Tag Archives: smartphones

Digital Payments

When the iPhone first hit the market, the pundits started touting the huge benefits that would come from carrying around a computer in our hands. Some of those benefits have been transformational. There used to be a rack with maps inside every gas station and convenience store to help travelers figure out directions. The map industry has been completely displaced by online GPS and driving instructions that have brought huge efficiency and a lot fewer lost travelers wandering rural roads.

We were also told that the Rolodex was dead and that you would be carrying everybody’s contact information with you – something that quickly became true. When was the last time that you called information to get somebody’s telephone number?

At the top of the claimed benefits was the promise that we’d quickly be paying for everything seamlessly with our smartphone. We’d be able to buy from a vending machine or shop at a store by just waving our phone.

There has been some movement in recent years to make this easier. You can load credit or debit cards into your phone and use Apple Pay, Google Pay, or Samsung Pay at places that accept the payments. There is a more recent movement to allow people to seamlessly pay each other through direct bank debits without having to use an intermediary service.

But we are nowhere near universal acceptance of payments through a phone. There are a number of reasons why this is still the case 16 years after the promise that this was right around the corner.

  • A bank survey in 2022 showed that 38% of Americans would refuse to use such a payment system. But that is not an excuse for making it easier for everybody else.
  • For many years, financial institutions didn’t have any interest in accepting micropayments. Banks were not interested in enabling a system that would generate millions of $1 transactions at vending machines or other types of small transactions. The fees the banks wanted for the transaction were too high to make this reasonable.
  • There were always a lot of concerns about security. Somebody could steal a phone with an automatic payment system and spend it without scrutiny. That’s being solved in many cases by phones tied into biometrics.
  • All of the proposed payment solutions require sellers and retailers to foot the bill for the electronic readers that can accept payments. This is particularly challenging when there isn’t a universal reader that would accept payments for multiple payment systems. The different payment systems have been pushing unique hardware solutions. This has led to many merchants unwilling to embrace electronic payments.
  • It’s even more of a challenge to equip millions of vending machines, gas pumps, and other payment portals with readers, particularly those in an outdoor environment.
  • There are still plenty of merchants in rural areas that have problems accepting credit cards the traditional way. A credit card transaction doesn’t require the transfer of a lot of data, but it requires a stable connection to be held during the length of a transaction. A lot of rural broadband fluctuates and kills a lot of credit card transactions.

Perhaps the most important reason it’s not widespread here is that the U.S. took the high-technology approach, like we do with many things. Requiring a new set of payment readers is good business for the merchant service companies that provide the readers and the software for merchants.

To demonstrate how we might have taken the wrong path, we only need to look at India. A common payment method for outdoor street vendors is to have a QR code posted. A buyer scans the QR code, which sends them to a portal where they approve the amount of payment. When the payment is complete, a message is sent and is usually played out loud on the merchant’s cell phone. When somebody buys food from a food cart, the payment can be completed by the time the seller is ready to hand over the food. Maybe we are just making this too complicated.

Apple Buys into 5G

Apple is coming out with a full range of new 5G iPhones. The phones have been designed to use the full range of new frequencies that the various cellular companies are touting as 5G, up to and including the millimeter wave spectrum offered in center cities by Verizon. In addition to 5G, the phones have new features like a better camera, better ease at using wireless charging, and a lidar scanner. The last change is the most revolutionary since lidar allows apps on the phone to better see and react to the surrounding environment.

But Apple is going all-in on the 5G concept. It’s a natural thing to do since cellular carriers have been talking non-stop about 5G for the last few years. However, by heavily advertising the new phones as 5G capable, Apple is possibly setting themselves up to be the brunt of consumer dissatisfaction when the public realizes that what’s being sold as 5G is just a repackaged version of 4G. The new features from an upgrade in cellular specifications will get rolled out over a decade, like we saw with the transition from 4G to 5G. In terms of the improvements of these new phones, were probably now at 4.1G, which is a far cry from what 5G will be like in ten years.

