More IoT Connections than Phones by 2018, Ericsson Predicts

Ericsson predicts that, in 2018,  Internet of Things (connected cars, machines, utility meters, remote metering and consumer electronics) connections will outnumber mobile connections used by people.

Some might argue that forecast is more robust than others expect, since it includes consumer electronics connections that we do not all agree are IoT connections at all. To be sure, many include wearable devices within the IoT category. Others might use a more-restrictive definition.

But Ericsson forecasts that IoT device connections will grow at a compounded annual growth rate (CAGR) of 23 percent from 2015 to 2021.

In total, around 28 billion connected devices are forecast by 2021, of which close to 16 billion will be related to IoT.

There were around 400 million IoT devices connected by mobile subscriptions at the end of 2015.

Mobile IoT connections will reach 1.5 billion in 2021, Ericsson argues.

source: Ericsson

Will India Allow Some Forms of Zero Rating, After All?

In politics or regulatory realms, principles often follow practices and action precedes theory. So it is in India, where the Telecom Regulatory Authority of India (TRAI) has ruled that zero rating is a violation of network neutrality.

Now TRAI is trying to actually define what network neutrality actually means. “Putting the cart before the horse” might come to mind, but that is a bit too harsh. The problem with network neutrality, all along, is that it is a concept devilishly hard to define, much less understand.

So it is paradoxical to hear TRAI chief executive RS Sharma say “he is open to the idea of internet content being provided free of cost or at discounted rates, just like toll-free phone helplines.” Huh?

That sounds like zero rating.

"We have no objection in general if someone decides to provide content free, or at a discounted rate, if the same is made available to subscribers of all mobile operators," Sharma said.

Such comments are one reason a new TRAI consultation paper on net neutrality is seen by some strong network neutrality (no zero rating) proponents as reversing or modifying the initial ban on zero rating.

For the cynical, the new interpretation is an attempt to wiggle out of a tight place. Sharma has said that such subsidized content “does not violate net neutrality” and is not in variance with TRAI's ban on zero rating.

One possible way of squaring that circle could be that sponsored data, or zero rating, could be deemed lawful if available to all mobile subscribers, not just subscribers of a single mobile provider.

TRAI, like all other regulatory bodies, faces the challenge of defining and implementing policies that some believe are harmful, not helpful, and difficult to codify, in objective terms, as rules.

As a matter of science or engineering, it is difficult to guarantee that “every bit will be treated the same,” in terms of delivery delay. Some would argue the obvious point that some apps actually require predictable delivery and low latency (interactive videoconferencing and voice being the best examples).

Nor is it easy to reconcile the fact that the purpose of lawful content delivery networks is in fact to ensure low-latency, predictable packet delivery. So non-neutral packet delivery is part of the existing fabric of consumer Internet access.

Nor have we ever been able to settle the question of how to manage network traffic without some forms of packet shaping, really.

Rationing or prices actually are the only two ways to manage traffic on networks, argues consultant Martin Geddes.

And one problem with bans on zero rating is that doing so precludes the development of “quality of service” differentiators. That, in fact, was precisely what proponents had in mind in requiring “best effort only” Internet access as the only level of lawful service for consumers.

But network neutrality rules essentially try to “protect competition in the app market” from ISP market power in a way that is not fact or science based, Geddes argues.   

To be sure, regulatory harmonization always poses a big choice. Even when applying “the same” regulations to all contestants in a market, regulators must choose between “more” or “less” approaches.

Should markets be harmonized up or down; in the direction of more rules for all contestants, or fewer rules for all contestants; allowing robust competition or restricting it; applying legacy rules to new providers; protecting incumbents or letting innovation reign?

In the past, the question of how to regulate OTT voice and messaging has turned on precisely such questions.

Will India Allow Some Forms of Zero Rating, After All?

In politics or regulatory realms, principles often follow practices and action precedes theory. So it is in India, where the Telecom Regulatory Authority of India (TRAI) has ruled that zero rating is a violation of network neutrality.

