SunRocket Axes Most of its "C" Titles

Andy Abramson says he also has gotten confirmation that SunRocket has laid off its gets CTO, CIO, CFO and CPO. The founders, including Paul Erickson, Joyce Dorris and Chris Koehncke all left in February. It's a shame. The founders had brought some of that old MCI marketing flair to the independent VoIP space.

Convergence Spells Opportunity for Managed Services | PodTech.net: Technology and Entertainment Video Network

Convergence Spells Opportunity for Managed Services | PodTech.net: Technology and Entertainment Video Network

Jajah for iPhone

First Jajah said to ditch your headset. Now Jajah says to "free your phone." Jajah earlier had optimized its site for smart phones, so it obviously works with the Apple iPhone. Yes, you can pay a monthly fee of $4 for the privilege of making 23 cents a minute calls to the United Kingdom. Or you can use Jajah for three cents a minute. The site is mobile.jajah.com.

Practical Anthropology at Swisscom and Microsoft

An anthropologist at Microsoft points out that when instant messaging and other social networking tools are taken away from people (especially people under the age of 35), productivity drops. That's an indication that social networking is becoming a key problem solving tool, not a "time waster" as many managers seem to believe. Swisscom Innovations anthropologist Stefana Broadbent points out that use of written channels, ranging from IM to text messaging to email is growing, while voice growth has slowed where text communications are possible.

Broadbent theorizes that written channels allow constant interplay and availability without creating an information overload. A person without online social tools averages about 20 contacts with whom they keep in touch. A person with online tools can maintain 70 or more contacts, she notes. She theorizes that IM, for example, is both fast and non-committal, allowing a wider circle of contacts without overload.

That's an interesting perspective as more people start to worry we all are too connected, too much of the time. Broadbent argues that people should not have to unplug. In fact, she rhetorically asks, "why would I want to unplug?"

And she questions the notion that most people actually are overloaded with communication requests. "Most people we interview get five emails a day," says Broadbent. "They are thrilled to get one more friend on Facebook, for example."

Though the common perception is that most people are overloaded with communications, Broadbent says that isn't true. "Not many people are overloaded," she says.

"I'm opposed to the notion of unplugging," Broadbent says. "I don't want to lose my social intelligence network." To Broadbent, "IM is like bringing your dog to work."

Though I don't see lots of evidence that "always connected" behavior is all that important to most people over the age of 40 or so, I am beginning to see how most of the social networking tools can increase knowledge diffusion and make possible a wider degree of casual monitoring of one's environment. I wouldn't say I find it as helpful as RSS. But part of the reason is that most of the people I normally want to interact with do not seem to be heavy social networkers.

It's a Wireless World

Wireless revenue passed landline revenue internationally in 2006 and will be 59 percent greater by 2010, says the Telecommunications Industry Association. In the global markets, that means wireless customers outside the United States will increase by 975 million people by 2010, when the wireless total will reach 3.13 billion.

Wireless customers in the United States, meanwhile, will total 270 million in 2010, up from 216 million last year and 135 million just five years earlier. Wireless customers in the Asia/Pacific region totaled 963 million at the end of 2006 and are expected to total 1.58 billion by 2010, more than twice the number expected to be in Europe by then.

Wireless data revenue in the United States was nearly $13 billion last year and is expected to reach $44 billion in 2010, TIA notes.

Layoffs at SunRocket

SunRocket apparently has laid off a third of its workforce; between 40 and 60 people, sources say. The independent VoIP provider has been trying to raise another round of funding, and the effort appears to have failed, up to this point.

iPhone line New York Apple Store

Waiting in line for an iPhone...

T-Mobile and Verizon Might Get Slammed Today

According to an unscientific poll of people in line in New York to get their hands on an iPhone, 40 percent currently are at&t subscribers. That means 60 percent of the buyers will be switching carriers to join at&t. It appears T-Mobile is the largest loser, but Verizon stands to lose nearly as much. About 25 percent of the people in line are T-Mobile customers, just about 23 percent Verizon Wireless. Sprint users number about 10 percent, according to CNBC. One wonders what sort of win-back offers are ready to roll. And, in this case, whether anybody would even consider a win-back offer.

Why Do People Text Each Other?

In many markets, the cost of doing so is far less than the cost of making a voice call, says LirneAsia. And it is the relative cost of SMS compared to a minute of voice, for example, which drives texting, more than the absolute cost of sending an SMS (See Brough Turner's blog).

"What matters really is the relative cost of sending an SMS; for instance, in the Philippines, for a Smart TnT prepaid mobile user, a one minute call is about 5.5 times more expensive. In Pakistan, for a Jazz Budget prepaid mobile user, the ratio is about 2.1. In India, where SMS use at the BOP was seen to be the lowest (among the countries studied), the ratio was 1 – i.e, a one minute call and an SMS are the same price (so why would you bother SMSing if that were the case?)."

