U.S. Government Now on IPv6

Lots of entities, despite the inevitability, have incentives to drag their feet on a transition to Internet Protocol version six (IPv6) as long as possible, the simple reason being the need to replace virtually 100 percent of their existing router infrastructure. At the beginning of June 2008, all U.S. government networks were required to migrate to IPv6, however. 

Many observers have expected U.S. government conversion to prime the pump for U.S. adoption of the new standard, which provides virtually unlimited address space, compared to the IPv4 standard now in widespread use. 

Created by the Internet Engineering Task Force in 1998, IPv6 replaces IPv4, which supports 4.3 billion individually addressed devices on the network. Under a White House policy directive issued in August 2005, all federal agencies had to demonstrate the

ability to pass IPv6 packets across their backbone networks by the June 30 deadline.

It wouldn't be the first time the U.S. government has primed the pump for the Internet. Without the U.S. government, there might not have been an Internet, it can be argued. 

Ouch! "DSL is the New Dial Up"

Ouch! "We are starting to see DSL become the new dial up," say analysts at Strategy Analytics. "The telcos' core DSL offerings are unable to compete effectively with cable; they must step up their already frenetic fiber roll out to stay in the game, says Ben Piper, Strategy Analytics director.

That might be overstating the case, but there is no doubt that a dismal second quarter broadband access performance is very troubling for the major DSL providers in the U.S. market. It was not an easy quarter, by any means, but new broadband accounts have been decelerating for at least a year, as the market starts to saturate. 

Broadband access providers collectibvely added only one million net additional subscriptions in the second quarter, compared to over two million in the first quarter, says Piper.

"The dramatic downturn in the quarter is largely attributable to a slowdown of `new connects,' as well as consumer migration from DSL to cable," says John Lee, Strategy Analytics analyst. "As users become more accustomed to high speeds at the office or elsewhere, they are less willing to tolerate slow performance in the home."

If it turns out that is the case, it would be very bad news for the major telcos indeed. But I doubt that is the case. One doesn't typically see a major shift in demand (an order of magnitude shift) in a single quarter. That suggests to me something other than a demand shift has occurred. Marketing inattention, or inadquate attention to the value proposition seem more likely culprits. I could very well be quite wrong about this, of course. 

Maybe something I've never seen before has happened. Maybe a radical, sudden shift in end user demand has occurred. It just doesn't seem like the most-likely explanation, and I'll stick with Occam's Razor: "All other things being equal, the simplest solution is the best."

And the simplest solution is that marketing staffs took their eye off the ball. 

3 of 4 Presidential or VP Candidates Generate Twitter Traffic

It is a commonplace and probably largely accurate observation that younger users avail themselves of Twitter more than older users. Most people might therefore make the assumption that backers of Barack Obama twitter more than backers of John McCain. 

That probably is true as well. But if an analysis of Twitter messages during the recent Democratic and Republican conventions is correct, there must have been lots of younger viewers.

Except for when Joe Biden was speaking, John McCain, Sarah Palin and Barack Obama generated fairly high and comparable levels of activity, according to Twitter. 

That implies nothing about "support" or anything else, simply interest (or "outrage" or whatever you want to imply about what you think people were saying). 

Forecast Error is a Fact of Life

Having spent some time doing market research and making forecasts about how much money is going to be spent, on what, in the future, one learns humility. Sometimes forecasters underestimate a growth trend, but that is fairly rare. The biggest misses I can recall in my professional career were in the early days of the Internet, where I think it is fair to say nearly everybody underestimated growth, usage and revenue potential. 

These days we have the more-typical problem, which is overestimating growth. Most of the time, forecasters are wrong about the magnitude of change, even when the basic trend is correct. Sometimes we get the trend wrong, as well, but the big variances normally are on the "magnitude of change" dimension. 

There are lots of reasons for this apparent built-in bias. In economics, a discipline too few of us pay serious attention to, statements are formally or implicitly made "ceteris paribus" (all other things being equal). In the real world, almost nothing is every really going to remain equal. 

