Despite Hype, Enterprise Workers Cling to Voice, Email

It appears that many enterprise 2.0 collaboration tools are struggling to be adopted, at least n Europe, says Stewart Baines, on the Orange Business blog. He notes recent research by Forrester Research indicating social networks, blogs, wikis and virtual worlds are being shunned by workers as they continue to communicate by phone or email.

The survey of 3,000 European knowledge workers found that, while 99 percent of workers collaborate with others and 81 percent work with two or more people in different time zones or regions, current tools do not meet their needs.

Security and control of information once it has been distributed seem to be clear barriers. But it might be more than that. Respondents seem to think collaboration tools simply are not engaging enough. About 44 percent of respondents say they still are looking for more engaging ways to collaborate.

About half of information security professional recently polled by Webroot say they intend to shelve plans for collaboration as a result of security concerns.

The Webroot survey found just 25 percent of security professionals are prepared to move ahead in spite of security concerns and only 15 percent have already resolved their security issues. The remaining 10 percent have no plans for collaborative working.

At least to some extent, Web-based collaboration tools appear still to be at some stage of supplier hype rather than end user demand, complicated by unresolved security and governance issues, at least in European enterprises.

What's the Value of a "Click"?

The number of people who click on display ads in a month has fallen from 32 percent of Internet users in July 2007 to only 16 percent in March 2009, with an even smaller core of people (representing 8 percent of the Internet user base) accounting for the vast majority (85 percent) of all clicks, say comScore.

You can draw your own conclusions about what that means. Some might argue that display advertising "doesn't work." Others would argue simply that clicks are not the right way to measure impact.

“The act of clicking on a display ad is experiencing rapid attrition in the current digital marketplace,” says Linda Anderson, comScore VP. “Today, marketers who attempt to optimize their advertising campaigns solely around the click are assigning no value to the 84 percent of Internet users who don’t click on an ad.

"That’s precisely the wrong thing to do, because other comScore research has shown that non-clicked ads can also have a significant impact," says Anderson. "As a result, savvy marketers are moving to an evaluation of the impact that all ad impressions – whether clicked or not – have on consumer behavior, mirroring the manner in which traditional advertising has been measured for decades using reach and frequency metrics.”

The results underscore the notion that, for most display ad campaigns, the click-through is not the most appropriate metric for evaluating campaign performance, comScore says.

Rather, advertisers should consider evaluating campaigns based on their view-through impact. The company has conducted more than 200 client studies demonstrating that online display ads generate significant lift in brand site visitation, trademark search, and both online and offline sales among those Internet users who were exposed to the online ad campaigns – whether they clicked on the ad or not, says comScore.

“A click means nothing, earns no revenue and creates no brand equity," says Anderson.

“You want people to visit your website, seek more information, purchase a product, become a lead, keep your brand top of mind, learn something new, feel differently – the list goes on. Regardless of whether the consumer clicked on an ad or not, the key is to determine how that ad unit influenced them to think, feel or do something they wouldn’t have done otherwise,” says Starcom USA SVP/Director, Research & Analytics John Lowell.

Social Media is Made for Mobile

Social media is about conversations. Mobile phones are about conversations. Social networking is about conversations. So how much insight is required to figure out that social media and social networking are about mobiles?

Today, every major social network offers its users a range of mobile services, from mobile web access to downloadable mobile applications. Although consumers with high-end devices may be the primary users of these mobile services, some social networks also offer a number of SMS-driven features that allow consumers to stay engaged by text, even on low-end mobile phones.

According to Nielsen, more than three million Twitter users in the United States regularly access the service using their mobiles. Additionally, many consumers are frequently using Twitter though text messaging and a range of downloadable mobile applications for iPhone, BlackBerry and other mobile devices. In fact, those third party applications might represent as much as 80 percent of mobile Twitter use, suggesting there could be as many as 15 million U.S. mobile Twitter users.

