Comcast to Ditch HFC for FTTH for 2 Gbps

Comcast's 2-Gbps Internet access offer, to be introduced in Atlanta and then other locations, is a watershed moment for the U.S. cable TV industry.

It appears that Comcast will use a fiber-to-the-home architecture to provide the service, ditching the hybrid fiber coax network for the first time in a mass consumer application.

That doesn't mean Comcast is abandoning HFC for most of its customers, at most locations. Much hinges on the price, and how many consumers are willing to pay what it will take to get the 2-Gbps service.  One suspects that is a rather low number. 

The new service will require replacing HFC connections with all-fiber access, and Comcast, as well as other cable TV operators, will resist "rip and replace" to the greatest extent possible. 

So, in a sense, Comcast might reasonably expect that a relatively small percentage of consumers actually will opt for the service, which will require overlaying new optical fiber drops from existing optical nodes. 

But it is a watershed moment, as Comcast would, for the first time, use FTTH as its consumer access network, at least for some customers, at some locations. 

Comcast has suggested it will  potentially reach 18 million of some 21 million homes, as 18 million Comcast consumers live within a third of a mile of an optical node. 

Comcast Rolling Out 2-Gbps Symmetrical Internet Access for Consumers in May 2015

Comcast in May 2015 will introduce Gigabit Pro, a new 2-Gbps symmetrical residential Internet access service in  Atlanta, with an expected introduction in additional Comast markets nationwide.

Comcast currently expects the service to be available to about 18 million homes by the end of 2015.

The new speeds are made possible by the DOCSIS 3.1 standard. To give you some idea of the bandwidth required, DOCSIS 3.1 requires availability of two 196-MHz downstream channels (392 MHz total bandwidth downstream) and two 96-MHz upstream channels (total 192 MHz).

Though it seems almost laughable that fixed network bandwidth could grow at rates close to that of Moore’s Law, that seems undeniably to be happening.

That service is not likely to be purchased by many consumers. The Comcast 500-Mbps service now costs about $400 a month, so there is no telling what the price for 2-Gbps might be.

The larger point is that, based simply on historical precedent, widely-available gigabit speeds (which is likely going to be different than the speeds most consumer choose to buy) should be available in the U.S. market by about 2016.

source: CableLabs estimate

BT Outlines Strategic Imperatives: Most Service Providers Face Similar Challenges

BT’s prospectus related to its acquisition of EE assets contains the expected statement of risks.  

The document warns that BT operates in an industry featuring “high levels of change; strong and new competition; declining prices and, in some markets, declining revenues; technology substitution; market and product convergence; customer churn; and regulatory intervention

to promote competition and reduce wholesale prices.”

Those who have read such documents will not read too much into such clauses. A reasonable person might quip that if a company really believed such risks were likely, and that the firm could not cope, that firm would not attempt the acquisition.

On the other hand, it is hard to dispute the general thesis that BT and EE operate in a tough, challenging and possibly worsening business.  

Revenue growth, even in the fast-growing mobile business, has slowed dramatically. Global mobile service revenue in the first half of 2014 grew  just 0.5 percent, compared to the same quarter of 2013, to $385.5 billion, according to Infonetics Research.

“Increased competition has led to a decline in the prices which EE charges for its mobile services and is expected to lead to further declines in pricing in the future,” the document notes.

In addition, BT warns that the rate of adding net new customers could shrink, churn could increase, revenue and market share could fall.

BT obviously believes it can deal with the challenges. But the statement of challenges neatly summarizes industry challenges that mostly are occurring on a global scale. If the global telecom business continues to grow--and many believe it soon will cease to do so--it will not be easy.

We can disagree about how much new revenue some communications service providers will have to create over a decade’s time, to replace lost legacy revenues.

One working hypothesis is that service providers in developed markets, in particular, will have to replace about half of current revenue over about a decade. That prediction is based on past experience, where the leading revenue category--long distance voice--experienced precisely that rate of decay.

Then many service providers found they had to replace lost voice revenues with high speed Internet access, mobility and video entertainment revenues. Many expect the rate of replacement will ultimately work out to a loss of half of voice revenue over 10 years, and its replacement by other sources.

If global telecom revenue is about $1.6 trillion to $2 trillion, and assuming about half the revenue is earned in mature markets, then the revenue subject to disruption ranges from $800 billion to $1 trillion.

Half of that represents $400 billion to $500 billion. That, hypothetically, is the potential amount of global revenue that might be lost, and would have to be replaced.

So BT’s prospectus, though containing much required legalese, still captures the magnitude of coming changes, and the seriousness of the response.

How Fast will IoT, M2M Commercial Use Cases Develop?

Timing of investment always is tricky when a brand-new industry segment or product is being introduced. But the pace at which demand develops also is an issue.