Forecasters cannot account for the timing of economic expansions and slowdowns, wars, oil shocks, technological or business breakthroughs and other exogenous variables that shape real-world trends. And as basic as our spreadsheets have become, we can't really model more than two dimensions of change. 

I have long suspected that there is another bias working, though. Some people fund and buy research because they really want to know what might, or will, happen. It tends to be my experience, though, that many research buyers spend money for other reasons. Sometimes a forecast is a useful way of "covering your ---" when a decision already has been made. 

Often, it is an argument for pursing one avenue of investment versus others that have competing stakeholders. In such cases, more robust numbers are better. The sets of stakeholders will look for validation that their approach offers the bigger financial return. 

In some cases, robust growth statistics are needed to attract or retain capital investments. Small number do not help in that case. I'm not saying numbers routinely are "cooked." But when a client clearly wants to hear good news, one always can make reasonable assumptions at the upper end of reasonable bounds, rather than the lowest or median reasonable assumptions.

The other issue is that most forecasts cannot take into account other competing demands on resources. A given product or service could reasonably be expected to grow at certain rates if it proves popular with buyers. What cannot typically be modeled is the impact of alternate products or services that real-world buyers spend money on. 

Appetites are infinite. Budgets are not. If all growth forecasts for all products and services are tallied at one time, the result typically is that projected demand that far outstrips reality. Not all the goods and services everyone models can be bought at the predicted levels because there isn't that much aggregate demand in the whole economy. 

About all one can say is that, providing these competing claimants for spending do not "suck up all the oxygen in the room," demand for a particular product, over a specific time frame, could reach certain levels.

It appears a garden variety "ceteris paribus" explanation is at work with Internet advertising forecasts that researchers now are suddenly revising in a lower direction. Without explaining why, researchers at SNL Kagan recently downgraded U.S. cable industry advertising growth rates for 2009, but then assume growth at the former rates after 2010. 

Likewise, JP Morgan analyst Imran Khan now sees domestic online display advertising growing only 14 percent to $8.2 billion in 2008 (compared with his prior forecast of 20 percent growth to $8.6 billion), and growing 16 percent to $10 billion in 2009. Search ad spending also will grow at a slower 27 percent rate, down from an originally forecast 32 percent. International online ad-spending rates also have been similarly lowered.

Nobody can adequately incorporate macroeconomic variables, or demand shifts, into forecasts. Should forecasters permanently lower uptake expectations? No. The shift will continue, away from legacy formats and towards "targeted" and quantifiable online subsitututes. But one cannot adequately take into account unplanned real-world events, especially of the growth-stunting sort. It's simply a hazard of the business.

What is Google, These Days?

Sometimes there is no good way to describe a company except by long clumsy strings of words. How does one discriminate between service providers who own facilities from those who do not; who own different kinds or amounts of facilities; who operate in different customer segments. Worse, how does one describe companies whose business ambitions and scope defy simple explanation, or operate in multiple categories, some of which do not seem to have widely-understood names, yet?

In other cases, shorter tags can be used, but are imprecise. Gvien that all the growth in the cable TV business is in voice and data, plus small business and even, in some cases, in enterprise services, does calling them "cable" companies, referrring to their use of physical access media, or "cable TV" companies, referring to their legacy business, make sense?

Google causes us those sorts of problems. Journalists and bloggers often use shorthand such as "search giant." But Google already operates in more important segments and businesses than that. Now it's into browsers, cloud computing infrastructure, mobile phone operating systems, advertising placement systems, video, wikis, email, blogging, software as a service, messaging and other applications including collaboration. 

It's part media company, part advertising services provider, part software company, part computing utility. And to say it is a "software" company belies the customer segments and types of software it creates. If you are somebody who thinks the most-valuable asset is knowledge about what people are doing--right now--and what they are interested in, that's one way of describing what Google does, in its totality. It creates software for people to use at least partly to create knowledge about what they do, who they know and what they are doing now. 

