$157 Billion Telecom API Revenue Opportunity?

Telephony application program interfaces can generate as much as $157 billion in global revenues by 2018, growing at a CAGR of 38 percent between 2013 and 2018, according to Mind Commerce. 

The Asia Pacific, North America and Western Europe region will remain to be the largest market segments by the end of 2018, while the Latin America and Central America and Middle East and Africa regions will see the healthiest growth rates over the next five years.

The subscriber data management category will witness the fastest growth rate and will eventually account for $29 billion in global revenue by the end of 2018. 

The average volume of API transactions for a tier one wireless carrier will eventually reach 167 billion transactions a month on average.

Telecom APIs allow carriers to generate revenue by exposing network features to third-party service or application providers. 

Examples include network quality of service for video services, subscriber data management for advertising and profiling. 

Today nearly 24 percent of all Web and 15 percent of all mobile applications utilize APIs, the report suggests. This figure is expected to increase to over 80 percent by the end of 2018. 

Small Alberta Town to Get Gigabit Speeds

Residents of a 8,500-resident Canadian town north of Calgary will get gigabit service for the same price they now pay for 100 Mbps, as part of a network upgrade by the town's non-profit ISP. 

The non-profit Olds Institute for Community and Regional Development in Olds, Alberta, Canada will pay $57 a month for a gigabit connection if they also subscribe to television or phone services, or pay $90 a month a la carte, at least as part of a promotion the ISP is running. 

O-Net already provides 100 Mbps service in town, and O-Net also got a $6 million loan from the town of Olds to support construction of the network. 

Tablet Mobile Connections Grow 48%

Mobile service providers are having success convincing subscribers to buy access for their tablets, according to NPD Connected Intelligence. Mobile connections for tablets grew 48 percent in the first quarter of 2013 compared to the first quarter of 2012, and are used on 12 percent of U.S. tablets.

Tablet connections tend to use 850 MB of mobile data per month, compared to 1 GB on smart phones, according to NPD.

Tablet Wi-Fi data use averages around 10 GB of data per month, or more than 2.5 times the amount of Wi-Fi data being used on smart phones.

“The difference in consumption on the Wi-Fi side comes from much higher video consumption on tablets (4GB per tablet per month), which accounts for 40 percent of all tablet data traffic, compared to less than 10 percent of data consumption on smart phones.” said Eddie Hold, NPD Connected Intelligence VP.

The connected tablet market is currently dominated by and AT&T and Verizon Wireless, in large part because most consumers purchase the tablet connection from their smart phone service provider.

It is highly likely that AT&T and Verizon Wireless are benefiting from their shared data plans, which make it relatively easy to add another device to a data plan. About a third of Verizon Wireless customers now are on “Share Everything” plans that make adding a tablet relatively affordable, at about $10 per tablet per month.

Still, given the fact that most tablets get used inside the home, where Wi-Fi typically is available, demand for mobile broadband likely will remain fairly muted. “Most consumers haven’t found that key application convincing them to add a cellular connection,” says Eddie Hold, vice president, Connected Intelligence.

Source: The NPD Group/Connected Intelligence Mobile Data Consumption Report

To be sure, use of tablets when on the go and at work will increase as more people get them, and more discover they can dispense with use of a PC.

According to a Google survey from March 2011, people were generally using their tablets at home. 82 percent said they primarily used their tablet device at home, followed by 11 percent on the move, and seven percent at work.

A survey by Forrester Research in 2013 suggested that work-issued tablets get used 48 percent of the time at a desk during a typical work week, while 68 percent of the time in a work week,  tablets get used at home.

source: Forrester Research  

Bill Proposes Auctioning 1755 MHz to 1780 MHz Spectrum for Mobile Use

Legislation that would require the spectrum between 1755 MHz and 1780 MHz be reallocated and auctioned for commercial mobile broadband use has been introduced in the U.S. House of Representatives. The bill first was introduced in 2012.

The additional spectrum is intended to be paired with the 2155 MHz to 2180 MHz spectrum band and then auctioned.

The “Efficient Use of Government Spectrum Act of 2013” was introduced by Representatives Doris Matsui (D-CA), Brett Guthrie (R-KY), Duncan Hunter (R-CA) and Adam Smith (D-WA).

The National Telecommunications and Information Administration has concluded that 95 megahertz of spectrum, the 1755 MHz to 1850 MHz band can be repositioned for wireless broadband use.  

NTIA has proposed a combination of relocated federal users and spectrum shared between federal agencies and commercial users.  

Are "Data Only" Phones Inevitable?

For 43 percent of respondents to a U.K. survey, data allowances now have become more important than the number of minutes in a mobile service plan.

Those results are one more indication of a potential future trend, namely, service provider offering of data-only phones that do not include voice service, much as mobile broadband dongles allow only Internet access.

Randall Stephenson, AT&T CEO, has said he believes such plans are inevitable, and that such plans could be in the market by 2014 or so.

If that happens, some might speculate it would make more sense than it has in the past for third parties to become branded service providers, the better to integrate apps and device features with the access function itself.

