Maybe Service Providers Need to Follow Banks

It is too bad that service providers have to send bills to consumers every month. Such processes, and the questions they generate, are one reason customer service chores sometimes are onerous, and why consumer ill will is garnered.

Some banks have found that mobile phone transactions can offload as much as 90 percent of the transactions that once required a JPMorgan teller.

In 2015, about 65 percent of new JPMorgan customers used mobile capabilities within six months of opening an account, up from 53 percent.

Customers say they are happier, and JPMorgan cuts its operating costs and churn.

JPMorgan estimates that each teller transaction costs $2 to $3, compared with 10 cents for the same service using an automated teller machine and just a few cents via a mobile device.

Mobile devices are helping with customer retention as well.

People who use their bank's smartphone app frequently are 40 percnet less likely to switch banks than those who do so only rarely, according to a study JPMorgan conducted.

Some service providers have processes that are easier to use, more pleasant and can be “self provisioned.” Some service providers literally force customers to interact with a call center.

But most service providers would do well to emulate at least some of the processes banks have found customers like, use and that also lower operating costs.

source: JPMorgan Chase

source: JPMorgan Chase

Top U.S. Linear Video Providers Lose Subs in 2015 for First Time Since 2006

For the first time since Verizon and AT&T launched their TV services in 2006, the six largest U.S. linear video subscription providers lost subscribers for a full year, despite gains in the seasonally-strong fourth quarter, says Ooyala.

There possibly should be an asterisk, however. Some of those firms now include streaming accounts in their subscriber totals. That is akin to a mobile operator including prepaid accounts as well as postpaid accounts in the subscriber totals, mixing higher revenue, higher value net adds with lower value, lower revenue gains.

In the fourth quarter of 2015, DirecTV, AT&T, Time Warner, Comcast, Dish Network and Verizon gained a net 125,000 subscribers.

DirecTV (owned by AT&T) gained 214,000 subscribers in the U.S. market, but AT&T’s  U-verse also lost 240,000 for the quarter.

source: Business Insider

It was AT&T’s third consecutive quarter losing accounts, the only three quarters AT&T has failed to gain linear video accounts since 2006.

For the year, AT&T was lost a net 355,000 subs and DirecTV lost a net 568,000, Ooyala says.

Comcast added a net 89,000 accounts for the quarter. For the year, Comcast was down 36,000 accounts.

But Comcast now seems to be including streaming customers to its linear video totals.

Dish Network lost 12,000 subs in the quarter and 81,000 over the year. Notably, Dish Network definitely now includes Sling TV customers in its account totals.

According to MoffettNathanson, Dish might actually have lost 141,000 linear subs in the quarter.

Time Warner Cable added 54,000 video customers in the last quarter and 32,000 over the year,

Verizon adding 20,000 FiOS television customers in the quarter, its lowest level of net additions  since 2006.

For the year, the six firms lost 781,000 accounts.

In 2014, the companies added 472,000 accounts. In 2013, they added 500,000 accounts.

Nobody will be particularly surprised by the findings. Virtually everyone considers the linear video subscription business a declining legacy business.

Google Fiber to Use Existing Fiber to Serve MDU Customers in San Francisco

Google Fiber plans to use existing fiber infrastructure in San Francisco to connect potential customers to Google Fiber. The approach is not dissimilar to the way Comparative local exchange carriers traditionally have wired high-rise buildings apartment buildings and condos.

It is not clear how many potential customer locations Google Fiber can reach using this method.

Still, the initiative shows Google Fiber continues to experiment with ways to accelerate connecting customers to its gigabit internet access networks.

Mobile Operator Messaging Relevance Now Arguably Hinges on Google

Two developments illustrate a principle, where it comes to developing over the top messaging apps that have at least some carrier involvement. First, Google, which owns Jibe Mobile, appears to want to use rich communications services (RCS) as a messaging standard for Android devices.

So Google has joined wireless standards group GSMA and a host of global operators to launch an initiative to accelerate the adoption of RCS.

Operators including América Móvil, Bharti Airtel, Deutsche Telekom, Globe Telecom, Millicom, Orange, Sprint, Telenor Group, TeliaSonera, Telstra, Turkcell and Vodafone have agreed to transition to a single RCS standard, which will be supported by Android.

Google also will provide a universal RCS client based on Jibe for all the GSMA carriers.

Separately, the Joyn initiative started by GSMA, has gone nowhere. One example: alhough SK Telecom continues to push forward, KT and LG Uplus have ended their support for Joyn.

In fact, some might argue that Joyn--the GSMA effort to create a market-viable Rich Communications Suite (RCS) ecosystem--already is “dead.”

Launched in 2008, what became Joyn was launched by Nokia, Ericsson, Orange, NTT DoCoMo, SK Telecom, Telefónica, and TeliaSonera, with the intent of creating a vibrant ecosystem for rich communications experiences based on IMS (IP multimedia subsystem).

Joyn was supposed to be the carrier answer to Skype, Viber, WhatsApp, and all the other OTT messaging and voice apps.

It simply hasn’t worked. And one might argue that lack of effort or skill is not “why” Joyn arguably has failed. Carriers simply were too late, competing against apps with high value and much more traction.

