Vermont Telephone Sells $35-A-Month Gigabit Internet Access

Though the offer does not have many implications for other Internet service providers not able to get $5371 per home in free money, Vermont Telephone has begun selling 1-Gbps Internet access for $35 a month.

Vermont Telephone serves 17,500 homes, and has gotten $94 million in "broadband stimulus" funds (about $5371 per home) to upgrade its network. It's interesting, but not an example of sustainable nationwide gigabit access precisely because it is built on huge subsidies. 

The really important developments are any new ways ISPs can build networks delivering gigabit speeds, without subsidies, with clear and sustainable revenue models. 

Will LTE Reset Consumer Price Expectations?

The cost of mobile phone service in Europe has fallen by 15 percent since 2007, even as they have risen by 25 percent in the United States, at least as measured by “average” monthly phone bills. That is one reason why service providers in Europe hope Long Term Evolution will provide a chance to reset pricing expectations.

European users now spend an average of just 24 euros a month on their mobile phones, according to Sanford Bernstein. Americans spend about two thirds more. Some attribute the difference to the higher phone subsidies in the U.S. market, but at least some of the reason for lower European phone bills is greater erosion of voice revenues.

Voice represented more than 80 percent of revenue in 2007 and now accounts for 62.6 percent of revenue for European firms, according to  Informa. And gross revenue is only part of the problem.

Profit margins on that earned revenue also is falling, in most markets, for most providers in Europe, North America and Japan. To be sure, one advantage of LTE is that it is more spectrally efficient, and should allow mobile service providers to offer service at lower costs per bit.

In fact, some might argue that is the primary advantage of LTE, not necessarily the platform for new services. Others would argue that vastly lower latency and much higher speeds so represent an application platform with huge advantages, compared to 3G networks.

The key early test will be whether LTE actually allows mobile service providers to reset consumer expectations about tariffs.

Does Bandwidth Once Again "Want to be Free?"

What is the key implication of Google Fiber selling 1-Gbps symmetrical access for $70 a month? Granted, such offers pose destabilizing and disruptive challenges to any ISPs competing in the markets where Google Fiber exists, or could exist. At the very least, Google Fiber will push other major ISPs to speed up the volume and tempo of their bandwidth upgrades.

But Google Fiber raises, in a new way, an older argument about the impact of Internet technology in a broad sense.

About a decade ago, Bill Gates irritated executives in the communications ecosystem by arguing that “bandwidth wants to be free? ” Others at the time quipped about whether “computing wants to be free?” Others might argue that data wants to be free. And some have been arguing that content wants to be free.

To be sure, Gates meant that bandwidth would not be a constraint to creating new services and apps, as computing cycles and storage had ceased to be a fundamental problem in the software business.

Nor, as it turns out, is it true that computing or information or content always “wants to be free.” But it still is worth considering “what would my business look like?” if communications, bandwidth, computing, storage or information were so available and low cost that those ceased to be constraints to a revenue model.

Such assumptions have immediate consequences for suppliers of those goods, of course. If communications, computing, storage or information wind up being so low in cost that they no longer constrain what can be done, what changes?

Google, Netflix, Amazon, Apple, Facebook, Square and many other examples illustrate what is possible when computing, communications, devices, transactions and information suddenly cease to be barriers.

But Gates was substantially correct. How many these days would argue against the notion that most public Wi-Fi access is substantially free?

“You can’t use today’s technology constraints to predict tomorrow’s developments,” says Amadeus Consulting CTO John Basso. That fundamental insight, based in large part on Moore’s Law, might once again be more important than often is believed.

You could argue whole businesses now are built on the assumption that technology (especially hardware) constraints disappear over time. All cloud-based apps are built on such assumptions.

In 2004, Gates argued that “10 years out, in terms of actual hardware costs you can almost think of hardware as being free — I’m not saying it will be absolutely free — but in terms of the power of the servers, the power of the network will not be a limiting factor,” Gates has argued.

You might argue that is a position Gates adopted recently. Others would argue that has been foundational in his thinking since Micro-soft was a tiny company based in Albuquerque, New Mexico in 1975.

