New Nexus 4, Nexus 7, Nexus 10 Will be Sold Direct on Google Play

Google's new Nexus 4 smart phone will be sold unlocked and without contract on the Google Play app store. 

The 8GB model will sell for $299 while the 16GB model will sell for $349, beginning on November 13, 2012, in 
the United States, United Kingdom, Australia,France, Germany, Spain and Canada, Google says. 

The 16GB version also will be sold by T-Mobile USA for $199, with a two-year contract. 
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Google also unveiled the Nexus 7,  a seven-inch screen tablet, as well as the Nexus 10, a tablet with a 10-inch screen. 

The Nexus 7 featuring 16GB of memory will sell for $199, while the 32GB version will sell for $249; available in the U.S., U.K., Australia, France, Germany, Spain, Canada and Japan, and also through retail partners Gamestop, Office Depot, Office Max, Staples and Walmart.

The Nexus 7 with 32GB and mobile data will sell for $299, unlocked, starting Nov. 13, 2012, on the Google Play store in the U.S., U.K., Australia, France, Germany, Spain and  Canada.

The Nexus 10 with 16GB will sell for $399; the 32GB model will sell for $499; available on Nov. 13, 2012,  in the Google Play Store in the U.S., U.K., Australia, France, Germany, Spain, Canada and Japan.

How Much New Revenue Must U.S. Telcos Generate, Over the Next 5 Years?

How much incremental revenue might the U.S. telecom business need to generate over about the next decade to replace lost revenues from landline voice, mobile voice, mobile messaging and other revenues related to voice?

Perhaps $33 billion, one might argue. That is the amount of voice revenue U.S. service providers (fixed and mobile) will lose between 2010 and 2015, Verizon says. And the good news is that it probably won’t be a problem, at least for the leading mobile service providers.

The precedent in the U.S. market was long distance revenue. Over about a decade, service providers moved from earning about half of their total revenue from long distance, to earning about half their revenue from mobile services.

In North America, some believe voice connections should shrink by about half between 2007 and 2016, a period of nine years, according to Pyramid Research.

As a rough illustration, look only at the U.S. market, where some have forecast annual six percent declines in fixed network voice revenue.

If that proves to be accurate, then U.S. fixed network voice providers might have to replace about $33 billion in annual revenues between 2010 and  about 2017, while mobile service providers might have to replace about $5 billion in voice revenues.

To be sure, much of the immediate answer already is in place, namely video entertainment, fixed broadband access, mobile data and possibly other contributors such as hosting and data center revenues.

And most would say that level of revenue replacement clearly is “doable.”

Insight Research, an aggressive optimist,  predicts U.S. service provider revenue could double in just the next five years. The firm predicts that, between 2011 and 2016, North American carrier revenue will  rise from $287 billion to $662 billion, representing 11 percent compound annual revenue growth.

That rapid growth, on a compound basis, would lead to a doubling of industry revenue in five years. That doesn't mean providers in every segment will benefit equally. But overall revenue growth will happen mostly at the largest service provider entities.

The forecast explicitly assumes that U.S. service providers successfully will grow new revenues at a rate fast enough to compensate for weakening voice revenues, Insight Research believes.

In one sense, it therefore is possible to suggest that U.S. service providers will, once again, succeed in transforming their businesses, as they did when long distance revenue shriveled and was replaced by mobile revenues. 

How Many U.S. Mobile Service Providers are Optimal?

With the recent mergers of T-Mobile USA and MetroPCS, and the purchase of Sprint by Softbank (assuming both transactions pass regulatory muster), there is once again an active discussion in many quarters about the future shape of the U.S. mobile service provider business.

What seems a safe observation, though, is that the number of successful mobile service providers will be few in number. The only question is “how few?” In many markets, there are four to five major providers, in terms of market share. But just how stable a market that is is questionable.

The Rule of Three holds nearly everywhere. While the percentage market share might vary, on an average, the top three mobile service providers control 93 percent of the market share in a given nation, irrespective of the regulatory framework.

Some might argue that scale effects account for the relatively small number of leading providers in many capital-intensive or consumer electronics businesses. At some point, the access business can have only so many facilities-based providers before most companies cannot get enough customers to make a profit.


Eventually, only the top three service providers control the majority of the market. There are niches that others occupy but they are largely irrelevant to the overall structure and functioning of the overall market.

Younger mobile markets can see five to six significant contestants at first, each with at least 10 percent market share. Over time, that winnows to three, history suggests. To be sure, there are plenty of markets where four to six major contestants operate, but even there, about three firms control most of the actual customer and market share.

The competitive equilibrium point in the mobile industry seems to when the market shares of the top three providers are 46 percent:29 percent and 18 percent, some might argue. At such a structure, the top three providers have 93 percent of the market.

That roughly corresponds with a rule of thumb some of us learned about stable markets. The rule is that the top provider has twice the market share of the contestant in second place, while the number-two provider has about twice the market share of the number-three provider.

That suggests the U.S. mobile market still has room to change. At the moment, Verizon Wireless has perhaps 34 percent share, while AT&T has about 32 percent share. Sprint has about 17 percent, while T-Mobile now has about 13 percent.

Classic theory would suggest the ultimate market share could approach a market with the top-three providers having a market share relationship something like 50:25:12.

Real markets always vary from “textbook” predictions, but a “rule of three” market structure seems likely.

That would have highly-significant implications for the four current U.S. providers that today represent 93 percent of all subscribers. One would presume the long-term viability of Sprint and T-Mobile USA is questionable.

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.