Salisbury, NC Becomes "America's First 10 Gbps City"

Small relatively unregulated companies often can do things large more regulated companies cannot, just as small compact city-states often can move with a speed that continent-sized countries cannot match.

So it is that the Salisbury, N.C.  municipal Internet service provider Fibrant has launched 10 Gbps service throughout the city, to both businesses and residents.

Fibrant has been offering gigabit service for $105 a month, and 50 Mbps service for $45 a month, since about 2011. Fibrant also sells phone and linear video entertainment services.

Billing itself as the first 10-gigabit city, Fibrant believes the market for 10 Gbps really is the business customer, which will pay about $400 a month for the 10-Gbps service.

"To be honest with you, we're not anticipating residents taking 10Gbps service," Fibrant Director of Broadband and Infrastructure Kent Winrich says.

The first 10 Gbps customer is Catawba College, which wants the bandwidth for computer labs and other school buildings. High-definition videoconferencing figures into the college’s heavy bandwidth plans.

Fibrant has 3,300 home and business customers, about 25 percent of households in the community.

One might ask why Fibrant does not have 100 percent market share, and the reason likely is that even with bundles that do not match Fibrant in terms of Internet access speed, Salisbury cable and telco providers still are able to retain much of their original market share by offering enough value, often at lower prices than Fibrant, to anchor in place perhaps 75 percent of the potential market.

AT&T U-verse is sold in Salisbury, and the cable operator is Time Warner Cable.

23% of U.S. TV Now is Viewed Online

source: GlobalWebIndex

About 23 percent of daily U.S. TV consumption now happens online, according to GlobalWebIndex.

The issue now is likely which of the expected revenue sources will drive most of the revenue. Advertising and subscription fees are the obvious drivers of most of the revenue, but much remains to be decided, in particular the role of advertising.

Traditionally, consumers have tolerated advertising because it defrayed the cost of viewing. But some important formats--HBO, Netflix and Amazon Prime--have eschewed advertising to concentrate solely on subscription fees.

There likely is room for both models, but strategies around the amount of tolerable irritation is likely to grow. The perhaps obvious example is what is happening on many linear TV services, where the amount of time devoted to advertising has grown significantly.

To the extent that advertising is “irritation,” distributors are irritating their customers more. And since so many people now use Netflix, Amazon Prime and other services without commercial interruptions, the contrast literally is easy to see.

That is one reason YouTube plans to launch a commercial-free service.

One indication that commercial-free products might have appeal is that the next version of Apple’s IoS will allow its device users to block ads, though that will not be the default setting.

For Apple, which makes its money from devices, ads are seen as content elements that degrade end user experience.

For Google, Facebook and many content providers, ads are a primary or important revenue source. The estimated loss of global revenue due to blocked advertising during the first half of 2015 was $21.8 billion, according to Pagefair.

Ad block usage in the United States resulted in an estimated $5.8 billion in blocked revenue during 2014. It is expected to cost $10.7 billion in 2015 and $20.3 billion in 2016.

Globally, ad blocking is expected to result in a loss of $41.4 billion in potential ad revenue by 2016.

Use of ad blocking software is increasing. Globally, the number of people using ad blocking software grew by 41 percent between 2013 and 2014, according to Pagefair.

Ad block usage in the United States grew 48 percent in 2014,  increasing to 45 million monthly active users (MAUs) during the second quarter of 2015.

Ad block usage in Europe grew by 35 percent in 2014, increasing to 77 million monthly active users during the second quarter of 2015.

Mobile Infrastructure Market Will Grow at 8% Annually Through 2019

The global macrocell mobile infrastructure market grew two percent in the second quarter of 2015 over the first quarter, and also grew two percent year-over-year, according to IHS Infonetics, reaching $11.4 billion.

LTE revenue was essentially flat (up one percent) sequentially, but grew 10 percent year over year.

IHS believes LTE spending by mobile operators will peak at $23 billion in 2015 and then start to decline as service providers complete their builds.

Some 422 commercial LTE networks have been launched as of July 2015, 363 of which are of the FDD (frequency division duplex) variety.

Ericsson and Huawei share the LTE infrastructure market share lead, each claiming a bit more than 20 percent market share.

Mobile infrastructure software is forecast by IHS to grow at a 5-year (2014-2019) compound annual growth rate of eight percent.

But 3G investments also matter.

"Substantial 3G deployments took place in Brazil, India, the Middle East, Myanmar, Thailand and Vietnam," said Stéphane Téral, IHS research director for mobile infrastructure and carrier economics. "Brazil kicked off a massive 2G GSM to 3G W-CDMA migration, and Thailand has ordered mobile operators to shut down their GSM network to re-use the spectrum for LTE."

U.S. Mobile Internet Access Consumer Satisfaction Grows

U.S. smartphone owners seem increasingly satisfied with mobile Internet performance--even as their expectations rachet higher--according to a survey sponsored by Vasona Network.

Users expecting "good mobile data performance all of the time, with no temporary hiccups or outages" remains high at 73 percent, up one percent from 2014 levels.

