Add Jangl to the Dead Company List

Jangl, the Internet phone company is being closed down, after efforts to find a buyer failed. Most of the team are joining Jajah.

What Cable, Google Get from Clearwire, Sprint

Google and several cable operators got some goodies in addition to equity in the new Clearwire national WiMAX network. And the advantages do not come from WiMAX, but from the Sprint 3G network.

Briefly, Google apps (YouTube, Google Maps, Gmail) get premiere placement on some Sprint devices, while Google Web, local search and location information become the default options for Sprint data customers.

The cable operators become resellers of Sprint 3G services, including voice. So now the three operators will be able to construct quadruple play services. That is the more important development, as interesting as the Clearwire resale agreement is. In the near term, cable operators need a viable mobile voice option more than they need a future mobile broadband option.

To be sure, Google and the new cable investors will become resellers of the WiMAX network as well.

Google will partner with the new Clearwire in the development of Internet services, advertising services and applications for mobile WiMAX devices. In addition, Google will be the search provider and a preferred provider of other applications for the new Clearwire’s retail product. As an open network, anybody can "partner" with Clearwire to develop applications or supply devices. But Google is a "preferred" and "default" provider, which historically has real value in the mobile arena.

The new Clearwire will support Google’s Android operating system software in its future voice and data devices that it provides to its retail customers.

But Sprint and Google have also entered into an agreement whereby Google will become the default provider of web and local search services, both of which will be enabled with location information, for Sprint, as well.

Sprint will also preload several Google services, including Google Maps for mobile, Gmail and YouTube, on select mobile phones and provide easier access to other Google services.

Comcast, Time Warner Cable, and Bright House Networks will be resellers of Clearwire’s mobile WiMAX service. More important, over the near term, all three cable operators now will become wholesale retailers of all Sprint 3G services, including voice services.

Clearwire is getting the attention. But Sprint 3G will be where the action is.

Qwest 12 Mbps, 20 Mbps is Resonating

Of the 90,000 the net additions Qwest had for high-speed access in the most recent quarter, 13,000 (14 percent) of them were related to the new fiber-to-the-node build-out. You might think, "so what?"

Those customers were gotten in just 30 days, in the last month of the quarter, so it appears there is strong demand for a higher-speed (12 Mbps or 20 Mbps) product.

Qwest also appears to be readying an "over the top" video on demand service in conjunction with DirecTV, which already supplies Qwest linear entertainment video services. That would make perfect sense for both companies. DirecTV needs more bandwidth on the ground to serve up an effective VOD service, and Qwest has the bandwidth.

Qwest also has been an effective retail partner for DirecTV services, so the any new offer would make sense to consumers who already buy DirecTV from Qwest.

"We are hopeful to take advantage of video on demand with our DirecTV," Mueller says. Qwest is "preparing for the natural synergies between their video on demand product to launch this year and our investment in broadband capabilities."

And high-speed access prices will rise. "We will do price increases, that is our plan," says CEO Ed Mueller. The logical path is to create higher-speed tiers and then charge more for them. People understand that sort of packaging.

Qwest Report "Steady" Results

Under the current challenging circumstances, "typical" or "normal" performance is a good thing. And Qwest Communications International reported "steady operating results" for the first quarter of 2008. Adjusted EBITDA totaled $1.14 billion with adjusted EBITDA margins of 33.6 percent as data, Internet and video revenue grew by nine percent compared to the first quarter of 2007.

Broadband subscriptions were up 17 percent year-over-year while video subscribers were up 42 percent, year over year. Total data, Internet and video services revenue now represents nearly 40 percent of operating revenue.

The business market segment reported revenue of $995 million in the first quarter, up 3.1 percent year over year as data and Internet revenue grew 6.9 percent. Data and Internet revenue grew 29 percent over the same period a year ago.

Mass markets revenue was $1.48 billion in the quarter, a 0.7 percent decline compared to the prior year. Data, Internet and video revenue growth of 20.7 percent was offset by declines in both voice and wireless services.

