U.S. Mobile Market Structure to Remain Largely Unchanged Through 2020

Neither T-Mobile US nor Sprint are going to catch Verizon Wireless and AT&T Mobility in subscriber market share between now and 2020, Strategy Analytics predicts..

The U.S. mobile market has entered into a new phase, evolving from voice to text to data and now to constant connectivity and what you do with it, according to the Strategy Analytics, with annual subscription growth in the four percent annual range.

While growth has slowed, nearly 100 million mobile connections (including consumer electronics connections but excluding M2M)  will be added through 2020, reaching a 128 percent penetration rate of the US population.

Mobile service revenue will grow 0.2 percent to reach US$197 billion in 2020, up slightly from $195 billion in 2015, spurred by a 5.7 percent growth in prepaid service revenue and 3.3 percent growth in data revenues.

Verizon Wireless and AT&T will maintain their market share lead over Sprint and T-Mobile US, however.

“No major shifts are anticipated in market share among the top four carriers,” Strategy Analytics predicts.

source: Strategy Analytics

Mobile Device Sales Slow to 3.3% Globally

Among digital device markets, only the mobile phone segment is growing, driven by emerging markets, according to Gartner. http://www.gartner.com/newsroom/id/3088221

Still, mobile phone market growth rates are expected to slow down to 3.3 percent in 2015. "We have witnessed fewer and fewer first time buyers in China, a sign that the mobile phone market in there is reaching saturation,” said Annette Zimmermann, research director at Gartner.

Worldwide Devices Shipments by Device Type, 2014-2017 (Millions of Units)

Device Type	2014	2015	2016	2017
Traditional PCs (Desk-Based and Notebook)	277	251	243	233
Ultramobiles (Premium)	37	49	68	89
PC Market	314	300	311	322
Ultramobiles (Tablets and Clamshells)	226	214	228	244
Computing Devices Market	540	514	539	566
Mobile Phones	1,879	1,940	2,007	2,062
Total Devices Market	2,419	2,454	2,546	2,628

Source: Gartner (July 2015)

Why 5G Could be a Wild Success....When 6G Arrives

The “5G-NORMA” initiative by the 5G Infrastructure Association Public Private Partnership (5G PPP), an international non-profit association for collaboration on 5G, is one of a number of groups working to define the features and attributes of the fifth generation mobile network.

The 5G NOvel Radio Multiservice adaptive network Architecture does face some potential issues, though. The effort has goals other than the purely technical.

It is intended that 5G-NORMA will help 5G “create a single digital economy and put Europe back in the driving seat with a ubiquitous network,” 5G-PPP says.

Granted, all standards involve commercial interests and pressures. But the 5G-PPP effort also has serious political constituencies and objectives as well. Whether that is helpful or harmful cannot yet be determined.

But it is probably worth noting that most “next generation network architectures” proposed by the telecom industry have had mixed fortunes.

In terms of commercial success, a wide variety of protocols and platforms have missed the market. ISDN, broadband ISDN (ATM), OSI, IMS and RCS are examples of next generation platforms that have had modest success, compared to Internet Protocol, for example.

Mobile next generation platforms have had adoption issues as well, but might generally be seen as more broadly accepted than the core network protocols and platforms. It would be hard to fault 2G or 3G as platforms or protocols that “failed” in the market, or had only a modest financial impact.

Long Term Evolution 4G seems destined for clear success. Eventual success for 5G likely is somewhat inevitable. But the impact could well be shaped by any number of matters.

The more-complicated and sweeping the standard is, the more complicated its political context, the less likely 5G is to succeed in the near term. As arguably was the case for 3G, success might be delayed. And most of the developments foreseen for 3G arguably happened only with 4G.

So the possibility exists that much of the hoped-for 5G success could be delayed until 6G. It would not be an unprecedented development.

Device Leasing is a Big Deal for Sprint

There now are lots of moving parts in the U.S. mobile business, ranging from major new entrants (Dish Network in the near term, Comcast in the medium term, Google Fi potentially a factor) to changes in handset financing that affect revenue and cash flow.

