Friday, August 31, 2007

Defanged Skype

For all the fear Skype and other IM-based and peer to peer voice applications and services have created in the broader service provider industry, Skype seems to have crested. Skype still has lots of registered users, but they don't seem to be calling and using Skype chat as much as they used to.

Remember the concern municipal Wi-Fi networks raised just two years ago? Telcos and cable companies were worried muni Wi-Fi would cannibalize cable modem and Digital Subscriber Line services. And dare we even mention Vonage and other independent VoIP providers.

In fact, the only threat that really has materialized is cable companies. At least in North America, cable companies have emerged as the most serious threat to wireline voice and broadband Internet access revenue streams. Everything else essentially has remained a flea bite.

On the video and audio content side, remember the hackles BitTorrent and Kazaa raised? Now we have iTunes, Joost and a legal BitTorrent working with content owners.

So what conclusions should one draw from all of this? Probably that "disrupting" powerful incumbents is going to be much harder than attackers once had believed. Bandwidth exchanges thought they'd reshape interconnection. Competitive local exchange carriers thought they'd capture a goodly portion of the wireline voice market. Independent DSL providers thought they'd catch the telcos sleeping. Internet Service Providers thought the same about dial-up.

Turns out incumbents have more resiliency than anybody might have thought.

Or Maybe Google Phone Looks Like This...

Who knows? The point is that Google probably has to get involved with handsets at some point, just as Microsoft now has to supply phones, to get other things done. Google wants to stimulate mobile search so it can sell more contextual ads based on location. Microsoft wants to sell more unified communications applications. Each might have to play in the device arena as part of a broader effort to meet a business objective. Voice is just something people expect a mobile to do, even if the supplier objective really is revenues built on mobile search and advertising.

GooglePhone? GPhone?



Since late 2006, there has been speculation that Google is prototyping a Google mobile phone, optimized to run Google apps, enable communications between Gtalk users and operate as a standard mobile phone as well. The speculation then was that a launch could occur in 2008.

The rumors are out again, suggesting a device that could sell in the $100 range, not to compete with the iPhone but rather low-cost PCs and other Web-capable devices. The device supposedly is powered by Linux, includes global positioning satellite capabilities, and of course will be optimzied to run Google Maps and other Google software.

Google is said to be showing the prototype to cell phone manufacturers and network operators as it continues to hone the technical specifications that will allow the phone to offer a better mobile Web browsing experience than current products, even the Wall Street Journal has reported.

Perhaps more surprisingly is the apparently-serious talk that Google might try an ad-support model. Maybe someday. That strikes me as requiring too great a change in end user behavior. People don't mind paying something for calling. A more logical approach is a simple flat fee plan for data network usage, including IP-to-IP calls using the data plan, and some for-fee charge for calls that have to terminate on existing mobile and wired networks.

There is a rumor about T-Mobile being a network partner, but that is curious since T-Mobile's data network would provide a horrible end user experience. Perhaps T-Mobile is thinking about a dual-mode approach with connectivity at T-Mobile Hotspots. Despite that, T-Mobile has the most to gain, as it needs to do something to break out of its fourth-place spot in the U.S. mobile market.

Such a GPhone or Google Phone would aim for the "Internet in your pocket" segment of the market, with a heavy emphasis on how it can be a platform for contextual advertising based on user location, not just past behavior. There's always some risk when a supplier tries to create a new segment in the device category. But Apple has done it with the iPod and now with the iPhone.

The Google Phone would have to pioneer another new segment in the handset category as well. That's always challenging. But mobile search is a big deal for Google, providing huge incentives to prime the market.

This image, by the way, is just one conception of what such a device might look like.

Thursday, August 30, 2007

EarthLink San Francisco Network Now Toast


EarthLink will not be providing free wireless Internet access throughout San Francisco. As promised, EarthLink is not proceeding with any new muncipal Wi-Fi networks when it has to pay the full cost of construction, as would have been the case in San Francisco.

Under the original deal, EarthLink would have invested $14 million to $17 million to build the network. EarthLink also expected to be able to charge $22 a month for a premium tier of service.

San Francisco officials probably will issue another proposal request. And EarthLink conceivably could get additional sponsors. But it's getting tough to make the numbers work when tethered broadband rates now are so affordable. In cities where muni Wi-Fi networks are in operation, or have been proposed, it isn't unusual to find tiers of service comparable to Wi-Fi available for $10 to $15 a month.

Also, as video becomes a more important part of the Internet experience, muni Wi-Fi networks just aren't going to be able to keep up.

No Bidders Left for Chicago Wi-Fi


Chicago has failed to reach agreement with either at&t or EarthLink, each of which had proposed building a municipal Wi-Fi network for the city. Just a few years ago, backers were arguing a business case could be made for either ad-supported free service or for-fee service at rates of $20 a month. But that was before U.S. telephone companies got serious about broadband pricing and dropped access costs behow $20 for service very comparable to what muni Wi-Fi networks were supposed to offer.

at&t charges $20 a month for speeds of 1.5 megabits a second in Chicago and will provide connections half that fast for $10 to new subscribers. In other cities such as Houston, an 800 kbps connection can be purchased for about $15 a month.

In Lompoc, Calif., the city signed up fewer than 500 users out of a population of more than 40,000.

So it looks like we are nearing the end of the muni Wi-Fi craze. Though some networks, primarily for public safety and municipal operations, might still be viable, it doesn't appear that most municipal Wi-Fi networks will prove commercially viable outside high-density urban cores.

And even there, how hard is it to find a T-Mobile hotspot at a Starbucks?

Wednesday, August 29, 2007

Ex-EarthLink Employee Site Created

If you are an ex-EarthLink employee, or soon to be one, this new site has been created for you.

http://exlinkers.blogspot.com/

EarthLink Pays Houston Fine; Might Be Off the Hook


EarthLink is paying the city of Houston a $5 million penalty fee for missing its first deadline in building the city's municipal Wi-Fi network. The payment might ultimately let EarthLink off the hook for the entire network build, though technically the payment buys about nine months to begin construction. The contract calls for complete construction time of two years.

Of course, EarthLink already has said it is no longer interested in continuing under the original contract terms, so unless the contract is renegotiated in some way, the network won't be built, at least not by EarthLink. It might not be the last fine EarthLink pays.

The city of Houston is also free to take proposals from other vendors during the nine-month period, and could award the contract to another company, observers say.

Considering that at&t offers Houston residents a $15 Digital Subscriber Line service running at 768 kilobits a second, it's hard to see how much share EarthLink might get for a service that will wholesale to retailers at $12 a month for a 1 Mbps service. The retail price then likely will have to be set at $15 or more.

Vista is a Damn Disaster


From: Alec Saunders
Sent: August-29-07 9:54 AM
To: Steve Ballmer; Jeff Raikes; Steve Sinofsky

Subject: regarding Windows Vista

Steve, Jeff and Steve…

I am writing you both because I know you from my days at Microsoft from 1992 to 2001. And to put what I’m about to say in context, I have been a Windows PC user since Windows version 1.02, and my home is stuffed full of PC’s, networks and servers… all running Windows – XP, Vista, Home Server. I worked on the launches of MS-DOS 6, MS-DOS 6.2, Windows 3.1, WFW, NT 3.1, NT 3.51, Windows 95, Windows 98, Windows CE, Windows 98 SE, and Windows ME before leaving the company. I’m a self-professed geek and will willing put up with a lot of pain in order to have the latest technology as well.

Now that you have the context for who I am, I want to tell you that I am seriously losing faith. My experience with Windows Vista has been a rank disaster. At this point, I believe it to be worse than Windows 98, which many consider to be the worst quality Windows product that Microsoft ever released. Specifically:

1. Driver quality is low. The ATI graphics card I have installed in my PC regularly causes a spontaneous reboot. My HP scanner doesn’t have a supported driver anymore.

