DPI Raises Consumer Ire, Should it?

"Network bandwidth is a finite resource, especially so in wireless networks, so it is reasonable and indeed expected that carriers will manage their network bandwidth to assure sufficient quality of service for all subscribers," says Brian Wood, Continuous Computing's VP. That tends to mean use of deep packet inspection, and that tends to raise hackles in some quarters.

The problem is that Internet access, and Internet backbones and servers, are shared resources. There is a "tragedy of the commons" problem if a few users have behavior patterns dramatically different from those of the typical user, because all networks are engineered statistically.

Nobody builds a network that provisions bandwidth on a "nailed up" basis, because nobody could afford to do so. Instead, bandwidth is "underprovisioned," on purpose. Network architects assume that not every user will be putting load on the network, all at the same time.

That works remarkably well most of the time. What causes problems are unexpected loads that haven't been engineered into the network.

"Without traffic management, a few 'bandwidth hogs' can easily degrade the user experience of many other users on the same network," says Wood. That might especially be true in the access network, but the entire Internet transmission  network, including all the servers, are shared resources.

"For consumers, DPI-based traffic management ensures that subscribers get the quality of service that they expect, or at least that they pay for," says Wood.  So, for example, a business user might opt to pay a slight premium for a guaranteed level of service (e.g., guaranteed minimum bandwidth) while a frugal college student might go for a cheaper "best effort" rate plan.

Basically, DPI or other traffic shaping mechanisms are about fairness: making sure most users get reasonable performance most of the time. The other advantage is the ability to learn or be instructed by a user on what activities are most important, so those activities get the highest priority during congested periods.

DPI can be viewed as an automated away, or a self-learning kind of way, for the network to provide those kinds of benefits, says Wood. "It's all a matter of filtering out the stuff that, based on past behavior or the behavior of similarly-profiled individuals, is deemed to not be of value and, instead, prioritizing the stuff that is deemed to be of value."

Behavioral tracking is an issue, though. "Cookie-based tracking seems to be a generally-accepted practice with web sites these days, but there was great concern when cookies were first introduced," says Wood. There are end user advantages, of course, such as sites "remembering" who you are and what your preferences are.

Behavior-based tracking has raised more concern. Deep packet inspection is deemed by some as intrusive and too personal, says Wood. The same sorts of concerns are raised about DPI-based ad insertion.

"What's interesting to me, though, is that Google has been offering Gmail for free to users in exchange for content-based advertisements being displayed next to their emails, and I haven't heard of any uprising against Gmail," he says.

Subscriber notification, how subscribers are notified, and whether those subscribers have any say in the matter, seem to be the key sticking points here, he muses. "Nobody likes the idea of being monitored without their consent, especially if they feel like information gathered through such monitoring will be used in an attempt to profile or manipulate them in the future."

But behavior-based marketing seems to work well for Netflix and Amazon, Wood notes. The difference seems to be one of perception. Lots of people are afraid technology will be used "on" them, rather than "for" them.

Consumer Spending on Internet Access, TV and Mobility is Stable, Poll Suggests

Cutbacks in home communications and entertainment services have yet to emerge as a measurable trend, despite the ongoing recession, say researchers at Pike & Fischer, who recently polled 600 consumers nationwide about their spending on phone, Internet and multichannel video.

Scott Sleek, Pike & Fischer director of broadband advisory services, says the firm conducted the survey because it has been hearing so much "doom and gloom" from service provider executives.

But the study indicates respondents say they would rather keep Internet, video and voice services in their budgets than any other type of expense, including gym memberships, personal care products and apparel.

But the results also point to customers becoming more aware of ways to spend less on those services. That suggests average revenue per user is, or will soon become, an issue for service providers.

"We found very consistent consumer behavior," says Sleek. "We found no evidence of downgrading, for example."

"What I found interesting was that when we asked what people planned to do with their phone and TV services, most said they were planning absolutely no changes," says Sleek.

"Of course, neither are they upgrading, buying more premium channels or adding faster Internet tiers, either," he notes. That is "better than a lot of people thought would happen," he adds.

But one reason service provider executives remain nervous is that there are so many free and cheaper services available now that didn't exist five years ago. Nobody was sure what would happen, this time around.

So far, though, behavior is what one would have predicted, based on behavior in past recessions: stability of subscriptions, but some pressure on average revenue per user.

"The cable guys are worried about over the top video, but so far, it seems to be augmenting video consumption," says Sleek.

