Cisco Makes Big Move into Cloud Computing

Cisco has undertaken a major new initiative in the unified communications space, introducing a new architecture for its former WebEx Connect service, making Cisco a provider of Web-based productivity applications including email, instant messaging, voice, calendaring and virtual whiteboards.

The offering is part of Cisco’s Software as a Service (SaaS) platform and is part of a vision Cisco now has for "everything as a service." Predictably, the initiative has pundits touting Cisco's new move to compete with the likes of Google and Microsoft in Web-based services and applications. The strategy has elements of that, to be sure. But that's almost a by-product of the larger move towards cloud computing services that use a browser front end as the portal to services and applications of all sorts that once were delivered using physical media and local storage. 

Cisco says Verizon Communications is an initial partner, and that further deals are expected with European and Asia-based service providers as well. Cisco executives say business models might vary from carrier to carrier, but that subscription fees will drive the retail offerings and carriers will share in that revenue. 

Though initially services are expected to be consumed by PC users, the service also will be made available to "most" mobile platforms by the first quarter of 2009, including support for Symbian, BlackBerry, and Windows Mobile

operating systems.

EC Wants to Slash Texting Rates 60%

The European Commission, as expected, has proposed a new law slashing international text messaging rates by 60 percent by the summer of 2009. Specifically, the EC has proposed a retail cap of €0.11 (about 16 cents), excluding value-added tax, on roaming text messages, combined with a €0.04 cap at wholesale level, to be introduced by July 1, 2009. 

Tracfone Plumbs a Niche

TracFone Wireless Inc. has launched a program in Florida that provides low-income households with phone service. SafeLink Wireless will operate as part of Lifeline, a U.S. government-supported program providing phone service for low-income households.

It provides households a free mobile phone, mobile access to emergency services and 68 minutes of free monthly air time for a year. The cell phone offers in-demand features like voicemail, text messaging, call waiting, international calling to over 60 destinations and caller ID.

Families may qualify for SafeLink Wireless service if their household income is not above 135 percent of the federal poverty income guidelines, or if they receive government assistance that including Medicaid, food stamps and other programs.

The program is yet another example of a niche voice service that does not fit the classic definition of a "commodity." That is to say, this particular voice application is not a functional substitute for other voice products, but rather a particular implementation of voice that is the foundation for a vertical revenue segment within the broader market. 

Some providers of voice services for retailers would probably note that very little outbound traffic or features typically are used in such settings. Most of the value is provided by inbound calling features such as automated attendant and call transfer, for example. Low-cost mobile service might be part of the reason. But part of the reason for this use pattern is simply that many retailers do no outbound telesales. They simply wait for customers to walk in the front door or call. 

Restocking functions might require some outbound calling, but in many cases local distributors supply that function, so "long distance" is not required. 

The point is that, in actual practice, there are all sorts of real-world use cases for voice communications that do not fit the classic definition of a "commodity," with the implications that typically has for pricing, conditions of use and packaging. 

Xohm Launch Slips to October

Sprint Nextel will launch its Xohm mobile WiMAX network Oct. 8 in Baltimore, the company says. But that doesn't mean we should expect a full commercial launch. Initially, the network will be used by "friendly" partners such as Intel and other Xohm partners who will seed the market with selected friendly users. 

Motorola, Nokia, Nokia-Siemens Networks, Samsung, ZTE, ZyXEL, Ciena, DragonWave and Mformation also will be providing software, hardware and applications during the test period. 

Future service will launch in Chicago and Washington, D.C. as well. Aside from the normal shakedown issues, backhaul has been a key issue, and carrier Ethernet is a key technology for solving those problems.

T-Mobile Drops 1 Gbyte Monthly Cap for G1

Facing huge criticism about its 1 Gbyte monthly cap on 3G access for the G1 Android phone, T-Mobile has decided to lift the cap immediately and is reviewing its options for a permanent plan. But T-Mobile now is saying it has removed that limit while it reviews its plans and decides on new ones.

T-Mobile is likely to come up with a plan that still accomplishes the goal of shaping traffic, when necessary, to maintain reasonable end user experience at times of peak load, especially when some very-heavy users are placing unusual stress on the radio network.

Consumer pressure does work. T-Mobile knew it had a problem and is taking steps to ameliorate it.

U.K. VoIP Declines?

The number of U.K. VoIP users has fallen in 2008, according to research conducted by Ofcom, the U.K. communictions regulator. Ofcom suggests this is in part because of consumer resistance, and in part because the cost of using mobile or traditional fixed line services is falling.

The majority of broadband users still choose  not to use VoIP, perhaps because of issues over VoIP quality of service or

because of competition from low-priced fixed and mobile telecoms services, Ofcom says. 

