U.S. ISPs, Linear Video Providers Get Higher Satisfaction Ratings

It never has been easy for providers in some industries, including telecommunications or airlines, to earn high marks in consumer satisfaction surveys.

There might be some improvement on the part of fixed network communications providers though, according to the latest J.D. Power surveys. A separate study by the American Customer Satisfaction Index shows some Internet service providers are doing better, some worse.

But linear video subscription services and Internet service providers score at the bottom of industry rankings.

Overall satisfaction with television service providers has increased by 12 points to 723 in 2015 from 711 in 2014 (J.D. Power uses a zero to 1,000 scale).

Satisfaction with network performance and reliability improved 22 points from 2014. This follows a 17-point increase between 2014 and 2013.

The danger of low scores can be illustrated by a couple of facts. Lower potential churn rates are associated with scores of 900 or higher.

About 53 percent of highly-satisfied residential television customers (overall satisfaction scores of 900 or higher) say they “definitely will not” switch providers in the next 12 months.

When scores are below 550, 90 percent of respondents indicate they definitely plan to leave their current provider.

Scores in roughly the same range (700s) were earned by Internet access services as well.

Satisfaction with ISP network performance and reliability improved 16 points in 2014.

Mobile Internet Usage Now About 33% of All Usage

Globally, more people get access to the Internet using a personal computer or tablet, according to Global Web Index. 

But the percentage doing so using a mobile phone is growing steadily, and currently represents usage about half the level of PC or tablet access.

People 16 to 24 are the most-frequent mobile Internet users, spending 3.25 hours per day online on their smartphones, about 43 percent of their total internet time.

Mobile Ops Need to Maximize Customer Touch Points

Aside from the assertion that mobile service providers can do a better job of upselling products and services to customers who have interactions with the mobile websites, a new Allot Communications report indirectly points out some of the core challenges faced by mobile service providers.

The report points out that service provider websites are very rarely accessed on daily basis by subscribers.

Most of you would not find that a contentious observation. The most-used apps and sites are those of third party providers, and likely always will be. That is simply a reality for an application architecture that divorces apps from access.

Most people, most of the time, are going to go to third party apps and sites. But Allot also notes that such low engagement makes it harder for mobile operators to foster higher uptake of their

own applications and content.

On average it appears that only 0.7 percent of subscribers access their CSP website on a daily

basis. So service providers must do better at maximizing the value of touch points they do get, including subscriber use of the third party app and websites.

In fact, service providers that implement smart engagement solutions involving their own websites have been successful in increasing the subscriber engagement by about 70 percent on average, Allot argues.

The challenge of leveraging customer behavior across all mobile-accessed activity, though, points out an inescapable fact. The unique role of any access provider in the Internet or mobile ecosystem is, in fact, “access.”

All other value within the ecosystem successfully created by the access provider will be an uphill, difficult task that has access providers stepping out of the area where they have unique advantage in the ecosystem.

And some would argue that the access function itself is becoming more challenged, and “less unique,” as new competitors enter the market.

It is quite easy to argue that telcos and other access providers must “move up the stack,” or “add more value.” The challenge is that doing so on a scale basis requires moving out of the unique role within the ecosystem, to fight on territory arguably not within an access provider’s  core competence.

It can be done, to be sure. App providers are learning how to become access providers, for example. Someday, device suppliers might become access providers. As a matter of defense, access providers almost inevitably have to try and become app providers.

We can argue about which is harder: an access provider becoming an app provider, or an app provider becoming an access provider.

Both are likely to prove essential, long term. It isn’t exactly a complete vertical integration strategy, as might have been possible before the Internet era. But contenders can create integration strategies. That, after all, is what Google has sought when it began producing Nexus devices, attempting to showcase ideal integration of Google apps with Android hardware.

Apple has taken a different, and arguably more closed approach, to achieving the same end. The point is that even when an access provider cannot recapture its former dominance at integrated apps and access, each contestant can aim for some forms of integration.

It generally is not easy, but the effort is no less vital. It is hard to see a prosperous future for most access providers if that is all they do.

Study Finds Public Wi-Fi Assets are Wasting Capacity

XCellAir conducted an analysis of 250 live Wi-Fi access points around its offices in Montreal, Canada and found that 92 percent of access points do not adjust their operating frequency, no matter how badly performance is degraded by interference.

It also found that on average, two channels worth of bandwidth is unused at any given time, despite congestion and interference. Each channel equates to 50 Mbps of idle bandwidth totalling 100 Mbps unused.

The study, conducted in partnership with independent telecoms analyst Real Wireless, shows that poor management of Wi-Fi assets severely limits such assets' usefulness in dense urban environments.

To quantify the impairment, Real Wireless modeled the impact on a capacity-constrained mobile service provider, over a five-year period.

In New York city, for example, the net present contribution of operational savings and new service revenues was estimated to be $374 million over five years. Some of that value came in the form of avoided mobile network upgrades and investments, worth perhaps $71 million.

New services made possible by efficient use of Wi-Fi assets represented $303 million in value. Quality of experience and lower capacity costs presumably could be used to add price-sensitive users, the analysts assumed.

