Spectrum Value Declining?

As essential as licensed spectrum might be for mobile operators, price and quantity still matter, as does the existing amount of spectrum any contestant already has in its possession. In addition, the strategic context also matters.

At least in some markets, planned releases of huge amounts of new spectrum, plus possible sales of surplus spectrum, and use of unlicensed spectrum, now are viewed as viable alternatives--longer term--to acquiring new licensed spectrum at current prices.

In other words, many competitors, in some markets, now might be less willing to pay high prices for 4G or 5G spectrum.

Consider a recent Egyptian government offer to license 4G spectrum available in 2.5-MHz and 5-MHz blocks.

None of the three other Egyptian mobile operators placed a bid, suggesting both that the price was too high, and the amount of spectrum too low.

Vodafone Egypt Telecommunications, Orange Egypt and Etisalat Misr all have twice declined to submit bids.

Only Telecom Egypt, the state-run fixed-line monopoly, did buy a 4G license, purchased to allow it to enter the mobile market for the first time. As a challenger, Telecom Egypt arguably was willing to pay more than the other leading carriers, for a smaller spectrum allocation than would be needed if it is successful, for several reasons.

First, without spectrum it could not enter the market as a facilities-based provider. Also, if Telecom Egypt believes it will have a smaller customer base, then the smaller spectrum allocation might work, for a time.

The GSMA has called for boosting the amount of spectrum available, arguing that the total amount of spectrum assigned to each operator for 4G needs to be in the range of 2x30MHz to 2x60MHz, across a range of coverage and capacity bands, with a minimum contiguous bandwidth of 2x10MHz in each band.

In contrast, only 2×2.5MHz to 2x5MHz were proposed to mobile operators by the Egyptian authorities.

GSMA also argues that the proposed prices were too high as well.

The National Telecom Regulatory Authority now says it will consider options for offering the new licenses to new international operators.

Mediacom Goes Hybrid for HFC Network

In a real sense, a “hybrid” strategy that bridges present and future technologies, business models and services is an effort to harvest a legacy business while laying the foundation for the next business model.

And even when cable TV executives remain confident about scaling their hybrid fiber coax networks to multi-gigabit bandwidth, they also are starting to deploy fiber-to-premises networks to serve business customers.

Mediacom, for example, plans to install gigabit per second Internet access for its consumer customers over the next three years. But Mediacom is using a hybrid physical media strategy.

“We’re actually doing dual cables where we are running both both fiber and coax,” said Dan Templin, Mediacom VP of business services.

The dual fiber and coax drop includes a four-pair fiber and coax in single sheath to address various service configurations that might be required by business customers.

By doing so, Mediacom creates an upgrade path for fiber to customer that does not require additional construction.

Car Makers, Suppliers Form 5G Auto Association

source: Analysys Mason

Audi, BMW Group, Daimler AG, Ericsson, Huawei, Intel, Nokia and Qualcomm have formed the 5G Automotive Association to develop, test and promote communications solutions for connected vehicles, smart cities and intelligent transportation.

Christoph Voigt, BMW Group SVP, is board chairperson and Dino Flore is director general of the association.

source: Business Insider

By 2020, BI Intelligence estimates that 75 percent of cars shipped globally will be built with the necessary hardware to allow people to stream music, look up movie times, be alerted of traffic and weather conditions, and even power driving-assistance services such as self-parking.

Almost by definition, the connectivity of choice will be mobile networks.

Rogers, Shaw Shut Down Streaming Service

Rogers and Shaw Communications have decided to shut down their streaming video service “shomi,” illustrating once again the importance of scale for over-the-top voice, messaging or video services. As has often been the case, services launched by just one operator fail to gain enough scale to compete.

Over the top voice services run by mobile service providers or telcos have had modest success, and much the same is true for carrier messaging services.

