Sunday, January 31, 2010

Fundamental Changes to PSTN: What Would You Do?

Legacy regulation doesn't make much sense in a non-legacy new "public switched network" context. Nor do legacy concepts work very well for a communications market that changes faster than regulators can keep pace with, both in terms of technology and the more-important changes of business model.

In a world of loosely-coupled applications, old common carrier rules don't make much as much sense. Nor is it easy to craft durable rules when rapid changes in perceived end user value, which relate directly to revenue streams, are anything but stable.

Consider the public policy goal of ensuring a ubiquitous, broadband networking capability using a competitive framework, to promote the fastest rate of application creation and development, under circumstances where the government has neither the financial resources nor ability to do so.

The typical way one might approach the problem is regulate intramodally, looking at wired access providers as the domain. The other way might be to regulate intermodally, comparing all broadband access providers, irrespective of the network technology.

Then consider how a major broadband provider might look at the same problem. No wired services provider, as a practical matter, is allowed for reasons of antitrust to serve more than about 30 percent of total potential U.S. customers. Mobile providers are allowed, indeed encouraged, to serve 100 percent of potential customers, if possible.

Would a provider rationally want to invest to compete for 30 percent of customers on a landline basis, or 100 percent, using wireless?

Ignoring for the moment the historically different regulatory treatment of wired networks and wireless networks, in the new historical context, is it rational to spend too much effort and investment capital chasing a 30-percent market opportunity, or is it more rational to chase a 100-percent market opportunity?

Granted, network platforms are not "equal." Satellite broadband networks have some limitations, both in terms of potential bandwidth and network architecture, compared to wired networks.
Mobile networks have some advantages and disadvantages compared to fixed networks. Mobility is the upside, spectrum limitations impose some bandwidth issues. But fourth-generation networks can deliver sufficient bandwidth to compete as functional substitutes for many fixed applications.

Verizon has already stated that they're going to launch LTE at somewhere between 5 and 12 Mbps downstream. LTE theoretically is capable of speeds up to 80 Mbps, but that assumes lower subscriber demand and also low distance from towers.

The point is simply that discussions about national broadband frameworks will have to open some cans of worms. It is a legitimate national policy goal to foster ubiquitous, high-quality broadband access.

It may not be equally obvious that the best way to do so is to impose "legacy" style regulations that impede robust mobile capital investment and business strategies. That isn't to discount the value of fixed broadband connections. Indeed, broadband offload to the fixed network could play an invaluable role for mobile providers.

Still, aligning policy, capital investment and business strategy will be somewhat tricky.

Apple is Now a Mobile Company

The iPhone now is Apple's biggest business, and it was a "zero" revenue contributor three years ago. Where Apple had fourth-quarter 2009 Mac revenue of $4.5 billiion, it had iPhone revenue of $5.6 billion, up 90 percent year over year. The iPod contributed $3.4 billion in revenue.

Even if one assumes no Mac revenue is attributable to portable devices, iPhone and iPod revenue from fully mobile devices amounts to $9 billion out of a total $13.5 billion in quarterly revenue, or two thirds of total.

Friday, January 29, 2010

Voice as a "Spice"

Consultant Thomas Howe describes the way voice can work in a new context by calling it the equivalent of "spice." In other words, it might often be the case that, within the context of an enterprise application, voice is a feature used to enhance a process, rather than a stand-alone function or application.

In that sense, click-to-call is an example. Most people would agree that is the case. What remains unclear, at least for service providers who will continue to make signficant revenue selling voice as a stand-alone service, is whether "spice" is a business for them, or not. In some cases, it will be; but in other cases it will not.

To the extent that spice can be an interesting revenue stream for service providers is whether they can figure out ways to combine traditional calling functions with enteprise application features that integrate "calling" with information relevant to the call, that is valuable to the enterprise and is worth paying for, from the corporation’s point of view.

Monetizing such "hard to replicate" data by combining it with voice is where telcos have a great opportunity to grow, says Howe. There are many areas where only telcos can deliver voice and have the information that will add value to the call, such as authentication, location, even availability.

The issue is that many other providers in the business ecosystem also have the ability to integrate such functions in new ways. Google and Apple, for example, may well be able to leverage "location" information without needing the assistance or permission of the service provider.

Still, it should be possible to create services that confirm a person is home to receive a delivery, or to assist in scheduling at-home or at-office appointments.

Identity authentication, more than simply location or "phone number" identity, might be useful for transactions as well.

Few Takers for 50 Mbps Access

Time Warner Cable has about nine million high-speed access customers. It has about 20,000 customers for its fastest DOCSIS 3.0 service, which depending on configuration can support speeds up to about 43 Mbps per 6 MHz channel in the downstream direction, or more, if more bandwidth is made available.

All that means is that few customers are willing to pay $100 a month or more to get really-fast broadband access running at speeds of about 50 Mbps maximum.

How Important is AT&T's U-Verse?

AT&T books something on the order of $124 billion a year worth of revenue. In the fourth quarter of 2009, AT&T booked U-verse revenues representing an annualized $3 billion. Some will note that this represents about three percent of AT&T's annual revenues.

By way of contrast, wireless already contributes about $56 billion annually. For the quarter, wireless revenues were $12.6 billion and wireless data was about $3.9 billion.

A rational observer might note that U-verse, AT&T's broadband and TV services effort, represents less revenue annually than mobile data does in one quarter. One might also argue that U-verse is not a revenue contributor that really "moves the needle" in terms of overall AT&T revenue performance.

One might also infer that a rational AT&T executive would not spend nearly the time on fiber-to-customer services that he or she would spend on wireless services, given the relatively small contribution U-verse can make to the overall bottom line, even if such broadband services represent the future of the fixed access business.

On the other hand, U-verse services have a much-higher growth profile, growing at about a 32-percent rate in the fourth quarter, where mobile revenues grew at about a nine-percent rate. Wireless data is growing at about a 26-percent rate.

Still, a rational executive might conclude that the gross revenue implications of high wireless data growth rates are vastly more signficant than equally-high growth rates for U-verse broadband services.

Some U-verse growth cannibalizes digital subscriber line revenue. And though video services have room to continue growing, that revenue source is fundamentally bounded by the total size of the U.S. multi-channel video business, where AT&T essentially takes existing revenue and market share away from cable competitors.

The wireline data business essentially can aim to grow to nearly 100 percent of the existing base of AT&T's existing huge installed base of wireless voice customers. AT&T has more than 85 million mobile voice customers.

The entire U.S. cable customer base is about 62.6 million accounts, and AT&T does not have a universal U.S. footprint. AT&T ultimately might cover 30 million U.S. homes out of 115 million total with its U-verse network.

If AT&T often appears to be a wireless company first and foremost, there is a good reason.

In 2014, 80% of Broadband Access Will Be Mobile, says Huawei

By 2014, 80 percent of the world's two billion broadband users will be using mobile networks for their access, says Huawei. Of those two billion users, 1.5 billion will be first-time subscribers.

Predictions such as that are one reason regulators and suppliers need to be much more cognizant of how much is changing in the global communications business. Policies that relate to broadband access and deployment must reorient to reflect user behavior and supply that will be overwhelmingly mobility-based in just a few years.

Huawei also points out that voice services revenues also are steadily declining."In the past five years, the revenue for fixed voice services decreased by 15 percent, reflected by a decreasing growth rate for mobile voice services in 2009," Huawei says.

If that is a fundamental trend, as Huawei believes it is, then policies cannot be designed on the assumption that voice revenues, traditionally the underpinning for the whole global business, will continue to do so in the future.

In other words, instead of assuming service providers are powerful gatekeepers who need to be restrained, it might be more apt to view them as endangered suppliers who must replace the bulk of their revenues over the next decade or so, simply to remain in business. That certainly is not how telecom companies have been viewed in the past, but to ignore the changes could be dangerous.

U.S. regulators were so intent on introducing more competition in voice services in the early 1990s that they nearly completely missed the fact that the Internet, broadband and over-the-top applications and services were about to change the industry. Basically, the intended market result was to cause incumbents to lose market share while competitors were to gain share, precisely at the point that nearly every competitor was about to face a declining market for voice services.

