One Trillion VoIP Minutes

Some 1,079 billion minutes of VoIP traffic were carried by service providers around the world last year, says ILocus. The data suggest over half of calls were for long distance national calls. Separate estimates by TeleGeography suggest global VoIP minutes amounted to just short of 72 billion minutes last year.

There were 37.5 million voice over broadband subscribers, an increase of 16.5 million subscribers over the year. The biggest growth occurred in the U.S., French and German markets.

In the VoIP equipment market, softswitch and media gateways sales generated combined revenues of $2.2 billion - with 36.9 million Class 5 softswitch licences, 34.8 million Class 4 softswitch licences and 48.2 million service provider media gateway ports sold worldwide.

Bandwidth Now Driven by Consumers

"About 85 percent of carriers want Ethernet intelligence embedded into the optical transport network," says Meriton Networks chief network architect Nick Cadwgan. 

In some cases that means the ability to create Ethernet tunnels through an optical network, so that the transmission fabric starts to become a service delivery fabric. 

In some cases, though, it remains important to transport TDM traffic through the optical fabric, as in the case of wireless backhaul, notes Emanuel Nachum, ECI Telecom executive. "You want to integrate TDM, SONET and Ethernet layers as part of the optical infrastructure," he says. And though it has gone unnoticed in some quarters, dramatic changes in transport bandwidth are starting to occur. 

There's a move to 1 gigabit Ethernet at the edge of the network, in part because that's what the cards now support," says Umesh Kukreja, Atrica executive. "Enterprise sites now are pushing 20 Mbps to 40 Mbps while data centers are putting in 10 Gbps links. "We're also seeing N by 1 Gbps paths carried within 10 Gbps wavelengths.

But there's an even bigger change going on. Historically, bandwidth demands were driven by business. 

From this point forward, they will be driven by consumer demand for IPTV and other applicatons. Cadwgan says that over the last 18 months the demand drivers have flip flopped and that telco requirements for consumer video, using IP transport, now are the single greatest bandwidth driver.

Even for service providers who serve small, medium or enterprise customers, there are key implications. Paramount among the changes are new buyer benchmarks for what bandwidth should cost. 

SureWest Communications, for example, offers a symmetrical 50 Mbps Internet access service for customers who take a premium bundle including unlimited wireless, wireline and premium video. On a sum of the parts basis the symmetrical 50 Mbps works out to something like $200 a month. When those consumer users go to their offices, they are going to wonder why their business bandwidth costs so much.

Likewise, even some independent telephone companies serving rural areas on a suburban fringe are planning now for residential access bandwidth in the 40 to 50 Mbps range, with a 10 Gbps "metro core" to support it. You might wonder whether this is "overkill." Not if the telco plans on delivering IPTV services. And executives also acknowledge that if competing cable operators start bonding channels to create 100 Mbps services, then there will have to be a competitive response.

All of which puts telcos and other service providers in an awkward position. Competitors are driving consumer bandwidth expectations and delivery, not the voice and data networks that used to be expected to provide such leadership.

iPhone Boosts Analyst Forecasts

Apple's iPhone will likely see positive acceptance when the device ships in June, according to research firm Goldman Sachs. Goldman points to a recent handset branding survey that was conducted in China, India, the U.K. and the U.S. as evidence that Apple's new gadget might yield positive results for the Cupertino-based company. Despite the fact that the survey took place before iPhone was debuted in January, the number of potential iPhone buyers is equivalent to 75 percent of the installed base of current iPod owners. Just under one-half of the potential buyers come from respondents who have never owned an iPod, and 71 percent of respondents in the U.S. indicated interest in a potential Apple cellular handset.

Separately, Morgan Stanley says they would be buyers of Apple on incremental revenue and operating leverage. The firm believes the market is underestimating the likely success of iPhone. They're raising their annual unit and revenue forecasts to better reflect iPhone interest levels.

Morgan Stanley expects sales of eight million iPhones in 2007. A survey of 2,500 US consumers found that more people are interested in buying an iPhone than the combined number of people who already own or are planning to buy a similar high-end device soon(23 percent of non-owners compared to 19 percent of owners).

Apple ranked as the fourth most desired multimedia handset brand in the U.S. even before the iPhone was ever announced, and 30 percent of U.K. respondents alongside 15 percent of U.S. participants suggested that they would switch carriers in order to get the handset they want.

