One Way of Looking at Bundling

DirecTV executives point out that a move into new services such as voice and high definition TV hasn't hurt the satellite provider's ability to keep growing, as this DirecTV graphic indicates. But there's another way to look at matters. What cable's ability to create Triple Play services has done is break the trend line of DirecTV's growth. DirecTV might have grown much more rapidly had cable not begun to flex its muscles with voice, broadband access and other services.

Vonage to Go Dual or Triple Play

Vonage Holdings Corp. is creating a subsidiary to resell EarthLink Municipal Wi-Fi access. EarthLink Wi-Fi is live in New Orleans, Philadelphia, and Anaheim and Milpitas, California. EarthLink's San Francisco network isn't operational yet, but has been approved. That will make Vonage a "dual play or quasi-triple-play" provider, moving Vonage beyond the "over the top VoIP" or "minute stealer" position it has had in the market.

Vonage now will be a provider of broadband access, VoIP and wireless VoIP, since its Wi-Fi phone will work throughout areas of the municipal Wi-Fi footprint where the signal can be received. One might question the ultimate viability of either independent mass market broadband access, VoIP or muni Wi-Fi businesses, but the move gives Vonage a chance to move in a new direction, gaining many of the benefits of "bundled" services approaches.

IPTV: China, France, United States Lead in 2011

China will have the most subscribers, France the highest penetration, the United States the greatest service provider revenue, in 2011, according to Informa Telecoms & Media.

Top 5 IPTV Markets in 2011
Ranked by Subscribers (000)
China 11,182
USA 3,429
France 3,390
Japan 3,075
Germany 2,626

Ranked by Penetration
Hong Kong 37.6%
France 14.8%
Singapore 11.9%
Norway 9.2%
Israel 9.2%

Ranked by Revenue $ Millions
U.S. 2,198
Japan 1,847
France 1,586
Italy 1,085
U.K. 810
Source: Informa Telecoms & Media

New GrandCentral Spam Filter

GrandCentral Communications announced at the International Consumer Electronics Show a new community-wide PhoneSpam Filter. The first of its kind, this free service combines a GrandCentral database of abusive callers together with a user-generated list of telemarketers to filter out unwelcome or insidious calls with a check of a box. As visitors and users report telemarketers and other unwanted callers to GrandCentral at www.grandcentral.com/stopphonespam, the numbers are confirmed and added to the PhoneSpam Filter.

Whenever one of the numbers on the list calls a GrandCentral user who has enabled the filter, those calls will be caught by GrandCentral and sent directly to the users’ Spam Voicemail folder. As more telemarketers and abusive callers are reported, the community-wide system increases in its effectiveness and provides even greater protection to GrandCentral members.

GrandCentral's addition of community or social networking features is one way new providers are adding value to voice communications by extending features in ways that go way beyond historic PSTN features. Basically, that means services become richer and more valuable as the end users create value and add knowledge. That's a big shift from the past, when a service provider essentially defined all the features.

My GrandCentral number is 303.997.1275, by the way.

TalkPlus Goes Mass Market

TalkPlus has unveiled its "multiple number, one device" service for Spint, Cingular, T-Mobile and Verizon mobile handsets. The company says mobile-centric professinals and "socially active" users are the early lead adopter targets. The service probably will appeal to people who really live by their mobiles and want to clearly separate their work and private lives, while gaining additional privacy by using virtual public numbers.

Some 15 to 17 percent of mobile phone users in North America usemore than one mobile phone, typically one phone for personal use and one for work. But some use a standard cell phone for most voice calls and have a second device, usually a BlackBerry, as their second phone.

A TalkPlus Number can be quickly created, used for temporary situations and then discarded. If a TalkPlus subscriber is selling a car online, they can get a disposable number just for the sales process, the company suggests. Using Mirror Numbers, mobile subscribers can instantly alter their caller ID to any approved phone number. TalkPlus can be activated on any of today's mobile phones in seconds and adding a new TalkPlus Number doesn't require any new hardware or changes to a subscriber's existing carrier plan, even for prepaid customers, the company says. TalkPlus doesn't require access to a computer to make calls, asking others to download software, or conducting complicated call set-up processes.

The TalkPlus Basic Plan includes:
* TalkPlus Number
* Call Screening
* Voicemail
* Web-based control center

Basic plans start at less than $9 per month. TalkPlus Pro adds:

* Multiple TalkPlus Numbers (up to 10) All numbers will have their own voicemail and call history.
* Mirror Numbers -Subscribers can clone a home or office number onto their mobile phone. This feature allows users to present an alternative caller ID when making calls. Up to 10 Mirror Numbers can be added to one mobile phone.
* Conference Calling - Subscribers can make up to 10-way conference calls.

