Vonage, AT&T Settle VoIP Patent Dispute

Vonage and at&t have finalized the settlement of a dispute between the companies. No details were released. But $39 million had been mentioned earlier.

IP Multicasting Coming?

Not being a "techie," I first became aware of "IP Multicasting" in 2000, when working with some folks developing a streaming media service. As somebody who spent some time in the cable TV business, it made a huge amount of sense. Basically, the idea is that for popular content, say a TV show that millions of people want to watch, one uses multicasting to launch a single stream that all those viewers can watch, rather than millions of discrete streams. Those of you who are network engineers will appreciate the elegance of the way this conserves bandwidth, in the same way that satellites deliver a single stream that millions of viewers can watch. That's the beauty of all multicasting: highly efficient sharing of downstream bandwidth.

Carriers proved resistance to enabling multicasting, however, for all sorts of other reasons, not the least of which was the fear that control over available bandwidth would be lost. But technology journalist Mark Stephens (Robert X. Cringely) argues multicasting is the future of television. Well, at least the future for some sorts of television: the highly-viewed, synchronous sort.

Multicast was built into the structure of the Internet from the very beginning but was generally not turned on because network administrators view it as a resource hog (local storage and resources, not bandwidth, per se).

Cisco long has been a huge supporter of multicast because it requires ever bigger and more powerful routers. That might be true, but multicasting still makes eminent sense as a way to distribute highly-popular video. Sure, there are other sorts of video that have to be unicast because demand is low. But multicasting is quite efficient of bandwidth for highly-popular streams.

Stephens uses a simple example. Say a user wants to see Seinfeld episode 60, and is entitled to do so. That event gets assigned a multicast address.
When the show is made available on a server anywhere on a part of the net that supports multicast, the user receives it. All the routers between here and there look for multicast subscriptions and enable them and the episode is is cached locally.

In order to lower their bandwidth bills, ISPs are trying to take greater control of the way we, their customers, use our "unlimited" bandwidth, says Stephens. But IP multicast offers another tool to do so, and is less bothersome.

Both Comcast and Verizon are rapidly rolling out IP multicast, Stephens notes. The reason is that IP multicast remains a highly-efficient to deliver popular programming, and means most of the linear cable channels. ESPN demands as part of its contracts that much of their programming on MPEG-2-equipped cable systems must delivered at 5 Mbps to 8 Mbps, compared to the 2 Mbps used for most other channels.

Contracts are similiar for premium cable services such as HBO or Showtime.

Internal audience studies at Comcast have shown that 90 percent of the customer base watches 10 percent of the available channels.The problem is that each of use might have a different seven favorites. Also, even if few people actually are watching, cable companies can't turn them off because programming contracts with the studios require carriage.

Multicast solves this problem because it allocates no bandwidth to channels that aren't being watched. It's an interesting business issue: the signals are "carried" but maybe not "broadcast" to consumers who aren't actually "tuned" to the channel.

IP Multicast is an alternative to P2P, in other words.

Has Apple Sold 5 Million iPhones?

Cleve Nettles at Mac9to5 thinks so. Nettles expects Apple to say so in January, at Macworld. The issue is how those sales relate to the announced goal of selling 10 million iPhones. Some people recollect Steve Jobs, Apple CEO, promising sales of 10 million phones in calendar year 2008 alone. Others seem to think he meant 10 million by the end of 2008, in total.

Rivals at Nokia and Research in Motion probably aren't excessively worried either way, given the installed base of devices each of those firms has, and the number of new devices they ship every month. Of course, Apple has a distinct advantage. It gets recurring revenue from the sales of each of its phones.

RIM and Nokia do not. So one iPhone sale is worth a lot more revenue than the sale of a new BlackBerry or Nokia handset.

Cable Targets Small Business

The coming year is when we see just how formidable U.S. cable companies will be in the small business communications market. To be sure, many veterans of the business communications market don't think cable will much of a factor in the enterprise market. Maybe not. That's not where cable companies are going to focus, which is the small business customer.

Comcast Corp. apparently plans to spend $3 billion to sign up 20 percent of small companies in its territories by 2012. Time Warner Cable Inc. is also pursuing businesses with fewer than 1,000 employees. And Cox Enterprises has been signing up lots of business customers for years.

Phone companies dominate the $25 billion annual market, which can generate profit margins about 10 percent higher than services offered to consumers or enterprises.

On the other hand, large telcos don't generate nearly as much money from phone lines and calling as they used to. In fact, small business lines provide only about five percent of at&t's revenue these days.

