Churn Reduction Often More Valuable Than Direct Revenue

Not many mobile or fixed network service providers are likely to make huge amounts of direct revenue, or profit, from mobile banking services. Instead, value is going to come from indirect mechanisms, such as reducing churn.

The total transaction value of mobile financial services in emerging markets (including domestic money transfers, deposits on loans, insurance products, and savings accounts) will approach $500 billion in 2021, up from an estimated $198 billion in 2016, according to Juniper Research.

The Telenor Suraksha life insurance offer in India, for example, has seen nearly 50 percent of its 45 million user base sign up since its December 2015 launch. That might help with customer acquisition, but it certainly will help with retention.

Decreasing churn by one percent can yield a revenue improvement of 0.6 percent to 0.8 percent, some argue.

So churn reduction might yield more benefit than direct mobile financial services revenue. Retaining a single voice customer in a $7US ARPU market with three percent monthly churn would preserve approximately $250 in lifetime value.

To generate the same amount of revenues from a mobile money user would require the user to conduct transaction value of  $350 every month for three years (the average lifetime of a voice customer) and pay the operator two percent in fees.

Open Source Core Networks?

The CORD Project (Central Office Re-architected as a Datacenter) now says its open source virtualized Evolved Packet Core (EPC), part of the broader 5G M-CORD suite, now is available, building on  the Radisys EPC framework. “Today, with Radisys’ transformative open source EPC contribution, M-CORD is on its way to becoming a completely end-to-end open source platform that will deliver the fundamental value of 5G with economies of scale in the mobile network and accelerated delivery of new services,” said Guru Parulkar, executive director of the Open Networking Foundation and ON.Lab.

Open source core network platforms are the objective of the CORD Project, supported by AT&T, China Unicom, Google, NTT Communications, SK Telecom, and Verizon, Ciena, Cisco, Fujitsu, Intel, NEC, Nokia, Radisys and Samsung.

CORD and its partners also are developing the open M-CORD platform for 5G including open source solutions for programmable Radio Access Network (RAN), disaggregated and virtualized EPC, mobile edge computing, and end-to-end slicing from RAN to EPC, the group says.

CORD intends to bring data center economics and cloud flexibility to the telco Central Office and to the entire access network.

21 Billion Connected "Things" by 2020

Some 6.4 billion connected things will be in use globally in 2016, up 30 percent from 2015. The number of connecting devices will reach 20.8 billion by 2020, according to Gartner.

In 2016, 5.5 million new things will get connected every day, Gartner predicts.

Connecting those IoT devices will support a range of services spending of $235 billion in 2016, up 22 percent from 2015.

Those services are dominated by the design, installation and operation of IoT systems.  Connectivity services and consumer services will grow at a faster pace, however. In 2020, it is possible that some 13.5 billion consumer-facing devices will be connected.

Internet of Things Units Installed Base (Millions of Units)

Category	2014	2015	2016	2020
Consumer	2,277	3,023	4,024	13,509
Business: Cross-Industry	632	815	1,092	4,408
Business: Vertical-Specific	898	1,065	1,276	2,880
Grand Total	3,807	4,902	6,392	20,79

source: Gartner

Internet of Things Endpoint Spending (Billions of Dollars)

Category	2014	2015	2016	2020
Consumer	257	416	546	1,534
Business: Cross-Industry	115	155	201	566
Business: Vertical-Specific	567	612	667	911
Grand Total	939	1,183	1,414	3,010

source: Gartner

Is IoT the Leader of the Next Mobile Product Cycle?

Once upon a time, I did not think voice was a product like any other, with a life cycle. Clearly, I was wrong. International voice, long distance and “calling” all are products with a life cycle. As it turns out, text messaging is a product with a life cycle. So is linear video entertainment. Soon, it will be clear, even mobile data--the recent driver of revenue growth--also is a product with a life cycle.

As with any industry, or any business, facing a maturing set of products, new revenue-generating products have to be discovered or created. And that is why, even if internet of things revenues are small at the moment, they are strategically important.

And, at least so far, it is fairly clear that scale is required to participate extensively in the IoT business. In the U.S. market, AT&T and Verizon dominate IoT revenue streams in the operator space.

AT&T’s connected car reached the 10 million connected vehicles milestone in the third quarter of 2016, the first mobile operator to do so, argues Chetan Sharma. AT&T reached that milestone in less than 12 quarters, compared to the 25 quarters it took for tablet connections to reach the same level.

For 2016 through the third quarter, non-phone net account additions represented about 71 percent of all such account adds, with vehicles and IoT dominating.

Verizon’s IoT and telematics revenue rose 25 percent, year over year, in the third quarter of 2016, to reach $217 million of revenue, close to an annual run rate of about $1 billion.