2. Partner software quality is even worse. For example, over the weekend I installed Sony’s software for the HDR-SR1 (their new high definition camcorder) and lived through a series of spontaneous reboots. On one PC I was able to do a system restore. On another, uninstall worked. However, at this point I am simply unable to retrieve or view video files from that Camera, as they are all recorded in the new AVCHD format.

3. The OS quality is also low. Subsystems sometimes stop working for no reason. The PC I have printers attached to simply decides not to print, periodically. Then the print spooler on all of the other Vista PC’s attached to it simply stops and has to be manually restarted.

4. Microsoft software hasn’t been fully tested on Vista either. I use Foldershare, quite a bit, which works intermittently. My Windows Live OneCare software sometimes works and sometimes not… on some PC’s and not others.

I could go on and on, but suffice it to say it’s no surprise to me that one of the top stories on Techmeme this morning is that one in six new laptops are Macbooks, and not Windows. I myself have seriously looked at abandoning my investment in Windows. My Macintosh owner friends encourage me to do so, and don’t seem to have the same kind of trials with PC’s that I do. They appear to be able to just open them, use them, and put them away. Parents I know are opting to buy their children Mac’s, apparently because it relieves them of the need to be IS manager for the home.

The driver, Microsoft software and OS quality issues are Microsoft’s alone. However, the partner quality issue is an evangelism and certification issue. It seems, from where I sit, that the evangelism effort that the Windows 95 launch team undertook was not matched by the Windows Vista launch team.

This issue impacts me daily. I spend at least an hour a day fixing PC problems, whether on my tablet PC in my office, or at home. I can’t continue this way, and if I can’t I would imagine a lot of other customers can’t either.

Regards,

Alec.

EarthLink: Except for Helio, New Course Set

Saying it has made no final decision about its Helio investment, EarthLink officials have made a few things clear. It simply won't proceed with municipal WiFi networks in Alexandria, Va.; San Francisco; Atlanta; Houston, St. Petersburg, Fla. and Arlington County, Va. unless the terms of those franchises are altered.

It will continue to operate or invest in the networks in Corpus Christi, Tex.; Philadelphia and Anaheim, Calif.

What EarthLink is looking for is risk sharing by other stakeholders, possibly including the municipal governments, chipmakers, network infrastructure vendors or other stakeholders who benefit from continued deployment of municipal WiFi networks. In other words, EarthLink simply won't build if it has to put up all the cash.

For those of you who wonder about the business case, EarthLink is voting with its own wallet: there isn't an adequate return when it has to build the network.

So far at least, EarthLink seems to have made no final decisions about its Helio wireless venture, either. The problem is that EarthLink already has invested more than $100 million into the joint venture with SK Telecom, and it will watch that investment go down the drain if it doesn't try to get it into gear.

At any rate, Helio does not seem to be "top of mind" for the EarthLink management team. That belongs to the business-focused networking business of its New Edge Networks division. Getting New Edge to profitability is job one.

Among the current problems: gross margin of just five percent and churn of 2.7 percent a month. Of those two problems the bigger issue is gross margin. Monthly churn of 2.7 percent, while not pleasant, isn't terribly unusual in the small and mid-sized business market. But five percent gross margin is not a business.

EarthLink also is cutting back its customer acquisition efforts, and doesn't necessarily think it will be a bigger company in the future, measured by subscriber count. Instead, it will focus on selling more products to its existing base of customers.

That doesn't preclude acquisition of customer bases that are stable. EarthLink always has been an acquirer of customer bases, so that's in keeping with its legacy. But after a careful analysis of its customer cohorts, it has found what just about every other company with a recurring services revenue model also should find.

And that is that most of a company's churn occurs very early in a customer relationship. A good chunk--perhaps as much as a third or more of total churn--occurs within a few months. Perhaps half of all churn happens in the first year. Get past that point and churn actually is pretty low.

So the municipal WiFi decision essentially is made. For the markets not yet built, get concessions or get out. Run the three networks already operational. With immediate attention focused on New Edge, and different customer management straegies in place for the consumer Internet access business, that just leaves Helio unresolved.

Tuesday, August 28, 2007

What EarthLink Didn't Say...


..in announcing a cut of 40 percent of its current workforce, a tactical move, was what it intends to do about a business strategy with no focus. And that was what EarthLink remains mum about. Helio and municipal Wi-Fi are bleeding cash; broadband is slowing and dial-up is dying.

One thing EarthLink did say is that gross subscriber additions will decelerate in 2008, in part because EarthLink will stop marketing to customer segments it believes likely to churn.

There's something else. The company expects fewer migrations from narrowband to broadband. Why? Because, industrywide, the pool of people using narrowband who want to upgrade to broadband is nearing exhaustion. And the number who see little value in owning and using PCs obviously won't be candidates for narrowband or broadband access.

We rapidly are approaching the point where the "problem" of broadband adoption is no longer a "problem" of access, but a problem of "demand." There just aren't that many more people who want broadband and can't get it. Which means the marketing battler will refocus, as it always does in saturated markets, on upselling more services and features and stealing market share from somebody else.

All things being equal, a facilities-based access platform typically beats a leased-access platform. But there's one more essential ingredient. There have to be customers. In the fixed broadband access market, we are running out of customers.

One Movie: You Blow Your Monthly Data Plan


Something's gotta give here: Akamai has rolled out a high definition television delivery service, capable of delivering a two-hour feature-length movie encoded at a bit rate of at least 6-8 Mbps, with a resultant file size of 5 Gbytes to 8 GB. For those of you with some popular wireless broadband accounts, that's pretty much your "acceptable use" level of monthly consumption of data! And that's just your problem.

Assume the same bit of content were delivered to enough households to create one Nielsen ratings point. That's 1,102,000 households. Which means the delivery networks would require 6.6 Terabits per second of sustained bandwidth, assuming zero latency and zero network congestion!

I don't care who you are, your pipes are getting to be too small. Local area network bandwidth at enterprises is growing smartly, but consumer bandwidth won't be far behind, if in fact consumer bandwidth does not soon eclipse enterprise bandwidth in at least the downstream direction.

One HDTV movie. Two hours. Your whole monthly acceptable use consumption. Obviously there's not enough bandwidth.

Another Glitch: Not Vonage's Fault


So here's a prediction: third quarter additons of a wide range of products ranging from cable modem to satellite TV to VoIP service will be lower than expected, or at the very least pushed towards the last month of the quarter, despite the normal lift provided by millions of college students returning to school. The reason? Not the economy, necessarily. Not a slowdown in new household formation. Not fewer college students returning to campuses.

Of all things, the slowdown will come from the perhaps unexpected shut down of a widely-used in-store-activation service supporting sales of Verizon, at&t, Comcast, Time Warner, Cox Communications, Time Warner, DirecTV, Clearwire, Covad, HughesNet and other major service provider retail sales efforts. Oh, and Vonage.

Boston-based GetConnected Inc., a maker of transaction processing platforms for broadband service providers,

abruptly closed its doors in mid-August, leaving Circuit City, Best Buy and Radio Shack without a way to do in-store

activations of Vonage accounts. With predictable results.

That doesn't mean customers can't activate, simply that they can't activate in the store. And in some cases, the hassle factor is high enough that retailers, such as Circuit City, have simply opted to stop selling products requiring in-store activation, such as Vonage. The problem, apparently, is that the in-store-activation process is the only way to get Vonage when sold by Circuit City. There is not after-market activation process to default to.

So Circuit City, for its part, has stopped selling Vonage, either in its retail locations or online.

