2013 Telecom Council TC3 Part 1: Start-up Pitches and SPIFFY Award Winners

Introduction:

Telecom Council Carrier Connections (TC3) – the Telecom Council’s annual summit- was held Sept 18-19, 2013 at Juniper Networks in Sunnyvale, CA. The event provides an opportunity for start-ups, network equipment vendors, and application developers to interact with telecom carriers (telcos) and global network operators.  In addition, several carrier-vendor success stories were were told in a panel session format, moderated by Telecom Council Chairman Derek Kerton.

Investor Forum Meeting:

During day one (September 18th) of the two day TC3 summit, several “investment ready” start-up companies presented their value propositions to an Investor Forum panel panel that consisted of the Venture Capital division of carrier, equipment and semiconductor companies.

The Nokia Ventures representative stated that “the mobile industry is heavily disrupted and (as a result) there will be many new opportunities in the next few years.”  Among the strategic areas of interest to Nikia: security, cloud, mobile, data centers, and video.

Here’s a very brief summary of selected start-up company pitches:

Whitenoise Labs:  Very strong encryption scheme with key lengths > 1060 bytes, produced via random number generator.  This secure text encryption and decryption software.was referred to as “Infinite One Time Pad.

Pie Digital:  Connected home call center and end user solution.  Broadband Service Providers (BSPs) lack tools to see past residential gateway (RGW) and offer home user support.  Fully integrated platform discovers the devices behind the RGW.  “Field trial with one carrier is a win. Very high CSR satisfaction rates.”

Ethertronics: RF front end using “active antenna system” that is able to dynamically respond to continuously changing wireless environment.  Interaction between antenna system and wireless modem along with end to end performance optimization was said to provide for a better user experience.

Saisei Networks:  Flow-based network visibility and policy control appliances. “These innovative virtual appliances are designed to deliver next-generation application intelligence and granular policy control to maintain and improve carrier and enterprise network health. SDN controlled, their NFV solutions improve link utilization, provide real-time analytics, and deliver application protection.”

StreetLight Data:  Contextualizes anonymous location data (from cellular towers and GPS devices) to measure consumer mobility patterns for a place.  “This next generation geospatial data can help brick and mortar retailers, and planners, transform the way they make decisions.”

Playphone:  Connects mobile users to a global gaming network.  “Live with AT&T, VZW, Sprint, Claro-Brazil, Telus, Rogers.”  Mobile games were said to be the largest part of smartphone ecosystem. Mobile game store comes pre-loaded on devices sold by carrier partners.

Readypulse:  Aims to turn Instagram photos into mobile apps (SaaS).  Monthly subscription fee from brands and retailers.

Wefi Inc: Key innovator in mobile data collection and analytics.  Customers include Cricket Wireless, TW Cable.  SDK for mobile apps comes pre-loaded on devices sold by carrier partners. End users don’t pay for this capability.

Radio Gigabit (Russia):  MM Wave wireless backhaul with beam steering capability. Advanced radio technology for next generation mobile networks includes smart lens antennas beamforming and DSP.  “Will be the next big thing in small cell backhaul.”


SPIF Meeting:

The second September 18th panel was the Service Providers Investment Forum (SPIF), which was the predecessor organization for the Telecom Council.  Over the last few years, global carriers have come to Silicon Valley in search of innovation and doing things that haven’t been done before. The SPIF panel members included AT&T, Sprint, BT, Telefonica, Orange, and Singtel Innov8 Ventures.

The presenting start-up companies were Guavus, Keypoint Technologies, Devicescape, Altobridge, 2600HZ, Calient Technologies, Jamcracker, Innopath Software, and Jolata.

We’ll only comment on Calient, which was one of the hottest Silicon Valley start-ups in 1999-2000 during the optical network boom. At that time, the company was said to be a leader in pure optical (photonic) switching.  More than eight leading optical networking vendors invested over $4.5 billion dollars into photonic switching, with most of that being Nortel’s $3.25 billion acquisition of Xros Networks (which was soon shut down). It was in this environment that Calient was able to raise $400 million to build a fab and deliver its first systems for the “all optical network” that was a very hot topic then.

