Orchestrator or Platform?

Rather than the term platform, which implies that a company creates an orchestration role or marketplace, systems of delivery might be a better way of explaining a path forward for connectivity providers trying to supply more value for their customers and create new roles within the value chain. 

In the enterprise software as a service space, some argue for approaches that are more agile because something akin to an operating system can be envisioned: a way of breaking down silos and allowing horizontal integration. 

The problem is either too much integration (too “tight” and therefore not flexible) or too loose (little to no effective integration). Think of the way application programming interfaces are used to allow systems to work together, in a more loosely-coupled manner. 

The analogy for connectivity providers is to become something of a process orchestrator, integrating various functions on behalf of a customer. The older model of system integrator comes to mind, but in the context of orchestrating the use of resources, more than creating the resources. 

Creating a system of delivery arguably is far easier than creating a platform. One arguably sees this in the software as a service business. “SaaS is upping its game with a growing number of vendors downplaying 'best of breed' and talking instead of a 'rising tide' where they become centralizing hubs in which an ecosystem of other apps are operationalized,” notes S&P Global. 

source: 451 Research 

That sounds akin to “platform,” but might be better characterized as “orchestration.” Agility and alignment arguably are parts of it. Integration might arguably be part of it. Overcoming silos is part of the idea. 

The key observation is that almost every effort made by connectivity firms to increase value for customers will require some orchestration of value to create a solution. Though not easy, it is perhaps easier to envision a large connectivity provider becoming an orchestrator of value than becoming a true platform.

Fixed Wireless Could Reverse a 20-Year Trend

Cable operators and many observers say they do not believe fixed wireless is a threat in the home broadband market. The argument is that speeds will not match what hybrid fiber coax or fiber to the home is capable of; usage allowances will not match that of cabled networks and price discounts will not be significant enough to attract switchers. 

T-Mobile and Verizon are enthusiastic for perhaps equally-compelling reasons: $195 billion worth of annual revenue. Comcast and Charter Communications alone book $150 billion annually from internet access services that largely are generated by home broadband customers. 

But even most business accounts could be candidates for fixed wireless, including smaller businesses as well as larger entities using fixed wireless as a backup service. 

source: S&P Global 

Beyond all that, fixed wireless is interesting for attackers in the home broadband market, simply because the easiest possible business model is “same service, lower price” in a market with proven demand characteristics. And the “lower price” part of the value proposition is powerfully enhanced by fixed wireless.

Fixed wireless does not have to compete with the high-end FTTH or cable gigabit services. As history has shown, most competitive attacks in software or communications happen at the low end: a product that is “not as good as that provided by the leaders, but still useful.” 

Fixed wireless only has to shift a bit of market share to become a significant revenue driver for T-Mobile, and allow Verizon and AT&T to reverse a 20-year loss of market share to cable operators in the home broadband business. 

And since at least half of all U.S. home broadband customers buy services operating in the 100 Mbps to 200 Mbps range, a fixed wireless service only has to provide about that level of performance, with adequate usage allowances and a lower price, to be competitive. 

Most likely, the center of gravity of demand for 5G fixed wireless is households In the U.S. market who will not buy speeds above 300 Mbps, or pay much more than $50 a month, at least in the early going. The reason is that that pricing level and downstream bandwidth fits the profile of 5G fixed wireless using mid-band spectrum.

The other issues are coverage and infrastructure cost. T-Mobile has had zero market share in home broadband because it is not in the fixed networks business. Verizon has a small geographic footprint and has never been able to compete in 80 percent of the U.S. home broadband market. Fixed wireless, provided by the same 4G and 5G networks they must operate in any case, provide a platform for doing so.

Look for Expedited FTTH Investment in U.K. Because of "No Price Controls" Rule

Regulated prices in the connectivity industry generally result in less investment. Pricing freedom, on the other hand, tends to lead to more investment. That was true in the U.S. market and seems to be shaping up in the U.K. market as well. U.S. policy, early in the wake of the Telecom Act of 1996 focused on robust wholesale pricing. 

Wholesale discounts as high as 40 percent encouraged lots of new competitors to buy wholesale capabilities, while also leading the providers of facilities to complain that they had few incentives to invest robustly in optical fiber infrastructure, given the existence of robust mandatory wholesale policies. 

“We currently do not expect to introduce cost-based price controls (on new fiber to the premises) facilities until at least 2031,” said Ofcom. 

That is expected to lead to faster investment by OpenReach and BT, since a higher return is possible. 

U.K. Broadband Illustrates Key Change in Business Model from Voice Era

Consumer internet bandwidth speeds, consumption and retail prices illustrate one enduring issue for connectivity providers: where the voice business was usage based, the broadband access business is largely untethered from usage charging. 

The revenue implications are key: where additional voice usage tended to generate additional revenue, that tends not to be the case for broadband services. As this data from Ofcom illustrates, usage and speeds keeps climbing, but revenue is flat. 

source: Ofcom 

The business model implications therefore are stark. Capital investments must be made without necessarily producing incremental revenue. To keep profit margins stable, other areas of the business must become less expensive, whether that is marketing, sales, operations fulfillment, customer support or customer premises equipment.

