Tuesday, November 12, 2024

Commercial Agreements on AI Model Use of Content are Coming

A statement opposing the use of creative works for artificial intelligence model training, without compensation, is not unusual. Nor are efforts to diffuse the issue by revenue sharing mechanisms.


One example is a new licensing deal between Meta and Reuters allowing Meta AI to use Reuters content when a user query involves current events and news. Meta's AI chatbot is integrated into the search and messaging features on Facebook, Instagram, WhatsApp and Messenger. 


So even if Meta has been downplaying news content for its main feeds, user Meta AI inquiries might often be about  news. The new agreement means Meta AI can cite Reuters and link to its coverage, while 

Reuters also is compensated for such use. 


The ultimate resolution is likely to be some form of payment by models to copyright owners in some fashion, even if an argument can be made that the models are not infringing copyright. 


Both AI crawlers and humans consume large amounts of information to learn and develop understanding. The models are different mostly because of their efficiency, compared to human consumption.


AI models and human brains both identify patterns and extract meaningful insights from the content they process and the acquired knowledge is used to generate new ideas, solve problems, or create content in both cases.


The key difference, one might argue, is that the AI crawlers can process vastly larger amounts of data at much higher speeds than humans. And that might matter for copyright as it is not an infringement to read a book, watch a film or video or listen to a recording. That, in fact, is how people learn. 


And, in fact, one might argue that “copying” or “imitating” an existing bit of content also is part of the training or learning process. In art school, students often have exercises where they attempt to mimic the styles of renowned painters, for example, learning to paint in those styles. 


And since copyright protections do not last forever, even the “good copy” of an old work is not an infringement. The analogy then is that the mere act of ingesting content is not, under existing law, a copyright violation. 


And yet that is essentially what content owners happens when an AI web crawler indexes content on the internet. So some might argue that AI crawlers are not infringing copyright simply by indexing. 


AI models also can retain and access all processed information, unlike human memory which is more limited. 


The issue is whether that quantitative capability also is a qualitative difference when applying notions of copyright. 


AI web crawlers can process enormous volumes of web content at speeds far exceeding human capacity. While a human might spend hours or days reading through websites, an AI crawler can scan and index millions of pages in a matter of minutes or hours. 


That quantitative difference might not be a reason to differentiate such operations from the human process of reading, listening or viewing, for purposes of copyright. 


In fact, even the creation of content should not be a copyright infringement if the way ideas are presented is different from that of the crawled content. Recall that ideas themselves cannot be copyrighted, only the form in which ideas are presented. 


That’s the principle some would invoke. Commercial reality is another matter. Licensing might be the less-expensive way to move forward, compared to litigation.


Saturday, November 9, 2024

Eventually, "Back to the Future" for Lumen Technologies

Eventually, Lumen Technologies will go back to the future, reversing its mashup of focused data transport and enterprise customer base with legacy telco local access businesses.


Right now, Lumen arguably is too small to compete with the likes of AT&T, Verizon and T-Mobile, but too large to effectively compete with local internet service providers.


And if Lumen separates its data transport from local access businesses, it will recreate its existence as a bigger version of Level 3 Communications, but shedding its legacy in the local access business. Still, it will be a smaller company than it is today.


The reason is simply that the capacity business is smaller than the mobility and consumer communications businesses Lumen will leave.


Looking at data transport revenue for major U.S. fixed network providers in 2023, excluding mobile revenues, Lumen’s position is arguably quite different from that of AT&T and Verizon. Because both of the latter firms have such huge mobile services businesses, the data transport portion of total revenue is relatively smaller than at Lumen. 


Though business revenues represent about 30 percent of Verizon’s revenue, and about the same percentage at AT&T, business revenues are 45 percent of Lumen Technologies revenue. Data transport is a portion of total business revenue.


Company

Total Revenue (USD Billion)

Business Segment (USD Billion)

Consumer Segment (USD Billion)

Lumen Technologies

$14.56

$6.6 (Enterprise)

$3.1

AT&T

$120.7

$36.3 (Business Wireline)

$15.1

Verizon

$134.0

$39.6 (Business Solutions)

$21.8


With the caveat that it can be difficult to separate out data transport revenues, such revenues are likely in single-digit billions of dollars for leading transport providers in the U.S. market. 


Company

Core Network Data Transport Revenue

Lumen Technologies

~$4.7 billion (2023)

AT&T

~$9 billion (2023)

Verizon

~$7 billion (2023)

Charter (Spectrum Enterprise)

~$1.5 billion (2023)

Comcast (Comcast Business)

~$2 billion (2023)

Cox Communications

~$1 billion (2023)


The point is simply that Lumen Technologies is different from the other noted providers in having a relatively small consumer business to rely upon for revenue generation. And that consumer business relies principally on the local access facilities, not the wide area data transport network. The other providers have substantial consumer revenue operations in both mobility and fixed network realms. 


Lumen does not have mobile revenue exposure and has a relatively small consumer revenue footprint, as business segment revenues are routinely about 78 percent of total revenues. 


That is the result of a sort of “mashup” of data transport assets with a traditional telco base that always was the least-dense of all former Bell company geographies. That also means it is less feasible for Lumen to upgrade its fixed network for fiber services. 


