Sprint Mogul to Use Rev A Broadband

Sprint is releasing a software update for the Mogul phone, made by HTC Corp. of Taiwan, that will enable the phone to connect at Rev. A speeds.

Downloads speeds should be 600 kilobits per second to 1,400 kbps, up from a range of 400 kbps to 700 kbps with Rev. 0.

It will be capable of uploads of 350 to 500 kbps, up from 50 kbps to 70 kbps.

Traffic Shaping Enhances User Welfare

To protect all users of shared access resources from service degradation, it makes sense to charge a congestion premium or use traffic management techniques, say researchers at the Phoenix Center. When congestion-causing applications degrade the experience of other users, the most efficient traffic management actions would be targeted at applications that cause congestion externalities and not upon all applications generally, say George S. Ford, PhD, Thomas M. Koutsky, Esq.and Lawrence J. Spiwak, Esq., Phoenix Center analysts.

Ironically, service providers tend to do too little to reduce the harmful effects of negative externalities caused by network congestion, they say. So those who argue that the Federal Communications Commission needs to impose prohibitions against network management practices because broadband providers will always be “too aggressive” in clamping down on uses of their network have it precisely backward, the researchers argue.

"It is socially desirable to charge a congestion premium when congestion-causing applications are used on a broadband network," Ford, Koutsky and Spiwak say. That is especially true when the congestion charge targets a particular congestion-causing
application, not blanket "price-per-bit" rules, they argue.

Indeed, if such charges are not targeted, then the price premiums may not achieve their desired purpose, Phoenix Center argues.

The objective of such charges is to attenuate congestion by requiring users of bandwidth-greedy applications to consider more fully the
congestion costs imposed on others.

"The fact that a broadband service provider operator may engage in application-specific traffic management techniques should not necessarily be viewed by a policymaker as evidence of illicit anticompetitive intent, the researchers say.

In fact, congestion is more likely to occur in shared media networks, such as wireless broadband networks, where all users share the common pool of spectrum capacity.

The complexity of this issue indicates that specific, prescriptive rules that ban entire categories of traffic management techniques across all network architectures and topologies can result in sub-optimal outcomes, they say.

"Our focus is upon the presence of congestion externalities: that is, the use of applications by some users that reduce the value of broadband service to other users on the broadband network, without compensation, by causing delays or other service quality problems," the researchers say.

"In the presence of a congestion externality, network management—including, but not limited to, the differential treatment of particular applications—is welfare enhancing," Ford, Koutsky and Spiwak say.

Apple Won't Block VoIP Apps Using Wi-Fi

CEO Steve Jobs says Apple will not block third-party development of VOIP applications for the iPhone and iPod Touch, as long as the applications run over Wi-Fi. That's an obviously politically astute move given Apple's relationship with mobile providers who aren't keen on the idea.

Nevertheless, the idea might allow everybody to get a bit more experience with "dual mode" service, using a widely-deployed handset, without a lot of expensive bets on particular devices, interfaces or marketing.

Mobile Content Habit Grows

Mobile phones for lots more than just talking, especially by Millenials, according to a recent study by the Deloitte Development-Harrison Group.

Nearly 90 percent of 13-to-24-year-old Internet users surveyed said they sent text messages frequently or occasionally.

Slightly more respondents overall said they used their handsets as cameras than said they used them for texting.

The intensity of usage of just about any data-oriented application drops in older demographics, as you might expect.

Ubiquitous Wireless Broadband: New Possibilities

As new WiMAX and 700-MHz broadband networks are built, two different sorts of new user behaviors will emerge. The abiliy users have to access Web-based data and applications anywhere, at any time, over wired and wireless networks, is going to allow business users to rely on network-based applications in a way unthinkable at present.

“Cloud computing” or "network computing" will move applications and data storage away from the desktop or laptop to remote servers accessed using high-speed networks. That's going to change enterprise data center strategies in profound ways.

It will make possible lighter, more portable access devices on the PC side, and might also drive the emergence of even-more-powerful portable devices on the handheld side, as business users start to rely on network-based resources where they now rely on their own hard disc drives.

