Australia National Broadband Network Pricing Clues

Australia's planned National Broadband Network (NBN) expects, over a decade, to build a fiber-based broadband access network providing 93 percent of Australian homes and small businesses with 100 Mbps service. Some locations will be served by wireless or satellite services that will operate at 12 Mbps. Fixed wireless will be used to supply service to about four percent of locations, while satellite is used to deliver service to about three percent of locations.

In total, about 13 million connections will be supplied.

"Retail pricing structure for fiber products is based around bundled (cheap or free) voice, fast broadband access and multi-channel TV," the NBN plan suggests. That little tidbit largely reflects the prevailing view that voice communications, though still a huge part of the overall value proposition, will not be the revenue driver for the network. Some might wonder about the relative contribution of multi-channel TV, over the medium or longer term, as well.

Of course, since the NBN will only supply wholesale access and transport, the specific retail plans will be determined by the retail providers themselves. Some may elect not to provide any one of the potential constituent services. Also, the NBN and its retail partners will continue to compete in a market with existing cable competition and expected growing competition from mobile networks as well.

One might guess, based on prior instances of robust wholesale regimes, that Telstra's current 70-percent-plus share of voice, and nearly-70-percent share of fixed broadband, could drop to about 40 percent, as already is the case in the wireless services domain. Market share of about 40 percent for fixed services would be consistent with other markets where robust wholesale competition is possible.

Some idea of the "retail pricing floor" can be gleaned from planned NBN pricing. Wholesale prices for a single 12 Mbps circuit are set at $24. A retail service provider will add operating, sales and capital costs to derive retail pricing. Other prices include wholesale charges of $27 for a 25 Mbps service with 10 Mbps return; $30 for a 25/20 service and  $34 for a 50/20 access; $38 for 100/40 service.

Wholesale pricing for a 250/100 plan will cost $70; $100 a month will buy a 500/200 service and $150 is the wholesale price per month for a 1 Gbps/400 Mbps service. The charges intentionally are designed to encourage wholesale partners to buy and retail services running at 100 Mbps.

The NBN also will sell symmetrical services with guaranteed quality of service (committed information rates).

NBN Co will "provide a layer two bitstream service only, using a GPON (gigabit passive optical etwork) architecture. The company is not preparing for the provision of layer one services, layer one unbundling, functional or structural separation. Retail partners will not be able to buy "dark fiber," in other words.

Wholesale products will be sold supporting downstream bandwidths of 12 Mbps, 25 Mbps, 50 Mbps, 100 Mbps, 250 Mbps, 500 Mbps and 1 Gbps, with upstream bandwidths ranging from 1 Mbps up to 400 Mbps. The NBN also will offer wholesale voice capabilities.

The NBN will add video streaming delivery, but will not supply the rest of the video infrastructure. Also planned are features to support multi-location enterprises and 1 Gbps virtual LAN services, as well as protected diverse-routing services.

The entire fiber network will take 9.5 years to build, assuming no materials or labor delays, and is projected to cost $36 billion. Revenues to 2020 are expected to be about $21 billion and operating costs are expected to run about $22 billion through 2020. The Australian government is contributing R27.5 billion, with debt financing of about $13 billion. The internal rate of return is expected to be seven percent.

For Telstra, the stakes are high, as Telstra will essentially be out of the infrastructure business, and purchase access and transport services from the NBN. Telstra also will divest its cable network customers as well.

You can read the full report here

FCC Net Neutrality "Rules" are More Like "Principles"

To me, this reads more like a statement of principles and direction than "rules." That likely is by design. That also means if the court challenges do not invalidate the entire order, we are in for a long period of gradual testing of what each of the principles actually means.

It appears we don't really know much, yet, especially since the actual language hasn't been released.

http://www.scribd.com/doc/45749183/Net-neutrality-statement-by-Julius-Genachowski-the-FCC-chair-on-Dec-21-2010

Netflix CEO Reed Hastings Disagrees with Investor "Shorts"

You would not expect any CEO of a public company to do anything but defend the company's valuation. Reed Hastings, Netflix CEO, facing what might be termed significant concern in some quarters that the firm is over-valued, does so in this post, a response to investor Whitney Tilson's stated reasons for shorting Netflix.

