VoIP Will be a Mixed Blessing for Mobile Service Providers

This prediction for use of mobile VoIP by about 2013, made by In-Stat, might suggest the reasons why incumbent voice providers have been somewhat hesitant to fully embrace VoIP.

The pie chart suggests that a majority of VoIP activity on mobile phones will be provided by third party, over-the-top providers, not the "service providers" themselves.

That's roughly the same experience fixed line operators have had: most of the usage is enabled by third-party application providers or competitors, notably cable companies.

Some might find it odd, but VoIP actually has been a mixed blessing for incumbent voice providers. It represents the next generation of voice, but the next generation of voice turns out to be an application "anybody" can provide.

VoIP proponents have hammered away at the theme that VoIP is about new features, not price. The market keeps demonstrating by its spending that price is what VoIP "really is about." Features are nice, especially in the business market, but consumers seem to buy based on their ability to "save money," rather than for the whiz-bang new features.

The fundamental dilemma for an incumbent voice provider is that they essentially must invest more money, to provide new features end users won't pay for, at lower or the same prices. To a certain extent, that's the similar problem service providers face when upgrading to fiber-to-home or fiber-rich access networks. Video services are truly new. But broadband access has been following a "more speed for the same money" trajectory, for the most part. Fiber-rich access networks have made possible new faster tiers, sold for more money, to be sure.

But it would be tough to make the argument that the new sales of faster access, plus revenue from new video services, have earned sufficient return to justify the investments in a classic sense. More often, such investments are strategic, intended to ensure that a provider still has a business, more than investments that immediately produce attractive revenue lift.

VoIP has been a mixed blessing for incumbent telcos, though it has been very satisfying for cable operators and some over-the-top providers.

Mobile, Broadband Growth Have Shifted to the Developing World

Not since abour 2006 have there been more fixed broadband lines in service in the most-developed broadband markets than emerging countries, and by 2009 a group of about 15 nations, including the BRICs, as well as countries in Southeast Asia, South American and Eastern Europe had surpassed the developed countries in total subscribers.

These days, the 15 emerging countries have the biggest share of broadband lines and the fastest growth rates as well, says Point Topic.

It's worth pondering that for just a moment. In 2000 there were 738 million global mobile subscribers. In 2010, there are 4.3 billion mobile subscribers, and most of those subscribers live in the developing world, according to the International Telecommunications Union.

It took just four years to double the number of global mobility users, from 2000 to 2004, and just another four years to double yet again, from 2004 to 2008. That sort of growth does not happen much in the telecom business, and has not happened before in the developed world.

Broadband growth is likely to assume something of the same pattern, but likely will be driven by mobile, not fixed access. Mobility has proven to be a raging, unexpected success story for people in developed regions. Broadband is about to repeat that feat.

Quietly, without much fanfare, communications really has become a capability available to all the world's people, after many decades of attempts by policymakers and providers to figure out how to do that. In the end, better technology has made all the difference. We don't use wires, we use airwaves. We don't use analog, we use digital. We don't use physical goods; we use electronic goods.

By 2014 just 15 developing nations will account for over 320 million broadband lines, 43 percent of the world total of 740 million broadband lines, by that time.

The fastest-growing group of 15 countries will have broadband growth rates of 14.2 percent annually. Another group of 12 countries, including the United States, Japan, Greece and Taiwan, will see annual growth of about 5.5 percent each year through 2014. Some 13 countries, including Western European nations, Canada, South Korea and Hong Kong, will see 4.6 percent annual growth rates.

All of those statistics are important for one compelling reason. Global subscriber and revenue growth for voice services, mobile services and broadband now has shifted to developing regions of the world.

Boston Tops "Good for Telecommuting" List

Boston is the top U.S. medium-sized or large city for telecommuting, according to a new survey of 3,600 workers in 36 markets.

The survey, commissioned by Microsoft Corp., examined urban areas based on factors including the percentage of workers who say their jobs can be done from outside the office; the percentage of companies with formal work-from-home policies; the extent of support from bosses for working from home, as gauged by workers; and the extent of technological support provided by employers to enable working from home.

Most respondents said they were more productive when working from home. The top complaint listed was the lack of face-to-face interaction with colleagues.

Fewer than half of the companies surveyed had telecommuting policies. Within those companies that did have such policies, a little more than a third of workers took advantage of the opportunity.

