Four More VoIP Patent Infringement Suits

As many of us had feared, if Vonage is infringing patents, why aren't other independent VoIP providers doing so as well? Well, we now have a possible answer. Sprint Nextel Corp. is suing four competitive VoIP providers for the same patent infringements Vonage has been found to infringe. Sprint has sued NuVox Communications, Broadvox Holdings Paetec and Big River Telephone Co.

On the heels of Verizon's new lawsuit against Cox Enterprises for VoIP patent infringement, we might be seeing the materialization of the threat. Executives in the competitive VoIP community have privately worried about just such a turn of events for some time. It now looks as though those fears are justified.

Justin McLain, Endeavor Telecom CEO, partly in jest (but only partly) recently said at a panel at the Internet Telephony Expo that any independent, "over the top" VoIP provider had better have all the funding they need for 24 months, because if not, the companies will fold within that period. "You might want to look for another job," McLain said, again partly in jest, but only partly.

Competing against well-established providers who own their own access facilities and have huge customer bases, plus the ability to bundle entertainment video and broadband access or mobile services simply is going to be too tough, at least in the consumer market segment.

"No bring your own broadband provider really is successful," McLain said. In fact, a good part of any independent provider's success in the consumer market is driven to a large extent by customers who recently have immigrated to the United States and have high needs for international calling back to their home countries, McLain says.

Some other part of the market is composed of price-conscious callers, but the problem is that the average revenue per user a provider can generate from that segment is not enough to support a business, says Sanford McMurtree, RNK Communications VP.

Among the other possible changes in strategy are a shift to multi-level marketing on the Amway pattern, says Gary Coben, deltathree director. "For all the money spent marketing VoIP services, there aren't that many customers," Coben says. "That means people aren't comfortable buying."

It looks to be a tough year for independent VoIP providers who cannot reposition from a consumer focus to serve smaller business customers.

DoCoMo Gets Moving on Android

Not to count chickens before they hatch, but Japan's DoCoMo says it has begun a process leading to Android-powered devices being offered to customers, according to reporting by InfoWorld writer Martyn Williams. "We are starting discussions to offer handsets that will have the Android operating system," says Takeshi Natsuno, NTT DoCoMo managing director.

The talks include getting support for I-mode, DoCoMo's hit mobile Internet service, on the Android platform. Nearly 48 million of DoCoMo's 53 million customers subscribe to I-mode, so having it on Android will be key to the Google platform's success in Japan.

The availability of Android-powered phones on the DoCoMo network of course was expected. The point is that tangible steps now are being taken to make that a reality. Since nobody is going to be able to assess how important Android might be until people actually get to use devices running the new operating system, it's an important step.

UM to UC to CEBP

It isn't clear how much actually has changed except the semantics, but application providers finally are getting better at explaining the benefits to be gained from IP-based communications capabilities. Several years ago the buzzword was "unified messaging." Last year it was "unified communications." This year it is "communications-enabled business processes.

However meaningful the change, it seems fairly clear that the terrain now is shifting in a subtle way. In the old days "telephone service" "dial tone" or even "messaging" was a discrete point solution, not requiring understanding of what the end user actually was doing at the use site, Martin Suter, Objectword president says.

By definition, a supplier has to understand much more about what a user or organization actually has to accomplish at a site, and what software is used to support those tasks, to "communications enable" those processes.

Almost by definition, value added resellers and other technology support organizations have had to know more about what users wanted to accomplish, compared to retailers of "voice" services. And that probably will be telling over the next several years as the CEBP or "next acronym" business moves forward.

In the meantime, expect to hear lots more about how communications can affect everyday business or organizational processes, ranging from safety to inventory management and customer management. It isn't "old wine in new bottles," though some will rush to try that. It's a new role for communications: enabler of better software.

More Changes at Sprint Nextel

Sprint Nextel faces big problems. New CEO Dan Hesse is wasting no time "doing something." First Sprint announced significant headcount reductions (4,000) and closing of a number of retail operations (125 stores and 4,000 retail partners) Now Sprint says CFO Paul Saleh, Chief Marketing Officer Tim Kelly and Mark Angelino, president of sales and distribution, are leaving the company.

The executive changes involve officials most responsible for building the telecom company's brand and customer base, or more accurately, a declining customer base. The earlier set of moves will help Sprint reduce its overall and cost structure. The resignations allow Hesse to bring in a new team to change course. The issue now is what course Sprint Nextel will take.