GetConnected executives blamed an unexpected and "faster than usual" downturn in broadband sales. I'm not sure I buy that explanation. However, if true, it might suggest a broader slowdown in uptake of a wide range of consumer communications and entertainment services, as the company had worked for quite a roster of "Blue Chip" clients.

Those customers included Comcast, at&t, Verizon, DirecTV, Clearwire, Charter Communications, Covad, Cox Communications, HughesNet, Timewarner, Cox Communications . and Time Warner Cable.

Presumably the bankruptcy has had a similar effect on sales of Digita Subscriber Line, cable modem and DirecTV subscriptions in retail stores as well, though customer service and activation teams have more than a month to get the backlog cleared.

Most of the majors seem to also be partnered with Synchronoss Technologies for automated ordering of a variety of services including VoIP, mobility services, cable TV and wireline phone service. The big lift for Synchronoss is that it supplies activation for at&t iPhone sales. That's as much as 68 percent of total company revenue at the moment. With the demise of GetConnected, we'd expect more diversification of Synchronoss revenue streams.

Monday, August 27, 2007

Sametime, Not Same Thing

Watching Lotus Notes morph into something beyond email has been interesting. Rescued from irrelevance when IBM changed Notes into an open platform, Sametime now talks to Ajax, making Notes features compatible with all sorts of Web services and legacy telecom platforms as well (with the Siemens OpenScape deal).

That sets up an unexpected new round of combat in the collaboration space that Lotus lost to Microsoft Outlook some years ago. Only this time, the battle is centered around instant messaging, rather than email. Email is a key feature, to be sure. But IM is key, in part because presence features are getting to be so important.

So do companies in technology sometimes get a second chance? It would appear so. Look at Apple and Sametime.

Web 2.0 Corollary: Email as Content Context


With IBM Launching Sametime and Microsoft getting ready for its OCS launch, we might note a corollary to the trend that has communications being embedded within the context of applications and content. One trend has communications (voice, video or audio conferencing, text messaging, instant messaging, email) being embedded within enterprise applications or portals.

At the same time, stand-alone communications tools such as email are morphing as well. Where today email is a stand-alone communications tool on the desktop, it seems to be pushing in a new direction. It seems to be becoming a tool to coordinate communications or content from RSS feeds, blogs, wikis, IMs, and voice.

Instead of using a document attachment, email might simply point a user to a link that displays a page, a document, a news feed, a site or client where a piece of information or content resides, rather than leading a user away from the message.

Zimbra, for example, pops up other information that embedded in a message. Zimbra retrieves the information and pulls it into the email, instead of opening a link that takes the user someplace else.

So it might not make sense, someday, to separate out a user's "communication" activities from a user's "information" or "content" activities. One will communicate when using or accessing information or content, and use or retrieve information or content from a "communications" application.

at&t, Verizon, Time Warner Telecom Top Ethernet Providers


Two of the top three providers of U.S. retail business Ethernet services gained port share for mid-year 2007 as compared to year-end 2006 results, according to Vertical Systems Group. In addition, a formerly cable company affiliated contestant entered into the top tier for the first time. Time Warner Telecom, started as an affiliate of Time Warner Cable, has been spun out on its own.

At&t, Verizon Business and Time Warner Telecom are the top three U.S. retail business Ethernet services providers, as measured by ports in service, says Vertical Systems Group.

At&t, including the former BellSouth market share, holds the leading position with a 19.5 percent share of mid-2007 ports. Still, at&t’s share declined compared to the combined year-end 2006 shares for at&t (13.6 percent port share) and BellSouth (8.5 percent) separately.

Verizon Business is second overall with a 15.8 percent port share, up from 12.2 percent at year-end 2006. In third position is Time Warner Telecom with 13.7 percent of ports, a jump from 10.7 percent in 2006, says Vertical Systems Group.

Cox Business, holding a port share of 8.9 percent, now is in fourth position—and is the first U.S. cable company to climb to the top tier of metro Ethernet providers.

Cogent is fifth with an 8.6 percent share of the market, an increase from 8.2 percent at year-end 2006. Qwest (including OnFiber) is sixth at 8.4 percent, down from a 9.9 percent port share.

Yipes is seventh with a share of 4.6 percent, a decline from 5.4 percent at the end of 2006. Yipes recently announced its acquisition by Reliance Communications and will operate as a business unit within the company's FLAG Telecom operations.

Other Business Ethernet Services providers comprise an aggregate 20.5 percent of the market, including AboveNet, American Fiber Systems, Alpheus Communications, American Telesis, Arialink, Balticore, Bright House Networks, Charter Business, CIFNet, Cincinnati Bell, Comcast Business, CT Communications, Electric Lightwave, Embarq, Expedient, Exponential-e, Fibernet Telecom Group, FiberTower, Global Crossing, Globix, IP Networks, Level 3 (including Broadwing), LS Networks, Masergy, Met-Net, Neopolitan Networks, NTELOS, NTT/Verio, Optimum Lightpath, Orange Business, RCN, Savvis, Spirit Telecom, Sprint, SuddenLink, Surewest, Time Warner Cable, US LEC, US Signal, Veroxity, Virtela, Windstream and XO Communications.

New Yahoo! Mail Launches


Yahoo! Mail has launched in the U.S. market. The updated former email client expands the Web mail service into a "social communication" tool, adding the ability to send text messages to cellphones directly from e-mail. The latest update also illustrates a trend: "communication" and "content" apps are blurring and blending. At the same time, communications are shifting, in part, into the context of social networking sites, where communications is a "background" feature always available, and where the current willingness and ability to communicate is known to each social network "buddy."

Yahoo! also has tweaked the interface to make it easier for people to go back and forth between email, instant messaging and text messaging, and to access content from inside the client itself.

The new service includes two real-time communication features that are the first of their kind from a leading Web mail service. These include the ability to send free text messages from Yahoo! Mail to mobile phone numbers in the US, Canada, India, and the Philippines, and the ability to send instant messages (IM) from Yahoo! Mail to members of the world's largest combined IM community, including users of Yahoo! Messenger and Windows Live Messenger2.

The new Yahoo! Mail enables people to select how they want to communicate with their online contacts: by e-mail, instant message or text message to a mobile phone number.

U.S. users now can right click on underlined dates, names and keywords within messages and take additional action, such as adding events directly to their Yahoo! Calendars, adding friends to their Contacts, immediately viewing a Yahoo! Map of an address or performing a Web search on a keyword.

Yahoo! says the client will operate with the speed and responsiveness of a desktop application. A co-branded version of the new Yahoo! Mail will also be available in the fall to customers using the following broadband Internet services: AT&T Yahoo! High Speed Internet, Verizon Yahoo! and Rogers Yahoo! Hi-Speed Internet. The new Yahoo! Mail will be available this fall to Yahoo! Small Business Mail users as well.

Thursday, August 23, 2007

100 Percent Mobile Penetration by 2013


SNL Kagan now estimates that 84 percent of the U.S. population, including consumer, business and double users, will have mobile phones by the end of 2007. By 2013, penetration will be over 100 percent. It might not even take that long. U.K. mobile penetration is something like 116 percent already, according to Ofcom, and has broken 100 percent in a number of western European countries.

A First for Google Mobile Usage



Google has seen a spike in usage of its mobile services since May, partly offsetting the traditional summer slump in computer-based Web surfing for the first time, says Marissa Mayer, Google VP.

Traffic to Google's maps, e-mail and mobile searches on mobile phones and wireless handheld devices rose 35 percent between May and June. That reversed the previous annual pattern in which both mobile phone and computer use declined, Mayer says.

