The Next Cord Cutting: Real Cord Cutting

Today "cord cutting" refers to consumers who stop paying for TV and go broadband only from the cable or telecom company.  This is more accurately called "cord shaving".  The economic impact is significant but it's more of a redistribution.  More money to "Netflix" and less to the service provider for video.  Yet, more to the latter for higher capacity broadband that provides higher margins.

Tomorrow's "Real Cord Cutting" refers to consumers who completely stop all services from a wired service provider.  The go completely wireless.  We've seen the prequel with the elimination of a "home phone".  This next generation cord cutting has consumers relying on their 4G/LTE service for all broadband services.  This can be accomplished by simply turning their smart phone into a Wi-Fi access point when in their home.  The economic impacts of next generation real cord cutting are severe. The fixed access service provides not only lose all service revenues they lose customers entirely.

As 4G/LTE deployments expand and as more small cells get deployed the average bandwidth per device will increase substantially.  When the Netflix threshold (e.g., when the quality of streaming video is acceptable) is only a matter of time.  Slowing down real cord cutting will be the price of mobile data plans which will eliminate the intended savings in the first place.   Service providers with wireless assets will be in a strong position to succeed in this future scenario.  Other, such as cable MSOs will need to address their pricing plans which are driving customers away in the first place.  They can also compete with unique content, primarily "Sports and Wars", (i,e., live programming) and push for better quality video such as emerging 4K technologies.

Today's cord cutting is growing significantly especially in the under 30 demographic.  Tomorrow's real cord cutting will occur and will have substantial economic disruption for the entire ecosystem.


For past article please visit greywale.com 

The Last Mile.. All local loops are local.

This is a great quote that captures the real challenges of the last mile.  Notice these challenges are not technical.  To adapt a quote from Tip O'Neal (Speaker of the U.S. House (D-MA)  circa 1980s) ....  All local loops are local. 

"The last mile. It sounds easy, it's only a mile, after all – but the problem is, there are just so darned many of them. Wireless or Fixed, the last mile is a massive, poorly-scaling problem that manifests itself with trucks, cherry pickers, tower climbers, backhoes, manholes, labor unions, vandals, and byzantine local regulations and by-laws. What's to love? But as wireless modulation schemes approach the Shannon-Hartley limit, the last mile will increasingly be where we see networks scale to meet the surging demand for mobile capacity. "

From a meeting notice of the Telecom Council of Silicon Valley.

Google and the Home... Is there where we are heading?

Open Internet + Fast Lane: Win for Consumers: Yet Trust but Verify

The recent move by the FCC is a win for Consumers.  Yet, it's important the FCC "Trust but Verify".

Let's look at who will be the winners with the new FCC rules.  The Consumers.  Consumers will be the ultimate winners.  First, the ISPs will get a fair return on their capital investments and will have the incentive to invest in more bandwidth. Which enables wave after wave of innovation.   Second, those companies that pay for the fast lane will be those that consumers want and have a willingness to pay for.  Netflix for example.

Keep in mind that the FCC proposal STILL prohibits the ISP for degrading traffic.  Thus, those consumer applications in high demand get preferred treatment for the last 50 miles of the network (CDN Cache to home) and all other traffic gets treated the same it's always been.

The argument that small start up companies will be disadvantages is hollow.  It will force entrepreneurs to innovate more to deliver a compelling product to consumers.  It's just another market force to overcome.  It will raise the bar and eliminate the marginal applications from clogging the network.   This is no different than supermarket shelf space, a large barrier to entry.  Coke and Pepsi dominate.  Yet, look at all the upstart beverage companies that keep gaining shelf space.  They're doing this by creating innovative products that consumers want.  Not by whining to some federal regulator.

Why do industry pundits complain when Verizon, AT&T, Comcast, et al get  fair return on their investment and look the other way when Google, Amazon, et al make $1000's per second? 

Therefore, Consumers are the big winner here.  A) More bandwidth B) More innovation and C) Less marginal applications.

Given that the FCC is charted, via the Congress, to protect consumers this new Fast Lane approach is a step in the right direct.  However, the service providers must be careful not to over use this opportunity.  Hence, the "Trust But Verify" mantra.

Telco's and Cableco's must know that the FCC will be closely monitoring this new ruling (assuming it gets implemented).  They must adopt a high level of transparency to eliminate complaints from consumers.  Remember, all it takes is some savvy lawyer to get a single citizen to file a complaint.  To prevent endless litigation and legal costs that effectively eliminate the economic value to the "fast lane",  service providers need to provide this high level of transparency to avoid an FCC mandated higher level of transparency.

