Why U.S. High Speed Access Costs So Much

With the possible exception of Google Fiber's 1-Gbps symmetrical broadband service pricing in Kansas City, Mo. and Kansas City, Kan., few consumer customers likely would agree that retail prices for 100-Mbps or faster services are "affordable." 

Some business users, and to date it is likely that most buyer of 100-Mbps services are businesses, might say the price-performance of a 100-Mbps high speed access service is reasonable, though, especially compared with retail pricing of much-slower T1 services, for example. 

Still, many observers would point to prices for 100-Mbps services in other countries as examples that U.S. services are overpriced. 

Prices for residential gigabit service range from a low of $26 per month for Hong
Kong Broadband’s service to a high of $560 per month at network operator Turkcell, according to a study by Joe Savage, Telecom ThinkTank principal, and Michael Render RVA Market Research principal.

It is hard to ignore South Korean pricing of $27 a month for a gigabit per second service, even given the high density that characterizes most South Korean networks (higher density means lower per-dwelling cost).

But there are logical reasons for such price differences, namely that prices roughly correlate to the capital investment required to pass a subscriber in the serving area, the authors say. 

For example, it costs $200 per home passed in Hong Kong, compared to $1,000 to $4,000 per home passed in Europe and North America, the study notes. 

Population density might be the single most important factor determining the cost of any fiber to home network build. A related issue is average “loop length,” a metric that is roughly related to population density.

U.S. service providers have to supply service over much longer average loops than service providers in Europe, or in many “city states” that feature high-density housing. Basically, retail cost everywhere is related rather directly to network investment cost.

That has direct implications for retail pricing. In other words, based strictly on the costs of the infrastructure, consumer broadband "should" cost an order of magnitude more than in Hong Kong.

Google Fiber in Kansas City is among the first examples of a U.S. service provider trying to deliver an arguably disruptive level of bandwidth that is an order of magnitude or even two orders of magnitude faster than what most consumers can buy today (1 Gbps, not just a hundred megabits per second), at vastly lower prices, for such a service.

The issue is whether a cable company or telco, with different cost structures, can afford to replicate that level of retail pricing. Some would argue they cannot. Google might have a few advantages related to outside plant costs, but nothing significant enough to affect its costs of construction.

The potential long term advantage will be in the operating and marketing cost arena, plus the overall lower overhead. Google does not carry the huge pension obligations a telco does, for example.

The point is that there are clear reasons why retail pricing for high-speed Internet access is so different in different markets. Costs of construction, not to mention all other costs, can vary by an order of magnitude.

Turn an iPod Touch into a Mobile Phone

FreedomPop has just announced that its WiMAX-capable iPod touch cases are now shipping. The sleeve wraps around an iPod touch and uses the Clearwire network to create a local Wi-Fi connection for the touch that is nomadic. 

The sleeve costs  $99 and reportedly operates for six to eight hours on a single charge. FreedomPop also is working on a mobile VoIP app, allowing a FeedomPop-equipped iPod touch to function just like a mobile phone.

Smart Phones Drive Global Device Revenue

The global mobile phone market grew 2.4 percent, year over year, in the third quarter of 2012, lead by Samsung and Apple. Nokia dropped off the "top five" list of smart phone vendors. 

Vendors shipped a total of 444.5 million mobile phones in the third quarter of 2012,  compared to 434.1 million units in the third quarter of 2011,  IDC says. 

In the global smart phone market, suppliers shipped 179.7 million units in the third quarter of 2012,  compared to 123.7 million units in the third quarter of 2011. 

The 45.3 percent year-over-year growth was slightly above IDC's forecast of 45.2 percent for the quarter.

