How Much Share Will Skype for Business Take?

source: No Jitter

In many ways, the relative slowness of hosted PBX adoption is a puzzle, given the feature richness and cost savings, compared to premises switch alternatives, in many cases.

A subsidiary question is how well some services, such as Skype for Business, might fare.

Of the 224 respondents to a No Jitter survey that say they are using Skype for Business on-premises, 33 percent said they are using Enterprise Voice as a PBX replacement.

source: No Jitter

Of those 75 respondents, 52 percent estimate that their organizations have replaced at least half of their prior PBX capacity with Skype for Business Enterprise Voice and 63 percent indicated that their organizations will have done so in two years.

Some 17 percent of these respondents report a full replacement of PBX capacity, with 25 percent reporting that they expect to have fully replaced their PBX capacity with Enterprise Voice in two years.

Overall, 61 percent of respondents using Enterprise Voice said they consider it to be "better" or "much better" than the PBX systems replaced or still in use at their organizations.

source: No Jitter

Conversely, 11 percent deemed Skype for Business to be "worse" or "much worse," while 22 percent said Enterprise Voice and PBX systems are about the same in their experience.

Of those respondents whose organizations have already shifted some or all of their UC to Skype for Business in Office 365, many seem to be open to the idea of using Microsoft's cloud-based calling services..

Just shy of 60 percent of 175 respondents said they are already using or have considered using Skype for Business in Office 365 for voice services.

source: No Jitter

New Thinking on Bundles?

For a couple of decades now, the triple-play bundle has been a mainstay of fixed network service provider strategy for coping with greater competition.

Simply, where it might once have been possible to garner up to 80 percent or 95 percent of all potential customers for a particular service, it now is quite common for any single contestant to get 30 percent to 40 percent share.

Under those conditions, selling more products to a smaller number of customers is necessary and rational.

Still, there always are niches in the communications business, especially for smaller providers without the benefits of massive scale.

Some independent Internet service providers might focus on dual-play packages. Some mobile services providers are pure-play mobile suppliers. Some might have wholesale-only business models, selling a single capability to retail partners.

Over time, even some former triple-play services providers might rethink that stance, and focus instead on dual-play communications bundles. Potential new regulations, it is claimed, could undermine the video business model for smaller cable TV operators, for example.

Even AT&T essentially now is emphasizing a different type of triple play (fixed network Internet access plus voice; combined with satellite video entertainment; or mobile voice and Internet plus satellite video) than in the past.

The point is that even when a particular strategy makes sense for scale players, there always are niche strategies for smaller specialists that defy the general rules.

"The Era of Paying for Voice Calls is Ending," Says Reliance Jio CEO

source: ITU

Reliance Industries Chairman Mukesh Ambani says domestic voice calls will be free forever on the Reliance Jio network. He also and announced a four-month introductory offer of free voice and data services for new customers, starting on September 5, 2016.

“The era of paying for voice calls is ending,” he said.

That, in a nutshell, the fundamental revenue problem faced by legacy service providers in the Internet era: it is tough to compete with providers that “give away what you sell.”

Analysts at Morgan Stanley Research expect Reliance Jio to generate more than $2 billion revenues in 2017 to 2018 period, gaining two percent voice market share and 19 percent market share in mobile data, without overall mobile market share of six percent.

That forecast sees Jio getting  more than 40 million subscribers in a year.

Analysys Mason says mobile data tariffs need to be reduced 75 percent to bring costs in line with developed nation levels.

India’s data tariffs for 1 GB of usage represent 2.6 percent of gross national income per capita

Developed country levels are 0.4 to 0.5 percent GNI per capita.

source: ITU

“Our analysis concludes that a 75 percent cut in data tariffs (average revenue per GB of Rs 57) alone could increase the user base to 645-667 million SIMs, and the level of monthly data usage to around 4.2-4.3 GB per SIM in 2019-20,” said Analysys Mason.

Perhaps nobody expects a 75-percent fall in tariffs over the next couple of years. Longer term, it is hard to bet against such an outcome. Fixed network Internet access prices in the developing world--arguably a much-tougher proposition, still have been falling towards developed country levels, on a percent of GNI basis.

By 2015, average mobile broadband prices corresponded to 5.5 percent of GNI per capita, worldwide. In developing countries, the average was more like seven percent. Of course, mobile Internet access was below one percent in developed countries, as a percentage of GNI per capita.

Further reductions in fixed network costs might be difficult, some data suggests. Since 2013, for example, fixed network costs seem to have grown, not shrunk.

source: ITU

Over 15 Years, Average Internet Speed Ceilings Have Become Floors

source: PCmag.com

Progress is very swift in the Internet access business. In 2009, the average Internet access speed in Australia was about 12 Mbps. So at the time, a boost to 25 Mbps, the minimum national speed promised by the National Broadband Network,  sounded pretty good.

In 2009, the average Internet access customer In the United Kingdom was getting 4 Mbps. So a boost to “superfast” (24 Mbps to 30 Mbps) likewise sounded pretty good.

That same year, typical U.S. speeds were in the 5 Mbps range. By 2015, though, average U.S. downstream speeds had climbed to nearly 36 Mbps.

