OECD Mobile Broadband Users Paying 4% Less for Speeds Up 123%

Mobile Internet access users in the Organization for Economic Cooperation and Development areas are paying less for access to faster connections, the most recent mobile broadband price benchmarking results from Strategy Analytics shows.

The average monthly cost for a tablet user needing 2 GB per month has fallen four percent since the same period last year, to USD PPP 17.79, while average advertised speed for the same basket has risen by 123 percent, to 26 Mbps.

For a laptop user requiring 5 GB per month, the cost has fallen by nine percent, and currently averages USD PPP 25.24, while the speed has risen by 35 percent over the year, and now stands at just under 24 Mbps.

The data was generated by a survey of 3,549 SIM-only, modem, laptop and tablet plans from 107 mobile network operators in 34 OECD countries.

SIM-only plans account for around 25 percent of all plans covered as part of the survey, suggesting those accounts are used by consumers in addition to their primary service.

Some 51 percent of all plans have an advertised maximum download speed of 20 Mbps and above. About 31 percent of all plans are 4G Long Term Evolution tariffs, an increase of about three percent since June 2013.

Also, some 29 percent of all offerings include WiFi or public hotspot access.

AT&T to Deploy 40,000 Small Cells as Part of Move to "Heterogeneous Network"

As part of Project VIP, AT&T’s network upgrade program, AT&T also plans to deploy more than 40,000 small cells by the end of 2015, creating a denser mobile network better able to handle data traffic demand in dense or urban areas.

Project Velocity IP (or Project VIP) is a three year, $14 billion investment plan to enhance AT&T’s mobile and fixed network IP broadband networks.

Between 2007 and 2012, mobile data traffic on AT&T’s network has increased more than 30,000 percent, AT&T says.

AT&T furthermore is working on the next generation of small cell technology, such as multi-standard “metrocells” that will support 3G, 4G LTE and Wi-Fi air interfaces.

Most observers would agree that end user demand for mobile network capacity is going to grow exponentially over the next decade, while even Long Term Evolution provides only incremental bandwidth gains.

Many would suggest several simultaneous solutions must be embraced, ranging from new spectrum to better coding, more efficient air interfaces, new spectrum, shared spectrum, small cell and virtualized architectures and use of unlicensed spectrum and Wi-Fi. In all likelihood, all will play a part in creating new networks.

Mobile analyst Monica Paolini, Senza Fili Consulting principal, argues for an “all of the above” definition of “heterogeneous networks.” Paolini says all air interfaces (GSM, CDMA, UMTS, HSPA, HSPA+, 4G: LTE, LTE-Advanced and Wi-Fi will be parts of the heterogeneous network, though not all will be used by every network.

Radio architectures will include macrocells as well as small cells (pico, femto, Wi-Fi or personal area), as well as distributed antenna systems.

Heterogeneous networks will span Indoor and outdoor locations; public, enterprise and residential locations.

All of that explains why many observers now say a future “fifth generation network” will not be distinguished from 4G strictly by air interface, bandwidth or frequency, but by the integration of many different architectures, protocols, networks, air interfaces and network ownership patterns.

In essence, network access for end user devices will be assembled dynamically, which explains the interest in “self organizing networks” able to provide access to any available network, in real time, often using the best available network.

Paolini says most of the adaptation will be an overlay of sorts, with mobile service providers incorporating new small cells, carrier Wi-Fi or other techniques first in dense urban areas where data demand is greatest.

By definition, frequency planning and interference control issues will grow as smaller cells are activated. Also, by definition, call control, data access and handoff chores will become more complex as users move into and out of small cell coverage areas and across access networks.

“Different radio technologies manage interference differently, and so the same small-cell

location may work for an LTE-Advanced small cell with sophisticated interference

mitigation techniques and not for a 3G small cell,” says Paolini.

In fact, the limited ability to manage interference in 3G environments is often cited as a cause for mobile operators’ hesitance to deploy 3G small cells.

Also, for the first time, frequency planning and interference avoidance will have to account for cells that are separately vertically, not just horizontally. So floor location within a single building now matters.

Use of Wi-Fi networks owned by third parties is the best example of how mobile networks are becoming heterogeneous. But small cells represent a next step, as well. Radio sites supporting multiple air interfaces are another example.

