More "Free Mobile Data Offers" in India?

Idea Cellular may soon launch promotional mobile data offers lasting one to 1.5 years that offer unlimited free mobile data for 4G customers. Idea also might offer free international incoming calls.

Those moves would counter Reliance Jio’s free mobile data offers, which run until March 2017. Bharti Airtel already has matched Jio's offer by providing 3 GB extra data every month till December 2017.

Such promotional offers should never be mistaken as indicating direct shifts in the level of  “permanent pricing.” On the other hand, rarely--if ever--do such promotional offers allow “every day” pricing levels to climb back to prior levels. Such offers are indicators of increased competitive pressure, leading to pricing declines, over the longer term.

Average revenue per account in the Indian mobile market has, in fact, been declining for some years.

The Indian mobile service provider market has been in a state of disruption for several years, with Idea Cellular displacing Reliance Communications as the third-largest Indian mobile company, ranked by subscribers. The next big changes will involve mergers that could again reshape the leader ranks, and the emergence of Reliance Jio within the top-10 ranks in 2017.

Longer term, most observers believe Reliance Jio will be a threat to the mobile market leaders.

source: TRAI

source: Datareign

OTT Voice and Texting to Cost Telcos $104 Billion in 2017

At the risk of seemingly downplaying the danger of declining voice and text messaging revenues globally, that is the lesser problem global telcos face. The trend is real.

On a global basis, over-the-top (OTT ) voice and text messaging alternatives displaced more than $84 billion in 2016. In 2017, another 23 percent erosion will happen, representing nearly $104 billion, according to Juniper Research.

Telcos globally might have lost about 19 percent of their text messaging revenues to over-the-top (OTT) alternatives between 2013 and 2015, according to Juniper Research.

In Spain, for example,  text message volume peaked as early as 2009, at 9.6 billion messages. By 2015, less than 2.3 billion messages were sent.

In the Netherlands, KPN experienced a 60 percent decline in average text message volume between 2011 and 2013. Similar declines have also been reported in South Korea following the widespread adoption of KakaoTalk, while similar trends have been seen in China.

Though it clearly matters that global service providers are losing voice and text messaging revenue, the bigger question is what suppliers do about that situation. One proven strategy is simply to harvest legacy revenues as long as possible, at the highest rate possible, while making other plans.

In the near term, in developing nations, mobile data is the immediate solution. In developed markets, where mobile data adoption already is robust, acquisitions are the near term solution, while the long term solutions involve creating big new markets in the internet of things and machine-to-machine industries.

Those, and other initiatives are likely to be jarring in some cases. As with the move by Mars from packaged goods into pet services, the range of applications and services businesses telcos and other internet service providers will seek to own and offer will be controversial.

At first glance, it might seem incongruous that Mars, a company perhaps best known for candy brands, is big in the pet services business.

But Mars owns pet food brands Pedigree, Iams and Nutro. Mars also owns the biggest U.S. veterinary operation in Banfield Pet Hospitals. Mars also owns the BluePearl emergency and specialty clinics, and also is buying VCA, the operator of veterinary offices. That represents a diversification away from consumer packaged goods and towards services.

Juniper Research suggests big data and analytics packages for both consumer and IoT (Internet of Things) devices will be fruitful. Juniper also suggests carrier billing, mobile money and mobile identity services will drive new opportunities.

Some of us might argue that even if such initiatives develop, they will be too small to fundamentally reorient service provider revenue streams. Core telecom service revenues in 2016 were about $1.93 trillion. Smaller service providers might have earnings before interest, taxes and depreciation of less than one percent. Tier-one carriers might have EBITDA of as much as 15 percent. So 15 percent of $1.93 trillion is about $285 billion, less than the capital investment carriers will make of about $350 billion.

At the revenue level, replacing lost voice and messaging revenues requires annual new revenues in the range of $100 billion. That might  be tough to achieve on the strength of billing services, mobile money and analytics services.