That then creates the ad-based revenue streams that so far have been the foundation for its business model. So in a broad sense, Google creates software people really like to harvest the analytics and monetize that capability. But that's hard to capture in a simple adjective. Harder still is to figure out what Google is, so the search for an appropriate adjective can begin. 

iPhone Shopper Demographics Changing

There is no doubt that Apple iPhone users are atypical of most mobile phone users. They are younger, more technologically savvy and richer. In July 2008, people checking out the iPhone on AT&T's Web site were about 40 percent more likely to have an income of $100,000 or more, compared to the typical wireless shopper. 

At annual income levels below $59,000, iPhone shoppers were about 25 percent less likely to be looking. In the $60,000 to $100,000 annual income bracket, iPhone inquires were just about the same as the "average" mobile phone inquirer.

That suggests the next big surge of usage will be concentrated in the ranks of users with incomes in that $60,000 to $100,000 range. It is not yet a truly "mass market" device, yet. But there are some signs of change. 

Social Networking: Glass Half Full

More than one-half of adults surveyed in 17 countries do not know what social networking is, according to Synovate. The company surveyed 13,000 consumers in Brazil, Bulgaria, Canada, France, Germany, India, Indonesia, Japan, the Netherlands, Poland, Russia, Serbia, Slovakia, South Africa, Taiwan, the United Arab Emirates (UAE) and the United States if they were familiar with social networking.

U.S. 3G Catches European Penetration Rates

comScore reports that the United States has caught up with Western Europe in the adoption of third generation wireless subscribers.  Some 28.4 percent of American mobile subscribers now have 3G devices compared to 28.3 percent in the largest countries in Europe. The number of U.S. subscribers with 3G enabled devices has grown 80 percent to 64.2 million during the past year. 

Chrome Gaining Share?

Google's Chrome, just a few days into beta launch, already owns one percent of the Web browser market. Apple's Safari browser has 2.4 percent share. It isn't clear how much of that share is people test driving Chrome, and who may decide to stick with their default browser. At Silicon Alley Insider, about six percent of visits on Sept. 4 were from Chrome browsers, about 41 percent from Firefox browsers.

On one of my blogs, between Sept.2 and Sept. 3, 2008, Chrome browsers represented more than five percent of visits. About 49 percent were Internet Explorer while 40 percent were Firefox browsers. Safari users were about four percent. 

FCC Acts on Potential Interference Issues

The Federal Communications Commission has ordered a freeze on the granting of any equipment authorization requests for wireless microphones that would operate in any of the 700 MHz Band frequencies. In addition, the FCC is considering a ban on any wireless microphones operating in the space. The issue, as often is the case for licensed spectrum holders or prospective holders, is signal interference.

The spectrum in question is in the over-the-air band corresponding to broadcast channels 2 through 51, which will be converting to digital broadcasting next February 2009. To avoid local interference with broadcast TV signals, wireless microphones would be restricted to the guard bands between each of the 6-MHz channels.

Many of you who attend conferences might have discovered that Research in Motion BlackBerries cause significant interference with wireless microphones, enough so that audiovisual personnel always will ask for speaker or panelist BlackBerries to be turned off. Potential interference also has been an issue with various tests of "white spaces" between TV channels as well.

Boingo Supports Sony Ericsson Handsets

Boingo Wireless now supports  Sony Ericsson UIQ 3.0 handsets. Owners of those devices now can download the Boingo Mobile application to get online worldwide at more than 80,000 Boingo hotspots. Boingo Mobile supports Wi-Fi enabled Sony Ericsson W960i, P1i and G900 models.  

 

Boingo’s network includes more than 500 airports, including 85 of the top 100 airports worldwide, as well as hotels, coffee shops, restaurants, cafés and retail locations.

As an aside, I have been attempting to test the Boingo Wi-Fi network in my normal travels. The issue for me is that I am an untypical user. There is fixed broadband at every tethered location where I normally work and I have a Verizon Wireless 3G card for mobility. 

