In Asia, Users Sometimes Use Apps More than Web; In Other Cases Use Web More than Apps

Global statistics can obscure more than they reveal, and that is true for the Asia-Pacific region as well.

Asia will account for 55 percent of the world’s nearly 1.18 billion smartphone users in 2016, according to eMarketer. But user behavior is quite disparate, where it comes to preferences for use of mobile web and apps.

In more developed markets like Japan and South Korea, daily time spent with the mobile web on smartphones outpaced time spent with smartphone apps, often by 10 minutes or more, a TNS study found.

In emerging markets in Southeast Asia including the Philippines, Vietnam and Thailand, daily time spent was more likely to favor smartphone apps.

This split in app habits follows mobile trends observed in other regions of the world. Mobile users in emerging markets are comparatively more enthusiastic about downloading and spending time with apps, those in more developed economies less so.

Telcos Upgrade Networks In Wealthier Areas, Lag in Poorer Areas, Study Argues

In a study, the Center for Public Integrity argues “the largest non-cable internet providers collectively offer faster speeds to about 40 percent of the population they serve nationwide in wealthy areas compared with just 22 percent of the population in poor areas.”

The argument is that the large telcos have rather systematically targeted network upgrades to “wealthier” communities, compared to “poorer” communities.

There is statistical truth to those claims. Any analysis of urban-rural Internet access speeds would show that rural speeds are generally much slower than urban speeds, and that urban household incomes are generally higher than rural incomes.

Hence, it is is statistically correct to argue that speeds are, in fact, faster in urban (wealthier) areas, compared to rural (poorer) areas.

It might also be correct to argue that top speeds in some poorer neighborhoods are slower than top speeds in more-upscale neighborhoods.

The reality is that several obvious issues are at work. Telco copper network speeds are distance sensitive. That is one reason why rural networks have been “slower” than urban networks, as a rule.

Customer density is far lower in rural areas, which is why it is hard to justify the same investment in rural areas, compared to urban areas.

source: FCC

Also, upgrading even some urban properties--especially multiple dwelling units--is less than straightforward, as building owners can block or delay installation of new facilities.

Beyond all that, communications policy related to Internet access facilities never has been governed by “common carrier” regulation that mandates universal access and comparable prices for the same classes of service, or even minimum levels of service.

In fact, precisely because incentives matter, where it comes to next-generation facilities, mobile and fixed service providers have traditionally had more leeway to build facilities in some areas first, in other areas later, to avoid building, in many cases.

Service providers are free, for example, to build new networks to serve business customers only, and not consumers; large businesses in preference to small businesses; or businesses in some areas and not others.

In fact, municipal authorities now have taken that same approach and applied it to next generation networks serving consumers. That is why Google Fiber is allowed to build in some neighborhoods, and not others, or to build first in some neighborhoods, and not others.

That approach has changed AT&T and Verizon thinking about deployment of fiber to home and gigabit networks, as well. Building first where there is higher demand drives more investment. It also means disparities will widen, for a time.

So, yes, the CPI study does show disparities. But the explanation is partly for reasons of regulatory frameworks, incentives for investment, the physical properties of telco copper networks, population density, property owner rights and end user demand for services, as well as income disparities.

That is not to condone the disparities. But it is a reality of the business model that networks are far more expensive in rural areas than urban areas, while demand is more robust in business customer segments than consumer; higher in wealthier neighborhoods than poorer ones.

There likely are disparities by age, marital status, children in household and regional differences, as well.

As this analysis by the FCC shows, high population density means affordable network cost. Conversely, low population density means high network cost.

It No Longer Really Matters Whether "Users Need a Gig"

It probably no longer makes sense to argue about whether gigabit Internet access “should” be deployed at a time when “nobody needs a gig.” The reason is that the shift to gigabit networks is not driven by direct end user demand, at the moment.

Instead, gigabit access speeds are strategic matter, driven by the level of intensifying competition in fixed and mobile networks, all of which are moving rather swiftly in the direction of gigabit and multi-gigabit capabilities. And that is being done irrespective of immediate end user demand.

Australia’s National Broadband Network (NBN), for example, says “14 percent of NBN’s fixed line services used a 100/40 Mbps wholesale speed tier, 49 percent used a 25/5 Mbps wholesale speed tier and 32 percent used a 12/1 Mbps wholesale speed tier” in 2015.

In 2014, those tiers were at 18 percent for 100 Mbps plans, 42 percent for 25 Mbps plans and 35 percent for 12 Mbps plans.

Note that demand for 100 Mbps actually dropped, year over year, while demand for 25 Mbps plans grew.

It is one thing to argue that the cost of upgrading immediately to gigabit fiber-to-home networks will not yield sufficient return to justify making the investment.

It is quite another matter to argue that cable TV operators, using hybrid fiber coax, likely can justify selling gigabit speeds, and already are preparing for multi-gigabit speeds, over their hybrid networks, without resorting to fiber to the home.

Likewise, the global mobile ecosystem is preparing for “gigabit to every device” in the earliest versions of 5G networks, with clear development paths for multi-gigabit and 10 Gbps 5G speeds.

At the same time, 4G networks are using channel bonding to boost 4G speeds up to the multi-hundreds of megabits per second range, whether or not there is direct and immediate end user demand.

As has been the case in the past, next generation networks are being developed for strategic reasons, not driven by direct end user demand.

Some competitors not required to use fiber to home platforms are going to market gigabit services themselves, in large part to maintain or take a lead over their key competitors. Mobile operators, on the other hand, see an opportunity to take market share from fixed services, for the first time, on a widespread scale.

