Amazon Takes Social Shopping to a New Level

If you use Amazon’s “Price Check” mobile app on Saturday Dec. 10, 2011 to compare the price of an item in a brick-and-mortar store with what you can get it for at Amazon’s website, Amazon will give you a five percent break, up to $5,  if you buy that item from Amazon.com. 

What is interesting is that this is a new application of social shopping, where users contribute feedback, but where the social exchange is that users compare prices, let Amazon know, and then get value the form of discounts. In many other forms of social shopping, people post public reviews and information. 

In this case, Amazon essentially is having shoppers act as "mystery shoppers" to check out and report retail pricing at competitive outlets. Retailers do this all the time.


What is different here is the social angle, the value exchange and yet another use of mobile apps in mobile commerce.


Amazon is giving comparison shoppers a quick-and-easy way to earn up to $15 in discounts, but the promotion is making brick and mortar retailers are unhappy, of course.



The Price Check app is free and works on the iPhone and Android smartphones. To use it, you scan a product's bar code, take its picture or say or type its name. The app then gives you the Amazon price.



If you decide you'd rather buy the product from Amazon, you can put it in Amazon's online shopping cart where you'll get a discount if you complete the purchase within 24 hours.

The discount can be used on three items for a maximum of $5 off each. The deal good on electronics, toys, sports, music and DVDs sold directly by Amazon, not its third party suppliers. .

A product you're price checking also has to be an exact match to what Amazon is selling. Some might note that the promotion, though possibly enabling a shift of some sales to Amazon.com, has other value. It will feed Amazon current pricing on a wide range of products being offered by brick-and-mortar retailers all over the United States.



In fact, Amazon says on its website that the discount is “an introduction to sharing in-store advertised prices with us.”



In some cases, Amazon also will get location information as well. Qualifying products for the promotional period will have a yellow “Get deal” button next to the Amazon offer price. Amazon price check promo Dec. 10, 2011



Though it is understandable that brick and mortar retailers worry about sales volume shifting on one shopping day, they also are worried that Amazon will have a highly-efficient “mystery shopper” campaign running on Dec. 10, 2011 that no brick and mortar retailer can afford to support.



Also, some will argue, shoppers already are routinely comparing prices using their smart phones while shopping. This is just a fact of life these days, and illustrates one more way mobile commerce is being a material factor in the shopping process.

Media, Broadcast, Telco Regulatory Models Someday Will be Revisited

National Cable & Telecommunications Association president and former Federal Communications Commission chairman Michael Powell says there will be fewer distinctions between what cable does and what the Web does, over time. What Powell clearly will not want to talk about is that the same is true of the "distinctions" between telcos and cable companies in voice services. Distinctions Disappearing Between Cable, Web

It hasn't been a "live" and relevant argument since the run-up to the 1996 Telecommunications Act, but the fact remains: the regulatory regimes governing the "cable TV" business and telecommunications are different and arguably unfair in light of the fact that services sold in both industries now are functionally identical.

So the big issue is whether telcos get more freedom, by movement to the "cable" model, which is less "free" than other media, but more free than telecom companies routinely deal with. Or, one might argue, should cable companies have less freedom by being brought under the same regulatory framework as telcos face.

In the U.S. regulatory environment, newspapers and magazines and web media are the most free of regulations. Broadcasters and cable are in a middle bucket, with more rules and restrictions than media face, while telecom companies are the most heavily regulated. As the walls between industries, functions, services, apps and revenue models continue to dissolve, though, you wind up with a regulatory mess, where like services receive distinctly unequal treatment.

The issue has never been fully addressed, and might not be substantially changed the next time the nation gets ready to revamp its communications or broadcasting rules. One has no immediate sense that this is on the agenda. But the problem will remain, if and when such discussions do move to a stage where action might be taken. Which existing models ought to be applied in a new context?

Should less-regulated industries get heavier regulation, and less freedom, or should more-regulated industries receive the same freedoms their competitors enjoy? In other words, we have environments that, on one hand, reflect the First Amendment to the U.S. Constitution. So media are "most free." On the other hand, we have "common carrier" regulation, representing the least freedom. Then we have broadcasters and cable in the middle. All that might have made sense when the three distinct types of functions and businesses were that, distinct. That increasingly is not true any longer, so the regulatory environment is out of step with "realities on the ground."

