By 2015, 1/3 of Consumer Brands Will Integrate Payment Into Their Mobile Apps

By 2015, 33 percent of consumer brands will integrate payment into their branded mobile apps, according to Gartner. 

That illustrates the evolution of mobile apps from a variety of information and communication purposes, consumer support or experience enhancement, to transactions. 

This the will be more pronounced for brands with retail outlets, such as those in the fashion, food and drink, grocery and entertainment sectors, Gartner says. 

Data released by IBM shows that mobile traffic to e-commerce sites in 2012represented an average of 26.5 percent of all site traffic (up from 15.8 percent in 2011) and sales from a mobile device are now at 14.1 percent of total site traffic, according to iconnect. 

Gmail Domestic U.S. and Canada Voice Calls Free for 2013

Users of Gmail's calling features in the United States and Canada will continue to be able to make free domestic calls through 2013, Google says.  

Gmail's voice feature was introduced in 2008 and was said to support such free calling for an introductory period, and has been extended every year, about this time, since late 2008. 

Since Google incurs real termination costs for delivering those calls, there cannot be any assurance that the policy will continue indefinitely. 

Nor, apparently, does Google necessarily think providing voice services is necessarily a great way to make money. Voice generates lots of traffic. It is a very "sticky" application. Voice usage adds one more dimension to a social graph. 

Knowledge of how voice gets used makes it easier to understand a user's social context and interactions. Given the huge value advertising, especially targeted, personalized advertising and marketing has for Google, voice therefore has strategic value. 

Google arguably is not interested in providing "unified communications" as such. But Google might be very interested in mining the relationships, circles and interactions between people who use Gmail. 

For most companies, that would not be a value great enough to essentially give people "free calling" services. But Google is not like "most companies."

South Korean Mobile Ops Launch “joyn”

SK Telecom, KT and LG Uplus in South Korea are launching “joyn” services to combat inroads being made by over the top messaging services. At first, each carrier will operate joyn as a service available only to users of its own network, but interoperability between the three carriers is expected in 2013.

Joyn, the brand created to support  Rich Communication Services (RCS), allows customers to make Internet-based voice calls and video calls and send chat messages as well. Joyn supports individual and group messages of up to 5,000 characters,, Yonhap news service reports.

In South Korea, KakaoTalk is among the rival services mobile service providers must contend with.

The service is initially available on 22 different types of Android phones, and can be downloaded from each operator’s app store for free. SKT says it will announce extended Android support and an iOS version early in 2013.

Messages to non-users will be sent as text messages, as is the case with Apple’s iMessage service, while a PC-based version is slated to launch in Korea in the first quarter of the new year.

SKT says the service will be free for users of its flat-rate 3G and LTE tariffs. For all other customers, chat and text messages will be charged at 20 won ($0.02) and video calling upwards of 0.6 won per second (that’s circa $0.03  per minute).

Some think joyn will face major obstacles. KakaoTalk has more than 70 million users worldwide and, in its native Korea, is installed on more than 90 percent of the country’s smart phones.

Smartphone messaging apps are hugely popular across Asia. Alongside KakaoTalk, China’s WeChat (near-300 million users) and Japan’s Line (85 million) have grown massively in 2012. Of course, the issue is less the installed base of apps but the volume of WhatsApp messages being sent and received by mobile users.

But not all mobile service providers seem to think joyn is the more profitable way to compete in the messaging market. The logic is simply that the OTT apps already have achieved such large installed base and scale that any new entrant will have trouble dislodging users.

Indonesian carrier Telkomsel in fact has partnered with Kakao Talk, rather than participaing in the joyn effort. But it would be fair to argue that most service providers will try joyn.

In Spain, Movistar, Orange and Vodafone, Spain's three leading mobile service providers, have launched "Rich Communication Services" using the joyn brand.

Spain has been the first country in the world to offer a fully interoperable carrier-owned over the top voice and messaging app, meaning that any customers of any of the mobile service providers can communicate with each other.

In Germany, Deutsche Telekom and Vodafone both support joyn, and the leading South Korean mobile operators appear to be following that approach as well.

The idea is that joyn will allow mobile service provides to create a very large community of users, with access to "rich" voice and messaging ("rich" generally implies support for video) features. That scale effect might ultimately be crucial for joyn success, as well as the ability of mobile service providers to blunt the over the top messaging app attack.

There are about three or four different ways mobile service providers globally can react to over the top messaging.

