Vidtel Launches Video Calling Service

Vidtel, a Sunnyvale, Calif. company lead by Scott Wharton, CEO and former BroadSoft VP, has launched its videoconferencing service, which today supports video calls between Vidtel users. In addition to video calling, users can also make and receive regular voice calls to anyone in the world with a telephone number.

In 2009, Vidtel will add the capability to call other video users around the world regardless of the service or type of device they use.

That means interoperability with Skype, iChat, Google and video-enabled mobile phones (3G and 4G mobile phones), Wharton says, arguing Vidtel will create the first interconnected video calling network, offering a standard by which all video callers can call each other, regardless of service they are using.

Vidtel uses the Grandstream GXV-3000 video phone, sold separately at a cost of $199.95 plus tax. Two service plans are offered. The "Standard" plan costs $14.95 per month or $99.95 a year. The standard plan offers unlimited video calling within the Vidtel network (Vidtel-to-Vidtel customer) using a regular 10-digit phone number.

Users also can make domestic and international phone calls in addition to video phone calls. Calls within the US, Canada and Puerto Rico are 3.9 cents per minute. Enhanced 911, a dedicated telephone number, call waiting, voicemail, caller ID and call forwarding, plus enhanced features you can’t get anywhere else like video mail.

The "Premium" plan costs $29.95 per month or $249.95 a year. The premium plan includes unlimited video calling plus unlimited telephone calls within the US, Canada and Puerto Rico. Like the Standard plan, the Premium plan includes enhanced 911, dedicated telephone number, call waiting, voicemail, caller ID, call forwarding, and video mail) and simultaneous ring.

Vidtel charges a one-time account activation fee of $19.95 and shipping and handling fee of $19.95. Vidtel monthly service packages are also charged the required federal and state taxes and 911 fees.

The video mail feature allows users to send and receive video messages from friends and family. Video messages can be retrieved on the phone or in email. Video messages can be forwarded to any email address, anywhere in the world.

At present, the service requires getting a new phone number. In 2009 uesrs will be able to transfer an existing number to Vidtel.

Billing is by credit card and users obviously require a broadband Internet connection.

Wharton says target customers include family and friends who live far away. Wharton also thinks some small or medium-sized businesses might use it as an affordable conference calling system.

Mobile Penetration at 90% of 18-Year-Olds

Some three quarters of online youth in North America have a mobile phone today, including more than 90 percent of 18-year-olds, says Charles S. Golvin, Forrester Research analyst. These young people rely heavily on their cell phones for a wide variety of communications and content services, he says.

In fact, they report spending more time texting than on any activity other than face-to-face contact with their friends. Almost one quarter of these young mobile users access the Internet on their phones, as well.

Broadband is Demand--Not Supply--Constrained

Broadband access in the United States now is a demand-constrained "problem," not a supply-constrained issue, for the most part. That is not to deny there remain some homes too expensive to reach economically using wired networks. But it is hard to ignore existing satellite broadband, terrestrial wireless broadband and multiple mobile broadband networks in service, even when a wired connection is not available.

Indeed, a recent study by Connected Nation found that nearly one-half (44 percent) of those with no home broadband connection say "I don’t need broadband." That suggests availability is not the actual problem.

Likewise, the top barrier to computer ownership is also a perceived lack of need. Nearly two-thirds (62 percent) of those who do not own a computer say "I don’t need a computer," Connected Nation finds.

That isn't to say cost is not an issue at all. Nearly one-fourth (24 percent) of those who do not own a computer cite the up-front cost as a barrier. Similarly, nearly one-fourth of those without a home broadband connection say broadband is too expensive.

Four out of ten parents with children who are without a home computer see no need for having a computer in the home. And nearly one-third (30 percent) of parents with children who do not have a home broadband connection see no need for a broadband connection.

More than one-half (56 percent) of people with disabilities who do not own a computer see no need for having a computer in the home. Four out of ten people with disabilities who do not have a home broadband connection see no need for a broadband connection.

Predominantly, even in contexts with reliable supply of broadband, it is consumer demand for broadband that is the tallest barrier to adoption and represents America’s competitive vulnerability, Connected Nation argues.

For example, among residents with children at home but without a computer at home, 41 percent did not see a need for a computer at home and 30 percent did not see a need for a broadband connection.

So which segments are most commonly receptive to broadband and use of computers? Households with children who need Internet access for homework are a high-adopter segment. About 84 percent of households with children own a computer, compared to 74 percent computer ownership among all residents.