Microsoft OCS: Not Everyone Will Rest Easy...

...despite repeated assurances from Microsoft that it just wants to supply unified communications and presense features to any existing business phone system. Microsoft unified communications manager Mark Deakin says Office Communications Server 2007 is not a replacement for current PBX services. And he's right, as far as it goes. It's just that some observers say they have tested OCS as a full replacement for a PBX and it seems to do the job. And now that Microsoft is supplying U.C. software, desktop software and actual phones.......

It doesn't get any easier than this...

MINO Wireless has done one heck of a job in the user interface area. MINO provides a downloaded application running on BlackBerries that routes international calls on MINO's network rather than the mobile provider's network. If you make international calls on your mobile, you know what that tends to cost. As a rule, applications requiring a client download don't do as well as apps that don't require a download. I'd have to say this was the smoothest download I've ever encountered for my BlackBerry. The client is pushed out without user involvement and then installs with about two clicks, as I recall. I'd say it was as painless as anything I've encountered yet. The "use MINO" prompt appears whenever I open the directory to make a call, and offers two options: bill the enterprise account or use my personal account. That's it.

I earlier had downloaded and installed another application that provides the same functionality. But I'd have to say the user interface was much more opaque. Confusing, in fact. That application hasn't been used (which is why I once or twice have gotten emails reminding me that I can use the app). User interface is REALLY important. MINO Wireless has done a great job.

Making Sense of Mid-Band Ethernet

For the last couple of years we all have been hearing lots about mid-band Ethernet (2 Mbps up to possibly 24 Mbps, with the arguable sweet spot between 2 and 6 Mbps). Suppliers have made special note of the cellular network backhaul opportunity and that frankly has puzzled me a bit, since that particular market segment isn't bigger than the broader metro Ethernet market including enterprises, small and mid-sized businesses and organizations. But Hatteras Network VP Gary Bolton has an answer for that.

The backhaul segment isn't bigger than the others, but it is more urgent for mobile providers as well as the transport providers who provide service with service level agreements, Bolton says. On the mobile side, 3G networks immediately create new bandwidth needs that T1 links aren't well equipped to handle. That's pretty immediate.

Then there are the service providers who sell mobile tower sites connectivity services. And there's urgency there as well. If a circuit goes down, all the timing information at the affected tower can be lost, and then there is the resync time. Mobile carriers hate that.

That typically results in a financial penalty on the transport provider. So the tower backhaul opportunity gets so much attention because both mobile and wireline network providers need a solution right now.

Enterprise software buying influences changing...

Enterprise buying influences are changing, and it is the "line of business" decision makers who are more influential now, says Kneko Burney, Compass Intelligence president. "New purchases generally come at the request of the LOB dimension," she says. In fact, this is where "the money really sits." So don't wait for IT to recommend a solution. Software providers have to create demand by the line of business units.

The other thing is that end users are getting more influential as well, she says. The "voice of the end user gets louder each year and is a force of influence that could be better leveraged in marketing strategies," says Burney. End users don't care about price or platform. They do care about ease of use and "coolness."

And what about IT executives? Burney says they primarily are reactive rather than proactive. So don't bother telling them about the strategic advantages. They need to solve problems at a very tactical level.

Microsoft OCS Launch

The name “Microsoft” is not top of mind whenever one thinks of suppliers of enterprise phone systems. But Microsoft hopes that will change in a big way. Microsoft unveiled its own IP phones in May, and is preparing for a major launch of Office Communications Server, the latest revision to Live Communications Server.

Not be alarmist, but “road kill” comes to mind as one surveys the existing line up of providers of business phone systems. Heck, it has to. As Cisco before it came essentially out of nowhere to claim a lead position in the enterprise phone systems market, so now Microsoft is about to make its move as well.

To be sure, Microsoft is “playing nice” for the next two years, designing its new line of phones to work with existing private branch exchanges. Inevitably, Microsoft will go further. That is what Office Communications Server 2007 and Office Communicator 2007 are about, after all: the full integration of desktop and other enterprise apps with unified messaging and communications in a Microsoft framework, as the Wainhouse Research illustration shows.

“Microsoft’s plan is a 10 to 15 year view of the market, which is only starting to be visible today,” says Alec Saunders, Iotum CEO and former Windows CE executive. “Taken in totality, it’s a plan to dominate every aspect of enterprise communications, with the exception, perhaps, of the carrier network.” And even there, Microsoft would like to have its software embedded.

As Saunders puts it, every provider in the enterprise voice space now has to have an answer for OCS; some strategy for surviving Microsoft's charge.

Doesn't Qualify as a Headset

So we won't be sumbitting this to Jajah's "ditch your headset" contest. Besides, my granddaughter wouldn't want the Jajah T-shirt in any case. It would have to be pink, and illustrated with horses. My wife wouldn't be caught dead wearing a headset, it goes almost without saying. If I really want to know whether some new innovation is thoroughly mass market, she's the market sample. She wouldn't intentionally use VoIP; doesn't use instant messaging or SMS, either. Will not check email at home after work, for any reason. Does think the iPhone is worth owning. That's significant.

