Though we should expect to continue to see higher growth rates in parts of the Asia-Pacific, Latin American and African regions, expectations might be more challenging elsewhere.
Purchasing managers indexes (PMI) gauge the activity of thousands of companies, and are considered a leading indicator of coming economic activity.
The latest eurozone PMI reading from survey compiler Markit indicates that the eurozone economy is shrinking at a quarterly rate of around 0.5 percent, according to the purchasing manager surveys. That should also translate into reduce or constricted communications and information technology spending by business customers, probably indicates lower spending by consumers, and therefore will lead to lower capital investment by service providers.
U.S. enterprises also are cutting spending. And on top of all that are declining text messaging, voice and other legacy revenues.
So if global industry revenue grows, it will likely be because of China, India, activity in other developing regions and results from operators in a few developed countries. You should expect trouble in European markets, for the most part.
Tuesday, November 6, 2012
Soon We'll Start Seeing 2013 Global Telecom Revenue Forecasts...
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Fight or Flight is the Fundamental Service Provider Choice
Many global service providers now face a classic “fight or flight” choice. Faced with an immediate threat to life, humans experience physiological changes that prepare them to respond to an immediate stress by fighting or fleeing.
Some might argue that service providers now face similar choices. The “fight” response can be seen in service provider efforts to create their own over the top apps and otherwise invest in upgrading existing legacy services.
The “flight” response has more tactical expressions, but basically amounts to a “harvest and invest elsewhere” effort. The determination is that, fundamentally, no matter what a contestant does, the revenue stream cannot meaningfully be “saved.”
The fundamental assumption for the “fight” strategy is that a product category can be revitalized and sustained by investment. The fundamental assumption for the “flight” strategy is that the product category either cannot be revived, or that the financial returns will not match the returns from investing elsewhere.
That is the challenges posed by over the top messaging and voice apps, for example. As customers increasingly use services such as Skype, BlackBerry Messenger and WhatsApp, service providers must decide whether fight or flight is the proper response.
“Joyn” is an example of “fighting,” as it attempts to create a carrier-owned substitute for over the top mssaging services. But much service provider attention now seems to be in the “flight” direction.
New pricing plans instituted by Verizon Wireless as one example of flight. Share Everything essentially creates a flat-fee “use the network fee” that includes unlimited domestic calling and texting. That’s a defensive measure to keep some voice and messaging revenue while revenue growth occurs elsewhere.
But most flight strategies entail finding new sources of revenue. That is why Telefónica set up its "Digital" division in September 2011, to develop new products and services that create new customer value.
The flight response also is one reason tier-one service providers around the world are taking a look at growth opportunities such as advertising, banking and machine-to-machine initiatives. Some might include cloud computing businesses among the top possible new areas as well.
Capital investment also is another example the “fight or flight” choice. How much capital should be invested in fixed networks, if investment in mobile networks is a viable alternative? So far, most service providers with a real choice have favored mobile networks.
Some might argue that service providers now face similar choices. The “fight” response can be seen in service provider efforts to create their own over the top apps and otherwise invest in upgrading existing legacy services.
The “flight” response has more tactical expressions, but basically amounts to a “harvest and invest elsewhere” effort. The determination is that, fundamentally, no matter what a contestant does, the revenue stream cannot meaningfully be “saved.”
The fundamental assumption for the “fight” strategy is that a product category can be revitalized and sustained by investment. The fundamental assumption for the “flight” strategy is that the product category either cannot be revived, or that the financial returns will not match the returns from investing elsewhere.
That is the challenges posed by over the top messaging and voice apps, for example. As customers increasingly use services such as Skype, BlackBerry Messenger and WhatsApp, service providers must decide whether fight or flight is the proper response.
“Joyn” is an example of “fighting,” as it attempts to create a carrier-owned substitute for over the top mssaging services. But much service provider attention now seems to be in the “flight” direction.
New pricing plans instituted by Verizon Wireless as one example of flight. Share Everything essentially creates a flat-fee “use the network fee” that includes unlimited domestic calling and texting. That’s a defensive measure to keep some voice and messaging revenue while revenue growth occurs elsewhere.
But most flight strategies entail finding new sources of revenue. That is why Telefónica set up its "Digital" division in September 2011, to develop new products and services that create new customer value.
The flight response also is one reason tier-one service providers around the world are taking a look at growth opportunities such as advertising, banking and machine-to-machine initiatives. Some might include cloud computing businesses among the top possible new areas as well.