And 62 percent of households with children choose to subscribe to broadband services at the home, contrasting with the overall broadband adoption rate of 50 percent. Parents, therefore, generally recognize the importance of what broadband has to offer their children. However, even among these parents with children at home, 13 percent still do not own a computer and 38 percent do not have a broadband home.

According to consumers, the primary barrier to computer ownership and home broadband adoption is not expense or lack of available broadband service, but rather, a perceived lack of need. When asked why they don’t subscribe to broadband or why they don’t own a computer, consumers responded most often with, "I don’t need it."

FCC Free National Wireless Plan Set for Dec. 18 Discussion

Federal Communications Commission Chairman Kevin Martin is pushing for action at its December 18 meeting on a plan to offer free, pornography-free wireless Internet service to all Americans, the Wall Street Journal reports. The plan would require the winner of to set aside a quarter of the airwaves for a free Internet service. 

The frequencies are the Advanced Wireless Service-3 block, which the FCC originally hoped would attract bidders to create a nationwide public safety network. The FCC reportedly wants the winner of the AWS-3 auction to devote 25 percent of the bandwidth to free wireless nationwide broadband with a downstream speed of 768 Kbps.

Predictably, carriers and service providers aren't happy about the idea, as readily-available free service would crimp demand for "for-fee" alternatives. But some policy advocates object to the "pornography free" provisions. 

Separately, a coalition of groups is calling for spending on a national broadband program as part of a possible infrastructure investment program Congress has been talking about. Precise details so far are vague, but the 57 member group, "A Call to Action for a National Broadband Strategy," includes Google, AT&T, Verizon, trade associations, labor unions and others.

The stated objective is to provide every American with affordable access to a high-speed broadband connection. Presumably that also means enacting policies to stimulate private investment and consumer adoption of broadband.

Tax incentives, grants and subsidies from the FCC's Universal Service Fund and different approaches to spectrum allocation are examples of possible policies the group suggests are worthy of consideration. 

One might note a growing body of evidence suggesting that demand, not supply, is the issue, for most potential consumers. Notable issues remain in rural areas, of course. 

Mobivox Decides to Work with Service Providers

Mobivox, which has operated as an over-the-top application, is changing its business model. Rather than compete with other over-the-top VoIP providers, Montreal-based Mobivox, which allows people to make free or cheap phone calls, is increasingly interested in partnering with service providers. 

In particular, Mobivox is white-labeling its platform of services, such as voice-enabling calls and an online hosted address book. Jajah, for example, uses Mobivox to provide voice-enabled dialing.  The Jajah Concierge service activates a phone call to anyone in a user's address book.   

Mobivox can provider a number of features for service provider partners in addition to voice-assisted calling. It also can be used to support group communications for social and business users, allowing users to say the name of a predefined group in the

address book or use the voice assistant to add contacts to a live call. 

Mobivox also can enable voice-activated calls to Instant Messaging voice clients from any phone. 

The reverse charging feature can enable receiving calls from anywhere in the world at local termination rates. Call costing and screening tells users who is calling and what it will cost to accept a call.

The voice-to-text feature supports hands-free recording of messages from any device, the messages being transcribed into text for delivery as email or text messages.

The issue here is that Mobivox now is an example of a "VoIP 2.0" firm concluding that its business interests are better aligned with "VoIP 1.0 service provider partners" rather than battling them as a stand-alone entity. Voice is a scale business, and Mobivox seems to have concluded that scale can be gotten a lot faster working with service providers than going it alone. 

Clearwire Might Use LTE

Clearwire CEO Benjamin Wolff says the company would consider using Long Term Evolution, the fourth-generation platform global mobile providers have settled on as their preferred 4G network. Wolff says that if LTE becomes a dominant wireless technology, Clearwire would consider using the technology in addition to WiMax.

The issue is not "if" LTE becomes a dominant technology, but probably only "when." That suggests LTE is in Clearwire's future, one way or the other. That isn't to say Clearwire would abandon WiMAX completely, or that other providers would. Such a move by Clearwire might well relegate WiMAX to "niche" status in the U.S. market, though.

Hawaiian Telcom Declares Bankruptcy

Carlyle Group's $1.65 billion bet on Hawaiian Telecom has gone bust. When the 2004 purchase from Verizon Communications was announced, Carlyle Group executive and former Federal Communications Commission Chairman Bill Kennard called it an "exciting opportunity" that was expected to add many new jobs, according to the Washington Post.

