Vonage Doesn't Have to Pay $58 Million, 5.5% of Revenue to Verizon: Appeals Court

At least, not yet. The U.S. Court of Appeals says the U.S. District Court has to take another look at one of the three Verizon patents Vonage is said to have violated, though it upheld two of the three decisions as originally made.

Further, the Court of Appeals vacated the entire award of $58 million in damages and the 5.5 percent royalty. The Court of Appeals sent the case to the U.S. District Court and directed that the court retry those aspects of the original case.

Vonage has work-arounds in place, and argues none of the patents should have been granted in the first place, though it seems unlikely to an untrained observer that Vonage can get the courts to agree.

Still, it is a partial victory. Perhaps the damage award and royalty payments will be lowered, ultimately. And, at this point, a partial victory is about the best news Vonage has had on the patent front this year.

Mobility, SaaS, Laszlo, Google, et al

As work and workers become more mobile, enterprises are starting to use more Web-delivered applications. As that starts to happen, Web-based desktops and productivity suites are going to make more sense. Enter Laszlo and the Laszlo Webtop, referred to as a Web 2.0 Desktop. Laszlo Webtop has developed bundled solutions for three target markets: service providers, enterprises and developers.

Laszlo Webtop for Service Providers comes bundled with Laszlo Mail and Contacts and supports customized Web portals. Laszlo Webtop for Enterprises comes bundled with Contacts and optional Laszlo Mail.

Meanwhile, the Laszlo Webtop SDK for Developers offering is a software development kit allowing developers build their own Webtop solutions compliant with the Webtop.

This just makes sense. If one is going to build a distributed applications architecture assuming broadband access, then assuming a Web-based desktop also makes sense.

Vonage Loses Sprint Lawsuit, Has to Pay $69.5 Million

A federal jury has ordered Vonage Holdings Corp. to pay $69.5 million in damages for infringing on six telecommunications patents owned by competitor Sprint Nextel Corp.

Vonage also will have to pay a 5 percent royalty on future revenues. If neither this decision nor Vonage's Verizon patent infringement decisions are overturned, 10.5 percent of Vonage's recurring revenue will have to be paid out in damages to Verizon and Sprint together.

The upfront damage awards are hefty enough. The recurring 10.5 percent of gross revenue that will be lost might be more significant.

Vonage says it would appeal the decision but would also begin developing technological workarounds that it said would skirt the disputed technology.

Earlier this year Vonage also was ordered to pay Verizon $58 million in damages plus 5.5 percent royalties on future revenues. That decision also is under appeal.

Between the distractions (getting the work-arounds into place; the cost of further appeals), vigorous competition from cable companies and the damage payments, I suppose one now has to wonder whether Vonage can pull out of a dangerous spiral.

Global Voice Traffic Keeps Growing

Despite all the new ways people can talk to each other, and all the other ways people can communicate using text, global voice traffic keeps growing at a steady rate, according to TeleGeography.

Friendvox Will Unify IM Boxes: No Download

I realize there are other ways to federate instant messaging clients. But it will be nice to do so without adding one more client. Hopefully this Facebook app will install and work as simply as most other Facebook apps. Sept. 28 is the expected launch.

MySpace Mobile Phone Coming....Sort Of

Social networking Web site MySpace is launching free, advertising-supported cell phone sites next week as part of a wider bid by parent News Corp. to attract advertising for mobile Web sites, according to the Associated Press.

Fox Interactive Media, which oversees News Corp.'s Internet properties, said it also plans to roll out versions of FoxSports.com, the gaming site IGN, AskMen and its local TV affiliates in the coming months that will work on cell phones that can access the Internet.

The company already offers subscription-based versions of MySpace through at&t and Helio wireless services. Those versions include special features integrated into specific handsets, such as uploading cell phone photos directly to a user's profile page.

The new version reportedly will work on all U.S. mobile carrier networks and will allow users to send and receive messages and friend requests, comment on pictures, post bulletins, update blogs, and find and search for friends.

So I suppose we now have to add "social networking in my pocket" to the expanding set of mobile device niches. Not a phone, though.

iPhone Wins with Software Defined Radio

Software defined radios--software that emulates all the functions of one or more radio transceivers--have been talked about for at least a decade, and at least one company--Vanu--has had its SDR approved for U.S. use by the Federal Communications Commission. The attractions are many: mobile communications becomes an application any device can be given; dedicated firmware and hardware are unnecessary; multiple radios can be made available to any single device; smaller radios are possible.

An SDR could mean a global mobile device, able to work in Japan, on GSM or CDMA networks, with Wi-Fi or other wireless networks. Some users would love it. Mobile carriers have to be ambivalent. Sure, you'd like to sell a true "global phone." But then you also lose control of the end user and the device. Any truly global phone necessarily works with any mobile provider's network, as well as with Wi-Fi and potentially other wireless platforms--such as WiMAX--as well.

