Big Value of Industrial IoT is Protecting Capital Stock from Damage

source: Business Insider

Lower energy consumption is a value often cited for industrial Internet of Things applications, but protecting expensive equipment from potential damage arguably is the bigger driver of value in the industrial Internet of Things space.

Real time process control is the broad reason why edge computing (fog computing) is important, said David King, Foghorn Software CEO.

The reason process control is so important--beyond efficiency gains--is the value of protecting expensive equipment from damage and downtime.

In some cases, as with high-pressure water pumps, engineers might have only milliseconds to detect and prevent pressure conditions that cause cavitation and bubbles that damage a pump, said Sastry Malladi, Foghorn Systems CTO.

That is hard to do in a traditional cloud computing--rather than edge computing--environment. Communications latency alone can prevent proactive adjustments.

In manufacturing settings, $110,000 machines operate with specific winding tension, said Malladi. Equipment operators have only seconds to take machines offline when the winding tension is off, he added.

The point is that process control managers might have seconds to milliseconds to respond to a problem and modify operations to prevent equipment damage.

In other words, the value proposition includes better energy consumption, or more-efficient operations. But the real value is reducing damage to expensive equipment.

For Unconnected, "Killer App" Already Exists

source: Globalwebindex

Occasionally, one hears observers say that a “killer app” is required to get billions of people interested in using the Internet, assuming other barriers also are diminished (service cost, device cost, language, knowing how to use the Internet).

Others might say it is very clear that social networking is the killer app already in place. “Demand” is not the issue.

In other words, "end user demand" on the part of people who do not routinely use the Internet is not really lacking. People know what they want to do. We just have to build networks to deliver it, at prices people are willing and able to pay.

Network Interconnection Now is a Business Model Issue in India

Network interconnection is more than a technical process whereby companies connect their networks. The business rules for exchanging traffic can help some providers and harm other providers.

As Reliance Jio prepares to enter the India mobile market, interconnection rules once again are highlighted as a material contributor to firm revenues and business models. The Telecom Regulatory Authority of India, for example, is taking a look at termination charges.

There is some possibility TRAI could recommend essentially eliminating interconnection charges. That would reduce revenue for the largest mobile companies in India, and reduce cost for Reliance Jio.

The reason is simply that when networks of unequal size exchange traffic, the large networks always will, on balance, terminate many more calls than the small carriers.

At the same time, the small networks will mostly originate traffic, and will get relatively small amounts of terminating traffic from the big networks.

So low or zero-rated termination helps small carriers, and hurts big carriers, since it is the big carriers that terminate most traffic.

If Reliance Jio plans to offer “no incremental cost” (“free”) domestic calling, then interconnection charges to terminate those calls on other networks has to be set at “no incremental cost” levels as well, at a high level, or else Reliance Jio will subsidize every minute of use.

Reliance Jio Will "Crash Prices" and Drive Some Competitors from the Market

Two developments are virtually certain as Reliance Jio enters the India mobile market: revenue will “crash” and markets will consolidate.

Case studies of seven markets over the last 10 years revealed that whenever a "radically new disrupter" came in it has almost always led to two things: first, crash in voice service prices as consumers make a shift to higher data usage and second, demise of weaker players, an analyst said.

Beyond that, the overall trend in the global telecom business for three decades has been lower prices, greater competition and differentiated business strategies. Over time, the pricing trend for telecommunications products has had a tendency to move towards zero, or marginal cost pricing.

The clear problem with marginal cost pricing is that the supplier only recovers the incremental cost of producing the extra units, not the sunk cost of the infrastructure.

In principle, marginal cost pricing assumes that a seller recoups the cost of selling the incremental units in the short term and recovers sunk cost eventually.

The growing question is how to eventually recover all the capital invested in next generation networks, if retail pricing moves to “marginal cost.”

Indeed, some already argue that tier one telcos do not recover their cost of capital, perhaps an indication that marginal cost pricing is dangerous to the long term health of the industry. .

