5G Might be Powerful, but Also Will be Fragile

Future 5G networks are expected to feature much-faster speeds. Compared to fixed network access, though, there still will be issues. Total mobile bandwidth will never approach what is possible using a fiber connection, and interference will remain an issue for wireless approaches.

Government Content Blocking, Commercial Pressures Are Internet Dangers

Government blocking and filtering of content poses a big danger to the future Internet, but so does growing commercialization of Internet apps a survey of 1,400 experts by the Pew Research Center's Internet & American Life Project has found.

Less content access is a possible or likely consequence of government action, but a growing commercial context also will shape the unrestricted flow of information, the experts say.

But growing lack of trust also will reduce end user willingness to share using the Internet. And  "too much information" might likewise reduce end user desire to share content and information, as use of content filtering grows.

Despite those perceived threats, many respondents expressed optimism that the problems can, and will, be addressed.

In fact, a majority of respondents say they hope that by 2025 there will not be significant changes for the worse and hindrances to the ways in which people get and share content online today. 



And they said they expect that technology innovation will continue to afford more new opportunities for people to connect.

In fact, a majority of respondents he majority of respondents  say they hope that by 2025 there will not be significant changes for the worse and hindrances to the ways in which people get and share content online today. And they said they expect that technology innovation will continue to afford more new opportunities for people to connect.

By 2025, about 35 percent of respondents thought there would be significant hindrances to the free exchange of information, while 65 percent predicted the obstacles would be overcome, and that the free exchange of information would not be significantly dampened.

To be sure, some who are optimistic said they “hoped” that would be the case, not necessarily that they expected such an outcome.

Those who expressed hope or the expectation that access and sharing would survive challenges between now and 2025 also often noted that billions more people may gain access and begin sharing online over the next 11 years, allowing content sharing to survive the challenges.

Digital Divide Now is More Subtle

There is no digital divide on inter-city trains, inter-city buses or airplanes, a study of use of personal devices on buses, trains and airplanes suggests.

Internet access remains an issue in rural and lower-income areas, compared to suburban and mid-income urban areas, to be sure, but the issues now are more subtle, having as much to do with people not seeing Internet access as useful as actual physical lack of access.

To be sure, use of fixed high speed access services is lower among households with less income. Access is 70 percent amongst households with $10,000 or less annual income, in the 85-percent range for households with income between $20,000 and $40,000, and above 90 percent for households in higher income ranges.

But age explains non-use of the Internet as much as income. Also, mobile Internet access is substantial among lower-income households, ranging from 50 percent to 60 percent among lower-income groups.

In fact, many younger users use mobile Internet access, rather than fixed network access. In other words, much of the digital divide that remains in U.S. Internet access is explained by age or use of mobile access.

Access speeds in rural areas continue to lag offered speeds in urban and suburban areas, as a rule, though the gap is closing, as cable TV high speed access services tend to be much faster than all-copper digital subscriber line connections. That is true even in India.

That is one good reason why AT&T, among others, is upgrading rural networks with fiber.

In fact, widespread use of connected personal devices on inter-city transportation services suggests the important role ownership of connected devices now plays.

On Greyhound inter-city buses, the use  of personal technology use is now significantly higher than on airplanes and is only marginally below that on Amtrak and discount bus lines, a study by the Chaddick Institute for Metropolitan Development has found.

In fact, for the first time in five years, use of personal devices on at least one  inter-city bus service was higher than on airplanes or Amtrak.

Among the 505 passengers observed on 20 Megabus and Van Galder buses operating from curbside locations in 2013, 59 percent were using technology, compared to 46 percent in 2012.

In large part, that might be because the amount of use of new “connected” bus services--which offer travelers uninterrupted cell phone signals as well as free Wi-Fi and power outlets--grew 30 percent between 2012 and 2013.

On Amtrak, the share of technology users was flat at 52 percent in 2013, the study found.

Availability of power outlets, Wi-Fi and mobile access likely explains the lighter use of personal devices on airplanes, according to the Technology in  Intercity Travel Study.

