Mobile Internet Access Now Makes a Big Difference in "Access" Domain

If there are any certainties, it is that "everyone" agrees internet access, and faster access, are good things that "everybody" should have. That typically means "most people" approve of measures to improve access and speeds in rural areas and for poorer people.

One recent example: Tennessee Gov. Bill Haslam has signed the Tennessee Broadband Accessibility Act into law, releasing $45 million, to be disbursed over the next three years, in the form of grants and tax credits for Internet Service Providers (ISPs) making broadband service available to unserved homes and businesses.

source: StatCounter

Connected Nation says the plan allows Tennessee’s private, non-profit electric cooperatives to provide retail broadband service and make grant funding available to the state’s local libraries to help residents improve their digital literacy skills.

Observers can applaud the new efforts, while also noting that consumer preferences appear to be changing. It appears that virtually all the growth in broadband usage since about 2013 has come either from mobile or some other method of gaining access, based on a reported decline in home internet access purchasing since 2013.

There was a seven percent net gain in internet usage between 2013 and 2014, even as fixed network access dropped two percent. That suggests consumers are opting increasingly to use the internet significantly or primarily on their mobiles.

In the U.S. market, about 12 percent of all internet users relied solely on mobile only for internet access.

source: eMarketer

About six percent of Tennessee homes are unserved, studies have concluded. The bigger problem is the percentage of homes that do not have access at speeds at least 25 Mbps.

Perhaps 17 percent of Tennessee homes apparently did not have 25 Mbps access in 2014, while 66 percent did have such access.

Fixed network adoption in Tennessee seems to have peaked about 2013, even as internet access adoption climbed to 81 percent.  

That trend, reported in other earlier studies, suggests that mobile internet now is what is driving incremental subscription growth.

A related trend--faster speeds--could also affect our statistics. Some access lines using digital subscriber line could shift to fixed wireless as Verizon and AT&T turn to fixed wireless, including 5G variants, to boost access speeds.

How those lines are counted also could affect fixed access adoption figures. There is a logic to counting a fixed wireless connection as a "fixed" connection. There also is a logic to counting it as a "mobile" connection, if supplied by a mobile operator's network.

The point is that all things related to use of the internet, its apps and devices change with time. It almost does not make sense to distinguish between "broadband" access and ""internet access." It no longer makes sense to ignore the huge amount of internet access that happens in the mobile domain.

Nor, where it comes to measuring "broadband" or "internet access" progress, can be ignore the role played by mobile internet access.

source: Connected Tennessee

AI No Longer a "Science Project"

source: Tata Consultancy Services

Some technologies are in development for such a long time it seems as though they always will be “science projects,” not commercial realities. That actually is not true for artificial intelligence, which is being used to reduce electrical use at data centers or expedite customer service interactions.

Amazon Web Services uses a compute capacity forecasting model driven by machine-learning (artificial intelligence), AWS CEO Andy Jassy said.

For example, AWS uses sales team efforts (who they visit, when)  to forecast demand. The company also has used AI to predict where it has to store excess components, he adds.

All that helps AWS control its capital spending.

AWS also uses AI to reduce fraud, bad debt, and the number of customers who didn’t get their goods and suppliers who didn’t get their money.

AI has been important for content and search activities. Bing uses AI to support search operations, for example. Other firms use AI to personalize content for discrete users.

Also, sales automation, an older trend, now is being boosted by application of AI to allow more predictive value, not so much “what happened?” but “what will happen next?”

Insurance payments are another area where AI is applied to streamline operations. Others use AI to automate chatbot interactions.

Uber uses AI to personalize rider interactions, such as offering suggested destinations based on your current location and past habits. Expedia uses AI for fraud detection and better travel recommendations.  Banks use AI for phone-based customer service interactions.

Tata Consultancy Services says enterprises it surveyed already are using AI in 63 core areas,  most frequently to detect and fend off computer security intrusions in the IT department.

Capex Estimates Hinge on Assumptions, Since it All is At the Margin

Assumptions always matter when conducting studies. But assumptions also are important when looking at levels of capital investment at aggregate levels. Firm priorities can vary. Industry segment patterns can be quite distinct. Also, "capex" includes all manner of investments not directly related to network investment. 

It is worth noting that “capex” includes lots of spending (trucks, customer premises equipment, international spending, smartphone leasing, buildings and computing gear) that might not contribute to our assessment of “network” investment.

