What's a Wallet, and How and Why Do You Use It?

There are reasons why Google Wallet, cash, debit and credit cards and checks exist, and why some consumers prefer to use one or a few of those, rather than others, as payment tools. Those habits will be hard to change. 


To design a successful mobile payment process therefore requires changing stubborn end user behaviors.


To cause change, mobile payment proponents also must understand those barriers, including the values and attitudes shoppers have when they choose to pay for purchases one way, rather than another. 

A study conducted by Ipsos for American Express broadly suggests three payment "personae," with distinct sets of values and payment preferences. They also therefore have key objections or attractions to using mobile payments.


If 69 percent worry about security, that objection has to be overcome. But that isn't a primary objection for every user. "Techies" will use any tool that is convenient, and prefer the "bleeding edge." Security isn't a big concern; coolness is. Cash isn't as "good" as using a smart phone, because it is easier to track expenses when using either online or smart phone payment methods. Credit cards are the current default payment method. 


For many shoppers, though, security probably is the biggest objection. Identity theft is a big issue, so brand preferences lean towards their established financial institutions. "Convenience" is not as strong a value for this sort of buyer. For this persona, cash and credit cards are central and preferred payment methods, though there remains some use of checks.


For others, the chief concern is an ability to manage and understand spending. Debit cards and cash currently are the preferred payment methods, because each is viewed as helping with the budgeting of spending. So convenience, security and control are key values for different parts of the user base. 


But addressing any one of those key values does not necessarily drive interest for the other two types of personae. "New" is attractive to techies. 


"Safety" is the big value for "security buffs," so "fear of compromised data" is the key objection. 


Spending control is the big driver for "budget bosses" so fees are a big objection. (click on the image to see the full chart). 


 

2.5 Billion Unbanked Consumers: Mobile Can Fix That Problem

Some 68 percent of adults surveyed by the World Bank say they have used a mobile phone for a money transaction. In Sudan, 52 percent say they have done so. In Gabon, 50 percent, in Algeria 44 percent. 


Some 2.5 billion people do not have access to financial services, often because bank branches are unavailable. That's why mobile money transfers are so useful. With just a little use of existing retail locations, people can pay education or utility bills, for example, using feature phones and simple text messaging, without needing physical bank branching locations. 

Most of the Revenue in Mobile Content Business is "Access"

2011 was the first year that global consumer spending on media content, apps and services for mobile phones broke through the $100 billion barrier, according to Strategy Analytics. 


But there is an important caveat: 60 percent of that spending was for broadband access. In other words, some $73 billion was spent by consumers for mobile data access. In 2012, mobile data will represent $82.8 billion in spending, up 9.5 percent over 2011 levels.


Apps are now the second largest category for revenues. Advertiser spending on mobile media is expected to almost double (85.4 percent growth) from $6.3 billion to $11.6 billion in 2012, Strategy Analytics says.


That implies $149.8 billion in global revenue in 2012, a 17 percent increase over 2011.

Apps are expected to account for about 19 percent of global consumer spending in 2012, amounting to $26.1 billion, up about 31 percent over 2011.


In fact, it often is the case that much of the revenue in any product category consists of "access services." Consider cloud computing. Well over 33 percent of total end user spending on "cloud computing" is "access," for example. 

Fuzzy Thinking on Wireless "Spectrum Crisis"

One apparent problem with many discussions of how much bandwidth mobile service providers will need in the future is that some observers confuse tactical buying and selling of some blocks of spectrum with the overall bandwidth trend; and today's problems with tomorrow's problems. 


"The wireless carriers say that in the next few years they may not have enough of it to meet the exploding demands for mobile data," writes Brian X. Chen in The New York Times. But some think spectrum crisis is imaginary, and point to some specific proposals, as a commitment by Verizon to sell some spectrum if it is allowed to complete its purchase of AWS spectrum from Comcast, Cox Communications, Time Warner Cable and BrightHouse Networks. 





Other say there obviously will be a spectrum shortage if demand keeps growing 60 percent to 100 percent a year. It is true that technology can help. Better signal compression, more efficient coding, Wi-Fi offload and retail financial incentives can help. 


