Mobile Drives 72% of Webpage Views in India

Mobile continues to drive Internet access subscriptions globally, accounting for 72 percent of all India webpage views in 2014, for example. 

Globally, mobile devices account for about 80 percent of all traffic, such as sessions, many would argue. 

But overall data volume still is driven by fixed devices. How much longer that might be the case is an issue. Experts still disagree about how to measure the relative weight of mobile and fixed access, in part because usage varies so much by region and country. 

Digital, Social & Mobile in 2015 from We Are Social Singapore

Was 2014 an Aberration, or the New Normal?

Was 2014 an aberration in the U.S. mobile business, or a harbinger? The answer matters.

From 2010 to 2013, U.S. mobile data pricing (per unit sold) declined by only single digits year over year. In the first nine months of 2014, data pricing dropped by 77 percent, according to industry analyst Chetan Sharma.

The other key inputs to the business model shows escalating numbers as well. Average (mean) mobile data consumption increased to about 2 Gb a month. Sharma notes it took 20 years for consumption to reach 1 Gb per month usage levels.

The increase to 2 Gb took about a year.

In addition to plunging prices (less revenue per unit sold) and higher usage (more network cost), marketing costs have grown as competition has become more intense.

Overall U.S. operating expense rose 20 percent, year over year. Income was flat while earnings grew three percent.

Among the positives, total revenue grew 21 percent to almost $400 billion.

Among the negatives, voice revenue declined 15 percent, messaging by 16 percent and tablet subscriptions by four percent.

So was 2014 an aberration? In some ways, it has to be. Can mobile data pricing (per unit sold) continue to drop at breath-taking rates? Some might note the other key figure is the amount of incremental new buying that happens as per-unit rates drop.

Sharma argues that Internet access will not grow fast enough to offset voice revenue losses. Neither will device sales revenue or wholesale revenues grow fast enough, even in conjunction with mobile data revenue growth, grow enough to offset sharp declines in voice. That, in a nutshell, is the strategic challenge mobile operators face.  

Us wireless market_q4_2014_update_feb_2015_chetan_sharma_consulting from Chetan Sharma

Google Wallet to be Pre-Installed on AT&T, T-Mobile US, Verizon Android Devices

Google now is working with Softcard, the mobile payments service owned by AT&T Mobility, T-Mobile US and Verizon Wireless. As part of a new agreement between the mobile carriers and Google, the Google Wallet app, including the tap and pay functionality, will come pre-installed on Android phones (running KitKat or higher) sold by these carriers in the U.S. market  later in 2015.

As part of the deal, Google also is acquiring “some technology and intellectual property” from Softcard.

Google does not appear to have bought Softcard, nor do the mobile carriers appear to have sold the business to Google.

On the other hand, since October 2014, when Apple launched Apple Pay, both Google Wallet and Softcard, which have failed to get much traction, seem to have concluded they need to move faster to counter Apple Pay.

Cable TV Firms Will Not be Able to Replace Lost Linear Video Revenues with High Speed Access Gains

For the past decade, U.S. telco and cable TV revenue sources have been a game of musical chairs: give up the chair you have and hope you can grab another when the music stops.

And everybody is playing. Telcos have relied on mobile services to replace lost fixed network voice revenues.

Cable TV companies have grown by adding voice, high speed access and business segment customers.

Mobile companies have grown by adding tablet accounts on top of phone accounts, while adding Internet access revenues to displace dwindling voice and text messaging revenues.

But it can be a difficult game if the new revenue sources are smaller than the lost revenue sources, or if profit margins are significantly less robust. And that might be a growing issue.

“Gross margin dollars will be lost in video, and will not be replaced by faster growth in broadband,” said Craig Moffett, Moffett Nathanson analyst.

That might be why firms such as Comcast and Cablevision Systems Corp. are planning--or have launched--mobile services. The best way to add incremental revenue is to add one more new service to the bundle.

Comcast and Cablevision are using, or are expected to use, their own public Wi-Fi hotspots as the foundation of their mobile services.

U.S. Mobile Market Structure Will be Shaped by Dish Decisions

As competitive as the U.S. mobile market has become--despite frequent protests that the market essentially is a duopoly--it almost certainly is going to become more competitive.

Strategically, Comcast is expected to enter the market, at some point. Cablevision Systems Corp. already has done so, though as a niche provider with greatest potential impact in its limtied home operating area. Comcast almost certainly will have to enter as a national provider.

Dish Network either must enter the market as an operator, or forfeit the rights to spectrum that presently accounts for as much as 80 percent of its total market value.

And then there are the other contenders, including Google, which it is believed soon will be entering the mobile market, and Apple, a perennial potential actor in the market as well.

But the biggest current question mark is what Dish Network will do.

Since nobody believes Dish will allow scores of billions in equity value to evaporate, Dish’s Long Term Evolution spectrum has to be put into service. That might consist of partnering with an existing carrier (normally assumed to be Sprint, T-Mobile US or Verizon) to create a wholesale-only operation, or a branded retail offering, or selling the whole spectrum portfolio or the whole company.

So the shape of competition--and the structure of the U.S. mobile market--rests on which alternative Dish ultimately pursues. Both Comcast and Google are expected to enter the market as retail providers, though each might pursue something of a niche approach.

If Dish decides to partner with one of the existing leading national operators, and become a wholesale provider, it will enable third parties, but not directly increase or decrease the number of national providers.

