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Broadband's Impact

2013 Telecom Predictions from Analysys Mason: LTE Limited, Social Media Shakeup of Instant Messaging, Slower Smartphone Growth

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LONDON, December 19, 2012 – In 2013, roll-out of LTE services will have limited immediate economic impact, social media giants look set to stir up IP-based messaging services and smartphone penetration growth rates will slow considerably, according to Analysys Mason’s top telecoms predictions for the next 12 months.

The technology, media and telecommunications consulting and research company also predicts that Apple will continue to lose market share in the tablet space and the VoLTE investment case will come into the spotlight for operators.

1. LTE arrives, but with limited immediate impact: in 2013 LTE will become a commercial reality in many more countries, but will have limited economic impact in the next 12 months. Some European countries and emerging markets in Latin America are set to launch the network, as well as countries in South-East Asia via the Asia–Pacific band plan. Some developed markets such as South Korea will also start to deploy LTE-A and take advantage of features such as carrier aggregation to craft larger channels for higher-speed services.

However, the immediate economic impact of LTE will be limited in countries where it has been priced as a premium product and the economy remains sluggish (e.g. Italy and Spain). The industry will also realise that consumers are unwilling to pay a premium for LTE mobile broadband, and that this service will not compete with next-generation fixed access on anything other than a complementary basis. The effect will be to push down the price of 3G/HSPA mobile broadband services.

2. The ‘big switch-off’ will accelerate: 2013 will see growing operator focus on ‘the big switch-off’ – legacy mobile infrastructure for mobile network operators, copper networks and PSTN for fixed operators. Approaches to this will be varied. One operator in South Korea, for example, has already switched off its 2G network.

3. Social media giants to further shake up IP-based messaging: in 2012, operators responded to SMS cannibalisation by launching RCS-e, which was followed by a number of ‘telco-OTT’ services. In the next 12 months, competition will heat up further as social media giants such as Facebook move in. Analysys Mason forecasts that European operator revenue from messaging will decline by 34% in the next four years, from EUR28 billion in 2011 to EUR18.6 billion in 2017.

4. VoLTE investment case to come into the spotlight: the first voice-over-LTE (VoLTE) services came to market in 2012. Though widespread commercial deployments are still some way off, operators will need to make some tough decisions about the future of their voice services. Potential cost savings are currently driving the IMS investment case, but revenue implications are uncertain, and a clear vision for how voice services should evolve in an LTE world has yet to be articulated. HTML5/WebRTC will further stimulate the debate about whether ‘voice is just an application’.

5. Smartphone penetration growth rate to slow markedly: the smartphone market will continue to grow but the rate at which it grows will be markedly slower than in previous years. The number of annual global smartphone shipments will grow from 691 million in 2012 to 869 million in 2013. However, the rate of growth in the rate of new smartphone connections will significantly decline: from 39% in 2011 to 29% in 2012. In 2013, this growth rate will decline further to 20%.

Analysys Mason predicts continued, incremental development of the smartphone OS market share situation. Both Android and iOS are predicted to marginally grow their share of smartphone sales in the next 12 months globally (from 56.4% to 58.1% and 21.5% to 22% respectively). However, Symbian’s market share for sales will fall from 5.9% to 2.7%, reaching zero in 2016.

6. Apple to fall below 50% market share for tablet sales: as the tablet market continues to grow, Apple’s dominance of it will continue to decline, faster than many expect. Apple will fall below 50% market share for tablets by the end of 2013, with the iPad mini expected to have only a limited impact on sales numbers due to its high price point (USD329 versus less than USD200 for a Kindle Fire HD). Both Apple and Samsung lost market share in 2011-12 to the benefit of other vendors such as HTC, Motorola, RIM and Sony.

Content ecosystems for tablets will be a key differentiator in 2013 and as important a feature for tablets as the quality and size of the screen or processing power. Vendors who focus on expanding their content line-up and international footprint will be most likely to capture non-Apple tablet users.

7. Multi-device subscription pricing to emerge: selling prices for smartphones and tablets have been falling in the past five years; the average price of a smartphone has declined by EUR300 since 2007. This trend has supported increasing data penetration and the emergence of the multi-device user segment, which will result in many more operators launching multi-device subscription plans to capture additional revenue. This is particularly true for LTE subscriptions where per-gigabyte pricing covers a wide range of USD14–85 per gigabyte.

8. Traditional TV under more pressure: OTT/Connected TV and non-linear TV will continue to force broadcasters/pay-TV and telecoms operators to re-think their strategies. The take-up of paid-for OTT video services to the TV in the USA and Canada will more than double to 53.1 million households between 2012 and 2017, representing 37.4% of households.

The take-up of paid-for OTT video services in Europe will reach an estimated 2.3 million households in 2012, representing a mere 0.7% of households. We expect this to increase to 32.2 million, or 10% of households, in 2017. Compared with the USA and Canada, growth in Europe will continue to be constrained by a lower propensity to pay for video services, because of the widespread availability of high-quality free content from public broadcasters.