Today, Calient finds its biggest opportunity in a “SDN Hybrid Data Center,” which consists of traditional Ethernet/IP switches that are augmented by the Optical Circuit Switches (OCSs) that Calient makes. Calient claims that traditional Data Center networks don’t scale well and consume huge amounts of power. The new Hybrid Data Center combines strengths of packet/frame switching for short or bursty traffic and OCS’s for on-demand, large or persistent flows. Examples of the latter include: scheduled events like VM (Virtual Machine) migration or Map Reduce; real time events like breaking news videos.

Calient’s OCSs are built from 3D MEM that use mirrors to move and switch optical paths from input port to output port.  Current product is a 320 x 320 port OCS which draws less than 45 watts of power and has less than 1.8 dB insertion loss. It was said to use SDN management (?) and control (Open Flow?) planes.

At the conclusion of the presentations, Telecom Council president Liz Kerton asked the carrier representatives to raise their hands if they planned to follow up with at least one of the companies. All six hands went up, which was a first for a SPIF meeting.  Ms. Kerton said that there was an average 80% “followup rate” from the carriers at typical SPIF meetings.


SPIFFY Awards:

The final TC3 day one event was the SPIFFY awards- the Council’s annual innovation recognition ceremony where SPIFFY members recognize entrepreneurs helping to improve the telecom industry.  Hundreds of start-ups were reviewed by over 25 SPIF members throughout one year (June 2012 through May 2013), but only seven were selected for awards.

The winners of the 2013 SPIFFY Awards are:

  • The Edison Award for Most Innovative Start-Up goes to SIGFOX.
  • The Ground Breaker Award for Engineering Excellence goes to Jibe Mobile.
  • The Graham Bell Award for Best Communication Solutions goes to Range Networks.
  • The San Andreas Award for Most Disruptive Technology goes to SmartThings.
  • The Core Award for Best Fixed Telecom Opportunity goes to 2600hz.
  • The Zephyr Award for Best Mobile Opportunity goes to Quixey (mobile app search engine).
  • The Prodigy Award for the Most Successful SPiF Alumni is Violin Memory.
  • The Fred & Ginger Award for Most Supportive Carrier goes to Orange for the active role of their Silicon Valley-based team in supporting telecom entrepreneurs.

President of Telecom Council, Liz Kerton said proudly of the 25 SPIF carriers and the 100+ startup presenters:

“A great year for innovation in telecom; we all applaud these winners for their contributions to the future of our industry. The Telecom Council looks forward to presenting many more telecom companies to the industry in the coming years.”


Up Next:

TC3 Part 2 will cover the likely strategic goals for the next FCC Chairman, especially Spectrum Policy.


Related Article:

Telecom Council TC3 Wireless Session Quicktakes & Highlights: Sept 18-19, 2013 at Juniper Networks in Sunnyvale,CA  

Global Telco Capex May Surprise on the Upside in 2013!

After several years of disappointments, global telco capital expenditures (capex) might increase stronger than expected next year. That might breath new life into the struggling telecom equipment and module market, which has been in the doldrums since at least 2001 with ever shrinking profit margins for telecom infrastructure gear makers.

Light Reading reports that European telcos might be forced to boost capex. Networks there are running at 65 percent of capacity, up from 40 percent, said Eitan Gertel, president of Finisar Corp., speaking at an MKM Partners conference recently.  Finisar is a company that is driven primarily by growth in the demand for bandwidth from the pervasive distribution and use of video, photos, and all forms of digital information.  Finisar Executive Chairman Jerry Rawls said on a recent earnings call, “Over time, enterprise and carrier spending will increase to provide more bandwidth capacity.”  He added that “Finisar is uniquely positioned to capitalize on these market opportunities.”

Commenting on Finisar’s recent earnings results, MKM Partners analyst Michael Genovese said “Telecom continues to rebound and datacom likely stays solid. We view FNSR as a key beneficiary of the capex recovery.”

“The U.S. telecom services market is becoming more competitive with significant infusions of overseas capital into Sprint (from Softbank) and T-Mobile (from parent Deutsche Telkom). This has the potential to spark something of a capex race, and we have already seen positive spending announcements from AT&T, Sprint, CenturyLink and Deutsche Telkom. China Mobile has also made positive comments about its 2013 100G optical investment plans,” added Genovese.