The takeaway might well be that carriers--working alone or collectively--are not in a position to lead messaging, without key leadership by app or operating system partners.

One Way "Technology" Reduces Churn in the U.S. Mobile Business

One reason the U.S. mobile services market arguably is less competitive, or “more sticky” than some other markets has nothing to do with regulatory policy, bandwidth, financial assets, brand equity, differentiated services or even network coverage or other measures of “quality.”

For historical reasons, half the market has a legacy “GSM” air interface, while the other half has a legacy “CDMA” air interface for third generation platforms that remain significant, even for users of fourth generation Long Term Evolution services.

The reason is that voice and Internet access “fallback” are to the 3G networks. That has implications for customer retention and ability to switch carriers. Those same barriers provide the explanation for today’s carrier offers to subsidize switching costs (phone installment payments or service contract early terminations).

Verizon and Sprint, which use CDMA, represent 50 percent of the installed base. AT&T and T-Mobile US represent 49 percent of the installed base. What that means, in practice, is that every customer moving from a CDMA platform to a GSM platform, or a GSM platform to CDMA, necessarily must buy new devices.

With top of the line smartphones routinely costing $600 and up, that is a significant barrier to switching behavior. That, in turn, might explain why churn rates  in the U.S. mobile services business are relatively low, despite all the competitive offers.

Verizon and AT&T have churn rates that often are below one percent a month, a rate that is low for a consumer subscription service, historically.

T-Mobile US and Sprint have higher churn rates, but rates are dropping for those carriers as well. T-Mobile US has seen postpaid churn in the range of 1.5 percent recently. Sprint’s postpaid churn rates likewise now are in the 1.5 percent a month range.

To be sure, there are other forces at work. The large number of accounts connected on shared accounts is substantial. So the cost of changing a single account entails potential replacement of numerous devices.

AT&T, for example, has said that 70 percent of all its customers are on shared accounts.

Still, the fundamental divide--GSM versus CDMA--likely remains a barrier to full switching ability across the air interface barrier. And that is just one more reason why customer churn is relatively low in the U.S. mobile market.

source: Statista

Netflix, Facebook, Google Drive Bandwidth Consumption in Americas

“Network traffic in the Americas seems to be getting increasingly concentrated,” said Dave Caputo, CEO, Sandvine. Although most will not be surprised that Netflix is the single application representing the greatest bandwidth consumption, and continues to rise as a percent of North American fixed network traffic, Facebook apps come in second.

In Latin America, Facebook (Facebook, Instagram, WhatsApp) and Google (YouTube, Google Play) represent more than 60 percent of mobile network traffic, Sandvine says.

source: Sandvine

What Will it Take for Carriers to Win When Creating OTT Apps?

Uber is analogous to fring, offering a better user experience and more choice, Genband CEO David Walsh has argued, part of Genband’s focus on development of over the top applications and business models carriers might be able to create.

“We believe that the power of community and the economics of exchanges, changes everything,” Walsh has said. Many would agree with that position.

The issue, so far, is whether carriers actually can do so.

At issue is less “capability” than sheer scale and the growing “winner take all” OTT market dynamics.

Recently, instead of “leaders” in any category of OTT apps or services, markets have tended to evolve towards a “dominant” supplier, with little room, or revenue, for second place or third place.

One might argue that unless any carrier federation is a “first mover” in a new category, leadership is unlikely to happen. That is not to denigrate intent, effort or skill, only to point out that “first to market with the best experience” also has to be matched with high word of mouth (social) adoption.

Success in the OTT app business hinges on network effects--huge scale--for success and monetization models. Carriers, especially federated carrier efforts, can achieve scale.

What is not yet clear is whether carrier apps can achieve scale in the new way: not by leveraging an existing base of customers, but by capturing the loyalty of an even bigger audience of non-customers.

Consider experience so far with Joyn, the carrier-focused platform for unified and rich communications. Though SK Telecom continues to push forward, KT and LG Uplus have ended their support.

In fact, some might argue that Joyn--the GSMA effort to create a market-viable Rich Communications Suite (RCS) ecosystem--already is “dead.”

Launched in 2008, what became Joyn was launched by Nokia, Ericsson, Orange, NTT DoCoMo, SK Telecom, Telefónica, and TeliaSonera, with the intent of creating a vibrant ecosystem for rich communications experiences based on IMS (IP multimedia subsystem).

Joyn was supposed to be the carrier answer to Skype, Viber, WhatsApp, and all the other OTT messaging and voice apps.

It simply hasn’t worked. And one might argue that lack of effort or skill is not “why” Joyn arguably has failed. Carriers simply were too late, competing against apps with high value and much more traction.

Genband is right that innovation is needed. Many of us would argue OTT is simply the way apps get created these days. But we still do not have a good example of a carrier-developed or carrier-backed OTT app that has achieved leadership in its category.

That is not to say such a result is impossible, only to note that, so far, it has not happened.

One reason is that some strategies--including all approaches other than “first to market”--risk losing in markets that tend to have a  “winner take all” structure.

It remains true for all contestants in any ecosystem: moving up the stack is much harder than moving down the stack.