It might not be a "live" issue now, but it will be, at some point.

DirecTV an Immediate Loser From Verizon Deal with Cable Ops

Many of the ramifications of the recent purchase of mobile spectrum from cable operators by Verizon Wireless are yet to be seen. But one immediate consequence of an accompanying deal between Verizon Wireless, Comcast, Time Warner Cable and Bright House Networks is that DirecTV will lose a potential partner.

DirecTV has been testing a method of modifying a standard DirecTV receiver so that it also can use Long Term Evolution networks operated by Verizon Wireless. With the recent deal between Verizon Wireless, Comcast, Time Warner and Bright House, it appears that future option, which would have allowed DirecTV to sell a dual-play package of broadband access and video, is now foreclosed.

Verizon began trialing LTE service with DirecTV in late 2010. But Verizon continues to resell DirecTV satellite video service in areas where it does not offer its own FiOS TV product.

On Dec. 2, Verizon Wireless agreed to buy 122 AWS wireless spectrum licenses covering 259 million people from SpectrumCo, a consortium of Comcast, Time Warner Cable and Bright House Networks, for $3.6 billion. That deal also includes several agreements that will enable the parties to sell each other's products. By 2015, the cable companies will have the option to sell Verizon Wireless service on a wholesale basis. Verizon Will End LTE Trials With DirecTV

Social Media Value is Tough, Expensive, to Measure

Despite demand for accountability, it often remains difficult and expensive to measure the business value of social media and content marketing, such as changes in brand perception. Small businesses might simply argue they have to make wise decisions and plow ahead without clear evidence, as small businesses typically do in other parts of their operations. 


In fact, all the good advice in the world is not likely to convince many, if not most marketers at smaller organizations that it makes good sense to spend more on measurement than on the actual campaigns, you might reasonably argue. But that isn't easy even for the larger enterprises, either.


"Our philosophy is that we need to measure metrics that are related to business value," says Irfan Kamal, Senior Vice President, Digital/Social Strategy at Ogilvy & Mather. "Does social media change brand perception?"

"Does it increase consideration?" he asks. "Does it drive actual sales for the brand?"

What often gets measured instead are what what Kamal says are diagnostic or optimization metrics such as the number of Facebook fans, the Twitter follower base, the size of a group or a message board or a LinkedIn group. All the metrics that are easily visible are the ones that end up getting measured most often. Impact hard to measure


"The problem is that it’s unclear whether there is a direct relationship between these metrics and genuine business value," he says.


"What we are trying to do is go the next step and understand first, what is the relationship between the metrics we can measure and business value, and second, if we can find a good relationship, what are the metrics that we should be measuring for business value?"


The other problem, aside from the difficulty of measurement, is that social media measurement can be expensive, one might say.

"A big part of what we do is try to figure out the best way to measure within specific budgets, and not all programs allow for really expensive measurement tool integration," he says.

Existing tools such as TweetReach and Google Analytics offer ways to measure things like reach relatively well, he says. But he acknowledges the cost issues for more sophisticated measurements. 

"I do think that the more complex measurements, such as the impact on brand perception or sales that are indirectly driven by social media, are important to measure, but they are somewhat more expensive to measure," he says.

"It would be great if some of the social media companies realized the importance and made these measurement capabilities more accessible to a wide variety of companies, from small businesses through to the largest brands," says Kamal.

Google to Launch Mobile Reading App "Currents"

Google has launched a new social tablet and smart phone reading app, with 150 magazines contributing free subscriptions. 


Users also can  add RSS, video and photo feeds, public Google+ streams and Google Reader subscriptions they already are following. 


In addition, users can also use the trending tab to discover related content. Currents is highly social.

Google Currents is integrated with Google+ so users can share articles or videos twith their circles. Publishers can also associate their account with Google Analytics in order to increase their awareness of consumers’ content preferences, device use and geographic distribution.



