Why Connected Car Could be So Big for Mobile Operators

The connected car ecosystem is among the most-promising for mobile operators for several reasons. First, firms such as Verizon and AT&T already earn revenue in that ecosystem, so it is not completely-new terrain. But there are other reasons.

Connected vehicle systems promise huge changes in the cost of transportation, and huge changes in industry dynamics. And anything that promises huge disruption of existing industrial business models always will get attention, investment and rearrange revenue streams and business models.

So connected transportation could provide huge new roles for access providers who move up the stack into platforms, services and roles.

“If you remove the cost of the human driver from an on-demand trip, the cost goes down by perhaps three quarters,” argues Benedict Evans, “If you can also remove or reduce the cost of the insurance, once the accident rate has fallen, it goes down even further.”

So, autonomous vehicles are “rocket-fuel for on-demand” transportation, he argues. And, logically, potential reshaping of auto sales and support markets, demand for urban parking (possibly including the cost of adding mandatory parking facilities in large buildings) and other externalities.

Demand for, and use of, public transportation could change dramatically, in many cities. Oddly enough, if there is less congestion overall, might public transportation journey times be shorter? And, if so, might more people use public transportation?

On the other hand, will on-demand transportation actually reduce congestion as much as some believe? Might some passengers who might have chosen public transportation choose on-demand modes instead?

And, if so, what effect might that have on the business case for supplying bus service in many areas? Might it be cheaper for a city or municipal transportation service to rely on on-demand as a substitute product, in some instances?

Up to this point, on-demand ride sharing has competed with use of taxis. In the future, might on-demand also compete with package delivery services, owned vehicles and bus service?

Such changes are hard to model. But all suggest the widespread implications of autonomous vehicles for mobile service providers, especially when those operators can create or build roles elsewhere in the ecosystem beyond communications.

"Going to Save Some Lives"

Sometimes the health of your business; your industry or even important goals such as ensuring that everyone has internet access are not the most-important thing. Saving lives; helping out; serving other people is much more important. "Going to save some lives, indeed."



Personally, since animal charities are among the ones I normally support, I'll be looking to help organizations such as Houston SPCA, an animal shelter and is also taking in stray or displaced pets. 

Most of us do not think about it, but in addition to people being displaced, pets get abandoned or lost as well. You can donate here to Houston SPCA. 

Also, since Catholic Charities is another regularly-supported effort, I'll also be supporting the special effort for Houston. Donate to Catholic Charities for Houston here.  

Other options include: 

GLOBAL GIVING: An international organization that supports local charities and organizations. You can donate here.

SAVE THE CHILDREN: An international organization focused on children, making sure they have a healthy start to life. You can donate here.

DIRECT RELIEF: An international organization that provides emergency relief and helps equip local health providers. You can donate here.

AMERICARES: An international organization that has deployed an emergency response team to Houston and focuses on health. You can donate here.

RED CROSS: An international network of emergency relief. You can donate here.

INTERNATIONAL RELIEF TEAMS: An international organization providing more than a thousand personal hygiene kits to flood refugees in Houston, among other emergency services. You can donate here.

PORTLIGHT: A U.S.-based organization that will help displaced residents who have disabilities or otherwise need special care. You can donate online here if you scroll down their main page.

HEART-TO-HEART INTERNATIONAL: An international organization which will help provide medical supplies. You can donate here.

SOUTHERN BAPTIST DISASTER RELIEF: An international volunteer organization which is providing emergency relief. You can donate here.

AIRBNB: If you can offer up room locally for displaced residents and evacuees, or if you need a place to stay, AirBNB will help facilitate that. Here’s more information.

SOUTH TEXAS BLOOD & TISSUE DONATION: You can donate here. Local residents can also donate blood in person.

TEXAS DIAPER BANK: You can donate here.

CENTRAL TEXAS FOOD BANK: You can donate here.

SAN ANTONIO FOOD BANK: You can donate here. Many displaced Houston residents will be relocated to San Antonio.

COALITION FOR THE HOMELESS: An umbrella organization coordinating shelters and organizations across Houston. You can donate here.

