Global Startup Competition Offers Funding for 18 Winners

Early stage startups are encouraged to apply now for a chance to get funding from the newly formed Global Innovator Fund, which is sponsoring a competition that will award 18 winners a share in $1 million in funding from the fund’s limited partners including Cheetah Mobile and Sequoia Capital.

All startups accepted into G-Startup Worldwide receive the opportunity to pitch their company for funding.

Each local G-Startup victor will receive a $50,000 investment prize, while second place will receive $20,000.

The nine local G-Startup winners will pitch one final time at GMIC Silicon Valley, with the overall champion receiving an added $250,000 and the runner-up receiving an added $120,000.

Additionally, each local winner receives a free trip to the finals at GMIC Silicon Valley, to be held September 28-30, 2016.

Applications are now open for:

• Tel Aviv (March 22, 2016; http://telaviv.thegmic.com/) and
• Beijing (April 28-30, 2016; http://beijing.thegmic.com/)

The Global Mobile Internet Conference (GMIC), will host a G-Startup competition at all nine GMIC 2016 locations, including additional stops in:

• Tokyo (July 15, 2016)
• Jakarta (August 9, 2016)
• São Paulo (August 24, 2016)
• Bangalore (November 16-17, 2016)
• Taipei (October 21-22, 2016)
• Silicon Valley (September 28-30, 2016)

Past judges for GMIC competitions include Lei Jun, CEO and Founder at Xiaomi; Dave McClure, Managing Director at 500 Startups;James Shen, Managing Director at Qualcomm Ventures; and Tim Chang, Managing Director at Mayfield Fund.

Startup alumni include App Annie, the go-to place for understanding app analytics, and Didi Kuaidi, a skyrocketing ride-sharing service that hosted over a billion passengers in 2015 alone.

GWC has existing investments in startups around the world, focused in China, India, and the United States.

G-Startup Worldwide intends to become the world's most influential global startup competition, with over 100,000 expected attendees for 2016 GMIC events, an expected 1,500+ startup submissions, and 700+ mobile executives within the G-Network portfolio.

Startups interested in competing are recommended to have raised a seed round not exceeding $1.5 million and have produced a minimum viable product with initial signs of traction in its local market.

Submissions from mobile, IoT, wearables, virtual reality (VR), drones, robotics, education, health, cloud, social, and commerce are welcome, with preference given to startups that show evidence of making a profoundly positive impact on the world at large.

GWC was founded in 2008 with the vision to be the world's most influential mobile innovation platform. It includes the G-Network, a member network with over 700 CEO industry members; the Global Mobile Internet Conference (GMIC) event series; GHome, a China-US innovation incubator; and RobotX, a leading  AI and Robotics innovation platform.

GMIC, the Global Mobile Internet Conference, hosts mobile executives, entrepreneurs, developers, and investors from around the globe and across platforms to build partnerships, to learn from industry thought leaders, to better understand mobile technology trends, and to shed light on how mobile is positively changing the world.

U.S. Internet Progress: Lies, Damned Lies and Statistics

The latest Federal Communications Commission report on the status of Internet access does not vary much in one respect from earlier reports: people in rural areas tend to be underserved or unserved.

Beyond that, one has to interpret the results, as the report paradoxically suggests Internet access is getting worse, when in reality it is getting better.

Specifically the FCC report suggests the nation is going backwards, in terms of capability, when in fact capacity has been growing at nearly Moore's Law rates. The report, as always, is right to point out gaps between urban and rural availability and performance.

But it is completely wrong about the trend.

Where in 2012 “100 percent” of urban consumers had “fixed advanced telecommunications capability,” that dropped to 57 percent in 2013 and then to 54 percent in 2014, the report states.

Cable TV operators, who have done the most to improve Internet access speeds, for the most people, have increased speeds  at nearly Moore’s Law rates--doubling nearly every 18 months--for years.  

And now we have Google Fiber, plus gigabit investments by third party providers and telcos including AT&T and CenturyLink.

In fact, over the last year, U.S. Internet access speeds grew 105 percent, ironically using figures the FCC itself provides.