Now TRAI is trying to actually define what network neutrality actually means. “Putting the cart before the horse” might come to mind, but that is a bit too harsh. The problem with network neutrality, all along, is that it is a concept devilishly hard to define, much less understand.

So it is paradoxical to hear TRAI chief executive RS Sharma say “he is open to the idea of internet content being provided free of cost or at discounted rates, just like toll-free phone helplines.” Huh?

That sounds like zero rating.

"We have no objection in general if someone decides to provide content free, or at a discounted rate, if the same is made available to subscribers of all mobile operators," Sharma said.

Such comments are one reason a new TRAI consultation paper on net neutrality is seen by some strong network neutrality (no zero rating) proponents as reversing or modifying the initial ban on zero rating.

For the cynical, the new interpretation is an attempt to wiggle out of a tight place. Sharma has said that such subsidized content “does not violate net neutrality” and is not in variance with TRAI's ban on zero rating.

One possible way of squaring that circle could be that sponsored data, or zero rating, could be deemed lawful if available to all mobile subscribers, not just subscribers of a single mobile provider.

TRAI, like all other regulatory bodies, faces the challenge of defining and implementing policies that some believe are harmful, not helpful, and difficult to codify, in objective terms, as rules.

As a matter of science or engineering, it is difficult to guarantee that “every bit will be treated the same,” in terms of delivery delay. Some would argue the obvious point that some apps actually require predictable delivery and low latency (interactive videoconferencing and voice being the best examples).

Nor is it easy to reconcile the fact that the purpose of lawful content delivery networks is in fact to ensure low-latency, predictable packet delivery. So non-neutral packet delivery is part of the existing fabric of consumer Internet access.

Nor have we ever been able to settle the question of how to manage network traffic without some forms of packet shaping, really.

Rationing or prices actually are the only two ways to manage traffic on networks, argues consultant Martin Geddes.

And one problem with bans on zero rating is that doing so precludes the development of “quality of service” differentiators. That, in fact, was precisely what proponents had in mind in requiring “best effort only” Internet access as the only level of lawful service for consumers.

But network neutrality rules essentially try to “protect competition in the app market” from ISP market power in a way that is not fact or science based, Geddes argues.   

To be sure, regulatory harmonization always poses a big choice. Even when applying “the same” regulations to all contestants in a market, regulators must choose between “more” or “less” approaches.

Should markets be harmonized up or down; in the direction of more rules for all contestants, or fewer rules for all contestants; allowing robust competition or restricting it; applying legacy rules to new providers; protecting incumbents or letting innovation reign?

In the past, the question of how to regulate OTT voice and messaging has turned on precisely such questions.

What is the Killer App for Smart Cities?

Some now believe smart cities will be an early and substantial market for Internet of Things apps and services. The problem is that there are any number of practical implementations, without clear and sustainable business models, yet.

Of course, nobody yet knows. It is conceivable that connected car, wearables, health or agriculture and manufacturing or even home automation theoretically could emerge earlier.

Parking, air pollution, traffic management, monitoring of water pipe leaks, streetlight management or wastewater management are some of the areas believed to be fertile ground for smart cities initiatives. Others might argue less-exotic implementations, such as municipal Wi-Fi, also count as “smart cities” programs.

But there are many sources of inertia, including unclear payback or business models, technology platform confusion and the cost of equipping end users and networks with sensor capabilities. It is not clear what sustainable revenue models look like, nor are there absolutely clear killer apps to drive massive adoption.

Some amount of pump priming, in the form of government grants, might help, in a few cases. Still, beyond installing a general purpose communications network, it is not so clear that there are synergies between the various proposed “smart city” capabilities.

source: Compass Intelligence  

Banks Warming to Cloud Computing?

Large financial institutions traditionally invest heavily in new technology, but also are “conservative” about security issues and control. That some now seem willing to embrace moves to cloud computing might suggest change is coming.

Capital One is already in the process of shutting down five of its eight private data centers to move most of its data to AWS by 2018. Another "large" bank cited in the note said it's committed to shutting down all of its private data centers by 2020, although it's more likely to start with a hybrid of cloud and on-premise data centers, according to the note.