Service provider IoT revenue passed the $1 billion mark in 2013, roughly tracking revenue growth for mobile data. Few likely believe that can continue, as IoT is about solutions, not simple connectivity, and not as direct a value as “mobile access to internet apps.” Also, IoT is industry-specific, and therefore a “vertical” sales opportunity, rather than a horizontal “every firm needs this” opportunity, for the most part.

source: Chetan Sharma

Hardware Knowledge is Becoming Less Important for Enterprise IT Buyers

One of the bigger changes in enterprise computing, with the advent of cloud computing, is that customers increasingly can de-emphasize hardware and not worry so much about the platforms software runs upon.

Conversely, Google infrastructure czar Urs Hölzle also argues that one of the key advantages of the cloud is that customers can get the benefits of new hardware without having to completely rework their software.

That, in turn, might lead to an easier hardware upgrade cycle than has generally been the case in the past. That advantage should apply both to Google and its cloud operations, as well as enterprise customer platforms. Google, for example, could safely experiment with a variety of hardware platforms without disrupting customer experience.

Hölzle sees a future where the overwhelming majority of customers won't even worry about what type of compute instance their workloads are running on. Instead, platforms will be responsible for intelligently suggesting what sort of compute resources customers should use and keep pace with what they need.

"So I hope, five years from now, one percent of cloud customers know the word 'machine type,' and 99 percent say 'I've never thought about it,"Hölzle said.

In a real sense, such changes also illustrate how enterprise applications are changing. Decades ago, enterprise computing was much more a case of buying the right hardware, installing and maintaining it.

With the shift to cloud, “computing” increasingly becomes a matter of what software enterprises and other businesses want to use, as provisioning from the cloud is a rather simple matter of ensuring that adequate quality bandwidth is available.

In a market where both computing and applications are managed services, even the process of buying potentially can change. To a growing extent, buying and using software and computing becomes a matter of buying a managed service.

At least in principle, that should mean suppliers of computing apps and platforms can expand from system integrators, value-added resellers and distributors to include new services specialists who no longer need to be as knowledgeable about computing platforms. In other words, where “knowing about routers and how to set them up and keep them running” once was a foundational skill set, that will be less true in the future, where knowledge about how particular software works in particular industry verticals will be more important.

Small Businesses Want Managed Wi-Fi Services, Study Suggests

A new study by iGR suggests as many as 64 percent of 12 million small to medium enterprises could be “very interested” in Wi-Fi as a service.

“There’s a growing interest from enterprises in network as a service in order to reduce capital expenditures and take advantage of IT outsourcing,” said Iain Gillott, president and founder of iGR. “The research we conducted for KodaCloud shows that the great majority of enterprises with 100 or more employees would outsource Wi-Fi because they want to focus on the core business, or lack the IT capability in house.”

Some 64 percent of larger SMBs (over 200 employees) and 61 percent of medium SMBs (100-199) would prefer to outsource information technology chores, if they could.

The study suggests 60 percent of small SMBs provide Wi-Fi to employees only, while 35 percent of such firms supply Wi-Fi access to both employees and customers.

In addition to the cost of enterprises buying Wi-Fi equipment, the cost associated with managing Wi-Fi was estimated to be between $27 to $30 per access point per month.

KodaCloud’s managed Wi-Fi service makes it easy to buy Wi-Fi as a service at a flat rate of $100 for a network of four access points, or $300 to $400 for networks of 12 to 16 access points.

Recurring management fees run about $150 to $225 yearly.

$300-400 for a network of 12-16 Access Points addresses the needs of several hundred thousand of medium sized businesses.

In many cases, up to 65 percent of SMBs also show significant interest in other managed services beyond Wi-Fi.

By some estimates, the managed services market will grow from $145.33 billion in 2016 to $242.45 billion by 2021, at a compound annual growth rate (CAGR) of 10.8 percent.

That forecast includes spending on managed data center services and also managed mobility.

source: Infonetics

Facebook in Talks to Deploy Aquila in India

Facebook now is in initial talks with Indian telecom companies and the government to create pilot programs using the new Facebook Aquila unmanned aerial vehicles for internet backhaul for mobile towers in remote areas.

Telcos that don’t find it feasible to create the infrastructure for internet services in rural areas can use Facebook’s Aquila as a platform to deliver mobile broadband. Once such a service generates adequate demand, the operators could build their own infrastructure and the Aquila planes can be moved to another location, argues Robert Pepper, Facebook’s connectivity public policy director.

Aquila can help mobile operators, in other words, by matching investment to demand.

Aquila could be used to provide internet in areas where the national optical fibre network (NOFN), renamed Bharat Net, hasn’t reached.

Aquila is a backhaul mechanism only, and cannot provider retail mobile access, a fact that makes Aquila a natural partner for retail mobile operators, functioning as a supplier of backhaul, like a regional optical fiber transport company.

But Aqulia is not a fixed asset. It can be moved from place to place, meaning it is an ideal asset for providing backhaul to areas where immediate deployment of optical fiber backhaul is not economically feasible.