Read more at:

http://www.streetinsider.com/Analyst+Comments/Finisar+(FNSR)+Seen+As+Key+Beneficiary+of+Telecom+Capex+Race/7960351.html


Deutsche Telekom AG (DT) recently announced that it plans to increase capex by €9 billion to €10 billion- to a total of about €30 billion ($38.9 billion) over the next three years.   DT hopes to cover 85% of Germany’s population with LTE and 65% with Fiber to the Curb (FTTC) by 2016. LTE would come with download speeds of up to 150Mbit/s, while FTTC would be paired with vectored VDSL at speeds of up to 100Mbit/s.  DT expects to spend about €6 billion ($7.78 billion) on the FTTC and VDSL vectoring pieces.

The increased capital expenditure is intended to help compensate for the decline in revenues from traditional fixed line network and mobile telephony as well as text messaging. In the US, capital expenditure of around USD4.7 billion has been planned for 2013 and around USD3 billion in each of the two subsequent years, compared with USD2.7 billion per year on average from 2010 to 2012.

“Hesitation now means playing catch-up later. We are investing in the future – with resolve and a clear strategy,” said Rene Obermann, DT chairman. “The investment plans we have presented today will lay the foundation for future growth, and it is the people in Germany in particular who will benefit more than ever from the modern infrastructure.”

http://www.telegeography.com/products/commsupdate/articles/2012/12/07/dt-steps-up-investment-in-high-speed-networks-cuts-dividend/


In its recent report, “Service Provider Capex, Revenue, and Capex by Equipment Type (2012 Edition),” Infonetics Research forecasts a 3.6% increase in global telco capex in 2012 over 2011.  The firm’s 5-year CAGR for capex from 2011–2016 is 2.7%.

“Economic readings are worrisome everywhere, but so far the impact on global telecom and enterprise remains tame, and we’re forecasting capex to grow nearly 4% in 2012 over 2011,” notes Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.  Téral adds: “With the announcement of AT&T’s and Deutsche Telekom’s multi-billion dollar investment plans, next year’s capex outlay looks brighter.”

The firm forecasts that Asia Pacific will account for about 1/3 of global service provider revenue by 2016, propelled by China Mobile, the world’s largest mobile operator by revenue and subscribers. Wireless pure-play operators will account for nearly 1/3 of all telecom capex by 2016, driven by 3G and LTE rollouts in China, India, and Africa.  Surprisingly, incumbent carrier capex on the whole is flat to slightly down this year.  But independent wireless operators, competitive operators, and cable operators (led by the independent wireless operators)are increasing capex by 12% this year.

For more information, please see:

http://www.infonetics.com/pr/2012/1H12-Service-Provider-Capex-and-Subscribers-Highlights.asp


Insight Research is not so optimistic on capex. The company’s latest report “Telecommunications and Capital Investments: Impacts of the Financial Crisis on Worldwide Telecommunications, 2012-2017,” states that capex for global telecommunications service providers will be very uneven, with North America, Europe and the Latin American-Caribbean regions showing little or no growth and only Asia-Pacific and Africa continuing to make investments in telecommunications hardware and software to keep up with burgeoning customer demand for new services.  The firm’s compounded 5-year (2012–2017) forecast is for an increase of 1.5% in global telco capex.

Customers in every region are pinching pennies and the demand for advanced applications is uncertain. The confluence of these trends means a further erosion of operator margins, which in turn will affect investments into infrastructures and new technologies since funding is now more difficult to obtain,” says Insight Research President Robert Rosenberg.

For more information, please see:  http://www.insight-corp.com/reports/invest12.asp


Reference:

Lat month we reported on AT&T’s huge buildout expansion of its fiber and wireless networks.  AT&T announced it will spend $14B over the next three years to expand its wireline and wireless networks under its newly coined “Project Velocity” initiative.  $6B of that $14B will be spent on wireline upgrades, with the remainder on wireless- primarily LTE rollouts.

Read more at:  http://viodi.com/2012/11/08/at-bring-fiber-to-commercial-buildings-cover-99-of-us-with-lte/

Viodi View – 08/24/12

Same stuff, different day is the cleaned up song title that comes to mind when reviewing some of our recent interviews with folks who bring a bit of an international flavor to this issue of the Viodi View. Whether it is access to content on terms that are comparable to what can be had by larger operators or providing broadband access to the most rural of customers, the challenges for the smaller operators are the same, even if the terminology and the regulatory environment are slightly different.