The other potential development is that the range of consumer behaviors related to wireless broadband data might emerge.

"Our recent research shows that 62 percent of American adults have either accessed the Internet wirelessly or used non-voice data applications, such as texting, emailing, taking a picture, or recording video, with a handheld," says John B. Horrigan, Pew Internet & American Life Project associate director.

On the average day, 42 percent of those with cell phones or other wireless-enabled handhelds use the devices for at least one non-voice data application.

Users in this emerging environment will fall ino at least two different use profiles, Horrigan argues. Mobile business use might start to resemble desktop use. But consumer users might embrace digital content to play games. Today, some think mobile blogging or social networking might emerge as widespread new behaviors.

Apple, RM Battle Shapes Up

Apple took 28 percent share of the fast growing U.S. converged device (smart phone) market in the fourth quarter of 2007, behind Research in Motion’s 41percent, but a long way ahead of third placed Palm at nine percent, say Canalys researchers.

Apple also finished ahead of all Windows Mobile device vendors combined, whose share was 21 percent in the quarter.

Globally, converged device shipments rose 60 percent to hit 115 million in 2007. U.S. sales doubled.

Nokia remained the global market leader, shipping 60.5 million smart phones, while RIM shipments grew 112 percent to 12.2 million.
Globally, Symbian operating system devices had 67 percent share, followed by Microsoft on 13 percent and RIM with 10 percent.

Apple claims that nearly 70 percent of all mobile Internet traffic is generated by iPhone users. Executives at Google, meanwhile, have confirmed the basis thesis: iPhone users surf the Web way beyond anything seen up to this point.

On the other hand, RIM points out that nearly two thirds of its 12 million BlackBerry subscribers in December 2007 were government or corporate customers.

The observation is that as the smart phone market continues to grow rapidly, the dynamics of the U.S. market--as distinct from the global markets--are shaping up, in part, as Apple going "up market" to enterprises and RIM going "down market" to consumers. That's not to dismiss Microsoft-powered or Nokia devices, but simply to illustrate a dynamic.

We have a market likely to take new shape as devices and users expand beyond the original base of "mobile email" addicts. The iPhone has shown there is a new class of user who uses mobile email but also surfs the Web and uses the mobile Internet in ways we haven't seen before. That's going to get designers moving in different directions as the various segments start to emerge. For some users the current iPhone or BlackBerry interfaces still will work. For others, something else might emerge.

Personally, I like the ability to swap SIMs between devices, which iPhone doesn't want me to do. I like to be able to change my own batteries, which iPhone doesn't want me to do. Small things, of course, but real barriers to me getting rid of my BlackBerry. Other choices will have to be made by music or video afficianados.

DirecTV Awaits Satellite Launch

Satellite launches always are dangerous things. But, should the DirecTV 11 broadcast satellite be launched successfully on March 12, DirecTV will be able to provide 150 national high-definition channels and will be capable of supporting spot beams carrying 1,500 local high-definition channels, typically useful for beaming retransmitted local broadcast station signals back into the local markets.

In February 2007 a Zenit-3SL rocket on the Sea Launch platform, the same one DirecTV is using, exploded on the platform. It happens from time to time.

The odds of a Sea Launch satellite launch will fail are about one in 8.5. Of roughly 25 attempts to date, the company has experienced a failure rate of 12 percent. That's no particular slam on Sea Launch. Launch failures have been part of the industry's reality since the beginning.

Enterprise Users Get their iPhone

Starting in June, Apple iPhones will be able to receive push email, calendar and contact information from Microsoft Corp.'s Exchange server. Apple has licensed Exchange ActiveSync from Microsoft and is building it right into the iPhone, so that iPhone will connect out-of-the-box to Microsoft Exchange Servers 2003 and 2007 for secure over-the-air push email, contacts, calendars and global address lists.

The iPhone 2.0 software provides a configuration utility that allows IT administrators to easily and quickly set up many iPhones, including password policies, VPN setting, installing certificates, email server settings and more.