5G Will Happen; It Has To Happen

A few skeptics might argue that there is no need for 5G, or that the business model will not work or that consumer demand does not exist. That noted, the movement, globally, seems unstoppable, and for existential reasons. Whether 5G works out largely as planned (it actually produces new revenue streams, business models and applications), it is a gamble that must be taken.

In fact, for fixed network telcos, the odds of failure are growing, as revenue earned from investments increasingly is less than the capital investment.

source: The Economist

For that reason, there is a good reason for arguing that either capex or opex, or both must be reduced to match potential revenues earned by those investments.

In fact, the importance of cash flow, rather than other traditional measures of “profit,” indicate the shift. In past years, it was mostly unprofitable startups whose progress was measured in terms of cash flow.

But the big issue is simply that, with all existing revenue sources flat, diminishing or poised to become flat and diminish, the broad telecom industry must find big new revenue sources to replace those being lost, or face decline, if not death.

Since 5G is being purpose built to support new applications (internet of things, machine-to-machine communications, connected cars, fixed line replacement), it is a necessary gamble on the ability to create and sustain big new businesses in those areas.

There can be no certainty, at this point, about the degree of success. What there is certainty about is that doing nothing risks industry failure. So 5G is going to happen. It has to.

Did SingTel Acquire Amobee in 2012, 2013 or 2017?

Did SingTel acquire Amobee in 2013, buy Amobee in 2012 or make the acquisition in 2017? Apparently, “fake news” (which, to be honest, has seemingly always been part of the press agency business) is alive and well, since "news" of that acquisition is being publicized in 2017, when the deal actually happened in 2012. Odd.

Whatever the odd reason for apparently announcing, in 2017, a deal that was previously announced in 2012, the Amobee deal is the direct precursor of what Verizon Wireless is attempting to do with AOL (and possible Yahoo). Amobee is a digital advertising platform, an ambition AOL has had, as well.

That strategy sometimes is contrasted with AT&T’s more direct investment in content and content delivery. Arguably, either approach targets a different part of the same ecosystem.  

Globally, broader entertainment and media revenues are expected to rise at a compound annual growth rate (CAGR) of 4.4 percent between 2016 and 2020, from $1.7 trillion in 2015 to $2.1 trillion in 2020, according to PwC. Those figures include the broader internet advertising business, internet access, broadcast TV, theatrical distribution, newspaper and magazine industries, plus some business-to-business categories not relevant to the consumer video subscription business.

Looking strictly at the TV and video segment, revenue is expected to rise from $121.4 billion to $124.2 billion in 2020 (0.5 percent CAGR). Those revenues include video on demand (VOD) and over-the-top (OTT) services.

Mobile advertising represents 34.7 percent of total Internet ad revenue at $20.7 billion in 2015 and projected to rise to 49.4 percent by 2020. But the rise in mobile video Internet ad revenue will be the most remarkable, from $3.5 billion in 2015 to $13.3 billion in 2020 (30.3 percent CAGR), driven by growth of mobile video consumption.

Verizon’s ambition to create a position as the default for U.S. advertisers that do not want, for whatever reason, to use Google or Facebook for mobile advertising requirements.

source: Business insider

No Global Consensus on 5G Early Use Cases, But Fixed Wireless Will be Key in North America

There is no global service provider consensus about which 5G applications will be important, early on. In fact, one survey conducted on behalf of Ericsson found no agreement on the killer app for 5G, though obviously there was a majority who believed mobile broadband would be among the key uses. Nor is there agreement on whether consumers or business users will drive the early adoption.

Fixed wireless will be the lead application in North America and South America, says Glenn Laxdal, CTO and head of strategy at Ericsson North America.

Laxdal says a mixture of direct fiber and wireless will be used to balance performance and cost in the access business. Also, Ericsson’s tests show a higher antenna point results in significantly better performance and lower path-loss. When aiming for delivered 5G fixed bandwidth of 100 Mbps, a six-meter high radio will reach 350 meters, containing 100 to 120 homes. If antenna height is increased to 12 meters, the signal will propagate 500 meters and potentially reach 200 homes.

