53% of American Adults are "Gamers"

Some 53 percent of American adults age 18 and older play video games and about one in five adults (21 percent) play everyday or almost everyday. While the number of video gamers among adults is substantial, it is still well under the number of teens who play. Fully 97 percent of teens play video games.

Younger adults are considerably more likely than older adults to play games, and the likelihood that an adult is a video gamer decreases significantly with age.

Fully 81 percent of respondents18-29 years old play games, while only 23 percent of respondents 65 years old and older report playing games, according to to a recent Pew Internet & American Life Project poll.

Overall, men (55 percent) are slightly more likely than women (50 percent), and urbanites (56 percent) are a bit more likely than rural-dwellers (47 percent) to play any kind of digital game. There is no significant difference in game playing across income groups or between suburbanites and adults from other locales.

A person’s education level is another predictor of video game play. Some 57 percent of respondents with at least some college education play games, significantly more than high school graduates (51 percent) and those who have less than a high school education (40 percent).
Current students who are 18 or older are also avid players. Notably, 76 percent of students (82 percent of full-time and 69 percent of part-time students) report playing games, compared with 49 percent of non-students.

AT&T Will Hit 10% Video Penetration in December 2008

AT&T now says it will end the year with more than one million U-verse (multi-channel video) subscribers. The company expects to surpass that milestone in mid-December. That is important for people who track progress telcos are making in the video market, which is the mirror image of telcos losing voice customer share to cable companies.

At that level, AT&T will have surpassed 10 percent penetration within one year when we begin marketing operations. That itself is a milestone on the way to stable long-term penetration for wired network providers, which has in some other cases reached 30 percent or higher levels in a few markets where there is robust multi-channel video competition. Verizon has attained that level in some of its FiOS video markets, for example.

Most telcos probably think they will get to 20 percent in several years. Verizon already has hit about 24 percent penetration where it offers FiOS video. On average FiOS TV achieves 17 percent penetration in just 12 months and over 26 percent penetration within two years, Verizon reported in the third quarter of 2008.

Covad Certifies PBXes

Covad Communications has certified IP PBXs from TalkSwitch, Grandstream, Vertical and Epygi for its new Covad Integrated Access service.
 
IP PBXs certified by Covad include:
* TalkSwitch IP PBX equipped for VoIP (models 244/248vs, 284/288vs,  484/488vs and 844/848vs)
* Grandstream GXE502X ALL-IN-ONE IPPBX 
* Vertical Xcelerator IP
* Epygi Quadro 2x and Quadro 4x IP PBX

Mass Media Will Miss the Bottom...Again....

Count on the mass media to miss the "bottom" of the present recession: they always do. You now are seeing headlines about layoffs at larger and mid-sized companies.
Economists now say we have been in recession since December 2007. The only good news there is that one year of the recession already has passed.

So whether you think this is a garden-variety recession or a longer one, the average recession lasts 18 months. By the end of the year we'll have been in recession a full 13 months. And layoffs always are a lagging indicator.

So as you note news reports about job losses, keep one thing in mind: when we reach the peak of the job losses, the recession will have hit bottom and the recovery will have begun.

Peak job losses in the 2001 recession were 325,000, which were reported in October, the last month of that recession. Peak losses during the 1990-91 recessions—306,000—were reported in February 1991, again one month before the recession ended.

During the 1981-82 recession, peak job losses were 343,000, a figured reported four months before the end of the recession. A bottom in the labor market often indicates the near bottom of a recession, since employment is a lagging indicator.

There are implications for service providers. Though not every company is as cash rich as Cisco or Apple, opportunities to take market share or reshape a market always present themselves in a recession.

And there is clear evidence that in some customer segments, such as small business, hiring actually increased every month of 2008, says SurePayroll, a company that makes its living processing employee payroll checks (through the end of November, the last month where data is available).

Hiring tends to drive increased buying of communications products, so whatever weakness you think you will see in the enterprise segment, small business trends could well be quite different.

Small Business: Conventional Wisdom is Wrong

With all the bad news we are hearing, the conventional wisdom is that small businesses will be cutting back on hiring. As sometimes occurs, the conventional wisdom often is wrong. Keep in mind that economists now have concluded the U.S. economy has been in recession since December 2006.

So what might surprise you is that SurePayroll, a company that makes its living processing employee payroll checks, hiring in the small business segment climbed steadily through 2008.

What that means for providers of communications services to small businesses is that underlying demand in the small business segment grew all year in 2008.

After the carnage of October 2008, one might have expected, and news reports suggest, a wave of layoffs starting in November 2008. But SurePayroll says U.S. small businesses increased their staff levels by 0.26 percent in November. “It was the second lowest percentage increase this year, but it extended the run of monthly hiring increases to an impressive twenty-four months,” the company says.

