Margin Impact: Online Vs. DVD Distribution

Factoid: Video on demand “day and date” sales--when content is available on the same release day as the same content released on DVD--has gross profit margins of 60 to 70 percent. DVD sales sold on the same "day and date" window have margins of 20 to 30 percent."

Keep that in mind as more and more experimentation with highly-popular movie and TV programming occurs. Even though gross revenue might be lower for digital delivery, so are costs. And the margin for digital products beats physical delivery by a three to one ratio.

Senate Passes Immunity Bill

The U.S. Senate voted July 9, 2008 to grant retroactive immunity to telephone companies that participated in the White House's warrantless domestic surveillance program. The House of Representatives earlier had approved the bill, which now goes to President Bush, who is expected to sign the bill.

Some people think "warrantless" means "unwarranted." I don't. Carriers acted in good faith in complying with government requests.

Has BT Bought Ribbit?

Lots of smart and experienced people think application developers will not find a warm reception in the tier one carrier community. I think that's dead wrong. Never have "telco" executives been more aware that they need partners to create compelling new applications.

So VentureBeat reports that BT has purchased Ribbit, a voice platform company playing in the "communications enable business processes" space. Think of the way voice gets integrated with Salesforce.com.

Techcrunch says Ribbit has been bought by BT for $55 million. But there's still some speculation that the deal isn't done yet.

No matter. The important thing is that the deal illustrates a trend: telcos no longer have a "not invented here" attitude about applications and services invented by third parties.

There is lots of room for application developers to create interesting features service providers will want to offer.

For my friends at Qwest: talk to Fonolo.

WeFi One-Touch Wi-Fi for Windows Mobile Devices

WeFi Inc., creator of an open, community-based global Wi-Fi network, announced today the launch of a new ‘one-touch-internet’ feature for Windows Mobile, providing mobile users with seamless access to the best Wi-Fi connection relative to their location at the simple click of the touch-screen.

WeFi’s one-touch-internet feature gives the Windows Mobile user a convenient interface to launch any application or webpage from the “Today” screen, automatically finding the best Wi-Fi connection available when this application is launched.

In addition, each application can be configured in advance to use only Wi-Fi, or revert to 3G or 2.5G data connection if no Wi-Fi access point is available – so that a seamless connection is constantly maintained.

WeFi says its network now includes 1.5 million access points.

Windows Mobile users can also register the WeFi software on their personal computers.

Mobile Video Forecast

Consumers are demanding more personalization and entertainment content on their mobile phones, driving mobile video revenue to exceed $3.5 billion in 2008, according to recent research by MultiMedia Intelligence.

By 2012, the mobile video and mobile TV market will exceed $15 billion, including direct customer payments and advertising. But most of the money is in subscriber fees. Total Mobile TV and Video advertising revenue will exceed $1 billion by 2012.

Those numbers illustrate something about the relative importance of various revenue streams. Some observers think video, advertising and other related revenue streams ultimately will represent most network service provider revenue.

I'm a bit of a contrarian, perhaps, but I continue to believe voice and data services will constitute the clear majority of "legacy" telecom service provider revenues for the indefinite future. That doesn't mean "dumb pipe" or "simple access" services are the only revenue components former telcos will have.

It is to argue that most of the revenue will continue to come from access and the services that are built rather directly on access. I'd argue that will continue to be true on both wireless and wired networks.

With the combination of a large wireless subscriber base and free-to-air alternatives, Asia has the vast majority of mobile TV subscribers. By 2012, Asia will have two thirds of all mobile TV subscribers.

For that reason alone, mobile TV is unlikely to represent a very large revenue stream for network service providers. And what revenue there is will come in the form of recurring subscription payments or on-demand fees.

Harmonizing WiMAX and LTE

Participants from both the WiMAX and LTE camp and IEEE and ETSI 3GPP standards organizations seem to be of a mindset that a common air interface for both Long Term Evolution and WiMAX would be a good thing. Vodafone, for example, is calling for the merging of WiMAX and LTE.

