Median U.K. Mobile Data Consumption Up 70% in 1 Year

According to data collected by BillMonitor, the median U.K. mobile data user consumed 63 percent more data in January 2013 than in February 2012, representing median consumption of 236 MB, an annual increase of 70 percent.

It appears, as other studies have suggested, that 4G users consume at least an order of magnitude more mobile data. EE has said that subscribers to its 4G services used an average of 1.4 GB of data per month.

In May 2013, 4G users interviewed by YouGov SixthSense were a third of respondents. Of respondents aware of their consumptionm YouGov found that 29 percent of 4G

users consumed more than 1 GB per month.

About 47 percent said they used less than 500 MB per month. Some 44 percent of the smart phone users surveyed by Ofcom in April 2013 said that they would use their handset more if their mobile data connection was faster, a pattern that would mirror consumption trends for fixed network access as well.

Data collected by BillMonitor also found that the largest percentage increases in the consumption of mobile data were from the users with the lowest historic consumption. Users in the 25th percentile of usage increased their use of mobile data by 94 percent, equivalent to 106 percent on an annual basis.

Users in the 90th percentile increased their use of mobile data by 51 percent between 2012 and 2013, about 57 percent on an annual basis.

The 90th percentile consumers used 878 MB of data in January 2013, more than 3.7 times the consumption of the median user.

U.K. Telecom Market Revenues Drop for 4th Year in a Row

Overall revenue earned by all U.K. telecom service providers fell for the fourth consecutive year in 2012, driven by weakness in the wholesale segment of the business and voice services, according to the latest analysis by Ofcom, the U.K. communications regulator.

The nearly two percent overall revenue shortfall of £0.7 billion (1.8 percent) resulted in annual revenues of  £38.8 billion, largely as a result of a £1.0 billion fall in wholesale revenues and weakness in voice services.

As you would expect, mobile and Internet access revenues grew.

Retail revenue increased by £0.2 billion to £27.5 billion during 2012. Business data services grew by £0.1 billion). In other words, consumers and businesses were spending slightly more, overall.

Mobile services revenue grew  £0.3 billion, while fixed network Internet access revenue grew  £0.3 billion, representing the growing parts of U.K. service provider revenues.

The weakness in the fixed network market came from voice services, which saw a £0.3 billion revenue decrease.

On average, a typical U.K. household increased its monthly spending on communications services by £1.31.

The total number of active mobile subscribers increased by 1.1 million in 2012, as did the

total number of fixed broadband connections.

During the year, the number of fixed broadband connections operating with a headline

speed of 30 Mbps or higher increased from 1.1 million to 3.3 million as consumers migrated

to faster services.

Call volumes from both fixed and mobile phones decreased in 2012, with the former down by eight billion minutes to 103 billion minutes and the latter down by one billion minutes to 122 billion minutes.

Google Becomes Starbucks Wi-Fi Access Provider

For those who anguish or worry about whether application providers might become Internet service providers or access providers, we might as well simply agree that this has happened, and probably will happen on a wider scale over the next decade.

The latest data point: Starbucks’ WiFi will be provided by Google. Starbucks previously had used AT&T as the access provider. 

Google says it will provide access speeds an order of magnitude faster than before, while lucky residents of Google Fiber cities will see speeds up to two orders of magnitude faster. The transition is scheduled to happen over an 18-month period.

So one other way to look at matters is that although Google Fiber operates in just three metro markets currently, it soon will be an ISP and access provider to 7,000 locations scattered across the United States. 

In addition to providing faster Wi-Fi, Starbucks and Google will also work together to co-develop the next-generation Starbucks Digital Network.

You might say the access is powered by Level 3 Communications, which will manage in-store connectivity on behalf of Google.

As always, you never can be completely sure where Google might want to go with this in the future. 

Samsung Edges Apple in Consumer Satisfaction, in U.S. Market

Samsung has "a home run with its Galaxy S III and Note II," the American Customer Satisfaction Index says. 

Samsung’s flagship model for 2012, the S III, got an ACSI benchmark of 84 (on a 0 to 100 scale), beating Apple’s iPhone 5 at 82. 

Another Samsung model, Note II, shares the top of list at 84. The rankings undoubtedly provide some "headline" boost for Samsung, but the scores might also be said to be comparable. 

