Most of the Money Still is in Legacy Media

PricewaterhouseCoopers reported in its Global Entertainment and Media Outlook that as of 2007, digital and mobile distribution made up only five percent of total spending on entertainment and media.

PWC projected that this percentage will increase to 11 percent by 2012. No doubt, digital media is growing, in some cases, growing fast.

But even with momentum, 11 percent is still a small percentage of the $2.2 trillion annual spending on media and entertainment, especially when market share is held by a wildly fragmented cast of contenders.

Sometimes, it makes sense for large providers to place bets on "legacy" video even when everybody acknowledges that the market is changing. That doesn't mean wisdom is not found in spreading a number of bets on legacy and emerging media. It does mean that a rational investor with the ability to attack the existing revenue streams would be rational to do so.

A small percentage of a big number is a big number. A small percentage of a small number is, well, a smallish number. Large companies do not have the luxury of chasing small number markets. Small companies can, and do.

If recent AT&T quarterly results are an indication, it will ultimately prove to have been wise to invest heavily in "legacy" video, despite the coming shift of much video to alternate delivery methods. The issue right now is that the emerging markets still represent small amounts of revenue.

That will change over time as revenue at stake shifts and the scale economics emerge. At that point, one would have to expect consolidation of the market to create some large distributors able to capitalize on the scale economics.

That does not mean that, in the interim, large returns from legacy services should be ignored.

Vonage U.K. Launches Lower-Cost Plans for North America Calling

Vonage U.K. has launched two new "value" call packages for consumers concerned about their phone bills, as well as a new £6.99 plandesigned for the high percentage of Vonage consumers who call North America. The two new call plans offer Vonage’s lowest ever tariffs and are priced at £5.99 per month for unlimited calls to the U.K. and £6.99 per month for unlimited calls to the U.K., United States and Canada.

The £6.99 plan also includes an option that for £1 extra a month providing unlimited calls to mobile phones in the United States and Canada.

Vonage’s £7.99, £14.99 and £18.99 plans incorporating up to 45 countries remain unchanged.

Wireless Powers AT&T Results

As expected, AT&T wireless services revenues excluding handset and accessory sales, were up 14.5 percent to $10.9 billion for the quarter. Total wireless revenues were up 15.8 percent to $12 billion.

The company also continued to grow its AT&T U-verse TV subscriptions. AT&T had a second-quarter net gain of 170,000 customers for a total of 549,000 subscriptions in service. AT&T has a goal of connecting more than 1 million subscribers by year’s end.

Text Messaging Still Dominates Mobile Data Use

Voice continues to be the dominant application most mobile customers use on a daily basis. Text messaging remains the dominant data application, according to researchers at the Yankee Group.

Teenagers, as you would expect, are the one demographic that uses text just a bit more than voice. About 63 percent of teen users surveyed say they use text on a daily basis, while voice is used daily by 61 percent of users in that age group.

Growth rates for mobile Internet access, mobile video and mobile email are strong, but are growing from a relatively smaller base of users.

Mobile email use grew 71 percent between 2006 and 2007, for example, while mobile Internet use grew 57 percent.

Satellite Broadband Penetration Now a Bit over 10%

Satellite broadband now is the growth focus for providers such as Hughes Network Systems and WildBlue, and the stated opportunity often is said to be rural users as well as residents of suburban or urban areas not yet wired either for digital subscriber line or cable modem services.

According to data from the Pew Internet & American Life Project, that might not be completely correct. Though 16 percent of respondents to a recent Pew survey reported they have satellite broadband, so did 10 percent of urban users as well as 10 percent of suburban users.

The usual assumption is that the remaining urban and suburban areas ultimately will be wired, with potential loss of nearly all the urban and suburban users, depending on the definition of "suburban" one uses.

In the separate video entertainment business, one can make a reasonable argument that availability of the wired alternatives is less an issue, as the satellite providers compete not only on "availability" but on image quality and program diversity.

Satellite broadband providers do not have that opportunity, as satellite generally offers speeds slower than DSL and cable modem services, for slightly to meaningfully higher prices. Satellite services clearly win when there is no other alternative but dial-up service.

Nor does satellite fare as well on price in wired areas. Both cable modem and DSL prices have dropped since 2004, Pew reports. The price drops arguably have been highest for "value" priced packages, as new "premium" services featuring more speed continually have been added at the high end.

Still, Pew researchers report that 62 percent of surveyed dial-up users say they "do not want" broadband. Overall, the remaining pool of dial-up users iucludes just about 36 percent of users who say they are willing to switch to broadband. One expects the base of resisters will continue to dwindle over time.

AT&T to Change Broadband Marketing Language

At the Federal Communications Commission Pittsburgh broadband hearing, AT&T Senior Federal Regulatory Vice President Robert Quinn is reported by Broadband Reports to have said the company would in the future stop advertising speeds "up to" a specified rate, and would instead "strive to provide service within the speed tier purchased by the customer."

When AT&T finds it is not providing service within the ordered speed tier, AT&T will take action either to bring the customer's service within the ordered tier or give the customer an option to move to a different tier," he said.

