End of the Internet"

There's probably no shortage of people who decry the "end of the Internet as we know it."

Some think it is a good thing, in the sense of the Internet becoming a utility like electricity. "The biggest take-away from last week’s Consumer Electronics Show is that every device in our lives is rapidly becoming a computer connected to the Internet," says Edgelings CEO Tom Hayes. "That new reality means the Internet will soon transition from the conspicuous to the unconscious; from something you go “onto” to something you never go off of-and in fact hardly even think about."

Others worry or lament the emergence of "private," traffic-shaped," managed or other forms of IP networks. There are public policy issues, to be sure.

But IP networks are more than the Internet, and the Internet itself is changing. And there is a paradox here. Ask anybody in the communications policy community whether the Telecommunications Act of 1996 succeeded and you'll get, as often as not, an argument that it has failed in some major way. But ask those same people whether their own choice, value and services are better now than they were then, and everybody will say "yes, my services are better, cheaper, more valuable."

Ask many policy advocates about the health of the Internet and they will say things are terrible, for any number of reasons. But ask those same people whether the Internet is more valuable today--much more valuable and useful--than it was before 1996. I suspect we all know the answer.

There are serious public policy issues, of course. But the Internet is not now what it was. Neither are television; radio; audio; magazines; newspapers; theaters; library catalogs; classifieds; phones; computers or data networks. In one sense, we can "save" the Internet about as meaningfully as we can "save" black and white, monaural, NTSC, broadcast television.

End? How about "beginning"?

U.K. Broadband: Lies, Damned Lies and Statistics

Samuel Clemens once quipped that 'there are three kinds of lies: lies, damned lies, and statistics." So the U.K. Office of Communications says real-world end-user average peak throughput is about half the "advertised" broadband speed users pay for. 

On the other hand, Ofcom also notes that average speeds run between 81 percent to 85 percent of the "advertised" speed. 

In fact, subscribers on services promising 2 Mbps or less get those speeds about 91 percent of the time. Since most broadband subscribers in the U.K. are on lower-speed tiers of service, the national average speed delivered is about 85 percent of the maximum line speed.

So whether performance is "good" or "bad" is a statistical matter, depending on whether peak throughput at the peak congestion hours are examined, compared to average performance across each day, week or month. "Peak" performance also hinges on matters beyond a service provider's direct control, such as the state of in-home wiring and capabilities of in-home end user equipment. 

That said, the difference between "peak" throughput and "average" is directly affected by the fact that access is a shared resource, in the access network, in the aggregation network, on the backhaul networks and at the servers users are trying to communicate with. 

The actual throughput received by its national panel of testers was 3.6 Mbps in the 30 days beginning October 23, 2008. That throughput represents 49 percent of the average ‘headline’ speed (7.2 Mbps) and 83 percent of the average maximum line speed (4.3 Mbps), Ofcom reports. Consumers on the most popular broadband headline speed package, advertised as offering  "up to’ 8 Mbps," received an average actual throughput speed of 3.6 Mbps, about 45 percent of the headline claim, and they had  an average maximum line speed of 4.5 Mbps, representing 56 percent of headline speed.

About 20 percent of testers on the 8 Mbps package received an average speed of less than 2 Mbps. Still, about 83 percent of respondents say they are "happy" with their service, while 21 percent report they are dissatisfied for some reason. About 16 percent express dissatisfaction with the "value for money" they receive and 13 percent are unhappy about service reliability.

About 28 percent of users were unaware what the advertised speed of their connection was. Rural consumers on "up to" 8 Mbps packages received average speeds 13 percent lower than their urban counterparts.

To be sure, Ofcom notes there are many reasons why throughput might be slowed. Congestion on the wider internet, loop length, the condition of the access cables, poor home wiring, absence of filters, computer clock speed or router specs can degrade performance.

Honesty in advertising is an issue, of course. The issue is that broadband access is a shared, best effort resource. There will be times when any single user actually will experience the full advertised throughput. Most of the time, likely not.  So long as users use "maximum speed" and "cost" as the key criteria to compare providers, it is not likely the advertising verbiage will change. 

