What iPhone Has Done for AT&T

If surveys of ChangeWave Research members are any indication, the Apple iPhone has paid big dividends for AT&T, essentially allowing it to overcome a perceived “satisfaction” and “dropped calls” gap compared to Verizon Wireless.

But there also are signs the “Apple effect” might be waning, as stated buyer intentions are trending back in Verizon’s favor, possibly suggesting a saturation of the obvious iPhone market as Verizon brings functional substitutes to market. 

The December 9-15, 2008 survey of 3,800 respondents shows a very-close market share between AT&T, with 31-percent share, and Veizon with 30-percent share. As you might expect, Sprint Nextel has not yet fully solved its churn problem, showing a 10-percent share decline since the last survey, with T-Mobile unchanged at 10-percent share.

But Verizon handily leads all the others in customer satisfaction. Some 49 percent of Verizon customers say they are very satisfied with their provider. About 30 percent say they are very satisfied with AT&T. About 27 percent of T-Mobile customers say they are “very satisfied.” About 25 percent of Sprint Nextel customers say they are very satisfied. 

But there seems to be some movement in the churn area. Verizon had been the clear leader among users who indicated they were going to switch providers, and were thinking Verizon was the carrier they would defect to, at least until the introduction of the iPhone.

Since news of the iPhone introduction, the roles have reversed and it is AT&T that has had the upper hand in the race to win defecting users. But Verizon seems to be gaining momentum again. 

About 27 percent of respondents still identify AT&T as the firm to which users are thinking they will move. But intention to switch to AT&T is down four percentage points  from September 2008. 

At the same time Verizon, reported by 22 percent of respondents as the carrier to which they are inclined to move, has gained three percentage points since September 2008, a net swing of seven percentage points. 

There is encouraging news for Sprint Nextel on the churn front, as five percent of respondents indicated they were inclined to switch to Sprint Nextel, a gain of two percentage points since the last similar survey. 

T-Mobile, though, seems to battling a headwind, as five percent of respondents indicated they were leaning to switching to T-Mobile, down two percentage points from the last survey.

Mobile Revenue Sources Shift to Data

Mobile data revenues are becoming a significant portion of overall service provider gross revenues, an important measure of diversification as voice continues to lose its status as revenue driver for the global mobility industry.

For a typical European operator, text messaging accounted for up to 80 percent of non-voice revenues in previous years, say researchers at Informa Telecoms & Media. But other data services are starting to show as a more-signficant revenue source. Operators such as Vodafone are seeing non-SMS services generating up to half of non-voice revenues, for example, Informa says.

Non-voice revenues totaled $157 billion in 2007, according to Informa Telecoms & Media, up from $116 billion in 2006. In the second quarter 2008 non-voice revenues surpassed $50 billion for the first time in any quarter. For 2008 as a whole they are expected to exceed $200 billion.

Revenues are heavily skewed toward emerging markets. Asia Pacific captured 39 percent of global data revenues in the second quarter, but the region is dominated by China, along with Japan and South Korea.
Europe was the second-largest region, with 25 percent of global revenues, followed by North America at 19 percent Other regions contributed just 17 percent of global revenues.

The United States, though, tops the world in mobile data average revenue per user. In the second quarter, data ARPU was $10 a month in North America, compared with a global average of just under $5.

More PC Entrants in Smart Phone Business?

What's the difference between a smart phone and a standard PC? Not much, more PC vendors are hoping. Computer makers Acer and Dell are said to be developing high-end mobile phones to complement their successful laptop and desktop computer portfolios. Such a move would not only help to sustain growth during the recession, but also put them in a better position to counter the growing threat of rival Apple.

As successful as they have been, a move into the smart phone arena will be challenging, as other suppliers have found when entering the mobile device business for the first time. Not many "PC" suppliers have found the success Apple has had in the MP3 music player and smart phone markets. In fact, failure is more common than success.

Dell and Acer may be bolstered by the reasonable success Hewlett Packard has had with its iPAQ smart phone for reassurance. And Microsoft is an almost-perennial candidate for doing so.

They likely are more emboldened by HTC's success, though that firm has had the easier task of producing devices under its own retail brand, not making the leap into the mobile device area for the first time.

It seems that Dell has already produced prototype devices, based on the Windows Mobile and Android platforms, as part of a scheme to commercialize an iPhone-type device, complete with touch screen.

Consumer Sentiment Shift?

The important thing about the recession is to look for signs of change, for evidence of a bottoming, as the recession now has been formally working its way through the economy for 14 months. Though it is not definitive by any means, a shift in consumer sentiment already might be occurring. 

According to the latest ChangeWave survey of U.S. consumers, conducted January 5-9, there were signs that consumer spending may finally be stabilizing.  While overall spending still looks terrible, ChangeWave notes, the 90-day outlook is not quite as "horrible" as it was in the December 2008 survey. 

Fifty-seven percent of U.S. respondents said they'll spend less during the next 90 days than they did a year ago, but that's three points better than in the December survey. Another 13 percent said they'll spend more -- two points better than previously. 

Respondents were also queried on their current impressions of the economy and, once again, while things look bad, they don't appear quite as awful as they did in December. About 12 percent said they think the economy will improve in the next 90 days, three points better than in December. About 56 percent said they think the economy will worsen during the next 90 days, but a significant 10 points better than the December low.

Other sentiment indicators also show some improvement, according to the study.

Some five percent said they are very satisfied with the current state of their personal finances, up one point from the record low in December, while another 39 percent said they're somewhat satisfied, up eight points.

Twenty-six percent said they are now more confident in the U.S. stock market than they were 90 days ago, 13 points better than previously. Only 31 percent said they're less confident, a 25-point improvement 

The new data is important because the first step in the recovery is for a bottom to be reached. Changing sentiment is one such sign. In past recessions, peak unemployment claims have been an indicator as well, as significant layoffs are a lagging metric. Often, if not typically, the "bottom" is reached about 30 days after a month where "peak" layoffs occur. 

AT&T Wireline Revenue Now Led by Video

Here's what some might consider the key take-away from AT&T's fourth quarter results: "Despite the economic environment, we grew revenues in 2008, and I expect 2009 will be another year of overall revenue growth and solid progress for our company," says Randall Stephenson, AT&T chairman and chief executive officer.

There are other noteworthy take-aways, though. The video business now is leading wireline revenue growth at AT&T. It doesn't appear AT&T is doing as well as Verizon is in the broadband access area, though one must infer that from the "non-reporting" of digital subscriber line customer performance. 

Revenue growth was driven by 13.2 percent wireless gains and a 14.2 percent increase in wireline IP data, which include AT&T U-verse services and business offerings such as VPNs and managed Internet services.

Verizon can say the same, as it reported record growth in video and data services. Verizon added 303,000 net new FiOS TV customers and 282,000 net new FiOS Internet customers, the highest ever for the company.

It also posted a 14.3 percent increase in consumer ARPU in legacy telecom markets and  8.4 percent increase in revenues from business services. 

U-Verse digital TV growth accelerated. AT&T signed up 264,000 new U-Verse TV subscribers, its highest ever. Combined with Verizon's 303,000 new FiOS subscribers, it seems like the telcos took solid share from cable and satellite last quarter.

U-verse network deployment now reaches 17 million living units. 

AT&T added 2.1 million net wireless subscribers, down from 2.7 million in the fourth quarter of 2007. Verizon, added 1.2 million net subscribers during the fourth quarter.

Data = 44% of Verizon Wireline Revenues

The most-interesting tidbit from Verizon's fourth-quarter earnings was the news that wireline data revenues now are 43.6 percent of total wireline revenues. That of course is significant because Verizon and other telcos are working to replace slipping wireline voice revenues as their revenue mainstay.

And though wireless obviously is important, the landline results show the contributions broadband services can make for wireline providers, exclusive of wireless services. 

Wireline data revenues of $5.2 billion in the fourth quarter 2008 represented an increase of 10.9 percent compared with the fourth quarter 2007.  

Total broadband connections were 8.7 million, a net increase of 214,000 over the third quarter 2008.  This includes a decrease of 68,000 DSL-based Verizon High Speed Internet connections, which was more than offset by the increase in FiOS Internet customers.  The 8.7 million is an increase of 8.2 percent year over year. 

Broadband and TV products now account for more than 31 percent of consumer ARPU in legacy markets, compared with 22.7 percent in the fourth quarter 2007.  The ARPU among FiOS customers continues to grow and is more than $133 per month. 

Verizon: Strong 4th Quarter

Observers watching intently for some sign of how the recession is affecting communications services have a major new data point. Verizon Communications has reported what happened in its fourth quarter, and revenue growth accelerated.  There is lots more data required, but so far, the recession has not had a negative effect on Verizon. 

In fact, Verizon Communications continued to grow sales of broadband, wireless and strategic business services in the fourth quarter 2008. Verizon's total operating revenues grew 3.4 percent in the fourth quarter 2008, increasing to $24.6 billion from $23.8 billion in the fourth quarter 2007.  

After adjusting for the spinoff of non-strategic local exchange and related wireline business assets early in 2008, this represents an increase of 4.6 percent. 

