Reducing Carbon Footprint is Not Painless

It is a really good thing that data centers and service providers data centers and communications service providers now are working to reduce their carbon footprints. 

Sometimes the magnitude of the changes is hard to assess, in personal terms, as those changes by firms are not directly experienced. 

This estimate by Business Insider suggests a typical U.S. resident produces 17 tons of carbon dioxide a year. Some of us would be happy it was only that much.

Other estimates peg typical carbon footprint at 20 tons per year, with an absolute minimum of perhaps 8.5 tons (no home, no car, mostly carbon embedded in food consumption). And I have seen estimates as high as 26 tons per year. Of course, it all depends on one’s assumptions.

I did some calculations of what it would take to get my own footprint cut nearly in half, using 26 tons are the baseline, in other words aiming for about 14 tons annually.

The assumptions include business travel on airplanes, one of the worst carbon impacts. A long story made short, I’d have to stop flying altogether, and stop using a private auto altogether, to have any shot at reaching 14 tons of carbon production per year.

source: Business Insider

That sort of hints at the actual sacrifices most people might have to make, to get more carbon neutral. Low carbon lifestyle, no matter how we frame it, is a tax on living standards. Some of that hit arguably consists of us being more careful about how we define lifestyle.

In other words, some changes simply mean a shift to lower-carbon output, without necessarily “lowering” living standards.

But I found it hard to escape the reality that quality of life was going to be affected in serious ways. Granted, one might argue that personal carbon and work-related carbon output should be treated separately. In that case, I’d have a shot at 14 tons. But only a shot. Major limitations on air travel might still be required. I have not modeled that scenario. Sobering, very sobering.

And it has to be said: rich people will simply buy offsets and do as they please. Most working people cannot afford to pay the carbon tax without cutting somewhere else. It is disingenuous to argue otherwise.  

Why Amazon Meetings Ban Presentations; Why Memos Instead

At 24:54 of this video, Amazon CEO explains why he bans use of slideware (PowerPoint and others) at meetings, and instead has meeting organizers prepare written briefing documents of no more than six pages.  

The first half hour of so of every meeting consists of attendees reading the memos, before actual discussion begins.

Some would say that is because “reading” is part of Amazon’s legacy as a bookseller.

Some of us might say the reason for such practices is that writing is related to thinking. clear thinking and clear writing tend to be directly related. In fact, some would argue writing is thinking. better writing requires better thinking.

In fact, some would argue that critical thinking also is correlated with writing. You might agree that teachers believe reading, writing and thinking are related.

There are business implications, if in fact thinking and writing are related. Business leaders these days often complain that their employees, or potential employees, have weak writing skills. According to one study, perhaps 26 percent of college graduates have deficient writing skills.

You will forgive my own biases, as someone who worked at a university, has taught college students and graded papers, then worked for decades as a journalist and writer. I am susceptible to thinking that writing and thinking are related.

But Bezos unusual meeting content format might point to a weakness of media formats. Presentations, one might argue, are difficult, as is writing. But they might be difficult in different ways. Slideware often tends to bullet points, which must be snappy, short, and therefore without nuance.  

Clarity, in fact, is often a casualty of slide presentations. Ideally, a presentation tells a simple story. How many presentations have you created, or witnessed, that pass that test?  

Clarity is no less a problem with any written communication, to be sure. But you might reasonably ask whether it is harder to tell a clear story in a memo or using a presentation. It is difficult in both media.

But Bezos seems--unusually for a business leader--to believe both that the act of producing a memo produces better thinking than a presentation, and that the mandatory “read the memo now” format also forces people to consume the message before the meeting starts.

Those of you who attend lots of meetings know that unless thinking about the meeting subject occurs before the physical meeting, little deeper thinking is likely to happen at the meeting, especially as attendee count grows.

There is another problem the “we all read the memo together, right now” approach tends to fix: the tendency for busy people to skip reading the meeting documents altogether.

     

Maybe Legacy Voice Is Not a Bad Solution for Many Businesses

Though I have to admit I do not follow the unified communications market anymore, one fact about the market that has puzzled me for two decades is why smaller businesses and organizations have not adopted at a far-higher rate.