Under such conditions, it doesn’t make much sense to debate, any longer, whether “users need gigabit.” They do not, at present. That is not the point, however. Internet service providers see a need to provide such capabilities, for strategic reasons and as clear marketing tools.

AT&T Uses Drones to Check Cell Towers

AT&T is using drones to conduct cell tower inspections and find birds' nests that can potentially affect cell coverage. That involves perhaps thousands of technicians every year. But that is going to change, if AT&T gets its way.

Eventually, AT&T says it plans to use artificial-intelligence-equipped drones to help assess problems in the field autonomously, without requiring a technician to manually inspect a tower.

As with all important new technologies, there will be job impact. Without a drone, inspecting a bird's nest could take up to a week and often requires the assistance of an environmental scientist.

The specific use of drones to inspect towers without sending techs climbing up those towers will save on operating costs, part of AT&T’s wider effort to slice such costs as part of its aggressive software defined network initiative.

It will not be popular, but lots of other measures will have to be taken to streamline network capex and opex, to match expected costs with expected revenues. And with competition seemingly growing, revenue is going to get hit. That means costs have to fall.

And one person’s cost is another person’s income. There’s no way around that.

Study Suggests 3 Facilities-Based Competitors Unlikely to Succeed in U.K. Market

source: Analysys Mason

A new analysis of facilities-based competition in the United Kingdom tends to support the view that ubiquitous fixed network on a facilities basis will tend to be a duopoly; that a third network offering triple-play services would not be able to cover most of the country, even under the most-optimistic scenarios.

That conclusion likely comports with the notions most researchers have reached, namely that facilities-based and ubiquitous fixed access network markets are oligopolies, because that is all the market will tend to support.

The only issue here is whether the stable oligopoly structure (in terms of facilities) features two providers or can include three (and if so, under what conditions).

That is not to say an oligopoly at the retail level is inevitable: robust wholesale policies have proven effective at stimulating retail competition. What robust wholesale has tended not to promote is investment in new facilities.

Analysys Mason researchers estimate that, at about 25 percent market share, a third facilities-based provider would be able to sustain access to about seven percent (two million locations) of homes.

The study tends to reconfirm that housing density encourages investment. But the study also suggests that robust wholesale policies actually discourage investment.

source: Analysys Mason

The researchers note that the greatest degree of facilities-based competition elsewhere in Europe relies on duct and pole access by competitors in countries where there is no wholesale regime in place.

In other words, where competitors must build their own facilities, and have some clear incentives to do so, facilities-based investment is most robust.

Also, third parties seem to have been most successful where the percentage of high-density housing is high.

The study authors conclude that investment in a third facilities-based network is highly risky and unlikely to succeed in the U.K. market, on a wide basis, though the business case might work in some high-density areas representing about 1.1 million households.

The analysis concluded that "it is highly unlikely that a third operator will be able to reach 40 percent (FTTP) coverage on a commercially viable basis".

“Our economic modelling suggests that encouraging a third separate network to invest in covering more than five to 10 percent of the country will be extremely difficult to achieve,” the study states.

Some might point to the key role cable TV competition tends to play, as well. In several countries, the primary facilities-based competition comes from cable TV operators.

For All Networks, "Fiber to Where You Can Make Money" is the Issue

"Fiber to where you can make money" is a good way to evaluate various fixed network access methods. For cable TV operators, the issue is fiber deep into the neighborhood. For some telcos, that is the same issue.

For some telcos, fiber to the premises is the choice, but the issue of revenue generated by such networks remains.

For fixed wireless networks, the issue is fiber to tower or building. For mobile operators, the issue is fiber to the macrocell or fiber to the small cell.

In other words, the issue is not the choice of physical media, or the topology, but the revenue that any given deployment can generate. And, at a time when voice revenues are declining, and where facilities-based competition exists, the financial returns from fiber to the home often are questionable.

The choices are even more difficult for any telco operating in a market where cable TV firms are active, serious competitors. Stranded assets then are the real issue, as up to 60 percent of deployed assets can routinely be stranded (assuming cable TV gets 40 percent to 45 percent share, the telco gets 40 percent share, while other suppliers get 15 percent to 20 percent market share.

In other words, the issue is to deploy “fiber to where you make money.” That is true for all fixed network suppliers, including cable TV firms using hybrid fiber coax technology.

Assuming fiber is deployed rather deep into the network, coaxial cable can carry huge amounts of bandwidth.

25 Gbps on Hybrid Fiber Coax

Huawei has demonstrated 25 Gbps downstream speeds on a hybrid fiber coax network running DOCSIS, the cable modem protocol. As always, if one has enough capacity, huge amounts of throughput are possible. The Huawei demonstration used 3 GHz of spectrum on the simulated cable network.

Separately, Nokia has demonstrated symmetrical 10 Gbps bandwidth on an HFC network. There are a couple of important caveats. Achieving such speeds requires fiber fairly close to the end user location (about 200 meters in the Nokia demonstration), or new methods for extending the range of frequencies that can be carried over an HFC network (Huawei dem).

DOCSIS 3.0 supports use of 1.6 Gbps downstream bandwidth.

The DOCSIS 3.1 solution, with a 1.2 GHz spectrum, used with multi-channel bonding and orthogonal frequency division multiplexing (OFDM) technologies, already can support a downstream rate of 10 Gbps.

Huawei’s demonstration extended the amount of usable coaxial cable spectrum to 3 GHz for the first time.

Huawei believes a symmetrical 25 Gbps capability can be commercialized.