Broadband and Apartments

Comcast just released the results of a survey they completed that talked to apartment building managers around the country. The published results of this survey can be found here. No doubt the survey was conducted and published as a way for Comcast to convince apartment owners and managers that Comcast can provide them with a broadband solution. But the findings are interesting in that I’ve seen few such surveys that concentrate on the MDU demographic. I’m sure the big ISPs do this kind of market research all of the time, but have rarely disclosed their findings.

While there are some apartment buildings in most communities, this is particularly of interest for urban areas where there are significant numbers of people living in apartments. There are a number of big cities in the country where half or more of residents live in apartments and condominiums. As I’ve discussed in a number of blogs, many cities have spotty broadband coverage that ranges from buildings with fiber for tenants down to buildings with no broadband connectivity. Here are the most interesting results of the survey:

Renter’s Expectations. 87% of apartment managers thought that technology played a vital role in keeping tenants satisfied. 75% of managers said that a majority of prospective tenants ask about communications services. 46% of managers said that having fast broadband connections was their most important amenity for residents with another 36% ranking WiFi as the most important. A distant third was in-apartment laundry.

Property Values. Property managers were asked how technology improves the value of their properties. 30% of managers said that providing good communications services boosted the value of their property by at least 20%. Over 90% of building managers said that good infrastructure increased their value to some degree.

Competition. 67% of the buildings involved in the survey have only one or two telecom service providers – meaning generally the incumbents.

Desire to Modernize. A lot of building managers have plans to improve technology for tenants. 47% have plans to improve infrastructure capable of delivering gigabit speeds. 48% have plans to introduce some smart home technologies (which also require good communications infrastructure).

Challenges Faced. While apartment managers almost universally want to improve their communications infrastructure, they face several roadblocks. 67% are worried about the cost of upgrades. 40% worry about having a quality ISP available even should they make the upgrades. 82% said that they would be quick to adapt upgrades that reduce their operating costs.

Plans for Future Technology Improvements. 89% of managers said that technology plays an important role in the decision of tenants to renew leases. The same percentage said that they wanted to improve WiFi performance in their buildings; 60% want to add energy-efficiency improvements; 49% want to add better security; 43% want to add smart home technology and 43% also want to bolster the underlying communications infrastructure.

Demographics. Looking at the trends with apartments provides one of the few glimpses into how younger households are shaping broadband demand. The managers surveyed said that 36% of their tenants were between 18 and 34, a much higher percentage than seen in single family homes. 90% of building managers said that younger renters were driving the demand for faster broadband speeds and better WiFi.

The Customer WiFi Experience

Every broadband provider is familiar with customer complaints about the quality of broadband connections. A lot of these complaints are due to poorly performing WiFi, but I think that a lot of ISPs are providing broadband connections that are inadequate for customer needs. Making customers happy means solving both of these issues.

It’s the rare customer these days that still only has a wired connection to a computer and almost the whole residential market has shifted to WiFi. As I have covered in a number of blogs, there are numerous reasons why WiFi is not the greatest distribution mechanism in many homes. I could probably write three of four pages of ways that WiFi can be a problem, but here are a few examples of WiFi issues:

  • Customers (and even some ISPs) don’t appreciate how quickly a WiFi signal loses strength with distance. And the losses are dramatically increased when the signal has to pass through walls or other impediments.
  • Many homes have barriers that can completely block WiFi. For instance, older homes with plaster walls that contain metal lathe can destroy a WiFi signal. Large heating ducts can kill the signal.
  • Most ISPs place the WiFi router at the most convenient place that is nearest to where their wire enters the home. Most homes would benefit greatly by instead placing the router somewhere near the center of the house (or whatever place makes the most sense with more complicated floor plans). Customers can make things worse by placing the WiFi router in a closet or cupboard (happens far too often).
  • There are a lot of devices today, like your cellphones, that are preset to specific WiFi channels. Too many devices trying to use the same channels can cause havoc even if there is enough overall WiFi bandwidth.
  • A WiFi network can experience the equivalent of a death spiral when multiple devices keep asking to connect at the same time. The WiFi standard causes the transmission to pause when receiving new requests for connection, and with enough devices this can cause frequent stops and starts of the signal which significantly reduces effective bandwidth. Homes are starting to have a lot of WiFi capable devices (and your neighbor’s devices just add to the problem).

