Global Telecom Revenue to Grow 3.4% in 2013

The total worldwide telecom market grew by 3.2 percent during 2012, and IDC is forecasting growth of 3.4 percent during the 2013 time frame, with the market settling into a steady growth rate of about 3.2 percent during the forecast time frame," according to Courtney Munroe, GVP, Worldwide Telecommunications, Mobility, and Network Infrastructure, IDC. 

But those service provider revenues will be unevenly distributed. What is not so clear from those global statistics is the actual pattern of growth and decline regionally.

Revenue growth, though slower than it had been in the first decade of the 21st century, will continue everywhere but Europe. 

The Asia Pacific region will lead growth. But Africa is growing faster than many think. 

Telecom retail revenue in Latin America will grow at a compound annual growth rate (CAGR) of 3.3 percent between 2012 and 2017, according to Analysys Mason.

But the European telecom service market decreased for the third year in a row in 2011, by 1.5 percent, the European Telecommunications Network Operators Association reports. 

In the third quarter of 2012, European carrier revenue contracted, though growing in other regions such as China, the United States, India and South America.

Even in the United Kingdom and Germany, the markets with the brightest future, STL Partners forecasts a respective 19 percent and 20 percent revenue decline in mobile core services (voice, messaging and data) revenues by 2020.

Revenue in the French market will decline 34 percent by 2020. In Italy, revenue will drop 47 percent and in Spain revenue will drop 61 percent by 2020.

Overall, STL Partners anticipates a reduction of 36 percent or €30 billion in core mobile service revenues by 2020, a loss of about €50 billion for Europe as a whole.

Europe's share of the global telecoms market has been declining regularly over the recent years, from 31 percent  in 2005 to just over 25 percent in 2011 as the gap between global growth (+3.2 percent in 2011) and growth in Europe widens.

Gigabit Network Coverage Almost Has to be Uneven, At First

It hasn't happened yet, but it is predictable that, at some point, concerns will be raised about the extent of coverage of gigabit access networks in the United States. One might argue that is a fair public policy concern, but also a concern that some might argue has to be secondary to promoting the building of gigabit networks as widely as possible.

Even within its own chosen cities, Google Fiber builds first in neighborhoods where the expressed demand is the highest.

Now AT&T, facing Google Fiber in Austin, Texas and Kansas City, Mo., believes there will be demand for gigabit or other similar very high speed networks in neighborhoods, if not whole areas of every city.

AT&T Chairman and Chief Executive Randall Stephenson says AT&T is not the only ISP that will want to provide gigabit or other very high speed service,  though perhaps in neighborhoods with many potential customers, rather than "everywhere."

Other projects, such as Gig.U, have roughly the same idea, that communities within cities, anchored by colleges and universities are the ways to get gigabit access networks up and running.

The point is that pushing forward will require deploying where that is possible: where there is demand. That will be an uneven process, almost by definition. And that is going to raise hackles, because communications is a political business.

There eventually will be complaints about universal service, or the communications equivalent of “redlining,” where whole neighborhoods might be deemed “low priority” or “no priority.” But that is just a problem we will have to face.

Given the uncertain business model and high costs of upgrading access networks for gigabit operation, we will have to push forward bit by bit, area by area, where the chances of sustainable success are highest.

The biggest single problem most would-be ISPs face when trying to provide  low cost, universal Internet access is a sustainable revenue model. Grants won’t do it. Permanent government support won’t do it. Good intentions won’t do it.

A self-sustaining revenue model of some sort is necessary. Though indirect mechanisms might be possible in some cases (ad-supported Wi-Fi hotspots, for example), in most cases actual end users will have to support the continued operation of the networks.

The second biggest problem is inability to get government permission to do so (licensing, spectrum). In many countries, ISPs are required to get telecom licenses, or can use unlicensed spectrum, but only if they pay a licensing fee.

That adds expensive overhead for any set of entrepreneurs trying to bring Internet access to everybody, under difficult financial circumstances.

Even for well-heeled providers in the United States, gigabit networks might have to be spot deployed.

"The key is being able to do it in areas where you know there's going to be high demand, and people are willing to pay the premium to be able to do it," Stephenson said.

Stephenson suggested the ideal level of potential subscribers would occur when 25 percent to 35 percent of households in a neighborhood want it.

There are sure to be complaints that such a deployment process is unfair. But without an attitude of “build gigabit networks where you can,” we run the risk of slowing the availability of such networks anywhere.

Google Maps Goes "Personal"

The new version of Google Maps will personalize and customize map detail for each user. 

When users set "Home" and "Work" locations, star favorite places, write reviews and share with friends, every Google Map instance automatically will include such details within the mapping experience. 

The new "carousel" gathers all Google Maps imagery in one spot enabling users to fly through cities, walk canyon trails, climb mountains, and even swim the oceans, Google says. 
And on a WebGL-enabled browser, like Google Chrome, the carousel includes the Earth view which directly integrates the 3D Google Earth images into maps. 

Send Money to Anybody with an Email Address Using GMail

One of the adoption issues with Google Wallet or any other type of mobile payment system is getting a critical mass of users and merchants. One new helpful wrinkle for Google Wallet is a coming ability to send money to anybody with an email address (no need for them to use GMail). 

That isn't a direct mobile payment app, but certainly will have critical mass. 

