Groupon Issues Aside, Daily Deals Business Grows

Recent concern about daily deals in general and about one provider of "daily deals" (Groupon) in particular tends to cast doubt on the daily deals business as a whole. But the "coupons" business, of which daily deals are a part, continues to grow. "Social" ad spending is growing.

With the shift of consumer behavior to mobile devices, transactional marketing opportunities are growing as well. But isn't clear is how the market will continue to develop, though. 

Key revenue streams are emerging such as monthly or annual fees, commissions for loyalty business, bounties for new customers and mark-ups on transactional fees, according to BIA Kelsey.

Will French Mobile Market Consolidate?

We might soon get a real-world test of how many mobile service providers a stable market can support, as the three larger mobile service providers continue to face a pricing challenge from Illiad's Free Mobile operation.

SFR, owned by Vivendi, is in the midst of a strategic review that could have SFR merging with at least one other provider in the French market. The other mobile operators are struggling with revenue issues as they lower prices to compete with Free Mobile. 

So there now is growing speculation about industry consolidation. Many executives believe the market will eventually return to just three providers. That would correspond to the "rule of three" that seems to operate in most markets. 

In the meantime, all the providers seem to be looking at ways to reduce operating costs further, the Financial Times reports. 

Social Networking is Heading Towards "Mobile First"

As adoption of smart phones grows, so does the percentage of time people use social networks from those devices, instead of PCs. Nielsen says more than 60 percent of social network users get to their favored sites using their mobile device in Singapore, Indonesia, China, Korea and Hong Kong.

You might reasonably infer that mobile social media use is higher in those nations because smart phone penetration is highest in those nations. 

Actual smartphone penetration rate (per population) varies wildly among that bunch, from low penetration in Indonesia to more than 60 percent in Korea, Nielsen says. 

What is 5G?

Mobile networks have gone through distinct generations based on air interface, ranging from the original analog to second generation TDM and then a few flavors of 3G and now a small range of flavors of 4G Long Term Evolution.

Now U.K. regulator Ofcom is referring to "5G," which doesn't yet exist, for spectrum it plans to auction off in 2018, if all goes according to plan. 

Those frequencies in the 700 MHz band, which by that time will no longer be used to support TV services. 

Because the spectrum won’t be available till 2018, Ofcom, expects this will be used for the next technology following 4G or LTE, and it is therefore being referred to as “5G”. It's a fiction at the moment, since the industry has not agreed on what is to follow LTE. Nor is it clear LTE necessarily will need to be superseded by 2018. 

Roughly speaking, air interface generations have occurred about every decade, starting about 1980 for first generation, then 1990 for second generation, then 2000 for 3G and now 2010 for fourth generation networks. That implies the fifth generation will start to appear about 2020. 

Another Example of Regulator Impact on Business Strategy

Taxi and limousine regulators from 15 U.S. and Canadian cities plan to place restrictions on use of smart phone applications and online services that allow people to find and use taxi services, the  Wall Street Journal reports.

The story would be a familiar one for many veterans of the communications, broadcasting, cable TV and radio businesses, and a newly-heard story for technology industry participants. And that story is the foundational role played by regulations in enabling or barring a new industry from developing.

In fact, some global studies indicate that such entry restrictions not only are harmful to consumer welfare, but also lead to corruption. That flies in the face of theories of the benefits of “public interest regulation,” but the facts are hard to ignore, some might argue. Simply put, a study of practices in  85 countries shows fewer public benefits, not more, from heavy entry regulation. 

Deregulation has dramatically reshaped mobile service provider markets, for example, leading to a situation where it is common for a former monopolist to have only about a third of the market.



The other element of the story that will be familiar to many in the telecommunications business is the notion that the industry that is supposed to be regulated comes to ”own” the regulatory process. Such regulatory capture is widely seen as part of the reason large firms spend so much money lobbying in Washington, D.C., for example.

The rules, created by a task force of the International Association of Transportation Regulators,  would, for example, ban the use of a GPS-equipped smart phone in place of a taxi meter. Any experienced executive in the communications business could likely point to many instances where a regulator ruling on a technology matter had large business consequences for a service provider, or would-be service provider.

The rules would essentially kill Uber Technologies, and others like it, which use drivers' phones to determine the length and cost of rides. That appears to be a simple “technology” rule, but it also has business consequences.

The rule is, in some cases, and perhaps ultimately, about controlling entry into the business. The use of new smart phone based systems essentially undermines the licensing system used in the taxi industry. By banning the use of smart phones for metering, regulators also control entry into the business.

That is a hallmark of communications regulation as well, where a wide variety of rules, some based on technology, also prevent or enable contestants to enter the business.

The proposals also speak to retail packaging and pricing, another hallmark of communications regulation. The new rules would forbid "demand-pricing,” where fares for trips of equal length and destination could vary based on supply and demand.

As always, regulators will say the new rules are intended to protect the public from unfair fares and protect safety. The corollary is that the rules will protect an incumbent industry from competition that represents more consumer choice.

It’s an old story, indeed. The story might be less obvious in the wake of widespread deregulation of telecommunications in most nations, but remains a crucial element of the communications business. And the car for hire business, it now seems, is in the spotlight.

Whatever one thinks of the benefits or costs of entry regulation, there are costs.

More Worrisome Data on TV Viewing

Some television executives argue that use of digital video recorders explains sharp declines in "live" viewing of most major broadcast networks in the fall of 2012. That might not be entirely true.

It appears that consumer viewing of broadcast TV using a DVR also shows a decline that virtually matches the live TV results, the Wall Street Journal reports. In other words, DVR viewing and real-time "live TV" viewing fell by roughly the same amount. That indicates that a shift to DVR time shifting does not explain the drop of "live TV" viewing. 

The data are going to fuel speculation that people have been spending more time watching on-demand TV or online video.

The more worrisome explanation would be that people are just less interested in TV, overall. Younger people might just be watching less, in particular. 

Google Talks with Dish About Partnering for LTE

Google has held preliminary talks with Dish Network Corp. to partner on a new wireless service that presumably would be a Long Term Evolution mobile network, the Wall Street Journal reports. But Dish apparently has been talking to a few potential partners, so the talks with Google would not be unusual, except for the fact that Google would be bringing cash and application expertise, not network infrastructure skills Dish would need.

To be sure, there are lots of reasons for holding such talks, so nothing is certain. For starters, Dish Network, which has been talking about finding a partner to help it build out an LTE mobile network, if the Federal Communications Commission approves its request to use satellite mobile spectrum to support a terrestrial LTE instead, might want to pique the interest of other service providers.

Talking with Google is one way to do so. But Google has a vested interest in spurring faster broadband access, on as many devices as possible, for the simple reason that faster page loading increases the amount of ad inventory it can display to consumers. 

Google for that reason has invested in any number of ventures that promise to create faster broadband, ranging from municipal broadband to Clearwire to Google Fiber in Kansas City. At least so far, most of those initiatives have been intended to spur action by service providers, not to get Google into the service provider business. 

Google's building of its own branded "Nexus" line of smart phones has a similar process, namely, to illustrate what can be done with an Android handset.