Technology use on airlines remained virtually flat and continues to lag behind other

modes in 2013, suggesting that lack of communications “for no incremental cost” is an issue.

But the ban on phone calls aboard aircraft, as well as the lack of power outlets, likely also are issues.

The two fastest growing modes of intercity travel over the calendar years 2012 and 2013—intercity trains and discount buses—were also those in which the technology use was observed to be the highest in early 2013.

The amount of discount bus service grew by four percent between 2012 and 2013, while the number of Amtrak seat-miles grew by 1.4 percent, as did airline seats.

Availability of Wi-Fi and mobile Internet connections, the “no incremental cost” access and lawfulness of device app use on trains and buses possibly explains the higher use of personal devices on buses and trains.

Mobile device connections are disabled in the air, on airplanes, in addition to being unlawful. When Wi-Fi is available, usage requires payment, and power outlets often also are not available.

But there seems to be no “digital divide” between passengers on inter-city buses, trains or airplanes.

The Chaddick Institute survey in 2014 consisted of 1,659 airline travelers, 1,608 intercity train (Amtrak) passengers, 505 discount city-to-city bus passengers (Megabus and Coach USA), 270 conventional intercity bus passengers, and 2,992 commuter rail passengers.

FTC Charges Un-Carrier with Un-Cool Cramming

It is hard to know what what is worse, T-Mobile US being charged by the Federal Trade Commission with cramming, or the abuse by third party information and content suppliers using third party billing.

Cramming is the practice of placing unauthorized, misleading or deceptive charges on a telephone bill.

Crammers rely on confusing telephone bills in an attempt to trick consumers into paying for services they did not authorize or receive, or that cost more than the consumer was led to believe.

Purportedly,  T-Mobile USA made hundreds of millions of dollars by charging customers for by “premium” text messaging services that never were authorized by its customers.

The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month.

According to the FTC’s complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.

Which Firms Will Lead the Next Generation of Video Aggregation?

As surely as night follows day, one already can predict that as consumer demand for unbundled, on-demand access to TV series content is satisfied, the fragmentation of desired content on many different distribution services will lead to dissatisfaction with the unbundled approach, leading suppliers and distributors to try and recreate the linear video subscription bundle.

As leading over the top video distributors work to create unique,  “must see” video series that create product differentiation, many consumers will find they are buying multiple subscriptions.

As always, that is going to create demand for a bundled approach that allows convenient access to multiple services. That is why numerous suppliers are creating new devices that can aggregate video from multiple sources and display that content directly on a TV.

That creates a “logical” or “virtual” bundle rather than the formal bundle now sold as “cable TV.” Only this time, the distributors are Amazon, Google, Apple and others.

That also is why some linear video distributors already have moved to add Netflix access to standard TV decoders.

In principle, the new aggregators (Apple TV, Amazon Fire and Google Chromecast) threaten to rival or displace traditional aggregators, over time, allowing consumers to create their own bundles.

Though there is risk for traditional programmers as well--who might well see far smaller audiences--the new aggregators should make it easier for consumers to buy and then watch content from multiple independent sources.

The habit of getting and watching over the top television already is well established.

Some 77 percent  of U.S. adults say they regularly watch television shows using either cable TV (55 percent) or satellite TV (23 percent), while 43 percent view streamed video. About  67 percent of Millennials report they watch streamed video, according to Harris Interactive.

About 38 percent of respondents say they've subscribed to premium cable TV channels in order to watch specific shows, while 24 percent have subscribed to one or more streaming services for the same reason, Harris Interactive reports.

Among those who regularly watch television shows using streaming, 74 percent use a computer to do so, while 55 percent use a television (attached to a set-top box, a game system or a television with integrated online capabilities).

About 37 percent watch on tablets, including 63 percent of tablet owners. Some 30 percent watch on smartphones, including 42 percent of smartphone owners.

It isn’t clear how those preferences might change, though, as more content traditionally available only from a bundled linear video subscription gets “unbundled,” albeit slowly.

