Reliance Jio Market Entry Will Drive Revenue-Per-Megabyte Lower by 30% to 40%

Reliance Jio's launch of 4G services could disrupt data pricing in the Indian mobile service provider market, causing revenue-per-megabyte prices to tumble 30 percent to 40 percent this year, according to the India Ratings and Research (Ind-Ra).

At the same time, given expected lower prices, data services average revenue per user also will decline, although the number of accounts should increase, while data consumption also climbs, over time.

Revenue per megabyte declined by 4.5 percent to 5.5 percent, sequentially, in the third quarter, for Bharti Airtel and Idea Cellular.

Ind-Ra believes expects a further softening of data tariffs in the current year of perhaps negative eight percent to 10 percent.

Those are among the least controversial observations that could be made about Reliance Jio’s entry into the Indian mobile services market.

India Ratings and Research (Ind-Ra) “expects the launch of Reliance Jio Infocomm Limited (RJio) to intensify competition which will squeeze the market share, EBITDA margins and credit metrics of incumbents.”

At the same time, debt burdens will increase, as competitors and Reliance Jio itself invest heavily in their networks and spectrum.

Ind-Ra also expects voice revenue to decline. Airtel and Idea reduced voice tariffs by eight percent to 10 percent last year.

source: Brookings

In addition to price drops over time, price-per-megabyte also drops with volume purchased.

source: GSMA

Open Cable Boxes? Less Impact Than You Might Think

The recent move by the U.S. Federal Communications Commission to “open up” set top box information flows to third parties ostensibly leads to consumer ability to buy and use third party boxes instead of renting such decoders from their linear video suppliers.

The three information flows include service discovery (information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels).

Information on customer entitlements (information about what a device is allowed to do with content, such as record it) also would be provided to third parties.

Finally, content delivery information (the video programming itself, along with information necessary to make the programming accessible to persons with disabilities) would be available to third party devices.

On its face, the move creates more potential competition for the conditional access function, which also represents perhaps $20 billion in annual rental fees paid by consumers to their video providers.

At one level, it is hard to argue that authorizing more competition is a bad thing. But the move might also not be so consequential, long term, much as the Telecom Act of 1996, in defining competition as “competition in voice services” missed the mark.

Over time, more consumers are going to use services and appliances that are Internet based, obviating the use of any such decoders. In the interim, however, as the FCC earlier had tried (and failed) to create a third party market for decoders, there could be some opening for use of existing devices (game players, mobile phones or dongles) as functional substitutes for the “cable box.”

Scale always is an issue, as the actual market for decoder hardware is fairly small, by consumer electronics standards. So it is unlikely many new suppliers really would want to enter the market for stand-alone decoders.

One reason existing decoders are relatively costly, compared to many other consumer devices, is that volume is limited.

The upside might come for app providers who could leverage existing mass market devices such as smartphones or cheap dongles to provide the tuning and access functions, while also garnering more information about consumer behavior.

That is one reason why Google supports the rule change.

Three Makes Blockbuster Ad Blocking, Sponsored Data Policy Change

In a momentous decision, mobile operator Three, after having instituted ad blocking at the network level, plans to add the capability on all of its networks, everywhere, in a way that notably will institute sponsored data for virtually all advertising content, across all Three networks, in a first for any tier one mobile operator anywhere in the world.

The decision has several important--even historic--implications.

The most far-reaching implications affect mobile advertising business models on the Three network, and any other mobile services that decide to move in a similar direction.

The universal ad blocking feature essentially means that all advertising will require that the advertiser pays for bandwidth consumed to deliver the messages.

In other words, Three customers will not pay data charges to receive ads. The policy also means that all advertising instantly becomes “sponsored data.”

In a policy that also should help shape the nature of advertising in direction it had already been moving, Three’s policy aims to promote advertising content that is “relevant and interesting” to each user.

At the same time, the new Three policy will seek to block “excessive, intrusive, unwanted or irrelevant ads.

This is a huge shift, with implications for all apps that are ad supported, which is to say nearly all the important and widely-used apps. The policy also will force advertisers to recraft their ads, and significantly, pay for the bandwidth used when consumers view those ads.

The ultimate implications are not clear, as it remains to be seen whether the leading mobile providers in any market will follow the example. If the other contestants do not adopt similar policies, Three might simply find it gains consumer subscription market share, at the cost of losing some attractiveness for ad-supported apps and advertisers.

Three might well consider that a reasonable trade off.

Three UK and Three Italy have implemented the Shine Technologies ad blocking system, with intent to enable the feature on all Three networks in all countries.

“Our objective in working with Shine is not to eliminate mobile advertising, which is often interesting and beneficial to our customers, but to give customers more control, choice and greater transparency over what they receive,” Three says.

Precisely how Three will work with the advertising community to achieve those goals is not yet clear.

