40 Gbps Gear Sales Grow 59% Annually

The 10 gigabit-per-second equipment market is big and growing fast, on target to hit nearly $9.5 billion worldwide in 2008, say researchers at Infonetics Research. At the same time, 40 G system sales are ramping rapidly, and 100 G should begin soon and take off by 2013, the company says.

“A majority of service providers we've spoken to are expecting to invest in 40 G until the 100 G market is up and running; some providers are hoping to skip the 40 G phase altogether, but we don't see that being a viable option, as growing traffic demands are outstripping current capacities and 100 G won't reach reasonable price points until about 2012 or 2013," says Michael Howard, Infonetics co-founder and principal analyst.

"When 100 G Ethernet arrives, it’ll be the next big thing and the most important, because it will last to at least 2025, solving traffic problems for a very long time," Howard says.

40G equipment revenue is forecast to increase at a fast clip, with a compound annual growth
rate of 59 percent from 2007 to 2011, Infonetics projects.

The number of 10 G, 40 G, and 100 G ports shipping on enterprise and service provider equipment will jump from over one million in 2007 to 7.4 million in 2011, with 100 G making its small debut in 2009.

AT&T Reverses DSL Slowdown

AT&T added 148,000 net wired netwwork broadband access customers, up from the 46,000 AT&T added in the second quarter of 2008. That's a far cry from the 300,000+ quarterly net adds AT&T was putting up in 2007, but the broadband access market clearly is reaching saturation.

Some of us had suggested that a shocking fall-off in broadband access net adds in the second quarter this year would be repeated in the third quarter. We'll have to wait to see reporting from Verizon and Qwest to confirm the thesis, but AT&T's results suggest marketing attention that had lapsed in the second quarter now has been sharpened. 

Wireline broadband subscribers, including both consumer and business customers, totaled 14.8 million, up 1.1 million over the past year.

Perhaps the other notable story coming out of AT&T's third quarter report was the huge increase in wireless broad band net adds. Total broadband-capable connections in service increased 2.9 million in the third quarter to reach 20.7 million. 

About 2.75 million of those net adds came on the wireless network, not the wired network. Wireless broadband connections include data  users with 3G LaptopConnect cards and broadband-speed integrated devices with

a QWERTY or touchscreen keyboard. AT&T does not provide detail on the percentage of cards or dongles and broadband handsets. 

Telco and Satellite TV Subs "More Satisfied"

Cable television customers say they are less satisfied than customers of satellite and telco TV providers, according to Parks Associates. A new study by Parks Associates suggests, as other surveys have found, that subscribers to satellite television and telco IPTV are significantly more likely to be satisfied with their services than both basic cable and digital cable subscribers.

“Cable subscribers are generally less satisfied, which creates opportunities for satellite and telco/IPTV providers to grab customers,” says Kurt Scherf, Parks Associates VP. “Although cable operators have improved service efforts, cable operators will still hemorrhage subscribers unless they are perceived as offering leading-edge features at equal or better value. In today’s economic climate, carriers cannot afford to ignore these findings.”

Cable operators have struggled in selling the value of their services, Scherf said, and framing their services as an enhanced and convenient form of entertainment will be critical in reestablishing higher satisfaction. Video on demand initiatives, particularly those aimed at delivering a “Primetime, Anytime” experience, should be key elements in this effort.

“Subscribers who actively use primetime VoD services show significantly higher satisfaction levels,” Scherf says.

Mobile Broadband Overtakes Wi-Fi

Proponents of mobile broadband have argued that 3G and other mobile broadband networks ultimately would make Wi-Fi networks largely unnecessary. While that is not yet completely true, it increasingly true. Mobile broadband now has pushed the mobile phone networks ahead of Wi-Fi hotspots as the most popular way of accessing the Internet on the move, in the United Kingdom, according to Point Topic.

U.K. mobile phone companies have managed to grow their market share to 47 percent of users accessing the Internet away from home or work, compared to 42 percent who use Wi-Fi hotspots. A year earlier the ratio was 40:30 in favor of Wi-Fi, Point Topic says.

Point Topic says 26 percent of those who use a mobile network to access the Internet are O2 customers. Orange and Vodafone each take about 20 percent of the market, while T-Mobile and 3 have 14 percent and 12 percent respectively.

Vodafone is the leading provider of the dongle-user segment, with 24 percent share. of respondents. O2 comes in at 23 percent, followed by Orange, T-Mobile and 3, Point Topic says.

RSS Stalled?

Now this prediction I will find quite shocking, if it materializes: Forrester Research now estimates that use of Real Simple Syndication (RSS) might be nearing a peak of usage, among online marketers. About half of marketers already have put RSS feeds on their Web sites.

Keep in mind that RSS is used by about 11 percent of Web users, up from two percent in 2005, reports Steve Rubel at Micropersuasion.