Channel conflict is an issue, but across the Internet ecosystem we have seen that suppliers wind up competing with their customers in at least some ways.

Booksellers and content providers become device suppliers. Operating system suppliers become device suppliers. Device suppliers have become content service suppliers.

To be sure, it is a troublesome issue for any device or operating system supplier to ponder becoming a branded mobile access provider, creating unwanted channel conflict.

On the other hand, bundling data access with devices would provide some advantages for a device supplier, possibly including the ability to package the experience in different ways. It might also be possible to subsidize the cost of access in new ways, as by using advertising support.

Google in fact, already has become an ISP in several U.S. cities, and is experimenting with novel ways of providing Internet access. Google also has bid on 4G Long Term Evolution spectrum, owned part of Clearwire and has offered municipal broadband services as well.

Google’s “moon shot” testing of balloon based Internet access might be the best example of an attempt at widespread disruption of the traditional costs of providing Internet access at the low end, the bookend to Google Fiber, the effort to disrupt the market for high-end Internet access.

In fact, rumor has it that Google submitted a big to buy T-Mobile USA. With its advertising business model, Google might be ideally placed to test the value of an ad-defrayed, ad-supported or “subscriber” relationship with mobile users.

Data Allowance Now Top Priority for U.K. Mobile Users

For 43 percent of respondents to a U.K. survey, data allowances now have become more important than the number of minutes in a mobile service plan. For those respondents, the top priority for users, when choosing a service plan, is the amount of the data allowance (presumably assuming pricing is roughly comparable).

Still, for 41 percent of respondents, the size of the voice bucket still is the top criteria.

The importance of the data allowance arguably is a function of the importance of web-based apps and  Internet communications apps such as email. Some 73 percent of survey respondents reported that web access was essential.

Likewise, 71 percent indicated email access also was essential. As other surveys have shown, people are using voice less as they shift to Internet-supported messaging, text communication modes or simply spend more time engaging with web or native apps.

Some 26 percent of respondents consume less than 30 minutes of voice a month. Some

23 percent, however, spend more than five hours each month browsing the web on their

phones.

About nine percent of respondents say they make or receive five hours worth of calls a month.

Some 32 percent of respondents have allowances of less than 300 minutes per month

and just 11 percent buy service that includes unlimited minutes.

Some 25 percent of respondents estimate they use less than a fifth of their minutes each

month, while eight percent use more than 80 percent of their voice allowances.

About 29 percent of users report they consume their minutes allowance primarily for quick chats with friends and family of under five minutes each, while 12 percent say they only use the call function of their phone in emergencies.

.

Fully 75 percent of respondents report using text messaging and 41 percent say they use mobile email. About 13 percent use Apple’s FaceTime video messaging to communicate with family and friends.

Some 16 percent use Skype.

The research was carried out online via online with the uSwitch consumer opinion panel of 1,649 respondents in July 2013.

When respondents were asked “which of the following phone functions do you think you could live without?”, 5.2 percent said “calling function,” 7.8 percent said “texting function,” 26.8 percent said “web browsing” and  29.1 percent said “email.”

Some 33.5 percent said “apps” were indispensable. Some 20.7 percent said “camera,” 19.8 percent indicated the “clock/alarm” and 54.1 percent reported “music/radio.”

About 24.5 percent reported they needed all those functions.  

Will Early Device Plans be Good for Service Providers?

T-Mobile's Jump plan, the Verizon Wireless "Edge" program and the AT&T "Next" plans for more frequent device upgrades might not be the best plans for most smart phone users, as attractive as they will be for people who really want to upgrade often, and really do not care so much about the cost of doing so.

One might ask whether the plans will be good for the service providers who offer the plans. 

At least in the case of AT&T and Verizon Wireless plans, where the traditional recurring cost is assumed by many observers to include both the cost of service and the recouping of handset subsidies, it so far does not seem to be the case that users who want to take advantage of the early device upgrade feature are compensated for separating their device plans from their service plans by lower service prices. 

In other words, buying a device on the installment plan, with the possibility of early upgrade, does not come with a reduced service plan cost.  That might strike you as unfair. 

It might also be argued that the early upgrade decision is a relatively costly proposition for users who take advantage of the feature, at least on Verizon and AT&T networks. 

It actually might not be "unfair" to consumers who want to take advantage of the early upgrade.

AT&T and Verizon Wireless might argue they still are subsidizing devices when a user pays half the retail price and then upgrades without paying the final half of the full device cost. 

If that is so, then maintaining the recurring service plans equivalent to "device plus service" plans makes sense, since service providers essentially recoup at least part of the potentially foregone device payments.

In other words, if the assumed device subsidy is $200, representing half the retail cost of $400, then when a consumer has paid off $200, returns the device and buys another, the carrier is left with $200 in phone subsidies to cover. 

The unchanged monthlhy recurring fees help the carrier recoup those lost device payments. 

So keeping the former "device plus service" price essentially compensates AT&T or Verizon Wireless for the lost subsidy recovery when a user upgrades after paying for half the full retail cost.