The need for scale is one reason some observers believe it is inevitable that Comcast and Charter Communications will look seriously at acquisitions in the U.S. mobile operator market. Neither firm, by itself, has network assets reaching as much as 30 percent of U.S. households.

That implies that national reach, which some would argue now is required for leaders in the mobile market, must be created, one way or the other.

source: Ovum

How Often are you "Amazon First"?

About 55 percent of consumers turn to Amazon first when searching for products online, according to research conducted on behalf of BloomReach. But higher percentages will go straight to Amazon if they already know what they are looking for.

When holiday shoppers know what gift they want, 59 percent will start on Amazon, 24 percent will start on a search engine, and 16 percent will start at a retailer that has that product.

When holiday shoppers don't know what gift to buy, 49 percent will start on Amazon, 28 percent will start on a search engine, and 26 percent will start on a retailer the gift recipient likes.

Those findings make sense. If a person has a problem, but is not sure about the solution, using a search engine--”Google it”--makes sense. But if a person already has chosen a particular solution, then it makes sense to go straight to Amazon.

The "State of Amazon" study, which surveyed 2,000 U.S. consumers, found that search engines and retailers lost almost equal ground, coming in at 28 percent and 16 percent respectively.

Amazon increased its share by 11 percent in one year.

The study also found that mobile devices are driving more than half of all traffic to top sites and has grown to 30 percent of all U.S. e-commerce.

While Amazon (mobile site or app) still commanded 50 percent of consumers' first stop for products on mobile, search engines fared better with 34 percent, with retailers lagging at 16 percent.

Free Basics and Other Sampling Programs Help Solve Both Demand and Supply Issues for Internet Access

Ultimately, demand might be the bigger barrier to ubiquitous Internet usage than supply, even if both supply cost and demand value are key issues in most markets, according to the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

On the supply side, the high cost of infrastructure is the main barrier, suggesting that mobile networks will be the way most people eventually get access to the internet.

Despite differences in the economic fundamentals of nations, the barriers to deployment and adoption are categorically of the same underlying nature.

On the supply side, the lack of access to broadband is mostly a financial issue driven by the high infrastructure costs of network deployment relative to the revenue potential.

On the demand side, awareness and digital literacy as well as affordability are the key issues. “Awareness” means use of Internet apps and services is an experience good.

An experience good is a product for which the value is difficult to ascertain prior to its consumption. One proven way to solve that problem is to allow “sampling” of the product. That is the idea behind Free Basics, the Internet.org initiative that provides access to a suite of apps without requiring that users buy a data plan.

The issue is sustainability: how to balance the use of promotions and sampling with the longer-term goal of generating enough revenue to build and maintain the access networks.

And that is where economics suggests the value of a mix of retail offers, including the sampling programs at low or no cost and other packages that add incremental value for incremental cost.

In other words, “free but limited,” combined with “for fee” packages, contributes to the overall goal of enabling Internet access and use of apps for everyone.

source: Phoenix Center

If Netflix, HBO Go and Hulu are Treated Like Linear Video, Then Zero Rating Should Not be an Issue

The city of Pasadena, Calif. Plans to tax Netflix, HBO Go and Hulu accounts 9.4 percent starting Jan. 1, 2017.

At least 45 other California cities have been advised they too could tax their residents’ online viewing using their city’s existing tax rate for cable providers, at rates ranging from 4.5 percent to 11 percent.

Whatever your views on taxation of over the top Internet services, the move provides one more bit of evidence that traditional regulatory thinking now applies to OTT streaming. Colloquially, that attitude can be termed “if it walks like a duck, and squawks like a duck, it is a duck.”

At least for purposes of taxation, OTT is viewed the same as linear video service. That raises an interesting question, however. If OTT streaming video is the equivalent of linear video, as a type of service, and if linear video rules apply, then zero rating should not be an issue at all.

All linear video services zero rate use of bandwidth. That is why many Internet service providers have argued that managed services are not covered by network neutrality rules.

Managed services are not "Internet services."