It might be one thing to forecast that RSS is a technology that is not going mainstream anytime soon. It is quite something else to predict it is nearing saturation.

Forrester says a recent survey of marketers found that of the 89 percent of those who don't use feeds, only 17 percent say they're interested in using them.

"Unless marketers make a move to hook them, and try to convert their apathetic counterparts, RSS will never be more than a niche technology," Forrester analyst Jeremiah Owyang suggests.

Rubel himself does think RSS use by marketers has peaked. But then, I'm biased. I can't think of any development more important for many content businesses than RSS.

P2P Really Stresses the Upstream

Overall, peer-to-peer file sharing represents 43.5 percent of total North American consumer broadband consumption, while Web browsing represetns 27.3 percent and streaming contributes 14.8 percent of overall demand.

But those statistics conceal something far more fundamental about P2P impact on access networks.

In the upstream direction, P2P absolutely dominates. The three biggest traffic generators in the upstream direction are P2P at 75 percent of total load, tunneling at 9.9 percent and Web browsing at 9.1 percent. Entertainment, not productivity, is driving bandwidth consumption during the peak evening hours.

Web traffic and streaming videos account for 59 per cent of downstream bandwidth consumption as well, says Sandvine. The three biggest traffic generators in the downstream direction are P2P at 35.6 percent, Web browsing at 31.6 percent and streaming content at 17.9 percent.

Over time, the proportion of P2P traffic might decline as a percentage of total, as more streaming services aimed at PCs and TVs take hold. Those services will add more demand primarily in the downstream direction.

80% of Mobile Users Send Text Messages; or Do They?

The amount of time users spend doing things on their mobile phones is increasing. About the only issue is by how much. 

About 54 percent of mobile users surveyed in September 2008 reported their usage had increased by more than 25 percent over the past two years. One-fifth of respondents estimated their usage had increased by 50 percent or more. 

One third of respondents talked on their mobile phone more than 10 hours per week, and 34 percent of respondents ages 17 and under talked for more than 15 hours weekly.

Nearly four out of 10 mobile Internet users said they surfed the mobile Web for two or more hours every week. The key adjective there is "mobile Web" users. Other researchers have found that just about 16 percent of mobile users have the ability to access the Web from their mobiles. 

Some 62 percent of mobile users surveyed said they either already owned a smart phone or would own one within the next 12 months.

Text messaging is nearly universal, with 80 percent of mobile users saying they use that feature and 29 percent of those who did spent more than two hours every week on the activity, says Azuki Systems. 

Researchers at Nielsen Mobile don't think so. They report just 53 percent text messaging usage during the second quarter of 2008. 

Vonage Dodges a Bullet

Vonage has Vonage has signed definitive agreements to refinance its convertible debt, a move that virtually everybody assumed was essential for Vonage to stay in business, and about which there has been doubt in some quarters. 

The financing package consists of a $130.3 million senior secured first lien credit facility, a $72.0 million senior secured second lien credit facility, and the sale of $18.0 million of senior secured third lien convertible notes.

Vonage says it will use the net proceeds of the financing along with its own cash on hand to repurchase up to $253.5 million of the company's existing convertible notes in a tender offer commenced on July 30, 2008. 

Verizon Has Fewest Dropped Calls

Verizon Wireless has the lowest percentage of dropped calls among all major U.S. service providers, according to ChangeWave.

Verizon subscribers report that, on average, just 2.7 percent of their calls were dropped over the past 90 days, nearly a percentage point better than AT&T (3.6 percent), their closest competitor.

Sprint/Nextel (4.4 percent) and T-Mobile (4.5 percent) were third and fourth respectively.

Importantly, one-in-five Verizon users (20 percent) say they didn't experience ANY dropped calls over the past three months, compared to 18 percent for T-Mobile, 17 percent for AT&T, and 10 percent for Sprint/Nextel.

In addition, 43 percent of Verizon's customers in the survey say they're "very satisfied" with Verizon's service.

New Versions of Chrome and Firefox are Faster

New beta versions of Firefox and Google Chrome now are available, and in recent tests, CNet found Firefox the fastest, with Chrome right behind, in executing JavaScript, which powers applications such as Gmail and Google Docs. 

The answer: both browsers made big strides, but Firefox still beats Chrome on one widely-used performance test, says  Stephen Shankland. CNet writer.

When Chrome was released, Shankland ran Google's JavaScript speed test on Firefox 3.0.1, the initial Chrome beta, Internet Explorer 7 and 8 beta 2, and Safari 3.1.2. 

He found Chrome led the speed test with an overall score of 1,851 and Firefox in second place at 205. 

Running the same test on the latest developer version of Chrome, 0.3.154.3, boosted the browser's score to 2,265, a 22 percent increase. And Firefox jumped 15 percent to 235. Firefox 3.1 beta one, he says. 

