Service Providers Could Lose Up to 1/2 of Their Customers in 12 Months

Telecommunications service providers might lose as much as half their current customers in one year, a new global survey by Ovum suggests.

The survey of 15,000 consumers and 2,700 enterprises in 15 major global markets found that only about half of surveyed customers definitely had no plans to leave their current suppliers.

About 25 percent of all users globally say they will definitely change providers within 12 months, while 25 percent reported they might do so.

Those findings are not necessarily unusual, even if, in markets where the triple play offer is standard, customer churn rates are far lower, on the order of 12 percent to perhaps 15 percent annually. That tends to be true, in the U.S. market, for example, for the largest service providers, including AT&T, Verizon and Comcast.

Churn rates for smaller service providers still are in the 24 percent to perhaps 36 percent range.

Two decades ago, churn rates for constituent triple play services--even at the biggest companies--could range as high as 36 percent annually.

But results vary widely by market, and likely are highly affected by the degree of product bundling.

The survey finds that almost twice as many customers of Airtel India or LG U+ in Korea plan to churn more than the global average of 23 percent. In contrast customers of Vodafone Germany or NTT DoCoMo in Japan are much more loyal, with only about 10 percent indicating they plan to switch operators, Ovum reported.

The survey shows that the quality of the mobile broadband experience is the leading driver for mobile customer churn rates, with 37 percent of consumers globally saying that they either have left or plan to move to another provider because of slow connection speeds.

“When we asked consumers to rate a range of activities on a scale from ‘essential’ to ‘unimportant’, browsing the Web came top, with nearly 6 out of 10 consumers rating it as essential,” said  Angel Dobardziev, Ovum practice leader.

Watching TV was rated by only three out 10 consumers as essential, scoring as less important than reading the news (50 percent of consumers), reading a book (45 percent) and listening to music (42 percent).”

The Ovum findings illustrate one leading problem for service providers in most markets, namely the impact of competition. The other, and strategically more dangerous problem, is abandonment of services such as fixed network voice and mobile text messaging, or the beginnings of a potential abandonment of linear subscription video.

Losing customers to a competitor is a key problem. Disinterest in a product category is more dangerous, long term.

Sky Becomes a Quadruple-Play Service Provider

U.K.-based Sky is about to enter the U.K. mobile service provider market, becoming a mobile virtual network operator using the Telefónica UK network in 2016.

The move will make Sky a quadruple-play services provider, as it already sells fixed line high speed access, fixed network voice and video entertainment.

Sky is the second-largest provider of consumer high speed access, with more than five million customers. Sky also sells a triple-play package to 40 percent of all its customers.

Telefónica UK will give Sky wholesale access to 2G, 3G and 4G services over its nationwide network.

Telefónica UK also is the wholesale supplier for the largest MVNO, Tesco Mobile. The latest move by Sky simply illustrates the fact that the consumer telecom market now is based on triple-play or quadruple-play offers, not discrete services.

AT&T Revenue Contributors Will Change Significantly After DirecTV, Iuacell, Nextel Mexico Acquisitions

AT&T’s proposed acquistions of DirecTV, Iusacell and Nextel Mexico would have a material impact on revenue segments, dramatically boosting video entertainment and broadband segment revenues and business customer revenues, while dramatically reducing exposure to consumer wireless services.

If you think the U.S. mobile marketing war is about to become even more intense, with Google’s entry into the business, the revenue contributor changes might be a very good thing for AT&T.

TracFone's "Unlimited" Plan Really Wasn't, FTC Says

TracFone Wireless, the largest prepaid mobile service provider in the United States, has been ordered by the U.S. Federal Trade Commission to refund $40 million to customers whose “unlimited” service either was throttled or suspended.

The issue is the advertising of “unlimited” prepaid data service plans that include a provision for a reduction of speed after a certain threshold of usage. Such throttled access speed cannot be advertised that way, the FTC concluded.

Since 2009, TracFone’s ad campaigns touted  “unlimited talk, text, and data.” But TracFone drastically slowed or cut off consumers’ mobile data after they used more than certain fixed limits in a 30-day period

The FTC complaint says TracFone violated the FTC Act by advertising unlimited mobile data service while failing adequately to disclose that it imposed material restrictions on the quantity and speed of data for customers who used more than a fixed amount in a given service period.

FCC Clarifies: Hotels Cannot Block Use of Personal Hotspots

The Federal Communications Commission has clarified that hotels cannot block other mobile hotspots while guests are on the property. That, the FCC is, is a violation of Section 333 of

the Communications Act.

The ruling actually confirms what some argue, namely that network neutrality rules probably are not needed to prevent many forms of potential anti-competitive behavior. The FCC has for years adhered to policies that prevent blocking or interference with lawful apps.

So despite some popular rhetoric, blocking or slowing down rival apps is not a problem that requires additional authority. The FCC already has such policies in place.

Internet freedom, in the sense of the ability of any consumer to use any lawful app, is not really an issue the FCC is unable to address with current tools, some would generally argue.

Where the debate actually does involve new concepts is the existence and use of content delivery networks or caching networks that improve content or application latency, as used all the way to end user devices. Such content delivery networks routinely are used by applications over the wide area network.

It’s good that the FCC has clarified, once again, that blocking is not lawful in the consumer Internet domain. But the action also shows that “blocking” of lawful apps is not a problem, even is some claim it is.

Google Will Switch Access Between Sprint, T-Mobile US, Wi-Fi Dynamically

Although we typically believe smaller start-up firms are most likely to disrupt an industry, sometimes only a large firm can do so. So it is that Google will try to disrupt AT&T and Verizon by launching mobile service based on its becoming a mobile virtual network operator, with a new twist.

In addition to using third party Wi-Fi, Google apparently has signed up both Sprint and T-Mobile US as underlying access providers because Google wants devices used by its customers to switch between Sprint and T-Mobile US and Wi-Fi based on which network has the best signal “right now.”

In case you missed it, this is the same concept touted by supporters of fifth generation mobile networks.

Perhaps only a firm as large and wealthy as Google could try this, something that has not been attempted before (using two different wholesale providers), and which has a chance to disrupt the market more than any MVNO to date.

You might remember that it took Apple to revolutionize the relationship between handset manufacturers and the mobile service providers. Perhaps it is Google--more than T-Mobile US or Sprint--that now will disrupt the U.S. mobile market.

Google is Vertically Integrating the Internet Ecosystem

Google now has announced launches of Google Fiber in Atlanta, Charlotte, N.C., Raleigh-Durham, N.C. and Nashville, Tenn. Those launches come as Google also is said to be preparing to enter the U.S. mobile service provider business and has invested $1 billion in SpaceX, Elon Musk’s satellite firm.

SpaceX, in turn, has announced plans to build a new constellation of low earth orbit satellites to provide Internet access to people in Asia, Africa and elsewhere.

Separately, Virgin Group and Qualcomm also are investors in the WorldVu “OneWeb Ltd.” service, which hopes to launch a constellation of 648 satellites to provide Internet access to users in Asia, Africa and elsewhere.

Investor Richard Branson thinks the total number of satellites launched could eventually be higher than 648. Branson also says voice service will be part of the core service.

Those efforts of course follow on Google’s Project Loon effort to test use of balloons to provide Internet access, as well as earlier Google investments in Clearwire, municipal Wi-Fi, as well as pledges to invest in spectrum in past mobile spectrum auctions.

Then there are the Android mobile operating system initiatives, Nexus tablets and phones.

So the shocking new development is that it might be Google that is slowly assembling the sort of vertically-integrated service that telcos once provided. Shocking, isn’t it?