Users Willing to Pay for Faster Internet Access, Global Study Finds

A global survey of mobile users by Accenture finds that the speed of mobile Internet connection was important to 97 percent of all respondents. That is not too surprising, given the overwhelming prevalence of 2G and 3G network connections globally.

About 78 percent of respondents said there is some room for improvement in mobile Internet access speeds. For ISPs, the equally important finding was that 63 percent of all respondents said they would pay additional monthly fees for mobile Internet service.

But there is a caveat: that willingness to pay is based on the assumption that the new service is an order of magnitude (10 times) faster than their current connection.

For mobile service providers hoping to monetize their Long Term Evolution investments, that is good news. Sort of. It depends on where a service provider is operating.

In mature (developed nations) markets, the willingness to pay extra for 4G is lower (57 percent of all respondents in these markets), except in Italy (71 percent) and Finland (70 percent)

In emerging markets, three-quarters (76 percent) of mobile Internet users would pay more for 4G; customers in Brazil and Russia (83 percent in each country) are willing to pay more.

The more important issue, though, is not what people say they might do, or will do. What matters is what they actually do.

On that score, one might argue that even if consumers in developed markets are not so apparently willing to pay more for 4G, many likely are paying more, if only because of the well-known observation that users of faster networks consume more data.

According to Federal Communications Commission data, users of satellite Internet access services, which arguably face the toughest bandwidth challenges, consume orders of magnitude less data than users of digital subscriber line, cable modem or fiber to home networks.

Currently, a 4G connection generates 19 times more traffic than a non-4G connection, Cisco notes. In part, that is because many 4G connections are used for residential broadband routers and laptops, which have a higher average usage.

But the other issue is simply that when users have access to faster networks, they consume more data. A smart phone on a 4G network is likely to generate 50 percent more traffic than the same model smartphone on a 3G or 3.5G network, Cisco says.

The survey also showed that almost all respondents (96 percent) said the quality of network is important, closely followed by its area of coverage (95 percent).

About 94 percent of respondents said the cost of data is slightly less important than quality, coverage, or connection speed, and even less, 89 percent, cited customer service as being important.    

Accenture’s Mobile Web Watch 2013 study surveyed nearly 31,000 consumers in 26 countries.

Global Mobile Devices and Connections by 2G, 3G and 4G

Although 4G connections represent only 0.9 percent of mobile connections today, they already account for 14 percent of mobile data traffic, according to Cisco.  In 2017, 4G will represent 10 percent of connections, but 45 percent of total traffic, Cisco estimates.

4G will be 10 Percent of Connections and 45 Percent of Traffic in 2017

Apple to Launch iTunes Radio

Apple is launching “iTunes Radio,” a free Internet radio service featuring over 200 stations and an incredible catalog of music from the iTunes Store, available in the fall of 2013.

“Featured Stations” curated by Apple and genre-focused stations that are personalized will evolve based on the music users play and download. To begin with, iTunes Radio will base its personalization experience on user listening history and past purchases from iTunes.

In addition, if you’re listening to a song you like from iTunes Radio or your music library you will be able to have a station built around those songs.

Users will be able to create and customize stations based on artists, songs, or genres.

Rwanda LTE Coming by Government-KT Corp. Joint Venture

Rwanda is building a new fourth generation Long Term Evolution network in a 25-year joint venture with KT Corporation of South Korea. KT Corp. is contributing $140 million in investment. 

The Rwandan government is contributing 3,000 kilometers of long haul optical fiber, spectrum and a wholesale-only operator licence. Additional financing will be added in the form of debt and vendor financing. 

The project aims to provide LTE broadband coverage to 95 percent of Rwanda’s 12 million population within the three years.

More than half the population of Rwanda now uses mobile phones. There were in March 2013 about 6,039,615 mobile subscribers, representing a penetration rate of about 57 percent.

The country's largest mobile company, MTN Rwanda lost 2,088 subscribers between the same periods, according to RURA with 3,452,182 active lines down from 3,454,270 in January.

With over 3.4 million subscribers, MTN remains the dominant player controlling more than half of the total market share with Tigo in second spot. 

The newest entrant, Airtel Rwanda, boasts a rise in subscriber base of 781,162 in March from 570,739 in January 2013. 

Rwanda’s mobile penetration at the start of 2012 was about 40 percent (4.3 million people), with Internet access penetration at seven percent, according to the Rwanda Utilities Regulatory Agency. By the end of 2012, mobile adoption had grown to about 5.7 million people.

MTN and Tigo’s networks each reach more than 98 percent of the population, whereas Airtel’s population coverage currently stands at 15 percent.

MTN group is Africa’s largest telecommunications operator with more than 130 million cellular subscribers in the region and in the Middle East.

Tablet Adoption Reaches 50% of Broadband Homes

It makes sense that personal devices used by people will outnumber shared devices used by households (TVs, refrigerators). 

At the moment, smart phones have become the consumer electronics product with the highest penetration, among smart phones, tablets, smart TVs, game consoles or digital media devices, according to Parks Associates.

Parks Associates predicts the number of U.S. tablet users will increase by 61 percent from 2013 to 2014.

Tablet adoption already is close to 50 percent of all U.S. broadband households, said Heather Way, Parks Associates senior research analyst.