Looking specifically at streaming TV's likely "core" constituents, half of those who list streaming among their top venues for television shows say they've subscribed to streaming services for access to specific shows, according to Harris Interactive.

In the near term, that means more fragmentation of the video subscription business, as consumers buy discrete services to get access to a couple of lead unique series (“House of Cards” or “Orange is the New Black,” for example.

Also, there is new potential for creation of “premium” services. About 40 percent of respondents say they would be willing to pay more for a service that allowed them to stream current shows ad-free.

About 37 percent of respondents report they  would pay more for a streaming service that allowed them to temporarily download TV episodes, for when they're away from an Internet connection.

As you would guess, streamed video gets viewed on a variety of screens. About 85 percent of respondents report they most often watch TV on an actual TV (live feed, recorded or on demand). That is down from about 89 percent in 2012.

Streaming use, meanwhile, has grown from 20 percent of respondents in 2012 to 23 percent in 2014. Among Millennials, 47 percent of respondents say they use alternate screens, while use of TVs has dropped from 77b percent to 68 percent.

About 23 percent of respodnents say they're watching more online or streaming television in 2014 now than they were a year ago.

Some 37 percent say their online or streaming viewership is unchanged over the last 12 months while seven percent say they watch streamed content less than a year ago.

Half of respondents say they expect no change in viewing habits over the next year. Some 18 percent say they think they will watch more streaming or online video in the next 12 months.

Some four percent of respondents think they will watch less online or streamed video.

The Harris Poll included 2,300 U.S. adults surveyed online between April 16 and 21, 2014.

Does Product Reinvention in Telecom Work, Long Term?

Frontier Communications Corporation is launching a text messaging feature for business voice accounts that allows  business fixed network numbers to support text messaging. That is a primary example of one way service providers try to prop up the fortunes of a declining product.

That itself often is one part of a two-pronged effort to maintain revenue growth. Adding value to an existing product hopefully enhances a particular product enough to slow or arrest rates of decline.

The other challenge is to create new lines of  business and sources of revenue to displace declining lines of business.

Some are more sanguine about ways to change the value of voice services than are others.

When confronted with a sustained drop in average revenue per minute of long distance usage, AT&T essentially decided to harvest the revenue stream rather than reinvent the product, turning its attention instead to measures that would create new lines of business.

In 1991 AT&T bought NCR in an effort to enter the computing business. NCR eventually was spun out as a separate company.

In 1993 AT&T entered the mobile business by buying McCaw Cellular.

AT&T bought the largest U.S. cable TV company in 1998, and MediaOne, in 2000, becoming the largest provider of cable TV services in the U.S. market, only to dismantle the strategy and sell those assets in 2001.

In 2005, AT&T was acquired by SBC Corp. The point is that, in essence, AT&T never was able to create new lines of business big enough to displace the older revenue sources.

Still, “harvesting” legacy revenues while creating new lines of business is the fundamental strategy for any service provider facing challenges in its original lines of business. History also suggests the task is fraught with uncertainty.

Arguably, most such efforts essentially fail, in the sense that the firms simply are acquired by other firms, and cease to exist.

But there is a difference between transforming a whole industry, or a whole firm, and changing key revenue sources and product lines. Whole industries and firms can manage big transitions more easily than they can manage to reverse the fortunes of a declining and key line of business.

Frontier Communications hopes, at the very least, to slow the rate of decline of its business voice lines.

So far, it has not found any solution for arresting the decline of the consumer voice business, even if bundling arguably has proven the most-successful tactic so far, in the consumer business.

Frontier Texting and high-definition voice are both examples of efforts to reinvigorate voice services by “adding more value,” enhancing the core functionality in some customer-significant way.

Whether such techniques can do much more than slow the rate of decline is the issue. At the moment, there is virtually no evidence that this sort of product revamping actually can reverse a product line’s decline, though one might argue such measures slow rates of decline.

That is worth doing, so long as other growth initiatives also are underway.

