Monday, January 29, 2018

New S&P 500 "Communications Services" Segment Shows You Where We Are, Where We are Going

Though impressionistic, a coming September 2018 change in industry categories--combining telecom, tech, media, and entertainment companies--tells you something about fundamental changes in the internet and telecom ecosystems. To wit, the changes show--in part--that connectivity and apps now are becoming parts of a single market.

The new S&P 500 sector called Communication Services also is being created because the former “telecom” sector now includes too few firms. The new Communications Services sector will replace the former “Telecommunication Services” category.

But the rationale is important for larger reasons. S&P Dow Jones argues that tech and content and app companies have become a lot more integrated.

Verizon, AT&T and Comcast,  for example, have made acquisitions to become content, mobile and internet services providers. Google now makes devices and provides mobile and internet access service, not just key internet apps. Facebook and Amazon have made smaller moves into either internet access and network infrastructure, or into devices.

The other important change is that both Netflix and Amazon also will be part of the single Communications Services category. Google and Facebook are moving into e-commerce or content, or both.

The larger point is that 30 years ago, the global telecom business was the center of its own industry and ecosystem. It created its own apps, built its own devices, conducted its own research and built its own network equipment.

These days, research and development primarily is conducted by third parties. Devices are supplied by other third parties. And most apps are created--”over the top”--by third parties.

And as all legacy revenue streams atrophy, the telecom industry has become--essentially--a tail on an internet dog.

At the same time, large app providers increasingly are integrating functions once provided by service providers. From owned undersea cables to hyperscale data centers; from devices and mobile services to local internet access services; from voice to messaging; other firms with business models based on advertising or commerce are competing both with telecom service providers and consumer electronics manufacturers.

In principle, that is why firms such as Comcast, AT&T, Verizon, NTT and others are moving into new lines of business other than “access or transport” services.

So, though impressionistic, the new S&P 500 Communications Services category tells you quite a lot about where the business is, right now, and where it  is going.

Cord Cutting by Heavy Users Saves Them $115 a Month, Study Finds

Customers who seem to the heaviest users--and cut their linear video subscription--saved about $115 each,  study by LendEDU finds.

The typical heavy users--spending more than $140 a month total on entertainment video, also reported buying three streaming services, though, spending an average of about $33 a month on streaming services.


Some 77 percent of the cord cutters report they still continue to buy streaming services, and report spending about $35 a month on streaming services.




When current cable subscribers were asked whether they use their linear services or streaming more, the split was fairly even: 52 percent reported using linear more, while 48 percent reported using streaming more.


Less than 70 percent of the current linear video subscribers estimated they still would be buying in a year. Three years out, just 44 percent believe they still will be buying a linear service.


The main point seems to be that many consumers still want to buy entertainment video, but are not inclined to spend $100 a month. Many of us believe typical customers will buy multiple subscriptions, up to perhaps $60 a month, total, for all services.

Nokia Launches Future X Platform for 5G

Nokia now is calling its 5G platform"Future X," referring to the reference silicon design and the 5G network itself. Here is what is notable about the nomenclature. The phrase “Future X” actually comes out of Nokia Bell Labs, the research and development unit, and specifically from the title of the first book ever published by Nokia Bell Labs, The Future X Network, written by Bell Labs President Marcus Weldon.

In choosing the name, Nokia also suggests its strategy. The Future X Network will have to deliver different value, Weldon and the team of contributors argues.  Most fundamentally, the value of the network will not be “connectivity.”

"Free" Wi-Fi illustrates the problem. At a recent industry conference, the audience saw a slide illustrating the telecom industry new value proposition, and laughter erupted. It erupted because at the base of the value chain was the phrase “free Wi-Fi.”

Acknowledging the mirth, Weldon suggested that was because the audience of telecom professionals understood very well what was happening.




Go to 08:30 minutes into the video if you just want to hear the discussion of where telecom sits in the perception of value. Or watch starting at about four minutes in if you want to hear the Bell Labs vision of how "value" will be created in the next era.

Simply, the thesis is that value will be created by the network to the extent that it “creates time” for people and augments human intelligence. That might sound ethereal, but the point is that to survive, much less thrive, the global telecom industry will have to find a way to create an entirely new value proposition, one not based on connectivity.

It is challenging in the extreme. So what is noteworthy is that Nokia has chosen to name its entire 5G platform the “the Future X platform,” encompasses eight major technologies, including Nokia 5G New Radio, AirScale Radio Access, 5G AirScale Active Antennas, 5G Small Cells, 5G Anyhaul, 5G Core, Massive Scale Access and 5G Acceleration Services.

Congratulations to Bell Labs professionals who have been able to take a big idea and get it into commercial use at a high level. Best wishes to Nokia in its effort to make the platform concrete.