According to Nielsen, about 15 percent of Facebook users (11 million) in the U.S. regularly access the social network's mobile web version, plus three million users who use text messaging for Facebook access. There also are third party apps for mobile Facebook use as well.

More than 4.6 million users use the mobile version of YouTube as well, Nielsen says.

Net Neutrality Not Good for Real-Time Services?

One of the unknowns at the moment is how any proposed Federal Communications Commission network neutrality rules might affect a service provider's ability to offer quality-assured services.

That's possibly important for any users or providers of real-time services (voice and video), since bandwidth alone is not a guarantee of quality experience.

Real-time services are highly sensitive to latency and delay. The issue then is whether consumers will have the option of buying services optimized for real-time services.

Think of this as an end-user opportunity to buy bandwidth services that are akin to the Akamai content delivery service currently available to businesses.

Mobile Web Use Explodes

As is always the case, the highest growth rates for any product or service come when growth starts at a low base. And that seems to be the case for mobile Web usage, which over the last year has grown faster among users 65 years old, or older.

Over the last year, users 65 or older adopted mobile Web behaviors at a 67 percent rate.

The other trend of note is rapid growth at the other end of the demographic scale. Users between 13 and 17 increased their mobile Web usage by 45 percent. That means teens are buying smart phones, or having smart phones bought for them.

Casual Use Biggest PC-Based Mobile Broacband Segment?

Mobile broadband services used by PC owners likely will follow the pattern seen recently in the U.S. mobile phone business, where prepaid payment plans have grown at the expense of postpaid plans.

By 2011, only 40 percent of PC mobile broadband users will be on long-term monthly contracts, says  Dean Bubley, Disruptive Analysis principal. Most will use prepaid, casual use or “free” access, he predicts.

In fact, the strongest growth probably will come in the casual use segment.

High Social Media Use Also Means High Email Use, Nielsen Finds

At least in principle, as consumers and workers get access to unified communiations tools, there is a chance behavior will change. When a user can get a message in one media format and reply in another format, people might start using the tools they like best, and thereby decreasing use of other message formats.

Researchers at the Nielsen company, for example, guessed that as people began using social media, they would use less email, for example. To test that thesis, Nielsen broke the online population into four groups.

The first three are terciles of social media consumption in minutes, says Jon Gibs, VP, Media Analytics.  The fourth is a group that doesn’t use social media at all.

Nielsen then looked at each segment’s time of web based email consumption over the course of a year.
Finally, Nielsen subtracted the email consumption of those that do not use social media from those that do, basically to show a lift over possible external forces.

As it turns out, Nielsen found the opposite of what it guessed it would find.

"It actually appears that social media use makes people consume email more, not less, as we had originally assumed, particularly for the highest social media users," says Gibs.

In part, that might be because social media sites like Facebook can be set to send messages to user inboxes every time someone comments on a post, depending on user preferences.

But it also is likely that high users of social media are, well, "social." They might use any number of media to keep in touch with friends and associates.

$350 Billion to Build 100 Mbps Symmetrical Broadband Throughout U.S.

Based on an average cost per dwelling of about $2,700, including capital and operating expense (construction and so forth), the Federal Communications Commission estimates it will take about $350 billion to bring 100 Mbps service to about 111 million to 116 million U.S. homes.

Internet Users are Unique, Treat Them That Way

As this chart suggests, there are distinct Internet end user segments, some of which only require moderate bandwidth, others which require more bandwidth, better latency performance and more upstream bandwidth, if not symmetrical bandwidth.

The issue for any facilities-based service provider is that the whole network has to be built to accommodate the most advanced users, even if much, or most, of the demand is from less-demanding users.

Still, given that such investment must be made, there is increasing room to personalize and tailor broadband access and applications to individual users who actually behave in unique ways.

Though the concern expressed by many supporters of strong forms of network neutrality rightly is focused on protecting legal applications from anti-competitive behavior, there clearly are other values that conflict with the  proposed solution for discrimination, which is that no bits, from any providers, can be prioritized.

