How Much Substitution Will LTE Drive?

Long Term Evolution might be a "future" strategy in most markets. But it is starting to look as though LTE already has become a marketing platform in the U.S. market. Every major mobile operator already is deploying, or trying to figure out how to deploy LTE.

Beyond that, some have been waiting for evidence that fourth generation mobile networks are fast enough to displace some amount of fixed broadband access. Up to this point, the actual amount of such product substitution has been fairly limited, though consumers in Austria have been enthusiastic about relying only on mobile for broadband access. 

In Austria, 19 percent of households say they use only mobile broadband, and have no fixed broadband access. In Italy, about 14 percent say they have "cut the cord."

In the United Kingdom, about five percent say they now use only mobile broadband, while six percent report using only mobile broadband in the U.S. market. But those figures probably will jump as fourth generation LTE networks reach ubiquity in some markets. 

The reason is that LTE should should in some cases offer users about an order of magnitude faster access than 3G. 

And that will entice at least some users to evaluate LTE as a reasonable substitute for fixed broadband, especially lighter users who do not watch lots of streaming video, that do not share a single fixed connection for more than one or two light users, and who might conclude that the cost of a single mobile subscription with LTE offers a reasonable savings compared to buying both mobile service and a fixed network connection.


Verizon Wireless, for example,  now plans to complete its LTE rollout by the middle of 2013, two quarters ahead of its previous goal to blanket its 3G footprint with LTE by the end of 2013. 

AT&T now appears to be accelerating its own LTE build as well. AT&T and Verizon both have indicated they believe LTE can be a viable "next generation" broadband access network for many users in rural areas, for example. 

In that sense, both AT&T and Verizon will themselves try to drive LTE cannibalization of fixed broadband access. So watch for new signs LTE is driving more substitution for fixed broadband service. 

Mobile Revenue Still Start Declining In Central, Eastern Europe in 2015

Mobile service providers in Central and Eastern Europe will hit a peak sometime about 2015, and then start declining, according to analysts at Analysys Mason. 

Between 2007 and 2011, operators in Central and Eastern Europe had seen revenue growth of about 4.7 percent on a compound annual basis. 

But Analysys Mason now projects that growth has slowed to about a one percent compound annual growth rate. Starting in 2015, revenue will slow at about a negative 0.6 percent CAGR.  

Mobile service revenue at constant (2011) exchange rate  [Source: Analysys Mason, 2012]

In Western Europe, revenue has been declining for some time. 

Consumers Want Tablets for Christmas and Holidays

When consumers were asked whether they would rather receive a tablet computer or a laptop as a holiday gift this year, 59 percent indicated that they would rather receive a tablet, according to a PriceGrabber survey.

Some 71 percent of shoppers also indicated that they believe tablet computers will replace e-readers as gifts this year. Conducted from Oct. 24 to Nov. 1, 2012, the survey includes responses from 1,475 U.S. online shopping consumers.

If so, some current forecasts of tablet adoption, compared to sales of PCs, might have to be revised. 

Austrian Telco Finds You Can't "Go it Alone" in Mobile Payments

It is extremely difficult for any single brand, especially a telecom service provider brand, to launch its own branded mobile payments system, competing, in other words, with MasterCard and Visa.

Isis, the venture owned by At&T, Verizon Wireless and T-Mobile USA, considered that approach but fairly quickly turned to a business model based on marketing, advertising and other e-commerce services other than processing transactions. 

But Austria mobile service provider A1 gave it a try. It launched a "paybox NFC" payment system focused on mobile parking fare-collection service, as well as retail point of sale. 

The telco, which is one of the few operators worldwide to operate its own bank, still found the task too daunting. A1, which is part of the Telekom Austria Group, had tried to get other Austrian telcos to take part in the paybox NFC payment scheme, but was apparently unsuccessful. 

Nor was A1 able to entice a wide range of retailer to embrace the system, either.  The closed-loop system also meant consumers would not be able to use the payment service outside of Austria.

The industry is in the early days of the shift to mobile commerce, including mobile payments and mobile wallets, so lots of trials will be held, and lots of approaches will fail. Some competitors still are going to try to take on the likes of Visa and MasterCard. You might say PayPal is among them. 

