Vodafone Ghana Introduces Mobile Data Backup for Fixed Lines

Vodafone Ghana has announced that it is introducing mobile data backup services for its customers who experience problems with their fixed network data connections.

Other mobile providers offer similar backup services, although one potential objection is that business customers might not be able to forecast the level of unexpected charges when unmetered data connections unexpectedly default to mobile connections that are both more costly and metered.

That sort of problem should be ameliorated or vastly reduced when 5G networks are operating, providing gigabit connections, either for backup or even primary use, in some instances.

Spectrum Scarcity Won't Exist Too Much Longer

It would not be incorrect to argue that, at least in some markets, spectrum sharing, new spectrum allocations and more-intense use of unlicensed spectrum are going to dramatically affect the “scarcity” assumptions that long have driven mobile and fixed network business models.

In many countries there is between 500 MHz and 700 MHz of licensed spectrum available to mobile operators, plus Wi-Fi assets of perhaps another 800 MHz. In the U.S. market, mobile operator spectrum assets might increase by 80 MHz to 100 MHz after the 600-MHz auctions are concluded.

But much spectrum is unused, so methods of sharing licensed spectrum on a dynamic basis will dramatically affect the amount of assets that can be productively employed.  

In the U.S. market, where the Federal Communications Commission plans to release 29 GHz of additional spectrum, relative spectrum abundance should replace spectrum scarcity as a fundamental assumption.

It is not clear how much longer the divergence in network use (fixed versus mobile) will continue, where the volume of consumed bits is on the fixed network, even if the number of mobile users vastly outstrips the number of fixed users.

As 4G is deployed and used more widely, and when 5G networks become widely used, it is conceivable that the volume of data transferred over mobile and fixed networks will narrow substantially.

For some participants in the internet ecosystem, “volume of data” in fact does not matter. Only time of engagement really matters, and on that score, mobile clearly is the most-important form of access.

It already is clear that end users are shifting “time spent with the internet” from PCs or desktop devices to mobile devices, though, depending on how one measures (what we count), the shift to mobile is happening faster or slower.

source: Cisco

Since 2009, there have been more mobile users of the internet than fixed users, according to Nokia. About 2013, U.S. users reached parity in terms of the minutes of use on mobile devices and fixed devices. Since then, mobile has been gaining steadily, in terms of “time of use.”

source: Business Insider

No matter how one counts, though, there is a massive disconnect between revenue and cost drivers in the mobile content ecosystem, and that disconnect now has to drive strategy for some of the providers in the ecosystem.

Consider only the key difference in metrics used in the advertising, content and commerce industries and the networks business where it comes to “usage.”

For advertisers, marketers, content providers and commerce businesses, what matters is user engagement (where they spend their time).

source: Nokia

For advertisers, content providers or e-commerce providers, minutes of use (engagement) matters, since the markets move to where the users are, and where they spend their time.

For network facilities operators, capital investment comes first, where it comes to looking at usage, since usage primarily is a matter of capacity.

For “pipe providers,” it is the volume of bits consumed that matters. In other words, how much traffic, and where it flow, matter first. Only secondarily does “revenue” enter the discussion. Capacity must be deployed where there is need for it, and only secondarily because that correlates, more or less, with revenue.

For content providers, advertisers and e-commerce firms, usage means direct revenue opportunity; the chance to reach large audiences.

Desktop visits, by other measures, remain higher than mobile visits to many websites, but the percentage of desktop or PC visits is dropping, across the board, according to Adobe.

source: Adobe

For transport and access providers, time of engagement matters only scarcely. What really matters is the volume of usage, since there is a weak relationship between “volume of usage” and “volume of revenue.”

So there is a big business model disconnect. For advertisers, content providers and commerce providers, usage creates direct business opportunity.

For transport and access providers, usage first creates need for capital investment, only secondarily revenue opportunity.

source: KCPB

In other words, for app layer or “business layer” entities, “time invested” drives several business models, ranging from advertising to e-commerce. As the generalization suggests, “money follows attention.” So the attention itself creates revenue potential.

For physical layer facilities providers, “time” hardly matters, while “volume” is everything, primarily because volume dictates investment. But volume only indirectly creates business opportunity.

That provides one more bit of evidence that business models--and revenue--increasingly lie in the applications and services people want to consume over the internet, and not the pipes that connect people to their content.