“Currents”  is a mobile app available on both Android and iOS devices. You can download the app here for either Android or iPhone devices.



The app was developed to allow publishers to display content in a magazine-style format, on tablets and smart phones with HTML5 compatibility.



Google says it has worked with more than 150 publishing partners to offer full-length articles from more than 180 editions including CNET, AllThingsD, Forbes, Saveur, PBS, Huffington Post and Fast Company.


The content is optimized for smart phones and tablets, allowing users to intuitively navigate between words, pictures and video on large and small screens alike, even if when offline.



Currents also has launched a self-service platform that gives publishers the flexibility to design, brand and customize their web content. 


For example, if you’re a small regional news outlet, a non-profit organization without access to a mobile development team, or a national TV network with web content, you can effortlessly create hands-on digital publications for Google Currents, Google says.

Consumers want 'free stuff' from social, marketers think they 'want to be heard' | Econsultancy

A study from the Chief Marketing Officer Council and Lithium reveals a disconnect between what senior marketers think consumers want from social media, and what people actually want.

According to the 1,300-plus consumers surveyed online globally, there was an expectation that a brand follow, like, post or preference in a social media environment would enable a person to be eligible for exclusive offers (67 percent), have the opportunity to interact with other customers who share the same experiences (60 percent) and gain access to games or contests (65 percent).


In other words, consumers view a social media follow, like, +1 or other "vote" as part of a transaction. Users assent to public support for a brand, in return for value of some sort. 

When the same question was asked to over 120 CMOs, the results were very different. The CMOs saw social engagement is more of a by-product of quality content. They tended not to believe they needed to provide incentives to foster and maintain loyalty among their followers. 


According those surveyed, customers interact with brands because they; want to be heard (41 percent) or are looking for news or information about products (40 percent) Consumers want 'free stuff' from social


It appears consumers view social engagement in much the same way they see TV commercials, namely that it is an exchange of value. In exchange for ad exposure, viewers get free, no incremental cost or subsidized access to content.


Apparently, much the same sort of thinking is at work with social engagement mechanisms. Amazon recently took advantage of that sort of thinking, offering shoppers discounts of up to $5 for checking prices of products in retail outlets, and where Amazon sells the identical item, buying from Amazon, instead. Amazon "Price Check" promotion


That's a value exchange. The user checks a price, lets Amazon know, and then gets something in return if that item is purchased on Amazon. 

Mobile Commerce Provides Lots of Value, and Not Just Transaction Fees

You might think that mobile payments are significant because they represent a potential shift of transaction fee streams from one set of providers to another.


That's true.  AITE Group, for example, in January 2010, it estimated that mobile payments would reach $214 billion in 2015, up from $16 billion in 2010, a 68 percent compound annual growth rate (CAGR) between 2010 and 2015. U.S. Mobile Payments


To the extent that all those payments will involve a transaction fee earned by some entity, you see the upside. But the value doesn't stop there. 

To give you some idea of what that can mean, eBay Chief Executive John Donahoe said otal payment volume transmitted by mobile devices through PayPal's system will be more than $3.5 billion in 2011. That helps PayPal.

But there are other ways value can be created. EBay, which owns PayPal, also uses smart phone apps like Red Laser, which lets shoppers scan bar codes to check prices online and at other retailers nearby. You might wonder what value that provides. For one thing, it allows eBay to do “comparison pricing” that retailers routinely conduct, but more efficiently, since eBay can rely on its users to do the work. PayPal mobile payments volume

Amazon.com is doing similar things, with a twist. On Dec. 10, 2011, Amazon will offer comparison shoppers a five percent discount, up to $5, on any item whose price is checked, in a retail store, using the Amazon “Price Check” app, and which is purchased on Amazon within 24 hours of the price check.

Though you might say this is a test of how much sales volume potentially can be shifted by offering such discounts, it also is a way for Amazon to gather quite a lot of infomation on retail pricing at brick and mortar locations selling the same merchandise that Amazon is selling.

Mobile Remittances: $55 Billion in 2016, or More?

Nearly $55 billion in international remittances will be sent using or received on mobile devices in 2016, up from less than $12 billion this year, Juniper Research now predicts.


