Small Business Commits to Social Media, Email, Search

About 75 percent of small businesses will increase their spending on email marketing in 2010, while nearly 70 percent will spend more on social media, according to VerticalResponse.

The findings might not suggest small businesses are spending wildly. In most cases the firms likely are testing new media. But the testing seems very widespread.

Almost all businesses with 500 or fewer employees will use email marketing next year, the company says. Only 3.8 percent of small business executives say they will not be using email marketing in 2010.

More than 70 percent also indicated they would not use TV or radio advertising.

Search advertising is used by about 72 percent of small businesses, but banner advertising is used by about 40 percent of small businesses, VerticalResponse says.

Facebook, Twitter and YouTube, as well as other social media sites, are used by about 78 percent of small businesses, the firm says.

"People Don't Like Ads" Yes and No

Surveys for decades have shown that "consumers don't like ads." But there's a big caveat. People always say they don't like ads when those ads are interruptions of some desired experience.

But sometimes ads are part of the desired experience. If you are an outdoors enthusiast, ads about gear you can use outdoors are very interesting. If you are a runner, ads about shoes, clothing, nutrition and events are very interesting.

If you are a surfer, ads about surfboards are very interesting.

So it comes as absolutely no surprise that 38 percent of respondents to a Parks Associates survey say they do not want to receive ads for any reaon. About 37 percent of respondents say they are neutral about ads and 25 percent are open to getting them.

(click image for larger view)

The study also confirms the notion that people will not mind getting ads when those messages are personally relevant, timely and valuable. To be sure, 18 percent of respondents say they don't mind seeing personally relevant ads, with 39 percent reporting they are indifferent and 43 percent not interested.

The problem with surveys, though, is that they sometimes cannot capture the complexity of consumer attitudes. Just about any survey will show that people dislike ads. But if asked whether they would rather pay money to gain access to desired content, for example, or get that same access for free, in exchange for the presence of ads, most people say they'll accept the ads.

Targeting and value make the difference. If the ads are relevant, they are unobjectionable, for the most part. If the user gets something in exchange for receipt of the ads, and the ads also are relevant, surveys show people are accepting, if not entirely happy all the time.

Advertising is Changing from "Push" to "Pull"

Consumer packaged goods companies that typically have preferred mass media are making a significant move into social media messaging, says eMarketer. And where pushing ad messages to potential customers has been the dominant focus, social media allows retailers to engage in different ways.

“By looking at social media as a way to listen to consumers, respond to their needs and create ongoing dialogue—instead of as another way to advertise to them—CPG companies can reinvigorate their marketing and create new bonds with consumers,” says Debra Aho Williamson, eMarketer senior analyst.

That doesn't mean consumer retailers are abandoning traditional advertising by any means, she says. So far, social media advertising represents only a small fraction of the total dollars going to that channel, according to Nielsen AdRelevance.

And here's the difference: many mass market retailers consider social media to be "earned" media, historically the province of public relations, more than "paid" advertising. For that reason, more effort is going into blogger relations programs and promotional interactions that complement display advertising, for example.

Social media more frequently is seen as a way to “humanize their brand and create loyalty simply by being available when consumers have a problem, question or compliment,” says Williamson.

Telecommunications firms are leaders in the social media messaging space, as are Web media firms. About 20 percent of all social network site advertising over the last year (September 2008 to September 2009) has been spent by communications firms, while 19 percent was spent by Web media firms.

This is a significant shift. At some level, one might note that retailer spending is shifting from "advertising" to "public relations;" from "ads" to Web-based interactions on social sites. That means spending for Web operations overall is growing, most likely displacing spending that previously would have been devoted to tradtional display advertising.

The shfit from a "push" approach to a "pull" approach is tangible, if seminal.

Despite Shocking Unemployment, Consumer Demand for Communications Holds Up

There's a sobering statistic in the latest research from Centris about consumer spending on communications and video service consumption: 27 percent of households reporting at least one member who lost their job in the last six months.

Most of the other findings seem consistent with other surveys taken over the last two years, though. The issue now is whether recession-induced behaviors will change as we exit the recession.

About eight percent of U.S. households said they were likely to cancel their Pay TV service in the third quarter of 2009, unchanged from the second quarter of 2009. Keep in mind that a typical churn rate for video services is about two percent a month, so those findings are relatively consistent with typical disconnect plans, and most churners simply sign up with alternate providers.

Some 18 percent of households said they were likely to cancel their home phone service and replace it with a currently-used cell phone. That is an underlying trend that might have accelerated during the recession, but was in place already.

Fully 75 percent of respondents said they would not likely downgrade their Internet access service. Virtually all other studies show high resistance to cutting back, or cutting off, Internet access services.

Nearly half of all households have contacted their current TV service providers shopping for discounts and lower-priced packages, though.

If past patterns show themselves, consumers should start spending more on enhanced services of all sorts, including premium video entertainment and mobile services, as the economic recovery takes hold. The wild card are services such as wired voice, which have been under pressure for other reasons unrelated directly to the recession.

Does "Open Access" Lead to More or Less Consumption of Broadband?

Samuel Clemens famously quipped that there are "dies, damned lies and statistics." Something like that seems to be at the heart of conflicting analyses of the impact of widespread open access requirements on consumer buying of broadband access services.

The Berkman Center for Internet & Society suggests robust open access regulation increases consumer buying of broadband while analysts at the Phoenix Center says the opposite is true.

The interpretation matters. Good public policy requires decisions that are based on facts, as difficult as it may be to determine precisely what the "facts" are. The wrong "fact base" will lead to policies that could harm the intended public policy goal.

http://www.fcc.gov/stage/pdf/Berkman_Center_Broadband_Study_13Oct09.pdf

http://www.phoenix-center.org/perspectives/Perspective09-05Final.pdf

Hardware Sales Flat, Software up 4.8%, Telecom up 2.3% in 2010, Says Gartner

Providers of information technology solutions likely will have to emphasize customer retention more than customer acquisition in 2010 and 2011 because of a sales environment that will remain challenging, says Richard Gordon, Gartner Research VP. That said, sales of IT hardware and software will grow about 3.3 percent in 2010, about in line with telecom service provider revenue growth of 3.2 percent.

Enterprise hardware sales, for example, will show zero growth in 2010, compared to 2009, Gartner forecasts, in part because hardware lifecycles have lengthened.

Software sales, on the other hand, should grow 4.8 percent, says Gartner.

How the Global Telecom Business has Changed Since 2000

A few statistics will illustrate just how much has changed in the global telecom business since 2000. Prior to the turn of the century, most lines in service used wires and carried voice.

By 2007, 74 percent of all lines in service used wireless access or carried data, says the Organization for Economic Cooperation and Development.