In fact, prioritizing bits represents a primary tool for personalizing end user services and applications so that those favored applications are optimized for each user. Surely there are ways to ensure non-discrimination without precluding the creation of personalized services that benefit from end-user specified preferences.

Is Mobile Broadband a Commodity?

Most industry observers tend to think and behave as though "voice" were a commodity, and there is some truth to the notion, at least on the wholesale, carrier-to-carrier or carrier-to-enterprise level. I would dispute the notion that voice, in all its permutations, actually fits the definition of a commodity, but for the moment let's look at mobile broadband.

Is mobile broadband a commodity? Can it replace a fixed broadband connection. As this chart suggests, the answer largely is "no." A mobile service easily can displace a single consumer voice line or simple Internet applications such as email. But it isn't so clear email access is what people generally mean when thinking about mobile broadband.

At the other extreme, high-quality linear entertainment video is virtually impossible to replicate in the mobile domain, so IPTV, for example, has no direction equivalent in the wireless domain. Other applications are somewhere between "mostly" substitutable and "not" substitutable.

The point is that a product probably isn't a full "commodity" if full substitution is not possible, or is possible, but without fully interchangeable value. So far, mobile broadband does not seem to be a "commodity" fully capable of replacing a fixed broadband line.

There are many reasons, including vastly different speeds, usage caps and pricing. Then there is the demographic element. It is easier to consider substitution when a single-user household is concerned, hardest when multi-member families are concerned.

The value of a fixed broadband connection grows with the degree of bandwidth sharing and total number of devices to be supported. One fixed broadband connection might make more sense than five mobile broadband connections, for example.

The other angle is that linear multi-channel entertainment video is just a discrete application delivered over a fixed broadband connection, and there is as of yet no mobile substitute. So despite outward appearances, mobile and fixed broadband are not fully-exchangeable substitutes, and hence not true commodities.

Monetizing Broadband: Something has to Give

Inevitably, Verizon Communications Chief Technology Officer Richard Lynch would get attention in mentioning that the broadband industry “will see a pricing paradigm shift” because Internet service providers “cannot continue to grow the Internet without passing the cost on to someone.”

Lynch's remarks would come as no surprise to anybody who follows revenue-per-bit trends in the broadband access business. It has been clear for some time that, as access bandwidth increases, revenue is not keeping pace.

Service providers have some room to deal with the widening gap, by adding new revenue-producing services and applications, managing cost and so forth. But there is not unlimited room to juggle cost elements.

At some point, higher bandwidth, which customers want to buy and service providers want to sell, will require investments with a more-linear payback mechanisms.

That likely means new ways of pricing bandwidth consumption. That probably doesn't mean a shift to fully-metered usage, as consumers do not like it, and such an approach undoubtedly would depress consumption and therefore stifle new applications and services.

But there are lots of other, more-palatable alternatives, namely "buckets" of usage analogous to the ways people now buy voice services or text messaging. Bigger buckets will cost more money; smaller buckets will cost less.

And if network neutrality rules are not onerous, service providers might be able to create service tiers with quality of service mechanisms, much as business customers are able to buy, though basic "best effort" plans likely would coexist.

“We are going to reach a point where we will sell packages of bytes,” Lynch says. Those packages might also offer differentiated quality of service.

Consumption at "off peak" hours might be offered at prices lower than equivalent consumption at peak hours, for example. Whether optional packages could be offered that allow end users to prioritize some applications, as businesses do, will not be clear until after new network neutrality rules are clarified. And that is going to take some time.

Video Business Model Disruption Inevitable, But Not Imminent

What will media companies look like in a couple of years? Pretty much what they look like today. But what will they look like in 10 to 15 years? Very different.

There are clear reasons why the couple of years will look an awful lot like this year,  while a decade from now the whole media business could be structured in very different ways.

