Deutsche Telekom Metrics Improve

Deutsche Telekom has been clear for some time about it strategy to maintain leadership in the European communications market, a strategy that has made T-Mobile US an asset to be monetized.

Somewhat ironically, then, T-Mobile US stands out, even within the context of improving metrics for Deutsche Telekom overall. DT noted that T-Mobile US had grown to become the third-biggest U.S. carrier in the quarter, for example.

In the second quarter of 2015, revenue grew by 15.3 percent to EUR 17.4 billion, with organic revenue growth of 5.7 percent.

Adjusted EBITDA improved by 13.5 percent to EUR 5.0 billion, with organic growth of 6.7 percent.

T-Mobile US adjusted EBITDA by 22.8 percent. Adjusted net profit up by almost 70 percent.

Despite subscriber growth, and in part because DT is investing heavily to modernize its networks, net profit was basically flat, year over year. Free cash flow grew 31 percent, while debt grew 18 percent.

Mobile revenue grew 8.8 percent but fixed network revenue declined 2.7 percent.

Sprint Next to Enter the Pan-Americas Mobile Plan Market?

Perhaps AT&T’s move into the Mexican mobile market, allowing AT&T customers to communicate across the United States and Mexico as though they were in one country--or with low rates--now has ignited a wider response across much of the U.S. mobile market.

First T-Mobile US responded with a similar plan, but added Canada to the unified coverage area.

Now Sprint might up the ante again, according to a post on a Sprint-focused website, and a post authored by a Sprint employee.

The rumored new Sprint no-cost roaming plan includes unlimited calling and messaging, plus use of 1 gigabyte of mobile data across Canada, Mexico and 12 South American countries, might be launched this week.

This plan includes unlimited free calling to Canada and Mexico from the United States and then calling to South American countries for five to 20 cents a minute.

For additional data usage beyond the free 1GB, each additional gigabyte costs $30, billed at $0.00002861/KB.

How about if you're in places other than Canada, Mexico or the listed Latin American countries?

The same data rate applies of $30/GB for high speed data, texting is free and calls are 20 cents per minute.

Countries covered initially include:

• Argentina
• Brazil
• Chile
• Columbia
• Costa Rica
• Dominican Republic
• El Salvador
• Guatemala
• Honduras
• Nicaragua
• Panama
• Paraguay

Aside from the observation that no particular innovation by any one leading service provider will go unchallenged for long, most recent innovations involved giving users “more for less.”

That is what we have come to expect in the competitive telecom industry. At a high level, the trend to offer “more for less” also illustrates the long-term tendency of any digital market to drift towards marginal cost pricing.

Most people instinctively would understand or believe that end user prices for any digital product will trend, now or over time, towards the marginal cost of producing the next unit.

Most in the industry will acknowledge that the incremental cost of the next unit of any digital product is very close to zero.

That suggests the long term tendency will be for digital product prices to push relentlessly towards a cost very close to zero. That does not mean literally “zero,” but prices so low the cost is not a barrier to consumption or use.

T-Mobile Has Fastest U.S. LTE Network, Cable Leads Fixed Network Segment

T-Mobile US operates the fastest mobile network, while Comcast operates the fastest fixed Internet access network, according to new measurements by Speedtest.

Note the rankings in the fixed network segment. Only Verizon FiOS is in the top five. That is simple testimony to the effectiveness and relative low cost of upgrading bandwidth on a hybrid fiber coax network.

Fastest US. Internet Access Networks
	ISP	Downlink Mbps	Uplink Mbps
1.	Comcast	104.56	12.71
2.	Time Warner Cable	99.11	19.23
3.	Cox Communications	94.06	21.28
4.	Verizon FiOS	83.39	87.26
5.	Charter Communications	66.31	4.46

Google Keep Direct to Google Docs

Perhaps it is a niche application, but notes (including voice transcribed notes) created in Google Keep can be imported directly into Google Docs. A few of you who have worked as journalists might remember a time when you tape recorded interviews. 

Perhaps some of those chores now can be done using an Android phone, Google Keep and Google Docs. 

Personally, I gave up recording interviews decades ago, but it is a nifty use case, for those who rely on recorded notes. 

Google Fiber for Austin: Biggest Network So Far

Google Fiber is coming to San Antonio, with 1.4 million residents, representing the biggest market Google Fiber has entered, to date. Some might note that the move by Google Fiber suggests Google now is starting to reap experience curve benefits (getting more efficient with experience).

It is an imponderable, but moves such as this, along with the cable TV industry’s dominance of the U.S. fixed network high speed access market, raise questions.

Telcos have been facing erosion of their enterprise, small/medium business and consumer markets for some time. A variety of competitors, ranging from local exchange carriers (especially cable TV companies) to municipal broadband providers, plus over the top apps of all sorts, not to mention product substitution by their own mobile operations, have taken market share, while profit margins have been attacked as well.

Let us reasonably assume that the function of access to high speed Internet, voice, messaging, entertainment and other services remains intact in the future.

How much share can all the competing platforms take? How does the business model for a fixed network telco change? How drastic might the change ultimately be, and how will telcos react?

