Public Cloud Revenue Grows 34% Annually in India

Public cloud services revenue in India will reach $638 million by the end of 2014, an increase of almost 34 percent, or $161 million over 2013 revenue, according to Gartner analysts.

Software as a service will generate $249 million in 2014, an increase of 37 percent over 2013. Spending on infrastructure as a servivce will grow 33 percent to $77 million during the same period.

In 2018, the public cloud market will generate almost $2 billion in revenue.

Some 53 percent of surveyed organizations in India indicate they are using cloud services today, with another 43 percent indicating plans to begin using cloud services in the next 12 months, Gartner says.

Business process as a service (BPaaS) is expected to grow to from $131 million in 2014 to $358 million in 2018.

SaaS is expected to grow to $735 million in 2018, PaaS is forecast to grow to $121 million, and IaaS is forecast to grow to $295 through 2018.

Where Available, Fixed and Mobile Internet Access Both Get Used, All the Time

Smartphones are expected to become the way most people in some markets use the Internet. In markets where smartphone adoption is significant, and where fixed network connections also are common, both mobile and fixed Internet access get used daily, a study by The Cocktail Analysis has found.

The study of female Internet users in Brazil, conducted in January 2014, found that smartphones were arguably the most-used platform for Internet access. About 81 percent of female smartphone users surveyed reported they used a smartphone for Internet app access every day.

Brazilian digital woman: Permanent Connectivity from The Cocktail Analysis

On the other hand, high speed access using desktops and laptops also get used daily for Internet access, 79 percent of respondents reported.

Tablets are used by 52 percent of owners to access the Internet every day, and tend to be used at home.

The point is that, in markets where mobile and fixed Internet is available, people use both forms of access, daily. 

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Why Not Let Users Decide if Some Apps Need, and Should Get, Delivery Priority?

One objection some have to strong versions of network neutrality is that some applications, especially VoIP and video (either conferencing or entertainment) are sensitive to jitter and delay that typically get worse when access networks get congested.

Some argue that more bandwidth fixes these problems, but some engineers would disagree.

It doesn’t make sense, one might argue, to deny end users the right to choose some apps that get priority, either all the time, or under conditions of congestion. Among the classic examples is when a user is on a VoIP call.

At such times, higher quality of experience results when email, website or software updates get delayed, or at least get a lower priority, than the more mission-critical voice or video-enabled communication sessions.

Under one proposal, AT&T U-verse and business customers might choose which sites they want to designate for expedited packet delivery, a way of allowing end users to decide when expedited packet delivery has value, and avoiding the need for strict “best effort only” Internet access that can pose issues for services such as voice and video.

An AT&T customer might choose to prioritize latency-sensitive and jitter-sensitive apps such as VoIP or video conferencing, for example.

Under the AT&T concept, AT&T and other ISPs would honor those end-user designations over that customer's "last mile" Internet facilities.

“There is no conceivable reason that such services, demanded and used widely by business customers today, should be foreclosed by regulatory fiat,” AT&T argues.

That solution avoids the charge that an Internet service provider is picking winners and losers, provides better user experience and remains under the customer’s control.

It is well worth considering.

Only 33% of U.S. Households Use the PSTN Anymore

Only about 33 percent of U.S. households actually use the public switched network anymore, according to USTelecom.

As of June 2013, incumbent local exchange carriers (telcos) served a total of about 78.5 million switched and VoIP access lines. That is just 44 percent of the 178 million telcos served at the end of 2000.

Traditional switched lines had fallen to 70.5 million by June 2013, or only 40 percent of lines served at the end of 2000.

In eight states, suppliers other than the telco had more wired telephone lines (switched access or VoIP) than the telco, and most of those were provided by the cable TV company.

In an additional 10 states, providers other than the telco had 45 percent to 50 percent of the wired voice connections.

And then there is mobile. The FCC reports that there were 305.7 million mobile voice connections in the United States as of mid-2013, about double the number of all fixed network voice lines.

Looking at the total voice market (including mobile, telco and cable TV or other fixed voice connections), telco market share fell from 60.5 percent to 18.5 percent from 2000 to 2012.

Total telco retail switched access lines have fallen by 60 percent since the year 2000, from 178 million to 71 million.

From the end of 2007 to mid-2013, there were almost 60 million retail switched access lines lost, and the rate of decline was still around 9.5 million per year as of mid-2013.

At the same time, and in large part because of legacy regulations, the majority of capital investments made by U.S. telephone companies from 2006 to 2011 went toward maintaining the declining telephone network (legacy voice), not the high speed access network that represents the future.

One might note that U.S. cable TV companies, that are not so regulated, now account for the “overwhelming percentage” of high speed access lines. The issue is not that cable TV suppliers have more than 50 percent market share in the high speed access market.

The issue is the percentage of market share at the top end of the market. Cable TV suppliers of high speed access have about 58 percent market share, but are getting 80 percent of the net new additions.  

