Mobile Payments Growing Faster Among Small, Distributed Businesses

The issue with mobile payments adoption always is the ability to align clear value propositions for several key constituencies, simultaneously. So far, the clearest example of that alignment is small business (or distributed retail units of enterprises) use of mobile credit card readers.

Square's mobile payments volume, for example,  rose to $10 billion in 2012, up from $2 billion in 2011. 

The point is that mobile card readers have solved the adoption conundrum by immediately aligning consumer, retailer, bank and processor interests. 

Consumers don't need new phones; they keep using their existing debit and credit cards. But small retailers get a low-cost way to accept credit and debit card payments even at non-traditional locations. 

The value to retailers is more "time to processed payment" than "lower payment processing fees," though. 

In fact, the value of mobile card readers is the ability to accept card payments at non-traditional locations, for small merchants to take such payments for the first time, or to reduce the float time between transaction and receipt of funds. 

That value can outweigh even the alternate value of "lower transaction fees" that can be another driver for adoption of mobile payments by retailers. 

For card-issuing institutions, processes don't change, but transaction volume grows. And transaction clearing is unaffected. 

The point is that a clear value proposition has to exist, and that value has to be significant for at least one of the key segments of the payments ecosystem, to succeed. One might argue that value for retailers is what has made mobile card readers so successful, so fast. 

Urbanization is a Big Deal for Communications Service Providers

Urbanization is a big deal for communications service providers, since cities create both a critical mass of potential customers and lower the costs of infrastructure to connect those potential customers. 

Urbanization also tends to be associated with higher economic growth and household incomes, also trends that are helpful for communications service providers.

So the global urbanization trend is an important and powerful underpinning for communications in the 21st century. 

All Enterprises Have Faced Cyberattacks: They Just Don't Talk About It

Though JPMorgan Chase (JPM) and BB&T (BBT) are the only big banks to confirm a denial of service attack in March 2013, roughly a half dozen institutions endured digital assaults at around the same time, according to Radware. 

Cyber attacks in fact have become a regular fact of life fact of life. 

Samsung Impact on Device Market

The issue in the smart phone ecosystem right now is whether any of other challengers to Apple and Samsung can claim a significant and permanent role in the device market. The future issue will be whether Samsung can outgrow its hardware roots and become a software leader. 

Some think more success in the enterprise markets would provide some sign Samsung is making that turn successfully. 

Success in challenging Apple's position in tablets remains a work in progress, one might say. But it is hard to deny the impact and leadership Samsung is having in smart phones. 

Where Will Mobile Internet Behaviors Lead?

The conventional wisdom about communications is that mobile increasingly represents the future for consumers. The devices people will use are mobile phones, smart phones and possibly tablets, but certainly not PCs or fixed network phones as the primary devices.

For example, U.S. mobile data revenues have surpassed voice for the first time. 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.

The same trend is happening globally. But among the other issues such mobile behavior raises is the future use of both mobile and. fixed networks.

U.K. Android users send and receive 78 percent of all their data over Wi-Fi networks, according to Nielsen

Data collected by Mobidia shows that Wi-Fi usage is close to ubiquitous in developed markets, where more than 90 percent of smart phone users also use Wi-Fi as a means of data connectivity. In Hong Kong and the Netherlands, use of Wi-Fi by smart phone users is over 98 percent.

So though it might not be the main issue, one potential issue is whether, as usage shifts in some markets from voice and messaging to use of the Internet and apps, business models and services based mostly on Wi-Fi access could make more sense, to more users.

To be sure, mobile access always will be vital and valuable in many instances. But the larger business issue is what proportion of value can be supplied by fixed networks, how often, and what value end uses will place on such access.

At least in principle, one could envision scenarios where some users benefit from lower-cost prepaid style “mobile usage” while relying on fixed network access for the bulk of Internet-related operations, which in some cases will become the number one reason for using a smart phone.

In a larger number of instances, even when voice and text are valued, a device will be used primarily for Internet apps, and mostly when users are stationary, rather than out and about. Just as important is the growing importance of access to the Internet as a primary value of a mobile device.

About 25 percent of U.S. teens are “cell-mostly” Internet users, who report they mostly go online using their phone and not using some other device such as a desktop or laptop computer, the3 study by the Pew Research Center has found.

Few would extrapolate in linear fashion to future behavior when those teens grow older and join the workforce. But, as always, youth behavior tends to be a strong indicator of what their preferences will be in the workplace.

So the “money quote” is that “the nature of teens’ Internet use has transformed dramatically, from stationary connections tied to shared desktops in the home to always-on connections that move with them throughout the day,” says Mary Madden, Senior Researcher for the Pew Research Center’s Internet Project.

