IoT Revenue Mostly Will Happen at App Layer

Platforms often drive much more economic activity than is directly generated by the platforms themselves, and that is virtually certain to the case for access and connectivity markets created by Internet of Things apps and devices.

A McKinsey Global Institute study suggests that the Internet of Things has the potential to create economic impact of $2.7 trillion to $6.2 trillion annually by 2025. Connectivity (access) might account for about 16 percent to 17 percent of total ecosystem revenues, according to McKinsey analysts.  

source: Woodside Capital

Vodafone plans to roll out the narrowband IoT (NB-IoT) platform to support Internet of Things connectivity across multiple markets in 2017, said Vodafone Internet of Things group Director, Erik Brenneis.

As often is the case when new platforms are being commercialized, different tier-one mobile operators are making different bets.

Altice’s SFR is deploying Sigfox while rivals Bouygues and Orange have opted for LoRa. Orange, though, has not ruled out use of other platforms as well.

China Mobile also has chosen to support NB-IoT.

In some ways, the choice of NB-IoT is not too surprising. Historically, tier-one telcos have preferred solutions based on licensed spectrum, and also have preferred options that build on already-established networks and also have perceived “quality of service” advantages. BB-IoT fits within that approach.

“NB-IoT operates in licensed spectrum and that is important to us at Vodafone because we need to deliver a high quality experience to our customers,” said Brenneis.

All of the proposed networks emphasize lower-cost connectivity and lower power consumption.

Facebook Explores Anchor Tenant Model in India

In the U.S. market, many innovators have looked to the concept of “anchor tenants” as one way to build a sustainable Internet access service. Schools, hospitals or government buildings often are seen as suitable anchor institutions.

Some would-be suppliers of gigabit access, for example, think it makes sense to connect anchor institutions that essentially become hubs for more-extensive networks surrounding the anchor locations.

The same concept underpins many rural Internet access efforts, which first try to connect schools, for example, and then use the schools as hubs. In some ways, that is the concept behind village kiosks that are connected by satellite links, and then use Wi-Fi for local distribution.

Facebook‘s “Express Wi-Fi” uses the same concept, encouraging anchor tenants to become local Internet service providers, providing a sustainable business model.

“We are already live in India and Indonesia with Express Wi-Fi,” said Ryan Wallace, Facebook technical program manager. “If you look at Myanmar as a great example that has got poor fiber infrastructure so satellite would probably be an interesting play there.”

“The Philippines is an island nation, so fiber is very much within the metropolitan areas. Satellite could be a big play there.”

Facebook has partnered with an Indian rural Internet access provider, AirJaldi, to manage the actual installation and operation of the Express Wi-Fi service.

For AirJaldi, which is based in Dharamsala and mostly provides Internet services to large customers like the Dalai Lama’s Tibetan government in exile, the project is a chance to figure out how to make money serving a widely dispersed customer base.

Google Play Android Apps to Run on Chromebooks

In a possibly-huge move, Google has announced that all Google Play apps will run on Chromebooks. As a practical matter, for Chromebook users, that means a Chromebook will be able to run Skype and GoToMeeting, for example, apps that previously required a download, and therefore could not be run on a Chromebook.

Essentially, all apps that run on Android phones and tablets will now run on Chromebooks without compromising their speed, simplicity or security.

The advantage is about one million applications.

Up to this point, Chromebook functionality has been limited by the fact that everything had to run within a browser.

Every “app” was essentially a browser plug-in. High security and fast startup were clear advantages.

Apparently, the Chromebook and Android teams to take advantage of innovations in enabling the Android environment work within the ChromeOS “container.”

Since Chromebooks are running desktop class hardware, the Android apps consume virtually no overhead, the user experience is consistent, and the environment is secure.

The Google teams say the Chrome operating system is not rendering the Android environment, running the apps fully.

The feature will start rolling out in the developer channel with M53 on the ASUS Chromebook Flip, the Acer Chromebook R 11 and the latest Chromebook Pixel.