A number of ISPs have begun to sell a managed WiFi product that can solve a lot of these WiFi woes. The product often begins by a wireless survey of the home to understand the delivery barriers and to understand the best placement of a router. Sometimes just putting a WiFi router in a better place can fix problems. But there are also new tools available to ISPs to allow the placement of multiple networked WiFi routers around the home, each acting as a fresh and separate hotspot. I live in an old home built in 1923 and I bought networked hotspots from Eero which solved all of my WiFi issues. And there is more help coming in the future, with the next generation of home WiFi routers offering dynamic routing between the 2.4 and 5 GHz WiFi spectrum to better make sure that devices are spread around the usable spectrum.

But managed WiFi alone will not fix all of the customer bandwidth issues. A surprising number of ISPs are not properly sizing bandwidth to meet customer’s needs. Just recently I met with a client who still has over half of their customers on connection speeds of 10 Mbps or slower, even though their network is capable of gigabit speeds. It is a rare home these days that will find 10 Mbps to always be adequate. One of my other clients uses a simple formula to determine the right amount of customer bandwidth. They allow for 4 Mbps download for every major connected device (smart TV, laptop, heavily used cellphone, gaming device, etc). And then they add another 25% to the needed speed to account for interference among devices and for the many smaller use WiFi devices we now have like smart thermostats or smart appliances. Even their formula sometimes underestimates the needed bandwidth. But one thing is obvious, which is that there are very few homes today that don’t need more than 10 Mbps under that kind of bandwidth allowance.

It’s easy to fault the big cable companies for having lousy customer service – because they largely do. But one thing they seem to have figured out is that giving customers faster speeds eliminates a lot of customer complaints. The big cable companies like Comcast, Charter and Cox have unilaterally increased customer data speeds over the past few years. These companies now have base products in most markets of at least 50 Mbps, and that has greatly improved customer performance. Even customers with a lousy WiFi configuration might be happy if a 50 Mbps connection provides enough bandwidth to push some bandwidth into the remote corners of a home.

So my advice to ISPs is to stop being stingy with speeds. An ISP that still keeps the majority of customers on slow data products is their own worst enemy. Slow speeds make it almost impossible to design an adequate WiFi network. And customers will resent the ISP who delivers poor performance. I know that many ISPs are worried that increasing speeds will mean a decrease in revenue – but I find many of those that think this way might be selling six or more speeds. I’ve been recommending to ISPs for years to follow the big cable companies and to set your base speed high enough to satisfy the average home. A few years ago I thought that base speed was at least 25 Mbps, but I’m growing convinced that it’s now more like 50 Mbps. It seems like the big cable companies got this one thing right – while many other ISPs have not.

Looking at Generation Z

We’ve already seen a lot of analysis about the viewing habits of Millennials. We know as a group that they watch less traditional linear TV than older generations. We know that over 30% of millennial households are already cord cutters and get all of their entertainment from some source other than traditional TV.

But now we are starting to get a glimpse at Generation Z, the next wave of our kids. These are the generation following the millennials. A new survey firm, Wildness, is concentrating on this generation to study trends for companies that want to market to this segment. The firm is a spin-off of AwesomenessTV (and since I assume you don’t know what that is, it’s a leading source of programming for kids on YouTube).

Wildness just did their first survey of Generation Z viewing habits. These kids are the first ones to grow up in a connected world since birth. They looked at 3,000 kids from 12 to 24 and found the following:

  • Nine out of ten watch YouTube daily.
  • For 31% of them their favorite programming is on YouTube.
  • 30% of them follow their favorite brands on social media and post about them.
  • When asked if they could keep only one viewing screen, only 4% said they would keep a television. Their screen of choice is a cellphone.

This does not bode well for traditional linear television. For a long time industry pundits assumed that millennials would ‘come back’ to traditional TV as they got older and started their own households. But they have not done so and now it’s largely accepted that the way you learn to view content as a kid will heavily influence you throughout your life. And Generation Z kids are not watching linear TV.