These kinds of changes will only speed up the adoption of the cloud by other sectors, too, expanding the overall pie for public-cloud vendors. Gartner estimates spending on public-cloud services to increase from $85 billion in 2014 to $180 billion in 2019, according to a note by Bank of America.

source: IDC

Verizon Will Not Wring Blood from a Stone

You cannot, as the aphorism suggests, wring blood from a stone. Neither, history suggests, can an industry in fundamental decline afford to boost its own costs of operation. To have any hope of maintaining cash flow as long as possible while the business declines, firms have to control costs.

And, as always within any ecosystem, one segment’s “costs” are another segment’s “revenue.” That is rarely pleasant, for workers, suppliers, collaborators, investors or managers, in a declining business or industry.

The new Verizon contract that ended a strike might provide an example. The new contract adds 1,400 jobs and provides a 11-percent wage increase. Union officials argue that Verizon has been understaffing fixed network workforces, a charge that resonates.

Verizon has been moving spending towards mobile, and away from fixed network operations, to match its revenue generation.

And wages for U.S. workers have been depressed for quite some time. Workers think they deserve more of the surplus. Verizon management knows it has to "harvest" the business. Both have a point.

Only in context do those developments make sense.

If you wanted a one-sentence description of how the U.S. fixed network business has been transformed over the last 15 years, here it is: “Wireline now accounts for less than 30 percent of Verizon’s total operating revenues, down from 60 percent in 2000, and less than seven percent of our operating income,” noted Verizon Communications CEO Lowell McAdam.

In other words, from 2000 to 2014, revenue from fixed networks was cut in half, while profit dropped more than that. At a very high level, that means any business in a similar situation would have to chop at least half its costs. And, unfortunately, enterprise cost includes employee headcount,  wages and benefits.

In the first quarter of 2016, Verizon fixed network revenue was down, while earnings were flat. To be sure, weakness in wholesale and global enterprise were bigger problems than the mass market segment, lead by FiOS revenue.

The point is simply that fixed network operations are generating a small, and likely ever-smaller, portion of Verizon revenue and profits. Under such conditions, harvesting is a rational strategy.

There is nothing nefarious about this. It is simply what a business must do when it is in decline.

In that light, a 10 percent or 11 percent hike in wages and benefits, plus the addition of more employees, will create greater pressure in the fixed networks business.

Indeed, some might speculate that selling or spinning off most of the fixed network business might make sense, if willing and able buyers can be found, and if regulators allow such dispositions.

Verizon would be better off as a smaller, mobile-focused entity, the logic suggests.

Some entities can operate FiOS or fixed networks more efficiently than Verizon can. Some entities might have different business models as well, allowing them to wring more value out of assets such as Verizon's, if they are free to tweak the cost model.

Unfortunately, employee prospects in a declining industry are a zero sum game, at best. Most often, negative growth is the requirement. If one accepts that Verizon's fixed network business is in decline, then more employees and higher wage bills are not sustainable.

It will not be pleasant. It never is.

More Cloud Means Fewer Moves, Adds, Changes: Bye Bye MAC Revenue

Disruption across the information technology and communications businesses is a virtual certainty as cloud-based computing grows.

And that applies equally to sales channels, software platforms, hardware suppliers and services operations. For decades, revenue models in some parts of the business have been built on “moves, adds and changes.”

As enterprises, mid-market and small business customers move operations to cloud-based alternatives, the revenue formerly earned by MACs can diminish.

Hutchinson Networks, a U.K. systems integrator and professional services provider, provides a case in point.

The fundamental problem: enterprises won't need systems integration and professional services if they shut down their IT operations and move to the cloud.

One example: Hutchinson used to support SMEs with their own data center operations, to support Microsoft Exchange, Active Directory, Sharepoint and phone services.

Increasingly, those businesses are going to Office 365, and don't need on-premises computing. That also means they do not require the support for owned facilities and systems that Hutchison Networks used to support.

The fundamental problem for some IT support operations is that more cloud computing means fewer MACs. And that means a diminished  business role for IT services companies.