In some markets, likely including the United States, where 5G spectrum is likely to be available in lower bands as well as new millimeter wave regions (28 GHz and 39 GHz), 5G is likely to be useful in some scenarios for coverage, and it other cases for capacity, even if 5G typically is thought of as a capacity tool.

Fixed wireless is not expected to lead the commercial deployment of 5G in other regions, though.

In Europe, operators expect new revenue models and apps to drive adoption.

In North Asia, mobile broadband will be the lead app.

Symmetrical 10-Gbps on HFC is Possible, But Only with Big Changes in Business Model

Symmetrical 10 Gbps on a hybrid fiber coax network is possible, researchers at Cisco believe. But what is possibly in technology terms would also require a major shift in business model, essentially doing away with linear video as we now know it.

There are many important assumptions, however. The new full-duplex capability is not backwards compatible with DOCSIS, and much depends on how much former video bandwidth can be repurposed for internet data, as well as how much operators want to spend to extend network bandwidth beyond the now-standard 806-MHz upper limit, to about 1.2 GHz.

The newer frequency plans that would allow more capacity (upstream and upstream) are are not easy to achieve without replacing nearly all active gear in the distribution network. The full 10-Gbps duplex mode literally requires removing all amplifiers (active elements) beyond the optical node.

That is significant. Full 10-Gbps duplex is likely to require a move to a “passive” optical network that removes all RF amplifiers from the network. Though copper plant would still be used to reach customer locations, that copper would be “passive,” with no active elements in the series.

Consumer terminals also would have be changed to handle the new frequency plans. And key decisions about reducing video bandwidth would also have to be made, to free up more bandwidth for internet bandwidth.

There is, in other words, “no free lunch.” To upgrade beyond 1 Gbps to 10 Gbps, video bandwidth would have to be reduced. That implies either an end to the “hundreds of channels” video menu or a way of switching video “on demand,” for each customer. Both those decisions would be highly disruptive to the present business model, and would not be undertaken lightly.

That is analogous to what AT&T has done with its linear video delivery and on-demand access. Essentially, AT&T is offloading linear video to the DirecTV network, freeing up nearly all the remaining bandwidth on the terrestrial network for IP services and bandwidth.

For cable operators to entertain the notion of symmetrical 10-Gbps service, video likewise would essentially have to be removed from the fixed network. For that reason, virtually nobody believes that choice is conceivable for the near future. Only a massive shift of its own customers away from linear video to on-demand video would allow a change that radical, and that is not expected in the near term (next five years).

Also, there is some thinking that linear video might still drive most of the video revenue for most cable operators as far out as a decade, as tweaks in the packaging continue to be made, adding more on-demand features to the linear packages. That “sell-through” model is fundamental for the cable TV business model, and is similar to plans offered by some telcos where the best prices for internet access require purchase of a fixed voice line.

So symmetrical 10-Gbps service on a hybrid fiber coax network seems possible, though not without massive changes (removing all amplifiers, changing consumer gear.

Internet of Things: 16% Revenue Growth to 2020

Global spending on internet of things (IoT) is slated to grow at a 15.6 percent compound annual growth rate (CAGR) between 2015 and 2020, to nearly $1.29 trillion in 2020 from $737 billion in 2016, according to International Data Corporation (IDC),  

Perhaps significantly, while 31 percent of that revenue will come from the sale of devices and hardware; 28 percent from services and 25 percent from software, 17 percent will be generated by connectivity services. In other words, growth in nearly every part of the ecosystem.

In 2016, manufacturers (for operations, asset management, maintenance and field service) will have invested $178 billion, transportation entities (largely for freight monitoring) about $78 billion and utilities (largely for “smart grids”) about $69 billion.

Consumer IoT purchases, the fourth largest market segment in 2016, will become the third largest segment by 2020.

