outside these channels, so we are reflecting our retail space on Facebook.

“This study  might prioritize the areas we step into first. We might not go for the f-commerce route, we might spend more time and resource in the smartphone quarter,” he says. 

According to Vision Mobile, "purchasing,"  either in form of in-app purchases or an actual application purchase, are the two most popular revenue models for app store developers. 

iOS and Android Adoption Explodes Globally

The global smart phone business still appears to be a two horse race. In fact, the rate of iOS and Android device adoption has surpassed that of any consumer technology in history, according to Flurry.

In fact, smart device adoption is an order of magnitude faster than that of the 1980s PC rate of adoption, twice as fast as the 1990s Internet access adoption and three times faster than social network adoption.

Overall, Flurry estimates that there were over 640 million iOS and Android devices in use during the month of July 2012.