On the other hand, looking at this from a consumer device manufacturer's point of view, SDR is a wonderful thing. If you sell mass market communicating devices all over the world, and have to deal with disparate radio infrastructures and protocols, you want SDR because it streamlines the entire manufacturing and logistics process.

You build one device, supporting multiple radio types; not multiple devices designed to work on one sort of radio platform. If you are Apple, in other words, SDR is a really nice thing. It's a nice thing if you are Nokia as well. Nokia just has more entangling relationships with customers that undoubtedly will press Nokia not to make SDR available.

Also, no particular business model inevitably is bound up with the use of SDR, though obviously the technology lends itself to more open and flexible end user models. One can envision open, unlocked business rules on one hand and walled garden rules on the other where "roaming" is possible anywhere in the world so long as the user has agreed to pay for that privilege.

The point is that by fits and starts, we see more openness at both the device and application layers of any communications-enabled business, corresponding to the openness IP itself has brought to transmission.

Now This is a Smart Move

T-Mobile has rolled out the BlackBerry Curve 83200 with Wi-Fi support, so the device can be used with T-Mobile's Hotspot@Home system or on public hotspots. As part of that plan, the Curve can be used for unlimited calling from the home or public Wi-Fi zones. That costs an extra $10 a month.

The in-home router T-Mobile sells is optimized for voice and costs about $50 but there is a rebate, we understand.

Dual-mode service with limited or unappealing handsets is a main reason why femtocells, which place no restrictions on end user handset choice beyond the limitations of handsets any given carrier will support, have seemed to me a wiser choice for fixed-mobile consumer applications. Giving Curve Wi-Fi is smart.

Internet Phobia?

BT wants to find out why some people, even living in homes with broadband connections, resist using the Internet. About 39 percent of U.K. households do not have Web access. Fear of technology might be one reason, BT theorizes.

To acquaint them with online life, four subjects have been given a broadband link, a laptop, webcam and a digital camera. A two-month training plan has also been developed that will introduce them to what they can do on the Internet.

Writ large, that's one way to deal with any lingering short term "digital divide." Long term, I don't think there's a problem. There used to be a joke several decades ago in the U.S. cable TV industry about "resisters." Basically, the punch line is that the "resisters" are dying. There was a clear shift in the character of demand for television that now has fully established itself, as tough as it might have been to get the new behavior established in the first place.

The same thing is going to happen with broadband. Demand simply is shifting. All of which suggests BT ultimately will move beyond its fiber-to-cabinet; copper drop strategy and move ahead with a full fiber-to-customer upgrade. Like any other tier one service provider it is going to hold out for the most favorable deal it can get from regulators. But there's not much doubt about the long term outcome.

Bandwidth consumption is going to outstrip anything all the wireless networks together can provide, which makes the fiber connections an essential part of the future bandwidth story.

U.S. cable operators used to "diss" switched digital video" as well. Now they're starting to embrace it. They still say in public that fiber-to-home networks are way too expensive, and are unnecessary, from a cable standpoint. That's not necessarily what executives think privately, though.

Nor is it the case that resisters stay that way forever. Those of you with grandparents, who are grandparents or who have pre-baby boomer relatives know that mobile phones, PCs, cable and Internet connections frequently are used daily by people who might be prime "resisters." And the people who move them into the "connected" camp are friends, children and grandchildren. So BT might consider a "friends and family" program that enlists other family members in providing training and support for resisters. That's the way it works anyway.

Boomers Buy More than 1/3 of all Music

The trick is to get them to buy digital downloads or music subscriptions as well as CDs, which they buy in great quantities. More than 70 percent of the 76 million baby boomers in the U.S. report buying music in the past year, making it the most important buying segment for CDs and an increasingly important market for digital downloads, according to Russ Crupnick, entertainment industry analyst for The NPD Group.

Baby boomers born between 1941 and 1964 now account for a third of all music sales. About 68 percent buy CDs. About 26 percent purchase both digital music and CDs, while just six percent purchase only digital music downloads.

Nearly 40 percent of boomers report that they regularly visit the music retailers or the music section of retail stores.

NPD believes more attention to the boomer segment could yield $700 million to $1 billion in potential incremental sales of both CDs and digital downloads from baby boomers.

Nothing personal: Just don't put them on iPod billboards!! That would not, as they say, be a pretty picture

SK Telecom to Carry Helio

SK Telecom says it will invest up to an additional $270 million to support Helio, effectively signaling that Earthlink will not be investing further in the joint venture. So the issue is how Earthlink can exit the joint venture.

No Contract, No Locking, Nobody

Sprint CEO Gary Forsee says Sprint is thinking about expanding the test area for an unlimited calling plan that doesn’t require customers to sign a contract. That's something Leap Wireless and MetroPCS already offer. Nokia meanwhile appears poised to start selling unlocked N95 series really-smart phones imminently. So far, no carriers seem willing to do both.

Of course, there are good financial reasons why carriers like contracts and locked phones. The former provides a more predictable revenue stream and the latter ensures lower churn. Apple doesn't like unlocking either, as it now participates in the recurring revenue stream.

