Bandwidth Caps are Just Buckets

Lots of people get upset about bandwidth caps that strike me as extraordinarily generous. Does anybody think the planet or the economy would be better off, companies better able to improve service or people given incentives to "do the right thing" if electricity, gasoline, water, natural gas or heating oil were sold on an "all you can eat" basis.

This is simple economics, folks. Most people can do all they want without ever worrying about bandwidth caps. That's why people like flat rate pricing. And most people don't abuse the reasonable use rules.

But when there is literally no penalty for consuming as much as some people seem to want, you get what economics teaches you will get: over-consumption.

I don't necessarily like my electricity or water rates. But I conserve because there is a penalty for unrestrained use.

Consider the difference between wireless "unlimited" plans and other plans that simply offer more minutes or capacity than you actually use in a month. Is there really any practical difference--for most people--between "truly unlimited" and "more than I can use" plans?

Caps are just buckets. As long as the buckets are capacious enough, the plans clear enough, the usage information available and the prices reasonable, buckets work. Bandwidth caps are just buckets.

http://stopthecap.com/2009/04/23/hissyfitwatch-cutting-off-customers-who-use-too-much-in-austin/

Video, Social Networking Changing the Web

The growing popularity of online social networking and video content is deepening web users’ engagement with the Internet and is causing a dramatic shift in the global online landscape, says the Nielsen Company.

Nielsen’s research shows that since 2003, the interests of the average online user have shifted significantly, evolving from use of “short-tail” portal-oriented browsing sites, such as shopping directories, guides and internet tools, to sites that contain more specialized “long-tail” content geared to specific and interactive user interests.

This change is manifested by the fact that video and social networking sites are the two fastest growing categories in 2009, and will necessitate new ways of thinking about online marketing, Nielsen says.

The number of American users frequenting online video destinations has climbed 339 percent since 2003. The unique audience for online video surpassed that of email in November 2007.

Time spent on video sites has shot up almost 2,000 percent over the same period. In the past year, unique viewers of online video grew 10 percent, the number of streams grew 41 percent, the streams per user grew 27 percent and the total minutes engaged with online video grew 71 percent.

There also are 87 percent more online social media users now than in 2003, with 883 percent more time devoted to those sites, Nielsen says.

http://www.marketingcharts.com/television/socnets-web-video-radically-alter-online-behavior-8838/?utm_campaign=rssfeed&utm_source=mc&utm_medium=textlink

Will Consumers Follow Through on Wireless Plans?

Some quarters are more important than others. The first quarter of 2009, for example, will provide an important test of whether consumers are "putting their money where their mouths are." The reason? Some surveys have consumers telling researchers they will cut back or drop important communication services.

A recent survey by Pew Research Center, for example, has some 20 percent of respondents reporting they’ve gone with a less expensive cell phone plan, or canceled service altogether. About 22 percent adults say they are saving money on their cell phone bills.

Young adults, the group that is the most likely to use mobiles, are the most likely to have taken this step: 30 percent of respondents under the age of 30 and 20 percent of other adults say they have changed cell plans or dropped service because of the recession.

Three-in-ten adults with family incomes below $30,000 say they have changed or cut their mobile service, and 13 percent of those making $100,000 or more say they have done so as well.

If those respondents really are acting as they say they will, we might expect a bit of an explosion as mobile providers report first-quarter results. To be sure, over the last couple of quarters there has been a clear upsurge in use of pre-paid mobile services, generally interpreted as a cost-saving measure.

Still, AT&T, the first mobile provider to report first-quarter results, had a wildly successful first quarter for post-paid plans. There are of course some other logical developments we might be watching for. Among the obvious economy measures are switching from post-paid to pre-paid plans, and that clearly is happening.

On the other hand, we will be watching for any signs of actual, industry-wide shrinkage of wireless accounts. A simple switch to pre-paid generally reduces average revenue per user, while maintaining subscriber numbers. That likely means some shift of market share among wireless providers, even if it does not automatically suggest overall subscriptions will dip.