Growth is currently being led by mobile remittances sent across established migration corridors such as the United States and Mexico, as well as intra-regional transfers across Africa and the Middle East, as migrant workers send money back home from foreign countries.

Mobile remittance forecast by Celent

However, substantial inter-regional and intra-regional activity from and within Western Europe will see this region account for the largest remittance volumes by the end of the forecast period. $55 billion in mobile remittances by 2016


In 2008, Celent estimated that remittances were sent by some 150 million people on a regular basis. By 2050, the number of immigrants worldwide is expected to increase to 280 million, leading to greater remittance volumes and transactions.

In 2006, formal and informal remittances were estimated to be around $450 billion, Celent estimated at the time. Big remittance market 

One of the big issues is how much share mobile remittances can take of the total remittance market. 

Retailers Embracing Mobile Commerce, Though Unevenly

A survey of 110 retailers conducted by Lauren Freedman and the  e-tailing group indicates that digital marketing spend will grow in 2012 across the board. But there are important changes brewing, the survey suggests.  In the coming year, retailers said they may shift those priorities to allocate more spending to search engine optimization, natural search, social strategies (blogs, social networks), email, and re-targeting or behavioral marketing.





Though it seems not to have been a specific question for this particular survey, use of mobile channels also is growing, virtually all studies suggest.  


 In the United States alone, 91 percent of the population owns a cell phone according to Cellular News. A  consumer survey by Sterling Commerce confirms retailer interest in unifying mobile and other channels.  


In spite of these staggering statistics, according to the e-tailing group’s 9^thAnnual Merchant Survey, 73 percent of those surveyed “are not engaging shoppers in mobile in any way.” Still, we seem to be very early in development of mobile channels. Were it comes to "digital" marketing, other channels still seem to be getting most of the attention, at the moment.


 


Regarding revenue generation, merchants surveyed said that they expect top-performing channels will be SEO (31 percent), mobile (m-commerce, iPads, mobile application 30 percent) email (22 percent), paid search (22 percent) and social media (14 percent). Retailer Digital Marketing Spend to Increase Across All Channels in 2012

Verizon Blocking of Google Wallet Likely About Control of Credentials Loading

The decision by Verizon Wireless not to support Google Wallet natively when Verizon begins selling the Galaxy Nexus smart phone in December 2011 illustrates in a couple of ways how decisions about "mere" technology choices can have important business implications.

Verizon Wireless, which owns a significant portion of Isis, a competing mobile wallet system, has clear enough reasons for not wanting to help a competitor gain an advantage, at a time when Isis is not yet been formally launched.

Verizon Wallet says Google Wallet, unlike most apps, "needs to be integrated into a new, secure and proprietary hardware element in our phones." That almost certainly means that Verizon Wireless, as do most mobile service providers who have thought about the matter, want to maintain control over the wallet credentials process by embedding the loading of user authentication information into the subscriber information module (SIM), that a mobile operator controls.

Handset suppliers would prefer an approach that puts the credentials loading process into a new, and separate, element that is not under the control of service providers, again with an eye to avoiding carrier control of the process. At least for the moment, it appears Verizon is going to get its way, at least in terms of maintaining wallet credentials loading through the SIM.

The Google Nexus that works on GSM networks has the NFC chip embedded in the battery, and Verizon might want to have the NFC chip in the SIM card. Others have argued for creating a new micro-SD card that would be the locus for credentials loading. 

Putting the credentials loading into the battery-based element means a user could switch carriers and retain the use of the app. So does the micro-SD approach. Where can the credentials loading occur? 

Since users must get new SIMs when they switch service providers, you can see why there is more potential leverage for a mobile service provider if the credentials management process is in an element controlled by the retail service provider. 

Obviously it should be possible to use the Android Market to allow users to download Google Wallet. One suspects that option will occur at some point, though one also suspects Verizon Wireless might try and extract some concessions from Google to support that capability. Whether payments by Google to use the features of the SIM could be among those business details is unknown.