Those workers listed achieving work/home balance, saving on gasoline and avoiding long commutes as their top reasons for telecommuting.

As for where they did work outside the office, many employees listed family vacation spots as a top choice. About a quarter of telecommuting workers said they set up operation in coffee shops. Some 10 percent worked from doctors’ offices.

The increase in telecommuting is being driven by the economy, which has made companies less willing to relocate staff, and by technology, which makes remote work lots easier.

After Boston, top telecommuting cities were:

Raleigh-Durham, N.C.
Atlanta
Denver
Kansas City, Mo.
Richmond, Va.
Austin, Texas
New York
Sacramento, Calif.
Portland, Ore.

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FCC to Propose Spectrum for "Free or Low Cost" Broadband Access

The Federal Communications Commission appears to be ready to license some spectrum, as part of its proposed national broadband plan, for free or very-low-cost access. It is not clear whether the agency envisions giving a single national operator the entire frequency block, whether it will license the spectrum for free or for fee, or whether the plan mirrors other proposals that have been advanced.

FCC statement

The FCC has provided no additional details, but the thought is not new. Outgoing Federal Communications Commission Chairman Kevin Martin in 2008 had pushed for action on a plan to offer free, pornography-free wireless Internet service to about 95 percent of the country, using about 6 MHz of spectrum in a block of about 25 MHz. The licensee would have been free to create a revenue-generating plan using about 19 MHz.

The FCC's proposal mirrored a plan offered by M2Z Networks, which has been proposing
 providing free, wireless, family-friendly service at speeds of 512 kbps, providing a basic and relatively slow 384 kbps for downloads and 128 kbps for uploads.

M2Z Networks had proposed using AWS-3 spectrum in the 2155-2180 MHz band.

Advertising revenue would support the free service, while M2Z also proposed offering faster "for fee" services at speeds up to 3 Mbps.

M2Z also has said it would pay the government about five percent of revenues from such a service.

Cisco Announces 322-Terabits per Second Router

To support more bandwidth consumption at the edge of the network, one needs to supply more bandwidth in the core of the network. For that reason, Cisco has announced its new CRS-3 Carrier Routing System (CRS), offering three times the capacity of the Cisco CRS-1 Carrier Routing System, which operates at 92, where the CRS-3 operates at up to 322 Terabits per second.

The device offers more than 12 times the traffic capacity of the nearest competing system, Cisco says.

The Cisco CRS-3 offers operational expense savings and up to 60 percent savings on power consumption compared to competitive platforms, Cisco says.

New Taxes on Amazon in Colorado; Amazon Stops Supporting Colo. Sales Associates

Economists are uniformly agreed on one essential fact of economic life: when you raise the price of some product, you get lower sales. That suggests lower sales for Amazon in Colorado, since the state has now imposed new taxes on Amazon sales associates in the state.

One can argue about the utility and fairness of sales taxes on Internet commerce. But it is hard to argue that sales will be under greater pressure now that the prices for virtually all Amazon products now are going to cost buyers more.

Amazon says the problem is that the Colorado law increases regulatory compliance burdens in an attempt to induce Amazon to collect sales taxes, something it says it will not do.

For that reason, Amazon will stop paying commissions to Colorado-based associates for providing leads that turn into sales, and will shift such payments to partners in other states, or will sell directly from the Amazon site.

"As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly," Amazon says.

"The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates," Amazon says.

Associates in Colorado have had their accounts closed as of March 8, 2010.


North Carolina and Hawaii also have levied similar taxes on sales of Amazon products made from affiliated in-state Web sites. The taxes apparently do not cover sales made directly from Amazon's own site.

"The sad irony of this issue is that the 'Amazon Tax,' as the North Carolina General Assembly calls it, will not collect any taxes; it will only cause lost revenue for North Carolina businesses," says Bob Butler, BestThinking.com CEO, a former Amazon affiliate based in Cary, N.C.


New Taxes on Amazon in Colorado

What Future for Telecom Business of 2015 or 2020?

The telecommunications industry has experienced more change in the last decade than in its entire history, says IBM. Consider that, in 1999, only 15 percent of the world’s population had access to a telephone; by 2009, nearly 70 percent had mobile phone subscriptions.

So where will the industry be in five years, in 2015? While nothing is certain, forecasters at the IBM Institute for Business Value say they see four possible outcomes, and none of them offer rosy futures.