Internet Access Speeds Change, Consumer Demand Not So Much

About 51 percent of U.K. customers now buy broadband operating between 30 Mbps and 100 Mbps, according to Ofcom. A quarter of households buy services running slower than 30 Mbps.

About 20 percent purchase services at speeds between 100 Mbps and 300 Mbps. About three percent buy service at speeds greater than 300 Mbps. 

source: Ofcom 

From a supplier’s point of view, increasing available speeds without the ability to boost revenue is an unattractive option. Consumers, for their part, always evaluate speed versus price, buying based on value. They tend not to buy the “best possible” service, but packages that represent value: “enough value for a reasonable price.”

The same dynamics happen in the U.S. market, where in the fourth quarter of 2020, about 8.5 percent of customers purchased gigabit speed access. 

Fully half of U.S. customers purchased service operating at speeds between 100 Mbps and 200 Mbps, according to Openvault. 

source: Openvault 

By about 2025, Ofcom expects the percentage of households buying service at speeds greater than 300 Mbps to remain at about the same percentage of U.K. households. But customers purchasing service at speeds between 80 Mbps and 300 Mbps could grow to 23 percent of households. Roughly half of customers will buy service operating between 55 Mbps and 80 Mbps. 

source: Ofcom

Consumer broadband always is a combination of supply and demand: what internet service providers are willing and able to provide to customers with value and price sensitivities. And Ofcom forecasts suggest a fairly stable market over the next five years.

Online Events Change User Expectations

Online events come with different attendee expectations than in-person events, a major study by Bizzabo finds. 

Bizzabo analyzed data from 967 events (358 in-person, 618 virtual) between September 2019 and September 2020 as well as data on 660,000 attendees (105K in person, 556,000 virtual). 

“Engagement” for virtual events is lower than for in-person events, based on “check-in” rates (people who actually show up, compared to people who have registered to attend). Live or virtual, people only attend about 20 percent of available sessions. 

Compared to live events, virtual events are widely viewed as opportunities for learning, but not for networking. But learning in virtual formats was said to be less than in live settings. 

Expectations for “networking” are four times lower in the virtual format. Also, virtual events are not viewed as “fun” experiences. 

source: Bizzabo

source: Bizzabo

Here are the findings on virtual event prices.

source: Bizzabo

As you might guess, virtual event attendees are more concerned with learning than networking, which is harder in the virtual format than live events. 

source: Bizzabo

Whether virtual or live, most attendees attend 20 percent of available sessions.

source: Bizzabo

You can view here a discussion of the Bizzabo findings. 

SMBs Will Keep IT Services They Adopted During Pandemic

A new survey of small and mid-sized businesses in Australia, Canada, the United Kingdom and United States by Analysys Mason suggests post-pandemic technology priorities will focus on the ability to sustain operations remotely. That means higher spending on mobility services, information technology support for remote workers, more use of cloud applications, replacing desktop PCs with notebooks and tablets, as well as boosting fixed broadband connectivity. 

source: Analysys Mason 

The survey also shows what you might have expected: firms tried--when possible--to continue operations remotely.

“The most urgent priority for many SMBs is to ensure that their business can continue to operate remotely for as long as necessary,” said Analysys Mason. “This includes improving mobile and fixed communications for remote employees.”

Some 38 percent of SMBs in the United States, for example, prioritize mobile connectivity and 33 percent of SMBs in the United Kingdom prioritize fixed connectivity. Ensuring that all of their IT assets can be managed from the cloud will be another key focus, particularly for medium-sized firms (36 percent) and small businesses in the U.S. (36 percent) and the U.K. markets (33 percent). 

Providing remote IT support for their remote employees will be increasingly important for mid-sized firms (38 percent) and SMBs in the United States (36 percent).  

5G adoption was cited as important by 26 percent of Australian SMBs and 29 percent of U.S. SMBs. some 25 percent of Australian SMBs also plan to focus on adopting cloud infrastructure services or cloud based software (SaaS) solutions in the next 12 months. 

Firm tactics have varied by the severity of revenue decline. Hospitality firms have been hardest hit, while financial insurance real estate were the least affected, along with healthcare. FIRE is among industries where remote work is easiest to achieve. 

source: Analysys Mason 

Likewise, firm responses largely correlate with industry ability to continue normal operations while workers are remote. The biggest single change most firms took was to increase use of collaboration tools. Some 35 percent to 45 percent of firms report having done so.

Adoption of all other technologies increased, but generally not more than 15 percent. The survey also suggests that firms will tend to keep using those new tools once the pandemic has ended. 

source: Analysys Mason 

source: Analysys Mason 

Definitions always are crucial when examining the small and medium business communications market. Analysys Mason uses a definition of “small business” including all entities with up to 99 employees. The firm defines a “medium” business as an entity with between 100 and 999 employees.