Pro plans start at less than $17 per month.

PC to TV Will Be Big at CES

Porting Web video to TVs will be a big theme at this year's Consumer Electronics Show, it appears. Sling Media is epxected to introduce SlingCatcher, which uses the in-home Wi-Fi network. The SlingCatcher also will also be able to transmit programming on a Slingbox-connected TV to another TV set, either to one in the same house via a home network or to one in a remote location via the Internet. SlingCatcher will be available in mid-2007 for less than $200, according to Sling Media Chief Executive Blake Krikorian.

Together with other similar initiatives from Apple Computer and Microsoft, among others,this sort of capability will need to be put into place before we can gauge the actual extent of consumer receptivity to all sorts of "direct to consumer" video. So far, not that many people claim to have used or paid for legal fare. But most observers think technical impediments (not being able to easily view on a TV, in particular) keep most people from experimenting with the new formatpaid video content. All that is going to change, though, and innovations such as SlingCatcher are the necessary forerunners of such developments.

Of course, demand is half the equation. Equally important is the supply side. Television executives, for example, now are asking if future TV programming will be delivered over the Internet, bypassing today's traditional cable and satellite providers, and seem increasingly open to the idea. Chief among the obstacles is the lack of Internet connections to TV sets, bandwidth-limited video quality, lack of business models, and the challenge of navigating through thousands of video programs, otherwise known as "search and discovery."

About all we can surmise at this point is that once these obstacles are removed, there will be a potential alignment of demand and supply. The bad news for cable TV operators, broadcasters and telcos is that "over the top" delivery disintermediates today's channel partners. This is probably a five year preparation phase. After that, watch for a slugfest between over the top video and cable, telco, satellite and broadcast delivery methods.

When Dark Fiber Makes Sense

If an enterprise has requirements for four or more optical wavelengths, it makes more financial sense to lease dark fiber and light its own network, at least in Western Europe, say analysts at The Yankee Group. The savings for the dark fiber approach are 40 percent over leasing four wavelengths, Yankee Group says. The economics work for cross-border and national networks. Since such deals involved distance-sensitive pricing, however, route length and the type and number of wavelengths can affect the analysis. For four or more wavelengths, savings between 13 percent and 70 percent are potentially achievable by leasing fiber. Bigger savings occur when bandwidth has to be bumped up. The incremental cost of additional new wavelengths on a dark fiber infrastructure is only 10 percent to 15 percent of the cost of adding a new wavelength.

The Difference Between Bellheads and Netheads

The IEEE has given the effort to develop 100 Gbps Ethernet its official support. Some network equipment vendors had argued for 40Gbps, 80Gbps and 120Gbps speeds, in line with synchronous digital hierarchy. But Ethernet always has been designed around factors of 10, or an order of magnitude improvement, all the way from its first incarnation at 10 Mbps in the 1970s.

So here's the suggestive comparison. Netheads design around orders of magnitude of change, every time there's an upgrade. Bellheads tend to want increases to match the legacy base. There's nothing wrong with that. There simply are different assumptions about what "next version" of bandwidth growth should entail.

There are other parallels in life. Established businesses would be happy with incremental growth in the tens of percent. Venture capitalists won't bother with any innovation that promises anything less than an order of magnitude performance improvement over the existing state of the art.

Again, some endeavors in life are geared around incremental improvements while others are organized around at least an order of magnitude change. Not surprisingly, VC-backed efforts frequently are disruptive, specifically because that's what they aim to do. Established organizations frequently grow at 10s of percent rates, precisely because that's what they aim to do.

If Netheads and Bellheads tend to produce different results, it is at least in part because they aim to do different things. Bellheads aim for incremental change. Netheads, riding Moore's Law, aim for orders of magnitude change on a sustained basis. Which is why the global tension in the communications business isn't going away. There will be no possibility of easy stability. Not when some value chain participants live in a world of incremental change while others live in a world where an order of magnitude is the normal rate of change.

That isn't to say end users immediately see all those improvements. There are some physical constraints in the infrastructure world that make Moore's Law improvements in the access plant tough, if easier in the wide area network and relatively simple in the device arena.