Mobile alone in 2007 accounted for 61 percent of all subscriptions while standard phone lines have dropped to 26 percent. And the change has come swiftly: in just seven years.

Mobile revenues now account for nearly half of all telecommunication revenues—41 percent in 2007—up from 22 percent 10 years earlier. (click chart for larger view)

Along with the change in access methods and applications is the sheer number of connections. The total number of fixed, mobile and broadband subscriptions in the member nations of the Organization for Economic Cooperation and Development grew to 1.6 billion in 2007, compared to a population within the OECD nations of just over one billion inhabitants.

To put that in perspective, consider that there were seven access paths in use in 2007 for every access path in use in 1980. That includes broadband, wireless and voice connections.

To put those figures in even greater perspective, consider that the percentage of household budgets devoted to communication expenses has climbed only slightly over the last 10 years. In most OECD countries, households generally spend about 2.2 percent and 2.5 percent of household income on communications, year in and year out, though one can note a slow rise since 1998.

The big exception is Japan, where household spending on communications is close to seven percent of household income. That might be something to keep in mind when making cross-national comparisons. It is true that Japan has very-fast broadband and has pioneered any number of mobile application innovations.

But Japanese households spend very close to three times as much as U.S. households on their overall communications. That’s worth keeping in mind. It always is difficult to make meaningful comparisons between nations.

Japan has very-fast broadband. But Japanese consumers also pay nearly three times as much as U.S. households do for their communications services.

Generally speaking, though, OECD consumers have added seven new connections for every existing connection in 1980, while spending about the same percentage of their incomes on those services. That’s an obvious example of an explosion of productivity.

Much has changed in the Internet access realm as well. Broadband is now the dominant fixed access method in all OECD countries. In 2005, dial-up connections still accounted for 40 percent of fixed Internet connections but just two years later that percentage had fallen to 10 percent.

Also, while many criticize the industry for retarding innovation and behaving as “nasty monopolists,” prices have tended to fall for virtually all communication services on all platforms, the OECD says.

“Over the previous 18 years, residential users saw the real price of residential fixed-line
phone service fall roughly one percent per year while business prices fell 2.5 percent per year,” the OECD says.

Mobile subscribers also benefitted from declining prices between 2006 and 2008. The average price of OECD “mobile baskets,” representing a number of calls and messages per year that normalizes features and prices, fell by 21 percent for low usage, 28 percent for medium usage and 32 percent for the heaviest users over the two-year period.

User voice behavior also has changed. The number of minutes of communication per mobile phone is increasing while the minutes on fixed networks are decreasing. In other words, the mobile is becoming for most people the primary voice device while the landline is a backup.

Some might argue that ultimately has implications for pricing. In some real ways, the mobile is the “premium” device and a landline represents a supplemental service. That probably means the value is such that consumers ultimately will think it should be priced as a backup service.

Data between 2005 and 2007 suggest people are making fewer domestic calls on the fixed network in most countries, OECD says. When people do use fixed networks they are increasingly making calls to users of mobile phones.

This trend is well highlighted by Austria where the introduction of flat-rate voice telephony on mobile networks has shifted calls away from the fixed-line network. Voice traffic on Telekom Austria’s fixed network fell 13.3 percent in 2007 as a result of the shift to mobile communications.

There was an OECD monthly average of 272 minutes of outgoing calls on fixed line telephones in 2007. This is down 32 minutes per month from 2005.

But there was an interesting landline rebound trend appearing recently in a number of OECD countries.

The number of PSTN minutes per line declined until 2005 when the numbers started rising again. For example, French minutes per PSTN line fell until 2004 when they started to increase.

One explanation is the shift in France to flat-rate national calls offered by a number of carriers. That suggests U.S. landline voice providers might stem some of the traffic erosion by offering aggressive, flat-rate, all-distance services within the domestic market, as VoIP providers generally do.

On the mobile side, the OECD average number of outgoing minutes of completed calls on mobile networks was 220 minutes per month in 2007, up 56 percent from 2005.

Subscribers in the United States make far more outgoing calls on mobile phones each month than any other country in the OECD. The average number of minutes per mobile subscription was 443 in 2007, more than double the OECD average. One might argue that is because of the reasonable cost of calling great distances. In Europe, many calls that would be domestic in the United States are international calls.

Broadband prices have fallen as well over the same time. OECD broadband prices declined significantly over the previous three years. Prices declined an average of 14 percent per year for DSL and 15 percent for cable between 2005 and 2008.

The average price of a low-speed connection (2 megabits per second or less downstream) was $32 per month in September 2008. At the other end of the scale, broadband connections with download speeds advertised as faster than 30 megabits per second averaged $45 per month.

Despite the falling price-per-unit trends, telecommunications services, about a trillion dollar market in the OECD, continues to grow at about a six-percent annual rate. That remains to be tested as we finish 2009, but there is reasonable historic precedent for continued growth, though perhaps not at a six-percent rate.

Regarding voice and new mobile and data services, we might as well note that landline voice appears to be a product like any other. That is to say, like any other product, it has a product life cycle.

To be specific, wireline voice looks like a product in its declining phase. Optical fiber-based broadband looks like a product earlier in its cycle, with 56 percent compound annual growth since 2005.

Digital subscriber line and cable modem services likely are further along their curves. DSL grew at a compounded rate of 21 percent per year while cable modem service grew at 18 percent rates between 2005 and 2007.

Mobile voice markets grew by 10 percent each year since 2005 but may be nearing saturation levels in a number of OECD markets. Mobile broadband clearly is early in its product life cycle.

Analog lines, used for voice, facsimile and dial-up Internet access, also seem to be in decline. The number of analog subscribers fell by 34 million between 2005 and 2007.

The decline of Internet dial-up services also means that many households no longer need a second analog line. The same might be true for in-home fax machines. And many additional lines once used by teenagers now have been replaced by mobiles.

Finally, the number of “mobile-only” subscribers has increased as well.

The penetration rate for fixed telephone lines (analog and ISDN) in 2007 was 41 subscribers per 100 inhabitants, which was less than the penetration rate ten years earlier.

Overall, the penetration rate rose from 43 percent in 1996 to a maximum of 47 percent in 2000, only to decline again to 41 percent in 2007. The year 2000 appears to be the turning point in the technological life cycle of fixed-line telephony.

Canada had the highest fixed-line penetration in 2007 with a penetration rate of  54 subscribers for every 100 inhabitants. Sweden, Luxembourg and the United States all had penetration rates greater than 50 per 100 inhabitants. Mexico, the Slovak Republic and Poland had the lowest penetration rates in 2007.

