Watch What People Do, Not What They Say They Will Do

People often tell researchers they might do something, buy something, use something or switch something. Such responses tend to exaggerate actual changes in user behavior, as our recent experience of wireless number portability suggests. Canadian consumers, for example, suggest they are fairly likely to switch providers once number portability becomes law. History suggests they really won't change.

Wireless number portability, in fact, has not proven effective in creating more competition in the wireless market, says Analysys Research. There are few countries where more than 10 percent of mobile phone customers have taken advantage of number portability, but for the most part number portability hasn't been destabilizing.

Alastair Brydon, Analysys researcher, said that in Britain and Italy, just under 10 percent of mobile phone users had taken advantage of number portability, while in France and Germany the number of people keeping their numbers when switching carriers was negligible. In the United States, about 5 percent of cellphone users have taken their numbers to a new operator. One country that stands out is Finland, where about 55 percent of cellphone users have transferred their phone number in the four years since the service was introduced. The survey covered 25 countries.

"The concept of losing your mobile number in Finland is more painful to people because 35 percent of households do not have a fixed-line phone and 70 percent of all phone traffic is on mobiles," says Brydon.

Jon Arnold, Marc Robins Join Forces

Robins Consulting Group and J Arnold & Associates have formed a new partnership to provide an array of marketing, communications, strategy consulting and market research services to their growing roster of IP communications technology vendors and service providers. Jon says they will be jointly developing new information resources, including an electronic newsletter and related Web site, which will offer unique industry analysis, a healthy dose of opinion, provide a new platform for other industry thought leaders, and offer valuable coverage and information not readily available elsewhere about the rapidly evolving IP communications industry.

A Game Changer?

Release date pretty much dictates the financial contributions made by various movie venues, as this data from Adams Media Research suggests. There has been concern recently that DVD sales are slowing. If that continues, it will be easier to shift release dates to some sort of window where DVD release and pay per view or video on demand release dates are concurrent. That would dramatically improve the revenue earned by VOD, PPV or other forms of network delivery, at the expense of physical media. The issue here is fundamentally less cusotmer demand or technology platform, and more the prosaic issue of "when can I watch it?"

Does Vonage Compete with Cable VoIP?

Vonage's fourth quarter results won't be released until next month, when you can bet observers will be scrutinizing the company's marginal cost of acquiring new customers, compared to the marginal revenue Vonage is able to eke out. Which isn't to say Vonage has yet lost its lead in the subscriber race, according to TeleGeography. For a large part of the community, the issue is Vonage's ability to outrun its burn rate. Also, at some level there's a sense that an independent provider can't survive in a mass market dominated by the likes of Comcast, Verizon and at&t. There's truth in the observation: oing toe-to-toe with cable or dominant telcos isn't wise. But that's possibly not the point. The notoriously difficult telecom industry also is a place where specialists always have been able to carve out sustainable businesses. They might not be on the scale of a Comcast, Verizon or at&t. But it's hard to explain away the survival, and in some cases, thriving business models put together by quite indpendent specialists of all sorts.

Many observers, including this one, have been pointing out for some time that stand-alone long distance isn't a viable business model. And though the rule might correct as far as it goes, there are salient exceptions. Skype, for example. Some mobile resellers, IP-based dial-around, smaller integrators, telecom agencies, some interconnect firms and competitive local exchange carriers, some fiber-based access providers, some hosting companies and ISPs are able to make money in an environment that says they can't.

Sure, Vonage is trying to beat the odds. Providing it can carve out a niche, it will. The issue is whether it can do that. Of late, Vonage chief strategist Jeffrey Citron has been arguing that Vonage has unexpectedly left the "early adopter" and "early majority" markets and begun to target the core of the mass market. One would have to argue that cable companies are doing exactly the same thing. But it doesn't feel right. Surely the typical cable customer isn't the same customer that Vonage continues to attract, even though both would say they are selling into the core of the mass market.

To be sure, I can't put my finger on precisely why the Vonage "mass market" customer is psychographically different fromt he typical "cable voice" customer. Citron points out, and we have no reason to doubt him, that the incremental customers Vonage now is picking up have demographics of any core mass market customer. There's little doubt, though the cable companies provide no evidence for the thinking, that the typical cable customer also has pretty "normal" demographics.