About half the options are hostile or unfriendly to the consumer. Carriers can block use of over the top apps, or charge extra fees for people who use the generally free apps. Neither of those approaches are especially desirable in competitive markets where another provider will avoid blocking or charging.

There are two approaches that are less surly ways of approaching the problem. Joyn is one way of competing with a carrier-owned alternative intended from the start to be a "third party" brand.

In other cases, carriers have created their own branded OTT apps. The level of competition in a given market tends to suggest whether mobile service providers should offer their own OTT apps, or avoid doing so.

In markets where voice and messaging revenue already is sharply declining, competing might be the only choice. In other markets, where there is less pressure, service providers generally will resist jumping into branded OTT voice and messaging apps, to avoid cannibalizing carrier voice and messaging.

In other cases, as with Verizon Wireless, carriers simply offer unlimited domestic calling and texting as a basic network access fee, to undercut the value proposition of the "free" OTT apps.   That arguably works best where there is a very-large internal calling market.

Asia-Pacific Middle Class Growth Will Drive Communications Revenue Growth

Between 2009 and 2020, the amount of consumer spending in the Asia-Pacific region will nearly have doubled, and will represent the largest single regional volume of spending, outstripping Europe, North America, Central and South America and the Middle East and Africa. 

That will have important ramifications for providers of communication apps and services, creating much larger markets than ever have been seen in those regions. 

36% of U.S. Households Might be "Wireless Only"

Some 35.8 percent of U.S. homes did not use or buy fixed network telephone service during the first half of 2012, an increase of 1.8 percent since the second half of 2011, according to the latest survey and report by the Centers for Disease Control. 

In addition, 15.9 percent of U.S. adults received all or almost all calls on wireless phones despite also having a fixed network telephone service.

The only thing that would have been surprising about the latest survey is if the wireless substitution trend had stopped or reversed. CDC does not that the rate of substitution has slowed to 1.8 percent over the first six months of 2012.

CDC says that is the slowest rate of increase since 2008. 

At current rates of change, in about a decade, about 70 percent of U.S. adults would be "wireless only."

As has been the case in earlier CDC studies, four demographic groups primarily account for the "wireless only" preferences. Younger adults aged 25 to 34, adults living only with unrelated adult roommates, adults renting their home, and adults living in poverty are those groups. 

Among households with both landline and wireless telephones, 29.9 percent received all or almost all calls on the wireless telephones between January 2012 and June 2012. These wireless-mostly households make up 15.9 percent of all households, CDC says. 

The shift to mobile forms of voice service also corresponds with a shift of household spending on voice, Internet access and video services. Since 2001, spending priorities have shifted to mobile, Internet and video, as fixed voice spending has dropped, according to Chetan Sharma. 

Researchers at the International Telecommunications Union and Pyramid Research likewise believe the same basic trends will  occur. 

Over the 2000 to 2014 period, fixed voice subscriptions will decline by 50 percent, while mobile subscriptions will grow by 100  percent. 

"Broadband Access" is More Nuanced, These Days

Evaluating use of the Internet and broadband is getting more complicated by the day. For starters, mobile now represents a majority of Internet access activities. And it sometimes is hard to comprehend just how fast that has happened.

Consider that, in the G-20 countries, mobile broadband went from negligible to a majority of all access connections in just five years, between 2005 and 2010, according to Business Insider.

In five more years, in 2015, mobile G-20 Internet connections will be about 80 percent of all connections, Business Insider estimates. That has some clear implications for the way we evaluate “broadband” penetration. For starters, “mobile” access might be more important, more of the time, than fixed modes.

Traditionally, the reason for buying broadband access services was for fast Internet access for some sort of PC, at a fixed location. These days, there are other reasons beyond “PC access,” and many more situations where “mobile broadband” is preferred.

Some users might want a fixed connection, solely or in part, to offload data sessions from a mobile network to a fixed network, to get access to the Internet from some other devices, such as a tablet or iPod.

Some might want broadband access to support Internet access for game playing consoles or some other video device (Roku, for example) that displays Internet video on a TV. In other words, there are many more devices, other than PCs,  that derive value from a fixed network broadband connection.

Notably, a Business Insider poll suggests 45 percent of users are doing their browsing on a tablet, 24 percent on a notebook and 17 percent on desktop PCs. About 14 percent of browsing now is conducted on a smart phone.

There are other implications, such as our notions about “digital divides.” Approximately nine out of ten Hispanics have access to the Internet, when  extended family, work, school, and other
public places are included, according to Nielsen.

