Europe is Falling Behind, GSM Association Argues

Drawing valid comparisons between countries, in terms of communications development, quality and pricing are difficult for any number of reasons. Some measures of “development” or usage are relevant on a household basis. But differing average housing densities materially affect per-capita metrics.

Average national revenue and cost of living indices likewise affect price levels. Average loop lengths and population densities affect the costs of deploying networks, both mobile or fixed.

Large continent-sized countries will tend to lag small, highly-dense countries and city-states on most measures of network performance or advanced network deployment, simply because of scale issues.

Regulatory and national investment priorities likewise will have a material effect on the quality and speed of advanced networks and services. Also, nations differ in ability to use infrastructure for maximum economic effect.

Even allowing for such important differences, relative rankings can change, and significantly, over time. Not so long ago, many critics pointed out that U.S. consumers lagged far behind Japan, South Korea and most Western European countries on any number of metrics, ranging from use of mobile services to use of mobile messaging to magnitude of Internet speeds.

Critics still point out that U.S. prices for any number of services are higher than elsewhere, or that average access speeds are lackluster. All that said, we should not be too alarmed that new studies suggest Europe is “falling behind” the United States in the use of mobile networks, especially the next generation of networks.

Over time, the differences will evaporate, just as differences have evened out in the past. And some differences principally are caused by prevailing levels of wages and prices in any particular country. In most countries, for example, when Internet access prices are three percent or less of typical household income, broadband adoption soars.

What matters is the retail price of broadband as a percentage of household income, not the absolute price.  

As recently as five years ago, the European mobile market was performing as well as, or even better than, the United States, any observer can conclude, looking at mobile service adoption or consumption of mobile services such as voice, texting or mobile Internet.

However, since then, the situation has dramatically reversed, a study sponsored by the GSM Association suggests.

The United States has opened up a “large lead in deployment of next-generation technologies,” the study suggests. By the end of 2013, nearly 20 percent of U.S. connections will be on Long Term Evolution  networks, compared to fewer than two per cent in the European Union, the study suggests.

U.S. mobile access speeds are now 75 percent faster than the EU average, and the gap is

expected to grow.

Also, the United States is deploying LTE at a much faster pace than the EU, the study argues. By the end of 2013, 19 percent of U.S. connections will be on LTE networks compared to less than two percent in the EU.

Some of us would say the problem will be rectified soon enough, and that the “gaps” will narrow to the point of meaninglessness, as similar gaps between Western European and U.S. markets were erased in the past.

Also, many studies are commissioned for some business or political purpose. The GSMA study is no different. It occurs in the context of a heated struggle to convince EU regulators to allow much more market consolidation, to allow faster innovation in next-generation networks.

That isn't to dispute the findings; simply to note the context.

Have Cloud Apps Started Disrupting the Computing Upgrade Cycle?

Technology analyst Brian Proffitt suggests cloud apps now are disrupting the computing hardware upgrade cycle, which might explain the weakness of Windows 8 adoption. Simply put, and as has been the case for the last several Windows upgrade cycles, users are finding their apps work well enough that there is no need to upgrade hardware to run new software. 

That wouldn't be unusual, and represents a consumer trend that mirrors what should happen i the business networking space, others would suggest. 

Baird Equity Research Technology has argued that "cloud services will drive a shrinking IT spending pie," since companies will replace server and networking infrastructure with cloud services.


That means spending will shift from owned hardware and software to services. 

"We estimate that for every dollar spent on [Amazon Web Services], there is at least $3 to $4 not spent on traditional IT, and this ratio will likely expand further," Baird analysts predict.

In part, that might explain any number of things, from shrinking PC sales to slower operating system upgrades. 

Cloud-based apps, in other words, have begun to affect the hardware upgrade cycle because cloud-based apps do not require hardware upgrades as much as locally-resident apps often do, are upgraded automatically in the cloud and rely as much as the Internet connection as processor speed and memory. 

Over the next three to five years, technology spending in both consumer and business markets will transition from PCs to mobile phones, from servers to storage, from licensed software to cloud, from fixed voice and data connections to mobile. 

EU Network Neutrality Rules Would be Less Restrictive than U.S. Rules

It appears that any European Union version of network neutrality would have some distinctive features, compared to the rules fixed network providers (cable and telco) must follow in the United States, if the framework now proposed by European Commission Digital Agenda Vice President Neelie Kroes is adopted.

Among the most-noticeable differences is that although fixed network ISPs can provide only “best effort” access, EU network neutrality rules would allow quality of service tiers. At the moment, mobile service providers can offer such features, while fixed network ISPs cannot.

“I you've just bought a videoconferencing system, you'll probably also want an internet service that guarantees the right quality, end-to-end,” said Kroes. “If someone wants to pay extra for that, no EU rules should stand in their way; it's not my job to ban people from buying those services, nor to prevent people providing them.”

In other ways, the EU rules would be similar, requiring plan transparency, for example. “Before you sign up to an internet contract, you want to know key details,” said Kroes.

