Replacing TCP is Becoming More Common

Transport protocols such as TCP/IP are the foundation of computing and communications. But transport protocols change from time to time. So Quic is viewed as a replacement for TCP that also provides reduced latency performance. 

source: NetApp 

The “layers” design of data communications ensures that TCP functions and IP functions can be updated or changed without upsetting the whole transport system. IP obtains and defines the address of the application or device the data must be sent to. 

TCP is responsible for transporting and routing data through the network architecture and ensuring it gets delivered to the destination application or device that IP has defined. But other protocols can be used in place of TCP, such as UDP. 

It might be quite fanciful at this point to speculate on a replacement for TCP/IP as the global standard for communications. It is not speculation that QUIC can replace TCP. 

Other proposals have been floated, but have not gotten traction. Most such proposals involve modifying TCP, though at least one proposal suggests replacing IP.  

Technology Value is What the User or Customer Says it Is

Customer value might be defined as “the perception of what a product or service is worth to a customer versus the possible alternatives.” When new technologies are created, developments have some idea of why they believe an innovation will provide value. 

Sometimes, customers disagree. They see value, but not where developers believed value would exist. Unintended uses, in other words, happen. Technologies and products are used in ways developers did not foresee. Using Xbox controllers to fly unmanned aerial vehicles provides one example.   

Text messaging was a byproduct of instituting Signaling System 7. TCP/IP became the global telecommunications next-generation protocol when it was originally intended to support military computer communications under conditions of uncertainty. 

Consider multi-access edge computing. The stated value is ultra-low latency performance. But connectivity service provider executives say their own belief is that MEC’s greatest value--as a means of moving workloads to the edge,  will be a reduction of bandwidth use or cost. 

But a recent survey conducted by Heavy Reading--94 percent of whom were connectivity providers--suggests the top motivator for moving workloads to the edge is to “reduce bandwidth use or cost.” “Improved application performance” was fourth on the list, ranked in terms of “top motivators.”

source: Heavy Reading 

To be sure, multiple values exist. But it is worth noting that the intended value as developed by suppliers  is not always the “perceived value” seen by end users or customers. 

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For as long as I can remember, calls have been issued that connectivity service providers are missing out on revenue opportunities from small and mid-sized businesses. 

Looking at 5G revenues, for example, BearingPoint and Omdia point out that up to 99 percent of all businesses globally are SMEs, though connectivity providers focus on enterprises. 

source: BearingPoint, Omdia 

That is an “untapped” opportunity, they argue. That is misleading. 

Omdia’s own data show that 63 percent of mobile operators believe large enterprises will generate the “most” 5G revenue. 

Omdia’s own data also suggest that 54 percent of service providers believe SMEs will generate the “most” revenue. That is hardly neglect, as 32 percent of respondents believe consumers will generate the “most” revenue from 5G. 

Keep in mind that mobility has, since the 2G era, been built on consumer revenues, not revenues from business. 

source: Omdia, BearingPoint 

But there are other reasons why smaller businesses are not specifically targeted. The cost of sales and buying behavior is virtually indistinguishable from the behavior of consumer customers. 

In the U.S. market, for example, 83 percent of all businesses are “micro” sized, having no more than nine employees. 

“Small” firms with 10 to 99 employees represent  15 percent of all businesses, while “medium” organizations with 100 to 499 employees represent just two percent of entities. 

If enterprise is targeted directly with field sales, then “micro” (83 percent of business entities) are marketed through the mass market channels. “Small and medium” organizations tend to be marketed to by partner and channel entities. Think of the role played by resellers and system integrators and distributors in the computing hardware business. 

source: CompTIA

So some of us would argue that mobile operators are not neglecting SMEs. They sell using mass market techniques tot he 83 percent of customers that behave like consumers when evaluating and buying 5G services. 

They use channel partners to sell to the mid-market. And they have dedicated field and inside sales teams to sell to enterprises. 

