Missing Really Big Trends is Par for the Course

Nothing better illustrates our inability to foresee the future than the unexpected, non-linear growth and exponential impact of mobile services and the Internet.

Who would have predicted, in 1990, that voice communications would be available to nearly everyone on the planet before 2010, and used by most people by 2015?

Likewise, we sometimes miss--with all the talk about the digital divide--how fast Internet access is spreading, and how fast access speeds are growing. In Nigeria, mobile Internet adoption already is 59 percent of all mobile users.

Mobile data traffic in Sub-Saharan Africa is predicted to grow around 20 times between the end of 2013 and the end of 2019. Globally, mobile data traffic will grow 10-fold during the same period, according to Ericsson estimates.  

In fact, by about 2019, 75 percent of users in the region will have mobile Internet devices that are

video capable. That is a radical departure in a region where most devices today are feature phones.

In 2002, roughly 10 percent of people owned a mobile phone in Tanzania, Uganda, Kenya and Ghana. Now, adoption ranges from 65 percent to 83 percent. In just a little over a decade, mobile usage grew 600 percent to 800 percent.

Today, mobile phone ownership is as common as in the United States (89 percent adoption) in South Africa.

At the same time, fixed network adoption  penetration in the seven countries surveyed (Ghana, Kenya, Nigeria, Senegal, South Africa, Tanzania and Uganda) is close to zero.

About two percent of respondents surveyed across these nations say they have a working landline telephone in their house.

It is fair to say that as recently as 1980, few would have predicted most of the world’s people would be connected to communications networks by about 2015, solving a major development and social problem that had seemed nearly intractable.

Back then, the only feasible solution was deemed to be the traditional fixed telephone network. Mobility changed all that.

That precedent is one reason why many believe supplying Internet access to the world’s people likewise will be solved, with a few decades, if not within a single decade, by the use of non-tethered, mobile or other spectrum-based networks.

Netflix Looks Past HBO

Netflix once argued there was a race going on between HBO and Netflix, each racing to become more like the other. Perhaps the race is over. Maybe the race no longer matters, as both are favored brands with distinct content .

Maybe the coming inflection point is coming, and the real challenge for Netflix is not “catching HBO,” but displacing linear TV.

That shift in emphasis, confirming that the competition is not HBO, arguably represents an intensification of the “Internet TV” trend.

There are times when a firm succeeds with one goal, and needs to switch to bigger goals. Netflix seems to be at such a place.

India Inches Towards Banning "Zero Rating"

Though action has not yet been taken, it is starting to look as if Indian Internet regulators will eventually put an end to “zero rated apps” that have proven effective ways of introducing non-Internet users to the benefits of using the Internet.

So here we have an issue of “good things” in conflict. One is the notion that innovation is promoted when every app has an “equal chance” of being discovered and used (even if, in practice, that rarely is true, or possible).

The other good thing is the ability to provide people access to useful apps without those people having to pay.

And it appears one or the other of those good things will not be lawful, eventually.

Should such a framework remain in place for a long time, more new apps are going to move away from “Internet” delivery, though. Some apps work better when quality of service measures are available. And some apps might have life-threatening consequences if absolute low latency or bandwidth is unavailable.

Such apps will move away from the public Internet and into “walled gardens.” That might be useful, in some instances. Medical apps, driverless cars and other automated processes arguably would benefit from higher performance guarantees than can lawfully be provided using the consumer Internet.

Google is Almost at a Watershed Moment

If history and precedent matter, then Google has nearly reached a watershed moment.

The evidence comes from what happened to Microsoft when it faced its own antitrust troubles in the late 1990s and early 2000s.

Microsoft ruled computing in the mid 1990s. By 2010, it was an also-ran. All that happened despite the fact that Microsoft escaped being broken up, and also avoided crippling fines.

Google now faces the same potential problems (forced divestiture and huge fines). Some day, when the case has run its course, Google is likely to be fined a relatively small amount, and will have avoided any danger of a forced breakup of the company.

But Google’s momentum will have been halted. And if precedent serves as guide, Google never again will “lead” computing markets.

By End of 2015, I will be able to Buy Gigabit Service from 2 Suppliers

By the end of 2015, I will be able to buy gigabit Internet access from at least two Internet service providers, including the cable TV and telco suppliers serving my neighborhood.

That sudden development raises new questions. Have incumbent ISPs concluded they must beat Google Fiber to a gigabit?

What does that do for demand for other products, such as access at 40 Mbps or 100 Mbps?

And once users become accustomed to such speeds, will their perceptions of experience shift?

The big immediate questions are about incumbent ISP strategy.