Connected vehicles, smart buildings,insurance, consumer applications such as “smart home,” healthcare and retail all will be leading areas of growth through 2020.

source: IDC

Services a Bigger Part of Video Conference Partner Sales

As you would expect, an October 2016 survey of video conferencing channel partners shows that channel partners believe the fastest-growing part of the business is services, not product sales or installation services.

Recurring services are said to represent half of total revenues. In the past, product sales have been the biggest revenue driver. With the shift of supply to cloud services, that increasing share of services would not at all be surprising.

That shift to services has been the trend in the larger value added reseller and systems integration businesses for some time, even prior to the cloud shift, and a broad trend in most other businesses as well, where services and software have become key parts of product value.  

The survey indicates that about 75 percent of channel partners sell cloud or managed services.

Microsoft Skype for Business is said to be the product with the strongest overall customer interest and was rated much higher than in 2015.  

Integrating video conferencing with persistent collaboration spaces, the newest conferencing and collaboration category in our survey, was rated the lowest of the available survey options.

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source: Wainhouse Research

Cable a Bust in Mobile, Google Coming in, Dish out, Legere Predicts

T-Mobile US CEO John Legere predicts big changes in U.S. mobile market are coming in 2017, although cable TV operator success in the mobile virtual network operator space will fizzle badly. In fact, Legere flatly rejects selling capacity to U.S. cable operators to support such MVNO operations. That might be a safe enough rejection of a big new customer, as the big U.S. cable companies already have said they will use Verizon as their wholesale partner.

Predicting cable failure also is an indirect slap at competitor Verizon, and not a prediction many others would make so boldly. It is true that cable operators have acquired and sold spectrum;  entered major partnerships with Sprint in the past and studied (in one case actually launched) mobile or wireless businesses. So it is true that, historically, cable has not figured a way to be relevant in mobile, though it claims to have such relevance in wireless (cable homespot networks).

Still, Legere does believe one new application provider will make a big effort in the U.S. mobile market sometime in 2017, with Legere’s personal belief being that it will be Google making the move. As T-Mobile US already is a major supplier to Google Fi--Google’s existing Wi-Fi-first mobile service--he might be basing that on requests T-Mobile US has had for additional capacity or wholesale services in 2017.  

Legere also believes Dish Network, with its trove of mobile spectrum, will cease to exist as an independent entity in 2017. That implies a belief that Dish will be acquired, and the most logical candidate, many believe, is Verizon, which needs more spectrum. If that seems fanciful, consider that some are speculating (in other words, dealmakers are trying to stimulate) that Verizon and Comcast could merge. That deal would likely require such huge divestitures of fixed network assets (and to whom) that Verizon would effectively cease to be a fixed network services provider.

Verizon might actually entertain that notion, but antitrust issues would be huge. Comcast already has enough share of the fixed services market that it could not easily pass the historic screens regulators have used to limit the size of any single firm in mobility or fixed services. The easiest way to avoid violating that screen is to divest all Verizon consumer fixed assets. Who the buyer might be is the issue, even if Verizon were to agree to divest.

Likewise, Softbank might hope to make another run at acquiring T-Mobile US. The big hurdler last time was excessive market concentration, using a standard antitrust tool. That noted, telecom service provider markets tend to be highly concentrated over the long run. The issue is how to promote competition under such circumstances.

It remains to be seen whether a minimum of two providers is enough to sustain robust competition over the longer term. Many would argue the evidence tends to suggest long-term robust competition with just two providers is difficult to sustain. Three suppliers seems a minimum.

The U.S. market looks to be unsettled under almost any combination of scenarios. Even if Sprint and T-Mobile US somehow were to gain approval to merge (leaving three roughly equivalent-sized mobile leaders), Comcast, Charter Communications and likely Google would have to be accounted part of the competitive mix.

All things considered, it would appear there is a greater chance of disruptions in the mobile space than in the fixed network space in 2017. And there is just as certainly little chance the U.S. mobile market will be anything but dynamic for the foreseeable future.

Will V2V Survive Contact with 5G and Wi-Fi?