Capital investment also is another example the “fight or flight” choice. How much capital should be invested in fixed networks, if investment in mobile networks is a viable alternative? So far, most service providers with a real choice have favored mobile networks.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
One Thing Everybody Can Agree On: UN Shouldn't Control the Internet
The International Telecommunication Union (ITU) plans to hold a treaty conference, the World Conference on International Telecommunications, in December 2012, which will revise a 1988 treaty.
At stake are the ways communication network owners compensate each other for terminating international voice calls through the payment of settlements. But that is but one of many huge implications. Observers say the danger is direct controls on freedom of Internet expression.
The ITU is seeking to gain more control over Internet content. One reason is that countries such as Russia have called for restrictions over the internet where it is used to" interfere in the internal affairs of a state."
Opponents rightly say this represents a dramatic threat to the openness of the internet, where countries could regulate content not just within their own borders but globally.
But there are many practical business implications as well. The ITU proposes to change the way the Internet is governed, in ways that will harm the Internet by raising the cost and complexity of exchanging traffic, Analysys Mason researchers argue.
In part, the ITU wants to create a new Internet traffic “settlements regime” modeled on voice precedents that will be difficult to administer and raise overhead costs.
But there could be other significant effects. First, operators might be induced to maintain their customers‘ websites abroad. One of the significant benefits of establishing an internet exchange point is to make it attractive for domestic websites to be hosted at home, in order to increase their performance and lower costs, Analysys Mason notes.
However, given that foreign websites will generate a source of incoming settlements revenue, the incentive to keep them abroad would increase.
At the same time, foreign operators, in order to compensate for the higher settlements costs, would likely raise the price of hosting websites serving countries with high settlement rates.
While this could be seen to increase the incentives to locate content in the target country in order to avoid settlements, that is often not efficient, particularly for small or undeveloped markets from which access to a regional server may be sufficient, Analysys Mason argues.
In addition, it is likely that infrastructure investment decisions would be affected, as providers would be reluctant to invest in providing infrastructure to a particular country to which it is expensive to deliver traffic. In other words, there will be financial reasons not to build more undersea links to certain countries, for example.
Also, huge volumes of Internet traffic could be artificially generated in order to arbitrage a rate-regulated model, to generate inbound payments, alter traffic balances, or otherwise unfairly leverage any accounting rate regime that may be applied to the Internet.
Entities that believe they would be net recipients of settlements, based on current projections of traffic flows, might find themselves net payers as a result of the manipulation of traffic flows by other players. In other words, the incentives for arbitrage will increase.
Consider the flows of traffic. The notion of settlements is that a carrier that terminates traffic incurs costs to deliver that traffic. So a sending carrier pays the terminating carrier. In many cases, the traffic flows should largely balance each other, so the net payments are relatively small in magnitude.
But there are scenarios where traffic is unbalanced, and that causes problems. In the voice settlement regime, carriers that accept more traffic than they send wind up paying money. Carriers that send more traffic than they receive make money.
Some of you will remember, or even be able to point to, instances where revenue arbitrage was possible precisely because of such asymmetrical traffic flows. Server farms and “free conference calling services” in the United States provide examples.
In the proposed ITU framework, it is server farm traffic that could be troubling for some carriers.
Multimedia content, for example, might represent as much as 98 percent of Internet traffic. Right now, where those servers are located does not have implications for inter-carrier settlements.
For cost reasons, many of those servers are located in Africa. In 1999, 70 percent of international Internet bandwidth originating in Africa went to the United States. In 2011, less than five percent goes to the United States.
These days, content is stored at African server farms, for distribution largely to Africa, Analysys Mason notes. In some ways, that is helpful to African consumers, for quality and cost reasons. In other ways, high cross-border charges are unhelpful.
While it is true that IXPs are emerging to facilitate local exchange of traffic in Africa, the cost of cross-border connectivity between many African countries is still quite high, and this is hindering the emergence of regional IXPs to help exchange traffic and distribute content.
The bandwidth from Latin America presents the same broad picture. Between 1999 and 2011, the percentage of bandwidth going to the United States fell from just under 90 percent to 85 percent, replaced by more intra-regional traffic.
The main similarities between Africa and Latin America are that over 80 percent of their Internet bandwidth is connected to another region (Europe and the US respectively). At the same time, little bandwidth goes between countries within the region. Intra-Latin American traffic is 15 percent of total, while intra-African traffic is two percent.