I understand why the economics of switch and server ownership continue to make sense for larger enterprises. Any product sold as a subscription, by the unit, will tend to have tougher economics for buyers as the number of subscriptions purchased climbs, and when known “own your switch or server” alternatives exist.

Most of us can cite at least some reasons why an IP-based solution of any sort (premises switch or hosted service) has feature advantages over a legacy TDM (time division multiplex) phone system.

source: Edgewater Networks

An annual survey of small and mid-sized businesses conducted for Edgewater Networks of North American organizations seems to suggest that a majority of SMBs of all sizes still rely on TDM solutions for voice.

There is no methodology information provided, so I cannot tell whether the sample was of entities believed not to buy hosted PBX (substitutes for a premises private branch exchange or phone system) services or a sample of entities with a potential mix of buying behaviors. We can easily conclude the survey was not of hosted IP service buyers, since the “IP” adoption rate would then be 100 percent.

The most-logical assumption is that the survey was aimed at firms believed not to be buying hosted IP PBX services (we can use the term “unified communications” interchangeably since all hosted IP solutions include UC features).

About two percent of respondents in the very-small business category (20 or fewer) report buying a hosted solution, while some 11 percent report using an IP PBX. But 40 percent report using key systems that always have been aimed at this market segment, while 22 percent report using TDM-based PBX systems.

After two decades of sales evangelism, that seems a bit of a shock. Most firms have not migrated to hosted or IP premises solutions over the last couple of decades. There are, of course, business reasons for those choices. Many small businesses have single-line phone service, where spending on a phone system of any type does not make sense.

source: Edgewater Networks

The other noteworthy observation is that so many respondents in the very-small category (20 employees or fewer) seem to get by using mobile phones as the “primary” communications device.

In many ways, a smartphone now offers many attributes of “unified communications,” such as a single device that handles conferencing, voice mail, messaging and email. That is a new possibility not generally available two or three decades ago.

So in the very-small business segment of the market, mobile substitution for fixed line servcies seems to operate, as it has in the consumer market.

Larger organizations (100 employees or more) have higher rates of use of hosted PBX services and IP PBXes, as you might expect. But even there, just eight percent of survey respondents in the “100 or more employees” category report buying hosted PBX services.

That is far lower than I would have anticipated, especially after 20 years of sales activity.

If you ask me to explain what I would consider a painfully-slow rate of adoption, it would be that IP voice and unified communications are deemed to provide relatively-low business value, compared to legacy solutions, especially when mobility serves some of those same needs.

The analogy is the relative business upside of modern voice or UC, compared to websites, e-commerce or mobile communications (voice, text messaging, social media and app and web support and email). Businesses still need voice communications, of course.

It is just that the perceived business value for upgrading from legacy solutions arguably is not as high as spending money on other tools.

I cannot explain what I consider slow uptake in any other way.

What Does "Winning 5G" Mean?

Winning the 5G race is a term we hear quite a lot. What it means, and whether it is feasible, are the big questions. In industrial policy terms, mobile platforms such as 4G or 5G are viewed as “zero sum” games, where a fixed amount of success (revenue, jobs) exist and winners take winnings from losers.

At one level, this is nonsense. Customers of mobile networks in India or Columbia do not directly affect subscriber counts in Canada. What policymakers and advocates of “winning the 5G race” refer to is something else, namely economic benefits in other parts of the mobile ecosystem.

At another level, scale does matter. A critical mass of users is necessary to create conditions where innovators have a pool of potential customers large enough to justify developing new features and functions. So, in that sense, getting quickly to critical mass (getting scale) does matter.

But most of the benefits of “winning a race” in the mobile platforms area are to be found elsewhere.

Most observers would agree that, in terms of device or network infrastructure supply, a few European firms (Nokia, Ericsson) were market share leaders in the 2G and then 3G eras. FCC Commissioner Brandon Carr says that is because “other parts of the world, including the U.S.,  to move quickly enough to modernize our regulatory frameworks. “

“For example, the FCC required that carriers continue to support their analog 1G networks long after Europe dropped that requirement,” Carr notes. “By requiring carriers to maintain essentially two networks, our outdated regulations drained capital and resulted in less efficient spectrum use.”

Regulation clearly matters. “In the 1990s, Europe tied spectrum bands to particular technologies, which delayed the repurposing of spectrum from 2G to 3G. Japan had no similar constraints, and the country launched three separate 3G networks by 2002,” Carr says. “It took years for the United States to come close to Japan’s 3G deployment.”

