Tuesday, January 7, 2014

Global Device Shipments Up 7.6% in 2014

Global shipments of devices including PCs, tablets and mobile phones are projected to reach 2.5 billion units in 2014, a 7.6 percent increase from 2013, according to Gartner. 

Among operating systems, Android is on pace to surpass one billion users across all devices in 2014. 

By 2017, over 75 percent of Android's volumes will come from emerging markets, according to Gartner.

Worldwide Device Shipments by Segment (Thousands of Units)
Device Type
2012
2013
2014
2015
PC (Desk-Based and Notebook)
341,273
299,342
277,939
268,491
Tablet (Ultramobile)
119,529
179,531
263,450
324,565
Mobile Phone
1,746,177
1,804,334
1,893,425
1,964,788
Other Ultramobiles (Hybrid and Clamshell)
9,344
17,195
39,636
63,835
Total
2,216,322
2,300,402
2,474,451
2,621,678
Source: Gartner (December 2013)

Sony to Launch Streaming TV Service in U.S. in 2014

Viacom had in 2013 predicted at least one firm would launch a new streaming TV service in 2014, featuring the same kind of channels that now are only available to cable and satellite TV subscribers, and now Sony has done so.
Sony says it will start an Internet-based TV service in the United States in 2014, offering a mix of live TV programming and video on demand.
Andrew House, group CEO of Sony Computer Entertainment, says the service will have personalized channels reflecting the viewer's tastes.

Based on the number of homes with Internet-connected Sony devices, he says the service would be among the top five providers of TV programming in the country.

Verizon and AT&T Have Captured Most of the U.S. Mobile Industry's Growth Since 2008

A new report on the U.S. mobile industry provides confirmation of the pervasiveness of the mobile business. U.S. mobile penetration at the end of 2012 was 102 percent and almost 40 percent of U.S. households are mobile only, IGI Group says. 

The report also shows how U.S. market structure has changed since about 2008. Verizon Wireless and AT&T Mobility still are number one and number two in terms of subscribers, and have captured most of the market's growth.


Europe has Lowest LTE Retail Prices: Good for Consumers, Not Service Providers

Average Long Term Evolution 4G mobile service  pricing in the European Union  is $34.89 per month (average monthly data allowance of almost 20GB) and is the lowest of the six regions surveyed by Tariff Consultancy.

For consumers, that is the good news. For service providers, that is the bad news. In fact, LTE service providers in France offer LTE services without any pricing premium over 3G data plans.

And though observers and practitioners alike might have hoped that LTE could be uniformly introduced as a “premium” offer, that has not universally been the case.

In the United Kingdom, LTE prices are certain to come under pressure once 3 launches its LTE network, as 3 has said it will not charge a premium for LTE data access.

The pricing pressure should not be a surprise, as many surveys had suggested 4G service pricing would be an issue.

In most European markets, however, new adopters of smartphone service expected to pay less, about 28 percent to 31 percent less--than the amount existing subscribers said they were willing to pay.

And that rate typically was less than the current average market price for 3G service, researchers at McKinsey had found.

Should that trend spread, mobile service providers will find they have to work harder to reduce costs, since LTE might impose capital spending burdens with little direct revenue upside.

Monday, January 6, 2014

AT&T Introduces "Toll Free" Data Service for Partners

AT&T has launched a “Sponsored Data” service that content or application partners can use in a way similar to “toll free” phone numbers,

With the new Sponsored Data service, data charges for participating apps and services will be billed directly to the sponsoring company, much as Kindle content downloads have been paid for by Amazon, directly to AT&T.

The Sponsored Data program extends that concept, allowing business partners to encourage usage, as mobile customer data plans are not charged for usage.

The Sponsored Data apps and services will be delivered at the same speed and performance as any other content, on a best effort basis, with no packet prioritization.

AT&T believes the program will be attractive for partners in industry verticals including healthcare, retail, media and entertainment and financial services, to encourage sampling of new apps that otherwise might strain data plan allowances, especially video apps such as movie trailers and games.

If users are able to browse mobile shopping sites without incurring data plan charges, that likewise should encourage usage of the sites offering the feature.

For business customers, the feature might be a way to support essential work-related apps without necessarily subsidizing all other consumption.

Winners and Losers in Content

Any specific regulation or law normally produces winners and losers. Consider the impact of copyright law. You might instinctively assume that when copyright produces more revenue, the result is more content production.

Some might argue the relationship between revenue and creative output is not so simple. In other words, less copyright protection arguably can lead to more content production by at least some producers.

Broader copyright may thus entail a trade-off between two marginal effects: More original works from new authors along one margin, but fewer original works from the most popular existing authors along a second, argues Glynn S. Lunney, Jr. of the Tulane University School of Law.

If the second effect outweighs the first, then more revenue (produced by greater copyright protection) may lead to fewer original works. Conversely, less revenue (produced by less copyright protection) may lead to more original works, albeit by newer artists.