In ways directly related to human freedom, the free flow of information and the cost of getting information anywhere on the planet, U.N. governance of the Internet would be harmful.
At stake are the ways communication network owners compensate each other for terminating international voice calls through the payment of settlements. But that is but one of many huge implications. Observers say the danger is direct controls on freedom of Internet expression.
The ITU is seeking to gain more control over Internet content. One reason is that countries such as Russia have called for restrictions over the internet where it is used to" interfere in the internal affairs of a state."
Opponents rightly say this represents a dramatic threat to the openness of the internet, where countries could regulate content not just within their own borders but globally.
But there are many practical business implications as well. The ITU proposes to change the way the Internet is governed, in ways that will harm the Internet by raising the cost and complexity of exchanging traffic, Analysys Mason researchers argue.
In part, the ITU wants to create a new Internet traffic “settlements regime” modeled on voice precedents that will be difficult to administer and raise overhead costs.
But there could be other significant effects. First, operators might be induced to maintain their customers‘ websites abroad. One of the significant benefits of establishing an internet exchange point is to make it attractive for domestic websites to be hosted at home, in order to increase their performance and lower costs, Analysys Mason notes.
However, given that foreign websites will generate a source of incoming settlements revenue, the incentive to keep them abroad would increase.
At the same time, foreign operators, in order to compensate for the higher settlements costs, would likely raise the price of hosting websites serving countries with high settlement rates.
While this could be seen to increase the incentives to locate content in the target country in order to avoid settlements, that is often not efficient, particularly for small or undeveloped markets from which access to a regional server may be sufficient, Analysys Mason argues.
In addition, it is likely that infrastructure investment decisions would be affected, as providers would be reluctant to invest in providing infrastructure to a particular country to which it is expensive to deliver traffic. In other words, there will be financial reasons not to build more undersea links to certain countries, for example.
Also, huge volumes of Internet traffic could be artificially generated in order to arbitrage a rate-regulated model, to generate inbound payments, alter traffic balances, or otherwise unfairly leverage any accounting rate regime that may be applied to the Internet.
Entities that believe they would be net recipients of settlements, based on current projections of traffic flows, might find themselves net payers as a result of the manipulation of traffic flows by other players. In other words, the incentives for arbitrage will increase.
Consider the flows of traffic. The notion of settlements is that a carrier that terminates traffic incurs costs to deliver that traffic. So a sending carrier pays the terminating carrier. In many cases, the traffic flows should largely balance each other, so the net payments are relatively small in magnitude.
But there are scenarios where traffic is unbalanced, and that causes problems. In the voice settlement regime, carriers that accept more traffic than they send wind up paying money. Carriers that send more traffic than they receive make money.
Some of you will remember, or even be able to point to, instances where revenue arbitrage was possible precisely because of such asymmetrical traffic flows. Server farms and “free conference calling services” in the United States provide examples.
In the proposed ITU framework, it is server farm traffic that could be troubling for some carriers.
Multimedia content, for example, might represent as much as 98 percent of Internet traffic. Right now, where those servers are located does not have implications for inter-carrier settlements.
For cost reasons, many of those servers are located in Africa. In 1999, 70 percent of international Internet bandwidth originating in Africa went to the United States. In 2011, less than five percent goes to the United States.
These days, content is stored at African server farms, for distribution largely to Africa, Analysys Mason notes. In some ways, that is helpful to African consumers, for quality and cost reasons. In other ways, high cross-border charges are unhelpful.
While it is true that IXPs are emerging to facilitate local exchange of traffic in Africa, the cost of cross-border connectivity between many African countries is still quite high, and this is hindering the emergence of regional IXPs to help exchange traffic and distribute content.
The bandwidth from Latin America presents the same broad picture. Between 1999 and 2011, the percentage of bandwidth going to the United States fell from just under 90 percent to 85 percent, replaced by more intra-regional traffic.
The main similarities between Africa and Latin America are that over 80 percent of their Internet bandwidth is connected to another region (Europe and the US respectively). At the same time, little bandwidth goes between countries within the region. Intra-Latin American traffic is 15 percent of total, while intra-African traffic is two percent.
In ways directly related to human freedom, the free flow of information and the cost of getting information anywhere on the planet, U.N. governance of the Internet would be harmful.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
By 2016, 66% of Workers Will Use Smart Phones
“In 2016, two-thirds of the mobile workforce will own a smart phone, and 40 percent of the workforce will be mobile,” sayts Crolina Milanesi, Gartner VP.
