Will VoLTE Revenue Be Net "Zero"?

What are the revenue implications for service providers if two billion VoLTE (Voice over LTE) connections are in service by 2020? One possible explanation is that VoLTE will represent $100 billion in annual service revenue.

But that is hard to parse, since VoLTE in one genuine sense only represents the ability to sell mobile voice service over a fourth generation network, with native support by the 4G network. For the most part, VoLTE therefore only represents voice revenue that already had been provided using 2G or 3G platforms.

In other words, net revenue might not be much more than "zero."

“Direct revenues from VoLTE will be limited at first,” argue analysts at Juniper Research. Mobile operators initially will focus on experience and quality of service, rather than monetization.

You might say the same is true for Wi-Fi calling (VoWi-Fi). “Operators are launching the service to add value for the customers with little investment, where VoLTE is focused on operator network efficiency,” Juniper Research said.

Whether high definition voice provides a better revenue opportunity might also be questionable. The problem is that HD voice might wind up being mostly a way to compete with over the top voice apps.

If so, then is is unlikely a premium of any sort can be charged for the HD quality.

Facebook Messenger, for example, recently launched free high definition VoIP calling over mobile and Wi-Fi networks. It is tough to compete with “free,” so carrier HD voice is unlikely to represent a chance to hike prices.

In most cases, VoLTE, VoWi-Fi and HD voice are likely to be features, rather than revenue drivers.

Cloud Traffic Drives 83% of Data Center Traffic in 2019

Some trends in communications--such as the relationship between computing and communications-- are drop-dead simple. Information technology and communications have been increasingly intertwined for decades, as computing architectures have grown more distributed.

Globally, of every dollar spent on enterprise information technology spending technology, 43 cents are expended for communications services.

That also is true of consumer computing. By 2019, 55 percent of the residential Internet population will use personal cloud storage (up from 42 percent in 2014), in addition to most apps also reliant on cloud computing, according to Cisco.

To state the obvious but important fact, cloud computing requires communications. As cloud computing grows, so does demand for communications.

Annual global data center IP traffic is projected to reach 10.4 ZB by the end of 2019, up from 3.4 ZB per year in 2014. But that is not the key figure. 

Cloud traffic is key, since cloud traffic necessarily requires outside the building communications. Data center traffic often moves within a building, server to server.

Annual global cloud traffic is projected to quadruple, reaching 8.6 ZB (719 EB per month) by the end of 2019, up from 2.1 ZB per year (176 EB per month) in 2014, and is expected to account for more than 83 percent of total data center traffic by 2019.

Overall data center workloads will more than double from 2014 to 2019. Cloud workloads will more than triple over the same period, Cisco predicts.

Cloud traffic, a subset of data center traffic, is generated by cloud services accessible through the Internet from scalable, virtualized cloud data centers.

Total data center traffic includes all traffic traversing within and between data centers as well as to end users.

Some suggestions of consumer services reliance can be gleaned from the prediction that software as a service (SaaS) will be the most popular and adopted service model for public and private cloud workloads, respectively, by 2019. Those workloads are the other side of a consumer’s use of mobile and Internet applications.

By 2019, 59 percent of the total cloud workloads will be Software-as-a-Service (SaaS) workloads, up from 45 percent in 2014.

As an example, the Cisco forecast estimates that by 2017, global smartphone traffic (201 EB per year) will exceed the amount of data stored (179 EB per year) on those devices – necessitating the need for greater storage capabilities using the cloud.

Worldwide IT Spending Forecast by Sector (Billions of U.S. Dollars)
	2014	2014	2015	2015
	Spending	Growth (%)	Spending	Growth (%)
Devices	693	2.4	654	-5.7
Data Center Systems	142	1.8	136	-3.8
Enterprise Software	314	5.7	310	-1.2
IT Services	955	1.9	914	-4.3
Communications Services	1,607	0.2	1,492	-7.2
Overall IT	3,711	1.6	3,507	-5.5
Source: Gartner (June 2015)

Orange Business Services Intros Faster Business Cloud Access

A new global business-grade Internet service from Orange Business Services--Business VPN Internet Accelerate--provides access to cloud applications up to ten times faster (based on a test of the Paris-to-Singapore route).