About 74 percent of teens ages 12 to 17 say they access the Internet on mobile phones, tablets, and other mobile devices at least occasionally, but the 25 percent who say they do so “mostly” on a mobile phone is higher than the 15 percent of adult users who say they are “mobile mostly.”

By comparison, 55 percent of adults use the Internet from a mobile device. However, this gap is driven primarily by adults ages 65 and older.

Adults under the age of 50, on the other hand, are just as likely as teens to be mobile internet users. Fully 74 percent of adults 18 to 49 access the Internet on a mobile  phone, tablet, or other mobile device.

In some cases, teens might use a mobile because they do not have access to a desktop or laptop computer. About 80 percent of teens have their own computer at home.

Among the 20 percent of teens who do not have their own computer, 67 percent have access to one they can use at home. Taken together, this means that 93 percent of teens have a computer or access to one.

The implication there is that teens mostly use mobile to access the Internet because they prefer to use such access. Among teen smart phone owners, 50 percent say they use the internet mostly using their mobile phone.

The findings show not only the prevalence of use of mobile data, but also that mobile access is disproportionately more important for lower-income adults. Adults with an annual household income of less than $50,000 per year and those who have not graduated college are more likely than those with higher levels of income and education to use their phones for most of their online browsing. 

Who Benefits From Growing Unlicensed Spectrum Inventory?

The Federal Communications Industry says it has identified more than 700 MHz of spectrum that is available in the United States for mobile broadband use on a nonexclusive basis, as well as an additional 345 megahertz that is either in the pipeline or has the potential to be used in such a manner.

You might argue that there could be lots of winners or losers as more unlicensed spectrum is made available. Licensed carriers and existing major ISPs might lose, to the extent new competition is enabled. New competitors, and smaller competitors, might win.
The big issue in some quarters is how much of that unlicensed spectrum might prove useful of fixed broadband as well. So far, most of the hope has centered on the potential use of “TV white spaces.”

As Google's white spaces data base suggests, many of the best places to use white spaces spectrum for fixed operations are in the rural areas where most wireless ISPs operate.

To be sure, most of the attention and business models using unlicensed spectrum have been for Wi-Fi and other personal area or in-home or in-office signal distribution, not for access, as provided by most ISPs.

But the white spaces spectrum probably is the biggest block of spectrum useful for access, rather than local distribution, as valuable as that might be.

As always, the business case is among the biggest issues. And one argument in favor of use of white spaces is the non light of sight propagation, a huge advantage for wireless ISPs who have in the past had to work with line of sight frequencies.

Right now, white spaces are in trial in the United States, South Africa and Kenya. All of that is useful, but widespread deployment will hinge on sustainable revenue models. In that regard, consumer models may hinge on traditional “access services.” Some enterprise models might work in the more traditional private network sense that many larger organizations have built and operated their own access and transport networks.

A Reflection in Income Inequality

Income inequality is a difficult issue to sort through, in part because how one measures, and what one measures, can lead to different conclusions.

It nevertheless is possible to argue that excessive income inequality is a bad thing, while arguing that some amount of income inequality is a positively good thing (to the extent it encourages people to invest in training, and further to note that some income inequality is justly deserved.

At the same time, one also should note that one reason income equality in some countries, which arguably has increased recently, is caused by "returns to wealth," and not necessarily by excesses on the "executive pay" front, which it might be easy to argue do exist.

The average annual income of the top one percent of the population is $717,000, compared to the average income of the rest of the population, which is around $51,000.It also is fair to note that there is a logarithmic difference. 

The top one percent of the top one percent have incomes of over $27 million. But the real disparity between the classes is not income but net worth. The top one percent are worth about $8.4 million, or 70 times the net worth of "regular folks."

As a simple look at the Dow Jones Industrial Average will suggest, owners of equities should have done very well since the early 1980s. Since dividend income counts as income, that will show up in the income indexes as well. 

Here's the point:  "The richest one percent earn roughly half their income from wages and salaries, a quarter from  self-employment and business income, and the remainder from interest, dividends, capital gains and rent."

About 16 percent of the top one percent in income were in medical professions and eight percent were lawyers.

Some 18 percent of the top one percent in 2005 worked in the financial industry. 

But the ranks of the one percent also include highly paid atheletes and entertainers, as well as the people leading firms that innovate in the Internet ecosystem. The point is that the vague sense that people "did not earn their money" covers a smaller range of people than commonly suspected. 

All that noted, the graph shows why returns to equity have had such an large impact. Equity owners would naturally benefit from the huge run up in equity values, irrespective of any changes in income trends.