Big Blurring of Lines Between "Networks" and "Distributors"

Disney’s move to create its own streaming service sheds light on how the content business has changed from its former pattern. In the past, some companies or people developed and created content; others bundled it (networks) while other firms distributed the content (TV stations, cable TV companies).

The big distinctions, maintained in law, were that entities involved in one part of the ecosystem could not also be owners of assets in other parts of the ecosystem. So movie studios were barred from being theater owners and big networks could not own large shares of the distribution market (networks owning local broadcast outlets).

Over time, some of those restrictions have been eased. And though ecosystem includes both retail subscriptions, advertising, on-demand content purchases (including movie theater tickets, home video). For the most part, advertising and subscriptions drive distributor revenues, while content licenses and advertising drive bundler revenues. Content creator revenue is generated primarily by sales of intellectual property.

source: navigationpartners

The continuing debate within the ecosystem is the relative balance of value and therefore power between content bundlers (networks) and distributors (primarily video subscription providers, both linear and on-demand). Roughly speaking, revenue generated by video advertising supports both bundlers and distributors, though advertising is a bigger contributor for networks than licensing fees; while distributor business models range from “mostly advertising” to “subscription only” and mixed models based on both revenue streams.

source: Standard and Poorts Market Intelligence

But there is a new reality to the older debate about where value lies. Traditionally, the issue was whether the content bundlers (networks) or the distributors (cable TV, other providers) had more power within the ecosystem.

The new change is that “distribution” itself has changed, from those with actual physical networks, and those distributing “over the top” (Netflix, Hulu, Amazon Prime). These days, some distributors own and operate physical access networks, while others do not.

In fact, the line between “networks” and “distributors” is blurring. Netflix aims  to increase the percentage of “owned” versus “licensed” content to 50 percent. In other words, Netflix plans to become as much a network, with original programming, as a distributor.

Disney, on the other hand, owns 75 percent of BAMTech, a platform for streaming video distribution. That, plus its announced intention to create its own streaming service means Disney also will become a distributor.

In fact, market share within the “distribution” segment itself is changing, as fewer customers buy “big bundle” subscriptions, while more embrace streaming services of various types. As Netflix shows, the emerging model might well be networks that also are distributors, bypassing or augmenting many other existing distribution vehicles.

source: Strategy&

AI to Generate Content Feeds

https://www.wsj.com/articles/the-news-reads-you-in-chinaand-people-cant-get-enough-of-it-1503570085?mod=e2tw&mg=prod/accounts-wsj

AI does not get any more practical than this.

Execs Expect Industrial IoT Investments Next 5 Years

It is not at all yet clear how big a deal 5G will be as a platform to support internet of things applications, including industrial IoT.

It is clear that executives from Asia, Europe, the Americas believe that is a possibility, as there is significant thinking about investments in mobile, location tracking, wearables and voice recognition as key technologies that will transform the plant floor, over the next five years.

The biggest increases seem to be in the areas of mobile technology and location tracking, both of which naturally lend themselves to wide area networks, rather than "in building or on campus" connectivity.

source: Zebra Technologies

Does IoT Represent the Crucial Variable for 5G?

How important will internet of things be as a platform for big new mobile service provider revenue streams? Huge. One might predict that if IoT does not drive significant new revenue sources (20 percent of total revenue, for example), 5G is going to be an expensive possible failure, leading to massive consolidation of industry suppliers.

So one of the biggest debates that has not yet happened surrounds the internet of things revenue potential for mobile and other service providers.

While most observers seem to believe IoT will be the key new revenue source for 5G networks, others think the upside is going to be “bleak.” That matters for two major reasons. If the IoT revenue streams do not emerge, the payback from 5G networks might be minimal to negative.

Also, if IoT does not emerge as a major new revenue stream, mobile operator business models are going to be quite stressed, as IoT revenue is needed to balance lost voice and messaging revenues.

IoT services can contribute up to 15 percent to 20 percent of total revenue for Indian mobile operators, according to Rishi Mohan Bhatnagar, President, Aeris Communications.

Siddharth Thakkar, Analysys Mason consultant, believes IoT could contribute as little as five percent of revenues, up to perhaps 10 percent for a very successful operator. “Currently, most telecoms operators earn less than one percent of revenues from IoT.  Vodafone is an exception in that it earns around 1.4 percent of revenues from IoT,” he said.

