Verizon Introduces Small Business "Mobile First" Service

Verizon has introduced a “unified” small business communications system that is “mobile first,” and unifies desktop and mobile communications.

“One Talk” from Verizon is the “only” mobile-first communications solution in the U.S. market designed for small businesses and simplifying small business communications decisions, Verizon argues.

Some might argue that Sprint has been crafting unified mobile-desktop approaches to business communications for at least a decade, though.

So the Verizon offer arguably resurrects in slightly different form a Sprint mobile-only approach adopted about five years ago, pioneered a decade ago and reflecting a similar mobile-only approach.

Verizon says “One Talk” is the first mobile solution that includes business calling features typically only available on traditional desk phones, and allows customers the flexibility to buy only one service to meet both needs (mobile and desktop).

One Talk supports both Android and iOS devices, plus One Talk-capable office, lobby, and conference room phones.

The advantages, aside from single numbers, might include reduced need to buy desktop phones. Ability to support both a business number and the customer’s own personal phone number on one device also are said to be advantages.

One Talk supports:

• High Definition (HD) Voice, video calling, Wi-Fi calling and messaging
• Auto receptionists, hunt groups, and executive assistant line sharing, all of which work uniformly over mobile devices and One Talk-capable desk phones
• One service provider, one bill, one support team and one partner for all mobile and fixed communications
• A graceful evolution path for established businesses, who can migrate branch or satellite offices to One Talk to simplify their communications, reduce cost and mobilize their business

“We designed One Talk to be flexible, to meet the needs of the 39 million employees working in small businesses across the U.S., and to scale to medium businesses as well,” said Mike Lanman, Verizon SVP, IoT and enterprise products.

One Talk is available nationwide, while cable companies are limited by regional geographic footprints and struggle to support out-of-network employees.

Premises-based solutions available from cable, telecommunications and cloud service providers require customers to buy two solutions, one for mobility and one for wireline services.

Charter Passes Verizon as Supplier of Carrier Ethernet Services

Charter Communications has passed Verizon as a supplier of carrier Ethernet services (as measured by port share)  to U.S. business customers, according to Vertical Systems Group.

That one data point is among many others showing that incumbent tier-one telcos are losing their “dominant” position in many market segments. Some would argue that means regulatory policy should change, as well.

In the middle of 2016 retail port share was lead by AT&T, Level 3, Charter (Time Warner Cable and Bright House), Verizon, CenturyLink, Comcast, XO, Cox and Windstream.

Charter instantly becomes the third-largest supplier, as a result of its acquisitions of Time Warner Cable and Bright House.

At the end of 2015, Time Warner Cable was the top Cable industry supplier, and ranked fifth. Charter Spectrum is now the largest cable industry provider of retail Ethernet services.

Verizon drops to fourth from third and CenturyLink moves from fourth to fifth.

"The competitive balance of the Ethernet marketplace is evident, as more than 60 percent of new connections were delivered by CLECs and Cable MSOs during the first half of 2016," said Rick Malone, Principal of Vertical Systems Group. "Our analysis shows a 17 percent annualized growth rate for U.S. carrier Ethernet services for the full year."

Will IoT be as Big as the Industrial Revolution?

If you are in the communications business, you should hope the hype is going to be proven correct, and Internet of Things is as transformative as was the Industrial Revolution. 

The reason is that all those connected devices represent the next wave of growth after mobile data saturates. And that is just the "access" part of the story. 

To the extent that "dumb pipe" providers want to "move up the stack" and into value-added parts of the ecosystem, IoT offers many opportunities to do so. 

Comcast Increases Internet Access Speeds at Moore's Law Rates

As crazy as it seems, U.S. Internet service provider Comcast, now the biggest supplier in the market, has doubled the capacity of its network every 18 months.

source: Comcast

In other words, Comcast has  increased capacity precisely at the rate one would expect if access bandwidth operated according to Moore’s Law.

source: Comcast

Mobile Internet Price per Gigabyte Falls Again

Lower retail prices are an expected outcome of price wars. So it is not surprising that retail prices for mobile service in the U.S. market have become more affordable in the wake of price attacks by T-Mobile US and now Sprint that seem to be crimping growth for AT&T and Verizon, when not causing actual market share loss.

Recessions also cause sales to slump, most executives in most industries likely believe. Most also likely believe that recessions or difficult economic conditions cause consumers to seek lower-cost solutions.

One example: look at what happened to U.S. cable TV business customer segment growth during the Great Recession that began in 2008. Growth was slashed a much as four times the prior levels.

Recent adjustments of mobile data prices by Verizon and AT&T to raise prices for bigger usage allotments (bigger buckets for slightly-higher prices, producing lower revenue per gigabyte) can be viewed in several ways.

Increasing value is one way of fending off continued price attacks by T-Mobile US and Sprint. In the first quarter of 2016, for example, T-Mobile grew its subscriber base 31 percent. Sprint grew its base three percent. Verizon grew just one percent and AT&T lost accounts.

The attempts to boost perceived value might also be a response to consumer perceptions that tougher economic conditions require more-affordable solutions.