Wireless organic growth totaled 1.4 million net customer additions. Verizon Wireless also continued to have low churn of 1.35 percent churn among all customers, and 1.05 percent among the company's retail post-paid customers. 

Average monthly revenue per customer increased for the 11th consecutive quarter.  Total service ARPU of $51.72 was up 1.4 percent year over year, reflecting strong growth in total data ARPU, which was up 27.9 percent over the same period. 

Verizon added 303,000 net new FiOS TV customers, compared with 226,000 in the fourth quarter 2007. 

FiOS TV sales penetration (sales as a percentage of potential customers) increased to 20.8 percent, compared with 16.0 percent in the fourth quarter 2007. FiOS TV service was available for sale to 9.2 million premises by year-end 2008.  This represented a 57 percent increase in the availability of FiOS TV - and, by extension, of "triple play" bundles of FiOS TV, Internet and voice services - since year-end 2007. 

Verizon added 282,000 net new FiOS Internet customers, compared with 244,000 in the fourth quarter 2007.

FiOS Internet sales penetration increased to 24.9 percent, compared with 20.7 percent in the fourth quarter 2007. FiOS Internet was available for sale to nearly 10 million premises by year-end 2008. 

Broadband and video revenues from consumer customers totaled nearly $1.2 billion in the fourth quarter 2008, representing year-over-year quarterly growth of 42.0 percent. 

Growing revenue from broadband and video services drove consumer ARPU in legacy Verizon wireline markets (which excludes consumer markets served by the former MCI) to $68.46 for the fourth quarter 2008, a 14.3 percent increase compared with the fourth quarter 2007. 

Verizon Telecom, which serves domestic consumer and small-business customers, and Verizon Business, which serves large-business and government customers worldwide, each had 2.3 percent year-over-year quarterly revenue declines, continuing the secular trend of voice line loss  This was the smallest decrease in 12 quarters, however. 

Total broadband connections were 8.7 million, a net increase of 214,000 over the third quarter 2008.  This includes a decrease of 68,000 DSL-based Verizon High Speed Internet connections, which was more than offset by the increase in FiOS Internet customers.  The 8.7 million is an increase of 8.2 percent year over year. 

Broadband and TV products now account for more than 31 percent of consumer ARPU in legacy markets, compared with 22.7 percent in the fourth quarter 2007.  The ARPU among FiOS customers continues to grow and is more than $133 per month. 

Wireline data revenues, which represented 43.6 percent of total wireline revenues, were $5.2 billion in the fourth quarter 2008, an increase of 10.9 percent compared with the fourth quarter 2007.  

That might one of the more-important developments. Where its wireless business had been anchored by voice, Verizon now has grown data to nearly 44 percent of total. 

Conferencing Apps Lead UC Deployments?

Conferencing applications seem to be lead unified communications applications, according to a survey of IT professionals surveyed on behalf of CDW Corp. 

CDW's poll found rich media conferencing strategies are emerging as a dominant approach to UC. Some 39 percent of respondents report their organizations are choosing that approach over telephony-centric approaches (32 percent), email-centric (18 percent) and instant messaging and presence approaches (11 percent). 

While the survey found that only six percent of organizations report their UC deployments are complete, it also uncovered gathering momentum for UC adoption, with 20 percent of organizations actively implementing UC and 33 percent actively planning for implementation. 

Seventy percent of organizations currently in the UC planning and implementation phases expect to complete their adoption within two years. 

Sixty-one percent of respondents identified increased productivity and 56 percent identified operating cost reductions as the most important benefits. Other benefits cited included more reliable communication (48 percent), improved cross-functional communication (44 percent) and more effective use of remote or mobile workers (41 percent).

Wireless Substitution, Cable Digital Voice Cost U.S. Telcos $23 Billion a Year

In-Stat researchers estimate North American cable operator digital voice service revenues will hit just under $10 billion during 2009, from an installed base of 23 million cable telephony households.

Cable telephony subscriber growth continues to be strong, with almost eight million new subscribers added around the world in 2008, says In-Stat. Growth in North America has been particularly strong.

Globally, cable telephony service revenues represented about $12.6 billion in 2008, up from $10.7 billion in 2007.

Total worldwide cable telephony subscribers reached 37 million by the end of 2008, and will rise to over 64 million by 2012, In-Stat projects.

So something on the order of $9 billion in annual revenue seems to be earned by U.S. cable operators in voice revenues that used to be provided by U.S. telcos. In fact, the revenue loss for telcos is greater, since most customers switch to cable for the lower prices.

If one assumes a 20-percent average discount, that's a loss of nearly $11 billion in lost U.S. telco voice revenue.

Assume there are 20 million U.S. households that have gone wireless-only, with a former average monthly bill of $30. That is about $7.2 billion in "lost" or "shifted" revenues. If one assumes a more-likely monthly bill of $50 a month, the lost revenue amounts to $12 billion.

In that case, wireless substitution and losses to cable operators are about equal contributors to telco voice line losses.

Rethinking Communications, in 7 Parts

Stealth and Partners Not Seeing Downturn

House Broadband Stimulus Bill Fails to Define "Open Access"

As sometimes happens, some lawmakers have proposed legislation possibly specifying policies they cannot define. In approving $2.9 billion for network build-outs in rural and underserved areas, the House Energy and Commerce Committee insisted that the funding comply with the Federal Communications Commission's statement of "Internet Freedoms" contained in FCC 05-151.

The House bill also calls for grant awards to be made for broadband networks using "an open access" framework that complies with the FCC 05-151 principles. The term ‘‘open access’’ is to be defined by the Federal Communications Commission not later than 45 days after the date of enactment of the law.

Those principles include the right of consumers to access the lawful Internet content of their choice and run applications and use services of their choice, subject to the needs of law enforcement.

Consumers are entitled to connect their choice of legal devices that do not harm the network and

are further entitled to competition among network providers, application and service providers, and content providers.  

Those "Internet freedoms" are not exactly the same thing as "network neutrality," though many observers seem to think they are identical.

Still, the Senate also has to approve the bill, so it remains unclear whether the language will be retained, in any case.

Some observers interpret this as calling for some form of network neutrality, though the term itself is a muddle whose meaning nobody can seem to agree on.

The House version of the bill panel calls for funneling new funds to the existing grant programs operated by the National Telecommunications and Information Administration. The House version calls for 25 percent of the $2.9 billion to be spent on areas of the country with no broadband access with the remaining 75 percent poured into "underserved" areas.

The other half of the $6 billion dedicated to broadband build out in the House stimulus package calls for $2.9 billion in grants and loans to administered by the Rural Utilities Service of the U.S. Department of Agriculture.

If the language survives in the Senate or any reconciled bill, presumably, any service provider that accepts the funding will have to comply with whatever the FCC defines as "open access" for all customers and services on that network.

One wonders whether content delivery services ultimately will be allowed, in that case, as CDNs must, by definition, employ packet discrimination to make their features work.

More Surprising News on Small Business IT Spending in 2009

Though it is possible decision-makers have changed their minds since late November, as of that period, nearly a third of 2,000 U.S. IT decision-makers in businesses of all sizes said they expected their 2009 budgets would increase over 2008 levels, according to research from Compass Intelligence. 

If respondents follow through with their stated intentions, U.S. IT spending will grow more than four percent by the end of 2009, with growth rising through 2013, Compass Intelligence says.

Growth will tend to stem from small and mid-sized companies and less from enterprise businesses. While the total U.S. IT market will grow 4.1 percent in 2009, enterprise spending will account for just 2.8 percent of spending growth.

About a third of respondents expect to spend more, about a third expect to spend the same amounts as in 2008 while a third expect budgets to shrink. We might add that this is not an atypical finding. 

However, 2009 ICT revenues will not come easy and are likely to be earned after the first quarter of this year because IT decision-makers also indicated they will cautiously plan their investments in the first couple of months.

"This isn't the first time that we've seen a recession in the last decade, and most ICT decision-makers have been in troubled times like this before - so have the line-of-business managers influencing them," says Kneko Burney, Compass Intelligence president. "Most IT & Business decision-makers are planning to spend through this slow-down."

Key areas of spending priority for 2009 are computer systems, wireless applications and services, business Web sites or Web infrastructure and business networks according to the IT decision-makers surveyed.  The order of key priorities varies among size of business, but the top four priorities are, for the most part the same, regardless of business size, Burney notes.

63% of Mobile Subs Are On Family Plans

Family Plans, offering a shared bucket of usage that multiples devices can share, have to  be judged one of the more important marketing innovations yet devised by the mobile industry.

About 63 percent of respondents to a recent survey conducted on behalf of Sprint Nextel said they were on such plans. Another 15 percent said they would consider joining such a plan. About 22 percent said they were not interested. 

Among the 22 percent of users are single people, who, by defintion, do not have family members to share buckets of usage with. 

Aside from that innovation, only the abolition of the difference between "local" and "long distance" calling rates had comparable impact on subscribership. 

33% of Wireless Users Say Mobile is "Only Phone I Need"

About a third of mobile users surveyed by Sprint Nextel say a mobile is the only phone they will ever need. About 76 percent say they would consider going "mobile only" because it is "more cost effective." 