Another interesting aspect of Generation Z is that they are not just content consumers, they are also content generators. More than half of them routinely generate content of their own (short videos, pictures, etc.) and share with their friends. And a significant amount of their viewing is of content generated by other kids. This has to scare traditional content generators a bit as these kids are not consuming traditional media to the extent of older generations. This generation has blurred and blended their social life with their online life to a much greater degree than older generations. This is the first generation that freely admits to being connected 24/7.

And it’s not just prime time TV shows that are being ignored by this generation. They are also not following sports, traditional news or any of the other standards of programming. At a young age they are discovering that interacting with each other is far more satisfying than watching content ‘crafted’ for them by older generations. Most of the programming they follow on YouTube is being generated by contemporaries (millennials or younger) rather than by traditional media companies.

Anybody that offers traditional cable TV has to look at these statistics and know that the clock is already ticking towards a day when cable TV becomes obsolete. Already today the average age of viewers of prime time shows keeps climbing as younger viewers eschew linear programming.

Last year about 1.7% of all households become new cord cutters. That may not sound like a lot, but it’s over 2.1 million households. And it seems that cord cutters rarely come back to traditional TV. A lot more older households are also favoring Netflix and other OTT content. These households still maintain cable TV subscriptions, but you have to wonder for how long.

I would not be surprised within a few years to see cord cutting accelerate rapidly. It’s getting hard to find households that are satisfied with what they are paying for cable TV. Even those who love traditional cable think it costs too much. And this could lead at some point to a rapid abandonment of traditional cable. But one thing the industry must accept is that when Generation Z grows up they are not going to be buying cable TV.

Ready or Not, IoT is Coming

We are getting very close to the time when just about every appliance you buy is going to be connected to the IoT, whether you want it or not. Chips are getting so cheap that manufacturers are going to soon understand the benefits of adding chips to most things that you buy. While this will add some clear benefits to consumers it also brings new security risks.

IoT in everything is going to redefine privacy. What do I mean by that? Let’s say you buy a new food processor. Even if the manufacturer doesn’t make the device voice-controlled they are going to add a chip. That chip is going to give the manufacturer the kind of feedback they never had before. It’s going to tell them everything about how you use your food processor – how long before you take it out of the box, how often you use it, how you use the various settings, and if the device has any problems. They’ll also be able to map where all of their customers are, but more importantly they will know who uses their food processor the most. And even if you never register the device, with GPS they are going to know who you are.

Picture that same thing happening with everything you buy. Remember that Tostitos just found it cost effective to add a chip to a million bags of chips for the recent Superbowl. So chips might not just be added to appliances, but could be built into anything where the manufacturer wants more feedback about the use of their product.

Of course, many devices are going to go beyond this basic marketing feedback and will also include interactions of various kinds with customers. For instance, it shouldn’t be very long until you can talk to that same food processor through your Amazon Alexa and tell it what you are making. It will know the perfect settings to make your guacamole and will help you blend a perfect bowlful. Even people who are leery of home automation are going to find many of these features to be too convenient to ignore.

There is no telling at this early stage which IoT applications will be successful. For instance, I keep hearing every year about smart refrigerators and I can’t ever picture that ever fitting into my lifestyle. But like with any consumer product, the public will quickly pick the winners and losers. When everything has a chip that can communicate with a whole-house hub like Alexa, each of us will find at least a few functions we love so much that we will wonder how we lived without them.

But all of this comes with a big price. The big thing we will be giving up is privacy. Not only will the maker of each device in our house know how we use that device, but anybody that accumulates the feedback from many appliances and devices will know a whole lot more about us than most of us want strangers to know. If you are even a little annoyed by targeted marketing today, imagine what it’s going to be like when your house is blaring everything about you to the world. And there may be no way to stop it. The devices might all talk to the cellular cloud and be able to bypass your home WiFi and security – that’s why both AT&T and Verizon are hyping the coming IoT cloud to investors.

