Stickers Make LINE Money

Who'd have thought a business model could be built on "stickers!"

LINE Corporation’s revenue for the quarter was JPY 12.8 billion, up 348.9 percent over the same quarter of 2012 and 45.3 percent over the previous quarter. 

Revenue sources included in-game purchases (53 percent), sticker purchases (27 percent), official accounts, and sponsored stickers, LINE says. 

Telefónica Reportedly Will Shut Down Over the Top Voice App Tu Me

Telefónica reportedly will shut down Tu Me, its over the top free messaging app, on Sept. 8, 2013. Some had questioned the logic of competing against the likes of Skype and WhatsApp with a branded single-carrier app.

The shutdown of Tu Me might confirm the thinking that such an approach is difficult to impossible. T-Mobile’s Bobsled and Orange’s Libon remain active, so the matter is not completely resolved.

At least in part, the original thinking behind Tu Me was that availability of the app would allow users who were not Telefónica subscribers to communicate with Telefónica customers, eventually perhaps driving incremental calling revenue, as SkypeOut does.

At the time of its launch, some suggested Telefónica was a standout among service providers that “got it.” Such observations frequently have proven wrong.

Service provider executives are not dumb for refusing to embrace some business models that make sense for over the top app providers. As their experience with VoIP has shown amply enough, just because Skype or WhatsApp can build a business offering free voice or messaging, that does not mean a telco or cable company can do so.

As it turns out, Tu Me could not get traction, at least, not enough traction to create a huge user base that might have enabled a sustainable revenue model. As Tu Me might illustrate, service providers cannot always compete successfully against over the top apps with their own branded versions of such apps.

Do Apple iPhone Sales Mean Apple is the Same Company as it Was in PCs?

Apple, in its days as a supplier of personal computers, never had much market share, compared to machines of the Windows ecosystem. And while Apple still makes the argument that profit, not sales volume, is its top concern, Apple's recent smart phone sales are starting to remind some of us of Apple's past, when another ecosystem gobbled up the sales volume, installed base, and influence.

The Android ecosystem is approaching 80 percent market share. Apple's iOS still is significant, to be sure. But even Apple's profits seem to be dipping, as Samsung's profits climb almost to parity with Apple. 



Though it might have seemed far fetched not so long ago, Apple is facing a replay of its experience with PCs, where it lost leadership to Microsoft early on, and survived only a niche supplier. That isn't to say necessarily will repeat itself, but the numbers should provoke concern. 

Some would say Apple's iPhone business, as originally constructed, no longer works. The high-end is saturated, so Apple needs to introduce a low-cost iPhone, even if that risks further weakening of its average selling price and pressure on profit margins. 
 

 

Unlicensed Spectrum Can Dramatically Reduce ISP Breakeven Points

You'd undoubtedly be correct--or at least in very good company--if you predicted that mobile data access would be the primary way most people without Internet access will use it over the next 10 years. 

But some of us also would argue that other methods will play a significant role, including public-private partnerships, Wi-Fi hotspots, non-profit or fixed broadband access services as well. 

Some of us also would argue that the only way ubiquitous coverage for all potential users, including those with little ability to pay commercial rates, will hinge on creating lower cost alternatives ot mobile or fixed network service.

That is no slam on mobile or fixed ISPs. It simply is a recognition that the cost structures for telcos and mobile service providers might not allow for very low cost access, and reasonable usage buckets, for users with little disposal income. 

For that reason, some of us believe shared spectrum and unlicensed spectrum will be necessary parts of the overall Internet access ecosystem in many regions where consumers are underserved, or not served at all. 

By reducing government licensing and spectrum purchase requirements, at least some ISPs would be encouraged to create sustainable access services that would be absolutely unfeasible if those ISPs had to buy licensed spectrum or comply with the full set of regulations telcos and mobile service providers must obey.

Google Starbucks Wi-Fi Deal Will Represent a $50 Million or Greater Annual Investment by Google

Based on industry pricing, the Google deal to supply Wi-Fi services at 7,000 Starbucks locations could represent at least a $50 million a year investment by Google, based on what it is paying Level 3 Communications to supply and manage the access, according to estimates from D.A. Davidson telecom analyst Donna Jaegers.

That level of investment does not include money Google will spend to upgrade the Starbucks Digital Network experience, either. 

Consider that the sort of long-range investment Google previously has made in access capabilities, ranging from metro Wi-Fi to Google Fiber.

Cable Companies Earn More Than 25% of Metro Ethernet Revenues

U.S. cable TV operators earn more than 25 percent of Ethernect access revenues overall, and will earn perhaps as much as 33 percent in the near future, Heavy Reading says. 

Wholesale Ethernet is substantially outgrowing retail, expanding as a share of MSO Ethernet from 10 to more than 20 percent, including resold telco capacity and traffic delivered on their own facilities.

As you would guess, cable operators also are moving up the stack by adding more application-based, vertically-oriented services, expanding further into the enterprise space and downward into the smaller business segments.

By 2016, according to Insight Research, U.S. enterprises and consumers will spend over $44 billion on carrier Ethernet services, growing the market from $4 billion in 2011 to nearly $11.1 billion by 2016.

Will Telco and Cable Revenue be Lead, Anchored By or Exclusively Driven by High Speed Access?

Will high speed access be the primary telco and cable operator revenue driver in the future? Looking at mobile services, one would be quite tempted to argue that will be the case. In many markets, and perhaps globally, mobile data already represents the majority of revenue, if not the majority of users.

For both cable and telcos, high speed access is the biggest revenue growth category and legacy lines of business are receding, across the landline business.

So it might not be unusual that Cablevision CEO James Dolan has said in public that "there could come a day" when his company stops offering television service, making broadband its primary offering.

Time Warner Cable CEO Glenn Britt said in 2011 that broadband already is cable’s anchor service, a less dramatic of saying the same thing Dolan said.

Cablevision Systems Corp. has a rather long history of maverick behavior within the U.S. cable TV industry, notably investing significant sums in satellite delivered television ventures on more than one occasion, something other cable operators never did.

But Cablevision also went its own way even in more mundane matters such as the wavelengths it preferred for optical transmission, choosing to use the 1550-nm window rather than the 1310-nm window virtually all the other service providers preferred.

Some might say that explains the candor. Cablevision just isn’t shy about going its own way. On the other hand, one might also say Cablevision executives do not actually believe they will be running the asset when that happens, either. Sometimes imminent freedom creates more opportunity for telling the truth, as one sees it.

The day when high speed access, not video revenues, anchor cable revenues is but is a simple extrapolation from the declining percentage of revenue virtually all U.S. cable operators earn from video services, compared to other newer services, especially broadband, voice and business services.

The parallel statement would be the CEO of a tier-one U.S. telco or mobile services provider saying it could envision a time when the firm no longer offered voice services.

Whether telcos actually completely abandon voice, or cable companies completely abandon video, probably is not the question. The question is what drives revenue growth for either cable or telco providers, and the answer revolves around broadband and service provider roles as Internet service providers.

Looking only at profit margin, broadband is the most lucrative service, and arguably becomes the foundation access mechanism for an IP network, including some content and communication services, if not eventually all of them.

An analysis by IBM Global Business Services, for example, predicts just a few basic future outcomes, characterized either by consolidation, disaggregation (breaking the firms up into more specialized assets)or some shift to more horizontal revenue models.

One might argue for a future where some service providers are in the consumer segments, while others are in the business segment.

Either of those choices would involve significant structural change for any major telco, involving a huge amount of operating cost and capital investment reduction for the surviving units.