Asia has 51% of All Mobile Subs, Pacific Basin Up to 66%

If we can speak meaningfully of a region spanning the Pacific Ocean, and therefore including Asia and the Americas, then that "region" includes 66 percent--two thirds--of global mobile subscribers.

That is significant for several reasons, including the fact that global fixed voice lines now number only about 800 million. In other words, there are 7.8 billion carrier voice lines in service, of which mobile represents about 90 percent of all lines.

So knowing the volume of mobile lines very nearly captures the extent of voice line usage in any region, the trend being most pronounced in “developing” regions.

Asia alone represents 51 percent of global mobile subscribers.

source: Ericsson

source: Ericsson

You can Move Down the Stack on Your Own; To Move Up, You Have to Partner

It no longer is unusual for an app provider to become an access provider. Google Fiber provides only one example. Tucows, originally a domain name registrar, has become both a mobile services provider and now a gigabit Internet service provider.

Both Google and Facebook are developing entirely-new access platforms based on unmanned aerial vehicles and, in Google’s case, fleets of balloons. Facebook now leases transponder time to support Internet access operations in sub-Saharan Africa.

Facebook also is testing Wi-Fi services in India.

Virtually every major telco thinks about ways to enhance value by “moving up the stack” and bundling more apps.

That naturally raises questions. Is it easier to move up the stack or down the stack? In other words, is it easier for an app provider to move down the stack, and provide access, or for an access provider to move up the stack into new apps beyond voice and messaging?

Most of us will conclude that it is easier to move down the stack, compared to moving up the stack.

One can think of many reasons why that is so, even if the core competence, either way, is not present, when occupying new adjacencies in the ecosystem.

It is not necessarily the case that “access” is easier to learn than “apps,” though that likely is the case. The simplest explanation is that an app provider moving into access has one major advantage: it is the “customer” for access, and therefore knows precisely why such a move has value.

That also would be true for any app provider getting into the cloud data center or transport business. The move “down the stack” supports core app provider business operations.

Google, for example, even can quantify what “faster access” means for its core business model (at least the present business model). Faster access means more pages can be viewed in any unit of time. That, in turn, creates more ad inventory to sell.

That is a lot easier than figuring out where and how to spend money to move up the stack. The access, transport or data center provider is not the “customer” when moving up the stack. A firm does not necessarily “know” what the customer requires, finds valuable and will pay for, when moving up the stack.

So moving up the stack is more risky. All of that suggests any move up the stack will be less risky when a partnering approach is taken. Not riskless, by any means, but less risky than trying to be right about the end user value proposition, in a major way.

An illustration: service providers created the value of voice and messaging, and were able to build significant  businesses around enterprise need for connectivity. Cable operators were able to create a huge business model around video entertainment choice.

Other entities have been able to create meaningful businesses around enterprise computing (cloud computing and data center operations).

But the app creation function mostly has been separated from infrastructure operations. And it is app providers who must figure out what buyers (consumers) want, and will pay for. In many cases, that includes indirect revenue models, where the actual buyer is an advertiser, not the retail end user.

It all means that service provider app creation typically will require partnering with app providers. App providers, on the other hand, often can simply move into access, transport or data center operations themselves. They are the “customers” for such services.

So there are only three rules for service providers creating important new apps, and moving up the stack. Partner, partner, partner.

Fiber to Home No Longer is the Key Metric: Gigabit Access Is the Issue, and Pessimism is Completely Unwarranted

Vern Fotheringham, V-Satcast executive chairman, asked an interesting question at the Pacific Telecommunications Council’s 2016 annual conference: “what percentage of U.S. homes now are connected to by fiber?” Eventually answering his own question, he said “five percent.”

As with all such figures, context is required. The Fiber to the Home Council estimated in 2015 that 26 million U.S. homes were passed by fiber-to-home connections and could buy service. If there are 134 million U.S. homes, then perhaps 19 percent of U.S. homes are passed by fiber to the home networks and are able to buy service.

As always, though, the issue is not where we are, but where we are going, and there the FTTH statistics do not tell the story. FTTH is one method of providing very high speed Internet access. But it is not the only way.

Cable TV networks able to provide gigabit service would, for many, be a functional substitute for FTTH access.

Also, the issue is the impact of new fiber providers such as Google Fiber, as well as stepped-up gigabit programs by AT&T. The way some of us would frame the issue is the percentage of homes able to buy gigabit service, not the number using a specific access technology.

That paints a different picture. With the commercialization of Data Over Cable Service Interface Specification (DOCSIS 3.1) platforms, cable operators can upgrade Internet access speeds up to 10 gigabits per second by means of a software change to modems and routers.

The DOCSIS 3.1 platform supports speeds up to 10 Gbps, depending on how much bandwidth a cable operator wishes to devote for that purpose.

Comcast, for example, already has announced it will upgrade its entire consumer high speed access base (both customers and passings) to gigabit speeds using DOCSIS 3.1. Comcast originally believed it might do so in 2015 or 2016. It now has said that could happen, nationwide, by 2018.