There is also the added security risk of IoT devices being used in nefarious ways. We’ve already learned that our TVs and computers and other devices in the house can listen to all of our private conversations. But even worse than that, devices that can communicate with the world can be hacked. That means any hacker might be able to listen to what is happening in your home. Or it might mean a new kind of hacking that locks and holds your whole house and appliances hostage for a payment like happens today with PCs.

One of the most interesting things about this is that it’s going to happen to everybody unless you live in some rural place out of range of cell service. Currently we all have choices about letting IoT devices into our house, and generally only the tech savvy are using home automation technology. But when there are chips embedded in most of the things you buy it will spread IoT to everybody. It’s probably going to be nearly impossible to neutralize it. I didn’t set out to sound pessimistic in writing this blog, but I really don’t want or need my toaster or blender or food processor talking to the world – and I suspect most of you feel the same way.

Replacing Legacy Telephony

office-handsetI remember sitting in on an industry panel somewhere in the mid-2000s and hearing a discussion about how VoIP was going to sweep the business world and that the PBX would be obsolete within just a few years. I took this with a grain of salt since those on the panel were mostly VoIP vendors or sellers. But still, the general consensus in the industry was that the new would quickly replace the old.

And yet here we are more than ten years later and there are still thriving PBX providers serving businesses. I have a client who sells PBXs and resells PRIs to serve them who has been steadily growing his business every year for the last decade. He still made a significant number of new PRI sales in 2016, many of them for two and three year contracts going forward.

There are several reasons that the PBX industry is still going so strong. The first is that a few years after I saw that panel, SIP came along as a big improvement to PBXs. SIP allows PBXs to mimic some of the best features of VoIP and reduced the sharp contrast between the old and the new technologies. SIP meant there was no longer a huge contrast between old PBX phones and phones with newer features.

But SIP alone doesn’t account for the continuing popularity of PBXs for businesses. As I mentioned earlier, there is still a thriving PBX industry that uses traditional PRIs and not SIP trunks and which still support that same old telephones that businesses have been using for decades.

There are a number of reasons why PBXs are still being used by businesses. Probably first among these is captured by the old adage, “if it ain’t broke, don’t fix it”. Offices full of information workers have probably upgraded phones during the last decade. But a lot of businesses operate in a different environment. There is no particular urgency to change a phone system that’s operating in a warehouse or a lumber yard or a milking barn. As long as such phones work well, the easiest path for the business operator is to keep renewing the phone systems and to not make a change.

I remember back when CCG still operated several offices that we were always being bombarded by vendors to upgrade our key systems. But it’s easy in a business office to defer such upgrades because they are disruptive and time consuming. My employees universally told me that they didn’t want to learn a new phone system – and so we never made an upgrade.

It seems like a lot of businesses also don’t want to make the capital spending decision to change technologies. Tearing out a PBX and installing new phones can mean a big one-time fee. Even if this is financed over time, businesses seem to put off making that decision until their old system stops meeting their needs.

And while most businesses still have office phones, you can’t discount the influence of cellphones on the workplace. It is a daily occurrence for me to be talking to somebody who is on a cellphone while they are sitting at their desk next to their office phone. Businesses are often not ready to get rid of office phones, but a lot of their business is handled with cellphones. This is only going to be bolstered by the widespread introduction of HD voice where the quality of cellphone calls promises to meet or exceed the quality of landline calls. Perhaps the real transition we will see in a few years will be businesses finally walking away from office phones altogether.

This all has a material impact upon those who sell phone service to businesses. I know a number of ISPs, for example, that only offer VoIP and they are often flummoxed by the number of businesses that are not interested in what they have to sell.

A lot of ISPs don’t want to hear the market’s message – that a lot of businesses are still happy with legacy voice products. My clients that do the best in sales of voice to businesses still operate their own voice switches and offer a variety of products to businesses including IP Centrex, PRIs, SIP trunks and traditional POTs lines. A seller who offers both the old and the new technologies is always offering something that people want to buy. I think a lot of us get wrapped up in the idea that newer is always better and it often takes customers to tell us that isn’t always true.