Though VoIP often is marketed as a cheap way to make international calls, the cost per minute of making international calls over fixed and mobile connections continues to decline, while use continues to grow. With flat rate tariffs becoming an increasingly prevalent component of both fixed and mobile tariffs, the incentives to use VoIP services are decreasing.

Ofcom traditionally has included Skype and other "over the top" services in the VoIP category, so it isn't exactly clear what the findings might mean. It is doubtful what Ofcom means is that telco or cable-provided voice replacement services are declining. Most likely, Ofcom has found evidence of lower use of Skype and other IM-based calling apps. 

PC Buying Down, Outsourcing Up

Corporate PC purchasing continues to weaken, according to the latest ChangeWave survey, and will remain sluggish for the remainder of 2008. For the third-consecutive quarter, we're seeing a drop in corporate PC buying going forward. 

About 68 percent of IT executives surveyed  say their company plans on buying laptops next quarter. About 67 percent say their company plans to buy desktops. 

Applications and infrastructure outsourcing, though, is proving a stable element in an otherwise tough enterprise information technology environment this year. It appears hardware and software projects are bearing the brunt of the cutbacks, as "demand for services holds steady," says Forrester. 

About 45 percent of firms plan to increase their use of applications outsourcing, while 43 percent of firms are increasing their use of infrastructure outsourcing. About 43 percent of respondents said they are moving more work offshore.

 Infrastructure outsourcing also is on the rise, as convergent telecommunications and network management will be oursourced by 20 percent of firms this year, the survey finds.

Netflix Dives Deeper into Streaming

Netflix has signed deals with Disney/ABC and CBS (CBS) to stream television shows online a day after they air on television. Netflix also has done deals with Microsoft to distribute video on Xbox 360 and created a player by Roku to stream movies to customers who subscribe to monthly DVD rental plans.

The latest deal means Netflix will be able to stream current shows from CBS and Disney. As Hulu has shown, a recognized brand name or troves of branded content are big assets in the streaming business. 

In fact, though the "long tail" has gotten a lot of attention, there is some evidence that content viewing in the online world mirrors content viewing in the offline world to a great extent. That is to say, people mostly watch the "branded, professional" content they typically watch on television. Early experience with long tail content might have suggested otherwise, but as more people start to use online video, online viewing patterns might start to look more like offline viewing patterns. 

One study of music listening by Rhapsody customers shows that the top 10 percent of titles accounted for 78 percent of all plays, and the top one percent of titles for 32 percent of all plays. Of course, that is precisely what the "long tail" theory would predict. Popularly known as the "80/20" rule, the Pareto distribution predicts that roughly 80 percent of results are generated by 20 percent of the actions, or that 80 percent of sales volume, profit or margin are generated by 20 percent of products. 

Rhapsody's listeners follow that pattern. Just 10 percent of titles in the million-title catalog account for nearly 80 percent of the plays. 

New Comcast Bandwidth Management Plan Targets Heavy Use, Not Apps

Comcast says it plans to avoid throttling specific applications by throttling all high-volume subscribers instead. The new system would focus on users rather than content by temporarily giving bandwidth hogs lower priority status than that enjoyed by average users when local networks become congested. 

Comcast estimates the slowdowns would affect just one percent of its subscribers. The slowdown kicks in when subscribers run at 70 percent or more of their bandwidth allowance for at least 15 minutes.

“The system does not manage congestion based on the applications being used by customers," Comcast says. "It is content neutral, so it does not depend on the type of content that is generating traffic congestion."

Though Comcast also has instituted a 250 GByte monthly cap on total usage, a generous bucket compared to the 5 Gbyte caps some other wireless and wired Internet access providers have in place. 

Lehman Brothers Banruptcy Will Stick Vendors with Losses

Bankrupt investment bank Lehman Brothers owes a fair amount of money to a number of telecommunications and information technology firms. Among the tech companies with defaulted contracts are AT&T, Verizon and Sprint. 

IBM, EMC, HP, Oracle, and Sun Microsystems also are on the list of suppliers whose contracts now are in some state of default. Microsoft, for example, is owed $22,580,526. IBM is owed $8,995,892. Barclays Capital, which is buying Lehman, will have to pay up on those contracts, but not necessarily the full amounts. 

The proposed amount Verizon would have to be paid is listed as $325,000 but Verizon says it is owed $2,24 million.

AT&T, representing AT&T Wireless, SW Bell, Bell South, Cingular Wireless, says it is owed

more than $3 million, but would be paid $669,000 as part of the Barclays purchase of Lehman.

Cisco Systems, Global Crossing, KDDI, NTT, PeopleSoft, Real Networks, Red Hat, Sybase and Vodafone also might be in similar positions. 

Google G1 Is No BlackBerry Killer

Whatever else it may be, the new Google G1 smart phone, to be sold by T-Mobile, is not a "BlackBerry killer." The reason is simple enough: the device does not synchronize automatically with Microsoft Outlook.  Unlike the iPhone, the G1 doesn’t work with Microsoft Exchange, and it can’t physically be synced with a PC-based calendar or contacts program, like Microsoft Outlook. 