Jajah Attacks Headset Metaphor

Jajah is running a "dump your headset" contest. Users send in photos and videos and win prizes. It's an entertaining and interesting way to dramatize the difference between Jajah's approach to web-enabled calling and Skype's. Jajah is IP-enabled callback, using any telephone or device a user chooses. Skype remains a PC-initiated experience. Hence the "attack" on headsets.

Web 2.0 Enterprises

I wouldn't say many small or mid-sized businesses or entities are adopting tools such as wikis, blogs and the like, but it appears lots of enterprises have figured out they are quite helpful. At least that's what one IDG survey finds. Nor would I venture so far as to say the generally more collaborative world we seem to be moving towards is transforming older hierachical and closed modes of organizing enterprises. But something is happening. And it ultimately doesn't matter whether a transformation creates the new tools that are needed, or the existence of the tools foment a transformation in the ways things are done. Either way, more collaboration results.

It's a trade show, after all...

...so some snafus are to be expected. That worried look on Seamus Hourihan, Acme Packet SVP? He's got his presentations all queued up. But there's no overhead projection equipment in the room, and there is supposed to be. His panel ultimately proceeded without visual aids.

The subject was voice and application peering. As far as drivers, though quality is an issue, Derek Koecher, Qwest wholesale VoIP manager quipped that "price represents nine of the ten criteria for buying wholesale VoIP services." And, presumably also drives desire to peer.

The session was held at NxtComm, which was pretty quiet, though vendors put on a brave face about the quality of their meetings and booth traffic. Nothing like the old SuperComm. Of course, there's a huge current of weariness and dissatisfaction with just about all of the bigger trade shows IP executives have been attending (and I am being polite). People honestly are questioning why they keep coming. And if they are coming, lots of people are saying they won't be exhibiting. Clear signs of trouble for major telecom show producers...

Do the Math

IPTV might have been the one overarching theme at NxtComm, but at&t CEO Randall Stephenson left no doubt about where at&t is anchoring its strategy. "To succeed you have to be a wireless centric company," Stephenson said. "The wireless decision is the first decision a consumer makes."

"Everything else comes after that, because the wireless is the most personal communications device and goes everywhere with you," Stephenson said. Of course, he fairly quickly added that at&t is not neglecting its wireline broadband strategy.

But there's an important principle here. If one totes up the actual revenue any telecom provider can generate from video (ARPU is nice, but gross margin for an entertainment product has to be sliced in half to figure out what "gross revenue" actually is for a service provider), and then compares that to what a service provider can lose from current voice and data, the potential loss from voice and data is a larger number than the potential gains from new video services.

That isn't an argument against providing video. It is an argument for not getting defocused on core data and voice revenues. That's where the money is.

John Chambers on Surviving the Coming Shift

I had forgotten that John Chambers has worked both at IBM and at Wang Laboratories. That means he worked at companies that were leaders of two previous waves of computing technology. IBM is about as good a proxy for leadership of the mainframe era as one could find. Wang also was a leader of the minicomputer era. That's signficant as Cisco Systems attempts something no other company has achieved in the semiconductor era: leading in at least two separate eras of computing. So what's the most dangerous thing that could prevent Cisco from making history in this regard?

Hubris: the idea that your company is so powerful, so well managed, so agile that it cannot fail, even as a new computing paradigm replaces an older one.

"You have to keep it constantly in front of yourself," Chambers says. As in, looking nervously and constantly over one's shoulder, hoping to hear approaching footsteps before anyone can be seen. "We make Andy Grove look relaxed," Chambers says, alluding to the classic Grove dictum that "only the paranoid survive."

"Transition will happen; not could happen," says Chambers, who is as aware as any executive ever has been of what it would mean to lead in two waves of computing. It would make history.

It's Quite a Metaphor

On the day NxtComm convenes, drawing most of the North American telecom press, Google convenes its press day. Not many North American telecom media types will be there (okay, the meeting is in Europe, so logistics are a factor). Apps are separated from transmission. So is the value chain and the business. Where the press is parked today shows that.

WiFi Will Supplement, Not Replace...

A recent survey by Ipsos Insight suggests a third of users would "sign up for or replace" their existing connection. As with all surveys, one should always be skeptical. Some people might attempt to replace their current service. Then they'll find out indoor coverage is a major issue, and will switch back. Or they'll figure out that the bandwidth isn't what they were expecting. Of course, there is another way to look at the results, and that is supplemental use of muni Wi-Fi for portable devices of various types, not the PC. If the cost is low enough, lots of people might be convinced to spend a bit more money for an incremental muni Wi-Fi connection to support connections to devices other than PCs or phones.But full replacement? Not many will find that a reasonable trade-off, in all likelihood.