But Verizon says it is "continuing our commercial discussions with Google on this issue. Verizon Blocks Google Wallet


How mobile payment and mobile wallet credentials get loaded onto a user's phone is way too much "in the weeds" for users to worry about. But the resolution of the question could have significant revenue implications for service providers and wallet providers alike. 

Coke's "Un-commercial" Couldn't Fail to Get Attention

In a campaign that could not fail to generate word of mouth and media attention, Coca-Cola Portugal Coke planted a wallet in a busy Lisbon shopping center with a hidden camera.

In the wallet was $200 and sticking out of the wallet was a ticket to a "hot" soccer match. You can guess the purpose of the hidden camera: how many people would take the money, the ticket, both, or turn the wallet in to "lost and found?"

Fully 95 percent of the people who found the wallet turned the wallet, with contents intact.

Though all these good people probably expected nothing in return, Coke gave them a ticket to the soccer game of their own, courtesy of Coke. Coke's Social "Un-commercial"

Clever. Original. And sure to get attention.

Kindle Fire Usability Findings by Jakob Nielsen

The Kindle Fire and other seven-inch tablets have either a glorious future or will fail miserably, says usability expert Jacob Nielsen. " I doubt there's a middle path in their future," he says. 


Essentially, user experience requirements for 10-inch devices are one thing, smart phone design another, while seven-inch tablets present a third platform that has to be designed for distinctly from either full-screen or smart phone apps.

"Re-purposed designs from print, mobile phones, 10-inch tablets, or desktop PCs will fail, because they offer a terrible user experience," he says. "A seven-inch tablet is a sufficiently different form factor that it must be treated as a new platform."


On one hand, seven-inch devices do not support easy, pleasant, and efficient use of the broad range of user interfaces optimized for other form factors. In other words, seven-inch screens are too small to easily browse full websites, and yet too big to carry with you at all times like a mobile phone.


On the other hand, they are capable enough to provide good usability when designs are optimized for the platform. The screen is large enough to show pictures and full-color illustrations, and it can also support fairly efficient navigation and other user actions, he argues.

Kindle Fire Usability Findings

Is There a Killer App for LTE?

It has become the conventional wisdom that there is no "killer app" for fourth-generation mobile networks. Orange's LTE/EPC Program Director Rémi Thomas says "LTE is not driven by a killer application, but it will essentially be driven by capacity needs," said Thomas. No Killer App for LTE

It might be more accurate to say there is, at present, no stand-out killer app for 4G networks. Some think if such an app is possible, it will emerge, rather than being "planned for." Killer app is a myth

But it would be odd, perhaps almost unprecedented, for 4G mobile networks to succeed wildly, which is what virtually everybody expects, without the emergence of some new qualitatively different experience or value driver. 

It might be more important to say that "nobody knows" what such qualitatively-new experiences will emerge. But some find say it is unlikely 4G will remain "3G but faster." Some might suspect that 4G will lead to new apps that we originally believed would happen on 3G networks. 

About a decade ago, when the first commercial 3G networks were introduced, there was much talk about innovation and new applications the networks would enable, and the list looked remarkably similar to what people claim will happen with 4G. 3G history

E-commerce apps, for example, were thought to be an important 3G innovation. That is claimed for 4G as well, with more conviction, perhaps. “The availability of 3G services is going to have a profound effect on electronic commerce,” it was said. 

That also is said of 4G. It was said that “3G works better” than 2G, and that was true. It also is said of 4G, and also is true. 

3G wireless was sometimes characterized as a wireless version of the Internet, encompassing Web browsing, e-mail and media downloads. That sounds like 4G as well.

Over time, though, a distinctive lead application does tend to develop, though it might take some time. Voice and texting were the lead apps for 2G, while Internet access and email have emerged as the "killer app" for 3G, it can be argued. 

Exactly how 4G products and services evolve is highly uncertain at this time and very similar to when wireless operators first deployed 3G networks, Fitch Ratings has argued. 

For 3G networks, the industry did not offer a good view of this until smart phones, in particular the iPhone and other similarly oriented devices, drove significant consumer uptake for broadband data, as opposed to the earlier growth provided by 2G email services.

