IoT Will Drive More Private WAN Networking

Internet of things deployments will likely rely on private networks rather than the public internet for connectivity, a study conducted by Omdia suggests. That should come as no surprise, if IoT deployment volumes grow as much as some expect. 

source: IoT Analytics

The study included 200 enterprise executives in North America and Europe in several vertical industries already using or in the process of deploying IoT, including financial services, retail, manufacturing, healthcare and hospitality. 

About 46 percent of respondents already use private networks and 40 percent are evaluating private networks to support their IoT deployments. That might tend to be important if private 4G and 5G networks operated by enterprises prove to be as big as Nokia hopes. 

If an enterprise uses its own private 5G network to support mission-critical operations, why would it not use a more-secure private WAN to support those operations, as enteprises now use private WANs?

source: Syniverse

Much Small Business Spending is Essentially Similar to Consumer Spending

There’s a reason tier-one service providers often report small business revenue in a “mass market” category with consumer accounts. Very-small businesses tend to buy consumer connectivity products, with buying processes very similar to that of consumers. Some surveys of small business suggest just 10 percent of such firms generate $500,000 or more of annual income.

source: Business Knowhow

According to the U.S. Census Bureau, there were about 7.6 million employer firms (businesses with employees) operating in the United States in 2017. Of those businesses, 89 percent have fewer than 20 employees.

According to statistics from the US Small Business Administration's Office of Advocacy, 81 percent of small businesses are classified as nonemployers because they have no employees. 

Possibly 40 percent of SMBs had annual revenue less than $100,000 in 2013, according to Parks Associates. Perhaps another 30 percent had annual revenue of less than $500,000. 

According to the U.S. Census Bureau, perhaps 26 percent of U.S. small businesses generated more than $1 million in annual revenue. 

source: U.S. Census Bureau

source: Parks Associates

One often hears rather big numbers where it comes to the number of SMBs. But a huge percentage of total businesses actually are very small, home-based businesses with no employees. 

source: the kickassentrepreneur

Average small business owner salaries were about $66,000 annually, according to PayScale, which gives you some idea of likely profits from many small businesses.  

The point is that much small business connectivity spending is not going to be that different from consumer accounts.

Verizon Says Calling and Text Messaging Already Have Returned to Pre-Covid Levels

Verizon reports that call volumes as well as text messaging are “returning to normal levels,” while physical mobility also is increasing. That last statistic is evidence that lockdown and stay-in-place rules are loosening. 

According to Verizon’s handoff metrics, 44 states have had increases in mobility over the last two weeks and 36 percent of states have surpassed their pre-COVID mobility levels, Verizon says. Verizon’s stats also show these trends have been in place since at least the end of April. 

Verizon’s April 29 report on usage indicated that “most categories of usage are starting to decline, with some falling significantly below peak levels.” Downloads were down five percent, week to week, and have dropped about 55 percent from the peak infection period. Gaming dropped 10 percent week over week and 45 percent from the point of peak infection. 

“Customers have placed 14 percent fewer wireless calls from the peak of COVID, while calling and wireless calls are now three percent shorter in duration,” Verizon said. 

On the other hand, we need to be careful about attributing literally every social phenomenon to the impact of the Covid-19 pandemic. Mobility normally increases in the spring, in any case. “In the spring, we often see an increase in handoffs as people move around more and volume on our networks increases over what we see in the winter,” said Verizon Chief Technology Officer Kyle Malady.  

Still, gaming is up 82 percent over pre-COVID levels, virtual private network connections are up 72 percent over pre-COVID levels and use of collaboration tools are about 10 times pre-COVID levels.

Nor can we be too confident about predictions of long-term changes in customer behavior as we move further from the pandemic. Changes that already were in place pre-Covid will persist. But the magnitude of such changes, out about five years, are hard to estimate. Even past traumatic events (the Great Recession of 2008, the internet bubble burst of 2001, 9/11 attacks) have produced changes that are hard to see, over longer periods of time. 

The return of calling and text messaging behavior might be an example. We are not yet out of the lock-down, and already basic behaviors are returning to pre-Covid levels.

That is not to say permanent changes in behavior are inconceivable. We simply should not extrapolate in a linear way from our emergency behaviors.