For that reason, it always has seemed reasonable to assume that, at some point, the former U.S. West (Qwest) assets would be separated from the core data transport assets. 


Looking at the acquisitions and asset dispositions Lumen has made over the past couple of decades, you can see the logic. 


U.S. West, the former telco, was acquired by Qwest Communications--a long-haul data transport and metro fiber company, in (2000. That was the first mashup.


Then, in 2011, Qwest was acquired by CenturyLink, a Louisiana-based telecom provider with a largely rural and consumer footprint. That would seem to be a move back in the direction of local access operations. In fact, CenturyLink sought a bigger role in business and enterprise services, but the acquisition of Qwest also gave the new CenturyLink a greater consumer services footprint. 


The 2011 CenturyLink acquisition of Savvis gave CenturyLink a bigger footprint in data center, cloud computing, and managed hosting services, rebalancing a bit back to enterprise and business revenue.


But it was the acquisition of Level 3 Communications in 2017 that completed the mashup, given Level 3’s huge presence in long-haul data transport, metro fiber operations and international assets. Level 3 has solely focused on enterprise and wholesale capacity operations, not consumer local access.


The first step towards reconfiguring the asset base came as Lumen divested its local telephone business in 20 states in 2021, shrinking the company’s revenue and highlighting its debt profile. 


The next shoe to drop, some would argue, is a separation of the remaining former U.S. West local access assets from the assembled portfolio of global capacity assets. If Lumen retains the capacity portfolio, while shedding the local access assets, it would be a smaller, focused capacity business, as was Level 3 Communications. 


Back to the future, in other words.


Friday, November 8, 2024

How Important are Mobile Service Provider IoT Revenues?

Some might argue that 5G was the first mobile platform intentionally designed to support internet of things services in addition to mobile phone services.


That noted, IoT mobile service revenues arguably represent less than four percent of total mobile service provider revenues using any mobile platform (2G, 3G, 4G and 5G combined). As important as service providers hope IoT will be, the bulk of revenues will continue to come from the staple "voice and internet access" services used by consumers and their smartphones.


Revenue Source

Percent of Total Revenue

Voice Services

20-30%

Data Services

30-50%

Messaging Services (SMS)

2-5%

Roaming Charges

3-7%

Value-Added Services

5-10%

Device Sales

5-15%

Content and Digital Services

5-10%

Enterprise and IoT Solutions

5-10%

Wholesale Services

5-10%

Other Revenues

1-5%


On the other hand, some estimates suggest IoT will be a significant portion of the enterprise customer revenue stream, eventually. 

source: IoT Analytics 


IoT percentage of connections is higher, but revenue per connection is an order of magnitude lower than traditional phone connections, generally speaking. 


Study

Date

Publisher

Estimate

Global Cellular IoT Connectivity Tracker & Forecast

June 2024

IoT Analytics

Cellular IoT (2G, 3G, 4G, 5G, LTE-M, and NB-IoT) makes up nearly 21% of global IoT connections

Global IoT Connections Forecast

2024

IoT Analytics

Global cellular IoT connections grew 24% year-over-year in 2023

Ericsson Mobility Report

June 2023

Ericsson

5.5 billion cellular IoT connections by the end of 2027, majority on 4G/5G.

GSMA Intelligence IoT Report

2023

GSMA Intelligence

3.2 billion IoT connections on mobile networks by 2025, with rapid 5G growth.

Cisco Annual Internet Report

March 2023

Cisco Systems

10% of global IoT connections will be 5G by 2025.

Statista IoT Connectivity Forecast

2023

Statista

2.7 billion IoT devices connected via cellular (4G/5G) by 2025.

IoT Analytics Cellular IoT Report

2023

IoT Analytics

4.3 billion active cellular IoT connections by 2026.


At least one reason connections might not be as high as some might have forecast is that there are other ways to connect IoT devices, including unlicensed wireless such as Wi-Fi or Bluetooth and other methods. 


Study

Date

Publisher

Estimate

Global IoT Connectivity Tracker

2024

IoT Analytics

Wi-Fi makes up 31% of all IoT connections4

Global IoT Connectivity Tracker

2024

IoT Analytics

Bluetooth accounts for 25% of connected IoT devices worldwide4

IoT Device Connections Report

2023

Pondiot

Bluetooth offers a maximum data transfer rate of approximately 3 Mbps for IoT devices1

IoT Connectivity Analysis

2023

Very Technology

Bluetooth range for IoT devices can be anywhere from 1 meter to 1 kilometer depending on device class and context2

IoT Project Connectivity Study

2023

Euristiq

Bluetooth Low Energy (BLE) can transfer data at a rate of approximately 100-250 KBps for IoT applications3

Global IoT Connections Forecast

2024

IoT Analytics

There were 0.7 billion wired IoT aggregation nodes in 2023, representing 4% of total IoT connections


That experience is worth keeping in mind as we start to hear about 6G platforms and their ability to support other types of enterprise or consumer applications, such as virtual reality, autonomous vehicles and so forth.


One always hears about such “futuristic” new use cases whenever a next-generation mobile platform is proposed. Rarely do the proposed innovations reach revenue scale, compared to supporting mobile devices such as smartphones.


DIY and Licensed GenAI Patterns Will Continue

As always with software, firms are going to opt for a mix of "do it yourself" owned technology and licensed third party offerings....