Gartner estimates that in 2012 purchases of tablets by businesses will reach 13 million units and will more than triple by 2016, to reach 53 million units.
Some 821 million smart devices (smart phones and tablets) will be purchased worldwide in 2012 and pass the billion mark in 2013, Gartner says. Smart devices will account for 70 percent of total devices sold in 2012.
Gartner estimates that in 2012 purchases of tablets by businesses will reach 13 million units and will more than triple by 2016, to reach 53 million units.
Some 821 million smart devices (smart phones and tablets) will be purchased worldwide in 2012 and pass the billion mark in 2013, Gartner says. Smart devices will account for 70 percent of total devices sold in 2012.
“For most businesses smart phones and tablets will not entirely replace PCs, but the ubiquity of smart phones and the increasing popularity of tablets are changing the way businesses look at their device strategies and the way consumers embrace devices,” said Milanesi.
Gartner estimates that 56 percent of smart phones purchased by businesses in North America and Europe will be Android devices in 2016, up from 34 percent in 2012 and virtually no penetration in 2010.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Android Adoption Ramping Up 6X Faster Than iPhone, Mary Meeker Says
Android phone adoption is growing six times faster than the Apple iPhone, says Kleiner Perkins Caufield & Byers Partner Mary Meeker. Android also surpassed Windows as the number-one operating system for Internet-enabled devices in the first quarter of 2012, Meeker says.
Apple iPad adoption also is growing five times faster than the iPhone did. In fact iPad adoption rates have accelerated. In May 2012, Meeker said the iPad ownership was growing three times faster than did the Apple iPhone.
In fact, it appears that Android has been adopted faster than Google itself had expected. In this Asymco estimate, the blue line is Google's forecast, while the yellow line is actual adoption.
Google cares about devices, operating systems, faster Internet access and browsers because alll of those are tools that get the Intenet in front of more people, who can see more ads. In fact, Google arguably is the first very-large software company in history to make a business model out of providing technology while earning its revenue indirectly, from advertising.
In the past, Google has tweaked its mobile browser and tried to show website owners see the connection between their sites’ performance and sales. In fact, Google search ranking depends, in part, on loading speed.
But the "need for speed" even has lead Google to invest some money in higher-speed access experiments designed to prod others to invest more, and invest faster.
Faster mobile Web loads could increase mobile commerce sales in the United States by 10 percent, or about $600 million a year, said Forrester Research analyst Sucharita Mulpuru.
Almost half of mobile users are unlikely to return to a website at all if they had trouble accessing it from their phone, a 2011 study by Equation Research found.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Monday, November 5, 2012
Business Process as a Service Estimates are Going to Be Huge, For Obvious Reasons
It typically is difficult to estimate the size of a big a new market when that new market essentially cannibalizes existing businesses in the process.
Something like that probably is going to happen with cloud computing. Cloud-based services will cannibalize other existing functions and revenue streams.
Consider the notion of “business process as a service.” What’s a business process? Business process management is said by IBM to include such functions as
Email management, communications management or shopping cart services and catalog processes might be other examples of possible candidates for BPaaS displacement.
Estimating how big the BPaaS market actually is will be a tough exercise, though. What counts as a business process “as a service?” Is it only the value of the contract to use a retail checkout system, a catalog or a fulfillment process? Is it partly the value of the transactions, or the value of the products traded?
For any cloud-supported mobile or Internet advertising system, what should be counted? Is it the value of the advertising, or only the commissions an exchange might earn? The same question can be asked for any cloud-based payment system.
The point is that it is possible cloud services markets might be bigger than currently envisioned, only partly depending on “what” gets counted.
The reason is that more and more business processes using software, processing and storage are shifting to cloud mechanisms, even though we traditionally have viewed software delivery, computing resources, storage and development environments are the primary cloud markets
That might be one reason why BPaaS, already represents the largest segment of what analysts at Gartner now tabulate in the cloud services realm, accounting for about 77 percent of the total market, Gartner now argues.
BPaaS is the largest segment primarily because of the inclusion of cloud advertising as a sub-segment.
But you might also argue that BPaaS is so big because it basically represents a redefinition of the traditional outsourcing business. And that is a larger business than simple computing, storage and applications delivery.
One expects to see big numbers for cloud revenues. But one reason those estimates can get so large is that traditional outsourcing and advertising, both substantial businesses, logically can be counted as a BPaaS.