It just doesn't feel right. The demographics might be similar. But there is something about a typical Vonage customer that is distinct from a typical cable customer. They are, in other words, distinct segments of the mass market. I'd bet that Vonage customers are more likely the "traveling" or "untethered" sort of worker, for example. Neither can I believe the typical Vonage customer is the same age as a typical cable customer. Vonage customers, even the mass market customers Vonage now is getting, have to skew younger, and have to be more comfortable with technology, compared to the typical cable customer.

Cable customers, in other words, likely are a "segment" of the mass market, as are Vonage's customers. If that is true, then Vonage's efforts to add other features, such as Wi-Fi support, more mobile calling features and so forth, shoudl pay off. Vonage's customers have to be more venturesome where it comes to replacing traditional calling services, even if Vonage is said to be a simple "minute stealer" service.

Is Vonage a competitor to cable voice? Most might say "yes." I don't think so. I think both are appealing to distinct customer segments within a broad "demographic" that only appears to be the same. Demographics, in other words, don't tell the story. There still is something about the psychographics of the customer bases that is distinct.

100 Gig Ethernet Coming

As WAN backbones begin to move to 10 gig Ethernet pipes, scientists already are at work on 100 gig versions of Ethernet. Demand for 100 gigabit per second Ethernet is being driven by Iternet exchanges, Carriers and high-performance computing organziations and applications. "You’re also seeing a need when you look at what’s happening with personalized content, which includes video delivery such as YouTube, IPTV and HDTV," says John D’Ambrosia, chairman of the IEEE 802.3 Higher Speed Study Group and a scientist at Force10 Networks Inc. "There’s also video on demand.

"You do have 10G Ethernet already, and if you use link aggregation you can go higher," he says. "But bandwidth needs are quickly surpassing these bandwidth limits." That means we will see new optical transport, backplane and chip technologies.

So even if higher bandwidths are needed, why not just contatenate 10 gig waves? "Depending on who you to talk to, you’ll hear that two, four or eight links can be aggregated together before you have management and troubleshooting issues," says D'Ambrosia. "Also, those cables take up precious real estate, and you have power and cooling considerations." Aggregation also ties up ports that can't be used for anything else, such as bringing in additional revenue. Basically, scaling becomes an issue.

Differentiating Downloaded Music

It migh be argued that downloaded music is a commodity. A song is a song. But broadcast radio, though skewed to large national audiences, does have specific formats that appeal to specific demographics. Then there are "talk" formats, "language" formats, "subject" formats. Then there's XM and Sirius, that slice and dice the domographics into much more granular listening segments. That being the case, whys shouldn't every form of Internet-centered media also be capable of segmentation? Keep in mind that segmentation can occur on any number of levels. Type of content, method of delivery, geographic focus, device support, storage, navigation and other elements of a user experience can be targeted.

So it is that Ruckus Network, which distributes movies and music online to colleges nationwide, now is attempting to exploit a college niche by expanding its ad-supported music download service to any user with a valid university email account.

The Herndon, Va.-based company aims to boost the rolls of college students who use its service to woo more advertisers seeking to market to young audiences. The company adopted the ad-supported business model about a year ago.

Previously, Ruckus' service was only available to students at universities that had entered into agreements with the company.

Students outside Ruckus' network of affiliated universities will not be able to download movies, but will have access to Ruckus' more than 2.1 million tracks, which they can download to their computer for free. To transfer audio files to a portable music player, however, users must pay either $5 a month or $19.99 per semester.

Previously, students at universities without an agreement with Ruckus had to pay $5.99 a month to download music from the service and couldn't move the tracks from their computer.

Infinite Storage, Bandwidth, CPU Power

In a world with infinite storage, bandwidth, and CPU power, Google could offer instant end user access to "all applications," CEO Eric Schmidt has said. "Everything can be stored and accessed from anywhere, on any device." Everything can be stored in the cloud. "Every experience and application can be customized for each user." All of which might be reason enough for Google to build a huge, private Internet. It could be "100 times better" than anything else, offering a programmable, executable, reliable experience.

50% Margins on iPhone?

Apple phone is expected to cost $600. Cingular (at&t) won't be allowed to discount it. The cost to manufacture an 8 Gbyte iPhone is estimated to be about $280. As iTunes exists to sell iPods, so now mobile service exists to sell iPhones. True, as Steve Ballmer, Microsoft CEO points out, iPhone doesn't have a keypad, so text entry might be a bit of a chore. Still, this device is going to get lots of attention, and sales, from professionals, engineers and other people who just think it is the coolest phone on the market.