Cable providers, with less than five percent of the small business market, may seize one-third by 2012, saus Sanjeev Aggarwal, AMI-Partners VP.

So two things are going to happen. In some cases telcos will cut their own prices to match the discounts cablers are expected to offer. They'll keep share but sacrifice margins. Or, telcos can simply accept the loss of some share to maintain margins for a while longer.

Anticipating the onslaught, Verizon and at&t seem to be prepared to cut prices and bundle services to keep small-business customers who sign up on contracts.

Verizon offers 20 percent off Internet access for companies taking unlimited local and long-distance calling plans for one year. Customers buying voice services from at&t pay roughly 40 percent less with an annual Internet service contract.

About 54 percent of AT&T's small and mid-sized-business customers in areas where cable may compete have might already have signed new contracts, some observers suggest.

Blogging Tops New York Times, Sort of...

According to ReadWriteWeb, a five-year-old bet was settled recently. The bet, between New York Times executive Martin Nisenholtz and Web 2.0 Founding Father Dave Winer, was about blogs topping the New York Times in Google search results for the top five news stories of 2007.

Rogers Cadenhead has done the tabulation and found that Winer, and blogging, have indeed won. Sort of, ReadWriteWeb notes.

According to the Associated Press, the top 5 news stories of 2007 were Chinese exports, oil prices, Iraq war, Mortgage crisis and the Virginia Tech killings. Obviously this is a list for US news markets and not the entire world.

Today, a Google search for those terms brings up a blog higher than the New York TImes for Chinese exports (Blogging Stocks 19th vs. NYT 20th), Iraq War (a blog was 17th, NYT 20th) and Virginia Tech killings (Newsvine coverage of the AP's top stories of the year is 9th in Google vs. the Times at number 30.) So blogs topped the Times in 3 out of 5 top stories.

Wikipedia, however, ranks higher than both blogs and wikis according to Candenhead.

The three blogs that topped the Times in the Google results in question don't tell such a simple story. Two are stories from the AOL-owned Blogging Stocks and one is from social news site Newsvine, now owned by MSNBC.

Mobile Web is About the Big Brands

You'd be hard pressed to find a more significant year in the U.S. mobile business than the one that is passing. We witnessed the entry of a major consumer and computer electronics retailer--Apple--into the mobile business. We saw the emergence of an unprecedented revenue model for the iPhone.

We saw Google put together an open source community around Android that includes tier-one mobile service providers. We saw Google make at least an opening bid for actual spectrum, and cement development deals with Sprint and Clearwire for WiMAX handsets.

We saw the Federal Communications Commission mandate an "open networks, open devices" regime for the 700-MHz C block spectrum, the best quality mobile spectrum yet to be made available, because of its wall-penetrating abilities signals in the 700-MHz range possess.

We saw Verizon Wireless declare its support for "open" networks as well. Taken together, all the developments signal the emergence of the mobile Web. And that is going to create new space for contestants, including the most-popular Web brands.

That is not to say networks are unimportant. It is to say that now handsets and brands become much more important in the wireless business. That's a huge change.

Word of Mouth, Internet Key for Breaking News

Even though television plays a key role in alerting and updating people about big news stories, the initial awareness often comes by word of mouth or the Internet.

After the April 16 Virginia Tech massacre, Frank N. Magid Associates polled Millennials; Gen Xers; and Baby Boomers about how they first got the news.

Television coverage was the primary source to which all three groups turned for information on the shooting spree, but nearly a quarter (23 percent) of the adult Millennials first learned about the story on the Internet, compared with 19 percent of Gen Xers and 16 percent of Baby Boomers.

About 29 percent of Millenials heard about the Virginia Tech story by word of mouth, which includes text messaging.

In fact, in all three target demos, word of mouth was the number one source of alerts to those who weren't at home.

On the other hand, 37 percent of Millennials first learned about the story from TV, as did 43 percent of Gen Xers and 50 percent of Boomers.

Who Will Sue Google for Incorrect Traffic?

Spain's top media company Prisa said Monday it had taken legal action against Nielsen for miscounting traffic to its ElPais.com Web site as well as readers of its newspaper.

Prisa said its Internet arm Pisacom and El Pais were suing Nielson "based on the damage caused by the unjustified downward revision in the number of unique visitors of ELPAIS.com during the current year."

"The lawsuit argues that due to the serious negligence on the part of Nielson in its measurement of audience figures for ELPAIS.COM, El Pais and Prisa suffered serious damages due to lost advertising this year."

Data from marketing firms like Nielsen are important in determining the amount websites charge for advertising, with sites with high viewing figures being able to charge higher fees to sponsors. Networks sometimes have such disputes with the firms doing the counting.