Once the configuration is defined it can be easily and securely delivered via web link or email to the user. To install, all the user has to do is authenticate with a user ID or password, download the configuration and tap install. Once installed, the user will have access to all their corporate IT services.

Built-in Exchange ActiveSync support also enables security features such as remote wipe, password policies and auto-discovery.

The iPhone 2.0 software supports Cisco IPsec VPN to ensure the highest level of IP-based encryption, as well as the ability to authenticate using digital certificates or password-based, multi-factor authentication.

The addition of WPA2 Enterprise with 802.1x authentication enables enterprise customers to deploy iPhone and iPod touch with the latest standards for protection of Wi-Fi networks.

Those are features most enterprise information technology managers require before a device is approved for widespread use, and represent a huge potential opportunity for Apple to penetrate enterprise accounts.

Some even think the iPhone is about to become an envied thing: a "platform."

“Think about it," says venture capitalist John Doerr, who has launched a $100 million fund to back iPhone-related application companies. "In your pocket, you have something that's broadband and connected all the time. It's personal. It knows who you are and where you are. That's a big deal. A really big deal. It's bigger than the personal computer."

Why the Line Loss Pattern?

The top four incumbent telcos in the U.S. market, AT&T, Verizon, Qwest and Embarq, will lose around 2.3 to 2.6 million local access lines per quarter, according to IP Democracy.

These four service providers lost a combined 2.53 million local access lines during the fourth quarter of 2007, compared to 2.55 million in the third quarter, 2.64 million in the second quarter, 2.28 million in the first quarter. So the question is, why the steady pattern?

The consistent rate of loss might suggest a couple of things. Some share is shifting to cable voice providers, but the losses tend now to follow a pattern. When a new area is opened to marketing, the biggest losses occur in the first couple of quarters, and then some sort of "normalcy" occurs. That will tend to produce a linear rate of change, rather than a disruptive rate, over time.

And since the largest operators are now well into their deployment patterns, we probably are past the stage where a large amount of share shifts rapidly.

The other major sources of loss are fairly steady as well. There's some intentional churn caused by telcos shifting dial-up customers to broadband, which often means an access line is lost. But again, we are past the peak surge in broadband net additions. Every year, another couple of million dial-up accounts switch to broadband. But again, the rate of change is relatively stable.

Wireless substitution also continues, but that sort of line loss has never shown any "spikey" pattern. Some percentage of users simply decide, every quarter, to go wireless only, but with no noticeable change in attrition rate.

The other issue is that consumer customers once served by competitive providers are slowly churning back to the incumbents. So as competitive inroads are made on one hand, lines are being won back on the other.

On the other hand, telcos themselves increasingly are venturing out of region, and typically are competing for business lines. Rates of change are bounded by the size of sales forces, the rate at which existing contracts come up for renewal, the aging of phone equipment and other "change" factors that are fairly predictable.

In any given year, only a percentage of contracts are up for renewal; only a percentage of phone systems; only a percentage of new businesses or locations launched or closed.

Also, consumer VoIP adoption rates are flattening as well, again showing a sort of linear pattern, and contributing to the linear loss rate for legacy access lines.

The other thing is that incumbents, as a matter of policy, are not yet at the point where they are willing to make massive changes in pricing, technology or packaging to match VoIP competitors. What that means is that, as a matter of deliberate policy, executives will let the losses continue, at a controllable rate, until the point where it makes more business sense to respond with competitive efforts.

Nor have the largest carriers, for the most part, gone out of their way to emphasize wireless substitution. Quite to the contrary, bundling has provided incentives to keep a landline at very small incremental cost.

This might now begin to change a bit, with the advent of unlimited calling plans. Sprint or T-Mobile, who have no access lines to lose, might be expected to emphasize wireless substitution a bit more.

For some users, such plans create a new buying context. Assume a user with a landline and a wireless plan, plus a text messaging plan that collectively costs about $100 a month, living alone or in housing with unrelated people. That user now can spend about the same amount of money as at present, and shift all traffic to one device, with unlimited texting in some cases. If a Sprint plan is bought, the user will get unlimited Web browsing, music and video services as well.

