SE Asia is World's Fastest-Growing "Internet" Market

With 260 million users now and an estimated 480 million by 2020, Southeast Asia’s is the world’s fastest growing Internet market, adding 3.8 million new users a month, according to an analysis by Temasek, sponsored by Google.

E-commerce in the region could be worth $88 billion, growing at 32 percent per year, while

The online travel market could reach $90 billion, growing at 15 percent per year.

Online media such as games and advertising could grow to $20 billion, increasing at 18 percent per year, while the taxi on-demand service could hit $13 billion and 29 million monthly riders, up from an estimated 7.3 million at present, growing at 18 percent per year, the analysis suggests.

There are obstacles to overcome, ranging from a relative lack of human resources (engineering and managerial), access to capital and consumer mistrust about the security of online transactions.

But most of the obstacles are directly related to access and other forms of infrastructure. Logistics networks required for remote product delivery are underdeveloped. Some 60 percent to 70 percent of consumers are outside the traditional banking system.

Low Internet usage, especially for archipelago nations such as Indonesia and the Philippines, also are key obstacles to be overcome.

Smartphone-Only Internet Access in U.K. Grows to 16%, Up 10% in One Year

A study sponsored by Ofcom might suggest that 16 percent of U.K. Internet users rely on devices such as smartphones and tablets for online access, and do not primarily use fixed Internet connections.

In 2014, mobile-only access was at about six percent. Ofcom therefore suggests that use of computers for online access has decreased by 10 percentage points--from 81 percent to 71 percent--since 2014.

One might argue that a qualitative survey also sponsored by Ofcom shows the complexity and nuances of smartphone-based Internet access that could have implications for developing regions as well.

“The extent to which smartphones are liberating or limiting for these participants is complex, nuanced and highly dependent on their circumstances,” Ofcom says. “In addition, the perceived price of using data lead many users to limit usage.”

In fact, “heavy reliance on smartphones may inhibit users from developing alternative digital skills, such as typing,” the survey suggests. Perhaps that will not be a limitation, eventually, but Ofcom suggests lack of such skills is a job-affecting circumstance.

Also, many users who were mobile-only had more-limited skills in terms of technical troubleshooting and file and information management, Ofcom says.

Aside from other issues, the cost of mobile data was an issue. “The limitations of smartphones as a primary means of going online, across all parts of the sample, included the perceived pressure to complete tasks quickly to prevent the erosion of their data allowances,” Ofcom notes.  

“Creating, editing and sharing any document of length in office software applications (e.g. MS Office) was seen as almost impossible for most participants,” the report notes.

Those issues were largely experienced by users who were smartphone based by circumstance (low income, no at-home fixed network access, no home PC, for example), not choice (some users have jobs where they are highly mobile, so phone-based access is seen as an advantage).

The implication might be that smartphone-based access, which will be the way most people, in many regions, will use the Internet, does pose some challenges.

The cost of using mobile data is an issue. The difficulty of creating and manipulating documents and files are other issues.

Is "Zero" a Price?

Is “zero” a price? The answer matters, because there are many instances where regulators insist they are not in favor of rate regulation, at least when markets are competitive.

In other words, whenever a regulation mandates, or prohibits a “zero” price, that is an instance of rate regulation.

This matters since banning or enabling zero pricing is rate regulation, even when rate regulation is expressly not within policy guidelines. That recently has become an issue where zero rating of mobile Internet access is outlawed.

The essence of rate regulation is that some prices are not allowed, while other prices are mandated. Generally, we are accustomed to prices being limited to keep them low.

What is different with bans on zero rating is that the restriction applies in the other direction: governments make illegal the offering of “no incremental charge” or “free” access.

Generally, price regulation is used when an entity has a monopoly or a dominant market position that gives it excessive market power. So prohibiting “free” as a price implies concern about monopoly power.

Regulators sometimes insist they are not engaged in rate regulation when mandating that prices of zero are not lawful. That is wrong. Zero is a price, and mandating or prohibiting zero rating is rate regulation.

The answer also matters because rate regulation--whatever its other suggested benefits, also tends to depress investment.

That means rate regulation, all other things being equal, leads to lower investment by competitors in a market who own facilities, even if it increases demand by customers who want to use that rate-regulated network.

To the extent that bans on zero rating impose price rules, it is a form of rate regulation, even if not formally a matter of formal “rate setting.”  While paid services have prices that are acknowledged to be “rates,” it is much less obvious that “zero” also is a price.

How Will AT&T's Virtualized Network Affect its Suppliers and Retail Sales Partners?

It isn’t as easy to describe the likely impact of network functions virtualization (NFV) on the retail end of the business as it is to envision the implications for network infrastructure supplier impact.

By definition, virtualization means new and existing apps can run on a single hardware platform, rather than having dedicated equipment for each app. That should mean less spending on network equipment, so less capital expense, and arguably lower operating expense.

At a high level, that also implies lower revenue for telecom network equipment suppliers.

This will be a big deal for AT&T and many of its networking equipment suppliers.. “We are now forecasting that by the end of this year 30 percent of our network functions will be virtualized,” said Ralph de la Vega, AT&T vice chairman. “ And by 2020, it will be 75 percent.”