Some former rural telcos already have provided us with one answer. Both Frontier Communications and Windstream are driving growth by selling service to business customers.

In fact, Windstream approaches the market as does a CLEC, choosing to service business customers with selective networks, and avoiding the consumer market altogether.

Windstream, for example, has expanded its fixed wireless platform to serve Boston, Mass.

The service also is offered in Chicago, New York, northern New Jersey and Milwaukee.

AT&T and Verizon have gotten most of their growth from mobile services. But at least for AT&T, linear video turns out to be a cash flow generator, if not necessarily a “growth” business, as it has become the largest U.S. linear video provider.

Cable TV providers now are the market share leaders in high speed access, however, and remain key players in the consumer market, even as they scale up operations in the SMB and enterprise communications markets. And mobile lurks in the medium term.

The point is that it might not be reasonable to assume the present leaders in any customer segment or application will be the leaders forever. No matter how long the history of leadership in communications markets, everything seems to be changing.

DirecTV had to sell itself. Dish Network will become a mobile provider. CLECs, Google Fiber, municipal networks, cable TV, Wi-Fi-based service providers and eventually others are challenging telco revenue streams, products and market share at every turn.

One bit of business strategy I had imprinted on me  many years ago is that, in a competitive market, the low cost provider wins. Generally speaking, telcos are the high cost provider in every market.

Mobile, cable TV, municipal networks, CLECs, over the top providers and even satellites (for linear video) have lower cost profiles. It isn’t yet clear where Google Fiber ranks, but it is likely Google Fiber also has lower operating costs than telcos tend to have.

If you want to know why network functions virtualization is so important, that is why. NFC helps lower operating and capital costs.

At Least 60% of U.K. SMEs Use Cloud-Based Apps

At least 60 percent of U.K. small and medium-sized enterprises (SMEs) polled already are using cloud-based applications, according to the latest research from BT Business and British Chambers of Commerce (BCC).

In truth, the percentage likely actually is much higher, if one assumes many cloud-based consumer apps are used as business tools.

Of those interviewed, 43 percent believed cloud-based applications cloud-based applications were a critical element of effective flexible working, while 52 percent said  remote access to company data was essential.

U.K. business’ reliance on Internet access was also highlighted by the research, with more than two thirds (68 percent) of respondents believing that their companies couldn’t survive more than a day or two without a connection.

Full 86 percent of businesses have one or more members of staff working from home on a regular basis.

Some 47 percent of respondents say they have staff working away from the office at least once a week, while 28 percent have someone working remotely every day.

About 50 percent of respondents also said Wi-Fi access when out of the office was an important capability.

Sprint Operating Metrics Improve, but T-Mobile US Takes Third Place in U.S. Mobile Market Share Rankings

Sprint reported improved churn performance and improvement in its net account additions, with a small loss for its first quarter of 2015, ending in June 2015.

But some also would note that, for the first time in recent memory, the market share rankings for the top-four U.S. mobile providers actually changed, with T-Mobile US becoming the third-largest U.S. mobile service provider, while Sprint slipped to fourth.

Sprint now has  57 million customers, while  T-Mobile US with 58.9 million. T-Mobile US gained two million net new customers while Sprint added only 675,000.

For the most part, the quarter was a continuing saga of reversing prior operating trends. Sprint platform postpaid churn of 1.56 percent was a record low, with total net additions of 675,000 accounts.

In addition, the company reported net operating revenue of $8 billion, operating income of $501 million and Adjusted EBITDA of $2.1 billion.

Sprint also raised guidance for its fiscal year 2015 Adjusted EBITDA outlook from the previous expectation of $6.5 to $6.9 billion to $7.2 to $7.6 billion, excluding any accounting impacts from potential lease financing.

Postpaid net additions of 310,000 compared to net losses of 181,000 in the prior year quarter, with an improvement of 491,000 year-over-year.

For the first time in nearly two years Sprint recorded monthly postpaid phone net additions in both May and June.

This marked the fifth consecutive quarter of sequential improvement and compared to losses of 620,000 in the prior year quarter.

The 608,000 year-over-year improvement was driven by lower churn and a 13 percent increase in gross additions, including a 47 percent increase in gross additions with prime credit quality, Sprint said.

Sprint also said it was net port positive for the second consecutive quarter, meaning it activated more transferred accounts than it lost to other providers.

On the Sprint branded platform, total net additions of 675,000 compared to net losses of 220,000 in the prior year quarter.

The 895,000 year-over-year improvement was mostly driven by fewer postpaid phone customer losses.

Prepaid net losses of 366,000 compared to net losses of 542,000 in the prior year quarter.

Wholesale net additions of 731,000 compared to 503,000 in the prior year quarter. The year-over-year growth was mostly driven by connected devices.

Still, operating revenues of $8 billion decreased nine percent year-over-year as consolidated adjusted EBITDA of $2.1 billion grew 14 percent from the prior year period.

Operating income of $501 million was relatively flat from $519 million in the year-ago quarter as higher depreciation expenses offset the growth in Adjusted EBITDA.

Net loss of $20 million, or loss per share of $.01, compared to a net income of $23 million, or earnings per share of $.01, in the year-ago period primarily due to higher interest expenses.