Wireless Power Delivery: Kilowatts at a Kilometer

Yes, substantial amounts of electiical energy can be converted into microwave radio frequencies and delivered without wires. 

Monetization of Higher Data Consumption Remains a Key Issue for ISPs

Virtually all internet service providers worry to some degree about monetizing growing data consumption on the part of their customers. But monetization is a bigger problem in some markets than in others. 

If consumption and revenue were strictly linear, as once was the case for long-distance telephone communications, the highest usages would correlate with the highest revenue, all other things being equal. Looking at mobile ARPU, some markets including India and South Africa show the monetization issue.

soruce: Cisco, Kagan Research 

In most markets, though, monetization is sticky on the revenue side. Average revenue per user might not increase as usage grows. To remain viable under such circumstances, an ISP must reduce costs per delivered bit or find additional revenue sources with higher profit margins and stronger revenue growth profiles. 

Who is the "Speaker?" The Platform or the User? Does it Matter?

Free speech always has been a difficult and complicated subject in the United States. Time, place and manner restrictions have been upheld as lawful. But the First Amendment to the U.S. Constitution only binds the federal government. 

The Amendment says “Congress shall make no law. respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

Over time, many have emphasized a few key words. It is “Congress” that can “make no law” regarding the “establishment” of any religion or abridging “freedom of speech” or “press.” 

The Constitution therefore restricts the federal government, not other entities, jurists have concluded. But the meaning of “make no law” has been debated. Though intended to protect political speech, the courts have, over time, concluded that other forms of expression with political implications also are protected.

All those issues now are complicated, many would argue, by suppression of political speech by social media platforms. To be sure, such entities are not bound by the First Amendment to the U.S. Constitution. Neither are newspapers, radio stations or other publishers of content. 

But such issues have been raised before. Consider the issue of “who is the speaker whose rights are protected? In the 18th century the right was said to be held by the owners of printing presses. In the 21st century it is social media platforms. 

But where jurists might agree that a newspaper is a “speaker” for reasons of protection, who is the “speaker” on a social media platform? Is it the platform (which insists it is not responsible for the views expressed on its sites) or the users of the platform? 

And, to be sure, in either case, no matter which definition is used, the constitutional protection of speech might not apply. The platform, speaking for itself as a legal entity, has the right to express its own views. What is unclear is whether, for all other purposes, the views expressed on the platform are distinct. 

Though courts have refused to consider private property venues areas of protected speech, that arguably remains an issue. In other words, is a major social media platform the equivalent of the village commons. So far, courts have not agreed. 

Still, naked suppression of political speech arguably rankles most people. And at least so far, none of the historical precedents seem to provide much room for adapting First Amendment law to 21st century political speech. 

"You Get to Keep Your Business" is the Fundamental Value of FTTH

It now is possible to suggest that a fundamental business problem in the internet era affects both mobile and fixed networks. In both cases, the fundamental issue for connectivity providers is the financial return from network upgrades, whether seen in fiber to the home or 5G and future mobile networks. 

Simply, in a competitive market, capital intensity tends to increase as upgrades to fiber access or mobile networks happen. But revenue does not increase to match. Instead, the pattern is that bandwidth supply grows more exponentially, while customer revenue can grow only linearly, at low single digit rates. 

Higher capital intensity with inelastic revenue growth is therefore the key strategic problem. 

It is a bad scenario, when looked at in traditional financial terms. The capital investments, however, essentially are strategic. Many decades ago, a telco executive facing competition from cable operators concluded that the upside of FTTH was not “more revenue” but “we get to keep our business.”

That is not the sort of analysis a financial analyst would find appealing. 

But that is essentially what upgrades to 5G (and future upgrades) mean. More capital-intensive networks must be deployed to preserve what already exists: the ability to serve customer demand in terms of capacity (gigabytes used) and speed. 

Telco upgrades to FTTH essentially represent the same sort of value: consumer and business account market share is protected from predation and loss to competitors. Spending more money to protect what one already has might not sound like a victory. 

But it is far better than the alternative: continued share loss to competitors and ultimately, a non-viable business model. Sustainability and survival, in other words, is the upside. Revenue growth is nice, but survival is essential. 

The basic issue is that end user demand for data increases almost linearly with time, while the amount of money paid to use networks increases only marginally, if at all, in some cases. 

GlobalData, for example, expects U.S. 5G services will generate average revenue per user of $45.56 during 2022, with 4G generating ARPU of $26.41. 

But matters could change. GlobalData expects that U.S. 5G ARPU will be more than double 4G ARPU in 2023. If that happens, it is almost certainly going to be driven by new use cases and revenue streams such as edge computing, network slicing or content services, we can speculate. 

It is hard to imagine that much growth from consumer data plan price increases. Up to this point, much of the ARPU increase has  been driven by customer upgrades to unlimited usage plans. The obvious problem there is that this is basically a one-time source of revenue lift.

By definition, once a customer plan is upgraded to unlimited usage, usage cannot, itself, drive incremental revenue growth. Price increases largely reflecting inflation adjustments will happen, but beyond that, data usage will not drive ARPU growth. 

source: GlobalData 

Mobile operator executives are right to worry about the financial return from 5G. Those networks are more expensive than 4G. But the alternative is going out of business. 

Traditional financial analysis still matters. Firms will be punished if higher capex results in either the same or lower revenue. But the fundamental problem remains: higher capex now is required to preserve the ability to compete for business.