What the industry has yet to prove, though,  is that it actually can enhance legacy products enough to reverse losses.

In other words, there is a strategy challenge: should capital be invested in revamping legacy products, and if so, how much? The alternative is to harvest revenues, deploying available capital into creating new lines of business.

Though industries sometimes can reinvent themselves, the issue is whether specific products can be reinvented, and if so, how often that actually happens. At a high level, the global telecom business has managed to replace declining revenue sources with new sources.

Mobile revenues have supplanted long distance revenues, while video and high speed access revenues have replaced voice revenues. Some firms have shifted from a reliance on consumer customers to business customers.

But that really does not address the specific challenge of adding enough value to a declining product to stem losses long term, or possibly reignite growth.

Backhaul Increasingly is a Strategic Matter for ISPs

Backhaul sometimes is a strategic advantage or key impediment for one or more service providers, as well as an important driver of operating cost. Backhaul often accounts for as much as 25 percent of total operating cost for a mobile service provider, for example.

As transmission networks become more dense, using small cell and carrier Wi-Fi architectures, for example, backhaul will be a major issue, mostly because the cost of backhaul has to scale to much-lower levels than has been the case for mobile and enterprise backhaul prices.

Where a traditional enterprise backhaul had substantial revenue generated by the link, a carrier Wi-Fi or small cell might have close to zero incremental revenue generated by the link.

The cost of backhaul also has been a key impediment for ISPs seeking to provide higher access speeds in regions distant from an Internet access point.

When the “Broadband Technology Opportunities Program” was launched in 2008 to promote high speed access advances in rural areas, you might have predicted that most of the money would be spent to create or augment access facilities.

Instead, middle mile backhaul facilities received significant funding. The reason was simple enough: in many rural areas, it is the backhaul to Internet points of presence that is the key impediment to faster end user Internet access.

You might argue that is the case in many parts of South Asia and Africa as well. There is little point in creating new access networks where backhaul is insufficient to support those access assets and potential customers.

Wi-Fi also now is an essential part of the backhaul strategy for most mobile service providers, allowing carriers to offload half or more of total Internet access traffic from the mobile network to the fixed network.

In some cases, up to 80 percent of mobile traffic is offloaded to Wi-Fi networks.

In similar fashion, deployment of mobile cell capacity likewise drives growth of demand for backhaul. And though much attention has been focused on the impact of new small cells and carrier Wi-Fi, standard macrocell deployments can be important as well.

“Over the past several years of experience, a fairly strong correlation between domestic carriers, aggregate CapEx and our level of organic growth in American Tower” can be seen, said Jim Taiclet, American Tower Corp. CEO. “For example, from 2010 to 2012, we saw aggregate spend on wireless CapEx of about $25 billion to $30 billion supporting our organic core growth rates in the range of seven percent to eight percent during those years.”

In 2013, when U.S. mobile service provider capital investment grew to nearly $35 billion a year, American Tower has seen revenue growth of nine percent.

Backhaul bandwidth demand scales in other ways beyond the number of tower sites and radios, though.

Between 2012 and 2013, average daily U.S. smartphone data consumption grew by almost 40 percent, while connected tablet usage increased by over 50 percent. And then there is mobile video, consumption of which might grow an order of magnitude between 2013 and 2018, according to Cisco projections.

Small cell deployments will have an impact, but American Tower presently generates 95 percent of its revenue from macrocell sites.

And one big question is how much incremental demand Sprint might drive, as it activates new 2.5 GHz capacity.

As an example, said Taiclet, Sprint would have to add 30,000 to 40,000 transmission locations to have 2.5 GHz coverage match the existing 1.9 GHz network footprint. That could possibly double the number of tower locations operated by Sprint.

All of those examples--Wi-Fi offload, small cell backhaul, existence of backhaul facilities in emerging markets, additional 2.5-GHz cell sites and BTOP funding--illustrate the roles backhaul often plays as a strategic matter for mobile service providers, not merely a tactical necessity.