Young Bill Gates reportedly asked himself what his business would look like if hardware were free, an astounding assumption at the time. In inflation-adjusted terms, an Apple II computer of 1977 would have cost $5,174, for example.

Though there are lots of entrepreneurs advocating or working on new ways to make bandwidth available to end users, both in consumer and business settings, Google Fiber arguably has the potential to radically remake expectations in the Internet access space, in part because of its high profile and assets. It sometimes might take a very well-heeled entity (such as Apple) to change or disrupt an industry, and Google is such a firm.

In the same way that Gates has argued that hardware will not be a limiting factor for what can be done with computing, you might argue that Google Fiber once again raises the same question for communications. Granted, $70 a month is not free. But $70 for a symmetrical gigabit access service, in a decade, might be the equivalent of “so affordable that access no longer is a constraint.”

That is what Google wants, and that is what Google Fiber seems to be encouraging, in a serious new way.

12% of Internet, App Activities Occur on Mobiles

The amount of time people spent using mobile devices for activities such as Internet and app use, gaming, music and others has more than doubled in the past two years, according to eMarketer.

As a result, 12 percent of total time spend consuming media, using apps and the Internet now happens on mobiles. 

In 2012, the amount of time U.S. consumers spent using mobile devices excluding talk time, grew 52 percent to an average of 82 minutes per day, up from just 34 minutes in 2010, eMarketer says. 

Time spent with "online" (non-mobile) apps and activities grew 3.6 percent to an average 173 minutes per day, compared to 7.7 percent growth in 2011 to 167 minutes per day.

Mobile will have the higher growth rates, in part because mobile usage starts from a low installed base, and in part because more mobile devices are being used for Internet and mobile app activities.

U.K. to Test White Spaces in Third Quarter of 2013

Ofcom, the U.K. communications regulator, plans to test “white spaces” technology in the United Kingdom in the fall of 2013.

White spaces are frequencies otherwise used for digital terrestrial TV broadcasting and wireless microphones, but which for reasons of frequency planning are not actually used in particular areas. Think of the way a cellular network is built, reusing frequencies by spatially dividing them.

The actual amount of available spectrum will be available in rural areas, if U.S. experience holds. In urban markets, it is possible that only a few 6-MHz channels will be available. Perhaps perversely, it also is possible that tens to scores of 6-MHz channels will be available in isolated or rural areas.

But progress probably will be relatively slow, as a full ecosystems of end user devices and infrastructure has to be built, meaning relatively high prices for devices and infrastructure in the near term.

White spaces takes advantage of similar interference protection schemes where the same frequencies are not used in adjacent areas.

Among expected applications for white spaces are broadband access for rural communities, Wi-Fi  services or new “machine-to-machine” networks.

Ofcom anticipates that the technology could be fully rolled out during 2014.

Ofcom separately is planning to free up more spectrum in the future for fifth generation mobile networks (5G).

AT&T Digital Life Launches in 15 Cities

AT&T Digital Life puts AT&T into the home security and energy and water management businesses in a big way, launching in 15 U.S. cities, with a plan to serve 50 cities by the end of 2013. 

Presumably the service will work anywhere AT&T's wireless network reaches, and also uses any broadband connection as well. 

It's a big test of market demand for machine-to-machine services, especially with Comcast and Time Warner Cable offerings slated for commercial launch as well. 

8% of Canadian Households Have Cut Video Cord

About eight percent of Canadian households no longer watch either over the air TV or buy a video subscription, according to Media Technology Monitor. The percentage of homes without a TV subscription service or off-air TV rose one additional percentage point in 2012 to eight percent, after doubling in 2011 to seven percent, apparently as a result of the transition to digital TV formats. 

As other analysts have noted, perhaps the bigger problem is people and households that simply never sign up for a video service when they set up their households. Such households might not own a TV. But even some households that own a TV do not use it, Nielsen estimates. 

In fact, perhaps 75 percent of homes that no longer watch over the air or video subscription services actually own at least one TV.