LTE Phone Shipments To Reach 67 Million Units In 2012

Global Long Term Evolution fourth-generation network device shipments will grow ten-fold in 2012, to reach 67 million units, up from 6.8 million units in 2011.

Strategy Analytics says the growth will be driving by adoption in the United States, Japan and South Korea, especially driven by Verizon Wireless, NTT Docomo and SK Telecom. The growth comes after a several year period where the paucity of LTE phones has limited uptake of service on the 4G networks.

Surprising New Data on Telecom Revenues

There are some interesting conclusions one might draw about the relative importance of several service provider products, in the latest communications industry revenue forecast published by the Telecommunications Industry Association. The most-obvious take away is the dominance and importance of wireless services.

U.S. wireless revenue in 2012 will be about $335 billion, while fixed network voice revenue will be about $132 billion, with an additional $38 billion in broadband access revenue and $6 billion in television revenue, for a total of about $176 billion in fixed network revenue.

In case you hadn’t noticed, in the U.S. market, wireless now is 66 percent of total revenue; all fixed network services just a third.

Globally, the trends are even more lop-sided, as mobile revenue is, by some measures, 4.5 times bigger than fixed-line revenue, already.

The other observation is that, as vital as all the new revenue streams are, legacy voice continues to be the most-important source of revenue for fixed-line service providers. With the growth of broadband access, entertainment video and VoIP, that might come as a surprise.

So what of voice, the traditional “most important” revenue source. As it turns out, legacy voice still is, far and away, the most important revenue source.

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion, in the U.S. market.

That compares with circuit-switched voice revenue that, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. But the notable point is that VoIP does not represent all that much revenue. In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.

Consumers Actually Not Too Keen on "Smart Utility Metering"

Many proposed new services just never seem to get traction with consumers. "Smart utility meters" seem to be running into that issue as well. One of the primary goals of the smart grid movement is to empower consumers with greater control over their use of energy in the home.

There's just one important problem. Up to this point, many customers have been less enthusiastic about smart meters than the utilities originally anticipated, and in fact smart meters have been the subject of significant consumer opposition in some service territories, according to Pike Research.

Meanwhile, utilities and their vendors have struggled to identify the appropriate user experiences and business models for home energy management and smart energy devices.

But a new survey by Pike Research found that 47 percent of consumers would be “extremely” or “very” interested in home energy management products and services that would allow them to monitor and control energy usage in their home.

About 45 percent of survey respondents stated that they would be interested in connected smart appliances that would help them manage their electricity consumption more efficiently.

You just have to square those apparently favorable "opinions" with the demonstrable "actions" that indicate consumers oppose the methods used to enable those features they claim they want.

Some of us might suggest a simple explanation. So far, the emphasis on "smart meters" is on benefit for the utility. There often is an implied benefit for the user in terms of "managing" their own usage, but only after an investment in new appliances.

That means, In many cases, users might not see the actual benefits without major new investments in home technology. Without those investments, the smart meters provide consumption information, but perhaps with spending implications too slight to bother with.

That's not unusual. Supplier "good ideas" do not automatically translate into massive end user adoption. People have to see the value, and the value has to be really significant before they will change their behavior and spend more money.

Will Telcos and Cable Companies Really Compete with Apple and Google?

One hears more talk these days that telcos and cable companies are competing with, or about to compete with, the likes of Google and Apple. It’s a catchy headline. But is it a serious reality? Maybe.

Some would say service providers are moving to develop new services ranging from mobile advertising to new messaging technologies to counter competing and often free services from Apple and Google. Google Wallet and Isis are direct competitors, for example. Will Telcos and Cable Companies Really Compete with Apple and Google?:

Essentially, contestants in the communications and entertainment ecosystem are finding they increasingly must compete not only with other competitors within a portion of the ecosystem, but even to a certain extent with partners in the rest of the ecosystem.

That’s the sense in which there is validity to assessing how much, and where, telcos and cable companies might actually find themselves competing with traditional partners in the value chain.

There are growing examples of at least potential conflict between participants in different parts of the Internet ecosystem. Google says it is launching a line of consumer devices, and already owns Motorola Mobility. So the app provider is in the device part of the ecosystem. Apple likewise in both the apps and device parts of the ecosystem.

There perhaps is a latent possibility that Apple could wind up in additional roles. Some have speculated that Apple could launch its own mobile service, not so much to grab voice revenues but to complement its device and application experience in new ways. Others think Apple would be foolish to do so.

The point is that such a move would not be entirely unthinkable. In the telecom portion of the ecosystem, there likewise is movement into applications, even over the top applications. What might be more intriguing are more radical moves. At least in principle, would any access provider seriously consider abandoning its access role for some other spot in the ecosystem. That hasn't ever happened.

Sure, service providers exit some geographic operations. Some have abandoned the network operator  function, though remaining in the retail access business. Some might divest wired network operations to focus on mobile-only operations.

But not telco or cable operator has taken the rather drastic step of abandoning access provider roles for some other position in the ecosystem. And that would be the fullest expression of the notion that a telco or cable company actually competes with Apple or Google.

Historically, in fact, telcos have gone the other way, progressively abandoning producing their own devices and apps, for example. The old AT&T system included both network operations, retail services, phones and manufacturing of network gear. Since 1984, the movement has been almost exclusively in the direction of shedding network equipment, consumer equipment, research and development and app creation.

Now, for the first time, we might be seeing signs of movement back in the other direction, to some extent. It wouldn't be surprising to see service providers enter the over-the-top applications business in a bigger way, for example.

Mobile News Consumption Leaps

Nearly 37 percent of smartphone users in France, Germany, Italy, Spain and the United Kingdom reported using news sites in January 2012, an increase of 74 percent over the past year. 

For smart phone users who used news sites on a near-daily basis, the growth rate was even stronger at 82 percent. Users in the United Kingdom showed the highest penetration with nearly half (46.8 percent) of smart phone users reporting having accessed news sites at least once in the past month,  according to comScore. 

The data shows that mobile devices of all types now are becoming content consumption devices, not just communication devices. 

Growth in News Access Amongst Smartphone Audience 3 Month Average Ending January 2012 vs. January 2011 Total EU5 (FR, DE, IT, ES and UK), Age 13+ Source: comScore MobiLens
	Year-Over-Year % Growth for  Smartphone Audience Accessing News
	Almost Every Day	Ever in Month
EU5	82%	74%
France	59%	62%
Germany	82%	80%
Italy	75%	67%
Spain	160%	127%
UK	76%	63%

Iing news at least once monthly and 15.8 percent accessing news almost every day.

Some Things Haven't Changed: Apple and Samsung Own 90% of Device Earnings

For at least the past year, it has been clear that Apple and Samsung are disproportionately accounting for handset earnings.

In its latest report about the state of the handset industry, UBS noted that Apple and Samsung together are taking over 50 percent of revenue in the handset industry, but perhaps 90 percent of the profit.

Smart phones now account for over 30 percent of shipments, and over 75 percent of total industry revenues.

M2M Services will Be 20% of Europe Telco Revenue by 2017

Machine-to-machine services aren't generating all that much revenue at the moment, in Europe, representing perhaps 4.2 percent of total revenue in 2011, according to Frost & Sullivan analysts.

Keep in mind that most observers consider "connected devices" such as tablets to be part of the M2M revenue stream. But revenue will grow significantly to more than 20 percent of total revenue by 2017, Frost & Sullivan predicts.

That's a big deal, in terms of new revenue, from new lines of business, in and industry where it is very hard to "move the revenue needle."