Don't Worry about Blu-ray

There has been some speculation that the Sony victory in the high-definition digital video recorder war is somewhat "Pyhric", to the extent that content is moving to digital distribution, and away from physical media.

That might be premature,if a recent survey of U.K. consumers is any indication. The survey suggests Blu-ray DVRs will have the highest growth of any digital entertainment activity in 2008, according to Russell Hart, Chief Executive of Entertainment Media Research.

The survey asked about usage of 49 digital and entertainment activities. Around 24 percent of consumers surveyed reported they will start watching movies in the Blu-ray format in the next six months. "This is at least double the intention rate of any other entertainment activity," Hart says.

The other issue is that consumers are happy to watch on-demand programming as long as it is free. There's high interest in new movie releases (84 percent are interested and 48 percent say they are definitely interested.

Live music concerts are attractive to 72 percent of respondents. So is comedy, interesting to 79 percent of respondents.

When confronted with three options--subscription with unlimited content, PPV and free ad-supported models--the free model wins. About 70 percent of respondents would rather put up with the ads than pay for the content.

Still, 48 percent of respondents say they are "definitely interested" in new release movies and 53 percent are willing to pay to watch them.

Singapore Gets 10 Bidders for 100 Mbps Network

Singapore’s Infocomm Development Authority has pre-qualified ten bidders for a new optical access network that will be open to any retail providers who want to use it.

The proposed network would feature initial capacities of 100Mbps downstream and 50Mbps upstream, with the ability to upgrade to 1 Gbps.

Alcatel-Lucent Singapore, Axia NetMedia Corporation of Canada, BT Singapore, City
Telecom Hong Kong, NTT West, Nokia Siemens Networks Singapore, Singapore Computer Systems Limited, Singapore Telecommunications Limited, Singapore Power Telecommunications and StarHub are on the list.

Covad Dips Toe into Metro Wi-Fi

Covad Communications is trying a different approach to metro Wi-Fi services, targeting services at businesses rather than consumers to create a revenue base.

Covad will build a Wi-Fi test network in a square-mile business district in San Carlos, Calif., using an approach far more narrow than what a regional nonprofit and a consortium including Cisco Systems and IBM had once envisioned. Covad also will limit its downside by agreeing to operate the network for a period of three months.

An earlier proposal by the Silicon Valley Network and Silicon Valley Metro Connect didn't take off, and revenue was the chief culprit. Azulstar, the startup that was to build and operate the network, couldn't get funding for two test networks at about $500,000 each.

That was supposed to be the start of a project serving 1,500 square miles and about 40 cities.

Technology really isn't the issue. Covad wants to find out whether it can get enough small business users to anchor a larger or more permanent effort.

Covad’s wireless business unit already serves business customers in San Carlos, allowing Covad to overlay the Wi-Fi capability on top of its fixed wireless broadband service. Central to the test is discovery of whether a repeatable financial and operational model exists.

Following the completion of the test, Covad Wireless will explore expanding the mesh service to additional locations in the region.

Covad Wireless operates California’s largest fixed broadband wireless network serving businesses, and the company views the trial as a way to test a theory: that it can reach incremental new customers in the very-small and home office segments it so far has not focused on.

Up to this point, Covad Wireless has focused on business customers requiring a T1 or higher bandwidth. So the issue is whether a sustainable business case exists for users who may not need, or are not willing to pay for, nailed up T1 connections.

P2P Issue is Hairy

P2P users amount to only one percent of Comcast's users, but those users are consuming 50 percent of the company's bandwidth, according to George Ou, an editor at large at ZDNet and the former technical director at TechRepublic.

Some say the ultimate solution is "more bandwidth." The problem is, that doesn't really address P2P bandwidth consumption, which automatically will scale to devour the additional bandwidth as well, some point out.

The problem is figuring out whether or not P2P applications really do pose outsize network loads, and must therefore be managed to preserve quality of experience for the 99 percent of other users, or whether P2P constitutes a lawful application that shouldn't be subject to rate shaping.

