Mobile Broadband is Cheaper than Fixed Broadband in 111 Countries

The global average price of a basic fixed broadband plan (1 Gbyte) is 1.7 times higher than the average price of a comparable 1 Gbyte mobile broadband plan.

Fixed high speed access costs $52 on a purchasing power parity basis (a way of normalizing prices across countries). Mobile high speed access costs $30 on a purchasing power parity basis

That is why mobile broadband has become the typical way people get access to the Internet.

In at least 111 countries the price of a basic (fixed or mobile) broadband plan corresponds to less than five percent of average gross national income per person, the threshold of affordability used by the International Telecommunications Union.

In developing countries, average monthly fixed broadband prices (in PPP$) are three times higher than in developed countries. Mobile broadband prices are twice as expensive as in

developed countries, the ITU notes.

Spectrum Futures

A Billion People: Dozens of Ways to Connect

Over the next decade, a billion people in Asia will start using the Internet for the first time.

Nearly all of them will do so using a mobile or other untethered device, and nearly all of them live in South Asia and Southeast Asia.

Spectrum Futures, a new Pacific Telecommunications Council conference to be held in Singapore from 10—11 September 2015, will examine how all that will happen, who will do it and what key obstacles must be eliminated along the way.

Now in its second year, the two-day conference includes sessions on business models, backhaul, new spectrum, new satellite constellations, regulatory policies and mobile strategies to rapidly reach the unserved.

Spectrum Futures

And even if mobile operators still are favorites to connect most of the additional users, new satellite constellations, balloons, drones and Wi-Fi are new platforms that aim to have a role as well.

Regulators will, as always, have a private half-day session to share ideas about what they plan to do, would like to do, and have done, to rapidly extend Internet access.

Learn more and register at www.spectrumfutures.org.

U.S. Linear Video Market Concentrates

If the Charter Communications acquisition of Time Warner Cable is approved, as well as the AT&T acquisition of DirecTV, just three companies, Comcast, AT&T and the new Charter would control 82 percent of the broader linear video subscription business (including both networks and distributors), according to an analysis by USA Today.

That might overstate matters a bit, but the general conclusion seems valid enough.

Over time, every consumer communications business eventually is lead by just a few firms. Capital-intensive industries tend to encourage such outcomes.

Analysis of Leichtman Research Group data suggests that perhaps five companies (distributors) control about 75 percent of the linear video subscription market.

Some seven companies would control about 87 percent of the market, using Leichtman Research Group data.

So perhaps six companies would control about 80 percent of the linear video subscription business. That is concentrated, but not as concentrated as the USA Today analysis suggests.

More important, the linear video business is contracting, and will be replaced by streaming services, virtually all observers predict.

What is more important is the high speed access business, which is largely, and eventually largely, the foundation for all fixed network access services.

Cambodia to Get First Direct Undersea Optical Link

Cambodia is getting its first direct connection to the subsea backbone network as Huawei Marine Networks builds a new cable jointly financed by  Telekom Malaysia Berhad, Symphony Communication Public Company Limited and Telcotech Limited.

The Malaysia-Cambodia-Thailand (MCT) Submarine Cable System, 1,300 km long, connects Cherating in Malaysia and Rayong in Thailand with a branch connecting Sihanoukville in Cambodia.

Access to neighboring countries such as Laos and Myanmar will be achieved by connected terrestrial networks.

The 100 Gbps network, with a total design capacity exceeding 30 Tbps, will be commissioned and ready for commercial service by the end of 2016.

Will India Voice Revenues Be Cut in Half, in Years or Months?

Competition from over the top voice and messaging apps might reduce mobile voice revenues in India by up to half, according to industry body COAI.

The proliferation of services such as Skype and Whatsapp could carve 30 percent to 50 percent of revenue from operator's voice services, in months, COAI director general Rajan Mathews has said.

The predictions of revenue decline would not be unusual. Only the potential speed of the decline is unusual.

In 2001, in the U.S. market, for example, about 65 percent of total consumer end user spending for all things related to communications and video services went to "voice."

By 2011, voice represented only about 28 percent of total consumer end user spending.

Over that same period, mobile spending grew from about 25 percent to about 48 percent.

Spectrum Futures

You see the pattern: growth of about 100 percent of new revenue sources and losses of 50 percent in legacy revenues.

We can disagree about how much new revenue some communications service providers will have to create over a decade’s time, to replace lost legacy revenues. But the amounts are quite substantial.

If global telecom revenue is about $1.6 trillion to $2 trillion, and assuming about half the revenue is earned in mature markets, where the displacement arguably is most imminent, then the revenue subject to disruption ranges from $800 billion to $1 trillion.