So we don’t hear much about 24 Mbps or 30 Mbps being “superfast.” The U.S. Federal Communications Commission, in fact defines broadband as being a minimum of 25 Mbps downstream.

source: PCmag.com

In 2016, the biggest cable TV ISPs offer downstream speeds ranging between 49.6 Mbps and 39 Mbps. Verizon matches the top average speed of 49.6 Mbps.

Among other ISPs, Google Fiber is the absolute fastest, offering average downstream speeds of 354 Mbps.

In other words, what once was a “goal” now is simply a “fact.” For expensive, long-lived assets such as Internet access networks, all that shows how dangerous it is to make too many assumptions about “where we are, and where we are going,” where it comes to the Internet and Internet access.

Give Google Fiber credit for kicking off a major upgrade cycle in the U.S, market, despite some mocking of that role by AT&T.

But typical speeds have been increasing fast. In fact, Comcast, the leading U.S. Internet service provider, has been increasing speeds at rate equivalent to Moore’s Law--doubling about every 18 months.

With 5G coming fast, even mobile Internet access is going to happen at gigabit speeds.

source: Akamai

source: Ookla

Australia’s NBN now says the whole network will be finished by 2020. The NBN expects to earn about A$5 billion in wholesale revenue, with average revenue per user forecast at A$52.

The network also will deliver speeds of at least 50 Mbps downstream to 90 percent of fixed line premises.

Perhaps oddly, only customers served by hybrid fiber coax networks will be able to get gigabit per second service.

Flexibility or Debilitating Uncertainty From New Proposed EU Net Neutrality Rules?

Sometimes, it is sensible not to create hard and fast rules to cover circumstances that are expected to be novel. In other cases, the same stance can create such uncertainty that innovators will be dissuaded from trying to create new things.

New proposed rules on network neutrality are likely to cause just that problem.

As a practical matter, network neutrality is based on a principle that “providers of internet access services shall treat all traffic equally,” a concept initially seen as primarily relating to the notion of “best effort access only,” with no prioritization of packets by sender, receiver, terminal or access network.

Even if some think ISPs--or consumers, app providers and ISPs--should be free to create access services with quality of service measures, the default “best effort access only” principle is at least clear.

Other newer proposed principles are not so clear.

The net neutrality concept has been broadened, in some quarters, to rules about zero rating of apps or data received by a user or customer.

New proposed regulations  by the Body of European Regulators for Electronic Communications (BEREC) do not necessarily create clarity on that matter.

The guidelines prohibit zero-rating in circumstances "where all applications are blocked or slowed down once the data cap is reached," though the document also acknowledges that some cases are "less clear-cut."

Therein lies a problem. The proposed rules do not clearly permit or outlaw zero rating. Instead,

BEREC says practices will have to be looked at case by case.

Companies are not going to take many risks, under such circumstances, even if consumers want such features, services and price points.

There are other issues as well, but the creation of uncertainty is a clear problem.

Bandwidth Inequality is Going to Increase, at Least Momentarily

source: M. Hilbert

There are times when the amount of communications capacity, as available to consumers across the globe, becomes more equal, and times when there is more inequality. We seem to be heading for a time when gaps grow again.

Since 2006, gaps have tended to shrink, globally. In 2012, by one analysis, gaps began to grow again. The reason is that the introduction of new platforms tends to happen unequally, first in developed markets, later in developing markets.

source: 4G Americas

With 5G coming, platform-based inequality will grow, for a time. But there are some other

developments likely to widen gaps. In the U.S. market, unprecedented amounts of new spectrum are going to be released, while spectrum sharing and massive amounts of unlicensed spectrum also are coming.

At the same time, North America is witnessing huge leaps in bandwidth supply from cable TV companies about to innovate at their own pace, separate from what all other suppliers using traditional telecom technology can do.

At the same time, significant new uses for fixed wireless, especially in conjunction with new platforms, new radio and antenna technologies and use of shared and unlicensed spectrum, are going to make possible huge increases in delivered bandwidth, at prices lower than possible using fiber to the home.

As small cell technology is more-widely deployed, gaps between rural and urban users also will start to increase again.

AWS, Other Cloud Computing Leaders Best Telcos in U.S. Market

With NTT as the exception that proves the rule, tier-one telcos have not been able to outcompete the application and commerce providers that, oh by the way, have decided to monetize their cloud computing assets.

The “bundled services” strategy Verizon and AT&T attempted, melding cloud services with private internet networks, security, data storage and service guarantees, has failed to gain traction, compared to Amazon Web Services, Microsoft, IBM and Alphabet (Google).

Some would argue that the market changed. Though colocation remains a distinct segment within the broader “data center services” market, the cloud computing market arguably has changed because the original concerns about security have faded.

In substantial part, those buyer perceptions changed because the leading app cloud computing services were able to create security mechanisms strong enough to allay the original fears.

In other words, a buyer would often have closen AWS for cloud computing, unless convinced security was not sufficient. If AWS could prove that fear was unjustified, then it was going to make sense for customers to buy from AWS, rather than other suppliers without AWS moxie.

The other issue is that AWS and other leading cloud computing companies arguably were quicker to build ecosystems around their cloud offers, as well as making it easier for developers to create new features, services and apps in a cloud context.

Some will draw larger conclusions from those developments. Some will say that, once again, tier-one telcos have proven they are not adept at innovating. There is historically much truth to that argument.