Top Five Smartphone Vendors, Shipments, and Market Share, 2012 Q3 (Units in Millions) 

Vendor	3Q12 Unit Shipments	3Q12 Market Share	3Q11 Unit Shipments	3Q11 Market Share	Year-over-year Change
Samsung	56.3	31.3%	28.1	22.7%	100.4%
Apple	26.9	15.0%	17.1	13.8%	57.3%
Research In Motion	7.7	4.3%	11.8	9.6%	-34.7%
ZTE	7.5	4.2%	4.1	3.3%	82.9%
HTC	7.3	4.0%	12.7	10.3%	-42.5%
Others	74.0	41.2%	49.9	40.3%	48.3%
Total	179.7	100.0%	123.7	100.0%	45.3%

"TicToc" Messaging App Going Global

Korea’s "over the top" messaging service TicToc has set its sights abroad with the international launch of TicToc Plus TicToc Plus on the Google Play store and an upcoming iPhone app.

The recently updated TicToc Plus Android app offers unlimited calls and messages, integration with Facebook photos and YouTube videos, stickers and group chat. The app is currently available in English and Korean with more languages planned soon.

Over the top messaging apps are anything but unusual these days. But what is more noteworthy is that Tic Top Plus is owned by Korean mobile service provider SK Telecom. 

Some service providers, such as Telefonica, have launched their own services. Others, such as Sprint, simply integrate with one or more favored over the top providers. Embrace or resist, every mobile operator has to have a strategy for dealing with over the top messaging and voice.

Text messaging (short message service, or SMS) still dominates the mobile messaging market in both traffic and revenue terms. 

SMS revenue is forecast by Portio Research to dominate worldwide mobile messaging to 2016. MMS is the second most successful non-voice mobile service, but generates less revenue than mobile e-mail.  Mobile IM generated the lowest revenue in the mobile messaging market in 2011, but it will surpass MMS revenue by end-2016.

SMS made the highest contribution to worldwide mobile messaging revenue in 2011 with a 63.5 percent share, Portio says. In 2016, SMS will continue to lead other messaging services, but its revenue share (of the then $310 billion market) will have eroded to sub-50 percent.

Vodafone to Launch its Own Mobile Wallet Globally

Vodafone is launching its own mobile wallet service in 2013, allowing Vodafone’s customers to use their smart phones to conduct a number of transactions, including paying for goods and services at the point of sale, during 2013 CorFire says. 

Near field communications seems to be the technology of choice for the global initiative. 

NFC remains a controversial choice of device to point of sale terminal communications in some quarters, but NFC clearly is the favored mobile service provider communications protocol. 

Vodafone has approximately 406 million customers in its controlled and jointly controlled markets and equity interests in over 30 countries across five continents and more than 50 partner networks worldwide. 

As is often the case, Vodafone also participates in other mobile wallet ventures, including Weve, the newly rebranded "Project Oscar" venture of a U.K. mobile operator consortium  including EE (Orange and T-Mobile), Vodafone and O2. 

New Nexus 7 Pricing

Though the official launch of the Google Nexus 7 tablet is delayed by Hurricane Sandy, pricing news is available because retailers already are advertising them.

The 32GB Nexus 7 is priced at $249 and the 16GB version is priced at $199 at Office Depot,  Droid Life reports. 

The prices are not terribly surprising, given trends in the broader market, especially pricing of Amazon devices in similar form factors. 

Tablet computers will see an explosion in sales over the next four years, selling 60 percent as many units as PCs by 2015, Gartner predicts. 



Most analysts predict that PCs will outsell tablets for quite some time. Forrester Research has estimated that in 2015, PCs, including notebooks and desktop units, still will outsell tablets in the U.S. market by a better than two-to-one margin. 

U.K. Mobile Operators Launche "Weve" Mobile Wallet

The United Kingdom mobile payments venture originally code named "Oscar," and operated by a consortium of U.K. mobile operators including EE, (Orange and Deutsche Telekom), Vodafone and Telefonica’s O2, have chosen the retail brand name "Weve."

Along the way, the consortium has modified its anticipated revenue model, as have others in the young market. Originally, the idea was that the consortium would provide a single network platform for all participating card issuers (banks, for example), and would take part of the transaction fee.

After a European Union investigation of potential antitrust issues, as well as stout opposition from Visa and MasterCard clearing networks, Project Oscar was refocused on mobile advertising and mobile commerce. 

Now "primarily aimed at advertisers looking to engage in mobile commerce," Weve has adopted the "mobile wallet" approach also used by Isis and Google Wallet.