AT&T Sees Gigabit Networks Where 25% of Households Want It

Google Fiber is having the intended effect, namely convincing other leading ISPs that gigabit networks are feasible and have demand.


AT&T, now facing Google Fiber in Austin, Texas and Kansas City, Mo., now believes there will be demand for gigabit or other similar very high speed networks in neighborhoods, if not whole areas of every city.

AT&T Chairman and Chief Executive Randall Stephenson says AT&T is not the only ISP that will want to provide gigabit or other very high speed service,  though perhaps in neighborhoods with many potential customers, rather than "everywhere."

"The key is being able to do it in areas where you know there's going to be high demand, and people are willing to pay the premium to be able to do it," Stephenson said. 

Stephenson suggested the ideal level of potential subscribers would occur when 25 percent to 35 percent of households in a neighborhood want it. 

The real implications are not limited to the actual number of consumers able to buy, and buying, gigabit connections. The more important implication will be the number of consumers who buy 50 Mbps or 100 Mbps connections by 2020. 

By 2020, it is possible, perhaps even likely, that 100 Mbps will be a common consumer access speed.

In 2002, it is hard to remember, only about 10 percent of U.S. households were buying broadband service. A decade later, virtually all Internet-using households were buying broadband access service.

The point is that an order of magnitude increase, over about a decade, is doable.

In 2009, long before there was Google Fiber, Technology Futures predicted that, in 2015, about 20 percent of U.S. households would be buying access at 100 Mbps, about 20 percent at 50 Mbps, and something more than 20 percent will be buying service at about 24 Mbps.

It might be a bit of a stretch to hit that 2015 forecast, but the direction and momentum is clear enough, as implausible as it might have seemed just two years ago.

Even mobile networks could be offering breathtaking amounts of bandwidth in a couple of decades. 

Streaming Displacing Linear Radio, Stitcher Survey Suggests

It probably will not surprise you to learn that a survey suggests younger U.S. residents prefer to listen or watch "on demand" rather than listen to the radio. 

 Mobile streaming service Sticher conducted an online survey of 2,000 adults and found that 57 percent believe that in five years, Americans will primarily listen to streaming radio options over traditional AM/FM radio. 

The survey also found that U.S. residents aged 18 to 34 are far more likely to watch movies, television, and listen to music always or mostly on demand than their older counterparts. Duh. 

Streaming is displacing legacy modes of audio and video entertainment consumption virtually everywhere globally. 

Will Eventual Sprint Owner Try to Disrupt U.S. Mobile Market?

The outcome of the bidding for Sprint is not yet concluded, but it might not be incorrect to suggest that whether Dish Network or SoftBank wins Sprint, there is potential for a disruption of the U.S. mobile market. If Dish wins Sprint, the attack is more likely to take longer to develop.

Dish would immediately create bundles (Sprint voice and data with Dish video). But the big changes would come later, when the video portion of the bundle shifts from satellite to mobile delivery. But that would take time.

If SoftBank wins Sprint, the assault would come quicker. While SoftBank would aim to leverage new services and applications, as it did in the Japanese market, SoftBank also might launch a disruptive assault on retail pricing and packaging, as it also did in Japan.

How much the assault would resemble what Illiad’s “Free” has done in the French market is unclear. But Free’s attack, squarely on disruptive levels of value and retail pricing, has allowed it to grab nine percent market share in about 15 months.

Iliad offers users unlimited calling (domestic) and 3 gigabytes of data for EUR20 per month, prices that have proven attractive enough to entice nine percent of French consumers to change providers.

To be sure, European mobile revenue has been under pressure since at least 2007. In part, that is because mobile data revenue has so far failed to compensate for the sharp decline in mobile voice revenue, according to Wireless Intelligence research.

That study found mobile average revenue per user had fallen by 20 percent between 2007 and 2010, dropping from EUR25 in 2007 to EUR20 in 2010 on average.

A major reason is a decline in the average per-minute price for voice calls, which dropped from EUR0.16 to EUR0.14 in the EU27 mobile markets over the period. France has been particularly affected, one might argue, because of the new level of competition.

SFR in the first quarter of 2013 suffered an 11 percent  year-over-year revenue decline, as it faces the second year of price competition with Free, the upstart mobile operation owned by Illiad.

Orange recently reported an 8.1 percent fall in first-quarter 2013 revenue.  

In the 15 months since its launch, Free has secured around nine percent of the French mobile customer base.

Illiad Group, parent company of Free Mobile, said that sales in its mobile business had increased by 202 per cent to €294.5 million from €97.5 million, with the company adding 870,000 mobile subscribers during the first quarter to take its total to 6.08 million.

EU27: Average Revenue Per User (ARPU) 2007-2010

Source: Wireless Intelligence

And, as competition in the French market has at least one of the three leading providers looking for some way to merge with another entity to strengthen its position, a SoftBank assault could spur more thinking about market structure. In France, the thinking is that four providers probably cannot survive, even if French regulators say that is a minimum number of providers necessary to preserve competition.

In the United States, where regulators and antitrust officials likewise have suggested that four is the minimum number of providers necessary to ensure robust competition, a disruptive price assault by SoftBank would challenge those notions.

As the Broadband Availability Gap study suggested, a three-competitor market reduces ISP average revenue per user by 28 percent, and take rates by 75 percent. And the four-leader U.S. market has impact arguably more severe than that.