FreedomPop Launches Wireless Fixed Service

FreedomPop, which already has launched its mobile broadband service, now is launching a "fixed" service offering 1 Gbytes of free data in nearly all of the the 80 largest urban markets across the United States. 

Orders for the new modems will be filled in January 2013, it appears. 

The services requires a refundable $89 deposit that covers the cost of the modem. 

FreedomPop is trying to disrupt U.S. broadband pricing, and in addition to the free allotment of 1 Gbyte, compared to the free 500 Mbytes offered with the mobile version of the plan. 

If early reports are correct, the fixed service will offer perhaps shocking prices of 10 Gbytes for $10 a month. Users who are comfortable with speeds that some will compared to lower-speed digital subscriber line, and who do not watch lots of video, might find that a very-attractive offer.

The mobile service features higher tariffs, as typically is the case for mobile broadband. A 2-Gbyte plan would cost $17.99 per month. After that, each additional 1MB costs just $0.01 (which works out to $10 per 1GB). 

That works out to about $28.99 per month for 4GB of data, $34.99 for 5GB and $59.99 for 10GB, all with the same $0.01 charge for each additional megabyte you go over your plan. Most users will consider that a mild overage charge, indeed. 

What Percentage of U.S. Household Income Does Apple Get?

In 2011, the average amount U.S. households spent on Apple products was $444, according to Morgan Stanley analyst Katy Huberty, Reuters reports. Some might find that a "large" number, while others might consider it a rather small percentage of total spending. What is clear is that "average" households are spending more on Apple products.

In 2010 the "average" household spent $295 on Apple products. Back in 2007, U.S. households spent  $150. If you assume median U.S. household income of $50,054, that suggests some households are spending a modest amount on Apple products, about 0.9 percent of household income. 

Compare that with other spending percentages, based on an average American household income of $63,000.

Dry cleaning, storage of clothing, rental of clothing, jewelry and watch repair represent 0.5 percent of spending.

Tobacco products might represent about 0.8 percent. 

Entertainment, including such items as sports equipment, photographic equipment and supplies, hunting and fishing equipment, bikes, boats, balls and other sports equipment, might represent . 0.8 percent. 

Alcoholic beverages might consumer about 0.9 percent of income. Admission fees constitute about 1.3 percent of income. Vacation lodging represents 1.4 percent of income.

Spending on hobbies, toys and pets takes about 1.4 percent of income, while television, radio and audio equipment, cable TV subscriptions claims two percent of income.
Gifts represent 2.2 percent of income. 

Some might say U.S. residents spend "too much" on Apple products, but that is a subjective call. Looking at the other common spending categories, one could easily argue that purchases of Apple products are not uncommonly high, and that there are lots of other places spending might be shifted to account for Apple spending. 

Netflix ISP Ranking Shows Modest Differences Between ISPs

Google Fiber is now the most consistently fast ISP in America for watching Netflix streamed content, according to Netflix. But keep it in perspective: Netflix streaming only happens so fast. 

Is Sprint Moving to Take Over Clearwire?

Many observers were convinced Softbank would not have taken control of Sprint without a clear path to own Clearwire as well, and that might be the impetus for a Sprint bid to buy the remainder of Clearwire it does not already own. Reuters reports that Sprint is in talks with Intel Corp. and Comcast Corp. to buy out their stakes in  Clearwire.

Intel and Comcast own a combined basis roughly 12.4 percent of Clearwire's total shares. Aside from plans Sprint might now have for a new assault on the U.S. mobile market, something most expect Softbank to attempt,   the U.S. market is showing other signs of instability or attempted disruption.

There are growing signs that the U.S. mobile service provider market is unstable, in terms of market structure, and on the cusp of changes that could include a significant wave of provider restructuring, despite the failure of the AT&T bid to buy T-Mobile USA.

"What is clear for now, in our view, is that the current strategy, indeed the entire current business, isn't working," said Craig Moffett, an analyst at Sanford C. Bernstein. Moffett seems to be referring to the whole business operated by regional U.S. wireless carriers.

To be sure, Moffett has been saying that the U.S. mobile business is saturated since at least 2009.

Oddly enough, to some of us the new stresses resemble the earlier transition from dial-up Internet access to broadband access. In this case, the transition is from feature phone to smart phone business models.

In that earlier transition, many suppliers that had made a business of supplying dial-up access found they no longer could compete in the broadband business. Now, in mobile, it appears that the cost of supporting handset subsidies is pinching operating revenue, while the cost of building fourth generation networks likewise will hit earnings.

Of the "big four" U.S. mobile carriers, only T-Mobile USA seems to have experienced a subscriber loss.

In its second quarter of 2012, AT&T added 1.5 million net new customers. Verizon Wireless added 1.2 million net new subscribers. Sprint added postpaid net additions of 442,000 postpaid net additions. But T-Mobile USA, one the "big four" U.S. mobile service providers, lost 510,000 subscribers in the first quarter.

The immediate stress is heavy for the regional mobile providers, often using prepaid models.

Regional or prepaid service providers clearly have had a tougher 2012 than had been the case in the mid-2000s, for example. Leap hasn't been profitable since 2005, for example. MetroPCS profits dropped 63 percent during the first quarter of 2012.

A study undertaken by Tellabs suggests that mobile service provider profitability could become extremely challenging for some mobile operators within three years, with costs surpass revenues for many operators.

