Mobile Price Wars Escalate, Again

Another round of price cutting has broken out in the U.S. mobile market. T-Mobile US and Sprint are emphasizing “unlimited” mobile data. AT&T and Verizon are emphasizing “more value,” increasing prices but also increasing usage allowances.

T-Mobile US has launched its “One” offers that provide unlimited data on every plan. For “one low price,” customers get unlimited unlimited domestic talk, unlimited domestic texting and unlimited 4G LTE smartphone data, T-Mobile US says .

Pricing is simple: the first line is $70 a month, the second is $50 a month, and additional lines are only $20 a month up to eight lines (for accounts with auto pay).

Without auto pay, costs are $5 more a month higher, per line. Verizon has introduced a “unified” small business communications system that is “mobile first,” and unifies desktop and mobile communications.

Wasting no time at all, Sprint has countered the new T-Mobile US “One” offer of unlimited mobile data as the standard plan.

Sprint’s Unlimited Freedom plan features two lines of unlimited talk, text and data for a price of $100 a month.

Beginning Friday, Aug. 19, 2016, Unlimited Freedom includes:

• Unlimited talk, text and optimized streaming video, gaming and music
• Unlimited nationwide 4G LTE data for most everything else
• $60 a month for one line
• $40 a month for a second line
• $30 a month each for lines 3-10

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 always, such offers are a bet on supply and demand dynamics. As always, a carrier with fewer customers, and more bandwidth, can afford to load its network more heavily than a carrier with lots of customers and more-limited bandwidth.

Also, T-Mobile US is betting that most consumers will continue to use relatively modest amounts of bandwidth. As always, the difference between a formally “unlimited” plan and a plan with “generous amounts of data” is effectively nil.

For users who each need to use only a few gigabytes a month, it doesn’t matter whether a plan offers 10 Gbytes or is actually unlimited.

Some have argued that mobile marketing wars are moderating. Others might argue the facts indicate otherwise.

85% of Asia Mobile Service Providers Want OTT Partnerships

Fully 85 percent of surveyed Asia-based mobile service providers believe partnerships with over-the-top (OTT) providers give, or will give their organizations, a competitive advantage in the region that will contribute to revenue and subscriber growth, Alepo says.

Since most apps now are developed by third parties, not access providers, if app bundling is desired, that means partnerships with app providers. The big issue is what sorts of apps to bundle, and which bundled apps will drive the greatest value for access providers (ISPs, mobile operators).

While just over half of respondents have working partnership agreements with OTT providers today, nearly all expressed interest or intent in forming OTT partnerships.

Today, OTT services represent a $28 billion market globally, projected to double to $54 billion by 2019, Alepo says. Or course, those gains for app providers also will produce losses.

The challenge is huge. Ovum predicts that operators will lose $386 billion to OTT voice providers from 2012 to 2018. One can disagree with the magnitude, while agreeing that product substitution is happening.

In India alone, the growing popularity of OTT messaging apps in the past two years has siphoned $2.76 Billion from operator text messaging revenue, according to Ovum.

In the Asia Pacific region alone, OTT TV and video revenues are expected grow to $18 billion by 2021.

So it is not surprising that more than 78 percent of respondents say third-party OTT players represent a threat to their business or revenue.

Fully 67 percent of respondents agreed that  “OTT providers are able to provide lower-cost service options.” Some 63 percent agreed that  “traditional mobile voice revenues are stagnant or declining while OTT voice services are on the rise.

Also, 60 percent say “OTT providers are able to innovate and better market their services to our subscribers.”

That is why app development will be such a big focus at the upcoming Spectrum Futures conference. Apps now are created mostly by third parties, so access providers mostly have to partner to create bundles of value featuring apps.

Here’s a  fact sheet and Spectrum Futures schedule, illustrating the planned discussion of how and where ISPs and app providers can partner, as well as the business issues to be confronted.

Venture capitalists will explain what they are looking for, as well.

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