Longer term, Fitch expects the majority of operators should achieve data device penetration rates of at least 70 percent to 80 percent. If so, mobile broadband will collectively represent the killer app for 3G. But what about 4G? Is it just "3G with more speed," or something else?

Fitch expects that 4G services will likewise be defined by innovative devices, perhaps tablet oriented, with new content applications, including video that will drive significantly increased demand for data. If so, 4G might ultimately be different from 3G in providing a platform for different types of end user experiences.

There is a line of thinking that the value of 4G might initially accrue in large part from significantly-lower the cost per-bit costs to provide mobile broadband. Verizon Wireless, for example, believes the cost to deliver a megabyte of data on 4G with LTE will be half to a third of the costs of a 3G network.

But if the 4G experience is anything like what we've seen with 3G, it might take years for the answer to be found. 

Family Data Plans are Coming

Verizon Wireless expects to offer family data plans “sometime in 2012,” says  Verizon Communications CEO Lowell McAdam. 

The long-awaited move should have roughly the same impact on mobile broadband adoption as family plans for voice and texting have had on mobile adoption, namely drive mobile broadband usage and accounts very high, over a relatively short period. Family data plans coming

Family plans for voice and data were a major factor in driving widespread adoption of mobile devices in entire households, and family data plans are fully expected to spur adoption of smart phones and data plan usage.

In 2003, family plans accounted for less than 10 percent of the U.S. market, where by 2007 they accounted for 41 percent of adult mobile subscriptions, and 56 percent of new activations. Family plans revolutionize the market

In 2005, researchers at the Yankee Group noted that “family plans have been the main driver of teen cell phone adoption during the past few years. Family plans drive teen mobile adoption

As recently as 2007, 71 percent of all family plans involved only two lines, while Ericsson Business Consulting suggested at the time that nearly 60 percent of family plan accounts, the master account holder is using 75 percent or more of the monthly bucket minutes. Impact of family plans

Contrast that with the situation late in 2011, when the heaviest usage is probably not on a parent’s line, but on the teen and young adult devices. That would be true both for voice as well as text messaging. In many families, it was children who got parents using text messaging, which were, pre-2007, “data services,” as mobile broadband had not begun to be adopted on a wide scale.

Most observers also would say that family plans drove text messaging adoption and contributed to lower churn, as well.

A study by Strategy Analytics suggests that 60 percent of smart phone owners want a single, shared data plan to connect multiple devices like tablets, smartphones and laptops. About
50 percent of smart phone owners are interested in connecting multiple devices through tethering to their smart phone and 40 percent have an interest in a standalone 3G portable WiFi router (like the MiFi from Novatel Wireless) to connect all their devices. Consumers want family data plans

Executives at AT&T and Sprint also have been talking about the changes for years, and it appears the plans finally will be offered. Though it appears specific policies are not yet fully worked out, the plans will encourage purchases of smart phones and data usage across a range of devices on a single account. Policies not set yet

"I think in 2012 we will see it," McAdam said. UBS webcast

At the moment, not that many service providers offer family data plans, and most plans are not the robust plans we typically see in the U.S. market for texting and voice.

Since the spring of 2011, Orange has been offering two devices per data plan, bundling 600 minutes, unlimited texts, unlimited BTZone WiFi access, and 2 GBytes of  shared data across for iPad and iPhone users, for example, with a cost of £99 a month for 16 GByte plans, according to Infonetics Research.

Typical U.S. family plans might allow as many as five devices to share texting and voice buckets. The number of devices presumably would be greater, to include tablets and tethering, for example, once the major U.S. carriers start to introduce the new plans. .

Vodafone Ireland offers shared mobile broadband for business users with a 5GB limit, shared across however many users is required, for a fee of €7.50 per connection per month, with each additional increment of 5GB being another €10.

Optus offers a plan connecting five users each on a 4 GByte shared plan, with 20 GBytes of data pooled between those five users each month.