But is is much more difficult to create usable mobile bandwidth than it is to create additional fixed network capacity. That's mostly a matter of physics. To avoid interference, discrete blocks of frequency are used by only one service provider, though those firms can re-use the same frequency across nearby cells, by using frequency planning.


For fixed network providers, each discrete provider can, in principle, use a full range of frequencies, even when other licensees have exclusive rights to use discrete frequencies in the wireless domain. U.S. wireless service providers have the use of frequencies in the 700 MHz, 800 MHz and 2 GHz bands, for example. All others generally are reserved for other users. And even if higher frequency spectrum were available above 2 GHz, it is, for reasons of physics, difficult to economically use those frequencies in a mobile communications context.


Fixed line providers can use much more spectrum. Where mobile service providers are restricted to specific frequencies in three main bands, each separate cable operator can use all frequencies between about 1.6 MHz up to about 1 GHZ, the real limitation being the cost and signal propagation characteristics, not the ability to use frequencies above about 750 MHz. 


By way of comparison, then, where a mobile service provider might use paired 10-MHz channels, representing 20 MHz of total capacity, and where one single mobile provider can use those specific frequencies nationally, each cable operator can use more than 700 MHz. In other words, every cable operator has an order of magnitude more "raw bandwidth" to work with, compared to any mobile service provider. 


To be sure, many mobile operators run two or three discrete networks, each with 10 MHz to 20 MHz of spectrum, there are clear physical limits, compared with any cable network. 


Landline telcos generally use optical fiber, and different signaling methods, that support hundreds of megabits per second to gigabits per second for every user, in principle. Consistent with the business case, landline telcos also could use multiple discrete wavelengths to reuse all their frequencies over and over again. 


That means it always will be easier for fixed networks to re-use frequencies that, in the wireless domain, must be reserved for use by only a single provider.


Also, most spectrum usable for mobile communications already is licensed to "somebody else." There is very little "fallow" spectrum.  The point is simply that there is no comparison between fixed network potential bandwidth, and mobile potential bandwidth.


Observers who argue there is no need for more spectrum sometimes argue that "new technology" can fix any mobile service provider capacity problems. New technology can help. Alternative technology can help. Creating incentives for people to use finite spectrum wisely can help. 


But there are clear indications that mobile network physical capacity will not be sufficient for future needs. Denying that strikes some of us as fuzzy thinking. 

Cloud Computing and Mobile Apps Could Shake Up IT Business

Cloud computing might be part of the next great evolution of computing, but mobile computing probably will be such an intrinsic part of the architecture that the two will be hard to separate. The ramifications could be substantial.

Amazon’s AWS Marketplace, for example, could have huge ramifications for sales forces in the communications and information technology marketplace. As AWS Marketplace and other similar marketplaces develop, the “cloud” becomes the way everyone gets access to business apps and data.

Separately, Hewlett-Packard (HP) has launched an “HP Enterprise Mobility Platform” designed to allow telcos to create “enterprises app stores.”

Service providers can populate the app stores with custom apps designed to use data from corporate back-end systems (such as CRM and ERP) and deliver it to increasingly mobile staff using tablets and smartphones. The assumption is that apps and data can be gotten directly by any device from the mobile network.

Both offers illustrate use of cloud computing and mobility to make business application installation and use a simple mobile app install to a device with web browser capability and broadband access.

What you will note about the enterprise app store concept is that it disintermediates nearly all of the premises networking infrastructure. There is no need for the enterprise local area network, except perhaps to switch to Wi-Fi access at times.

You can imagine this will have serious implications for firms that traditionally make a living selling gear and services for enterprise LANs. Just as easily, you can see the upside for traditional communications providers who now could have an expanded role in the information technology business.

What products would be “natural” parts of a communications and information technology bundle? How much easier would it be for traditional telco sales organizations to sell key business software?

In fact, non-technical sales forces of all types might find there are new opportunities to sell products that might have been “too technical” in the past. Firms outside “IT” might find they can create bundles almost on the fly, customized for vertical markets or businesses of various sizes and types.

