This Explains It...

Not to pick on Marriott, but if you travel, you know that hotel Internet access can be spotty and troublesome. Unexpected guest demand for video bandwidth turns out to be an issue. Neil Schubert, Marriott International VP says the Courtyard segment ran ads announcing "free access" and showing a guest using that connection for video telephony. Courtyard then experienced a four-fold increase in bandwidth consumption.

“This ad came out before we knew about it,” Schubert says. So why was this a problem? Courtyard typically was allocating a single Digital Subscriber Line circuit for 160 customers. "It didn’t work real well at first,” Schubert says.

Slingbox was a factor, apparently. It seems more and more travelers are toting their Slingboxes around with them. So the next time you see a forecast for at-home video consumption (such as this one from Telecom Futures originally created in 2001), remember that users consuming that bandwidth at home are going to keep some of the same behaviors when they are not at home. We're going to need more bandwidth, at more locations, than just office and home.

Just like AT&T

All media, not just all communications, are being forced to change because of IP and the Web. You all know that. Believe me, it is something we grapple with all the time as a "print publisher." We all know a transition to online and Web-delivered content is inevitable. How well we succeed will be measured by how fast any Web-based portion of our business grows, compared to the inevitable rate of decline for anything we do in print form. Oddly enough, we are in the same position the old AT&T was in. Our legacy business probably cannot be expected to do anything more than decline at fairly predictable rate.

Time Warner CEO Dick Parsons argues that the company's "publishing" operation can be successful, and grow at eight to 10 percent a year, "for a long time, if we successfully make this transition to digital.”

So that's the issue, isn't it? Cost controls only get any of us so far. And digital revenues have to grow fast, from a small base, to make any significant contribution to overall revenue. And one thing is certain: no matter what publication we are talking about, over the long term, the economics of the business are changing enough that tweaking through cost controls will be exhausted.

At some point, quality will have to be diminished, as painful as that will be for any entity that prides itself on such things. That doesn't mean "poor" quality: simply "uneven" quality. More and more of what we and others do will be like the Web itself: some really good stuff; some useful stuff; lots of irrelevant or shabby stuff.

Like most communications service providers, media will have to make hard choices. Free, cheap, more costly options will surface. Quality is going to get more uneven as a result. Still, we are just at the front end of the process. Change has been largely incremental up to this point. It won't stay that way for much longer.

Apple and RIM Offer a Model

According to Charles Dunstone, CEO of Carphone Warehouse, in order for the iPhone to function correctly there is a requirement for Apple servers to be placed deep in the operator's network. One might argue that something along the same lines is required for BlackBerry service to work (we will for the moment ignore the argument about whether app servers are "edge" or "core" devices: logical experience rather than physical placement is the issue).

Logically such servers will be used for authentication and email services--just as Research in Motion might. The point is that when an application provider can provide functionality which resembles a "network service," it can justify a share of the ongoing revenues.

This might be significant, as it suggests a broad model under which network access and transport providers can work with application providers to create a mutually-beneficial revenue-sharing arrangement. The point isn't so much where the servers physically reside but that BlackBerry and iPhone both are devices featuring applications that require the cooperation of a network services provider to provide an optimal experience. Not to mention that the way both applications work provides some "walled garden" features carriers prefer.

The point is that here are two devices and application providers that operate neither in complete "walled garden" or "over the top" fashion. It is a hybrid model where the transport services provider is centrally involved, and both application and access/transport providers are sharing revenue.

So the point might be: what other applications have relatively broad appeal, can be embodied in a physical device and require some degree of authentication? Where are other examples of applications that are neither "over the top" or "closed," but someplace in-between?

Verizon Votes for Broadband

Verizon CEO Ivan Seidenberg, asked whether wireless or broadband represents the stronger driver of revenue over the next several years, says that at the end of the day "broadband" is how Verizon sees its growth drivers, whether in the wireless or wired domains. That's a sharp contrast with at&t CEO Randall Stephenson, who says "wireless" is the growth driver.