Not Convinced, Eh?

Canadian small and mid-sized businesses remain more than a little unsure about the wisdom of out-tasking their information and communication systems and services, say researchers at The Yankee Group.

telx|vision:IP Business's Gary Kim TMC's Conference Topic #1

enterprise peering

telx|vision:IP Business's Gary Kim TMC's Conference Topic #2

Is voice a commodity?

Ad-Supported Calling?

There can be no doubt about the direction of advertising. So if the trend is so clear, it is inevitable that ad-supported calling will get closer attention. Jajah has been trying this in Germany and Austria, for example. Jajah has partnerships with three large media companies, including Bild, Germany’s largest newspaper; ProSiebenSat1, which owns two major German TV stations, and NewsAT, an Austrian station. The partners will spend seven million euros to advertise Jajah’s Internet phone service.

They will point users to their own Web pages, which will have a co-branded Jajah service from which people can make calls. Essentially, the media companies will subsidize voice to build traffic on their sites. Deutsche Telekom, Germany’s large phone company, is part owner of Bild. So, in a sense, DT is kicking the tires to see what's there.

Jajah will keep 50 percent of any advertising revenue that it sells on the pages it shows people while they make calls. It will sell a banner and a skyscraper on each page.

Separately, Globe7 offers a softphone-based approach integrated with video streaming. The play seems to be that the content downloading creates an ad potential. Ad viewing then earns calling credits. The angle here is possibly more interesting than the old "listen to a short ad and then I will connect your call" approach. PC-based or Web-activated sites can show ads on a home page, without disrupting a call.

Duh! at&t Should Have Talked to Some Cable Guys

at&t is promoting U-Verse IPTV services in Connecticut from an Ice Cream truck outfitted with a flat panel HDTV showing off the service. at&t also is holding U-Verse block parties and free concert or movie nights. It sounds as though the new tack is being taken because mass media advertising is a mixed blessing when a company is in the middle of a network build. Apparently at&t has finally discovered that it creates problems for itself when it advertises new services that only are available in a portion of a service territory reached by the mass media where the ads run.

Potential customers call in to get it and then have to be told service isn't available in their neighborhood. That's why cablers used to send out people with door hangers block by block as networks were built out. They tended to use the same "micro" targeting as their networks successively were upgraded. at&t couldn't ask anybody who had ever done this before what the pitfalls would be? It's not like it would have cost any money to get the insight. It's a one-sentence question and a one-sentence answer.

Healthy SME Communications Spending Forecast

The typically highly reliable Knecko Burney, owner of Compass Intelligence, predicts that U.S. spending for nearly every category of small and mid-sized business spending for information technology and communications will be headed north for the next five years. About the only things SMEs will be spending less on are PCs, truly a commodity, as well as personnel. Software, communications, network infrastructure and support all are headed north at about an eight to 10 percent rate over the forecast period.

(By the way, you can just click on any image in any post on this site and the larger version of the graphic will appear...just in case you are reaching for your magnifying glass to read the numbers!)

Ad Supported Wi-Fi?

Nobody knows whether ad support for municipal Wi-Fi services will work, though most seem to have given up on the notion that a network can be supported solely by advertising. Perhaps the more germane question at this point is how much ad-support models will complement subscription and municipal underwriting models (where a government entity becomes an anchor tenant).

Microsoft's own polling on the subject suggests a combination of free and subscription is viable. Penetration for a fee-based service might range from five to eight percent, while a "free" service might be used, some times, by 21 percent of people. Offer free and fee service and overall penetration could rise to about 26 percent.

Of course, the issue is whether an operator can get any significant amount of ad support. And as others in the field now have found, user potential in dense urban areas might be four times more than in a suburban area. All of which suggests muni Wi-Fi will be a supplemental form of access, useful at times but with single-digit subscriber potential. That's not shabby. Even independent WiMAX providers can't expect to do much better than that.

Significant capture of most of the access market by telcos and cable companies is part of the answer. But increasing use of 3G and 4G services by mobile users will be a significant factor as well.

If independent providers of mobile WiMAX can offer service cheap enough, they might yet carve out a niche in the "connected personal devices" space. The issue is competition from the likes of Sprint Nextel or others who may adopt mobile WiMAX as their 4G platform.

If the equivalent of "multi-user" plans were to be offered aggressively by a mobile carrier, with reasonable broadband plans plus significant discounts for plan member use of additional devices (gaming consoles, PDAs, cameras), that will prove attractive for much of the market.

Mobile voice and broadband to a "mobile phone", plus PC data card, plus connections for other devices from a single provider offering price discounts for each additional unit. That's especially true if the user-perceived value of connectivity for things like cameras is seen as low. A mobile carrier can afford to price such connectivity at low levels if it is capturing reasonable value from 3G phones and PC cards from a single customer.

