Mobile Data Offload Growing "Faster than Expected"

Mobile data offload to the fixed network is happening a bit faster than many had expected.

In 2012, Cisco estimates, mobile offload represented about 33 percent of total mobile traffic, on a global level.  As recently as 2011, Cisco estimated mobile offload would comprise 22 percent in 2016.

In 2013, offload will grow to 38 percent of total data consumption.

By 2016, Cisco estimates about 46 percent of global mobile data traffic will be offloaded  to fixed networks. That represents a “dramatic shift” of mobile traffic offloaded to fixed networks, Cisco says.

Some might speculate that offload could be a bigger factor. Offloading is even more pronounced in the United States,  where mobile offload will account for 66 percent of total mobile traffic in 2017.

Mobile data offload has grown faster than expected at least in part because Internet service providers intentionally are encouraging users to do so. Mobile service providers do so to maintain capacity on their networks, while fixed network providers do so to create “wireless extensions” of their fixed access services.

Consumers have a vested interest in using mobile offload to avoid stressing their data plans, especially as video has become the dominant driver of data consumption.

As smart phones increasingly are used for content consumption, not talking or texting, the value of mobile offload is bound to grow.

And that ultimately could create some new opportunities for untethered devices and services that replicate 80 percent or more of the value of a smart phone but without the need for traditional voice or texting plans.

And though people have been speculating for more than a decade about whether dense Wi-Fi networks could “compete” with mobile networks, the possibility of doing so actually is growing as the primary applications shift to content consumption, while voice and texting become available as over the top apps, and the density of Wi-Fi nodes increases.

AT&T Says Unlocking Not a Big Deal

Some will see AT&T’s comments about device unlocking as posturing, but it is not entirely clear that device unlocking is something the leading mobile service providers could not live with or even support.

“AT&T’s policy is to unlock our customers’ devices if they’ve met the terms of their service agreements and we have the unlock code,” says  Joan Marsh on the AT&T Policy Blog. “ It’s a straightforward policy, and we aim to make the unlocking process as easy as possible.”

Federal law makes it unlawful to circumvent technological measures employed by copyright owners to protect their property, including software. Under the Digital Millennium Copyright Act (DMCA), the Librarian of Congress conducts a periodic review to determine whether or not users of copyrighted work – in this case device owners – will be adversely affected.

On October 28, 2012, as part of the periodic review, the Librarian issued a new ruling on the mobile handset exception which narrowed the unlocking exemption that it had previously granted.  

Under the latest interpretation, the unlocking must be initiated by the owner of the device (not a bulk reseller) who also owns the copy of the software on the device, the device must have been purchased within a specific time window, the wireless carrier must have failed to act with a reasonable time period on a request to unlock the device and the unlocking must be requested to permit connection to another carrier’s network.

The new interpretation “has very little impact on AT&T customers,” Marsh says.

“If we have the unlock code or can reasonably get it from the manufacturer, AT&T currently will unlock a device for any customer whose account has been active for at least sixty days; whose account is in good standing and has no unpaid balance; and who has fulfilled his or her service agreement commitment,“ Marsh says.  

“ If the conditions are met we will unlock up to five devices per account per year,” says Marsh.

So “the Librarian’s ruling will not negatively impact any of AT&T’s customers,” says Marsh.

Some will say that is fine, but what they really want is unlocked phones at the start of a relationship with a service provider. Some might say that often is possible. Others might say the financial advantages are structured to make such practices nonsensical.

For example, if a user bringing an unlocked device has to pay the same monthly fees as a customer whose fees include a phone subsidy and a two-year contract, then there is no real financial break for supplying one’s own phone.

Unlocking, per se, seems not to be the issue. The ability to buy a user an unlocked phone “on any mobile network (consistent with air interface capabilities of the device)” with the benefit of a lower monthly service plan seems to be the real issue.

Just a nice graphic for International Women's Day

By Googledoodlers. 

The Value Driving Small Business to Mobile Payments

One issue proponents of many forms of mobile payment have had to grapple with is the issue of "value" for the end user, when the success of any such venture hinges on making several classes of end users happy, all at the same time.

That ecosystem includes people who buy things, the retailers who sell things, the financial institutions providing the end user accounts and the processors who handle the transactions, Unless each segment sees clear value, it is tough to create the new business. 

PaySimple, Intuit, GoPayments, PayPal Here, Square and Flint Mobile are solving one key element of the "value" question for some retailers, especially smaller businesses that always have cash flow issues. 

A primary benefit of retailer mobile payments systems is that sales are converted into cash inflows, within a day. That doesn't change the value proposition for shoppers, necessarily. Nor do such systems always and necessarily work to the advantage of banks or settlement brands. 

But getting paid right away is enough value for small businesses to drive adoption fast. Up to this point, convincing many retailers to invest money in mobile payments has been a tough sell. 

For small businesses, that increasingly is not the case. The cost of terminals is not much of an issue. The value does not have to hinge on "lower fees" for taking credit card or debit card payments. Just getting paid fast is the driver. 

EC Mobile Antitrust Probe Ends

European Commission regulators in March 2012 began a probe of whether five large telecom operators (Deutsche Telecom, France Telecom, Telefonica, Vodafone and Telecom Italia) were using standards processes to inhibit competition in the mobile business.

But the EC now has concluded that since such standards work now is conducted by the GSMA and other standards bodies, there is no immediate problem. 

To be sure, all standards ultimately benefit some contestants and market participants more than others, especially when a standard plays to one specific technology approach that becomes an "industry" standard. 