It takes little insight to observe that a narrow focus on fixed broadband might likewise be dangerous at a time when usage is shifting so profoundly to mobile modes.

To use an analogy, regulators must resist the temptation to "fight the last war," rather than the different new war that is coming.

Thursday, January 28, 2010

Is Verizon a "Wireless" Company as AT&T Is?

Is Verizon now a "wireless company with a wireline business"? Some might argue that is the case. Others might argue Verizon is a company with significant wireless and broadband businesses. At AT&T, it is easier to make argument that the company really now is a wireless company with wireline businesses.

Part of the reason for the difference is Verizon's decision to go to a "fiber to the home" access network, while AT&T has chosen a less-costly "fiber-to-neighborhood" approach. But those decisions are conditioned by the different potential customer bases in each telco's territory. AT&T is less dense, so FTTH is aq more expensive choice. Verizon also has more business customers, and fewer consumer customers, relatively speaking.

Analysts at Trefis, for example, estimate that mobility counts for 34 percent of Verizon's equity value, with broadband access contributing 36 percent. Services to larger businesses and organizations account for 17 percent of Verizon's equity value.

The consumer and smaller business revenue stream accounts for just 10 percent of Verizon's equity value.

At AT&T, wireless accounts for a whopping 51 percent of equity value, while Internet and television services account for 16 percent. Services to business customers, plus wholesale, accounts for 12 percent of equity value. The landline voice business accounts for 12 percent of equity value.

AT&T really is a wireless company with a wireline business.

VZW added 2.2 million net wireless subscribers in the last three months of 2009. Verizon remains the marker leader in size, quickly approaching the 100 million-sub mark with 91.2 million total mobile customers.

Total wireless service revenues remained flat quarter-over-quarter at $13.5 billion and were up only five percent year-over-year.

But wireless data revenues continued to balloon, increasing $200 million over the third quarter to $4.3 billion and 26.6 percent  year-over-year. Data now accounts for 31.9 percent of all service revenues.

Wireline service revenues fell $100 million quarter over-quarter to $11.5 billion, representing a 3.9 percent drop year-over-year. On the residential side, access line loss showed no signs of improving with Verizon posting a further 12.3 percent decline.

Verizon also is losing digital subscriber line accounts as it switches customers over to the FiOS service. Verizon lost 107,000 broadband lines, primarily DSL accounts, as its FiOS service grew by153,000 net new customers, including both broadband access and video customers.

FiOS now has 2.9 million TV subscribers (25 percent penetration) and 3.4 million Internet customers (28 percent penetration).

But wireline figures also were distorted by the addition of Alltel assets.

Wireless profit margins also are higher than wireline. Wireless had 45 percent margins in the fourth quarter of 2009, while wireline margins fell to 23 percent.

Mobile Broadband Prices: As Usage Climbs, Something's Gotta Give

Sooner or later, mobile broadband consumption patterns are going to force mobile Internet service providers to better match consumption with usage, for the simple reason that the cost of supplying end user bandwidth probably will grow faster than the cost of infrastructure, on a per-megabit-per-second basis, will drop.

That obviously affects the mobile broadband business case, especially if video comes to represent 90 percent of all bandwidth demand, as Cisco now predicts and as global backbone networks already demonstrate.

At the current average traffic levels of 500 MBytes a month, revenue per MByte outstrips delivery costs for HSPA, LTE and WiMAX at monthly retail prices starting at $20 per month, says Monica Paolini, Senza Fili Consulting president.

At $20 per month, mobile operators operate at a loss for subscribers using more than 1 GByte per month in a 3G network, or for subscribers using more than 5 GBytes per month on a 4G network, Paolini says.

At 10 GBytes per month, data subscribers do not generate any net benefit for mobile operators on a 3G network. On a 4G network 10 GBytes of usage might be a break-even proposition.

Who are the Media Gatekeepers These Days?

Media business models nearly always are a mix of end-user revenues and advertising or promotion. That likely won't be different as mobile media start to develop (click on image for larger view).

And though much attention always is directed at the role of "access providers" as key gatekeepers, that probably is not an issue in the mobile marketing and mobile media business.

Instead, it is device providers and application providers that are emerging as the key gatekeepers. Consider platforms such as the iPhone, with its App Store, or Facebook.

These days, the App Store and Facebook are emerging as distinct business ecosystems for application sales, gaming and advertising.

That is going to prove something of a shock for "service" providers, but that's just what seems to be happening.

Internet Isn't What it Used to Be

Some time ago, the Internet was "controlled" by standards groups.

These days, some think it is controlled by ISPs.

Increasingly, it is controlled and shaped by ecosystems formed about devices or key applications (Click on image to see larger view).

That means our old notions about the "open" or "neutral" Internet have changed.

To some extent, the Internet still is about the ability of any one user to reach other user. To an increasing extent, it is about domains accessible only to members, users and subscribers.

For content owners, advertising and marketing specialists, users and enablers, that means development and business models are based on discrete ecosystems, not the "Internet" in general. And while much attention is paid to the role of ISPs as "gatekeepers," there are all sorts of gatekeepers these days, and application providers or device manufacturers might be more important gatekeepers than ISPs.

YouTube "Feather" Beta Seeks Lowest-Latency Connections

YouTube, or any video content for that matter, is tough to watch on a  low-bandwidth Internet access connection or even a computer with insufficient processing power, such as some netbooks.

So YouTube is in beta testing of "Feather," a way of optmizing latency performance on limited hardware or low-bandwidth connections.  Feather is said to work by “severely limiting the features" and "making use of advanced Web techniques for reducing the total amount of bytes downloaded by the browser."

The video playback page of Youtube Feather is fully transferred after downloading 52 Kilobytes of data compared to 391 Kilobytes that the standard pages require, some note.

Youtube Feather achieves the better performance by partially by removing standard YouTube features such as posting of comments, rating videos, or viewing all comments or customizing the embedded player.

The Feather beta suggests why strict versions of "network neutrality" might hinder innovation or end user experience. Feather works by blocking some bits and features. It is an opt-in feature, and that also is part of the danger over-zealous network neutrality rules represent. Users might want to selectively tune their use of some applications, blocking some features and bits, to optimize the experience.

Earned Media to Grow Most in 2010, Survey Finds

Earned media spending will see the biggest increases in spending in 2010, a new survey of brand marketing professionals by the Society of Digital Agencies finds. "Earned media" refers to refers to favorable publicity gained through promotional efforts other than advertising, as opposed to paid media, which refers to publicity gained through advertising. Increasing use of social media accounts for much of the change.

About 81 percent of the brand executives expect an increase in digital projects in 2010, and half will be moving dollars from traditional to digital budgets. Further, more than 75 percent think the current economy will push more allocations to digital formats.

Senior marketers reported that social networks and applications were their biggest priority for 2010, for example.

“Unpaid, earned, proprietary” media spending has seen the sharpest rise, with nearly 20 percent of respondents reporting increases of more than 30 percent.

Wednesday, January 27, 2010

Apple iPad Will Use AT&T 3G Network

Apple's new iPad will use Wi-Fi and also AT&T's 3G wireless network. Users can opt for using Wi-Fi only, as iTouch users do, or can buy 3G service. AT&T offers a 250-megabyte plan for $15 a month, and an unlimited plan for $30, neither requiring a contract.

Those pricing levels more closely resemble an iPhone data plan than a data card subscription, which costs $60 a month, and typically requires a contract.

Some observers might say the iPad subscriptions represent a "higher-quality" or higher-margin revenue source than is typical for iPhone subscriptions, which also represent $30 a month in fees, because AT&T gets the traffic without having to factor in a subsidy for the devices.

One issue is how much data iPad users will consume. Users of the iPhone typically consume about 400 megabytes a month, where mobile PC card users tend to consumer about 2 gigabytes a month. A reasonable estimate is that iPad usage will fall somewhere between those levels.

Apple Launches iPad: What Don't We Know?

So this is the day we found out, for sure, that Apple is launching a tablet device called the iPad.

Nobody knows how big a market it might create. And that's probably the key: Apple likely intends to create a new market, not simply be " a better Kindle" or a "larger-screen iPod." 