Separately, researchers at the Pew Internet and American Life Project now estimate that about 34 percent of U.S. adults ages 18 and older own a tablet computer like an iPad, Samsung Galaxy Tab, Google Nexus, or Kindle Fire, up nearly 100 percent, year over year.

In 2012, about 18 percent of surveyed respondents owned a tablet.

As you might guess, there are differences in rates of adoption, as there were with smart phones.

As was true for Apple iPhone owners, households with higher incomes are more likely to be tablet owners. About 56 percent of households earning at least $75,000 per year own tablets, compared to 38 percent of people in households earning between $50,000 and $74,999.

About 28 percent of respondents in households with $30,000 to $49,999 in income own tablets, compared to 20 percent of respondents in households below $30,000 annual household income.

Unlike smart phones, which are most popular with younger adults ages 18 to 34, the highest rates of tablet ownership occur among adults 35 to 44. In that age bracket, 49 percent of respondents report owning a tablet.

In the 25 to 34 age bracket, 37 percent of respondents own a tablet. About 18 percent of adults ages 65 and older are less likely to own a tablet.

Tablet adoption, as did iPhone adoption, also is directly related to education. About 49 percent of adults with at least a college degree own a tablet. Only 17 percent of those who did not graduate high school own a tablet.

The findings might suggest that smart phones are “mission critical” devices, while tablets are more discretionary.

Intel Might Have to Pay 75% More for Content Than Other Video Service Providers

The problem attackers will have, when trying to disrupt the traditional TV business, is that if the content owners control the value proposition, disruption is not possible unless those content owners agree to be disrupted.

In other words, it is the content, or programming, that provides the value, not so much the delivery network. To disintermediate the distributors, the content owners will have to conclude that they can make as much, if not more money, by supporting Internet-direct suppliers such as Intel. 

For consumers, there are direct implications as well. Most people probably assume that one advantage of Internet delivery is the ability to watch content on any device, nearly anywhere, for less money.

To be sure, those value dimensions are not necessarily linked. Value could be "watch on any device," or "watch anywhere" or "watch for less money" or any combination.

But the "watch for less money" remains one of the assumptions nobody can be too sure about.  Intel, for example, is offering to pay as much as 75 percent more than cable operators do, to get the content Intel needs to provide a viable competitor to cable, satellite or telco TV offers. 

There are other elements of its business plan, of course, but it is hard to sell at a discount to the market leaders when the cost of goods might be that much higher. 

Deride it If You Must, But Capitalism Has Lifted 1 Billion Out of Extreme Poverty in 20 Years

Between 1990 and 2010, the number of people living in “extreme poverty” declined by 50 percent in developing countries, from 43 percent to 21 percent, lifting about a billion people out of extreme poverty.

And though the implications will be discomforting for some, free market capitalism is the reason for the progress.

Poverty rates started to collapse towards the end of the 20th century largely because developing-country growth accelerated, from an average annual rate of 4.3 percent in 1960-2000 to six percent in 2000-10.

That is important since 66 percent of poverty reduction within any country comes from growth.

To be sure, greater income equality can contribute about 33 percent. A one percent increase in incomes in the most unequal countries produces a mere 0.6 percent reduction in poverty; in the most equal countries, it yields a 4.3 percent cut in poverty.

Still, since so much of the recent rise has occurred in China, lifting the next billion out of extreme poverty likely will be tougher.

It is easy to attribute most ills of modern life to capitalism. But those attributions are wrong, on one important dimension. If you want to eliminate poverty, free markets work better than anything else we have been able to devise. It rarely works without externalities.

But trying to cure all the externalities will fail if the growth engine itself is constrained. Without growth, we cannot solve any of our key problems. That isn’t to say growth does not create some problems: it does.

Still, without growth, almost nothing else is possible.

Will "Homezones" Compete with or Complement Other ISP Services?

Cable companies are some of the ISPs that might in the future extend Internet access using “homespots” in addition to “hotspots.” The distinction is that ISPs might require, as one of the terms of service, that some portion of at-home bandwidth be reserved for “public” access by other users.

As Fon and Devicescape have done, this would potentially create a “new” network stitched together by amalgamating formerly-private at-home ISP connections.

Homespot Connect, for example, is an Android app that allows smart phone users to connect to Telenet Telenet (Belgium) “homespots.”

Google has for some time been collecting information about U.S. Wi-Fi locations, as part of its Google Maps app. In principle, that could help Google (or users) later if mechanisms to create homespots become more common.

It remains difficult to say with precision whether such “homespot” efforts represent “competition” to mobile or fixed ISP offers.

For some users, who use public Wi-Fi instead of at-home ISP service, there is some amount of competition. But most users tend to use Wi-Fi as a complement to their paid-for ISP services.

In that sense, homespots or public Wi-Fi hotspots offer more coverage, or the ability to offload traffic, and hence mostly are complementary to fixed or mobile ISP service. In principle, that is little different than a mobile operator deploying small cells to provide more capacity in dense urban areas.

But it would be fair to say that in the future, when many subscribers have connections operating at hundreds of megabits per second to a gigabit per second, there should be plenty of bandwidth to enable those at-home connections in “homezone” fashion as well, without affecting the subscriber’s experience.

Still, it will be a matter of business logic, more than anything else, that determines whether a specific homezone network is complementary or competitive to any other ISP operations.