IMS Realism

IP Multimedia Subsystem seems to be moving from concept to deployment, if recent observations by Manuel Vexler, IMS Forum VP, are any indication.

For starters, billing and operations support software firms are starting to be more active. That suggests their carrier customers finally are thinking about generating revenue from deploying IMS features (IMS is a platform allowing services providers to rapidly and cheaply create new services, test and then deploy them).

Carrier chief financial officers also seem to be asking tougher questions, which suggests carrier technologists are asking for authority to buy platforms. Many of the questions seem to be of the "you bought ATM 10 years ago, soft switches five years ago and now you want to buy IMS?"

IMS backers also now seem to be more aware that it really is infrastructure, and that the search for services will have to follow. "You don't have Google until you have the Internet," Vexler notes. Up to this point some have worried about identifying some "killer app" that would justify IMS deployment. Now there may be more awareness that until the platform is in place we won't really know what apps will resonate.

It probably still is a fair bet that wireless apps will be early candidates, as IMS originally was created by mobile carriers.

at&t 4Q: Guidance More Important Than Results

What's important about at&t's fourth quarter results is less the robust wireless and broadband services gains; or the matching financial performance. The fourth quarter included growth contributed by the purchase of BellSouth, so comparisons to the same quarter of 2006 do not mean much. More important is the guidance at&t offers about its 2008 performance, as that will reflect more directly--but not exclusively-- internal or organic growth, rather than growth by acquisition.

The company says it is confident about sustained double-digit growth in adjusted earnings per share in 2008. Some of that will be delivered by merger synergies or other cost cuts, as revenue will be growing at a mid-single-digit range in 2008. Growth in 2009 and subsequent years is expected at about that same rate: at mid-single-digits, possibly better.

Mid-teens wireless service revenue growth is expected in 2008, but again that partially is driven by the acquisition of Dobson Communications.

Enterprise revenue growth is expected to be in the mid-single-digit range by 2010. In-region consumer revenues will "be positive." In-region business services will grow in the mid-single-digit range as well.

So the company says it is "confident" it has the ability to deliver sustained double-digit growth in adjusted earnings per share and strong growth in free cash flow in 2008 and on an ongoing basis.

Some of that performance is driven by cost savings over the next few years because of the BellSouth merger. Company executives say they wrung about $2 billion in cost out of the company in 2007 and will save $5.9 billion in 2008 as well. Savings will grow to "more than $7.0 billion in 2010."

The forward-looking guidance arguably is more important than the fourth-quarter results themselves, which obviously were driven by acquisition-inflated numbers.

The company's net gain of 2.7 million wireless subscribers was the highest quarterly subscriber increase ever for any U.S. wireless provider, up 13.5 percent from 2.4 million net adds in the year-earlier fourth quarter.

But that performance includes the impact of the acquisition of Dobson Communications, which added 1.7 million subscribers.

That's not to denigrate at&t's performance. It was a good quarter. The point is that we all need to separate out organic rates of change from those wrought by the impact of acquisitions. Lots of companies in communications hide slow or lagging internal growth by buying other companies, with a predictable growth in revenue or customer base. That sometimes is a sign of weakness, not strength.

BroadSoft for Act!

Forget the hype about "voice mashups," the integration of communications capabilities with applications. The idea is about as simple as mating the BroadSoft call control and feature set with the Act! customer management application.

The VoIP AddOn developed by C3IP seamlessly integrates ACT! with BroadSoft’s BroadWorks platform Basically, BroadWorks users now can access those features directly from Act!

That means the ability to "click to dial" from the database, automatic logging of calls and screen pops on inbound calls, for example. So far, voice mashups largely have been developed as a way to improve the efficiency or effectiveness of current business processes.

That's just the way such innovations are introduced, because in a business context there has to be some measurable benefit on either cost or revenue fronts. The easiest way to demonstrate such effects is to "save money" or "save time" doing things that already must be done.

It will be a while before people start to redesign whole processes in light of ubiquitous communications embedded inside the applications themselves.

EarthCaller: Free U.S. Calling

EarthCaller (http://earthcaller.com), a new PC-to-phone service developed by Jaduka that allows its users to call any landline in the U.S. market for free, has been launched.

EarthCaller is said to run the calls over the Public Switched Telephone Network, with obvious call quality benefits. That's really a teaser for international calling, offered on a prepaid basis.

EarthCaller currently is PC-compatible at the moment.

Service Providers Don't Know Much About Customers

About 62 percent of global network service providers (telcos) say they do not today have enough information about how their customers behave, according to a new study commissioned by Apertio.