One can argue that more internal resources should be devoted to direct sales efforts for SMEs. But cost of sales is an issue. In many cases, the financial return from higher sales and marketing cost expended on most “small or medium” customer accounts would generate a zero to negative financial return, compared to using channel partners.

All of us have to define our terms: what is “small;” what is “medium” and what does that mean for marketing, sales and requirements? 

Also, are we talking about “new revenue sources” or “total revenue generated by segment?” It might, for example, prove to be the case that much “new use case” revenue is generated by enterprises, as they will be the entities deploying large internet of things and sensor networks. 

Those are non-phone revenues. But phone revenues might still be led by consumer users, as historically has been the case. 

The issue is “which are we talking about: new use case revenues or total or segment revenues?

Either way, though, it might be hard to make the argument that most of the return is going to come from SMEs, as compared to consumer or enterprise revenues. 

For Whom is 5G an SMB Opportunity?

Very frequently, some mobile or fixed network operators have greater or lesser revenue growth opportunities based on their existing market shares, asset and liability positions. A firm with zero to low exposure to a revenue opportunity often has a much-higher chance of fast growth, compared to legacy suppliers that lead a market.

Since many connectivity markets are essentially zero-sum games, a win by one contestant is a loss for another supplier. And leaders have the most to lose; attackers the most to gain.

In the U.S. market, for example, cable operators with zero exposure to fixed voice, mobility services and business internet access have been able to take market share from the incumbents. Conversely, telcos who historically have led those markets have lost share to the attackers.

T-Mobile and Verizon stand to take share from cable operators (who are the market leaders) using new fixed wireless platforms. T-Mobile historically has had zero share of the home broadband market, while Verizon has been limited by its geographic footprint, covering perhaps 20 percent or so of all U.S. home locations with its fixed network.

So the "SMB" segment is an opportunity for some competitors; less so for the leaders. What might be questionable are assertions that mobile operators are "neglecting" the SMB segment where it comes to 5G.

For as long as I can remember, calls have been issued that connectivity service providers are missing out on revenue opportunities from small and mid-sized businesses. 

Looking at 5G revenues, for example, BearingPoint and Omdia point out that up to 99 percent of all businesses globally are SMEs, though connectivity providers focus on enterprises. 

source: BearingPoint, Omdia 

That is an “untapped” opportunity, they argue. That is misleading. 

Omdia’s own data show that 63 percent of mobile operators believe large enterprises will generate the “most” 5G revenue. 

Omdia’s own data also suggest that 54 percent of service providers believe SMEs will generate the “most” revenue. That is hardly neglect, as 32 percent of respondents believe consumers will generate the “most” revenue from 5G. 

Keep in mind that mobility has, since the 2G era, been built on consumer revenues, not revenues from business. 

source: Omdia, BearingPoint 

But there are other reasons why smaller businesses are not specifically targeted. The cost of sales and buying behavior is virtually indistinguishable from the behavior of consumer customers. 

In the U.S. market, for example, 83 percent of all businesses are “micro” sized, having no more than nine employees. 

“Small” firms with 10 to 99 employees represent  15 percent of all businesses, while “medium” organizations with 100 to 499 employees represent just two percent of entities. 

If enterprise is targeted directly with field sales, then “micro” (83 percent of business entities) are marketed through the mass market channels. “Small and medium” organizations tend to be marketed to by partner and channel entities. Think of the role played by resellers and system integrators and distributors in the computing hardware business. 

source: CompTIA

So some of us would argue that mobile operators are not neglecting SMEs. They sell using mass market techniques tot he 83 percent of customers that behave like consumers when evaluating and buying 5G services. 

They use channel partners to sell to the mid-market. And they have dedicated field and inside sales teams to sell to enterprises. 

One can argue that more internal resources should be devoted to direct sales efforts for SMEs. But cost of sales is an issue. In many cases, the financial return from higher sales and marketing cost expended on most “small or medium” customer accounts would generate a zero to negative financial return, compared to using channel partners.

All of us have to define our terms: what is “small;” what is “medium” and what does that mean for marketing, sales and requirements? 