SPs should freely adopt a level of transparency that satisfies consumers and their advocates and limits the level of proprietary disclosure to their competitors.  They should ensure the "fast lane" does not, by design,  effectively harm all other traffic.  This can occur unwillingly using standard IETF IP Networking Protocols.

Therefore,  I believe the "Open Internet + Fast Lane" approach is worth implementing. It ultimately benefits the consumer and it's fair to the service providers.  Yet, and a "BIG YET", the FCC must Trust and Verify.

To comment on this or to discuss this in more detail please contact me at gwhelan@greywale.com

For additional articles and analysis please visit www.greywale.com

Is VoLTE Worth the Investment?

Mobile network operators across the globe are moving to deploying VoLTE (Voice over LTE) systems.  The reasons for this are as expected.  They include:

1. Better voice quality
2. Protect voice revenues
3. Leverage IMS investment
4. Be able to provide billing services (Leverage their billing system)
5. Migrate 2G and 3G voice services to LTE

However, given the successes of over-the-top (OTT) services over wired broadband and in current wireless networks is this billion dollar investment prudent?  Consider the following:

1. OTT has won, or is winning, the battles.  Skype and Netflix are two good examples.  WhatsApp is another case in point of OTT success. 
2. OTT services are “good enough”.  The majority of the market is unwilling to pay for QoS when a free, or near free, service is sufficient.
3. When a consumer experiences poor quality for an OTT service they blame the service provider and not the OTT provider.
4. QoS can only be guarantee when the “call” is completely on-net.  As soon as the voice call leaves the originating SP all bets are off.  Why spend the $ billions only for a subset of calls?
5. Voice revenue and now SMS Text revenues are crashing.   Why spend $ billions to chase a losing battle?
6. Service providers are moving away from call-based billing (i.e., CDRs (Call Detail Records)).  Although the NSA loves them.  Unlimited calls and texts are the norm. 
7. Data limits are prevalent.  A few Youtube videos or one Netflix movie will dwarf a month’s worth of phone calls from a data usage perspective. 
8. When Google deploys their fiber optic networks (e.g., Kansas City) they do not offer voice services.  The reason is to avoid the mountains of regulations required when offering voice services.    Does that mean people in Kansas City don’t make voice calls?  

It is understandable why a service provider with decades of legacy voice experience would want to consider VoLTE.  After all, they have decades of legacy voice experience.   Similarly, it’s not surprising that service providers that have spent $ billions and years deploying and perfecting IMS want to leverage that investment in time, money and careers.  It’s difficult to face reality that IMS is a “sunk cost” and therefore should not be factored in when evaluating VoLTE investments.

The OTT trends and successes cannot be refuted.  Service providers continue to face the fact that they cannot compete effectively against every segment of OTT services.  The $ billions they would spend on VoLTE would be better spent on: 

1. Increasing bandwidth per subscriber
2. Providing industry leading network security to protect their subscribers
3. Fighting the short sighted Net-Neutrality laws that make regulators “feel good” at the expense of long term viable markets.
4. Creating an infrastructure where OTT’s want to pay them for QoS in a fair, open and non-discriminatory manner. 

I’ve spent 20 years working on technologies with the goal to ensure service providers do not become a “dumb pipe”¹.   I am fully biased toward ensure the success of SPs and believe that “net neutrality” is unfair to them².  However, SPs should not spend $ billions on VoLTE just because it’s voice.  High speed, high quality broadband is the future.  Don’t fight it.

To discuss this please contact me at gwhelan@greywale.com

 Notes:       

1.  http://greywhalemanagement.blogspot.com/2012/07/if-sps-become-dumb-pipe-everybody-loses.html
2.  http://greywale.blogspot.com/2014/02/net-neutrality-overruled-win-for.html

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IoT, Market of Everything....

I'm questioning whether the term "IoT" is more about hype and selling trade shows than a real market opportunity.  As previously noted, there are many real markets and applications that are now put in the "IoT" bucket.

Why do many lead with the "smart refrigerator" as the poster child for IoT?  A smart appliance requires a "smart consumer" which makes it a niche market at best.


What's different now?  Cheap sensors, cheap modems (wired and wireless), cheap broadband connectivity, remote (i.e., cloud) intelligence?

When you put everything in the "IoT bucket" of course it's going to be a multi-trillion dollar market.  It's analogous to tire manufactures including the price of vehicles in their market size calculation.

   To discuss these issues please contact me at gwhelan@greywale.com

   For a list of previous articles please see   http://greywale.com/articles

Interesting Question