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Showing posts from April, 2017

Verizon "Very Confident" in Spectrum Position

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Most informed observers outside of Verizon believe it will have to boost its spectrum assets. But Verizon continues to insist it is “very confident” with its present and potential spectrum assets, according to Matt Ellis, Verizon CFO. “We have significant opportunities to continue to grow within the spectrum holdings that we currently have; we’re refarming spectrum as we've talked about for a while; we still have the AWS-3 spectrum; and then unlicensed,” said Ellis.
It is not an unrealistic position. Even if, historically, gaining new spectrum has been the main way mobile operators have added new capacity, using smaller cells is the other typical way additional gains have been achieved. With the fiber deep architectures Verizon is pioneering in Boston, it is creating the backhaul infrastructure to do just that: add small cells to reuse existing capacity.
So, in terms of the physical options, Verizon does not absolutely need more spectrum to add more capacity. On the other hand, ther…

AT&T Adds Gigabit Service in Eight More Metro Areas

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AT&T plans to add eight more metro areas to its AT&T Fiber service, reaching at least 75 major metros with the fiber-to-home, gigabit per second service.
AT&T now markets gigabit connections to 4.6 million locations across 52 major metros. AT&T expects to add two million locations in 2017, and plans to reach at least 12.5 million locations by mid-2019.
Some critics will point out that the deployment is neighborhood by neighborhood, and not a “ubiquitous” deployment. That is a simple case of selling gigabit connections where there is enough demand to warrant the investment. Even Google Fiber, which did build in the same way, found insufficient demand to continue. AT&T expects its deployments to be sustainable.
Some observers characterize AT&T fixed network investment plans as “running away” from that business. Some of us would disagree. AT&T, it is undoubtedly true, will not drive most of its future revenue growth from its U.S. fixed network. That will tend t…

In U.S. Market, Internet Access is Broadband; Phones are Smartphones

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In many markets these days, there is very little functional difference between “internet access” and “broadbamd internet access,” as there is very little distinction between a “mobile phone” and a “smartphone.”
In the case of internet access, though, there is one important observation to be made, namely that buying of fixed internet access seems to have passed its peak, as mobile broadband continues to grow, suggesting there is product substitution going on.
For those of you who live in a developed market, when was the last time you met anybody who uses a dial-up connection to the internet? For most of us, the answer is that we cannot remember the last time we saw anybody using a dial-up connection, or actually know somebody who buys such a connection. source: Pew Research Center,  source: Pew Research Center data source: Pew Research Center
source: Pew Research Center
Smartphone Sales (Percent of Total, 4Q 2016) China 96 India

"What if Computing and Communications were Free?" Still Are Key Questions to Ask

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Though it is not something anybody really thinks about on a daily and routine basis, virtually every business, in every industry now operates in a context where “computing and communications are nearly free.”
Even if it is not yet true everywhere on the planet, for everyone, computing and communications are shaped by Moore’s Law, which means those products and capabilities ultimately will be so affordable people do not have to worry about using the tools.
That is a good thing, in a broad sense, if often challenging for suppliers of computers and other computing devices; as well as suppliers of communications services. Bill Gates and Reed Hastings, though, are among the executives who correctly figured out how to leverage those trends.
For Gates, the insight that free computing would be a reality meant he should build his business on software used by computers.
source: Deloitte University Press
source: plot.ly
Reed Hastings came to the same conclusion as he looked at bandwidth trends in …

Nothing is Going to Prevent Internet Access Prices From Falling

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It is helpful to remember some historical facts whenever a regulatory policy is changed in a way that critics argue “will lead to higher prices.”


And that lesson is that internet access prices decline over time. That seems to be the case for fixed or mobile internet access, and certainly has been true for transport prices. Sometimes observers focus only on retail prices, not consumption. That is important, as users tend to consume more data over time, buying tiers of service that are faster, and often have higher retail prices.  

In other words, in addition to retail price declines, quality of service keeps improving (looking only at speed) while volumes consumed keep climbing as well. So cost per megabyte or cost per gigabyte matter. Now is it crazy to argue that prices are going to fall further, as much more supply, and more-efficient platforms are introduced.

Such price changes are clear in both consumer and business realms, as well. Consider T1 prices, DS3 prices or Ethernet prices.…

Wi-Fi Offload Now Mostly is a Matter of How Mobile Usage Plans are Built

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With the caveat that “being connected to Wi-Fi” is a different matter from “using Wi-Fi,” the incentive to use Wi-Fi offload obviously is directly related to consumer perception of the value of doing so. An analysis by OpenSignal finds that T-Mobile US customers (presumably the customers most likely to have unlimited-usage plans) shift to Wi-Fi access the least of customers of the top-four U.S. mobile service providers.
source: OpenSignal
In the coming 5G era, and assuming data tariffs remain affordable (no particular consequences for relying on mobile networks instead of offloading to Wi-Fi), customers might not find it useful to offload to Wi-Fi.
Assuming mobile data usage policies do not penalize video consumption, while usage charges remain affordable, the economic incentive to offload will be lessened. Also, given the speed fo 5G networks, offloading to Wi-Fi will not often result in better user experience. source: Cisco

