Reliance Jio Earns "Profit" in Less than 2 Years (Arbitrage, Accounting Rules Help)

It has been two decades since I’ve seen anything like the apparent regulation-assisted business model changes that apparently have helped Reliance Jio earn a profit within two years of launching its attack on the India mobile market.
The profit also is based on accounting rules, as Jio still has negative cash flow. In other words, Reliance Jio is able to capitalize some operating expenses.
Still, it is fair to note that some regulatory changes have simultaneously harmed Reliance JIo’s biggest competitors, and helped Jio reduce its own operating expenses.
The last time I saw this sort of regulatory arbitrage was back pre-2000, when incumbent and upstart telecom firms sparred over reciprocal compensation fees paid to firms for terminating calls on their networks from other service providers.
Basically, because such fees were very generous in a few locales, long distance conferencing services started businesses in those areas, charging very-low calling fees and essentially making their m…

FCC Definitions are Floors, Not Ceilings

Defining what broadband means now is an arbitrary exercise, if a necessary task to measure progress. According to the current minimum definition--on fixed networks--of 25 Mbps in the downstream, many internet access services actually cannot be marketed as “broadband,” using the Federal Communications definitions.
People, app experience and markets are not affected by any such definitions, of course. It probably does not matter at all that fixed network 10 Mbps Ethernet is not “broadband,” using the FCC definition.
The definitions do not apply to other wireless or mobile networks, though, a nuance that often is missed.
Still, for most users, it does not matter that most of their Wi-Fi and mobile internet access sessions are not “broadband,” using the fixed network definition. What matters is that user experience is good enough to provide satisfactory interactions.
“Satisfactory” often hinges on the actual use case, of course. Relatively modest speeds are required for most consumer apps…

Cable One Offers Gigabit Internet Access to 95% of its Passings

Cable One’s “GigaONE” gigabit internet access service is now available to residential customers across more than 95 percent of its U.S. footprint, representing more than 200 communities.
The primary impact likely will be that more people buy access at lower speeds, ironically. The reason is that when gigabit services are offered, the price of lower-speed tiers tends to drop. And, as you would guess, consumers buy more of a product they like when the price is lower. Verizon, for example, introduced its new gigabit per second at a retail price half that of the former 760-Mbps service, for example.
Gigabit services launches tend to reduce prices of services in the 100 Mbps or hundreds of megabits per second range to drop about  $27 per month, or about 25 percent, according to an Analysis Group study.
In markets where gigabit service has been introduced, prices for internet access in the 25 Mbps and lower speeds also tend to drop, by 14 percent to 19 percent.
Likewise, when two providers …

Telcos Developing Practical AI Apps

As exotic as artificial intelligence and machine learning might seem, they are becoming routine tools for optimizing networks, discovering and preventing problems on networks, and supporting consumer interfaces and third-party AI aps.
Telefonica is working with Juniper Networks to develop its “Self-Driving Network” solution, which uses machine learning to enable self-configuration, self-monitoring and self-diagnosis. THe idea is to give the network the ability to identify potential problems and correct them--without human intervention--before they cause issues.
Vodafone has been working on artificial intelligence trials in Germany and Ireland with Huawei and Cisco on ways to create a “centralized self-organising network” (C-SON) that identifies the optimal conditions for voice-over-LTE.
AT&T, for its part, also is creating a platform for supporting artificial intelligence apps that run on its networks, in addition to using AI to virtualize its network.
Verizon, among other apps, is …

Will WAN Business Exist in 20 Years?

Product substitution has been a big trend in the global communications business, for decades. As customers have deserted fixed voice for mobile voice; over the top video for linear video, OTT messaging for carrier messaging, they might increase substitution of mobile internet access for fixed access.
Eventually, in business markets, large app and content providers might largely rely on their own networks for bit transport across wide area networks.
That is a bit ironic. Logically, cloud computing, which presupposes wide area communications, should underpin communications service demand. That arguably has been the case, historically.
What also is clear is that consumption of data only partially results in revenue benefits for access service providers. What is even more unclear is the eventual role of service providers in the long haul data business.
In the access realm, much of that consumption flows over Wi-Fi connections that generate no direct incremental revenue for access provider…

DoJ Effort to Block AT&T Purchase of Time Warner is Wrong, Just Wrong

Most observers now agree that the biggest single problem with 5G is the business model. Simply, a new business model must be created; sustainable value and revenues are not a given.

Many believe platforms will drive 5G business models. Others argue with equal logic that new use cases and applications beyond human use of devices will be key. Others emphasize personalized and customized content and services.  

The underlying issue is that 5G is unlikely to create substantial new value--enough to justify the investments--if it winds up being mostly faster 4G,” especially as 4G itself becomes capable of faster speeds and lower latency.

In broad industry context, the enduring problem is that internet access services increasingly are becoming commodity “dumb pipe” (low value, low profit) services, while once-central voice and messaging services continue to diminish as drivers of revenue.

The simple fact is that the industry cannot sustain itself on such business models. For tier-one service …