What's the "Best" Way to Charge for Bandwidth?

Comcast recently reiterated that it has no current interest in usage-based billing for consumer broadband access. Time Warner Cable has tended to support the notion. Telco executives tend to favor usage-based billing, as that is the industry legacy and mainstay.


But there are differences. Tier one service providers tend to be much more strongly favor in favor of charging customers for data on a usage basis than tier two and tier three service providers.

In large part, such discussion of retail packaging is happening because volume growth for broadband access services, especially on mobile networks, threatens to outstrip supply.


That's one compelling reason why mobile service providers might like to manage peak-hour traffic more gracefully, possibly by using charging mechanisms to create incentives for off-peak consumption.

In principle, one might argue that capacity upgrades “solve” the problem. That might be true, but only to the extent that capital investment is offset by revenue gains. If not, service providers ultimately will fail. And consumers have proven highly resistant to price hikes. 


Mobile service providers almost universally are moving to data usage caps, as one immediate step.
If data caps do not work to manage mobile network peak hour traffic loads, what does? The answers will vary from country to country, and are different on mobile and fixed networks.

U.S. mobile operators have different tools, including Wi-Fi and small-cell offload, policy, content optimization and QoS-based tiering. Those tools are not available to fixed-network operators, at least if current “network neutrality” rules survive legal challenge.

In some markets, “transparency” is required, but traffic management, including traffic shaping, can be employed. Ofcom rules

In Canada, both fixed line and mobile service providers have more freedom than U.S. ISPs. Though regulators say “the best remedy for network congestion is investment in new infrastructure,” the second choice is economic incentives.


Internet traffic management practices such as charging more for higher speeds, are one way to generate incremental revenue to support incremental investment, says Konrad von Finckenstein, Canadian Radio-television and Telecommunications Commission chairman. But other tools likely will be required, as well.

Eventually, to fully benefit from traffic management tools, mobile operators will have to move to real-time, cell-level traffic management in the radio access network, Monica Paolini of Senza Fili Consulting argues. Policy-based management will be needed

U.S. network neutrality rules do not absolutely prohibit such measures in the mobile network, though fixed-line operators basically are stuck with rules that mandate complete “best effort only” access.

Paolini argues that mobile operators will need to actually act ahead of time, using predictive data to prevent congestion, especially when due to unexpected traffic spikes. That sounds appealing in principle, but adds new cost and complexity to carrier operations

“Most mobile operators I talked to would rather avoid this and reasonably so,” she says. “Tracking and acting traffic in real-time at the cell level inevitably adds complexity.”

Such are the tensions between the desire for operational simplicity, consumer friendly pricing and packaging, and the desire for more-sophisticated end-user features. Likewise, there is a tension between the ability to manage networks simply, and the desire to manage them with greater sophistication.

In truth, consumers, regulators and service providers are “conflicted” to some degree about balancing simplicity and variety. Users want understandable plans, fair pricing and clear billing statements. But they also might want differentiated experiences.

Service providers want simpler operations, but also greater sophistication in terms of ability to create and package new and existing products. The tension probably cannot be eliminated.

Mobile Search is Universal, Local Shopping is Going to Be

Google is big on mobile commerce, for any number of reasons, Mobile represents the biggest advertising revenue stream nobody yet dominates. And mobile commerce represents potentially the biggest change in retailing since the advent of online shopping. 

Across most of six markets, including the United States, United Kingdom, France, Germany, Spain and Japan, roughly 60 percent of smart phone users are searching because of an ad they’ve seen offline or in a store.


Another reason is big on mobile and smart phones is that mobile users search while on smart phones. 



Some 99 percent of smart phone users in Japan have used a search engine on mobile.


This means that practically everyone who’s gone online on mobile has searched on their phone.


Mobile search is a frequent activity. In most of these six countries more than 75 percent of smartphone Internet users search at least once a week.

The study suggests 92 percent of Americans use their smart phones to look for information about local businesses or services.


More to the point, those searchers take action. Some 81 percent of French smart phone users who’ve looked for local information then acted on it with a quarter (26 percent) having called the business and 43 percent having visited the business.


Globally, one out if five smartphone users in all six countries made a purchase after looking for local information, whether in-store or online. Mobile commerce study

We Don't Have a Mobile Payment Problem; We Have a Mobile Shopping Problem

“Consumers don’t really have a mobile payment problem,” says Jack Stephenson, director of mobile, e-commerce and payments at JP Morgan Chase. “Ninety-five percent of the time, paying with cash and credit cards actually works pretty well. Consumers have a mobile shopping problem. There’s a difference. ” Mobile Shopping Problem

You might say roughly the same for retailers. They don't have a mobile payment problem, either. Retailers only have a mobile sales problem. And though it is a legitimate argument that no mobile payment scheme really succeeds without consumer adoption, neither does mobile payments succeed without retail merchant adoption. 