Infonetics forecasts that approximately 15 percent of all smart phones (with some regional variation) will be sold as part of a shared data plan by 2015. Likewise, 15 percent of tablets will be sold as part of such a plan by 2015, and that percentage will continue to grow beyond this point, according to Shira Levine, Infonetics Research directing analyst, and Richard Webb, Infonetics directing analyst. Family data plans set to grow

Infonetics forecasts for penetration of family data plans likely will be revised upwards once the U.S. service providers start to introduce the new plans. As family voice plans made feasible use of mobiles by children and teen-agers, so family data plans will expand mobile data usage from a couple of devices, or a few devices in a household to allowing every device to be a smart phone, plus encouraging users to buy network-capable tablets and e-readers.

To the extent that mobile service providers wish to encourage network use by tablet devices, the family plans will be the key enabler of more-rapid adoption.

Zero Moment of Truth from Google

Today we're all digital explorers, seeking out online ratings, social media-based peer reviews, videos, and in-depth product details as we move down the path to purchase, says Google, which as a free e-book dealing with the "zero moment of truth" in all shopping. ZMOT from Google:

"Winning the Zero Moment of Truth" is a powerful new eBook by Jim Lecinski, Google's Managing Director of US Sales & Service and Chief ZMOT Evangelist. Jim shares how to get ahead at this critical new marketing moment, supported by exclusive market research, personal stories, and insights from C-level executives at global leaders like General Electric, Johnson & Johnson, and VivaKi.


If you're a marketer, a CEO, a sales rep, or an aspiring entrepreneur, this eBook on marketing strategies and the ZMOT will help you understand this shift in the marketing landscape and show you the strategies it takes to win.

Do Service Providers Earn Back Their Cost of Capital?

To the extent that all U.S. broadband networks rely on private capital to invest in new broadband facilities, the question of financial return for such investments is fundamental. After all, telcos, cable companies, satellite and wireless providers go to private markets for the funding to build their broadband networks, and those investors have lots of choices.

If the financial return, and the risk, of broadband facilities investment do not roughly match or exceed what is available from alternative investments, those investments will not be made, and it won't matter much how much people scream about what they can't get.

In that regard, it is fair to note that many investors no longer consider telecom an especially desirable investment. It is rare these days to find a venture capitalist willing to consider backing a new telecom equipment supplier, for example. To the extent that interest remains, it is centered on mobile and mobile applications.

And there are reasons for that investor caution. Any perusal of industry statistics or quarterly or annual financial reports, at least in developed markets, will show stress around the traditional revenue sources most communications or video suppliers rely on. 

Growth rates are down, subscriber trends are negative in many cases, profit margins are lower than has been the case historically, and there is more competition and a shift of value elsewhere in the Internet, broadband and wireless ecosystems. 

In fact, Bernstein analyst Craig Moffett argues that, over the last decade, the returns on invested capital in communications networks in U.S. markets have been anemic, at best. He argues that economic value creation has been, in aggregate, barely positive.

Wireline networks have the weakest returns on invested capital with a 1.5 percent gain over the last decade. Wireless networks had a meager return of 0.3 percent. Cable garnered a 2.5 percent return. Satellite networks had the best return on invested capital at 5.5 percent. Others, including AT&T, Comcast, Dish,Sprint and Verizon, have negative returns, Moffett argues.

You might argue that though low, those are positive numbers. True enough. But there are borrowing costs, and in many cases the cost of "good will" associated with acquisitions. Add those in and returns can go negative pretty quickly.

It probably goes without saying that potential end user shifts in the direction of over the top video entertainment do represent a threat to subscription video revenues now earned by telcos, cable and satellite companies.

A new study by Edelman suggests U.S. consumers are are disenchanted with their entertainment choices. Only about 17 percent of respondents think entertainment sources today provide “very good” or “excellent value.” That should send up a warning flag about the latent potential demand for different video and other entertainment options. 

Declining entertainment value obviously creates a gap that competing providers might be able to exploit. Unlike many other businesses, though, the video entertainment business is unusually controlled by content creators and distributors, rather than distributors. DirecTV, for example, recently had unusual success with its “Sunday Ticket” service delivering National Football League games, says Michael White, DirecTV Chairman, Chief Executive Officer and President.