Granted, both wired and wireless networks are important for both companies. But the linguistic accents are illustrative. FiOS is a huge bet for Verizon, and Verizon's 3G wireless network outperforms at&t's wireless network, most observers say. at&t, on the other hand, has deliberately chosen a less fiber rich approach to its landline upgrade. at&t also has shown a much different strategy overall, growing more through acquisition than through organic growth. Verizon leans the other way.

"Common history; uncommon future" is one way to look at matters. Global tier one carrier strategies are diverging.

Volpi Joins Joost

Joost has named Mike Volpi CEO. The ex-Cisco executive says "traditional television as we know it is gradually going to go away.” Separately, Apple TV now supports the display of YouTube video. In principle, there is no reason why Joost software could not be embedded into a TV set top decoder, into a TV itself, a mobile phone or personal digital assistant. Given the early support provided by Time Warner and Viacom, it appears video content owners have gotten the message the music industry did not: the Web is a new distribution medium.

To this point, most telecom executives have taken an approach to IP-based and Web-based services more akin to the music industry than the video industry. To wit, they've seen more threat than opportunity. That will change, at some point, just as every content, advertising or media business will have to adapt as well.

Not to Minimize Broadband, But...

New at&t CEO Randall Stephenson views wireless as the growth driver for the next three to five years. "The conversation about winning the race for consumers' homes starts and ends with wireless," he says.

Here's a Metric

Blogger Don Dodge (on The Next Big Thing)cites a statistic provided by David Skok, a venture capitalist with Matrix Partners. On average about three percent of all open source software users pay for a support contract, and most of them are business users, as you would guess.

Since the three percent paying for maintenance, support, training, and consulting will spread their buying across the entire ecosystem of providers, it is obvious that high volume adoption is needed to support many such companies. In the mass market, it is a surer route to sell hardware or software add-ons.

The conversion or "upsell" rate would strike many in the direct mail business as "par for the course. Conversion rates for targeted mass mailings, even when one has the right audience, the right product and the right timing, tend to hover in the three percent range.

Structural Separation?

New Zealand Telecom is in the midst of discussions with regulators about breaking itself up into three distinct companies: retail, wholesale and networks. In India, wireless carriers are setting up an independent infrastructure company so two different service providers can concentrate on selling. BT, obviously, has taken the structural separation route. And here in the United States, the old Rochester Telephone Co. agreed to structural separation in exchange for more freedom to operate unregulated lines of business.

While there have been calls for structural separation as a way of enhancing local loop competition, the success of such a policy hinges on the cooperation and willingness of the asset owner to go along. No such cooperation is likely on the part of major U.S. carriers.

The point is that we might agree or disagree about the merits of structural separation as a way of spurring more competition and goodness in communications services, but it simply cannot occur without the cooperation of the asset owners. The idea will resurface again. It always does.

Google Gears

At its developer conference, Google announced Google Gears, an open source technology for creating offline web applications. The new browser extension extends use of Web-based online applications into an offline mode. As an example. the Google Reader now allows offline reading of the top 2,000 items. Very cool.

Google also is gearing up to support creation of a single, open source way of enabling access to email and online calendars, for example, without access to the Web. Google Gears obviously also will allow developers to embed indexing and search functions into other applications.

Google Gears is another step towards making Web-based applications respond just about as well as offline, hard-disk-drive-based applications.

Nothing Stays the Same...

Alec Saunders, Iotum CEO, says "Skype hasn’t lost relevance for me. It just doesn’t work." Saunders had to uninstall the application because of some unpleasant interactions with his PC, he reports. He says he had similar issues with Gizmo and so now uses GoogleTalk or Jajah.

Likewise, Saunders notes that blogger Ken Camp points out that fewer people are using Skype today than a few months ago. It's almost an embarassment of riches. "There are now so many options for quality cheap calls that Skype isn't as exciting as it was when it first hit the market a few years ago," says Saunders.