About 76 percent of respondents say customer profiling is important, closely followed by identity management. (64 percent of respondents say that is important. That sort of knowledge is important since 67 percent of respondents say "personalization of services" is a key revenue opportunity for IP and data services

The situation won't be too surprising to anybody who has been in the service provider industry long enough. The problem arguably is easier to deal with in the IP realm, but even there network service providers might not have access to as much granular data as IP application providers do.

Some observers continue to think that demographic information is helpful, and it is, up to a point. More significant, others think, is actual user behavior expressed in application use, and what users do inside those applications. Since telcos and cable companies don't have much useful information on their customer demographic profiles, ability to capture clickstreams, when legal, is much more useful.

That's another reason why the drive to capture Internet access account is so important. It isn't simply that broadband access is becoming the foundation service for a landline services provider, it is that the ability to personalize a user experience comes from knowledge about clickstreams, not calling patterns or street addresses.

Auction Starts Jan. 24

Bidding begins Jan. 24 for the 700-MHz spectrum that will, among other things, allow creation of a new broadband network with significant open access requirements for devices and applications. The auction also will allow some regional players to acquire new spectrum on a local basis, either to fill in a national footprint or to serve some new local need. The biggest unknown is whether Google will place an initial minimum bid only, and then watch other bidders increase their bids to win the auction, or make some move to try to win the spectrum.

Under FCC rules, the identities of daily bidders will be kept secret although bid amounts will be posted on the agency's Web site on a daily basis. So we'll know soon enough.

Most observers saay the requirement to support any technically compliant device on the C block national network, as well as any lawful applications, has contributed to a recent "embrace" by Verizon and at&t Wireless of open-network policies even on the existing mobile networks.

At least so far, many observers say Verizon Wireless is the most motivated bidder as it needs additional spectrum more than at&t, for example. Some think at&t will look to the regional allotments in other blocks as a way of filling in its footprint.

at&t launches VoIP in Detroit

At&t says it will soon launch VoIP for U-verse customers. The service has been launched in the Detroit market. The service is a replacement for traditional landline service and is priced accordingly.

A $40 monthly fee provides unlimited domestic calling while a $20 a month plan provides 1,000 long distance minutes. The service includes an online call manager portal, unified messaging, click to call from the TV, and simultaneous ring of up to four separate telephone numbers.

So the long march towards VoIP by dominant telcos begins. As just about everybody now recognizes, VoIP will in some cases represent an incremental change in user behavior, in some cases a replacement for traditional calling and in some cases a better way to do traditional calling with a better user experience.

Pretty soon we'll start to get some insight into the ways VoIP helps traditional telcos, in addition to representing a threat to established revenue streams. Without widespread fiber-to-customer networks and a complete shut-off of traditional time division multiplex infrastructure, it will be hard to say for certain.

But Verizon executives think they will save operating expense when they are able to shut off the TDM voice network and shift everything over to IP.

Employees Spend $693.50 Calling and Texting When Abroad

Global U.S. enterprise travelers spend about $693.50 on an 11-day trip, about 12 times more than the average monthly wireless bill, according to a new survey conduced by Harris Interactive and sponsore dby Brightroam.

“The study shows that 15 percent of employees make at least one international trip per year, which translates into costs of more than $950,000 annually per 10,000 employees," says Jeff Wilson, Brightroam general managers. Voice accounts for about 80 percent of the charges while data charges for Web browsing or testing represent 20 percent of total roaming charges.

About 62 percent of calls are made directly for business purposes while the balance of calls are personal, at 38 percent. Cell phones account for half of the devices being used to make those calls while 29 percent are originated from landlines.

The average number of calls is nine to 10 calls a day. About half of business users have smart phones rather than traditional wireless phones, the survey finds.

About four out of five companies surveyed say cell phones or smartphones are the primary communication tool used when employees travel internationally and 57 percent of all calls made on a trip are made on these devices. Users also are more likely to use a cell phone rather than a land line phone whether they are calling locally, to another country or calling back to the United States from abroad, the survey finds. If not using their cell phone, 60 percent will use a calling card and half will use the hotel phone.

Half of calls are placed back to the United States while 40 percent are local calls within the country traveled to.

Wireless Open Access Watch

With a change of presidential administration, and the high possibility that the White House will be occupied by a Democrat, all bets are off where it comes to the composition, leadership and therefore direction of Federal Communications Commission policy. But it is fair to say that a more heavily regulated approach is likely if Democrats win the White House. Incumbent tier one U.S. telcos won't like that. For other reasons, cable industry leaders will be happy as well. Competitive providers might well think their chances improve as well.