Credit Apple's iPhone, at least in part. The iPhone launch apparently lead to a jump of 40 percent to 50 percent in use of Google Maps on mobile phones.

Mobile use remained high into August, even as overall traffic searches surged then fell in the summer months. The traffic traditionally drops by 20 percent to 40 percent between May and June, as computer users in the Northern Hemisphere go on vacation.

Mayer says the numbers suggest growing acceptance of mobile Web applications.

Overall growth in the usage of Google services has begun to pick up again in the current week, as U.S. students go back to school and vacationers begin to return to work, Mayer says.

Unlocked Phones?


Perhaps we will have to hope for Google to win the right to build a national wireless broadband network before we see unlocked phones on a wide scale. To this point, wireless carriers have argued they have to lock phones for several reasons, including some that are technical, but also to subsidize the handsets and control monthly recurring costs. Up to a point, that's reasonable.

But carriers could dispense with the objections some customers have to locked devices in a pretty simply way: create separate plans for unlocked phones. Sell the phones for full retail price and charge different prices for access. Warn users that some features might not work, or work in the same way, as they do on "locked" devices.

Carriers might just find out that most users don't care whether their phones are locked or not. Others will be passionate about using their own devices, and might not mind higher device prices or even higher monthly access fees.

Of course, one significant reason for locking phones is to prevent use of data connections for mobile VoIP. But people already can do this, even on phones that don't run the Symbian operating system. Sooner or later, unlocking will happen. As is always the case, it probably won't until somebody really dangerous convinces the legcy carriers to move. That somebody has to be Google.

Wednesday, August 22, 2007

GrandCentral Number Porting Affects 434


GrandCentral has had a few number porting issues of its own. CEO Craig Walker says GrandCentral had issues with 434 customers whose numbers could not be seamlessly transitioned from one underlying supplier to another.

What happened is that a supplier of numbers and connections "sent us a notice that they’d be exiting certain markets and disconnecting some phone numbers in 30 days," says Walker. GrandCentral immediately began porting the numbers to a larger carrier partner. But 434 couldn't transparently be moved.

Those users had to be assigned new telephone numbers in the same area codes they already were using. Going forward, GrandCentral is emphasizing working with large, reliable providers committed to providing these services long term.

"Although this affected only 15 of the local areas where we offer services, out of nearly 8,000, we take this matter seriously and have done everything to make the disruptions as limited as possible," says Walker.

That is the way to handle an unplanned outage.

Wells Fargo Outage Yesterday

Wells Fargo, the fifth-largest U.S. bank, had an outage of its own on Tuesday, taing down knocked the company's Internet, telephone, and ATM banking services for at least an hour and 40 minutes. Five nines? Not likely.

U.K. VoIP Provider Also Has Outage


U.K. VoIP provider VoIP.co.uk had an outage of its own last Monday. Users could call other VoIP.co.uk users, but were unable to place or receive calls from users on the public telephone network. Service was out for the better part of a day.

Microsoft OCS Starts to Disrupt


Microsoft's Office Communications Server 2007 is going to disrupt market share in today's business phone system market. It also is going to take share and rearrange markets in other areas you might not expect, such as the test and measurement space. Huh? Isn't voice quality testing, on both qualitative (subjective) and quantitative (mean opinion scores, for example) dimensions, something that specialized test and measurement firms do? Well, yes.

But Microsoft also is bringing to market its own "quality of experience" server that automatically tracks end user voice quality no matter where a call is placed--from inside the enteprise or at a hotel. No network test probes are required.

That's just one more example of how incumbents are finding their core businesses under threat of rearrangement from upstarts with deep pockets, strategic motivation, different visions and deep expertise in software and networking.

Tuesday, August 21, 2007

Microsoft OCS Managed Service for SMEs?


Microsoft's Office Communications Server hasn't begun shipping in general release. But that hasn't stopped OCS from garnering significant mind share among enterprise information technology managers. Some recent surveys by the Gartner Group and Wainhouse Research show OCS in the top spot among unified communications providers, according to Gurdeep Singh Pall, Microsoft corporate VP.

Pall positions OCS as an alternative to private branch exchanges (business phone systems) in either the time division multiplex or Internet Protocol or hybrid flavors. But Pall also notes that OCS obviates the need for a PBX of any sort, though it interoperates with IP and TDM systems. That's one reason Microsoft is introducing a new line of desktop phones that work with OCS.

Less attention has been paid to the issue of how small and mid-sized enterprises will some day be able to use OCS. Warren Barkley, a principal group program manager at Microsoft, says a hosted service ulitmately will be made available to SMEs.

Barkley simply noted that small organizations generally lack the IT resources to set up and run an OCS style unified communications system. It wouldn't be the first hosted service Microsoft offers.

Microsoft already offers a hosted collaboration platform, LiveMeeting, and is moving to offer applications such as customer relationship management as services.

Linked In is Like Email; Facebook is Like IM


I've never been a fan of LinkedIn (I'm not a "head hunter," and it undoubtedly is a useful tool for people who do that for a living). It might be a nice utility for updating contact information for a small subset of the people you actually know and communicate with. Beyond that I've never had occasion to use it.

Facebook seems like a better version of LinkedIn, though. I was able to get my son's new address when he went back to NYU without using LinkedIn. To be sure, the information wasn't pushed to me. I had to go view his Facebook page. But I got what I needed without emailing or calling.

So why is LinkedIn like email? It's a tool "older" people use for work. Why is Facebook like IM? It's a tool "younger" people (and increasing numbers of "not so young") use to keep up with other people they actually care about. In some important ways, IM also is a "richer" experience, as Facebook is.

Monday, August 20, 2007

Skype: The Ultimate Windows Externality


"On Thursday, 16th August 2007, the Skype peer-to-peer network became unstable and suffered a critical disruption triggered by a massive restart of our users’ Windows-based computers across the globe within a very short time frame as they re-booted after receiving a routine set of patches through Windows Update," Skype says.

Not everybody buys that explanation. But, if true, it has to rank as the most massive, unexpected software interaction Windows ever has inadvertently caused.

The high number of restarts apparently caused a flood of log-in requests, which, combined with the lack of peer-to-peer network resources, prompted a chain reaction, Skype says. Some have argued that the outage proves peer-to-peer networks are inherently unstable.

It's hard to test that assertion since Skype uses a modified P2P architecture with a sign-in process that is more "client-server" and centralized than most other P2P networks.

Some think there was some sort of hacker attack, but Skype denies it. "We can confirm categorically that no malicious activities were attributed."

If the Microsoft routine updates were, in fact, contributory or causal, it would rank as the most significant network-wide interaction anybody ever has seen. Just another example of the way applications are reshaping the way global networks perform.

As some of you know I have recently been dealing with interactions caused by a Vista upgrade, mostly of the "we don't talk to Vista" sort. I will say one thing, however. Vista seems to be much more robust than XP was about handling "hibernation" operations. XP used to become unstable after several hiberation operations, at least on my machines. I have not found that to be the case with Vista.

Sunday, August 19, 2007

Is Wireless Cable's Achilles Heel?


In the early 1990s, Comcast and other cable partners invested in an earlier version of "SpectrumCo," a business that would eventually become Sprint PCS, only to pull out later in the decade when the going got tough. Cablevision, for its part, also flirted with creating its own PCS network, but ultimately decided against it.

In 2005, Comcast, Time Warner Cable (TWC), Cox (COX), and Advance/Newhouse Communications banded together with Sprint Nextel to creat the "Pivot" service.

Sprint CEO Gary Forsee says that it took longer than expected to get Pivot off the ground and subscriber numbers haven't been released. That logically suggests uptake has been slow.

