1000-Fold Improvement in Mobile Bandwidth Requires Multiple Changes

Though some might question the assumptions, many in the mobile industry would argue that a 1,000-fold increase in mobile bandwidth is going to be needed, over time, and some think that will be necessary as early as 2020.

That assumption tends to rely on typical mobile consumers downloading a gigabyte every day. You can make your own assumptions about whether that is a reasonable assumption. 

No single technique is likely to provide an improvement of three orders of magnitude in mobile bandwidth, though. So most think several different approaches will be needed, in tandem. 

One promising example is the “Neighborhood Small cells” model — a network of extremely low-cost, plug-and-play, open, indoor small cells, Qualcomm argues.

What makes the approach unusual is that the subscriber hosting the cell supplies the backhaul, which also bleeds out into the neighborhood to reinforce mobile coverage for other neighbors.

Studies show potential capacity increases of up to 500 times with a mere nine percent penetration of households and up to 1,000 times with 20 percent penetration, when combined with 10 times more spectrum.

Qualcomm is among firms that see three basic ways to get to a 1,000-fold increase in effective bandwidth. Virtually all the ways to get to 1,000 involve more spectrum, more small cells and use of offload strategies or better coding techniques.

Is 1-Gbps a "Hail Mary Pass"for Burlington Telecom?

Financially troubled Burlington Telecom, a municipally-owned communications provider, has decided to sell 1-Gbps Internet access services. 

The symmetrical 1-Gbps service will sell for $150 to $200 a month. The issue at this point is whether the new superfast access is capable of turning around revenue enough to stave off a financial collapse. 

A 2010 study concluded that “BT is not viable in relationship to its current debt load of $51 million and its ability to generate earnings to repay this debt."

"BT cannot meet its principal and interest obligations at this time,” the study concluded, noting that the company’s current business plan can’t meet future financial challenges either.

An agreement with pirmary lender Citibank in March 2012 stipulates that the first 60 percent of BT profits are to be paid to Citibank, which means taxpayers now are second in line to protect their investment. 

At current rates, it will take 96 years for BT to pay off the Citibank loan. 

Soon We'll Start Seeing 2013 Global Telecom Revenue Forecasts...

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. 

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.

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.

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.

“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. 

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.