The other issue is how to describe "average" speeds, across different provider networks, in ways that are consistent and meaningful, since the actual end user experience always will differ for all sorts of reasons, some not under the direct control of the access provider. 

$10 iPhone Tethering?

The rumor that AT&T is considering both Apple iPhone tethering (allowing it to act as a PC modem) and an incremental $10 charge over a standard data plan, would be a smart move, in the right direction. 

Since AT&T expects virtually all consumer devices to be capable of wireless broadband connection, some of us already have been figuring out what that means, cost-wise, for the devices we support, keeping in mind that some of us support a whole family's requirements.

It is self-evident that this future will have a tough time becoming material reality if present pricing for mobile broadband remains where it is. There is no way most parents would be willing to pay $30 to $60 per connected device to participate in such a world, where a dozen to scores of devices might plausibly need to be connected. 

The only way this idea really becomes a mass option is to create unified data access plans built on the notion of family plans, where all devices and people can share one bucket of access. Even fixed broadband penetration would not be where it now is if users had to pay a separate fee for each device, and each user, accessing a single connection. 

Windows 7: Faster, Longer, Fewer

"Windows 7 should boot more quickly, have longer battery life and fewer alerts,"says Steve Ballmer, Microsoft Corp. CEO. That would be nice. All three are present annoyances.

AT&T Mobility Bundles PC

Dell  and AT&T Mobility have launched a limited-time offer (ending Jan. 31, 2009) bundling 3G service with a PC, requiring a two-year contract to AT&T "LaptopConnect" costing $60 a month. 

The offer extends the common mobile phone offers that bundle discounted handsets with service to mobile PC service. The Dell Inspiron Mini 9 will cost $99 after a $350 mail-in rebate. 

Orders can be placed on Dell.com.

There are several obvious implications, some pertaining to service provider strategy and revenues, some pertaining to public policy issues. The service provider angle is that, as handset subsidies have boosted mobile subscriptions, so PC subsidies will boost use of mobile PC data plans. 

The public policy angle is that, to the extent there are users who want to use the Internet, but do not own PCs, this sort of bundling addresses their needs. To the extent there remains a gap between desire to use the Internet, and the means to do so, programs of this sort will address the problem. Some people do not want to use PCs or the Internet, and virtually nothing is going to entice them to do so. On the other hand, bundling access devices with service is a proven way to stimulate demand. 

Another angle is that this bundle moves us further towards a world when broadband access will be a "personal" service. Where in the past voice service was to "places," it now is to "persons." Where broadband access largely is to "places," this sort of plan moves us in the direction of broadband access to "people."

Frogs at the Bottom of Wells

Inevitably, all of us are paying quite close attention to all things economic these days. Just as inevitably, we journalists and bloggers cannot resist writing about it, and what it means for all manner of things, ranging from penetration rates of various devices, services and applications to levels of industry spending.

Crowd sourcing, as valuable as it is, also can be dangerous, though. The reason is the well known tendency people, and therefore markets, have to overshoot on both the upward and downward sides of any trend.

So one easily can take a poll of industry participants (largely on the sell side) and find dire opinions about the state of service provider spending (and therefore buying). Keep in mind an analogy: the frog sitting at the bottom of a well, and asked to describe "the sky."

By definition, all of us have limited visibility. None of us can see the whole sky.

And our view is obscured in several obvious ways. The overwhelming amount of spending in any country or market is dictated by just a few buyers. Some types of products are needed more, some are needed less. Big capital projects are needed, but end at some point.

Sure, most providers have some base level of maintenance-related capital spending that doesn't change much from year to year. But there tend to be waves of investment in the global communications business that ebb and flow.

There are times, such as 1998 to 2000, when spending, in absolute volume, climbs, and periods such as 2001 to 2003, when the percentage falls. Capital spending fluctuates, for all sorts of logical reasons.

Then there are the other obvious visibility-limiting issues, based on which customer segments and which product lines one sells. Some segments do better, some worse. Some products are necessities, others can be postponed.

All of us will have a tendency to attribute virtually any shifts to the downside as caused by the economy. That isn't always true. Nor is it true that service provider revenue actually is falling. Through 14 months of recession, service provider revenue has grown virtually across the board, for every segment, though there are market share shifts and secular changes in demand.