There’s an interesting observation we can make about those figures. Nobody seems to argue that the United States has a big problem with voice service availability. In fact, availability is not the issue: consumer demand is the issue. One doesn’t hear people complaining about the lack of voice availability in Canada or Sweden. But penetration is in the 50 percent range, per capita.

Nearly all Internet users in the United States use broadband, not dial-up. And yet broadband penetration might well be higher than voice penetration, on that score. People who want the product generally buy it.

That said, there are some methodological issues here. “Per capita” measures might not make as much sense, as a comparative tool, when median household sizes vary. Adoption by households, adjusted to include people who use the Internet only at work or at public locations, or using mobiles, would be better.

Broadband adoption, by people who actually use the Internet, might make the most sense of all. Broadband is a product like any other. Not every consumer values every product to the same degree.

DSL network coverage is greater than 90 percent in 22 of the 30 OECD countries. Belgium, Korea, Luxembourg and the Netherlands report 100 percent.

Cable coverage is extensive in some countries such as the United States (96 percent) and Luxembourg (70 percent), but non-existent in others such as Greece, Iceland and Italy.

An analysis which followed the evolution of broadband plans over four years shows that speeds increased by 28 percent  for DSL and 72 percent for cable on average between 2007 and 2008.

A survey of 613 broadband offers covering all OECD countries shows the average advertised speed grew between 2007 and 2008 across all platforms except for fiber. The average advertised DSL speed increased 25 percent from 9.3 Mbps in 2007 to 11.5 Mbps in 2008.

Advertised speed of course is not user-experienced speed at all times of day. Still, it offers some measure of changes in the product.

The average fixed wireless offer in 2008 was 3 Mbps, up from 1.8 Mbps just a year earlier.

Fixed wireless speeds grew by 64 percent but remain only one-quarter of the average advertised speeds of DSL providers. The average cable offer is five times faster.

There are some insights about mobile broadband in the OECD’s analysis. The amount of data traffic carried over mobile networks remains small in relation to other broadband data networks.

For example, Telstra in Australia reported in a 2008 investor briefing that data consumption increased from 100 kilobytes per month per user in 2007 to 250 kilobytes in 2008. Compare that to the gigabytes consumed on landline connections.

Data from the Netherlands also show relatively low data traffic in the first half of 2008. Between January and June 2008, Dutch mobile broadband subscribers downloaded 358 gigabytes over mobile networks.

It is possible to calculate an estimate of mobile data traffic per 3G subscriber per month in the Netherlands by making a few assumptions. If the ratio of 3G to total mobile subscriptions in the Netherlands is equivalent to the OECD average of 18 percent, then the average amount of data traffic per 3G subscription per month in the Netherlands works out to be only 18 kilobytes per month.

Of 52 mobile broadband packages evaluated in September 2008, the average headline speed was 2.5 Mbps. Subscribers to these plans were allowed an average of 4.5 gigabytes of data traffic per month.

Much has changed in the global telecommunications business in just seven years. Landline voice might still provide the revenue mainstay, but it is a product in the declining stages of its life cycle.

Even mobile voice, DSL and cable modem service are products at something like the peak of their cycles.

Mobile broadband and optical fiber access are early in their product life cycles. Mobility is becoming the preferred way of consuming voice communications.

That’s an awful lot of change in just seven years. And we haven’t even discussed VoIP, over-the-top applications, content or video.

People Don't Buy Smartphones, They Buy the Experience and the Feeling

All engineering involves choices, and that is true of all smartphone design as well.

Perhaps one of the background pressures is the desire to create devices that perform reasonably across a range of functions.

But that might not be a formula for success. A recent study by Interpret might suggest that instead of balancing features, it might be better to "unbalance" and produce a device that is demonstrably better at one thing.

Though one can argue we are early in the adoption cycle, a panel of consumers indicated that the Palm Pre made them feel "smart," "trendy, hop or cool," and "productive" within some range of acceptance for a smartphone device.

The problem would seem to be that Pre scores highest on the emotional attribute that users say is least important of the top three. The Pre produces emotions on the "hip" and "productive" scale that make it analogous to the BlackBerry Storm.

The bigger problem is that the Pre does not produce unusually high key emotions on any of the top three most important measures smartphone buyers say are important to them. BlackBerry and iPhone probably are the best models. Each of them scores unusually high on at least one of the three key emotional drivers smartphone buyers say motivate them.

So maybe designers should forget "balance." So far, no single smartphone unit scores unusually high on the "it makes me feel smart" measure. The iPhone owns the "hip, cool, trendy" space. The BlackBerry owns the "it makes me feel productive" niche.

Smartphones are bought because of the "feelings" they produce, not the features they provide. As the saying goes, smartphones "sell an experience."

Consumer Behavior in Recession was as Expected

Time Warner Cable's third quarter results provide a bit of concrete evidence that consumers did what they said they were going to as far as watching their spending on communications and entertainment services because of the recession.

Consumers said earlier in 2009 they were least likely to cut or reduce spending on Internet access and most likely to cut back on buying pay-per-view movies downloaded over the Internet, according to a new survey by Alcatel-Lucent. But mobile service, basic entertainment video service and telephone lines were among the items consumers said they were most likely to keep, though cutting back on things such as going to night clubs and concerts or going out to movies and restaurants.

All of those patterns would be in keeping with past consumer behavior in recessions.

(see http://ipcarrier.blogspot.com/2009/06/network-services-generally-safe-but.html, http://www.blogger.com/post-edit.g?blogID=7312392900566055630&postID=5497830666217750659)

Generally speaking, people said they would be keeping their broadband Internet, wireless and video entertainment services, though showing much more willingness to curtail adding new enhanced or premium services.

Some surveys suggested consumers would accelerate their abandonment of wired voice, while others suggested demand for fixed telephone services would hold up.

Time Warner Cable's results show that broadband Internet additions held up as expected, though sales of digital video, a premium upgrade, fell, as consumers suggested would be the case.

Time Warner's new voice customers also appear weak, though that bit of data does not necessarily confirm analyst expectations. Existing customers of other voice services might simply have stuck with their existing providers instead of switching to Time Warner Cable.

Overall net new additions tend to show the impact of consumer caution. The company added 117,000 revenue generating units in the third quarter, compared to 522,000 a year ago.

More to the point, Time Warner added 8,000 net new digital video customers, compared to 56,000 net new subscribers analysts were expecting. It added 62,000 net new voice customers where analysts had expected 107,000. The firm also added 117,000 broadband Internet access customers, where analysts had expected 115,000.

So broadband held up, while digital video activity fell, as did voice services.

Still, there are lots of variables to consider. Local market competitive conditions can sharply affect results, as do promotional activities.