One might point to the mismatch between investment in low earth orbit satellite constellations and market demand; the investment in application service provider businesses that faltered when demand proved insufficient to support most of the new entities.

In the mobile business, early investments in third generation mobile spectrum came at too high a price to allow immediate recovery of the capital investment.

Those dangers will exist for firms such as Bouygues Telecom, which is building a dedicated LoRa (long range) network to support Internet of Things (IoT) and M2M network offerings. Bouygues expects to operate in 500 towns and cities by the end of 2015.

Bouygues Telecom, working with Semtech, Sagemcom, Eolane, Adeunis and Kerlink, has been testing LoRa with “several major industrial customers.”

Bouygues is not the only European mobile operator investing in LoRa capabilities. Fastnet and KPN already have done so, while Belgacom and Swisscom also are preparing to introduce LoRa infrastructure.

All of that activity aims to create the network access capabilities to support M2M and IoT applications requiring long battery life and low bandwidth, bursty communications. The low-power wide-area (LPWA) technology is designed to support devices operating 10 years, using standard batteries, before requiring a battery swap.

How fast such markets will develop is the unknown. LoRa supporters argue the platform can support smart parking, building surveillance, sound monitoring, people detection, traffic management, street lighting management, domestic waste management or billboard displays.

Fire detection, air pollution, snowfall measurement, avalanche prevention, flood and drought monitoring or earthquake detection systems might also benefit.

Monitoring of water supplies, chemical contamination detection, swimming pool monitoring, seawater pollution measurement, leak detection and tide monitoring also are other applications.

Up to this point, smart electricity/water/gas meters have provided much of the early commercial deployment.

Tracking of vehicles, bicycles, objects of value, animals or people also are feasible apps, as are safety and rescue services.

But many commercial applications are expected in the industrial areas of the econmy, such as for supply chain control, mobile payments, smart shopping or shelf stock rotation.

Logistics and industrial or agricultural monitoring provide many potential examples.

Many see eHealth apps as well.

The trick will be matching investment to expected development of commercial apps requiring use of the network in volume. It always is tricky.

GM Expects to Make $350 Profit on Auto LTE Services

General Motors believes it will generate $350 million in additional profit between 2015 and 2018 from fourth generation Long Term Evolution services (4G LTE) mobile broadband in its cars and trucks.

GM has suggested 4G LTE in GM cars will cost between $5 and $50 per month for data on top of the $20 to $30 per month that owners pay for OnStar telematics.

A 200 MB per month service plan costs $5 ($10 without Directions & Connections plan).

The 1 GB per month service costs $15 ($20 without Directions & Connections). The 3GB per month plan costs $30.

The 5 GB per month plan costs $50.

A day usage plan including 250 MB for one day costs $5.

Users also can buy a 10 GB plan, allowing usage over 12 months, for $150 ($200 without Directions & Connections).

AT&T Share Plan customers can add the car service for $10 per month per GM car.

7% of U.S. Consumers Substitute Mobile Access for Fixed Access

About seven percent of U.S. residents own a smartphone but do not buy fixed network high speed access service at home, and therefore rely on their smartphones for access. That data point provides some evidence about consumer ability to substitute mobile access for fixed Internet access.

About 15 percent report they have a limited number of ways to get access to the Internet aside from using their phones, according to a study conducted by the Pew Research Center.

Those finding point out the growing role of mobile Internet access, especially for some groups of consumers, as well as the changing context of “Internet access,” which now includes a variety of access methods.

Today nearly 66 percent of U.S. residents own a smartphone and 19 percent rely to some degree on a smartphone for online access.

Using a broader measure of the access options available to them, 15 percent of Americans own a smartphone but say that they have a limited number of ways to get online other than their cell phone.

Those of you familiar with Internet access trends in the developing world will not be surprised to find that smartphone-only Internet access is correlated with income, education and age.

About 15 percent of U.S. residents 18 to 29 years old are heavily dependent on a smartphone for online access.

Some 13 percent of U.S. residents with an annual household income of less than $30,000 per year are smartphone-dependent, compared to one percent of residents in households earning more than $75,000 per year.

Likewise, some 12 percent of African Americans and 13 percent of Latinos are smartphone-dependent, compared with four percent of whites.

U.K. Poll Finds 33% No Longer Talk on Their Phones

We still call the devices “phones,” but “voice” was not on a list of the top 10 most-used mobile phone features in a recent poll of 1,000 people in the United Kingdom, conducted by Oxygen8 Group.

In fact, 33 percent of respondents claim they no longer use their phones to make or take calls.

Granted, the online poll appears not based on a randomizing process, so likely is not representative of the “typical” user, but the results are a surprise, nonetheless.

source: Oxygen8