Should Dish decide to become a full branded retail provider, it might take a niche approach, heavy on video entertainment. But the manner of entry matters.

Some speculate Dish will try and buy T-Mobile US. In that case the U.S. market structure is not changed. Others believe Dish will partner with a network owner, but become a retail service provider, in which case the number of potential leading contenders in the market increases from four to five.

But Dish might also simply sell itself, in whole or in part, monetizing its spectrum holdings, but leaving the market structure unaffected. Some will argue the odds of a buyout that large, by either AT&T or Verizon, is extremely unlikely, given the debt loads both leading carriers now carry.

At some later point, such a purchase by Verizon--not AT&T--is possible, but not at the present time.

AT&T presumably already would have acquired DirecTV, which makes additional video assets superfluous. Nor does AT&T appear especially interested in investing much more capital in the U.S. market, given its Mexico market expansion or other potential growth moves outside the U.S. market.

Verizon must wait to get its debt burden reduced significantly before it can afford to consider an acquisition of all of Dish. A more limited buy of some significant spectrum assets is more feasible, but Sprint might be a seller of spectrum assets as well.

Complicating the analysis is the nature of potential Sprint and Dish Network spectrum assets. Some of Dish Network’s spectrum is in the 700-MHz band, while much is in higher bands near 2 GHz.

Some of the potential partners--especially Sprint and T-Mobile US--have plenty of spectrum in the 2-GHz range, so either have little need for additional spectrum in those bands themselves, but might be happy to earn revenue supporting Dish Network network operations.

Verizon, historically not a big player in the mobile wholesale market, does have some potential obligations to support wholesale operations by Comcast and other cable operators from which it purchased AWS spectrum.

Should that happen, Verizon might want the additional Dish spectrum to support its wholesale partners, in addition to its own retail requirements, in the future.

Complicating matters further is growing ability to use unlicensed spectrum to support and augment LTE, plus additional communications spectrum that will be added, at some point, on a shared basis.

More competition is coming. It just is hard to predict precisely what form that competition will take.

Study Finds Most Don't Understand Net Neutrality

A survey of U.S. consumers has found what you might expect, namely that few U.S. residents understand network neutrality. The Hart Research Associates survey found only 25 percent of respondents claimed they knew what network neutrality is.

Perhaps not surprisingly, 73 percent said they wanted disclosure of what the rules actually are, when told that “just five members of an unelected Federal Communications Commission will decide the future of the Internet without providing an opportunity for the public to see and understand the regulations prior to a vote.”

The wording of the explanatory note, most might suggest, was not “neutral.” So it might not be surprising that 80 percent of respondents wanted full disclosure of the ruling before a vote is taken.

Just 32 percent of respondents thought regulating Internet access like telephone services would be helpful.

Business, or Consumer, Few Actually Benefit from Really Fast High Speed Access

With the caveat that a business customer’s use of bandwidth differs from the pattern typical of a consumer customer, small business customers of Cogent Communications tend to use about 12 Mbps of the 100 Mbps services bought to replace T1 connections of about 3 Mbps, said BTIG researchers.

According to Cogent, only about 12 to 24, out of perhaps 17,400 customers ever have reached 50 percent utilization of the 100 MB pipe.  Likewise, customers who buy gigabit connections have usage that does not likely differ materially from 100 MB customers, according to Cogent.  

One might well argue that consumer consumption is growing faster than business customer usage, certainly. But Sandvine data suggests U.S. median household data consumption over a fixed network connection is about 20 Gb a month. Granted “Gbps” is a measure of speed, while “Gb” is a measure of consumption, but monthly consumption of 20 Gb does not suggest most households likely are taxing their access downlinks.

To be sure, households with faster connections tend to consume more data. But that might be because households consuming more data disproportionately buy the faster connections. As more locations are able to use connections operating from 40 Mbps up to 1 Gbps, we should get a better idea of how much a “typical” user consumes, when access speeds exceed the ability of far-end servers to respond.

A study by Ofcom, the U.K. communications regulator, suggests that beyond about 10 Mbps, local access speed is not the experience bottleneck.

The study found that “access speed” matters substantially at downstream speeds of 5 Mbps and lower. In other words, “speed matters” for user experience when overall access speed is low.

For downstream speeds of 5 Mbps to 10 Mbps, the downstream speed matters somewhat.

But at 10 Mbps or faster speeds, the actual downstream speed has negligible to no impact on

end user experience.

Since the average downstream speed in the United Kingdom now is about 23 Mbps, higher speeds--whatever the perceived marketing advantages--have scant impact on end user application experience. Some 85 percent of U.K. fixed network Internet access customers have service at 10 Mbps or faster.

Investing too much in high speed access is, as a business issue, as bad as investing too little, one might argue.

Average access speeds in the United States are 10 Mbps, according to Akamai. Average speeds are 32 Mbps, according to Ookla. Another study shows that average Internet access speeds in the United Kingdom and United States are equivalent, in fact.  

The point is that, in terms of user experience, faster marketed speeds (gigabit, 100 Mbps) actually do not improve end user experience.

As someone who recently was able to upgrade from about 15 Mbps to 105 Mbps, I would confirm, as an end user, that the upgrade has made no apparent difference in my browsing experience.

For that reason, I will not be buying a gigabit access connection, which I could do. There being no apparent change in experience at 100 Mbps, I cannot see the advantage of upgrading further, to 1 Gbps.