Based solely on the AT&T results, respondents are not necessarily behaving as they say they will.

http://pewresearch.org/pubs/1199/more-items-seen-as-luxury-not-necessity

New York Times Equity Now Worth Zero?

Quantum changes--such as when a liquid turns to gas or solid--are highly disruptive. That's what we've seen this year as decades of gradually-worsening business models have toppled major U.S. newspapers. Now one financial analyst says debt at the New York Times is so high it essentially values the company's equity at zero.

http://jacksonville.bizjournals.com/jacksonville/stories/2009/04/20/daily36.html?ana=yfcpc

CallVantage Closing Highlights VoIP as Part of Triple Play

AT&T is discontinuing its CallVantage "over the top" VoIP service, a move that has some observers calling AT&T stupid for turning its back on the future. But that isn't what AT&T is doing. It will focus on using VoIP as a key part of its triple-play or quadruple-play consumer offerings, instead of devoting resources to a small, if well-run service that offers little synergy or business value with the other things the company is doing.

It just makes more sense to focus on VoIP as a part of a bundle.

Solar Plants in the Desert Will Be a Disaster

Tundra and desert arguably are the most-sensitive ecosystems to be found on land, with their plant life highly susceptible to disturbance. So essentially "clear cutting" huge swatches of desert for solar factories is bad enough. Draining the important underground aquifers is worse. 

"It is not in the public interest for BLM (Bureau of Land Management)  to approve plans of development for water-cooled solar energy projects in the arid basins of southern Nevada, some of which are already over-appropriated," Jon Jarvis, director of the Park Service's Pacific West Region, says. 

National Park Service hydrologists say nearly 16.3 billion gallons of consumption has been proposed by applications in the Amargosa Valley alone. That water cannot be replaced. 

Nevada officials say the basin can support only half that amount. Rushing to approve huge solar projects without proper environmental review is dangerous. Clearing the desert and draining the aquifers is worse. 

Solar power is a good thing. But not when destruction of fragile ecosystems is the price. 

http://www.guardian.co.uk/world/feedarticle/8466882

EU Caps International Text, Mobile Internet Access Rates

As expected, the European Union has mandated price caps for international text messages, Reuters reports. Charges will be capped at rates as much as 60 percent lower for travelers in the European Union. The caps take effect in July

Operators will be allowed to charge customers a maximum of 11 euro cents (14 U.S. cents) for each text message, excluding sales tax, compared with current prices of about 28 cents, when customers use their mobiles outside their home countries.

Buying a song using a mobile phone or using a laptop with a dongle or GSM card to access the Internet will cost a maximum of 1 euro per megabyte at the wholesale level, from about 1.68 euros today.

Price caps that were introduced in 2007 on roaming voice calls.

The rule has to be ratified by each member state.

Solar Isn't Necessarily "Green." Neither is Ethanol.

In the desert, where many think we should create solar factories, solar is anything but "green." And that's before one considers the impact on aquifers. If you live out west, and you have spent even a little time looking at the matter, you realize that water is the truly-scarce resource. 

"Wet-cooled parabolic trough systems require five acre feet of water per megawatt. The five plants planned for Amargosa Valley, Nevada, propose to generate from 150 to 1,000 megawatts, so we are looking at over 10 million gallons of water a year. This water is fossil water believed to be tens of thousands of years old, not recharged since the last ice age. Even if they buy out the private water rights, there still would not be enough to supply this massive use of water. Devil's Hole, Ash Meadows wetlands, and springs of Death Valley (all home to a great diversity of endemic pupfish) would be dried up."

If you look at the amount of water required to grow corn, to create ethanol, you face the same problem. Water is the scarce resource. There are other ways to create clean energy. 

http://www.latimes.com/news/opinion/commentary/la-oe-pavlik15-2009feb15,0,7619561.story

http://www.basinandrangewatch.org/SolarDesert.html

Forget Job Growth: Rural Broadband Never Pays for Itself

Surprise, surprise: rural broadband does not automatically lead to measurable job growth or other economic benefits. That doesn't mean we shouldn't provide it. But it likely is not ever going to provide a financial return for the companies that install it.