It also suggests why “moving up the stack” or “moving up the value chain” is so important for tier-one service providers. For small providers of access, even that option is mostly unreachable. For providers without scale, only cost control and marketing prowess will matter.

Mobile "Time Spent" Now Leads Fixed; Will Volume of Bits Also Shift?

It is not clear how much longer the divergence in network use (fixed versus mobile) will continue, where the volume of consumed bits is on the fixed network, even if the number of mobile users vastly outstrips the number of fixed users.

As 4G is deployed and used more widely, and when 5G networks become widely used, it is conceivable that the volume of data transferred over mobile and fixed networks will narrow substantially.

For some participants in the internet ecosystem, “volume of data” in fact does not matter. Only time of engagement really matters, and on that score, mobile clearly is the most-important form of access.

It already is clear that end users are shifting “time spent with the internet” from PCs or desktop devices to mobile devices, though, depending on how one measures (what we count), the shift to mobile is happening faster or slower.

source: Cisco

Since 2009, there have been more mobile users of the internet than fixed users, according to Nokia. About 2013, U.S. users reached parity in terms of the minutes of use on mobile devices and fixed devices. Since then, mobile has been gaining steadily, in terms of “time of use.”

source: Business Insider

No matter how one counts, though, there is a massive disconnect between revenue and cost drivers in the mobile content ecosystem, and that disconnect now has to drive strategy for some of the providers in the ecosystem.

Consider only the key difference in metrics used in the advertising, content and commerce industries and the networks business where it comes to “usage.”

For advertisers, marketers, content providers and commerce businesses, what matters is user engagement (where they spend their time).

source: Nokia

For advertisers, content providers or e-commerce providers, minutes of use (engagement) matters, since the markets move to where the users are, and where they spend their time.

For network facilities operators, capital investment comes first, where it comes to looking at usage, since usage primarily is a matter of capacity.

For “pipe providers,” it is the volume of bits consumed that matters. In other words, how much traffic, and where it flow, matter first. Only secondarily does “revenue” enter the discussion. Capacity must be deployed where there is need for it, and only secondarily because that correlates, more or less, with revenue.

For content providers, advertisers and e-commerce firms, usage means direct revenue opportunity; the chance to reach large audiences.

Desktop visits, by other measures, remain higher than mobile visits to many websites, but the percentage of desktop or PC visits is dropping, across the board, according to Adobe.

source: Adobe

For transport and access providers, time of engagement matters only scarcely. What really matters is the volume of usage, since there is a weak relationship between “volume of usage” and “volume of revenue.”

So there is a big business model disconnect. For advertisers, content providers and commerce providers, usage creates direct business opportunity.

For transport and access providers, usage first creates need for capital investment, only secondarily revenue opportunity.

source: KCPB

In other words, for app layer or “business layer” entities, “time invested” drives several business models, ranging from advertising to e-commerce. As the generalization suggests, “money follows attention.” So the attention itself creates revenue potential.

For physical layer facilities providers, “time” hardly matters, while “volume” is everything, primarily because volume dictates investment. But volume only indirectly creates business opportunity.

That provides one more bit of evidence that business models--and revenue--increasingly lie in the applications and services people want to consume over the internet, and not the pipes that connect people to their content.

It also suggests why “moving up the stack” or “moving up the value chain” is so important for tier-one service providers. For small providers of access, even that option is mostly unreachable. For providers without scale, only cost control and marketing prowess will matter.

Smart Water IoT Saves City Users 15 Billion Gallons of Water

As with any other consumer or business product, Internet of Things applications will succeed based on perceptions of value and appropriate pricing.

HydroPoint, for example, provides smart water management solutions for urban water use, especially landscape irrigation. In a single year, in the city of Los Angeles, HydroPoint’s WeatherTRAK customers saved 15 billion gallons of water, $137 million in expenses,
hundreds of thousands of man hours, and 62 million kilowatt hours of energy.

WeatherTRAK analyzes multiple atmospheric and geological factors to pinpoint exact water needs, and then controls sprinkler systems based on whether watering actually is needed.

Mobile service providers, of course, see big upside in IoT, as all those sensors and apps require communications, and often, the mobile network, or a specialized IoT wireless data network, will be the most-convenient solution for communications.

For ISPs Trying to Connect the Unconnected, "Easy Part is Over"

The challenges of lower costs, better business models and securing more spectrum to “connect everyone across South Asia and Southeast Asia to the Internet” were key themes at the Spectrum Futures conference held in Singapore, Oct 20 and 21, 2016.