You can read the original here: http://seekingalpha.com/article/242320-whitney-tilson-why-we-re-short-netflix

Both sets of arguments are cogent. The one point where the Hastings response seems to me to miss the mark is Tilson's argument about higher broadband costs, incurred by consumers, not by Netflix, to consume Netflix or any other provider's streaming content.

Hastings rightly points out that on a cost-per-megabyte, backbone transport costs are declining. He's right about that. But Tilson seems to be pointing to the money end users have to pay, for their broadband access subscriptions, to consume streaming content.

As users begin to watch more online video, it is highly likely they will need to spend more money on their broadband access plans, and that will play some role in any consumer's evaluation of their costs to watch streaming video. It does not appear that Tilson was commenting on Netflix costs to move video across the Internet backbone, but about potential higher costs borne by end users to watch online video.

Netflix CEO Reed Hastings Responds to Whitney Tilson

FTC Wants Do-Not-Track for Online Ads

Any industry can run into consumer issues that are troublesome from a business perspective, and can lead to problems from a legal or regulatory perspective. It isn't yet clear whether the online advertising industry has done enough, or can do enough, to self police itself before outside intervention occurs.

It might now be too late for online advertising to escape outside intervention. The Federal Trade Commission wants a "Do-Not-Track" program for online advertising, saying the industry has moved too slow.

FTC Wants Do-Not-Track for Online Ads

Google’s Click-to-Call Boosts Response Rates

Google click-to-call over the last three months, on mobiles, has grown by an average of 28 percent month-over-month globally.

Surojit Chatterjee, senior product manager of mobile ads for Google, said campaigns with the click-to-call feature report sic percent to eight percent higher click-through rates than ads that don’t have it.

Google’s Click-to-Call Boosts Mobile Revenues: Tech News

FCC Passes Net Neutrality Order, Unclear What it Means

The Federal Communications Communication has voted to approve new net neutrality regulations on a three-to-two vote. As nearly as we can tell, the new rules, which will face court challenge and possible contrary instructions from the U.S. Congress, mandates network management transparency, and simply codifies existing rules protecting a consumer's right to use lawful applications.

The actual language of the order is not available yet, and much remains to be understood. Some would characterize the general thrust of the rules as forbidding some forms of "priority access" to sites and applications.

The rules appear to apply to both fixed and mobile networks, though only "unreasonable discrimination" is prohibited.

The rules appear to be less affected than fixed networks are, though the language used is broad enough that the actual details will have to be filled in by actual enforcement actions later, taken on a case-by-case basis. It appears we will have to wait not only for the actual written order, but for the legal challenges, case-by-case complaints to the FCC and then possible Congressional direction, one way or the other.

In short, it isn't entirely clear what has changed, here, and how big the impact might be.

Read more: http://www.electronista.com/articles/10/12/21/fcc.approves.net.neturality.rules.despite.gop/#ixzz18ltQVSRl

As expected, many who had argued for more-rigorous rules are disappointed. See http://www.freepress.net/press-release/2010/12/21/free-press-fcc-net-neutrality-order-%E2%80%98squandered-opportunity%E2%80%99 for example.

Orange Makes Big Bet on NFC, Mobile Payments

Orange, the key France Telecom brand, has announced that it will roll out near field communications-enabled handsets across its whole European Union footprint starting in the second half of 2011.

Orange Makes Big Bet on NFC, Mobile Payments | Mobile Marketing and Technology

Mobile Can Help or Hurt Retailers

In the absence of measures taken to use mobile shopping to their advantage, broadly-defined mobile retailing will hurt, rather than help, most retailers. The reason is simple. Web-equipped mobile users easily can check prices, availability, product reviews and other information on products while they are in stores. And people are doing that.

About 30 percent of respondents surveyed by the GfK Roper Poll say that, while at a store looking at a product, they tried to find a better deal elsewhere, using their phone. About 33 percent say that while out shopping, they emailed or texted someone to tell them about an experience at a store, such as finding a great deal or a great gift.