As a rule, any industry touched by Internet distribution tends to see a trimming of supplier profit margins. In fact, that is an important strategy for digital disruptors, where the strategy literally is to destroy profit margins in a traditional business, gaining share and then dominating the new business, with permanently lower profit margins, and possible lower gross revenues.

That is the theory that underpins the pursuit of “zero billion dollar markets.” One sense of the word is that big markets get created when whole new industries are founded. But one other use is more ominous for incumbents.

That is reliance on marginal cost pricing to literally “destroy” the pricing regime in an existing market, allowing a new competitor with radically lower cost structure to displace the current leaders. That is the essence of the phrase “analog dollars, digital dimes and mobile pennies.”

More Regulation for Skype, WhatsApp in EU?

source: Ali Saghaeian

Even if one believes that telecommunications policy should treat all similar services provided by similar entities in a similar way, there are two basic approaches to achieve those ends.

Regulators can lessen rules on incumbents, to match rules applied to new competitors, or apply incumbent rules to new providers. In the European Union, it appears telecom regulators are preparing to apply some rules to over-the-top voice and messaging apps.

source: Ali Saghaeian

Incumbent telecom providers have argued for nearly two decades that over-the-top voice and messaging services such as Microsoft’s Skype and Facebook’s WhatsApp are functional substitutes for carrier voice and messaging, and should be covered by the same rules applied to carrier voice.

It can be argued that OTT messaging and voice are imperfect, or only partial substitutes, with limitations. Skype is further along the process of supporting communications on an “any-to-any” basis. WhatsApp still remains a social app, requiring all users to join the community to use the app.

On the other hand, the range of functionality keeps increasing.

Skype may have to offer emergency-calling services for European customers. In cases where it assigns users telephone numbers—allowing for the receipt of calls from traditional phones—it could also be required to let those users take their numbers with them if they decide to move to a different provider.

WhatsApp could be subject to new rules on network security.

Whether one agrees that OTT apps are full functional substitutes or not, regulators have a choice: lighten burdens or increase them, to “level the playing field.”

Some of us would argue that less regulation makes sense for products in decline, as characterizes the voice and messaging services business.

5G Will Bring Differentiated "Mobile" and "Not Mobile" Tariffs

If fixed wireless and 5G begin to compete for Internet access accounts now served by fixed networks, several key business model changes will be required. First, speeds will have to increase by an order of magnitude or perhaps two orders of magnitude.

Prices also will have to drop, on a cost-per-megabyte basis, as mobile bandwidth has historically been priced significantly higher than fixed network bandwidth.

Another likely development for mobile rate plans is differentiated pricing for non-mobile access, relying either on Wi-Fi offload or small cell pricing when users are not mobile, in large part because the huge amounts of new bandwidth to support 5G will be available mostly in small cell areas.

Just how big a difference can be gleaned by the amount of capacity available below 1 GHz and newer spectrum in the gigaHertz ranges. Basically, all presently-deployed mobile communications spectrum represents less than one gigaHertz of total spectrum. New allocations for 5G will add scores of gigaHertz of new spectrum.

Bandwidth requirements will be shocking. As much as 56 GHz of 5G spectrum might be needed, one study of the United Kingdom by Real Wireless suggests. Even if that is wildly off base, otehr researchers still believe that, to support 5G, 3.1 GHz per mobile operator might be required, according to Samsung researchers, with consumption as high as 12.75 GHz per user in small cells.

By way of comparison, the typical tier-one mobile operator in European markets uses about 590 MHz of spectrum, each.

All that suggests differentiated pricing for "mobile" bandwidth, compared to non-mobile use.

source: Telecoms.com

source: policytracker

Small Cell Bandwidth Per User Could Reach 12.75 GHz for Each User

Though mobile spectrum for purposes of coverage might not change nearly as much, small cell bandwidth could mean consumption as high as 12.75 GHz per user, in the small cell areas.

That could mean, by some estimates, a need for as 56 GHz of spectrum, to support multiple service suppliers, one study of the United Kingdom by Real Wireless suggests.

For 5G, 3.1 GHz per mobile operator might be required, according to Samsung researchers.

The typical tier-one mobile operator in European markets uses about 590 MHz of spectrum, each.

source: Samsung