How Important are Data Upload Speeds?

cheetah-993774I’ve recently seen that the cable industry is working towards a solution that will provide what they call “full-duplex,” or, what the rest of the industry calls, “symmetrical” data speeds. Currently cable networks are capable of download speeds of up to a gigabit, but the technology supports relatively tiny upload speeds.

It looks like the solution for full-duplex won’t be cheap. Cisco says that their solution will require having additional fiber to the last active component in the network, which either means more fiber to nodes, or in some cases even past the nodes. It’s also going to require setting aside a few more empty channels from the cable network unless the duplex operates by cannibalizing the downstream data.

This raises the question of how important upload speeds are. Are they important enough for big cable companies to implement an expensive network upgrade? Already today cable companies have built (or plan to build) fiber to larger businesses or to sizable business communities. The DOCSIS cable networks have been unacceptable for business broadband for many years, except perhaps to smaller businesses that use the web in ways similar to home users. Most of the large cable companies have also begun building fiber to greenfield communities rather than extend their coaxial network.

But there is no doubt that upload speeds are vital to businesses. There are huge numbers of businesses served with cable modems today that would benefit from faster upload speeds. The case for symmetrical residential speeds is harder to make.

There are only a few types of residential customers that need fast upload speeds. One is gamers. They don’t necessarily need superfast speeds, but everything I read shows that they love speeds somewhere between 25 – 50 Mbps. There are also lots of folks that work from home that need faster broadband. For example, I know several photographers who send out massive files of pictures and videos to customers and who struggle if they are on slow upload broadband.

In my work I sometimes send fairly large files and attachments. And yet, except for those few times when somebody is on the phone waiting for the files while we talk, I’ve never much cared if it takes a little longer to send files. I’ve always figured that’s how most people feel. One of the services we offer at CCG is conducting consumer surveys and I’ve never reviewed a survey that showed a big consumer demand for fast upload speeds – most survey respondents say that it doesn’t matter.

Many of you probably suppose that once somebody buys fiber broadband that they get blazingly fast upload speeds. But when I look at my small clients that is not the case. I would guess – without sitting and counting –  that 60% to 70% of my clients with fiber networks do not offer symmetrical data speeds.

But there is obviously a lot of marketing advantage in offering symmetrical speeds. Verizon FiOS converted all of their products to symmetrical speeds late in 2014. CenturyLink built fiber past a million homes this year and is offering symmetrical data speeds. And of course, Google Fiber made the huge splash a few years ago by offering a symmetrical gigabit product for $70. The first symmetrical data products I can remember were from municipal providers like the ones in Chattanooga and Lafayette.

It will be interesting to watch to see if the cable industry decides to implement full-duplex. By doing so they might be able to wipe out the perceived advantage that fiber has in the marketplace today. I would think today that a lot of consumers would view a 100/100 Mbps product as superior to a 100/25 Mbps product even if they never use the upload capabilities. And perhaps it is that marketing perception that most matters, and maybe that is what will drive the cable companies to make the investment, at least in the markets where they have competition.

Why is my WiFi Slow?

Wi-FiOne of the universal complaints in the broadband world is that WiFi networks operate poorly. So today I thought I’d talk a bit about how WiFi functions. I think it’s probably different than what most people expect.

Most people know that there are two frequencies used for WiFi today – 2.4 GHz and 5 GHz. The 2.4 GHz band covers 80 megahertz of total bandwidth and is divided into 11 channels in the US. That may sound like a lot, but one 802.11 connection requires five consecutive channels. In practical terms this means that almost all WiFi gear in the US is preset to only offer channels 1, 6, and 11 and that means that only three non-overlapping transmissions can occur at the same time. The WiFi in Japan covers a wider spectrum footprint, up to channel 14, meaning they can use four non-overlapping signals simultaneously.

In practical use if you can see three or more WiFi networks you are experiencing interference, meaning that more than one network is trying to use the same channel at the same time. It is the nature of this interference that causes the most problems with WiFi performance. When two signals are both trying to use the same channel, the WiFi standard causes all competing devices to go quiet for a short period of time, and then both restart and try to grab an open channel. If the two signals continue to interfere with each other, the delay time between restarts increases exponentially in a phenomenon called backoff. As there are more and more collisions between competing networks, the backoff increases and the performance of all devices trying to use the spectrum decays. Your data is transmitted in short bursts each time you make a connection and before the restart cycle repeats.