There is no way to determine what the "margin of error" might be, so such consumer satisfaction scores might reasonably be said to be a better indicator of broad sentiment than anything else It's hard to say just what a point or two of ranking actually means.

A difference in the double digits might be a more important indicator. 

While U.S. customers give Samsung’s smartphones the top scores, Korean consumers prefer Apple. According to the National Customer Satisfaction Index (NCSI) in South Korea, which uses the same technology as the ACSI, the iPhone 5 has higher customer satisfaction than Galaxy S III.

Why OTT Video Could Help Some ISPs, Harm Others

Ask most telecom industry professionals whether competition from over the top services is a problem, and you are likely to get an affirmative answer. Ask most cable TV industry professionals whether over the top video is a potential problem, and you might also expect to get an affirmative answer.

Perhaps ironically, a new survey by Incognito Software of executives largely from cable TV providers of broadband Internet access suggests a rather strong belief that over the top video services will help more than hurt their existing TV businesses.

Some 86 percent of service providers surveyed (82 percent of the respondents were cable executives) did not report cord cutting as a major threat, for example.

There are several ways to look at the findings. The respondents might not presently view OTT video as a threat, but might, in the future. That response would be rational today: there is not much evidence that over the top alternatives have harmed take rates for entertainment video by any appreciable amount.

But the answers might be different if the respondents had been asked what might happen in the future.

Also, the job responsibilities of respondents is a key issue. Network professionals tend to have different priorities than CEOs or CFOs, who might have answered differently.

The survey might indicate a rather sharp division of thinking within the cable and telephone industries about the threats from OTT, driven perhaps by different legacy services and platform upgrade issues.

Telco narrowband revenue streams (voice and messaging) are rather easily disrupted even at modest bandwidths. And there are differences between industry perspectives on the timing of disruption.

Telcos already have seen erosion of voice for more than a decade. Cable operators have only recently started to see video customer erosion.

Also, some of the telco voice erosion has been to mobile services many telcos also own, so revenue is shifted from a fixed network platform to a mobile platform. But there are bandwidth dimensions to the shifting market share.

Assuming there is upside for ISPs from greater consumption of OTT video entertainment services, ISPs ought to be able to generate incremental revenue from their customers, as customers will need bigger pipes and bigger usage plans.

But cable executives might rationally believe it will be more affordable to upgrade gracefully, since cable networks are, by definition, broadband networks.

Telcos face a rather disruptive upgrade path, as they must shift from all-copper to hybrid fiber-copper or all-fiber networks, since telco access networks historically have been narrowband networks.

That could explain the apparent optimism about the impact of over the top video. OTT video might harm the existing video subscription business, but also should offer compensating broadband access revenue.

Also, there is the potential upside from branded and owned OTT services, or partner revenue generated by services sold to third party providers.

In a real sense, then, you might argue the difference in industry perspectives is less about over the top services and more about the impact on capital investment, business risk and operating margins from network upgrades.

Cable executives might rightly believe their upgrade path is more incremental and affordable, even if they are highly exposed to disruption of existing video revenue streams.

Telcos face some of the same disruption of their own video revenues, while even platform upgrades could not stop erosion of the narrowband services.

In a broad sense, you might argue that telcos strategically have less to gain from growing broadband access demand than cable operators might gain, simply because the telco capital investment requirements would be much greater.

Simply, OTT voice, messaging and video are disruptive for all incumbents. But OTT video also requires much more end user purchasing of bandwidth services, so there is an offsetting revenue source for the lost video entertainment revenues.

But there are stark differences in capex impact, on the cable and telco fixed network ledgers.

Of the respondents who reported growth in bandwidth consumption, 75 percent point to streaming video sites as the reason.

Latin America was most concerned with bandwidth consumption, as 47 percent indicated this was a top concern.

Service providers in Europe, Middle East and Africa were most concerned about losing content rights to OTT service providers. Some 43 percent of respondents from those regions suggested this was a top concern.

North American respondents were concerned about high bandwidth consumption but at much

lower levels (24 percent) than Latin America.

North American service providers were most optimistic about OTT content as an opportunity. About 56 percent of North American respondents suggested they saw OTT as a chance to create new services and revenue streams.