At least in principle, that means U.S. suppliers of apps and features requiring 3G could not move as quickly to market as in Japan. As a matter of fact, most observers would say that mobile app innovation in Japan was far higher than in the United States, in that era.

Most observers would likely agree with Carr that “the U.S. learned some lessons and bounced back to win the race to 4G.”

But here is where matters get a bit tricky. Was the “winning” based on ubiquitous access networks? Sure, because scale matters. But what arguably was decisive was a shift in the mobile device and service value proposition.

The 4G era was the first where mobile phones become computing devices (“smartphones”), and therefore were the beneficiaries of huge innovation in mobile apps, features and capabilities made possible because Silicon Valley, Silicon Rainforest, Silicon Hills, Silicon prairie emerged as global leaders in applications (Facebook, Google, Netflix, Amazon and others).

For many of us, thinking about on our preferences in phones, there was a point where keyboards became important because mobile email had become a killer app. But there also was a point where internet apps became paramount, and that was when device leadership shifted to the Apple iPhone and other touchscreen devices optimized for web, apps and related services. The killer app became the mobile internet.

That seems clear enough in CTIA’s new report on the race to 5G. Says Carr: “4G leadership increased our country’s GDP by $100 billion per year and cemented American preeminence in the tech sector more broadly.”

And that might be the real basis--application, device and infrastructure leadership-- for claiming “leadership” or “winning” in the 5G era. And there are probably few who believe the global winners can come from anyplace other than China or the United States.

If there is a race, it is a two-nation race.

"AT&T Watch" and "Terminal Decline"

It is not always so obvious why new services such as AT&T Watch, a $15-a-month streaming service, is so fundamental for mobile operators and retail- and consumer-focused telecom service providers.

The  fundamental problem is that the core business model--connectivity services--is incapable of driving future revenue growth. In fact, we are likely to see an actual erosion of such revenue in developed and developing markets, sometime within the next five to 10 years.

Terminal decline is the phrase the Economist Intelligence Unit uses to describe the fixed network telecom business. Harsh words, perhaps, but instructive if one honestly has to assess the direction of public policy about fixed telecom networks.

It is too early to use that term for the mobile business, which continues to grow, globally, even if the business is mature in developed markets.

Still, developed market revenue trends have been dipping since 2008, for example, according to the Organization for Economic Cooperation and Development.

source: OECD

So movement into new value-generating lines of business--beyond connectivity--is essential, to replace lost core revenues. In the consumer services space, video entertainment has been the latest new service to offset declining voice and messaging revenues, and slowing internet access account growth in developed markets.

In developing markets, subscription growth has slowed, but not abated, and mobile internet access growth is nascent and growing. Still, eventually subscription growth will stop, and adoption of mobile internet will saturate. That is how product life cycles work.

There are many warning signs.

Since 2010, service provider share of industry profits has dropped from 58 percent to 45 percent, as every other segment has grown its share of profits, according to the World Economic Forum.

source: AT Kearney

In 2008, internet access revenue was 18 percent of ecosystem revenue, dropping to 14 percent in 2015 and headed to seven percent by 2020, according to A.T. Kearney.

Since 2008, service provider revenue growth rates in developing markets dropped from 15 percent to three percent percent this year, while developed market growth dropped from four percent to zero, according to GSMA.

Global telecom revenue in the 60 biggest markets will fall by two percent in U.S. dollar terms, to $1.2 trillion, in 2018, according to the Economist Intelligence Unit.

In developed markets, subscription growth has shifted from consumer access for phones, tablets and PCs to growth lead by internet of things devices and sensors.

But one of the few growth areas for consumer services is mobile substitution for internet access. The coming 5G network will be foundational in that respect.

Using 5G, cost per gigabyte will fall 100 times, according to Mobile Experts. That drop in per-gigabyte pricing is essential if mobile alternatives are to be price competitive with fixed internet access services, allowing mobility suppliers to cannibalize the fixed network business.

source: Mobile Experts

At the same time, the next big opportunity in the applications arena, as apps create potential for mobile operators, is edge computing that will reduce app latency from thousands of milliseconds to single digits, enabling internet of things apps such as the $79 billion AR, VR market in 2021, according to Artillry Intelligence and $87 billion in automated vehicle revenue by 2030, according to Lux Research.