First, new IP technology and broadband is in place that will drive a long cycle of innovation for challengers and economic destruction for incumbents. That almost assures vast change over a longer time frame. But the emphasis here has to be on "long" cycles.

Changes in the media can take quite a long time to mature. Gordon Crawford, The Capital Group managing director, notes that in 1972 the existing media business was quite attractive, financially. But that changed after 1995, the year of the Netscape initial public offering, which ushered in the age of Internet-based media.

Only now, 14 years later, is the impact starting to really affect the print segment of the business. And most of the video impact has yet to arrive.

Still, Crawford thinks change is inevitable. "If you go out enough years, bandwidth will be there," he says. "Storage will cost nothing and rights issues will be resolved."

"People will have access to whatever they want, whenever they want it, on any device," says Crawford.  "That is where we are going."

But one has to remember that large-scale and fundamental technological changes seem to have less impact when the trends are just beginning, but reach some inflection point, beyond which vast change happens relatively quickly. That should not be too different for the video business.

There will be less change that you expect early on, and greater change later, in other words.

There are some possible outcomes, though. If regulators were, for example, to impose an "a la carte" pricing regime on video providers, 250 of 400 cable channels will disappear overnight," says Crawford.

Peter Chernin, former News Corp. president, also agrees that fundamental change is coming. "Non-consumer-friendly business models cannot be supported anymore," he says.

"The single biggest question facing the industry is the ability of niche cable channels to survive," says Chernin. "About 60 to70 percent of media profits of big conglomerates come from there."

But people only want to watch 10 to 15 channels. "Is that sustainable?" Chernin muses.

And while most people think Hollywood ultimately will change its "release windows," that might not have as much effect on what consumers decide to rent or buy as one might think. But there could be big changes in distribution.

Chernin thinks the days of people buying DVDs are numbered because of streaming. "The DVD business is declining 15 to 20 percent a year," he says. If networks are ubiquitous, can you convince people to own content for $15 when they can stream it for lots less?

Some "70 percent of DVD purchases are for new releases," Chernin notes. Even if the delivery format changes, that is likely to remain the buying pattern.

"It’s just a matter of time" before cable networks are faced with "digital destruction," Chernin says.

There are obvious implications for satellite, cable and telco multi-channel video providers, of course. The good news is that distributors have some time to get ready for the transition. Being "too early" is about as bad for business as "being too late."

Smart phones for Play, More than Work

Though businesses only buy smart phones for their perceived productivity advantages, a new Compete survey sugggests people mostly use their smart phones for entertainment and other personal applications.

That is to say, entertainment, games, music, social networking and weather are the most popular across smart phone platforms.

More than anything else, the Compete survey results illustate the changing value proposition, application focus and business models possible in the wireless space. Communication remains fundamental. Email, microblog posts, instant and text messaging are communication formats, first and foremost.

But mobiles also are becoming entertainment devices. The survey shows that smart phone owners prefer personal and social apps to business applications.

That was not true early on, when a "smart phone" was nearly synonymous with "BlackBerry," and was bought on behalf of business users. While business users remain a key segment of the market, consumer users gradually are becoming the majority of the market.

The survey suggests that iPhone owners, more so than other smartphone users, were more likely to spend money on apps., while 83 percent of all smartphone users preferred apps $5 or below. Whether that is because first movers are different than mainstream users, or because the Apple user experience is so much easier, is hard to determine with precision at this point.

About 73 percent of Blackberry owners have downloaded five or fewer applications; in contrast, 72 percent of iPhone owners have downloaded 10 or more applications. Clearly, iPhone owners have been more receptive to customizing their devices.

Facebook is hot among iPhone owners. About 71 percent of iPhone users report accessing Facebook from their mobile device, and 37 percent listed Facebook as one of their top three most used apps. About 18 percent claim it's their favorite app.

