Internet applications develop much faster than Telecom standards and adoption via social networks is extremely fast, millions of users in weeks.
It seems likely that to cut infrastructure costs, future telecom operators will build LTE-data-only networks, and simply skip providing voice calls, SMS, MMS, USSD etc via traditional telecom protocols and core network services. Just provide data. Good, fast, reliable data with good coverage and understandable tariff models and reasonable usage limits. Nothing else. No frills.
Why not just pre-install all their phones with nice, customized apps for:
- Skype
- WhatsApp
- Facebook
- Gmail
And then of course negotiate a small revenue share deal with each of these providers for the service of gaining them new users, to capitalize in some way of the value "lost" by not providing the traditional telco cash cow services of voice and SMS.
These are really ridiculously priced and the only reason they continue to be so is due to the fact that telcos have a global well-known addressing mode: The phone number. But the e-mail address, or Facebook account, works just as well and the number of users is rapidly increasing. Also, the phone number is hard to remember.
We should be seeing such operators within the next few years, but of course all legacy operators will do whatever they can to block their entry.
Prediction: By 2015, Europe will have several (>= 5) minor operators using this business model. By 2020, most (> 50%) European operators will use this business model.
Update 2016: LTE is growing rapidly (see e.g. https://gsmaintelligence.com/research/2015/02/4g-deployments-and-connections-gather-pace/476/) but the network building cost is so high that new entrants are few and far between. The existing operators have extended their existing networks to also include LTE. We still don't see GSM shutdowns, but they will come. VoLTE will preserve voice as a special telco service for the foreseeable future. P2P SMS is nearly dead in developed countries, but SMS for A2P keeps growing. I think the prediction was too bold and has met with too much resistance from operators struggling to not become bitpipes. I no longer believe that this will happen by 2020. Maybe by 2030.
Tuesday, November 22, 2011
Tuesday, August 30, 2011
Gold prices vs stocks
Gold just keeps going up, up, up. Why?
1) All other things equal, it retains its value as currencies suffer from inflation -> its value should increase at least by inflation every year.
2) It is perceived as the most safe investment imaginable when the global economy is troubled.
3) It has been going up for a long time now and lots of investors use momentum.
Of these, 1) is a mathematical fact. 3) is a psychological fact. The thing I'm not so sure about is 2). Why is gold seen as a safe investment? Looking at the price rise, to me it is obvious that gold is already WAY above its "intrinsic value", having been blown out of proportion by speculative investments (or panicked "safe haven" investments). But what would happen if the entire world decides that copper is the new gold tomorrow? Or silver? Or platinum? Or that we should all just use glass and plastic jewelry?
I believe gold prices are seriously inflated and will bubble down sharply "eventually". However, for that to happen there must exist some other attractive option for investment/speculative money. Right now that's difficult to see: I hear that investors are recently PAYING to "invest" in Swiss bonds (at a negative interest rate). Swedish and German bond interests are at record lows. So what could trigger it?
1) Solid stock market recovery.
2) Solid bond market recovery.
I don't really see anything else. Not commodities, because rising commodity prices cause problems for the economy and will just cause even more people to buy gold.
The European debt situation must be resolved before these things can happen. The US economy as well, but Europe is the true bad guy as I see it. Europe must:
1) Accept lower living standards, in particular in pensions and health care.
2) Accept tougher working conditions to compete with Asia. This can mean lower wages, more hours worked, less benefits, whatever. But this is something which is already facing Europe and it will just get worse and worse the coming years.
3) Accept either a split of the EU or a much closer union where there are money transfers between countries (euro-bonds for example, or a fiscal union), just as there are money transfers between regions inside a country today. The latter is already happening de facto with the "rescue funds" for the PIGS countries, but it's a hard sell in the net contributor countries. Remains to see where the limit is.
4) Punish corruption, in particular in government finances, much harsher.
The above are not simple things. They will take a long time to accomplish. Surely 5-10 years. Does that mean that gold prices will rise for 5-10 years more? Logically yes, but somehow it just doesn't feel like the rise can keep on going for that long.