Based on Akamai Cloud Networking, the business-grade Internet service is built on the Akamai Intelligent Platform, which includes nearly 200,000 servers across more than 110 countries and advanced optimization technologies.

Sometimes, such content delivery networks improve response time because they cache content closer to a user’s location.

source: wpmudev

Project Loon for India?

The Indian government is considering a test of Google’s Project Loon. The pilot project might also involve use of BSNL 2.6 Ghz spectrum for downlink.

Three leading mobile service providers in Indonesia, plus authorities in Sri Lanka, also are testing Project Loon as a backhaul platform.

Can mobile service providers across South Asia, Southeast Asia and Oceania get Long Term Evolution coverage at an order of magnitude lower costs by partnering with Google’s Project Loon?

Project Loon supporters believe that is possible.

In tests, Project Loon has partnered with mobile service providers with in-place LTE towers to provide backhaul to Project Loon balloons, along the 40th parallel.

At the 30th parallel, winds are easterly. Near the equator the winds are westerly. Presumably the same techniques would work at other latitudes.

By definition, some LTE tower infrastructure is required, as those towers provide uplink to the balloons.

But the balloons then provide LTE coverage directly to LTE-capable handsets. At this point, it likely makes sense for mobile service providers to source wholesale retail capacity on the balloons, which essentially substitute for fixed mobile cell sites.

The mobile service provider networks and towers, on the other hand, will provide Project Loon with backhaul.

Google says it can now deliver data at 5 Mbps to mobile phones, or 22 Mbps to fixed antennas.

Unlicensed Spectrum Sustainability Model Still Will Be an Issue in a "Shared" Environment

Use of license-exempt spectrum always has posed--and continues to represent--business model challenges. Initially, Wi-Fi mostly had an indirect business model in the consumer segment of the business.

Access to public Wi-Fi hotspots was an amenity gained from using a specific high speed access provider.

These days, public Wi-Fi plays a role on the capital investment side of the infrastructure business. Mobile service providers offload half or more of their customers usage from the core networks, slowing the rate at which core network upgrades are required.

In a coming iteration, public Wi-Fi will play a role supporting upstart mobile service providers.

Some firms have created direct revenue models by using public and amenity Wi-Fi to support enterprise and business customers.

But most services using unlicensed spectrum tend to face key business model challenges. Shared access to 3.5-GHz spectrum in the U.S market will not be exempt.

As envisioned, a formal tripartite model would be applied. Licensees would continue to be protected for the purposes the spectrum originally was intended to support.

But where surplus exists, commercial users would be allowed to have subsidiary rights to use spectrum, and likely would pay for the privilege. Where even the primary and secondary users are accommodated, opportunistic access would be allowed (on the model of Wi-Fi spectrum use, with license-exempt access, but without guarantees of quality or availability).

One might argue there is no fundamental business model issue with either primary licensed access or secondary usage. Primary licensees already have a sustainable model of some sort.

Commercial users would have to create a sustainable model. But some potential users, including cable TV companies, mobile service providers or possibly some app providers, have existing models that benefit--indirectly or indirectly--to an existing revenue model.

The traditional issue has been the sustainability of business models based strictly on opportunistic access, though. As anybody familiar with the fixed wireless business understands, lenders have been cautious about any business models founded on use of license-exempt spectrum, because there is a not a defensible “moat.”

In other words, there is no enforceable scarcity that keeps competitors out. That does not mean there are no “moats.” Geography sometimes creates potential barriers to entry. Large sports stadiums and airliners provide examples, says Armand Musey, Summit Ridge Group founder.

The other obvious potential model is a wholesale infrastructure model, which U.S. cable TV companies have suggested is a possibility for them, at least as a business model for their access facilities, which might become an attractive backhaul platform for small cell deployments, for example.