9. Wi-Fi to the rescue: small-cell/service-provider Wi-Fi solutions will address mobile operators’ needs for dense urban wireless coverage and capacity, but limited backhaul availability, standards maturity and solution costs will blunt major deployments until late 2013 or early 2014. LTE 2600 will emerge as a key option for small-cell spectrum gaining network and device support to address capacity needs of developed-market operators, complemented by growing 5GHz Wi-Fi providing improved Wi-Fi performance.

Service-provider Wi-Fi solutions based on HotSpot 2.0 and devices supporting Passpoint 2.0 will come to market in late 2013, helping to bridge the chasm between cellular networks and the emerging ‘carrier grade’ Wi-Fi service. Operators will also start to look at providing various grades of service: cellular, SP Wi-Fi and ‘Best Effort’ Wi-Fi to help differentiate their service and brand as well as support monetisation of the wireless experience.

10. Operators in emerging markets come of age: process transformation, opex and network cost optimisation will become major issues in emerging markets as operators within these regions are coming of age and an apparently endless growth in mobile penetration rates is finally slowing down.

The penetration rates of active SIMs in some African and Middle Eastern countries, for example, already exceed 100% of the population (eg. South Africa, Saudi Arabia, Morocco, and the United Arab Emirates).

Editor’s note: for media inquiries regarding this press release, contact Kate Brown or Alistair Young at press@analysysmason.com or telephone +44 (0)845 600 5244. Please mention that you saw the release on BroadbandBreakfast.com.

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Digital Inclusion

Doug Lodder: How to Prevent the Economic Climate from Worsening the Digital Divide

There are government programs created to shrink the digital divide, but not many Americans know what’s out there.

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The author of this Expert Opinion is Doug Lodder, president of TruConnect

From gas to groceries to rent, prices are rocketing faster than they have in decades. This leaves many American families without the means to pay for essentials, including cellphone and internet services. In fact, the Center on Poverty and Social Policy reports that poverty rates have been steadily climbing since March. We’re talking about millions of people at risk of being left behind in the gulf between those who have access to connectivity and those who don’t.

We must not allow this digital divide to grow in the wake of the current economic climate. There is so much more at stake here than simply access to the internet or owning a smartphone.

What’s at stake if the digital divide worsens

Our reliance on connectivity has been growing steadily for years, and the pandemic only accelerated our dependence. Having a cell phone or internet access are no longer luxuries, they are vital necessities.

When a low-income American doesn’t have access to connectivity, they are put at an even greater disadvantage. They are limited in their ability to seek and apply for a job, they don’t have the option of convenient and cost-effective telehealth, opportunities for education shrink, and accessing social programs becomes more difficult. I haven’t even mentioned the social benefits that connectivity gives us humans—it’s natural to want to call our friends and families, and for many, necessary to share news or updates. The loss or absence of connectivity can easily create a snowball effect, compounding challenges for low-income Americans.

The stakes are certainly high. Thankfully, there are government programs created to shrink the digital divide. The challenge is that not many Americans know what’s out there.

What can be done to improve it

In the 1980s, the Reagan administration created the federal Lifeline program to subsidize phones and bring them into every household. The program has since evolved to include mobile and broadband services.

More than 34 million low-income Americans are eligible for subsidized cell phones and internet access through the Lifeline program. Unfortunately, only 1 in 5 eligible people are taking advantage of the program because most qualified Americans don’t even know the program exists.

The situation is similar with the FCC’s Affordable Connectivity Program, another federal government program aimed at bringing connectivity to low-income Americans. Through ACP, qualifying households can get connected by answering a few simple questions and submitting eligibility documents.

Experts estimate that 48 million households—or nearly 40% of households in the country—qualify for the ACP. But, just like Lifeline, too few Americans are taking advantage of the program.

So, what can be done to increase the use of these programs and close the digital divide?

Our vision of true digital equity is where every American is connected through a diverse network of solutions. This means we can’t rely solely on fixed terrestrial. According to research from Pew, 27% of people earning less than $30,000 a year did not have home broadband and relied on smartphones for connectivity. Another benefit of mobile connectivity—more Americans have access to it. FCC data shows that 99.9% of Americans live in an LTE coverage area, whereas only 94% of the country has access to fixed terrestrial broadband where they live.

Additionally, we need more local communities to get behind these programs and proactively market them. We should see ads plastered across billboards and buses in the most impacted areas. Companies like ours, which provide services subsidized through Lifeline and ACP, market and promote the programs, but we’re limited in our reach. It’s imperative that local communities and their governments invest more resources to promote Lifeline, ACP and other connectivity programs.

While there’s no panacea for the problem at hand, it is imperative that we all do our part, especially as the economic climate threatens to grow the digital divide. The fate of millions of Americans is at stake.

Doug Lodder in President of TruConnect, a mobile provider that offers eligible consumers unlimited talk, text, and data, a free Android smartphone, free shipping, and access to over 10 million Wi-Fi hotspots; free international calling to Mexico, Canada, South Korea, China and Vietnam; plus an option to purchase tablets at $10.01. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Broadband's Impact

Senate Bill Subsidizing U.S. Semiconductor Production Clears House, Going to White House

Bill aims to strengthen American self-reliance in semiconductor chip production and international competition.