Over time, this will roll out to other Chromebooks in the market as well.

15% of U.S. Residents Have Used Ride-Sharing, 11% Have Used a Home-Sharing Service

An estimated 15 percent of U.S. adults have used a ride-hailing app such as Uber or Lyft. Some three percent of U.S. adults use ride-hailing apps on a daily or weekly basis, and around 66 percent of these regular ride-hailing users indicate that they own a car or regularly drive a personal vehicle.

About 11 percent have used a home-sharing service such as Airbnb. U.S. residents 35 to 44 are nearly twice as likely as those ages 18 to 24 to have used home-sharing services (16 percent compared to nine percent).

A majority of regular ride-hailing users are car owners or drivers, but are significantly more likely to use a range of other transportation options.

source: Pew Research Center

Ride-hailing apps appeal heavily to younger adults. The median age of adult ride-hailing users in the United States is 33, and 18- to 29-year-olds are seven times as likely to use these services as are those age 65 and older (28 percent compared to four percent).

Ride-hailing use is also heavily concentrated among urban residents (especially younger urbanites and those with relatively high levels of income and educational attainment), while being consistently low among rural residents of all kinds.

In Some Countries, 4G is Faster than DSL

With the caveat that the situation changes quickly in the U.S. high speed access market, recent speed tests conducted by DSL Reports suggest that, in many countries, under some conditions, users might experience faster speeds using a Long Term Evolution 4G mobile connection, rather than an all-copper digital subscriber line service.

Of course, all things are not equal. DSL cost per bit is far lower than mobile data cost per bit, so the typical application set for any single user will determine whether mobile data is a functional substitute for DSL.

The DSL Reports tests suggest an average DSL speed of about 13.7 Mbps, and an average 4G speed of about 12.3 Mbps. There is not so much functional difference there, for a single user account.

The cost decision of course hinges on how much data any single user consumes in an average billing period. The economics shift dramatically for multi-user households.

The tests show that in some countries, such as Canada and Australia, 4G speeds actually are faster than DSL.

source: DSL Reports

In another year or so, cable speeds are likely to climb fast, as Comcast and other providers roll out ubiquitous gigabit access, and fiber providers upgrade many lines to 1 Gbps as well.

Out another five to 10 years, matters could change again, as mobile 5G speeds potentially reach a gigabit per device, initially, then potentially extend to 5 Gbps or 10 Gbps.

What are Possible Business Models for Managed Services, if Zero Rating is Unlawful?

The Telecom Regulatory Authority of India has banned zero rating the ability of an Internet access provider to offer access to some Internet apps without requiring purchase of a data plan, or levying usage charges for use of those apps.

But TRAI has not issued clear guidance about what service providers will be allowed to do, in terms of creating managed services. TRAI recently has suggested that no currently-offered Internet app or service can be refashioned as a managed service.

Some might argue that zero rating is precisely what will eventually be required to create incentives for the “unconnected” to experiment with and then become accustomed to use of Internet apps. The reason is simply that mobile data is too expensive for many non-users who do pay for mobile voice and text messaging services.

source: Percolate

Now TRAI appears to be attempting to create such frameworks, the key issue being permissible revenue models. So far, TRAI has suggested that some current models might make sense.

One possible  model is to offer an incentive or reward to users when customers download certain application or take some defined activity on a particular website.

In this reward based model apps may provide rewards in the form of a recharge for data usage or for voice usage to the users, TRAI suggests.

Perhaps ironically, TRAI suggests another possible model is sponsored data, where there is a “toll-free” approach. “This model is also prevalent in many developed markets, allowing free access to certain websites and applications,” a TRAI consultation paper says.

A reimbursement model might also be permissible, TRAI suggests. In that model, the user pays for usage, but then some third party reimburses the user.

Every country has a distinctive way of approaching regulation and economic freedom. India is not an exception in that regard. Though it is not the current approach, some might argue the simplest approach is simply to allow zero rating.

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.