At some airports I also have access to the T-Mobile Wi-Fi network, especially at Denver International--which also offers its own free service--and at the Dulles International Airport, where I also have T-Mobile Wi-Fi access for no additional fee.

The Boingo software is really easy to use, I will say that. 

My particular issue is that the T-Mobile hot spot signal normally is much stronger (I'm right under the radios) where I normally am sitting in either Denver or Washington. Moreover, I have the 3G card, so I typically slap in the 3G card without worrying about the Wi-Fi. 

I normally can get in some minutes of use after boarding the plane by using the 3G, and typically cannot get signal with any Wi-Fi provider out on the tarmac.

I do have a Nokia N95 with Wi-Fi access, so I have been thinking I should test the Boingo service with the mobile. But I am not a typical user. I do lots of keyboard entry, so when I am in a stationary location, my preference is to power up the PC. 

In my case, Wi-Fi is a secondary or backup service for a PC. The other mobile I carry does have mobile data access as well, so there's even more complication. 

If I didn't have 3G and other options, there's no question Boingo would be useful, either for PC or mobile handset access. 

 

Duh! Online TV Viewing is Growing

Confirming what you already knew, the Conference Board reports that online TV viewing has been gaining in popularity. Nearly 20 percent of American Internet households watch television broadcasts online, double the viewership from 2006. And as if to underscore the observation that both professional and user-generated content are getting traction, the study shows the top two destinations for online broadcasts are programming network home pages and YouTube.com.

Aside from other important considerations Comcast and some other service providers--wired and wireless--may have in enforcing usage caps, such limits also help limit the potential damage from a massive switch to downloading and streaming content direct from the source rather than buying subscription video packages. At the same time, usage caps also create a packaging opportunity: "download from my site and the bits don't count against your cap."

Another trend you probably didn't need further evidence confirmation about: most consumers do not like being forced to observe a set schedule when watching video. "Being able to watch broadcasts on their own time and at their convenience are the top reasons users tune in online," the Conference Board says.

Of course, avoiding commercials and content portability also are important. Nearly 72 percent of online households log on for entertainment purposes on a daily basis, and one in ten users indicates entertainment as the most important Internet activity.

“Most consumers are pressed for time and require flexibility in their daily schedules and TV viewing habits,” says Lynn Franco, The Conference Board Consumer Research Center director. “Being able to watch broadcasts on their own time and at their convenience are clearly reasons why we are seeing a greater number turning to the Internet. And, it is the reason why we would expect to see this trend continue.”

The top five types of shows viewed online are news, drama, sitcom/comedy, reality shows and sports, with user generated content following close behind. Among consumers connecting to online broadcasts, 43 percent tune into the news, 39 percent watch drama shows, 34 percent view sitcom/comedy shows, 23 percent watch reality shows, 16 percent view sports, and 15 percent view user generated content. Other categories attracting viewers include previews, additional content from favorite shows, soap operas, and advertisements.

Among online TV viewers, almost nine out of ten watch online broadcasts at home. About 15 percent say they watch internet broadcasts in the office, and 6 percent watch TV online from other locations, including the library or a friend’s home.

“The shift from appointment TV to content on demand is well underway,” says Michael Saxon, Senior Vice President, Brand and Communications, TNS. “Fundamentally, consumers expect content to be available when they want it, and on the screen of their choice – TV, PC, or mobile. For consumers, PCs enhance content on demand from simply time-shifting to place-shifting. Online content can be viewed in any room in the house, or at work or school.”

The top methods for viewing broadcasts online are streaming video, used by 68 percent of online TV viewers, and free download, used by 38 percent of viewers. The top two destinations for online broadcasts are programming network home pages, accessed by 65 percent of viewers, and YouTube.com, accessed by 41 percent of viewers. Other sites used for access include iTunes, Hulu, file sharing sites, social networking sites, and Limewire. Few consumers are willing--at least so far--to enroll in pay-per-download and subscription services.