If you’ve ever been in a hotel where you can see ten or more other WiFi signals, the reason for slow speeds is that there are huge conflicts between competing devices. People generally assume that the hotel has a poor Internet connection, but they could have a fast connection and the slo speeds are due to so many devices trying to connect simultaneously. Each WiFi device is rapidly turning on and off repeatedly trying to get open access to a channel. Your device will grab a channel for a short time and then get kicked off due to interference. Congestion has become so bad on the 2.4 GHz band that AT&T and Comcast no longer use 2.4 GHz for video or voice. Almost all smartphone makers no longer recommend using their smartphones at 2.4 GHz.

WiFi has improved dramatically with the introduction of the 5 GHz spectrum. In North America this spectrum swath has 24 non-overlapping channels. However, more than half of these channels are reserved for weather and military radar. However, this still provides a lot more potential paths to add to the three paths provided by the 2.4 GHz spectrum. Unfortunately the 5 GHz band shares the same WiFi characteristics as the 2.4 GHz spectrum and has the identical interference issues. But with more open channels there is still an increased chance of finding a free channel to use.

And interference between devices is not the only culprit of poor WiFi speeds. The network configuration can also contribute to poor performance. Some of the biggest sources of interference are range extenders or mesh networks that are used to try to get better signals. Range extenders listen to all WiFi transmissions and then retransmit them at a higher power level, and usually using a different channel. This creates even more WiFi signals in the intermediate environment competing for an open channel. When you can see your neighbor’s WiFi network, if they are using range extenders they might be always trying to use most of the available WiFi channels.

In a lot of the US we now also see a lot of public hotspots. For example, Comcast is in my neighborhood and I can walk and maintain a WiFi signal is most places from WiFi public signals that are transmitted from every Comcast home WiFi router. These public signals are always on, meaning that the WiFi router is using at least one channel at all times.

Probably the biggest new culprit for poor WiFi performance comes from our quest for greater speeds. The 802.11ac standard operates by merging together a lot of WiFi channels, and divides the whole WiFi spectrum into just two 160 MHz-wide channels. This means that only two devices using this 802.11ac can use up all of your home WiFi bandwidth. This standard was intended to be used to operate in short high-bandwidth bursts, but as people use this for gaming or watching 4K video the channels stay occupied all of the time.

Unfortunately the demands for WiFi are only increasing. The cellular carriers are still pestering the FCC to allow LTE-U, which would using WiFi to complete cellular calls. There are currently tests underway of the technology. We can also expect an increasing demand for WiFi from IoT devices. While most WiFi devices won’t use spectrum continuously, they still place demands on the channels and cause interference. There are also increasing use of devices that are always on, such as video surveillance cameras or smart home controllers like the Amazon Echo. A lot of experts look out five or ten years and expect WiFi to be unusable in a lot of places.

OTT is Not Easy on the Consumer

Fatty_watching_himself_on_TVThis article compares the channel line-ups for Sling TV, DirecTV Now and Playstation Vue.  I think it provides the best demonstration I’ve seen yet of how confusing it’s going to be for consumers to choose an OTT option.

The process of choosing an OTT provider is only going to get harder in the future as additional OTT providers enter the market. In the coming year we are going to be seeing Google / YouTube with a similar on-line option. Hulu has announced that they will soon be launching a live-streaming alternative. There is a strong rumor that Amazon is considering an OTT option and has already announced they are pursuing live sports. And various articles I’ve read hint at a few more new OTT providers in 2017.

Comparing OTT channel line-ups is a lot more work than comparing the line-ups of your cable company vs. one of the satellite providers. While satellite providers aren’t required to maintain the same rigidly-defined line-ups as the cable companies, the two sets of line-ups are still reasonably comparable.