The study, sponsored by Sapient, also found that 30 percent of respondents own a smartphone capable of supporting such activities.

About 19 percent of respondents used their phone to post something on Facebook, MySpace, Twitter, or other social networking sites about their holiday shopping experience.

Mobile Marketing and Technology

Mogreet Launches MMS Ad Network

Mogreet has launched a Multimedia Messaging (MMS) ad serving network giving brands the ability to deliver video and picture content to virtually any mobile phone and any wireless carrier, says James Citron, Mogreet CEO.

Mogreet’s interactive Multimedia Messaging (MMS) provides marketers with the largest MMS reach in the mobile world, allowing access to nearly any mobile phone in North America, Europe and Asia, including both smartphones and feature phones.

Among its first customers is Cha Cha, the online question and answer service that handles about a billion queries a year. It would be hard to argue that video and rich media have more impact than simple text, nor the proposition that reach for any visual campaign is wider for MMS than for any other channel.

Mobile Marketing and Technology

20% Will Buy a Table in Next 3 Years

More than 20 percent of Americans currently surveyed by Harris Interactive say they plan to own or buy a tablet device within the next three years, according to a new online survey conducted in November by Harris Interactive and sponsored by Fuze Box. Harris Interactive also estimates there are nine million people who already own a tablet device.

Adults who own or plan to buy a tablet computer in the next three years plan to use their tablet for a variety of applications. Browsing the Internet (78 percent); email (75 percent); reading e-books/newspapers (53 percent) and social networking (50 percent) are expected lead applications.

Some 43 percent expect to watching TV or movies, while 37 percent expect to use their devices for work.

Mobile Marketing and Technology

FCC Net Neutrality Order: No Transparency

Does the public have the right to see the FCC's net neutrality proposal? Net Neutrality probably ranks as the most controversial issue in the communications sector right now, but nobody will be able to see the order in advance. In fact, nobody will be able to read the order until after it is passed.

The lag between passage and publishing is normal for the FCC. What is different is the secrecy in advance of a vote.

Why is FCC's 'net neutrality' order still a secret? - CNN.com

AT&T Says it Has the Fastest Network

AT&T cites a study by Global Wireless Solutions to back up its claim that the AT&T network is 20 percent faster than its closest competitor.

Mobile Broadband Out Performs Competitors | AT&T

Google Still Hunting for a Social Coupon Network

Google, whose $6 billion buyout offer was spurned by Groupon, is in talks with much-smaller rivals, the New York Post reports.

The news is not unexpected. Having determined that social couponing capability is key to local advertising, Google has to get into position, one way or the other.

Google shopping for Groupon wannabe - NYPOST.com

Facebook: The Case for Commerce Is Emerging | ClickZ

There is a growing expectation that Facebook will emerge as a key platform for commerce-based business models.

To the extent that sales originate through traffic, then Facebook already has achieved critical mass. Referral traffic began to clim when the 'Like' button was launched, some would argue.

Referral traffic to retailers and brands from Facebook began to climb. In August 2010, a few commerce brands even had more referral traffic from Facebook than Google.

Facebook as a meaningful source of referral traffic for e-commerce is a trend, and a case for commerce is emerging.

Facebook: The Case for Commerce Is Emerging | ClickZ

Digital Divide is Not Based on Access

In the District of Columbia and other urban areas, unlike rural areas of the United States, "lack of adoption of digital resources (computers and broadband) generally is not due to lack of availability of broadband," says a new strategy paper by the District of Columbina CTO.

"The District currently has three large wireline broadband providers and many smaller ones, as well at least six major wireless broadband providers (both 3G and 4G); together, these providers furnish service in all areas of the city," the report notes.

"Rather, individuals and households in areas where broadband service is available typically choose not to subscribe for one or more of three leading reasons²usability, affordability, and perceived value/relevance."

That's a different problem than the "there is no access" argument some have insisted is the issue, and will be tougher to remedy.

Digital Divide Strategy