Value-Added Services Double the Typical Business Customer Monthly Billing

Value-added services generate business customer monthly spending twice the average customer account size, according to J.D. Power. Security services and videoconferencing are among the services that increase customer recurring spending the most.

Value-added services increase the industry average customer bill of $322 to $582 among subscribers to cloud computing services; to $766 among subscribers to security solutions; and to $792 among subscribers to videoconferencing applications.

Service providers offering value-added services achieve higher overall satisfaction scores than do providers not offering such services, J.D. Powers reports.

For example, overall satisfaction among business customers who subscribe to videoconferencing applications is 816, which is 75 index points higher than the overall industry average score of 741.

Offering security solutions to protect against corporate hacking (812) and cloud computing (794) are other advanced technology services that lead to higher overall satisfaction, according to J.D. Powers.

Google Fiber Costs Do Not Appear to Have Been Materially Better than Any Other Telco

One key issue since the advent of Google Fiber, as well as market entry by any number of other independent Internet service providers, is whether Google Fiber had uncovered some cost advantage over all other leading providers that would allow it to make a profit selling gigabit Internet access connections at $70 a month, when other major ISPs were selling services operating at far lower speeds, at comparable prices.

To be sure, getting streamlined permitting processes from cities arguably helped a bit. Building networks neighborhood by neighborhood was an important innovation municipal regulators decided to allow.

But it never was clear that Google Fiber had material advantages in construction costs that represent perhaps two thirds of the total cost of building a new fiber to home network.

A decade has passed since the first FTTH network deployments, yet the cost of building
a network remains the primary obstacle to ubiquitous fiber connectivity for every household,” says Commscope.

From 2005 to 2015, the cost per home passed dropped from $1,021 to just under $700, Commscope notes. Those costs likely are fairly standard, no matter how big or small a firm might be.

The problem is that most of the cost of building a fiber-to-home network comes from civil engineering, not network elements.

Construction, civil works engineering, obtaining permits and right-of-ways account for roughly 67 percent of total cost, while the equipment accounts for about 33 percent.

So while GPON and fiber equipment costs have indeed fallen, skilled labor rates have risen.

In other words, a fiber-to-home network mostly represents construction costs, not network element cost.

My simple way of explaining this is that most of FTTH cost comes from “digging holes, then closing the holes back up.”

If so, then the cost of FTTH cannot be reduced too much more.

That rather suggests that Google Fiber has no particular business advantage in construction costs.

Consider that Dycom Industries, whose main business is network construction for tier-one telecommunications providers, counts AT&T, Comcast, CenturyLink, Verizon and a “customer who has chosen to remain anonymous” among its top-five customers.

Most everyone believes the unnamed customer is Alphabet (Google Fiber).

If so, it is unlikely Google Fiber has material advantages in either network elements or construction cost. It might have some marginal advantages in permitting and other sorts of make-ready work, but those are not the primary cost elements.

Perhaps Google Fiber has saved a bit by making its own set-top boxes for video, as well as network interfaces for Internet access services. But not necessarily. At low volumes, Google Fiber might well have spent as much, or more, than it would have spent buying gear off the shelf.

Nor is there any particular reason to believe Google Fiber has gotten network element prices very different from what AT&T, Comcast or Verizon might pay. In fact, if volume discounts apply, then Google Fiber might be paying higher prices than AT&T, Comcast and Verizon.

With rumors that Google Fiber has fallen quite short of its subscriber forecasts, and might be getting ready to cut its workforce in half, it might be reasonable to assume that whatever else might be the case, Google Fiber did not uncover some new cost-saving way of building a fiber to home network.

One might have hoped for lower overhead costs, something that seems key to success for small, independent ISPs. But Google Fiber probably did not have overhead costs materially better than Verizon or AT&T, and perhaps had overhead higher than that of Comcast.

Even if Google Fiber had some marginal cost advantages in a few areas, it does not appear that the cost side of the network build was materially different from any other bigger providers.

Google Fiber Falling Short of Expectations?

Google Fiber does not seem to be achieving as much success--measured by subscriber growth--as it originally expected. Though nobody outside Google can say for certain, many believe accounts now number only in the couple of hundred thousand range, not the five million many had hoped would be signed up by now.

Google Fiber also seems to be planning major staff cuts.

Oddly enough, Google Fiber clear has succeeded in one goal everyone agreed was an objective: spurring other Internet service providers to dramatically boost access speeds.

Many speculate that new interest in fixed wireless is partly driven by expected lower infrastructure costs. But that does not directly speak to the issue of less-than-anticipated account growth.

Perhaps Google Fiber’s marketing efforts have been less than required to make serious inroads into cable TV or telco customer bases.

Perhaps the incumbents have showed they still have the moxy to fend off even stout challengers, using price promotions and bundling, as well as unexpected consumer inertia, to fight off the challenge.

In markets where Google Fiber clearly was a superior offer (in terms of speed), one might have expected Google Fiber to get 20 percent to 25 percent adoption relatively quickly, growing to as much as 40 percent over three or four years.

