By 2017, 50% of Enterprises Will Require Employees to Supply Their Own Computing, Communications Devices

By 2017, possibly 50 percent of enterprises will require employees to provide their own computing or communications tools, Gartner now predicts.

Some 38 percent of companies expect to stop providing devices to workers by 2016, according to a global survey of CIOs by Gartner.

Those forecasts, if borne out, indicate that an inflection point in enterprise computing already has happened.

"BYOD strategies are the most radical change to the economics and the culture of client computing in business in decades," said David Willis, vice president and distinguished analyst at Gartner.

The changes come for a myriad of reasons, including the power of consumer devices, the preference for consumer devices, the growing prevalence of cloud computing, the ubiquity of high-speed access, the ability to offload mobile traffic to the fixed network and the advantages to enterprises of changing information technology costs.

Gartner defines a BYOD strategy as an alternative strategy that allows employees, business partners and other users to use a personally selected and purchased client device to execute enterprise applications and access data. It typically spans smart phones and tablets, but the strategy may also be used for PCs. It may or may not include a subsidy.

Though enabled by cloud computing, the switch to user-supplied devices also will further drive cloud app adoption, since that is one way enterprises can enforce policies and allow access without the traditional support labor.

While BYOD is occurring in companies and governments of all sizes, it is most prevalent in midsize and large organizations ($500 million to $5 billion in revenue, with 2,500 to 5,000 employees). BYOD also permits smaller companies to go mobile without a huge device and service investment.

Adoption varies widely across the globe. Companies in the United States are twice as likely to allow BYOD as those in Europe, where BYOD has the lowest adoption of all the regions.

In contrast, employees in India, China and Brazil are most likely to be using a personal device, typically a standard mobile phone, at work.

Today, roughly half of BYOD programs provide a partial reimbursement, and full reimbursement for all costs will become rare. Gartner believes that coupling the effect of mass market adoption with the steady declines in carrier fees, employers will gradually reduce their subsidies and as the number of workers using mobile devices expands, those who receive no subsidy whatsoever will grow.

As you might well expect, the BYOD change will affect enterprise spending on all manner of computing devices. The impact on enterprise IT spending also should be positive for enterprises but negative for existing suppliers of enterprise premises systems and gear.

CenturyLink to Launch Omaha Gigabit Network "Pilot"

Google Fiber seems to be succeeding in changing ISP behavior about access bandwidth. Count CenturyLink as the latest big ISP to launch a gigabit network project. CenturyLink is going to build a gigabit network reaching 48,000 homes and businesses in part of Omaha, Neb. 


CenturyLink's service apparently will be available at first for 9,800 potential customers in west Omaha neighborhood that was a test bed for Qwest Communications "Choice TV," meaning meaning much of the physical infrastructure already is in place. 

The new service, called Lightspeed Broadband, will be available to all of the 48,000 households and businesses in that territory by October 2013.

The CenturyLink residential service will sell for $79.95 a month when bundled with other CenturyLink services, or for $149.95 a month a la carte. 

On a stand-alone basis, the CenturyLink service will sell for more than double what Google Fiber charges, though CenturyLink clearly would prefer customers buy a bundle.

Obama to Name Tom Wheeler to Head FCC

President Barack Obama is expected to soon nominate a former head of the largest U.S. cable TV and mobile trade organizations to be chairman of the Federal Communications Commission, WSJ.com reports. 

Some policy advocates will decry Wheeler's nomination, but he is an acknowledged subject matter expert on both the cable and mobile industries. Others might say an FCC chairman intimately familiar with the funding of new entities should have views about innovation and regulation that could be helpful as the FCC grapples with how to adapt its regulation to a non-monopoly world where innovation can outrun regulatory understanding. 

Mexico Telecom Deregulation is Coming

Mexico's telecom and TV markets are about to be disrupted, as the Mexican Senate has passed a bill to create a new communications and media regulator with the power to break up any firms with 50 percent or more market share in either the communications or TV broadcasting markets.

The legislation also ends the current limits on foreign investment in fixed network telephony and television. The law also creates a state-owned wholesale telecom network that would allow rival companies to bypass America Movil, which controls 75 percent of the country's fixed telephone lines and 70 percent of its mobile telephones and broadband accounts.

Televisa is the other target the new regulator will be looking at. Televisa, has around a 70 percent share of the TV market,

The new regulatory body, called the Federal Telecommunications Institute, is expected to be in operation by the end of 2013, with its first actions occurring in the first half of 2014.

Just how much impact the new law will have in promoting competition is not immediately clear, though it is anticipated the new regulator will impose asymmetric rules on contestants that will favor all the smaller competitors and handicap America Movil and Televisa in  some way.

The ending of the 49 percent investment cap on foreign firms might, or might not, have too much impact. Telefonica is a possible buyer of some of the smaller providers, as it already has about 22 percent mobile market share.

But international investors have been able to own more than 49 percent of mobile operations in Mexico for some time, and few have shown any appetite to buy into the market on a wider scale.

Possibly two new TV networks are expected to launch as a result of the changes. But there seems more uncertainty about market entry in the telecom business.

Observers might expect one of those new networks to be launched by Carlos Slim, who controls America Movil. Basically, Slim probably will use the new regulatory framework to diversify into television, even if America Movil

loses market share in telecom. 

OTT App Traffic Now Higher than Text Messaging

Over the top messaging now is costing mobile service providers in Spain about €341 million annually.  Text messaging revenues in Spain have declined from €1.1 billion (US$1.4 billion) in 2007 to €758.5 million in 2011 (US$991.8 million), says  Pamela Clark-Dickson, Informa Telecoms analyst. 