Executives are being prudent, to be sure. Investors and investor advocates demand that. But we all have the visibility of frogs, who think the sky is a relatively small blue circle. So we will overshoot, as we always do.

Without dismissing in any way the obvious issues the industry confronts, do not mistake your own view for the whole picture. And do not make the mistake of believing that any present trend can be extrapolated into the future on a linear basis. By definition, there are turning points. The year 2000 was a turning point. So was 2003. It appears 2008 will mark a turning point. Another is coming.

If your business will last more than several years, you have to spend some time looking for the next turning point. It is hard to do. But it is coming.

Global communications infrastructure spending has a "float" level, generally a percentage of revenue, to which the industry is trending after a buildup leading to 2000, a brief lull, then a wave of infrastructure spending largely driven by broadband. At the moment spending is drifting back to "maintenance" levels.

Another wave is coming though, based largely on the fact that broadband multimedia networks must spend much more discretionary capital on consumer premises equipment. As more services are turned up, there is more spending on CPE. That's a secular change strictly driven by revenue opportunities.

Also, Internet-delivered video, at some point, is going to drive more revenue for service providers, as opposed simply to application providers. As that happens, more investment in access networks will have to be made. The precise timing will depend on end user uptake and therefore new revenues.

But tier one service provider performance in 2008 suggests the process has moved significantly further than even many tier one executives had expected in 2006, for example. To cite but one example, where many had expected new data revenues only to offset voice revenue losses, many carriers now find data revenue growth is outstripping mere replacement of lost voice revenues.

Look for the next turning point, even as you manage for the present circumstances.

Boucher Replaces Markey: Expect Changes

Congressman Edward Markey, a key proponent of net neutrality, will leave his position on the committee that deals with telecommunications regulation to chair the House Energy and Commerce Subcommittee on Energy and the Environment. He will be replaced by Congressman Rick Boucher, who takes on the chairmanship of the Communications, Technology and the Internet Subcommittee of the House Energy and Commerce Committee.

It is worth noting when key communications regulators change seats, since regulators are a primary force in the creation of permissible business models and the potential profitability of communications business models. If his past actions are any indication, "net neutrality" is going to get a lot less attention, rural broadband much more.

Boucher is likely to support plans to tie universal service support to broadband, not voice. That could have positive investment implications for rural telcos and even for some tier one providers. Qwest, for example, has large rural service areas where it might benefit from increased support for rural broadband.

"The indication right now is that the Obama administration will be thoughtful," says Qwest CEO Ed Mueller. So support programs for rural broadband could change. Qwest favors a bidding process for any new government support for building rural broadband facilities, a process it believes it can win. "But we think we'd get a decent return on that," Mueller says.

The other structural change that would help Qwest is if USF funds were awarded on a community-by-community basis, not on a statewide basis. The reason there is that Qwest operates in many states where it serves both urban communities and lots of smaller rural communities. Obviously, that formula restricts Qwest from getting USF support to serve a large number of rural communties .

"More broadband support would be good for Qwest," says Mueller. "We just want to bid on it."

Using "Password Manager"

I've been testing a password manager program, "Password Manager," created by Large Software (www.largesoftware.com), which earlier released PC Tune-Up. Now, some of you may not think a password manager is a useful thing, so you can skip to another post. Personally, I live on the Web for professional reasons, and there no longer is any easy way for me to remember all my user names and passwords.

Some of you may be diligent about storing all your user names and passwords someplace, but that gets to be a chore, not to mention a security risk. Those of us who travel need our identities with us on the road. Retrieving them from a secret location in our offices or homes is not a convenient option. Sticky notes are worse.

Password Manager encrypts each saved password and also protects the program by offering a master password, keeping all the information stored protected and secure. For obvious reasons I have not tested that particular feature. I also use fingerprint readers to protect access my machines, so the additional level of protection is comforting, I will say that.

Password Manager is built to automatically recognize when a user is returning to a site for a login. For new accounts, the system completes the user’s login information in order to eliminate cumbersome set-up forms. Keystrokes are concealed to avoid keyloggers or spyware from stealing sensitive information.