Also, are we talking about “new revenue sources” or “total revenue generated by segment?” It might, for example, prove to be the case that much “new use case” revenue is generated by enterprises, as they will be the entities deploying large internet of things and sensor networks. 

Those are non-phone revenues. But phone revenues might still be led by consumer users, as historically has been the case. 

The issue is “which are we talking about: new use case revenues or total or segment revenues?

Either way, though, it might be hard to make the argument that most of the return is going to come from SMBs, as compared to consumer or enterprise revenues.

Beyond that, some competitors do have an oportunity, especially if they have historically had zero to low exposure to SMB customer revenues. Cable operators have been in that position, as has T-Mobile.

Will Consumers be Buying Home Broadband at 1 Gbps to 4 Gbps in 2025?

How soon will the headline speed for home broadband reach 10 Gbps? And what does that imply for the speeds most consumers will purchase?

There is widespread expectation that the headline speed for home broadband, in many markets, will be 10 Gbps by about 2025. By other rules of thumb, that also suggests the "typical" home broadband customer will be buying service at rates between 1 Gbps and 2 Gbps, with a significant percentage buying service at 4 Gbps.

The top home broadband headline speeds matter, even when most mainstream home broadband buyers never buy the fastest tiers of service. The reason, simply, is that mainstream buyers gravitate to the mid-tier packages as the best combination of value and price, not the fastest or budget tiers of service. 

source: Openvault 

In the third quarter of 2021, for example, 66 percent of U.S. households purchased service operating between 100 Mbps and 400 Mbps, according to Openvault, when the top tier of service was 1 Gbps. 

You might say price anchoring is at work. Price anchoring applies for list costs of consumer broadband services no less than for other products.  

"Price anchoring" is the reason most consumers able to buy gigabit internet access do not do so. Price anchoring is the tendency for consumers to evaluate all offers in relation to others. As the saying goes, the best way to sell a $2,000 watch is to put it right next to a $10,000 watch.

 

source: Point Topic 

In the United Kingdom for example, 86 percent of consumers buy service at speeds of 30 Mbps or about 100 Mbps, even when the headline speeds have reached a gigabit per second and are now in the early stages of heading for 10 Gbps and terabits per second by 2050  

As Nielsen’s Law suggests, the headline speeds grow at an average of 50 percent per year, typically in star step fashion as platform upgrades are made. 

Nielsen Norman Group estimates suggest a headline speed of 10 Gbps will be commercially available by about 2025. 

source: NCTA  

By 2030, Nielsen’s Law suggests, the fixed network headline speed will be 85 Gbps. The implication is that typical mobile speeds--which often lag fixed network speeds by an order of magnitude or two orders of magnitude--will by 2030 be looking at speeds up to 8.5 Gbps, but possibly as “low” as 1 Gbps per connection. 

Since most mobile device instances of use are “single user,” mobile speeds do not have to share bandwidth as do home broadband accounts, where multiple devices are supported by a single home broadband connection. 

That also implies that mobile speeds do not have to match fixed network speeds to remain competitive or useful. 

source: IDtechex

Population Density "Predicts" Economic Growth; Quality Broadband Does Not

Though virtually everyone supports ubiquitous, quality broadband services, and even as policymakers and infrastructure interests always claim broadband is a platform for economic development, those claims almost always are unprovable.

At the micro level, “broadly speaking, there are two main sources of economic growth:  growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce,” economists might say. 

It might be argued that broadband helps with both, in the same way that roads, electricity, education and skill levels, “quality of life” attractions, airports and other transportation hubs, education, health and other social infrastructure also might be viewed as underpinning prospects for growth. 

Population density and geographical remoteness also are underlying issues. Though poverty, health care, educational attainment and other background issues exist in isolated rural areas, one reason economic development is stunted in such areas is low population density and remoteness. 

Most economic activity takes place in proximity to urban population centers, in large part because that is where most consumers and buyers live, and where the logistical costs of creating and delivering products is most favorable. 

In some areas, strength builds on strength, as a large, important economic activity creates an ecosystem that attracts other firms. 