“Over the coming months Three will announce full details of how it will achieve these objectives and will work with Shine Technologies and the advertising community to deliver a better, more targeted and more transparent mobile ad experience to customers,” Three says.

"Irrelevant and excessive mobile ads annoy customers and affect their overall network experience,” said Tom Malleschitz, Three UK CMO. “We don't believe customers should have to pay for data usage driven by mobile ads.”

The question now is how successful Three will be. Though few leading app providers are likely to block access to Three customers, they are going to have to figure out how to mollify advertisers, or simply forego some ad revenue earned from views on Three networks.

It will be complicated. Three is gambling, likely reasonably, that no leading app provider will block use of its apps by Three customers. But the new policy immediately raises revenue issues for all ad-supported app providers, with new cost issues for those app providers and their advertisers.

Firms Announce Efforts to Create 3.5-GHz CBRS Ecosystem

Federated Wireless, Google, Intel, Nokia, Qualcomm Incorporated and Ruckus Wireless say they will work to build a robust ecosystem of industry participants around use of the U.S. 3.5 GHz Citizens Broadband Radio Service (CBRS), the first band expected to support commercial shared spectrum access in spectrum formally licensed to government users.

The companies are participating in the Wireless Innovation Forum’s efforts to develop standards suited to the CBRS band.

The CBRS band represents 150 MHz of spectrum (3550-3700 MHz) that can be opened for commercial use.

Indoor access--initially focused on support of Long Term Evolution 4G networks,  is expected to be a key use of CBRS spectrum, but some believe there also could be access applications (wireless local loop).

Blocking Sponsored Data Programs Also Blocks Innovation, Limits Consumer Benefit

Anti-competitive behavior by Internet service providers might be said to be a theme for many who oppose zero rating or sponsored data.

Ironically, rules banning zero rating or sponsored data actually work to reduce access options for consumers who either cannot afford--or do not wish to buy--full mobile data usage plans, Syntonic argues.

“Connecting the unconnected is really important,” says Gary Greenbaum, Syntonic CEO.

Also, different methods for furnishing Internet access in new venues, ranging from automobiles to wearable devices and wide variety of Internet of Things apps, might be blocked if zero rating or sponsored data is outlawed, Greenbaum argues.

In other words, “all or nothing,” “one size fits all” access models do not work, argues Syntonic. Syntonic Wireless “urges the Commission to avoid prophylactic rules that would prohibit the creation of new, potentially consumer-friendly products and services.”

For consumers, sponsored content increases the value of a wireless subscription, by offering additional content that the consumer may enjoy in addition to whatever data is consumed under the consumer’s traditional monthly data plan, Syntonic argues.

Consumers can also “sample” sponsored content without the risk that they are stuck paying for a suboptimal product or service.

And technophobic consumers who are unsure whether to purchase a mobile broadband service can potentially access a broad array of sponsored content on a minimal data plan, to decide whether to upgrade to a more comprehensive service.

Consumers should have access to all lawful applications, just as service providers, app providers and brands should be free to innovate with new business models that deliver more consumer value, at less direct cost to those consumers.

Verizon Best U.S. Mobile Network Nationally, Rootmetrics Says

With the caveat that any network will be better than another at any specific location, RootMetrics  says that in the second half 2015, Verizon's performance across the United States continues to set the pace, leading the mobile network race in nearly all aspects of testing.

“This was Verizon's fifth consecutive time receiving the United States Overall Performance RootScore Award,” Rootmetrics said.

For the fourth consecutive national report, AT&T was the only carrier other than Verizon to win or share a RootScore award at the national level.

The overall national scores:

1 – Verizon (94.5)

2 – AT&T (91.3)

3 – Sprint (86.0)

4 – T-Mobile (80.9)

Sprint showed improvements in the second half of 2015 at the national level, Rootmetrics says.

While the carrier didn't win any RootScore Awards on the national level, Sprint gained the second-place spot for call performance, beating AT&T. Sprint also continued to hold third place in both overall performance, network reliability, and text performance categories.

While T-Mobile finished fourth for overall performance, the carrier continues to show steady data and network speed performances at the national level holding onto its third-place titles in both categories.

During the second half of 2015, RootMetrics testing staff drove 231,941 miles, visited 6,607 indoor locations, and conducted about 3.9 million tests across all 50 states and 125 metro areas using the same phones consumers can buy from the carriers' stores, statistically reflecting performance across 100 percent of the U.S. population.

The tests used phones enabled for 4G Long Term Evolution  spectrum bands for each of the four carriers, including T-Mobile's Extended Range LTE.

Flat Revenue for Western Europe Mobile Operators to 2019

A revenue forecast for Western Europe mobile operators shows the extent of product maturation in some mobile markets.

Between 2015 and 2019, aggregate revenue will be flat. By 2019, total revenue will actually have fallen slightly, by about one percent.

That will be a problem for public companies, which tend to be judged by revenue and profit growth. Lack of revenue growth is going to be a problem.

source: 451 Research