The application pretty much runs after you download it. I did experience a bit of wondering whether it was working at first, as I was using the Google Chrome browser. I figured out what was going on after I switched back to Mozilla Firefox. Password Manager also works on Internet Explorer, of course.

If you decide to change a password, the program gives you a prompt, asking if you want to proceed.

The login information and passwords are available only when the password storage database is unlocked by an authorized user. In my case, the fingerprint swipe seems to do the job, so I can't speak to whether one has to enter the master password to activate the vault.

Password Manager is said to protect users from keylogging (the unauthorized monitoring of your key strokes by a third party). Again, I believe this claim, though I haven't tried to verify it by hacking my own machines.

I recently spoke with a buddy who uses a different password manager and was unhappy with it. Except for the fact that I have to remember whether I am in Chrome or Firefox or Internet Explorer, I haven't had any problems at all. Add support for Chrome one of these days and I'll be even happier.

Each of you will have to decide whether it is worth $30 to automate your password entry chores. Speaking for the skin on my fingers, it is quite useful. I use fingerprint readers so it is important there be recognizable skin on those fingers!

By the way, I just ran a PC Tune-Up scan on a machine that hadn't been scanned before and the software found 266 problems, about half of the "high priority" sort and about half of the "medium priority" sort. I'm a dumb end user so I have no idea what all that stuff was, though they seem to be "invalid application paths."

Flat Consumer Electronics Revenue Growth: CEA Predicts

During the 2001 through 2004 period, when the U.S. economy went through, and then came out of, the "Internet and telecom bubble," household telephone expenditures held constant at 2.3 percent of all household expenditures, a rate constant from 1996 through 2004. Only in one year--2002--was spending different, and in that year, household expenditures rose to 2.4 percent.

That might be the sort of year 2009 is for the consumer electronics industry. Or at leaset, that appears to be what the Consumer Electronics Association believes will happen in 2009.

The consumer electronics industry is projected to generate $171 billion in U.S. shipment revenues in 2009, according to the semi-annual industry forecast released by the Consumer Electronics Association. That would be a decline of about $1 billion from the estimated $172 billion CEA estimates the industry earned in 2008.

“The CE industry is resilient but not immune from the business cycle," says CEA CEO Gary Shapiro. The essentially flat forecast would be something of a break with past history. Over the past 10 years, annual revenues have not slipped, according to iSuppli, but growth rates have slowed, as this chart shows.

As early as 2006, for example, iSuppli projected growth rate declines from the seven to nine percent range down to the three percent range, compared to the nine percent annual increases seen between 2001 and 2005. The essentially flat CEA forecast, should it materialize, would be something of a data point outlier. But then, CEA might be expecting a recession that has different characteristics than past recessions.

Flat growth would seem likely, if past measures of consumer spending on communications, for example, during a recession, remain true to form. There is no evidence that broadband or mobile growth went into reverse during the last time of turbulence, for example. Internet access penetration of homes actually accelerated from 1997 through 2003. Where Internet growth was 18.6 percent in 1997, it stood at 50.5 percent in 2001 and at 54.6 percent in 2003.

Actual household spending on telecommunications rose steadily from 1981 through 2004, the Federal Communications Commission reports, with one exception. In 2002, spending flattened, rather than growing.

Broadband penetration was 4.4 percent in 2000, 9.1 percent in 2001 and 19.9 percent in 2003.

Wireless presents a similar picture. In 1999 six-month mobile revenues stood at $19.4 billion. Revenue then grew to $24.6 billion in 2000, to $30.9 billion in 2001, to $36.7 billion in 2002, $41.4 billion in 2003 and $48.3 billion in 2004.

Between December 1999 and December 2004, the average monthly wireless bill climbed steadily, from $41.24 in 1999 to $50.64 in December 2004.

There is, however, evidence for "flat" growth during a recession. In 2002, household expenditures on communications overall did flatten, but only for a single year, and then only slightly, on the order of $1 a month in reduced spending.

The issue is whether this recession is structurally different from past recessions, though. Nobody knows, yet.