Today, customers can order service "up to 7Mbps" tier, while plant conditions limit them to lower real-world bandwidth. Under the new scheme, customers will be offered the expected speed the plant supports, and then supplied with the higher speeds actually possible on their chosen plans.

AT&T also says it will supply customers information about how much bandwidth various applications consume, so they can choose the right plans. To Broadband Reports, that sounds like a precursor to some form of usage-based billing. It may well be. AT&T has been pretty clear that usage will play a bigger role in future access plans. That is an issue many will argue about.

But giving users a better understanding of their bandwidth requirements is a good thing, as is the policy of selling actual service that matches the marketing claims.

Expect Continued Line Losses as Telcos Report Earnings

In the 12-month period between March 2007 and March 2008 U.S. telcos lost 8,647,000 access lines while cable companies added 4,508,400. That suggests the balance of lost telco lines either wound up in the "wireless" category, taken by independent VoIP providers or were part of business line contraction made possible, on the user side, by IP and broadband technologies that provide voice services over a broadband connection of some sort.

It is quite hard to avoid the conclusion that the lost lines taken by cable companies were solely due to "lower price," since cable digital voice normally has no new IP features, is provisioned in a "whole house" manner that mimics POTS, and differs mostly in its price, not its quality.

The drivers might be more complicated in the other cases. VoIP customers sometimes buy based on price, at other times because of the new IP features. Enterprise or business customers often simply substitute voice services delivered over broadband for "voice grade equivalents."

Make no mistake, telcos are behaving deliberately. They simply seem to conclude that losing lines is preferable to across-the-board price reductions. It wouldn't be the first time industry participants have decided that harvesting a declining business is the best course of action.

So long as that continues to be the case, there seems little prospect that the line losses will abate. That being the case, the metrics to watch for are how well broadband-based revenue streams are building. Wireless still will be a bright spot, of course. But telco wired network performance is all about broadband revenues.

Voice simply is being harvested.

Google Maps Adds Walking Directions

Starting today, July 22, 2008, you can tell Google Maps that you want walking directions, and Google will try to find you a route that's direct, flat, and uses pedestrian pathways when we know about them, says the Google Lat Long blog. Just get directions as you normally would, for distances of 10 km or less.

As is usual for a "perpetual beta," there are some refinements Google wants to make. Right now, walking directions work well for short trips in urban areas, but Google says it does not presently always know if a street has a sidewalk, or if there's actually a special pedestrian bridge for crossing a busy street. Or for those of you navigating certain parts of Chicago's downtown loop, whether there are elevated roadways in your path that have to be navigated.

Google says it is working on ways to improve those sorts of features. Very useful, though, for those of you who travel and will be walking to a destination instead of driving.

Where Enterprises Buy Internet Access

Enterprises buy Internet access where you would expect: mostly from larger service providers. About half of all buying is from the former Regional Bell Operating Companies and Sprint.

Level 3 Communications, TW Telecom and Savvis have notable shares as well. About 37 percent of ISP access services are bought from a variety of other service providers, say reseachers at BackChannel.

More Use of Open Source Mobile Web Browsers

It might not be the case that control of a mobile browser necessarily means control of the applications environment. It might, though, mean substantial upside in terms of software customization and enhancement of user experience. So mobile device manufacturers seem to be focusing on use of open-source browser platforms as a way to leverage creation of other applications that can lead to differentiation of user experience.

As consumers increasingly surf the Web on their mobile phones, handset vendors are looking toward open-source browsers such as WebKit – the browser engine at the heart of the iPhone’s Safari browser – as a way to bring it to them. However, despite growing interest in WebKit and Gecko (the engine for the Mozilla Corporation Firefox browser), commercial browser vendors such as Opera and ACCESS continue to see growth in their businesses.

According to ABI Research, overall growth in the mobile browser category will lead to a total pre-installed revenue of $492 million by 2013, driven by the trends of more complex HTML-based browser integration.

“Device manufacturers are interested in open-source solutions where there is a desire for increased control of their software footprint, and where they can bring internal programming resources to bear,” says research director Michael Wolf. “

Open-source offerings such as WebKit are experiencing adoption by vendors such as Apple, Nokia, and others. Google made WebKit its core browser and Web-rendering engine for the Android platform; and application framework vendors such as Trolltech have integrated WebKit into their development framework. Mozilla also continues to develop its version of mobile Firefox, and Nokia has integrated a Gecko-based browser on its N800 Internet tablet.

More Evidence of Cloud Computing, SaaS Trends

Coghead, which provides a platform for authoring applications that are "mashups" added to other existing business apps, now is selling its services on a usage-based basis, in addition to a per-user basis, Clint Boulton, eWeek staff writer, notes. That change allowsCoghead to price in a way more attractive for lighter users, and using a model similar to Salesforce.com, the popular application sold as a service.

Coghead CEO Paul McNamara saysCoghead, to date, has charged per user—$49 per month for five users as a base plan—regardless of how much users were using its applications. That worked well for active users but not so well for infrequent users.

Coghead will continue to offer per-user pricing plans for full access to Coghead applications.