“While this may seem radically counterintuitive, it also happens to be true,” Lunney argues.  

Lunney studied the relationship between copyright protection, revenue, and creative output, by looking at file sharing and the parallel fall in music industry revenue.

Looking at songs in the top fifty of the Billboard Hot 100 from 1985 through 2013, Lunney found that the sharp decline in music industry revenue that paralleled the rise of file sharing was associated with fewer new artists entering the market, but also more hit songs, on average, by those new artists who did enter.

Moreover, because the second marginal effect was larger than the first, the decline in revenue since file sharing began was associated with a net increase in the number of new hit songs.

“Thus, for the music industry, the rise of file sharing and the parallel decline in revenue has meant the creation of more new music,” says Lunney.

Those findings will provide little comfort in some quarters. As with many other phenomena related to the Internet ecosystem, more usage does not translate directly into “more revenue” for some participants, even if it means more revenue is earned by other participants.

In other words, there are some winners and some losers.

Some Pro-Competitive Policies Just Don't Work

Political rationality and economic rationality sometimes are in conflict. In other words, public policy sometimes (perhaps often) is applied in ways that actually are counter productive, whether that is communications policy or social policy.

One example: nearly two years after the official end of the "Great Recession," the U.S labor market remains historically weak. Counter intuitively, dramatic expansions of unemployment insurance might be prolonging the problem.

In other words, not only do our efforts to ameliorate distress do very little, those efforts actually cause the problem to become worse.

To be specific, a study by the National Bureau of Economic Research suggests that
unemployment insurance extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment, concentrated among the long-term unemployed.

In other words, UI benefit extensions raised the unemployment rate in early 2011 by about 0.1 to 0.5 percentage points.

National policies to promote competition in telecommunications markets suffer from similar dangers. What “seems reasonable” to promote consumer welfare might in fact lead to the opposite effect, namely a reduction in long term consumer welfare.

The practical example is policy affecting the number of providers in any market segment. And just how few service providers are necessary to provide meaningful competition in any segment of the telecommunications business is a thorny question.

Many observers would say the empirical evidence is fairly clear when the number of suppliers is “one or two,” based on the history of monopoly fixed network communications, or sluggish adoption, high prices and limited innovation when just two mobile service providers operated in any single market.

But there is more controversy about the minimum number of contestants required in the satellite TV segment, fixed network business and mobile business, under present circumstances.

Intermodal competition (competition from other suppliers outside the segment) is the difference. A few decades ago, one might have argued, as did U.S. antitrust regulators, that the satellite TV market would be insufficiently competitive if the two suppliers merged.

These days, satellite TV competes directly, and successfully, with cable TV and telco TV suppliers, at least for the video product. But satellite providers are at a clear disadvantage in the areas of broadband Internet access, voice and interactive services generally.

So “two becoming one” in the satellite segment might not be as challenging as in the past, in terms of impact on consumer welfare.

The other key challenge is the minimum number of service providers necessary to maintain effective or reasonable levels of competition in the core fixed network and mobile service segments.

In the fixed network access market, that minimum number today is “two.” Google Fiber will provide a key test of whether the long-term number of sustainable providers can become “three.”

In the U.S. mobile communications business, the developing issue is whether three major providers will provide sufficient sustainable competition. To be sure, there will be a common sense belief that four providers provides more competition than three providers.

That, in fact, is a common belief for regulators in some European markets.

To the extent that is true, the issue is whether competition is sustainable over the long term. Highly fragmented markets can be relatively stable over long periods of time, so long as capital intensity is low. Most packaged consumer products categories provide examples.

But access networks are capital intensive, limiting the number of viable providers over the long term, even if, in the near term, competition can temporarily support more competitors. And that’s the conundrum.

It is difficult to say what the minimum number of providers must be to provide the benefits of competition, beyond the number “one.” One is tempted to argue that “more providers” provides greater benefits than “fewer” providers.

That might even be the case, in the short term. Over the long term, sustainable competition might feature fewer competitors. The reason is simple enough: capital intensive businesses require enough profit margin to allow robust investment in the business.

Having “too many” providers in a market tends to reduce profit margins so much that no providers, at least theoretically, can earn enough to sustain themselves over the long term.

So although “more” sounds like a better recipe for competition than “fewer,” fewer might be the way to sustainable long term competitive benefits.

Sure, it sounds crazy that “fewer” competitors might produce better consumer outcomes than “more” competitors. But the problem is that a highly capital intensive business requires methods to earn enough money to build the next generation of networks. And “excessive” levels of competition might be quite detrimental in that regard.

In the end, perhaps political rationality wins, at the expense of economic rationality. But there is no reason to pretend that some policies designed to promote competition and consumer welfare actually will do so.

Some policies designed to ensure competition might actually do so at the expense of the ability to invest in the next generation of networks. In that sense, some touted pro-competitive policies might lead, in the long term, to sub-optimal consumer welfare.

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