Samsung Resale Prices Drop, Apple Patent Win Seen as Cause

Significantly more customers of Samsung are putting their smart phones up for sale on Gazelle.com. Gazelle.com reports a 50 percent increase in placements of Samsung smart phones in the last week of August, which has led to a 10 percent drop in prices for those devices.

“Consumers seem to be jumping ship,” says Anthony Scarsella, chief gadget officer at Gazelle.com. “We expect this trend to continue, especially with this latest verdict.”

It is possible that Samsung users suspect the next generation of Samsung phones may be very different from those on the market today. That could be an issue since consumers get used to certain key features of their phones, and they might not be so sure that will be the case in the future. 

Indian Consumer Fixed Services Market To Reach Rs 240 Billion In 2012

The Indian consumer fixed services market is on pace to reach Rs 240 billion in 2012, a 2 percent increase from 2011 revenue of Rs 235 billion, according to Gartner. At an exchange rate of 44 rupees to one U.S. dollar, that implies about $5.5 billion in fixed network revenue. 

By way of comparison, 2012 mobile voice revenue should reach about $25 billion. 

Consumer fixed voice revenue is forecast to reach Rs 148 billion in 2012, a seven percent decline from 2011. From 2012 through 2016, voice revenue will further decline by 25 percent, Gartner says. 

“Voice traffic continues to shift to mobile,” said Neha Gupta, senior research analyst at Gartner. 

The Indian consumer fixed line services market will see growth from broadband and Internet access sectors, which will collectively grow to Rs. 92 billion in 2012. 

In 2012, household broadband penetration will cross six percent. 

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