Those sorts of issues mean there is potential for alternative distribution methods, so long as content providers are willing to cooperate. For fixed-line access providers, there are other issues, beyond a threat to existing video service revenues, though. Some would argue that fixed networks already have trouble earning a return on invested capital that justifies deploying that capital.

Whether or not a provider of goods and services can remain in business is not a consumer's problem, of course. But the apparent difficulty of making money in the fixed-line service provider business is a key concern for service providers, naturally. 

Beyond that, to the extent fixed access networks are seen as a key underpinning of economic growth, and a "national resource," there are key public policy issues. Specifically, if robust and high-speed broadband access is a "public good," inability to earn a return on invested capital is a broader problem. 

Where is the Value of a Fixed Line?

One often hears it said that “broadband is the anchor service” for fixed-line service providers in the future. One also frequently hears that new value-added services would be a healthy antidote to service providers becoming “dumb pipe” access providers. One sometimes also assumes the growing use of "connected devices" benefits mobile service providers (it does), but not fixed-line providers.

All of those statements are true, but analysts and observers might be missing the growing potential of the “dumb pipe” access business, especially as the home and business environments increasingly feature the use of many different “untethered” devices, and as more users get used to switching even their mobile devices to untethered fixed line connections (Wi-Fi). Razorsight Blog


the value of a fixed-line broadband connection will grow as each additional connected device is added.

In August 2011, for example, the share of non-computer traffic for the U.S. market increased to 6.8 percent. The largest percentage from this share came from mobile devices, which drove 4.4 percent of total digital traffic in the U.S. market. The second largest driver of non-computer traffic was the tablet category, contributing nearly two percent of total traffic.



As the share of U.S. non-computer traffic rose over the past four months, the percentage of that traffic driven by tablets has risen from little more than 20 percent to nearly 30 percent. In May 2011, 22.5 percent of non-computer traffic came from tablets. By August 2011 that figure had grown to 28.1 percent, eating into the share of traffic garnered by mobile devices and other web-enabled devices.

That is but one example of how use of connected devices is changing the value and use of fixed-line broadband connections.



In fact, the GSMA expects the number of total “connected” devices to increase from nine billion in 2011 to more than 24 billion in 2020. “Mobile connected devices” (presumably those with a subscriber information module) will grow 100 per cent from more than six billion in 2011 to 12 billion in 2020.

Do Data Caps Alleviate Congestion?

It is an unquestioned fact that a small percentage of broadband users, on virtually any network, use vastly more data than typical users do. The top one percent of data consumers account for 20 percent of the overall consumption, for example. What isn't so clear is that data caps actually do anything to help manage congestion at peak hours.

Are heavy users the problem during peak hours? The question might seem silly. If the big problem for an access provider is peak hour congestion, then heavy users would seemingly have to be part of the analysis. But the question some would ask is “who are the heavy users, at peak hours?” That might be a different question than “who are the heavy users, over a billing period?”

Some might say heavy users are just good customers. Of course, usage is not revenue. Most access providers might argue that the best customers are those who pay the most each month, while using only as much data as most other typical users. Razorsight Blog

Social Communications Patterns Different from Voice

Those of you familiar with the typical voice usage pattern will find this graphic by Dan Zarella interesting. It shows that Facebook sharing ("communications") happens on weekends, in contrast to voice traffic which tends to happen on weekdays. Contagious content


Some would also note that much website "commenting" and reading tends to happen on weekends as well, suggesting that perhaps people engage in digital communications on weekends because that is when they have time to spend on social sites, read, watch and then share.


  


On the other hand, the data is not completely conclusive. Other studies suggest that the amount of Facebook content creation is fairly even throughout the week, though consumption might be said to peak mid-week, on Wednesday. Facebook shares and reads





But Zarella suggests Twitter "retweet" activity shows yet a third pattern, building during the week and then falling on weekends, suggesting people are reading during the work week, and then cutting back on weekends. People retweet when they actively are reading, in other words, implying that Twitter is getting used less on weekends.





Friday is the best day to get retweets, Zarella says. The click-through-rate of emails ist best on Monday and Saturday, as well. Less content is published on the weekend, therefore more comments are compiled on Facebook on Saturday, says Zarella. Best days for sharing, consuming