Amazon Set to Unvel Smartphone with 3D display Exclusively with AT&T

With Apple and Samsung the dominant U.S. smartphone providers, with 60 percent share and nearly 100 percent of the profits, any new provider has to ask itself what segment it has to create or capture to have a shot at success.

Amazon, certain to face skepticism about its prospects, appears ready to introduce a new smartphone of its own, exclusively on the AT&T network, and featuring a three-dimensional display as a unique feature.

To be sure, Amazon might always have been expected, if entering the smartphone business, to emphasize content, given its core business model. So the 3D feature, said to be usable without use of any special glasses, will cater to video content consumption and product sales, matching the content and product sales business model.

Few other smartphones have had such a specific positioning. One might argue Blackberry had an “email-optimized” approach.

Likewise, others had at least contemplated whether a “Skype-optimized” or “Facebook-optimized” approach might have appeal. Certainly a music-optimized approach has had appeal (“Beats”).

In many ways, a 3D approach might be said to be optimized for video content consumption. Whether Amazon will be successful is, of course, to be determined. But Amazon believes its Kindle strategy is working, allowing Amazon to sell more content. Fire TV is another move in that direction.

Clearly, Amazon hopes its smartphone strategy will work at least that well.

LTE May Make the Difference for Google's Hope to Commercialize "Loon"

Google’s Project Loon (steerable balloons to provider Internet access) appears to be making order of magnitude advances in performance, including 10  times more bandwidth, 10 times better abiltity to steer the balloons and 10 times the time afloft.



Should those sorts of advances continue, odds of a commercial launch would improve beyond the "greater than 50 percent" range Loon currently is said to enjoy. 



One key element is likely to be communications using the Long Term Evolution air interface, rather than Wi-Fi. The reason is that a Loon network would allow mobile service providers to access signals, eliminating the need for special base stations. 



Recent Loon tests have shown ability to delivery speeds up to 22 Mbps at a base station and 5 Mbps to a phone.

Getting Internet Access to the "Other Three Billion" Might Take Courage

Supplying Internet access, affordably and sustainably, to the other three billion humans on the planet is going to anything but easy, but not necessarily for technological reasons. To be sure, the cost of appliances and networks is an issue. It always is.

But operating costs are an issue, says Alcatel-Lucent Consulting Services managing partner Hilary Mine. The reason is that “jobs” are an outcome governments desire from their communications providers, not just “communications services.”

The practical implication is that although “automating everything” would help with controlling operating costs, it conflicts with the objective of creating incremental new jobs.

A similar sort of tradeoff exists in the spectrum policy area.

On one hand, Internet access provider operating costs will be lower if unlicensed spectrum is available. On the other hand, governments lose a source of revenue if spectrum is allocated in that way.

In that sense, the hard tradeoff is “less license revenue now, more sustainable tax revenue later.” But “later” is the issue.

Any politician or government official knows if always is preferable (politically rational, not necessarily always helpful for the nation) to push off costs into the future and deliver benefits now, when it can be done.

And that makes any effort to speed up Internet access delivery by using unlicensed spectrum a tough political challenge, when the alternative might be “license now, book revenue now.”

Technology matters. It always does. But so does policy. It might take some courage as well.

How Sky, Dish Network Hope to Avoid Cannibalizing Existing Customers When Launching On-Demand, Streaming TV

Service providers rightly worry about cannibalizing revenue they already earn when creating and selling “value-priced” offers. That is why “TV Everywhere,” which allows subscribers to watch some of the content they pay for as part of a linear video subscription to be watched on tablets and smartphones or PCs, is a value-add to the existing product, not a standalone offer.

Dish Network is going to be more daring, launching an online-accessed, standalone streaming video service featuring linear content and channels. So the issue is how that might affect existing customer behavior and potential downgrades to the more-affordable streaming service.

If Dish Network’s experience is similar to that of Sky, the U.K. satellite video service provider, the risk of cannibalization might be slight.

There are some caveats. Both firms are targeting a specific demographic, namely younger users who do not presently subscribe to linear TV. If the new services perform as expected, the cannibalization risk is minimal, since the new subscribers are net additions, while the offers are built in a way not especially attractive to existing consumers for the linear product.

In 2012, Sky launched “NowTV,” an Internet video service that does not require any “sell through,” where a NowTV subscriber must first be a Sky TV subscriber.

How NowTV is packaged is important. It offers on-demand video and some live TV, costing about  £8.99 ($15), as well as one-day “sports” access costing £9.99 ($17).

Though not saying precisely how much downgrade activity has occurred (Sky TV customers downgrading to NowTV), NowTV is attracting former non-customers, especially younger customers, according to Hilary Perchard, Sky  VP.

Perchard also says NowTV is not cannibalizing existing Sky customers.

The trick is to create an over-the-top service with enough value to attract the value-conscious buyer, while maintaining clear distinctiveness from the existing linear video service, to avoid cannibalization.

Dish Network plans to launch a similar  OTT service, not requiring a traditional subscription, by early 2015.

Basically, SkyNow and Dish Network, as well as others likely to follow at some point, have to create a new service compelling enough to compete with Netflix, Hulu or Amazon Prime, not traditional subscription TV.

Neither satellite provider is offering something most believe will happen, at some point, namely full ability for consumers to buy single programs or channels.

But NowTV and Dish Network’s expected efforts will move the industry in that direction.

In principle, the challenge resembles the segmentation strategy mobile providers face in mobile markets where both postpaid and prepaid segments are important. Each segment’s product has to have clear and distinct value, and a matching price and packaging approach.

For Sky and Dish Network, that task is made simpler because both are targeting a younger, non-subscriber demographic. So sports is a huge emphasis, rather than news, for example.