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Photo of Sen. John Hickenlooper, D-Colorado, during Tuesday's press conference

WASHINGTON, July 29, 2022 – A $54 billion bill to subsidize U.S-made semiconductor chips passed the House Thursday on a 243-187, and moves to President Biden for his expected signature.

Dubbed the CHIPS Act for Creating Helpful Incentives to Produce Semiconductors Act for America Fund, the measure is expected to incentivize domestic semiconductor manufacturing and also provide grants for the design and deploying of wireless 5G networks. It also includes a $24 billion fund to create a 25 percent tax credit for new semiconductor manufacturing facilities.

Advocates of the measure say that it will also improve U.S. supply chain, grow U.S. domestic workforce, and enable the U.S. to compete internationally to combat national security emergencies.

The measure passed the Senate Wednesday on a 64-33 vote.

Congressional supporters tout benefits

House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., voiced his support on the House floor, calling it “a win for our global competitiveness.”

The CHIPS Act of 2022 provides a five-year investment in public research and development, and establishes new technology hubs across the country.

Of the funds, $14 billion goes to upgrade national labs, and $9 billion goes to the National Institute of Standards and Technology research, of which $2 billion goes to support manufacturing partnerships, and with $200 million going to train the domestic workforce.

In a virtual press conference on Tuesday, Colorado Democratic Sen. Michael Bennett said that America’s semiconductor industry has lost ground to foreign competitors. “Today, only 12% of chips are manufactured in the United States, down from 37% in the 1990s.”

He said relying on cheaper products produced in China and overseas for so long, it has caught up with the United States.

Bennet suggested to move manufacturing labs to Colorado, where it can support it due to the plenty of jobs in aerospace and facility and infrastructure space.

“We don’t want the Chinese setting the standard for telecommunications. America needs to lead that. This bill puts us in the position to be a world leader,” said Bennet. “We are at a huge national security disadvantage if we don’t do this.”

Sen. John Hickenlooper, D-Colorado, joined his Rocky Mountain state colleague in support: “There is a real sense of urgency here to compete not only to re-establish the U.S. to make their own chips, but to compete internationally.”

He said that semiconductor chips are vital to almost every business and product, including phones, watches, refrigerators, cars, and laptops. “I’m not sure if I can think of a business that isn’t dependent on chips at this point.”\

“This is a space race,” he said. “We cannot afford to fall behind.”

Industry supporters say measure is necessary

The U.S. has lost ground to foreign competitors in scientific R&D and in supply chain industry during a recent semiconductor crisis, said France Córdova, president of the Science Philanthropy Alliance, at a U.S. Chamber of Commerce Foundation event on July 19. The U.S. only ranks sixth best among other prominent countries in the world for research and development, she said.

“The CHIPS Act of 2022 and FABS Act are critical investments to even the global playing field for U.S. companies, and strategically important for our economic and national national security,” said Ganesh Moorthy, president and CEO of Microchip Technology Inc.

Bide expected to sign measure

With the Biden’s Administration’s focus to tackle the semiconductor shortage and supply chain crisis through the Executive Order made in February, the Biden administration has been bullish on the passage of the CHIPS Act, in a Wednesday statement:

“It will accelerate the manufacturing of semiconductors in America, lowering prices on everything from cars to dishwashers.  It also will create jobs – good-paying jobs right here in the United States.  It will mean more resilient American supply chains, so we are never so reliant on foreign countries for the critical technologies that we need for American consumers and national security,” said Biden.

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Health

Providers Call for More FCC Telehealth Funding as Demand Grows

‘I think obtaining funding from the Universal Service Fund would go a long way.’

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Photo of FCC Chairwoman Jessica Rosenworcel

WASHINGTON, July 26, 2022 – Health care providers in parts of America say they are struggling to deliver telehealth due to a lack of broadband connectivity in underserved communities, and recommended there be more funding from the Federal Communications Commission.

While the FCC has a $200-million COVID-19 Telehealth program, which emerged from the Coronavirus Aid, Relief and Economic Security (CARES) Act, some providers say more money is needed as demand for telehealth services increases.

“The need for broadband connectivity in underserved communities exceeds current availability,” said Jennifer Stoll from the Oregon Community Health Information Network.

The OCHIN was one of the largest recipients of the FCC’s Rural Health Care Pilot program in 2009. Stoll advocated for the need for more funding with the non-profit SHLB Coalition during the event last week. Panelists didn’t specify how much more funding is needed.

Stoll noted that moving forward, states need sustainable funding in this sector. “I am hoping Congress will be mindful of telehealth,” said Stoll.

“The need for telehealth and other virtual modalities will continue to grow in rural and underserved communities,” she added.

Brian Scarpelli, senior global policy counsel at ACT, the App Association, echoed the call for FCC funding from the Universal Service Fund, which subsidizes basic telecommunications services to rural areas and low-income Americans. “I think obtaining funding from the Universal Service Fund would go a long way.”

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