When scaled to the top ten financial centers across the globe, the opportunity for all operators equates to $17.9 billion over five years. Cities considered include New York, London, Tokyo, Singapore, Hong Kong, Shanghai, Paris, Frankfurt, Beijing and Chicago.

Much of the revenue lift comes from the ability to add price-sensitive new customers, as a result of lower investments in core network facilities. That obviously will make more sense for some operators than others.

Still, even if one does not fully agree with the full extent of potential benefits, virtually nobody would contest the general notion that a dense pubic or carrier Wi-Fi network has significant benefits in terms of quality of experience or relieving mobile network congestion.

Telco Fundamental Strategic imperatives Remain, Tactical Focus Changes Over 5 Years

“Telcos are an endangered species; their traditional business model has come undone, and many operators face a downward revenue/earnings/investment spiral,” Forrester Research analysts argued in 2011.

Revenue shrinkage in triple digit billions was predicted by analysts at Telco 2.0, over a span of perhaps a decade, beginning about 2006.

Whether you agree or disagree with the characterization, not much has fundamentally changed, though the specific tactical recommendations might be different.

Now, as then, competition from alternative connectivity providers, IT services firms, and over-the-top providers, all enabled by open regulatory environments, is a fundamental reality.

Some of the 2011 recommendations still make sense. Service providers need to “adjust” cost structures from higher to lower. But where earlier efforts focused on headcount or other relatively obvious operating areas, attention now is turning to methods of revamping core network operations and capital spending.

That is why one hears so much about network functions virtualization or software defined networks. 

Some of the issues are largely resolved, or will soon be solved. The transition from legacy to Internet Protocol environments continues. But few executives spend much time talking about that change, since the path is largely understood and underway.

Finding new, sustainable revenue opportunities remains as crucial now as it was in 2011. But the opportunities are not necessarily the same.

Forrester emphasized “wholesale and cloud computing” as new revenue streams in 2011. Service providers largely already have responded, where possible.

Telcos have moved into video entertainment, while some are investing in various digital enabling platforms and services, ranging from mobile payments to mobile advertising.

The attention now is on the next generation of services, or perhaps next several generations, based on Internet of Things and services not sold directly to end users.

That is why fifth generation networks, and specialied narrowband IoT networks, now loom large.

LTE Now Generally Faster than Wi-Fi

Smartphone users are on average connecting to fourth generation Long Term Evolution  networks at much faster speeds than Wi-Fi, according to Open Signal, a circumstance that might surprise you.

In the past, users connected to Wi-Fi because it provided a faster connection than the mobile network. That might still happen, but, on average, LTE connections now are faster than Wi-Fi.

Open Signal points out that there is “tremendous variance” in Wi-Fi connection quality around the world.

In North America or East Asia, a consumer might see 50 Mbps or better connections on their home or office networks, but then find their internet connection timing out at a local coffee shop.

There’s also a lot of variance in Wi-Fi speeds between countries, with some of the fastest Wi-Fi  speeds in Europe.

Of course, network loading and backhaul availability and cost are key parts of the picture.

Some of the earliest adopters of LTE -- like the U.S., Japan, Sweden and Germany -- are starting to fall behind in terms of data performance. In part, these older networks are suffering from their own success, Open Signal says.

In the U.S., for instance, LTE’s introduction in 2010 resulted in a huge base of LTE subscribers in the country today. Those subscribers are all competing for the same network resources, slowing down average speeds.

In comparison, newer networks in South America and Europe are more lightly loaded. But the U.S. has also failed to keep up with the rest world in both spectrum and technology, Open Signal argues.  

Who Leads U.S. Fixed Network Markets? Some Clearly Say "Cable TV"

Definitions matter. For example, Access Platforms, in an analysis of “overbuilders” in San Antonio, Texas, uses a definition of high speed access provider market I had been unaware of, and illustrates the fundamental nature of the market.

Access Platforms, noting that cable TV service providers have 62 percent high speed access market share in San Antonio, considers AT&T an overbuilder.

My traditional understanding of an overbuilder is that it is a third or ancillary provider of triple play services in a market, in addition to the presumed incumbents, a cable TV operator and the local telco.

Access Platforms defines overbuilder as “Companies (independent telco and municipalities) that build additional systems over existing cable systems in order to provide a competitive service in a market.”

That might apply to virtually any fixed network service--video, Internet access or voice--normally sold by a triple play services provider.

Access Platforms considers all providers other than the cable TV operator as overbuilders, such as Google Fiber, a fixed wireless or perhaps satellite internet access service. Eventually, TV white spaces and other networks also will be added to the competition in some locales.

So here’s the key assumption: where it comes to high speed Internet access, according to Access Platforms, it is the cable TV operator that is the incumbent, and everyone else is a challenger.

The fact that a telco operates in region, and historically has been one of the two major suppliers of Internet access, does not appear to matter.

There is cable, which is the incumbent, and then there is everybody else. Looking at all of the constituent services, for example, satellite has significant share, based on its video services, with about 29 percent market share. Cable has 34 percent, while telcos have 21 percent, while other overbuilders have perhaps 15 percent share.

While I would not use such a definition, the implications are huge. Cable TV is considered the incumbent to beat. Everybody else is an overbuilder.

If you wonder why AT&T or Verizon face huge issues related to their fixed network businesses, that framework explains why. Cable is the new leader.