“Between September 2013 and September 2014, we observe a 105 percent increase in the maximum advertised download speeds among the most popular service tiers across participating ISPs weighted by the number of participants using a given ISP,” the FCC said.  

“We find that, over the course of our reports, the average annual increase in actual download speeds by technology has been 28.2 percent for DSL, 61.2 percent for cable, and 19.2 percent for fiber,” the agency said.

The point is that the most-recent FCC broadband progress report has to be heavily interpolated, even as referenced against other recent FCC reports on the subject.

source: FCC

source: FCC

To be sure, updating definitions is not an unreasonable step, over time. Since end user requirements change over time, while supplier capabilities likewise increase, it does make sense to use reasonable “current market” tests. The problem is that comparisons over time then become difficult.

“What” one measures matters. Measuring “fiber to the home” (the means for delivering) instead of capacity leads to distortions, for example. Those sorts of distortions will grow over time as new platforms become widespread, in addition to making comparisons over time less useful.

To be sure, the FCC report points out the gap between urban and rural service, which is real. For an agency whose mission includes universal service, that makes sense.

On the other hand, because the definitions keep getting changed, the sense of progress is blunted.

On the other hand, even using the new 25-Mbps definition, not the older 4 Mbps definition, over the past two years alone, the number of people who have “no fixed advanced telecommunications” service has been cut in half, while the percentage of people living in urban areas without that same level of access likewise has been cut in half.

The report also suggests 10 percent of all residents have “no access.” That is a “platform specific” approach, and will come as news to satellite broadband providers, for whom that group is the primary customer target.

Eventually there will be some other new wrinkles that could skew the results. Mobile Internet access has become more important, and eventually will have to be accounted for, as it now is impossible to evaluate Internet access globally without reference to mobility.

It Isn't So Much That People are "Mobile First" as They Are Mobile All Day

Of the 7.4 hours a day people in the United States spend in front of screens, 34 percent involves a small screen (mobile device), while 33 percent is spent in front of a television.

Some 23 percent of screen time occurs in front of a personal computer. About 10 percent of a typical user’s time is spent with a tablet.

The small mobile screen gets used in just about every setting, though.

source: Intercom

Ofcom Chief Opposes 3, O2 Merger

A decision to approve the proposed U.K. merger of O2 and Three lies with the Europe Commission’s antitrust regulator Margrethe Vestager, not Ofcom, the U.K. regulator. And some might argue the merger, which would have faced high obstacles, will face higher obstacles.

Sharon White, Ofcom CEO, now says she opposes the merger, which would create a new market leader with 40 percent share.

The arguments opposing the deal mark the strongest position taken on the £10.5 billion merger by Ofcom CEO White.

Ofcom’s intervention raises further doubts about the attempt by Hong Kong’s CK Hutchison to acquire O2 from Telefónica to merge with Three, the smallest mobile operator in the UK.

White argues the creation of another, fourth network to replace O2 "might be one answer" for some of her concerns, but would take "time and considerable investment".

That is one example of regulator belief that four leading operators are required to obtain the benefits of robust competition. Ofcom, for example, notes that average prices, over the past 25 years, are as much as 20 percent lower in markets with four operators, compared with those with only three leading networks.

Much hangs in the balance. The proposed merger is seen as a test case for similar deals across Europe.

Paradoxically, Higher Capex is a Negative Unless Big New Revenue Streams are Created

Paradoxically, heavy capital investment in telecom networks often is considered to be a negative in financial markets, even if such investment results in higher consumer welfare and an arguably better long-term strategic position.

So it is mildly surprising to hear Globe Telecom touting aggressive spending to improve services in the Philippines. Some might argue that is the only way Globe, and others, can prosper, long term.

Still, it is somewhat uncharacteristic to hear Globe touting a boost in its capital-to-revenue ratio up to 28 percent in 2015, after climbing to 27 percent in 2014.

Globally, telecom capex-to-revenue ratios have been running between 15 percent and 20 percent, with a declining trend.

There is a clear logic. Global telecom revenue growth has dropped to less than GDP growth, according to PWC.