Recently, Sprint abruptly withdrew from SpectrumCo, the entity that in late 2006 snapped up $2.37 billion worth of licenses to wireless airwaves. The acquisition had spurred speculation that together, Sprint and cable companies were planning their own wireless network.

All of which might suggest wireless continues to be the platform telecom competitors can use to parry cable's wireline thrusts. It is, after all, a simple line extension to add voice and broadband access to a cable network. It is a discontinuous jump to offer wireless services over a completely distinct network. And cable execs dislike discontinuities as much as any other exec.

And the evidence is growing that mobile is way people "do voice."

BitTorrent Throttled by Comcast


Internet Service Providers don't like BitTorrent because it basically destroys their business model (flat rate access) and stresses the very part of their network most vulnerable to high usage (the upstream). Many ISPs simply limit the available bandwidth for BitTorrent traffic. Cable operators that now seem to include Comcast go a bit further and disupt the "seeding" process that allows BitTorrent peers to act as better upload nodes. In Canada, Cogeco and Rogers Cablesystems also "step on" BitTorrent traffic.

If P2P traffic keeps growing the way Cisco predicts, and if no changes are made in the dominant retail pricing model, throttling of P2P applications will happen on a wider scale. P2P attacks network capacity at its weakest link.

Cisco Predicts Exabyte Networks

Cisco's recent forecast of global IP bandwidth consumption suggests a 37 percent cumulative average growth rate between 2006 and 2011, or about five times the 2006 level. That's aggressive, but you might expect that. You might even have expected the prediction that consumer usage will outstrip business usage, though business dominates at the moment. You wouldn't be surprised at all to learn that video will drive overall global usage.

You wouldn't necessarily be surprised to learn that Cisco forecasts at least 60 percent of all traffic will be commercial video delivered in the form of walled garden services. And a significant percentage of the remaining 40 percent of IP bandwidth will be consumed by IP-based video applications.

The next network, in other words, will be a video network that also carries voice and non-real-time data.

That would be a stunning change from the originally envisioned view of the Internet. But I think we have to recognize at this point that virtually none of the key developments in communications technology have developed as industry insiders, public policy proponents, technologists or entrepreneurs had supposed.

To be sure, all of the diligent work on Session Initiation Protocol will have a significant payoff. But that didn't stop Skype by rocketing past SIP using a proprietary approach.

The Telecommunications Act of 1996 was supposed to lead to an explosion of innovation by dismantling restrictions on "who" could be a provider of Class 5 switch services. Instead, innovation came from the Web. Perhaps despite the Telecom Act, all sorts of innovation has happened.

VoIP was supposed to transform the nature of communications. Instead, mobility, instant messaging and social networks are doing so. One might arguably look to all manner of text communications as the disruptive communications development of the past several decades, not voice.

And then there's electronic numbering and voice peering. Perhaps these approaches still will have some dramatic impact on global voice communications prices and ability to circumvent the "public network." But it's starting to look as though ENUM might be a next generation to provide the signaling system 7 function. That's not to say it is unimportant: only to say it was not what many had intended or expected.

So far, it would seem that the most disruptive impact of the whole basket of new technologies has been to disrupt our ability to predict the future. We've been wrong more than right, as we always are. IP networks are not now, and never will be, as closed as the old public network was. Neither are IP networks going to be "open," any-to-any networks in the old manner, with no intelligence or policies operating in the core of the network.

Lots of things can, and should, be done "at the edge." But increasingly, lots of things cannot. The transition of the global IP network to video also means a shift to real time services (and we aren't even talking about the same process at work for voice and visual collaboration). That spells the end of the completely "dumb network."

Friday, August 17, 2007

DHT Behind Skype Crash?


Not that anybody really claims to know, but there's some thinking that the Skype outage was caused by some failure of the Distributed Hash Tables that Skype Supernodes apparently maintain. Some say "this is normally very slow and done over UDP," so restoration, even once the problem is identified, will take some time. So even as the ability to send instant messages and set up voice sessions is restored, other niceties, such as correct "presence" information, might take a little longer. The immediate problem, some say, is that if a Skype client cannot find a Supernode (and I am not a techie, but understand a DHT corruption would have something very serious to do with that sort of failure mode, then even if a client is authenticated by a central server, the user would not be able to get onto the Skype network.

All I know is that this failure mode would explain why I can communicate using text, and send audio, but my presence shows as "offline," when I am "online." I will test a live conversation tomorrow morning and see what happens.

This is a crisis management professional's dream: when your client is getting lots of bad press, some other bigger event occurs to overshadow it. So Skype now is sucking all the oxygen out of the "I'm mad my VoIP doesn't work" room.

Skype Sorta, Kinda Up

Though my status shows "offline" to Rich Tehrani, my Skype client seems to be up, though sending incorrect status information. Not many contacts seem to be visible at the moment.

Skype Outage Not Over

Skype initially said its outage is over, but that clearly is not the case everywhere, and we are nearing 24 hours since the log-in problem began. Now Skype warns that the outage is likely to continue through Friday. My U.S. log-in still hangs.

The service had been sporadic but gradually improving during the business day in Asia on Friday, some report.

"There are about 2.5 million people logged in right now, where normally there would be over 8 million, and it's been going on and off every 10 minutes," says Mark Main, senior analyst at Ovum in London.

You may draw your own conclusions about which other application or service providers might benefit, but urges to gloat should generally be suppressed. Nobody whose service uses IP and the public networks is safe from outages or service disruptions.

That's why businesses and networks have redundancy. People who scream and yell about losing their service have only themselves to blame if they didn't build some level of diversity and redundancy even into their personal communications. Use Skype, other IM applications, mobiles, POTS-replacement VoIP, and POTS, email and anything else you can get your hands on. Some of us use multiple mobiles from different providers and multiple broadband providers. But never hang everything on any one service or provider, especially if your business depends on it. Personally, I wouldn't even hang my personal communications on a "single provider" strategy.

Thursday, August 16, 2007

Dark Skype


Skype Ltd. early today blamed an unspecified "software problem" for an outage that might make the service unavailable for as long as 24 hours. At 9 a.m. EDT Skype said the outage might last 12 to 24 hours.

Most people are finding it impossible to dial out or open an instant message session with any of their contacts. A "Connecting" message just hangs.

Skype rarely goes offline. The last reported outage resulted in the service going dark for several hours in October 2005.

Fred Pitts Back in Service with TeleBlend


It took 10 days, but TeleBlend customer Fred Pitts FINALLY is back in service.
"My first try to call home this morning continued with the "fast busy" signal; by midmorning, however, it was working," Pitts says. "So, while disappointed to have been without incoming service for such a length of time, I am thankful today that I am back up. I hope everyone else will be back in service soon as well."

A gracious comment, I'd say. At least some disgruntled SunRocket customers who picked TeleBlend as a replacement say they have churned to other providers such as Packet8 and Vonage.

A harrowing experience, to be sure. Perhaps it is only fair to note, though, that of the 60,000 transitioned customers, nearly all made the flash cut without much apparent disruption. Call it 99 percent. But one percent of 60,000 is still 600 customers, and it will be scant comfort to know that (hypothetically) 54,000 customers had no real issues.

That's the devil with mass market services, though, isn't it? Getting 99 percent of things right still generates thousands of trouble tickets (I'm not suggesting TeleBlend had issues with as many as one percent of its accounts, by the way. Just making the point that a very small failure rate in a mass market application or service can result in huge trouble ticket queues.)

Skype apparently still is having a major outage itself today, and as older posts today note, at&t and Cisco have had issues this month as well. S*** happens even to companies as large and sophisticated as Cisco and at&t.

And Cisco Goes Down, Also...