Automakers and mobile service providers have had differing views about how to supply vehicle-to-vehicle communications, but 5G could settle the matter. Car manufacturers, working with the the National Highway Traffic Safety Administration, have been developing V2V communications for about a dozen years.

In fact, V2V proponents have been arguing with Wi-Fi interests about allocation of new unlicensed spectrum in the 5.9-GHz range that is intended to support V2V systems. And mobile carriers have good reason to argue that 5G will be a better choice by the time V2V is supposed to start being widely deployed.

Already, Audi, BMW and Daimler have formed an association with Qualcomm, Huawei, Ericsson, Intel and Nokia to study the potential of 5G networks for vehicle-to-vehicle communications.

In Europe the 5.875 GHz to 5.905 GHz frequency band is set aside for transport safety applications. V2V also is known as VANET (vehicular ad hoc network).

The thing about proposed new network standards is that delay tends to reduce or eliminate relevance, as newer platforms inevitably arise, often the most-powerful new platforms being able to leverage investments already made for some other purpose. So Wi-Fi, created to support in-building local distribution of traffic, now has emerged as a key building block for mobile communications.

Some would argue that V2V now faces too many obstacles to prevail, simultaneously having to fight off the Wi-Fi industry and facing rival platforms offered by the mobile industry, both of which arguably will have deployment economics working in their favor.

High-volume chipsets originally created to support either Wi-Fi or mobility (4G and 5G) can be leveraged to support new vehicular communications, while both Wi-Fi and mobile will have the advantage of in-place networks that have other revenue models. That will make easier the task of creating a vehicle-to-vehicle communications network.

Google's autonomous vehicle research, for example, might suggest that by the time a critical mass of vehicles equipped with the proposed V2V system has had a chance to be created, alternatives will have arisen, especially if those alternatives do not require ubiquity, but can be deployed on a “point” basis, incrementally, as users see value.

Already, some features that V2V might support already are being deployed on vehicles (lane change alerts, automatic braking, automatic parking) that might otherwise be seen as features of a new V2V system.

Given a choice between a proprietary, government-lead system moving slowly and an open, market-pushed alternative that “creeps in” as an “oh by the way” feature of systems with other value, many of us would argue the market-based system wins.

92% to 93% of U.K. Mobile, Internet, Voice Marketing Spend is Wasted

All the effort expended on marketing of mobile, fixed network voice and fixed network internet to small and medium-sized businesses in the United Kingdom might be directed to a potential “switcher” market as small as six percent to seven percent of the entire customer base, in any single year.

In fact, less than 60 percent of all SMBs in the United Kingdom, and between 41 percent and 47 percent of SMB survey respondents have never--never ever--switched from one service provider to another, a survey conducted on behalf of Ofcom found.

Only around 15 percent to 17 percent of respondents reported they had switched service providers in the last two years.

source: Ofcom

That seems an unusually-low amount of churn. Some argue that major mobile operators have annual churn as high as 40 percent.

source: S. Saravanan

Compared to other consumer services, mobile services do seem to have a higher rate of churn, compared to banking or utility services.

source: S. Saravanan

Churn rates in the software as a service business, by way of comparison, also are high, with annual churn rates as high as 58 percent a year in the SMB space.

source: KIssmetrics

Is 5G the "Next Big Thing?"

It is hard to deny the widespread opinion that 5G is the next big thing for a wide number of industries from consumer electronics to telecom; healthcare to transportation. Those hopes are likely to take longer to emerge than many believe. Some are even skeptical that there is any need for 5G, or business models that work. To be sure, there was skepticism about 4G as well

There was, in the case of 3G and 4G, a real element of build it and they will come thinking. In fact, supporters “hoped” that the faster speeds would lead to creation of new applications and revenue streams, even if nobody was sure which apps and revenues sources actually would develop.

In fact, some might argue that cost savings, in the the form of lower costs per bit, was the actual driver of 4G. On the other hand, one might well argue that 3G did succeed in making the mobile web a useful consumer experience, while 4G made consumption of video a useful and widespread consumer reality.