Consumer average revenue per unit increased 7.8 percent to $55 from $51 a year ago. Qwest Broadband subscribers increased 90,000 in the quarter to reach 2.7 million, up 17.2 percent from a year ago.

Wholesale Markets reported revenue of $841 million in the quarter, down seven percent year over year largely due to long-distance revenue pricing and supplier consolidation. Data and Internet revenue was up three percent year over year.

Vodafone U.K. Lowers Data Barriers

Vodafone UK has created a new plan that aims to remove the barrier to use of mobile email and mobile Web access, allowing 500 megabytes of data use each month on plans costing GBP 25 or more.

Postpaid customers who take a GBP 40 or higher package also will be offered a choice of unlimited text messages, unlimited landline calls or unlimited Vodafone to Vodafone calls, as well.
This move essentially sweeps away the last remaining cost barriers to entry for both mobile email and the mobile Internet, helping Vodafone UK to make mobile data more applicable to the mass market, says Emma Mohr-McClune, Current Analysis principal analyst.

The new plan will encourage more users to experiment with the mobile Internet. For customers who do not want the mobile data feature, Vodafone allows a monthly discount of GBP 5.

Standalone mobile data pricing currently runs about GBP 7.50 a month, Mohr-McClune says. "This is the first time" that a U.K. operator has offered bundled mobile Web access and email across its entire pay monthly portfolio, starting at GBP 25 per month.

French Broadband at 94% of Internet Users

One of the enduring claims observers make about the state of U.S. broadband is how woeful it is compared to other nations around the world. Consider France, which deregulated its telecommunications market in 2004, leading to heavy competition. In fact, broadband now is nearly synonymous with Internet use.

In March 2008, 93.5 percent of at-home Internet users in France enjoyed a broadband connection to the Internet, down slightly from the 94.2 percent who did so in the previous year. That's significant. The primary reason consumers buy broadband access is to use the Internet. Someday that will change, but right now broadband really is a way PCs can connect to the Internet.

So 94 percent of all home users of the Internet use broadband to do so. That's serious penetration. So note that about 52.4 percent of French homes had a broadband connection in 2007. That's a bit higher than U.S. broadband penetration, which is just about at 50 percent.

The point is that France has been highly successful at getting broadband adopted by Internet users. Fully 94 percent of all Internet users have broadband.

But note that household penetration is about 52 percent. There seem to be more dial-up users in the U.S. market than in France. But the point is worth noting: household penetration might not be the best way to measure penetration.

A household that doesn't use the Internet is hardly a candidate for broadband aimed at Internet users. The more relevant measure is how far broadband has penetrated homes where the Internet actually is used.

Apple iPhone Sales to Blow Through Roof?

As reported by Silicon Alley Insider, RBC analyst Mark Abramsky thinks Apple will sell 14 million phones this year, up 40 percent from his previous prediction of 10 million and more than eight times the 1.7 million phones the company sold in the first three months of the year. He also thinks Apple will sell 24 million iPhones in 2009.

The 3G model will help. So will new carrier deals in Europe and Asia, broader consumer interest thanks to Apple's forthcoming apps platform, and broader corporate interest.

He also thinks Apple might drop or reduce exclusivity requirements in some markets. This would let people buy iPhones without being forced to use Apple's hand-picked carrier partner.

He also thinks Apple will allow carriers to subsidize pricing, and also will allow sales of unlocked phones.

T-Mobile FINALLY Launches 3G

T-Mobile USA has taken the first commercial step in the roll-out of its third-generation (3G) wireless network, launching its UMTS/HSDPA network in New York City. Also, contrary to some early reports suggesting only voice service might be available immediately, the network will be data-enabled from the start.

T-Mobile plans to continue the rollout of its 3G network across major metropolitan markets through the year. By year's end, T-Mobile expects its high-speed data network will be available in those cities where a majority of its subscribers currently use data services.