Presumably that translates more or less directly with the notion that cutting a landline reduces cost. Still, there are indications that unified communications could be a problem solver as well.

About 36 percent say it is more convenient to receive calls on one line. About 33 percent of respondents say it more convenient to manage a single voice mail account. 

15% or 40%? WiMAX Share Could Hinge on Capital Markets

Whether WiMAX winds up being a 15-percent share or a 40-percent share of market might hinge on developments in the credit markets, in particular as it affects the fortunes of smaller and independent providers, says Paul Obsitnik, BridgeWave SVP.

Most observers think Clearwire is going to get the funding it requires, one way or the other. But “if credit markets stay frozen for 18 to 24 months,” it could be another matter. Of course, we might all agree that if that happens, we are all going to have problems bigger than WiMAX availability.

“If I had to bet, I’d say LTE will be the market share leader,” says Obsitnik, a prediction just about anybody would admit is the likely outcome, given the embrace Long Term Evolution has gotten by the global GSM mobile industry and even users of CDMA platforms.

“But WiMAX will have a good chunk of the fourth-generation business,” Obsitnik says.
“On WiMAX side, the big challenge is that it is difficult to build that much infrastructure very fast.”

But Obstinik says mobile broadband is a huge opportunity. “Every operator I’ve talked to sees a big usage explosion when unlimited plans are instituted,” he says. Some report that their demand is growing 100 percent every six to eight weeks.

The obvious challenge is to monetize that usage. “With full mobile broadband, all you can eat is an issue,” he notes. In a sense, Clearwire is unfettered because it is not cannibalizing a big installed voice base or existing mobile data revenue streams, he says.

That will make it easier to market plans where multiple devices can use a single bucket of usage, as voice and text messaging now are offered as part of family plans.

“We add value by providing ability to assist the scaling of networks more effectively,” Obsitnik says. TDM and SONET operations are an issue for cellular operators, who need to be careful about cutting over networks to IP. That’s why BridgeWave allows mobile operators to run both TDM and IP simultaneously, and then gradually shift, when LTE is a real-world commercial issue, he says.

I do think mobile side of the house is following the fixed line pattern, Obsitnik says. “First voice drives the model, then email, then Web, then video,” he says.

Truphone Now Available for Android G1

"Truphone Anywhere," an application for Android-enabled mobile handsets, is available now as a download on the Android Market in the U.K. and the U.S. markets.

A German version of Truphone Anywhere for Android is available and will be the first native language multi-communications application in the Android Market in Germany and Austria when it launches in March.

"Truphone Anywhere for Android" allows customers to take advantage of Truphone’s low international call rates, in addition to the cost of a local call.

Truphone customers can also easily instant-message their friends across a variety of networks including MSN, Yahoo!, Google Talk and Twitter from within one Android application. Customers can also call friends anywhere in the world on Google Talk for the price of a local call, and similarly will soon will be able to instant-message and call their friends on Skype.

Truphone is now available on Android, the Apple iPhone, the Apple iPod touch, Blackberry and Nokia devices.

Truphone Anywhere works in 33 countries around the world and reduces international call costs to as little as six cents a minute.

Unlike a calling card, Truphone Anywhere doesn’t require a user to remember what to do. Whenever an international number is dialled Truphone Anywhere simply asks whether the user wants to make a Truphone call. The user simply accepts, and Truphone connects the call.

Excel Offers Roadmap for Communications Service Providers, says Jaduka

Commodity voice now is part of a broader communications environment more focused on voice and communications as an attribute of many other experiences and applications, says Jaduka CEO Pete Pattullo. 

In part, that means creating the ability for direct integration of communications into business processes, even though stand-alone versions of voice will continue to be important. One example is how voice can be used to improve the efficiency of package deliveries. 

"We have a customer that delivers packages for which there must be a signature," says Pattullo. "So the company calls ahead, just before a delivery, to make sure packages can be delivered the first time, without return visits."

Application providers have to step up and create easy ways to "drag and drop" voice and communications features into existing applications. But app providers cannot do all the work, he says. The analogy is Microsoft Excel, where a tool allows end users to create their own custom spreadsheets.

Creating application program interfaces is a start, but the APIs are not, in themselves, a business model, Pattullo says. Service providers need more awareness of the actual business problems their customers have, to be able to create lots of applications using voice and communications features that are germane to users. 

Business VoIP: Lots of Hybrid Deployments

Only 34 percent of businesses with VoIP use it exclusively, and have no TDM infrastructure, according to analysts ar Research and Markets. VoIP is expected to be used by 74 percent of all U.S. businesses by 2012, Research and Markets projects.

Global Bandwidth: Video, Video, Video

Hibernia Atlantic CEo Bjarni Thorvardarson says trans-Atlantic routes now are driven by "video, video, video."

He's got that right. About 78 percent of global traffic now consists mostly of video, according to TeleGeography. 

Voice represents about one percent of traffic. And that illustrates a problem network services providers face. The one percent of traffic underpins the business model, while most of the video contributes little, if anything, beyond driving broadband access package upgrades. 

More Use of Mobiles for International Long Distance

Participants on a Pacific Telecommunications panel on voice peering agreed that mobile termination rates are under pressure. That is one reason why more people now are using their mobiles to originate international long distance calls, as TeleGeography analyst Stephan Beckart says. 

Asked about the notion that many forms of voice will move to some "no incremental charge" basis, panelists from Orange, Sparkle and Rogers Communications agreed that regulators are unlikely to disallow cost recovery that the termination regime now permits and requires. 

There still are costs to terminate calls, and those costs will have to be recovered. What remains unclear, though, is whether the incidence of those cost recovery mechanisms will remain where they presently are. It is possible that broadband connections might emerge as the replacement, in some cases. 

Are Telcos Losing Revenue Because of Low-Quality Voice?

Telcos are losing some voice revenue because existing voice quality is poor, says Andrew Odlyzko, University of Minnesota Digital Technology Center director. Despite growing volumes, “toll quality voice is lousy quality, especially for women’s voices," he says. Likewise, "wireless voice is horrible; it has been selected to be the lowest quality one can have that people wouldn’t reject.”

There is room for higher-quality voice as a premium service, Odlyzko maintains. As others have argued, Skype provides an example of quality "better than toll." 

The problem is that many examples of higher quality voice are hard to separate from other variables that also might illustrate what the specific value proposition is. Skype, with good microphones and on a good broadband connection, can sound better than toll. But such connections also provide other sources of value, such as the ability to talk internationally for "no incremental cost."

What cannot easily be tested is the thesis that, for this particular application, even lower quality would not reduce usage, or destroy the value of the application. In fact, if voice volumes, using Skype-style mechanisms as well as mobile and fixed line long distance, continue to grow, it is hard to argue clearly that there is an unmet consumer need. There might be. There should be. But so far, no clear test has been devised.  

“There are opportunities for higher quality voice,” he says. One suspects he is right, though it is not so clear, beyond business videoconferencing, where one can point to examples. 

Odlyzko is an original thinker, so some of his views run counter to conventional wisdom. He argues, for example, that wireless providers have erred in focusing on mobile data, where they might have used their 3G networks to provide better voice. 

I'm not sure I agree with that conclusion. And, perhaps, despite his views, neither does Odlyzko. He pointed to at least some forms of wireless data as services that provide higher value and margins. That clearly is the case for text messaging. It appears to the case for mobile Web access. 

So far, the service provider effort has been to provide IP-based equivalents of time division multiplex voice, with equivalent stability and quality, not greater quality. It might be interesting to see whether such a clean test could be market tested. 

Not many service provider executives appear to believe there is a significant market for higher-than-toll-quality voice in the consumer market, though. Users might well like it, but service providers likely are skeptical about whether consumers would pay a premium. Business users might be a different case, but not many clear examples aside from room conferencing systems can be noted. 

Service providers might be losing some revenue because of poor voice quality. They also are losing some customers for other reasons, such as a secular decline in demand for landline voice. It is unknown whether a revenue opportunity exists in the mass market for higher-quality voice. There should be an opportunity in business markets. But the thesis largely remains untested. 

That isn't to say some providers have failed to offer better-performing codecs, for example. That should provider higher-quality voice. The issue is whether consumers are willing to pay a premium for it. They might be. The problem is arranging a clear market test where some other obvious variable does not cloud the test. 

Microsoft to Sell Comcast Stake

Microsoft has decided to sell its 7.3 percent stake in Comcast. Microsoft had owned 150,935,575 Class A common stock in the cable operator.

Microsoft made its $1 billion investment in Comcast in 1997, when Microsoft had interest in becoming a major player in the cable set-top box business. Some observers familiar, even casually, with cable operator strategy would have argued even then that the effort was unlikely to bear much fruit.

As anxious as some operators might have been to gain a stamp of legitimacy in the coming wave of Internet-based or interactive content, cable executives when speaking to other cable executives would have insisted they had no intention of "letting Microsoft take our business." In those pre-Google days, it was Microsoft cable operators worried most about, in terms of digital-savvy outsiders with the skills and credibility to siphon off the leading edge of interactive attention, if not business.

Apparently Microsoft long ago realized its hoped-for strategy would not lead to success. After several years when Microsoft powered an on-screen program guide for Comcast in some of its Washington markets, Comcast stopped using the guide altogether, in favor of its alternate guide, developed with Gemstar.