One has to wonder when somebody will sue Google for mishandling a search ranking.

Is Google the New Microsoft?

Is Google the new Microsoft? Some people think it is on the way; others say there is no chance of such an enduring dominance. For regulators, the question is thornier. Every competitive market sooner or later turns less competitive, for very simple reasons: users flock to great products and stop using or buying the less-good products. Over time, that naturally creates market dominance, and that in turn ultimately draws in regulators to prevent excessive market control.

But regulators have to define what markets are in the first place, define the relevant competitors, then quantify the impact and propose remedies. Let's assume the relevant market in this case is "search." Ignore for the moment the fact that neither Google nor any of the other contestants ultimately will operate in such a narrowly-defined segment as "search."

Sometimes, regulators, users and markets get the "dominance" thing wrong. Some of us can remember very-serious discussions about how to "control" the browser market, as that was deemed essential to "control" of Internet experiences. As it turns out, the browser was not central to "control." Then Microsoft proposed an Internet identification system called "Passport." Regulators were concerned that Microsoft could become the "toll keeper" to the Internet if the identity scheme were massively adopted.

For starters, it didn't get such adoption. In broader terms, the Internet itself grew so fast that it is questionable whether any single identity system could be said to "dominate" the Internet.There was competition after all.

All that said, regulators have ruled that Microsoft has a monopoly in desktop operating systems, that Microsoft has abused its monopoly position and that consumers therefore were harmed, though not necessarily in the opearating system market but in "ancillary" markets that might have developed more competitively.

So the issue is whether Google is becoming, in search at least, the equivalent of Microsoft in the operating system area. Curiously, Google will be charged simultaneously with being a "monopolist" over information and at the same time essentially a leech as it "creates no new information of its own." Google will be called an "information gatekeeper" even as it continually tries to devise better ways for users to find the very information it is supposed to be "gatekeeping."

The issue with that line of thinking is that Google doesn't "own" or "control" the information. What it "controls" is a user preference for its algorithms and search results. If Google interferes with the value of search results, users will go elsewhere. There arguably are more issues about paid local search. But the analogy there is probably "phone books" rather than search. Phone books are in the paid local search business. What Google wants to do is provider a better paid local search experience.

There probably are better-grounded objections in the privacy area. Google will know lots about its users. But that's something other Web application providers, entertainment and access services provider also are racing to capture. Privacy is a legitimate issue. The conflict between search and advertising models built around search seem less legitimate. Think of Google as media. Media always have had business models based on ad support for content. Google's privacy issues in that regard will not be different in kind from the issues other media will face as well.

To be sure, every era of computing has been lead by new companies. So some company, some day, will be acknowledged to have become that new leader. At some broader level, one wonders whether any such company will have "control" of the Internet and the Web the way Microsoft once controlled desktops.

So far, most consumers say they haven't even heard of "online versions of desktop productivity suites," for example. That isn't to say things will always be that way; just that domination of adjacent markets on the Web will be quite difficult.

Business Broadband: Cable Modems Significant

Businesses use all sorts of access technology, if a recent Aethera Networks poll is to be believed. As you might guess, more than a quarter of business users have Time Division Multiplex access while more than a third use Ethernet of some sort.

You might not be surprised that more than a quarter use cable modems or Digital Subscriber Line, especially business-class DSL. What is interesting is that cable modem technology shows up in such surveys of the small business space. In fact, at least some business owners tell me they replaced T1 lines with cable modem service, and are happy they did.

What Disruption Looks Like: Newspapers

So what would disruption of the global telecom industry by IP communications look like? It's a hypothetical question, for a couple of reasons. The newspaper industry, for examnple, has been in a lingering decline in readership and ad revenue for decades. Nothing spectacular, year over year: just a steady, decades-long decline.

The telecom industry has seen something like that only in the twin areas of rates per minute charged for long distance and number of wired access lines in service. The long distance data is different from what one sees in the newspaper business in that volumes have skyrocketed even as prices have dropped. There is no such elasticity in the newspaper market.

The parallel between newspaper and telco fortunes is most similar in the area of access lines, where there might even be something like negative elasticity developing: "drop the price and people buy less." But the analogy doesn't fit very well precisely because, unlike the newspaper industry, the global telecom business has developed a huge replacement business for wirelines, namedly wireless services.

In fact, global telco revenue has been climbing steadily almost without a break for more than a century.

At the same time, telcos have discovered data services in addition to voice, broadband Internet access, entertainment video, ringtones, music and game downloads and other smallish businesses. The point isn't "smallishness." The seeds of tomorrow's business already are planted.

