Verizon Growth Profile Has Changed

The business climate for tier one providers is quite a bit better than it was just several years ago, when some analysts feared the best tier one telcos could do was hold steady in terms of revenue and profit. "In the past 18 months, we talked a lot about growth for Verizon," says Greg Miller, Deutsche Bank Securities analyst.

"Only two to three years ago, it was something that many people didn't think was going to happen, considering what was going on with the competitive dynamic in cable."

"Clearly, we've started to see some fairly significant growth within the business," he says. Also, the growth is "not just confined to one segment in the business."

Global Facebook Traffic Catches MySpace

April 2008 was the first time Facebook traffic officially caught up to MySpace in terms of unique monthly worldwide visitors, according to data released by Comscore. Both services are attracting around 115 million people to their respective sites each month.

But there are clear regional differences. It looks like MySpace continues to hold a steady lead over Facebook in the U.S. market. That being the case, most of Facebook’s growth has come in international markets.

Facebook added 75 million monthly uniques over the last twelve month, but just 13 million of those visitors are located in the United States.

7.8 Million Business VoIP Lines by 2012

Business VoIP lines to Total 7.8 million by 2012, say analysts at Pike & Fischer. If one assumes there are something on the order of 110 million business lines now in service, that's about seven percent. Some of us think business VoIP "lines" will be higher, but disguised in the form of IP trunks. It will be very hard to count them, since no regulatory agency records such things. Nor is it clear many IP trunking providers will release figures relating to "lines" rather than "IP trunks" in service.

If you ask me, 7.8 million is a low forecast.

Carphone Warehouse Blames Wireless for Fixed Broadband Sales Dip

You might not be surprised if a broadband access provider blames either housing or economic sluggishness for lower than expected unit growth, in the U.K. or U.S. markets. So it's probably no big deal that Carphone Warehouse blames a housing slowdown for lower take-up of additional broadband lines.

But note this tidbit: Carphone Warehouse also says "mobile broadband sales" are partly to blame for lower fixed broadband sales, warning it expects lower revenue next year if the trend continues.

So the question logically arises: are some U.K. consumers substituting wireless broadband connections for fixed connections?

Execs Know Change is Coming; Just 30% Claim Insight

There's no question global telecom service provider executives know big changes are coming. There's universal agreement that new revenue sources will displace voice as the industry mainstay.

There's wide agreement that traditional voice revenues will shrink for a variety of reasons. A shift of some usage to Web-mediated or IM-mediated providers and applications is one factor. But so are other IP-based and enhanced versions of voice communications that will substitute for legacy voice. Higher-fidelity voice is one example, say researchers at Telco 2.0.

What also remains clear is that just 30 percent of executives claim to know "quite well" the additional needs users may have for new voice and messaging products. At this point, that's refreshing. The industry has been surprised by the biggest innovations in demand on a fairly regular basis.

Mobile wasn't thought to be such a big deal. But mobile accounts now surpass landlines in many countries. Text messaging emerged from nowhere. So executives thought multimedia messaging would be big as well. It hasn't worked out that way.

Global executives were certain 3G would create huge new revenue streams. So far it hasn't. So there's nothing wrong with an attitude of openness to innovations that might develop, for demand that could exist, and for applications with revenue potential one might not suspect.

If history teaches us anything, it is to anticipate the unexpected.

Comcast Upgrades Sacramento, Davis, Roseville and Placerville Calif. Cable Modem Speeds

Comcast is doubling its highest Internet speeds for residential customers in the Sacramento, Davis, Roseville and Placerville areas to download speeds of 16 megabits per second and upload speeds of 2 Mbps.

Customers who already get Comcast's highest-speed service, which offers 8 Mbps downloads and 1 Mbps uploads, will be automatically upgraded to the faster service at no charge. The automatic upgrade to the new higher-speed service begins June 31.

Comcast offers two other, lower-tier services of 4 and 6 Mbps. Those customers would need to sign up for Blast! to receive the higher speeds.

Comcast and other cable operators typically conduct such market-by-market upgrades when competing against higher-speed telephone company offers. AT&T is a factor, but in Roseville, SureWest Communications offers a 10 Mbps Ethernet access service broadly to consumer customers.

Mobile Transaction Processing: $1.9 Billion

The market for mobile digital commerce services grew to $1.9 billion in 2007, say researchers at S2 Data Corp.

Digital commerce service providers process the financial transactions that monetize premium content from music, video and gaming companies over the mobile operator's network.

By 2012, the market for mobile digital commerce services will grow to $1.9 billion.

Operators are seeing data revenue exceed 30 percent of total service revenue as the ring tone market shifts from a primary to a partial revenue stream in a premium content mix that includes ringback tones, games, full track downloads and mobile video, S2 says.

Tolerance for Email Outages?

Oddly enough, though many users will tell you that email is more important than voice, they also seem more tolerant of email than voice outages.

Most organizations put up with periodic outages and most seem to tolerate that state of affairs.

But email seems to benefit from different expectations, in particular the store and forward use model.

The fact that voice mail is the same sort of experience doesn't seem to detract from the possibility of a synchronous session at least part of the time.

Curious, don't you think?

WiMAX Threatens 3G, Fixed Wireless

WiMAX provides the right mix of
features and pricing to appeal to consumers, though business users will provide more of a challenge, say researchers at In-Stat.