The bankruptcy filing by an incumbent local exchange carrier is extremely rare.

Hawaiian Telcom has about $1 billion in debt and missed $26 million in interest payments last month. It had been trying to work out a debt-restructuring plan with its creditors but apparently was unable to do so.

Of its current $1 billion in debt, about $574.6 million is in bank loans and $500 million is in bonds.

It isn't clear yet whether there will be other similar problems popping up. It might happen that a major proposed private equity buyout fails to occur, though.

Bell Canada Enterprises and the Ontario Teachers Pension Plan, which is leading a BCE buyout plan along with three U.S.-based private equity firms, are haggling over the deal's $1.2 billion break-up fee, according to a report in the Toronto Globe and Mail.

The acquisition, valued at around $35 billion recently, had been expected to close by Dec. 11, but might now be in question after independent valuation firm KPMG advised that market conditions and other factors would make it unable to render a solvency opinion on the deal.

Ease of Use Still a Problem

Technology ease of use remains a problem, according to a new survey conducted by the Pew Research Center's Internet & American Life Project. Nearly half (48 percent) of adults who use the Internet or have a cell phone say they usually need someone else to set up a new device up for them or show them how to use it. And many users of various devices and services also encounter breakdowns from time to time.

Some 44 percent of those with home Internet access say their connection failed to work properly for them at some time in the previous 12 months. About 39 percent of those with desktop or laptop computers have had their machines not work properly at some time in the previous 12 months as well, says John Horrigan, Pew Center associate director.

About 29 percent of cell phone users and 26 percent of smart phone usres say their device failed to work properly at some time in the previous year.

Some 15 percent of those experiencing problems with PCs, mobiles, Internet access or smart phones said they were unable to fix the problem. About 38 percent of users with failed technology contacted user support for help while 28 percent say they were able to fix the problems themselves. Some 15 percent fixed the problem with help from friends or family. About two percent found help online.

Voice a Broadband Killer App?

There is much truth to the notion that "email was the killer app for dial-up." There may also be some truth to the notion that "voice is the killer app for broadband." At least that seems to be a developing theme for SureWest Communications. 

SureWest benefits by selling more bundled triple-play services with the offering, thereby enhancing overall subscriber margins. "We have converted nearly 2,900 customers from the telecom voice product to the new broadband Voice over IP service since its launch earlier this year," he says. "And of those converted customers, over 20 percent added SureWest Internet with their phone service, and over 10 percent added TV."

In other words, VoIP has driven buying of other key services as well, especially broadband Internet access and IPTV. SureWest broadband residential voice RGUs increased seven percent year-over-year and five percent sequentially. In the original Sacramento region, voice RGU growth was 18 percent year-over-year and 13 percent sequentially.

U.S. Mobile Data Prospects in 2009

The U.S. wireless data market grew 7.3 percent sequentially in the third quarter 2008 and 37.5 percent year over year to reach $8.8 billion in data services revenues. For first nine months, mobile data revenues of $24.5 billion were equal to the revenues generated for all of 2007. 

The big question is what happens in the fourth quarter and after, as it appears handset upgrades and sales, for example, already are slowing. Some observers think wireless data service revenes will hold up. Analyst Chetan Sharma, for example, notes that text messaging represents 40 percent of all data revenues, and that the texting habit is unlikely to change. 

In the third quarter, U.S. messaging volumes grew 38 percent while messaging revenues grew six percent. Use of wireless dongles and cards for mobile PC access has been a big driver of revenue of late, and Sharma thinks that could an area of softness though, for the simple reason that many former users will fall victim to layoffs, while managements might be less generous in providing such technology to their remaining employees.

Still, it is conceivable that mobile data growth in the U.S. market will flatten out in 2009, says Sharma. "If the job loss rate increases substantially, more than it has been in the third quarter and into the fourth quarter, we might, just might, start to see flattening of data revenues in the first quarter of 2009 and gradual decline over the course of the year," says Sharma. 

Mobile providers probably can counteract economic issues by emphasizing sales of sub-$200 smart phones bundled with data plans, Charma says. To the extent there is an economic effect, it is likely to be on average revenue per user, Sharma suggests. 

That likely will be the case for wired network providers as well, as price and bundle promotions increase.