But tethered PC connections used by the mass market will be dominated by cable and telco providers. Broadband for mobile "phones" will be dominated by the wireless carriers. What remains uncertain is how the "connected personal devices" segment might develop (cameras, iPods and MP3 players, game players, PDAs). There will be niches. The issue is how big any of those niches will be, and whether providers can operate at costs low enough to serve those niches.

This Explains It...

Not to pick on Marriott, but if you travel, you know that hotel Internet access can be spotty and troublesome. Unexpected guest demand for video bandwidth turns out to be an issue. Neil Schubert, Marriott International VP says the Courtyard segment ran ads announcing "free access" and showing a guest using that connection for video telephony. Courtyard then experienced a four-fold increase in bandwidth consumption.

“This ad came out before we knew about it,” Schubert says. So why was this a problem? Courtyard typically was allocating a single Digital Subscriber Line circuit for 160 customers. "It didn’t work real well at first,” Schubert says.

Slingbox was a factor, apparently. It seems more and more travelers are toting their Slingboxes around with them. So the next time you see a forecast for at-home video consumption (such as this one from Telecom Futures originally created in 2001), remember that users consuming that bandwidth at home are going to keep some of the same behaviors when they are not at home. We're going to need more bandwidth, at more locations, than just office and home.

Just like AT&T

All media, not just all communications, are being forced to change because of IP and the Web. You all know that. Believe me, it is something we grapple with all the time as a "print publisher." We all know a transition to online and Web-delivered content is inevitable. How well we succeed will be measured by how fast any Web-based portion of our business grows, compared to the inevitable rate of decline for anything we do in print form. Oddly enough, we are in the same position the old AT&T was in. Our legacy business probably cannot be expected to do anything more than decline at fairly predictable rate.

Time Warner CEO Dick Parsons argues that the company's "publishing" operation can be successful, and grow at eight to 10 percent a year, "for a long time, if we successfully make this transition to digital.”

So that's the issue, isn't it? Cost controls only get any of us so far. And digital revenues have to grow fast, from a small base, to make any significant contribution to overall revenue. And one thing is certain: no matter what publication we are talking about, over the long term, the economics of the business are changing enough that tweaking through cost controls will be exhausted.

At some point, quality will have to be diminished, as painful as that will be for any entity that prides itself on such things. That doesn't mean "poor" quality: simply "uneven" quality. More and more of what we and others do will be like the Web itself: some really good stuff; some useful stuff; lots of irrelevant or shabby stuff.

Like most communications service providers, media will have to make hard choices. Free, cheap, more costly options will surface. Quality is going to get more uneven as a result. Still, we are just at the front end of the process. Change has been largely incremental up to this point. It won't stay that way for much longer.

Apple and RIM Offer a Model

According to Charles Dunstone, CEO of Carphone Warehouse, in order for the iPhone to function correctly there is a requirement for Apple servers to be placed deep in the operator's network. One might argue that something along the same lines is required for BlackBerry service to work (we will for the moment ignore the argument about whether app servers are "edge" or "core" devices: logical experience rather than physical placement is the issue).

Logically such servers will be used for authentication and email services--just as Research in Motion might. The point is that when an application provider can provide functionality which resembles a "network service," it can justify a share of the ongoing revenues.

This might be significant, as it suggests a broad model under which network access and transport providers can work with application providers to create a mutually-beneficial revenue-sharing arrangement. The point isn't so much where the servers physically reside but that BlackBerry and iPhone both are devices featuring applications that require the cooperation of a network services provider to provide an optimal experience. Not to mention that the way both applications work provides some "walled garden" features carriers prefer.

The point is that here are two devices and application providers that operate neither in complete "walled garden" or "over the top" fashion. It is a hybrid model where the transport services provider is centrally involved, and both application and access/transport providers are sharing revenue.

So the point might be: what other applications have relatively broad appeal, can be embodied in a physical device and require some degree of authentication? Where are other examples of applications that are neither "over the top" or "closed," but someplace in-between?

Verizon Votes for Broadband

Verizon CEO Ivan Seidenberg, asked whether wireless or broadband represents the stronger driver of revenue over the next several years, says that at the end of the day "broadband" is how Verizon sees its growth drivers, whether in the wireless or wired domains. That's a sharp contrast with at&t CEO Randall Stephenson, who says "wireless" is the growth driver.

Granted, both wired and wireless networks are important for both companies. But the linguistic accents are illustrative. FiOS is a huge bet for Verizon, and Verizon's 3G wireless network outperforms at&t's wireless network, most observers say. at&t, on the other hand, has deliberately chosen a less fiber rich approach to its landline upgrade. at&t also has shown a much different strategy overall, growing more through acquisition than through organic growth. Verizon leans the other way.

"Common history; uncommon future" is one way to look at matters. Global tier one carrier strategies are diverging.