Despite Twitter's ever-increasing mobile popularity, 85 percent of smart phone owners still prefer to access the site from the computer.

While 26 percent of iPhone users tweet from their device, only 15 percent of Palm owners and 10 percent of Blackberry users report accessing Twitter on the go.

Of the smart phone owners who do access Twitter via their phones, 41 percent use the application to keep track of what their friends are doing, 32 percent use the service to keep up with current events and 19 percent tweet from their handset to build a fan base or promote their company.

Facebook is the most heavily trafficked social networking site among smartphone owners, says the report, and iPhone users are twice as likely to use the mobile Facebook app as their Palm counterparts. In fact, iPhone owners are the most active mobile social networkers, with the highest percentage of respondents reporting mobile use of Facebook, MySpace and Twitter and from their mobile devices.

Prepaid Mobile Declining in Western Europe

In Western Europe, the prepaid share of total mobile connections varies significantly by country, but on average it was 57 percent at the end of 2008. Yankee Group is forecasting that figure to decline to 47 percent by 2013. In developing markets, prepaid dominates. For example, in Latin America prepaid accounts for 84 percent of mobile connections today. Yankee Group is predicting this percentage will remain flat during the next five years.

AT&T Google Voice Complaint Partly About Traffic Pumping

In asking the Federal Communications Commission to investigate Google's refusal to terminate some calls placed to high-cost rural areas, AT&T is not simply sparring with Google over network neutrality, but rather pointing up a pricing anomaly that distorts behavior and reduces carrier profits.

while suggesting current regulatory rules do not fairly treat competitors in the market, and arguing for narrowing the regulatory differences between VoIP and other carriers and between access, application and content providers, AT&T also is highlighting what it and other carriers say is a pricing distortion in the termination rate regime that directly underpins the businesses of free conference calling services.

At immediate issue here is Google's refusal to terminate some calls in high-cost rural areas. Many of you are familiar with free conference calling services that use area codes in rural areas. You might have wondered what the business model is. Simply, it costs carriers enough money to terminate calls in those rural areas that conferencing services can afford to give away the service and make their money on the termination fees.

Over the last couple of years other skirmishes have been fought about high termination rates in some rural areas of Iowa and some other areas.

Services such as Free Call Planet, freeconferencecall.com and others teamed with Iowa telcos to set up inexpensive or free calling services that generate profits for the providers primarily by collecting millions in access fees.

The local telcos provide the Iowa telephone numbers and voice gateways for the services, bill long-distance companies to terminate calls and then pay“marketing fees” to the conference calling services.

AT&T said in 2007 that the arrangements were costing it $250 million a year. AT&T, Verizon, Qwest and Sprint Nextel have opposed the "traffic-pumping" schemes, and the Federal Communications Commission did move to limit the practice.

Rural phone companies are allowed to charge about 2 cents to 8 cents a minute to connect long-distance and wireless calls to their networks. The fees, up to 100 times higher than rates charged by large local phone companies, are intended to offset the rural companies' high costs and low call volumes.

But that's where the arbitrage opportunity arises. Specialty calling services teamed with some rural phone companies to offer free conference calling, adult chat and other services, splitting the call-connection revenues with the rural carriers.

The FCC did move to suspend the rural companies' rates. But new providers have set up shop.

About 160 million minutes of calls by AT&T customers were routed to rural CLEC networks in March, 2008, surpassing the peak level of calls to rural incumbents, about153 million minutes, in January 2007, AT&T says. Sprint told the FCC that its bill from 11 competitive carriers soared 5,000 percent in 21 months.

Recently, even other rural telephone companies have decided they'd better side with the large tier one providers as well, as the practice might damage the wider rural termination regime.

Google tariff specialists know that, and apparently want to avoid those costs by restricting termination to such numbers, as the tier one carriers themselves did until forbidden to do so.

So aside from the other clear issues about treating like entities in similar fashion, there is the outstanding issue of high termination rates in some jurisdictions.