Looking North for Ideas to Solve Programming Woes

Alyson Townsend of the CCSA

Ensuring the voices of the smaller independent television distributors (e.g. cable, telco, municipal operators) and the voices of their customers are heard among policy makers and vendors is what the CCSA (Canadian Independent Communications) does. In our interview at the 2012 ACA Summit CCSA president, Alyson Townsend, discusses the challenges faced by the small, Canadian broadband service provider. At the time, the hot-button issue was a CRTC-led mediation between the Canadian Independent Distributors Group (CIDG) (of which the CCSA is a part) and Bell regarding programming rights for the some 29 networks controlled by Bell. In this interview, she suggests that U.S. operators should take a close look at the CRTC promulgated rules about how vertically integrated program provider/distributors deal with smaller distributors.


More Efficient and Better Customer Support

Fiber to the Everywhere

Does automation mean a reduction in jobs? Not necessarily, as proven by this creative independent telecommunications’ cooperative that built on the productivity gains offered by its Fiber to the Home network to improve their quality of service. In this exclusive video interview, Kari Nishek, IS Applications Manager, explains how DRN retrained their work force to provide in-home customer/tech support, after they implemented an all-fiber network with auto-provisioning; this configuration reduces the need for truck rolls and reduces operational costs. Click here to view the video.

On a related note, Brent Christensen of the Minnesota Telecom Alliance and David Crothers of the North Dakota Association of Telecom Cooperatives co-authored an op-ed piece in the Grand Forks Herald that mentions DRN, its advanced network and the challenges it faces due to FCC rule changes after it had built the network under a different set of rules.


Local Operator Driving Global Telework Opportunities

Telework

Establishing a model for other operators is what Park Region Mutual Telephone Company is doing with the Minnesota Telecom Association with its telework program. In this interview, Park Region’s General Manager, Dave Bickett, provides an overview of their telework program, how they have worked with other local businesses and how they have had to educate the various constituents, from Human Resources staff to potential employees, about the benefits and nuances of telework. Click here to hear how their work in this area is positioning the people in its community to compete for jobs on a global basis without these new employees having to leave home.


Telecom Death Spiral Continues with ZTE’s Steep Profit Drop by Alan Weissberger

Sluggish telecom operator infrastructure spending, mobile device price wars and roadblocks in several western markets have all combined to cause China’s ZTE to report an 85% drop in profits (year over year) in the latest quarter that ended in June. Net earnings for the first half dropped 68 per cent  to Rmb245m, in line with a warning issued last month. That’s the steepest drop in net profits since the Hong Kong listed company went public six years ago! Click here to read Alan’s analysis and his thoughts on the what this indicates for the overall industry.


A Win-Win Demand Response Program

Smart Energy

Congratulations to Vince Groff for his promotion to general manager for the Cox Home Security business. This promotion complements Cox’s move to commercialize its home automation and security services. Groff is a fixture at the Parks Associates’ Smart Energy Summit and represents a leading voice as to how communications service providers fit into the home automation space. As he explains in this interview, part of his motivation for being at the 2012 Smart Energy Summit was to discover technology companies complementary to Cox’s strength in distribution of broadband services to the home. Click here to view.


Some Tweets and Short Thoughts:

  • Excellent explanation regarding why there are so many independent Iowa telcos and how working together decades ago pays off today.
  • The real TVNext Conference Greg Fawson does a great job producing the TVNext conference. TVNext will be October 10/11th in Santa Clara. Don’t be fooled, like I almost was, by sound-alike conferences that are being held just prior to and nearby the TVNext conference.
  • With all the veteran cable talent at Inovobb, a provider of CPE for operators, I am reminded of the famous quote about “putting the band back together”.
  • This post on a little known battle of WWII that was a precursor to D-Day reminded me of Canadian and Telecom veteran, Tony Jamroz.
  • FTTB – Fiber to the Brewery – Only Roger Bindl could find the connection between Beer and Broadband.
  • Thanks Steve for adding the valuable link to the FCC site about Call Completion/Quality issues.