In May 2007, Comcast stopped using Microsoft’s on-screen program guide for its digital cable boxes in Washington state, the only U.S. location that software feature was being used.

Microsoft has had much-better luck as a technology partner for leading U.S. wireless companies, though.

New Buyer Concerns in Undersea Market

Latency, not to overstretch too much, is becoming for some customers the first requirement for a connectivity provider, followed in very close order by physical diversity, though in some cases jitter performance might rank among the top three requirements, ranking perhaps even before bandwidth. Such concerns are paramount for many financial and media firms, as you might guess.

So a touted feature of Hibernia Atlantic's new Amsterdam and its 37 POPs in North America is latency performance. The new route completely bypasses London’s common congested terrestrial fiber routes. Latency on the new Amsterdam-to-Boston route is now 74 milliseconds, making this the fastest available route, the company says. It also offers the fastest route between Amsterdam and Dublin, Ireland.

By using its northern cable, Hibernia’s new network bypasses London’s traditional backhaul by offering a diverse express route that shaves two milliseconds off the latency on the existing London-to-Amsterdam route.

“This new route is attractive for any business that requires direct, low latency connectivity between North America and Europe at competitive rates,” states Bjarni Thorvardarson, CEO for Hibernia Atlantic. “Financial firms, movie studios, IP providers and data storage companies requiring a fast, diverse connection over the Atlantic while avoiding London are among some of the enterprise customers that can benefit from the new route, as well as global carriers.”

Rural Access: More Capacity Than One Might Think

The popular sterotype is that rural America does not have broadband and that service providers refuse to offer it. Like all stereotypes, there is a grain of truth. Rural America is a tough place to provide communications services.

But a new survey of 146 members of the National Telecommunications Cooperative Association, 100 percent reported they offer broadband access. In 2000, 58 percent of surveyed members offered broadband service, so there has been substantial progress.

That does not mean every rural cooperative or service provider now offers broadband, or offers access at all the speeds it might desire. It does indicate that rural citizens increasingly are getting broadband and other new services despite the challenges. 

Higher speeds arguably are a good thing, of course, and might benefit from some changes in the way universal service and related mechanisms are structured.  But there is some mix of "demand" and "supply" drivers in rural, as well as urban, markets. 

Also, about 93 percent of survey respondents indicated they face competition in the provision of advanced services from at least one other service provider, up from 87 percent a year ago. That includes providers of satellite TV and broadband access, cable operators, Internet service providers and wireless providers. 

To the extent that most telcos already have broadband access competitors in their markets, adoption 

Some 99 percent use digital subscriber line, but 44 percent also say they use fiber to the home or fiber to the curb, up from 32 percent last year. About 17 percent use unlicensed wireless, 16 percent use licensed wireless, 14 percent use satellite access and 10 percent offer cable modem service. 

Some 91 percent of customers can receive service at 200 kbps to 768 kbps service. About 83 percent of cusotmers can get speeds of  768 kbps to 1.5 Mbps.

About 58 percent have access to speeds ranging from 1.5 Mbps to 3 Mbps. Some 46 percent of customers can buy service at speeds between  3 Mbps and 6 Mbps, while 25 percent can buy service at speeds greater than 6 Mbps. 

On average, 11 percent of customers buy 56 kbps service. About 19 percent subscribe to service at 200 kbps to 768 kbps.

Roughly 36 percent buy service in the 768 kbps to 1.5 Mbps band. Another 10 percent buy service in the 1.5 Mbps to 3 Mbps range.

Some 11 percent buy service at 3 Mpbs to 6 Mbps. Just five percent buy service at speeds greater than 6 Mbps. Overall, dial-up take rates declined and broadband take rates rose significantly in the past year, NTCA says. 

Of those respondents with a fiber deployment strategy plan, 71 percent plan to offer fiber to the node to more than 75 percent of their customers by year-end 2009, while 74 percent plan to offer fiber to the home to at least 25 percent of their customers over the same time frame.

Some six percent of respondents currently offer VoIP, but 46 percent have plans to offer VoIP in the foreseeable future. About 68 percent of respondents offer video service to their customers.

Wholesale Business: Perception and Reality Might Not Match

At the risk of appearing foolish, I have been writing a lot recently about the need to maintain some rigor in assessing the likely impact of the recession on communications service provider revenues, growth rates and profits. There is a natural tendency to panic and over-react when virtually everyone around you "feels so bad."

The emotion is real, and strains are real. But there is some amount of evidence that consumer and small business buyers, for example, have not been reducing their buying of services. So it might be noteworthy that, at the Pacific Telecommunications Council annual conference,  Stealth Communications CEO Shrihari Pandit says neither carrier nor enterprise customers, in aggregate, have reduced spending with Stealth in 2008. In fact, revenues have grown all year. 

That isn't to say every company, every customer segment or every industry segment can say the same. It is to point out that in times when emotion tends to cloud decision making, it is more important to pay close attention to the actual numbers, rather than relying on one's own emotions, or the emotions business partners might legitimately feel. 

Though it always is possible I am wrong, I would argue from history that, when the recession is over, communications service providers will have shown absolute revenue growth, though at lower rates than in 2007 or 2008, with lower average revenue per unit. There might be segments that do less well, but the industry will emerge with net growth. 

Sprint Gives Boost to Pre-Paid: Unintended Consequences?

As it has done in the post-paid market with its "Simply Everything" package, Sprint Nextel Corp. now is attempting to create new value-price positions for itself now in the pre-paid market. The operator has said it will offer a $50 unlimited plan for its Boost Mobile service on the iDEN network. 

Keep in mind that the new plan will include a data plan bundle with unlimited data, talk, messaging, and push-to-talk service for only $50 per month. The iDEN network won't support 3G or 4G speeds, but many users will be intrigued by the value and price point. 

AT&T  and Verizon Wireless are  currently offering $100 unlimited plans, by way of comparison. 

The $50 plan might help Sprint bring some users back to the Nextel iDEN network. It also puts Sprint firmly in the ring 

with Leap Wireless International and MetroPCS  in the low-cost wireless game. But one never can discount the potential impact in other areas. 

True, it is a "Boost" product, not a "Nextel" product, so the potential impact on the broader Nextel brand might be muted. Keep in mind the drawbacks. 

Phones for the service will be from Motorola and will start at $20. Since Motorola has not kept pace in the handset space, this is a weakness. And there will not be phones from other suppliers, given the historic unwillingness the other suppliers have to supply essentially one North American customer. 

There will some speed issues for data usage as well. 

On the other hand, in a recessionary climate, some observers argue that mobility users will not stop using mobile service, but will look for better deals, so long as handset replacment costs are not steep. This is an advantage for the new Boost package, as rival plans from Metro PCS and Leap Wireless do not bundle in the unlimited data usage, push-to-talk and messaging, and generally run about $60 a month. 

Also, Leap ("Cricket") and Metro PCS are fixed-line replacement solutions more than national roaming solutions. 

So while the new offer does compete with Leap and Metro PCS, Boost will not have any regional restrictions, putting the service in more direct competition with Verizon, AT&T and T-Mobile. 

It's an interesting move. The iDen network and service has some obvious limitations at the moment. But Sprint Nextel is doing what it can, with the assets it has, to create new positions in the market using those assets. Simplicity and value are the new factors in the equation, driven by the feature bundling and new industry price point.

It is the sort of thing one might expect from Dan Hesse, Sprint Nextel CEO. He widely is credited with pioneering the "Digital One Rate" plan that changed industry pricing for use of mobile minutes. "Simply Everything" and now the new Boost plan are in the same line of thinking: change the way usage is packaged and priced. 

Some will argue it is not enough. Of course not. But Sprint has to stop its bleeding before it can do other things that change the value proposition even more.  

$6 Billion Boost for Rural Broadband?

The U.S. House of Representatives version of a stimulus plan includes $6 billion dollars in grants for broadband deployment. The Senate will have its own economic recovery package, but the Fiber to the Home Council believes that the proposal is a good indication of where Congress is headed on the issue of broadband.

 

The responsibility for awarding the broadband grants would be divided between the Agriculture Department's Rural Utilities Service and the National Telecommunications and Information Administration in the Department of Commerce.  

The RUS money ($2.825 billion) would bolster the agency's current program of grants, loans and loan-guarantees to extend broadband infrastructure into largely unserved rural areas, and would not require that the services provide connection speeds higher than what typically passes for broadband today.

 

The NTIA money (also $2.825 billion) will consist of new grant programs for the development of broadband and wireless services in unserved and underserved areas.  Of this amount, $1.825 billion would be for wireline broadband - and 75 percent of that ($1.37 billion) is directed toward "advanced broadband," which is defined in the legislation as 45 Mbps down and 15 Mbps up.

About half the money would be of obvious interest to providers of fixed broadband in rural areas, as the new funds would simply bolster existing efforts to subsidize broadband deployment in rural areas. The other half is noteworthy because, if the eligibility rules remain as now conceived, the new infrastructure will have to operate at a minimum of 45 Mbps downstream and at least 15 Mbps upstream. 