Many would argue the possibility that 5G really will be different, in the sense that it is being purpose built to support internet of things applications, that might not--in fact often do not need--the vast increases in bandwidth 5G will enable. Instead, it is the lower latency that will be the key enabler of some new IoT applications.

Not to be ignored, either, are the other changes in networking that will come with 5G, though logically distinct. Those key trends include network virtualization, which will lead, over time, to lower cost networks and a vast increase in ability to create on-demand bandwidth and specialized network features on a virtual basis.

Also, 5G might be the first mobile network that embraces use of unlicensed spectrum and shared spectrum in an extensive way. In fact, some leading mobile service providers (cable companies and other upstart mobile carriers) will rely heavily on use of unlicensed spectrum to support their business models.  

So 5G might well be the next big thing, because it also is happening at the same time, and building on, network virtualization, while underpinning a huge new potential wave of growth based on smart devices and systems of all types.

For the mobile industry, 5G, it is hoped, will fuel the next great wave of industry growth, beyond services and apps used by people, and based on services and apps used by machines.

Why DirecTV Now Delivered Over a Fixed Wireless Connection Matters

AT&T says it will, in the first half of 2017, conduct a trial in Austin where residential customers can stream DirecTV Now video service over a fixed wireless 5G connection. You might think video is a logical app to test over a fixed wireless link, especially when using new millimeter wave spectrum. It is that, to be sure. But it is more.

The assumption is that if millimeter fixed wireless can handle video, it can handle anything a consumer wants to do, and therefore helps validate the use of fixed wireless for access connections, something AT&T already plans to do on an extensive basis, to serve rural customers.

Keep in mind that AT&T already can use DirecTV for linear TV delivery. DirecTV Now is different, as it is an on-demand service. And that means AT&T's networks have to support single, on-demand streams, rather than supplying what is essentially a multicast DirecTV feed.

The coming millimeter wave spectrum for 5G is very good in terms of bandwidth, not so good in terms of propagation distance. That is why most believe millimeter wave spectrum will work best in dense urban areas. But there always are ways to use beam-forming antennae and other techniques to boost output, and that is likely among the attributes AT&T will want to test.

AT&T expects to have deployed more than 400,000 active fixed wireless links by the end of 2017. By the end of 2020, AT&T plans to reach 1.1 million rural locations using fixed wireless. And most, if not all of those connections might use existing platforms and spectrum, not the new 5G platforms and spectrum, unless the new tests prove otherwise.

That is why the DirecTV Now over 5G tests in Austin are important. They will help validate the business case for using 5G in fixed mode, not only to deliver video, but to support gigabit internet access speeds.

Intel Debuts Global 5G Modem

The new Intel 5G modem is said by Intel to be the first global device, capable of delivering 5G in both sub-6 GHz bands and millimeter wave spectrum in regions including the United States, Europe, Korea and Japan. The modem supports initial 5G spectrum worldwide with one SKU.

It supports the 3.3GHz to 4.2 GHz portion of the sub-6 GHz bands enabling deployments and trials in China and Europe. It also supports 28 GHz, enabling deployments and trials in the United States, Korea and Japan  

The modem comes in 2x2 and 4x4 MIMO (multiple input, multiple output) configurations, including dual-polarization sub-channelization The Intel 5G RFIC (radio frequency integrated circuit) is expected to be available in sample quantities in the first half of 2017. The 5G Modem is expected to be available in sample quantities in the second half of 2017 and full commercial production soon afterwards.

The modem incorporates key 3GPP 5G New Radio technology, including low latency frame structures, advanced channel coding and massive MIMO, Intel says.

BlackBerry Announces New QNX OS for Connected Cars

BlackBerry Limited announced its QNX Software Development Platform 7.0 (QNX SDP 7.0), a 64-bit operating system for the automotive industry and connected cars.

source: Booz and Company, BI Intelligence