Half of that represents $400 billion to $500 billion. That, hypothetically, is the potential amount of global revenue that might be lost, and would have to be replaced. And that assumption is based on voice revenue growing, not contracting, in the rest of the world.

One rule of thumb is that service providers must plan for a loss of about half of current revenue every decade or so. That might seem shocking, but simply reflects history.

In the U.S. market, one can note roughly the same pattern for long distance and mobile services revenue. Basically, mobile replaced long distance revenue over roughly a decade.

At one time, international long distance was the highest-margin product, followed by domestic long distance. That changed fundamentally between 1997 and 2007.

Over that 10-year period, long distance, which represented nearly half of all revenue, was displaced by mobile voice services.

A similar trend is underway globally. By some estimates, voice revenue has been falling, globally, since 2011.  

But it is hard to see the impact in industry revenue projections COAI itself presents. The obvious conclusion is that other revenue sources, and an absolute increase in customer base, will have even more impact than the loss of voice revenue, which some would say is reasonable enough, as a prediction.

According to Ovum, global mobile industry revenue will contract by one percent in 2018,

He said OTT competition has already taken a 30% slice of operator messaging revenues in the market.

Ovum has estimated the size of the impact of OTT services on SMS and VAS revenue in India for the last two years at $2.76 billion.

Critics say mobile operators will make more money from data services than they lose in over the top messaging and voice.  

Credit Suisse also recently named India among the companies most exposed to the OTT threat, because the nation's operators still derive 80% of their revenue from voice.

How Long to Satellite Constellations Supporting 50 Mbps to 1.2 Gbps Per User?

If everything goes right, LeoSat could begin launching its new satellite constellation in December 2018, offering bandwidth to any single user site at speeds from 50 Mbps on the low end to a high of 1.2 Gbps. 

LeoSat, which plans to launch a new constellation of 80 or more low earth orbit satellites to provide high-throughput Internet access covering every square inch of the earth, thinks its wholesale business model and high bandwidth makes it a potential partner for virtually every other satellite capacity supplier or retailer, aside from the core markets it has identified.

For starters, LeoSat is focusing exclusively on wholesale capacity for business customers, not the consumer business and not business segment retail.

“We wouldn’t compete with anybody in the current milieu,” says Fotheringham. “Our lowest service tier begins where traditional satellite ends.”

The lowest tier of service offers 50 Mbps to 100 Mbps of Internet connectivity. The middle range offers 100 Mbps to 500 Mbps while the top tier supports 500 Mbps up to 1.2 Gbps.

“We do what they cannot,” Fotheringham says of the comparison with legacy satellite services. So he believes LeoSat will have “many chances to align with incumbents who are delivery partners.”

Strictly focused on business-to-business customers, LeoSat’s primary focus will be delivering “ industrial-grade communications to major organizations,” both commercial and government, says Fotheringham.

At the same time, by using a mesh network, LeoSat will avoid a key stranded assets problem that has plagued most prior constellations using the low earth orbit. 

In U.S., Cable TV Companies are Consumer Services Market Leaders, Not Telcos

Should the Charter Communications bid to acquire Time Warner Cable pass regulatory muster, and some of us would bet it will, more light will be shed on the relative roles of cable TV and telephone companies in the fixed network high speed access market, and also of market power generally.

The perhaps surprising result would be that In the fixed network Internet access segment, Comcast would be number one, Charter number two, AT&T third.

Think about that: the two largest legacy telcos would rank no better than third and fourth in the core service provided by the fixed network.

Verizon would rank fourth. CenturyLink would rank fifth, Cablevision Systems sixth and Frontier Communications seventh.

In the top five spots, cable TV companies would be number one and two providers, with even the largest U.S. telcos ranking third, fourth and fifth.

That would make cable TV operators the leaders for consumer services, though telcos would continue to lead in enterprise and business services. Keep in mind, however, that business services are the big growth leaders for cable TV companies.

Comcast and Charter would represent perhaps 40 million customers, while AT&T and Verizon have about 25 million.

AT&T has about 16 million Internet access customers. Verizon has 9.2 million.

Most observers would agree Comcast’s market share in high speed access was the deal killer when Comcast tried to buy Time Warner Cable.

Comcast would have had about 57 percent share of high speed access. That was an issue--and frankly always has been--whenever any fixed network supplier reached 30 percent share of U.S. homes.

A Charter-owned Time Warner Cable, plus Bright House Networks, would have substantial share, but probably well below the 30-percent level that traditionally has triggered antitrust concerns (some might peg high speed access share closer to 30 percent).