The importance of mobile Internet performance when choosing a service provider rose again from 32 percent in 2014 to 35 percent in 2015.

The survey suggests U.S. mobile service providers are doing well, in that regard. Some 35 percent of respondents believe that their provider offers the best mobile broadband performance available, up from 31 percent in 2014.

Nearly half (46 percent)  would recommend switching to their provider, up from 42 percent in 2014.

Fewer respondents think they can get better performance from a new provider. Some 28 percent now think that they can get better performance by switching, down from 32 percent in 2014.

Some 32 percent say that the mobile broadband experience offered by their provider has gotten better during the past year, while only 15 percent think that it has gotten worse.

As you might also expect, users are upgrading their mobile data plans. Some 32 percent of smartphone owners surveyed upgraded their mobile data plans during the past year, with an additional 10 percent planning to do so within the next year.

Smartphone Markets in U.S., Western Europe are About Device Replacement

No market ever “grows to the sky,” and that is evident for smartphones. For the most part, smartphone markets in Western Europe and the United States are replacement markets.

“The maturity of the European market is evident when looking at the declining number of first time smartphone buyers,” said Dominic Sunnebo, business unit director at Kantar Worldpanel ComTech Europe. “In the three months ending July 2015, only 25 percent of smartphones sold went to first-time buyers versus 29 percent for the same period in 2014.”

Replacement markets also mean that market share is grown mostly by taking share from another provider.

“This type of market maturity increases the impact of churn on overall performance as we have seen with Android this time around,” he said. “Of smartphone buyers across Europe left Android for iOS versus nine percent in the US.”

”The latest smartphone sales data from Kantar Worldpanel ComTech for the three months ending July 2015 shows continued market share losses for the Android OS across Europe’s five largest markets, while Android’s share remained positive in the U.S.,” he said.

Reliance Communications, Jasper to Launch IoT Platform in India

Reliance Communications Ltd. (RCoM) has entered into a partnership with U.S.-based Jasper, a global Internet of Things (IoT) platform provider, to offer enterprises and individuals in India the capability to launch and manage IoT business operations.

Reliance is Jasper’s sole telecom partner in India, and functionally will operate as a “platform as a service” offering from Reliance’s 11 data center facilities and its Global Cloud Exchange “Cloud X” platform.

Reliance Group companies will be the anchor clients for the IoT rollout in India, but discussions are also underway with multiple clients and state governments across India for the deployment of this platform. That method--using other Reliance businesses as anchor customers--has been used before by Reliance Communications.

A dedicated technical team from Reliance and Jasper will manage the phased roll-out of Internet of Things services across the country.

Telkom South Africa Launches Carrier Billing for Google Play

Bango and Telkom South Africa, have partnered to launch carrier billing in Google Play, a first for Africa. Telkom SA is using the Bango payment platform to provide the service to its Android customers, giving them access to a universal payment method to fully enjoy the app store experience.

Carrier billing is not new, but many view carrier billing as a convenient and efficient way to enable mobile content purchases.

Google Play carrier billing, on the Verizon Wireless network, for example. allows customers to purchase up to $100 in digital goods (virtual online games, music, e-books) from the Google Play store, using an Android device.

The purchases are charged to a customer’s Verizon Wireless bill. It is touted as an easy, convenient, secure method for purchasing digital goods on a device without having to provide an online merchant with credit card information.

There is a big potential market, as Google’s Android platform currently represents 89 percent of the smartphone market in Africa, according to IDC).

Telkom customers using Android smartphones and tablets can now purchase their apps, games, music and other digital content using one-click carrier billing, charging the cost to their phone bill or deducting the charge from airtime, without the need for a credit card or to register personal details.

Customers with limited or no access to other payment methods now can use carrier billing to buy from the Google Play store, Bango says.

Where carrier billing is introduced to fast-growing emerging markets such as in Africa, Bango routinely sees increases in digital content sales of 300 percent to 400 percent.

Where consumers are only presented with a “credit or debit card only” payment option, conversion rates can be as low as 0.5 percent  in developing markets, and rarely exceed 40 percent  even in developed markets where card penetration is high.

The average conversion rate for carrier billing in app stores using the Bango payment platform during 2014 was 82.4 percent, Bango says.

Traditionally, carrier billing has been a business issue for would-be merchants, as the carriers kept 25 percent to 40 percent of the gross revenues.

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That obviously is changing, as it is hard to see a business model for most app providers if an app store claims 25 percent of gross, and then a carrier takes another 25 percent of gross revenue.

That is one reason why micropayments generally are unrealistic using carrier billing. With revenue sharing rates so high, purchase amounts generally are in dollars, not cents. In the U.S. market, that tends to imply $10 to $20 purchase prices.

Of course, there are precedents. Linear video content providers generally are paid about 40 percent of retail gross revenue when a distributor sells a subscription.

But high prices are a deterrent to consumption in any market. So it is likely carriers are being more flexible these days.

In the past, consumer protection issues also have been a concern, where carrier billing is available.