In fact, it is dangerous to underestimate the Apple brand machine. That isn't to say the company doesn't occasionally produce a dud. Think Newton, Pippin or Lisa. Of late, though, it has been on a roll.

ABI Research late last year said a study it conducted suggested many prospective MP3 player buyers, including current iPod owners, would be likely to choose Microsoft’s Zune over an iPod.

Of course, forecasts can be quite wrong. When 1,725 teenage and adult US residents were asked whether they planned to buy an MP3 player in the next 12 months, of those responding they were likely to do so, 58 percent revealed they were “somewhat likely” or “extremely likely” to choose a Microsoft Zune player over the iPod or another MP3 player brand.

This 58 percent that were likely to go the way of the Microsoft Zune – all identified themselves as existing iPod owners. The respondents owning other brands, 59 percent, were also “somewhat or extremely likely” to purchase the Microsoft Zune as opposed to another brand – including the iPod.

But sales of the Microsoft Zune appeared to be trailing off rather quickly after a fast start last November, leading some analysts to believe consumer interest is waning. Which is why watching what people do, not what they say they will do, is so important.

The player, which stayed in the top 10 in sales in the Amazon.com electronics category for several days following its launch, has now nearly fallen out of the top 100, recently hovering around position 96.

However, that buzz appears to have been short lived. Whereas the iPod is expected to sell as many as 15 million players this holiday season, analysts only project Zune sales of about 300,000 to 500,000 units at most.

Steve Wilson, ABI Research principal analyst, even has argued that iPod users don’t display the same passionate loyalty to iPods that Macintosh users have historically shown for their Apple products. The survey revealed that only 15 percent of iPod owners said that they were “not very likely” or “not at all likely” to choose Zune.

iPod Worldwide Sales
Q4 2001 - 130,000
Q1 2002 - 57,000
Q2 2002 - 54,000
Q3 2002 - 140,000
Q4 2002 - 219,000
Q1 2003 - 80,000
Q2 2003 - 304,000
Q3 2003 - 336,000
Q4 2003 - 733,000
Q1 2004 - 807,000
Q2 2004 - 860,000
Q3 2004 - 2,016,000
Q4 2004 - 4,580,000
Q1 2005 - 5,311,000
Q2 2005 - 6,155,000
Q3 2005 - 6,451,000
Q4 2005 - 14,043,000
Q1 2006 - 8,526,000
Q2 2006 - 8,111,000
Q3 2006 - 8,729,000
Q4 2006 - 21,066,000
Total = 88,708,000

Consumers aren't willing to pay what Apple Inc. may ask for the iPhone but if the price drops they'll switch their mobile service to AT&T Inc. in order to get it, according to results of another survey.

Online market research firm Compete Inc. surveyed 379 people in the U.S., most of whom had heard of the iPhone and have shopped for an iPod, to find out how interested they are in the device.

Among the 26 percent of respondents who said they're likely to buy an iPhone, only one percent said they'd pay $500 for it. When Apple introduced the iPhone in January, it said it would cost $500 on the low end.

Forty-two percent of those who said they're likely to buy the phone said they'd pay $200 to $299. Just watch. You'll get early adopters at whatever price iPhone costs. Then lower-priced units will appear. At $300, demand explodes.

See What I Mean About the Phone?

It just looks industrial, compared to the design of the rest of the unit.

Verizon One, Competition Zero

Verizon is rolling out an all-in-one voice, data, and video center for the home riding on top of Verizon's FiOS service, though it looks like the first generation of the device will not have the planned Ethernet and Wi-Fi capabilities Verizon wants to add. The Verizon One makes VoIP phone calls, supports email access, limited Web searches, calendar functions and streaming audio as well as preview of digital camera images. "Limited" Web access means specific Verizon-approved content in the news, weather and movie listings areas are available.

The cordless phone available as part of the unit is a bit clunky looking, but will support Verizon's VoiceWing VoIP service, slated to be added to the FiOS bundle later this year. The Verizon One also runs Media Manager, the FiOS application that manages and routes all of a user's multmedia content to networked TVs, set-top boxes, and PCs. Hence the importance of Wi-Fi and Ethernet capabilities. The base unit apparently supports as many as five total handsets.