Globally, the rate of growth rate of adding new Internet users is slowing, said Chris Weasler, Facebook director of global connectivity. “We have gotten the easy ones.”

Speakers included communications regulators from Egypt on the west to Indonesia on the east; Internet service providers; app providers and enablers; venture capitalists; wholesale capacity partners; policy advocates and platform developers.

New ways of supplying and using spectrum; new models for deploying infrastructure and new ways to reduce the cost of Internet access facilities were discussed. New business models also were highlighted. “5G is completely different,” said Bob Horton, consultant.

Will huge new allocations of millimeter wave frequencies for 5G work? Simple answer, “yes,” said Reza Arefi, Intel director of spectrum strategy. Are infrastructure costs coming down? “By an order of magnitude,” said community networking specialist Jonathan Brewer.

Are regulator and industry expectations out of alignment? “Yes,” said Mohammed Shafi, Multinet Pakistan CEO. Is much more spectrum required? Without question, said Rajan Mathews, Cellular Operators Association of India director general.

Are there still big cultural gaps between service providers and app providers who can help access providers move up the value chain? Yes, said VC Dennis Wong, with Golden Gate Capital.

Telcos and app developers “speak a different (business) language,” said consultant Srinath V. So telcos should invest in app providers “as limited partners,” said Kenrick Drijkoningen, Golden Gate Ventures expert in residence.

Major work on business models also is necessary, argued James Sullivan, J.P. Morgan equities analyst.

“Even after accounting for Wi-Fi and new technologies and alternate business models, there will be still significant global wireless data demand that is not economically possible to serve,” said Sullivan. Simply, emerging markets “ don’t have nearly enough revenue opportunity to bridge the gap.”

Attendees learned about a number of initiatives, large and small, to bring lower cost Internet access efforts to bear, ranging from the Telecom Infra Project (TIP) to community-owned cellular.

TIP in an open source telecom platform effort presently supported by 300 organizations, ranging from tier-one mobile operators and equipment suppliers to Facebook itself. Few recognize that TIP wants to create open source access, backhaul, core network and management platforms.

Google’s Project Loon, using fleets of balloons to provide Internet access across rural areas, is working with all four Indonesian mobile operators and is awaiting approval from the finance ministry to proceed, said Leo Sugandi, Ministry of ICT, Indonesia.

Steve Song, Network Startup Resource Center associate, does not necessarily believe large national service providers are “required.” Villages and communities can be encouraged to create their own access networks, either mobile or Wi-Fi.

“Solutions that blur the lines between licensed and unlicensed are possible and represent lower risk for regulators and operators,” Song said. “We need new models for spectrum access.”

Will U.S. 600-MHz Auction Prices Fail to Meet Expectations? Likely.

Though virtually every Internet service or mobile service provider will need more capacity over time, the ways ISPs create capacity, and the need to buy licensed spectrum assets, is less linear than once was the case.

Though network architects always have several tools to increase effective capacity--additional spectrum, smaller cells, better modulation, radios and air interfaces, traffic offload, end user traffic shaping--it typically has been the case that big carriers relied on licensed spectrum as a key tool.

They still do so, but there now are a growing range of tools for increasing capacity that might not require as much new licensed inventory, or licensed inventory that costs as much. It is a simple matter of supply and demand.

In the U.S. market, vast increases in supply are on the way. So, as with any commodity, prices should fall as supply grows significantly.

For AT&T, tactical considerations, more than grand strategy, might affect willingness to bid heavily for 600-MHz spectrum assets. But Verizon, which arguably has greater need for additional spectrum assets, also has said it is not compelled to bid heavily for 600-MHz assets.

Still, the larger strategic context likely is relevant. Service providers large and small know that, in the future, huge new amounts of spectrum--unlicensed and licensed--are going to be made available.

That knowledge alone, plus major advances in small cell platforms, offloading and other technology advances, should be combining to reduce the perceived value of new spectrum assets. That, in turn, should reduce the value of new blocks of spectrum, and hence retail price.

That should be a material force in Internet access provider strategy and tactics, both near term and longer term. Verizon, for example, seems to be charging ahead with its 5G network commercial launch, as early as 2017.