Prediction: Gold prices will peak around the end of 2013, and will then drop off by over 30%. Based on a gut feeling, not on any hard data.
Update 2016: The peak was during 2012 at 1669 USD/troy ounce, during 2015 it was down to 1160 USD/troy ounce. It's likely we will see it rising again, let's guess it will reach its 2012 peak again by 2020.
1) All other things equal, it retains its value as currencies suffer from inflation -> its value should increase at least by inflation every year.
2) It is perceived as the most safe investment imaginable when the global economy is troubled.
3) It has been going up for a long time now and lots of investors use momentum.
Of these, 1) is a mathematical fact. 3) is a psychological fact. The thing I'm not so sure about is 2). Why is gold seen as a safe investment? Looking at the price rise, to me it is obvious that gold is already WAY above its "intrinsic value", having been blown out of proportion by speculative investments (or panicked "safe haven" investments). But what would happen if the entire world decides that copper is the new gold tomorrow? Or silver? Or platinum? Or that we should all just use glass and plastic jewelry?
I believe gold prices are seriously inflated and will bubble down sharply "eventually". However, for that to happen there must exist some other attractive option for investment/speculative money. Right now that's difficult to see: I hear that investors are recently PAYING to "invest" in Swiss bonds (at a negative interest rate). Swedish and German bond interests are at record lows. So what could trigger it?
1) Solid stock market recovery.
2) Solid bond market recovery.
I don't really see anything else. Not commodities, because rising commodity prices cause problems for the economy and will just cause even more people to buy gold.
The European debt situation must be resolved before these things can happen. The US economy as well, but Europe is the true bad guy as I see it. Europe must:
1) Accept lower living standards, in particular in pensions and health care.
2) Accept tougher working conditions to compete with Asia. This can mean lower wages, more hours worked, less benefits, whatever. But this is something which is already facing Europe and it will just get worse and worse the coming years.
3) Accept either a split of the EU or a much closer union where there are money transfers between countries (euro-bonds for example, or a fiscal union), just as there are money transfers between regions inside a country today. The latter is already happening de facto with the "rescue funds" for the PIGS countries, but it's a hard sell in the net contributor countries. Remains to see where the limit is.
4) Punish corruption, in particular in government finances, much harsher.
The above are not simple things. They will take a long time to accomplish. Surely 5-10 years. Does that mean that gold prices will rise for 5-10 years more? Logically yes, but somehow it just doesn't feel like the rise can keep on going for that long.
Prediction: Gold prices will peak around the end of 2013, and will then drop off by over 30%. Based on a gut feeling, not on any hard data.
Update 2016: The peak was during 2012 at 1669 USD/troy ounce, during 2015 it was down to 1160 USD/troy ounce. It's likely we will see it rising again, let's guess it will reach its 2012 peak again by 2020.
Swedish housing market crash
Swedish housing prices have risen faster than net income for many years now, in particular in the bigger cities. This is not a sustainable development; extrapolating the curves eventually households would pay 100% of their net income in living costs.
Stock markets are more volatile than ever, which generates uncertainty. Previous stock market crashes, in particular the one 2000-2002, did not affect housing prices much. The one 2008 did but only temporarily and to a small extent. The currently ongoing stock market crash (August 2011) seems poised to hit housing prices harder. Why? I'm guessing it is a combination of various factors:
1) Household loans are at record levels
2) People have been taking loans at record low interest levels for many years now
3) Interest rates are going up (for now, let's see when the debt crisis advances...)
4) New regulations on household loans make market entry harder
5) Media have been raving about household prices going down for over half a year now
6) People have upped their household loans to finance other types of consumption (cars, renovation, travelling, etc)
7) When stock markets go down, private fortunes go down, people feel poorer, and will settle for less when buying new houses
The fact that we see more and more "accept prices" in real estate is a sure-fire factor of how desperate the real estate agents have become to keep up their business. I like them; I hope they are here to stay. The biggest purchase of one's life should be as transparent as possible.