Cisco's main www.cisco.com page was offline at 11 a.m. Pacific Time on Aug. 8 and stayed offline for more than two and a half hours. It returned at about 1:45 p.m. The outage was an unintended byproduct of routine maintenance.

at&t EDGE Network Outage

See what we mean? AT&T Inc. acknowledged a brief outage of its EDGE network Tuesday, Aug. 14, which was blamed on routine router maintenance. The EDGE network was also down on July 2 for about six hours.

EDGE (Enhanced Data Rates for GSM Evolution) is the wide area wireless network that services iPhones and many other devices, providing data service but also carrying voice traffic over the GSM protocol.

Voice Quality is Getting Worse: What Would You Expect?


Those of use who grew up with one phone company got spoiled by the reliability and quality of its communications network (despite "customer service" so bad it became an oxymoron)," says technology journalist Mark Stephens, whose pen name is Robert X. Cringely. "Those of us trying to save a few bucks by piggy-backing voice services on the Internet are starting to get what we've paid for."

Skype itself now is experiencing an outage that might take 12 to 24 hours to fix (Aug. 16).

There's a larger trend at work here, and it happens in virtually all formerly highly-regulated businesses when deregulation and new technology hit. Remember when airlines were highly regulated, and could not compete on the basis of price? How did they compete? Amenities and other non-price differentiators. Of course, prices were high and not that many people flew.

Deregulation hits and all of a sudden price becomes a key competitive weapon. Of course, when people start paying lots less, something has to give. Like amenities. But more people fly now.

So here's the problem communications service provider executives face: they can't afford to run "gold plated networks" for the same reason airlines cannot. Obsessive concern about voice quality and service availability are one thing in a highly regulated environment. Such concern is quite something else in a highly competitive marketplace where customers in fact choose to pay money for service that is quite a bit less intensive than it once was.

In a nutshell, the business problem is that operators cannot afford to maintain the same obsessive levels of quality when customers demonstrably don't care. Mobile communications is the best example. Everybody uses mobile service. And everybody knows it simply is not as reliable as wired phone service. Nor is the audio quality as good. But it's a wild success, anyway.

If people will not pay you to maintain a higher quality of service, can you afford to do it? That's the problem the global communications business faces. People are voting with their pocketbooks: buying services with lesser quality on some metrics because the overal utility of mobility is so high.

In other cases, such as over the top VoIP, they are voting with their wallets to buy cheaper services with less reliable service.

Get used to it. In virtually every deregulated, formerly monopolistic industry, overall quality will drop. Of course, there's another trend as well. New, higher cost alternatives will develop. Because some people need high quality enough to pay for it.

IP communications are very valuable. They are very useful. But they are not as robust as the old public switched network, if only because of things like latency. The services can be made more rugged, of course. It just costs money.

Wednesday, August 15, 2007

HNS Launches SpaceWay Satellite


Hughes Network Systems has successfully launched and deployed its new Spaceway satellite, expected to enable high-speed IP data networking across North America at rates of from 512 Kbps up to 16 Mbps upstream and as fast as 30 Mbps downstream. It is one of the largest telecommunications satellites ever built, and its design includes onboard dynamic multi-beam switching, which will deliver bandwidth-on-demand and direct site-to-site mesh networking.

In a small business application, Spaceway is expected to operate at about 2 Mbps in the upstream. It's a different sort of satellite, using on-board routers to control 780 downlink beams and 112 uplink beams aimed at U.S. market customers. Unlike earlier generations of satellites, Spaceway uses nothing but spot beams, allowing a high degree of frequency reuse. What that means is that a single Spaceway satellite offers capacity equivalent to eight to 10 conventional birds using a single beam with continental coverage.

Commercial operations are expected in early 2008.

Spaceway might not be a game-changing network in the broad consumer mass market, where cable and telephone companies are expected to dominate the access market. But it might well have significant impact in the enterprise market, for customers who need distributed, IP-based, broadband mesh networks, where Spaceway will excel.

Spaceway also sets up head-to-head competition with Wildblue, another provider also offering satellite broadband to customers largely based in rural areas.

Channel partners might also want to take note that HNS, for the first time in its history, has created a channel program and is willing to sell to enterprise customers with fewer than 500 to 1,000 sites, its traditional market, using its existing VSAT network. That doesn't mean HNS is terribly interested, if at all, in two-node networks. But it undoubtedly is willing to entertain service for networks with as few as 20 to 50 nodes, something it never has been willing to do before.

DirecTV Adds Broadband Over Powerline


DirecTV will wholesale broadband over powerline broadband access services from Current Group no later than the beginning of 2008. The move gives DirecTV the ability to create a triple play bundle of voice, video and high-speed data access in the Dallas/Fort Worth area, reaching 1.8 million homes and businesses over the next several years.

The move shows the necessity of providing a triple play offering in the mass market, whether one approaches that market from the legacy voice or legacy entertainment video business. Both DirecTV and EchoStar have been weighing their terrestrial options for some time, though both have marketing deals with the leading incumbent telephone companies as well.

DirecTV might have additional concern about those relationships since at&t bought BellSouth, which had been a DirecTV partner. It isn't clear yet whether EchoStar or DirecTV will continue to be at&t's partner in the future, but EchoStar's longer history with at&t (formerly SBC) should carry weight.

Interesting bit of trivia: The just-launched Hughes Network Systems Spaceway satellite was originally supposed to be the third bird in the fleet of IP-enabled spot beam satellites. But when DirecTV was sold off to News Corp. by the holding company that still owns HNS, the first two birds went to DirecTV.

Perhaps sadly, those two birds are used for conventional TV broadcasting rather than the mesh networking applications the satellites originally were designed to support. Linear TV, including the high-definition sort, obviously is the foundation for businesses consumers consider important.

For some of us, though, broadband Internet access is the most important application, if one could only choose a single service remain available (and that includes landline voice, mobile phone, television and fax). The spot beam and on-board router capabilities of the first two of three "Spaceway" birds wound up in the dustbin.

I don't know that the owners of those two birds would have made more money, or garnered more strategic advantage, if all three Spaceway satellites could have been used for their original intended purpose. I will say that given a choice between devoting scarce spectrum to television, when it can be used for communications (including IP and Web applications), seems like a suboptimal choice.

That said, there's little question but that DirecTV has used the capacity provided by those two former "Spaceway" satellites to shore up its competitive position in the high-definition TV area, compared to its cable competitors. "Highest and best use," I believe property assessors call it.

Learning to Deal with Failure

Virgin Mobile, the only customer for BT Movio, will go dark at the start of next year. So will BT's Movio service, which provided the transport for Virgin and it was hoped, other mobile TV services.

Tier one carriers are going to have to get used to such failures, as that is the price of experimenting with new services for which demand is unproven. Fixed-Mobile Convergence services have not fared any better in western Europe of late.

That hasn't stopped researchers from predicting a robust market for mobile TV services.

Informa Telecoms and Media predicts that there will be 124.8 million broadcast mobile TV users worldwide by 2010, with an inflection point expected in 2009 as network rollout and device availability allow for the market to reach some level of critical mass.

for the next few years, the most advanced networks will be S-DMB and T-DMB services, dominating broadcast TV handset sales worldwide from its strongholds of South Korea and Japan.

By 2010, there will be 18.11 million terrestrial DMB subscribers, compared with 15.02 million satellite DMB users worldwide.

"Despite its slow start, DVB-H will become the dominant format in 2008, reaching significant levels worldwide reaching 74.03 million users by 2010, equating to almost 60 percent of all broadcast mobile TV users", says David McQueen, Informa analyst.

It didn't help that the European Commission has backed a rival transmission standard for mobile broadcasting. The EU chose Digital Video Broadcasting — Handheld (DVB-H) as the standard it wants used. BT Movio was based on the rival Digital Audio Broadcasting — IP (DAB-IP) standard, which reused digital radio spectrum to deliver a handful of TV channels and a range of digital radio stations.