The Korner – Fiber by the Community

The “F” is silent

A single English mother, who becomes an author and gains a degree of fame for her inspirational work; Lindsey Annison’s story has striking parallels to J.K. Rowlings. Instead of writing about wizards and magic, Annison tackled the real-world challenges of creating a rural broadband network. She wrote about those challenges in a series of books.

In this interview, filmed at the 2012 Broadband Communities Summit, she talks of the process and the motivation for bringing broadband to a rural region of Northern England. Working with her community, Annison found a way to bring broadband to the English country side, where the large telecom operator dare not tread. By using community funding, farmers and volunteer labor, B4RN (Broadband for the Rural North) is bootstrapping the build-out of a fiber infrastructure that has evolved from a wireless last-mile network.

Click here to read the rest of the post and to view our interview when she visited America earlier this summer.

Telecom Death Spiral Continues with ZTE's Steep Profit Drop

Sluggish telecom operator infrastructure spending, mobile device price wars and roadblocks in several western markets have all combined to cause China’s ZTE to report an 85% drop in profits (year over year) in the latest quarter that ended in June. Net earnings for the first half dropped 68 per cent  to Rmb245m, in line with a warning issued last month. That’s the steepest drop in net profits since the Hong Kong listed company went public six years ago!

The drop follows a series of weak results announcements by other leading  telecom equipment vendors. Huawei, ZTE’s larger Chinese rival, reported a 22  per cent slide in first-half operating profits.  Alcatel-Lucent and NSN have been losing money and laying off employees for years, while LM Ericsson recently reported net income down 63 per cent to SKr1.2bn ($172m), compared with a year ago.

ZTE blamed delayed orders from telecom operators and foreign exchange losses  because of the euro crisis for the weak performance, but some analysts say the  company faces much broader problems. China’s three telecoms carriers spent only a third of their projected  full-year capital expenditure during the first half, according to BOCI Research. Analysts do not expect a significant increase before the end of the year that could translate into new orders for ZTE, especially since Chinese operators are  not expected to receive licences for fourth-generation mobile services until  2014.

These are not ZTE’s only woes. The company, alongside Huawei, is being  investigated in the EU for allegedly receiving unfair subsidies from the Chinese  government. In the US, it is under investigation by the Department of Commerce and the FBI for allegedly selling equipment to Iran in violation of trade  sanctions. But unlike privately owned Huawei, ZTE is  predominantly owned by Chinese state entities despite its Hong Kong stock  exchange listing.

“The authorities in both the US and the EU appear to protect their own  players in the industry,” said Mr Ku. “That will make it very challenging for  ZTE to make inroads in the US market, much like it has been for Huawei.”

According to excerpts of an affidavit posted online by The Smoking Gun website last month, Ashley Yablon, a Texas-based lawyer working for ZTE, told the FBI that company executives discussed lying to the US government and  destroying evidence. ZTE on Wednesday declined to comment on the investigations.  As a result of the probe, Jon Christensen, a former Republican Congressman, terminated his lobbying for ZTE last month. A group of US lawmakers has also  called for a Treasury investigation against the Chinese company.

And mobile phone sales aren’t contributing to the bottom line! ZTE is the world’s fourth-largest handset vendor by shipments, but the ultra-competitive and price sensitive handset/mobile device business is depressing its profit margins.

“We still expect only low single-digit growth in global telecom capex next  year, and everyone is competing by price, so things will continue to be tough  for the industry,” said Jones Ku, an analyst with Barclays Capital.

More info at:  http://www.ft.com/intl/cms/s/0/c09c2db4-ec46-11e1-81f4-00144feab49a.html#axzz24NrVpW9v


From ZTE’s latest financial report:

Overview of the global telecommunications industry in the first half of 2012

Investment in equipment in the global telecommunications industry slackened during the first half of 2012. Regional differences remained as emerging markets such as Latin America, Middle East and Asia Pacific continued to enjoy faster investment growth. With the gradual phase-out of 2G networks and the further optimisation and upgrades of 3G networks, commercial deployment of 4G networks has commenced in many countries around the world. In the meantime, global broadband construction continued to be boosted by policy support for and financial commitments to the national broadband strategy in various countries. Smart terminals continued to account for an increasing share of the market, in line with growing popular demand for the product driven by the rapid development of Mobile Internet and the growing variety of mobile applications.