New revenue and use cases ultimately will be found. But those revenues might only compensate for declines in legacy parts of the business. It is an unappetizing prospect, but a realistic possibility. 

FTTH and 5G succeed if service providers continue to operate and continue to generate profits. For the most part, single-digit revenue increases might be the best outcome. That will not be easy to defend if capex increases more than that. But that is the nature of a connectivity provider’s position in the internet era. 

Bandwidth always must increase. Revenue will grow very slowly. The financial returns from increased capex will be paltry. But firm extinction is the inevitable result, if the investments are not made. 

“You get to stay in business,” like it or not, is the strategic driver of capex. “Higher revenue” is nice if it can be obtained. But it is largely adjustments in other parts of the business model that will help drive such results. 

It is fine to question the 5G or FTTH payback model, and to take other steps to support the business model when those investments are made. But traditional investment criteria will be hard to satisfy, without other adjustments of the payback model.

Will Fixed Wireless be the Actual "New Services" Revenue in U.S. 5G Market?

Fixed wireless has always been a niche technology in the U.S. consumer services business. But 5G, in its incarnation as the platform for home broadband, might generate the most-identifiable source of "new service" revenues for 5G.

Even as attention is focused on ramped-up fiber-to-home investment by fixed network providers, 5G fixed wireless might well emerge as the most-significant driver of market share change in the home broadband business in 2022.

Though still a niche platform, that is a significant outcome for any niche technology.

Still, 5G is not the only important driver of behavior in the U.S. mobile industry. Competition is likely causing revenue per account pressure as some mobile virtual network operators and facilities-based providers rely on promotional pricing to maintain share positions or drive account growth. 

U.S. cable operators, arguably the foremost forces in the MVNO market, gained 29 percent of domestic mobile industry phone account net additions in the fourth quarter of  2021, according to MoffettNathanson. 

source: MoffettNathanson, LightReading 

Billing Platforms are Not that Big an Issue, Really

Some retail connectivity provider issues never seem to go away. The old adage that “you cannot sell what you cannot bill for” is correct, as far as that goes. But it also is true that an entity cannot bill for what it does not own or control. 

And that seems the more fundamental problem. Some of you might recall the hope about using telco billing systems to support business partners offering microservices, in the older sense of products costing very little, not the current usage of the architecture upon which modern applications are built. 

Use of telco billing platforms to support third-party applications basically has remained unfulfilled. Part of the issue is that the whole architecture of how apps and services are accessed using the internet has changed the dynamics.

Since app providers do not need an access provider’s permission to conduct business with users and customers, there is scant--if any--value to using a telco billing platform. Usage--as such--tends not to drive monetization models. 

Subscription charges are easily supported using other payment and billing systems. Ad-supported models use a variety of engagement metrics. Commerce models likewise use other established retail payment systems. 

source: STL Partners 

Even if a connectivity provider owns its own industrial automation, gaming, water or electrical utilities, unmanned aerial vehicle systems, operates retail fleet management services provided to third parties or owns monitoring platforms for any range of business operations, the connectivity billing platform is simply not set up to support those types of operations. 

Were a connectivity provider the owner of such assets, such a provider would use the industry-standard and existing rating mechanisms. 

And where a connectivity provider partners with a firm that does offer such services, the necessary rating platforms would be those used by the third parties. There is scarce--if any--need for using the telco rating systems. 

The obvious areas where connectivity providers require new capabilities are for new connectivity services such as network slicing, which might have to support “on-demand” usage capabilities. But that has almost nothing to do with supporting third party applications. 

It seems marketing staffs never are happy with legacy connectivity billing systems. But aside from new connectivity-specific services, there still appears little practical value for new rating systems that support the third-party transactions and products that will use connectivity networks. 

Loosely-coupled architectures have largely made that unnecessary.

 

Demand is a 5G Issue, Not Simply Supply

A foundational claim about any sort of digital divide is that supply is the problem. Networks do not reach everyone; or quality networks do not reach everyone or prices are too high. Those all are supply-side ills.

What often gets confused or forgotten is that there are demand-side drivers as well. Consumers might prefer to buy based on their own perceived needs. Most often, consumers buy home broadband services that are in the middle of what is available, in terms of price and perceived value.

The same thing might apply to mobile services as well.

Where it comes to supply and demand, pundits often assume that slower 5G uptake is to be blamed on supply, not demand. That is not necessarily the case. Subscriber levels for 4G in a few European countries have always been below what we might expect, and availability cannot, at this point, be the main culprit. 

Some might point to lagging 5G uptake and suspect that supply issues are at work. 

source: Ookla 

Customer demand also shapes uptake. Nearly half of all German mobile subscriptions appear to use 3G, instead of 4G. nearly a decade after 4G was introduced, according to a study by Opensignal. 

Governments and policymakers always are quick to quantify supply-based gaps in uptake, quality or availability of communications services, which is among the reasons stories about any form of digital divide are evergreen. 

Most often, studies about service gaps rely on supply or demand indices, including network availability, typical speeds and cost. 

Demand side choices by consumers tend to be overlooked. In other words, some “gaps” might reflect consumer choices, not failures of supply. And that matters for 5G, as much as it did for 4G.

We often are surprised at the resilience of legacy services, as those use of legacy services is always a case of supply failure. Not always. Sometimes demand choices are at work. In other words, a huge percentage of German mobile users seem to be opting to remain on 3G networks even when 4G networks now are in good supply, with good performance metrics.