Some will try and take on card issuers. Count Square and others among this group. 

But many will simply look elsewhere for opportunities within the mobile commerce business. 

U.S. Video Subscription Business is Quite Mature

The U.S. video subscription business, like other network-based products such as voice and messaging, is a mature business, as seen in the number of net new customers the whole business is getting. 

It isn't getting many new customers, with most of the change consisting of consumers switching service providers. In the third quarter of 2012, U.S. video service providers lost 127,000 customers, overall. 

DirectTV gained 67,000 customers. Time Warner Cable lost 140,000; Comcast 117,000 customers. Cablevision shrunk by about 10,000 customers.

Charter shed 73,000 customers. So if those cable operators lost 359,000 customers, while DirecTV gained 67,000, there are 302,000 customers who went someplace other than DirecTV and Dish. 

Most of them must have gone to AT&T and Verizon, the two largest U.S. telco providers. 

Mobile Soon Will be Primary Internet Access, Everywhere

The use of mobile devices to access the Internet is becoming the medium of choice everywhere around the world, with 69 percent of all Internet users surveyed doing so daily, according to a study of consumers in Europe, Latin America and South Africa conducted by Accenture. 

In addition, consumers are using multiple devices to connect to the web, including smart phones (61 percent), netbooks (37 percent), and tablets (22 percent), the Accenture study suggests.

The study found that emerging economies such as Brazil, South Africa and Russia also have rapidly adopted mobile devices (more than 70 percent, on average) to access the Internet, Accenture says. 

Given their affordability, smart phones are more likely than other devices to serve as access gateways to the Internet in these emerging markets. This trend is set to continue, with a higher percentage of respondents in emerging markets expressing their intention to buy a Web-enabled mobile phone in the near future (Brazil, 78 percent;  Russia, 73 percent; Mexico, 61 percent; and South Africa, 57 percent) as compared with an average of 46 percent for all countries surveyed.


In developed European economies, mobile Internet is also on the rise. In Germany, adoption of mobile Internet access using smart phones has tripled since 2010 (from 17 to 51 percent), the study found.

In Switzerland, today 67 percent of respondents use Web-enabled mobile phones to go online, compared to 27 percent in 2010. In Austria, the percentage of mobile Internet users has doubled in two years (from 31 to 62 percent).

Information apps, such as train schedules, the weather, or news are the most popular downloaded apps, according to 72 percent of survey respondents, followed closely by entertainment apps (70 percent).

And there is confirmation of the importance of access network quality. Fully 85 percent of the respondents said that the “quality of the network” was the most important factor in selecting a smart phone or tablet.  As you would expect, “communications” leads applications used frequently by mobile Internet users. Sending or receiving e-mails through an installed program is the most popular feature among all respondents (70 percent), followed by accessing online communities (62 percent) and instant messaging (61 percent).Respondents in the emerging markets of Mexico and South Africa are the biggest users of mobile email and instant messaging (more than 80 percent of respondents in both countries).  Among all respondents, 27 percent use their mobile device for tweeting and blogging, and 46 percent use mobile devices to conduct banking transactions.

Post PC is Based on Mobile, Untethered, Cloud

You safely can assume we are entering a new era of computing when people do not even agree on a "name" for that era. We have passed through eras dominated by particular types of devices, such as mainframes, minicomputers and personal computers.

We now live in a world lead by use of smart phones, tablets and other devices such as MP3 players and game consoles. People seem to agree the coming or emerging era will feature cloud computing rather than locally-based, shrink-wrapped applications, untethered and nomadic or mobile devices.

People seem to agree that the "purpose" of computing appliances has changed. We use some devices mostly for "work," such as a desktop PC at the office. But most of the other devices, though sometimes also used for work, have a broader range of  use cases.



Smart phones routinely are used for work and play. Tablets are used in the same way, but lean towards consumption of content, not its creation. MP3 and game consoles obviously are used mostly for entertainment and play. 

Computers started out in glass rooms, moved to desktops, and now to pockets and purses. They are embedded in vehicles, industrial and commercial systems of all types. 

But it remains difficult to separate out cloud computing from mobile, untethered and other forms of ubiquitous computing as the "defining" characteristic of the new era.