Which forecast proves correct will be crucial. At about five percent new revenues from IoT, most mobile operators will find the 5G business case quite challenging. At 20 percent, 5G will likely have proven to be a successful gamble.

In two distinct large markets--India and the United States--competition is “not helping,” in terms of service provider profitability. Not that profits have been robust.

source: cis-india.org

But market entry by Reliance Jio, with a disruptive pricing attack--is destroying industry profitability.

The U.S. market is in what some have called a “race to the bottom” as well. Except for T-Mobile US, which is largely responsible for the latest price war, revenues are flat or dropping for the other three major service providers.

source: businessinsider.com

That is why internet of things revenues and 5G fixed wireless are likely to matter so much. Absent creation of big new revenue streams, mobile service providers are going to face severe stress in their core access businesses.

Why Have Cable Companies Wrung More Value From "Up the Stack" Investments than Telcos?

Why have cable TV companies have been so much more successful with their diversification or "move up the stack" strategies and investments, compared to telcos? One rarely hears of cable companies making strategic or technology investments that later prove to be ineffective, or which are divested.

It is a truism that value is moving up the stack, and telcos and cable have invested in software, hardware and services that are intended to help with that value-creation process. Still, cable tends to reap more rewards from its investments, compared to telcos.

One might argue that is because U.S. cable operators are more careful with their cash, being a smaller segment of the industry with a smaller supplier base, smaller revenues and resources than telcos.

https://seekingalpha.com/article/3981296-revenue-trends-telecom-sector

One might argue cable takes a practical approach, never investing in “moon shots.” But the structure of the two industries was quite different. Cable operators are able to focus on competing with telcos as the threat of competition from other cable operators is nil to non-existent.

Cable companies do not compete against each other in any single territory, as do mobile companies or satellite firms. That means there is less pricing pressure and less margin compression.

That also means it is easier for cable operators to collaborate on developing new technology or software, compared to telcos. Each cable operator realizes the odds of any new technology being deployed against it, by other cable operators, is virtually zero.

Every mobile operator knows other mobile operators will use any new capability against all the others, minimizing the comparative advantage.

Many telecom specialists do compete against telcos and cable in the fixed network business services segment (system integrators, interconnect firms, competitive local exchange carriers), and there is some--and growing--independent internet service provider competition as well.

Telcos mostly have been incumbents facing market share attacks in voice, messaging, internet access and business services. Cable has been an attacker. So telco investments are more risky: telcos have to invest in new lines of business they do not understand. Cable only has to take market share in businesses that are well understood.

Also, cable platforms, whatever the original limitations, have been “broadband” since their inception. Telco platforms have been “narrowband,” and the costs of upgrading both types of platforms were disparate: it cost cable far less to upgrade to reliable, gigabit internet access speeds, compared to telcos wanting to do the same.

Cable companies also have had lower operating costs than telcos, in large part the complex legacy of telcos having had cost structures shaped by monopoly conditions. The cable industry  began life “capital starved,” with important implications for business outlook and culture.

On the other hand, the separation of apps from access has meant the core telco apps, traditionally bundled with network access, can be delivered “over the top” by third parties. At the very least, that increases competition in the app realm. At worst, “access” becomes a dumb pipe function with less value.

Also, cable operators have had other advantages in terms of securing a role in the applications business. Consider that potential apps in the communications business are virtually infinite. Potential apps in the cable TV business are quite finite.

So it made sense for Comcast to buy NBCUniversal, and gain control of a differentiated revenue stream that also lies at the heart of its cost structure, in an adjacent part of its core and well-defined ecosystem.

Though AT&T is attempting something similar with its acquisition of Time Warner, many other telco acquisitions have not proven so successful. Telcos have bought computing companies, data centers, home security, mobile advertising, banking and other assets with mixed results. Many started their own app stores or OTT voice and messaging apps, with mixed results.

Compared to cable companies, telcos had to guess at what might work. What has worked is “horizontal acquisitions,” in both telco and cable segments of the business.

source: Deloitte

source: Deloitte

The point is that there are any number of reasons why vertical, up the stack efforts arguably have been more effective when attempted by cable companies, compared to telcos.