Tuesday, April 21, 2015

30% is the Key Number for Either Comcast or AT&T Acquisition Efforts

If market concentration rules of thumb continue to matter, either the Comcast acquisition of Time Warner Cable or the AT&T acquisition of DirecTV will turn on “30 percent” thresholds.

If both mergers were approved, Comcast would have about 57 percent market share in high speed access service and about 30 percent share of the linear video subscription business.

The number that will cause trouble is the share of high speed access accounts.

AT&T with DirecTV assets would have about 17 percent share of the high speed access market and about 25 percent of the linear video subscription market.

That is why the greater concern is likely to be the Comcast acquisition, not AT&T’s purchase of DirecTV.

Is T-Mobile US Taking Share Mostly from Prepaid Providers?

At least so far, it is hard to see the margin-reducing or revenue-reducing impact of the U.S. mobile marketing wars on Verizon Communications.  And though we will know more shortly, some have argued it likewise has been difficult to detect the negative impact of U.S. mobile marketing wars wars on AT&T.

Some would note that Sprint saw a 14 percent quarter over quarter drop in average revenue per account (ARPA) to $132 per month, largely due to its "Cut Your Bill in Half" promotion, in the first quarter of 2015.

T-Mobile US, on the other hand, saw its ARPA increase by four percent quarter over quarter  to $121 per month.

Meanwhile, AT&T saw its ARPA stay flat at $143 per month, while Verizon saw a five percent drop to $143 per month, some estimate, though ARPA had grown by six percent in the fourth quarter of 2014.

Though thinking might change after AT&T announces its first quarter earnings, so far it appears that T-Mobile US in substantial part has been growing at the expense of other prepaid service providers, and not primarily at the expense of AT&T, Sprint or Verizon.

In fact, some believe that, at the end of the first quarter of 2015, all four national carriers gained accounts at the expense of prepaid providers. Tablet account additions complicate the picture, though.

Still No Sign Mobile Marketing War is Denting Verizon Revenue, Margin

At least so far, it is hard to see the margin-reducing or revenue-reducing impact of the U.S. mobile marketing wars on Verizon Communications.

If revenue growth is the key metric for most tier-one communications service providers, Verizon Communications was a winner in the first quarter of 2015. Operating revenue grew 3.8 percent. Operating profit margins were up slightly, year over year.

Mobile segment revenues grew 6.9 percent, year over year, while operating income profit margins were flat. Postpaid customer churn improved, both quarter over quarter and year over year.

Perhaps more surprising, fixed network revenues grew four percent, year over year.

Wireline operating income margin was 4.3 percent in first-quarter 2015, up from 1.5 percent in first-quarter 2014. Segment EBITDA margin (non-GAAP) was 22.7 percent in first-quarter 2015, compared with 22.5 percent in first-quarter 2014.

With AT&T also reporting first quarter 2015 results soon, we will have a better handle on what is happening, at the firm level, in the U.S. mobile market, especially regarding the source of T-Mobile US net customer gains, and the impact of promotions on Sprint and T-Mobile US revenue and profit margin.

So far, it is hard to see negative impact at Verizon.  

FiOS Internet penetration (subscribers as a percentage of potential subscribers) was 41.5 percent at the end of first-quarter 2015, compared with 39.7 percent at the end of first-quarter 2014. In the same periods, FiOS Video penetration was 36.0 percent, compared with 35.0 percent.

By the end of first-quarter 2015, 62 percent of consumer FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 to 500 megabits per second, up from 59 percent at year-end 2014. The highest rate of growth is in the 75-megabit-per-second tier, to which more than 20 percent of FiOS customers subscribe.

Broadband connections reached 9.2 million at the end of first-quarter 2015, a 2.4 percent year-over-year increase.

Net broadband connections increased by 41,000 in the first quarter of 2015, as FiOS Internet net additions more than offset declines in DSL-based high speed access connections.

Monday, April 20, 2015

Rate of Return Regulation Now Drives Cost in Electrical Utility Business

If you have been in the telecom business for some decades--long enough to remember rate of return regulation--you know how different the business is today.

Some might start wondering whether a shake-up is needed in the electrical utility business that--even decades ago--was widely considered more stodgy than telecom.

Utilities still operate under rate of return regulations, meaning if they invest a dollar, they are guaranteed to earn more than a dollar on the investment.   

Rate of return regulation historically did not promote innovation in the telecom business, and did next to nothing to restrain spending or prices. Some might now be seeing similar problems in the electrical utility business, which despite all efforts has not yet been subjected more to market forces.

Families in New York are paying 40 percent more for electricity than they were a decade ago, the Wall Street Journal reports.  Meanwhile, the cost of the main fuel used to generate electricity in the state—natural gas—has plunged 39 percent.

Prices have not fallen because of rate of return regulations, in essence.