“we’re moving all of our service to this on-demand platform over time,” he said.

In principle, there should be implications for retail sales, or on-going customer support operations. As AT&T rolls out “Network On Demand,” retail enterprise customers will be able to  dial up, or dial down, bandwidth on demand. “If the customer has a five megabit per second circuit and they want to go a 20, they go to the portal, they make a change and in less than 90 seconds, the new service is provisioned,” said de la Vega.

“There is no need to call a sales person, there is no need to order equipment, there is no need to setup another connection it happens in 90 seconds,” de la Vega said.

For AT&T, that could often translate into higher revenue, if the direction of changes by most customers is “up,” rather than “down.”

“And what I love about it is my revenue cycle is 90 seconds,” said de la Vega.

In principle, that same bandwidth on demand feature could be available to medium-sized or smaller businesses as well.

De la Vega used the example of a small cancer center with 12 locations. That sort of mid-market customer can, assuming the bandwidth is available at all locations, dial up and then dial down bandwidth, allowing it to send big files episodically, at any of the locations.

That could have some impact on retail sales channels, if the “moves, adds and changes” revenue becomes a matter of customer self service.

That could drastically limit the amount of MAC revenue any retail agent--or AT&T itself--earns from bandwidth services.

AT&T has More than 50% Market Share of U.S. Connected Cars

AT&T Unlimited Plan customers now can add select connected cars or a ZTE Mobley vehicle Wi-Fi plug-in device to their data plans for $40 each month, getting unlimited data use for the connected vehicles.

Unlimited Plan customers also can buy 1GB of data per month for $10 per connected car or ZTE Mobley.

Connected car customers can continue to buy stand-alone data plans or add their car to a “Mobile Share Value” plan.

AT&T says it has more than eight million connected cars on its network at the end of the first quarter of 2016, representing more than 50 percent of all new connected passenger vehicles in the United States,on the strength of partnerships with 19 automakers, including Porsche, Jaguar, Land Rover, Infiniti, Audi and Volkswagen.

Embeded connectivity and and the ability to integrate smartphones ultimately are expected to drive most of the market. Simple tethering of smartphones will be a factor, however, according to analysts at Juniper Research.

source: Juniper Research

IoT Revenue Mostly Will Happen at App Layer

Platforms often drive much more economic activity than is directly generated by the platforms themselves, and that is virtually certain to the case for access and connectivity markets created by Internet of Things apps and devices.

A McKinsey Global Institute study suggests that the Internet of Things has the potential to create economic impact of $2.7 trillion to $6.2 trillion annually by 2025. Connectivity (access) might account for about 16 percent to 17 percent of total ecosystem revenues, according to McKinsey analysts.  

source: Woodside Capital

Vodafone plans to roll out the narrowband IoT (NB-IoT) platform to support Internet of Things connectivity across multiple markets in 2017, said Vodafone Internet of Things group Director, Erik Brenneis.

As often is the case when new platforms are being commercialized, different tier-one mobile operators are making different bets.

Altice’s SFR is deploying Sigfox while rivals Bouygues and Orange have opted for LoRa. Orange, though, has not ruled out use of other platforms as well.

China Mobile also has chosen to support NB-IoT.

In some ways, the choice of NB-IoT is not too surprising. Historically, tier-one telcos have preferred solutions based on licensed spectrum, and also have preferred options that build on already-established networks and also have perceived “quality of service” advantages. BB-IoT fits within that approach.

“NB-IoT operates in licensed spectrum and that is important to us at Vodafone because we need to deliver a high quality experience to our customers,” said Brenneis.

All of the proposed networks emphasize lower-cost connectivity and lower power consumption.

Facebook Explores Anchor Tenant Model in India

In the U.S. market, many innovators have looked to the concept of “anchor tenants” as one way to build a sustainable Internet access service. Schools, hospitals or government buildings often are seen as suitable anchor institutions.

Some would-be suppliers of gigabit access, for example, think it makes sense to connect anchor institutions that essentially become hubs for more-extensive networks surrounding the anchor locations.

The same concept underpins many rural Internet access efforts, which first try to connect schools, for example, and then use the schools as hubs. In some ways, that is the concept behind village kiosks that are connected by satellite links, and then use Wi-Fi for local distribution.

Facebook‘s “Express Wi-Fi” uses the same concept, encouraging anchor tenants to become local Internet service providers, providing a sustainable business model.

“We are already live in India and Indonesia with Express Wi-Fi,” said Ryan Wallace, Facebook technical program manager. “If you look at Myanmar as a great example that has got poor fiber infrastructure so satellite would probably be an interesting play there.”

“The Philippines is an island nation, so fiber is very much within the metropolitan areas. Satellite could be a big play there.”

Facebook has partnered with an Indian rural Internet access provider, AirJaldi, to manage the actual installation and operation of the Express Wi-Fi service.

For AirJaldi, which is based in Dharamsala and mostly provides Internet services to large customers like the Dalai Lama’s Tibetan government in exile, the project is a chance to figure out how to make money serving a widely dispersed customer base.