Also, big mergers and acquisitions, plus spending on customer premises equipment, can skew reported capex. When total spending is deemed to have changed in low single digits, such nuances can make the difference between growth or decline, on a reported basis.

USTelecom’s seventh annual report on U.S. broadband investment numbers is not available yet, but “our initial analysis strongly suggests that investment in 2016 continued to trend downward following the Federal Communications Commission’s (FCC) adoption of the 2015 Open Internet Order,” says Patrick Brogan, UST VP.

Data compiled from internet service providers representing 90 percent to 95 percent of annual industry capital expenditures, suggests the dip in broadband investment UST reported on in 2015 was not a one-off occurrence.

In 2016, capital expenditures was $71 billion, down from $73 billion in 2015 and $74 billion in 2014, UST says, an amount $2.5 billion to $3 billion lower in 2016 than it was in 2014, the year before the FCC adopted Title II utility regulations.

The amount of U.S. capital investment  is highly contested. Clearly, cable TV operator capex was up; fixed network capex was down and mobile capex was up, though one has to adjust for the impact of handset subsidy accounting rules. Financing of smartphone handsets is “capex” under accounting rules, but does not help us understand changes in network capex.

That noted, some studies suggest higher capex under common carrier rules, while others argue the opposite case.  

For others, what would have happened is the key issue.

source: USTA

Claims by some that broadband provider capex increased in 2015 and 2016 ignore accounting adjustments for certain non-material items like leased cellphones and acquisitions, such as AT&T’s merger with DirecTV and a Mexican wireless operation, UST argues.

The crucial question is what would have capex been if Title II had not been imposed, controlling for other factors.

IoT Connectivity: "All of the Above"

By most estimates, device connectivity revenue might represent as little as five percent or perhaps 10 percent of the new revenue to be created by most internet of things applications and services. Among the reasons is that existing connectivity solutions could well play a part

Short-range access methods such as Bluetooth, Wi-Fi, and 802.15.4, for example, could be device connectivity options that leverage existing network access services. To the extent that happens, nearly zero incremental access revenue is created.

ABI Research forecasts IoT will represent 15 percent of Wi-Fi, 27 percent of Bluetooth, and over 60 percent of 802.15.4 device shipments by 2022.

LPWAN and legacy M2M cellular technologies are set to ship nearly 575 million chipsets by 2022, growing faster than any short-range connectivity solution across IoT verticals.

ABI Research finds that cellular and LPWAN technologies, often perceived as more reliable than short-range connectivity solutions, require less intermediary gateways, can support greater distances between end nodes, and scale from the very smallest to the largest number of end devices, while providing a battery life that exceeds 10 years.

It is reasonable to assume widespread use of existing short-range access methods to support consumer wearable apps. It might not be so much the case for enterprise and business apps, which might require higher perceived reliability or reach.

“These technologies are specifically designed for IoT and are arguably much better matches for outdoor, larger-scale IoT applications due to their abilities to target greater coverage areas, their ease of deployment, and their greater scalability,” says says Andrew Zignani, Senior Analyst at ABI Research.

Wholesale is Among AT&T's Smart Cities Revenue Opportunities

There seems to be growing recognition that internet of things will create incremental revenue opportunities for access providers, but not as much incremental revenue as will applications in a number of vertical settings, ranging from water and lighting grids to urban transportation and parking.

Connectivity alone accounts for between five percent and 10 percent of the smart cities value chain, says Mike Zeto, general manager of AT&T's smart cities business unit. Among the opportunities AT&T sees is the chance to license its platforms to other telcos, providing a wholesale applications capability that is subscriber information module based, and can then be bundled with the access services partners already operate.

source: AT&T

Business Case is the Big Issue for 5G

Bob Everson, mobility domain leader for Cisco’s Global Service Provider segment, points out that a  clear business case as their most significant service provider concern about 5G. That is logical, considering that the big new use cases for 5G are more about internet of things and non-human users, than new use cases for humans. Fixed wireless would seem to be the big new opportunity, near term. 

Advanced 4G Underpins 5G, Says AT&T Director Brian Daly

Brian Daly, AT&T director of core and government/regulatory standards, emphasizes not only that 4G will underpin 5G for a long time, but also that 5G is about both fixed and mobile access.