50% Mobile Broadband Penetration by 2013?

The actual extent of mobile broadband usage in five years time is quite a jump ball. The conventional wisdom--undoubtedly correct--is that mobile broadband is growing, even if we might be a bit ahead of the game to call it "mainstream" at the moment.

If one assumes a smartphone sale is farily linearly a predictor of the sale of a data plan, increasingly of the broadband sort, then at the moment sales volume in the U.S. market is something on the order of 20 million units a year, but scaling smartly.

Of course, though we normally assume the sale of a smartphone comes with an activated data plan, that might not always be the case, as some of the market is of the "replacement" sort. Also, smartphones are not the only driver of mobile broadband. Of late, PC cards have been substantial contributors.

So the big change in market receptivity is the expansion of mobile broadband from the "mobile email" and "mobile PC" to "mobile Web" user cases.

In 2008, there might have been 38 million mobile email users in the United States, a reasonable proxy for the smartphone part of the mobile broadband ("data plans") market. That, at least, is the market size researchers at Mpathix suggest was the case.

Nielsen Mobile estimated in August 2008 that there were 13 million mobile data cards in use in the United States, to give you some idea of the installed base.

At the end of 2006, out of the 225 million cellular subscribers in the United States, 15 million used a 3G-based mobile broadband service via cell phone, PDA More about PDAs, laptop or other device, researchers at Parks Associates estimated. Parks Associates also estimated there were 3.5 to 4 million data card service subscribers in the United States in mid-2007.

That clearly is changing now with the advent of mobile Web devices such as the Apple iPhone, to be sure. Still, 38 million is a significant increase from the 12.1 million mobile email users in 2005, MPathix says. It is an even bigger increase from the six million mobile email users Research in Motion estimated were part of the U.S. user base at the beginning of 2006.

Parks Associates now estimates that nearly 60 million smartphone units will be sold in 2013. Parks Associates also estimates that in 2013, U.S. consumers will purchase over five million connected cameras, over one million 3G-enabled MIDs (portable media players), and over two million 3G-enabled netbooks (mini-PCs). There arguably is a less-linear relationship between purchases of those sorts of devices and activation of mobile broadband service, though.

So Parks Associates estimate that, by 2013, there will be over 140 million U.S. consumers paying for mobile broadband, including services provided to every device capable of such communication, argues Kurt Scherf, Parks Associates VP. As there are now 263 million mobile accounts in service, the 140 million represents more than half of the total number of wireless accounts. True, wireless subscriptions continue to grow, though at a slowing rate as we near 90 percent pentration. Still, that is a rather breathtaking scenario.

Keep in mind that U.S. fixed broadband penetration is somewhere north of 55 percent, in a market where 20 to 25 percent of homes do not own PCs, and in a market where perhaps 10 percent of Internet users remain on dial-up services, and perhaps 60 percent of those users say they do not want to upgrade to broadband.

The 50-percent mobile broadband penetration would represent a more-extensive degree of penetration by far, as it represents penetration of people, not of dwellings.

A Bold Forecast for U.S. Mobile Broadband

“By 2013, there will be over 140 million U.S. consumers paying for mobile broadband, which will extend video, communication, networking, and support services to all sorts of devices,” said Kurt Scherf, vice president, principal analyst, Parks Associates.

That's a bold forecast. But not outlandish if "mobile Web" gets traction as "mobile email" and "mobile PC" segments did.

Global revenues from mobile data services are set to exceed $200 billion this year for the first time, according to Informa Telecoms & Media. Total mobile data revenues were approximately $157 billion in 2007.

Mobile operators now generate approximately one fifth of their revenue from data services.Informa Telecoms & Media estimates that non-SMS data contributed $17.48 billion of revenue in the first quarter of 2008, accounting for 35.6 percent of total data revenues.

Tech Support on Installing a Husband

Dear Tech Support, 

Last year I upgraded from Boyfriend 5.0 to Husband 1.0 and noticed a distinct slow down in overall system performance, particularly in the flower and jewelry applications, which operated flawlessly under Boyfriend 5.0. In addition, Husband 1.0 uninstalled many other valuable programs, such as: Romance 9.5 and Personal Attention 6.5, and then installed undesirable programs such as NBA 5.0, NFL 3.0 and Golf Clubs 4.1.