Fleet Logistics IoT Shows Impact of Stay-at-Home Orders on Traffic, Truck Speed

Fleet logistics analytics provider Geotab says the stay-at-home orders issued as part of Covid-19 mitigation rules have decreased the time trucks spend at intersections and increased average speed when driving. The data was gathered from fleet internet of things sensors. 

The U.S. city with the largest increase in average road speeds was found to be New York City, moving from an average speed of 17.5 mph to an average of 21.0 mph - a 20 percent increase. San Francisco and Washington had the second largest increase in average road speeds.

source: Geotab 

The city with the largest reduction in time spent at intersections was Atlanta at 17 percent, with an average of 35 seconds spent at an intersection compared to 42 seconds before March 15. The city that has shown the smallest reduction in time spent at intersections is Seattle, with a three percent difference since before March 15.

“As soon as the lockdowns began across North America, we saw a drastic reduction in (carbon dioxide) emissions, down to 40 percent or less of normal for some cities,” said Mike Branch, Geotab VP. 

New York City, in particular, has seen the largest reduction, sitting at 38 percent of pre-pandemic CO2 emissions.” 

No Surprise, Net Profit Margins are Generally Lower than in Monopoly Era

Globally, a  typical retail connectivity service provider selling to consumers and businesses, likely with universal service obligations, tends to have net profit margins in the five percent range, according to Deloitte, perhaps six percent in the first quarter of 2020, making the business more profitable than low-margin grocery retailing but far less profitable than finance or technology services. 

source: Factset

Ironically, those sorts of net profit margins are close to monopoly-era margins as well. In the monopoly days, profit margins were set at guaranteed rates of return not much different, often in the six percent to eight percent range. The difference is attributable in large part to competition, which tends to lead to lower prices and therefore lower profit margins for suppliers. 

But product substitution also plays a part, as consumer and business demand shifts from legacy to new products, not all of which require purchase of a service provider product. Better technology also plays a role in enabling supply of better or more product at equivalent or lower prices. 

That illustrates a near zero pricing trend for basic connectivity products, especially on a per-bit, per-incremental-unit or per-use basis. Over time, connectivity prices have tended to mirror computation prices: better performance and declining prices over time. 

In fact, some major business models are premised on near-zero pricing for computing and communications goods. Microsoft’s software business, Netflix, Amazon, Google and 
Facebook provide examples of major business models built on the assumption of cheap communications and cheap computing. 

That can be seen in declining average revenue per user or commoditization.

Brief Dip, Quick Rebound Likely for Telecom Revenue, Capex

Though many parts of many economies might not see a “V-shaped” recovery post-Covid-19, Analysys Mason believes 5G capital investment will do so. If that happens, and looked at from a longer time frame, it will be almost hard to see the impact of Covid-19 on capex. That would be in keeping with past experience in the aftermath of the 2008 Great Recession, for example. 

And though Analysys Mason also predicts a revenue decline in developed markets of as much as 3.4 percent in 2020, growth will return in 2021. That also would be in keeping with the connectivity provider revenue recovery from the Great Recession. 

source: Analysys Mason

"Your Connection is Unstable"

“Your connection is unstable” is a message I almost always see at least once per Zoom session these days. So I did some checking, assuming there had to be a performance issue on my access circuit. Apparently, not so. Jitter measures at 2 milliseconds, well under the threshold of perhaps 39 ms on that measure. Bandwidth downstream is always between 200 Mbps to 300 Mbps per user, upstream between 11 Mbps and 12 Mbps, so bandwidth is not the issue, and latency is about 29 ms. 

All of that, essentially, means the connection, including both access connection plus Wi-Fi link, should not have instability issues. And yet it wobbles. Perhaps to be expected on a “best effort” internet connection, even with a new router. 

Most of the solutions I could think of involve removing the Wi-Fi link and direct connecting to the router using Cat 5 or Cat 6 cable, which is not an option since my PC no longer has an Ethernet port and uses Wi-Fi exclusively. 

I briefly looked at buying any available over the top QoS solution, but at least so far nothing seems suitable. And, in any case, it does not appear that jitter could be an issue. The apparently momentary unstable connection issues are annoying, but not mission critical for video conference calls. 

That is going to be a bigger issue when I am the one conducting webinars. About all I think of right now is rebooting the router before each Zoom session.