One Answer for Question: "Will Millennials Behave Differently When They Have Children?"

One big uncertainty about video consumption preferences among younger viewers is whether those preferences would change--and more resemble habits of older viewing cohorts--as younger viewers got older and established families.

At least one study suggests a bit of good news but much bad news. The good news is that Millennials who have children do indeed increase their consumption of linear video.

The bad news is that even Millennials with children do not watch linear video at levels of non-Millennial viewers. In face, Millennials with children watch a bit more than half the linear TV that non-Millennial viewers do.

Bad news, going forward, for linear TV.

source: L.E.K.

One Answer for Question: "Will Millennials Behave Differently When They Have Children?"

One big uncertainty about video consumption preferences among younger viewers is whether those preferences would change--and more resemble habits of older viewing cohorts--as younger viewers got older and established families.

At least one study suggests a bit of good news but much bad news. The good news is that Millennials who have children do indeed increase their consumption of linear video.

The bad news is that even Millennials with children do not watch linear video at levels of non-Millennial viewers. In face, Millennials with children watch a bit more than half the linear TV that non-Millennial viewers do.

Bad news, going forward, for linear TV.

source: L.E.K.

Fixed Network Business is in "Terminal Decline," EIU Says

Terminal decline is the phrase the Economist Intelligence Unit uses to describe the fixed network telecom business. Harsh words, perhaps, but instructive if one honestly has to assess the direction of public policy about fixed telecom networks.

The most fundamental observation: it does not make sense to add more regulation for an industry “in terminal decline.” If an industry really is dying, regulation that further distresses the business model is not needed, and ultimately does not matter.

Competitors often continue to argue that incumbent fixed network suppliers must be heavily regulated, because they have such overwhelming market power. But it is hard to square that position with the actual trends in the business.

If there are exceptions to the broad theme, it is the Internet access business, as well as mobility.

As the rollout of 3G and 4G connections proceeds rapidly, widening access to mobile broadband in developing markets, in 2016 Internet penetration is forecast to surpass 50 users per 100 people for the first time, the EIU says.

The other notable trend in mobility, aside from Internet access, is the role of content services.  Generally, “operators are likely to be less focused on acquiring new customers in 2016 than in coming up with plans to deliver more sophisticated and enticing content,” EIU argues.

The main point, though, is the prognosis: “terminal decline.” All strategy in the fixed network business has to be based around that one main trend.

source: Economist Intelligence Unit

Cost Structure Really Does Matter

British Internet service provider Gigaclear has gotten a €25 million (£19 million, $27.3 million) loan from the European Investment Bank, a move it reckons will help boost its rural broadband network for perhaps 40,000 homes.

Rough math: including overhead and debt service, that implies the cost of rural U.K. fiber to the home of no more than $682 per location. That appears breathtakingly low, and far less than BT costs to deploy fiber to the home.

With estimated average cost in excess of £2000, with a variable distance charge, an abandoned plan for fiber to home might imply BT transport and drop minimum costs of $2880, before the applied variable distance cost.

At an “average” distance of 1,000 meters to 1499 meters, that adds an extra £2500, for a total cost of £4880, or about $7,028 per location. Costs such as those explain why BT abandoned that particular plan.

source: BT

But those cost differences also explain why, in some cases, ISP with dramatically-lower embedded costs can build gigabit fiber facilities when a tier-one telco cannot. Cost structure matters.

Business Impact of E-SIMs: Friend or Foe, and Where?

Dynamic embedded subscriber information modules--something Apple introduced in 2014 for its iPad devices--are among the possible enhancers of competition in mobile markets.

The Apple SIM made it possible for iPad owners in the United States and United Kingdom to pick and choose a mobile connectivity provider, directly from the device (assuming multiple providers were willing to support the feature).

As Internet of Things devices and applications proliferate, the same basic concept--allowing an programmable electronic SIM to select from a number of potential mobile connections--could emerge on a wider scale, argue McKinsey and Company consultants Markus Meukel, Markus Schwarz, and Matthias Winter.

As you might imagine, mobile service providers were not keen on enabling that level of competition. But there is new thinking about IoT requirements, especially the ability to remotely activate IoT devices. And that requires use of an e-SIM.

So the difference in industry reception between the Apple SIM and e-SIMs is the role in supporting a big new revenue stream and business model. Where Apple SIM was a threat to existing business models, e-SIMs are a support for new and different business models.

The GSMA expects to finalize a technical architecture 2016.

In principle, widespread e-SIM capabilities could have marketing implications for wearables. Targeting new clients through promotional activities may be as easy as having them sign up by scanning the barcode of a print advertisement and activating the service immediately.

On the other hand, the ease of use and ease of operator switching has the potential to weaken the network operator’s position in the mobile value chain.

Customer touchpoints also could change. The e-SIM eliminates the need for customers to go to a store and acquire a SIM card when signing up for service. That might negatively affect the amount of upselling.

Churn and loyalty also could be affected, since customer may be able to switch operators and offers more easily. Churn could increase.

Prepaid versus contract markets. E-SIM’s impact may be greater in markets with more prepaid customers, as well.

There could be changes at the wholesale level. As Google’s Fi essentially has pioneered, wholesale service providers might buy capacity dynamically from multiple capacity and access providers. That could happen on price or quality or both dimensions.

High prices for global roaming might be just as important, allowing travelers to locally provision service when traveling internationally.

You can make your own estimates of possible advantages and disadvantages, for core mobile services sold to people and IoT devices.

Gigabit Internet Connections to Grow by 10X in 2016

Deloitte also predicts an order of magnitude increase in gigabit Internet, 70 percent of which will come from residential connections.

The number of gigabit Internet access connections will surge to 10 million by the end of 2016. 

By 2020, some 600 million subscribers may be on networks that offer a gigabit tariff, representing the majority of connected homes in the world.

That doesn't necessarily mean all 600 million will buy gigabit connedtions; only that they could.

OTT Could Claim 39% of U.S. Telecom Ecosystem Revenue by 2020; 21% in China; 12% in India

Over the top applications are going to keep taking a greater share of telecom ecosystem revenue, between now and 2020. That will be true in the United States, China and India, for example.

In the U.S. market, for example, OTT revenue might hit 39 percent of total ecosystem revenues by 2020, with telecom services representing 40 percent of ecosystem revenues, while device revenues (sold through all channels) account for 22 percent of ecosystem revenues.

In China, OTT revenues might represent 21 percent of ecosystem revenues by 2017, while service provider recurring revenues represent 60 percent of ecosystem revenues.

In India, by 2020, OTT will claim 12 percent of ecosystem revenues, while service provider revenues might contribute 66 percent of ecosystem revenues.

source: S. Saravanan

source: S. Saravanan

source: S. Saravanan