People report spending more time at home, so TV and Internet arguably are more valuable.

Energy Consumption up 250% by 2030, but Mobiles Help

Electricity consumption by "electronics" grew by nearly seven percent each year from 1990 to 2008, says Paul Waide, International Energy Agency senior policy analyst. And electricity consumption is likely to grow by 250 percent by 2030, as a majority of growth already is coming from non-OECD countries.

But use of mobile devices, which is growing rapidly, helps, as mobiles tend to be more power efficient. In fact, says the IEA, matters would be worse but for the convergence of technologies and the growth in mobile applications such as laptop computers, which draw less power.

The IEA study finds that over the next seven months, the number of people using a personal computer will pass the one billion mark. Electronic devices currently account for 15 percent of household electricity consumption but their share is rapidly rising.

Already there are nearly two billion television sets in use, with an average of over 1.3 sets in each home having access to electricity.

Without new policies, the energy consumed by information and communications technologies as well as consumer electronics will double by 2022 and increase threefold by 2030 to 1 700 Terawatt hours (TWh), says Nobuo Tanaka, International Energy Agency Executive Director

Higher efficiency technologies that are already available would half this demand, he notes. So aside from more-efficient technologies, unplugging devices when not in use, unplugging mobiles when fully charged and turning off unused applications such as Bluetooth or Wi-Fi when not needed are steps people can take to limit electrical consumption.

http://www.iea.org/Textbase/press/pressdetail.asp?PRESS_REL_ID=284

Grappling with IPTV, Online Video Economics

One of the issues service providers grapple with when weighing IPTV offerings is the financial return. Many executives who have done so say they actually lose money doing so, and others who think they will inevitably have to jump in likewise expect to lose money.

That is one reason some executives think an alternative approach, either based on streaming or downloading, might make more sense. Certainly that is what any number of video distributors are doing, or have done, with modest success.

But the economics of movie rental services might ultimately prove just about as challenging. The home video market represents about 54 percent of the U.S. film industry’s $45 billion in 2008 revenues.

Perhaps 49 percent of the revenue in turn is generated by DVD sales. Perhaps 21 percent is generated by video rentals. The issue, in part, is that profit margins are higher on sales than rentals, and higher for online-delivered products than physical media substitutes.

One wonders how long the content owners will sit by if distributors offering $1 rentals, low cost or even "no additional cost" streaming, continue to gain traction. There just isn't much margin at that price level, for anybody in the value chain.

At some point, lots of service providers without the scale economics of AT&T or Verizon Communications might conclude that online video is a "cost of doing business," not a "revenue" item.

http://seekingalpha.com/article/137502-netflix-movie-studios-pose-greatest-threat?source=feed

Social Network Ad Revenue to Stall, Blame it on MySpace

Total social network ad spending in the U.S. will drop 3 percent to $1.1 billion in 2009, from $1.2 billion last year, says eMarketer, and the falloff is almost solely attributable to what will happen at MySpace.

MySpace accounts for nearly half of all U.S. advertising spend in the social networking space. Analysts at eMarketer now forecast that MySpace advertising will fall 15 percent in 2009, compared to 2008.

MySpace booked an estimateed $585 million in advertising in 2008, but will earn just $495 million this year, down 15 percent from last year.

Facebook advertising and widget placements do not seem to be affected, eMarketer says.

Facebook advertising is expected to grow nine percent in 2009, to $230 million. Ad spending on widgets and applications also will climb $70 million in 2009, up 75 percent from the year before.

In general, U.S. ad spend on all other social network sites combined is expected to rise abou one percent to $345 million.

This is a major reversal, but perhaps to be expected, given the overall economic climate. Spending grew an estimated 33 percent in 2008 and 129 percent in 2007.

60% Unified Communications, Video Adoption by 2010?

Some 60 percent of enterprise executives polled recently by Network Instruments say they will have implemented unified communications capabilities at their organizations by 2010, while 57 percent say they will have implemented video solutions by 2010.

Some 66 percent of the 442 network engineers, IT directors, and CIOs in North America, Asia, Europe, Africa, and South America also report they will have teleconferencing solutions in place by 2010.

VoIP adoption continues to rise, as 75 percent of companies will have installed VoIP by the end of 2009,  compared to 61 percent in 2007.

One has to interpret such findings. When enterprise executives are asked whether they will deploy a given technology, it does not mean they will deploy throughout the entire enterprise. Also, plans typically slip a bit; rarely are they accelerated.