Make no mistake: that will change the picture dramatically. Comcast has shown it can increase high speed access speeds at Moore's Law rates. Comcast passes 54 million U.S. homes. So once the gigabit upgrade is completed, Comcast alone will represent gigabit coverage of 40 percent of U.S. homes.

Cox's consumer gigabit service will be available in all of its markets by the end of 2016. Cox passes 9.2 million U.S. homes. That adds another seven percent.

So Comcast and Cox alone will pass 47 percent of U.S. homes, with unduplicated gigabit coverage.

Assume Charter’s acquisition of Time Warner is approved by regulators. Time Warner passes 30 million homes. That is 22 percent of homes. So Comcast, Time Warner and Cox eventually will provide gigabit access to an unduplicated 69 percent of U.S. homes.

Telcos are moving as well.

Separately, CenturyLink is deploying gigabit access as well, though those locations will overlap with some of the Comcast and other cable operator homes.

AT&T is expanding its GigaPower service to parts of 38 more cities. It's now in 56 metro markets.

AT&T's GigaPower service now reaches one million addresses, with plans to double that in 2016 and ultimately reach 14 million homes and businesses, Goldman Sachs said in a research report.

MoffettNathanson, for its part, says AT&T has committed to expanding its fiber-optic service to 5 million "customer locations" by the end of 2017, 8.3 million by year-end 2018 and 12.5 million through July 24, 2019, as part of conditions tied to the approval of its DirecTV acquisition. Based on regulatory definitions, MoffettNathanson contends the 14 million "locations" will translate to 9.9 million "cable equivalent" homes and businesses, or 7.3 percent of U.S. households.

Google Fiber is on a path to serve Chicago and Los Angeles, as well as the 4.3 million or so homes it already could potentially reach with its already-announced deployments of gigabit service.

The point is that the present and coming competitive market business model for high speed access will change dramatically over the next several years. Where we are does not matter. Where we are going matters.

Fiber to the home availability is not the metric you want to watch. Watch for gigabit access to become the dominant and normal advertised speed across most locations cable can reach. And keep in mind, cable reaches 98 percent of all U.S. homes.

Soon, cable alone will potentially reach 70 percent of U.S. homes, with Google Fiber and telcos offering a second provider option across some of that cable footprint.

Fiber to the home passings do not tell the real story.

Infrastructure as a Service Grows 51%, Private and Cloud Computing 45%

During the 12-month period ending September 2015, public cloud services revenue grew to $110 billion, up 28 percent on an annualized basis, according to Synergy Research.

Public infrastructure as a service or platform as a service(IaaS/PaaS) had the highest growth rate at 51 percent, followed by private and hybrid cloud infrastructure services at 45 percent.

Amazon Sees 30-Minute Delivery by Unmanned Aerial Vehicles

At least for packages up to five pounds, Amazon believes it can commercially deliver merchandise by unmanned aerial vehicles. 

Technology Firm Business Models So Varied We Sometimes Have Trouble Identifying What a "Tech" Firm Is

An example of the diversity of business models, as well as the shift in technology firm business models, is clear from any look at advertising revenues. For the first time, ever, leading technology firms have advertising-supported or transaction-supported business models.

The other key--and longstanding--observation is the “software is eating the world” adage having serious relevance: more of the value of technology now comes from software, compared to hardware.

Looking only at mobile display advertising, Facebook had in 2015 generated $5 billion in revenue, Google and Twitter nearly $2 billion, with total U.S. mobile-only advertising generating about $19 billion in 2015.

Amazon and Alibaba, meanwhile, show that a big technology company can be built on transaction revenues. Granted, some might not view Amazon or Alibaba as technology firms. But that might be the point: how technology firms create business models is much more varied than ever before.

In that sense, Apple is among the more-traditional firms, with revenue built on device sales.

How Might Ecosystems Change, 5G and Beyond?

There is a very good reason fifth generation mobile networks get so much attention: 5G will be a big business, across a wide ecosystem, and likely will create the foundation for business models now yet in existence.

And, as has been the case in the computing industry, each successive generation of mobile networks creates the possibility of major shifts in industry leadership. In other words, the leader in one era are not necessarily the leaders in the next, or subsequent generations.

One simple example: many firms that lead the fixed network infrastructure market in the analog era--either in the cable TV or telecom supplier markets--no longer exist.

Nortel is gone. Alcatel and Lucent are gone. Scientific-Atlanta and General Instrument are gone. Their assets live on, but not the companies.

The other significant development is that, in the mobile and IP era, over the top app providers and mobile device suppliers are major new segments of the value chain.

OTT did not exist in the analog era, and the device suppliers were TV and fixed network telephone suppliers. Neither TV nor fixed network phone suppliers have much leverage in the new era.

In the core “access networks” portion of the ecosystem, one is not crazy to consider major potential shifts as well. The ultimate impact of new access providers and technologies remains an open question. But potential for major disruption exists.

source: Reed Hundt

source: Reed Hundt