It doesn't immediately appear clear that there is a single answer. Traffic shaping isn't blocking. And even outright blocking sometimes is socially desirable. Blocking of viruses and spam come to mind. But even voice networks are designed to block some traffic when peak loads occur. One has to re-dial. Traffic shaping is somewhat analogous to the means used to cope with voice congestion at peak hours.

And, unfortunately, "more bandwidth" isn't by itself a solution to P2P network loading, it wouldn't appear. At some point, market mechanisms will have to be applied. At some point, the business pricing model will be applied in the consumer space: you can use as much as you want; you just have to pay for the usage.

Access Bandwidth: Size Doesn't Matter As Much As You Think

AT&T has been doing some testing recently. It bought cable modem service and then tested peak throughput and average throughput.

As you might have guessed, there's a huge difference. But the point is not to show that Digital Subscriber Line access is any better. It is to emphasize the point that access is only part of what determines end user quality of experience.

Every element of the delivery chain has to be optimized or quality of experience will be bounded by the weakest link. In fact, the tests suggest that real-world performance is precisely what users encounter.

Peak advertised speeds are possible at 3 a.m. During the evening hours, when home usage peaks, average throughput routinely drops as low as 300 to 400 kbps.

And that's just the difference between peak and average bandwidth. IP-delivered communications and entertainment also is subject to degradation because of latency and jitter, port contention and any number of other issues. In fact, port contention might in some ways be a bigger problem for mobile providers than raw bandwidth.

Mobile Broadband is Inevitable: History Will Repeat

About 22 percent of U.S. consumers go online wirelessly outside the home, compared with 16 percent of U.S. online households a year ago, says Sally Cohen, Forrester Research analyst.

Almost half of consumers Forrester surveys say they would like to do so.

Cohen says the growing interest is due in part to familiarity with home Wi-Fi networks as well as public hot spots. About a quarter of of consumers use Wi-Fi at home, she says.

The issue now is how fast mobile operators, Clearwire and Sprint can move to capture additional demand in the form of handheld and PC card forms of mobile Web access.

Because one thing is certain: history tends to repeat itself in the communications business. And that story is that services and features once considered "luxuries" become necessities, and therefore mass market products or even commodities.

Once upon a time families would gather around a phone at Christmas and make a long distance call across the country or world, at some point being exhorted to "keep it short." Once upon a time homes shared a party line.

The point is that broadband use has expanded pretty much as wired voice did. It was place based. At some point a small number of people started to use mobile voice. Now virtually everybody does.

The same thing is going to happen with broadband. People used to share bandwidth at work. Then they got service at home. The next wave will be mobile broadband used by people, just as mobile voice now is.

U.S. industrialists and entrepreneurs have been turning luxuries into everyday experiences and necessities has been going on since the 1870s, depictions of many as robber barons notwithstanding. As with many other innovations, the key is to systematize and standardize and wring cost out of the production of former luxuries so they can be provided as mass market necessities.

Mobile broadband isn't going to be any different. History does repeat.

Online Video Viewed by Half of U.S. Internet Users

eMarketer predicts that over half of the U.S. population will have watched video on the Web before the year is out.

By next year, more than 80 percent of all Internet users will have done so.

New Peak Load Issues for Mobile

There's only one problem worse than dealing with peak load, and that is average load that starts to look like peak load. In the voice world, peak load has been the bigger issue, not average load.
Data networks have peak load issues as well, but those issues are mostly about the number of bits to pushed through the pipe, not generally use of circuits or network elements or ports.

Wireless is starting to have other problems, though, as data usage grows. And you instinctively would think bandwidth has to be the issue. It isn't. But take the easy stuff first.

Just as there are two “rush hours” on the road (6 a.m. to 9 a.m. and 5 p.m. to 7 p.m.), enterprises typically experience two “rush hours” on their phone systems, says Art Yonemoto, owner of his own telecom expense auditing firm. For most enterprises those PBX rush hours happen at mid morning (10 a.m.) and early afternoon (2 p.m.). Hospitals, though, tend to have one of their busiest hours at 9 a.m., especially on Mondays, as their patients call to schedule appointments.

