High Speed Access: U.S. Behind, at Par, or Ahead?

Evaluating the state of Internet access in the U.S. market always is a contentious matter. These days, it also is a rapidly-changing matter.

Some argue the U.S. high speed access market is way behind some other countries, though it might be fair to note that virtually all those other countries are small, or compact, highly urban or places where access is subsidized heavily by the government.

The point is that it always is much easier for a city-state to boost its infrastructure performance, compared to any continent-sized country, especially any country with large areas that are sparsely settled.

Also, such comparisons also can change quite rapidly. Very soon, the U.S. will be the market with the highest percentage of gigabit per second availability, based almost entirely on the decision by Comcast--the largest U.S. ISP--to boost 100 percent of its connections to gigabit speeds.

Other U.S. cable TV operators also will do so, as the incremental cost is as low as $200 per location to upgrade to gigabit speeds.

source: Point Topic

Others point to the retail price of access, claiming that prices are high in the U.S. market. On a percent of income basis, though, U.S. prices are quite low.

Also, some continue to complain that consumers do not have enough choice when it comes to broadband providers. But there is a trade-off between competition and investment, because profits are affected.

According to Akamai’s recent State of the Internet report, all 50 states, plus Washington, D.C., saw increases on a year-over-year basis in average connection speeds, and those ranked among the top 10 experienced double-digit gains, says the Information Technology and Innovation Foundation.

“The fact that the U.S. broadband industry has achieved competitive speeds while also maintaining low entry-level pricing is remarkable considering the hurdles we face with sprawling suburbs, rural states, relatively low levels of computer ownership, and relatively high rates of poverty,” says ITIF.

But competition in broadband networks is not an unalloyed good—more competitors in a given geographic market is not always better, ITIF also says.

Having more firms with smaller market shares competing at low margins will necessarily raise overall production costs while reducing average firm revenues.

The result, therefore, will be higher prices overall.

As such, spurring more competition through proactive government subsidies or other policies is almost always less efficient in lowering prices and improving service than effective competition among fewer firms, the foundation argues.

Global Business IP Telephony Market $35 Billion by 2018?

The global business VoIP market is projected to grow to $35 billion in service revenue by 2018, up from from $24 billion in 2013, according to Infonetics Research.

The hosted unified communications business will generate about $4 billion in annual revenue, while hosted PBX services might generate about $8 billion in annual revenue.

source: Infonetics Research

Voice over IP (VoIP) and unified communications (UC) services are forecasted to grow from $68 billion to $88 billion by 2018, according to Infonetics Research. These figures include both residential and business sectors as well as access services (SIP trunking) directly related to use of voice and unified communications services.

Other forecasts are not quite so robust. Frost and Sullivan has estimated that 2018 IP telephony and UC services might reach about $8 billion by 2018.

source: Frost and Sullivan

High Speed Access Up, Video Flat, Voice Down in U.S. Fixed Network Business

It is easy enough to describe the fundamental trends in the U.S. fixed network consumer services business. People are adding high speed access accounts. The linear video business is flat. The voice business is shrinking.

But there are market share shifts as well. Cable companies are winning virtually all the net new accounts in Internet access and video categories.

Leichtman Research Group says the the 17 largest cable and telephone providers in the United States, representing about 95 percent of the market, acquired nearly 1.1 million net additional high speed Internet access subscribers in the first quarter of  2016.

The 13 largest pay-TV providers, representing about 95% of the market, added about 10,000 net video subscribers in the first quarter of  2016, compared to a gain of about 170,000 subscribers in the first quarter of 2015. Most of the suppliers now are counting both linear and OTT accounts in those totals, it should be noted.

The only question in the fixed network voice business is how fast lines are being abandoned.

source: Statista

	Subscribers at End of 1Q 2016	Net Adds in 1Q 2016
Cable Companies
Comcast	23,767,000	438,000
Time Warner Cable	13,640,000	327,000
Charter	5,727,000	155,000
Cablevision	2,828,000	19,000
Suddenlink	1,253,000	30,000
Mediacom	1,114,000	29,000
WOW (WideOpenWest)	722,300	9,800
Cable ONE	508,424	7,183
Other Major Private Cable Companies*	6,775,000	50,000
Total Top Cable	56,334,724	1,064,983
Phone Companies
AT&T	15,764,000	(14,000)
Verizon	9,218,000	(10,000)
CenturyLink	6,056,000	8,000
Frontier^	2,468,600	24,600
Windstream	1,092,000	(3,100)
FairPoint	311,323	193
Cincinnati Bell	292,400	5,000
Total Top Phone Companies	35,202,323	10,693

Cloud Workloads to Nearly Triple in 5 Years

The cloud computing “wars” are “entering a new phase,” with good implications for Amazon.com and bad implications for Oracle, SAP and other traditional IT vendors, including Cisco, JP Morgan analysts Mark Murphy, Doug Anmuth, Sterling Auty, Rod Hall, and Philip Cusick said in a research note.