The other thing is that consumer access lines, as opposed to business lines, are a lesser percentage of overall revenue than used to be the case. Major telcos fairly rapidly are getting to the point where consumer voice revenue is less important every year.

And since the foundation service for the future is a broadband access line, that is where telcos can be expected to fight hard for every point of share.

Maybe there are other explanations as well. But the gradual, steady erosion is not different from the pattern we saw with long distance revenue, which declined at a fairly steady rate for years.

Cincinnati Bell Eyes Expansion

Cincinnati Bell is looking at out-of-territory expansion, possibly in Indiana and likely in Indianapolis, should that prove to be the case. The possible expansion mirrors a trend most incumbent telephone companies now face: growth is a tall order in their traditional service areas, and most are seeing out-of-territory moves as the surest way to gain new customers and revenues.

The implication is that, over time, the percentage of revenue from business customers will increase, as a percentage of total, as such expansions almost always are aimed at business customers.

CEO Jack Cassidy says that while Cincinnati Bell’s incumbent local exchange carrier operations are showing flat revenue and falling voice line counts, the picture was different in its out-of-region operations.

That operation, which now includes the northeastern suburbs of Cincinnati as well as parts of Dayton and eastern Indiana, saw revenue jump 45 percent year-over-year from $6.6 million in the fourth quarter 2006 to $9.6 million. And access lines actually grew, from 50,000 lines in the fourth quarter 2006 to 62,000 at the end of the fourth quarter 2007.

Likewise, the DSL customer base grew from 4,000 at the end of 2006 to 9,000 at the end of 2007. Inside its tradtional territory, Cincinnati Bell lost 7.7 percent of its access lines and also sees slowing DSL growth.

That strategy holds for larger service providers as well, ranging from European telcos and wireless providers to smaller U.S. telcos such as SureWest Communications, to independent U.S. CLECs such as Paetec and metro access providers such as Zayo Bandwidth that continue to amass bigger footprints.

Teens Abanding CD Format

The amount of music that consumers acquired in the U.S. increased by six percent in 2007, say researchers at the NPD Group. But there are key format changes. Legal downloads now account for 10 percent of the music acquired in the US. market.

At the same time, there was a continued decline in CD sales, which resulted in a net 10 percent decline in music spending from $44 to $40 per capita among Internet users.

NPD estimates that one million consumers dropped out of the CD buyer market in 2007, a flight led by younger consumers. In fact, 48 percent of U.S. teens did not purchase a single CD in 2007, compared to 38 percent in 2006.

The percent of the Internet population in the U.S. who engaged in peer-to-peer file sharing reached a plateau of 19 percent last year; however the number of files each user downloaded increased, and P2P music sharing continued to grow aggressively among teens.

Twenty-nine million consumers acquired digital music legally using pay-to-download sites last year, an increase of five million over the previous year.

But note: sales growth was driven by consumers between the ages of 36 and 50, reflecting an aggressive adoption rate of digital music-players by users in this age bracket in 2007.

Reflecting the growth in that sector of the market, Apple’s iTunes Music Store became the second-largest music retailer in the U.S. after Wal-Mart, based on the amount of music sold during 2007 (based on a 12-track CD equivalency for music track downloads).

Consumer Spending Still Dropping

ChangeWave's latest consumer survey shows a continued deterioration in U.S. consumer spending trends with no signs yet of any bottom.

The February 18-25 survey of 3,773 consumers focused on spending patterns going forward.

Nearly 39 percent say they'll spend less over the next 90 days than they did a year ago.

Sprint to Spin off Nextel?

The Notable Calls blog reports a "curious" rumor that Sprint Nextel Corp. has hired Morgan Stanley and initiated director Ralph V. Whitworth's plan to spin-off Nextel, with a formal announcement possibly coming in two to four weeks. Some undoubtedly will say this is a mistake.

Others, including me, will argue that if the choice is to ditch Nextel or the Xohm WiMAX network, Nextel has to go. Sprint already has taken the hit and essentially written off the entire value of the Nextel acquisition.