Yay!

Femtocells: Technology or Business?

ABI Research projects that 100,000 femtocell units wll ship in 2008. Volume deployments won't begin until 2010, when $100 price points will be possible, in volume. The other issue is whether femtocells are embedded in other widely-used consumer gear, such as Wi-Fi routers.

The really critical issue will be whether initial carrier deployments are supported by robust business models and service plans that extend beyond pure fixed-mobile substitution goals,” says ABI Research vice president and research director Stuart Carlaw.

The issue there is that some innovations are very useful and widely deployed, but don't necessarily create a business model. Wi-Fi is the best example of that. So one has to wonder whether femtocells will wind up being a very-useful technology--reducing service provider investment in macrocells, for example--or whether a new revenue stream of some sort can be created.

The most obvious example would be enhanced ability fo wireless providers to compete effectively in the wireline substitution business, where the new revenue stream is cannibalization of fixed line subscriptions. The other obvious issue is ability to sell voice-optimized fixed line broadband subscriptions.

Enterprise Mashups Coming

Mashup tools have so far been used mostly for simple enterprise applications like adding geographical information--typically Google Maps--to corporate data. But that's changing. IBM, for example, has introduced two offerings for building mashups that pull together data from multiple data bases and applications.

One of the tools is aimed at non-technical users while the other development is a mashup environment. WebSphere sMash supports dynamic scripting languages and widget-development tools. IBM Mashup Center allows business users to drag and drop components from local, enterprise and Web sources to create new applications.

JackBe Corp. and Kapow Technologies also have added support for Excel to existing mashup tools.

JackBe uses a plug-in is connected to a spreadsheet so that whenever data is changed, the Presto server updates the data, allowing the most-current version to be consumed by other applications.

Kapow sells an on-demand enterprise mashup service that allows companies to incorporate data from various Web sites and services directly into Excel spreadsheets.

Same DRM for Windows, Adobe, Silverlight: Widevine

Widevine Technologies has announced immediate availability of Widevine Cypher to protect content delivered to Microsoft Windows Media Player versions 9, 10, 11 and Silverlight versions 1 and 2.

The new capability means content now can be securely delivered in Windows Media, Silverlight and Adobe Flash environments using a single content protection solution. The innovation is an example of lots of the important "wrap around" features that will be necessary if digital content businesses are to be built with any scale.

Internet Use Now Totally Mainstream

More than a third of U.S. consumers born before 1946 (seniors) use the Internet, according to Pew Internet and American Life Project. Pew also said that more than half of the younger members of this group (ages 62 to 71) are online.

Older users also use the Internet for the same reasons younger users do: to stay in touch with other people. Nearly six out of 10 U.S. Internet users 62 and older use search engines. Among other activities, almost one quarter of the group banks or pays bills online and one fifth are video gamers.

Multichannel video, PCs, game consoles, mobile voice and use of the Internet now are totally mainstream.

Use of digital video recorders is nearing that point, as are text messaging and MP3 players.

But there's still a ways to go with other innovations such as VoIP and mobile broadband. Unified communications is no where close to being mainstream. It typically takes three to seven years for a successful mass market digital innovation to reach 50 percent penetration of households.

The big exception is high definition television, which will reach--and surpass--that status virtually overnight as a result of government mandate in February 2009.

As for the thousands of other bleeding-edge applications, most will fail to gain widespread mass market adoption. That's always the case for digital consumer electronics.

67% Growth in VoIP Server Licenses

Whatever instability may be coming in some parts of the U.S. VoIP market, global growth--especially in Europe--is robust. The most recent analysis by iLocus shows 67 percent annual growth in VoIP server licenses sold globally, with traffic up 35 percent.

For the second consecutive year, Europe outpaced rest of the world in VoIP penetration. All major European operators--whether wireline or wireless--have a VoIP offering in place and have announced that they will be deploying IMS platforms.

