DSL Net Additions Go Negative for First Time, Ever

Net digital subscriber line customer additions were negative in the fourth quarter of 2012 for the first time ever, Point Topic says. 

The total number of DSL subscribers worldwide fell from 366.95 million in September 2012 to 366.66 million by the end of the year.

Point Topic says that signals the gradual demise of "all copper" connections, but not necessarily of fiber-reinforced copper connections, including both cable and telco very high bit rate versions of DSL. 

Still, fiber and hybrid fiber connections now account for over 20 percent of the world’s fixed broadband lines, growing by more than 26 percent in 2012.

There were 643,770,042 broadband subscribers around the world by year-end 2012, according to Point Topic. FTTx is gaining ground on other technologies, including traditional DSL, which continues to be the most dominant technology in the market.

FTTx (including VDSL and VDSL2) showed the largest annual growth over the period between the fourth quarter of 2011 and the fourth quarter of 2012, growing 27 percent overall, compared to 7.2 percent for cable modem subscriptions and 3.6 percent growth  for DSL.

Fixed wireless grew 12 percent over the year.

Looking at the current market share, fiber technologies, at 21 percent, have overtaken cable modem’s 19 percent share, globally.

At least for the moment, it appears that global consumer demand tops out at around 70 Mbps, and that level of access speed demand seems to be driven by the desire to watch online video, Point Topic researchers say.

At least so far, there are no apps that drive consumers to buy much more than 40 to 50 Mbps access, says Oliver Johnson, CEO at Point Topic. But one might argue it is the number of people per household that drives “typical bandwidth consumption.”

According to an exercise conducted by Point Topic, bandwidth consumption is almost directly related to the number of people per household, and the number of Internet-connected devices each person tends to use.

If one assumes a household is consuming bandwidth literally 24 hours of every day, all seven days a week for a whole month, then a single-person household, using two Internet-connected devices, might consume 13 terabytes a month.

A four-person household with two adults and two children might consume 29 terabytes, assuming each person has a bit more than one device each.

A “hacker” household with at least five people, and each person using at least two Internet-connected devices, could consume 134 terabytes a month.

China SMS Usage Drops 11%: OTT is the Reason

SMS usage in China (person to person) has declined nearly 11 percent in 2012, a development that suggests substitution of over the top alternatives.

Mobile Data Now 42% of Total Among Leading North American Carriers

The percentage of postpaid service revenue related to data increased to 42 percent as of June 30, 2012, up from 38 percent for the same period in 2011, among 14 leading North American mobile service providers a study by

PwC has found.

Carriers with revenue greater than $5 billion increased data revenues six percent as of June 30, 2012, to 39 percent, compared with a smaller increase in the revenue generated by data services for carriers with revenue less than $5 billion, 45 percent as of June 30, 2012 compared with 44 percent as of June 30, 2011.

Data users on average contributed $23 of total average revenue per user as of June 30, 2012, which is up from the average of $21 at June 30, 2011, or about 40 percent of total monthly recurring revenues.

Bandwidth consumption by North American smart phone users continued to grow in 2012, but at an order of magnitude slower rate, compared to 2011.

In 2011, smart phone users, on average,  consumed about 114 percent more bandwidth, the study found. But the  increase on a per-subscriber basis averaged only 27 percent in June 30, 2012, compared to usage levels in June 30, 2011, the PwC survey found.

Bandwidth consumption is bound to grow, as sales of smart phones grows. The sale of smart phone devices to new postpaid subscribers represented 60 percent of device sales for fiscal 2011, up from 41 percent in fiscal year 2010.

Smartphone users on average consumed 632 MBytes of data per month as of June 30, 2012, compared with 431 MBytes of data per month at the same time in 2011.

Mobile Bandwidth Growth Drops 60%, Wi-Fi Likely the Reason

Overall traffic growth for 14 large North American mobile service providers has slowed significantly from the rapid rate of increase seen in recent years, with operators reporting

as much as a 60 percent reduction in their rate of traffic growth.

Where traffic grew in triple digits in 2011, growth was in double digits in 2012, a PwC survey has found.

Many will speculate about the reasons for the slowdown. Some will suggest the growing number of lighter users, as more and more people start using smart phones. PwC analysts speculate that market maturation and late adopters who do not use as much data as early adopters could explain some of the slowing rate of data consumption.

Some of us think users simply are switching much of their device data consumption to Wi-Fi. In fact, Cisco estimates that, in 2016, as much as 70 percent of mobile data consumption will use Wi-Fi.

By 2017, almost 21 exabytes of mobile data traffic will be offloaded to the fixed network by means of Wi-Fi devices and femtocells each month, Cisco estimates. 4G Americas says Wi-Fi offload of mobile traffic is at 35 percent today in the United States and is estimated to be 68 percent by 2016.

Without Wi-Fi and femtocell offload, total mobile data traffic would grow at a compound annual growth rate of 74 percent between 2012 and 2017 (16-fold growth), instead of the projected 66 percent CAGR (13-fold growth), 4G Americas says.

Cisco notes that tthe global average for daily data consumption over Wi-Fi is four times that of cellular, averaging 55 MBytes per day for Wi-Fi, and 13 MBytes for cellular.

 Average Daily Wi-Fi and Mobile Data Consumption

Even as mobile device data consumption grows, consumers rationally respond to incentives, such as the ability to shift consumption to Wi-Fi in ways that protects their data caps. Ignoring such changes in consumer behavior has been an issue before.

In March 2011, for example, AT&T projected that data bandwidth growth would be on the order of eight to 10 times over then-current levels between the end of 2010 and the end of 2015.