When You Cut Prices, Usage Really Grows, T-Mobile US and Sprint Have Found

T-Mobile US and Sprint customers, who arguably have access to “unlimited usage” plans, consume more data, at least since the second half of 2013, according to Macquarie Capital. That is about what classical economic thinking would suggest about outcomes, when effective prices are reduced: people consume more of products they value.

In similar fashion, earlier research by T-Mobile US suggests that allowing U.S. customers to roam outside the United States without paying roaming fees does in fact significantly increase usage.

In October of 2013, T-Mobile US stopped charging subscribers international texting and data roaming fees and lowered the price of calls from more than 120 countries to a flat rate of 20 cents per minute.

T-Mobile US customers travelling abroad now make three times more calls, text seven times more often, and use 28 times more data than before the new plans that dropped roaming charges.

Data usage, meanwhile, is nearly doubling every month, the study, conducted in April 2014, also found.

The study was conducted by Kelton Research, a consumer research firm, between April 25th and April 29th, 2014, among 1,044 Americans ages 18 and over who have smartphones and have traveled internationally, using an email invitation and an online survey.

Some 88 percent of respondents said they were frustrated by the expense and challenge of staying connected while abroad.

Among customers of the big three carriers, nearly 20 percent leave their devices at home or never turn them on while travelling outside the United States.

Another 40 percent turn off data roaming to avoid high costs, and another 20 percent say they would turn off data roaming if they knew how.

To be sure, much of the time, that means users will default to 2G data, which is a behavior-changer. To be sure, business travellers use voice and texting services when they might not otherwise have done so, and use 28 times more data.

But if network access is at 2G or 3G speeds, that probably indicates people are doing less bandwidth intensive apps, such as social networks, not watching video or even doing too much web surfing.

Between the first quarter of 2013 and the first quarter of 2014, the amount of data used by its enterprise customers increased by four times, while small business data usage increased by 11 times.  

The top five countries where small businesses are using the most data are, respectively, Mexico, Canada, the United Kingdom, Colombia and France (though the number of gigabytes being used in Mexico is nearly three times that of the other top-five countries).

Big businesses, by contrast, are using the most data in Mexico, the United Kingdom, Canada, Germany and France, respectively.

For the most part, that roaming access occurs on 2G or 3G networks.

T-Mobile US also sells “Speed Passes” for limited access to overseas 4G networks, featuring one-day passes for 100 MB at a cost of $15, or a two-week, 500 MB pass for $50.

But it appears less than one percent of T-Mobile US customers actually buy such upgrades.

Since T-Mobile introduced Simple Global, more than two million customers have roamed using the feature.

Another Way the Internet is in Danger of Becoming "Less Free"

Proponents of Internet freedom have not had a good decade, in some ways. The principle that any person can communicate with any other person, using any application, has broken with the development of "private" Internets created by governments. 

And even when use of any lawful application is guaranteed and enshrined in policy or law, that has not prevented a sort of "regulatory creep" that sweeps more and more issues related to business relationships, terms and conditions of use into the broad arena of "Internet freedom."

Such disputes are difficult, to be sure. They remind me of the way "free speech" rights are framed. Historically, one might well argue, the right of free speech was guaranteed to speakers, such as those who owned printing presses, and not actually to "hearers" who wanted to read newspapers and pamphlets. 

Over time, the emphasis has changed, almost always in the direction of the notion that the right of free speech belongs to the "listeners, viewers or readers." Neither view necessary is wrong or right, but the understanding of "who" has the right is different.

Of course, we also have different notions of what "speech" is, as well, as it pertains to the protection of "free speech." Originally, free speech was deemed importance in relation to clearly "political speech," as that was deemed essential for democracy to work. 

These days, art and entertainment routinely are deemed to be "speech." Something like that seems to be happening now in the United States regarding Internet freedoms and rights. 

Communications, video entertainment and now Internet regulation tends to oscillate over the decades, from less stringent to more stringent, and sometimes from more stringent to less stringent. 

It appears we are headed for a "more stringent" swing of regulatory activity. 

For example,  Internet interconnection could be the subject of new Federal Communications Commission action, even if all the FCC says it is doing for the moment is "gathering information."

The FCC action comes after recent interconnection disputes between Netflix and Comcast, and Netflix and Verizon. 

The new issue for industry participants (including operators of networks as well as application providers) is whether historically non-regulated Internet interconnection will face new regulation, for the first time. 

In the "common carrier" framework, networks have a positive obligation to connect with other networks. What has not been strictly regulated, recently, are the terms and conditions that govern such business relationships between carriers, when exchanged traffic volume is unequal, or highly unequal. 

Those rules have not applied to the interconnection of Internet domains, though the established business rules are that "settlement-free interconnection" occurs between networks that exchange roughly equal amounts of traffic. 

When unequal traffic exchange occurs, "for fee" transit agreements have been the norm, but prices and terms and conditions have not been regulated. 

All of that would now seem to be on the agenda. That conceivably could meani a major change, with potentially big business implications. Ironically, any new "first time ever" new rules would represent less "Internet freedom" in some respects, even if that is the language that would accompany "less freedom."

AT&T Will be the Largest Wireless ISP in the United States

Is AT&T about to become the nation's biggest fixed wireless ISP? It appears AT&T might well take that mantle, assuming AT&T’s acqusition of DirecTV is approved.

Buried in a filing with the Securities and Exchange Commission is this interesting promise: “the combined company will commit to deploy fixed wireless local loop (“WLL”) technology to bring high-speed broadband to approximately 13 million largely rural customer locations.”

AT&T expects the fixed wireless service will provide downstream speeds between 15 Mbps and 20 Mbps.