Price Matters, Where Public Wi-Fi is Concerned

Causation always is suspect when people say something needs to be done to spur economic growth by the means of better internet access. To be sure, virtually everyone behaves as though there is a causal relationship between internet access and economic growth, even if that cannot be proved.

Quite often, an argument can be made that the reverse actually makes more sense: quality internet access is a result of economic growth or existing wealth, not the cause of those developments.

On the other hand, it bears noting that value and price relationships do have a causal relationship to consumer buying. As with any desired product, lower prices cause more buying of that product.

Way back in the days of dial-up internet access, when most such dial-up services were sold on a metered basis, AOL leapt to leadership of the market by abandoning metered pricing, offering monthly access for a single flat rate.

The point is that, when new supply is added to the market, price matters. In most markets where there is high use of Wi-Fi hotspots for data offload or internet access, the incremental cost of using public Wi-Fi is zero. Low prices should spur incremental use in some markets, but just how much remains to be seen.

Public Wi-Fi now is seen as an important way to make fixed network internet access more widely available in India. As always, much will hinge on market dynamics. In many other markets where Wi-Fi offloading is prevalent, the offloading happens when consumers offload to their own personal internet services. In that sense,  high use of Wi-Fi is dependent upon, and derivative of, widespread fixed network adoption.

Public Wi-Fi (mostly amenity services) also tend to get significant usage because access happens “at no incremental cost” (“free”). It remains unclear how demand will fare in India, if public Wi-Fi hotspot access is a “for-fee” service.

Ironically, high public Wi-Fi usage might be a derivative of already-existing supply of internet access at affordable rates. not a driver of new and affordable supply. So it remains to be seen how well the new push for public Wi-Fi succeeds.

Nationwide Content Rights Mean Comcast Eventually Will Break With Past Industry Practice

Geography and industry culture sometimes can be barriers to success in the over the top applications and services realms. Note past efforts by Comcast to offer a streaming service only to consumers who live within Comcast’s fixed network geography.

That decision was partly an effort to avoid cannibalizing it own linear TV services, and partly to avoid competing with cable operators in other areas (cable TV operators virtually never overbuild over cable tV operators).

So Comcast’s latest move to gain content rights on a nationwide business is an important move. Eventually, success in the streaming service business will require ubiquitous availability, irrespective of which entity owns the actual access networks. That is a fundamental reflection of the way internet protocol networks operate, where any application can be used by any user on any public IP network.

But any such move to nationwide service availability will mark a huge change in industry practices, virtually requiring competing against other cable operators. The same will be true for cable operators who get into the mobile services business at the highest levels.

With roaming agreements, virtually any mobile service provider, such as any mobile virtual network operator, can offer service nationwide. But marketing sometimes is conducted on a regional basis. The main point is that the business now inherently requires nationwide scope, in terms of network coverage, if not in terms of marketing efforts.

Intel Says Moore's Law Not Dead

Intel insists it can keep innovating in ways that keep rates of progress based on Moore's Law a relevant assumption. Intel’s success or failure will have direct implications for the cost of many products requiring computing.  If other industries experienced innovation at the rate of Moore’s Law, car owners could drive a distance equivalent to traveling between the earth and the sun on a single gallon of gas, according to tacy Smith, Intel SVP.

Agriculture productivity would be so high we could feed the planet on a square kilometer of land, said Smith. As for the speed of travel, humans would be traveling at 300 times the speed of light.

So yes, Moore’s Law matters. But Intel is making some shifts in the way it measures progress, focusing less on the number of transistors and more on the cost of computing. Intel now will emphasize such matters as the manufacturing cost per transistor, which Intel expects to cut by about half with each new manufacturing process, which is in line with Moore's Law.

Moore's Law continues to face physical constraints, as the packing of more transistors into a finite space reaches physical limits, at least using silicon technology. So Intel now focuses more on output metrics, rather than input measures, such as transistor count. In fact, some might argue that Moore's Law is broken.

With the new measurements, Intel will be able to boast that its manufacturing improvements are surpassing Moore's Law. The company also said it would cut the manufacturing cost per transistor by half with each new manufacturing process, which is in line with Moore's Law.

Growth Gambles (Moving Up the Stack) are Dangerous, Difficult but Also Necessary

Not to pick on Ericsson at all, but the last several decades have not been kind to legacy providers in the telecom business, as growth has ended in some geographies (developed markets, mostly) , and is nearing the end even in emerging markets that are stronger now (Asia) , or poised to be stronger (Africa).

Many now are too young to remember it, but in the monopoly era  (pre-1980), both the United States and Canada were home to a couple of the biggest telecom infrastructure providers in the world (Northern Telecom and Lucent, formerly Western Electric). But some of that era’s leading firms also now have been absorbed, including Alcatel (to Nokia Networks), while the biggest growth has happened among the ranks of Chinese firms (Huawei and others).