The commercial user frequently requires ubiquitous coverage, which will be an issue initially.

"While early WiMAX network coverage will not be as large as 3G cellular, it will be adequate to appeal to consumers," says Daryl Schoolar, In-Stat analyst.

"When respondents were presented with
service examples and picked the one they most preferred, the one representing WiMAX was picked more than two-to-one over the one representing 3G cellular data, he says

Respondents are very interested in a wireless broadband service that
will allow them to connect multiple devices under a single service
plan, Schoolar notes.

Respondents also say they want a service that can meet both their at home and away Internet needs.

For this reason, fixed broadband operators are vulnerable to losing subscribers to WiMAX.

Survey respondents reported increased usage of public wireless broadband between 2006 and 2007, with expectations for further increases in 2008.

Belgacom Eyes Cable

A growing strategic reality in the global telecom business is the need to "go out of region" to fuel growth. Belgacom, for example, is offering €420m to the cable companies and municipal shareholders of the Belgian cablenet Interkabel.

In a statement the incumbent telco said that its offer was €70m more than had been made by its rival Telenet and 40 percent more than the upfront payment offered to the municipalities.

In this case there is the additional tactical consideration of buying customer base and revenue that is denied a key in-region competitor.

But make no mistake: organic growth is slow, tedious work these days. Leaps occur mostly through acquisition.

Sprint Churn Bottoming?

Sprint Nextel has lost one million customers since the end of 2007, a fact mirrored in surveys of ChangeWave Research members.

The more important news, though, may be a possible bottoming. It is possible Sprint finally has stabilized its churn problem.

In March 2008, for example, a survey of 3,597 consumers found 11 percent reporting they are Sprint Nextel customers.

Some 31 percent said they use Verizon while 28 percent reported using and AT&T. To be sure, that indication of market share among survey respondents does not track very well with other measurements of market share, such as the carriers own quarterly and annual reports of subscribership.

No surprise: Sprint customers are least satisfied of all of the major provider customers. When asked how likely they were to change service providers in the next 6 months, a relatively high percentage of Sprint customers (21 percent) said they're likely to switch, compared to just 10 percent of Verizon customers and 11 percent for AT&T' users.

When people do change cellular service providers, very few are switching to Sprint (three percent ). The good news is that the number of switchers looking to join Sprint actually turned up one percentage point since the last ChangeWave survey.

iPhone Sales to Triple?

Right now it's hard to say for sure, but there's sound logic behind predictions that Apple now will attempt to dramatically increase sales of iPhones, now that carriers are subsidizing the device. The rationale?

Richard Windsor, Nomura analyst, notes that higher volumes are necessary. "Apple must increase its volumes very substantially to make up the difference” between what it was making before, and what it will be making now on subsidized devices, without a recurring revenue share.

Windsor notes that a dollar from revenue share has EBIT margins of 100 percent, while hardware revenues have an EBIT margin of closer to 30 percent.

So a simple back of the envelope analysis suggests that if Apple wants revenue to grow, it will have to sell three times as many devices at the lower margins, to make up for what it might have earned under the old business model.

Cheaper iPhone = Digital One Rate

Some of you may remember "Digital One Rate," the first "bucket of minutes" wireless voice plan, launched by AT&T when Dan Hesse, now Sprint Nextel CEO, ran the AT&T Wireless business. You might also remember that Digital One Rate ignited a huge wave of wireless voice usage.

It is conceivable that the new 3G iPhone, with price points aimed at the "the other side of the chasm" crowd (the mass market), as well as the inevitable responses by competitors, could well ignite a new round of data services use by fairly "average" mobile users.

A $200 iPhone with 3G is just the sort of thing that could trigger dramatically-expanded mobile Web and mobile broadband use, driving smart phones and mobile Web services into the lead edge of the "early majority" market that mobile providers will have to crack if 3G is to become a user mainstay.

With the latest release, Apple is taking aim at the enterprise segment, one of several key smart phone segments, as well as the broader "entertainment-focused" segment. Some of us are in the less-well-defined segment that rely relies on the Web, even if we use BlackBerries, so the mobile Web element also now comes into play.

The point is that the 3G iPhone might one day be seen as a key turning point for mobile broadband.

iPhone, Other Devices Will Drive Data Revenue to $70 Billion

Goldman Sachs analysts Simona Jankowski and Thomas Lee now predict there will be 15 percent compounded annual growth in revenue in smart phones over the next five years as a result of “more affordable smart phone devices and focus by handset vendors following iPhone.”

That will result in increased email, Web and other data uses, leading to a ballooning of telecom services revenue, from $19 billion last year to $70 billion in 2012.

BlackBerry Vs. iPhone

The most-important take-away from the new 3G Apple iPhone announcement is the lower prices, which we flagged up as a barrier to uptake in the first version, says Steven Hartley, senior analyst at Ovum. But Alec Saunders over at Saunderslog.com thinks BlackBerry will start to feel some real heat, now that it is clear the iPhone and BlackBerry devices will be priced head to head.

Many of us BlackBerry users might concur, but also might note that we are quite attached to the reliability of key entry. If Apple can do just a bit better on that front, many of us will find few barriers to switching. Right now, it remains an issue.