That might provide a boost for wireless-based providers, such as Clearwire, if bidding rules allow them to compete. Fixed networks would have to deploy a "deep fiber" design to allow such bandwidths, in all likelihood. There is likely to be some wrangling over the right to bid for such support. 

Some tier one providers, such as Qwest, do serve many rural communities in the western United States, though Qwest has generally been denied rural broadband support because that support is awarded on a "statewide" basis rather than on a "community" basis. 

Consumer Wireless Spending Now Exceeds Wireline

Since 2007, Americans have been spending more for mobile than for landline telephone services, according to a new report from the U.S. Bureau of Labor Statistics.

In 2007, 55 percent of all consumer telephone expenditures were for wireless service, the latest year for which official figures are available. Landlines accounted for 43 percent, with the remaining two percent going for other services, such as pagers and phone cards.

It marked the first time that cellphones had topped landlines in annual consumer spending, as monitored by BLS.

In 2003, consumers spent 65 percent of their communications budget on landline voice. But the share for landlines dropped rapidly in subsequent years. Landline share fell to 60 percent in 2004, 54 percent in 2005, and 50 percent in 2006, before the latest slip to 43 percent in 2007.

The typical U.S. consumer spent $1,110 on telephone services in 2007, with $608 going for cellphones, $482 for landlines and $20 for other services. the BLS study obviously does not include spending for broadband access or other related services such as cable TV, in these amounts.

The BLS study found a direct correlation between age and cellphone spending, as you might expect. Consumers under the age of 25 directed 75 percent of their telephone expenditures to cellphones. That figure dropped for each rung on the age ladder. People between the ages of 25 and 34 spent 67 percent on cellphones; 35-44, 59 percent; 45-54, 57 percent; 55-64, 48 percent; and 65 and older, 33 percent.

More Mobile Broadband Subs than Fixed in 2011

Worldwide wireline broadband subscribers reached 287 million in 2007. But mobile broadband subscribers ultimately will surpass fixed broadband, for obvious reasons.

Fixed broadband, like fixed voice, is a service sold to places. Mobile broadband, like mobile voice, is sold to persons. There generally are more people than dwellings. 

By about 2011, it is possible that cellular

mobile broadband subscribers will catch up, or overtake, wireline broadband

subscribers, with an expected total mobile subscriber base passing 5 billion by 2011, say analysts at Infonetics Research. 

End of the Internet"

There's probably no shortage of people who decry the "end of the Internet as we know it."

Some think it is a good thing, in the sense of the Internet becoming a utility like electricity. "The biggest take-away from last week’s Consumer Electronics Show is that every device in our lives is rapidly becoming a computer connected to the Internet," says Edgelings CEO Tom Hayes. "That new reality means the Internet will soon transition from the conspicuous to the unconscious; from something you go “onto” to something you never go off of-and in fact hardly even think about."

Others worry or lament the emergence of "private," traffic-shaped," managed or other forms of IP networks. There are public policy issues, to be sure.

But IP networks are more than the Internet, and the Internet itself is changing. And there is a paradox here. Ask anybody in the communications policy community whether the Telecommunications Act of 1996 succeeded and you'll get, as often as not, an argument that it has failed in some major way. But ask those same people whether their own choice, value and services are better now than they were then, and everybody will say "yes, my services are better, cheaper, more valuable."

Ask many policy advocates about the health of the Internet and they will say things are terrible, for any number of reasons. But ask those same people whether the Internet is more valuable today--much more valuable and useful--than it was before 1996. I suspect we all know the answer.

There are serious public policy issues, of course. But the Internet is not now what it was. Neither are television; radio; audio; magazines; newspapers; theaters; library catalogs; classifieds; phones; computers or data networks. In one sense, we can "save" the Internet about as meaningfully as we can "save" black and white, monaural, NTSC, broadcast television.

End? How about "beginning"?

U.K. Broadband: Lies, Damned Lies and Statistics

Samuel Clemens once quipped that 'there are three kinds of lies: lies, damned lies, and statistics." So the U.K. Office of Communications says real-world end-user average peak throughput is about half the "advertised" broadband speed users pay for. 

On the other hand, Ofcom also notes that average speeds run between 81 percent to 85 percent of the "advertised" speed. 

In fact, subscribers on services promising 2 Mbps or less get those speeds about 91 percent of the time. Since most broadband subscribers in the U.K. are on lower-speed tiers of service, the national average speed delivered is about 85 percent of the maximum line speed.

So whether performance is "good" or "bad" is a statistical matter, depending on whether peak throughput at the peak congestion hours are examined, compared to average performance across each day, week or month. "Peak" performance also hinges on matters beyond a service provider's direct control, such as the state of in-home wiring and capabilities of in-home end user equipment. 

That said, the difference between "peak" throughput and "average" is directly affected by the fact that access is a shared resource, in the access network, in the aggregation network, on the backhaul networks and at the servers users are trying to communicate with. 

The actual throughput received by its national panel of testers was 3.6 Mbps in the 30 days beginning October 23, 2008. That throughput represents 49 percent of the average ‘headline’ speed (7.2 Mbps) and 83 percent of the average maximum line speed (4.3 Mbps), Ofcom reports. Consumers on the most popular broadband headline speed package, advertised as offering  "up to’ 8 Mbps," received an average actual throughput speed of 3.6 Mbps, about 45 percent of the headline claim, and they had  an average maximum line speed of 4.5 Mbps, representing 56 percent of headline speed.

About 20 percent of testers on the 8 Mbps package received an average speed of less than 2 Mbps. Still, about 83 percent of respondents say they are "happy" with their service, while 21 percent report they are dissatisfied for some reason. About 16 percent express dissatisfaction with the "value for money" they receive and 13 percent are unhappy about service reliability.

About 28 percent of users were unaware what the advertised speed of their connection was. Rural consumers on "up to" 8 Mbps packages received average speeds 13 percent lower than their urban counterparts.

To be sure, Ofcom notes there are many reasons why throughput might be slowed. Congestion on the wider internet, loop length, the condition of the access cables, poor home wiring, absence of filters, computer clock speed or router specs can degrade performance.

Honesty in advertising is an issue, of course. The issue is that broadband access is a shared, best effort resource. There will be times when any single user actually will experience the full advertised throughput. Most of the time, likely not.  So long as users use "maximum speed" and "cost" as the key criteria to compare providers, it is not likely the advertising verbiage will change. 

The other issue is how to describe "average" speeds, across different provider networks, in ways that are consistent and meaningful, since the actual end user experience always will differ for all sorts of reasons, some not under the direct control of the access provider. 

$10 iPhone Tethering?

The rumor that AT&T is considering both Apple iPhone tethering (allowing it to act as a PC modem) and an incremental $10 charge over a standard data plan, would be a smart move, in the right direction. 

Since AT&T expects virtually all consumer devices to be capable of wireless broadband connection, some of us already have been figuring out what that means, cost-wise, for the devices we support, keeping in mind that some of us support a whole family's requirements.

It is self-evident that this future will have a tough time becoming material reality if present pricing for mobile broadband remains where it is. There is no way most parents would be willing to pay $30 to $60 per connected device to participate in such a world, where a dozen to scores of devices might plausibly need to be connected. 

The only way this idea really becomes a mass option is to create unified data access plans built on the notion of family plans, where all devices and people can share one bucket of access. Even fixed broadband penetration would not be where it now is if users had to pay a separate fee for each device, and each user, accessing a single connection. 

Windows 7: Faster, Longer, Fewer

"Windows 7 should boot more quickly, have longer battery life and fewer alerts,"says Steve Ballmer, Microsoft Corp. CEO. That would be nice. All three are present annoyances.

AT&T Mobility Bundles PC

Dell  and AT&T Mobility have launched a limited-time offer (ending Jan. 31, 2009) bundling 3G service with a PC, requiring a two-year contract to AT&T "LaptopConnect" costing $60 a month. 

The offer extends the common mobile phone offers that bundle discounted handsets with service to mobile PC service. The Dell Inspiron Mini 9 will cost $99 after a $350 mail-in rebate. 

Orders can be placed on Dell.com.

There are several obvious implications, some pertaining to service provider strategy and revenues, some pertaining to public policy issues. The service provider angle is that, as handset subsidies have boosted mobile subscriptions, so PC subsidies will boost use of mobile PC data plans. 

The public policy angle is that, to the extent there are users who want to use the Internet, but do not own PCs, this sort of bundling addresses their needs. To the extent there remains a gap between desire to use the Internet, and the means to do so, programs of this sort will address the problem. Some people do not want to use PCs or the Internet, and virtually nothing is going to entice them to do so. On the other hand, bundling access devices with service is a proven way to stimulate demand. 

Another angle is that this bundle moves us further towards a world when broadband access will be a "personal" service. Where in the past voice service was to "places," it now is to "persons." Where broadband access largely is to "places," this sort of plan moves us in the direction of broadband access to "people."

Frogs at the Bottom of Wells

Inevitably, all of us are paying quite close attention to all things economic these days. Just as inevitably, we journalists and bloggers cannot resist writing about it, and what it means for all manner of things, ranging from penetration rates of various devices, services and applications to levels of industry spending.