What I find most disturbing about the whole 5G phenomenon is that the cellular companies have essentially sold the public on the advantages of faster cellular speeds without anybody ever asking the big question of why cellphones need faster speed. Cellphones are, by definition, a single user device. The biggest data application that most people ever do on a cellphone is to watch video. If  4G phone is sufficient to watch video, then what’s the advantage up spending a lot of money to upgrade to 5G? Home broadband needs fast broadband to allow multiple people to use the broadband at the same time, but that isn’t true for a cellphone.

People do get frustrated with smartphones that get poor coverage inside big building, in elevators, in the inevitable cellular dead zones in every town, or rural areas too far away from cell towers. 5G phones won’t fix any of these problems because poor cellular coverage happens in areas that naturally block or can’t receive wireless signals. No technology can make up for lack of wireless signal.

The big new 5G feature in the iPhones is the ability to use all of the different frequencies that the cellular companies are now transmitting. However, these frequencies aren’t additive – if somebody grabs a new ‘5G’ frequency, the bandwidth on that frequency doesn’t add to what they were receiving on 4G. Instead, the user gets whatever frequency is available on the new spectrum channel. In many cases, the new 5G frequencies are lower than traditional cellular frequencies, and so data speeds are going to be a little slower.

The cellular companies are hoping that Apple is successful. The traditional frequencies used for 4G have been getting crowded, particularly in urban areas. Cellular data traffic has been growing at the torrid pace of 24% per year, and the traditional cellular network using big towers is getting overwhelmed.

Cellular companies have been trying to offload the 4G traffic volumes from the traditional cellular networks by opening up thousands of small cell sites. But their biggest hope for relieving 4G was to open up new bands of spectrum – which they have done. Every data connection made on a new frequency band is one that isn’t going to clog up the old and overfull cellular network. Introducing new bands of frequency doesn’t do the cellular networks any good unless people start using the new frequency bands – and that’s where the iPhone is a godsend to cellular companies. Huge volumes of data will finally migrate to the newly opened frequency bands as these new iPhones hit the market.

Unfortunately, users will likely not see any advantages from the change. Users will be migrating connection to a different frequency band, but it’s still 4G. It will be curious to see who takes the heat when the expensive new phones don’t outperform the old phones – will it be Apple or the cellular carriers?

The Market Power of Millennials

wraparound-glassesFour or five times in just the last week I’ve seen news articles that reminded me that we are moving into a millennial world. It’s starting to become clear that millennials are already having a big impact on numerous traditional industries.

We certainly can see the impact of millennials in the telecom industry. New millennial households aren’t buying traditional cable TV packages and landlines. Because of this the average viewer age for traditional TV programming has skyrocketed, which is upsetting the advertising in our industry. Millennials love their smartphones and are happy to use them for the majority of their computing needs. And some are even starting to leave smartphones behind in favor of wearable devices like the Apple iWatch.

This is the first generation that had a radically different childhood than earlier generations. This generation grew up with computers and that seems to have changed them more than past technologies changed other generations. I’m a baby boomer, and we were the first generation to grow up with television and that changed us a bit from our parents. But at the core, the baby boomers still shared mostly the same experiences growing up as their parents, be that with school, church, leisure or social activities.

But it’s becoming obvious that growing up with computers changed the millennials from their parents. This is the first generation that was fully immersed in social networking, texting, smartphones, online shopping and all of the many things that come with being computer-centric.

The millennial phenomenon is not limited to telecom and computers. Millennials are walking away from ‘traditional’ institutions of all kinds. Interest in the NFL and Major League Baseball is dropping – largely due to the fact that millennials aren’t interested. NASCAR has seen attendance and interest drop like crazy – which is something you might expect from a generation that values connectivity more than the past car-centric generations. Church attendance is down. Voting in elections is down. Subscriptions to newspapers, magazines, and traditional news outlets of all kinds are down. Millennials are shunning fast food restaurants, shopping malls and traditional department stores. The bottom line is that this generation has made a big break from the way their parents did things.

So what does this all mean for ISPs, telcos and cable companies? First, it seems to me that millennials also have a different expectation for what it means to be a customer. They are used to buying things online and having the package delivered the next day. They are used to making appointments online and communicating in real time. This is a generation that has already walked away from email and is in the process of walking away from texting. It looks to me like this generation won’t do business with companies that don’t make it easy. For example, everybody in my generation moans about how painful it is to deal with the big cable company – but the millennials seem willing to walk away completely from the cable company or anybody else that is too hard to use.