Significant losses also have occurred in other markets such as the Netherlands and South Korea. 

Region		P2P Messaging Traffic (In Billion)
		2010	2011	2012	2013F	2014F	2015F	2016F	2017F
Worldwide	P2P SMS	5,812	6,546	6,623	6,687	6,654	6,522	6,304	5,931
	OTT Messaging	1,494	3,840	6,774	10,452	14,970	20,437	26,359	32,141

 source:Portio Research

Daily OTT messaging traffic has already overtaken daily P2P SMS traffic in terms of volume, with an average of 19.1 billion OTT messages sent per day in 2012, compared with an average of 17.6 billion person-to-person SMS messages.

By the end of 2013, Informa estimates that 41 billion OTT messages will be sent every day, compared with an average of 19.5 billion P2P SMS messages. 

Still, text messaging users vastly outnumber users of OTT apps. There were about 3.5 billion SMS users in 2012, compared with about 586.3 million users of OTT messaging. 

Each OTT user sent an average of 32.6 OTT messages a day, compared with just five SMS messages per day per P2P SMS user, meaning that OTT-messaging users are sending more than six times as many messages as P2P SMS users do, says Clark-Dickson. 

Still, Informa forecasts that global SMS revenues and traffic will continue to increase through 2016. Other analysts likewise predict the overall percentage of OTT messaging will continue to grow, compared to text messaging. Free is an attractive price point. 

What Openreach Fiber to Home Prices Suggest About Infrastructure Cost

“Cost” is not “retail price,” but new fiber-on-demand retail prices from Openreach shed at least some light on the costs of a 330 Mbps fiber to premises network.

Openreach requires a fixed installation fee of £500.  But most of the connection fee is variable, and is based on distance.

Openreach estimates more than half of premises (55 percent) will incur a distance based charge of between £200 and £1000. Virtually all other premises will face a charge of between £1,400 and £3,500.

It is hazardous to compare costs or retail prices between countries, but the Openreach retail prices translate to U.S. prices of $775 for the fixed install cost. Some 55 percent of locations also would have to pay between $310 and $1551 to get a fiber to home connection, which suggests a gigabit connection might cost somewhat more.

The other 45 percent of locations can expect to pay between $2171 and $5428 to get a fiber to home connection.

So for 55 percent of potential locations, costs might range from $1085 to $2326 to get a 300 Mbps fiber to home connection.

For 45 percent of connections, users might expect to pay between $2946 and $6203. Those are difficult numbers for a consumer connection.

Essentially, were “cost equal to price,” the standard monthly recurring cost of £38 a month ($59 a month) implies breakeven between 18 months to 39 months for 55 percent of locations.

Breakeven might take 50 months to 105 months. But cost is not equal to price.

Assume a designed 40 percent profit margin, suggesting actual breakeven costs for 55 percent of locations might range between $651 in revenue (11 months) to $1396 in revenue (24 months).

In 45 percent of instances, breakeven might occur at revenue between $1768 (30 months) and $3722 (63 months).

Of course, those estimates only describe simple payback on invested capital, with no accouting for the costs of borrowed money, and no profit until after the breakeven point is reached.

But those figures might roughly be in line with what other fiber to home projects might cost in North America, if a $70 monthly recurring cost is assumed.

Gigabit Networks Will Destabilize the ISP Market

There are times in the global communications business when stability is the main trend. The first 125 years of telecom history were such times of fundamental stability.

But there are other times when instability and change are the main trends. That might have been said to be the case when global privatization and deregulation happened in the 1980s and 1990s. And instability now is growing with the maturation of voice and the rise of Internet access and mobility as anchor services.

Some might argue growing instability is what we will see over the next decade. Consider only the impact of symmetrical gigabit Internet access service. Quantitative change is not the only issue. Qualitative competitive implications will exist for contestants using different network topologies and access media.

Consider cable operator frequency plans and use of hybrid fiber coax, for example. Executives typically argue that HFC can be upgraded incrementally to support future bandwidths of that sort.

To support gigabit networks, it is argued, fiber is simply extended deeper in the access network, decreasing serving area size by about an order of magnitude, creating the same sorts of advantages mobile operators gain by using a fixed amount of spectrum in a cellular configuration.

Though the least disruptive, such an upgrade might feature per-user peak bandwidth of 100 Mbps, still an order of magnitude slower than Google Fiber’s 1 Gbps, symmetrical. Some say only the high-split and new top-split frequency plans, all featuring more fiber, will support gigabit speeds.

But some might suggest it would be easier to overlay some sort of fiber to home capability than to dramatically change frequency plans now commonly used by U.S. cable operators to support symmetrical gigabit Internet access services. At least so far, most cable executives deem that too expensive an approach.

Though three different frequency plans (low split, mid-split, high split) have been available for decades, virtually all cable operators use the low split plan. Basically, that means frequencies up to 54 MHz are reserved for return signals, while all the rest of the bandwidth up to about 850 MHz is used to support downstream communications and services.

But even traditional “mid-split or high-split networks are not symmetrical. The mid-split frequency plan increases return bandwidth up to about 85 MegaHertz. The high-split network increases return bandwidth to about 200 MHz. The new top-split network offers support for gigabit speeds gigabit speeds.

For cable operators, as for others using radio frequency networks,  the challenge symmetrical gigabit services pose is not simply quantitative (more) but qualitative (equal split networks are needed).