But Hispanics are less likely to have Internet access at home  compared to the U.S. average (62 percent  and 76 percent, respectively).  So is that a problem? Yes, but a problem that is solving itself, it appears. Over the past year (2011 to 2012), Hispanics increased home broadband use by 14 percent, which is more than double the six percent growth  of broadband use in the general market.

But there are other important “demand” angles. Hispanics are three times more likely to
have Internet access using a mobile device, but not have Internet at home (nine percent
compared to three percent, respectively). In other words Hispanices, as blacks and Asians, “overindex” for mobile broadband.

Overall, Hispanics are 28 percent more likely to  own a smart phone than non-Hispanic
whites.  

In other words, many segments of the U.S. population, for example, prefer to buy mobile broadband than fixed broadband.

When Cutting Price Won’t Help

It is a truism of economics that price and sales are directly and inversely related . In other words, lower the price of a product and consumers tend to buy more; raise the price and consumers buy less. In fact, the whole point of some public policy policies (taxes, rebates, subsidies, penalties, credits, tolls, fees) is to dampen demand for some products or encourage demand for some products.


Communications markets are not exempt. Raise prices and people can be expected to consume less; drop prices and people theoretically buy more. But that only works up to a point.

Demand for the product, and ability to supply it, has to exist. And that is getting to be a problem for some communications or entertainment products.

Demand for streamed versions of items in the Netflix catalog is growing; demand for disc rentals is shrinking. Presumably Netflix could drop prices for “DVD only” versions of the product. But consumer preferences are shifting, and it is not clear whether even significant price drops would reverse the streaming versus DVD by mail volume changes.

You might argue something similar is happening with mobile voice and fixed network voice, or video entertainment subscriptions.

To be sure, there’s a relatively simple reason people globally prefer to use mobile for voice. In many markets, mobile is the only way to make a call. In 2010, about 90 percent of total call volumes in Brazil, Russia and China occurred on a mobile device. That is a market where there is no functional substitute product, so fixed network voice pricing isn’t relevant.

In other markets where both mobile voice and fixed voice are available, mobile is cheaper than using fixed services. In these markets, retail pricing and packaging, not just user preferences, drive usage.

Classical economics would suggest the suppliers could increase buying and use of fixed network voice services by dropping the price. Some would argue that is precisely what Skype and cable digital voice services have done.

In the video entertainment business, the price and volume consumed trends are not so pronounced, yet. But some surveys suggest not only that the problem of actual cord cutting is growing, but that demand is the issue.

The implication is that even a price cut for video subscriptions might not work to stimulate demand, on the part of some growing percentage of consumers.

About 33 percent of people who have “cut the cord” on their video entertainment subscriptions would not buy again, even if prices were cut in half, a study by TechBargains.com has  found.

That opinion illustrates the level of growing dissatisfaction with video entertainment services sold by cable, satellite and telco TV providers, at least in some consumer segments.

Despite the fact that 83 percent of surveyed cord cutters abandoned their video entertainment services because of the “high cost,” even a price cut in half would not be enough to entice many cord cutters to buy again.

Significantly, the study also suggests that video entertainment services are not even viewed as providing the best quality and variety of programming by 17 percent of people who disconnected their  cable TV or satellite TV services. For an industry that claims to provide the best quality and variety, that is a problem.

Another possibly-significant finding is that consumers who abandoned their fixed network phone service were two times more likely to eliminate their cable TV or satellite TV subscription than those who have not disconnected their home telephone.

Of respondents who have gotten rid of their landline, 36 percent  also discontinued their cable TV or satellite TV service. Of respondents who still have their landlines, 19 percent have cut the cable cord.

The survey found that 60 percent  of respondents no longer have a landline telephone service, either.

Although the survey also found  that 57 percent of people that still have a landline voice service  do not plan to disconnect their landline in the next year, that statistic might be only mildly reassuring, since it suggests that 43 percent might cut the cord on their fixed network voice service within a year or two.  

The Federal Communications Commission Technology Advisory Council has estimated that  U.S. time division multiplex fixed consumer access lines could dip to perhaps 20 million units by about 2018.

Others, such as Kent Larsen, CHR Solutions SVP, think lines overall could dip to about 50 million over the next five years, then to about 40 million on a long term and somewhat stable basis.

Keep in mind that the U.S. market supported about 150 million voice lines  in service around the turn of the century. One might argue, under such circumstances, that even lower prices would not entice many consumers to buy fixed network voice again.