Also Conversation 8.0 no longer runs, and Housecleaning 2.6 simply crashes the system. Please note that I have tried running Nagging 5.3 to fix these problems, but to no avail. 

What can I do? 

Signed, Desperate. 

DEAR DESPERATE:

First, keep in mind, Boyfriend 5.0 is an Entertainment Package, while Husband 1.0 is an operating system. Please enter command: ithoughtyoulovedme.html and try to download Tears 6.2 and do not forget to install the Guilt 3.0 update. If that application works as designed, Husband 1.0 should then automatically run the applications Jewelry 2.0 and Flowers 3.5. 

However, remember, overuse of the above application can cause Husband 1.0  to default to Grumpy Silence 2..5 , Happy Hour 7.0 or Beer 6.1. Please note that Beer 6.1 is a very bad program that will download the Farting and Snoring Loudly Beta. Whatever you do, DO NOT under any circumstances install Mother-In-Law 1.0 (it runs a virus in the background that will eventually seize control of all your system resources.) 

In addition, please do not attempt to reinstall the Boyfriend 5.0 –program. These are unsupported applications and will crash Husband 1.0.

In summary, Husband 1.0 is a great program, but it does have limited memory and cannot learn new applications quickly. You might consider buying additional software to improve memory and performance. We recommend Cooking 3.0 and Hot Lingerie 7.7. 

Good Luck! Tech Support

Broadband: This Doesn't Look Like a Problem

There continues to be concern expressed about the "lack" of broadband adoption in the U.S. market in some quarters. This illustration of the current and expected state of affairs for a number of nations by Analysys Mason does not suggest there actually is a problem. 

The United States appears to be in the mainstream of penetration rates. 

The Next Big Thing in Wireless Packaging

In the U.S. mobile business, there have been at least two major marketing concepts with huge impact on consumer adoption: "Digital One Rate," which erased the distinction between "local" and "domestic long distance," and "family plans," which principally are responsible for extending mobile penetration to most members of a family. 

The next big innovation? At some point, "data one rate combined with a family plan." The reason? Mobile broadband growth will be retarded until the data access equivalent of a family plan can be bought. Sprint already has taken a step in this direction by offering an "Everything Data" plan supporting two lines with Web and e-mail connectivity plus 1,500 minutes of shared voice services for $130. 

In fact, it is likely one can carry the concept just a bit further and create "data one rate family plans" that simply allow some consumers to buy a single broadband plan that supports all family members, whether in mobile or fixed mode, for a single rate. Executives at AT&T have been talking conceptually about unifying wired and wireless broadband as well, but the company hasn't actually launched anything like that. 

In principle, the idea is a simple extension of family plans, buckets of minutes or text messaging plans already in widespread use. 

There simply is going to be high consumer resistance to buying separate broadband connections for every connected mobile device. 

Clearwire has been talking about casual use plans, which likewise is a step in the right direction AT&T might also be looking at some transaction-based billing scheme that would support multiple Internet-connected devices. There won't be a marketing "big bang" on the order of Digital One Rate or family plans until carriers decide to get just that serious about mass adoption of broadband services. 

More Enterprises Disconnect Locations

The number of enterprises disconnecting network locations reached its highest level in six years during 2008, according to new research by Vertical Systems Group. In a survey of U.S.-based enterprise network managers, 14 percent reported that they had eliminated one or more network locations without adding or moving others. This figure compares to only nine percent from a survey conducted a year ago.

For the most recent survey, 41percent of respondents reported both additions and eliminations, while 16percent added locations without any eliminations. About 29 percent reported no change.

"The pace of network site additions stalled in the second half of 2008, and a significant number of networks are shrinking as compared to a year ago," said Rick Malone, principal at Vertical Systems Group. "Economic uncertainty and business slowdowns are forcing unplanned network reconfigurations, particularly within hard-hit industries like retail and financial.

Location eliminations peaked during the fourth quarter, and we expect this trend to continue throughout the first half of 2009," says Malone.