For the most part, though, enterprises handle their phone system peak loads quite well. Mobile networks cannot say the same. as they generally are designed to handle about 80 to 90 percent of calls on a non-blocking basis. At peak hours, blocking occurs.

Some calls simply go straight to your voice mail. The other obvious issue is a dropped call, which happens because you are moving from one area to the next, and the next cell tower has no free radio assets to hand off the call.

But there are other problems emerging, and that is amount of data traffic, and the different characteristics data applications impose on the network. Bandwidth alone is not the entire problem, any more than bandwidth is really the problem for voice traffic.

The issue is that radio resources are tied up even when not that much bandwidth is flowing over the radio network. An obvious example is a mobile virtual private network client, which essentially nails up a connection even when actual data is not flowing. The issue then is the strain on radio resources, not bandwidth as such. Other applications that don't actually consume much bandwidth might have lots of signaling and pinging. Some social networking applications and even mobile email devices can create that sort of stress.

So for wireless networks, it now appears application interactivity--not just bandwidth--is becoming a gating issue. It is an issue bandwidth alone does not fix. The additional new issue is occupation of radio resources.

Enterprise iPhone? Just talk to RIM Servers

Though there are other issues, Apple would get far down the road as an enterprise device if it did just one thing: ensure compatibility with Blackberry servers.

Though Microsoft Mobile is growing its share, BlackBerry is the device to beat. Apple will keep getting heat for its lack of security as well.

But the main thing is the ability of a user to get company email on an iPhone, not just on a Blackberry.

Sprint Unlimited Plan: Unlimited Everything

Sprint Nextel now has responded with a new “Simply Everything” plan offering not just talk, not just unlimited texting, but unlimited Web surfing, email access, GPS navigation services, DirectConnect, GroupConnect, Sprint TV and Sprint music.

The $99.99 Simply Everything plan is available to customers on both Sprint's CDMA and iDEN networks, and goes way beyond T-Mobile's comparable plan that includes unlimited voice and texting.

Sprint has thrown in the kitchen sink.

Existing Sprint customers can switch to the Simply Everything plan without extending their current contract either by contacting Sprint customer service or by stopping by any participating Sprint retail location.

New line activations require a two-year agreement.

For families, Simply Everything includes an incremental $5 discount for each incremental line, up to five lines on the same bill. For example, two lines would amount to $194.98 ($99.99 + $94.99); a third line would cost an additional $89.99. This is in sharp contrast to the multi-line unlimited rates offered by some competitors. The Sprint plan offers significant savings the more lines a customer adds.

Observers were wondering whether Sprint would go nuclear. This move is more "nuclear" that offering an unlimited voice plan for lower prices than the now-industry-standard $100 a month. Sure, Sprint Nextel would have frightened a lot of people if it had gone with an $60, or even an $80 unlimited voice plan.

What it has done, at least for users who really like several of the enhanced features, is create a package so compelling lots of people are going to upgrade lower-priced plans to get them. Don't worry about some high-end voice plans being downgraded.

The big issue here is a potentially significant upgrade of lots of other plans, to get the huge palatte of upgraded features. It is the sort of move one would expect from Dan Hesse.

For users who don't mind the lack of subscriber information modules (SIMs), the plan offers more value than competing plans offered by T-Mobile, which bundles unlimited voice and text messaging. Both at&t Wireless and Verizon Wireless plans provide unlimited voice for $100 a month.

For users who simply want unlimited voice, Sprint will offer a $90 voice-only plan. So far, the feared price war has not broken out.

As for why unlimited plans might not damage wireless carrier revenue, take a look at what Sprint has been finding with its Boost mobile prepaid business. After launching unlimited plans, traditional prepaid growth slowed, but unlimited plans more than made up for the slower growth for the traditional plans.

Luster Off MVNO in U.S. Market

Ed Mueller, Qwest Communications CEO, now can be counted among executives who believe their mobile virtual network operator ventures have been a bust.

After operating an MVNO using the underlying Sprint network, Qwest now has concluded it simply hasn't worked well enough to keep doing. "We have a hole in wireless and we don't have the assets and we aren't going to invest," he says.