Beyond all that, correlation is not causation. We might well note that quality broadband tends to exist where economic growth and other indices--educational attainment, incomes, wealth, housing prices, quality of schools and quality of life--also are high. 

Though it is widely believed that broadband access leads to economic growth, that cannot be proved, though many studies suggest a correlation. But correlation is not causation. 

“A  positive relationship between broadband expansion and employment growth could arise for other reasons,” says Jed Kolko of the Public Policy Institute of California. “For example, if

broadband providers expand in locations where they anticipate future growth, then the positive relationship would in part or entirely reflect this strategic decision of providers rather than a causal effect of broadband on growth.”

“Alternatively, population growth could cause both broadband expansion and employment

growth: Broadband providers could invest in areas where population (and therefore demand for broadband) is growing, while at the same time population growth could cause employment growth in industries (such as retail, restaurants, and personal services) that serve local populations<” Kolko says. 

We know correlations exist. But that does not mean we can prove that quality broadband actually produces outcomes such as economic growth, as much as we all believe it contributes to social outcomes we prefer.

We Might Already be Wrong about New 5G Revenue Sources

Fixed wireless is projected to provide nearly a third (32 percent) of global gross domestic product value generated by mid-band 5G spectrum; providing value, greater than internet of things or ultra-reliable connectivity use cases, according to a new report by the GSMA, and trailing only “higher bandwidth” in impact. 

If that proves true--or if fixed wireless creates that much revenue for mobile operators, it would be an early example of unforeseen and important new use cases for a next-generation network. That almost always happens with mobile next-generation platforms. 

source: GSMA

“Fixed wireless” does not generally get mentioned when the benefits of 5G are discussed. The traditional triad of enhanced mobile broadband, massive IoT and low latency use cases does not include fixed wireless. 

source: ITU 

So 5G fixed wireless--if it emerges as expected--will be a very-important early-stage 5G revenue enhancer. In fact, fixed wireless could well generate more near term revenue than does edge computing, internet of things or private networks. 

“For the period 2020 to 2030, almost 75 percent of the benefits of mid-band 5G will come from enhanced mobile broadband and fixed wireless access use cases and related applications,” a new report by GSMA argues.

That would be a big deal.

Edge Computing Growth Led by Data Centers to 2025

Edge computing  products, services and solutions will grow to reach US$17.8 billion in 2025, up from an estimated US$8 billion in 2019, at a compound annual growth (CAGR) rate of 15.6 percent, according to GlobalData. 

source: Global Data 

International Data Corporation estimates are higher. IDC projects enterprise and service provider spending on edge computing will reach $40 billion in 2022 in Europe alone. 

Worldwide spending on edge computing is expected to be $176 billion in 2022, an increase of 14.8 percent over 2021, according to IDC. The two edge use cases that will see the largest investments in 2022 – content delivery networks and virtual network functions – are both foundational to service providers' edge services offerings. Combined, these two use cases will generate nearly $26 billion in spending in 2022.

Across enterprise end user industries, discrete and process manufacturing combined will invest $33.6 billion in edge solutions this year. Retail and professional services will also see spending of more than $10 billion on edge computing in 2022, says IDC. 

source: IDC 

From a geographic perspective, the United States will be the largest investor in edge solutions with spending forecast to reach $76.5 billion in 2022. Western Europe and China will be the next largest regions with spending totals of $30.6 and $20.8 billion, respectively. 

China will see the fastest spending growth over the five-year forecast with a CAGR of 19.7 percent, followed by Latin America at 19.4 percent.

By 2025, edge computing in Europe alone will reach $64 billion, IDC forecasts,  with a five-year compound annual growth rate (CAGR) of 16.4 percent.

In North America, sales of edge computing products, services and solutions will amount to US$6.85 billion by 2025, which is equivalent to 38 percent of the total global market. 

Sales in Asia Pacific and Western Europe will amount to US$4.65 billion and US$3.39 billion, respectively, equivalent to 26.4 percent and 19.3 percent of the total global market.