That test measures Firefox without its new TraceMonkey JavaScript engine enabled, though.

Faster execution matters for a couple of reasons. At some point, the browser will become the client for executing any number of consumer and enterprise applications that are not stored on a local hard drive. Speed will matter. 

Also, users simply like faster-executing Web pages.  Faster execution provides a higher end user experience. 

Telco Business Model Transformation? Been There; Done That

Some people think the global telecom industry is not lead by people capable of fundamental business model transformation. Nobody can say for sure whether that opinion is correct.

What might be useful to reflect on, though, is the fact that the global already has managed several fundamental shifts in its revenue. 

In 1995, for example, U.S. telcos earned about $19.49 a month selling consumers basic dial tone. But telcos earned $42 a month selling enhanced services and long distance. 

In other words, 68 percent of consumer revenue was generated not from the basic dial-tone product but from other services and applications. For an industry generally considered at that time to be an "access lines" business, the appellation already was inaccurate. 

In 1997, nearly half of all local telco revenue came from long distance alone. By 2007, long distance represented just 18 percent of total revenue.  So a business once based on "lines" then became a business based on long distance and enhanced services, only to be replaced by a business where half of all revenue was generated from wireless services.

Also, consider that over the last decade we have seen the broadband access business grow from single digits to "near saturation" levels. 

The point is that business model transformations have happened several times in industry history, sucessfully. The next transformation likely will involve wholesale and business partner services of various types, augmented by content services. 

One can argue telco executives can't make this next change, even if they have transformed themselves before. I would not bet on that. 

Life throws curve balls.

Life throws curve balls.  Patriots don't get the perfect season. Red Sox come from behind to keep their title hopes alive. It happens. 

Enterprise Mobility Demand Still Growing

Roughly half of all  business and consumer communications spending goes to wireless services. But there appear to be relatively-distinct niches within the enterprise mobile user base. The "information worker" segment, including sales, information technology and managers use real-time data, email, calendar and portal accessed applications, say reserachers at Forrester Research. There are lots of devices used and IT staff tends to have limited control over them.

"Task workers" such as supply chain personnel, medical personnel, manufacturers and others using line-of-business applications on a single device such as inventory scanners, data entry tablets. IT tends to have significant control over the limited range of supported devices. 

But there is an emerging demand from "wannabes," including just about any worker not represented in one of the two other segments. Wannabees likely will use a wide range of devices for email, calendar, product information management and basic portal access, for work and personal uses. IT will have to support a wide range of devices and will have limited control over them, Forrester argues.

So far, though 57 percent of smart phone users engage in work--related phone calls, 

48 percent check email and 42 percent acess the Internet or a company Intranet for work related information. Some 35 percent of users say they use their smart phones "only for personal purposes." Keep in mind that nearly seven out of 10 enterprise mobility users pay for their own service. 

At the moment, 69 percent of employees pay for their voice service, while 23 percent have mobile paid for by the employer, Forrester says. About eight percent of workers cost share with their employers. 

About 59 percent of employees pay for their own mobile data services. About 34 percent have their mobile data service paid for by their employers. About seven percent of workers have a cost share agreement with their employer. 

What Does AT&T Do For An Encore?

Executives at AT&T have to be spending time thinking about what to do when the Apple iPhone ceases to be an AT&T-only product. 

In October 2006, before potential customers were aware that AT&T would have exclusive rights to market the iPhone, Verizon Wireless was getting twice as much upside from "churners" as AT&T was. 

About 28 percent of poll respondents surveyed by ChangeWave indicated they would be switching to Verizon for mobile service. About 14 percent indicated they would be switching to AT&T. 

After the deal was announced, the churn gap closed. And AT&T has had a net advantage in customer switching behavior since very-early 2008. Many would say this is an "iPhone effect." Some might argue it also is the result of other activities, including AT&T promotional activity. 

We won't really know until the iPhone exclusivity deal ends. In the meantime, AT&T marketing staffs have to be working on the next game-changer. 

Sylantro in the Amazon Cloud

Sylantro Systems has announced compatibility of its Synergy platform with the Amazon Web Services’ Elastic Compute Cloud (EC2).  By doing so, Sylantro makes its voice and Web applications available in a cloud computing environment.  

Amazon EC2 from Amazon Web Services is a Web service providing hosted, resizable compute capacity on a pay-as-you-go basis. It is designed to make Web-scale computing easier and cheaper.

So look at it this way: applications developed for Web delivery, using the Amazon infrastructure, now can be configured to work with Sylantro calling and communication features. In principle, this allows more applications or services to provide a range of communication features one normally would expect from a business phone system. 

Service providers can use the capability to test demand for services provided on a hosted basis, especially on a "sample this" basis, or as a way to provide hosted business or consumer communications services with a disaster recovery angle.