On the other hand, all existing stakeholders in the payments revenue stream are trying to figure out how to make themselves indispensable in a new mobile payments value chain, so that the risk of being relegated to a smaller role, or no role, is minimized.

That's one reason JPMorgan Chase & Co. might have invested in GoPago, a provider of a free smart phone application that allows consumers to browse, order, and pay for local goods and services. 

Businesses benefit by being able to easily set up mobile storefronts and the rich data and analytics GoPago provides helps them better target special offers to drive sales. The problem Chase is trying to solve, in other words, is brick and mortar retailer need to increase online sales.

Later in 2012, Chase’s customers will have the opportunity to create a free mobile storefront through GoPago, extending their reach to a broader audience and providing business tools once only afforded by large companies. In addition to the standard benefits of GoPago, Chase cardholders that use GoPago will receive exclusive offers and discounts from Chase merchants.

“Online commerce offers a number of opportunities to local business,” said Leo Rocco, CEO and founder, GoPago. 


The point here is that Chase is not trying to solve a "how do I pay by mobile phone in the store" problem. It is trying to solve a "how do I extend my retail sales into the online realm" problem. 

.

HTC Jewel for Sprint?

HTC's new line of "One" devices coming to Verizon Wireless and AT&T networks obviously raises the question of what might be coming for Sprint, which has been selling HTC Evo devices for a couple of years.

Some speculate the device is codenamed the "HTC Jewel."

Presumably the Sprint version will feature the  large screen Evos have sported, with the same high-definition display.

Sprint has tended to release a new Evo model every year, about March, so it might not be unusual if any new "One" device appeared about that time.  HTC Jewel

Facebook, 30 Companies Want to Create Web Platform for Mobile Apps

A coalition of 30 technology companies hopes to turn the Web into a competitive platform for building mobile applications. They have launched a Core Mobile Web Platform (coremob) community group through the W3C to provide a venue for collaborating on next-generation mobile Web standards.


Facebook and Mozilla are among the leading members of the group. The effort to make the mobile Web a competitive app platform represents one more challenge to service provider and app store "control" or influence over mobile applications.

Facebook also announced the release of Ringmark, a test suite for evaluating the capabilities of mobile Web browsers. 


The tests will help developers make informed decisions about what features they can safely use in various mobile Web environments. Facebook hopes such information will help developers create browser-based apps that run as fast, and as well, as native apps. 


The business implications are clear enough. Mobile apps need app stores to succeed. App stores are run by "somebody else." By creating fast-executing mobile apps, application developers gain freedom from app stores, service providers or device manufacturers. 

Will IMS Fail? In Other Words, Does OTT Win?

If you have been in the telecom business long enough, you have seen a few different "next generation networks" come and go with somewhat mixed market success. 


ISDN was, for some, the first such network. Then there was B-ISDN, known better as "asynchronous transfer mode." 


Then there is IP Multimedia Subsystem, whose ultimate success seems yet uncertain, if its fundamental architecture and goals certainly will be a foundation of future networks. 


And now there is Rich Communications Suite, which builds on IMS. Observers might further note that picture messaging, essentially a broadband version of text messaging, likewise has failed to garner much success.


Pessimists might point out that, so far, none of the would-be "next generation networks" has been a raging success.

To be sure, the functions often are accomplished, but sometimes in other ways. Who would have guessed that a "legacy" protocol such as IP would become, as much as anything else, the "next generation network," in large part.

Optimists keep trying, as standards, whether created by the market, or by standards bodies, are crucial for the global telecom business.

Tyntec is the company Thorsten Trapp formed to provide products based on the mobile industry’s Signalling Connection Control Part protocol used by GSM networks.

Apparently, Tyntec's software is what allows Pinger to provide over the top text messaging services. And Trapp apparently doesn't have much confidence that some of the newer proposed architectures are going to succeed.

Specifically, he is doubtful that IMS or RCS will succeed. The issue is why he believes that. Without widespread handset support it’s not going to become ubiquitous, and even if it does, users will be hit by roaming costs and interoperability issues.

But OTT players merely need an IP connection for their apps.Will RCS Fail? It's a challenging notion, but not historically unprecedented.

There will be standards. The only issue is which standards, and how they eventually take hold. In recent decades it has been "the market" more than the standards bodies that have succeeded.

Vodafone, Visa Form Mobile Payment Partnership

Vodafone Group is launching a mobile payments venture with Visa, using near field communications and Visa prepaid accounts to let customers pay for goods and services with their mobile phones.


Vodafone, the world's largest telecom company by revenue, said the companies will work together to develop Vodafone-branded services to the U.K. company's base of 398 million customers in more than 30 countries. 


These services will be launched later this year in Germany, the Netherlands, Spain, Turkey and the U.K., with rollouts elsewhere in Vodafone's global portfolio to follow.



NFC-enabled phones currently on the market include Samsung Electronics Co. Ltd.'s (005930.SE) Galaxy S II and Nokia Corp.'s (NOK) 700 model. Vodafone, Visa Form Mobile Payment Partnership