Operating results of the ZTE Group for the first half of 2012

During the first half of 2012, the Group achieved relatively fast growth in overall revenue courtesy to efforts to explore market niches and enhance its market position through initiatives in the perfection and innovation of product technologies, as competition in global telecommunications industry became more rational. Terminals remained on track for fast growth, while telecommunications software systems, services and other products sustained existing growth rates. Nevertheless, the Group’s net profit declined in comparison the same period last year, reflecting reduced investment income, exchange losses, postponement of network contract tenders of certain domestic carriers and lower gross profit margin. For the first six months of 2012, the Group reported operating revenue of RMB42.642 billion, representing a year-on-year growth of 15.21%. Net profit attributable to the shareholders of the parent company amounted to RMB245 million, decreasing by 68.17% as compared to the same period last year. Earnings per share amounted to RMB0.07 per share.

The international market

During the reporting period, the Group reported operating revenue of RMB21.757 billion from the international market, accounting for 51.02% of the Group’s overall operating revenue and representing a year-on-year growth of 6.20%. With a strong focus on populous nations and mainstream global carriers, the Group consolidated its market shares in emerging markets, while winning recognition in its work to enhance cooperation with mainstream global carriers on different products. As well as reinforcing its operation in current mainstream products, the Group was vigorously planning for new strategic niches.

http://wwwen.zte.com.cn/en/about/investor_relations/announcement/201208/P020120822628655583372.pdf

Closing Comment:

It’s been over three years since the “great recession” officially ended (at least in the U.S.). And 12 long years since the dotcom/fiber optic networking bubbles burst. Yet the recovery in sales and earnings for telecom equipment companies are still extremely depressed with little if any growth (especially in bottom line/net earnings). Layoffs continue unabated at most of the large networking gear makers (Alcatel Lucent to layoff 5,000 more employees starting in September 2012).  

There are also few if any network equipment start-ups being funded and many of those that got seed money in the last few years are folding as they can’t obtain additional capital/investments.  Network infrastructure has become a dirty word for VCs and Angel investors who were badly burned by previous investments in that space 10 or 12 years ago (e.g. ultra long haul, photonic (all optical) switching, multi purpose provisioning platforms (AKA “God boxes”), metro optical & resilient packet rings, terabit routers, free space optics, WiMAX, and many, many more technologies that never were commercially successful.

It has certainly been a very long nuclear winter.  More like a decade of frozen tundra for telecom gear makers, component and most semiconductor companies exclusively focused on this still depressed market segment.

When will the recovery come?  I was asked that question during an IEEE Globecom 2002 Business Applications Session on Optical Networks. Almost 10 years later, there is no recovery in site. Does anyone have a guess when the telecom infrastructure industry will see sunny days again?

References:

http://community.comsoc.org/blogs/alanweissberger/weak-global-econcomy-slow-business-china-has-negative-impact-alcatel-lucent-an

http://www.reuters.com/article/2012/07/16/us-zte-shares-idUSBRE86F00E20120716

http://community.comsoc.org/blogs/alanweissberger/huawei-gaining-ericsson-leadership-network-infrastructure-equipment-sales

 

Pyramid Research: Middle East Will Surpass Europe in LTE Early Adoption

Introduction

Despite the early LTE lead of Telia-Sonera in Sweden, Pyramid Research predicts that the Persian Gulf countries of Saudi Arabia, Bahrain, and UAE will pioneer Long Term Evolution (LTE) adoption and surpass European LTE deployments.  The LTE penetration rate for those countries is expected to reach 11.8 percent, which is more than the projected Western European average of 7.7 percent, according to a new report from Pyramid Research (www.pyr.com).  This conclusion could be somewhat misleading, as these three wealthy, but small Arabic countries may not be representative of the entire Middle East.  What about Lebanon, Jordon, Egypt- which are much poorer?  And Israel?  Nonetheless, here is what Pyramid has to say about this subject:

In its Insider report LTE in the Middle East: Early Lessons From the Gulf Pioneers, Pyramid Research Analyst Kerem Arsal examines the market criteria that will drive the early LTE deployments in the Middle East. By relating the driving factors to our forecasts for LTE adoption, it shows why certain markets are better positioned for growth than others in the region. Arsal also investigates the obstacles that some Middle Eastern markets may face despite sharing some commonalities with the early adopters. To provide a closer look at the active dynamics, this report presents three case studies from Saudi Arabia, UAE, and Turkey, which collectively comprise more than half of the total mobile service revenues in the region.