The point is that shared spectrum, as such, does not pose major unknown issues, as far as business model, for some commercial entities, especially when spectrum is used as on sub-licensed basis.

On the other hand, some traditional issues faced by small wireless Internet service providers and amenity Wi-Fi providers will remain, when opportunistic access is the platform.

Some things do seem to change. 

India Enterprise Communications Spending $28.3 Billion in 2016

Communication services will continue to account for the largest share of information technology spending in India and will account for 39.2 percent of revenue in 2016, or about $28.3 billion, according to analysts at Gartner.

Communications arguably represents a smaller percentage of total enterprise IT spending in India, compared to many other countries. Globally, communications represents about 43 percent of enterprise IT spending.

That factoid illustrates the intimate relationship between information technology and communications services.

Communications revenue will grow about 2.1 percent in 2016, Gartner also predicts.

Total India IT spending is forecast to reach $72.3 billion in 2016, a 7.2 percent increase from 2015 levels.

“India will continue to be the fastest growing IT market for the second year in succession and will continue growing to total $87.67 billion by the end of 2019,” said Aman Munglani, research director at Gartner. “India is currently the third largest IT market in Asia/Pacific, and by 2019 India will become the second-largest IT market within the Asia/Pacific region, following China.”

Devices, which include mobile phones, PC’s and tablets, will account for almost 33 percent of the overall IT spend in India, and the devices  segment will grow 9.4 percent in 2016.

Mobile phones will continue to be the single largest technology sub segment in India and the third fastest-growing through 2019.

“Data center systems will grow 3.9 percent in 2016, with most of this growth coming from enterprise network equipment and servers that will grow at 5.9 percent and 5.3 percent, respectively.

IT services, which accounts for 18.1 percent of overall IT spend in India, will be the fastest growing segment in India in 2016 with 13.8 percent growth year on year. Within these segments, business IT services will grow 15.2 percent over 2015 figures,” said Munglani.

Software, which accounts for nearly seven percent of IT revenue in India, will grow 12.7 percent as a segment, but within this segment, enterprise application software will be the fastest growing sub segment in 2016, with revenue forecast to grow 16.2 percent over 2015.

Internet Basics to Test Demand for Village Wi-Fi

Facebook’s Internet Basics initiative now plans to test demand for Wi-Fi in 100 Indian villages. As always, sustainability is an issue.

Initially, Internet Basics will help create service in 25 villages, buying bandwidth from BSNL for a minimum period of three years, allowing time to test the extent of demand for a “for-fee” service.

Internet Basics has partnered with an Indian rural Internet access provider, AirJaldi, to manage the operation of the “Express Wi-Fi” service.

As currently configured, Express Wi-Fi costs 10 rupees, or about 15 cents, for one day’s access to 100 megabytes of data. For $3, users can buy use of 20 gigabytes of data, which can be used over the course of a month.

There are, according to Professor Rekha Jain, of the Indian Institute of Management, 640,000 villages in India, containing 180 million houiseholds.

Those households hve monthly household income of US$230, with US$24 a month in per person spending.

So part of the challenge is convincing those consumers they should spend money buying Internet access. By way of comparison, the typical Indian mobile account repersents a bit less than US$2 a month in spending.

The government of India has said it will create facilities offering public Wi-Fi in 2,500 cities and towns across the country over three years, with the network built and operated by state-owned Bharat Sanchar Nigam Ltd (BSNL).

Use of Wi-Fi as an Internet access platform in India is growing, even if that might seem a difficult proposition in country with fixed network facilities. BSNL is among those who now are deploying public hotspot networks.

The city of Delhi also separately is working on a municipal Wi-Fi plan of its own, that might use a freemium business model.

For its part, Bharti Airtel Limited (Airtel) announced that Uber riders across India will be able to pay for their trips using Airtel Money, the firm’s mobile wallet service. As part of that plan, Uber vehicles will be outfitted with Airtel 4G connections, offering free Wi-Fi inside Uber vehicles.

The government of Bihar, meanwhile, plans to offer free Wi-Fi at all colleges within the state.