The authors base their work on a survey they conducted of 207 chief information officers at companies with a budget of $600 million or more annually, making it in their view a unique window into the preferences and intentions of “large Enterprises.”

One of the main takeaways is that use of the public cloud is set to rise dramatically. CIOs report that 16.2 percent of workloads are currently running in the public cloud, and that in five years 41.3 percent of workloads will run in a public cloud. That represents nearly a tripling of cloud workloads.

This suggests at least a 20 percent compound annual growth rate for public cloud workloads over the next five years.

source: Barrons

The analysts said budget pressures have large firms focusing technology spending on cloud services.

The accelerated move to the cloud, and in particular the rapid rise of Amazon’s AWS cloud service among large corporations, signals a “changing of the guard” in enterprise IT, suggesting that “threats to traditional, on-premise IT infrastructure vendors are serious,” the report said.

It said Microsoft still holds a commanding lead in the IT market for large businesses, but AWS, which has long been popular with smaller firms, is making significant inroads.

The findings are based on a survey of 207 CIOs with an average annual IT budget per firm of $600 million, together representing some $126 billion in enterprise IT spending every year.

IT budgets at these firms are set to grow in 2016  by only 2.8 percent, compared to more typical annual growth rates of three percent to four percent.

The largest firms, with annual IT budgets of more than $2 billion, plan to hike spending by less than one percent.

AT&T Acuires QuickPlay Media OTT Platform

AT&T is acquiring Quickplay Media, a platform for over-the-top (OTT) video and “TV Everywhere services” that AT&T already uses.

Quickplay’s platform currently supports AT&T’s U-verse “TV Everywhere” offering and will support the streaming offers “DirecTV Now,” “DirecTV Mobile” and “DirecTV Preview” that AT&T plans to introduce later in 2016.

The new plans will let viewers stream DirecTV content over the Internet to virtually any device.

The reason for the acquisition: OTT video is predicted to grow much faster than linear video.

source: IHS Infonetics Research

19% of Internet Users Experienced an Internet Security Breach, Causing Less Use of the Internet

About 19 percent of surveyed Internet-using U.S. households (some 19 million households, potentially) report they have been affected by an online security breach, identity theft, or similar malicious activity during the 12 months prior to a July 2015 survey conducted by the National Telecommunications and Information Administration.

Security breaches appear to be more common among the most intensive Internet-using households. While nine percent of online households that used just one type of computing device (either a desktop, laptop, tablet, Internet-connected mobile phone, wearable device, or TV-connected device) reported security breaches, 31 percent of those using at least five different types of devices suffered this experience.

These concerns are prompting some Americans to limit their online activity, according to data collected for NTIA in July 2015 by the U.S. Census Bureau. This survey included several privacy and security questions, which were asked of more than 41,000 households that reported having at least one Internet user.

Households Reporting Online Security Breaches by Number of Different Types of Devices Used,

source: NTIA

About 22 percent of Internet-using households that used a mobile data plan to go online outside the home experienced an online security breach, compared with 11 percent of those not using data plans while outside the home.

And it appears that security concerns are negatively affecting willingness to use the Internet. Some 45 percent of online households reported that these concerns stopped them from conducting financial transactions, buying goods or services, posting on social networks, or expressing opinions on controversial or political issues via the Internet.

Online Activities Avoided Due to Privacy or Security Concerns

source: NTIA

From "Convergence" to "OTT"

Most ideas and concepts have currency in a particular context and time. The use, or passing from use, of any such terms generally means that a specific big change has become routine, part of the background, and the new reality.

Convergence, for example, was a big idea in the 1990s. One almost never hears the term used, in the 2010s. Some 20 years ago, the big idea was that an era of application-specific networks was ending. All networks were “converging” on multi-purpose platforms that could deliver any media type.

The term also was used to describe the rise of multi-function devices able to display many media types, or to describe the the ability of applications to interact with each other.

At this point, we simply assume that is the case. On a more-granular level, it is hard to remember that “smartphone” and “Wi-Fi hotspots” once were “hyped” terms in the past.

source: Innovative Communications blog

At this point, all the “convergence” items are simply part of the existing fabric of networks, devices and apps. What was less well widely understood 20 years ago was the fundamental change in business models, however.

It now is clear that convergence was less important than another fundamental change, namely the separation of application creation, ownership and delivery from the actual “network” layer.

In the “non-converged” world, all networks were application specific, and that also meant that the network owner created, packaged and sold the apps the network supported.

That now is broken. While any network owner can create some managed apps and services (carrier voice, carrier messaging, linear TV and Internet access provide examples), most apps now are created and delivered independent of the access network.

In other words, no business relationship has to exist between any “Internet” app and any access network. That is why the term “over the top” has resonance with access provider executives, not “convergence.”

Convergence no longer matters. OTT does.