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This week in telecom news, Kleiner Perkins Caufield & Byers analyst Mary Meeker reports that mobile data traffic growth presents new opportunities for the industry as Internet growth slows. And a battle may be brewing between tech companies and utilities over who will manage consumers' electricity and home appliances. Some tech companies are partnering with carriers to develop bundles that include electricity, while tech giants like Google are buying up home automation technology.
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Legislation was introduced in the U.S. House of Representatives that would prevent the FCC from reclassifying broadband services as a common-carrier telecom service, due to fears such a move would disrupt the Internet economy. The American Consumer Satisfaction Index released its 2014 report on the telecom industry, showing which companies are keeping customers happy, which aren't and why. Read on for what you need to know in telecom news.
Mobile data traffic surges despite slow Internet growth
Mobile is still an opportunity for industry growth as worldwide Internet growth slows down, Kleiner Perkins Caufield & Byers analyst Mary Meeker said in a presentation of her Internet Trends 2014 report at Re/code's Code Conference last week.
Global Internet growth has slowed to less than 10% a year, as the market becomes more saturated. Mobile data traffic, on the other hand, rose to 81% growth and mobile Internet usage increased to 25%, according to Meeker's presentation.
Meeker's report highlighted what areas in the mobile industry are experiencing the most growth as well as the trends and other industries that impact growth. Google Android and Apple iOS made up nearly 97% of the global market's mobile operating systems in 2013 and the number of mobile devices being sold is rapidly increasing. With each new product cycle, including smartphones and wearable technology, the installed base is 10 times larger than the previous cycle, Meeker said.
More consumers are also uploading and storing data in the cloud. Two-thirds of all global digital content is consumed and created by consumers. Uploading and sharing data is driving cloud growth into the cloud, helped by declining storage and bandwidth costs, Meeker said.
Education and health care are two industries that can benefit the most from mobile growth as they become increasingly digitized and look to reduce costs, she said.
Security is a growing concern as mobile devices are increasingly becoming the targets of cyber-security attacks.
Meeker anticipates that mobile advertising will be a $30 billion growth opportunity in the U.S. and mobile device growth will continue to increase.
Will utilities be the next tech battleground?
The next competition between tech companies and utilities might be inside your home as they compete over managing your electricity and home appliances.
Google and AT&T are showing signs of interest in disrupting utilities' hold on electricity and energy. In February, Google acquired Nest, which produces a smart thermostat that can be adjusted by mobile phone. AT&T entered the smart thermostat market last year and has expanded its Digital Life smart home package.
"The battleground over the next five years in electricity will be at the house," said NRG Energy CEO David Crane. "When we think of who our competitors or partners will be, it will be the Googles, Comcasts [and] AT&Ts who are already inside the meter."
NGR Energy has made large investments in solar energy and plans to face off against utilities. Crane said utilities have "no clue" how to go beyond the meter and into consumers' homes. As for his company, NRG Energy and Comcast have partnered for a trial run of offering electricity with the traditional cable, phone and Internet bundle in Pennsylvania.
Home security company Vivint is also getting into the game by leasing rooftop solar systems to its customers. Customers can sign contracts to buy the power the systems generate at rates up to 30% lower than utilities. Utilities can contract Vivint or other home-automation companies to deploy smart technology and give customers the ability to better control their appliances to avoid power outages or shortages, according Bloomberg BusinessWeek.
"The next 10 years are going to change the electricity industry more than the past 100," said Patty Durand, executive director of the SmartGrid Consumer Collaborative. "Consumers will be the recipients of attention, instead of the way utilities have treated them for the past 100 years."
House bill would halt FCC threats to reregulate broadband services
Federal Communications Commission (FCC) Chairman Tom Wheeler used the old "we will reclassify you as common carriers" to placate the masses when the controversial Net neutrality re-do was approved in May. Wheeler's proposal said that the carriers have to use a "commercially reasonable" approach to charging for priority handling, but "commercially reasonable" hasn't been defined. Wheeler's warning was that if service providers started acting up and discriminating against content companies that don't pay for priority traffic handling, Wheeler wanted a stick big enough to beat them.
Getting Congress into the melee, Rep. Bob Latta, a Republican from Ohio, has introduced legislation that would prevent the FCC from reclassifying broadband services as a common-carrier telecom service under Title II of the Telecommunications Act of 1996. Latta said reclassifying broadband would hurt the Internet economy, which he called a reckless move. Texas Sen. Ted Cruz, also a Republican, said he will introduce a similar piece of legislation in the Senate.
In a statement, Latta said, "Subjecting them [telecom carriers] to bureaucratic red tape won't promote innovation, consumer welfare of the economy and I encourage my House colleagues to support this legislation so we can foster continued innovation and investment within the broadband marketplace.
Of course the wheels of Congress grind slowly or not at all, but Latta's bill certainly addresses the elephant in the room. -- Kate Gerwig
Customer satisfaction mixed bag for telecom services
This year saw a dip in customer satisfaction toward Internet Service Providers (ISP), fixed-line telephone service providers and wireless telephone service providers, according to the American Customer Satisfaction Index in its 2014 report on the telecommunications and information industries.
Fixed-line telephone service providers saw decreases in customer satisfaction as households continue to abandon landlines. Verizon took the top spot for customer satisfaction at 73% but saw a small drop from 74% in 2013. AT&T and CenturyLink rounded out the top three with 72% and 71% satisfaction respectively. Time Warner Cable had the lowest customer satisfaction, dropping from 68% in 2013 to 65% this year.
The results were a mixed bag for ISPs. Verizon FiOS ranked highest with 71% customer satisfaction, unchanged from 2013. AT&T also saw no change among customers, staying at 65% satisfaction. CenturyLink took the third spot as satisfaction increased from 64% in 2013 to 65% this year. Time Warner saw the biggest drop in customer satisfaction, however, dropping from 63% satisfaction in 2013 to 54% in 2014. Consumers report that the reasons for the mixed bag include reports of service interruptions and outages, decreases in speed and service reliability and weak peak evening-hour performance.
Wireless telephone service providers also had a mixed bag of rankings, with Verizon and T-Mobile seeing increases in customer satisfaction. Verizon jumped from 73% in 2013 to 75% in 2014, while T-Mobile increased from 68% in 2013 to 69% in 2014. Sprint and AT&T, however, saw a decrease in satisfaction. Sprint dropped from 71% in 2013 to 68% this year. AT&T dropped from 70% satisfaction in 2013 to 68% in 2014.
Wireless customers reported being satisfied with network coverage, call clarity and reliability. Data speed and reliability, however, left something to be desired for consumers who use their mobile devices for Internet services and applications.