That forecast appears to be based on an expectation that volumes would roughly double in 2011 and then increase by a further 65 percent in 2012.

Instead, AT&T seems to be seeing something like 40 percent annual growth. To be sure, 40 percent annual growth is significant. It means bandwidth consumption doubles about every two to three years.

Cisco estimates mobile broadband grew about 70 percent in 2012, and will grow at a compound annual growth rate of 66 percent from 2012 to 2017.

Some believe Wi-Fi offload will slow the rate of mobile broadband growth. On the other hand, even such offloading, at high rates of perhaps 80 percent, would slow the rate of growth by about 50 percent.

Google Fiber Seems to be Spurring ISPs to Upgrade, as Planned

Google Fiber, now operating or planned for Kansas City, Mo., Kansas City, Kan., Austin, Texas and Provo, Utah, seems to be having the intended effect of spurring other ISPs to move much faster in the area of access speeds.

AT&T now has said it will build a 1-Gbps network in Austin, while Wicked Broadband in Lawrence, Kan., which is close to Google Fiber in Kansas City, Kan., also says it plans to offer 1 gigabit service as well.

Wicked Broadband plans to offer 1-Gbps residential service for $99.98 per month; 100 Mbps service for $69.98 per month and 20 Mbps service for $49.98 per month.

None of the Wicked Broadband plans will have usage caps, nor will uploading speeds be reduced. The availability of nearby Google Fiber, also offering 1 Gbps service, clearly is a factor in the decision to move ahead with 1-Gbps service.

Wicked Broadband also will be offering business services at various prices and rates. The 1 Gbps service will cost $59.98 with committed rates.

A multi-tenant service operating at 100 Mbps will be sold for $12 a member. The 1-Gbps version of the multi-tenant service will be sold for $24 a member, per month.

Consumers or businesses that sign two-year contracts will have a free installation charge. Customers who sign a one-year contract will pay a $149 installation fee.

A 10-month contract will come with a $199 installation fee. Service on a no-contract basis will have a $300 installation fee. The latest expansions of Google Fiber likely will have further impact in the commercial segment of the  business, even as non-profit efforts also continue.

While less than a dozen U.S. cities offer ubiquitous municipal broadband, perhaps hundreds offer free Wi-Fi in certain public areas such as parks.

Petaluma, California is among the latest municipalities to offer municipal Wi-Fi, adding to the existing Wi-Fi hotspots it already provides as “CityGuest” in the Petaluma Community Center, at City Hall and the Senior Center. The Petaluma branch of the Sonoma County Library offers access to library patrons.

Where some municipal efforts concentrate on outdoor areas, at lower speeds, those efforts complement commercial ISP efforts that emphasize indoor coverage at medium to high speeds.

Also, there is movement on the “high end,” especially for university communities. The Federal Communications Commission wants to encourage creation of gigabit cities in every U.S. state, by 2015. That effort is better described as “gigabit communities,” built around “anchor institutions,” not full “cities.”

The general idea is that creating test beds is the best way to foster the creation of new applications that presume ubiquitous  gigabit communications. That is a demand side effort, intended to allow development of compelling new applications, rather than an effort to change the cost of supplying high speed access.

Likewise, Blair Levin, Gig.U executive director,  points out that by creating anchor communities built around universities, compelling new applications can develop, proving that more investment in very high speed access has a revenue driver.

The whole point of Google Fiber, the “Gigabit Cities” initiative and Gig.U are to try and change the math in a positive direction (lower cost, higher revenue) while changing the competitive climate (force incumbents to invest faster). But those efforts at at the other end of the barbell from the low speed outdoor access provided by 1 Gbps municipal Wi-Fi access.

Lawrence, Kansas Wicked Broadband Will Offer 1 Gbps

Wicked Broadband in Lawrence, Kan. plans to offer 1 gigabit residential service for $99.98 per month; 100 Mbps service for $69.98 per month and 20 Mbps service for $49.98 per month. 


None of the plans will have usage caps, nor will uploading speeds be reduced. The availability of nearby Google Fiber, also offering 1 Gbps service, clearly is a factor in the decision to move ahead with 1-Gbps service.

Wicked Broadband also will be offering business services at various prices and rates. The 1 Gbps service will cost $59.98 with committed rates.

A multi-tenant service operating at 100 Mbps will be sold for $12 a member. The 1-Gbps version of the multi-tenant service will be sold for $24 a member, per month.

Consumers or businesses that sign two-year contracts will have a free installation charge. Customers who sign a one-year contract will pay a $149 installation fee. 

A 10-month contract will come with a $199 installation fee. Service on a no-contract basis will have a $300 installation fee. 

Wicked Broadband customers whose dwellings already are outfitted with a optical network  interface do not have to pay a connection fee, but will pay a $50 charge for installer labor. 

As Google Fiber has done, Wicked Broadband will aggregate potential customers neighborhood by neighborhood, building fist in the areas where the greatest number of pre-committed users sign up. 

Will Cable Eventually "Merchandise" Video to Sell High Speed Access?

Fierce competition normally causes lower profit margins, and competition seems to be having that effect on video service providers. According to Strategy Analytics, profit margins on cable broadband services are 70 percent to 110 percent higher than those on video services (depending on whether or not advertising revenues are included in the calculation).

These days, overall video service profit margins for U.S. cable companies are likely in the 20-percent range, where once they routinely were in the 40-percent range. Profit margins for broadband access likely are closer to 60 percent.

It therefore is no surprise that a cable operator now can say that the anchor service is broadband, not video. It is not unreasonable to argue that, over time, video will be an application that is merchandised, in order to sell the access services to deliver the video.

That's a big change.