Why Revenue Sources Beyond Mobile, Mobile Data, Must be Found

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Some trends now are so well established they are a background issue, no matter how important. Revenue earned by mobile service providers, in developed markets, from mobile data, from human customers, has past its peak. In markets such as Japan and the United Kingdom, mobile data, no matter how important, is no longer driving growth.
That is why hopes for internet of things are so important. Growth prospects for all human uses of mobile services--with one possible exception--are largely negative, in developed markets, even if growing in developing regions.
That possible exception is entertainment video. If some mobile operators can shift enough market share from traditional fixed network linear video services to “owned” mobile video services, that access revenue segment still could grow.
The other important shift is indirect. Or, one might say, what happens with telco diversification efforts. Put simply, the access business is declining, in mature markets. To keep growing, service prov…

Unlimited Data Changes Verizon Customer Addition Trajectory

Verizon’s launch of unlimited mobile data plans definitely showed that when the price of a desired commodity is lowered, demand goes up.
“The launch of Verizon Unlimited positively changed the trajectory of customer additions in the quarter,” Verizon says. The new plan lead to a net decline of 307,000 retail postpaid connections in first-quarter 2017 included 289,000 phone losses. You might wonder why that was a positive change.
Consider that, prior to the launch of unlimited plans in mid-February, Verizon had a retail postpaid phone net loss of 398,000. After the launch, Verizon added 109,000 retail postpaid phone connections. In other words, the new plans accounted for a positive net swing of about 90,000 accounts.
For the entire first quarter of 2017, Verizon added a net of 49,000 smartphones to its retail postpaid phone base.
Verizon's retail postpaid connections base grew 1.2 percent year over year to 108.5 million, and retail prepaid connections grew 0.5 percent to 5.4 millio…

Spectrum Barriers are Going to Fall

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In a business where barriers to entry matter, spectrum policy is evolving in a direction that will dramatically lower such barriers. So, as competitive as the mobile industry tends to be, it is likely to get more competitive.
Spectrum costs for virtually all providers will fall as new access methods, and huge amounts of new spectrum, are brought to market.
On one hand, the lower spectrum costs will help traditional operators in both the capital investment and operating cost areas.
On the other hand, those new ways of using spectrum will enable new entrants, as barriers to entry will fall.
Though Wi-Fi offload will continue to be a key method for using unlicensed spectrum and networks as a support for mobile data access, 31 network operator executives surveyed by Tolaga Research finds executives executives also believe they will be using a number of new techniques.
The TIA study found executives believe their firms will be using techniques that essentially bond unlicensed spectrum with …

5G Fixed Wireless Works for Internet Access Business Case, Nokia Argues

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Using 5G (and millimeter wave spectrum) for consumer internet access, a service provider might well have a business case for using fixed wireless for internet access, Nokia has found.
In a study of one European service provider, the business model for using 5G for internet access in a fixed mode works at 30 customers served per cell site, though obviously the model is sensitive to capital investment and average revenue per account.
But the model appears most sensitive to take rate, as you would expect. The business model requires a 30-percent take rate. That is a lower threshold than generally required for a facilities-based fiber-to-home network.
Average revenue per account probably needs to be at least 40€ (US$43) per month, a target most consumer service providers should be able to hit with one service.

In its analysis for one European service provider, a Nokia 5G solution using millimeter wave spectrum allows each base station to serve tens of households.
The 5G short-range fixed w…

Fiber Reaches Less Than Half of U.S. Commercial Locations

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U.S. business locations with 20 or more employees reached by an optical fiber connection  reached 49.6 percent in 2016, according to Vertical Systems Group. In 2004, optical connections reached only about 10 percent of such locations.

One reason so many business locations, even those with at least 20 workers, are not connected directly by optical fiber is that so many are small locations that do not provide a business case. Roughly half of all commercial buildings represent about 10 percent of total floor space, showing how small most sites are.

The vast majority of commercial buildings are relatively small. About half of buildings are 5,000 square feet in size or smaller, and nearly three-fourths are 10,000 square feet or smaller. The median building size is 5,000 square feet (i.e., half the buildings are larger than this and half are smaller), while the average size is 15,700 square feet.

Buildings over 100,000 square feet (from large high schools to hospitals to sprawling distributi…

Where Will Artificial Intelligence Appear First in Telecom?

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Billing systems, self-optimizing networks, customer service and network functions virtualization are some of the areas in which artificial intelligence is likely to appear first in the core telecom business. AI also already is used by content and media firms to personalize content feeds, and some access providers who also own such assets will be using AI that way.
Over time, almost any function or process with big data characteristics will be augmented by AI, as that is a way to wring insights from masses of unstructured data.
Global revenues for cognitive and artificial intelligence (AI) systems will reach $12.5 billion in 2017, an increase of 59 percent over 2016, according to researchers at IDC.
Global spending by enterprises on cognitive and AI solutions will grow at a 54 percent compound annual growth rate (CAGR) through 2020, when revenues will be more than $46 billion.
The largest area of spending in 2017 ($4.5 billion) will be cognitive applications, which includes cognitively-e…

The Cure for High Prices is High Prices

Some observers worry that the growing cable operator market share in consumer internet access means higher prices are coming, as telcos increasingly are relegated to almost-marginal roles.
In a new research note, New Street Research analyst Jonathan Chaplin says cable providers controlled 65 percent of the overall consumer internet access market at the end of 2016, possibly growing to as much as 72 percent by 2020.
Of course, the concern about higher prices assumes new challengers, or new methods of competing, cannot arise. That is likely an unwise assumption. In virtually all markets that are open to competition, high prices and high market share are invitations for competitors to attack.
“The cure for high prices is high prices,” a commodities industry adage suggests. In other words, high prices encourage more production, which leads to lower prices.
To be sure, many observers of the communications might deny that can happen with the commodity known as internet access, but history s…