The catch there is that advertising is the way users can view "no additional fee" content. Despite the user preference for ad skipping, at some point, ad-supported "no additional fee" programming will not be widely available without ad support. And advertisers won't pay at all, or not as much, if they think the ads can be skipped over.

iPhone Browsing Share Keeps Climbing

There isn't much doubt about the observation that Apple iPhone users surf the mobile Web more than users of other smart phones.  Net Applications, for example, reported that, after five months on the market, the Apple iPhone had browser market share 33 percent greater than that of Windows Mobile devices, despite the vastly-larger installed base of those devices.

The accomplishment? In less than six months, Apple passed Microsoft’s 10-year-plus mobile platform in terms of browser use, and installed base of about 20 million devices. 

So has that behavioral pattern continued? Seeking Alpha writer Ram Krishnan says it has. "I charted the browsing market share of both iPhone and Windows Mobile over six quarters," he says. "Clearly, iPhone is continuing its dizzying ascent, widening its lead significantly over Windows Mobile."

"The market share today stands at four times that of Windows Mobile," says Krishnan. "At this rate, given iPhone 3G’s worldwide distribution, it is quite conceivable that iPhone/iPod will be the fourth largest computing platform in terms of browsing market share (behind only Windows XP, Windows Vista, MacIntel and Mac OS) by end of this year."

Krishnan points out that iPhone will have surpassed the browsing market share of Linux, Windows 2000 and Windows NT platforms.

Australia Broadband Access Plan Will Feature Open Access

Would-be bidders for the Australian broadband access upgrade now seem to be just two: Telstra, the incumbent, and a rival bidding group called Terria, lead by long-time foe Optus, remain in serious contention, according to the Australian. Final proposals are due on November 26. The project entails construction of a  national broadband network that will reach 98 per cent of Australians.

The network is expected to cost A$9.4 billion ($7.8 billion), and the Australian government will help fund about A$4.7 billion worth of the cost. 

Both bidders say they will (obviously) abide by rules requiring wholesale access to the network by retail competitors, though Telstra opposes any formal structural separation of the network, while the Optus-lead group thinks that is not a bad idea. 

Are Broadband Prices Rising or Falling?

It typically is somewhat difficult to measure price changes for a variety of consumer goods, in large part because the "product" changes over time, so nominal prices tell part of the story, but not the whole story. PC hardware, for example, has seen both nominal price declines and vast improves in functionality, all at the same time. That tends to be true in the software area as well, at least in terms of number of features and capabilities.

Multi-channel video service prices tend to rise over time, but the nature of the product also changes. There are more channels and features, even as the price rises.

In the voice area, one can note that mobile and fixed voice services now feature many more features and lower nominal prices, for the most part, though some prices, as in the case of text messaging, are rising. 

One might argue that when service providers increase bandwidth without increasing prices, something like that process of product improvement is at work. Still, recent data from the Pew Internet & American Life project suggests that broadband prices are a bit lower, while dial-up prices are rising. 

Broadband users reported an average monthly bill of $34.50 in April 2008, down from $36 in December 2005, researchers at Pew say. That has happened despite the fact that nearly one-third of home broadband users have a premium broadband

service that gives them a faster connection to the Internet, and for which they pay a higher monthly price. 

Dial-up users, on the other hand, reported monthly bills of $19.70, up nine percent from the $18 figure from December 2005.

The reported average cost of digital subscriber line service ($31.50) continues to be less than cable modem service ($37.50), Pew researchers say.

Given the fact that higher-priced, but higher-capacity products increasingly are available, the simple question "are broadband prices increasing or decreasing" cannot be answered very well. If users want more bandwidth, and buy plans that provide that access, but at higher prices, that is comparing apples and oranges. 

To get to an answer, one would have to compare prices over time for products of equivalent functionality. Aggregate prices alone will not provide answers.