Wi-Fi Offload Means "Don't Use Our Product"

What does one make of a business that encourages people not to use the key growth product the industry sells?

Perhaps the key growth product has a huge business model problem: if people really used it, the supplier couldn’t keep up with demand, and customers would become massively dissatisfied with both prices and experience.

Some might say that is precisely why mobile service providers encourage Wi-Fi offload: neither networks nor business models would survive actual usage of the product.

Consider the growing consumption of video on mobile networks. At some point, adding more capacity, in the form of spectrum, does not work. To be sure, mobile operators have other tools, including better air interfaces and more-intensive coding and small cell architectures.

Still, current mobile operator behavior continues to suggest there is a huge strategic issue here: the high-margin apps, such as messaging and voice, are being displaced by medium-margin Web browsing and transaction apps and a huge amount of low-margin video apps.

And there is almost a direct inverse correlation between bandwidth consumption and profit margin.

The problem actually is intensified as mobile networks introduce next generation networks. One constant in the mobile or fixed Internet access business is that when a faster network is made available, users consume more data.

Most observers would likely agree that the reason is better user experience. When content can be retrieved more quickly, people spend more time interacting with apps. That is the reason Google is so focused on encouraging faster Internet access.

And a new study conducted by JDSU’s Location Intelligence Business Unit suggests not only that LTE encourages more data consumption, but also dramatically increases the consumption of the heaviest users. Overall, heavy LTE users consume 10 times more data than similar heavy 3G users.

iPhone 5s users demand seven times as much data as the benchmark iPhone 3G users in developed markets, and twenty times as much data in developing markets, the study suggests.

Apple iPhone 5s users demand 20 percent more data than iPhone 5 users  in developed markets and 50 percent more data in developing markets, the study suggests.

Samsung Galaxy S4 users generate five times as much data as iPhone 3G users in developed markets, and eleven times as much data in developing markets.

The extreme one percent of all users consume over half of the downlink data in both developing and developed markets.

LTE users are ten-times more extreme: 0.1 percent of all users consume over half of

the LTE downlink data.

In 2011, one percent of 3G users consumed half of the entire downlink data. In 2012 the findings were the same: one percent of 3G users still consumed about half of the data.

On the 4G LTE networks, 0.1 percent of 4G users consume more than half of the entire LTE downlink data: an order of magnitude smaller group of users.

“The faster the speeds that mobile operators provide, the more consumers swallow it up and demand more,” JDSU says.

Perhaps significantly, the study revealed that users in developed and developing markets had similar overall rankings in terms of smartphone data consumption, but also little use of data cards and dongles or tablet connections.

South Korea to Build 5G network 1,000 Times Faster Than LTE

Though there is no formal fifth generation network standard, South Korea plans to move ahead anyhow, investing 1.6 trillion won (US$1.49 billion) through 2020 to build a fifth generation network (5G), the communications technology ministry says. 

The 5G network is expected to be 1,000 times faster than the existing Long Term Evolution network.

A trial 5G network is due to be rolled out in 2017, with full commercialization in 2020.

Perhaps one way to look at the effort, aside from Korea's determination to lead mobile network evolution, is that 2G networks were lead by voice, 3G by data (messaging, email, Internet access), 4G possibly by video. Will 5G be lead by the "Internet of Things" or machine-to-machine applications. We'll see. 

The initiative also seems a way for Korean firms to attempt what Huawei has achieved, namely getting a significant share of global telecom infrastructure share. 

Huawei recall, had by 2012 gotten about 26 percent share of global telecom infrastructure sales. Today, Korea mostly serves its domestic market, and has about four percent share of infrastructure sales. 

Okay, There are a Few Places Where There Really is No Spectrum Crunch

Is there really a spectrum “crunch?” Actually, the answer is more nuanced than you might think.

Certainly, there are places--such as the South Pacific--where spectrum seems not to be an issue, and is not considered to be a major concern even in the future. But that likely is an exception to the rule.

There are some who argue there really is not generally a problem, though that view seems a distinctively small minority opinion. And "when?" is a key qualifier.

Whether there is a spectrum problem today--in larger nations-- is a different question than whether there will be a problem later, unless multiple approaches are used to supply more spectrum.

Most observers agree that demand for mobile and untethered Internet access is growing fast, and will grow even faster as people consume more full motion video on untethered and mobile  devices.

Perhaps the better question is whether ISPs will need much more spectrum in the future to meet demand, even if they aggressively re-farm existing spectrum, redesign networks and have access to better network gear.

There is widespread agreement that mobile will become the primary way most people use the Internet, perhaps as early as 2017.

And if people start to use mobile Internet connections as they do fixed Internet connections, demand for spectrum will qualitatively change our notions of how much spectrum will be required.

Reasonable people can agree that spectrum ought to be “hoarded” only to deprive potential competitors of the assets. But reasonable people also can agree that present trends point to a clear need for more spectrum.

source: PriceWaterhouseCoopers

source: KPCB

U.S. Fixed Line Market Illustrates Mobile Importance

If you believe this access line forecast by JSI Capital Advisors is close to accurate, you will grasp the importance of mobile and wireless access technologies and revenue streams. 

Though up to this point firms such as Verizon Communications and AT&T, Comcast and Cox Communications have been able to maintain aggregate fixed line revenues by selling more services to a smaller number of accounts, one would be on safe ground in arguing that continued declines will, at some point, undermine that strategy.