(click image for larger view)

In fact, IBM's scenarios likely mean further, and major, industry consolidation at a very minimum. The more-radical alternatives include fundamental industry restructuring in ways that separate network operations from retail operations.

In some of the scenarios where radical industry restructuring occurs, today's service providers might find themselves competing against device manufacturers or even today's suppliers of network infrastructure.

The key observation is that IBM presents a range of five-year scenarios that all involve significant pressure on service provider profit margins or gross revenue, or both. Further service provider consolidation is the least disruptive change in industry structure that could happen.

In half of the most-likely scenarios, the industry is structurally separated into wholesale network services operations and separate retail operators.

Keep in mind IBM believes it will take only five years for one of these scenarios to develop.

In one scenario, which IBM calls "survivor consolidation," consumer spending for communications drops, leading to industry "stagnation or decline."

In this rather-bleak scenario, developed market operators have not significantly changed their voice communications and "closed" connectivity service portfolios and also have failed to expand horizontally or into new verticals.

That will trigger an Investor loss of confidence in the telecommunications sector, which produces a cash crisis and leads to industry consolidation.

In an alternate scenario IBM calls "market shakeout," carriers are structurally reshaped into separate wholesale and retail businesses, and the market is further
fragmented by government, municipality and alternative providers.

In this scenario private capital is available only to dense urban areas. Telecom provider growth occurs in large part through sales of services to business partners.

In a third scenario called "clash of giants,"  carriers consolidate, cooperate and create alliances to compete with "over the top" providers and device manufacturers or even equipment suppliers.

In a fourth scenario IBM calls the "generative bazaar," open access infrastructure leads to more competition from "asset light" and over the top competitors.

It is easy to dismiss the level of change the last 10 years has wrought. It might be easy to dismiss the level of change IBM believes can happen in just another five years. As always, the forecast might be too aggressive in terms of its timetable.

The major implication, though, is that the telecom industry might well be a very-different sort of business by 2020, if not by 2015. If you look at revenue sources, it is virtually certain that in developed markets, less revenue--in some cases far less revenue--will be earned from voice and text services.

More revenue will be earned from broadband services, and possibly from business partners rather than end users.

Arab Phone Lines Continue Decline

Lower use of fixed voice lines is not a phenomenon limited to North America, Western Europe or Japan, it appears.

Surveying 20 fixed network operators in 15 Arab countries, the Arab Advisors Group finds 27.8 million fixed line subscriptions in use at the end of September 2009, down from 29.2 million at year end 2008, a drop of 4.6 percent.

Globally, wireless stands at 67 percent penetration, according to the International Telecommunications Union, compared to 18 percent fixed voice line penetration.

That means there are about four mobile accounts in service for every fixed line. In the broadband access area, there already is 9.5 percent penetration of mobile broadband, globally, compared to 7 percent penetration of fixed broadband access, the ITU says.

Any way one looks at the matter, it increasingly is a wireless world.

Seasonally Adjusted, 5% Job Growth in 2nd Quarter, Manpower Finds

Seventy-three percent of companies polled in a new Manpower survey said their will not hire employees in the second quarter. Though 16 percent report they will increase hiring, eight percent will cut, for a net gain of eight percent.

On a seasonally adjusted basis, hiring will increase at about five percent of businesses surveyed. That is up from a decline of two percent a year ago, Manpower says.

That 73 percent of firms plan no hiring is a record-tying high in the history of the poll, Manpower says.

The leisure & hospitality industry has a strong outlook and is hiring. So is the professional and business services sector.

The news tends to reinforce the views of economists and the Congressional Budget Office that U.S. unemployment will stay close to 10 percent though the middle of 2010.

That will almost certainly constrain consumer spending and activity in the housing market, suggesting a sluggish recovery.

There had been some hope, particularly early in the current quarter, that business activity had begun to pick up sharply. It turns out that companies were replacing depleted inventory and that core GDP was not improving in any measurable way, says Doug McIntyre, 24/7 Wall Street columnist.

McIntyre is skeptical the latest attempt at stimulus will work, either. The latest "jobs" bill will focus on direct credits for businesses that hire, more state aid, and more infrastructure investment, says McIntyre.

The theory is that these plans will mainline capital to the place where the employment problem is most acute–small and medium-sized business which tend to have limited access to credit, he notes.