While the Middle East is a smaller market, it makes up the difference in its potential for growth. The Middle East's mobile data revenue growth of 34 percent for 2009 compares with only 7 percent for the same period in Western Europe, Arsal notes.  "We expect LTE adoption in the region to reach 6.1 percent of all mobile subscriptions by 2014, due to strong growth of demand for data services, reliance on mobile rather than fixed access technologies, and the increasingly competitive approaches of the telecom regulators," he says. "Among the region's LTE pioneers – specifically Saudi Arabia, UAE, and Bahrain – we project LTE adoption to reach 11.1 percent of all subscriptions by 2014, which surpasses our forecast of a 7.7 percent LTE adoption rate in Western Europe."

Mobile data revenue growth is a result of the absence of strong fixed broadband infrastructure and/or sufficient fixed competition, giving favorable signals to the network operators that are considering LTE deployments in the region. "Throughout the wealthier Gulf region, the absence of widespread fixed broadband infrastructure forced most subscribers to rely on mobile technologies for their Internet needs; as a result, some markets in the Middle East, particularly the Gulf area, have experienced huge leaps in mobile broadband demand,"  Arsal explains.  "These are the most suitable settings for LTE, which is likely to begin its life cycle with data cards and connectivity modems. In addition, wealthy Gulf nations have already developed much expertise in upgraded 3G networks; this will lead to a smoother transition to LTE."

Telecom Insider report overview

Early LTE deployments in the Middle East will be pivotal, both in shaping the future competitive dynamics in the region and in benchmarking expectations for similar markets. LTE carries particular relevance for the Middle East due to the region’s overall weakness in fixed broadband infrastructure and lack of competition in the fixed sector: Competing for mobile broadband access may equate to competing for broadband services in general. This opportunity is the region’s main difference from the developed markets in the West. On the other hand, some Middle Eastern countries parallel the developed regions when it comes to mobile market indicators such as subscription rates and the existence of UMTS/HSPA networks. Moreover, there are multiple markets of considerable size and purchasing power, such as Saudi Arabia and UAE, with mobile data revenues of roughly $1bn each in 2009.
The wealthier Gulf region has already displayed a great appetite for data services, and the absence of widespread fixed broadband infrastructure forced most subscribers to rely on mobile technologies for their Internet needs. Consequently, mobile operators in these markets have experienced quick returns on their network investments while accumulating valuable expertise in 3G technologies. We expect LTE adoption in the region to reach 6.1% of all mobile subscriptions by 2014, due to strong growth of demand for data services, the region’s existing reliance on mobile rather than fixed access technologies and the increasingly competitive approaches of the telecom regulators. Among the region’s LTE pioneers — specifically Saudi Arabia, UAE and Bahrain — we project LTE adoption to reach 11.1% of all subscriptions by 2014, which surpasses our forecast of a 7.7% LTE adoption rate in Western Europe.

This report examines the market criteria that will drive the early LTE deployments in the Middle East. By relating the driving factors to our forecasts for LTE adoption, it shows why certain markets are better positioned for growth than others in the region. The report also investigates the obstacles that some Middle Eastern markets may face despite sharing some commonalities with the early adopters. To provide a closer look at the active dynamics, this report presents three case studies from Saudi Arabia, UAE, and Turkey, which collectively comprise more than half of the total mobile service revenues in the region.

Key findings of the Report 

Some markets in the Middle East, particularly the Gulf area, have experienced huge leaps in mobile broadband demand, as a result of poor fixed infrastructure and changing consumer preferences. These are the most suitable settings for LTE, which is likely to begin its life cycle with data cards and connectivity modems.

o In Saudi Arabia, mobile data revenue grew by 70.9%, accompanied by a changing mobile user profile. Between 2004 and 2009, infotainment and connectivity revenues grew to become half of total mobile data revenue, which rose from $78m to $1.5bn in those five years.

o Operators in Bahrain already rely on data revenue to grow; their dependence will increase to 42% of mobile ARPS generated through data in 2014.

o Conversely, the importance of churn is much lower in lower-value segments where acquisition costs are low.