Service Not Entirely Restored


"Make it 10 (days without service), says TeleBlend customer Fred Potts. "Last Friday, Bill Fogg of Teleblend posted a reply after a comment I made on your blog. He sent an email follow up asking for a number where he could reach me. I sent my cell number and have sent follow up emails to him each day. The silence is deafening."

Free "In Community" SME Calling from Fonality Trixbox


Trixbox Pro by Fonality Inc. is free software for enterprises with up to 20 employees that runs on any computer and nearly any phone, including IP and analog models, and providing IP PBX functions.

An Enterprise Edition upgrade for $9.99 per employee per month will provide some business features such as conference bridging, and a Call Center Edition costs $19.95 per call center agent per month.

TrixBox launches with TrixNet, a free in-network calling service to let any TrixBox Pro user call any other TrixBox Pro user, using their regular phone numbers, Lymon said. TrixNet will be extended in the near future to TrixBox Community Edition, a popular open-source software based on Asterisk.

The offering might make most sense for the reseller and value added reseller community, since it assumes some technical skills to deploy.

Resistance is Futile: IP PBX Has Killed TDM


Forrester Research recently interviewed 516 landline voice decision-makers in North America and Europe and found that enterprises plan to increase budgets for IP telephony or IP PBX systems and services during 2007.

This is not surprising, nor shocking. It is getting hard to buy systems based on older platforms, just as it now is very hard to buy a new PC that doesn't have Vista loaded as the operating system.

New shipments of IPT outpaced those of traditional PBX systems three years ago, and the installed base of IPT lines is expected to outnumber traditional PBX lines within the next few years.

North American and European enterprises indicated that in five years most will have completed their migration to IPT. All of which continues to create a window of opportunity within which non-telco providers can sell hosted VoIP services into the consumer and smaller business markets without fear the telcos will massively convert to VoIP.

Someday, when they have lost enough share, telcos indeed will stop offering POTS and themselves become VoIP providers. But only after VoIP has completely reshaped customer expectations about what a voice service is, and how it should be packaged.

The SME customer segments remain the most promising opportunities for most competitive providers, though the cable companies have real advantages in the consumer markets.

Tuesday, August 14, 2007

TeleBlend Restores Service

Finally! TeleBlend has got service back up for customer Marc Kruskol, who I would say was one of the maddest TeleBlend or SunRocket customers I have heard from. Kruskil says his outage lasted from last Monday, August 6 until approximately 2:30pm PDT Aug. 14. The problem, I am pretty sure, has to do with termination partners in the Van Nuys area who either took some time to come to identify and strike business deals with TeleBlend, and then to get all the portability and software issues ironed out. Nice to hear that Kruskol now can use his VoIP service.

Yesterday, customer Fred O. Pitts reported that he still didn't have service. "I am now eight days and counting without incoming service." Pitts now says (Aug. 14) that his service still hasn't been restored. That's disappointing. Make it nine days.

Yoomba Hits 500,000 Users


Yoomba Ltd. says it now has 500,000 uses since officially launching about a month ago.

Yoomba’s peer-to-peer application sits on top of every email network and turns any email address into a phone or instant messenger. Once Yoomba is activated buttons appear inside a user’s chosen email application, providing one-click access to talk to friends, family or colleagues around the world and on any network for free.

It works, though users may notice some slowdown of their email client. That, at least, is what seems to happen when Yoomba runs over Microsoft Office.

Free Phone For Reseller Partners


All resellers who sign up for the Flat Planet Phone Company yearly $199 Reseller program will receive a free Cisco Linksys SPA942 phone and a $200 rebate on purchases of IP telephony equipment from VoIP Supply, says Moshe Maeir, Flat Planet Phone Company CEO.

FPPC offers resellers a brandable, SIP-based platform supporting hosted PBX service, voice mail and fax-to-email features, call recording, calling cards, disposable numbers, Iotum integration, local international phone numbers, reduced roaming expenses, virtual IVRs and click to call.

FPPC resellers are supported by an integrated rating and billing engine, customer self care portal capabilities and full customization of offered features.

Sunday, August 12, 2007

Are Landlines Becoming a Giffen Good?


Widespread use of VoIP tends to cause voice prices to fall. And classical economic theory would suggest that consumption of wireline calling should increase, as a result. In some cases that seems to be what happens. People call globally more often when the prices are lower.

But it just is possible,under some specific circumstances,for price declines to cause reduced consumption.

A Giffen good, for example, is an “inferior” good for which a rise in its price makes people buy even more of the product as its price rises. Conversely, there is less demand as price falls. To be sure, such Giffen goods are exceedingly rare. But one is tempted, when looking a mobile versus fixed line calling, to ask whether there are not some similarities.

Mobile calling now leads wired connections by a three-to-one margin globally and more people are shifting to "wireless only" calling. And though it is a loose analogy, perhaps we might think of mobile calling as a "superior" product and wireline calling as an "inferior" good, not in terms of intrinsic worth but in terms of the way people consume each product.

Giffen goods are named after Sir Robert Giffen, who was attributed as the author of this idea by Alfred Marshall in his book Principles of Economics. The classic example of potato consumption during a famine now is viewed as unsupported.

But in July, Robert T. Jensen, an economist at Brown University, and Nolan H. Miller, a professor of public policy at Harvard University, published an article for the National Bureau of Economic Research on Giffen goods.

The two economists say they have located a real-world Giffen good, namely rice and wheat flour in the central Hunan and Gansu provinces of China.

As Giffen suggested more than 100 years ago, goods whose price and demand move in the same direction are most likely to be essential products such as food on which households spend a large part of their incomes (and that's why neither VoIP nor landline voice service can be called Giffen goods in a formal sense).

Wheat flour and rice fit the bill in central China. When the price of the good falls, households appear to shift buying to meat. So lower prices cause less consumption.

Jensen and Miller look at poor Chinese consumers and demonstrate that they consume more rice or noodles, their staples, as prices go up.

Still, neither VoIP nor landlines strictly meet the criteria for consideration as Giffen goods. But it is an interesting notion. Might lower landline calling prices caused by VoIP actually lead to lower usage, in the presence of mobile alternatives that might be likened to “superior” goods, as compared to landline which might be thought of as an “inferior” good?

If so, lower landline calling prices will simply hasten the transition to more preferred mobile calling. I wouldn't push the loose analogy too far. But there some parallels.

As the chart suggests, consumers can buy either commodity Y or commodity X (line MN,where M = total available income divided by the price of commodity Y, and N = total available income divided by the price of commodity X).

The line MN is the consumer's budget constraint.

If there is a drop in the price of commodity X, the reduced price will alter relative prices in favour of commodity X, known as the substitution effect. This is illustrated by a movement down the indifference curve from point A to point B.

At the same time, the price reduction causes the consumers' purchasing power to increase, the income effect (line MP where P = income divided by the new price of commodity X).

The substitution effect (point A to point B) raises the quantity demanded of commodity X from Xa to Xb while the income effect lowers the quantity demanded from Xb to Xc.

The net effect is a reduction in quantity demanded from Xa to Xc making commodity X a Giffen good by definition.

Verizon FiOS Blows Away Competition

A recent survey of ComputerWorld readers has Verizon's FiOS service topping the satisfaction rankings in virtually every measured category. Overall, 96 percent of FiOS customers rated the service "excellent" or "good." And though cable modem services scored better than Digital Subscriber Line overall, Comcast fared poorly as a provider. All that noted, and for all the grumbling one tends to see on blogs and discussion boards, about three quarters of the respondents think their services are "excellent" or "good." Upload speed remains the single biggest gripe.