Presumably when the Ethernet capable units are available, users will be able to access any content on the Web. Multiple USB ports will be added to accommodate the peripheral devices. Verizon One can be located any place in the customer's home where there is access to a phone jack and an electrical outlet.

It's an interesting approach to creating a next-generation "phone" device. Some people won't like the look and feel of the cordless phone. And one would hope the walled garden content experience was intended as a way to simplify experience of the unit, not extract money from content suppliers. That said, Verizon will be climbing a wall of resistance for the device, since every other attempt to put a PC-style screen into "kitchen" areas in the home has flopped. I don't recall a combined "phone plus Web" unit, however. And we really won't know what demand might be until the full Ethernet and Wi-Fi version of the device is available.

Still, credit to Verizon for trying something new. The device might be attractive for quick searches as one is running out the door and doesn't have time to boot up a PC to grab information from the Web. In these "greener" days many users are powering down their machines when not in active use to cut carbon, so quick and simple information searches might be attractive. That at least has always been the theory about how a simple Internet access device could fit into a user's lifestyle.

But Nokia Says No...

The problem with market research is that findings can vary wildly from study to study. Nokia, for example, provides smartphone usage data that flatly contradicts other study findings. According to Nokia, messagng and voice drive the actual usage, not audio and video.

Audio, Video Drive Smartphone Use

Not email access, at least according to this data from ICM Research of users in seven countries.

Watch Wikipedia

Here's a trend you might not have expected. Wikipedia is one of the four most popular social networking sites, even though it is not of the "hang out with your friends or community" sort. In fact, you probably are among the users (including this one) that has come to expect and rely on the quality of most of the information available on Wikipedia, as well as the timeliness of the updating. If you had asked me whether so many human beings would help create a service so useful and so good, just because they wanted to help, I'd have said "no way." At least some times, what Web 2.0 proponents claim is true, is true. So in chatting with David Beckemeyer, PhoneGnome CEO, why would it not be able to create some sort of user research outfit (one hesitates to use the word "company") that essentially is a wiki, perhaps a private wiki for some purposes, and a public wiki for others? My point is that if IP-enabled applications and services are changing everything in communications and media, and changing many things in the learning and playing arenas, why is there not reason to believe it can change market research and analysis as well?

Fiber To Home Forecast

18 million homes by 2011, say researchers at Parks Associates. Normally I am more skeptical to the downside when evaluating nearly any sort of market forecast. This one, though, seems too cautious to me. We shall see.

Feature Creep: We're Doing Something Wrong

Anybody familiar with the vast array of features available on a Class 5 switch or a private branch exchange can tell you that most buyers of such platforms never deploy most of the features. Of the features deployed, most end users never use them. The same appears to be true even of the more restricted features available on mobile phones. Most cell phone customers don't use the camera, email, or gaming options offered by their wireless providers, according a survey by JD Power and Associates. Most are satisfied when they can simply place a call efficiently.

Survey respondents said they use the speakerphone option more than any other, but only 26 per cent of respondents said they used this function. Only 19 per cent of people say they use the camera on their mobile and a mere 16 per cent opt to play games. True, behavior is changing. But after decades of exposure, most end users use but a handful of features available from their advanced phone switches. There's a lesson there.

iPhone Demand: Watch Behavior

Because what people are saying they might suggests no clear trend. It is clear that Demand for music enabled phones is growing. But iPod demand is distinct from phone demand. And iPhone prices are an issue. But the potential churn away from other carriers to at&t could be substantial.

More than 33% of all wireless phones now are music enabled, and market researcher Compete found music phones made up over 53% of all December cellphone shopping hits it tracked. There were just over 3 million total music phone shoppers in December, and almost as many iPod shoppers, with 2.7 million consumers evaluating iPods online.

But the market for combination iPod and cellphone devices isn't clear. Compete found that only 5% of all cellphone shoppers also evaluated an iPod in December, and only 3% viewed both a music phone and an iPod.

Of course, price is an issue. Even among the diehard segment of iPod shoppers who said they are very likely to buy an iPhone, only 6% said they would pay over $400. There's little question that the iPhone has achieved near instant name recognition, however.

A week after the historic announcement of the iPhone, Compete found that75% of iPod shoppers had already heard of the iPhone, and a healthy 20% said they would postpone their next cellphone purchase to wait for it. 20% also said they would postpone their next music player purchase.