Count Intel as a proponent of such harmonization as well.

These proposals point out a key fact about both WiMAX and LTE: they simply are wireless broadband platforms. The differentiation will come only as differentiated business models can be created. It probably is inevitable that in the early going the volume will be in "DSL and cable modem substitution" and "alternative to 3G mobile broadband."

LTE, though, is in a different strategic position. Its backers can assume they essentially are looking at a next-generation network that will, over time, port existing customers and business models over to the new platform.

WiMAX, in North America, has to create space for itself by stealing some share from other existing contestants. That's why the pressure to position on one hand as a fixed line alternative and on the other hand as "better 3G" will be irresistable. If that is all WiMAX does, it will not be as successful as many hope. The compellingly different positioning is "mobile Internet," with all that implies about openness, applications heterogeneity, pricing and packaging.

U.S., Italy Lead in Moble Internet

Mobile Internet has become a mass medium in the U.S. and Italian mobile markets, say researchers at Nielsen Mobile. As of May 2008, there were 40 million active users of the mobile Internet in the United States.

Perhaps more interesting is the fact that 95 million U.S. mobile users have subscribed to the service but do not necessarily use it.

According to Nielsen, 144 million (57 percent) of U.S. mobile subscribers were data users in the first quarter of 2008 (any data activity from text messaging to mobile Internet).

Some 95 million (37 percent) of U.S. mobile subscribers paid for access to the mobile Internet, either as part of a subscription or transactionally.

About 40 million subscribers (15.6 percent in May 2008) were active users of mobile Internet services, using those services at least once on a monthly basis.

It's a small point, but in recent days studies have shown that penetration of global positioning satellite services and now mobile Internet are highest in the U.S. market. Over time, that distinction means little. But it's worth keeping in mind that different services propagate at different rates in different countries and regions, often because of value drivers specific to each region, sometimes because of regulation, other times because of pricing and packaging policies.

Less Value from Linking?

Louis Gray of LouisGray.com says he detects a decline in the effectiveness of "linking" as a driver of blog site traffic. Taking a look at traffic to his own site, he now finds "traffic from other blogs to be driving an ever-declining percentage of visits to my site, swamped by social media tools, aggregation sites, and of course, Google search."

People seem to be relying more on news aggregators and RSS feeds.

I'd have to agree. On this site, something like 68 percent of visitors arrive from a search engine site, about 23 percent from referring sites and about nine percent direct.

My personal interest in traffic drivers is as a professional journalist of more than 25 years. Since more of what we do is moving to online delivery, with more of the readership on a story by story basis, irrespective of the brand name packaging we used to emphasize, I'm always interested in how the craft of journalism is evolving.

I used to spend more time embedding links and tagging. These days I do so quite rarely. Mostly, I just put up the posts and am done with it. Of course, I've also stopped using instant messaging as well, Skype for calling and just about any other related applications as well.

I find I am too busy to keep testing many new applications; tired of having to adopt new behaviors. I'm even spending lots less time on Facebook.

Of the new things I've tried recently, Lypp, the Web-based conferencing tool, has proven most useful. It is even delightful. There's still a continuous stream of interesting tools. I just have gotten to the point where getting my work done matters more than exploring lots of new apps. Lypp actually helps me get my work done.

Microsoft ResponsePoint SIP Trunking Suppliers Named

Microsoft Corp. has selected Junction Networks as a preferred SIP trunking and gateway service provider for its Microsoft Response Point small business phone system. The Response Point Service Pack 1, generally available now, will feature services from Junction Networks pre-configured for simple account activation and maintenance.

Microsoft also has certified New Global Telecom, which now is accepting customer orders for NGT Digital Voice for Microsoft Response Point. In April, NGT became the first certified, Microsoft recommended service provider offering industry-standard SIP (session initiation protocol) phone services that works seamlessly with Response Point.

