LinkedIn: 38% of Visits are From Mobile Devices

In the third quarter of 2013, mobile accounted for 38 percent of LinkedIn unique visiting members the company says. 

In some markets, mobile visits are higher than 50 percent of all visits and members who use LinkedIn on mobile and desktop are 2.5 times more active than those that use desktop only.

The mobile access rates have been significant for some time, though. 

Are Tablets Now Driving Net New Mobile Service Provider Account Gains?

It is starting to look as though tablet connections are the new near-term growth driver for at leaset a couple of the top-four U.S. mobile service providers. Specifically, Sprint probably still is losing phone accounts, Verizon Wireless is still gaining them, while T-Mobile US and AT&T Wireless are growing on the strength of tablet connections.

And that might explain why T-Mobile US to offer U.S. tablet owners up to 200 MB of free 4G LTE data every month for as long as they own their tablet, even if they're not yet a T-Mobile customer.

T-Mobile US is banking on those users adding mobile network service for their tablets, and offers a trade-in program allowing users to get a mobile-capable device instead.

Indeed, the growing importance of tablet connections is about the only way to explain recent net addition trends at the big four national carriers.

If T-Mobile US and Verizon Wireless each gain nearly a million net customers in a quarter, AT&T adds half a million and Sprint loses half a million, in a context where 90 percent of net adds must come from some other carrier’s market share, the numbers do not add up. Simply, there are more accounts being added than are possible, counting only phones.

The only clear implication is that other service providers took about half a million Sprint customer accounts. Beyond that, the only significant change in U.S. mobile market dynamics is that T-Mobile, has moved from losing customers to gaining a significant number of them.

What seems to be happening is that most of the net new additions are driven by tablets and other machine-to-machine connections of various types, such as alarm connections. 

Analysts say AT&T has lost some phone accounts to T-Mobile US. Of 551,000 net postpaid wireless subscribers AT&T added in the second quarter, 398,000 were for tablets.

UBS estimates 160,000 were for other connections, such as home security or wireless home-phone service. AT&T lost a net 7,000 mobile-phone customers.

AT&T had not reported its third quarter results at the time this story was filed, but UBS analysts expected net additions of 350,000, virtually all from tablet connections , with 200,000 other net new connections canceling out a net loss of 200,000 phone subscribers.

That new tablet trend is especially crucial as overall mobile service provider net additions have been shrinking since the end of 2011, and perhaps 90 percent of all new net additions now are taken from another service provider.

And though we will have to wait for a full answer, a reasonable question for the future, when Sprint launches its expected effort to recapture market share, is which carriers will take share from which other carriers.

Will Sprint and T-Mobile US take market share from each other, from AT&T or from Verizon Wireless?

Verizon Wireless has been outpacing AT&T, Sprint and T-Mobile US at adding net new “customers” since about 2010.

Verizon Wireless, for example, added 1.1 million net retail connections, including 927,000 retail postpaid net connections, in the third quarter of 2013, to grow total retail connections to 101.2 million connections, up 5.5 percent year over year.

Some 95.2 million of those retail connections were postpaid connections. If AT&T, T-Mobile US and Sprint report third quarter results in line with their second quarter reports, we might expect T-Mobile US to add a million customers, AT&T to gain half a million and Sprint to lose about half a million.

So we might expect about 2.5 million net adds at Verizon, AT&T and T-Mobile US, with Sprint losing about half a million. In other words, about two million net accounts would be added, of which possibly 1.8 million represent market share shift.

If the market is mostly a zero-sum game, where 90 percent of all net adds are taken from a competitor, the net adds are greater than the net losses, and they should balance, if we are looking at a market that is 90 percent zero-sum.

That net adds exceed those figures illustrates the impact of tablets being added.

Fon Launches New Router to Help Build U.S. Fon Network

A new router available from Fon, the global Wi-Fi network, is designed to increase Fon’s U.S. Wi-Fi network.

Because Wi-Fi passcodes are not always handy and often not memorable, the new router allows users who are Facebook friends of the owner to connect without a password.

It also has the benefit of separating the hotspot owner’s traffic and that of friends by segregating traffic using different Wi-Fi channels.

The new Fonera router also can be used to extend an existing Wi-Fi router's signal. The Fonera router can be set up as a Wi-Fi bridge.

"When we defined the new Fonera, we were specifically thinking of the Wi-Fi needs of U.S. households,” said Martin Varsavsky, founder and CEO of Fon.

The new Fonera router will be available in the Fon Store and on Amazon for $59 in the United States and euros 39 in Europe starting in November 2013.

The U.S. effort will be aided by a deal signed between AT&T and Fon allowing Fon users to access AT&T hotspots in the United States.

Walmart Launches Tablet Trade-In Program

Smart phone and tablet “trade in” policies are seen by mobile service providers as a way of enticing consumers to upgrade their devices. Such policies also can shift upgrade activity from mobile service provider stores to mass market retailers, with revenue implications for the retailers.

That is one reason why Walmart today announced customers can now trade in their tablets at more than 3,600 stores and Sam’s Club locations nationwide.

Similar to its new smart phone trade-in program, customers and members can receive up to $300 for their current tablet, which will then be applied toward the purchase of a new tablet.

The reason for the new policy is clear: consumers increasingly are upgrading to new devices, service providers and service plans when they can trade in their existing device. So the trade-in policies help drive traffic to retail outlets, and away from mobile service provider retail stores.

“Trade-ins, in their many variations, are the new competitive battlefield for carriers, retailers and OEMs,” said Eddie Hold, NPD Connected Intelligence VP. “The consumer may not necessarily shop at the carrier store for their next device, but instead may look to big box retailers if the trade-in price is right.”