Among the reasons Google Fiber launched Google Fiber was to spur just those sorts of investments by the major U.S. Internet service providers, and one would have to say Google Fiber is succeeding.

But a sudden response now suggests U.S. incumbent ISPs have decided the challenge from Google Fiber simply has to be met. Where the dominant cable TV and telco competitors have essentially waited to see what would happen, Google seems to be getting huge market share.

So what now seems to be happening are preemptive strikes by the incumbents, to acquire as much of the gigabit market as possible before Google Fiber arrives locally, disrupting Google Fiber’s ability to make easy gains and develop a positive cash flow position.

The obvious related question is what happens to profit margins for high speed service. Some would say Google long has wanted costs as close to zero as possible, and the preemptive incumbent ISP moves suggest Google also is getting its way on that score.

At the same time, some believe demand for services from 40 Mbps to 105 Mbps also will get a big boost, either because ISPs upgrade customers to those plans without a price increase, or because consumers now will see value in upgrading to faster speeds, if not all the way to a gigabit.

To be sure, some will say the cost of the gigabit services offered by cable TV and telco providers is an issue. That is more likely to be the case where Google Fiber is not viewed as a potential competitor.

Where Google Fiber must be confronted as a local competitor, prices are likely to align around Google Fiber’s pricing leadership.

Even where that is not the case, Google Fiber price leadership still matters, as it sets consumer expectations.

In my own area, the difference between 100 Mbps and 1,000 Mbps now is about $58 a month, for a stand-alone high speed access service not bundled with voice or video.

On a stand-alone basis, a 100-Mbps service might cost $92 a month. On a stand-alone basis, it might cost $151 a month for a gigabit service, with no discounts for bundling.

Some will object to those levels of pricing. Some of us would counter “just wait.” I used to pay $100 a month for 700 kbps.

On a triple play bundle, I could buy a gigabit for about $80 a month, from one supplier.

The caveat is that those prices do not yet reflect the entry of the second competitor, by the end of the year. I expect prices will fall.

Many consumers actually buy dual-product or triple play bundles, so the “actual” cost for the high speed access is hard to determine with precision, but using an $80 figure for stand-alone video, and $50 each for voice and Internet access, a triple play bundle costing about $130 might infer promotional prices of about $58 a month for video and about $36 each for voice and high speed access, with the high speed access at about 105 Mbps.

At some point, some end users are going to be able to directly compare their experience at 15 Mbps with 100 Mbps or 1,000 Mbps. In many cases, consumers are going to discover they actually do not discern improvements.

Oddly, that might actually retard adoption of gigabit services, where 100 Mbps or 300 Mbps alternatives are available.

Still,  that is going to raise some other issues, as what app providers are going to have to do, as latency becomes the bottleneck, not access bandwidth. If latency performance improves, then a bandwidth boost to hundreds of megabits might actually produce an experience boost.

Europe Competition Commission Decides to File Antitrust Charges Against Google

Europe’s competition commission has decided to file formal charges against Google for violating the European Union’s antitrust laws, the result of a five-year investigation that many will see as analogous to the similar lawsuit faced by Microsoft almost a decade ago.

It is hard to say what will happen next, but Microsoft spent 21 years fighting antitrust regulators, and was seen by many as a turning point for Microsoft. That might someday be said about the EU case against Google as well.

Were Google to lose, the possibly $6 billion fine might be the least of the firm’s problems. The bigger issue would be the decisive break from past operating policies and growth strategies.

The EU has been investigating Google's market dominance for the last five years, and it seems unlikely Google will escape all damage, even if a consent decree “merely” restricts its business freedom.

In the past, such antitrust actions have had serious implications. The former Bell System monopoly in the United States was ended by just such a consent decree, splitting what became AT&T from seven local telephone companies and ending the AT&T telecom monopoly.

One can suggest we are a long ways from a resolution of the case against Google. But it wouldn’t be hard to guess that a “chilling effect” already has occurred, causing Google to move more slowly than it otherwise might have.

Perhaps 60% of This Information about Google Wireless is True

With the caveat that the confidence level is about 60 percent, here is what Android Police believes are features of the coming Google mobile service. 



The app-based service likely will use Sprint and T-Mobile US as suppliers of mobile network connectivity, but will rely on Wi-Fi whenever possible. 



Pricing might have several components, possibly "by the gigabyte" charges for data, with carryover of unused capacity, with separate multimedia text messaging charges. Presumably that is because the wholesale agreements with T-Mobile US and Sprint will require that charging scheme. 



But domestic voice and texting will be included, at no extra charge, with low international calling prices and the ability to use Google Voice ("Hangouts"), if a user already has an account. 



Multiple devices can be supported on one account, and service could be switched between devices without physically changing a subscriber information module.