Wi-Fi Erasing Difference Between "Fixed" and "Mobile" Access

The difference between “fixed” and “wireless” access networks continues to blur, as mobile networks rely more on Wi-Fi and small cells, while most fixed network access uses Wi-Fi.

As early as 2012, global revenue had shifted to 59 percent mobile and 22 percent data services on the fixed network, with everything else representing 19 percent of revenue. In Asia, something less than 13 percent of revenue is earned from fixed network voice, while mobile constitutes 64 percent of total revenue.

As a functional matter, in the future, more and more bandwidth will be consumed using short distance and stationary untethered access such as Wi-Fi or small cells, but Wi-Fi will be disproportionately important.

In fact, one reason Comcast and other cable TV operators have activated huge networks of consumer-based Wi-Fi hotspots is that this creates a huge “small cell” network of sorts.

And that is the sort of network that could create a few new revenue streams. First, Comcast can sell access to individuals who want to use the public hotspot network, and are not Comcast customers already.

Second, Comcast can sell wholesale access to other service providers, overlaying a large small cell and backhaul network onto whatever other primary network a service provider uses.

FCC Creates New Shared Spectrum Service

The Federal Communications Commission has voted to approve a historic spectrum sharing plan in the 3.55 to 3.7 GHz band, creating at new 150-MHz block of spectrum available for shared use by licensed government users as well as commercial entities expected to include mobile service providers, Internet app and service providers.

In creating the new “Citizens Broadband Radio Service,” the FCC will enable a new three-tiered commercial radio service that expands the amount of spectrum available for commercial Internet and mobile purposes, while saving the time and expense of relocating existing licensed users.

Under the plan, expected to provide a model for sharing in other spectrum bands, the licensed users will be protected from interference, and have priority use of the frequencies.

But two new categories of users will be created. The “General Authorized Access” tier will allow any user with a certified device to operate without seeking any further Commission approval, will permit low-cost entry into the band, similar to unlicensed uses such as Wi-Fi.

For service and app providers with greater requirements for quality of service, a “Priority Access” tier will offer geographically targeted, short-term priority rights to a portion of the band, available through future spectrum auctions.

One ormore spectrum access systems, operated by private commercial entities, will facilitate coexistence among the different user tiers. That is expected to be modeled on the use of access databases developed to support TV White Spaces.

Net Neutrality Makes it Harder to Connect the Unconnected

Network neutrality and getting hundreds of millions of people in the developing world connected to the Internet now stand in opposition.

Several Indian web companies that had been part of Internet.org, a program that allows mobile Internet users unlimited use of Facebook and other participating sites and services without counting that use against their mobile data cap, now have withdrawn from that effort, actions that arguably make it harder to rapidly introduce people to the benefits of using the Internet.

“Offering free services helps get people online for the first time,” said Berin Szoka, president of TechFreedom.

“Unfortunately, this isn’t the first time absolutists have stoked outrage to stop zero-rating,” said Szoka. “Back in 2011, MetroPCS offered an entry-level data plan with unlimited YouTube aimed at new adopters, mainly minorities in America’s inner cities.”

“Net neutrality activists fueled such a media frenzy that the company abandoned the program, even though it was almost certainly legal under the FCC’s new net neutrality rules,” said Szoka. “A year later, the company decided it couldn’t survive on its own, so merged with T-Mobile.”

Many, including the U.S. Federal Trade Commission, are certain potential abuses can be avoided by use of existing consumer protection and antitrust laws.

“Governments everywhere need to do everything they can to make it easier for private companies to expand and upgrade broadband networks,” said Szoka. “That means making as much spectrum as possible available for mobile service and ensuring that carriers can effectively and creatively market their offerings to consumer.”

Banning zero rating does not help.

Mobile Revolution was Unexpected

Nothing better illustrates our inability to foresee the future than the unexpected, non-linear growth and exponential impact of mobile services than adoption trends over about the last decade in Africa.

In 2002, roughly 10 percent of people owned a mobile phone in Tanzania, Uganda, Kenya and Ghana. Now, adoption ranges from 65 percent to 83 percent. In just a little over a decade, mobile usage grew 600 percent to 800 percent.

Today, mobile phone ownership is as common as in the United States (89 percent adoption) in South Africa.

At the same time, fixed network adoption  penetration in the seven countries surveyed (Ghana, Kenya, Nigeria, Senegal, South Africa, Tanzania and Uganda) is close to zero.

About two percent of respondents surveyed across these nations say they have a working landline telephone in their house.

It is fair to say that as recently as 1980, few would have predicted most of the world’s people would be connected to communications networks by about 2015, solving a major development and social problem that had seemed nearly intractable.

Back then, the only feasible solution was deemed to be the traditional fixed telephone network. Mobility changed all that.

That precedent is one reason why many believe supplying Internet access to the world’s people likewise will be solved, with a few decades, if not within a single decade, by the use of non-tethered, mobile or other spectrum-based networks.

India Mobile Carriers Call for Higher Termination Costs

You might find it odd when a firm asks its regulators to increase a cost of doing business.