There's no way of telling, yet, what will happen. Apple has launched products before that did not gain mass acceptance, though its iPod and iPhone launches have been revolutionary. The difference this time might be that the iPod basically took a huge existing human behavior ("listen to music" or "voice" and "using the Web") and changed the distribution or the experience. 

It is less clear which major human activity the new tablet will reshape. "TV" is one possibility. "Reading" is another. Down the road, the biggest potential innovation is a way to blend text, full-motion video, music and search in new ways. But that would take some time. Longer term, there may be a new "mobile media player" opportunity. 

Near term, a tablet does not seem to offer as clear a path to reshaping a major human activity as the iPod did for music or the iPhone did for mobile phones and mobile Internet. That might simply be my own lack of imagination. But so far, "mobile TV" hasn't proven as popular as "cheaper consumable media." To a large extent, e-book readers are popular because they offer cheaper ways to buy text content. Mobility plays some part, but it likely is "cheaper ways to read books" that supplies the greatest value.

If that turns out to be true for the tablet, it won't so much be "mobile" consumption as "cheaper prices" for content that prove compelling. Right now, it isn't clear that will be the case. 

The emergence of new multimedia formats is the likely long-term innovation, but that will take some time. At the outset, we'll have to see whether the tablet is able to reshape one or more existing applications and activities, in one or more settings. 

It isn't so clear that people will suddenly change their media consumption patterns because a new mobile display is available. PCs already can provide much of that capability, while the iPod itself and devices such as the Kindle allow mobile or cheaper reading. 

The true revolution lies in the new medium the tablet might enable. But new media requires assembling a complex ecosystem, with lots of stakeholders with much to lose. That suggests the business relationships will take some time. In the early days, the tablet likely will have to succeed based on its ability to do a superior job of satisfying some existing behavior and need. 

Is There a Need for iPad? If So, Is it a Big Need, and Big Market?

"All of us use laptops and smartphones now," says Steve Jobs, Apple CEO. "The question has arisen lately: is there room for a third category of device in the middle, something between the laptop and the smartphone?"

And that's the question users, application developers, content providers and marketers will have to answer. Is there some clear need for a third device? And if so, what is that need?

Suppliers have been trying to get the features and value right for as much as 20 years, depending on how one wants to characterize the "tablet" market. So far, nobody has proven there is a large consumer market for devices halfway between a smartphone and a notebook computer. 

We do know there is a major mass market for personal music players, personal music players with Wi-Fi access and smartphones with touchscreens that handle native Web applications very nicely. 

What Apple hopes to prove is that there are similar needs for a "device in the middle" that is an Internet-connected media player, easier to carry than a netbook or notebook, but with a relatively-large display for media consumption. 

The relative lack of apparent demand when consumer surveys are taken is not the big stumbling block. Consumer surveys would not have predicted the success of most recent Apple products. The bigger issue is simply that the device must uncover some existing, large and unsatisfied need.

We don't yet know yet whether the iPad will uncover such needs or not. But that is what Apple expects to discover. 

Monday, January 25, 2010

E-Book Readers Unlikely to Help Newspapers, Study Suggests

Portable e-readers such as the Kindle are unlikely to win readers back to the newspaper habit unless they include features such color, photographs and touch screens, according to professors of advertising Dean Krugman, Tom Reichert, and Barry Hollander, associate professor of journalism in the University of Georgia Grady College of Journalism and Mass Communication.

Young adults in particular compared the Kindle DX used in the study unfavorably to smart phones, such as the iPhone or Blackberry.

Skeptics might also suggest that changing the delivery channel for an unpopular product should not be expected to change the demand curve. An unpopular product's problem is its features and value, not its channels.

For younger adults, the Kindle fell short when compared to their smart phones, with touch screens and multiple applications, available in a single small package. The e-reader felt “old” to them, the professors say.

Older adults were overall more receptive to the concept of an e-reader. However, the Kindle failed to include aspects of the traditional newspaper they had grown fond of, such as comics and crossword puzzles.

Cost was a factor regardless of age. Nearly all respondents balked at the Kindle DX’s $489 price tag for reading a newspaper.

As a stand-alone attribute, Krugman said, the newspaper feature is likely not strong enough to sell the e-reader.

One might note that decades ago, when USA Today was launched, there was much speculation about how much a colorful, more "TV-like" presentation would change reader interest in newspapers. Despite USA Today's success, it does not seem to have had much impact on overall newspaper readership.

At this point, we might wonder why e-book readers will fare better.

Newsday Pay Wall Apparently Leads to 47% Decline in Visitors, which has put unlimited access to its content behind a pay wall, is finding what most of you would have predicted: it is losing readers. But Cablevision may be banking on a business model it has used in the past: providing "no incremental cost" access for customers who buy other Cablevision products.

In December 2009, unique visitors declined 47 percent while page views fell 32 percent compared to December 2008.

In December, had 1.4 million unique visitors and 18.9 million page views, according to Nielsen. That was down from 2.7 million and 27.8 million, respectively, for the month in 2008.

December was the second full month where Newsday's policy of charging people $5 a week for unlimited access to the site was in effect. People who subscribe to home delivery of the paper, or receive broadband service from its parent Cablevision, do not have to pay extra.

That provides another clue to the success or failure of "pay walls." Cablevision has ways of supplying "no incremental cost" viewership in the same way that it provides "no incremental cost" access to its metro Wi-Fi network.

If a person is a subscriber to Cablevision's fixed broadband access service, then use of the Wi-Fi network is available at no extra cost.

Cablevision does not appear to expect the new pay model to "materially" impact revenues in the "near term." One reason: many people interested in the site also receive the paper at home or get Cablevision high-speed Internet service.

How Important Are App Stores?

Consumers will spend $6.2 billion in 2010 in mobile application stores while advertising revenue is
expected to generate $0.6 billion worldwide, say analysts at Gartner. But app stores might be far
more important than the simple sales revenues would suggest.

There seems little question that the success of Apple's iPhone App Store came as a surprise to just
about all observers, including Apple itself. Perhaps none of us should not have been surprised.

Apple already used iTunes to dramatically reshape music distribution, music formats and relationships within the music ecosystem.

At this point, it is reasonable to look at the similarities between iTunes and the App Store and suggest that the Apple App Store, and other application stores, and wonder if they will not have a similar impact on some key portions of the software business, and further shape the attractiveness of any particular piece of hardware.

For some, perhaps many buyers, the software library could be the factor that pushes buyers toward a particular device or family of devices.

But there might be equally-important implications for service providers as well.

Ask a telecom service provider executive why they do not move faster to introduce new applications "at Internet speed" and you very likely will be told that carriers have reputations for quality and brand equity that require them to test the reliability of any new products very thoroughly, and that necessarily slows the pace of innovation.

Others might point out that moving "at Internet speed" to create new applications now is how things often are done, and for that reason delay can be troublesome.

Perhaps app stores are the crucial missing element in allowing service providers to emphasize the quality, stability and robustness of their transmission networks, while at the same time allowing them to stay abreast of rapid application innovation.

It is possible, perhaps even likely, that users can differentiate between the quality or userfulness of a third-party application sold through a service provider supported or affilated app store.

If so, that offers a way forward for service providers rightly concerned about their reputations, yet also needing to move more quickly on the application development front.

In that sense, app stores might offer a convenient way forward. Network performance and stability can be be separated from the perhaps less robust process of making available new applications of uneven quality and value.

Mobile application stores will exceed 4.5 billion downloads in 2010, eight out of ten of which will be free to end users, Gartner analysts predict.

Gartner forecasts worldwide downloads in mobile application stores to surpass 21.6 billion by
2013. Free downloads will account for 82 percent of all downloads in 2010, and will account for 87 percent of downloads in 2013.

Something of the same argument might be made for e-book readers and other new devices whose value depends on the availability of content or applications.

Saturday, January 23, 2010

Information Technology Industry Council Reaches Common Ground on Net Neutrality

The "network neutrality" debate is becoming more nuanced, with possibly greater understanding by many participants that it is important to find common ground that does not jeopartdize the Internet's future in a misguided attempt to preserve its past.

