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Showing posts from August, 2015

India Mobile Voice, Data Prices Climbing

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After increasing data tariffs for prepaid customers in Delhi, Bharti Airtel and Idea Cellular have now hiked charges for their postpaid users by around 20 percent.

The largest three mobile operators--Airtel, Idea and Vodafone--earlier had raised prepaid data plan prices  for 2G and 3G services in Delhi by up to 47 percent.
There arguably are a few reasons why prices are climbing. For starters, mobile operators have had to spend money acquiring or reacquiring their spectrum licenses. New fourth generation networks are being built, and data pricing, in general, tends to lag usage.

Also, the growth driver, going forward, is mobile Internet, not voice. There are tradeoffs, to be sure. Raising the price of any desired product, under most circumstances, leads to lower demand.

So, ironically, higher prices mean slower adoption of mobile Internet access, to some extent.

That might not be the most-significant driver, however. As wholesale tariffs for voice roaming prices must be lowered, by order…

Two Cows: All You Need to Know about "Economics"

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A humorous look at economic thought, using two cows.  

Iliad Reports Strong Profits, Market Share, Margin

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Illustrating the principle that scale matters in the telecom business, Iliad reported consolidated revenues up by seven percent to €2.2 billion in its first half of 2015, with mobile segment revenues up more than 18 percent, while fixed segment revenues climbed half a percent.
Iliad says its share of the mobile business rose to 16 percent, after adding a net 820,000 new subscribers in the first half of the year, with earnings (EBITDA) up 16 percent to €725 million.
Iliad said its EBITDA margin advanced by 270 basis points to 33.6 percent. “This strong rise in profitability was driven by favorable developments in the Mobile business and the economies of scale achieved in terms of the Group's fixed cost base.”
Iliad now has 10.9 million mobile subscribers, and has exceeded its original expectations for market share, on that metric.
source: Iliad
Though hopeful that the marketing war ignited by Free Mobile is drawing to a close, executives in the French mobile industry are generally un…

U.S. Fixed Network Revenue Declined 50% Between 2002 and 2013

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During the 11-year period between 2002 and 2013, By 2013, U.S. fixed network provider gross and net revenue both had fallen by more than 50 percent compared to 2002.
Growth of the mobile business replaced those lost revenues, as did growth by acquisition for the largest providers.
In 2002, U.S. telecommunications industry gross revenues were $385 billion (including cable and satellite TV), and its net revenues (after interconnection costs, program content, and handset subsidies) were $315 billion.
In 2013, gross revenues were $455 billion and net revenue was about $333 billion. Mobility accounts for most of the growth.
AT&T (the former SBC) and Verizon arguably also grew through acquisition, more than by organic growth.


Deloitte University Press

Valuation "Envy" and Importance of Content Businesses for Telcos

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Some executives might be forgiven a bit of envy where it comes to valuations. Access providers might envy the higher valuations of media properties, while media executives might envy the valuations given to technology firms.
Among the reasons for the difference in valuations is scarcity. Technology firms often create uniqueness hard to replicate, while media firms do so with exclusive content.
That explains why most major video suppliers try to acquire exclusive rights to some content. At the same time, that also means the value of bundles will remain substantially intact. If content is fragmented, then aggregating content will generally create value.
The point is that video entertainment, and all content businesses, are valued differently than “access” businesses that more or less sell “commodity” network access.
source: IATI source: IATI
source: Gridley & Co.


source: Market Realist

Fiber to Home Has Been the Superior Access Network for Nearly 4 Decades: Still Doesn't Always Win

Some believe hybrid fiber coax networks will not be able to deliver gigabit speeds, or even 100 Mbps, symmetrically.

Others might argue those claims are correct, in one sense: since HFC networks are designed to be asymmetrical, even at bandwidths that do hit a gigabit per customer location, HFC does not deliver bandwidth symmetrically.
Some might argue that is not the point. The claims about symmetrical bandwidth are largely correct, but irrelevant. After all, the claim of technological superiority of fiber to the home has been made for three decades, going on four decades.
But that is not the point. The point is which platform helps an ISP best match the twin goals of being the low cost provider of the services customers want to buy, with suitable profit margins.
The fundamental test is going to be whether HFC, fiber to the home or some other platform, in the relevant time period (a decade or more) best matches market cost, revenue and performance requirements.
In markets where HFC is wi…

India Public Wi-Fi Initiatives Grow

Public Wi-Fi is assuming a bigger role in Internet access in cities in India.
The government of India has said it will create facilities offering public Wi-Fi in 2,500 cities and towns across the country over three years, with the network built and operated by state-owned Bharat Sanchar Nigam Ltd (BSNL).
The city of Delhi also separately is working on a municipal Wi-Fi plan of its own, that might use a freemium business model.
For its part, Bharti Airtel Limited (Airtel) announced that Uber riders across India will be able to pay for their trips using Airtel Money, the firm’s mobile wallet service. As part of that plan, Uber vehicles will be outfitted with Airtel 4G connections, offering free Wi-Fi inside Uber vehicles.
The government of Bihar, meanwhile, plans to offer free Wi-Fi at all colleges within the state.
Though an introductory no-charge promotion is expected for the BSNL service, it will be “for fee,” analogous to the model of many prior municipal broadband efforts or the amen…