A shift to some new computing architecture based on cloud resources and mobility could have huge implications for any number of businesses in the information technology and communications businesses.

HTC Share of Traffic Drops 60% in Five Months

From October 2011 through March 2012, Apple’s traffic share grew from 46.8 percent to 76.9 percent, an increase of 64 percent, says Chitika Insights.  HTC, on the other hand, experiencd an overall web traffic share fall from 18 percent to 7.3 percent, a decrease of 60 percent. 


Traffic is in many ways a proxy for device market share. Others who follow the device market more closely than I do can offer reasons for the precipitous decline. Aside from the competition with Apple, HTC obviously has to compete with other Android device manufacturers on price and value. 

1 Gbps: If You Build It, Will They Come?

Individual subscribers connected at gigabit speeds constitute a relatively new phenomenon.
First introduced by Hong Kong Broadband in 2010, the number of service providers offering
residential gigabit services is growing, with more than two dozen service providers providing such service, according to a study by Joe Savage, Telecom ThinkTank principal, and Michael Render RVA Market Research principal.

About seven of those providers offer service to residences as well as businesses, and have networks that pass at least 100,000 sites (not to be confused with “customers”). “Our March, 2012 estimate is that global residential gigabit subscribers number in the hundreds,” the authors say.

Historically, consumers have responded enthusiastically to higher speeds, at least up to a point. For both dial-up Internet and then broadband Internet access, consumers responded in overwhelming numbers. Both were examples of “build it and they will come” optimism on the part of service providers.

But that has not yet proven universally true. As many people buy automobiles, but not everybody buys a luxury automobile, service providers probably should maintain some circumspection about demand for “super-fast” access, defined as 50 Mbps, 100 Mbps or even 1-Gbps service.

As with the market for automobiles, user have distinct needs and spending abilities. Any auto provides “transportation.” But most people do not buy high-end luxury vehicles. In the same way, one might argue, demand for broadband speed is simply not highly elastic.

Verizon, for example, had a total of five million FiOS Internet connections in service at the end of the first quarter of 2012. That works out to FiOS Internet penetration of 36.4 percent.

That should provide evidence that fiber to the home does not sell itself. Some of us tend to believe that the advantages of fiber to the home are so obvious Verizon would only have to "build it and they will come." Not so, it turns out.

Though there is slow movement to higher access speeds, Verizon's experience suggests providers of 1-Gbps services should have realistic expectations about take rates.

Some of us immediately would wonder whether existing 1-Gbps customers, especially in markets where monthly prices are in the $200 range, actually are “business” users, though, much as Google product managers and others have 100-Mbps connections, paid for by Google, so they can work efficiently at home. Some ISPs have found scant interest for 50-Mbps services, for example.

Prices for residential gigabit service range from a low of $26 per month for Hong
Kong Broadband’ s service to a high of $560 per month at network operator Turkcell. Prices
roughly correlate to the capital investment required to pass a subscriber in the serving area, the authors say. It costs $200 per home passed in Hong Kong compared to $1,000 to $4,000 per home passed in Europe and North America. ISPs have seen price resistance whenever monthly recurring costs approach triple digits.

In North America, Sonic.net will be seen by many, and ought to be seen as notable, for offering 1-Gbps service to consumers for $70 a month, including two phone lines with no-extra-charge domestic long distance. Comcast’s 105-Mbps service in San Francisco costs about $200 a month, by way of comparison.

Gigabit subscribers report that they are online an average of eight hours per day. That compares with the “typical” U.S. Internet user average of 2.5 hours per day. By definition, 1-Gbps customers are not “mainstream.”

In addition to being “early adopters” and “technology enthusiasts,” they stream high-definition content, engage in multi-player online games and tend to be content creators.

It remains to be seen whether there will be higher adoption as the service is made available to more potential users. At least up to this point, few subscribers who pay for their own connections (as opposed to having the bills paid by an employer) seem to have become customers. Also, surveys have shown that most users are happy with speeds they now get.

That said, we will soon get a better look at receptivity to 50 Mbps and 100 Mbps services in a number of markets, such as United Kingdom. Some question whether “build it and they will come” is so reasonable an assumption, at this point.