Sunday, January 28, 2018

U.K. Hits "Superfast" Targets, But the Target Keeps Moving

Remember when the United Kingdom in 2010 announced plans for “superfast” internet access blanketing the British Isles? That is pretty much done. Nearly 95 percent of U.K. customers now can buy internet access at minimum downstream speeds of 24 Mbps.

Of course, speeds change fast in the internet access business. When the “superfast” initiative was launched, back in 2010, 24 Mbps might have seemed “superfast.” At that time, about 68 percent of U.K. customers had services with headline speed (not actual experience) of between 8 Mbps and 10 Mbps.

In practice, actual average speeds were perhaps half the “headline” speeds. By April 2017, typical average U.K. internet access speed had climbed to 36 Mbps.

By way of comparison, U.S. average internet access speeds  were less than 4 Mbps in 2010, by some estimates. By 2017, average speeds had jumped to 23 Mbps, by some reports, while other studies said average speeds were up to 55 Mbps.

Speeds increase at Moore's Law rates, one can argue, at least for some suppliers, such as the cable companies. Comcast has doubled speed every 18 months, for example. Prices likewise have changed about as you would expect for a Moore’s Law rate of change.

When at least some suppliers are doubling speeds every 18 months, most targets and goals set by government are going to be eclipsed very quickly, no matter how ambitious the goals seem at the moment.

The impact of Moore's Law has been clear: with just a modicum of competition, U.S. access speeds have climbed quickly into the “hundreds of megabits per second” to “gigabit” (1,000 Mbps) ranges.

Even mobile access, which historically trails fixed bandwidth and speed, is poised to emerge as a functional substitute for fixed access in the 5G era.

PTC18 Launches Innovation Awards

At PTC18, the annual conference held by the Pacific Telecommunications Council, several innovation awards were presented to companies and individuals, in a range of categories ranging from technology to quality of life impact on the peoples of the Pacific region.

Organizers say they hope the program will continue, as a way of recognizing and promoting innovation in communications as practiced across the Pacific region.  

Image result for ptc 18 innovation awards

The awards covered six categories related to innovation within the ICT industry and were judged by a panel of seven jurors representing a broad cross-section of industry executives and thought leaders from a variety of network-centric industry segments.

The jurors were RingByName CMO Matt Bramson, Salesforce Vice President for Strategic Research Peter Coffee, APTelecom CEO Eric Handa, DE-CIX International CEO Ivo Ivanov, Garnet Consulting Pty. Ltd. CEO Hugh McGarry, North American Hawaiki Cable President of Business Development Randy Neals, and HOT TELECOM President and Founder Isabelle Paradis.

Each candidate entry was evaluated quantitatively against multiple criteria, with a strict mathematical protocol used to combine the perspectives of each of the independent judges. There was no fee or sponsorship required to enter to safeguard the neutrality and objectivity of the awards.

PacketFabric took the award for Best Application/Service Innovation, as well as Best Networking Innovation Award together with Aqua Comms. The award for Best Regulatory Innovation was presented to Geeks Without Frontiers, while Telstra took home the Lifetime Innovation Award. Télécoms Sans Frontières was recognized for Best Quality of Life Improvement, and Cloudflare won Best Overall Innovation Award.



Mobile Phone Use as a Proxy for Creditworhiness

I was chatting with a banker recently about the use of mobile phone behavior to assess borrower risk in areas where most people do not have credit scores or banking relationships. She was skeptical. I don’t blame her.

But many now believe that analysis of mobile data relationships, communities, frequency of communication and other evidence based on mobile phone use could, indeed, be used to assess credit risk.

There are many straightforward indicators of behavior that are plausibly related to loan repayment. A responsible borrower may keep their phone topped up to a minimum threshold so they have credit in case of emergency, whereas one prone to default may allow it to run out and depend on others to call them.

An individual whose calls to others are returned may have stronger social connections that allow them to better follow through on entrepreneurial opportunities.

As you would guess, such techniques are most valuable in the global South.

One obvious source of data is remittances received on a phone (M-Pesa, for example). It seems to make a difference whether contacts on a mobile phone include both first and last names, for example.

That bit of data can mean a 16-fold difference in default rates on loans. Micro-loan provider Tala analyzes mobile phone behavior such as the size of the applicant’s network. Consistency, like making a daily call to parents, and where a person goes daily make a difference.

About eight to 10 questions seem to be enough to establish a proxy creditworthiness score.

Certain behavioral patterns are remarkably accurate in predicting the probability of default among borrowers without formal financial histories, even for very poor borrowers whose mobile phone usage is extremely limited, according to studies cited by the World Bank.

Higher-risk borrowers used their phones infrequently, and were found to only place 22 minutes of calls and send one text messages, spending a total of $2.85 over a period of 11 weeks.

Individuals in the highest quartile of risk were six times more likely to default than those in the lowest quartile.