Coghead hopes the new pricing will help keep its current customers from jumping ship to Salesforce.com, Bungee Labs or Google App Engine, while luring new users with the flexibility options.

The changes illustrate the growing importance of business-oriented software sold as a service and the simultaneous use of utility computing "in the cloud" to create and deliver the services.

Packet8 Launches IP Key System Service

8x8 has introduced new Packet8 hosted Internet Protocol telephony services designed to replace traditional premise-based telephone "key systems" typically used by companies whose size or structure dictates the sharing of multiple, common phone lines among employees, regardless of where the employees are located.

Note the key phrase "shared line appearance." Since one of the issues hosted IP telephony providers have faced is a bit of confusion about why to adopt, the new Packet 8 service goes about as far as one can to position a feature other than "saving money" as the reason for a particular buyer segment to dive in.

Driven by the new Packet8 675xi series of IP desktop phones and the addition of shared line appearance services to the Packet8 Virtual Office platform, the new hosted key system solution provides businesses an opportunity to migrate to VoIP without altering the features, functionality and user behavior they have traditionally relied upon.Packet8 Virtual Office hosted iPBX solution," said 8x8 Vice President of Sales & Marketing Huw Rees.

The system is said to be ideal for offices where multiple users require the ability to view and answer more than one shared phone line at their desk or anywhere in the business

The SIP busy line appearance function apparently is quite difficult to do, but is essential for customers that require the ability for somebody else to pick up an inbound call without parking, says Rees. "It seems like a small function but it is actually quite complicated to do."

Verizon Launches Wireless, Broadband Wholesale

The Verizon Wholesale Mobility Solutions suite of services is now part of the portfolio of products offered by Verizon Partner Solutions, a leading wholesale provider of networks and network services to competitive local exchange carriers (CLECs) and other telecommunications providers based in the United States.

The move is important because mobility solutions are a more-important part of consumer and business communications spending. And if that is so, competitors will need to bundle wireless solutions.

The introduction of Verizon Wholesale Mobility Solutions means wholesale clients have the opportunity to bundle their full-service Verizon wholesale wireline services with wireless voice, text messaging and mobile broadband services to offer their retail end-users a single source for both fixed and mobile voice and broadband services.

Lightyear Network Solutions LLC is the first VPS client.

The Verizon Wholesale Mobility Solutions suite is comprised of two wireless service offerings: Verizon Wholesale Mobile Voice and Verizon Wholesale Mobile Broadband.

Verizon Wholesale Mobile Voice offers wireless calling plans with a choice of designated minutes of use allowances per month. Each plan includes Call Waiting, Call Forwarding, Three-Way Calling, No Answer/Busy Transfer, Caller ID and Basic Voice Mail at no additional monthly fee. Premium features, like Enhanced Voice Mail, monthly mobile-to-mobile minutes and directory assistance, are each available at an additional monthly charge.

In addition to voice plans, wholesale clients can offer text-messaging plans with a choice of designated message allowances per month to end-users that have also purchased wireless voice service. Optional international messaging and premium messaging packages are each available at an additional monthly charge.

Verizon Wholesale Mobile Broadband offers high-speed wireless Internet access via laptop computers with a choice of designated packet data transport MB allowances per month. This product can be sold as either a stand-alone service or as an addition to a voice calling plan. In addition to wireless network services, Verizon Wholesale Mobility Solutions provides wholesale clients with tools that enable them to become one-stop wireline and wireless services providers.

Jajah Adds Hosted PBX Functionality

Jajah has expanded its SMB Solution Suite to incorporate a managed service IP telephony solution, including a fully functional 'soft' PBX. The suite of services gives every small and medium business the ability to IP-enable their existing telephony systems and make VoIP calls to over 200 countries without any additional investment.

The Jajah SMB Solution Suite allows all devices: make or receive calls via mobile, landline and even softphone (PC-based telephone), with specific plug-ins for Blackberry and Windows Mobile phones available. Pre-paid and analog-only phones will also be supported.

Also included:are a suite of productivity tools providing the ability to embed telephony within Google Enterprise Apps and Microsoft Office. Features also include centralized address book, database and directory lookup services.

Presence features allow users to choose which phone to use to answer a call, whether on a mobile, landline or softphone, or even to divert the call to a voice mail, which will be converted to text and delivered as an email into the employee's inbox.

Employees can specify their location and availability, while the network will also make intelligent routing decisions based on last-call and office hours.

The system fully supports number portability. The Jajah SMB Suite also offers sophisticated dial-plans, call monitoring and limit-setting amongst other budget management tools.

The service also supports visual Voicemail (where voicemail is converted to text), universal messaging, SMS, conference calls, scheduled calls, call logging, and address book synchronization.

The SMB Solution Suite will be available directly at www.jajahSMB.com, with a global indirect channel partner to be announced in the third quarter of 2008.

Not Good Enough, Netherlands Regulators Say

The largest Dutch cable operator Ziggo has said it now reaches one million digital homes and is claiming to be the number one digital provider in the country. The figures means around 30% of all 3.3 million homes served is now digital.

Not good enough, Netherlands regulators believe. Coming: new rules giving alternate video providers access rights to cable plant. One wonders: will anybody want to do so?