More than 60 percent of smart phone consumers are aware of their trade-in options for a new device and 55 percent of them plan to take advantage of it the next time they upgrade, according to NPD.

In the past, only 13 percent of smart phone owners say they traded in their last mobile device, but the growing awareness and trade-in options have the potential to shift carrier and retailers loyalty.  

Among smart phone consumers, 30 percent said they would switch carriers if a different carrier offered a better trade-in deal, and almost 62 percent said they are willing to go to a different retailer (but not necessarily switch carriers) for a better trade-in price, NPD says.

The trade-in value is applied to a new tablet of their choice. If a customer’s new tablet costs less than the trade-in value of the old tablet, he or she will receive the balance on a Walmart gift card.

In part, the trade-in policies also are important as the bulk of new device sales become replacement sales.

A Lost Decade of Revenue in Europe

Despite current revenue issues, the European telecom business, including fixed line and mobile segments, will grow from 2013 to 2025, analysts at IDATE now predict. 

The challenging part of the prediction, though, is that in 2020, revenue levels only will reach 2010 levels.

By 2025, industry revenue will be at about 2009 level, which was higher than 2010 revenue.  

You might call that a “lost decade” of revenue. As you might guess, revenue growth in both fixed network and mobile segments will be driven by non-voice revenues, according to researchers at IDATE.

Of course, IDATE researchers also note that performance could be worse, leading to a negative 24 percent revenue performance, or better, in which case revenue could grow 28 percent more than the scenario IDATE considers most likely.

The most likely outcome is based on an assumption that revenue growth for the top five European markets, or EU-5 (France, Germany, Italy, Spain, United Kingdom), will start to grow again in 2016, after shrinking by about four percent in 2013.

In part, IDATE believes the worst case scenario is not the most likely, since it is a simple extrapolation of current trends, with declining voice revenues not matched by growth of new revenue sources.

The optimistic scenario assumes service providers are successful efforts to generate more money from tiered Internet access (pricing based on consumption) as well as significant new revenue sources. That optimistic scenario has revenue growth of three percent, starting in 2013, something IDATE suggests is not likely.

But even the most likely outcome would require some structural change, one might argue. If you assume new services revenue is likely to be quite modest for the next five or so years, a reversal of revenue patterns would require an ability to charge more largely for existing products.

That would tend to suggest service provider consolidation at a level that significantly reduces the amount of competition, less stringent regulation that allows service providers to raise prices, an ability to tie consumption to pricing, retail packaging policies that raise more revenue per account, growth by acquisition or some elements of each, one might argue.

Up to this point, European service providers have not have notable success boosting prices even for the latest fourth generation Long Term Evolution networks. Mobile data plan retail prices have been dropping, in many countries, since early 2013, according to ABI Research.

ABI Research now has found that Long Term Evolution 4G network tariffs also are falling, either in actual posted prices or as measured by “cost per bit.”  

Comparing mobile Internet access pricing between the second quarter of 2012 and fourth quarter of 2012, 73 percent of countries surveyed have reduced the “effective cost” of their 4G tariffs to a significant degree.

The effective cost, measured in terms of “dollar per Gigabyte,” has dropped by 30 percent. In the U.S. market, service providers generally have maintained retail prices, but  introduced larger data quotas.

In Australia, Sweden, Japan, and Saudi Arabia the operators lowered the monthly fee but have kept data quotas unchanged.

That state of affairs poses questions, such as whether mobile service providers actually will be able to drive higher revenue, in the near term, from LTE access services.

“ABI Research is concerned that a number of operators have introduced 4G pricing plans at the same, or even lower, price points than 3G,” stated Jake Saunders, VP for forecasting. “In Norway, Telenor has introduced 4G tariffs that are cheaper than 3G.

But one might argue that either the “return to growth” scenario and the “three percent annual growth” scenarios must involve something more than “acquisition by growth.”

Some amount of structural change to reduce the number of suppliers, and retail policies that allow service providers to raise prices (probably requiring regulator policies to change) also seems necessary.

If Airlines are Targeting Bus Travelers, What Can Communications Service Providers Do?

Every now and then, it is helpful tto ask, and answer, the question of “what business am I in?” You might say a low-cost airline is in the transportation business, which is true enough. But so are operators of bus, train, commuter rail, ferry or subway systems.

The more detailed and helpful follow-on questions start when a manager asks “who are my competitors?”

The reason is that the answers to that question can lead to new business models or sometimes even industries. In Latin America, for example, discount airlines are competing with long-distance bus service, not other airlines.

It isn’t so clear how that will play out in the communications business, but we might already argue that Skype does not so much compete with traditional carrier voice as it does with Internet messaging or email.

Google Hangouts in a similar sense does not so much compete principally with carrier voice or traditional videoconferencing as chat services. WhatsApp might not so much compete with carrier text messaging as with Facebook and other popular social networks.

The point is that new opportunities sometimes do arise by redefining the business a firm believes it is in, who its customers are, and what those customers require and want.

Most service providers think of “prospects and customers” as people who live in certain geographic areas where the provider has a license, franchise or certificate to provide services.

Other providers, especially those using cloud-based approaches, do not define prospects or customers in geographic terms, typically. Even a local telco who sells hosted IP business telephony could, in principle, create a cloud-based service sold to users outside a licensed service area for common carrier services.

The point is that as low-cost airlines in Latin America target long-distance bus travelers as their market, not “air travelers,” some clever entrepreneurs likely are going to figure out new ways to identify customers and services for communications-related services that are non-traditional. 

The iPhone is a Proxy for the Smart Phone Market, it Seems

The iPhone seems, by one analysis, to be a proxy for the smart phone business, at least in terms of smart phone adoption.