GooglePack Adds StarOffice

GooglePack has added Sun's Web-based productivity suite StarOffice. I don't see any icon for Google Docs & Spreadsheets in the Pack any more, so apparently Google has decided that the more robust StarOffice functionality warrants the switch. I suppose I would have to agree about that. If you are a heavy Microsoft Office user, StarOffice arguably will operate more along the lines of what you are used to, feature-wise. It's the small things, in many cases. The big thing is the presentation tool in StarOffice that wasn't part of Google Docs & Spreadsheets.

Saturday, August 11, 2007

Microsoft Vs. Cisco

For an unfortunately old telecom sort of guy, it really is something to watch the coming battle Cisco and Microsoft will be waging over voice services. If you've been around long enough, it seems discomforting that the key battles are not to be waged between Nortel and Lucent, or Avaya and Nortel.

In fact, it also is discomfiting that the coming battle won't even really be about voice per se. Instead, everything now hinges on capabilities in the unified communications or collaboration areas. Communications requires dumb pipes of high quality, to be sure. Beyond that, most of the heavy lifting now can be done by the applications.

So in some genuine sense, the whole global telecom business is about dumb pipes. Not completely, but largely.

Still, voice and real time communications remain challenging disciplines, though that generally is under appreciated by most people.

Microsoft probably is going to discover that, as Cisco has.

T-Mobile Prepping FMC Service?


T-Mobile, which has launched a dual-mode (GSM plus Wi-Fi) Hotspot@Home service, looks like it is getting ready to integrate landline service as well. T-Mobile is working with Linksys on a router that integrates home phone lines into the service along with providing VoIP service over cell phones, according to documents with the Federal Communications Commission.

In June, T-Mobile launched its Hotspot@Home service, which allows T-Mobile cell phone subscribers to transfer calls seamlessly between the T-Mobile cellular network and a Wi-Fi hot spot in the home.

My issue with the implementation is that it only supports two phones: the Samsung t409 and the Nokia 6086. So far, no tier one provider has found its dual-mode service very attractive to users when device limitations are that stringent.

The new router, not yet available but already bearing the model appellation WRTU54G, also has two slots that support two GSM SIM cards, allowing users to add up to two additional mobiles.

If T-Mobile wants to unify the access to VoIP and other IP-based communication services, over Wi-Fi in the home, wired connection in the home, at a T-Mobile Hotspot or on the GSM network, that might be more interesting. But there still is the handset issue. Given a choice between the tri-mode feature (even with seamless VoIP across all devices)and relatively unrestricted handset choice, I think handset choice wins, just about every time.

Friday, August 10, 2007

Global Crossing Didn't Do It

TeleBlend's VoIP network had an outage in late July and there was some confusion about why. Perhaps it was as simple as a temporary financial issue between trading partners. Global Crossing and Level 3 Communications, as major suppliers to SunRocket, likely got stuck with significant bad debt when SunRocket went dark. So you might understand why the providers might be worried about further bad debt exposure related to an account that had just gone south.

In all likelihood there was simply a period where a single payment got a bit delayed and at least one of the underlying carriers moved to protect themselves. We understand TeleBlend had been making incremental payments to the underlying carriers, obviously to limit their risk.

That's not to say there couldn't have been issues related to the SunRocket and TeleBlend back office processes. Under the circumstances, a late payment makes the most sense.

TeleBlend Quietly Provides SunRocket Service

If you have been following the SunRocket transition story, you might not have wondered just how it was that SunRocket went dark July 16, but nearly all SunRocket customers were still able to call in and out and use voice mail until the SunRocket creditor hard stop of Aug. 5. As it turns out, TeleBlend has quietly been paying Global Crossing and Level 3 Communications, as well as some others, to maintain service to all former SunRocket customers while TeleBlend conducted its marketing activities.

And the only reason TeleBlend wanted to keep that quiet was to avoid its own customer backlash. How's that? Customers are mad at SunRocket. If they then learn they are getting service from TeleBlend, even if free, there's still the possibility of ill will when the lights finally do have to go out at SunRocket. So TeleBlend said nothing.

Where Have SunRocket Customers Gone?


TeleBlend, the new provider formed to serve former SunRocket customers, says it has 60,000. CEO Bill Fogg says TeleBlend added 3,000 the week of Aug. 6 and 1,000 on Thursday, Aug. 9. Vonage says it has gotten about 20,000 and Packet8 says it also has gotten about 20,000, according to Huw Rees, 8x8 VP. That accounts for about half the former SunRocket base. And there may be significant movement this week and next. As it turns out, nearly all former SunRocket customers have quietly continued to get service that has been paid for by TeleBlend. So as service has gone completely and finally dark on Aug. 5, people who might have done nothing because they were still able to use their SunRocket service will have to do something else, for real.

SunRocket to Packet8 Transition: Why it is so Easy


Most former SunRocket customers who have moved to Packet8 service have had their new service up and running within three days, says Huw Rees, 8x8 VP. So why is the Packet8 service faring better than TeleBlend, in terms of transition ease?

Serendipity, at least in part. Global Crossing and Level 3 Communications were the primary SunRocket transport providers, and Packet8 works with both of them as well. So when a former SunRocket customer wants to switch to Packet8 service, pretty much all it takes is the letter of authorization, about 24 to 48 hours to get the account re-pointed to Packet8 and away from SunRocket, and time to ship out a new analog terminal adapter.

That's not to minimize the face that 8x8 has had quite some years to get its back office and warehouse operations into place. It's just that having common transport providers in common with SunRocket has made the logistical process of "porting" accounts easier.

Consumer, Mobile Satellite Drive Growth for HNS


Though its legacy enterprise networking business still generates the most revenue, consumer broadband access and mobile satellite provided the growth for Hughes Network Systems in the most recent quarter, says. Pradman Kaul,HNS CEO.

“The consumer, small and medium business and mobile satellite businesses continued to be the key contributors to our revenue growth,” says Kaul. Over 30,000 new broadband access subscribers were added in the second quarter of 2007, growing the HughesNet customer base to 353,000 at the end of June. That's year-over-year growth of 18 percent.

Revenue from our mobile satellite business showed strong growth of 88 percent
to $35 million in the second quarter of 2007 over the second quarter of 2006.

HNS does not report average revenue per unit for either its enterprise or consumer users. So you might not think 353,000 broadband access customers is a particularly big deal. But look at it this way. Assume that ARPU for a single enterprise customer site is $100 a month or so.

Then assume that each of the consumer, small office or small business sites each represents the same ARPU, as some analysts have suggested. That's a very healthy recurring revenue stream, by anybody's standards, for a consumer Internet access product.

And extremely rare in the communications business. How many other companies do you know that can claim the ARPU for a consumer access line is the same as the ARPU for an enterprise line? I know of no others.

Vonage Work-Arounds in Place


Vonage has "substantially completed" the deployment of work-arounds for two of three VOIP (voice over Internet Protocol) patents claimed by Verizon Communications. Though some litigation remains, the theory that patent infringement would kill Vonage does not presently look like it will match the facts.

Vonage began deploying the two work-arounds about July 1, the company says. The two work-arounds target most of Vonage's customers, with the third work-around covering wireless voice, Citron said.

Vonage also has completed development on the third work-around, Citron notes. The company consulted outside experts to ensure that the work-arounds do not violate Verizon's patents, he adds.

The patent hiccup will be just that: a hiccup. The strategic problem remains Vonage's positioning in a world where cable triple play offers have serious traction, more call volume is migrating to wireless or text modes, and communications are becoming part of enterprise, portal, entertainment and instant messaging experiences.

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