“Some segments (e.g., fixed line) are already in absolute decline, and even global mobile revenue is expected to begin declining in 2018, according to some researchers,” says PWC.

Under such circumstances, it no longer makes sense to invest as heavily as once made sense, since revenue gains will underperform the intensity of the investment. That is a strategic issue of paramount importance.

Ongoing investment might be required, but financial returns might be slim. Inevitably, that means the challenge is to uncover and discover big new revenue streams that justify higher sustainable investment.

source: Infonetics Research

Of course, much depends on what sort of infrastructure is being deployed. Capex in the mobile business is less expensive, compared to fixed network, but also includes spectrum costs.

Still, generally speaking, U.S. mobile market ratios have been falling for some time.

source: TMF Associates

Those levels lead local telecom industry averages of 23 percent in 2015 and 2014.

The capex-to-revenue ratio in China was 36 percent in 2015 and 33 percent in 2014.

In 2015 and 2014 capex-to-revenue ratios in Singapore were 26 percent and 22 percent, respectively; in Indonesia with 24 percent and 26 percent, respectively.

Thailand’s ratio was 23 percent in 2015 and 21 percent in 2014. India had a 2015 ratio of 17 percent and a 2014 ratio of 16 percent.

Taiwan’s 2015 ration was 14 percent and 16 percent in 2014.

Hong Kong had a 13 percent 2015 ratio and 14 percent 2014 ratio.

Malaysia had 13 percent ration in 2015 and a 12 percent ratio in 2014.

Fundamentally, higher capital investment, relative to revenue earned, is a difficult long term proposition. What must be discovered are ways to boost the “revenue” part of the ratio. Higher sustained investment is possible, when that happens.

What Happens When Telcos Start Going Bankrupt?

One has to wonder what happens if many fixed network telcos essentially go out of business, even if that has not yet happened on a significant scale. That might have been unthinkable decades ago.

After all, one might have argued, people and businesses still will need to communicate, even if telcos go bankrupt. And, others might argue, assets do not evaporate, even in a bankruptcy.

So reformed providers would emerge from any bankruptcies of today’s telcos. In large part, that is what already happened with the former “long distance” giants, whose assets now are part of former Regional Bell Operating Companies.

It might be worth noting how wrong prognosticators can be, in that regard. At the time of the Bell system breakup, it was widely believed that the fast-growing, interesting parts of the former Bell system would reside in the separated long distance business, not the local communications business.

In other words, AT&T, freed to grow in the unregulated long distance business, would outshine the regulated “Bably Bell” local access companies (Bell Atlantic, NYNEX, Pacific Telesis, US West, BellSouth, Ameritech and Southwestern Bell).

Most will not recall such times. It was before the Internet, the personal computer, widespread and affordable mobile services.

Notably, the prognosticators were quite wrong. AT&T was absorbed by SBC, which earlier had gobbled up Ameritech, BellSouth and Pacific Telesis; before NYNEX, Bell Atlantic and GTE were merged to create Verizon; before US West was acquired by former rural telco CenturyLink.

MCI was acquired by Verizon. Bell Laboratories and Western Electric, which had been renamed Lucent, also was acquired by Alcatel, which in turn now is owned by Nokia.

Voice no longer drives revenue or business strategy for any of the surviving players. Apps are almost completely created by independent providers and accessed using the Internet.

Worse, the fate of many fixed network telcos is dire.

“Slow yet steady decline” is the fate that awaits CenturyLink, Frontier Communications and Windstream Services, according to ratings agency Moody’s.

“Constraints such as capital allocation practices that favor shareholder returns, lagging infrastructure relative to cable companies and high cost of capital will prevent wireline telecommunications companies (telcos) from taking the necessary steps to fuel growth, resulting in their slow yet steady decline,” says Moody's Investors Service.

Essentially, the telcos are caught in a death spiral.

As they are owned by dividend-seeking investors, the firms cannot shrink or cancel their dividends without causing massive investor flight, with few “growth” investors available to replace those fleeing equity owners, since virtually nobody believes those firms can become “growth” properties.