Crowd sourcing, as valuable as it is, also can be dangerous, though. The reason is the well known tendency people, and therefore markets, have to overshoot on both the upward and downward sides of any trend.

So one easily can take a poll of industry participants (largely on the sell side) and find dire opinions about the state of service provider spending (and therefore buying). Keep in mind an analogy: the frog sitting at the bottom of a well, and asked to describe "the sky."

By definition, all of us have limited visibility. None of us can see the whole sky.

And our view is obscured in several obvious ways. The overwhelming amount of spending in any country or market is dictated by just a few buyers. Some types of products are needed more, some are needed less. Big capital projects are needed, but end at some point.

Sure, most providers have some base level of maintenance-related capital spending that doesn't change much from year to year. But there tend to be waves of investment in the global communications business that ebb and flow.

There are times, such as 1998 to 2000, when spending, in absolute volume, climbs, and periods such as 2001 to 2003, when the percentage falls. Capital spending fluctuates, for all sorts of logical reasons.

Then there are the other obvious visibility-limiting issues, based on which customer segments and which product lines one sells. Some segments do better, some worse. Some products are necessities, others can be postponed.

All of us will have a tendency to attribute virtually any shifts to the downside as caused by the economy. That isn't always true. Nor is it true that service provider revenue actually is falling. Through 14 months of recession, service provider revenue has grown virtually across the board, for every segment, though there are market share shifts and secular changes in demand.

Executives are being prudent, to be sure. Investors and investor advocates demand that. But we all have the visibility of frogs, who think the sky is a relatively small blue circle. So we will overshoot, as we always do.

Without dismissing in any way the obvious issues the industry confronts, do not mistake your own view for the whole picture. And do not make the mistake of believing that any present trend can be extrapolated into the future on a linear basis. By definition, there are turning points. The year 2000 was a turning point. So was 2003. It appears 2008 will mark a turning point. Another is coming.

If your business will last more than several years, you have to spend some time looking for the next turning point. It is hard to do. But it is coming.

Global communications infrastructure spending has a "float" level, generally a percentage of revenue, to which the industry is trending after a buildup leading to 2000, a brief lull, then a wave of infrastructure spending largely driven by broadband. At the moment spending is drifting back to "maintenance" levels.

Another wave is coming though, based largely on the fact that broadband multimedia networks must spend much more discretionary capital on consumer premises equipment. As more services are turned up, there is more spending on CPE. That's a secular change strictly driven by revenue opportunities.

Also, Internet-delivered video, at some point, is going to drive more revenue for service providers, as opposed simply to application providers. As that happens, more investment in access networks will have to be made. The precise timing will depend on end user uptake and therefore new revenues.

But tier one service provider performance in 2008 suggests the process has moved significantly further than even many tier one executives had expected in 2006, for example. To cite but one example, where many had expected new data revenues only to offset voice revenue losses, many carriers now find data revenue growth is outstripping mere replacement of lost voice revenues.

Look for the next turning point, even as you manage for the present circumstances.

Boucher Replaces Markey: Expect Changes

Congressman Edward Markey, a key proponent of net neutrality, will leave his position on the committee that deals with telecommunications regulation to chair the House Energy and Commerce Subcommittee on Energy and the Environment. He will be replaced by Congressman Rick Boucher, who takes on the chairmanship of the Communications, Technology and the Internet Subcommittee of the House Energy and Commerce Committee.

It is worth noting when key communications regulators change seats, since regulators are a primary force in the creation of permissible business models and the potential profitability of communications business models. If his past actions are any indication, "net neutrality" is going to get a lot less attention, rural broadband much more.

Boucher is likely to support plans to tie universal service support to broadband, not voice. That could have positive investment implications for rural telcos and even for some tier one providers. Qwest, for example, has large rural service areas where it might benefit from increased support for rural broadband.

"The indication right now is that the Obama administration will be thoughtful," says Qwest CEO Ed Mueller. So support programs for rural broadband could change. Qwest favors a bidding process for any new government support for building rural broadband facilities, a process it believes it can win. "But we think we'd get a decent return on that," Mueller says.

The other structural change that would help Qwest is if USF funds were awarded on a community-by-community basis, not on a statewide basis. The reason there is that Qwest operates in many states where it serves both urban communities and lots of smaller rural communities. Obviously, that formula restricts Qwest from getting USF support to serve a large number of rural communties .

"More broadband support would be good for Qwest," says Mueller. "We just want to bid on it."

Using "Password Manager"

I've been testing a password manager program, "Password Manager," created by Large Software (www.largesoftware.com), which earlier released PC Tune-Up. Now, some of you may not think a password manager is a useful thing, so you can skip to another post. Personally, I live on the Web for professional reasons, and there no longer is any easy way for me to remember all my user names and passwords.

Some of you may be diligent about storing all your user names and passwords someplace, but that gets to be a chore, not to mention a security risk. Those of us who travel need our identities with us on the road. Retrieving them from a secret location in our offices or homes is not a convenient option. Sticky notes are worse.

Password Manager encrypts each saved password and also protects the program by offering a master password, keeping all the information stored protected and secure. For obvious reasons I have not tested that particular feature. I also use fingerprint readers to protect access my machines, so the additional level of protection is comforting, I will say that.

Password Manager is built to automatically recognize when a user is returning to a site for a login. For new accounts, the system completes the user’s login information in order to eliminate cumbersome set-up forms. Keystrokes are concealed to avoid keyloggers or spyware from stealing sensitive information.

The application pretty much runs after you download it. I did experience a bit of wondering whether it was working at first, as I was using the Google Chrome browser. I figured out what was going on after I switched back to Mozilla Firefox. Password Manager also works on Internet Explorer, of course.

If you decide to change a password, the program gives you a prompt, asking if you want to proceed.

The login information and passwords are available only when the password storage database is unlocked by an authorized user. In my case, the fingerprint swipe seems to do the job, so I can't speak to whether one has to enter the master password to activate the vault.

Password Manager is said to protect users from keylogging (the unauthorized monitoring of your key strokes by a third party). Again, I believe this claim, though I haven't tried to verify it by hacking my own machines.

I recently spoke with a buddy who uses a different password manager and was unhappy with it. Except for the fact that I have to remember whether I am in Chrome or Firefox or Internet Explorer, I haven't had any problems at all. Add support for Chrome one of these days and I'll be even happier.

Each of you will have to decide whether it is worth $30 to automate your password entry chores. Speaking for the skin on my fingers, it is quite useful. I use fingerprint readers so it is important there be recognizable skin on those fingers!

By the way, I just ran a PC Tune-Up scan on a machine that hadn't been scanned before and the software found 266 problems, about half of the "high priority" sort and about half of the "medium priority" sort. I'm a dumb end user so I have no idea what all that stuff was, though they seem to be "invalid application paths."

Flat Consumer Electronics Revenue Growth: CEA Predicts

During the 2001 through 2004 period, when the U.S. economy went through, and then came out of, the "Internet and telecom bubble," household telephone expenditures held constant at 2.3 percent of all household expenditures, a rate constant from 1996 through 2004. Only in one year--2002--was spending different, and in that year, household expenditures rose to 2.4 percent.

That might be the sort of year 2009 is for the consumer electronics industry. Or at leaset, that appears to be what the Consumer Electronics Association believes will happen in 2009.

The consumer electronics industry is projected to generate $171 billion in U.S. shipment revenues in 2009, according to the semi-annual industry forecast released by the Consumer Electronics Association. That would be a decline of about $1 billion from the estimated $172 billion CEA estimates the industry earned in 2008.

“The CE industry is resilient but not immune from the business cycle," says CEA CEO Gary Shapiro. The essentially flat forecast would be something of a break with past history. Over the past 10 years, annual revenues have not slipped, according to iSuppli, but growth rates have slowed, as this chart shows.

As early as 2006, for example, iSuppli projected growth rate declines from the seven to nine percent range down to the three percent range, compared to the nine percent annual increases seen between 2001 and 2005. The essentially flat CEA forecast, should it materialize, would be something of a data point outlier. But then, CEA might be expecting a recession that has different characteristics than past recessions.

Flat growth would seem likely, if past measures of consumer spending on communications, for example, during a recession, remain true to form. There is no evidence that broadband or mobile growth went into reverse during the last time of turbulence, for example. Internet access penetration of homes actually accelerated from 1997 through 2003. Where Internet growth was 18.6 percent in 1997, it stood at 50.5 percent in 2001 and at 54.6 percent in 2003.

Actual household spending on telecommunications rose steadily from 1981 through 2004, the Federal Communications Commission reports, with one exception. In 2002, spending flattened, rather than growing.

Broadband penetration was 4.4 percent in 2000, 9.1 percent in 2001 and 19.9 percent in 2003.

Wireless presents a similar picture. In 1999 six-month mobile revenues stood at $19.4 billion. Revenue then grew to $24.6 billion in 2000, to $30.9 billion in 2001, to $36.7 billion in 2002, $41.4 billion in 2003 and $48.3 billion in 2004.

Between December 1999 and December 2004, the average monthly wireless bill climbed steadily, from $41.24 in 1999 to $50.64 in December 2004.

