T-Mobile USA to End Device Subsidies

T-Mobile USA says it plans to end all device subsidies in 2013, after finding that perhaps 80 percent of its customers choose a "bring your own device" or "buy your own phone" plan anyway.

To ease the "sticker shock," T-Mobile USA probably will offer installment plans that involve an upfront $100 payment and then monthly payments for as long as 20 months. 

T-Mobile USA also apparently will get the right to sell unspecified "Apple" devices in 2013. To be sure, the "value" approach fits T-Mobile USA's approach to the market. But there is risk.

In Spain, mobile service providers have had very mixed experience with ending device subsidies. But Vodafone Spain and Telefonica lost customers after they stopped subsidizing devices. 

In fact, Vodafone Spain lost a half million subscribers in a single quarter. Vodafone Spain later reversed course and restored the subsidies. T-Mobile USA will find out soon enough if different results can be obtained in the U.S. market. 

Taxes and Billing Issues Kept Google From Offering Voice in Kansas City

Google considered offering voice as part of its 1-Gbps service in Kansas City, Kan. and Kansas City, Mo., but the cost and challenge of billing for taxes was enough of a hassle to cause Google to drop those plans. 

Milo Medin, vice president of Google Access Services says the actual operating costs would have been trivial. Billing for taxes would not have been so easy.

“The cost of actually delivering telephone services is almost nothing,” Medin said. “However, in the United States, there are all of these special rules that apply.” Google would not be the first company to encounter the complexities of billing, and how that can affect a business case.

Retailers engaged in e-commerce, either throughout the United States or globally, know exactly what Medin means. 

People Spending Twice As Much Time with Apps as Web

Between December 2011 and December 2012, the average time spent inside mobile apps by a U.S. consumer grew 35 percent, from 94 minutes to 127 minutes, according to Flurry. 

By comparison, the average time spent on the web declined 2.4%, from 72 minutes to 70 minutes.  By our measurement, U.S. consumers are spending 1.8 times more time in apps than on the web.  

The study does not indicate that people are substituting interaction with mobile apps as a substitute for either web browsing or watching TV, since engagement with thoses activities seem to be stable. 

But end user time is finite. When users spend more time with mobile apps, while reported time watching TV and using the Web remain level, that time must either come from some other pursuit, or users are multitasking, most likely using more apps while doing something else. 

Why 1 Gbps Isn't Presently a Big Deal

You've probably read at least one story about Google Fiber, the 1-Gbps symmetrical fiber to the home network in Kansas City, Mo. and Kansas City, Kan.

I have not been recently in Kansas City, but have had a chance to work on a 1-Gbps connection. It did not change my life. It did not even seem to materially affect my normal use of the Web. As always is true, your local connection is but one element of end-to-end application performance.

What happens in between you and a remote server, and the set-up of the remote server's local connection, obviously controls the amount of data that actually can flow between two communicating computing devices.

Until most of the rest of all servers you interact with can match a local 1-Gbps connection on your end, one doesn't really see much difference, on a local gigabit per second connection, compared to using a much lower speed connection.

Granted, I wasn't uploading or downloading large files, using BitTorrent or watching YouTube. But you get the point. Had I not been told, I wouldn't have noticed anything special about the connection.

Google "Will Discuss" Owning a Mobile Network

From time to time, speculation arises about whether any of the four leading "Internet" firms in the U.S. market (Apple, Google, Facebook, Amazon) would seriously examine ownership of a branded mobile network. Half of those firms already are in the smart phone business, three are in the tablet business and Facebook, off and on, is rumored to be considering producing its own smart phone.

So is Google, for example, looking at owning a wireless network? "I'm sure we will discuss this," says Google Chairman Eric Schmidt. That doesn't necessarily mean Google will act.

But Google appears to believe that abundant spectrum could become a reality. If that happens, the barriers to a branded Google mobile service would seem less formidable.

"The current spectrum shortage [currently facing the mobile industry] is real, but it's an artifact of a licensing and regulatory error," said Schmidt. "New technology allows there to be lots of spectrum, far more than you could use."

NFC Pessimism Grows, and Might be a Good Thing

Juniper Research has revised its forecasts for the global near field communications market, significantly scaling back its growth estimates for the North American and Western European markets. In some ways, that might be considered a "good" thing, to the extent that it follows a common pattern of technology adoption.

What is "good" about deflated hopes is that such periods seem "always" to happen, and are just a milestone on the way to eventual adoption on a fairly wide scale. So the argument is that dashed initial hopes mean the market is moving in the way one should expect: high hopes, disillusionment, and finally adoption.
The most significant change to the Juniper Research forecast is the amount of transaction activity NFC devices will drive, as the new forecast reduced the number of NFC devices in use only slightly.

By 2017, global NFC retail transaction values are now expected to reach $110 billion in 2017, significantly below the $180 billion previously forecast. 

Such revisions are not unusual in the predictions business, especially not for a brand new market that depends on many changes in the ecosystem.

Apple’s decision to omit an NFC chipset from the iPhone 5 has reduced retailer and brand confidence in the technology, leading to reduced point of sale) rollouts, for example.
This in turn will lead to lower NFC visibility amongst consumers and fewer opportunities to make payments, threatening a cycle of “NFC indifference” in the short term, Juniper Research believes.