The Information Technology Industry Council, which includes Microsoft, Ebay, Intel, Apple, Qualcom, Adobe and Cisco, seems to be threading a needle, for example.

Everybody seems to agree that "certainty" is needed or innovation will be impeded. Everybody also seems to agree that innovation "at the edge of the network" likewise should not be impeded.

One way of getting there is by avoiding the temptation to write overly-detailed rules in advance of issues that could arise. That means the ITIC prefers that issues be settled on a case-by-case basis, as needed, rather than by creating new rules in advance of any conceivable set of issues that could arise.

"The FCC cannot posibly anticipate all future circumstances, and it is entirely possible that conduct that may appear to be harmful today will in fact be beneficial to consumers in light of future circumstances," the ITIC now says.

Managed services, for example, should be allowed unless it is proven that the services are "anticompetitive or harmful to consumers." That suggests a new openness to the possibility of enhanced services that take advantage of user-defined and user-requested packet prioritization features.

Quality of experience, especially during periods of congestion, almost requires that such mechanisms be available for users and applications that want to make use of such features.

Cbeyond Asks FCC for Mandatory Wholesale Optical Access

Cbeyond has the Federal Communications Commission to reverse its rules on wholesale obligations for fiber-to-customer networks. On copper access networks, competitors have rights to buy wholesale access. The FCC has ruled that on new fiber-to-customer networks, competitors have no similar rights.

Predictably, incumbents say the current rules should remain in place, which allow any voluntary wholesale deals, but do not require incumbents to offer wholesale access. The rules are consistent with rules that apply to U.S. cable companies, which likewise have no obligation to sell wholesale access to competitors.

The Telecommunications Industry Association  and the Fiber-to-the-Home (FTTH) Council have filed comments opposing the change.

The debate is an old one. Incumbents argue that the business case for FTTH is troublesome, and that they need the ability to profit from FTTH investments without being required to make those faciltities available to competitors who do not have to build expensive facilities of their own when they can simply lease capacity from others.

Though it is difficult to prove, one way or the other, the FCC has faced a dilemma. It can seek to spur competition by mandating robust wholesale access, or it can spur deployment of new optical access facilities, but might not be able to achieve both goals.

The reason is that incumbents can simply refust to upgrade their networks when they do not feel they will get an adequate financial return. There is some important evidence that incumbents are right about the ability to raise investment capital for FTTH.

Investors punished Verizon Communications for pushing ahead with its FTTH program, preferring AT&T's less-costly FTTN approach, for example. Calle and telco executives point out that all competitors are free to build their own facilities if they want, and most observers would note that in markets where there are three ubiquitous FTTH or FTTN networks, it has proven difficult to sustain business models allowing all three competitors to remain in business.

The calls for mandatory wholesale come at a time when everybody acknowledges that the business case for traditional cable TV and voice services is becoming more difficult, and that neither cable companies nor telcos can rely on their mainstay businesses (video and voice) for future growth. In fact, both types of companies are seeing steady shrinkage of those legacy businesses.

Under such circumstances, and given the shift to Internet-based applications, it might not make lots of sense to weakent he business case for robust optical access investments at a time when the financial returns for doing so are under pressure in any case.

Supporters of mandatory optical access obviously would benefit from a rule change, as they could offer optical access without incurring the expense of building new facilities. So the dilemma the FCC faces is an emphasis either on innovation or competition, in some clear sense.

Since virtually all applications now can be delivered over IP-based connections, it no longer makes as much sense as it once did to directly link "access" and "competitive" services. With or without broadband access, companies now can deliver virtually any service over the top, on any broadband connection.

Under such circumstances, robust competition occurs at the application level, not the access level. In fact, that is precisely the problem telcos face with VoIP, and that cable companies face with online video.

Google Voice Extension for Chrome Browser Now Live

Google Voice now is available as an extension for the Chrome browser. Adding the extension
adds click-to-ccall functionality to Web pages. If there is a phone number on a Web page, or your online address book, it will now have a hyperlink. Click it and Google will open a pop-up window asking which phone you want to use to set up the call, and does.

Google Voice, you will recall, is not an IP telephony or VoIP application n the sense that Skype or Vonage are. Basically, Google uses the Web to set up and complete calls using your existing mobile or fixed connections, adding some interesting call management features.

The extension also adds a small icon in the upper right of the browser. You can type in a name or phone number and call or send a text message from the browser, and read recent text messages and transcribed voicemails (Google automatically transcribes voicemails, usually not all that well).

Many observers think Google ultimately will add softphone functionality, allowing Google Voice to function as an VoIP client.

Friday, January 22, 2010

Geolocation's Downside

Don't get me wrong. Location services will be really useful. But as with everything else connected with the Internet, there are downsides. This is one of them. UYou may want to use location services. But you probably don't want to allow "broadcasting" of that location.

The Secret Service knows the location of POTUS on the second or third floor of the White House. The rest of us should not.

fring Upgraded for Android and Symbian Mobile Devices

Mobile VoIP provider fring has just released two new versions for Symbian and Android mobile device users, adding user-requested features.

The Symbian version, for Nokia users, lets users notify their friends know if they are online, offline, busy, or just stay invisible if they don’t want to be disturbed; all in the click of a button.

DTMF dialing now is supported as well. Now dialing “#” (“pound”) and “*” sign (“star”) is possible to use within a call through the new fring dialer.

Android users will find increased app stability as well as the ability to hide or show offline buddy presence, hide or show the address book, and manage privacy settings for IM signatures and "mood" messages.

The company also fixed some audio issues formerly experienced on Motorola Droid or Milestone devices and added better support for Google’s Nexus One device.

Improved battery consumption also is new.

The new apps can be downloaded at

U.S. is Key Android Market at the Moment

Worldwide mobile advertising requests from Android devices increased 97 percent from October to December 2009 and the big change since October is that Motorola devices have shown the greatest growth, undoubtedly because of Verizon's Droid launch late in the year.

AdMob says that in October, 98 percent of requests came from HTC devices.  In December, just 56 percent of requests were from HTC devices, 39 percent from Motorola devices, and five percent from Samsung units.

Increased device diversity: In December, seven devices generated more than three percent of requests each: the Motorola Droid, HTC Dream, HTC Magic, HTC Hero, Motorola CLIQ, HTC Droid Eris, and the Samsung Moment.

This is up from only three devices in October (HTC Dream, HTC Magic, and HTC Hero).

 The Motorola Droid is already the leading Android handset in the AdMob network and generated 30 percent of requests in December.

The U.S. market also, at least for the moment, the most-important global Android market. About 90 percent of Android traffic was generated in the United States in December, up from 84 percent  in October. The United Kingdom, Germany, France, and Canada were the other countries with some significant traffic.

Coopetition Model for Cloud App Providers and Telcos?

Discussing the future of apps in the cloud, IBM enterprise initiatives VP Mike Hill and director platform research Peter Coffee said the line between competing and cooperating was becoming blurred, with "coopetition" the likely result.

“The only place we tend to have some level of friction with service providers is when you’re up in to the largest organisations,” says Hill. “We see service providers as a huge platform opportunity for us here, because we’re going to take the platforms that we build in IBM to deliver these services, and we’re going to pitch and sell it to service providers so they have the opportunity to white label services from us; or even white label to start with so they don’t have to invest capital up front.

Coffee says the model provides one example of how application providers and Internet service providers can cooperate for mutual benefit.

“We have our services being re-sold by telecom providers who want to take advantage of the fact they already have more than their foot in the door, they’re already completely inside the door as a small business service-suite provider.”

"British Telecom packages and sells our CRM application as a service as part of BT’s small enterprise suite, and there’s absolutely no reason why we wouldn’t want to foster that because that means their skills, their knowledge of the local marketplace, local business customs, local regulations, becomes a leveraging factor for us to do what we do, which is to provide enterprise functionality, and then they make it relevant to the local market," Coffee says.

Recession Spurs SMB Shift to Conferencing, Away from Overseas Travel

The global recession seems to have spurred more thinking--and activity--by businesses large and small about the use of conferencing services and applications as a replacement for business travel.