That should be the start of a major transformation. For the first time, commercial bandwidth prices--supplied by fixed or mobile networks--should be matters of relative indifference. That is radically new.

In substantial part, that transformation will be enabled by availability of unprecedented amounts of new spectrum, much-better platforms and new business models for access assets.  

What AT&T Purchase of Time Warner is Not About

AT&T’s proposed purchase of programming giant Time Warner is perhaps not principally about vertical integration, synergies, bundling, churn reduction, entering the content business or lower programming costs, though all those are factors.

The deal is not principally about creating a new mobile streaming service that creates value, reduces churn and drives new revenue, though those also are potential benefits.

The principal driver is business strategy for any supplier of “dumb pipe” Internet access. In simple terms, the strategy is that any big access provider “has to own at least some of the content it delivers.”

This is not an unfocused “portfolio” strategy (creating a conglomerate), nor an effort to create a walled garden of attractive content. It is an effort to benefit from big content or application revenues that require use of a mobile network for delivery, irrespective of any walled garden or programming cost considerations.

At a high level, the access business is being commoditized. To preserve both gross revenue and profit margin, any big access provider has to create or acquire big new sources of revenue.

The logical thing to do is create or acquire stakes in apps and services that use the dumb pipe, which is to say, any service or app accessed using the Internet.

And that is what is driving AT&T’s proposed acquisition of Time Warner.

Many voices will be raised about whether AT&T’s bid to buy content powerhouse Time Warner should be pursued at all. Some will argue that the deal has little “synergy.” That view often hinges on the notion that the deal would somehow lower AT&T’s programming costs.

That is probably not the issue, as the deal will not actually directly affect what AT&T pays for Time Warner content rights.

Others just think the additional AT&T debt load is unwise, in large part because of the new debt AT&T will have to take on. But that was precisely what was said about the DirecTV deal as well, and at least so far, that is proving to be a positive development.

During the recent Spectrum Futures conference, mention was made of the fundamental strategy U.S. cable operators will take to “move up the stack (value chain).” Simply, the idea is that “you have to own at least some of the content that flows over your pipe.”

The Time Warner deal appears to be a perfect example of that same strategy, employed by a telco instead of a cable company.

The issue is that all triple-play providers sell a mix of services, ranging from “dumb pipe” Internet access (“tickets to Disneyland”) to applications such as voice, messaging, video entertainment or home security.

But to avoid being reduced simply to a “dumb pipe,” an access provider has to own at least some of the content, some of the apps, some of the services its customers want to use.

In other words, in addition to selling “dumb pipe” Internet access service, which under competitive conditions is subject to price per unit reductions and price competition generally, service providers must become owners of at least some of the new apps and services that its customers want to use.

It is not complicated: that is the strategy for “adding value” and “moving up the stack.” To be sure, there are some tangible benefits. As a major buyer of content from Time Warner, AT&T now at least is able to “pay itself.”

AT&T also now earns more from video than voice services.  

How AT&T benefits from owning Time Warner is a complicated question. Some might think AT&T could win by changing Time Warner content distribution, and making that content exclusive to AT&T.

AT&T will not be able to do so, at least for those networks routinely sold on linear video services.

U.S. rules force content networks that sell content to linear video distributors to sell to all such providers. There is no exclusivity. On the other hand, there are some content services--largely selling only online, that are not covered by the rules.

The interesting example is DirecTV’s NFL Sunday Ticket service, broadcasting football games. NFL Sunday Ticket is not covered by the rules pertaining to programming networks, presumably in large part because the NFL is not directly a programming network, and simply licenses the rights to show games.

Likewise, some new mobile streaming services do not seem to fall under the rules covering linear video programming networks.

At least in principle, some content (programming, rather than networks) could be developed for “direct-to-consumer” delivery, not using the linear video distribution system, and therefore be free of mandatory wholesale rules that pertain to linear video distribution.

But AT&T does not seem to prefer the “unique content” strategy in any case, at least for the moment. That strategy is very expensive, and AT&T seems to prefer the sale of “widely-viewed content” on networks that are themselves widely viewed.

There is some benefit in the area of content acquisition costs, but not direct impact. As programming fees rise, AT&T has to pay more for such content. Owning Time Warner will not change that. But AT&T will gain--as a content owner--from the fees it earns from all other distributors.

But AT&T does seem determined to acquire additional content assets as well, just as it intends to create connected car or eventually other Internet of Things applications and services that also use its network.