Volpi Joins Joost

Joost has named Mike Volpi CEO. The ex-Cisco executive says "traditional television as we know it is gradually going to go away.” Separately, Apple TV now supports the display of YouTube video. In principle, there is no reason why Joost software could not be embedded into a TV set top decoder, into a TV itself, a mobile phone or personal digital assistant. Given the early support provided by Time Warner and Viacom, it appears video content owners have gotten the message the music industry did not: the Web is a new distribution medium.

To this point, most telecom executives have taken an approach to IP-based and Web-based services more akin to the music industry than the video industry. To wit, they've seen more threat than opportunity. That will change, at some point, just as every content, advertising or media business will have to adapt as well.

Not to Minimize Broadband, But...

New at&t CEO Randall Stephenson views wireless as the growth driver for the next three to five years. "The conversation about winning the race for consumers' homes starts and ends with wireless," he says.

Here's a Metric

Blogger Don Dodge (on The Next Big Thing)cites a statistic provided by David Skok, a venture capitalist with Matrix Partners. On average about three percent of all open source software users pay for a support contract, and most of them are business users, as you would guess.

Since the three percent paying for maintenance, support, training, and consulting will spread their buying across the entire ecosystem of providers, it is obvious that high volume adoption is needed to support many such companies. In the mass market, it is a surer route to sell hardware or software add-ons.

The conversion or "upsell" rate would strike many in the direct mail business as "par for the course. Conversion rates for targeted mass mailings, even when one has the right audience, the right product and the right timing, tend to hover in the three percent range.

Structural Separation?

New Zealand Telecom is in the midst of discussions with regulators about breaking itself up into three distinct companies: retail, wholesale and networks. In India, wireless carriers are setting up an independent infrastructure company so two different service providers can concentrate on selling. BT, obviously, has taken the structural separation route. And here in the United States, the old Rochester Telephone Co. agreed to structural separation in exchange for more freedom to operate unregulated lines of business.

While there have been calls for structural separation as a way of enhancing local loop competition, the success of such a policy hinges on the cooperation and willingness of the asset owner to go along. No such cooperation is likely on the part of major U.S. carriers.

The point is that we might agree or disagree about the merits of structural separation as a way of spurring more competition and goodness in communications services, but it simply cannot occur without the cooperation of the asset owners. The idea will resurface again. It always does.

Google Gears

At its developer conference, Google announced Google Gears, an open source technology for creating offline web applications. The new browser extension extends use of Web-based online applications into an offline mode. As an example. the Google Reader now allows offline reading of the top 2,000 items. Very cool.

Google also is gearing up to support creation of a single, open source way of enabling access to email and online calendars, for example, without access to the Web. Google Gears obviously also will allow developers to embed indexing and search functions into other applications.

Google Gears is another step towards making Web-based applications respond just about as well as offline, hard-disk-drive-based applications.

Nothing Stays the Same...

Alec Saunders, Iotum CEO, says "Skype hasn’t lost relevance for me. It just doesn’t work." Saunders had to uninstall the application because of some unpleasant interactions with his PC, he reports. He says he had similar issues with Gizmo and so now uses GoogleTalk or Jajah.

Likewise, Saunders notes that blogger Ken Camp points out that fewer people are using Skype today than a few months ago. It's almost an embarassment of riches. "There are now so many options for quality cheap calls that Skype isn't as exciting as it was when it first hit the market a few years ago," says Saunders.

Come to think of it, though I don't know I've had the technical issues Alec reports, Jajah has come up and Skype gets very little use of late. I also got pinged by MobiVox to remind me I haven't used Skype on my mobile, either. Nor have I been making use of my video email client, either.

Perhaps the point is that it is terribly difficult for any new feature or application to really punch through all the clutter and user interface issues one faces in a busy life. Even useful and low price tools have to contend with lots of other distractions.

Jajah gets DT

In the VoIP world, this has to count as a pretty big deal Deutsche Telekom is backing Web-enabled VoIP service Jajah, says Reuters reporter Eric Auchard. In a real sense, DT is backing a dial-around service that when used cuts DT's long distance revenue, especially higher-margin international calling.

Deutsche Telekom is embedding Jajah into its T-Online Web properties and that it expects to offer calling services to consumers and businesses in the future.

And T-Online Ventures, Telekom's venture capital unit, disclosed it is part of a third round of funding for Jajah. Intel Corp. recently invested in a $20 million investment round and has granted Jajah use of some of Intel's key VoIP patents.

Jajah is one of a new class of rivals that let callers simply call phone-to-phone, once they have signed up on the Web. Jangl, Jaxtr and Rebtel also use the Web-enabled approach or dial-around approaches.

What all these firms offer is a way to use VoIP to make cheaper calls on standard POTS phones. And any way one looks at the matter, that is going to be most of the market, most of the time.

Jajah has signed up more than twi million users and expects well over five million users by year-end. Germany is one of Jajah's five biggest markets after the United States and Britain. Other top markets are China and India, he said.

This is Helpful...