Comcast, for example, saw its digital video customer base grow a net 7.4 percent, while adding 6.4 percent net new broadband customers and 20.3 percent voice customers.

Still, the point is that consumers had suggested, and history suggested, that wireless, broadband Internet and entertainment video growth rates would slow, but that the services themselves would hold up. It appears they did, at least for these two large cable operators. At&T and Verizon also added large numbers of wireless customers, as well as a decent number of video and broadband access customers.

How Not to Sell Hosted VoIP to Smaller Businesses

The single biggest mistake retail providers make when trying to sell hosted IP telephony to small and mid-sized businesses is that salespeople start with features, when they should start by reassuring buyers that “it is a reliable phone system,” Savatar VP Mike Ahearn told an audience of small telcos and cable companies attending a MetaSwitch marketing seminar.

The sales pitch has to begin with “it’s a high-quality phone system that is reliable and lets you keep your phone number,” says Chris Carabello, Meta Switch marketing director. In fact, establishing this lead proposition is so important retail sales personnel should establish that fact even before going to the “it will save you money” pitch.

Only after those two positioning efforts should sales personnel then add that hosted IP telephony “makes your life simpler.” The very last thing that should be discussed is that IP telephony offers new features.

And even then, when working with small business customers, even the discussion of new features should focus on a few new features that might appeal to the particular prospect.

That often is the reverse of the pitch made by many sales people, who lead with features first, says Carabello. The key message sometimes occurs at the very end of a discussion, but it needs to be delivered right up front, he adds.

It might seem unnecessary to emphasize that the product is “a managed, hosted IP telephony service that allows you to make and receive calls on IP phones or your computer,” but potential buyers are being asked to make a change in behavior that automatically raises the question of how well it will work.

And though there is greater understanding now that hosted IP telephony actually works, possibly 22 percent of potential buyers continue to think VoIP suffers from major quality of service issues, says Ahearn. As many as 28 percent to 32 percent of potential buyers with 100 or fewer employees might believe that, so take the issue head on, right away, he adds.

The important implication is that every prospect has to be reassured, right up front, that “it works.” Conversely, “cost savings” are generally seen as an IP telephony value.

And though hosted IP telephony obviously provides a path to selling many other services that could range from Web hosting to email and data services, “make the hosted telephony sale first, then up-sell later,” suggests Carabello.

The generic pitch should begin with the notion that hosted IP telephony “is an easy to manage phone system that will save money and help you run your business more efficiently,” says Ahearn.

Only after that is established should the salesperson move to the fact that it uses the Internet connection to make calls. And since most small businesses buy on the basis of a basic “cost per employee per month,” emphasize that hosted IP telephony offers a lower cost per user per month than the existing solution.

But there is one prevalent fact that suggests a simple SIP trunking offer will resonate with small businesses who already have invested in IP PBX gear. Ahearn points out that the trunk-to-phone ratio for smaller businesses is pretty close to 1:1. But an IP phone system really does quite well with a 4:1 concentration ratio.

Firms with four to seven employees report buying one to 1.2 trunk lines for every phone in use. Firms with eight to 10 employees report having 0.6 to 0.7 trunk lines for every phone in service.

Organizations with 11 to 20 employees report having 0.5 to 0.6 trunk lines for every phone. Firms with 20 or more employees say they have about 0.4 trunk lines for every phone.

The implications are fairly clear. Organizations that need to support between a few trunks and 14 PBX trunks are vastly over-provisioning trunk capacity. The typical organization using IP phones can get along fine with a 4:1 ratio of phones to trunks.

For a firm supporting six phones, and buying six trunks, an alternative SIP trunk strategy could save as much as $1,915 a year.

An organization requiring 14 trunks could save $2,205 a year by swapping SIP trunks with a 4:1 concentration ratio for PRI trunks that are provisioned at a 0.4 concentration ratio of phones to trunks.

The clear implication is that a small organization can save money immediately by replacing PBX trunks with SIP trunks.

Telco Business Models Diverge

Until recently, most global communications providers had business models that were highly similar. These days, it is clear enough that providers are starting to differentiate, and that the future business will feature several to many different business models.

Four telco business models will exist in the future, says Forrester Research analyst Mike Cansfield. Some carriers will stick with the vertically integrated model of the past, because they still can make it work. You will tend to see this most frequently among the largest global carriers, with the biggest customer bases and very large bases of recurring revenue.

Others will move to a partnership-based model, where some functions previously conducted in-house are shifted to business partners. Smaller national carriers with moderate customer bases will frequently use this model, as will carriers making aggressive expansion moves outside their historic footprints.

Some might shift to a horizontal model, though Cansfield points out that no legacy telco has actually decided to do so. This approach has been tried by some new competitors though. Vanco, which knit together a global VPN capability, is one example.

In the United Kingdom, other new contestants have chosen this approach, including Tesco, the supermarket chain, as well as the U.K. Post Office, says Cansfield.

In the mobility space the mobile virtual network operator model uses the horizontal approach. No major established operators have yet shifted from a vertically-integrated model to the horizontal model, though in some respects the “functional separation” model or “structural separation” model is an example.

The disaggregated model likewise is mostly a concept at the moment, not a practical option.

The horizontal model splits the network from the retail business, but in the future it will be easier to consider, if not adopt, a very-disaggregated approach where different functions are assembled on a virtualized basis.

This is a sort of cloud computing or “software as a service” concept applied in a very big way and perhaps can be thought of as the partnership model on steroids.

This fourth variant is based on the premise that a telco has a choice, says Cansfield. Does it own, operate, and manage a network within a horizontal structure or not? If it decides on the latter, then it can choose to disaggregate itself and find partners/outsourcers that can provide more or less all things.

The issue for the latter three models is that ownership of access assets remains valuable, and most would likely say strategic. Ubiquitous wired access networks are so expensive there always will be few of them.

Spectrum rights likewise are relatively scarce and expensive to acquire. Most executives probably would agree ownership of such assets, when possible, confers clear business advantage that should not be disaggregated. Some executives in some countries do not have a choice, of course.

The vertically-integrated communication service provider model is not going away, Cansfield argues, though it will not be the only model. Some providers will largely be able to retain the traditional model, where one entity controls the channel; owns, operates, and manages the technology deployed (usually meaning fixed and mobile); and runs the underlying network that delivers services.

The reason is simply that the networking business remains one where scale economies exist, allowing a large provider to operate efficiently where smaller providers simply cannot. A large provider of services to wholesale customers, enterprise, smaller business and consumers can leverage investments across multiple customer segments where a smaller provider cannot.

So the former incumbents of the world clearly will be prominent users of this model. Still, it is more than a semantic shift to note that the network becomes a platform in the new model, not the center of the model. Software, content and many new applications partially created by end users will be key.