The SurePayroll Hiring Index, which tracks the size of small businesses, ended the month of November at 11,249, which is 30 points higher than where the index stood in October.
For the first 11 months of 2008, when the economy was definitively in recession, small business hiring went up 3.3 percent nationwide.

Hosted IP Telephony: No Pain; No Gain

Retailers of hosted IP telephony (hosted PBX) services to small and medium-sized businesses have a problem, and it isn't the economy or other competitors.  The big problem is that most users are fairly satisfied with their current phone solutions. 

"Most users do not have problems with their current phone system," Andy Randall, MetaSwitch VP, notes. And that is a big barrier to adoption of hosted IP telephony. If there is no problem, there is no reason to buy an alternative solution.  

Essentially, the problem is that, in many cases, there is no current "problem" to fix. The "problem" essentially be created, though. If a potential customer finds out that they are "overpaying" by quite some amount for their voice and broadband access services, that becomes a problem. 

So one essential requirement here is to "create" a big enough problem that hosted IP telephony solves. Keep in mind that most smaller businesses essentially can compare any new solution to what they already are paying. And that metric typically boils down to a cost per employee per month. 

Randall  thinks providers of hosted PBX services to small and medium-sized businesses need to price at about $30 to $60 per employee per station to disrupt the value-price relationship now offered by current voice-plus-data services already bought by SMBs. 

The reason is that most SMBs today are spending from $29 to $125 per employee per month for voice and data access. At about 15 stations, hosted IP telephony generally costs $$56 to $106 per employee per month. At that rate, a new hosted IP telephony offer does not save SMBs money. And though new features are important, the biggest single objection to a sale is going to remain that the new solution, despite its benefits, does not save money. 

Since users expect hosted IP solutions to save them money, retail providers are trying to push a boulder uphill. "Where's the business driver?" Randall rhetorically asks. If a premises doesn't save an SMB money, and neither does a hosted PBX solution, there is no great incentive to change. "Disruption requires moving lower than $56 to $106, per employee, per month, for the total broadband access and voice offer, Randall argues. 

IP trunking also will be important for SMBs that really do not want to replace their current desk phones for new IP models. In part, SIP trunking can be a stealth adoption strategy. "Some people will keep their PBX for a few years," Randall says. "So sell the IP trunk today and then sell hosted voice later when the customer is ready to replace the TDM sets."

For 15 employees, a hosted IP telephony solution, plus the broadband, possibly costs $86 per employee per month, Randall says. The problem there is that it is tough to show savings from switching. And for any technology, whatsoever, the key is that the proposed new solution has to offer enough value to offset the pain level of the current solution.

The "problem" hosted IP telephony is supposed to fix is not generally perceived by the potential customer to be a "problem."  For most SMBs, the phone system they have works. There is not an obvious "crisis" that the hosted IP telephony solution can solve. 

And despite what most technologists tend to think, people don't change behaviors and adopt new technology because something about the solution is "10 times better" on some technical measure. What has to happen is that the pain a potential customer currently is experiencing can be alleviated by changing. 

At current pricing levels, lots of potential customers will not be persuaded to change because the level of pain is not so high. "The main competitor any retailer of hosted IP business voice faces is 'business as usual,' not some other competitor in the market," Randall says. 

One More Reminder: WiMAX is Not a Business Model

Clearwire CEO Benjamin Wolff says the network will built to support both WiMAX and Long Term Evolution, the "rival" standard favored by the world's GSM providers and even CDMA-based networks such as Verizon Communications.

"Our vendors will be able to deliver network infrastructure equipment to us that will enable us to operate both mobile WiMAX and LTE technologies if we decide that it makes sense to do so several years from now when LTE becomes commercially available," says Wolff.

"If LTE truly becomes established as a global standard as WiMAX has, Clearwire will be well positioned to take advantage of that opportunity," says Wolff.

Though sometimes obscured by the hype, WiMAX is broadband radio access. It is not a business model. Clearwire's willingness to use both protocols is simply further proof. If there is a new business model to be built, it will come from packaging, pricing and other elements that would create something like an open broadband wireless Internet experience, akin to what users can do today with 3G dongles for their PCs, but also including new "end user" segments, devices or applications.

Still, it is far from clear that even if Clearwire succeeds at doing those things, it will be alone. Verizon Communications has been quite vocal about opportunities for machine-to-machine applications, which would indeed open up new "end user" segments. And as we have seen time and time again, it isn't all that hard for one provider to mimic another provider's packaging, pricing or device features, if it is necessary.

Clearwire probably has something between a one-year advantage to two years worth of advantage on the "raw bandwidth" dimension. That won't provide much of a differentiator for long. To be sure, Clearwire has plans that would move it further away from the current mobile narrowband or broadband packaging model.

What remains untested is the size of the problem and the amount of "pain" users now face in the mostly-closed mobile broadband model. Technologists might experience "closed" environments as a pain point. Most users do not. More flexible, casual pricing arguably addresses a bigger pain point: the desire to occasionally use features.

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.