If you are a veteran of the telecom business, you know all about that.

Republic Wireless Wants to Pay You for Data You Don't Use

Republic Wireless is taking a different approach to data plan capacity not used in any single billing period. “What if you could get paid back each month for whatever cell data you didn’t use?” Republic Wireless Labs now says.  “Like, in money. Actual dollars credited back to your account.”

“If you signed up and were selected for Lab 1: Maestro, then having total control over your plan and the ability to get paid back for what you don’t use is exactly what you’ll be helping us test and figure out, this May,” said Republic Wireless. “What if you had total control over your plans and could appropriately size them for what best fits your needs?”

The issue Republic Wireless is tackling is generalized unease over prices and value.

“Our members want access to LTE coverage, but only four percent were willing to pay extra for an LTE plan,” Republic Wireless said. “On average, every single smartphone user is overpaying about $16/month for service they never use.”


10 Gbps Per User? Yes, Say 5G Backers

If fifth generation mobile networks supply 10 Gbps of bandwidth for every user or device, then even using all other available techniques--multiple input, multiple output radios, directional and phased array antennas, beamforming, ultra-dense small cell networks, better semiconductor technology, signal polarization and dynamic spectrum access--lot of new spectrum will be required.

Early discussion of which bands in the millimeter wave band (3 GHz to 300 GHz) will happen at this year’s World Radiocommunications Conference.

To give you some idea of what eventually will happen, the regional allocation for mobile services now is about 500 MHz, in total. For 5G, allocations are expected to be in the 10 GHz range. In other words, two orders of magnitude more bandwidth is expected to be allocated, but most of the growth will come from use of small cell architectures.

Some think as much as two orders of magnitude effective spectrum use will come from small cell architectures, about 20 times improvement from additional spectrum and maybe twice as much effective use will come from all the improvements made possible by Moore’s Law.

But there is lots of room for surprise. Some think the present limit of about two bits per Hertz of bandwidth could grow to 10 bits per Hertz or even 30 bits per Hertz, effectively. That would be a stunning advance, indeed.

   source: Keysight Technologies

In that regard, Ofcom, the U.K. communications regulator, has identified the millimeter wave bands it believes are best for fifth generation (5G) networks, and especially suitable for early discussion at the upcoming World Radio Conference.

“Our preliminary view is that the frequency bands 10.125 to 10.225; 10.475 to 10.575 GHz; 31.8 to  33.4 GHz; 40.5 to 43.5 GHz; 45.5 to 48.9 GHz and 66 to 71 GHz should be considered for study under a focussed agenda item on 5G mobile broadband for WRC-19,” Ofcom said.

At the moment, Ofcom says, there is general consensus that immediate efforts should be focused on additional spectrum below 100 GHz. Satellite interests generally argued that new allocations should be made at above 30 GHz, to avoid interference with existing satellite operations.

“We think these bands may be relatively straightforward to make available in the UK
compared to other options within the range 6 to 100 GHz...and could have potential for being harmonised and developed for future 5G use globally,” Ofcom said.

Spectrum adjacent to these bands, such as around 10 GHz, 43.5 to 45.5 GHz and 71 to 76 GHz and 81 to 86 GHz also are worth examining, Ofcom said.

To give you some idea of how much spectrum might be feasible, consider that Ofcom said
“it is particularly difficult to identify bandwidths of least 1 GHz below 30 GHz taking
account of incumbent use of these bands.” In other words, Ofcom is looking, ideally, at allocations of at least 1,000 MHz per band.  

Ofcom also points out that several different technology solutions will help enable use of spectrum above 6 GHz to enable 5G.

Those solutions include  massive multiple input, multiple output radios, directional and phased array antennas, beamforming, ultra-dense small cell networks, better semiconductor technology, signal polarization and dynamic spectrum access.

source: Ofcom

Commercial Project Loon Service in 2015 or 2016?

Some time in 2015 or 2016, if all goes according to plan, Google believes it will be able to create a continuous, 50-mile-wide ring of Internet service around the globe, initially focusing on potential customers across southern Africa, southern Australia, New Zealand and southern Latin America, and supplied by Project Loon, the constellation of planned unmanned balloons.  


The general plan seems to be to pioneer LTE service acorss relatively sparse areas before expanding to more-populous areas.

Google estimates the cost of coverage to be an order of magnitude less than building a network of cell towers to provide equivalent coverage.

Although Project Loon initially tested Wi-Fi as the communications protocol, it has since switched to Long Term Evolution, making mobile service providers logical partners.

Google says it can now deliver data at 5 Mbps to mobile phones, or 22 Mbps to fixed antennas.

Zoom Wants to Become a "Digital Twin Equipped With Your Institutional Knowledge"

Perplexity and OpenAI hope to use artificial intelligence to challenge Google for search leadership. So Zoom says it will use AI to challen...