But that is what is happening in India, where the Telecom Regulatory Authority of India cut interconnect charges to 14 paise a minute from 20 paise and completely eliminated fees on calls terminating and originating from landlines.

The Cellular Operators' Association of India wants a fee increase. That might seem incongruous. Only Reliance Jio opposes higher fees.

There are sound business reasons for each set of positions. Since no network covers a whole country, to say nothing of a whole region, continent or the whole globe, service providers routinely pay interconnect fees to the partners who terminate their customer calls.

In one sense, there arguably is no net impact on revenue or cost when two carriers exchange an equal amount of traffic, and the tariffs are comparable.

So long as tariffs are the same for all carriers terminating traffic, it doesn’t actually make a net financial difference that carrier A sends 100 units of traffic to carrier B, and carrier B sends 100 units of traffic to carrier A.

There are advantages, though. Though such transactions result in no “net” bottom line impact (costs and revenues are at the same level), each carrier can book the termination charges as “revenue.” That is helpful.

And sometimes, carriers actually can make genuine net gains in revenue. That happens when traffic flows between any two networks are highly unequal. That typically happens for carriers of unequal size, or networks whose customers are call centers or Internet service providers.

In the case of networks of unequal size, the odds are that many more people on the smaller network are going to be calling out to people on the bigger network (and thus incurring termination charges) than receiving calls from the bigger network.

A call center, by definition, will receive far more traffic than it sends (assuming it is a standard inbound customer service center). And a customer-facing  ISP traditionally receives more traffic than it sends.

And those are situations where the volume of exchanged traffic can make a difference.

As always, a firm’s concrete financial interests dictate positions on policy questions. Reliance Jio, as a smaller upstart, will definitely be sending more traffic than it receives. So lower termination costs are in its financial interests.  

The bigger carriers stand to benefit, since they will be getting more calls from Reliance Jio than giving traffic to Reliance Jio.

So though it might seem odd, the call for higher termination costs is rational for the bigger mobile service providers, an disadvantageous for Reliance Jio.

An Era is About to Pass: Many Will Stop Worrying About Google

The business environment changes fast these days. Consider any element of business strategy involving Google.

To the extent Google is a key competitor for Internet access, Internet apps, mobile operating systems, mobile and untethered devices, e-commerce or advertising, Google's days as a terrifying presence might be coming to an end.

If history and precedent matter, then Google has nearly reached a watershed moment.

The evidence comes from what happened to Microsoft when it faced its own antitrust troubles in the late 1990s and early 2000s.

Microsoft ruled computing in the mid 1990s. By 2010, it was an also-ran. All that happened despite the fact that Microsoft escaped being broken up, and also avoided crippling fines.

Google now faces the same potential problems (forced divestiture and huge fines). Some day, when the case has run its course, Google is likely to be fined a relatively small amount, and will have avoided any danger of a forced breakup of the company.

But Google’s momentum will have been halted. And if precedent serves as guide, Google never again will “lead” computing markets. What happened inside Google is likely to be akin to what happened inside Microsoft when it also faced antitrust action by the European Union competition authorities.

New products and potential business partnerships had to go through legal review, which took lots of time and discouraged employees from pursuing certain kinds of innovations. Many forms of promotion or bundling will be discouraged or limited.

Development teams will have to spend more time on legal activities than making better products. Competitor lawsuits might multiply as well. Potential partners will be scared off.

So a certain timidity will set in.

India May Impose Net Neutrality, Outlawing Sponsored Apps or Data

India may, or may not, decide to create new network neutrality rules that could eventually affect the legality of paid prioritization in any number of ways, ranging from content delivery and quality of service assurance to sponsored apps, the data equivalent of “toll free calling.”

Even if the Indian regulatory authority Telecom Regulatory Authority of India (TRAI) recommends adopting network neutrality, that would only be a recommendation. Action by the legislature still would be necessary.

In the meantime, a new Bharti Airtel “Zero” plan, which allows consumers to use some apps without consuming any of their data usage allotments. Such zero rating has proven highly effective as a means of stimulating usage of mobile Internet elsewhere, but is criticized by net neutrality supporters.

Most Indian mobile service providers (Idea Cellular, Uninor, Reliance Communications, Tata Teleservices) have service plans offering Facebook or Whatsapp at nominal charges or at no incremental charge.

Though clearly valuable for end users, net neutrality supporters argue zero rating “does not treat all apps equally.”

Ignoring for the moment all the ways that competitors in every market try and add value to create distinctiveness, the insistence on “treating all apps equally” ignores the non-equal use of content delivery networks by any number of app providers, already.

Nor does the net neutrality stance acknowledge that some apps, under conditions of congestion, do not work very well (voice, video conferencing, perhaps self-driving auto apps and other apps to come where lives and property depend on instant and reliable communications).

Ironically, where it is possible, innovators simply will create “managed services” that are not “Internet apps.” Innovation won’t be stopped, nor will efforts to provide end user value, halt because of network neutrality rules, even where passed and not overturned or modified.