CES Will See More Download Video Rollouts

The International Consumer Electronics Show is the first major U.S. trade show of the year that has direct implications for the communications and Internet apps industries. It is a logical place to launch a new "download-to-own" service or expanded Web video initiatives. We would expect some of that to happen. Sonic Solutions this week launched Qflix, a licensing and certification program approved by the studios, which will allow online retailers to sell movie downloads that can be burned onto DVDs.

CinemaNow currently sells a limited number of download-to-burn movies (using a different technology) and iTunes sells movies for viewing on iPods and PCs/laptops. Such services essentially use different distribution channels and are direct challenges to cable, satellite and upcoming telco video distributors of on-demand or pay-per-view fare, as well as to Netflix and Blockbuster Video. The key strategic change is the willingness of content owners to embrace the new channel. That's the single most important factor driving the new market.

It isn't clear yet how business models will shake out, but ad support already looks to be an important factor. In most media industries, advertising plays a significant role. Potential customers also indicate they prefer "free" ad-supported video as well, even though this preference coexists with a demonstrated to buy movie content in many forms (theatrical release, PPV, DVD, DVD rental).
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Declining ARPU Drives Thinking

Even in the robust mobility segment, growth is slowing. The decline in per minute pricing of voice calls is leading in turn to lower average revenue per unit, in North American and Europe, according to The Yankee Group. All of which makes the search for new services and revenues of all sorts mandatory, rather than optional, of course.

Nine Million VoIP Households

In-Stat says more than nine million households have at least one active VoIP user.
The top five facilities-based services used by households in the United States are Vonage (1.7 million households), Time Warner Digital Phone (1.6 million households), Comcast Digital Voice (1.3 million households), Cablevision/Optimum Voice (1.1 million households) and Cox Digital Phone (420,000 households.

The top five client-based VOIP service providers used by U.S. households are Skype (2.1 million households), MSN (1.1 million households), Yahoo Messenger with Voice (1 million households), Google Talk (658,000 households) and AOL Phoneline (266,000 households).

Price still remains the driver in the consumer market, though some marketwatchers are calling 2007 the "year of VoIP apps," at least in the enterprise space. That prediction probably will prove to be off the mark in the sense that all such "year of the..." proclamations are. In 2006 the International Consumer Electronics Show proclaimed last year "the year of the digital connected home". Guess what. So is this year.

WAN Ethernet Market to Hit $5 Billion in 2007

The global wide area Ethernet market will be something on the order of $5 billion in revenue in 2007, say Yankee Group researchers. The U.S. market for Ethernet revenue should grow at a blistering 50.3 percent cumulative annual growth rate between now and 2010, Yankee Group analysts predict.

Don't Have It, Don't Want It

One line of reasoning about broadband deployment is that carriers and government have failed to push it hard enough. There's another way of looking at matters, however. In the U.K. market, for example, respondents who don't buy broadband access services recently told researchers that they didn't want broadband, or didn't own PCs.

Some 27 percent just didn't want it, and some 22 to 23 percent don't own PCs in the home, so broadband has no value. About 15 percent said they couldn't afford it. This will change as compelling services aimed at TVs and game consoles, for example, become available.

In some cases, the ability to use mobile handsets inside the home for a flat fee each month might be so compelling that will drive broadband adoption. The point is that people buy things when they find things valuable, and many end users still haven't been persuaded.

Wireless IS Voice

This probably won't be the year that everybody agrees mobile voice is THE way to do voice. In fact, mobile might never be THE way to do voice. But there's no question that mobile handsets are becoming the convenient single device to use voice and other apps. There's no question the amount of conversation initiated and terminated on mobile devices is increasing. Nor is there much doubt that tethered devices and apps have to start offering value beyond "simple" conversation to remain highly relevant.

P2P Could Drive Architectural Change

Some trends we now are seeing in the Japanese broadband access market raise potential issues for all access network architects. Specifically, the issue is that consumer networks are designed asymmetrically, and P2P uploading requires symmetry. One might like to design a network so flexible that bandwidth can be provisioned "on demand."

The problem is that such a network typically implies an optical infrastructure with a fairly sophisticated degree of intelligence, to supply granular increases in bandwidth, on a "dial it up and it happens" basis.

And that's expensive, particularly so since the network has to be built past all potential end user locations, even when actual demand will vary widely, stranding some of the assets.

Some networks, with short access loops, might finesse the issue by deploying VDSL. Others are simply going to have to look at fiber-rich networks. Expensive stranded assets might result, in that case.