If it spins off Nextel, Sprint reduces the complexity of running two separate networks, with two sets of consumer devices and support operations to support, as it builds yet a third network.

Once upon a time Nextel boasted the highed average revenue per user in the business. That isn't much of an argument these days as the ARPU difference now has narrowed almost to the point of insignificance.

True, Nextel's customer base always was weighted more heavily towards business users, which is valuable, but Sprint's churn problems are disproportionately related to Nextel, these days. In the right hands, with a management unburdened by the other distractions Sprint has, something can be done about Nextel.

But it won't be easy. Nextel is the only carrier running the iDEN air interface, and Motorola is a key handset supplier. The former issue means handset scale isn't going to be there, so device costs won't be easy to manage. And Motorola itself wants to get out of the handset business, but so far seems to be finding few takers.

Potential WiMAX suppliers, on the other hand, are potentially much larger, and Google is among the firms active in supporting Sprint's Xohm initiative. Sprint already has taken the accounting charge related to the Nextel acquisition.

Spinning Nextel off also will simplify the previously-announced plan to finally consolidate headquarters operations in Kansas City, instead of maintaining two separate headquarters operations, one in Reston, Va. and one in Kansas City.

It's only a rumor at this point. But Sprint has to take drastic steps. It cannot incrementally creep back to health.

Blockbuster, Netflix, Movie Gallery: Diverging Paths

On-demand video will be a bigger part of overall television and movie viewing, no doubt. But that hasn't--so far--prevented Netflix from growing. In fact, Netflix recently raised its guidance for 2008 sales. The same can't be said for the retail store format, a business that awaits either reinvention or extinction.

For the first quarter, Netflix now sees revenues of $324 million to $328 million, up from $323 million to $328 million, with net income of $10 million to $14 million, up from $9 million to $14 million and ending subscribers of 8.16 million to 8.26 million, up from 7.85 million to 8.05 million.

For the full year, the company now sees revenues of $1.345 billion to $1.385 billion, up from $1.3 billion to $1.35 billion.

Netflix also sees year subs of 8.9 million to 9.5 million, up from 8.4 million to 8.9 million.

Blockbuster and Movie Gallery, it almost goes without saying, still face issues with their retail store formats. In its most recent quarter, Blockbuster DVD rentals continued to grow in global markets, though domestic U.S. sales fell slightly. Movie Gallery is operating under Chapter 11 bankruptcy protection.

Blockbuster worldwide same-store and by-mail revenues increased 7.4 percent from the same period last year. Domestic same-store revenues, excluding by-mail subscription revenues, decreased 0.9 percent, an improvement from fourth quarter 2006 performance, but not keeping pace with Netflix.

Movie Gallery, which owns the Hollywood Video chain, also is shuttering some 920 stores our of 4,491 existing stores located in all 50 U.S. states and Canada. Movie Gallery's May 2007 quarterly report, the most recent, showed declining sales.

Ultimately, the video distribution business will learn what other retailers have learned. There still is some element of "physical browsing" that provides value to consumer. If not, nobody would go to shopping malls or other retail outlets.

What requires some thought is whether a physical browsing capability still adds value, beyond the value of online recommendations and order fulfillment. Retail kiosks are a partial answer to distribution. So far, kiosks don't seem to replace the retail browsing experience.

T-Mobile Handles Churn

Though it doesn't appear T-Mobile USA will be changing its market share position in the near term, it appears to be doing a good job on the churn front.

It added 951,000 net new customers added in the fourth quarter of 2007, up from 901,000 in the fourth quarter of 2006. That's important because "net" adds are what one has left after deducting the customers who churned away in any given time period. The other data point is that, in its most-recent quarter, T-Mobile's churn dropped to 1.8 percent, down from 2.1 percent in the fourth quarter of 2006.'

That is notable because T-Mobile has a large percentage of contracts that are of the one-year variey, not the the two-year contracts that increasingly are the norm in the postpaid segment of the market. It also is notable because there is some evidence T-Mobile customers are more active than customers of some of the other leading mobile carriers in investigating alternatives.