A recent survey of U.K. users by Skype indicates that about a quarter of U.K. small and mid-sized businesses have started using conferencing and communications to displace international travel.

Although 24 percent of U.K. small business executives surveyed communicate with international colleagues on a daily basis, 54 percent say they have had to take unnecessary overseas trips when conferencing would work.

The emergence of more sophisticated technologies is having a clear impact on the way that businesses are opting to communicate and do business.

About 41 percent of respondents says they use instant messaging to avoid some travel. About 40 percent use Skype, while 34 percent use teleconferencing. About 28 percent say they use some form of video conferencing.

Video-based communication likely is the biggers winner as travel substitutes have been sought.

Significantly, almost half of SMEs in the United Kingdom (49 percent) are planning to increase the amount it is used for business and 59 percent indicate it will be a direct replacement for business travel.

That isn't to say other methods are ineffective. About 65 percent of respondents said email was effective. Voice was seen by 39 percent of respondents as effective. Video calls were seen by 36 percent of respondents as effective, compared with 29 percent citing Skype.

About 17 percent say instant messaging is effective. About nine percent say social networking is effective as well.

But 36 percent of respondents said they miss having a real picture of the person that they are dealing with. For videoconferencing as for entertainment television, the advantage of "realism," a greater sense of "being there," is what drives image or audio resolution, high-definition images and audio, bigger displays and ease of use.

“With the obvious cuts in business travel, companies need to find new ways to communicate, collaborate and compete,” says Stefan Oberg, Skype for Business VP.

“Without regular face to face meetings, tools that enable people to build and maintain trusted relationships are key," he says.

ComScore Hit for "Pay to Play" Plan

"Pay to play" business arrangements are unfortunately all too often a cost of doing business. Grocery retailers get stocking fees from suppliers who want better placement, or placement at all, on retail shelves.

Some industry awards essentially are sold. Firms win awards in some category of business excellence, but have to pay money to "announce" the awards. Other competitions require firms to pay money to apply to win.

Trade publishing often involves some explicit promise of coverage in return for advertising, or more commonly, just an implied obligation. Major conference sponsorships nearly always have some element of "taking care of sponsors."

You can make your own decision about whether this is simply a way of doing business, or something worse.

Now comScore is accused of promoting a version of pay-to-play with its Web traffic ratings by Henry Blodgett at Silicon Alley. He says the new policies are a form of blackmail.

Android Downloads Explode, Apple Continues High Growth, BlackBerry Leads

Visits to Myxer’s mobile site from users on the Android operating system grew 350 percent in 2009, compared to iPhone, which grew 170 percent, Myxer says.. In total, Myxer delivered seven times more downloads to Android devices than iPhone devices in the fourth quarter of 2009.

Keep in mind that Android starts from zero share, so extremely-high rates of growth are not unexpected. The bigger news would have been Android downloads failing to gain traction.

The analysis was made on Myxer’s 30 million members and their behavior relating to mobile entertainment downloads.

In part, Android growth is driven by the increasing number of Android devices now available, as well as a huge marketing push by Verizon Wireless to support its Droid introduction.

In December 2008 only one handset, the HTC Dream/G1, was operating on Google’s open source Android operating system. By December 2009, Myxer had seen nine different handsets running the Android OS.

• The HTC Dream/G1 remained the leader throughout 2009 garnering 35 percent of the unique users completing downloads on Android handsets. That makes sense, as the Verizon Droid launch did not happen until December 2009. It would be shocking if the Droid did not appear at the top of lists by the end of 2010.

“While we’ve seen the Android OS emerge as a serious competitor in the operating system landscape, RIM’s operating system still dominates the smartphone market on Myxer’s mobile site, growing from 51 percent in 2008 to 67 percent in 2009,” saysMyk Willis, Myxer CEO.

According to research conducted in the fourth quarter of 2009, Android users download seven times as many ringtones, wallpapers, videos, applications, and games as iPhone users.

Still, Apple iPhone downloads also grew 170 percent.

On the other hand, it is worth noting that RIM’s Blackberry Curve remains the number one phone on Myxer’s mobile site for the second year in a row, garnering close to 10 percent of visits in both 2008 and 2009. The Blackberry Curve is just one of the 1,500 different handsets that Myxer delivered content to in 2009.

Windows Mobile and Palm both lost ground in 2009, combining to relinquish 24 percent of the smartphone traffic on Myxer’s mobile site and giving ground to the Android, iPhone, and RIM.

Thursday, January 21, 2010

How Will Global Telecom Revenue Sources Change Over the Next Two Years?

Looking at global telecom revenue sources over the next couple of years, some basic trends can be seen (click image for larger view).

Fixed network services other than broadband continue to decline.

Wireless revenues continue to grow, as does broadband access revenue.
Dial-up access revenue continues to decline.

Keep in mind that these are global, aggregate numbers, buoyed by huge broadband and especially wireless growth in developing regions. The patterns can be quite distinct in specific national markets.

In the U.S. market, it is conceivable that video and content revenues could be a somewhat significant factor over a decade-long time frame. Wireless growth will be highly susceptible to broadband and data services growth, balanced by a certain amount of "harvesting" of mobile voice revenue, which will decline, relative to broadband, over the decade.

It is worth noting that voice revenue trends have been through two fundamental cycles, with a third on the way. At one time, international long distance was the highest-margin product, followed by domestic long distance. That changed fundamentally between 1997 and 2007. Over that 10-year period, long distance, which represented nearly half of all revenue, was displaced by mobile voice services.

Since about 2000, fixed voice lines and revenue have been steadily declining, at least in the telecom service provider segment, with the cable segment able to grow the role of voice in overall revenue.

In the third change, mobile voice will follow a trend similar to that of long distance.

In each of the shifts already occurring, several things happened. Prices and profit margins steadily were compressed. And new competitors picked up significant share of the remaining business. In each of the three periods, the product has changed.

Between about 1997 and 2007, "long distance" became loosely coupled with local calling and local access. Long distance increasingly could be consumed "over the top," using prepaid calling cards or separate providers for "long distance" on a local line, for example.

Between 2000 and 2009, it became possible to use mobile phones to similarly displace both local and long distance calling, as well as to substitute mobility for fixed voice, while both over-the-top and IP-based calling options became available.

Over the next 10 years, both voice itself and long distance calling in the mobile and fixed realms likewise will be increasingly disaggregated and amenable to "over the top" consumption.

At the same time, the number of settings where voice is used likewise will disaggregate. Voice will be used as an embedded feature of many types of applications and experiences, using many types of terminals and featuring multiple revenue models.

Cablevision and Scripps Networks; Fox and Time Warner Cable Deals Have Implications for Telcos and App Providers

Cablevision and Scripps Networks Interactive have reached an agreement that paves the way for the return of the Food Network and HGTV programming to the cable operator’s system. Inability to come to terms meant HGTV and Food Network disappeared from Cablevision after the old contract expired on Dec. 31, 2009 and the two sides could not agree on terms for a new contract.

Separately, News Corp and Time Warner Cable managed to agree on a new deal without a service interruption. That deal meant no service interruption for viewers of the Fox television stations, Fox, Fox Cable Networks and Fox’s Regional Sports Networks.

That deal also covers Bright House Networks sibscribers in Florida.

DirecTV and Versus have not come to terms and Versus has been dark on DirecTV since Nov. 11, 2009.

Contract disputes between programmers and cable operators are not new, and the precedent likely applies to telcos and their application providers and handset providers as well. Which is to say that although all the value chain or ecosystem partners rely on each other to create end user value, each participant has a specific role in the value chain and distinct financial interests that have to be accommodated.

The same sort of thing exists in the online video and music and e-book reader spaces as well. The point is that there is a temptation to see application providers and Internet access providers as enemies with little in common. In fact, applications make networks valuable, and without networks, the increasing number of valuable network-based services cannot work.

Of late there are signs some of the former tension between Google and some ISPs, for example, has melted. Google and Verizon are working together on creating applications and optimizing Android device operation on the Verizon network, for example.

That isn't to deny that some amount of tension always will exist between ISPs and application providers. As the cable, music (Apple and music companies) and online video examples illustrate, each participant always will seek to maximize their own value and revenue within the overall value chain and ecosystem.