Cable company line-ups are defined by the FCC cable rules that require a basic and expanded basic line-up. Contracts between cable companies and programmers has led to uniformity and there are not major difference between cable companies. Cable companies are free to offer additional premium tiers and packages, but even those are largely the same between cable companies. The satellite providers know that their basic package is competing against the expanded basic line-up, so they include roughly the same channels in their 50 – 75 channel packages as the cable companies.

The OTT companies have a different set of challenges. The programmers are not required to sell them any content, and so the OTT companies must negotiate with each programmer individually. These have to be interesting negotiations because the OTT providers want to put together the skinniest bundles they can get while still offering what consumers want. They are then free to bundle channels in any way that the programmer contracts will allow. Since each OTT providers negotiates a unique arrangement with programmers there are going to be major differences between the line-ups from different OTT providers.

The programmers, however, either want to sell multiple channels or else they want a revenue stream that insures them of some decent profits. Programmers understand the math, which is that they are losing money for every customer that moves from traditional TV to a smaller OTT offering. This puts them into an awkward position. It’s obvious that the cord cutting phenomenon is gaining momentum. But if the programmers help to create really attractive OTT packages they are then helping to accelerate cord cutting for consumers.

As I’ve written before, many of the programmers are able to tolerate the growth of OTT since they are selling a lot more new content overseas than they are losing to cord cutting. Many of them acknowledge that there are cable channels that only exist because of the monopoly the handful of programmers have over the industry. They know that the cord cutting phenomenon is going to mean the death of less popular cable networks.

But back to consumers. You can see in the comparison in the link I posted above that between the first three major OTT providers it’s not easy to even visualize what you get in the various packages. The options between the three providers are significantly different, and all of these options have some glaring holes from programmers that have not yet allowed their content into these OTT bundles. It’s hard to imagine how complex this comparison is going to be with 3 – 6 more options by the end of 2017. I think a lot of consumers are going to come to web sites like this and be intimidated by the choices and will delay cutting the cord.

It’s likely that over time the various OTT providers will find niches in the market. Certainly if they all end up with the identical sets of channels there won’t be a lot of difference between them. But I would expect the ones that will be successful in the long-run will find a demographic niche that will give them an advantage. But for now their line-ups are a messy hodgepodge since they are cobbling together line-ups from the channels that they are able to acquire. This is going to make for a number of confusing products for the first few years of this new industry until they all figure it out.

How We Use Cellphone Data

HTC-Incredible-S-SmartphoneNielsen recently took a look at how we use cellphone data. They installed apps on people’s phones that tracked data usage on both cellular networks and WiFi. The data comes from a massive study on the usage of 45,000 Android users in August. Nielsen also continues to study the usage of 30,000 cellular customers every month using the same app.

What Nielsen found wasn’t surprising in that they found that younger people use cellular data the most. They also found that Hispanics are the largest data users among various ethnic groups.

Here are the average monthly usage by age:

‘                      Cell Data         WiFi Data

18 – 24            3.2 GB            14.1 GB

25 – 34            3.6 GB            11.2 GB

35 – 44            2.9 GB              9.3 GB

45 – 54            2.1 GB              7.5 GB

55 – 64            1.4 GB              6.4 GB

65+                  0.9 GB              4.8 GB

This study quantifies a lot of things that we already knew about cellular usage. We know, for example, that younger people use their cellphones to watch video more than older people. I have anecdotal evidence of that by watching my 17-year old. If she’s representative of her age group then they are using cellular data even more than the 18-24 year olds. They communicate with pictures and videos where older generations use email, chat, and text messaging.

These numbers also show that most people are not yet using their cellphones as a substitute for landline data usage. Certainly there are many individuals for whom the cellphone is their only source for data, but these numbers show average cellphone data usage far below average landline usage. I have a number of clients that track landline customer data usage and most of them are reporting average monthly downloads somewhere between 100 GB and 150 GB per household. Comcast recently reported that their 6-month rolling median data usage is 75 GB – meaning half of their customers use less than that, and half use more. All of the numbers in the above charts, while representing individuals and not families, are still far below those numbers.