Philippines is Exception to the Rule that Duopoly Markets are Not Competitive

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There is an exception to every rule, including the “rule” that telecom duopolies stifle robust competition. Some would point to cable TV companies and telcos in the U.S. market, but a better case is the Philippine telecommunications market, where just two providers compete aggressively.
The telecom industry in the Philippines is a duopoly, with PLDT and Globe Telecom being the two dominant players in the mobile market.
Local media company ABS-CBN Corp. is trying to become the third player in the country's mobile  industry, operating using wholesale facilities supplied by Globe.
In addition, Philippine-based conglomerate San Miguel Corp. has also expressed interest in entering the telecom market, and is in talks with Telstra in that regard.
PLDT is the market leader with a dominant market share in all segments (mobile, fixed line, and broadband), having 60 percent to 70 percent market share in all these segments.
Analysts at Standard & Poors consider the Philippines telecom market …

Reliance Jio Market Entry Might Not Trigger Consolidation

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The only certainty in India’s mobile market is that market share will change after Reliance Jio enters the market late in 2015. What might not change is the degree of market fragmentation, however.
Many believe the market will consolidate to a smaller number of providers after Reliance Jio enters the market. But that might remain difficult for several reasons. Some would question how much upside is gained by any acquisitions of the smallest providers, given caps on permissible market share and spectrum limit the “growth by acquisition” strategy.
The point is that even if suppliers think consolidation would be helpful, there are regulatory barriers to serious structural change.
The other likelihood, though, is that Increasing data consumption and growing average revenue per user should lift revenue growth in India's telecommunications industry at eight percent annually up to 13 percent annually over the next several years, according to Standard & Poors.

What Happens When an Incumbent's Core Strategy Goes Wrong

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The current market status of the government-owned Bangladesh Telecommunications Company Ltd. (BTCL) provides one example of just how much the market share of a former incumbent carrier can fall.
With a declining base of less than a million connections, BTCL has shrunk to being mainly an infrastructure services provider, while Telenor--Grameenphone, Vimpelcom–Banglalink, and Axiata–Robi hold about 90 percent share of the mobile market of 126 million accounts. Bharti Airtel–Airtel, Singtel–Citycell, and state-owned TeleTalk round the ranks of mobile providers. Generally speaking, analysts have suggested there are but a handful of strategies any former incumbent can choose, ranging from full wholesale on one end to roles that are application heavy at the other extreme.
Fundamentally, the options range from focusing on pipes or over the top apps, being a wholesale supplier of bandwidth and fundamental services or becoming a provider of over the top apps at retail.
Many tier one service pro…

Competition and Regulation are Risks for Asia Telecom Firms

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Telecom companies in the Asian region, including India, face regulatory risks and intense price competition that can undermine returns and investment, Standard & Poor's (S&P) Rating Services said.

Many emerging Asian telecom markets have strong growth prospects, based on large populations and growth of gross domestic product. But competition is an issue, ranging from moderate to high levels, and concentrated market structures prevail. However, in some emerging Asian telecom markets, such as India, regulatory constraints have restricted consolidation that would typically occur in more market-driven economies. Emerging Asia's Competitive Intensity In The Telecom Industry Country Competitive intensity Bangladesh High Pakistan High Sri Lanka High India Moderate to High Indonesia Moderate to High Philippines

Sprint Offers Free Year of Mobile Service to DirecTV Customers

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Sprint thinks AT&T’s ability to bundle DirecTV with mobile service is a serious customer acquisition threat. So much so that Sprint is offering DirecTV customers a free year of Sprint mobile service.

The free year of service offer starts Friday, Aug. 28, and runs through Sept. 30, 2015,
DirecTV customers switching to Sprint--or existing Sprint customers--can take advantage of the promotion.
The offer for existing Sprint customers is available to customers adding a new line of service through Sprint Lease, iPhone Forever, Sprint Easy Pay1, or paying full retail price for a smartphone.
The free year of service includes unlimited talk, text and 2GB of data per line (up to five lines), while the devices are used on the Sprint network.
Customers are responsible for the one-time $36 activation fee and monthly taxes and surcharges.
For new customers, Sprint will pay off existing phone and contracts, up to $300 per line.
After the promotional period, customers will pay standard rates.

CDN Market Growing 26% Annually

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The CDN market is estimated to grow from $3.7 billion in 2014 to $12.2 billion by 2019, at a Compound Annual Growth Rate (CAGR) of 26.3 percent from 2014 to 2019, according to Marketsandmarkets.
In terms of regions, NA is expected to be the biggest market in terms of revenue contribution while Asia Pacific (APAC) is expected to experience increased market traction with high CAGRs, http://www.marketsandmarkets.com/PressReleases/cdn.asp
Other forecasts have called for annual growth between 16 percent and 25 percent.
According to Cisco, CDN traffic will represent about half of all Internet traffic in 2017, and a majority of traffic after that.
Much of that traffic will flow within specific metro areas, not across the long haul networks, as more content and app providers cache content locally.

Demand clearly is going to keep growing. On average, households using linear TV generate much less traffic than a household that relies on Internet video.
A cord-cutting household will consume 92 GB …

If Video Goes Mobile, Pricing Plans Will Really Have to Change

Executives at Comcast, Verizon and Dish Network are not dumb. They know there is a high likelihood of disruption of the linear video subscription business. Precisely what form any new model takes remains a matter of some speculation.

At a high level, there are three fundamentally different visions. There is the model of HBO or Netflix, where “channels” are not the foundation, programs are.

Then there is the Sling TV and other similar coming models where channels still are a building block, but the bundle is stripped down to perhaps 20 or 30 channels.

Finally, there is the completely unbundled model where single channels “go direct” to end users.

There likely is room for some forms of all three models, though it is highly probable not all three models will be of equal importance, in terms of revenue or subscribers.

The odds of a “going direct” (over the top) model are less robust, for the simple reason that the business model is the toughest. Going direct requires a huge new investment i…