Something like that probably is going to happen with cloud computing. Cloud-based services will cannibalize other existing functions and revenue streams.
Consider the notion of “business process as a service.” What’s a business process? Business process management is said by IBM to include such functions as
- Web analytics
- Enterprise marketing management
- Business-to-business integration
- Supply-chain management
- Security governance, risk management and compliance
- Business service management
BPaaS clearly has potential to shift customer buying, the supplier base and revenue streams as cloud alternatives develop and displace legacy alternatives.
Email management, communications management or shopping cart services and catalog processes might be other examples of possible candidates for BPaaS displacement.
Estimating how big the BPaaS market actually is will be a tough exercise, though. What counts as a business process “as a service?” Is it only the value of the contract to use a retail checkout system, a catalog or a fulfillment process? Is it partly the value of the transactions, or the value of the products traded?
For any cloud-supported mobile or Internet advertising system, what should be counted? Is it the value of the advertising, or only the commissions an exchange might earn? The same question can be asked for any cloud-based payment system.
The point is that it is possible cloud services markets might be bigger than currently envisioned, only partly depending on “what” gets counted.
The reason is that more and more business processes using software, processing and storage are shifting to cloud mechanisms, even though we traditionally have viewed software delivery, computing resources, storage and development environments are the primary cloud markets
That might be one reason why BPaaS, already represents the largest segment of what analysts at Gartner now tabulate in the cloud services realm, accounting for about 77 percent of the total market, Gartner now argues.
BPaaS is the largest segment primarily because of the inclusion of cloud advertising as a sub-segment.
But you might also argue that BPaaS is so big because it basically represents a redefinition of the traditional outsourcing business. And that is a larger business than simple computing, storage and applications delivery.
One expects to see big numbers for cloud revenues. But one reason those estimates can get so large is that traditional outsourcing and advertising, both substantial businesses, logically can be counted as a BPaaS.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
Voice Erosion Now "Alarming" in Some Markets?
Though the trend is not always quite so obvious in the U.S. and Canada telecom markets, erosion of fixed network voice lines is assuming alarming proportions in some markets, including the United Kingdom.
Some 65 percent of 500 U.K. chief information officers surveyed by Vanson Bourne on behalf of Virgin Media Business believe fixed network telephones “will disappear from everyday use within five years,” Virgin Media Business says.
Separately, analysts at STL Partners estimate that, with 2009 representing an index point of 100, U.K. fixed network voice revenues will have shrunk by 50 percent by 2014. Keep in mind, that is an estimate that use of fixed network voice lines will be cut in half in just five years.
That wouldn’t be an unusually damaging occurrence, if new revenue sources can offset the losses. But STL Partners says new data services will fail to keep pace, with a net overall result of declining fixed network revenues of possibly 24 percent by 2014, compared to 2009.
The latest report on U.S. fixed network voice connections by the Federal Communications Commission suggests that voice connections declined three percent between June 2010 and June 2011. That raises an obvious question: will number of fixed voice connections continue to drop, without end, to zero?
That seems highly improbable. There would seem to be some good reasons for predicting a perpetual demand for fixed voice connections, not the least of which is that voice quality likely always will be higher, and more consistent, on fixed connections, compared to mobile or forms of VoIP that do not use managed connections.
But that isn’t the only reason. Much might hinge on how voice services are packaged and priced.
In principle, service providers can package fixed network voice service in ways that impose little incremental cost over not buying the service, or in fact tie the purchase of another network service to the voice service. That is not to discount the “add value” approaches, but simply to note that the easiest path forward is simply to make fixed voice service so affordable there is no reason to drop it.
Service providers will not like the gross revenue implications, but the simple matter is that if the value of fixed voice keeps dropping, compared to mobile voice, erosion will continue. On the other hand, if voice and perhaps other features are bundled with the “lead” broadband access service in ways that users find reasonable, massive erosion might be avoided.
Under the new Verizon Wireless pricing scheme, for example, though users can still use over the top messaging and voice, there is no financial incentive to do so, at least for domestic calling.
At some point, fixed network providers will probably reach the same conclusion, and package “broadband access” with voice features in ways that make paying for fixed network voice a reasonable and preferable option. You might argue that Charter Communications and Verizon’s landline business already have moved in that direction.
If the executive opinions wind up being correct, whether the magnitude or timing of the changes are accurate, there will be huge shifts of opportunity for suppliers of voice services, unified communications, business phone systems, mobile and fixed network service providers alike.