That said, scale in and of itself will prove necessary but not sufficient. Carriers still will have to leverage scale to meet customer demand better than other providers can.

The multiple models also will lead to changes in performance metrics. While traditional financial performance is key for all contestants, there are changes in the need to measure product profitability and network performance, Cansfield argues.

This might sound odd, but what he appears to mean is not so much that the profitability of any single application or service need not be measured, but rather that it should be increasingly possible to gain visibility into the real costs and real profit margin for any service when providers gain the increased visibility many of the models allow.

That isn’t to say any service provider can dispense with a need to measure network and element performance.

At the network layer, measures like jitter and latency will clearly remain important. But Cansfield says other operating metrics assume new importance.

Non-traditional measures such as time between “lead to cash” also are measures of effectiveness. Likewise, the time taken from order to receipt of payment; cost to serve, or discrete analysis of how much it really costs to provide service to a specific customer and cost per transaction are better measurements of provider effectiveness.

This approach will enable the telco to benchmark itself against Google rather than other “me-too” operators, he says.

Those types of analysis are easier when a service provider actually sources inputs from partners, as there is a measurable and discrete cost. The traditional problem with conducting analysis at this level is that the traditional vertically-integrated model requires “guessing”: costs largely are allocations. And allocations inherently are political, based on any number of formulas that may not reflect the actual cost to create a product, sell and support it.

Getting a better handle on transaction or sales costs also is required, so service providers can derive unit total costs per service, a key step in understanding and then maintaining profitability, Cansfield says.

That is important if one assumes that retail pricing for products will decline over time. If that happens, more efficient sales and provisioning mechanisms are needed.

Rather than just focusing on metrics like financials, network performance and customer retention, new metrics also are needed. Measures such as cost per transaction, discrete customer profitability, and returns from bundles become important, he says.

The changes are propelled by choices in revenue dynamics. “Only five years ago, voice revenues at British Telecom amounted to 45.4 percent of total revenues,” says Cansfield. “In 2007 and 2008, BT voice revenues accounted for 39.3 percent of the total.” And virtually nobody thinks the basic trend can be reversed, though many think it will stabilize at some point.

But some other changes suggest where the communications industry already is headed. “Communications is no longer a discrete sector,” says Cansfield. That might overstate the case, but it is the direction things are moving as we move from single-purpose networks to multi-purpose networks.

Is Rural Broadband Penetration Close to 100 Percent?

Is it possible that rural broadband penetration actually is pretty close to the penetration of Internet users? In other words, is it possible that use of broadband in rural areas now is close to 100 percent of Internet users?

New data from comScore suggests that might be closer to the truth than many believe. The latest estimates are that, in rural areas, broadband penetration is at 75 percent. If one assumes some rural users still use dial-up, that suggests perhaps 85 percent of rural households now use the Internet.

In 2007 the U.S. Department of Agriculture Economic Research Service estimated that 63 percent of all rural households had at least one member access the Internet.

If rural broadband penetration now is up to 75 percent, as comScore indicates, that would imply that Internet usage is at least that high, in other words.

That would seem to have implications both for setting of national broadband policy and policy in rural areas. For starters, the new data suggest that rural broadband is growing robustly, without any additional government activity.

Some might argue that broadband usage remains lower in rural areas than in metro areas, and that remains true. Metro broadband penetration is at 89 percent. But virtually every study has shown that Internet usage also is lower in rural areas. The point? Lower Internet usage obviously means lower broadband access penetration.

One has to be careful with statistics, though. By definition, a household with no ability to access the Internet would not be an Internet-using household. So a better way to describe comScore’s findings are that, when wired facilities are available, rural households are buying broadband at rates not dissimilar to urban users.
That isn’t to say adoption is equal to urban rates, but that the gap is closing awfully fast.

Broadband penetration in U.S. rural areas increased 16 percent from 2007 to 2009, while metro area broadband penetration grew 11 percent, according to comScore.

In part, that is because rural markets have more room to grow. The analogy is wireless voice growth, which is highest in places such as India, China and Africa, where penetration is lowest.

“With low-speed DSL priced at about the same level as dial-up in many areas, there is little incentive for households to remain on dial-up,” says Brian Urutka, comScore VP.

Rural markets with a population less than 10,000 grew broadband penetration by 16 percentage points. Areas with population between 10,000-50,000 grew penetration 14 percentage points while metropolitan areas with populations of 50,000 or more grew penetration by 11 percentage points.

Critics sometimes say that even if access is not a problem, access speeds are, and that is an argument that makes sense. The issue there, though, quite often is the “middle mile” trunking between major points of presence and the actual rural communities.

Basically, the problem is not the Internet backbones, and not even so much the local access networks, as it is the trunking network to backhaul traffic to the Internet PoPs. Many rural ISPs find, for example, that they have access to a T1 or two T1s in the middle mile. That makes it tough to deliver faster broadband access to customers on the local access networks, for obvious reasons.

The Internet backbone is a firehouse. So are the access networks, for the most part. But the middle mile is a straw.

Solve the middle-mile problem and broadband access probably ceases to be an issue in many communities. Yonder Media CEO Craig Vallarino estimates that half the cost of building fixed wireless networks in rural areas is in the core network and middle mile.

The radio infrastructure represents about 20 percent of cost while customer premises investment represents about 30 percent of cost. In other words, it isn’t the access infrastructure which is the main investment barrier: the middle mile is.

That said, there still will be some locations so isolated that only a satellite connection really will ever make sense.

What Has Changed Since 2000

A few statistics will illustrate just how much has changed in the global telecom business since 2000. Prior to the turn of the century, most lines in service used wires and carried voice.

By 2007, 74 percent of all lines in service used wireless access or carried data, says the Organization for Economic Cooperation and Development.

Mobile alone in 2007 accounted for 61 percent of all subscriptions while standard phone lines have dropped to 26 percent. And the change has come swiftly: in just seven years.

Mobile revenues now account for nearly half of all telecommunication revenues—41 percent in 2007—up from 22 percent 10 years earlier.

Along with the change in access methods and applications is the sheer number of connections. The total number of fixed, mobile and broadband subscriptions in the member nations of the OECD grew to 1.6 billion in 2007, compared to a population within the OECD nations of just over one billion inhabitants.

To put that in perspective, consider that there were seven access paths in use in 2007 for every access path in use in 1980. That includes broadband, wireless and voice connections.

To put those figures in even greater perspective, consider that the percentage of household budgets devoted to communication expenses has climbed only slightly over the last 10 years. In most OECD countries, households generally spend about 2.2 percent and 2.5 percent of household income on communications, year in and year out, though one can note a slow rise since 1998.