Verizon FiOS, for example, was able to achieve numbers in that range, for its high speed Internet access offer.

Ting, the gigabit fixed network service run by Tucows, expects 20-percent take rates in the first year, growing to 50 percent within five years, for example.

But maybe three-provider markets really are that much more difficult than two-provider markets, even when the latest challenger has a disruptive offer. Maybe market selection really does make a difference.

Perhaps it really is harder for a third major ISP to get traction in a tier-two market, compared to smaller tier-three towns. Some of us cannot understand why Google Fiber would not have done about as well as Ting expected, in the first year of active marketing in any of its markets.

Perhaps the marketing effort has been flawed.

But maybe customers themselves are not yet clearly convinced that a symmetrical gigabit service for $70 a month really is “better” (in terms of the value proposition) than a $50 a month service offering 100 Mbps, symmetrical.

Perhaps consumers are proving once again that a “good enough” product, offered at a reasonable price, is preferable to a “best in class” product offered at a significantly higher price.

It’s curious.

Gigabit Internet Access Now Drives Telecom Network Construction

In a strategic sense, one might argue that the value of a fixed telecom network (cable TV, telco,  ISP, metro fiber specialist) is backhaul for mobile traffic. That obviously is most true for consumer apps and customers, less true for enterprise apps and customers.

One anecdotal way of illustrating that concept: “There are some industry experts who have said that for a 4G LTE network, about 90 percent of the communication path is wired, and for a 5G millimeter-wave communication path, it could be 95 percent or more of the path is actually wired,” said Steven Nielsen, Dycom CEO.

Still, any changes in access platform choices (use of fixed wireless instead of fiber to home; small cell architectures) should materially affect Dycom’s prospects.

Dycom's main business is contracting services (network construction, principally) for telecommunications providers and enterprises.

The company's five largest customers are AT&T, Comcast, CenturyLink, Verizon and a “customer who has chosen to remain anonymous.” Most everyone believes this customer is Alphabet (Google Fiber).

AT&T represents 28.1 percent of total revenue or $221.6 million. Revenue from Comcast was $112.7 million or 14.3 percent of revenue.

Revenue from CenturyLink was $110.7 million or 14 percent of revenues.

Verizon was Dycom's fourth-largest customer for the quarter at 12 percent of revenue or $95.1 million. Revenue from Windstream was $43.5 million, or 5.5 percent of revenue.

Charter Communications was sixth largest,  at 4.8 percent of revenue. Customer seven (believed to be Google Fiber) drove 3.6 percent of revenue.

Frontier Communications was the eighth-largest customer  at 1.4 percent of revenue.

Without question, gigabit Internet access services are driving current business activity.

Entertainment Video Drives 62% of Data Consumption on North American Android Devices

In North America, on Android smartphones, entertainment video represents about 62 percent of total data consumption.

The typical North American household now has over seven active devices in use each day, with six percent of households having more than 15 active devices, according to Sandvine’s Global Internet Phenomena Spotlight: Inside the Connected Home report.

As you might guess, that also means traffic is fragmenting. PCs now account for less than 25 percent of total traffic on fixed access networks.

Conversely, mobile devices (tablets and smartphones) now account for almost 30 percent of North American fixed access traffic.

Looking at applications, the big change is video streaming, which now accounts for 65 percent of bandwidth consumption, across all devices.

Game downloads drive about 25 percent of  bandwidth consumption.

30% Smartphone Adoption in Philippines

Mobile data will drive mobile revenue in the Philippines: just about 30 percent of people already use a smartphone, even if most people use feature phones. 


source: Pawn Hero

What is a Good Wave Worth?

What is a wave worth? By one estimate, waves ridden by surfers represent $51 billion in economic activity.

source: Save the Waves

That is the result of a study of 5,000 locations by Oxford University economists Thomas McGregor and Samuel Wills, who studied night-time light emissions as a proxy for economic activity.

“We find that high-quality surfing waves boost activity in the local area (<5km 0.15-0.28="" 18-22="" 1992-2013="" amounts="" between="" billion="" by="" comparable="" from="" globally.="" his="" locations="" log="" low="" million="" or="" per="" points="" ppp="" quality="" relative="" researchers="" say.="" span="" the="" to="" us="" wave="" waves="" with="" year="">

Another study of Australian activity over a two-month period of about $20 million for local economies.

The notion of applying market forces to conservation or preservation of natural assets sometimes is criticized as applying a market test to non-material values. Surfers who think about it might agree that highlighting the value of waves can contribute to preservation, conservation, cleanliness and other non-material values.

$45 per day is an estimate of the economic value of surfable waves found near the coastal community of Huanchaco, Peru, the non-profit Save the Waves organization has estimated.

In Pichilemu, Chile, for example, the average surf tourist spends $168 per day.  In Uluwatu in Bali, Indonesia, the typical surf tourist spends $150 per day.