There is, however, evidence for "flat" growth during a recession. In 2002, household expenditures on communications overall did flatten, but only for a single year, and then only slightly, on the order of $1 a month in reduced spending.

The issue is whether this recession is structurally different from past recessions, though. Nobody knows, yet.

50% Mobile Broadband Penetration by 2013?

The actual extent of mobile broadband usage in five years time is quite a jump ball. The conventional wisdom--undoubtedly correct--is that mobile broadband is growing, even if we might be a bit ahead of the game to call it "mainstream" at the moment.

If one assumes a smartphone sale is farily linearly a predictor of the sale of a data plan, increasingly of the broadband sort, then at the moment sales volume in the U.S. market is something on the order of 20 million units a year, but scaling smartly.

Of course, though we normally assume the sale of a smartphone comes with an activated data plan, that might not always be the case, as some of the market is of the "replacement" sort. Also, smartphones are not the only driver of mobile broadband. Of late, PC cards have been substantial contributors.

So the big change in market receptivity is the expansion of mobile broadband from the "mobile email" and "mobile PC" to "mobile Web" user cases.

In 2008, there might have been 38 million mobile email users in the United States, a reasonable proxy for the smartphone part of the mobile broadband ("data plans") market. That, at least, is the market size researchers at Mpathix suggest was the case.

Nielsen Mobile estimated in August 2008 that there were 13 million mobile data cards in use in the United States, to give you some idea of the installed base.

At the end of 2006, out of the 225 million cellular subscribers in the United States, 15 million used a 3G-based mobile broadband service via cell phone, PDA More about PDAs, laptop or other device, researchers at Parks Associates estimated. Parks Associates also estimated there were 3.5 to 4 million data card service subscribers in the United States in mid-2007.

That clearly is changing now with the advent of mobile Web devices such as the Apple iPhone, to be sure. Still, 38 million is a significant increase from the 12.1 million mobile email users in 2005, MPathix says. It is an even bigger increase from the six million mobile email users Research in Motion estimated were part of the U.S. user base at the beginning of 2006.

Parks Associates now estimates that nearly 60 million smartphone units will be sold in 2013. Parks Associates also estimates that in 2013, U.S. consumers will purchase over five million connected cameras, over one million 3G-enabled MIDs (portable media players), and over two million 3G-enabled netbooks (mini-PCs). There arguably is a less-linear relationship between purchases of those sorts of devices and activation of mobile broadband service, though.

So Parks Associates estimate that, by 2013, there will be over 140 million U.S. consumers paying for mobile broadband, including services provided to every device capable of such communication, argues Kurt Scherf, Parks Associates VP. As there are now 263 million mobile accounts in service, the 140 million represents more than half of the total number of wireless accounts. True, wireless subscriptions continue to grow, though at a slowing rate as we near 90 percent pentration. Still, that is a rather breathtaking scenario.

Keep in mind that U.S. fixed broadband penetration is somewhere north of 55 percent, in a market where 20 to 25 percent of homes do not own PCs, and in a market where perhaps 10 percent of Internet users remain on dial-up services, and perhaps 60 percent of those users say they do not want to upgrade to broadband.

The 50-percent mobile broadband penetration would represent a more-extensive degree of penetration by far, as it represents penetration of people, not of dwellings.

A Bold Forecast for U.S. Mobile Broadband

“By 2013, there will be over 140 million U.S. consumers paying for mobile broadband, which will extend video, communication, networking, and support services to all sorts of devices,” said Kurt Scherf, vice president, principal analyst, Parks Associates.

That's a bold forecast. But not outlandish if "mobile Web" gets traction as "mobile email" and "mobile PC" segments did.

Global revenues from mobile data services are set to exceed $200 billion this year for the first time, according to Informa Telecoms & Media. Total mobile data revenues were approximately $157 billion in 2007.

Mobile operators now generate approximately one fifth of their revenue from data services.Informa Telecoms & Media estimates that non-SMS data contributed $17.48 billion of revenue in the first quarter of 2008, accounting for 35.6 percent of total data revenues.

Tech Support on Installing a Husband

Dear Tech Support, 

Last year I upgraded from Boyfriend 5.0 to Husband 1.0 and noticed a distinct slow down in overall system performance, particularly in the flower and jewelry applications, which operated flawlessly under Boyfriend 5.0. In addition, Husband 1.0 uninstalled many other valuable programs, such as: Romance 9.5 and Personal Attention 6.5, and then installed undesirable programs such as NBA 5.0, NFL 3.0 and Golf Clubs 4.1.

Also Conversation 8.0 no longer runs, and Housecleaning 2.6 simply crashes the system. Please note that I have tried running Nagging 5.3 to fix these problems, but to no avail. 

What can I do? 

Signed, Desperate. 

DEAR DESPERATE:

First, keep in mind, Boyfriend 5.0 is an Entertainment Package, while Husband 1.0 is an operating system. Please enter command: ithoughtyoulovedme.html and try to download Tears 6.2 and do not forget to install the Guilt 3.0 update. If that application works as designed, Husband 1.0 should then automatically run the applications Jewelry 2.0 and Flowers 3.5. 

However, remember, overuse of the above application can cause Husband 1.0  to default to Grumpy Silence 2..5 , Happy Hour 7.0 or Beer 6.1. Please note that Beer 6.1 is a very bad program that will download the Farting and Snoring Loudly Beta. Whatever you do, DO NOT under any circumstances install Mother-In-Law 1.0 (it runs a virus in the background that will eventually seize control of all your system resources.) 

In addition, please do not attempt to reinstall the Boyfriend 5.0 –program. These are unsupported applications and will crash Husband 1.0.

In summary, Husband 1.0 is a great program, but it does have limited memory and cannot learn new applications quickly. You might consider buying additional software to improve memory and performance. We recommend Cooking 3.0 and Hot Lingerie 7.7. 

Good Luck! Tech Support

Broadband: This Doesn't Look Like a Problem

There continues to be concern expressed about the "lack" of broadband adoption in the U.S. market in some quarters. This illustration of the current and expected state of affairs for a number of nations by Analysys Mason does not suggest there actually is a problem. 

The United States appears to be in the mainstream of penetration rates. 

The Next Big Thing in Wireless Packaging

In the U.S. mobile business, there have been at least two major marketing concepts with huge impact on consumer adoption: "Digital One Rate," which erased the distinction between "local" and "domestic long distance," and "family plans," which principally are responsible for extending mobile penetration to most members of a family. 

The next big innovation? At some point, "data one rate combined with a family plan." The reason? Mobile broadband growth will be retarded until the data access equivalent of a family plan can be bought. Sprint already has taken a step in this direction by offering an "Everything Data" plan supporting two lines with Web and e-mail connectivity plus 1,500 minutes of shared voice services for $130. 

In fact, it is likely one can carry the concept just a bit further and create "data one rate family plans" that simply allow some consumers to buy a single broadband plan that supports all family members, whether in mobile or fixed mode, for a single rate. Executives at AT&T have been talking conceptually about unifying wired and wireless broadband as well, but the company hasn't actually launched anything like that. 

In principle, the idea is a simple extension of family plans, buckets of minutes or text messaging plans already in widespread use. 

There simply is going to be high consumer resistance to buying separate broadband connections for every connected mobile device. 

Clearwire has been talking about casual use plans, which likewise is a step in the right direction AT&T might also be looking at some transaction-based billing scheme that would support multiple Internet-connected devices. There won't be a marketing "big bang" on the order of Digital One Rate or family plans until carriers decide to get just that serious about mass adoption of broadband services. 

More Enterprises Disconnect Locations

The number of enterprises disconnecting network locations reached its highest level in six years during 2008, according to new research by Vertical Systems Group. In a survey of U.S.-based enterprise network managers, 14 percent reported that they had eliminated one or more network locations without adding or moving others. This figure compares to only nine percent from a survey conducted a year ago.

For the most recent survey, 41percent of respondents reported both additions and eliminations, while 16percent added locations without any eliminations. About 29 percent reported no change.

"The pace of network site additions stalled in the second half of 2008, and a significant number of networks are shrinking as compared to a year ago," said Rick Malone, principal at Vertical Systems Group. "Economic uncertainty and business slowdowns are forcing unplanned network reconfigurations, particularly within hard-hit industries like retail and financial.

Location eliminations peaked during the fourth quarter, and we expect this trend to continue throughout the first half of 2009," says Malone.

More At-Work Video Viewing, Nielsen Says

Though some studies continue to suggest that most online video is viewed at home, there also is growing evidence that at-work viewing is up as well. Among online TV viewers, almost nine out of 10 watch online broadcasts at home, according to the Conference Board. 

But a new study by Nielsen Online suggests people spend more time streaming video during weekday working hours than do so on weekends or at home on workday evenings. About 96 percent of at-work Web visitors in October 2008 were using a broadband connection. 

Since most online video is viewed on a PC, and with many employees spending nearly eight hours a day at their computers, workdays are prime time for online video viewing, Nielsen suggests. Nielsen says that 65 percent of online video viewers stream content between 9am to 5pm Monday through Friday, compared to 51 percent of online video viewers who log on between 6am and  8pm on weekends, or 43 percent on workday evenings between 8 pm and 11 pm. 