The big exception is Japan, where household spending on communications is close to seven percent of household income. That might be something to keep in mind when making cross-national comparisons. It is true that Japan has very-fast broadband and has pioneered any number of mobile application innovations.

But Japanese households spend very close to three times as much as U.S. households on their overall communications. That’s worth keeping in mind. It always is difficult to make meaningful comparisons between nations.

Generally speaking, though, OECD consumers have added seven new connections for every existing connection in 1980, while spending about the same percentage of their incomes on those services. That’s an obvious example of an explosion of productivity.

Much has changed in the Internet access realm as well. Broadband is now the dominant fixed access method in all OECD countries. In 2005, dial-up connections still accounted for 40 percent of fixed Internet connections but just two years later that percentage had fallen to 10 percent.

Also, while many criticize the industry for retarding innovation and behaving as “nasty monopolists,” prices have tended to fall for virtually all communication services on all platforms.

“Over the previous 18 years, residential users saw the real price of residential fixed-linephone service fall roughly one percent per year while business prices fell 2.5 percent per year,” the OECD says.

Mobile subscribers also benefitted from declining prices between 2006 and 2008. The average price of OECD “mobile baskets,” representing a number of calls and messages per year that normalizes features and prices, fell by 21 percent for low usage, 28 percent for medium usage and 32 percent for the heaviest users over the two-year period.

User voice behavior also has changed. The number of minutes of communication per mobile phone is increasing while the minutes on fixed networks are decreasing. In other words, the mobile is becoming for most people the primary voice device while the landline is a backup.

Some might argue that ultimately has implications for pricing. In some real ways, the mobile is the “premium” device and a landline represents a supplemental service. That probably means the value is such that consumers ultimately will think it should be priced as a backup service.

Data between 2005 and 2007 suggest people are making fewer domestic calls on the fixed network in most countries, OECD says. When people do use fixed networks they are increasingly making calls to users of mobile phones.

This trend is well highlighted by Austria where the introduction of flat-rate voice telephony on mobile networks has shifted calls away from the fixed-line network. Voice traffic on Telekom Austria’s fixed network fell 13.3 percent in 2007 as a result of the shift to mobile
communications.

There was an OECD monthly average of 272 minutes of outgoing calls on fixed line telephones in 2007. This is down 32 minutes per month from 2005.

But there was an interesting landline rebound trend appearing recently in a number of OECD countries.

The number of PSTN minutes per line declined until 2005 when the numbers started rising again. For example, French minutes per PSTN line fell until 2004 when they started to increase.

One explanation is the shift in France to flat-rate national calls offered by a number of carriers. That suggests U.S. landline voice providers might stem some of the traffic erosion by offering aggressive, flat-rate, all-distance services within the domestic market, as VoIP providers generally do.

On the mobile side, the OECD average number of outgoing minutes of completed calls on mobile networks was 220 minutes per month in 2007, up 56 percent from 2005.

Subscribers in the United States make far more outgoing calls on mobile phones each month than any other country in the OECD. The average number of minutes per mobile subscription was 443 in 2007, more than double the OECD average. One might argue that is because of the reasonable cost of calling great distances. In Europe, many calls that would be domestic in the United States are international calls.

Broadband prices have fallen as well over the same time. OECD broadband prices declined significantly over the previous three years. Prices declined an average of 14 percent per year for DSL and 15 percent for cable between 2005 and 2008.

The average price of a low-speed connection (2 megabits per second or less downstream) was $32 per month in September 2008. At the other end of the scale, broadband connections with download speeds advertised as faster than 30 megabits per second averaged $45 per month.

Despite the falling price-per-unit trends, telecommunications services, about a trillion dollar market in the OECD, continues to grow at about a six-percent annual rate. That remains to be tested as we finish 2009, but there is reasonable historic precedent for continued growth, though perhaps not at a six-percent rate.

Regarding voice and new mobile and data services, we might as well note that landline voice appears to be a product like any other. That is to say, like any other product, it has a product life cycle.

To be specific, wireline voice looks like a product in its declining phase. Optical fiber-based broadband looks like a product earlier in its cycle, with 56 percent compound annual growth since 2005.

Digital subscriber line and cable modem services likely are further along their curves. DSL grew at a compounded rate of 21 percent per year while cable modem service grew at 18 percent rates between 2005 and 2007.

Mobile voice markets grew by 10 percent each year since 2005 but may be nearing saturation levels in a number of OECD markets. Mobile broadband clearly is early in its product life cycle.

Analog lines, used for voice, facsimile and dial-up Internet access, also seem to be in decline. The number of analog subscribers fell by 34 million between 2005 and 2007.

The decline of Internet dial-up services also means that many households no longer need a second analog line. The same might be true for in-home fax machines. And many additional lines once used by teenagers now have been replaced by mobiles.

Finally, the number of “mobile-only” subscribers has increased as well.

The penetration rate for fixed telephone lines (analog and ISDN) in 2007 was 41 subscribers per 100 inhabitants, which was less than the penetration rate ten years earlier.

Overall, the penetration rate rose from 43 percent in 1996 to a maximum of 47 percent in 2000, only to decline again to 41 percent in 2007. The year 2000 appears to be the turning point in the technological life cycle of fixed-line telephony.

Canada had the highest fixed-line penetration in 2007 with a penetration rate of 54 subscribers for every 100 inhabitants. Sweden, Luxembourg and the United States all

had penetration rates greater than 50 per 100 inhabitants. Mexico, the Slovak Republic and Poland had the lowest penetration rates in 2007.

There’s an interesting observation we can make about those figures. Nobody seems to argue that the United States has a big problem with voice service availability. In fact, availability is not the issue: consumer demand is the issue. One doesn’t hear people complaining about the lack of voice availability in Canada or Sweden. But penetration is in the 50 percent range, per capita.

Nearly all Internet users in the United States use broadband, not dial-up. And yet broadband penetration might well be higher than voice penetration, on that score. People who want the product generally buy it.

That said, there are some methodological issues here. “Per capita” measures might not make as much sense, as a comparative tool, when median household sizes vary. Adoption by households, adjusted to include people who use the Internet only at work or at public locations, or using mobiles, would be better.

Broadband adoption, by people who actually use the Internet, might make the most sense of all. Broadband is a product like any other. Not every consumer values every product to the same degree.

DSL network coverage is greater than 90 percent in 22 of the 30 OECD countries. Belgium, Korea, Luxembourg and the Netherlands report 100 percent.

Cable coverage is extensive in some countries such as the United States (96 percent) and Luxembourg (70 percent), but non-existent in others such as Greece, Iceland and Italy.

