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iainmorris
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iainmorris,
User Rank: Blogger
1/9/2017 | 2:40:46 PM
Profits
So the implication is that operators are losing money in selling mobile data services (if costs are higher than revenues, you are making a loss). And I don't quite get that as the majority seem to be very profitable companies (even if their revenues and profits are in decline).

I also don't really get the economics. We are led to believe there is soaring demand for mobile data services and always being told about a capacity crunch on networks, which is spurring the need for new technologies and access to spectrum (itself a finite resource). There has been some consolidation in the market, too - even if there is regulatory resistance to M&A activity in Europe. 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/9/2017 | 2:48:00 PM
Re: Profits
The issue is that operators haven't been able to increase the prices consumers pay on a per-bit basis so as consumption goes up but, relatively speaking, prices don't keep pace. Every major operator I know has been discussing this for a while now, it's what fuels the whole SDN-NFV push.

And it gets worse as traffic continues to ramp. Traditional ways of building networks don't allow for the massive scaling needed to handle the growing bandwidth demand. That's why operators want to adopt the same kinds of technology that FB and Google are using - commodity hardware controlled by intelligent software - but they can't do it fast enough. 

So operators are cutting back on capital expenses to preserve their profit margins, and will do so until they have a way to ramp up capacity that is less costly than today's methods. 
SVPCloud29186
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SVPCloud29186,
User Rank: Light Beer
1/9/2017 | 2:51:39 PM
Re: Profits
The study referred to at Verizon was looking at the backbone costs of transport, not the access, and certainly not 4G and beyond.  The way I think about it is that now the access services (broadband, video, advertising) must subsidize the transport network.  Profits are still generated, but there is incerasing drag on them. 
mcande
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mcande,
User Rank: Light Weight
1/9/2017 | 5:10:44 PM
usage based billing
Why can't the industry make the transition to usage based billing. If consumers pay for what they actually use, the revenues grow organically as the usage goes up.
brooks7
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brooks7,
User Rank: Light Sabre
1/9/2017 | 5:22:00 PM
Re: usage based billing
 

All of the plans - SDN, NFV (usage based pricing) are all about increasing the price of service.  What I think there is little discussion of is the value that customers are going to derive from that increase in pricing.  By trying to raise the value of Enterprise cost per bit per second, the carriers are going to drive the bulk of traffic into large data centers where Enterprises will simply bid out to the lowest bidder the required bandwidth.  Consumers will simply complain to the FCC who will probably slap on price caps.

So, if you want adoption of all this modern stuff...figure out how it will drive down Enterprise spend.   Because THAT is the value that people will pay for.  You won't raise the top line, but the goal is bottom line - so less expansion to make the revenue number.

Other than that, you will see ongoing consolidation plays.

And Telecom Equipment has been in a depression since 2000.  It isn't coming back to where it was in the hey day of the CLEC/dot.com days.  The money has moved into other places.

seven

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/9/2017 | 5:22:32 PM
Re: usage based billing
Possibly because consumers would revolt. There was a usage-based billing push for broadband about 10 years ago and regulators and consumers alike pushed back. It turned out almost no one truly understood how much bandwidth they were using. Consumers didn't like the idea of bills that fluctuated and some of them didn't trust their service providers to accurate track their usage. 

I think it would still be a hard sell today, but maybe I'm wrong. The closest thing is the usage buckets that wireless providers offer. 
mcande
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mcande,
User Rank: Light Weight
1/9/2017 | 5:27:50 PM
Re: usage based billing
Where consumers will see the value is by eliminating the tiered pricing. They will be willing to pay for a better experience. We have been doing it for years with natural gas, water, electricity, etc.
brooks7
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brooks7,
User Rank: Light Sabre
1/9/2017 | 5:37:00 PM
Re: usage based billing
 

No fast lanes...Title II remember.

 

And Carol, all the SP would have to do to increase revenue is to throw away more packets in WRED.  

seven

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/9/2017 | 6:35:16 PM
Re: usage based billing
Okay, I'll bite - how does throwing away more packets in WRED generate more revenue?

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
1/9/2017 | 6:36:00 PM
Re: usage based billing
Service providers would love to charge more for a better experience, but regulation makes that unlikely. 

 
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