Newspapers have done nothing of the kind.

Last year, McClatchy, a U.S. newspaper chain, acquired Knight Ridder. To help pay down debt, McClatchy sold the Star-Tribune of Minneapolis in March for $530 million. Even with an added tax benefit of $160 million, the sale price amounted to only about half of what the company paid for the paper in 1998.

And then in November, the company took a $1.37 billion after-tax non-cash impairment charge, partly to reflect a further decline in the value of its newspapers.

The company's share price recently was $12.75, down more than 80% from the 2005 peak. The decline leaves McClatchy, the nation's third-largest newspaper publisher by daily circulation, with a market capitalization of barely $1 billion.

There is one sliver of hope: McClatchy has a position in the online classified advertising market, though newspapers collectively have lost their hoped-for lead to the likes of Craig's List.

McClatchy acquired a 14.4 percent share of CareerBuilder.com, as well as a 25.6 percent stake in Classified Ventures, the parent of Cars.com and Apartments.com.

The issue is how much success McClatchy and other major newspaper chains are going to have in the local online advertising business. Compared to the telecom industry, the newspaper industry is well behind the curve in cultivating new businesses, even if small.

One is tempted to say it is a shift of consumption to the Web that is responsible for the newspaper decline, but that's not entirely correct. Newspaper consumption began its decline long before the Web existed, so one has to blame television-based news. A shift of information consumption to the Web simply is accelerating a trend already in place.

Ubiquitous Online Communications

If you needed any reminding, email and instant messaging now is quite widespread in North America, Japan and Europe, as broadband penetration also has become a typical experience. Use of social networking sites still has a ways to go, except in Canada, where usage seems unusually high.

UK Leads in Digital TV

The U.K. is well ahead of most other European countries in its use of digital media, by some measures. By the start of 2007, more than 76 percent of U.K. TV households were receiving digital TV services, a rate higher than other Western European countries, Japan or the United States, for example.

According to Ofcom, U.K. adults also spend more time on social networking sites than other Europeans. Two in five U.K. adults regularly log on to these sites, clocking up an average of 23 visits and 5.3 hours each month.

In the U.K. market, 33 percent of users send picture messages via their mobiles and 16 percent use them to connect to the Internet. About 10 percent of U.K. adults use mobiles for e-mail.

Ofcom also believes that online advertising in the United Kingdom accounted for 14 percent of total advertising revenues in 2006, passing magazine advertising for the first time and registering more than total spending on outdoor, cinema and radio advertising combined.

Advertisers in the U.K. market also spend more money per consumer on Internet advertising than any other country, at £33. According to Ofcom, this is twice as much as France, Germany and Italy combined.

Online advertising revenues generated in the U.K. market in 2006 also beat the combined totals of Germany, France and Italy at £231 per head.

More Online Video Viewing, in All Age Segments

More viewers are turning to the Internet to supplement their traditional entertainment viewing habits, says Harris Interactive. In the past year, YouTube has widened its lead as a one-stop site for online video viewing.

Search and content providers, as well as online community sites, also have gained some ground on the video viewing front while TV network sites are holding their own as well.

While the incidence of online video viewership has increased overall in the past year (81 percent versus 74 percent), YouTube is by far enjoying the greatest increase.

Approximately two-thirds (65 percent) of U.S. online adults say they have watched a video at YouTube, compared to 42 percent at the same time last year, with the strongest gains among those over age 25.

Over 42 percent of YouTube viewers say they visit the site frequently, up from 33 percent last year. Just over two in five U.S. adults have watched videos on a TV network site (43 percent vs. 41 pecent).

While online video viewing declines with age for most sites measured, including YouTube, the incidence of online viewing on TV network and news sites remains consistent across age groups ranging from 18 to 64.

While interest in online video viewing is becoming more commonplace across older age groups, it is virtually ubiquitous among the under 30 set.

Yahoo, America Movil 143 Million Sub Mobile Search Deal

Yahoo and Latin America's top mobile phone company America Movil said on Thursday they have struck a deal to provide mobile Web services to 16 countries in Latin America and the Caribbean.

Yahoo's oneSearch service will be the default on America Movil's wireless carriers' portals. Yahoo plans to offer localized versions of oneSearch for each region, and said other Yahoo services may be added in coming months.

The partnership is the largest of the 21 search deals Yahoo has announced this year with mobile phone operators, the Sunnyvale, California company said.

Mexico City-based America Movil has 143 million wireless subscribers. Yahoo's broadest previous deal was with Spain's Telefonica SA, covering up to 100 million subscribers in several European and Latin American markets.