An analysis which followed the evolution of broadband plans over four years shows that speeds increased by 28 percent for DSL and 72 percent for cable on average between 2007 and 2008.

A survey of 613 broadband offers covering all OECD countries shows the average advertised speed grew between 2007 and 2008 across all platforms except for fiber. The average advertised DSL speed increased 25 percent from 9.3 Mbps in 2007 to 11.5 Mbps in 2008.

Advertised speed of course is not user-experienced speed at all times of day. Still, it offers some measure of changes in the product.

The average advertised fiber speed actually declined between 2007 and 2008 as operators introduced new entry-level offers at speeds below 100 Mbps.

For example, Dansk Broadband in Denmark offers symmetric broadband offers over fiber at speeds between 512 kbps and 100 Mbps.

The average fixed wireless offer in 2008 was 3 Mbps, up from 1.8 Mbps just a year earlier.

Fixed wireless speeds grew by 64 percent but remain only one-quarter of the average advertised speeds of DSL providers. The average cable offer is five times faster.

There are some insights about mobile broadband in the OECD’s analysis. The amount of data traffic carried over mobile networks remains small in relation to other broadband data networks.

For example, Telstra in Australia reported in a 2008 investor briefing that data consumption increased from 100 kilobytes per month per user in 2007 to 250 kilobytes in 2008. Compare that to the gigabytes consumed on landline connections.

Data from the Netherlands also show relatively low data traffic in the first half of 2008.

Between January and June 2008, Dutch mobile broadband subscribers downloaded 358 gigabytes over mobile networks.

It is possible to calculate an estimate of mobile data traffic per 3G subscriber per month in the Netherlands by making a few assumptions. If the ratio of 3G to total mobile subscriptions in the Netherlands is equivalent to the OECD average of 18 percent, then the average amount of data traffic per 3G subscription per month in the Netherlands works out to be only 18 kilobytes per month.

Of 52 mobile broadband packages evaluated in September 2008, the average headline speed was 2.5 Mbps. Subscribers to these plans were allowed an average of 4.5 gigabytes of data traffic per month.

Much has changed in the global telecommunications business in just seven years. Landline voice might still provide the revenue mainstay, but it is a product in the declining stages of its life cycle.

Even mobile voice, DSL and cable modem service are products at something like the peak of their cycles.
Mobile broadband and optical fiber access are early in their product life cycles. Mobility is becoming the preferred way of consuming voice communications.

That’s an awful lot of change in just seven years. And we haven’t even discussed VoIP, over-the-top applications, content or video.

How Do You Measure the Value of Something That Has No Price?

Global end user spending on communications services (voice and data, not entertainment video) runs about $1.8 trillion a year or so, one can extrapolate from the most-recent International Telecommunicatons Union statistics.

Fixed line voice probably sits at about the $740 billion range in 2009.

Infonetics Research says VoIP services bring in $21 billion for service providers in the first half, so assume an annual total of $42 billion. Assume 16 percent of those revenues are for trunking services of one sort or another and voice revenues might hit $35 billion or so for the full year.

That suggests VoIP services represent about 4.7 percent of total global voice revenues in 2009.

The point is that VoIP remains a relatively small portion of global voice revenues. But the situation is more complicated than simply how VoIP stacks up as a revenue driver. The larger problem with voice revenues, as everyone agrees, is that it is trending towards becoming an "application," not a service. That means it will sometimes be provided "at no incremental cost," or at "very low incremental cost."

The value VoIP represents cannot be strictly measured using "revenue" metrics, anymore than the value of email or instant messaging or presence can be measured by revenue metrics. Probably all that anyone can say with some assurance is that the value VoIP represents is greater than five percent of the total value of voice communications, as many sessions occur on a "non-charged" basis.

Many years ago, consumers got access to email in one of two ways. They got email access from their employers, or they bought dial-up Internet access and got their email from their ISPs. In neither case has it, or is, possible to calculate the economic value of email, as the measurable "product" for a consumer was the value of the dial-up Internet connection.

Business value is even harder to calculate, as organizations can buy software and hardware to host their own email, and then buy access connections that support any number of applications, without any specific fee required to host email services.

The larger point is that, in future years, the service revenue attributable directly to voice services will be a number that might remain flat, might grow or might shrink. If voice revenues ultimately shrink, as they might in many markets, or if VoIP replaces TDM versions of voice, that will not necessarily mean that people are talking less, or that the value ascribed to voice is less.

It simply will mean that the value is only indirectly measurable. Only one thing can be said for sure. Markets whose products cannot be directly measured will not be measured. The first sign of this is the increasing use of metrics such as "revenue generating units" or "services per customer" or "average revenue per user."

At some point, though it might still be a measurable quantity, the value of voice services will be only partially represented by "service" revenue. It's tough to measure the value of something that has no specific "incremental cost."

So what will market researchers and agencies do? What they have done before: they will measure the value of some associated product that does have a market price. They will measure the value of purchased access connections, rather than particular applications, much as one could measure ISP access subscriptions, but not the value of email.

Will Moore's Law "Save" Bandwidth Providers, ISPs?

In the personal computer business there is an underlying assumption that whatever problems one faces, Moore's Law will provide the answer. Whatever challenges one faces, the assumption generally is that if one simply waits 18 months, twice the processing power or memory will be available at the same price.

For a business where processing power and memory actually will solve most problems, that is partly to largely correct.

For any business where the majority or almost all cost has nothing to do with the prices or capabilities of semiconductors, Moore's Law helps, but does solve the problem of continually-growing bandwidth demand and continually-decreasing revenue-per-bit that can be earned for supplying higher bandwidth.

That is among the fundamental problems network transport and access providers face. And Moore's Law  is not going to solve the problem of increasing bandwidth consumption, says Jim Theodoras, ADVA Optical director of technical marketing.

Simply put, most of the cost of increased network throughput is not caused by the prices of underlying silicon. In fact, network architectures, protocols and operating costs arguably are the key cost drivers these days, at least in the core of the network.

The answer to the problem of "more bandwidth" is partly "bigger pipes and routers." There is some truth that notion, but not complete truth. As bandwidth continues to grow, there is some point at which the "protocols can't keep up, even if you have unlimited numbers of routers," says Theodoras.

The cost drivers lie in bigger problems such as network architecture, routing, backhaul, routing protocols and personnel costs, he says. One example is that there often is excess and redundant gear in a core network that simply is not being used efficiently. In many cases, core routers only run at 10 percent of their capacity, for example. Improving throughput up to 80 percent or 100 percent offers potentially an order of magnitude better performance from the same equipment.

Likewise, automated provisioning tools can reduce provisioning time by 90 percent or more, he says. And since "time is money," operating cost for some automated operations also can be cut by an order of magnitude.