Hosted Business VoIP Seats: Long Ways to Go

Ike Elliott over at Telecosm has completed a partial survey of business VoIP seats now in service. It's a tough number to come up with and is not exhaustive. But it is instructive.

The issue some of us have raised is whether hosted VoIP ever will be a business bigger than legacy Centrex was, in which case market saturation could come at about 33 million seats in service.

Ike's respondents do not represent the whole universe, but are instructive. We have a long ways to go before we can answer the question of how big hosted business IP telephony will be.

Apple Yanks 3G iPhone in Canada

Apple has decided not to sell the iPhone 3G in its retail stores across Canada in protest of Rogers price plans, according to AppleInsider. A minimum three-year contract for $60-a-month buys 150 talk time minutes, 75 text messages and 400 megabytes of data downloads. It clearly is an awful deal.

Information Overload

Wall Street Journal contributor Gordon Crovitz, writing about the dangers of information overload, points out that knowledge workers change activities every three minutes, usually because they're distracted by email or a phone call. It then takes almost half an hour to get back to the task once attention is lost.

A decline in our ability to focus is a side effect of the otherwise powerful tools we use to gather and analyze information, Crovitz argues. That has enterprises experimenting with ways to limit interruptions, at least some days of the week, and at meetings.

He argues that "we humans can be slow, but eventually we catch up to the technologies we create and figure out how best to use them."

I have something of an advantage in that regard, as I have very little need for active internal collaboration. I have to spend lots of time doing research, but very little time coordinating with coworkers.

Still, upon reflection, I have taken some steps to limit interruptions. Sometimes I just turn my phones off. For perhaps six months, I have not opened any instant messaging clients, for any reason other than to place a global call using Skype. Even that function, though, now can be dispensed with as I have added VoIP clients for both my mobiles.

That won't be a viable option for lots of other workers for whom internal collaboration is much more important. Still, one reasonable response is simply not to respond to every inbound email. In my case, I simply delete most messages without reading much more than the headers, or sometimes, on my BlackBerry, fractions of headers. On the BlackBerry, just the few characters displayed on the first line of any message is as far as I'll get.

Perhaps that is a severe sorting mechanism, but it does allow for the time I need to think about things, which is the job I have. Overload might be a problem, but it is not a problem without a resolution.

In my particular case, it means RSS feeds always get checked, all day long. So are text messages. Email is fairly often checked, but with very heavy deletion policies. At least for the moment, IMs are not an issue. It simply is a tool I have decided not to use. Again, my concrete situation is different than that of most enterprise users. IM might actually save time in that scenario, because of the presence function.

Really High iPhone Costs in New Zealand

For those of you who tend to think U.S. prices for any broadband service are higher than anywhere else, consider what New Zealand customers will be paying for a 3G iPhone with a one-gigabyte data plan: $185 U.S. dollars a month.

That comes with 600 minutes of talk time and 600 text messages.

Buyers of the least-expensive data plan (costing about U.S. $59) will have to pay $406 to buy an 8 GByte iPhone or $517 U.S. to get a 16 Gbyte model.

AT&T's best pricing plans are reserved for mobile customers switching from other providers. Existing AT&T customers who are not currently eligible for an upgrade discount can purchase iPhone 3G for $399 for the 8 GB model or $499 for the 16 GB model. Both options require a new two-year service agreement. But the $30 a month data plan includes unlimited usage.

In the future, AT&T will offer a no-contract-required option for $599 (8GB) or $699 (16GB).

Users switching from other mobile providers can get an iPhone for either $199 (8 GB model) or $299 (16 GB model), with the monthly data plan of $30. U.S. users on any mobile provider's plan can qualify for the lower device prices if they buy before July 11, 2008.

For U.S. users not already customers of AT&T mobile services, or not eligible for an upgrade, both device and data plan prices are reasonable, compared to other plans offered in other countries.