But EU rules probably will regulate terms and conditions of service in a way U.S. rules do not. With an eye to allowing consumers more ability to switch ISPs, the EU will be looking at excessive charges, modem rentals or control of email addresses that tend to create barriers to switching behavior. In the U.S. market those might not be in the domain of network neutrality but more consumer protection.

As do U.S. rules, EU rules would prohibit the blocking or other degradation of lawful services such as voice over Internet Protocol (VoIP) or over the top messaging services.

Traffic management to avoid congestion will be allowed, as network management is permitted on U.S. networks, under network neutrality rules.

But there are key nuances. Under EU rules, it appears Kroes supports rules that would allow ISPs to separate time-critical traffic from the less urgent traffic. Under U.S. “best effort only” rules, that is not allowed.

The EU rules might also allow creation of access services customized for different types of lead applications, ranging from light email or Web surfing plans to video entertainment intensive plans. “Operators need to respect these different needs, and to do that they must also be allowed to innovate to meet those needs,” said Kroes.

On balance, the EU rules would be less restrictive of ISPs, allowing more use of quality of service and assured levels of service features, while also making clear that all lawful applications must be free of interference, compared to U.S. rules.

Justice Department tries to force Google to Hand Over User Data

U.S. citizens no longer trust their government, polls suggest. A recent national survey by the Pew Research Center for the People & the Press found that 53 percent of respondents think the federal government threatens their own personal rights and freedoms. 

Just 28 percent of respondents surveyed by the Pew Research Center rate the federal government in Washington favorably. That is down five points from a year ago and the lowest level of trust percentage ever in a Pew Research Center survey.

A new lawsuit illustrates why the lack of trust exists. The U.S. Justice Department lawsuit, filed April 22, 2013, attempts to force Google to comply with Federal Bureau of Investigation demands for confidential user data. 

The FBI uses so-called National Security Letters, a secret electronic data-gathering technique that does not need a judge's approval and recently was declared unconstitutional in an unrelated court case.

NSLs  supposed are used only in national security investigations, not routine criminal probes, and there's no upper limit on the amount of data a single NSL can demand. Also, any recipient of an NSL, which do not require warrants, also make criminal the act of revealing that an NSL was issued. 

50 Mbps Services Dropping to About $1 to $1.60 Per Mbps Per Month?

Cable ONE says it has eliminated fixed usage caps for its high speed Internet access plans, and instead suggests that its plans assume a 300 GB maximum on monthly usage on its 50 Mbps plans. The 50 Mbps plan sells for $50 a month (before the taxes and fees) when bundled with voice service. 

Cable ONE also is launching new 60 Mbps and 70 Mbps plans, though pricing was not immediately made public. 

One might conclude that the dropping of the usage cap and the expansion of speeds is, at least indirectly, a response to Google Fiber. In 2010, for example, 50 Mbps service in the U.S. market cost about $145 a month, or nearly $3 per Mbps of access speed. 

The latest Cable ONE offer pegs bandwidth at $1 for each Mbps of access speed, when access service is bundled with a voice plan. 

Verizon FiOS likewise now is available, on a promotional basis, for about $1.20 per Mbps of speed for about a year, on contract, with second-year prices of about $1.60 per Mbps of speed. 

Line's "Chat" Revenue Model: Stickers and Messaging to Followers

"Monetization" is a very big deal for most Internet app firms, and a reasonably big deal for any would-be Internet access provider, simply because any entity requires a sustainable revenue model of some sort to stay in business and create new features. 

Line, the Taiwan-based messaging provider, now appears to be generating revenue by selling businesses access to Line users. 

A company buying a Line corporate account can send buy plans allowing sending of 15 messages or 30 messages a month to its followers. For those who select a limit of 15 messages, the cost would range from NTD 150,000 ($5014) – for up to a maximum of 100,000 fans – to NTD 450,000 ($15,047) – for more than 600,000 fans. 

The developing adage that if a user is not paying for a service, then the user is the product, applies to Line and many other application providers. 

But Line might make more money selling sponsor "stickers." For example, a firm might pay NTD 1 million ($33,438) for the right to develop eight stickers available for download for one month and which users can use up to six months.

Line's "Chat" Revenue Model: Stickers and Messaging to Followers

"Monetization" is a very big deal for most Internet app firms, and a reasonably big deal for any would-be Internet access provider, simply because any entity requires a sustainable revenue model of some sort to stay in business and create new features. 

Line, the Taiwan-based messaging provider, now appears to be generating revenue by selling businesses access to Line users. 

A company buying a Line corporate account can send buy plans allowing sending of 15 messages or 30 messages a month to its followers. For those who select a limit of 15 messages, the cost would range from NTD 150,000 ($5014) – for up to a maximum of 100,000 fans – to NTD 450,000 ($15,047) – for more than 600,000 fans. 

The developing adage that if a user is not paying for a service, then the user is the product, applies to Line and many other application providers. 

But Line might make more money selling sponsor "stickers." For example, a firm might pay NTD 1 million ($33,438) for the right to develop eight stickers available for download for one month and which users can use up to six months.