Financial interests are distinct, not identical. Ultimately, though, a stable ecosystem producing end user value will benefit from some stable understanding that key value chain participants all must profit, if the widest use of new applications and maximum end user experience are to be supported.

It won't be easy. Skype is a contributor to the declining value of basic voice revenues, for example. App developers obviously want to secure a place in the revenue and value chains. ISPs want to continue restructuring their own revenue models away from voice and towards new services based on IP networks.

Over-the-top app providers often believe they "don't need the ISPs." But over time, as the cable example shows, and as music, video and print content value chain participants will have to continue to work out, the best outcome is a flourishing new value chain where the key participants all win. That's best for providers and best for end users. Though it certainly will not be easy, it is the best way forward.

Wednesday, January 20, 2010

More "Middle Mile" Projects Funded by NTIA

The Department of Commerce’s National Telecommunications and Information Administration has announced grants totaling $63 million to expand broadband access and adoption in Massachusetts, Michigan and North Carolina.

Most of that money went to build new "middle mile" regional networks in Michigan and North Carolina.

In Michigan, Merit Network got a $33.3 million infrastructure grant with an additional $8.3 million in matching funds to build a 955-mile advanced fiber-optic network through 32 counties in Michigan’s Lower Peninsula.

In North Carolina, MCNC: $28.2 million infrastructure grant with an additional $11.7 million in matching funds and in-kind contributions to build a 494-mile middle-mile broadband network passing almost half the population of North Carolina in 37 counties.

Consumer Centric Communications

Live blog of Pacific Telecommunications Council panel on "consumer-centric communications"

Consumer Centric Communications: I was looking forward to this panel, and my expectations were met and exceeded. There’s a lot of great work being done in areas of e-health and remote communications that the title doesn’t accurately speak to. However, e-health is a good representative area illustrating ways and players addressing global human needs, and the technology that supports it.
David  Sawcer: Pfizer model and tele-health used to analyze questions like why mobile has such a potential benefit but not so great adoption? My experience show that all aspects of successful remote collaborative care, remote monitoring and senseing, and remote access to data and resources. Collaborative care: in military, servicemen would get posted to remote locations with limited health care, generally necessary to evacuate them. We set up a satellite link to joint services hospital, we were able to provide interactions to store-forward info, or interact with local care providers. Was possible to provide diagnosis or treatment questions but had limitations.
Access to data and services: using remote PDAs, drug formulary and interactions database, and online diagnosis (e.g., Up To Date and paid service through university) – didn’t exist until a few years ago, now widely adopted.
Remote sensing/monitoring: in Africa, rural health care, congesitive cardiac care (can be fatal) is common. Is simple question to monitor at local level with bathroom scales (weigh patients), then text in for medical advice (take certain amount of medicines). Unfortunately the program failed when someone stole the bathroom scales. Colleague Elizabeth: when there isn’t a good substitute, alternatives come about organically. On interface part of equation: on patient side, great willingness to use mobile phones or devices (if easy). David: Services most useful when regularly updated with reliable information and was given away free. Technology has to fit the way we work. Costs haven’t been well calculated re: efficiencies, investment; no studies in this area. We talk to the carriers a lot as they’re looking for new areas, but it’s not on their horizon. Pediatric study at UC Irvine and UC San Francisco: got to refer patients on web, by form interface, to appropriate providers. 400 referrals over 4 years shows disparity in usefulness.
Ravi Sharma: Modeling digital flows in the eHealth Eco-system: Strategic implications for players. Example of community center, relatively bandwidth intensive. This market is multi-sided, there is a critical role for telecom network operators (what’s in it for them?). Research questions: 1. identify key stakeholders in this space, model the digital info flows among them. 2. Analyze the values created vs values-captured… Is an ecosystem that encompasses all key players, allows interoperability among them by providing a common platform for interfaces and transactions. Business models: e-commerce based, centrism-based (hospital or provider centric), and platform based (Google; proprietary vs open). Shift in focus from provider-centric to patient-centric models. Time is right to look at electronic personal health records (PHRs). Value of this ecosystem is a function of many components. (Diagram of digital info flow). (Here’s the PDF paper.) Game theory/analysis questions: does value captured justify value created for every player? Does a player stand to lose by opting out of this system? Future work: is a player better off in-system? corresponding value in quantitative terms? what characterizes a win-win business model that makes for a fair, efficient, and stable (sustainable) value network?
Audience discussion: Many efforts on grassroots level to standardize and discover information sharing practices. Singapore doctors training includes steps for diagnosis, shared records with patients. Also generational change brings updated attitudes and technology practices.
Eunice Hsiao-Hui Wang: User acceptance of 3.5G mobile broadband services: the early adopters’ scenario. Early adopters focus of studying user behaviors of 3.5G (HSDPA). Study’s objective: availability: affordabilitiy and adoption (continued subscription). More people like to access the Internet by mobile devices. In Taiwan, several mobile networks (GSM, GPRS, 3G, 3.5G), also wireless (WiFi, WiMax). 23M cell phones, 100% penetration rate, 13M Internet broadband subscribers, penetration rate 66% (Jan 2009). Among Internet broadband subscribers, only 7.7% adopting mobile broadband services and growing fast. Small business user market (3.5G subscription bundling with smart phones like Blackberry, PDAs – slow user growth), potential critical mass market (3.5G bundling with free NetPC and affordable flat monthly fee ($27US).
Survey: web-based on 255 Taiwanese 3.5G mobile broadband subscribers, where is critical mass (behavioral pattern)? Technology Acceptance Model: belief – attitudes – behavioral intention, leads to belief: perceived ease of use, perceived usefulness and perceived playfulness. (graphic of reserch framework) Sample demographics: 53% female, 23.5% age 21-25 and 25.5% 26-30 years old, 55% university level, mostly lower income brackets. Conclusions: perceptions not significantly related to behavioral intention. Most significant factor is attitude: positive attitude leads to greater possibility of continued use. Suggestions: easy, simple and user-friendly service is essential, enhanced convenience-driven interface design encourages subscription (gets jobs done efficiently).

Live Blog of Voice 2.0 Panel at PTC

Jonathan Rosenberg, chief technology strategist at Skype; Rodrigue Ullens, Voxbone CEO; Frank Fawzi, IntelePeer CEO and Mke James, Metaswitch Networks director of systems engineering kick around "Voice 2.0."