In North America that could happen by the fourth quarter of 2013 or as early as Q1 2013. Developed Asia Pacific service providers could see problems by the third quarter of 2014. In some cases this could happen as early as Q3 2013, Tellabs said.

Service providers in Western Europe could run into trouble by the first quarter of 2015. In some cases this could happen as early as the first quarter of 2014.

Vivendi's SFR mobile operation reportedly has been talking to Iliad (owner of Free Mobile) about a merger. SFR also apparently is in talks with French cable operator Numericable about a merger of SFR with Numericable as well, Reuters reports.

Those talks indicate that, after a period of relative stability, mobile market structure, in France and elsewhere, might be changing, because of market saturation and competition.

In many Western European markets there are four, and sometimes five facilities-based mobile  service providers. That was sustainable in an earlier period where the mobile market was growing.

But the issue has been whether four to five contestants are  "too many" suppliers for a stable market. In the United Kingdom, the formation of EE is another example, while in the U.S.market Sprint and T-Mobile USA are the contestants seen as inevitable parts of a future market consolidation.

With the recent mergers of T-Mobile USA and MetroPCS, and the purchase of Sprint by Softbank (assuming both transactions pass regulatory muster), there is once again an active discussion in many quarters about the future shape of the U.S. mobile service provider business.

What seems a safe observation, though, is that the number of successful mobile service providers will be few in number. The only question is “how few?” In many markets, there are four to five major providers, in terms of market share. But just how stable a market that is is questionable.

The Rule of Three holds nearly everywhere. While the percentage market share might vary, on an average, the top three mobile service providers control 93 percent of the market share in a given nation, irrespective of the regulatory framework.

Some might argue that scale effects account for the relatively small number of leading providers in many capital-intensive or consumer electronics businesses.

At some point, the access business can have only so many facilities-based providers before most companies cannot get enough customers to make a profit. Consolidation is the result.

The point is that mobile markets are heading for a period of greater instability and possible change than we have seen for some time.

How 4G LTE Might TransformiThe Mobile Ecosystem

Will Long Term Evolution 4G transformthe mobile ecosystem? Possibly, Business Insider says. In fact, mobile service providers hope that will happen, much as 3G was thought to be the foundation for new applications user experiences and revenue streams.

Of course, the 3G experience also suggests that it sometimes can take quite a while for those new applications, experiences and revenue streams to materialize. So what does Business Insider think could happen?

LTE is about ten times faster than 3G wireless connections. In fact, many consumers have found LTE faster than their home broadband connections, Business Insider argues. That might lead more users to evaluate substituting LTE for a fixed broadband connection. So there could be changes affecting service providers.


LTE might encourage application developers to create, and people to use,  video-based or video-enhanced applications.

These categories most notably include video sharing, video chat, augmented reality, games, and apps.

Both consumers and app developers might therefore find that 4G creates the foundation for qualitatively different experiences, not just "faster" experiences.

Advertisers might find that LTE creates more engagement and more monetization opportunities. That might mean more advertising, and more immersive experiences, more often and in new locations. Google, Facebook and others are betting big that will happen.

On the other hand, some circumspection is probably in order. Mobile service providers were initially convinced that 3G likewise would create massive new revenue streams, apps and experiences, and for quite some time, none of that happened.

Only with the emergence of mobile email did lead applications of value to lots of people finally emerge. That was followed by mobile Internet access as a lead value. Most observers think video will play a key role in underpinning 4G-unique experiences. Others think the "personal hotspot" could emerge as a major new app as well.

News Consumption Shifting to Mobile Devices

News consumption ranks high among activities people conduct on mobile devices, a study by the Project for Excellence in Journalism has found.  

Over a third of respondents report getting news daily on the tablet and the smart phone, putting it on par with other activities such as email and playing games on tablets and behind only email on smart phones. 

None of that should come as a surprise, given the dominant role of content consumption on tablets, and the growing role of content consumption on smart phones. 

Fully 43 percent of male tablet owners consume news daily on their device versus 32 percent of female tablet owners. The gap is nearly identical on smartphones (41 percent compared with 30 percent among women).

As you might guess, younger users are heavier users. On the tablet, male news users under 50 are more likely than female news users under 50 (and both genders over 50) to check news more than once a day. 

Nearly half of male tablet news users under 50 (48 percent) get news on their tablet multiple times during the day compared to 33 percent of women under 50 and 31 percent of men and women 50 and over.

Male news users under 50 are more avid readers of in-depth news articles on the tablet. Fully 84 percent do so at least sometimes, compared to 70 percent of women under 50 and 65 percent of both genders over 50.

Computing Goes Mobile, Untethered, Content Oriented

Debates about whether tablets will displace personal computers are nearly pointless. Tablets clearly are driving sales of computing appliances as much as are smart phones.

The desktop PC market has for some time been shrinking, compared to the notebook part of the PC market, but even notebook sales probably will be displaced to a large extent by tablets  and smart phones, as well, IDC says. 

Those changes speak to changes in the ways people use computing appliances, as much as anything. As it turns out, most people do not require a PC, as much as they used to, to work or play. At work, most applications involve either light communications activities (email, messaging) and consuming content of various types, rather than creating it. 

In other words, more people most of the time, read or view documents, presentations and videos, rather than needing to create them. Tablets and smart phones work passably well for such activities.