The point is that Moore's Law, by itself, will not provide the solutions networks require as they keep scaling bandwidth under conditions where revenue does not grow linearly with the new capacity.

How Many People Will Buy a 50 Mbps Access Service?

Virgin Media now says it has 20,000 subscribers buying its 50 Mbps service. Virgin Media has about 3.77 million broadband access customers. So that suggests about one half of one percent of its customers are buying that grade of service.

I'd be willing to bet U.S. service providers offering a 50 Mbps service are doing about that rate as well, with one possible exception. SureWest Communications has been offering tiers that fast longer than anybody else I can think of, and probably can claim a higher subscription rate.

Virgin Media's current promotion for the 50 Mbps product offers a price of £18 a month (about $29.74) for three months and £28 (about $46.26) a month after that, when bundled with aVirgin Media phone line.

Those sorts of prices will make U.S. consumers jealous, but it is hard to compare pricing across regions and nations. Voice and text message prices on mobiles are far higher than in the United States, though broadband and video entertainment prices seem to be lower, across the board.

SureWest's 50 Mbps and 100 Mbps products are different, though, as they offer symmetrical bandwidth, not asymmetrical as is typical of DOCSIS 3.0 services such as provided by Virgin Media.

When SureWest first introduced its 50 Mbps symmetrical product, it was available as part of a high-end quadruple play bundle including the 50 Mbps access service; a 250-channel digital TV service; unlimited local and long distance telephone and unlimited wireless.

The package was priced at $415.18 a month. If it were offered on a stand-alone basis, SureWest said the 50 Mbps service would be valued at $259.95 per month. Not many consumers are interested in paying that much.

Will Telecom Markets Grow in 2010?

Worldwide telecom spending will decline four percent in 2009 with revenue of nearly $1.9 trillion. In 2010, telecom spending is forecast to grow 3.2 percent, say researchers at Gartner. The question lots of people logically will have is what pattern growth in U.S. enterprise and smaller business markets will take.

Qwest provided some anecdotal evidence during its third quarter earnings report. "As far as the activity in BMG and wholesale, I would say, yes. we are seeing some quicker decision making," says Teresa Taylor, Qwest COO. "Quicker decision making" is a sign of more buying intent and activity, as longer decision cycles represent less intent and activity.

Qwest's business markets group sells to enterprises, so the anecdote suggests enterprise demand, at least for Qwest, is growing. Business markets segment income of $409 million was flat, compared to the second quarter, but increased 11 percent year over year.

The caveat here is that Qwest believes it has been doing better than AT&T and Verizon over the last couple of quarters. All Taylor will say that trends are "positive."

Impulse Purchases Key for Mobile Marketing Messages

A significant number of American consumers are interested in receiving opt-in marketing messages, according to a new survey by Harris Interactive. It also appears impulse purchases are prime candidates for mobile marketing messages.

The survey of 2,029 mobile phone users, ages 18 and older shows 42 percent of users between the ages of 18 and 34 and 33 percent of those between 35 to 44 are at least somewhat interested in receiving alerts about sales on their cell phones from their favorite establishments.

Men are more interested than women. About 51 percent of men ages 18 to 34, and 34 percent of women of the same age range are at least somewhat interested in receiving opt-in shopping alerts on their cell phones.

Only one percent of cell phone owners currently receive alerts about sales at their favorite establishments on their phones, yet 26 percent would be at least somewhat interested in receiving such alerts, assuming they were permission-based.

Of those interested in receiving alerts, 53 percent would be at least somewhat interested in being notified about restaurant specials around them.

About 43 percent say they would be interested in getting information about movie or event tickets. About 39 percent are interested in getting weather information, while 37 percent indicated interest in information about clearance sales.

Sizable percentages expressed interest in specific products such as pizza, clothes, fast food, electronics, music, happy hour specials or bar and night club offers.

Impulse purchases seem particularly germane. The survey found that about 90 percent of U.S. adults have made an impulse purchase when they were out shopping in a store, based on a sale or special offer going on around where they were.

Nearly a quarter of adults owning cell phones (22 percent) make this type of impulse purchase at least once per week or more often.

Verizon Introduces Quad Play Bundles

Verizon customers in Northeast and Mid-Atlantic markets now can buy quadruple-play packages of wireless, TV, Internet access and home phone service in configurations costing as little as $135 a month with a one-year contract, for FiOS locations. Customers served by digital subscriber line service can get packages as low as $125 a month.

The basic Verizon quad-play FiOS bundle consists of the national Verizon Wireless calling plan of 450 minutes, "Freedom Essentials" voice service, FiOS Internet service with 15 Mbps downstream, 5 Mbps upstream connection speeds and FiOS TV "Essentials" service.

For customers served by Verizon's copper network, the lead quad-play bundle consists of the national Verizon Wireless calling plan of 450 minutes, a "Freedom Essentials" calling plan, broadband access with downstream connection of up to 3 Mbps and the DirectTV Plus DVR package.  A one-year Verizon commitment and a two-year DirectTV commitment with hardware lease are required with these bundles.

With four services all on one bill, qualifying quad-play customers will save from $59 to $179 a  year, depending upon which bundle they order.

New customers who sign up by Jan. 16, 2010 for FiOS quad-play or triple-play bundles that include broadband and TV also will receive a $150 Visa prepaid card. New customers who subscribe to quad-play or triple-play bundles that include Verizon Freedom Essentials, Verizon broadband access with an up-to-3 Mbps or 7 Mbps speed, and DIRECTV service will receive three months of free broadband access service.

T-Mobile USA Has No Urge to Merge

Deutsche Telekom AG Chief Financial Officer Timotheus Hoettges says there’s no need for further consolidation of the U.S. mobile market, apparently squashing the notion that T-Mobile USA might try to buy Sprint Nextel.

“There are four national players in the U.S. market for 300 million households, while in Europe, where we have 350 million households, there are 50-70 operators,” Hoettges says, according to Bloomberg. “We believe in our chances of being the challenger.”

Getting its third generation network strategy into higher gear remaining a key challenge.

“There is no question that we lost customers because many of our customers couldn’t get 3G.,” Hoettges says. “We now have to make sure that we can capitalize on the network in the top-10 cities where we have invested.”

Deutsche Telekom gets 24 percent of its revenue from T- Mobile USA, which saw its revenue drop 2.3 percent in the most-recent quarter.

On top of that is what T-Mobile USA can do about fourth-generation network capacity, which will require additional spectrum or wholesale sourcing.

So far, T-Mobile USA hasn't ruled out wholesale sourcing or additional spectrum acquisition. Clearwire's 4G network is rumored to be a contender, if T-Mobile decides to source spectrum rather than acquire more spectrum.