At least some users would benefit from unlocking and contractless service. Anybody buying a Nokia N95, for example, is spending enough on a device that the portable computer (it seems too limiting to call it a phone) clearly is more important than any network.

Of course, the carriers increasingly will find themselves in the position of angering power users who can figure out other ways to use unlocked devices, with or without contracts. To the extent that an N95 really is a mobile media and Web platform, outfitted both with Bluetooth and Wi-Fi, users can simply avoid any carrier "calling plan" if they are willing to put up with a little hassle and use Wi-Fi for connectivity.

That won't be very desirable for anybody who really needs mobile calling, but lots of people choose to carry two devices in any case. So maybe one of the new choices is one device for mobile email and voice, and the second for rich media and rich Web browsing.

It isn't so clear to me that a heavy email user is going to opt for an N95 in any case. The N95 excels as a rich media device (audio and video performance is spectacular) but won't satisfy a BlackBerry addict. The BlackBerry, though, isn't so great as a phone and really doesn't measure up as a media player.

Carriers might not like it, but devices are becoming the drivers of purchase and use behavior for a growing segment of the user base. Sure, the presence or non-presence of 3G capabilities is an issue. Operating system is getting to be more important. And then there's the blasted CDMA or GSM choice to be made. Pricing plans still are important, to be sure. But device coolness arguably is enough to outweigh the other considerations.

N95 might be among the first devices that test the theory that a powerful enough rich media device can get traction using Wi-Fi connectivity as an alternative to "mobile network" connectivity. Broad traction still will require 3G GSM. But N95 is the first device I've experienced that gets one to thinking about using it in a way similar to a laptop, rather than a phone. A Wi-Fi-equipped iPod is sort of in the same category.

Google Will Buy 30% of Servers in 2010

In 2010, say analysts at the Gartner Group, Google alone will consume 30 percent of all the world’s servers. That's three out of 10 of all servers manufacturing globally that year. That's some serious scale! And explains why Google buys so much optical bandwidth, and is investing in its own cable.

Google to Build Own Trans-Pacific Cable Network?

Up to this point, it has been local telcos, mobile providers, newspaper publishers and others in the media business who have had to ponder what Google might be up to. Trans-oceanic fiber providers might be next. Google apparently is planning to lay its own multi-terabit undersea communications cable across the Pacific Ocean, to be lit in 2009, according to Communications Day.

The Unity cable has been under development for several months. As envisioned, Google will join with other carriers to build the new multi-terabit cable. Google would get access to a fiber pair at build cost.

Partners haven't been announced, but rumors indicate Telekom Malaysia and Verizon, each involved in rival new cables, won't be part of the Google consortium.

There's not necessarily any broader agenda beyond securing low cost bandwidth on a major and growing oceanic crossing. Aside from that, the new capacity helps Google peer directly with Internet Service Providers in Asia.

Google's move still could be disruptive to the capacity industry, though. Obviously, Google's new capacity will take some revenue out of the retail market place.

TeleGeography Research says existing trans-Pacific cables provide on average 3.3 tbps of capacity and that carriers have increasingly been upgrading their existing cables or planning new ones. Trans-Pacific bandwidth demand has increased 41 percent between mid-2006 and mid-2007.

Metro Bandwidth Still Worth Investing In: Zayo

Demand for metro bandwidth still is a good reason to create a company focused on layer one and layer two metro access, say the founders of Zayo Bandwidth, a regional provider of fiber-based access and metro transport. Zayo has acquired PPL Telcom, a 4,600 fiber-route-mile network based in Allentown, Penn. serving areas throughout the Northeast, and Memphis Networx, a 200 fiber-route-mile network serving the greater Memphis, Tenn. area.

In addition, Zayo Bandwidth has signed definitive agreements to acquire Indianapolis, Ind.-based Indiana Fiber Works (IFW) and Minneapolis, Minn.-based Onvoy, Inc. which are expected to be finalized in the third and fourth quarters of 2007, respectively. Combined, the four companies represent $125 million of annual revenue and 8,400 route miles of fiber.

Led by industry veterans Dan Caruso and John Scarano, both formerly with ICG Communications and Level 3 Communications, Zayo Bandwidth has secured access to $225 million from leading venture capital firms, including Columbia Capital, M/C Venture Partners, Oak Investment Partners, Battery Ventures and Centennial Ventures.

According to the Telecommunications Industry Association, demand for broadband has driven the highest telecom industry growth since 2000. Overall U.S. telecom industry revenues grew 9.3 percent in 2006, while the worldwide market grew a robust 11.2 percent.

Zayo focuses on private line from DS1 up to OC-192; Ethernet running from 10 Mbps up to 1 Gbps; dedicated Internet access at T1 and above; wavelength services ranging from 2.5 Gbps to 10 Gbps and collocation space.

Global revenue growth for metro access services has grown at about 124 percent annually since 2001, says Cisco Systems.