Are Telcos Shifting Investment to Fixed Network, Away from Mobile?

With the caveat that it always is difficult to abstract local trends from global trends, Dell’Oro Group says investments in fixed networks are growing, while investments in mobile networks are declining, in the first half of 2016.

That is not to say that overall capital investment is dropping. In fact, investment might well continue to grow.

source: IHS Infonetics Research

A relatively flat trend, by some estimates, be not be unusual, as global telco capex has been dropping since perhaps 2013.

source: Infonetics Research

There always are logical reasons for the cyclical fluctuations. Mobile investment tends to be spiky, rising when new next-generation networks are being built, then leveling off as those networks reach completion, and capex shifts back to maintenance.

But there arguably are other important drivers of behavior. With the growing need for faster fixed network access speeds, as well as continuing competitive threats, many service providers with the option to invest more in either mobile or fixed networks might be shifting funds to upgrade the fixed networks.

Unfortunately, from a service provider perspective, less-robust revenue growth in the mobile segment also is an issue. If revenue upside from incremental mobile investment slows, it is rational to slow capital investment to match.

Investment in fixed networks is more strategic, though. Some amount of incremental investment is required--especially in markets where there are cable TV competitors--simply to maintain competitive parity.

Longer term, some investments in backhaul now are viewed as necessary to support expanded deployment of 4G and 5G small cells, or to grow business customer revenues.

The other long term issue is that capital investment as a percentage of total revenue, after a period of higher investment intensity, might be returning to more-typical ranges.

Analysts at Dell’Oro Group believe telecom capex will decline at a faster pace than revenues over the next three years.

Capital intensity might drop from 18 percent in 2015 to 16 percent in 2018, the analysts say. That would be about what longer-term investment levels have been.

source: Dell'Oro Group

How Much Data Will "Average" U.S. Homes Consume in 2 Years?

In 2011, the average U.S. household data consumption was perhaps 26 Gbps. Time Warner Cable says  the company’s average household usage in December 2015 was 141 gigabytes a month and has grown about 40 percent a year.

Such rates of growth, should they continue--and most believe double-digit annual increases are reasonable--quickly can up to doubling of consumption every 2.5 years to three years.  

In other words, by the end of 2016, the average Charter Communications customer (in legacy Time Warner areas) household might be consuming 197 GB worth of data, topping 276 GB by 2018.

But as with all things related to use of the Internet, averages might obscure as much as they reveal. Many consumers will use far less, but some might use far more.

U.S. homes using Internet-based video surveillance systems might require substantial upload bandwidth, for example, beyond that required for growing amounts of video entertainment in the downstream direction. Entertainment video requires an order of magnitude or more increase in transferred gigabytes, compared to web surfing, for example.

Typical upload bandwidth usage for a “Nest” home security system can reach 380 gigabytes, for example.

source: Southcentral Communications

What's the Advantage of Combining Chrome and Android?

Others of you can probably think of many other reasons why a single operating system blending Chrome and Android would be helpful, such as making tablets that work as notebooks, or notebooks that act like tablets.

Personally, this is the biggest obvious attraction: using the smartphone as the processor, docked to an external monitor or other tablet-sized screen.

For some applications, including content production, keyboards are a necessity and bigger screens very helpful. Sure, you could carry a tablet and external keyboard. You could carry a tablet and a PC, plus your smartphone. Many of us do.

But maybe having less to carry would be very useful.

source: Android Central

Will DirecTV Now be AT&T's Primary Video Platform in 2021?

AT&T’s new online streaming video service, DirecTV Now, will become the company’s primary video platform in three to five years, some inside AT&T apparently now predict. The speed of that change--and its implications--show just how much change might be expected in the entertainment video business and the service provider business model.

By switching to over-the-top delivery, AT&T in principle could avoid truck rolls, marketing, in-home capital and other fulfillment cost. DirecTV Now, though primarily aimed mostly at attracting new subscribers among the ranks of consumers disenchanted with linear services, might also eventually appeal even to consumers of facilities-based services that require a physical connection (satellite dish installation or installation of cables and set-tops.