The satellite industry faces the same slowing growth trend as the rest of the telecom industry.

Global satellite revenue growth slowed from 18 percent in 20 to two percent in 2016, according to researchers at Bryce.

Going forward, growth will shift to high-throughput satellites and new LEO constellations, according to Northern Sky Research, with 5.8 million satellite IoT connections in use by 2023, out of 20 billion total IoT connections.

Growth potential is challenged in a different way in the undersea or wide area network business.

Private networks operated by tier one app providers now dominate undersea traffic, carrying more than 70 percent of all internet traffic across the Atlantic, according to TeleGeography. On intra-Asian routes, private networks in 2016 carried 60 percent of all traffic.

On trans-Pacific routes, private networks carried about 58 percent of traffic. Though capacity demand continues to grow, which drives demand for cable construction, only a fraction of total capacity services demand can be captured by sellers of capacity.

Overall, it can be noted that applications, content, devices and platforms represent 97 percent of the value and revenue in the internet ecosystem. By definition, these are the ways value and revenue is created beyond pipes.

And that is why connectivity services providers are compelled to seek growth in apps and platform areas.

Tier-One Telcos Looking for Roles in Virtual and Augmented Reality?

As is true in almost every other part of the retail-focused telecom business, service providers are exploring roles in the artificial reality or virtual reality area that extend beyond mere connectivity, and move either up the stack or across the value chain.

“Telcos have a key role in enabling VRAR services as providers of broadband and mobile network services, but we see them beginning to explore revenue opportunities in VRAR that are beyond 5G data and connectivity, with some leading players entering key segments of the VRAR supply chain in the past two years,” says Ozgur Aytar, GlobalData director of research.

“Take Verizon, for example, that has made acquisitions in VRAR content platforms, while SK Telecom is building its own, or, AT&T that is investing to develop compelling VR experiences and AR apps and Orange is taking steps to increase its participation across the board in devices, platforms, services and original content,” he says.

source: GlobalData

Though it might be easy to focus on the need for “more bandwidth,” in the case of VR and AR, it might be latency which is the more-important requirement. That, in turn, is underpinning thinking about the role of edge computing in reducing latency, and the related role of 5G in slicing access latency to single-digit milliseconds, the threshold of human perception being about 50 milliseconds.

How Much Longer Can Fixed Internet Access Continue to Grow?

U.S. net new internet access accounts grew by about 2.1 million accounts in 2017, according to Leichtman Research Group.

A separate analysis by Convergence Research Group suggests U.S. internet access accounts grew by about 2.33 million accounts in 2017, reaching 96.95 million total accounts. At the same time, subscription revenue grew seven percent in 2017 to $56.8 million.

Convergence Research Group expects 2.57 million internet access additions and six percent revenue growth to $60.5 billion in 2018.

The issue is how close we now are to peak internet access. By at least one estimate, there are 95 million U.S. buyers of fixed network internet access.

In the fourth quarter of 2017 there were an estimated 136.9 million U.S. housing units. Vacancy rates are an issue, though. Some 16.7 million of those units were vacant.

In the fourth quarter of 2017, some seven percent of rental units were unoccupied, as were some 1.6 percent of owned residences. So assume the number of residences where fixed network consumer telecom services could be sold is about 120.2 million.

So that implies 79 percent of all U.S. households buy a fixed network internet access subscription. Assume another 1.6 million buy a satellite internet access service (about one percent of occupied U.S. residences. That implies 80 percent of occupied homes buy internet access.

But we also must add another six million subscribers served by all the smaller telcos, cable TV companies and independent internet service providers (assuming those smaller fixed network suppliers supply five percent of homes). That adds another five percent, bringing consumer household buying of internet access up to about 85 percent.

Also, some 10 percent of homes use mobile internet access exclusively, according to the Pew Research Center. So add another 12 million occupied U.S. homes to the total of buyers of internet access.

That brings buyers of internet access up to about 95 percent of U.S. occupied homes. The point is that we fast are approaching the point where at-home internet access is saturated. There simply are not that many more U.S. homes to convert, possibly six million or so (unless the percentage of occupied homes grows and millions of new households are formed, driving demand for new housing stock).