BT to Get Universal Service Relief

In a major sign of the changing times, it appears Ofcom, the U.K. communications regulator, finally is ready to release BT, the former monopoly provider, from its universal service obligations, which now require BT to run a phone line to every home in the country, as well as provide payphones and other basic services available at a reasonable cost.

Office of Communications Minister Stephen Carter is expected to propose that the legal requirement for BT to provide a phone line to every UK home become a "shared" responsibility whose costs will be borne collectively by all wired or wireless service providers.

Under the proposed new rules, universal service support will be provided by virtually every provider, whether wireless or wireline, and the support will be for universal broadband service, rather than narrowband voice, as has been the case in the past.

Today, BT has sole responsibility for supplying a phone line to every U.K. home. Current estimates are that this costs BT between £57 million and £74 million a year. Under the new rules BT would no longer bear this cost alone.

Presumably the new rules would require wholesale customers of OpenReach to share in universal service obligations.

Though there is no automatic and linear way to apply regulatory formulas used in one country to any other, there is clear logic to redefining "broadband" as the service for which universal service rules apply, rather than "voice," and equal logic to "burden sharing" by wholesale customers using the BT network, given the U.K.'s functional separation regime, where broadband access widely is available as a wholesale service for other retail competitors.

The North American regulatory regime is quite different, so a brute force application might not be feasible in either the United States or Canada, neither of which have the same sort of wholesale regime.

In the U.S. market, only one provider in each market, typically the incumbent local exchange carrier, has a legal requirement to act as "carrier of last resort," providing voice service to all potential customers. But observers long have wondered how long that state of affairs could last as more communications shift to wireless and as incumbents lose market share. In at least a few U.S. markets, the incumbent telco is in fact no longer the biggest provider of wired voice services.

How to rationalize and update universal service support therefore has been, and will continue to be, a contentious issue for U.S. competitors.

Net-Connected TV Theme at CES

Net-connected HDTVs and applications look to be one of the more-prominent themes from this year's Consumer Electronics show. 

Samsung Electronics Co.and Yahoo! Inc. have announced a new Internet-based service to Samsung televisions available in the spring of 2009. Select models in Samsung’s 2009 flat-panel HDTV line-up will be powered by the Yahoo Widget Engine, which enables TV watchers to interact with " TV Widgets"  that bring Web-based content, information and community features to the TV.

Select models in Samsung’s 2009 flat-panel HDTV lines will support the new TV Widget service, called “Internet@TV - Content Service.” The service allows users to engage in a variety of experiences that traditionally could only be enjoyed on a PC. 

That includes functions such as tracking a stock portfolio, reading headline news, browsing through videos, sharing photos or communicating with friends. Users can access the service by connecting the HDTV to a home network via the built-in Ethernet port or using an optional Wi-Fi USB dongle.

The suite of TV Widgets range from Flickr, Yahoo! News, Yahoo! Weather and Yahoo! Finance, to third-party content from well-known brands, including USA Today, YouTube, eBay and Showtime Networks. The content and services offered will grow to include video streaming and other popular internet services over time. 

Developers will be able to develop and deploy TV Widgets for the television by using the open-platform Widget Development Kit. 

There has to be a Pony in Here Somewhere

As the old story goes, a kid was found whooping and hollaring in the stable when mucking out the stalls. When asked why, the child says “With all this **** around, there must be a pony in here somewhere.” 

One wonders if Internet service providers might just want to whoop and hollar at some point about net-connected TVs and online video in a broader sense, despite the obvious business model challenges the applications now provide. 

The number of online video viewers will grow from 563 million at the end of 2008 to 941 million by 2013, according to ABI Research. Ways to watch online video on standard TVs will be a key enabler of that growth, which explains why firms such as Cisco, not in the past associated with such consumer technology, will be entering the market for devices that allow watching of online video on standard TVs, rather than PC screens. 

While today’s consumer is most likely to watch online video on the PC screen, over time more and more consumers will watch over-the-top video delivered to the living room, ABI projects. That's one reason Netflix will be introducing a net-connected HDTV from LG Electronics at this year's Consumer Electronics Show. The device will connect directly to the Internet, without the need for a PC or other device, a Wi-Fi or other hard-wire connection from the PC or similar intermediary box to the TV. 

Netflix will tailor the TV to access the Netflix online service offers 12,000 movie and television titles. Yahoo  and Intel Corp. separately plan to announce support from several major consumer-electronics companies to sell TV sets that come with widgets that make it easier to call up Web content on TV sets using ordinary remote controls rather than computer keyboards. Yahoo's Widget Channel is an example of that. 

It seems unlikely such net-connected TVs will be a major mass market success any time soon, though. The additional hardware cost will be as much as $300 initially. And then there is the obvious challenge of user experience. Not many broadband connections will have the latency performance--nor assured bandwidth--to deliver large pictures on HDTV screens. 

On the other hand, such devices are a perfect example of an application that really would benefit from quality assurance of the sort ATM was designed to provide, and that traffic shaping, edge caching and other forms of assured content delivery also provide. 

Real-time services require traffic shaping and network management. Net-delivered video to HDTVs is going to prove the thesis. Right now, ISPs are mucking out the stalls. Someday, they will find the pony. 

Small Business: Big Segment

There are several reasons why small business customers are becoming more important to communications service providers of all types. For starters, there is more pressure in the consumer market, chiefly pressure on fixed voice lines and associated revenue-driving features. 

For many service providers, the small business segment is important for the same reason trans-national enterprises are more important for tier one providers.  As growth gets harder "in territory," providers must find new customers "outside of region." And costs being what they are, it is easier to expand out of region when serving business customers. And most of those potential customers are in the small business segment. 

Small business and mid-sized business customers are a key driver of growth strategies for incumbent and attacking providers alike. Smaller business customers have been the key segment for competitive local exchange carriers, value-added resellers, long distance resellers, many Internet service providers, managed service providers and Interconnect companies for decades, in some cases. 

Long Tail Doesn't Apply?

As observers have started to track sales of digital goods more closely, some apparently-contradictory evidence has started to appear about the "long tail" theory of sales in the digital domain. The concept: cheap digital distribution changes the retail sales function, allowing profitable sales of low-volume titles or items on a scale not possible in a physical distribution strategy. Most observers instinctively would agree. 

The key prediction has been that online distribution would allow niche businesses, content and goods to thrive in a digital distribution context impossible to sustain in a physical distribution context. As commonly understood, perhaps an additional 20 percent increase in volume should be feasible, as well as a change in "mass culture" that would fragment demand. 

But some sales data contradicts the notion. A new study by Will Page, chief economist of the MCPS-PRS Alliance, a music royalty collection organization, suggests that online sales success still relies on big hits. The study found that 80 per cent of all revenue came from around 52,000 tracks. For albums, of the 1.23 million available, only 173,000 were ever bought, meaning 85 per cent did not sell a single copy all year.

Frankly, the long tail now appears, in one sense, as the triumph of hope over experience. Many "wanted" online distribution to change purchasing patterns. The notion was that once huge variety was available, tastes would change. It isn't so clear why it is assumed "tastes" will change with different distribution. It is clear why fulfillment will change with cheaper distribution. But efficient, or better, distribution still should result in a "long tail" of demand that is the same as a distribution-induced "short tail" of demand. 

The reason derives from the theory itself. The idea behind the "long tail" is not actually new, and dates back to an Italian economist, Vilfredo Pareto, who in 1906 coined the Pareto Principle, popularly known as the 80-20 rule. Basically, the idea is that in much of life and nature,  roughly 80 percent of the effects come from 20 percent of the causes.

The same concept is known as Bradford's Law. 

As implied by the theory of the long tail, online distribution should allow retailers to sell small volumes of hard-to-find items, instead of selling a smaller number of highly-popular items. Most people can grasp that. What isn't so clear is why that expected distribution curve will be a "new" Pareto curve, instead of validating the existing Pareto curve. 

Under any normal set of circumstances, a Pareto distribution is what one would expect to see. Some have pointed to music sales at Rhapsody, an online music service. Of the 735,000 items for sale, 39,000 account for 78 percent of sales, while 796,000 titles represent 22 percent of sales. 

Likewise, Netflix data suggests 20 percent of total rentals are of "tail" or low-volume titles, while 80 percent of rentals are basically "hit movies" one would expect most people to be interested in. 

Is that confirmation of the operation of a Pareto distribution? Yes. Does it represent incremental sales of 22 percent that might not occur in a physical distribution scenario? Yes. Are the results unexpected? Not if one expects to see a Pareto distribution. 

Is the idea wrong, or useless? Not really. A Pareto distribution can assume a 70-30 pattern, for example, suggesting a bigger role for niche products than before. That represents an important shift of opportunity for providers of niche services and products because of online or Web distribution. 

But the long tail might not mean a revolution. Forrester Research, for example, estimates seven percent of retail sales in 2008 will have been made online, up from 3.2 percent in 2007. What does that mean? Most sales follow a Pareto curve: 97 percent of things sold still are sold the traditional way. There will be further shifts, of course.

But Pareto would suggest online sales will settle in at around 20 percent of total sales, at best, on a sustainable basis.