Ultimately, Service Providers Will Embrace Over the Top

Though many challenges obviously remain, many executives in the communications, device and over the top application industries think access providers, device manufacturers and independent application providers will find ways to work together.

Some 64 percent of respondents surveyed by Coleman Parks on behalf of Amdocs said they believed OTT apps would bring valuable innovation to the industry. Some 62 percent said that partnering was a strategy to counter or eliminate the OTT threat.

Some 42 percent of device or service provider executives said they could offer any service
an OTT player could, better.

Research firm Coleman Parks conducted 100 telephone interviews of 50 global service providers, 35 OTT and Internet Players and 15 device manufacturers
as part of the study.

Of course, the issue is that device suppliers, service providers and application providers all say they must own the customer experience, if not the customer relationship. That will be a complicated problem to resolve.

But some 58 percent of service providers believe the communications market will rationalize in the future, and that only players that partner will win.

Fully 73 percent of device manufacturers think their long-term survival depends on partnerships and  60 percent of device manufacturers also say that OTT players must partner or die.

89% of Small Business Employees Use Their Own Mobile Phones for Work

A new survey sponsored by CDW shows that 89 percent of small business employees use personally-owned mobile devices for work. 

The survey found that almost all small business users surveyed (94 percent) believe their mobile devices make them more efficient, and most (67 percent) believe their companies would lose competitive ground without those devices. 

Next Generation Investment Now Has Competition

Policy makers, no less than fixed network service providers, face challenges never encountered before, when pondering how to stimulate faster deployment of fast fiber access networks. 

“It’s become a challenge for operators to know how much to eventually invest in fixed broadband networks and services,” says Jeff Heynen, Infonetics Research directing analyst. Some of us might say that is a very polite way of saying that industry executives are not certain how big a payback they might get from making such investments in fixed networks. 

That is a huge development. In the past, neither executives nor policy makers or regulators had to question whether investment in fixed networks was profitable or not. In the monopoly period, within some reasonable constraints, investment automatically generated a return. That's the substance of "guaranteed rate of return," after all. 

In the competitive era, when network access and transport are severed from applications, none of that can work. There no longer is any predictability of revenue, end user demand, profit margin or operating cost.

That makes a policy maker's job; a regulator's job or a service provider executive's job much more challenging. 

“On one hand, fixed broadband is among the most profitable services a provider can offer," says Heynen. "On the other hand, the investment required to roll out or upgrade mobile networks is eating into their available capital.”

In other words, mobile investment now is a competitor to fixed network investment. As a result, the transition to next-generation fixed networks will take "longer than many in the industry had hoped."

Nor is the issue so "simple" as making the "right" technology choice. The business model for an incumbent fixed network service provider actually is an open question, at this point. 

Text Messaging Revenue Has Peaked, Starts Decline in 2013

Global consumer spending on operator messaging services, including text messaging (short message service, or SMS) and miultimedia messaging service (MMS) has peaked in 2012 and will begin to decline in 2013, says Strategy Analytics.

In other words, you now can definitely add mobile messaging to the list of legacy services that now have passed their peak adoption and are declining. 

According to the latest Global Mobile Messaging Forecast from Strategy Analytics, consumers will increase their spending on SMS and MMS by 2.5 percent in 2012.

That will reverse in 2013, as mobile service providers globally will see a 12 percent fall in global consumer spending on operator messaging revenue over the "next five years," Strategy Analytics predicts.

The decline in messaging revenue will be more pronounced in regions with the greatest penetration of smartphones and data users, like North America and Western Europe, where SMS and MMS expenditure will decline by 18 percent and almost 25 percent, respectively. 

Growth in U.S. text message volume fell to nine percent in 2011, significantly down from 30 percent in 2010. In 2011 both T-Mobile USA and Verizon Wireless noted low single digit growth in total messaging revenue, Strategy Analytics says. 

"While RCS and RCS-e enables mobile operators both to evolve mobile messaging beyond SMS and MMS and keep operators relevant in mobile messaging, it will not offset the current decline in messaging revenue," says David MacQueen, Strategy Analytics director.

"We forecast that by 2017, 293 million users of RCS/ RCS-e based services will generate $370 million in revenue for mobile operators," he says. 

One Example of How Verizon is Monetizing "Big Data"

The whole idea behind "big data" is the ability to analyze and then apply insights gleaned from examining the structured and unstructured data any organization generates in the normal conduct of its business. In principle, large mobile service providers generate lots of data a marketer might find useful. 

"One vertical is a venue--like a sports stadium, a college campus or ski area," says Colson Hillier, Verizon vice president of precision marketing. Colson says Verizon worked with a professional sports team. The objectives were to help the client identify which types of customers attended the sports team's events, and when, Verizon says. 

Among the findings was the insight that customers attending this sports team's events also attended events from other teams within a certain league, so that helped them deliver joint promotional opportunities and ticketing packages with other teams in the league. 

FreedomPop To Target Fixed Broadband Providers

FreedomPop, the mobile broadband supplier that has launched a nationwide wireless broadband service with a “freemium” model, is planning to introduce a service tier that it will market against cable and telco wireline operators. 

A different cost structure might ultimately be key to the firm's possible success. For starters, FreedomPop is using leased service from Clearwire, not building its own network. That isn't terribly unusual, as Freedom is a mobile virtual network operator, like any other. 

The difference is that FreedomPop focuses on data access only, not voice. EarthLink will try that approach as well. 

The business model will build heavily on a "web distribution" model, with social elements that encourage users to sign up their friends. All that has implications for retail distribution costs and overhead.

The mobile access plans feature 1 GB of data for $10 a month, 5 GB for $35, and 10 GB for $60 a month. But FreedomPop says prices for fixed access might be different.

Cisco cuts ties to China's ZTE after Iran Sales

Cisco Systems Inc. has ended a longstanding sales partnership with ZTE Corp after an internal investigation into allegations that the Chinese telecommunications equipment maker sold Cisco networking gear to Iran, Reuters reports. 

That news comes as the The U.S. House intelligence committee is releasing a report that raises national security questions about Huawei, the Chinese firm that many say the the largest telecommunications equipment supplier in the world, with sizable share of the market for fourth generation networks.

The report does not have immediate consequences for private sector purchases of Huawei gear, but could point to future issues, especially if U.S. government agencies are barred from buying Huawei equipment. Those rules will tend to migrate to state purchases as well, and all of that could lead to pressure on leading U.S. telecom firms not to use Huawei gear. 

Committee chairman Mike Rogers (R., Mich.) said U.S. telecommunications networks would be at risk of cyber attacks if Huawei gear were used. "We simply cannot trust such vital systems to companies with known ties to the Chinese state," Rogers said. 

Huawei executives deny the charges. 

The House intelligence committee has conducted a year-long investigation of potential national security threats posed by Huawei and ZTE.

Huawei is now the world's second-largest provider of telecommunications equipment, and it does 70% of its business outside China.

The report also recommends that the U.S. government avoid using equipment from the firms, and that U.S. companies seek alternative vendors for telecommunications equipment.

Both moves suggest growing unease about ties between the two Chinese firms and the Chinese government.