That sort of "bias" cannot be completely eliminated. But the investigation points out how careful dominant service providers have to be when trying to develop new services and apps that require scale. Mobile payments and mobile wallets provide one other example. 

U.S. Telecom Business (Overall) is In Surprisingly Good Shape

If you prefer video, an have 40 minutes, you can hear a discussion at a high level of the 2013 Telecommunications Industry Association “Market Review and Forecast.” It’s always useful.

You can watch here.

If you don’t have 40 minutes, here are a couple trends you might find noteworthy. The single biggest takeaway is that the U.S. business is outpacing most other regions, in terms of growth and revenue.

That does not mean every sector of the U.S. business is doing so well, only that the entire business, lead by AT&T and Verizon, is doing surprisingly well. The trend over the last decade has been for the market share leaders to do far better than smaller providers. So scale clearly matters.

There are two other developments of note. Among them: U.S. mobile data revenues have surpassed voice for the first time. You knew it was coming, and it has finally happened.

In 2012, for the first time in the history of U.S. mobile communications, customers spent more money on mobile data services ($94.8 billion) than on mobile voice services ($92.4 billion), the Telecommunications Industry Association now says.

That primarily is significant for those in the service provider segment of the business.

At a high level, the key managerial task is growing the essential data revenues business, which represents the future, while maintaining voice revenues at the highest possible level, for as long as possible.

For many on the supplier side of the industry, the key trend is that U.S.service provider capital investment is accelerating, and will grow at a 34 percent rate over the 2013 to 2016 period.

In 2012, U.S. wireline spending was $39.1 billion, compared with $27 billion for wireless infrastructure. By 2016, wireline spending is expected to climb to $44.4 billion, while wireless will reach $38.4 billion.

If the prediction proves correct, industry suppliers are headed for four “fat” years, after that recent “lean” years.

The TIA reports that although overall global telecom industry revenue growth decelerated to seven percent, down three percent from 2011 levels, revenue growth actually accelerated in the U.S. market from 5.9 percent in 2011 to 6.2 percent in 2012.

TIA predicts this trend will accelerate in the years ahead – with mobile data spend hitting $118.6 billion in 2013 (versus $86.4 billion for voice) and $184 billion by 2016 (versus $70.1 billion for voice).

Additionally, U.S. wireless penetration jumped over 100 percent in 2012, growing to 102.5 percent for the year. TIA predicts that wireless carriers will add 40.3 million subscribers over the next four years, for a penetration of 111.3 percent in 2016.

TIA predicts U.S. revenue growth rates of 7.1 percent in 2013 and 6.8 percent in 2014, while international markets will see rates of 7.9 and 6.5 percent, respectively.

Unlicensed Spectrum and "Fairness"

Most people, if asked, will tend to say that all competitions ought to be "fair." But what "fair" means, in practice, is harder to describe. A foot race should have all contestants running the same distance, for example. That sounds fair. 

But what if the objective is to "normalize" a competition for a full range of contestants with highly-varied skills? In that case, a "handicap" system, as used in golf, might be necessary.

Something of the same conundrum might be said to exist for broadband access services. A notion of "fairness" might suggest that all licensees in a field abide by the same rules. But that rarely happens in our modern IP communications business.

Competitors always argue, and regulatory officials typically agree, that the former monopoly provider has such entrenched advantages that handcuffs need to be kept on the incumbent, at least until such time as the competitors have had a chance to become established.

But we also have the example of industries competing directly under "unequal" rules, such as cable TV and telcos, for example, where cable operators have no wholesale obligations and leading telcos do have such obligations. That is beginning to change, slowly. 

But the philosophical issues remain highly charged. Many do not believe, for example, that non-profit entities should be able to compete with for-profit entities when the non-profits can use their tax advantages to do so. 

A non-profit government entity should not, in this view, be able to compel purchase of products, or use its taxing authority to raise capital, borrow at favored rates, or employ other advantages no for-profit competitor can match.

That might be one attraction for wider availability of unlicensed spectrum: it can provide the basis for greater competition without raising those other competitive issues. That doesn't mean existing competitors will agree, only that some thorny issues are avoided if non-licensed spectrum is made available. 

Millimeter waves in the spectrum from 30 GHz to 300 GHz have not traditionally been usable for communications, even very short range (local distribution between a decoder and a TV, a mouse and a PC, a smart phone an a payment terminal).

Better coding and abundant cheap processing now makes those frequencies usable, in some cases, for the first time. 

For some of us, the question is whether any of those frequencies will be usable either for wireless backhaul or access purposes. The big problems lie with the physics. Waves at those frequencies just don't travel that far through air, limiting their effectiveness for network access. 

As a figure of merit, assume that a 3 decibel gain represents 100 percent more signal strength, while a 3 dB loss cuts signal strength by 50 percent. As always is the case with free space energy, there is less attenuation at lower frequencies, so 30 GHz to 40 GHz looks interesting, from an access perspective. 

The 80 GHz to 100 GHz range looks interesting as well, from an attenuation perspective. Because of the physics of radios, tiny antennae work well at these frequency ranges. There are line of sight and transmit power issues.

In many cases, the other issue is access to the core network (middle mile access). A robust local access network is only as good as the bandwidth and pricing of the connections to the backbone networks. 

But maybe everything can align. Unlicensed spectrum, smart people doing the algorithms, lots of people willing to share to build a big "public" or "commmunity" network, a sustainable revenue model and adequate middle mile connections. 

To be sure, incumbent service providers will not wish for such a scenario. But the problem probably is just hard enough, and small enough, in terms of revenue impact, to allow some room for experimentation. 

And, one hopes, experimentation could lead to new ways of supplying access, without upsetting notions of fairness.