What is important, though, is to note that the objective is to “own at least some of the content and applications that flow over the access pipe,” not the desire to create unique walled garden assets available only to AT&T customers. That is a crucial distinction.

The same strategy would seem to apply to other services, in other industries. Connected car services, for example, where AT&T supplies the actual end user service or platform to a car manufacturer, provide one example.

Instead of supplying simple mobile network access, AT&T will seek to become the owner and supplier of connected car services (content, security, vehicle monitoring).

There is a clear strategy here, pioneered by cable TV companies. In a business increasingly anchored by “dumb pipe Internet access,” where there is much competition for any app--voice, messaging, video, utilities, content, transactions--an access provider has to own at least some of the useful apps people want to use.

Exclusivity is not required. Branding is not constrained to the “service provider” brand, in all cases. If people want to use a particular app or service, and that is widely used, it makes sense to retain the retail brands, and not force the use of the access brand.

This is a shift in model. In the past, all services were branded under the parent’s name--AT&T X, Y and Z. In the future, what will matter is the revenue, cash flow and profits generated directly by the end user services and apps, even when--or especially because--those apps and services are in high demand by end users.

In essence, AT&T and Comcast become multi-industry conglomerates, to an extent, making money in several different industries whose common focus is that they require Internet or mobile access.

Moving up the value chain does not always require full branding under the legacy access provider name. It does require ownership of some of the assets.

Spectrum Key to Connecting Everyone

Spectrum equals capacity, and capacity is required if everyone is going to use the Internet. The simple issue is that adding four billion new users globally will exceed network capabilities, all other things being equal.

In India, spectrum is vital because “we only  have one network in India, the mobile network,” serving 1.2 billion connections, unlike the situation in other countries where there are ubiquitous fixed networks and cable TV, said Rajan Mathews. Cellular Operators Association of India director general.

“Spectrum is one of the most important challenges” because “there is very little,” Mathews said.

Recently, in fact, all spectrum presently used by all incumbents was put back out for auction, forcing companies to pay for spectrum they already were depending upon to serve existing customers. They wound up paying $75 billion spent on spectrum, Mathews said, raising $10 billion for the Indian government.

And there is not so much spectrum authorized for use. Globally, each mobile operator has about 50 MHz to 60 MHz worth of spectrum. The typical Indian mobile operator has about 20 MHz to 25 MHz worth of spectrum.

Mathews said spectrum prices in in India are about 30 percent over global norms, while 90 percent of equipment also is imported, and at prices above global norms.

On the demand side, “the average revenue per user, per month, is $3, not $75 like elsewhere globally,” said Mathews.

Globally, the rate of growth rate of adding new Internet users is slowing, said Chris Weasler, Facebook director of global connectivity. “We have gotten the easy ones.”

“That’s one reason we do solar-powered unmanned aerial vehicles,” he said. New platforms are required that allow mobile operators to affordably supply coverage to rural and isolated areas.

Facebook has designed and tested an open source, cost-effective, software-defined wireless access platform aimed to improve mobile connectivity in remote areas of the world, called “Open Cellular.”

Open Cellular is a reference model intended to be used by platform suppliers, who can use it to provide lower-cost access, allowing networks to reach rural and hard-to-reach areas, with hard-to-sustain business models.

The model also should allow smaller organizations to contemplate building their own localized access networks, when necessary.

In many cellular network deployments, the cost of the civil and supporting infrastructure (land, tower, security, power, and backhaul) is often much greater than the cost of the cellular access point itself.

So one of the goals was to make architectural and design improvements that would result in lower costs. The platform supports a range of communication options from 2G to LTE.

That is not all Facebook is working on. Facebook also drove creation of the Telecom Infra Project, developing open source telecom platforms, ranging from access to core networks.

Lance Condray, Facebook telecom architect, said the Telecom Infra Project now has 300 members. “It’s like setting u Wi-Fi, not a 30-year tower,” Condray said.

The reason for doing so is that third-party partners sometimes work in Africa where mobile can’t make a business case.

“Spectrum restrictions can be an issue,” in that regard. “We’d like to see that liberalized, allowing third parties to use mobile licensed spectrum,” said Condray. The way it works: the third party builds the network and operates it, and shares revenue with the spectrum holder.

“We have teams at Facebook looking at every conceivable option for access,” said Condray. “We are agnostic about the form of access.”