At the same time, as activity and investment have flowed to all things internet, other suppliers traditionally more viewed as “computing” suppliers have surged, as virtually all networks now are “internet protocol” networks. To a large extent, that also means all “telecom” networks are “computer networks,” while the telecom industry is part of the larger internet ecosystem.

Some might fault Ericsson for betting it could create an important new business in media services. What else it might have done is the question, and there are no easy answers. In virtually every part of the legacy telecom business, questions about how to ignite growth have few easy answers, beyond horizontal acquisitions to add bulk.

Value has moved inexorably towards the separated application layer, as all apps now have become “over the top” apps, by design. In principle, and by design, IP networks are dumb pipes.

So “moving up the stack” essentially means transport service providers literally must create roles on the applications side of the business. That is never easy. The best template is provided by cable operators, who have in some instances “vertically integrated” (in a new way) by acquiring content assets.

Instead of trying to capture value by restricting content availability, the new pattern is to seek the widest possible distribution of those content assets. Though it remains to be seen how much that strategy might apply to enterprise apps and services in the internet of things realm, it seems clear enough that the really-big wins would come if and when access providers own highly-popular apps and services that are not restricted to customers of just one network.

In other words, it makes no sense to restrict HBO sales only to AT&T customers, or Netflix only to Verizon customers. Nor would it make sense for any access provider owning other assets (Netflix or any other popular app) to restrict access to its own customers.

It isn’t clear what else Ericsson might have tried, since it was going to have to step out of its comfort zone, no matter what it attempted. It will not be the last firm to struggle with a growth strategy. Growth now has to come in new areas outside the core competence. That is risky and hard.

Video is Important Revenue for Fixed Service Providers

The fixed network internet access business now is importantly augmented by video subscription services, which significantly boost average revenue per account. For defenders as well as attackers, video take rates have an important impact on the business model.

In the latest figures compiled by the US Copyright Office and reported and analyzed by MoffettNathanson, Google Fiber said it added a little over 15,000 video subscribers in the second half of 2016, boosting its total to slightly over 84,000 video customers in its seven markets.

To be sure, that represents a 57.8 percent annual growth rate, but from a small base. Perhaps more important, video account additions declined from the 66.2 percent year-over-year growth rate in the first half of 2016 and the 78.8 percent annual growth rate in the same period of 2015.

The data also show that video subscriber growth slowed particularly in Google Fiber's principal Kansas City market. "Google Fiber added 19 percent fewer customers in Greater Kansas City over the past six months than they did over the six months prior, and their six-month growth rate in the region slowed from 27.4 percent to 17.4 percent,” said Craig Moffett, MoffettNathanson principal analyst.

Video remains the single largest revenue contributor for Comcast, as you might expect. But even at Verizon, video service adoption was about 35 percent in the fourth quarter of 2015. In the third quarter of 2016 Verizon added video accounts at a rate about 40 percent that of Fios internet access services.

Since gross revenue for each video account can easily be larger than revenue for internet access, video has emerged as a key method for boosting account gross revenue and average revenue per account. In some cases, video drives as much as 60 percent of net additions.  

source: Comcast

Consumers Want Fresh Content, Fast Loading, Personalization

About half of consumers in Malaysia, Singapore, Thailand, and the Philippines now spend more than 16 hours online, though, surprisingly, older demographics spend even more time than that online, a study by Limelight Networks shows.

Regardless of the time spent online, consumers are doing so primarily via their smartphones.

When it comes to spending time online, social media is the most dominant activity followed closely by watching online video.

Although consumers in the LImelight Networks study have demonstrated the importance of website performance, even performance comes in second to “fresh and updated” content.

Together with a consumer predilection for “fresh and updated” content, 53 percent of respondents say they  want a personalized web experience. Most consumers (67 percent) surveyed want a website to remember them and make recommendations based on previous visits.

Nearly half (43 percent) of consumers surveyed will leave a website and go to a competitor if a web page takes too long to load. Also, some 84 percent of respondents report they expect equally fast load times on any device.

DSA Features Regulators

The  fifth annual Dynamic Spectrum Alliance Global Summit, which will take place in Cape Town, South Africa from 9-11 May 2017, will feature:

• Mr. Pakamile Kayalethu Pongwana, CEO, Independent Communications Authority of South Africa (ICASA)
• Hon. Hector Huici, Secretary of Communications and Information Technologies, The Ministry of Communications, Argentina
• Dr. Martha Liliana Suárez Peñaloza, Director, Agência Nacional del Espectro (ANE), Colombia
• Dr. Agostinho Linhares, Manager, Spectrum, Orbit and Broadcasting Division, Agência Nacional deTelecomunicações (ANATEL), Brazil
• Mr. Peter N. Ngige, Assistant Director, Frequency Planning, Communications Authority Kenya
• Mr. Mario Maniewicz, Deputy Director, Radiocommunications Bureau of the International Telecommunications Union (ITU), Geneva