Big Changes in Mobile Value Proposition, Roles, Revenue Coming?

The choice of internet protocol as the foundation for modern networks has been fateful for application and service providers. As Verizon CEO Lowell McAdam has said recently, in 2000 Verizon could  monetize the entire stack (26:58),  as it was vertically integrated and created and controlled all the apps provided over its network.
Today, Verizon has to compete horizontally, monetizing apps and features “above the network layer,” since it no longer controls or creates most of the applications used by its customers.
That is the difference between a fundamentally “open internet” app platform and the older “closed” telecom platform. McAdam would say the “iPhone changed everything.”
What he means, in large part, was that, in the smartphone era, people are “customers” only for a few Verizon-supplied apps (internet access, carrier voice and messaging, the Oath ad platform or connected car and other possible internet of things apps), but “users” of a universe of third party apps and services.

Two Biggest U.S. Voice Providers are Not Telcos

Sign of the times: each of the two largest U.S. cable TV companies now have more voice subscribers than does AT&T, the largest fixed network telco.
In the fourth quarter of 2017, Charter Communications had 10,405,000 residential lines while Comcast had 10,351,000 accounts in service.  AT&T had 10,333,000 lines. So, for the first time, the largest U.S. “telephone companies” were cable TV providers, not telcos.
A key qualification is required, however. Mobile is the way most U.S. residents use voice services. Well over half of U.S. homes (53 percent, according to the U.S. Centers for Disease Control) have no fixed telephone service at all. As recently as 2004, nearly 93 percent of U.S. homes had fixed network voice service.
And, as always in the internet era, usage and revenue can be very different matters. In 2011, for example, U.S. consumer spend on fixed network voice had dropped from 65 percent to perhaps 26 percent, compared to 2001 levels, while mobile revenue grew from 25…

Full Mobile Substitution for Internet Access Coming?

Quite often in business, as well as in physics and the natural world, the equivalent of quantum changes happen. A quantum change is like the change of state of water from ice from solid to liquid, or liquid to gas, gas to liquid or liquid to solid.
The key analogy is that a series of almost-unremarkable quantitative changes accumulate before a nearly-instant change of state happens. A recent example is the change in viewer habits from linear video to on-demand (initially VCR tapes, then DVDs, then streaming) to over-the-top alternatives.
Other examples can be seen in the “long distance” business in the United States. Because of the 1984 breakup of the Bell system, a discrete “long distance” business--separate from the local telephone business-- was created.
Competition--initially from MCI--gradually lead to lower prices overall. Then AT&T launched “Digital One Rate,” which eliminated the price distinction between “local” and “long distance” services, first in the fixed network bus…

Will Artificial Intelligence Create Jobs, Displace Jobs, Recreate Jobs? Yes.

Workplace automation is expected to nearly double in the next three years according to a survey by Willis Towers Watson, with complex impact on jobs and job skills.
While survey respondents report that 12 percent of work is currently being done using AI and robotics versus just seven percent three years ago, they anticipate that this figure will rise to 22 percent in the next three years, the survey suggests.
Though 57 percent of respondents say the key goal of automation is to augment human performance and productivity, it is safe to say nobody can presently predict just how AI is going to wind up driving value.
At the moment, 68 percent of respondents say autonomous operations are not the way they use AI. Rather, 70% use AI and robotics somewhat or to a great extent to support humans in completing business processes.
Some 24 percent of respondents say the goal is to reduce costs. Some 15 percent say AI will provide value by helping firms avoid mistakes.
The report suggests it is a my…

WAN Business in Midst of Huge Product Substitution Trend

Product substitution is among the major underlying trends affecting the global telecommunications business.
Substitution of mobile voice for fixed; mobile internet for fixed; streaming video for linear; over the top apps for managed services; text communications instead of voice and private networking for use of public networks all are examples of the substitution trend.
Consider the wide area networks (WAN) business. In the 21st century, WAN traffic has moved steadily in the direction of carriage on private networks owned and operated by major application providers, and away from the public networks offering internet backbone carriage.
By 2016, more than 70 percent of all internet traffic across the Atlantic was carried over private networks, not on public WAN networks. Obviously, that also means no revenue was earned directly by public service providers for carrying that traffic.
On intra-Asian routes, private networks in 2016 carried 60 percent of all traffic. On trans-Pacific rout…

Premises Phone System Sales Fall 8%

A decline in on-premises private branch exchange (PBX) licenses led the global market to decrease eight percent in 2017 from 2016, to $5.7 billion, according to IHS Markit analyst Diane Myers. Total PBX lines were down nine percent year over year in 2017, with cloud alternatives and buyer caution being key issues.
“Just as we see one area begin to improve, it’s offset by slowdowns in specific geographies or market segments,” Myers said. “Many businesses are holding off on upgrades and new purchases, and the move to cloud services is having an impact.
Although enterprise spending is healthy, businesses are giving low priority to telephony upgrades and expansion on the premises side; PBX average per-line revenue was $167 in 2017, a 1 percent uptick from 2016
Enterprises continue to migrate to IP—to pure IP PBXs in particular—but the segment remains smaller than hybrid systems; hybrid IP PBXs represented 64 percent of all lines shipped in 2017
Demand for unified communications (UC) has been …

Have Internet Access Prices Really Grown 25% Since 2010?

“Average fees for standalone broadband have increased nearly 25 percent since 2010,” says a study by Parks Associates on subscription TV and internet access. Other studies have noted higher prices for internet access over the past several years.

That is not the same thing as saying “people are paying more for broadband access.” Sticker or suggested prices are one thing; what customers actually pay can be quite another matter.
That is a major reality of the U.S. internet access market, where most consumer mobile or fixed services accounts are purchased as a bundle, offering discounts over separate purchases of each service. That is why actual internet access prices have dropped over the past couple of decades, despite faster speeds and posted rate hikes.
And make no mistake: bundling as a marketing strategy is designed to increase value and cut prices. In other words, effective prices are cut when consumers buy bundles (dual play, triple play, in some cases quadruple play).  
Also, bund…