Voice 2.0: Beyond the Hype: Lots of ways people are using voice today, let’s look at changes. Gary Kim moderating discussions from Rodrigue, Mike, Frank, and Jonathan.
Jonathan: Voice 2.0 (see yesterday’s talk): it’s not voice anymore, it’s video. Voice is becoming integrated with other media, part of a broader communications experience. As voice and video permeates the web, everything fits together as interactive content experience with seamless integration.
Frank: interactive video being woven into experience. We’ve seen significant interest by enterprise carriers to enrich end-user experience, trying to reach audience by any means possible (clicking links, sms, etc.). It’s critical that you deliver quality as part of business process. We’ve seen minutes double, 4.5B end of 2008 to about 10B annualized run rate now, coming from all kinds of customers, uses, and sources.
Mike: Traditional voice now dull and boring, now it’s about software and applications. Voice embedded in PC, more integration with TV. No one carrier is everything to everyone, need support for 3rd parties to develop.
Rodrigue: Internet-based company with Internet-based business model, voice as part of it. Not a fight between AT&T and Google, is an ecosystem of business models in global market. Enterprises are next opportunity (IT direct, management and apps), mentality of using certain apps is going to change. Telcos can afford their business model is by staff and host switching, engineers, need to embrace new opportunities.
Gary: What strikes me about this panel is that panelists will benefit from creative applications and capability. This is clearly a good thing. What advice would you offer others in the ecosystem? No way to fight this, many new ways to drive revenue. Frank: We talk with carriers about opportunities to reach their end users, deal with hundreds of millions of phone number in their registry. How do you think about creating opportunities to expand embedded voice, lower cost of communications, increase applicability of voice in new ways? Expansion and connectivity between voice and multimodal technologies? (15 times more likely to convert with human interaction).
Gary: Rich voice? Jonathan: what makes voice sales more effective is the real people. All this technology is about replicating face to face interactions. It’s not just the words, it’s the nuances, facial expression, the reasons we get on airplanes. Voice is lowest level, video is next step closer to experience of sitting next to each other. As quality gets higher, you get increasing value of return.
Gary: implications of infrastructure with regard to partners? Mike: Sometimes we need to get out of the way and allow the end points to negotiate.
Gary: voice has always been cloud-based, but now there’s more to the cloud. Frank: communications as a service, using (common) links to access cloud. Slight distinction: now all we need to do is enable an IP pipe. Jonathan: leveraging the IP model, worldwide network model. Allows new service providers to offer new services. Voice was regional, now you can reach anywhere in the world. Rodrigue: one of the ways of providing voice over other apps: use hardware, open source, infrastructure where costs are declining and redundancy is scalable. Mike: agreeing, legacy connectivity enables… Rodrigue: lots of affordable solutions available today. Jonathan: a lot of cloud service providers develop locally, value is in software.
Question: What drives this Voice 2.0 development? Suggested application stores, is there community and/or clearinghouse function, who is gatekeeper? Jonathan: There is no one answer. One interesting area is the web and different web apps, distribution channel is the browser. Other: mobile apps, e.g., iPhone and Apple App store. Frank: types of folks that we work with, we’re not opening an app store, working with communities of interest who may want to add voice as a feature to enrich their end user experience. Mike: many models of distribution including the web, branded carriers and app stores; other carriers distribute through their own channels.
Gary: regarding voice as an app: abilty of smartest guys to be surprised. For example, Apple may not have expected App Store to be as big as they are. Now others are building app stores. Rodrigue: takes several months or years to create new products, while on the web you can launch, analyze, relaunch. Innovation can be brought online on behalf of their users.
Gary: executives express concern about protecting their brand. How to make use of developer community? Jonathan: on the web, if you want to see how things work, try it, collect results, improve or add new features. That new model of massive “learn as you go” is a hallmark of success of the web. Voice 2.0 is about embracing the benefits of the web, contrast with traditional telecom models (long time to roll out new features, compared to adding IM to Facebook).
Gary: US telecom industry replaced 50% of their revenue model in the 1990s. I’m calling for them to replace 50% over next 10 years. (You’ve done it.) Jonathan: it comes down to embracing the developers, doesn’t give up value to user. Windows: huge group of 3rd party developers. Devices and networks open up, carriers become portals, to become operating system of voice 2.0. Frank: wireline revenue disappeared, new technologies can displace existing revenue models. Wireless can help, uses for voice increase abundance of opportunities (scalable networks).
Question: Future of mobile environment: Jonathan: hoping for open environment where providers like us can add value-added services. It’s one of the next frontiers: getting quality up is a big challenge and growth opportunity.
Gary: experience is limited where networks are not robust (really cooking). Jonathan: capacity changes the equation.
Question: how do you tackle voice 2.0, what are trends? Rodrigue: identifier (phone number) from voice calls enable new innovation. Jonathan: enterprises are seeing vast deployment in IP communications (video, presence, IM), but landlocked inside of enterprise. Need to create new generation of peering technologies, security, etc. Cisco just announced product that’s focused on this problem, using phone numbers as identifiers (VIPER), peering.
Joe Weinman: concern for stability, scalability and reliability (911 and safety-critical apps), what strategies for innovation of massive disruptions, dilemma of brand protection vs innovation? Frank: point where scalability, robustness and quality becomes critical, need to have a high quality services, how does that apply on telco level, how to you move a large organization into disruptive model without affecting customers, mission critical services, and existing revenue streams? It’s more challenging. Jonathan: questions that presumption: reliability can be obtained, available; data is more critical than voice link going down. IP pipe needs to be always up. Rodrigue: difference between telco and app provider: telco provides infrastructure, everything is redundant, critical lines. Have a different business, e.g. BT and Ribbit, play at another layer (other business units). Frank: you guys are providing the infrastructure, reliabilty from traditional means; disruption does not take away responsibility of network providers. Joe: Mixing apples and oranges. Access is a critical issue, but at application layer testing becomes a brand protection mechanism. Mike: in some places, telcos are tied by regulatory bodies, services like Skype do not replace 911. Frank: we’re all capable of creating opportunities for ourselves. Gary: would be interesting to do a study about when we think things will break, all critical apps are IP based. We rely on the connection, not our hardware or software that can be fixed by rebooting. Interesting what human beings are becoming accustomed to. Frank: we’re willing to accept certain things, like quality of wireless compared to wired.

Ifbyphone Buys Cloudvox to Support Development of New Apps

Ifbyphone, provider of Web-based  voice and phone applications especially for call center type applications, announced today that it has acquired Cloudvox to give its customers the tools they need to build their own open-source, customized phone applications to fit their business needs.

The deal gives Ifbyphone an open applictions programming interface it can use to provides Web developers (even less experienced ones) with all the pieces they need to build working Web-based telephony services.

At the same time, Ifbyphone will still equip them with the technology they need to deploy and scale their newly-built applications.

Developers can build web telephony services to work with any existing software, whether it uses Python, Ruby, PHP, Java, C# or HTTP. They can still build on all the features they need to control every phase of a call with only a few clicks of a mouse — and without adding any new equipment or infrastructure, Ifbyphone says.

The move is an example of the growing importance of end-user created and customer applications in the business and organization segment of the market.

Truphone Becomes a Mobile Service Provider

These days, any company that really wants to become a mobile service provider can do so. Recently Mitel, a provider fo business phone systems and solutions, became a mobile service provider to deliver turnkey communications solutions for its business customers.

Now Truphone has launched "Truphone Local Anywhere," allowing local mobile calling initially in the United States and the United Kingdom, using a subscriber information module (SIM) approach. Addtional markets, including European countries, Australia, Hong Kong and South Africa, will be added in 2010.

Initially, the service will be most valuable for U.K. mobile users who want to call the United States, but the service soon will extended across Europe and other markets U.K. callers may frequently wish to reach.

The new service offers mobile users local rates for voice, data and text services for all countries where Truphone establishes operations, all on a single SIM.

In conjunction with the launch of Truphone Local Anywhere, the company announced it has become a mobile virtual network operator in the United Kingdom.

Truphone Local Anywhere eliminates the need for users to swap SIM cards, juggle multiple mobile devices or use complex dial-back systems in efforts to avoid costly roaming charges.

Amazon Offers Authors, Publishers 70% of Revenues from Kindle Sales has launched a new program allowing authors and publishers who use the Kindle Digital Text Platform to earn 70 percent of the revenue from each Kindle book they sell, net of delivery costs.

The new option does not replace the existing DTP standard royalty option and will be available on June 30, 2010.

Delivery costs will be based on file size and pricing will be $0.15 per MByte, Amazon says.  At today's median DTP file size of 368 KBytes, delivery costs would be less than $0.06 per unit sold.

This new program can thus enable authors and publishers to make more money on every sale. For example, on an $8.99 book an author would make $3.15 with the standard option, and $6.25 with the new 70 percent option.

"Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books," says Russ Grandinetti, Vice President of Kindle Content.

The new pricing shows, once again, how disruptive the Internet can be. This new plan will encourage more authors to "go direct" to Amazon, or at least force their publishers to sell ebooks at a substantial discount.

That will increase the pressure on traditional publishers to cut prices on wholesale Kindle books.

Amazon says the new program applies only to author or publisher-supplied list prices between $2.99 and $9.99. Why that price range? It creates a permanent and substantial pricing gap between Kindle-delivered content and a physical product delivering the same content. The list price must be at least 20 percent below the lowest physical list price for the physical book.

Publishers won't like that, but will have to get used to it.

The title is made available for sale in all geographies for which the author or publisher has rights, which similarly avoids the typical regional royalty deals, putting pressure on publishers worldwide.

Books must be offered at or below price parity with prices for the same content on other e-book readers or physical products.

This looks like a brilliant play from Amazon.  E-book prices need to (and should) drop substantially: When the cost of an incremental sale is near-zero, publishers have no business charging physical-book prices.