Eliminating a truck roll and customer premises equipment could eliminate several hundreds of dollars of cost whenever a new customer is signed up and activated.

DirecTV Now, set to be introduced by the end of 2016, appears aimed at about 20 million households that have no cable or satellite service, competing with services such as Sling by Dish.

One might argue that DirecTV Now is worth doing if the “unconnected” were the only target. But the benefits might also extend to other consumers who already buy either a fixed network or satellite-delivered linear service.

For AT&T there are trade-offs in other areas, particularly the need to ensure that its access bandwidth assets are plentiful enough to support the big upsurge in bandwidth consumption on mobile and fixed networks.

Linear Subscription TV Continues Slow Subscriber Decline

Though linear subscription TV is a mature business, indeed likely a product in the declining phase of its product cycle, it is not yet a business in sharp decline. Instead, it continues to decline very slowly, in terms of subscribers, while average revenue per account keeps climbing.

Some 82 percent of U.S. TV households (there are more homes than “TV homes”) subscribe to some form of linear TV service, according to Leichtman Research Group.

The percentage of TV households subscribing to such services is down from 87 percent in 2011,

Among TV households that do not currently subscribe to a subscription service, 14 percent reported they had paid for a service in the past year.

Overall, about 2.6 percent  of TV households bought linear TV service in the past year, but currently do not, compared to 2.5 percent in 2015 and three percent in 2014.

Average (“mean”)  reported monthly spending on such services is $103.10 -- an increase of four percent in the past year. Though the lowest annual increase in five years, that rate continues to remain above the average rate of price increases elsewhere in the economy.

How much longer account revenue can grow at that rate also is an issue, as average household incomes are not increasing, in inflation-adjusted terms. As a result, the percentage of household income spent for linear video is rising.

That is among the reasons for new emphasis on "skinny bundles" featuring a menu of fewer channels, sold at a lower price.

That percentage can continue to rise if consumers reduce spending elsewhere in their budgets, as they have done with spending on mobile services. But even those increases have come at the cost of reduced spending on fixed network services.

The big unknown is whether the rate of decline remains linear, or becomes non-linear at some point in the future, and when that could happen.

source: IHS

source: nScreen Media

source: BLS

source: IHS

Comcast to Sell Business 100 Gbps Ethernet in Annapolis, Md.

Comcast is going to sell business customers 100-Gbps Ethernet in Annapolis, Md., illustrating once again that it is cable TV operators who now set the standards for much of the U.S. Internet and data communications market, consumer, small business or enterprise.

Such speeds would not be unheard of in the long haul network, but are rare in metro access markets.

You would think speed leadership would come from Verizon's fiber to the home network, but cable TV operators such as Comcast have matched and now are eclipsing Verizon FTTH speeds at the top end, and have been leading telcos in "average" speeds since before 2004, with big increases since 2006.

So far, Google Fiber has few enough customers that it does not factor into the national picture, even if Google Fiber can be credited with launching the latest round of upgrades to gigabit speeds.

Nokia already has demonstrated 10 Gbps symmetrical speeds on hybrid fiber coax, supporting the CableLabs “full duplex” version of DOCSIS 3.1. Full duplex uses time division rather than frequency division.



source: FCC National Broadband Plan

20% of T-Mobile US Binge On Users bought Data Plan Upgrades

The T-Mobile US “Binge On“ program that zero rates streaming video has gotten a 99-percent satisfaction rating in a study of consumers produced by Strategy Analytics.

Also, some 20 percent of Binge On users traded up from a lower tier T-Mobile US price plan to get Binge On’s benefits, so the program arguably is paying off for T-Mobile US.

All of that arguably also helps video packagers who have gotten more viewers and engagement.

The survey also found 68 percent of customers of rival mobile networks indicated either strong or moderate interest un-metered video streaming over the mobile network in exchange for streaming limited to DVD quality.

Also, some 14 percent of users reported they were either “very interested” or “extremely interested” in switching to T-Mobile to get zero-rated video.

That would explain why both AT&T--and Verizon to some extent--now have responded with similar offers.