The difference between deployments in the U.S. and European markets is the attitude and actions of incumbents. In the U.S. market, incumbents have not yet decided to make a major effort to sell VoIP; in Europe that already has happened. Because of carrier reluctance, challengers, especially the cable companies, have made significant market share gains.

What happened in Europe will happen in the U.S. market, however. At some point, AT&T and Verizon will decide to push VoIP aggressively, and the dynamics of the market will shift as much as they have in the fdial-up and broadband access markets, which initially were dominated by independent providers.

But fixed line replacement isn't the only place to watch for change. VoIP as a mobility and Web or enterprise application is early in its development right now. Though it might seem inconceivable, revenues from those sorts of applications will one day be significant. If that is not apparent it is simply because applications and business models in the mobility and Web and software spaces are seminal. Even Skype, as popular as it is, only represents two percent or so of global long-distance traffic, for example. So it will take some time before anybody notices.

Still, note that nearly 25 percent of mobile virtual network operators--wireless providers that do not own their own networks--already offering or testing mobile VoIP. By 2010 more than two thirds say they will have a mobile VoIP offering in place.

Scottsdale Muni Wi-Fi Shuts Down

Scottsdale's muni Wi-Fi network, operated by Wildfire Broadband, has gone out of business, according to the Scottsdale, Arizona-based East Valley Tribune. As has been the case for nearly all other municipal Wi-Fi efforts, the networks have failed to attract enough customers.

It is reason at this point to theorize that mobile broadband--both data cards for PCs and smart phones--arecannibalizing some of the potential demand. Some of the remainder of demand is satisfied by free Wi-Fi at coffee shops, hotels and other locations.

Wi-Fi is a great technology. It just might not be much of a service provider business.

BroadSoft Targets Mobility, Web

BroadSoft has announced compliance with the 3GPP Multimedia Telephony standard and launched BroadSoft Xtended, an initiative to open its functionality to makers of Web-based and productivity applications. At the same time, BroadSoft has created at developer program

The trio of moves might be viewed in several ways. Most significantly they reflect BroadSoft's belief that the next wave of growth will come from mobile applications and integration of core communications capabilities with all manner of Web and enterprise applications.

At some level the moves also signal that the significance of hosted communications is not limited to replacing legacy Centrex or phone systems, but is part of a larger move towards more sophisticated communications capabilities for many, if not most, Web and enterprise applications.

It's a tough market to quantify, but looking at the size of unified communications services is a part of the whole picture. Ultimately, some communications service revenue will shift from existing categories to "Web enabled" categories.

Beyond that, some of the value will be intangible, such as "stickiness" leading to lower churn or higher ad revenues. Over the near term, unified communications "revenue" will be hard enough to quantify. Web-based rich communications will be even tougher.

"The full-blown developers program and an online marketplace will enable service providers and end users to download applications that integrate BroadWorks with a wide range of productivity, personal, and social applications," says Joe McGarvey, Current Analysis principal analyst.

While the transformation of services to IP presents opportunity for BroadSoft, it also creates challenges. While the company is well-recognized as a leading provider of enhanced VoIP applications, its application suite is also considered by some service providers to be overkill for residential services, says McGarvey.

At the low end of the application server market, BroadSoft faces significant challenges from traditional telecommunications equipment makers, e.g., Alcatel-Lucent, Thomson/Cirpack, MetaSwitch and Sonus.

McGarvey says it will be important for BroadSoft to capture the middle ground of the application server market, where service providers are looking for some enhanced features but do not require the complexity of applications associated with PBX replacement.

To be successful in this space, BroadSoft needs to move down the complexity curve than it is for challengers to move up, McGarvey says.

To be sure, BroadSoft now finds itself challenged by a new set of competitors, including softswitch providers, which have been gradually increasing the breadth and sophistication of their Class 5 application offerings.

Ultimately, market success might not be as dependent on unique features as on ability to make those features available widely on mobile, Web and enterprise applications.