Impatient at Broadband Adoption Pace? Don't Be

Americans are an impatient bunch, and pundits are even more unforgiving. We tend to want everything now, and seem to tire of complicated problems that take a while to solve. Consider broadband, which continues to be seen as a problem in some quarters. There still are calls to "national action" to fix the problem. History suggests there is no problem to be fixed.

Broadband reached 50 percent penetration of the consumer market in 10 years--faster than any number of other highly-popular consumer electronics innovations that do not seem to require "national action" to fix. The popular compact disk player took 10.5 years to reach 50-percent penetration. VCRs, another popular innovation in its day, took 14 years to reach half of homes.

Mobile phones took 15 years to reach half of homes.Color televisions took 18 years to reach 50 percent penetration. PCs took 18 years to reach half of homes. It is worthwhile to recall that prices for all these products initially were quite high, but dropped dramatically as volume rose.

Technology also seems to be the reason why any reasonable end user will tend to say their choices of devices, services, applications, as well as the prices they pay for those products and services, are measurably, sometimes dramatically lower these days than before the Telecommunications Act of 1996, which some contestants deem to be a failure.

Perhaps it is worth observing that end users--consumers and businesses--are far better off today than they were before the Act. That some contestants have fared better than others is undeniable. So perhaps another observation is in order. Despite any failures of the Act, users universally have more choices, more variety and lower prices in just about every segment of communications today, than they did in 1995.

So perhaps what has happened is that technology and open markets have outstripped all the particular policy regimes in a decisive way. It might be fair to say that success has occurred despite the Act. That there are many unhappy contestants is undeniable. But if the objective was an explosion of choices, better applications and lower prices, that has occurred.

That isn't to say a similar outcome couldn't have been obtained under some other set of policies. European regulators have pursed different courses. In a few cases, those different policies have resulted not only in higher broadband penetration, but also have provided higher bandwidth at lower prices. Japan and Korea come to mind.

Still, it probably also is worth noting that both those nations have domestic business cultures quite distinct from those of Europe, Africa, North America, South America and the rest of Asia. State-directed investment plays a significantly different role than elsewhere, and both nations are relatively compact and feature high-density housing. Both those factors, plus state-directed investment, mean both nations can do things that would be difficult elsewhere.

So it is true that U.S. broadband does not have the highest bandwidth or the lowest price among all nations. Those honors are held by small countries, generally with high-density populations (which means short access loops), or vigorous state-sponsored investment. In broadband, as elsewhere, scale makes a difference.

Wireless Bug is a Feature, But Not for Users

Sometimes "bugs" are "features;" the issue being "for whom" it is a feature. One end user "bug" is a bandwidth-saving feature for a mobile provider. Specifically, BlackBerry emails that strip out HTML links, saving as much as an order of magnitude (10 times) the bandwidth required if full HTML were displayed.

"If you are a Blackberry user, you are familiar with the fact that emails containing HTML links don’t display the graphics, but rather cause you to have to scroll down past that jibberish HTML text," says Seeking Alpha author Anton Wahlman. "It’s ugly and annoying, but those of us who are engineering-minded know the reason we have to suffer through this sub-optimal experience: bandwidth."

"By stripping each email of all of those colors and pictures, less bandwidth is utilized," says Wahlman.

This goes to the heart of Blackberry’s main argument to the carriers, such as T-Mobile USA and AT&T. Unlike other email-capable handhelds, Blackberries provide for a more predictable, and lower, bandwidth utilization.

Other devices, such as Apple's iPhone (AAPL), are making some people expect that email on the handheld will incorporate HTML just like it does on the PC.

Blackberry is supposed to be enabling that feature this summer. If there are more than 10 million U.S. Blackberry users, receiving probably 100 emails per day, or one billion emails, the amount of wireless bandwidth needed to support those emails will more than double the average size of the messages.

Fixing the "bug" will also mean eliminating a mobile network provider "feature."