I build business plans that look forward anywhere from five years to twenty years and sometimes I am not quite sure what to do about millennials in these plans. The one thing our industry sells that millennials seem to like is fast broadband. They live in a video-rich world and like to have multiple streams of video and music running at the same time. It looks like they are ready to slide easily into virtual and enhanced reality technologies which should strengthen their need for broadband. My guess is that millennials will be the ones forcing us oldsters to participate in virtual meetings and using other new technologies.

As different as the millennials are, I really wonder about how different their kids are going to be. If you have recently watched a five year old kid with a smartphone you quickly realize that they really don’t live in the same world as we do, or even as their millennial parents. I don’t know that any of us knows what to expect from the post-millennial generation. That generation is going to grow up in a world of virtual reality, artificial intelligence and all of the new technologies that will be hitting the streets over the next decade. The gulf between them and their grandparents is going to be immense.

Returning to the Basics

turntableThere is a really interesting trend happening with the electronics and the devices we buy and use. For the past decade we have seen the smartphone kill off numerous other industries by turning their products into apps. Consider the implosion of industries like photography and music and the waning of other devices like PCs. As the chipsets in smartphones have become more powerful they have let our little handheld computers take on more and more tasks that were once performed by other devices.

But it looks like the smartphone is starting to lose some of its zing. People are not fired up to run out and buy the latest phones because the new ones are not dramatically better than the old ones. People are holding on to phones longer and it’s been reported that people are even exploring the potential on their phones less and are using fewer apps. Sales of iPhones are down for the first time along with the price of Apple stock.

Along with this downward trend in smartphones is the resurgence of some of the industries that the smartphone helped to decimate. I travel a lot and for a number of years it has been rare to see anybody but a few obvious foreigners carrying a camera through airports. But all of a sudden they are noticeable again. And this is happening at a time when the cameras in smartphones are getting much better. I know the camera in my new galaxy S7 takes pretty amazing pictures. But there seems to be a desire by people to go back to the past when taking a picture was more complicated, but was also, somehow, more satisfying.

To an old audiophile like me, I am even more blown away by the resurgence of turntables and stereo systems. It’s been reported that the sales of vinyl albums last year was the largest since 1990. In today’s digital music world, a return to analog turntables and vinyl albums is almost like stepping into a time machine.

It seems that the smartphone is transitioning from being exciting new technology and is now just considered as an everyday tool. I can’t imagine buying a new phone now unless I am having noticeable problems with my current phone. It’s hard to imagine a smartphone improvement amazing enough to lure me to upgrade otherwise.

There are a number of technologists who predict that within a decade or so that smartphones will become a thing of the past. Let’s face it, it can be a hassle to always remember to carry your phone everywhere and to always protect it against getting wet or breaking. Sometimes carrying a smartphone feels like more of a burden than a benefit.

Futurists differ in what they predict will replace the smartphone. Some think it will be wearables, some think it will be some sort of virtual reality device such as glasses, and some even think that we’ll transition to implants of some sort. All of these possible futures have one thing in common – the computer will be automatically with us and we’ll barely notice it as a separate device. Many predict that connectivity and technology will become naturally integrated into our daily lives.

I’m now of an age when I’ve seen a lot of technology come and go. There are so many technologies that have grown huge and within a decade or less disappeared to be replaced by something else. I owned a lot of it – reel-to-reel tape records, scientific calculators, 8-track tape players, VCRs, digital cameras, and iPods. And along with many of these devices, the companies that made them often faded along with the devices.

It’s a bit hard to think that we could be a decade away from a time when the smartphone as we know it has been replaced by something better. The smartphone has probably been the most disruptive technology in my lifetime, except perhaps for the PC. But its days are most likely numbered like every other technology we’ve seen come and go over the past fifty years.

I have always been intrigued by new technology as it has come along. But I now regret having finally given away my hundreds of albums when I decided that analog music was dead. Why didn’t somebody tell me that turntables would be back?