The good news for Cingular is that 12% of iPod shoppers said they would be very likely to switch carriers to get the iPhone. The bad news is that of the people who are not willing to switch, over 30% cite Cingular’s service plan pricing, and another 35% cite Cingular’s coverage.

Of the people not likely to switch, almost 40% said they had no interest in purchasing a combination music player and phone, and over 55% said their current carrier has cellphones that meet their needs. And price will be a hurdle. Consumer oriented smartphones generally have sold in large volumes at a price point of about $200.

Still, we always have found that it makes more sense to pay attention to what people actually do, than to what they say they will do. And we'll have to wait six months to see what happens when iPhones actually go on sale.

Google, Avaya Aim at Enterprise

Avaya is supporting and joining the Google Enterprise Professional program to develop new capabilities for small businesses around Google's enterprise products. Under terms of the agreement, Avaya will develop, market and support offers that integrate Avaya's advanced communications solutions for small businesses with the new Google Apps Premier Edition, the subscription services solution for email, instant messaging, calendar and Web publishing services.

Examples of the open standards-based capabilities on which the solutions will focus include: enabling subscribers to easily share contact information, presence information and alerts; enabling a single in-box for voice mail, email, instant messages and fax messages; and enabling web calling over the Google Talk instant messaging service network. The companies' collaborative efforts will initially focus on Avaya IP Office, Avaya’s flagship IP telephony communications solution for small and mid-size businesses, with availability planned for fall 2007. Further solutions are expected to continue the emphasis on productivity-enhancing and cost-cutting capabilities for small and mid-sized companies.

The first integrated solution, which Avaya expects to deliver later this year, will be sold through Avaya's global network of resellers and distributors, providing customers with a single point of contact for sales, installation and support.

According to Google, Google Apps has been used until now by more than 100,000 small businesses and hundreds of universities. But not just small businesses.

“So much of business now relies on people being able to communicate and collaborate effectively,” says Gregory Simpson, CTO for General Electric Company. “GE is interested in evaluating Google Apps for the easy access it provides to a suite of web applications, and the way these applications can help people work together. Given its consumer experience, Google has a natural advantage in understanding how people interact together over the web.”

Tpad Gives Away SIP Addresses

Tpad now provides a unique incoming SIP number to every customer free of charge. All of which points out in a concrete way that while the cost to do such things is not "free," revenue models are not dependent on packaging cost elements in any linear fashion. Tpad has to cover it costs and make a profit, but the way it does so might be enhanced by doing some things in an unusual way and earning revenue someplace else.

"We believe that it is unfair to charge people just for a number to receive calls," says Steven Johns, Tpad marketing manager. Tpad also bills by the second, rather than rounding up to the next full minute.

GrandCentral and Gizmo Project Get Hitched

GrandCentral's unified communications service now is interoperable with SipPhone's Gizmo Project PC calling client. GrandCentral customers can now designate their free Gizmo Project profile ID, which appears like a 747 area code number in their Gizmo profile, as one of their destination numbers which will ring on their personal computers or select next generation Nokia dual mode Nseries mobile phone or Internet Tablet, whenever a call comes into their GrandCentral number.

This new GrandCentral feature also provides existing Gizmo users with the ability to receive calls for free directly from the traditional telephone network (PSTN) on their Gizmo enabled Nokia portable devices, Apple Macintosh and Windows PCs. Which eliminates at least one more direct inward dial number any user has to contend with.

Owners of Nokia dual mode N80-Internet Edition mobile phones, the Internet Tablet 770 or N series 800 Internet Tablet which access the Internet over Wi-Fi can also use versions of Gizmo Project on these handheld devices to receive calls without incurring any roaming charges or using any cellular minutes when connected to Wi-Fi networks.

Vonage to Try an "EarthLink"?

Vonage says it will start offering wireless services to subscribers during the second half of 2007, after announcing it would support dual mode phones working over Wi-Fi connections. The company also expects to announce new agreements to resell other carriers' broadband Internet access services, as well as new content deals later this year, sources say. That will make Vonage into something resembling an EarthLink.

Even residential video services, in some markets, might be offered. Though margin will be an issue, as it always is with resale, the moves will address the average revenue per unit problem Vonage has. Namely, its cost of acquiring a new customer is in line with what a cable company, at&t or Verizon would expect, but the monthly revenue is far below what those other providers typically get.