Obviously, voice will become--even more than it already is--the preferred way for people to use voice services. The only real surprise is that this could be true for enterprise employees, not just consumers.
Of course, for every “loser,” included fixed network telcos or suppliers of premises-based business phone systems, there will be “winners,” including mobile service providers and possibly some providers of unified communications services.
Call center functions obviously will continue to require a high level of voice and unified communications support. But collaboration functions could shift to other media types, for many other enterprise workers.
But if the CIOs are accurate, business voice rapidly is shifting to mobile modes, for most workers, with obvious architectural implications. By the end of 2012, 70 percent of the U.K. population is expected to have a smart device reliant on mobile connectivity, Virgin Media Business argues.
Already, in the past year the amount of data consumed on the Virgin Media Business network jumped to 765 billion individual bits of data being transferred every second, erasing the previous mark for the Virgin Media Business network by 27 percent, Virgin Media Business says.
The big problem in the U.K. fixed network business now appears to be that the legacy voice business is declining faster than the broadband access business is growing.
Some 65 percent of 500 U.K. chief information officers surveyed by Vanson Bourne on behalf of Virgin Media Business believe fixed network telephones “will disappear from everyday use within five years,” Virgin Media Business says.
Separately, analysts at STL Partners estimate that, with 2009 representing an index point of 100, U.K. fixed network voice revenues will have shrunk by 50 percent by 2014. Keep in mind, that is an estimate that use of fixed network voice lines will be cut in half in just five years.
That wouldn’t be an unusually damaging occurrence, if new revenue sources can offset the losses. But STL Partners says new data services will fail to keep pace, with a net overall result of declining fixed network revenues of possibly 24 percent by 2014, compared to 2009.
The latest report on U.S. fixed network voice connections by the Federal Communications Commission suggests that voice connections declined three percent between June 2010 and June 2011. That raises an obvious question: will number of fixed voice connections continue to drop, without end, to zero?
That seems highly improbable. There would seem to be some good reasons for predicting a perpetual demand for fixed voice connections, not the least of which is that voice quality likely always will be higher, and more consistent, on fixed connections, compared to mobile or forms of VoIP that do not use managed connections.
But that isn’t the only reason. Much might hinge on how voice services are packaged and priced.
In principle, service providers can package fixed network voice service in ways that impose little incremental cost over not buying the service, or in fact tie the purchase of another network service to the voice service. That is not to discount the “add value” approaches, but simply to note that the easiest path forward is simply to make fixed voice service so affordable there is no reason to drop it.
Service providers will not like the gross revenue implications, but the simple matter is that if the value of fixed voice keeps dropping, compared to mobile voice, erosion will continue. On the other hand, if voice and perhaps other features are bundled with the “lead” broadband access service in ways that users find reasonable, massive erosion might be avoided.
Under the new Verizon Wireless pricing scheme, for example, though users can still use over the top messaging and voice, there is no financial incentive to do so, at least for domestic calling.
At some point, fixed network providers will probably reach the same conclusion, and package “broadband access” with voice features in ways that make paying for fixed network voice a reasonable and preferable option. You might argue that Charter Communications and Verizon’s landline business already have moved in that direction.
If the executive opinions wind up being correct, whether the magnitude or timing of the changes are accurate, there will be huge shifts of opportunity for suppliers of voice services, unified communications, business phone systems, mobile and fixed network service providers alike.
Obviously, voice will become--even more than it already is--the preferred way for people to use voice services. The only real surprise is that this could be true for enterprise employees, not just consumers.
Of course, for every “loser,” included fixed network telcos or suppliers of premises-based business phone systems, there will be “winners,” including mobile service providers and possibly some providers of unified communications services.
Call center functions obviously will continue to require a high level of voice and unified communications support. But collaboration functions could shift to other media types, for many other enterprise workers.
But if the CIOs are accurate, business voice rapidly is shifting to mobile modes, for most workers, with obvious architectural implications. By the end of 2012, 70 percent of the U.K. population is expected to have a smart device reliant on mobile connectivity, Virgin Media Business argues.
Already, in the past year the amount of data consumed on the Virgin Media Business network jumped to 765 billion individual bits of data being transferred every second, erasing the previous mark for the Virgin Media Business network by 27 percent, Virgin Media Business says.
The big problem in the U.K. fixed network business now appears to be that the legacy voice business is declining faster than the broadband access business is growing.
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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