Why Security Always Tops Enterprise Objections...

to new IP-based services and platforms. Flaws in Web apps boosted bug counts for 2006 by more than a third over the previous year, according to data from four major databases tracking security and bugs: the Computer Emergency Response Team Coordination Center (CERT/CC), National Vulnerability Database, Open-Source Vulnerability Database and Symantec Vulnerability Database.

Counting both public sources and private submissions directly to the CERT Coordination Center, the group logged 8,064 vulnerabilities last year, an increase of 35 per cent over the number of flaws reported in 2005.

The three other major flaw databases, the National Vulnerability Database, the Open-Source Vulnerability Database, and the Symantec Vulnerability Database, recorded jumps anywhere from 20 to 35 per cent in 2006 compared to 2005. OSVDB estimates at least 20 per cent more vulnerabilities logged in 2006 compared to 2005.

Google's New Data Center

Google is opening a $600 million data center in Lenoir, N.C., matching the size of the similar facility Google is building in The Dalles, Ore. During the second and third quarters last year, Google's capital expenditures were more than $1.2 billion. Some experts believe dominance on the Internet could eventually be determined by the size and efficiency of huge data centers. Microsoft and Yahoo are both building facilities in Washington state, up the Columbia River from Google's. Microsoft also will build a $550 million data center in Austin, Tex.

Google also has leased enough wide area network dark fiber to rival that of many carriers. All of which will stand Google in good stead as video drives Internet traffic way beyond anything engineers have designed for, or that ISPs can afford to support, truth be told. Where a typical end user now generates between one and three gigabytes of traffic a month, video downloading could drive demand to one to three gigabytes a day. That 30 times increase, an order of magnitude and then some, is going to crush many ISPs, whose business models simply won't allow them to buy additional IP transit in that quantity.

So Google conceivably could emerge as quite a savior. Basically, peering with Google, on whatever terms Google might require, might be the key to survival. Interesting, indeed.

Other Things to Do With Your Mobile

Buy stuff! The number of mobile payment users is expected to grow from just more than 100 million worldwide users in 2006 to more than 200 million in 2009 according to the Yankee Group. That translates into revenue growth from $800 million to $1.8 billion in revenue between 2006 and 2009. That growth could be increased dramatically if a revenue sharing agreement can be developed among mobile carriers, credit card associations, issuing banks and retailers/merchants. This is better than debit cards for small purchases, don't you think?

Unity Will Put Brakes on Wireline Defections

Wasting no time at all since it gained full control of Cingular, at&t is creating one of the largest communities the communications industry has ever seen, in the form of 100 million phone and wireless accounts. at&t Unity, a pricing package that allows its cellular customers to call any AT&T landline customer without incurring additional usage fees or using their wireless minutes, expands the wireless "friends and family" concept to friends, family, business partners and people you don't know."

This is the same company that has an exclusive right to sell the Apple iPhone as well. Unity is available on all wireless plans of at least $59.99 a month.

To subscribe to a at&t Unity plan, a customer would need to have at&t wireless service as well as an at&t landline plan that offered unlimited local and long-distance service. AT&T’s unlimited local and long-distance landline service starts at $40 a month if bought online.

Actions such as this are one reason why even astute cable companies and independent VoIP providers won't be able to keep ripping landline customers away from at&t at high rates forever. At some point, it was inevitable that at&t and other similarly-situated firms would bundle their wireline assets in ways that would compel customers to keep their POTS lines.

Video Pricing Sticky to the Upside

One reason service providers might like being providers of video service, among many reasons they might well not like it, is that video entertainment prices are remarkably sticky to the upside where it comes to retail prices. Virtually every other type of communications good has seen declining prices over the last 10 years. Not so with video.

U.S. Phone Penetration is Up

...after a dip after 2000. This survey by the FCC includes both wireless and wireline service, and corrects for buying of multiple wired or wireless accounts by any single household.

More Web-Activated VoIP

Looked at from one perspective, voice is not inherently a commodity. It simply has been sold that way. Jajah, for example, has been a pioneer in web-activated calling that doesn't require a client, broadband access, a terminal adapter or much else beyond Web access and a phone service of some sort that can make a phone call.

So now voip.com now is beta testing its own web-activated calling service. To use the Make a Call service, members create a free account and then add credits, using any U.S.-issued credit card. Then, members simply go to the web-based interface and enter the number they're calling from and the number they'd like to call.

It might be a niche, but that's the point. Web-activated calling is a type of voice application quite distinct from POTS replacement. It appeals to the episodic or casual call to an international location, or to some of the same needs a prepaid calling card answers, namely an ability to budget for and control global calling expense.