Nielsen also tracked data usage by ethnicity, as follows:

‘                                  Cell Data        WiFi Data

Hispanic                       3.8 GB          10.1 GB

Native American         3.5 GB            7.3 GB

African-American        3.3 GB            9.1 GB

Asian                            2.3 GB            9.9 GB

White                           2.2 GB             8.6 GB

This shows that Hispanics, on average, are the largest users of data, both cellular and WiFi. Whites are at the bottom of the average usage chart.

Nielsen also was able to look into usage by geography. They didn’t publish all of the results, but did provide some interesting statistics. For example, they have some strong evidence now that cities with widespread WiFi networks can save customers money on their cellphone plans. For example, New York City has a lot of public WiFi and users in the city use WiFi 14% more than the national average while using cellular data 12% less. Contrast this with a city like Los Angeles with little public WiFi, and citizens there use WiFi 9% less than the national average and use cellular data 13% more. This kind of study can provide the basis for a city to quantify the benefits to the public for building a public WiFi network.

Productizing Safety

padlockThe Internet is becoming a scarier place by the day to the average user. It seems like a week doesn’t go by when there isn’t news of some new and huge data breach or other nefarious use of the web. But as much as those big events might create a general industry sense of unease, these announcements also make people worried about their own individual Internet security.

The big ISPs like AT&T crow about recording and monetizing everything that their customers do on the web. And with a likely weakening or elimination of Title II regulation by the FCC this is likely to intensify. Every web site parks cookies on the computers of their visitors, and the bigger sites like Facebook and Google gather every fact fed to them and peddle it to the advertising machine. There are hackers that lock down PCs and hold them hostage until the owner pays a ransom. There are smart TVs that listen to us and IoT devices that track our movements inside our homes. There was news this week that smartphones with a certain Chinese chip have been sending every keystroke back to somebody in China.

All of this has to be making the average Internet user uneasy. And that makes me wonder if there is not a product of some sort that smaller ISPs can offer to customers that can make them feel safer on the web.

Savvy Internet users already take steps to protect themselves. They use ad blockers to reduce cookies. They use browsers like DuckDuckGo that don’t track them. They use encryption and visit sites using HTTPS. They scrub their machine regularly of cookies and extra and unidentified files. In the extreme some use a VPN to keep their ISP from spying on them.

Small ISPs are generally the good guys in the industry and don’t engage in the practices used by AT&T, Comcast and Verizon. I know some small ISPs that try to communicate to their customers about safety. But I think safety is now one of the biggest worries for people and I think small ISPs can do more.

Customers can really use the help. It’s easy to assume that customers ought to understand basic safety procedures, but the vast majority of them load some sort of virus protection on their PC the day they buy it and never think of safety again. They repeatedly do all of the bad things that lead to trouble. They open attachments on emails. They don’t update their software to have the latest security patches. They use social media and other sites without setting basic privacy filters.

I think there is an opportunity for small ISPs to be proactive in helping to make their customers feel safer, and in the process can create more loyal customers. I think there are two possible ways to undertake this. One is an intensive education campaign to inform customers about better web practices. I’m not talking about the occasional safety reminder, but instead a steady and concentrated effort to tell your customers ways to be safer on the web. Brand yourself as being a provider that is looking out for their safety. But don’t pay it lip service – do it in a proactive and concentrated way.

I also think there is a space for a ‘safety’ product line. For example, I have clients who run a local version of the Geek Squad and who repair and maintain people’s computers. It would not be hard to expand on that idea and to put together a ‘safety’ package to sell to customers.

Customers could have a service tech come to their home for a day each year and you could ‘fix’ all of their safety weaknesses. That might mean installing ad blockers and a spyware scrubber. It would mean updating their browsers and other software to the latest version. It could mean helping them to safely remove software they don’t use including the junkware that comes with new computers. It might include making sure they are using HTTPS everywhere. It also might mean selling a VPN for those who want the highest level of security.

I have clients who have been selling this kind of service to businesses for years, but I can’t think of anybody who does this in any meaningful way for residential customers. But since the web is getting less safe by the day there has to be an opportunity for small ISPs to distinguish themselves from larger competitors and to also provide a needed service – for pay of course.