BlackBerry Cancels Sale Process, Will Remain Independent

In an unexpected development, BlackBerry, which had been seeking buyers, has abandoned its plan to sell itself. Until Nov. 4, 2013, talks had been proceeding with a Canadian investor group lead by Fairfax Financial Holdings.

Apparently, Fairfax Financial Holdings was unable to raise the money it needed to make the bid, and BlackBerry now will try to raise funds by selling bonds. But it appears Fairfax will be among the entities buying some of the new bonds.

Fairfax Financial Holdings Limited will acquire U.S. $250 million worth of the convertible bonds. The transaction is expected to be completed within the next two weeks.

The bonds are convertible into common shares of BlackBerry at a price of U.S. $10.00 per common share.

At closing, John S. Chen will be appointed executive chairman of BlackBerry's Board of Directors. Prem Watsa, chairman and CEO of Fairfax, will be appointed lead director and chair of the compensation, nomination and governance committee. Current CEO Thorsten Heins and board member David Kerr will resign from the board.

Those moves suggest either that the board became sharply divided about BlackBerry strategy, and not simply that the Fairfax Financial Holdings bid was deemed insufficient. In that case, the board would likely have solicited additional bids.

Others might suggest that the inability to raise funds for the $4.7 billion bid simply suggests there is not support among investors for that type of a deal.

Yet others might argue that the bond deal is a stopgap measure, and that a future sale, though not for the $4.7 billion purchase price, still is envisioned.

Other potential buyers were said to include Cerberus Capital Management, Qualcomm, Lenovo and BlackBerry co-founders Mike Lazaridis and Doug Fregin.

The move is a blow to BlackBerry bankers J.P. Morgan Chase & Co. and Perella Weinberg Partners, which were retained to manage the sale process. The bankers reportedly had spoken to Facebook, and had sought indications of interest from other firms including Microsoft, LinkedIn and Oracle.

0.07 Percent of Startups Reach $1 Billion Valuations?

Software-based startup firms eventually valued at over $1 billion by public or private market investors represent a rather miniscule 0.07 percent of venture-backed consumer and enterprise software startups, a study by Cowboy Ventures finds. 

To be sure, the survey only studied software-based startups started since 2003.

Takeaway: it’s really hard, and highly unlikely, to build or invest in a billion dollar company. 

The odds of creating a $1 billion valuation company is "somewhere between catching a foul ball at an MLB game and being struck by lightning in one’s lifetime."

Tech Sector Is In A Bubble

"We're in a new tech bubble, heading for a crash, just like the dot com bust of 1999," some now argue. After two bubble burses in the first decade of the 21st century (Internet in 2000, housing in 2008), we might be headed for the first bubble burst of the second decade of the 21st century. 


So the question is "what will it mean for the telecom industry?" At the very least, a significant deflation of equity values, which will mean less ability for firms to make acquisitions, raise capital for network investment and otherwise invest in their operations, right at the point that Long Term Evolution network builds are underway. 


That could delay network modernization for a few years, and slow down consumer demand as well. 

The best case scenario is that the tech bubble remains just that: a tech bubble that does not disrupt other market segments too adversely. 

The worse case scenario is that other sectors facing bubble conditions burst synchronously. U.S.farmland is among the sectors ripe for a major crash, for example. 


Some speculate that a massive default wave on student loans could set up the next financial bubble. 

To be sure, most would argue that telecom is relatively immune from bubbles. But telecom is not fully immune. 

The problem with bubbles is that one never knows one is in a bubble until it is over. 

Why is Time Warner Cable Losing Customers?

Time Warner Cable in the coming year that about 40 percent of the cable company’s service area will be overlapped by AT&T U-verse and Verizon FiOS.

In 2013, Time Warner Cable faced AT&T in about 27 percent of the Time Warner Cable service territory. Time Warner Cable likewise faced Verizon FiOS networks in about 13 percent of its coverage area. As the competition with video-capable networks grows to 40 percent, another one million homes also passed by the Time Warner Cable networks will face potential encroachment from either AT&T or Verizon.

That underscores a key background factor for telco TV success. Up to this point, few cable TV operators actually have had to face a telco TV competitor. In fact, cable TV operator market share losses to telco TV, which have been steady, if unspectacular, are mostly an artifact of low telco TV availability, not marketing prowess or consumer preferences.