So it might be all that significant that Commissioner Michael Copps, a Democratic member of the FCC, seems to want to give incumbent wireless providers a bit of time to make good on their recent pledges to move towards more open networks, allowing any devices or applications compliant with their networks to be used.

That's an obvious counterweight to any thinking by an eventual owner of a new national broadband network that construction and activation of that similarly open network should be built as slowly as legally possible, essentially "warehousing" spectrum as long as possible. The motivation obviously is to extend the life of current revenue models as long as possible.

Pressure to keep those promises about openness on the Verizon and at&t Wireless networks will remain high if Democrats win the White House. In fact, pressure to open up wireless networks more than before is likely unstoppable if Republicans retain the White House as well. The 700-MHz auction rules about openness were pushed through by a Republican FCC chairman and the market seems to be shifting inevitably in the direction of open devices because of the market force exerted by the Apple iPhone and Google, in any case.

Dominant wireless carriers really would prefer not to deal with more openness. But it appears they no longer have a choice. That's going to be good for some new handset providers, application developers and end users, both consumer and business.

Bidden or unbidden, openness is coming.

Who Buys Sprint?

With its stock price now so low, it is inevitable that speculation will grow about the fate of Sprint Nextel as an independent company. There has always been some level of speculation about Comcast's possible interest in Sprint. Most likely there also will be talk of what Google might want to do with those assets. There are lots of plusses and minuses for either company.

Given the growing importance of product bundling, as well as wireless, it might make sense for Comcast to have its own wireless assets, it is argued. Comcast is a part owner of some wireless spectrum through SpectrumCo and also uses the "Pivot" offering developed by Sprint to offer a branded wireless service to cable customers.

Then there is the fourth-generation WiMAX asset Sprint could provide. But there are lots of arguments why Comcast can't, or shouldn't consider buying Sprint. Start with the WiMAX network, which obviously would operate outside Comcast's cable franchise territory. There is one big unstated "no no" among leading cable operators, and that is that one never competes with another cable operator. "I have mine, you have yours" has been the rule since the industry began in the late 1940s. Comcast would not likely want to be first to break the taboo.

Comcast shareholders also seem to be terrified that Comcast might embark on just such an expensive acquistion. The last time Comcast tried, attempting to buy Disney, the stock was pounded. Any Sprint acquisition would likely have the same effect this time, and Comcast's stock price already is beaten way down.

Comcast also says it continually monitors what is happening in the wireless industry, and one could make the observation that as crucial as wireless has been as a revenue growth engine, slowing has to occur as the market reaches complete saturation in just a few years. Nor is it clear that cable customers see wireless as a "natural" part of a bundle. That's arguably not the case for buyers of "phone service," who may well see a wireless-broadband-voice bundle as "natural" and "logical."

Google, on the other hand, might also be seen as a logical consolidator. It clearly wants mass in the wireless market, and control of Sprint's customer base would be helpful. The price tag is really low. The 4G network makes much more sense for Google than it does for Comcast, and the cost of the spectrum is already baked into Sprint's share price.

On the other hand, Google wants to work with all the major wireless carriers, and becoming a competitor doesn't help. Nor will Google want to mess with operation of three networks or Sprint's marketing challenges. Still, to the extent that ownership of a national broadband wireless network might be helpful, and if the eventual owner of the 700 MHz C block spectrum is a company like at&t or Verizon, who might drag their feet putting that spectrum into service, Google and other supporters of a mobile Web approach untethered from legacy considerations about voice might want a chance to move ahead with WiMAX using a new business model.

Perhaps Google could even work out a pre-planned buy of all of Sprint, and then immediately spin off the non-WiMAX assets, to avoid becoming a competitor to at&t and Verizon. Other scenarios obviously will make sense to people if Sprint's share price doesn't climb soon.

Easier BlackBerry Use

It's going to be easier to read and respond to text, attachments and image-formatted documents on Research in Motion BlackBerries sometime later this year. RIM says it will upgrade its software so users can edit documents directly from the device and to view messages in their original formatting. That sort of functionality is obvious on Windows Mobile devices, so RIM has to keep pace. Apple's growing presence and market share also might be an issue, as the "easy to use, the whole Web" philosophy has got to be changing user expectations about what they ought to be able to do, and how, on their smart phones.

In the third quarter of 2007, Apple captured 20 percent of all U.S. smart phone shipments, Gartner Inc. says. RIM got 39 percent.