The other observation is the important role now played by cable TV operators in the Internet access and voice businesses. Once upon a time it might have been thought new "telco" providers would be the big winners from the Telecommunications Act of 1996, which legalized local access competition.

In the early going, in fact, it was AT&T and MCI, then the dominant long distance companies, that represented most of the competitive local exchange carrier industry's leaders. Since then, both AT&T as an independent long distance company, and MCI, have disappeared, absorbed into other firms (AT&T was bought by SBC, which rebranded itself), while Verizon acquired the MCI assets. 

In voice or Internet access segments of the local access market, cable TV operators are the single most important category of "new" providers. 

The Internet in 1969

Sometimes it is helpful to remember just how far one has come. 

Mobile communications was a concept, before it became a commercial service. 

In 1985, when the CTIA  first began keeping statistics, there were about 200,000 mobile phone customers in the whole United States.

Consider mobile adoption rates now. 

Earlier, the big problem had been access to "telephone service" at all. In 1996, phone phone penetration was about 1.9 percent in Africa, for example. 

Today, mobile adoption in Africa is at least 67 percent. 

Consider the size of the Internet in 1969: four nodes. Today, two billion people, at minimum, use the Internet. 

To twist a commonplace phrase, "progress happens."

Comcast to Double Existing Speeds for Some Users

Comcast will be doubling Internet access speeds for at least some customers, boosting the "Performance" tier from 25 to 50 Mbps, the "Blast" tier from 50 to 105 Mbps, and the "Extreme" service from 105 Mbps to 305 Mbps.



Prices will vary by local market competition and rival offers, and probably will only be available to customers who buy double or triple play packages.



Comcast isn't the only major ISP making speed investments and boosting offers for customers.Verizon Communications is doing so, as well.





By the end of fourth-quarter 2013, 46 percent of Verizon Communications consumer FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 Mbps to 500 Mbps, up from 41 percent at the end of third quarter 2013.



In the fourth quarter of 2013, 55 percent of consumer FiOS Internet sales were for speeds of at least 50 megabits per second.



The point is that, although there seems continual grousing about how slow and expensive U.S. broadband access is, that complaint is being addressed.  You can credit Google Fiber for stimulating such behavior, but history alone might have suggested speed improvements would continue.



Unbelievable though it might seem, typical access speeds have grown at about a rate you would predict, based solely on Moore's Law. That should strike you as highly improbable, given the fact that access networks, in particular fixed access networks, are construction projects. 



In 2007, Technology Futures Technology Futures made this prediction for bandwidth growth in the U.S. market, at a time when typical speeds ranged from 1.5 Mbps to 6 Mbps. If anything, the forecast seems to be turning out to be conservative. 

Verizon FiOS: 46% of Customers Buy 50 Mbps; 55% of Q4 2013 Sales Were for 50 Mbps or Higher

Though some still argue that the United States is woefully behind in Internet access speeds, the more important part of the story is growth.

By the end of fourth-quarter 2013, 46 percent of Verizon Communications consumer FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 Mbps to 500 Mbps, up from 41 percent at the end of third quarter 2013.

In the fourth quarter of 2013, 55 percent of consumer FiOS Internet sales were for speeds of at least 50 megabits per second.

The availability of 100 Mbps to 1 Gbps Internet access services grew the fastest, from 2010 to 2012, according to the  National Telecommunications and Information Administration (NTIA).

Though growing from a low base, availability of 1-Gbps services grew nearly 300 percent between 2010 and 2012.

Availability fo 100 Mbps services grew even more: 448 percent between 2010 and 2012. Availability of 50 Mbps services grew 160 percent between 2010 and 2012.

Services operating at 25 Mbps, arguably the speeds most consumers tend to buy, grew about 57 percent, in terms of availability.

Up to this point, cable operators have been the primary providers of high speed access services of at least 25 Mbps or greater but less than 1 Gbps. That should start to change as more telcos begin to upgrade to networks offering speeds up to 1 Gbps.

Still, at the moment, 82 percent of U.S. homes have access to speeds in excess of 100 megabits per second, while in Europe, only two percent of the population has access to these speeds, Comcast notes.

The availability of 100 Mbps to 1 Gbps Internet access services grew the fastest, from 2010 to 2012, according to a new study by the  National Telecommunications and Information Administration (NTIA). Though growing from a low base, availability of 1-Gbps services grew nearly 300 percent between 2010 and 2012.

Availability fo 100 Mbps services grew even more: 448 percent between 2010 and 2012. Availability of 50 Mbps services grew 160 percent between 2010 and 2012.

Services operating at 25 Mbps, arguably the speeds most consumers tend to buy, grew about 57 percent, in terms of availability.

Availability of lower-speed services has reached virtual ubiquity. Some 98 percent of U.S. residents can buy Internet access at speeds of 3 Mbps or greater and upload speeds of 768 kbps or greater.

About 91 percent of U.S. residents can buy access at 10 Mbps downstream. Some 78 percent can buy access services operating at 25 Mbps downstream.

Also, about 81 percent of U.S. residents can buy mobile broadband access at speeds of 6 Mbps or greater.

And nearly 26 percent of the population can buy fixed wireless service with download speeds at 6 Mbps.

Up to this point, cable operators have been the primary providers of high speed access services of at least 25 Mbps or greater but less than 1 Gbps. That should start to change as more telcos begin to upgrade to networks offering speeds up to 1 Gbps.

Still, at the moment, 82 percent of U.S. homes have access to speeds in excess of 100 megabits per second, while in Europe, only two percent of the population has access to these speeds, Comcast notes.