That's about the only way to make sense of survey findings that often show a third of respondents plan to do something "within the next 12 months," virtually every time a survey is taken.

Dramatic Shift for Telstra?

Australian incumbent telco Telstra would be split in two if a government proposal is accepted voluntarily. Under the deal, the Australian government would offer Telstra the chance to buy up to 49 per cent of a new national broadband network if Telstra agrees to separate itself into a wholesale access company and a separate retail service provider business.

In a first step, Telstra would be "functionally" separated into a wholesale access company and a retail business. As part of this deal, where Telstra would still own both businesses, Telstra would have the chance to buy as much as 20 percent of the new broadband access company to be formed, but would contribute its present optical network to the new entity.

Such approaches to stimulating broadband competition are in place in the United Kingdom and coming in Singapore, with both Australian and New Zealand regulators looking at the concept as well.

Such institutional frameworks would allow a different answer to the question "can a service provider make a business out of dumb pipe" than is conceivable in North America or most other markets globally. By definition, one provider would sell broadband access connections to all other retail service providers.

http://www.australianit.news.com.au/story/0,25197,25467023-15306,00.html

Android Will Grow 900% in 2009

Global Android smart phone shipments will grow 900 percent in 2009, say analysts at Strategy Analytics. Of course, very-rapid growth on a percentage basis often is possible for firms, services or products starting froma very-low installed base, but the growth forecast is indicative of a product expected to gain market acceptance. 

The Apple iPhone operating system will be the next fastest-growing smartphone operating system in 2009, with a 79 percent growth rate, Strategy Analytics says. 

"Android has fast been winning healthy support among operators, vendors and developers," says Neil Mawston, Strategy Analytics director.

"A relatively low-cost licensing model, its semi-open-source structure and Google's support for cloud services have encouraged companies such as HTC, Motorola, Samsung, T Mobile, Vodafone and others to support the Android operating system."

The upshot: "Android is now in a good position to become a top-tier player in smartphones over the next two to three years," Mawston says.

Pingo Business Drops Mexico Rates 50%

Pingo Business, the prepaid VoIP calling services from iBasis, has reduced calling rates to Mexico by 50 percent for consumer and small and medium-sized business (SMBs) customers, through May 31, 2009.

The move is a response to the recent H1N1influenza outbreak in Mexico, which has caused shutdowns in businesses and services, prompted airlines to severely curtail flights in and out of the country. With travel to Mexico also the subject of warnings from the Centers for Disease Control and Prevention, Pingo Business believes the temporary program will help businesses maintain operations.

Ovum says Demand, Not Access, is Chief Broadband Problem

Digital divides in developed economies are less about limited broadband availability and more about a lack of broadband demand and complex interfaces, say analysts at Ovum. In that that regard, Ovum joins a growing number of policy advocates who now recognize there is a difference between broadband availability" and "broadband use."

Though there clearly are some locations, largely in rural areas, that do not yet have a choice of wired providers, most rural U.S. locations, for example, can receive satellite service from two providers, HughesNet and WildBlue. And as many as 96 percent of U.S. homes can receive cable modem service, while 90 percent or so of U.S. locations can get digital subscriber line service from a telephone company as well.

 

“There has been significant focus on the limited availability of broadband as the main factor in creating digital divides” says Charlie Davies, Ovum senior analyst. "In fact, Ovum, as well as other consumer surveys and studies, have shown other factors such as a lack of demand as being a more significant barrier”.

That's an important distinction, since solving a problem requires defining accurately what the problem is. One might argue that not enough people buy BMWs because they can't get to a nearby dealership (an access problem). One might alternatively argue that more people do not buy BMWs because it isn't the right vehicle or because it costs too much (a demand problem).

Observers increasingly are acknowledging that demand, not access, is the main problem, though some areas are remote enough that physical access by wired facilities remains a problem.

In many developed markets, broadband penetration is now well over 50 percent but overall broadband growth is slowing, despite the fact that broadband availability is at an all-time high. Ovum says this situation is due to  a significant minority of people not being interested in taking up broadband, or other significant barriers in doing so (not interested in using the Internet, not owning a PC, not knowing how to use the Internet or not able to, or willing to pay for service, for example).

"Many people without broadband or the Internet are put off by overly complex devices and interfaces that cater to the technically literate," says Ovum. "In addition, users with disabilities are largely under-served."

The cost of using the Internet also is a barrier. So demand stimulation, not physical access, is the chief impediment to higher broadband usage.