At the same time, consumers might perceive that lower-cost options do not involve unappetizing trade-offs. In other words, high levels of competition have boosted the perceived value of all options, including the “budget” options. And standard retail offers that once might have been deemed “too pricey” no longer have that downside.

The other observation is that the plan revisions by AT&T and Verizon show the continuing trend of lower prices for data consumption. Prices do not fall exactly at rates Moore’s Law would suggest. But in many cases they fall close enough.

As crazy as it seems, U.S. Internet service provider Comcast, now the biggest supplier in the market, has doubled the capacity of its network every 18 months.

In other words, Comcast has  increased capacity precisely at the rate one would expect if access bandwidth operated according to Moore’s Law.

source: SNL Kagan

Verizon Arguably Now is Among the Largest U.S. CLECs

At least some veterans of the competitive local exchange carrier (CLEC) industry might argue that “things did not go as planned” in the wake of passage of the Telecommunications Act of 1996.

Ignoring the huge bankruptcies in the sector, which were among the biggest results, other key business model elements did not work out as planned, either.

Initially, AT&T and MCI were the biggest CLECs in the market, anchored by their consumer efforts as much as business segment sales.

But MCI was absorbed by Verizon, while AT&T was acquired by SBC, which promptly rebranded the whole company “AT&T.”

Many business-focused independent CLECs went bust. But the most-successful consumer CLECs--especially in the consumer segment--wound up being the cable TV companies.

And many former independent telcos now earn significant revenues from their “CLEC” operations.

And now Verizon arguably has emerged among the nation’s biggest CLECs, by virtue of its acquisition of XO Communications.

In classic terms, Comcast and Charter Communications arguably are  the largest U.S. CLECs, as measured by metro route miles. But XO Communications likely would be counted among the 10-biggest “CLECs,” on most measures.

Measured other ways, such by carrier Ethernet revenue, XO Communications might rank as high as second among all carriers, incumbent or CLEC.

Today, the business units of the nation’s largest cable operators (Charter Communications, Comcast and Cox Communications) are the fifth, sixth, and eighth largest providers of business Ethernet services in the United States, US Telecom argues.

Cable operator business customer revenue has been growing at double-digit rates for most of the period since 2004.

Carrier	Metro Route Miles	On-Net Buildings
AT&T	940,000	20,000
Verizon	800,000	10,000
CenturyLink	250,000
Charter Comm.	150,000	75,000
Comcast Business	141,000
Frontier	78,838	6,300
Charter	65,000	13,800
Level 3	55,000	30,000
Birch	31,000	580
Cox	30,000	28,000
Zayo	28,798	16,712
EarthLink	28,000	426
Cogent	27,400	2,090
Lightower	20,000	8,500
FairPoint	16,000	3,600
Hawaiian Telcom	15,000
Consolidated Communications	13,038	4,804
XO Communications	13,000	4,000
Fibertech (Lightower)	12,200	10,389
Sunesys (Crown Castle)	8,656	7,202
Fiberlight	8,059	2,018
Lumos Networks	7,955	1,530
Cincinnati Bell	6,600	5,800
Cablevision (Lightpath)	5,800	7,000
Spirit/PalmettoNet	5,000	100
Unite Private Networks	5,000	2,500
Southern Light Fiber	5,000	3,437
Alpheus	3,250	337
Integra	3,000	3,000
Wilcon	3,000	1,014
FirstLight Fiber	1,600	1,500
US Signal	1,100	704
source: Fierce Telecom estimates

Why IoT Funds Rural Internet Access

source: Strategy and Business

In the telecom business, some things do not change: not every customer segment or geography is equally profitable.

In fact, some customer segments and locations are highly profitable, some are profitable and some lose money.

That always is true for mobile networks, which make most profit from a small number of towers. In a typical pattern, half of total revenue is generated by as few as 10 percent of tower sites.

That is why customer segmentation is an increasingly-important part of service provider strategy.

There are some obvious implications.

If, in a country such as India, 75 percent of new mobile Internet customers come from rural areas, then it is possible to say that service providers will likely lose money on almost every account.

The same will be true in Indonesia, the Philippines or other nations with significant rural populations.

That is why it is vital to create access platforms that deliver reasonable quality service at much lower prices, or create new funding mechanisms such as advertising, to defray some of the end user direct spending.

Some argue that programs such as Free Basics are important precisely for such reasons.

But even that will not be enough. Historically, telecom services virtually always have been subsidized in rural areas. They are subsidized for a reason: few services actually are profitable in rural areas.

Several decades ago, profits from voice services sold to enterprise customers were used to support such services in rural areas. More recently, mobile revenues have propped up fixed network services.

That will not change as the new goal is Internet access for rural residents. One way or the other, profits from urban customers and segments will be used to support money-losing services in rural areas.

That is why Internet of Things, smart cities, machine-to-machine services, connected health, connected cars and other new potential revenue sources are so important.

Those potentially big new revenue sources will provide the profits to fund Internet access for rural customers. The connection--if direct--often is missed.

That is why app and service development, Internet of Things and smart cities will be part of the discussion at Spectrum Futures. Unless ISPs make lots of money someplace else, they will not be able to afford to provide rural customers Internet access.