Two Ways Predictions Go Wrong

It's hard to forecast the future. Not only do we tend to view the future through the lens of the present, we more frequently get the timing wrong. Perhaps the more common forecasting error is of timing, not direction. 

Many developments which occur, generally as expected, take a decade or more to arrive in any significant way. That might not be a crucial fact for most people and companies, but it is decisively determinant for investors in technology start ups. 

Being right about the trend doesn't help if one is wrong about the timing. 

Mobile Broadband Already Emerging as Key in India Market

India’s mobile services market will reach Rs.1.2 trillion in 2013, up eight percent from 2012 revenue of Rs. 1.1 trillion, according to Gartner analysts. As you might expect in a market where retail is quite important, the growth could prove challenging.

“The mobile market in India will continue to face challenges if average revenue per unit does not grow significantly,” said Shalini Verma, principal research analyst at Gartner. And there is no doubt competition and over the top apps are key challenges. Both are putting pressure on profit margins. 

Ironically, mobile broadband revenue already appears to be more important than voice revenue, as a driver of future growth. 

“As mobile voice services continue to get commoditized in the country with the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators,” said Ms. Verma. 

“If the prevailing conditions do not change in the Indian telecom market, India will account for 12 percent worldwide mobile connections, but just two percent of worldwide mobile services revenue (in constant USD) in 2013.”

Mobile connections will grow to 770 million in 2013, an 11 percent increase from 712 million connections in 2012. 

49% of South Africans Would Change Their Mobile Operator if They Could

A recent study commissioned by Comptel suggests that, among South African consumers, up to 49 percent would consider switching service providers. 

Those figures probably overstate churn potential. 

As always, one should take a consumer's responses to any survey with a bit of skepticism.

Consumers often say they will do something, when they really do not; or say they will not do something; and then do that. 

The conventional wisdom for most people, including executives at mobile service provider companies, is that there is a relatively direct relationship between "customer satisfaction" and customer churn. In other words, "happy customers" don't leave.

It doesn't appear that is the case. Perhaps perversely, even happy customers will churn (leave a supplier for another), and at surprisingly high rates.

Two out of three (66 percent) wireless and cable TV consumers switched companies in 2011, even as their satisfaction with the services provided by those companies rose, according to Accenture.

The paradox is that “customer satisfaction” does not lead to “loyalty.” Also, there are new precursors to churn, especially the growing pattern of consumers adding a second provider of a service, without dropping the original provider. That of course puts a potential full replacement provider into a relationship with a consumer.

The Accenture Global Consumer Survey asked consumers in 27 countries to evaluate 10 industries on issues ranging from service expectations and purchasing intentions to loyalty, satisfaction and switching.

Among the 10,000 consumers who responded, the proportion of those who switched companies for any reason between 2010 and 2011 rose in eight of the 10 industries included in the survey.

Wireless phone, cable and gas/electric utilities providers each experienced the greatest increase in consumer switching, moving higher by five percentage points.

According to the survey, customer switching also increased by four percent in 2011 in the wireline phone and Internet service sectors.

There is a new and apparently growing indicator of churn potential as well. In a growing percentage of cases, consumers are adding new providers, instead of switching entirely. That can disguise the danger of churn, as the original provider does not realize a new potential replacement provider also has established a relationship with a particular consumer.

“Companies are improving many of the most frustrating parts of the customer service experience, but they are facing a customer who is increasingly willing to engage multiple providers for a service and is apt to switch quickly,” said Robert Wollan, global managing director, Accenture Customer Relationship Management. “

Note the contradiction here: consumers were “more satisfied” and also “not loyal” because of that satisfaction.

Consumers reported increased satisfaction across each of 10 service characteristics evaluated. In fact, satisfaction rates on three customer service characteristics jumped by more than five percentage points from 2010.

However, only one in four consumers feels “very loyal” to his or her providers across industries, and just as many profess no loyalty at all. Furthermore, two-thirds of consumers switched providers in at least one industry in the past year due to poor customer service.

Spanish Mobile Market Shrinks

Some 245,000 Spaniards appear to have abandoned use of mobile phones in February 2013. 

In other words, the Spanish mobile market not only has stopped growing; it is shrinking. 

In February, 575,138 people switched suppliers, an 18 percent increase compared to the same month the year before, and only slightly lower than the record 633,616 changes recorded in January 2013.

Telefonica lost 85,161 customers to rivals, while 95,115 customers left Vodafone for other operators, the Spanish regulator reports 

Orange lost 5,757 customers to other companies. Low-cost Yoigo, the smallest facilities-based operator gained 32,424 mobile customers. 

But mobile virtual network operators gained 153,609 new customers, primarily taking them from the facilities-based suppliers.

EU Single Market Plan Accelerated

European regulators are planning to aggressively accelerate plans to create a single telecom market, releasing its plan in June 2013 instead of its original fall time table, in the hopes the plans can be put into place before the end of 2013. 

The European Commission still is working on a blueprint for a single telecoms market in the EC states, a move some tier one service providers want, but which national regulators and smaller service providers might fear.

The issue is how to create one market from 27 distinct national frameworks, as well as how to harmonize investment and operating rules across the different countries. It is not clear that such a move, if successful, actually would create a single regulator across all 27 countries. 

For a few tier one service providers, common rules and a single market would allow a more efficient and profitable approach to providing communications services across Europe. Many smaller providers would find they do not have scale to continue competing successfully, though. 

In fact, the plan might initially entail easier competitor access to tower sites, ducts and other forms of infrastructure. The objective would be to enable some European service providers to achieve greater scale. 

Android Notebooks Coming

Lenovo, Hewlett-Packard, Toshiba, Acer and Asustek Computer reportedly are launching Android notebooks, at least in part because Windows 8 machines have disappointing sales. 

Given the displacement of PC sales by tablets, one almost wonders why. 

By 2017, total tablet shipments will hit nearly 353 million,  compared to 382 million PCs. Still, volumes will continue to shift in the direction of tablets and smart phones. Given Android's huge installed base and the likelihood that Android and Chrome sooner or later will be unified, the PC vendors are hedging their bets. 

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.