Their ultimate fate is the issue. Some would argue those firms have high cost structures only formal bankruptcy can cure. The firms could, after radical restructuring, reemerge with cost structures suited to the market opportunities available to them.

That is the optimistic forecast. The pessimistic forecast might be that, even after bankruptcy, the fundamental business model might be unattractive, as costs might still not be low enough, nor revenue opportunity high enough, to sustain long-term operations on a profitable basis.

At the same time, cable TV companies have emerged as key, and ultimately, perhaps, the dominant providers of communications services.

At the same time, other providers are emerging. Google, for example, might be preparing to add voice service to its Google Fiber and video service. That would make it a full triple play competitor to cable TV and telco providers.

AT&T and Verizon, meanwhile, have become mobile service providers with significant fixed network assets, and might not face collapse even if the fixed network business continues to shrink.

Moore’s Law “changes everything,” one might say. More accurately, Moore’s Law means we can create new products, applications and networks using resources that previously were not commercially sustainable, from devices to apps to Internet access to whole networks.

You might argue that is a very good thing, as we might very well need new devices, apps, access and networks as major portions of the legacy communications and application ecosystem become unsustainable.

In a worst case scenario, where major former telcos literally are unable to keep their assets in operation sustainably, the successor companies might already be coming into view. Cable TV companies would be the dominant providers, but major firms such as Google, and likely others, also would have stepped in to replace former fixed network telcos.

In other words, complete business collapse of some traditional fixed network telcos would not be a complete disaster for end users. Other providers would have emerged. And technology will enable many others to contemplate providing service..

The end of an age where communications were dominated by fixed telecom networks therefore would not be a crisis. Those functions are likely to have been replaced by newer generations of competitors.

A previously-unthinkable “soft landing” would then be possible, rather than a “hard landing” where alternative suppliers had not already established themselves in the market.

TRAI Gets Ready to Outlaw Zero Rating

The Telecom Regulatory Authority of India appears ready to outlaw “zero rating” programs such as Free Basics or Airtel Zero, which allow consumers access to use of some apps without requiring either purchase of a data plan, or “usage” against a data plan.

It now appears we are headed for a lengthy period where the ramifications and extent of network neutrality rules get tested in a wider range of settings.

That seemingly always has been implicit in different understandings of what the concept entails, and might not be fully harmonized for quite some time.

For some, who favor a narrower understanding, network neutrality means that no lawful application can be blocked or slowed by the government or an Internet service provider for commercial reasons, though the difficulty has been that sometimes network management might have that effect.

Many would say it is simply prudent network management to take measures to preserve access to network resources at times of peak load, for example.

Supporters will say the move protects consumers and app providers from potential access provider exercise of market power. Under the possible new rules, no Internet access provider could favor its own apps over third party apps, some will argue.

Others will argue the potential new rules stifle innovation and investment, outlawing one way retailers can provide value to consumers and create differentiated offers in the market. In that view, zero rating is no different than any other sampling or discounting mechanism commonly used in the retailing of any product.

Ignoring legitimate disagreements over the concept and application of network neutrality rules, the move also would provide a not-uncommon instance of how difficult it is to craft regulatory policies that spur innovation and investment while also providing high consumer welfare benefits.

It also appears we are headed for an extended period where narrow technical rules to preserve app access increasingly are caught up in broader political questions of industrial policy. Laudable though many policies might be, in narrow technical terms, broader forces are at work.

Forces in government and the economy worldwide are trying to tilt the playing field in favor of domestic firms, and against firms from other countries. That often takes the form of regulatory, legal, taxation or other action that, among other things, is viewed as a means of protecting or promoting internal economic interests, and limiting the influence or success of “outside” firms.

No longer are issues about Internet or Internet app regulation simply about equal treatment of  bits or consumer access to all lawful apps. Unfortunately, those issues now are ensnared in broader policy issues related to perceived economic advantage on a wider scale.

That virtually assures a longish period of policy divergence, and wider differences, rather than harmonized understandings. Rates of innovation and volumes of investment now are perceived to be at stake. Unfortunately, consumer welfare also might be impaired.

Some mistakes are inevitable.