Painful as it will be, a crash will be good in the long term. It is ridiculous that it is impossible for young people starting their working career to buy even a small apartment in Stockholm today. Let alone rent one... We should have market rents. It will be painful for many households who will end up with bad debts, but that pain is outweighed by the fact that the housing market as a whole will become more accessible.
(Yes, I am an apartment owner myself. It will affect me negatively too. But I can take it.)
Prediction: - 20-30% in Stockholm for "bostadsrätter" by the end of 2012. Based on gut feeling, not on any hard statistics.
Update 2016: No way, it's just kept on going up, up, up! Prices have risen way faster than income for the last 15 years straight. There's a low supply/high demand situation in the bigger cities which still isn't abating. A crash would be good for Sweden long term. Let's see if one comes by 2020. I still believe it will happen.
Stock markets are more volatile than ever, which generates uncertainty. Previous stock market crashes, in particular the one 2000-2002, did not affect housing prices much. The one 2008 did but only temporarily and to a small extent. The currently ongoing stock market crash (August 2011) seems poised to hit housing prices harder. Why? I'm guessing it is a combination of various factors:
1) Household loans are at record levels
2) People have been taking loans at record low interest levels for many years now
3) Interest rates are going up (for now, let's see when the debt crisis advances...)
4) New regulations on household loans make market entry harder
5) Media have been raving about household prices going down for over half a year now
6) People have upped their household loans to finance other types of consumption (cars, renovation, travelling, etc)
7) When stock markets go down, private fortunes go down, people feel poorer, and will settle for less when buying new houses
The fact that we see more and more "accept prices" in real estate is a sure-fire factor of how desperate the real estate agents have become to keep up their business. I like them; I hope they are here to stay. The biggest purchase of one's life should be as transparent as possible.
Painful as it will be, a crash will be good in the long term. It is ridiculous that it is impossible for young people starting their working career to buy even a small apartment in Stockholm today. Let alone rent one... We should have market rents. It will be painful for many households who will end up with bad debts, but that pain is outweighed by the fact that the housing market as a whole will become more accessible.
(Yes, I am an apartment owner myself. It will affect me negatively too. But I can take it.)
Prediction: - 20-30% in Stockholm for "bostadsrätter" by the end of 2012. Based on gut feeling, not on any hard statistics.
Update 2016: No way, it's just kept on going up, up, up! Prices have risen way faster than income for the last 15 years straight. There's a low supply/high demand situation in the bigger cities which still isn't abating. A crash would be good for Sweden long term. Let's see if one comes by 2020. I still believe it will happen.
Tuesday, January 25, 2011
Videostreaming and P2P separate from other data traffic
Videostreaming and file sharing are by their very nature different from other types of Internet traffic. They grow and grow. Operators pay more and more in network infrastructure to keep up with demand for "unlimited" data plans.
I'm guessing that within 5-10 years (=2016-2021 timeframe), these types of traffic will have developed into a separate part of "Internet access" with different policies, quotas and tariffs.
We'll see if I'm right.
Update 2016: The first occurrences of "sponsored data" are appearing. 3 in Sweden are giving away free music streaming. Verizon and AT&T are working on sponsored data, as are Telefónica. The net neutrality debate is still raging, however. The basic issues is kickback, will network owners be able to charge content providers for use of their transport, or not? That is still not settled, but the sponsored data initiatives are moves in that direction. File sharing is not as big as it used to be. Video is growing faster than ever. But it's still not a separate quota. Not sure if we're on track for this one.
I'm guessing that within 5-10 years (=2016-2021 timeframe), these types of traffic will have developed into a separate part of "Internet access" with different policies, quotas and tariffs.
We'll see if I'm right.
Update 2016: The first occurrences of "sponsored data" are appearing. 3 in Sweden are giving away free music streaming. Verizon and AT&T are working on sponsored data, as are Telefónica. The net neutrality debate is still raging, however. The basic issues is kickback, will network owners be able to charge content providers for use of their transport, or not? That is still not settled, but the sponsored data initiatives are moves in that direction. File sharing is not as big as it used to be. Video is growing faster than ever. But it's still not a separate quota. Not sure if we're on track for this one.
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