Satellite Market Shows Classic Signs of Competitor Behavior in Deregulating Industries

Some trends are “evergreen” in the communications business, or have been so since the advent of deregulation, new technology and competition starting in the 1980s globally.

Among the recurring themes is pricing instability--or pricing wars--in virtually every segment of the business, driven by new competitors with disruptive price offers based on use of new technology.

So it is not surprising that U.K.-based satellite services provider Talia warns of pricing wars in many regional satellite markets.

“It is becoming a price war among satellite operators,” Alan Afrasiab, Talia CEO told Via Satellite. “We cannot make decisions to buy additional capacity or even renew capacity because we don’t know when the bottom price will be reached.”

“At the moment it is unstable, and it’s bad for everybody,” he said. “I think big satellite operators now realize the market needs lower prices, especially on Ku-band, simply because of the Ka-band prices and also some of the smaller operators that have been quite aggressive.”

High throughput satellites and Ka-band are two big influencers of price today, he said. Afrasiab said HTS is pushing prices down, and putting pressure on traditional Ku-band pricing. Anybody familiar with .

Shifts in demand towards the terrestrial networks also are happening, leading to a situation where “the satellite industry overall has less demand.”

None of those laments are unusual. One of the hallmarks of any market that formerly was a monopoly and then gradually is deregulated is the emergence of new competition, notably from outside the traditional industry boundaries.

One example might be the shift of capacity demand away from satellite to to terrestrial networks. New technology also often underpins new competition. So we see the growing level of competition from HTS and Ka-band competitors.

Virtually always, some new competitors attack using the “same product, lower price” marketing platform, and that also is a trend Talia notes. In response, Talia is moving to create a hybrid fixed and satellite business, an example of another common trend in deregulating markets, namely the emergence of new product niches and roles in a relatively undifferentiated market for services.

Comcast Begins Move into Mobile Services

The waiting is almost over: Comcast Corp. is planning to launch its own mobile service. As some of us recall, the deal called for an initial right to resell Verizon service, but later the ability to act as a mobile virtual network operator.

That suggests the first steps will involve Comcast bundling mobile service (still branded as “Verizon” service) with triple-play bundles. After a period of time, Comcast would then create an MVNO business, allowing Comcast to brand the service.

A market trial of a Comcast wireless service could begin six months after a notification to Verizon, which apparently has been made.

Comcast has the right to use Verizon as the underlying network provider as part of a sale of spectrum to Verizon in 2012. As part of that agreement, a consortium of cable companies led by Comcast sold nationwide spectrum licenses to Verizon for $3.6 billion and secured the rights to resell its wireless services.

Commercial service could start late 2016, some believe.

Verizon Chief Financial Officer Fran Shammo has said unnamed cable companies have informed the carrier they now want to execute the reseller part of the agreement.

“Obviously, the industry is moving,” Shammo said. “Cable is going to do what they’re going to do, and we’re going to do what we’re going to do.”

Comcast eventually would leverage its network of homespots and public Wi-Fi hotspots, connecting customers to such Wi-Fi hotspots whenever possible to reduce payments to Verizon for use of the mobile data network. Comcast alone has deployed perhaps 10 million such homespots.

It isn’t yet clear whether Comcast would want to start out that way, however, given the learning curve of becoming first a mobile reseller and then later a branded service provider.

AT&T, Verizon Video Strategies Fit Their Revenue Sources

Differentiating business strategies are among the key features of a global telecom business since the wave of privatization and deregulation starting in the 1980s. Where monopoly telecom service providers once looked remarkably alike, in terms of customer bases, products and strategies, they now are beginning to diverge.

In the U.S. market, some now say the clearest example of differentiation between Verizon Communications and AT&T lies in their approach to video entertainment services. Where AT&T bought DirecTV, increasing its exposure to linear TV distribution, Verizon purchased AOL and launched a mobile video service (Go90).

Actually, that divergence arguably is based on other earlier divergences. Verizon, with a smaller fixed network footprint, has become a mobile service provider with about 15 percent of revenues generated by all fixed network operations.

AT&T remains far more “balanced,” earning 44 percent of total revenue from fixed services. Given that profile, it makes sense for Verizon to focus on mobile video, and for AT&T to focus on linear video.

While DirecTV, as a satellite-delivered service, is not strictly “landline,” nor is it “mobile” service. Functionally, however, DirecTV will resemble a “fixed” service, sold to fixed locations.

Both company strategies, though, focus on the ability to sell an entertainment video services that matches its network assets (Verizon earns 85 percent of revenue from its mobile platform; AT&T earns 44 percent of revenue from fixed services).

Bharti Airtel, Idea Cellular Could Lose 5% of Profits from New Call Drop Rules

Bharti Airtel and Idea Cellular could lose up to five percent of their pre-tax profits as a result of new Telecom Regulatory Authority of India (TRAI) rules about compensation to consumers for dropped mobile calls.