Verizon Wireless Data Service (EVDO)no longer forbids use of the access for VoIP. That's helpful. My provider (at&t) does not allow the use of its broadband service for VoIP.

That's helpful for would-be third party developers and for Verizon itself. No dominant service provider, no matter how well endowed and resourceful, ever will be able to develop its own walled garden offerings in great enough abundance to satisfy businesses and consumers who will want to buy new services and features.

BT, Sony Partner for Calls from PSP

British Telecom is enabling calling from Sony PSP game players. Wwners will be able to call traditional lines, cell phones or PCs. There are more than eight million PSP devices in the European market. Initially, users will have to place their calls from home or from the two thousand BT wireless hotspots.

Eventually the service will be launched worldwide in around hundred countries. The four-year deal between BT and Sony will support messaging and video calling as well.

This Will be a Test

There are rumors Google Talk may finally offer the ability to connect with public network telephone numbers, where up to this point it has stuck to an instant messaging model for individuals and a "click to call" mode for commercial users of its maps feature, for example.

So the issue is the range of business models Google might consider. It is possible that Google will go with an ad-supported model, where callers listen to a brief ad before being allowed to make a call. Which will provide an interesting test of user behavior. This sort of thing has been talked about for decades but never has gotten any serious traction. Can Google make it work?

After all, there are lots of alternatives. Buddies who don't mind headsets can be reached for free. Domestic calls from landlines or mobiles don't typically impose any incremental cost. If you want to do video with a buddy or associate Skype's video feature is getting some pretty serious use. If you pick the right VoIP provider the global numbers you frequently call are no much of an issue. And there is always Jajah-style Web-enabled dial around/callback for the cases you haven't already thought of.

So the issue is how much "inconvenience" a user will put up with to place a call whose cost is zero to pretty minimal in some cases.

Gmail Attachments: 20 MB

Google's Gmail now allows sending of 20 megabytes worth of attachments. Of course, few mail providers will accept a such a big message, so it's safe to send messages bigger than 10 MB to other Gmail accounts, to Yahoo Mail Plus or to other premium accounts. And perhaps that's the idea: get people to use GMail because the large attachments are easier to handle.

Alltel Taken Private: That's Not the Issue

TPG Capital and Goldman Sachs' private equity unit are acquiring the fifth-largest U.S. wireless provider, Alltel Corp., for about $27.5 billion (chart by Chetan Sharma). The deal is the largest ever buyout in the telecom sector. One wonders just how far private equity firms can go before regulators become concerned. Wireless and cable companies are less likely to raise scrutiny.

But what if BCE, one of Canada's largest telephone companies, is taken private? At what point does the loss of public transparency become an issue for companies that, like it or not, are seen very much as having national interest implications. Not to mention social obligations not generally shared by cable or wireless providers. All the more reason to get a deal done now, fast, before such questions start getting asked, I suppose.

Google Steps Up Business Effort

Google and Salesforce.com are in talks about an alliance that conceivably could result in a new Web-based offering that integrates some of Google's online services such as email and instant-messaging with those of Salesforce.com, according to Wall Street Journal reporter Vauhini Vara.

Google also is launching a Google Apps Partner Edition, which will let other Internet companies build Google's online word-processing, spreadsheet and email services into their own products. Google Apps Partner Edition has both a free service and a package that includes phone support as well as additional branding and advertising options for a monthly fee.

The proposed alliance neatly illustrates a couple of overarching themes we see these days. Business information technology is changing because of robust consumer technologies built around the Web. As that happens in the enterprise market, value threatens to shift even further away from hardware, premises solutions or access and transport, and up into the "cloud."

And though it is a very odd thought for anybody who has been around enterprise IT or communications for a while, ad-supported services aimed at business users are coming. Premium and enhanced features will be sold for a fee. But lots of smaller businesses might find they can get along just fine with the ad-supported versions.

Over the top managed services providers will like that. Some infrastructure providers , ISPs, competitive local exchange carriers, resellers, cable companies, VARs or phone dealers won't like it so well.

"Classic" Isn't What it Used to Be...

Nokia is introducing what it calls a "classic" mobile phone, aimed at consumers and companies who appreciate simplicity and value for money."

"We recognize that a sizable number of people just want a mobile phone to stay in touch on their own terms," says John Barry, Nokia director. Apparently, "classic" isn't what it used to be.

The Nokia 3109 classic features email with attachments and synchronizes calendars and to-do lists with personal computers through its USB connection. The memory is expandable to 2 Gigabytes with a microSD memory card.

The Nokia 3109 classic is expected to be available in the second quarter of 2007 at an estimated retail price of EUR 140, excluding taxes and subsidies

The Nokia 3109 classic also features an integrated handsfree speaker, music player, UAB and Bluetooth connectivity plus an organizer with calendar, to-do list and notes.

"Staying in touch" now requires email, attachments, access to one's calendar, a music player and syncing with a PC, in addition to voice.