The study shows that at least some thinking on the part of cable operators that over the top video has more upside than downside, not an unreasonable belief if online video leads to greater demand for higher-priced and faster access services.

But we might also be somewhat cautious about other reasons video cord cutting was not viewed as a threat. If the respondents were largely in charge of capacity and network functions, the responses might indicate great confidence that the respondents know they can increase bandwidth on their existing networks rather incrementally, while there will be offsetting new revenue.

Consider also how an ISP that is a pure play Internet access provider might respond. In that case, there is no existing video entertainment revenue to cannibalize, and only the upside of faster tiers of services and bigger consumption buckets.

The issue there is again on the capital investment side of the business case. Some ISPs will find it easier and cheaper to upgrade, compared to others. OTT video is a greater problem for any ISP that faces challenges conducting the upgrades.

Fair usage is the most common approach to managing OTT consumption. On a global level, the most popular strategies employed to manage OTT are fair usage policies (40 percent), followed by bandwidth caps (34 percent), and proprietary OTT services (22 percent).

Proprietary OTT services and service add-ons, such as unlimited video streaming or speed boosts, are expected to see the most growth in adoption rates over the next 12 months.

International operators are more likely to view OTT as a threat. While the majority of respondents agree that OTT allows for the creation of new services and revenue streams, some operators — particularly those outside North America — believe that OTT presents considerable risks.

NSA Tracks Browsing History?

A National Security Agency program allows analysts to search through vast databases containing emails, online chats and the browsing histories of millions of individuals, according to whistleblower Edward Snowden.



Officials deny the allegations. 

The NSA boasts in training materials that the program, called XKeyscore is its "widest-reaching" system for developing intelligence from the Internet.

XKeyscore provides the technological capability, if not the legal authority, to target even U.S. persons without any foreign person of interest ties, for extensive electronic surveillance.

Is Apple Finally Getting into Mobile Payments?

On its latest earnings call, Starbucks executives pointed out that 10 percent of all transactions in its U.S. stores are made with a phone mobile and the Starbucks Card app. In addition, those transactions are enabled by use of Square mobile payments software.

Some observers would say Starbucks is the most successful retail mobile payments service so far, while Square has emerged as the best example of a mobile payments success in the retailer adoption sense or the retailer terminal business.

Some have been waiting for Apple to make a move of its own in mobile payments, building on its Passbook application, which already provides some related functions related to storing coupons, tickets or passes in one place.

Passbook enables users to use a coupon, concert ticket or check into a hotel if a physical coupon or ticket is scanned into an iPhone or iPod touch to Passbook. Passbook also enables such features as automatically displaying passes at a specific time or location, so a user could walk into a coffee shop and automatically have a loyalty card appear, allowing scanning to complete the purchase.

But Apple has other assets, including iTunes, which by definition includes scores of millions of iTunes user credit and debit card numbers.

Still, observers also would note that Apple has been moving slowly on the mobile payments front. That appears to be coming.

Isis, the mobile commerce joint venture created by AT&T Mobility, T-Mobile US and Verizon Wireless, says it will introduce the Isis Mobile Wallet nationwide in 2013, with support for the iPhone.

That means the Apple iPhone 5S will feature near field communications for the first time, and that Apple will finally get into the mobile wallet and mobile payments business.

“Support for iPhone, Windows Phone and Blackberry 10 is expected to be introduced later this year,” Isis says.

Up to this point, iPhones have not had NFC support. So the implication has to be that Apple 5S devices will include NFC support for the first time.

The only other conclusion one might draw is perhaps also interesting, namely that Isis is going to add some other form of device communications other than NFC. That seems less likely.

But few would argue Apple is basing its mobile payments strategy on Isis. Instead, Isis would appear to be one more option for an iPhone user. The bigger upside for Apple would come if it can somehow leverage its user base, Passbook app, iTunes capabilities and “one more thing.”

As Starbucks and Square already have demonstrated, mobile payments is a tough proposition until there is clear value. Starbucks succeeded early because it was able to leverage its Starbucks card assets.

Square was able to enable small businesses to accept credit cards, something that had been cost prohibitive in the past.

It seems unlikely that simply enabling Isis creates the better experience that tends to drive Apple product experiences. And that means something else will be forthcoming.