Operators in Europe have already started to feel the pinch, Sharma says. Vodafone and Telefonica recently have seen a decline in overall revenues. Though overall service revenues declined 1.7 percent, data revenues grew 30 percent. That suggests the importance of data plan, handset and bundling programs. 

100 Mbps Inevitable; Only Question is Price

NTT long has been the "gold standard" for residential bandwidth. But Verizon has closed the gap, suggesting that 100 Mbps is destined to become a common access speed.

The issue is how long it might take before such speeds are affordable.

To be sure, most of that bandwidth is needed for one simple reason: entertainment video. In its own analysis, Verizon has estimated that current and future needs for virtually all other applications top out at about 15 Mbps symmetrical bandwidth.

Beyond that, it is network-hosted applications and new forms of video that require higher bandwidth. Since it delivers linear video using a separate wavelength, Verizon thinks it really only needs about 15 Mbps downstream to support on-demand video.

But there's little question what happens if three-dimensional TV is commercialized. Then 75 Mbps might be required to deliver one stream.

88% of Internet Users Will Be Watching Online Video by 2013

By 2013, more than 69 percent of online video ad revenue will be associated with long-form video. By that point, about 88 percent of all Internet users will be watching online video as well, eMarketer now projects.

As good as that will be for content owners, it is unclear whether the trend will be good, bad or neutral for Internet access providers. Much depends on how involved ISPs are in the revenue value chain.

Have Landlines in Service Actually Decreased?

Just about everybody assumes that landlines in service have declined over the last seven or eight years. To be sure, if one looks at Federal Communications Commission data, there is a net loss of about 34 million access lines between the end of 2000 and the end of 2007, though there has been significant shift of market share from incumbents to cable TV and competitive local exchange carriers.

But there are some facts one wouldn't immediately see. Wired broadband connections increased by more than 65 million over the same time frame. And business lines in service likewise increased, despite technological substitution of broadband for narrowband lines.

So one has to differentiate between lines that shifted to new providers, lines that shifted from narrowband to broadband and lines that shifted to over-the-top providers (A customer buying an over-the-top VoIP service is still a wired voice customer, even if a "line" appears to be gone.

If one assumes that the roughly three million U.S. VoIP lines are active, revenue-generating wired voice lines, the market as a whole lost about 31 million lines, for all reasons, between 2000 and the beginning of 2008.

Broadband lines in service grew from perhaps five million in 2000 to about 65.4 million in 2007. Even if every broadband line represented the loss of a narrowband line, overall lines in service clearly have grown.

Is TV Getting Cannibalized or Not?

A new IBM study reveals that online video is cannibalizing television consumption. Another study by Nielsen says U.S. TV watching actually has climbed. Maybe there are key differences between U.S. and global TV viewing that could account for the differences. But the Nielsen report also notes that “TV use is at an all-time high, yet people are also using the Internet more often; 31 percent of which is happening simultaneously,” Susan Whiting, Nielsen vice chairwoman says.

That's a potential way of harmonizing some of the difference. People could be watching online video while the TV is on in the background.

The IBM poll of 2,800 people in six countries found that 76 percent have viewed video online and that 45 percent do so regularly. About 15 percent of those who watch online videos say they watch "slightly less" TV than they used to, while 36 percent say they watch "significantly less" TV as a result of their online video viewing. Indeed, "place-shifting alternatives may be changing consumer couch-potato behavior," the study claims. IBM polled 2,800 people in six countries for the study.

In the third quarter of 2008, the average American watched approximately 142 hours of TV per month, five hours more than they watched in a typical month during the same period a year ago, Nielsen says. During the 2007 to 2008 television season, the average U.S. household consumed eight hours and 18 minutes of TV per day, a record high since Nielsen started measuring television in the 1950s.

Americans who used the Internet were online 27 hours a month, and people who used a mobile phone spent three hours a month watching mobile video. Men were more likely than women to watch via mobile phone, while women were more likely then men to watch video online.

HDTV Drives 2.3 Million Churn Events

HDTV purchases seem to be driving some amount of service provider churn: nine percent of HDTV owners say that they switched multi-channel video providers when they purchased their HDTV, according to Leichtman Research Group. About 22 percent of all households purchased a new TV set in the past 12 months, with 43 percent of this group spending over $1,000 on a new TV.

There are about 114.5 million U.S. TV households. That suggests 25.2 million TV homes bought HDTVs. If nine percent of those buyers switched providers, that suggests 2.3 million homes switched providers, or about two percent of TV households, over the last 12 months, because of an HDTV purchase.