Rich Gulf nations have already developed much expertise in upgraded 3G networks. This will make the transition to LTE easier.

Despite criticisms of lacking liberalization, regulators in the Middle East are increasingly becoming adept at managing competition.

o In the cases of Saudi Arabia and Bahrain, we find regulators that have successfully created fully competitive settings without price wars.

o Economic incentives now overlap with a culture of innovation.

LTE in the Middle East: Early Lessons from the Gulf Pioneers is part of Pyramid Research's Africa & Middle East Telecom Insider report series.  This report can be purchased by contacting info@pyr.com
 

Disclaimer:  This journalist has no business relationship with Pyramid Research or their parent company- Light Reading.

Rural FTTH Clarity through RFOG

The year was 1995 and, after poring over real world maps and comparing architectures, I discovered that fiber to the home (FTTH) was less expensive than hybrid fiber coax for delivering video to extremely rural areas. The problem was that, although it was cheaper, it was still too expensive to justify; and, it did not support interactive services. Fast-forward 14 years and everything has changed for the positive for rural carriers. Dawn Emms, who I worked with at a partner company back in those days, recently co-authored, with Frank Park of Bresnan Communications, an excellent article in CED as to how cable operators can extend their cable plant to rural homes using RFOG (RF over Glass); a form of FTTH.

Surveys show strength of telecom video services with boomers surfing the web more than watching TV

Fiber-optic-based video services offered by telecoms show stronger levels of customer satisfaction than their cable and satellite-based rivals, according to a survey of 2,922 consumers in the U.S. and Canada performed by ChangeWave, a research and advisory firm. Of the 12% of respondents that said they would likely switch providers in the next six months, half said they would base that decision mainly on price.

 

Cable Leads But Fiber Looks Strong

According to ChangeWave’s latest survey, Cable (65%) still owns the bulk of the TV market, even though it’s been slowly ticking downward for much of the past 2+ years. We note, however, that they have gained 2-pts since our previous survey in March.

At the same time, Satellite providers (25%; down 1-pt) have remained relatively flat, even as the core growth story over the past two years has shifted to the fiber-optic TV service providers (11%). But what does this mean at the individual provider level?

Verizon continues to have the most satisfied customers (47% Very Satisfied), followed by AT&T’s U-verse service (39%) and then DIRECTV (34%).

In conclusion, fiber-optic companies are properly positioned to be the biggest winners in terms of future market share growth.

 http://seekingalpha.com/article/155923-fiber-optic-providers-show-strength-in-tv-service-markets?source=feed

 

Boomer TV Preferences and Internet Use
 

In an earlier survey in May of this year, Change Wave found several important changes in TV viewing and Internet use. In a survey of 1,660 members of the Baby Boom generation  – business professionals between the ages of 45 and 63, completed in early May, focused on TV viewing habits vs. home Internet usage.

The results point to a powerful shift occurring among Boomers away from traditional TV towards new types of online services and entertainment.  Importantly, this transformation is affecting lifelong habits.

-Boomers now spend more free time online (12.9 hrs per week on average) than they do watching traditional TV (11.8 hrs per week on average).

-By a five-to-one margin Boomers are watching less traditional television than they did a year ago. Among this group, 62% say it’s because they’re not as interested in what’s on TV these days, and another 26% say they’re spending more time surfing the web.

-Video-over-the-Internet now clearly represents a significant threat to traditional TV viewing. Better than two-thirds of Boomers (69%) say they’ve watched video content on their computer over the past 90 days. Even more ominously, 48% of respondents say they’d be willing to pay a monthly fee for a Video-over-the-Internet subscription if it provided the same programming currently available on their TV service.

-One place that Boomer professionals are spending more time online is with social networking sites – where 51% say they currently maintain one or more profiles.  Nearly three-in-five (57%) of these Boomers report they use the networking site LinkedIn, while another 55% have a Facebook profile – the site normally thought to be most popular among teenagers.  But Boomer interest in social networking has its limitations – 77% of users say they would not be willing to pay a subscriber fee for social networking. Of all the services, LinkedIn is the most likely to attract paid subscribers – but only 7% say they’d be willing to pay a fee if it was no longer free.

http://www.changewave.com/freecontent/viewalliance.html?source=/freecontent/2009/06/boomer-tv-habits-06-15-09.html