A bank that participated in a study found it could eliminate 43 percent of loan defaults by eliminating the 25 percent of people who are most risky.

At one level, this chart only illustrates the fact that developed nation citizens have more income, cash or wealth than citizens in developing nations.



Likewise for digital payments, citizens in developed markets tend to use such mechanisms more than citizens in developing nations.

Saturday, January 27, 2018

Federal Preemption Coming in Internet Access Business?

Communications that cross state lines generally have been regulated differently than communications that are confined within a single state, or parts of a state. In the internet era--even if data communications tend not to be regulated very much--there has been a “hands off” approach, which fits the generally highly-distributed nature of modern computing.

In more recent times--in the wake of the Telecommunications Act of 1996--there was a perhaps-necessary clarification of state and federal roles, mostly in the area of federal preemption of state and local rules.

The logic has been that, for clear efficiency reasons, it does not make sense to have potentially 50 sets of rules for communications that are, almost exclusively, interstate or global in nature.

It seems almost inevitable that we will have some form of the federal preemption debate as policy on internet access potentially fractures with imposition of state rules on internet access. AT&T, for example, already has started calling for federal rules to re-establish or preserve a single national policy.

That comes as some states and localities create their own policies for internet access, once again raising the issue of fractured policies across the nation. As those of you who work in tariff and taxation areas know, it is devilishly-complex to comply with all local and state regulations when you are running a nationwide business.

That, in fact, is behind the whole European Union project: ending the friction that comes with multiple regulatory and currency regimes within what increasingly is a single market.

“It is time for Congress to end the debate once and for all, by writing new laws that govern the internet and protect consumers,” AT&T says.

Given the obscurity of network neutrality in general, and its weaponization, it might be reasonable simply to point out the areas where nearly everybody continues to agree.

We all agree that people and consumers must be able to use all lawful services and applications. There cannot be blocking of lawful applications.

Such applications cannot be throttled or downgraded based solely on the ownership of specific sites and content.

Everyone has agreed on these principles for more than a decade. So, even if most seem not to understand, do AT&T and other major internet service providers.

“We don’t block websites; we don’t censor online content. And we don’t throttle, discriminate, or degrade network performance based on content. Period,” AT&T says.
But “Congressional action is needed to establish an ‘Internet Bill of Rights’ that applies to all internet companies and guarantees neutrality, transparency, openness, non-discrimination and privacy protection for all internet users.

“Legislation would not only ensure consumers’ rights are protected, but it would provide consistent rules of the road for all internet companies across all websites, content, devices and applications,” AT&T argues.

At this point, and ironically, it is as much the major app providers--not just ISPs--that probably have to worry about what that means. If the objection to changing the “best effort only” level of consumer internet access is about preventing the emergence of gatekeepers, we have problems far beyond “who owns the access pipe.”

Actual instances of “commercial blocking” have been happening, but by Amazon and Google, for instance, not ISPs.

In the coming debate, the need for predictable rules, across the whole country, will be stressed, as we have seen in the past, and for the same reasons. To be sure, AT&T’s concern is about future services whose performance does matter, and which might clearly benefit from optimization, as do consumer apps whose performance is assured by use of content delivery networks.

Ironically, most larger content and app providers already use content delivery networks, precisely for the purpose of optimizing performance of their consumer apps.


“In the very near future, technological advances like self-driving cars, remote surgery and augmented reality will demand even greater performance from the internet,” AT&T says. “Without predictable rules for how the internet works, it will be difficult to meet the demands of these new technology advances.”

To be sure, the issue all along has not been “lawful use of apps” and “no blocking” but the development of quality-assured or other services whose costs are defrayed by an enterprise.

Some ISPs and app providers have argued for the freedom to offer “toll free” services--offered at no charge to end users--alongside the for-fee models. Internet.org, for example, has tried to create no-charge internet access programs for mobile customers in developing markets.

Some ISPs want the freedom to create toll-free or tariff-free services that provide internet access in the same way that toll-free calling is offered.

To be sure, business services are not covered by network neutrality rules. The problem is that the line between enterprise and consumer services increasingly is blurred. Virtual private networks, for example, can be used by business or consumer end users.

The fear in some quarters, perhaps logically, is that, eventually, quality-assured internet access becomes high-definition to standard definition video; or 4K instead of HDTV, a “better” level of service that eventually forces app providers to upgrade, possibly with the implication that app providers pay money to a transport provider, as already happens with content delivery network payments.

The point is that CDNs are lawful and routinely used. Why are CDNs "to the end user" not lawful? And if so, does that business require uniform national rules, given that CDNs almost intrinsically operate across state lines?

Alphabet Sees Significant AI Revenue Boost in Search and Google Cloud

Google CEO Sundar Pichai said its investment in AI is paying off in two ways: fueling search engagement and spurring cloud computing revenu...