Consider that Time Warner Cable, which has seen significant customer defections in video and voice take rates in its consumer customer segment, also seems to be facing escalating availability of rival services from both AT&T and Verizon communications. Though the company blames third quarter 2013 performance on a CBS contract dispute, others might doubt that is such a material factor.

Some would argue it is the growing availability of a product substitute (U-verse TV or FiOS TV) that explains the weakness.

Though high speed Internet access was a bright spot, at least 24,000 Time Warner Cable broadband customers also departed.

Analysts had expected the company to gain more than 46,000 broadband customers during the quarter.

To be sure, revenue grew, despite the subscriber losses.

Coverage is a major factor enhancing or limiting video service provider market share. Cable TV companies operate in virtually every city and town in the United States. Satellite providers likewise cover nearly 100 percent of the surface area of the entire country.

Because telco TV is not ubiquitously offered, U.S. phone companies have about 10 percent  market share, where cable TV companies have about 55 percent share, and satellite firms have close to 30 percent share.

The issue is coverage. By 2015, AT&T, for example, will be able to market to only about 33 million locations.

Verizon’s FiOS covers about 17.8 million homes, so the two telcos will pass about 51 million U.S. homes, by 2015, out of perhaps 145 million U.S. homes by 2015. That implies coverage of about 35 percent of U.S. homes. Other telcos will sell telco TV as well, but collectively could only theoretically reach about 14.5 million homes, or so, by 2015, best case.

Even under the best of circumstances, it is unlikely U.S. telcos will be able to pass even 45 percent of U.S. homes by 2015, using their own facilities.

That is one reason why over the top streaming appeals to telco TV executives: it could enable universal coverage without requiring huge capital investments in access networks “out of region.”

Is the U.S. Ahead, Behind or at Par, in Terms of Broadband Speed, Price? Answer: Don't Blink

Whether the United States is ahead, behind or about par in the area of fixed network broadband speeds and prices seems always to be contentious. In fact, you can find, without looking too hard, analyses that claim the U.S. market is “behind” others.

It isn’t hard to do. A few nations, typically including South Korea, Singapore, Hong Kong and often Japan, are cited as the world leaders in typical, average or minimum speeds, year in and year out. That much is not in dispute.

The latest version of the “U.S. is lagging” analysis comes from the New America Foundation, which argues that “in comparison to their international peers, Americans in major cities such as New York, Los Angeles, and Washington, DC are paying higher prices for slower Internet service.”

Furthermore, the report emphasizes that “our data also shows that the most affordable and

fast connections are available in markets where consumers can choose between at least three

competitive service providers (fixed network only, as there also are satellite and mobile ISPs in virtually every market).

“Methodology is destiny,” one might argue, and so it always is important to specify what is being measured, how it is being measured and perhaps why something is being measured.

Suffice it to say, some studies show U.S. typical speeds are higher than is common in Europe, for example. Other studies show that more than 80 percent of American households live in areas that offer access to broadband networks capable of delivering data with speeds in excess of 100 megabits per second.

A study by the International Telecommunications Union argues that U.S. broadband actually is more affordable than in most other countries.

To be sure, never tends to rank much better than eighth on any survey of global teledensity or Internet access speeds. There are reasons for that, such as the continental-sized land mass, longer loop lengths, lower population densities and even consumer preferences.

Small countries, with shorter loops, higher population densities and different financing mechanisms often do score higher than the United States does.

In the end, what matters is that the U.S. market is highly dynamic. In many of the cities cited by the New America study, there are municipal broadband networks whose prices for gigabit service recently were reduced from about $300 a month to about $70 to $80 a month. That’s progress, you might argue, but the bigger story is the amount of dynamism in the market.

It isn’t just Google Fiber launching gigabit service for $70 a month. It is the upgrades other ISPs are undertaking, the significant and growing role played by mobile Internet access, and expectations that speeds will continue to grow at a healthy clip. Snapshots are fine, but the U.S. Internet access market never stands still.

In fact, U.S. Internet access speeds double about every five years. And it is reasonable to project speed increases of two orders of magnitude within a decade.

Though it is an argument some might continue to make for some time, Internet access speeds and prices really are not going to be a significant problem in the U.S. market for long, even if some believe that is the case right now.