Under the new rules announced by TRA,, mobile users will get a compensation of Re 1 for every dropped call, starting on  January 1, 2016.

The thinking is that the penalties will be larger than actual earnings on many calls. Whether that is literally the case, or not, some of us might argue that billing costs will be a material factor.

In other words, the time and expense of verifying whether a specific refund is to be applied, and then applying the credit, will be larger than the profit margin on any specific call. Nor is it entirely clear that all “call drops” can be accurately measured.

Part of the difficulty is determining when a “dropped call” has occurred. That is a judgment call, to some extent.

The reason is the definition used by mobile operators is very different from what a customer understands as a dropped call, said Kartik Raja, founder and managing director of Phimetrics Technologies.

“When I can’t hear you and the line just goes mute, but my phone shows that the call is still on, from a network point of view it is not a call drop,” he said. “For the network, only when they receive a message saying the call is dropped, it is counted as a call drop.”

Phimetrics conducted a study of telecom voice services, which began by defining a dropped call from a customer’s point of view rather than use a telecom company’s definition.

Using that method–when two users can’t hear each other for more than 10 seconds–the dropped call rates of two percent and three percent looked more like five percent and 15 percent, respectively.

"We consider this regulation as hard to implement in the current form and expect telcos to contest this ruling,” said Bank of America Merrill Lynch.

Dish Network Will Not Allow its Mobile Spectrum Assets to Fall to "Zero"

The only certainty, where it comes to what Dish Network might do with its mobile spectrum assets, is that the firm will never allow the value of those assets to fall to zero. Beyond that, almost any monetiztion strategy is conceivable.

Despite the difficulties, some analysts think Dish Network might finally move to create a mobile business by first striking a long-term spectrum leasing deal with Verizon before the start of the 600-MHz incentive auctions planned for the first quarter or second quarter of 2016.

In general, any such deal would have Verizon trading long-term spectrum rights obtained from Dish Network for turned-up mobile capacity Dish Network could use to launch its mobile service.

Another scenario is Dish creating a spectrum leasing company that supplies different spectrum assets to different customers, including Verizon, AT&T and Sprint.

Though one cannot completely discount Dish doing a deal of some sort with either T-Mobile US or Sprint, neither of those companies could easily consider any major cash deals, and neither company really needs more spectrum right now.

In principle, a spectrum deal, or creation of a spectrum leasing company, would not necessarily prevent Dish from inking other deals with other carriers. Dish might well require retail store support, for example.

Perhaps Dish’s business plan would combine both mobile and fixed access. About the only scenario not conceivable is that Dish Network would allow the value of its spectrum holdings to fall to zero.

And though any such deals are logically discrete from the upcoming 600-MHz incentive auction, any such deals would affect contestant interest in that auction.

In addition to the decision by Sprint to sit out the auctions entirely, removing a major bidder for the reserve spectrum, now Verizon is hinting that it sees less value in the 600-MHz bands, because it already relies on 700-MHz spectrum.

And Verizon’s thinking would definitely shape its need and willingness to bid in the 600-MHz auctions.

Verizon has said it does plan to bid for 600-MHz spectrum, but Verizon also seems to be signaling that it has other options, and might not bid as aggressively as some had thought likely.

To be sure, such statements might, aside from other reasons, be positioning tactics, designed in part to dampen expectations that Verizon would be forced to bid “whatever it took” to acquire spectrum in the 600-MHz auction.

Perhaps Verizon also is signaling that it is less interested in 600-MHz spectrum than some had hoped Verizon would be, perhaps tempering expectations of license sellers and containing prices.

On the other hand, such statements also signal that a potential deal with Dish Network for wholesale access to its spectrum at 2-GHz is perhaps more interesting. That might also dampen price expectations for 600-MHz spectrum.

"Higher frequency spectrum is capacity and that's really what we need at this point in time," said Fran Shammo, Verizon CFO.

But it also would be necessary for Verizon to conclude any such deals before the 600-MHz auctions start, to comply with anti-collusion rules.

Most mobile spectrum is valued on either its coverage or its capacity dimensions, the basic trade off being that lower-frequency spectrum is better for coverage, but less valuable for capacity, while higher-frequency spectrum is better for capacity than coverage.

Verizon arguably has a reasonable amount of “coverage” spectrum, but not so much “capacity” spectrum.

source: Daily Wireless

source: Barrons

The Force Awakens

Because you need to relax, sometimes. 

66% Mobile Broadband Adoption in Middle East, North Africa by 2020

Mobile broadband networks will support more than 66 percent of all mobile connections across the Arab States of the Middle East and North Africa by 2020, according to a new GSMA study.

The study predicts there will be 350 million 3G or 4G mobile broadband connections in the Arab States by 2020, accounting for 69 per cent of the region’s total connections by 2020, up from just 34 per cent at the end of 2014.

The number of smartphones connections in the region is forecast to almost triple between 2014 and 2020, reaching 327 million.