“While many vendors have introduced NFC-enabled smartphones, Apple’s decision is a significant blow for the technology, particularly given its previous successes in educating the wider public about new mobile services” says Dr. Windsor Holden, author of the study.

The report found that Apple’s move would impact most dramatically on markets in North America and Western Europe, where transaction values would exhibit a “two year lag” on previous forecasts as retailers delay POS investments.

Conversely, retail transactions in NFC’s heartland in Japan and Korea are likely to experience little or no impact from the Apple decision.

None of that is terribly surprising. Though the 2011 KPMG Mobile Payments Outlook, based on a survey of nearly 1,000 executives primarily in the financial services, technology, telecommunications, and retail industries globally found that 83 percent of the respondents believe that mobile payments will be mainstream by 2015, even the moset astute industry observers tend to overestimate early adoption of a major new technology, while underestimating long term impact. 



Analysts at Gartner, for example, use a model of how expectations for significant new technologies running in a predictable cycle. What the cycle suggests is that expectations nearly always (always, according to the model) run ahead of marketplace acceptance.

What the Gartner hype cycle suggests is that expectations for mobile payments using near field communications are at a point where we can expect five to 10 years to elapse until NFC actually begins to make serious inroads as an adopted mainstream technology. The emphasis probably is important to note: “begins.”

In fact, Gartner's Hype Cycle now expects it will take five to 10 years before NFC is in widespread and mainstream use. Gartner's latest expectation likewise is that cloud computing and machine-to-machine applications will not be mainstream for another five to 10 years as well.

But new technologies historically take some time to reach 10 percent, then 50 percent, then virtually ubiquitous adoption. To be sure, there has been a tendency for new technologies based on digital and electronic technology to be adopted faster. But a decade period to reach perhaps 10 to 20 percent adoption is hardly unusual.

That is not much of an issue for point solutions like computers that can be used without lots of additional change in infrastructure. That is not true for highly-complex ecosystems such as payments, though.

ATM card adoption provides one example, where "decades" is a reasonable way of describing adoption of some new technologies, even those that arguably are quite useful.

Debit cards provide another example. It can take two decades for adoption to reach half of U.S. households, for example.

If Gartner analysts are right about the near field communications "hype cycle," we should continue to see "disillusionment" expressed about near term prospects for NFC. The reason is that Gartner now sees NFC at the "top" of its hype cycle, the point at which overly-optimistic projections face the reality of an extended period of development, before something "useful" actually emerges.

Internet TV, NFC payment and private cloud computing all are at what Garner calls the "Peak of Inflated Expectations," which is always followed by a period where the hype is viewed as outrunning the actual market. That suggests NFC soon will enter a phase where expectations are more measured.

You Can’t Easily Sell “Unified Communications” to Small Business

Service providers arguably aren’t terribly good at selling “unified communications” to small business owners, but probably not because, as UC retailers, they are especially ineffective communicators.

No, the problem is that UC is tough to explain, tough to comprehend, tough to envision, quite often.

It’s a little bit like the old adage: people don’t buy drills, they buy holes.” Some of you are veterans of the IP telephony business, and can remember what it was lke trying to sell a “hosted PBX” service to small business prospects. Most will probably say, if they are honest, that most potential buyers didn’t immediately “get it.”

There is a reason most tier-one service providers split sales into “enterprise” and “mass markets” efforts. Small businesses are more like consumers than enterprises in terms of how they buy technology products. Try explaining “hosted PBX” to a consumer who is not in the technology business. Small businesses might not be too different.

That might still be true about some of the newer features and value propositions. Datavo, a competitive local exchange carrier operating in Southern California, is the first announced user of the Metaswitch Networks “Accession Communicator” platform, which turns a hosted PBX solution into a mobile solution.

The way Datavo sells the new capabilities illustrates quite a lot about how small business customers understand value, and how little they understand industry jargon.

Really, they don’t get “unified communications.” They don’t really get “hosted.”

“The concept really is not easy to convey in a brochure,” says Rhaphael Tarpley, Datavo’s chief operating officer, in large part because customers really do not understand “unified communications,” even if “that is what they actually want and need,” says Tarpley.

“They don’t get ‘hosted solution,’ but they do understand ‘cloud’ or ‘Internet,’ and that’s the way Accession features can be sold, Tarpley says.

Perhaps oddly, the metaphors tend to be “consumer” like references. People relate to their devices and their apps. And, perhaps oddly, the idea that invoking business office features from their office phones is something made possible by a downloaded Google Play or Apple iTunes app just makes sense to people.

Prospects understand the notion that the features are enabled by a free app downloaded from iTunes or Google Play, Tarpley says. That seems familiar and tangible.

They don’t necessarily “get” the notion of invoking features from a web portal. They seem better able to understand a Google Play or iTunes app download.

The point is that it is hard to sell “unified communications.” hosted IP telephony or mobile UC to prospects who struggle to understand it. It just isn’t intuitive. But they seem to grab the "Internet" and mobile app metaphors much more easily. So don't sell "UC."

Tell prospects they can download a free app from iTunes or Google Play that allows their mobile phones to use the features of their business phone service, plus video calling, plus starting a call on the mobile and finishing on the business phone, or vice versa. Later you can tell then how you do it.