Aside from that, assume $5,000 investment per home passed. Assume a 60-percent subscribe rate, at $50 a month retail prices. Assume a 30-percent profit margin on such accounts.

The per-subscriber cost of installing broadband is $8333.00. Recovery of the investment cost, without factoring in the cost of capital or time value of money is about 14 years. If one assumes the useful life of the plant is 20 years, a company never actually makes money on such investments.

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/22/AR2009042203637.html

AT&T Wireless-Broadband Bundles Show Strong Growth

Worth noting: AT&T CFO Rick Lindner says "our stand-alone DSL product which about 50 percent of the time is bundled with wireless has been very strong for us."

You might suspect there has been some recent promotional activity to encourage such behavior but that is not the case. "We haven’t been running any significant promotional activities I think in the last few quarters," Lindner says.

The implication: high-speed Internet access and wireless are the two foundation communications services.

E-Commerce Growth Falls off Cliff

The rate of growth for online products plummeted from 24 percent in early 2006 to nine percent in early 2008, while the rate of growth for products bought at retail locations dropped from nine to five percent over the same period.

One can think of lots of reasons why this might be the case. A more mature business grows more slowly.

There's less novelty effect. Perhaps it is just the impact of the recession, and more staples are bought at physical locations.

The issue is what happens after the recession ends. There's a line of thinking that with serious deleveraging happening throughout the economy, consumer spending will not return to its pre-recession level.

Off the top of my head, it's hard to see why this line of thinking is wrong, though it is worth noting that consumer behavior often surprises researchers.

Ad Priorities Radically Different Online

I estimate that direct response advertising accounts for about 80 percent of all ad dollars spent online, while in traditional media the situation is reversed," says Gian Fulgoni is chairman and co-founder of comScore. "There, branding dollars are estimated to make up about 75 percent of the market."

Why the disparity? "I believe that the very nature of the speed of the Internet and the young technical minds that first created online advertising both led to a focus on immediate response," he says. "The click metric is a good example of that."

“Time to purchase” is different for direct response ads, which aim at closing a sale or a transaction right here and now, and branding that builds brand equity that pays off over time.

Fulgoni thinks both are required. "For direct response ads to work well, it’s important that a brand’s equity have been communicated in advance of the consumer’s purchase decision," he says.

How do Internet media do brand building? "I believe it’s vital to take into account all of the marketing stimuli that affect consumer purchase behavior, not just that which occurred just prior to purchase."

"We should be wary of attributing 100 percent of the credit for a purchase to a click on a search ad," he says. Search might well have closed the deal, so to speak, but there is often a lot of other marketing activity that led the consumer down the path to purchase and, without which, closure might not have occurred.

The Atlas Institute, Microsoft Advertising’s research division, says “users exposed to both search and display ads convert at a higher rate: an average of 22 percent better than search alone."

http://www.comscore.com/blog/2009/04/branding_versus_direct_response.html

Apple Sells 3.79 million iPhones in 2Q

Apple sold 3.79 million iPhones in its second quarter and 11 million iPods. No problem blowing past analyst revenue forecasts. Other smart phone manufacturers might be under pressure. Not Apple.

T-Mobile Ultimately will Allow Skype over 3G

Despite understanable teeth gnashing over T-Mobile's blocking of Skype when using the 3G network, T-Mobile ultimately will allow it, either because customer pressure forces them to do so, or because European Union regulators do so.

http://oqlz.com/t-mobile-mobile-voip-integration-inevitable/

Cablevision Systems Corp. Introduces Mobile Portal

If you are looking for some idea of what a cable-centric wireless service might look like, consider what Cablevision Systems Corp. is doing. After putting into place an extensive metro Wi-Fi network, it is launching a  mobile version of its Optimum.net Web portal that's designed for all forms of cellular handsets but tailored for the company's 2.5 million cable modem subscribers.

The new mobile platform, accessible to handset browsers at m.optimum.net, is starting off with features including email, local traffic, weather, movie theater info, and access to Cablevision's digital TV lineup, but a remote DVR scheduler is on the roadmap.

http://www.lightreading.com/document.asp?doc_id=175683&site=cdn