Among the newer handset trends is the shift to device leasing by Sprint, not simply a reconfiguration of how handsets are purchased by consumers.

Using the leasing model, Sprint retains ownership of potentially millions of handsets with some residual value that can be monetized, in some way.

Perhaps it simply makes sense that the larger the device flow over time, the bigger the potential ability to monetize the used devices. Sprint appears to be approaching a 40-percent device leasing adoption, and seems poised to grow further.

That is unusual for a top-four mobile supplier.

Mobile Drives 40% of E-Commerce Transactions, Globally

U.S. mobile transactions now account for more than 30 percent of all e-commerce transactions and are expected to reach 33 percent by the end of the year in the United States and 40 percent globally, according to an analysis by Criteo of 1.4 billion individual e-commerce transactions totaling over $160 billion of annual sales globally.  

Key mobile e-commerce purchases happen in the fashion, luxury and travel verticals where one in three transactions are now on mobile devices.

The majority of mobile transactions in the U.S. come from smartphones, increasing to 54 percent in the second quarter of 2015.

Additionally, the Apple iPhone makes up the majority of smartphone transactions in the U.S. at 66 percent, up from 61 percent over the last two quarters.

Mobile commerce is now 34 percent of all eCommerce transactions globally.

Criteo State of Mobile Commerce Report Q2 2015 from CriteoReports

Inda Net Neutrality Rules Not as Rumors Suggest?

You might be confused if the India Department of Telecommunications agrees with leaked recommendations of a DoT panel on net neutrality. It is likely the reports are incorrect.

Leaked comments suggest the panel recommends banning zero rating as a violation of network neutrality, but will also will allow zero rating, so long as service providers get permission to do so.

Earlier rumors had suggested DoT would flatly ban any such practices. It is hard to make sense of those policies, if in fact those are the stanes.

The plan apparently would block app providers from zero rating, but approve it for mobile operators. Perhaps that is where the confusion lies.

Curiously, the rumored approach also would allow service providers to offer zero rated plans that require app providers to pay for the privilege, and apparently would bar app providers from doing the same thing, but without payment of any fees, by anyone, to anyone.

The panel reportedly has argued that "collaborations between telecom operators and content providers that enable such gate-keeping role to be played by any entity should be actively discouraged."

In that view, a general policy allowing any app to be used without incurring data charges is allowable, if the apps pay for the privilege. But the policy appears to reject similar availability if app providers or mobile service providers agree to do so voluntarily, and without any payments made for the right to do so.

The neutrality debate heated up in India after Bharti Airtel launched a platform, Airtel Zero, that would allow free access of some websites on it network, if the app owners paid Airtel.

Facebook-organized Internet.org had partnered with Reliance Communications to offer free acces to a suite of free apps, but without any payment to Reliance Communications.

The network neutrality rules must be sent to the Telecom Regulatory Authority of India for actual finalization.

So what is going on? The policy probably is not as rumored or reported. It is possible what the new recommendation will include is indeed a ban on zero rating, but allowance for network management or quality of service mechanisms for “managed services” such as carrier voice over IP networks--but not “Internet” bandwidth.

In that view, as all networks using Internet Protocol are not supporting “Internet access,” so too not all IP services supplied by mobile operators are “Internet access” functions. Private networks and managed services also use IP, but are not “Internet” services.

We’ll know soon enough. But it is possible, probably highly possible, some leaked rumors are not as they appear.

Reliance Jio Plans to Disrupt India Mobile Market

When Reliance Jio enters the Indian mobile market, it will do so offering voice and data services at about half--or possibly less than half--of current market tariffs. Some potential competitors believe it is possible voice services could be offered free.

In a market where voice services represent 80 percent of industry revenues, that would likely satisfy anybody’s definition of a disruptive attack.

Reliance Jio will offer data and voice services at half or less than half the current rates at Rs. 300-500 a month, Ambani said in June 2015 at the Reliance Industries annual meeting.

Few would expect the price attack to last forever, however. A reasonable expectation is a year-long assault that reshapes market share, making Reliance the fourth-largest mobile service provider, and likely dooming a number of smaller firms to failure in the process.