3G Shows Long Tail

In a way, global mobile experience shows the "long tail," Pareto principle or "80/20 rule" (80 percent of the results come from 20 percent of the services and features) already applies. Consider third generation (3G) networks. Every mobile operator has one, or is building one.

More than 74 percent of Japan's 97 million-plus subscribers were signed up for 3G services at the end of April, for example, so adoption of the platform isn't the issue.

But operators are still struggling to find the "killer app." Today's stock answer is "content." So far, however, no universally accepted "killer app" has emerged. Users are still mostly just using their phones to make voice calls and send text messages.

"As of now, it's difficult to pinpoint the killer service for 3G networks," said Lee Bang-hyung, Chief Operating Officer at SK Telecom Co Ltd. In fact, says Peter Erskine, the chief executive and chairman of Telefonica O2 Europe, agreed: "Text is the big standout."

That isn't to say a highly-used app won't be found. It is to point out that there will not be very many new applications nearly every user has to have. In the mass market, cable TV, mobile phones, videogame players, DVD players, iPods, TVs, PCs and phone lines are among the communications-related services and products that lie at the head of the usage curve. Almost everybody has them and uses them.

After these, usage begins to drop off pretty quickly. Fax machines and ATAs (or network interfaces) are lesser-used products that lie in the middle of the curve. PhoneGnome boxes, Jajah and mobile video today are things way out on the tail. If you randomly ask people on the street whether they use any of them, the expected answer would be "no."

In the mobile data services revenue bucket, service providers are eager to show rising average revenue per user in things other than short message service (text messaging). Those revenues are growing. From what we can tell, an awful lot of that revenue is coming from data cards and BlackBerry-driven data plans. So the growing, non-texting data revenues are for email and Web access, not content, music or other newer services.

What that tells us is that mobile email is emerging as a "head of the tail," popular service. Mobile broadband is shifting a bit closer to the middle of the curve. Some observers are hopeful that "watching TV on a mobile" will become a killer app. Perhaps. But we wouldn't be surprised if mobile email winds up being a bigger revenue driver. Or even mobile PC access, for that matter.

Our experience with 3G so far suggests the long tail operates in telecom as one would expect: Very few killer apps and lots and lots of things important to some people, some times. A few blockbusters, lots of niches, in other words.

BT Gets Monkeys Off Back

In 2001, BT had just three problems, says Sir Christopher Bland, BT Chairman. "Get the banks off our back, get the newspapers off our back, and get the politicians off our back." Bland says the monkeys are gone. To wit, the almost £30 billion debt situation has been dealt with. The issue of whether BT could grow revenues in a climate of declining traditional access lines has been answered. And while not everybody is completely reassured, BT has shown success at transforming itself from a "boring utility" to a company growing software and information technology businesses.

That isn't to say BT has succeeded wildly with all its initiatives. So far, there is little to show in the fixed-mobile convergence and personal TV areas, for example.

Where BT really has succeeded are network IT services and broadband. Over the last five years, network IT services have grown with the compound annual growth rate of almost 20 percent, at £4.4 billion, as BT's largest single stream or revenue, exceeding those of other calls or lines.

And broadband is the defining new service of the decade, having grown seven fold.

BT has grown its earnings before interest, taxes and depreciation for five consecutive quarters, with a nine-quarter improving trend.

The impressive thing is that mobility is such a slight factor. For most other tier one providers, mobility is the main story. BT has grown without mobile revenues to speak of. Certainly not on the scale of broadband and IT services. Maybe new monkeys are going to jump on. But at least the old olds are gone.

"The Network is the Computer"

Unfortunately, some of us can remember John Gage, Sun Microsystems co-founder saying this in 1984 or so. Nearly a quarter of a century later, we still haven't fully gotten there. With the rise of peer to peer technologies, many will offer we won't need to go there. Oddly enough, and for all sorts of reasons, network-centric computing is starting to look a lot like the older client-server model many thought we were morphing beyond.

Users don't care about that, of course. What they care about is how their lives change for the better. And there now is no question but that this new age of "computing architecture" is changing things. We would argue it is for the better, though the outcome is open.

We used to talk about "the network as the computer." Today, we talk about Web 2.0, which uses the networked computing platform and adds social elements (Dion Hinchcliffe produced the graphic). In some ways, "the network as the computer" will change at least some of the methods we employ to discover and retrieve video, audio and other content.

In the enterprise space, it might simply mean the ability to access centralized databases with a Web browser as the front end. At least at first. Later, more collaborative modes will develop, where end users collectively create value and knowledge of usefulness for enterprises. The analogy is Amazon and eBay, where much of the value of the service is created by users.

Still, there are clear portents. There's salesforce.com, Google Docs & Spreadsheets and Amazon's Elastic Compute Cloud, all of which deliver computing resources and applications on a hosted basis.

What changes here is much more than the way we use computational resources. Networked computing changes what we can do with computational resources. And those new ways are going to serioiusly shake business models across media and communications.