The traditional publishing industry obviously will have to deal with the reality of a new cost structure in the business, and that will have ramifications up and down the ecosystem. Margins will be lower, on a permanent basis, with all that implies for existing business arrangements.

On the other hand, the new policies could increase the volume of sales and certainly will create an opportunity for more niche publishing. It's just another example of how the Internet disrupts the economics of any business it touches.

33% of Users Will Post to Social Networking Sites Such as Twitter

The thing about social or online media is that people use media in different ways. In fact, even thinking about those ways has to be updated from time to time. Twitter and other social networks provide an example. Analysts at Forrester Research have for a couple years used the notion of "social technographics" to describe the different ways people interact with Web content.

Up to this point the focus has been Web sites and blogs. But now social networking is part of the model, as Forrester has added a new category, "conversationalists," to the framework. About a third of people will update their status information on a social networking site or post updates to Twitter.

That is more people than the 24 percent of people who actually publish a blog, for example, while 70 percent read them.

About 59 percent of people maintain a profile on a social networking site or visit social networking sites. About 37 percent post reviews or ratings, leave comments or contribute to online forums.

The analysis tries to describe ranges of online social media behavior, which has lots of people consuming content and relatively fewer creating it.

Conversationalists are 56 percent female, more than any other group in the framework.

Aside from the idea that people have different levels of involvement in the social media content creation process, the new category illustrates an important new feature of social media: the ability to create, sustain and promote conversations.

Tuesday, January 19, 2010

Skype Traffic Grows 63%

International long distance traffic growth has slowed, while Skype traffic is accelerating, says Stephan Beckert, TeleGeography strategy VP.

Over the past 25 years, international call volume from telephones has grown at a compounded annual rate of 15 percent. In the past two years, however, international telephone traffic annual growth has slowed to only eight percent. To be sure, growth rates always slow for any product or service that has attained high penetration, simply because any additional growth is compared to a larger base of existing users.

There have been some recession-related changes, though overall demand obviously has remained strong. Traffic to Mexico, the world’s largest calling destination, declined four percent in 2008, and aggregate traffic to Central America declined five percent, for example.

While international telephone traffic growth has slowed, Skype’s traffic has soared. Skype’s on-net international traffic (between two Skype users) grew 51 percent in 2008, and is projected to grow 63 percent in 2009, to 54 billion minutes.

"The volume of traffic routed via Skype is tremendous," said Beckert. "Skype is now the largest provider of cross border communications in the world, by far."

Is Net Neutrality a Case of "Feeling Good" Rather than "Doing Good"?

With typical wit, Andrew Orlowski at the U.K.-based "The Register" skewers "network neutrality" as a squishy, intellectually incoherent concept. It is so nebulous it can mean anything a person wants it to be, and often is posed as a simple matter of "goodness." Which makes people feel righteous, without having to noodle through the logical implications.

Yes, there often is a difference between feeling good, and doing good, and Orlowski wants to point that out.

"As a rule of thumb, advocating neutrality means giving your support to general goodness on the Internet, and opposing general badness," he says. "Therefore, supporting neutrality means you yourself are a good person, by reflection, and people who oppose neutrality are bad people."

"Because neutrality is anything you want it to be, you have an all-purpose morality firehose at your disposal," he says. "Just point it and shoot at baddies."

Beyond that, there are fundamental issues that seem hard to reconcile, because they are hard to reconcile. Consider the analogy to freedom of speech.

In the United States, at its founding, the right of free speech was said to belong to citizen "speakers," engaged in clearly political speech. Recently, the opposite view has been taken, that the right belongs to "hearers of speech." But that means there is tension: is it the creator of speech who is to be protected, or those who might, or might not, want to listen.

Does copyright protect creators of intellectual content, or those who might want to access it? Do property rights in real estate protect those who own property, or those who want to own it?

Network neutrality essentially poses similar issues, and they will not be easy to reconcile.

Monday, January 18, 2010

412 Million M2M Subscriptions Globally by 2014, Juniper Research Predicts

The number of mobile connected machine-to-machine and embedded devices will rise to almost 412 million globally by 2014, say researchers at Juniper Research. That is one answer to the question many are asking about where service providers--mobile and fixed--will replace lost voice revenues with new services.

Though much discussion logically centers on new services or products that can be sold to end users on broadband connections, the attraction M2M represents is that it frees service providers from a frustrating reliance on selling more things to human beings.

Up to this point multi-service bundles have been a primary way service providers have increased average revenue per user. But there are limits to how much can be gained that way. As industry executives might put it, getting an additional $10 a month revenue from a consumer customer is a big deal, and hard to do.

Enterprise spending on communications is not increasing as much as some might expect, in part because organizations are using IP-based communications to get more for less money. The big exception has been mobility support, which likely is the fastest-growing part of any large organization's communications spend.

M2M services might represent less gross revenue per connection, on a monthly recurring basis, but there are lots of devices to be connected. In the Indian market, for example, Bharti Aitel is making a big push to complete reliance on mobile networks for meter reading, for example, says David Nishball, Bharti Airtel president of enterprise services.

App Store Software Sales $30 Billion in 2013, Advertising Nearly $8 Billion

Advertising-sponsored mobile applications will generate almost 25 per cent of mobile application store revenue by 2013, amounting to nearly $8 billion in revenue.

Consumers will spend $6.2 billion in 2010 in mobile application stores while advertising revenue is expected to generate $0.6 billion worldwide, according to Gartner analysts.

Mobile application stores will exceed 4.5 billion downloads in 2010, eight out of ten of which will be free to end users.

Gartner forecasts worldwide downloads in mobile application stores to surpass 21.6 billion by 2013. Free downloads will account for 82 per cent of all downloads in 2010, and will account for 87 per cent of downloads in 2013.

“Games remain the number one application," says Stephanie Baghdassarian, research director at Gartner.

"No incremental cost" applications will use other revenue models, she says. Developers will charge for additional functionality, sales of products and services or advertising.

Worldwide mobile application stores’ download revenue exceeded $4.2 billion in 2009 and will grow to $29.5 billion by the end of 2013.

Verizon Offers New Bundle Pricing and Features

Starting Jan 18, 2010, qualifying customers can order double- or triple-play bundles with up to 7.1 megabits per second high-speed Internet access for the same price as bundles with up to 3 Mbps, a $10 per month rate reduction.

Consumers in select Verizon regions can also order quad-play bundles at the new 7.1 Mbps bundle price.

In addition, new voice and high-speed Internet access customers ordering qualifying double-, triple- or quad-play bundles are eligible for their choice of a Compaq Mini netbook or $150 back in the form of aVerizon Visa Prepaid card.

Existing Verizon customers who add either new home voice or High Speed Internet service in a qualifying bundle are eligible to receive a $100 Verizon Visa Prepaid card along with the other incentives.

Bundles eligible for these offers include the triple play featuring "Verizon Freedom Essentials" unlimited local and long-distance calling, up to 3 or 7.1 Mbps HSI and DirectTV's "PLUS DVR" service, including a free DVR upgrade, and the double play with Verizon Freedom Essentials and up to 3 or 7.1 Mbps HSI.

Customers who sign up now can get all this value for just $94.99 per month for the triple play and $69.99 per month for the double play, with the prices guaranteed for 12 months. One-year Verizon agreements and two-year DirecTV agreements apply.

Triple-play bundles that feature up to 1 Mbps HSI, Verizon Freedom Value and the DirecTV "Choice" package are offered at $84.99 per month for 12 months.

Double-play bundles that feature Verizon Freedom voice options with either HSI or DirecTV programming are also available, many at carryover or lower pricing from 2009, and range from $54.99 to $89.99 per month for 12 months.  One-year Verizon agreements and two-year DirecTV agreements apply.

New HSI customers with Verizon home voice service who do not opt for a bundle can order the broadband service for $19.99, $29.99 or $39.99 per month for up to 1, 3 or 7.1 Mbps service, respectively, and enjoy a lifetime price guarantee as long as they maintain the same tier of service and Verizon HSI is available at their service location.

Sales Friction Creates Barriers to Buying Behavior

Sales friction occurs when a sales process is: too long (the line at the grocery store) too complicated (working with real estate agents) a...