Come to think of it, though I don't know I've had the technical issues Alec reports, Jajah has come up and Skype gets very little use of late. I also got pinged by MobiVox to remind me I haven't used Skype on my mobile, either. Nor have I been making use of my video email client, either.

Perhaps the point is that it is terribly difficult for any new feature or application to really punch through all the clutter and user interface issues one faces in a busy life. Even useful and low price tools have to contend with lots of other distractions.

Jajah gets DT

In the VoIP world, this has to count as a pretty big deal Deutsche Telekom is backing Web-enabled VoIP service Jajah, says Reuters reporter Eric Auchard. In a real sense, DT is backing a dial-around service that when used cuts DT's long distance revenue, especially higher-margin international calling.

Deutsche Telekom is embedding Jajah into its T-Online Web properties and that it expects to offer calling services to consumers and businesses in the future.

And T-Online Ventures, Telekom's venture capital unit, disclosed it is part of a third round of funding for Jajah. Intel Corp. recently invested in a $20 million investment round and has granted Jajah use of some of Intel's key VoIP patents.

Jajah is one of a new class of rivals that let callers simply call phone-to-phone, once they have signed up on the Web. Jangl, Jaxtr and Rebtel also use the Web-enabled approach or dial-around approaches.

What all these firms offer is a way to use VoIP to make cheaper calls on standard POTS phones. And any way one looks at the matter, that is going to be most of the market, most of the time.

Jajah has signed up more than twi million users and expects well over five million users by year-end. Germany is one of Jajah's five biggest markets after the United States and Britain. Other top markets are China and India, he said.

This is Helpful...

Verizon Wireless Data Service (EVDO)no longer forbids use of the access for VoIP. That's helpful. My provider (at&t) does not allow the use of its broadband service for VoIP.

That's helpful for would-be third party developers and for Verizon itself. No dominant service provider, no matter how well endowed and resourceful, ever will be able to develop its own walled garden offerings in great enough abundance to satisfy businesses and consumers who will want to buy new services and features.

BT, Sony Partner for Calls from PSP

British Telecom is enabling calling from Sony PSP game players. Wwners will be able to call traditional lines, cell phones or PCs. There are more than eight million PSP devices in the European market. Initially, users will have to place their calls from home or from the two thousand BT wireless hotspots.

Eventually the service will be launched worldwide in around hundred countries. The four-year deal between BT and Sony will support messaging and video calling as well.

This Will be a Test

There are rumors Google Talk may finally offer the ability to connect with public network telephone numbers, where up to this point it has stuck to an instant messaging model for individuals and a "click to call" mode for commercial users of its maps feature, for example.

So the issue is the range of business models Google might consider. It is possible that Google will go with an ad-supported model, where callers listen to a brief ad before being allowed to make a call. Which will provide an interesting test of user behavior. This sort of thing has been talked about for decades but never has gotten any serious traction. Can Google make it work?

After all, there are lots of alternatives. Buddies who don't mind headsets can be reached for free. Domestic calls from landlines or mobiles don't typically impose any incremental cost. If you want to do video with a buddy or associate Skype's video feature is getting some pretty serious use. If you pick the right VoIP provider the global numbers you frequently call are no much of an issue. And there is always Jajah-style Web-enabled dial around/callback for the cases you haven't already thought of.

So the issue is how much "inconvenience" a user will put up with to place a call whose cost is zero to pretty minimal in some cases.

Gmail Attachments: 20 MB

Google's Gmail now allows sending of 20 megabytes worth of attachments. Of course, few mail providers will accept a such a big message, so it's safe to send messages bigger than 10 MB to other Gmail accounts, to Yahoo Mail Plus or to other premium accounts. And perhaps that's the idea: get people to use GMail because the large attachments are easier to handle.