In Qwest's case, at least, an MVNO isn't financially attractive, but also is weak in the market place," Mueller says. One of the issues is access to the latest, greatest phones. "We don't have scale to get the new phones," he says.

"The financials and economics are really difficult," he says. "Only six percent of our customers bought, where the national average is 200 percent."

"Even if we had access to all the new phones, it would still have been difficult," Mueller says. And he also acknowledges a historic reality resellers of basic communications products of all sorts have faced: low margins. "We won't get rich on this, even if we have wireless that works," he says.

So why bother? "As part of a bundle, though, wireless gives us great stickiness," he says. He likes the resale agreement with DirecTV just fine, for many of the same reasons. "We have nine percent penetration of video," Mueller says.

That's about the same penetration as at&t or Verizon get in some of their markets in the first year. But at&t as well as Verizon expect, and get, higher penetration than that after as few as six to nine months. By the end of a year of full marketing, penetration can be in the 13 percent range.

The real money in wireless over a three-year time frame is data, not voice, Mueller says. "Voice will be a ride-along on the data," he adds.

The other thing is Qwest's interest in fixed mobile convergence, especially ways to use mobile handsets inside the home. "FMC is about strong signal inside the home," he says. "So we want a partner with a data network."

Nor does Qwest want to wait for handsets. "We want to be equally advantaged on the product set immediately, not in six months," Mueller says. "Two of the four wireless networks do not have wireline assets and should be a good fit for us. "

In other words, Qwest doesn't want an MVNO agreement, even if it is reselling another provider's network services.

Fiber to Home: Density Matters

When evaluating prospects for fiber-to-home deployments, density really does matter. As recent data from the Fiber to the Home Council shows, countries with higher rates of fiber access tend to be highly dense, where a "fiber to the basement" approach is feasible. Japan is the exception. Generally speaking, fiber to the home penetration is high in countries with high density, though other factors, such as government financial support and regulatory framework, also play an important role.

50 Mbps from Comcast by 2010?

Comcast will offer customers 50 megabit-per-second service, upstream and downstream, available to half its subscribers and homes passed, by 2010, DSLPrime's Dave Burstein argues. What remains unclear is how many customers Comcast or any other cable company will be able to support at those rates, in any single neighborhood of 500 homes or so, unless a very large amount of analog video bandwidth is freed up by moving them to the digital service tiers.

Apple Inches Closer to Enterprise iPhone

Apple is convening a meeting to unveil its software development kit on March 6. For critics who have panned Apple for producing a closed device not suitable for enterprise users, Apple now will begin to prove at least some of those critics wrong. Salesforce.com, for example, already has moved to position its services for iPhone users. In fact, its own sales force demanded that this be done. And small business users, who don't have all the enterprise software issues to face, already are using the iPhone as their preferred device.

Why Netflix is Not "Toast"

On-demand video might affect the DVD rental business someday, but apparently not this year. Netflix just revised first quarter and full-year 2008 guidance. For the year, Netflix expects to have 8.9 million to 9.5 million subscribers, up from the prior forecast of 8.4 million to 8.9 million subs. It expects revenue of $1.345 billion to $1.385 billion, up from $1.3 billion to $1.35 billion. It expects unchanged GAAP net income of $75 million to $83 million. But GAAP earning per share will be higher. The new forecast calls for $1.18 to $1.30 per diluted share, up from $1.12 to $1.24 per diluted share.

On-demand viewing is convenient, to be sure. But there are countervailing values as well. On-demand purchases introduce an element of uncertainty into monthly budgeting of expenses. On-demand rentals can be cash transactions, with no later unexpected financial impact. It's an underestimated value for physical rentals rather than on-demand purchases.

Flat rate is important for many consumers. So is the "unlimited" number of titles one can buy on some Netflix plans. That adds more value. Think of how parents view texting charges. Why do so many people buy relatively large plans? Because they don't want overage charges.

On-demand viewing leads to "overage" charges. Flat-rate or "cash on demand" services eliminate that uncertainty.