“Today, a majority of American homes have access to 100 Mbps,” said Federal Communications Commission Chairman Tom Wheeler.

But it might soon be the case that as much as 75 percent of the fastest connections are supplied by cable TV operators.

In fact, cable modem services broke decisively from asymmetrical digital subscriber line services in 2006. Since then, digital subscriber line services have fallen far behind, and only telco fiber-to-home services have kept pace with cable modem potential speeds.

source: National Broadband Plan

So it is no surprise that telcos want legacy regulations removed. It comes as no surprise that competitors to the telcos want the legacy rules maintained.

But a reasonable person might well conclude it is foolish to maintain rules that funnel investment capital into a network offering services consumers do not want. That capital is badly needed elsewhere, to create faster access networks supporting Internet Protocol services and apps.

Google Messaging App Just for India?

Is it too late for Google to create a messaging app to rival Whatsapp, Line, WeChat, Viber and Line? And, if so, what chance would any tier-one telco have of doing so?

We might get a local test of whether it is now “too late” to get into the messaging app space as Google seems to be preparing for the launch of an India-focused messaging app in 2015.

Google has been “too late” before. Google missed “social” and “social on mobile.”

One might argue Facebook bought WhatsApp and Instagram to address both those features.

But Google might conclude India along is a big enough market to attempt a catch-up strategy.

Of the 600 million WhatsApp users, 65 million are in India. Viber has about 25 million Indian users. LIne has about 18 million users in India. WeChat might have between 25 million and 60 million users, in India.

Reportedly, Google will not charge a fee (WhatsApp charges $1 a year), will have Indian language support, and possibly voice-to-text features. The rumored message app might also not require Google single sign-in, either.

India is expected to become the world's second-largest smartphone market after China by 2019, and that might be the incentive to launch a Google messaging app for India.

How Much Potential for Dark Fiber Arbitrage of Leased Capacity?

Arbitrage, the exploitation of price gaps between products in markets, or prices between markets, always has been an important strategy in the telecommunications market.

One might argue that VoIP represented Internet arbitrage of the public switched telephone network.

Some free conference calling services likewise are built on arbitrate of access prices in some rural U.S. areas.

And though it is possible to argue that price arbitrate is not sustainable over the long term, it can be an important underpinning of business strategy, at least in the short term, allowing competitors to get a foothold in a market before transitioning to a more-sustainable model.

That, in fact, was the hope some held for local exchange carriers allowed to compete for the first time in the U.S. local telephone business as a result of the Telecommunications Act of 1996.

The thinking was that competitors would rapidly enter markets using resold connections, but then transition to facilities-based networks. For the most part, it did not work out that way, as it was the facilities-based cable TV operators that were able to build sustainable businesses, once wholesale tariffs were raised.

Something similar tends to happen in the wholesale capacity business as well, where most suppliers refuse to sell dark fiber, preferring the high gross revenue and profit margin of selling “lit” services.

But there almost always is customer demand for dark fiber, despite the general reluctance to sell the product. In some markets, the opportunity for arbitrage might not be so great, some argue.

“At some point, the cost of leased capacity and dark fiber is the same,” says Rozaimy Rahman, Telekom Malaysia EVP. That probably refers to total cost of ownership. But the point about arbitrage remains.

Some large enterprises, and certainly many carriers, will conclude that, at least in some instances, they will operate at lower costs when they are able to buy dark fiber and turn up their own networks.

By refusing to sell dark fiber, service providers might be creating a market opportunity for suppliers willing to do so.

In the long run, Rahman is likely correct: total cost of ownership, for an end user, might over the long term be nearly equivalent, for leased capacity or dark fiber approaches.

But arbitrage works because there are exploitable price differences in the short term. And Rahman is correct: the difference between dark fiber and managed bandwidth services, has at times past, n some markets, not been so great.

source: http://www-pam.usc.edu/volume5/v5i1a1print.html

Mobile is the Next Big Venue for Advertising, but Shift from TV to Online is Bigger, Near Term

When looking for key opportunities or threats in any business, it always is useful to follow the money.

Daryl Simm, Omnicom Group CEO of media operations, manages an operation representing  $54.4 billion in advertising spending globally.

So it is noteworthy that Omnicom Group has recently been advising its clients to move 10 percent to 25 percent of their TV advertising commitments to online video.

If clients follow that advice, the traditional gap between attention and advertising spend will start to close. In 2012, for example, advertising spend on television and print exceeded the audience those channels represented.

Mobile, which represented 12 percent of the actual audience, got just about three percent of the advertising. Internet audiences, representing 26 percent of the time spent with media, got about 22 percent of the ad spending.

To be sure, the gap between audience and ad spending has narrowed considerably over the past decade. The next big shift will be to mobile channels, given the wide gap between audience and advertising.

Over the long term, advertising will follow the audiences. Online audiences are growing. So are mobile audiences. TV, radio and print are shrinking. The money will follow.