Recession Drives Video Conference Interest

Among respondents that do not currently use video conferencing, 68 percent say expections they can save money on travel expenses is the most important factor driving their adoption of video conferencing in the next 12 months, says In-Stat.

One might safely assume the recession, and the desire to cut discretionary expense, accounts for much of the current interest.

Some 57 percent of decision-makers indicated their organizations have formal video conferencing policies in place and those policies are designed to maximize return on the video conferencing investment, particularly when it can be used to mitigate travel, says In-Stat.

“U.S. business users find video conferencing to be more appealing and beneficial when the sessions involve sharing files, collaborating on documents, and adding or including key individuals in the sessions dynamically,” says David Lemelin, In-Stat analyst. “There is also a strong desire to use video conferencing capabilities at the desktop, where users have better access to their complete set of communications and collaboration capabilities, including IM integration.”

http://email.in-stat.com/cgi-bin4/DM/y/hBREt0LeRpW0K560DHgc0EQ

BT Model for United States?

Competitor mandatory wholesale access to voice and broadband access services has been good for BT and the United Kingdom, and might be useful in the United States, says Sir Michael Rake, BT chairman. Though rules are not completely finalized for new optical access lines, BT's massive loss of market share in the landline voice and broadband access markets has forced the company to be more aggressive about new services, he says.

"It was painful at the time but has been better for the country and consumers in the long run," Rake says.

Today, BT generates annual revenues of about 20 billion British pounds, the same as five years ago. Accounting for inflation and new services, one might argue the results have been negative for BT, as good as they have been for retail consumers.

The average speed for broadband access has nearly doubled to 2 megabits a second and the price for service has been reduced by an average of 50 percent from five years ago.

The best way to get more people to adopt high-speed Internet is to create competition through a regulatory framework that forces the biggest players to open their networks, Rake argues.

http://voices.washingtonpost.com/posttech/2009/05/british_telecom_chairman_rake.html

Separate NOFAs for Broadband Stimulus

Get ready for the broadband stimulus fire drill. Sometime in June, the thinking goes, the National Telecommunications & Information Administration and the Department of Agriculture's Rural Utilities Service will issue the required Notice of Funds Availability (NOFA) outlining criteria and application processes for the $7.2 billion in "broadband stimulus" funds the agencies will be disbursing, presumably in three rounds.

It now appears there will be separate NOFAs.

"There will be separate NOFAs," says MarkTolbert, NTIA spokesman. "To my knowledge, NTIA and RUS will each issue their own NOFA."

http://www.stimulatingbroadband.com/2009/05/obamas-federal-broadband-stimulus.html

Verizon Signs Landmark FiOS Wholesale Deal with DSL Extreme

Verizon Communications has signed a deal with DSL Extreme allowing that firm to resell Verizon's FiOS Internet service in 17 states. The move is important for several reasons. Most observers think wholesale access on incumbent access networks is a key underpinning for a wide range of competitive offerings, and the status of such access when access loops are converted to optical technology remains unsettled.

Most observers might agree that Verizon's move also helps it counter mandatory access regulations. Verizon and other service providers have opposed mandatory access rules that do not offer a reasonable return on investment, preferring voluntary business arrangements.

Others will argue that Verizon's move aims to head off such regulations by providing some degree of wholesale access, to some providers, but in ways that protect wholesale margins. Time Warner Cable did something similar with its wholesale broadband efforts, allowing a few competing providers access, but not to any and all other contestants. 

DSL Extreme's Fiber Extreme is now available to 10.4 million households in 17 states where FiOS Internet service is available, including California, New York, New Jersey, Pennsylvania, Texas, Virginia and Washington.

Introductory residential pricing for Fiber Extreme is $99.95 per month for up to 50 Mbps; $54.95 per month for up to 20 Mbps; and $39.95 per month for up to 10 Mbps.

It is uncertain how this move will affect later wholesale access to FiOS broadband facilities, or even what positive impact might ultimately result for broader support of broadband competition on a voluntary or mandated basis. 

What is clear is that DSL Extreme will have ample opportunity to add on its own applications and value to the "dumb pipe." 

http://www.multichannel.com/article/231631-Verizon_Signs_National_Reseller_Deal_For_Fiber_To_Home_Broadband.php

Pull, Not Push, Obviously is the Way to Handle Mobile Marketing

No question about it: mobile marketing has to be "pull" rather than "push" oriented. Otherwise, it's pretty close to spam. But I think most people have got that figured out.

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=105751&lfe=1