But tax credits for hiring do not improve employment if companies see no increase in the demand for their products and services, he says.

The good news is that we are working our way out of the great recession. The bad news is that it appears to be a tough, dogged slog upwards.

One Problem with Smartphones: More Dropped Calls

U.S. wireless customer experience of wireless call quality has dropped over the last six months, according to J.D. Power and Associates.

Over the past six months, customer-reported call quality problems have increased significantly, from 11 problems per 100 calls in 2009 to 13 problems per 100 in the most recent study.

Dropped calls are on the rise, from four problem per 100 calls six months ago to six problems per 100 calls in the latest survey.

On average, smartphone customers experience problems at a rate that is 6 PP100 greater than problems experienced by traditional handset customers. In addition, smartphone customers are nearly three times more likely to experience dropped calls than are traditional mobile phone customers.

"Interestingly enough, consumers using less sophisticated (more traditional) handsets were nearly three times less likely to experience a dropped call than their smartphone counterparts," says J.D. Power.

A rational person might say those findings support the claims made by testing organizations that smartphone design can, and apparently does, have an impact on the ability of such devices to maintain calls, either because of mobile Web signaling interference or even smartphone design issues.

Frustration with call quality is often a leading reason why consumers choose to switch mobile carriers, J.D. Power notes. The study results show a PP100 rate six times as great (42 PP100 vs. 8 PP100) for consumers who report they “definitely will switch” providers in the next twelve months when compared to users who report they will “definitely not switch” carriers.

40 Ways the Internet Changed the World

Sometimes you need to put a face on things to understand a technology's impact.

Global Spending on Mobile Networks to Grow 4% in 2010

Given dramatic increases in mobile Internet and broadband use, it is perhaps not surprising that mobile service providers will be hiking their network investments about four percent in 2010.

Informa Telecoms & Media estimates that mobile broadband subscribers worldwide  reached more than 225 million subscribers in mid-2009, representing 93 percent year-over-year growth.

Global mobile data bandwidth usage increased by about 30 percent during the second quarter of 2009, says Allot Communications.

The investment growth comes on top of about two years of flat to negative spending where mobile service providers tried to hold down spending in the face of the global recession.

Overall investment was down about three percent in 2009, says ABI Research.

Investments in 3.5G technologies such as HSPA and HSPA+, along with the rollout of 4G LTE networks by large operators such Verizon Wireless and Telia Sonera, are driving much of the activity. The fastest growth in capital expenditures is expected to be in South America, where compound average growth rates will average 10 percent between 2009 and 2015.

”The rapid adoption of smartphones will drive service revenue growth in 2010, as more consumers adopt data plans to take advantage of their handsets’ features,” says ABI Research analyst Bhavya Khanna.

Developed markets such as North America and Western Europe saw more than 17 percent year over year growth in mobile Internet revenues, a trend that is likely to continue into 2010.

ABI Research forecasts mobile Internet service revenues to grow at a CAGR of 9.4 percent between 2009 and 2015.

Gracious Sandra Bullock Oscar Acceptance Speech

A gracious Oscar acceptance speech by Sandra Bullock.

Google Does Scare Potential Competitors

Just an entertaining video.

Digital Ad Spending Exceeds Print for the First Time

U.S. advertisers are spending more in 2010 on digital media than on print, says Outsell.  Outsell's study collected data from 1,008 U.S. advertisers in December 2009.

Of the $368 billion marketers plan to spend this year, 32.5 percent will go toward digital; 30.3 percent to print. Digital spending includes e-mail, video advertising, display ads and search marketing. "It's a watershed moment," says the study's lead author, Outsell Vice President Chuck Richard.


Last year, print spending accounted for 32 percent of the total, compared with 30 percent for online.

Spending on Web sites and other digital media will rise 9.6 percent to $119.6 billion this year. Print expenditures will drop three percent to $111.5 billion while total ad spending will jump by 1.2 percent to $367.9 billion from $363.5 billion last year.

Advertisers will reduce spending on marketing for events, and on television, radio and movies this year. TV, radio and movie expenditures will drop by 3.8 percent to $84.6 billion, Outsell says.

Spending on events will decline less than one percent to $45.2 billion this year.


But the survey also suggests marketers will spend 16 percent less on mobile in 2010, compared to 2009.

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