Coverage will be an issue as well, as T-Mobile's 3G network is available in far fewer cities than those of its larger rivals, AT&T and Verizon.

Though the Apple iPhone might be positioned as something of a competitor to the Research in Motion BlackBerry, that really can't be said for the G1, as it does not sync with Microsoft Outlook, a virtual requirement for most BlackBerry users.

T-Mobile Launches Android Phone Today

T-Mobile USA launches today launches the first handset that uses Android's software stack: a smartphone built by HTC, which is known for manufacturing Windows Mobile portable devices.

T-Mobile G1 includes a touchscreen, slide-out keypad, accelerated 3D graphics, Wi-Fi and 3G support, GPS and accelerometer. Observers say the device won't be as easy to use as an iPhone, though. 

Android's marketplace will accept any applications without a preliminary review, so that users decide whether they're useful. That means third party applications will be accepted even when they compete directly with apps built in to the device.

Developers will be able to make their content available on an open service with a feedback and rating system similar to YouTube. 

T-Mobile will hold a news conference today to announce further details.

Big Shift Away from Frame Relay

Some 75 percent of respondents at Global 2000 companies recently surveyed by Research and Markets said that they were looking to get their international sites off frame relay technology, with much of the shift happening over the next three to five years.

Also, about 75 percent of respondents at Global 2000 companies have deployed IPsec VPNs to connect their international offices.

Euro VoIP Up 400 Percent Since 2005

Consumer VoIP subscribership in Europe was up more than 10 million lines in 2007, compared to 2006, say researchers at Telegeography. At year-end 2007, 25.3 million consumer VoIP lines were in service in Western Europe, up from 15 million in 2006, and nearly four times the 6.5 million VoIP subscribers in 2005.

The key driver of growth has been aggressively priced bundles of voice, broadband, and video service. While prices vary widely across Europe, many operators charge as little as €30 (U.S. $43) for all three services, including unlimited calling.

This strategy has been spectacularly successful: TeleGeography projects that western European VoIP subscribers will top 37 million and will account for 29 percent of western European fixed lines by year-end 2008.

The success of upstart service providers has forced legacy telcos to respond. Most European incumbent phone companies have introduced dual-play or triple-play bundles, which frequently include flat-rate IP telephone service. While their success has varied widely, France Telecom has emerged as the largest VoIP service provider in Europe, and incumbents now account for five of the 10 largest European VoIP service providers.

Cloud Computing: The Next Disruption

There's something stirring out there in the computing world that will have large implications for communications service providers. Cloud computing is going to rip away the boundaries that have separated formerly-distinct business segments, realign value chains and bring massively large new players into fragmented, highly distributed businesses that are unaccumstomed to this level of competition. Consider recent moves by VMware, for example. 

VMware has unveiled infrastructure software that pools hardware resources, such as servers, storage and network, into an on-premise cloud-computing environment. At one level, this helps enterprises better manage data center resources. At another level it helps enterprises support remote or traveling users with all the applications they would expect to be able to use at their office desktops. The federation capability might be used in several ways, such as extending business partner access to enterprise resources for inventory tracking or supply chain management.

Okay, you say. It's a more efficient way to use computing resources, but so what? The "so what" is that cloud computing now means small Web hosting outfits are going to compete with Google, Microsoft, Amazon and others. That's a big deal

The Virtual Datacenter Operating System allocates resources to applications based on the workloads they're handling at a particular time. The VDC-OS also delivers a set of application services, such as security and scalability. These services are independent of the operating system, development frameworks or architecture on which the applications were built to run.

Cloud computing has become one of the dominant drivers in the IT sector over the last year or so. It generally it refers to hosting applications remotely and allowing local access using a browser.

The new platform will enable mid-market and low-end enterprise IT shops to build their own enterprise-grade external hosted clouds, and connect them with other clouds, if they so choose. 

VDC-OS shifts the center of server computing from individual operating systems to infrastructure software that spans many distributed servers, VMware said. In essence, the new technology serves as the operating system for the entire data center.

 

The VDC-OS expands virtual infrastructure along three dimensions. First, it seamlessly aggregates servers, storage and network as a pool of on-premise cloud resources and allocate them to applications that need them most. Second, it 

delivers a set of application services to guarantee the right levels of availability, security and scalability to all applications independent of the operating system, development frameworks or architecture on which they were built to run. 

Third, the VDC-OS federates compute capacity between the on-premise and off-premise clouds.  Unlike a traditional OS, which is optimized for a single server and supports only those applications written to its interfaces, the VDC-OS serves as the OS for the entire datacenter and supports the full diversity of any application written to any OS, from legacy Windows applications to modern distributed applications that run in mixed operating system environments.