"T-Mobile customers are the most active in checking out competitive products and services," says Compete.com analyst Jeff Hull.

"This is partly because they are a younger, more active subscriber base, and partly because of the legacy of one-year contracts at T-Mobile," says Hull.

"If you look at an upstart like Helio, four percent of their site traffic is from existing T-Mobile customers, with two percent from both AT&T and Verizon Wireless, and Sprint/Nextel customers seemingly uninterested in checking out the MVNO."

T-Mobile customers also are over-represented at the Boost Mobile site, another youth oriented brand that is successfully attracting T-Mobile user interest. At the margin, and it might only be at the margin, there does seem to be a difference between customer bases at T-Mobile and Sprint or Nextel, for example.

Given the apparent high "shopping" and "comparison" behavior, the lower churn is an accomplishment.

Senate Bill Mandates VoIP E911

Several years ago some VoIP proponents argued that regulators should not impose "legacy" emergency calling rules on new VoIP providers. That was back when some providers were aiming to replace legacy calling services with a variety of new applications or services, not all of which logically seemed to be "like" public network services. That largely remains true for services that remain in the PC-to-PC domain. But it appears the battle to avoid emergency calling regulations for all "replacement" services is moving inexorably to a conclusion.

Though similar legislation will have to be passed by the U.S. House of Representatives, the Senate has passed the IP-Enabled Voice Communications and Public Safety Act, a bill proposed by Senator Ted Stevens (R-AK). The legislation now moves to the House of Representatives for further consideration.

The bill requires all VoIP companies to provide enhanced 911 (E911) services to all subscribers. The bill gives the Federal Communications Commission authority to add 911 requirements into all new phone services as they evolve, without needing Congress' involvement. Elemental fairness, some would say.

For providers who once hoped relaxed regulatory oversight would provide a price advantage in the market, that hope increasingly is dashed. VoIP services that are effective replacements for public network calling will carry the same tax, safety and regulatory burdens legacy services do. And some would say that's just fair.

Jaduka Widgets Released

Jaduka has launched a new program to entice application developers to use Jaduka communication apps. It now offers free Web telephony service and widgets that bring voice communication to Web sites, browsers, blogs, and email.

Software developers can set up a free Jaduka Labs account that links their standard home, office, or mobile phone with their online activities.

dukaDIAL (www.dukadial.com) lets users make phone-to-phone calls to anyone in North America for free. The concept is similar to Jajah, if you are familiar with that service. A user goes to the Web site, enters the number of the device that will make a call and the number to be dialed.

When “Start your Call” is clicked, the application automatically dials both parties and connects the call. Users also can view call history and add numbers to the contact list that is shared with other Jaduka applications.

dukaLINK (www.dukalink.com) creates personal HTML hyperlinks that users can post on Craigslist, Facebook, a blog or emails. When users click the dukaLINK, they’re prompted to submit their phone number to automatically trigger a free phone call to you.

The application also supplies a public number and then forwards calls to the number a user has set up in a profile.

dukaBUZZ (www.dukabuzz.com) was developed for bloggers and social media junkies who want to hear from their readers. dukaBUZZ enables Web site visitors to leave “audio comments” or testimonials on your blog or Web site that can be heard by others.

Instead of typing and posting written comments, visitors record audio comments using the dukaBUZZ widget and their standard phone. dukaBUZZ works with any blogging software, including bBlog, Blogger, Drupal, Moveable Type / TypePad, Serendipity, WordPress, etc.

dukaBAR (www.dukabar.com) is a toolbar plug-in that automatically scans Web pages and converts all phone numbers into clickable links that initiate phone calls. It also stores a user's frequently called numbers in a contact list so that you can speed dial right from your browser. No software downloads or headsets required.

duhBATE (www.duhbate08.com) lets users create their own presidential campaign by adding their voice to the likeness of theirfavorite politician. The interactive political parody uses a user's telephone as the microphone for you to record "campaign promises", for example. When finished, the character speaks in the user's recorded voice online.

All of these widgets are examples of ways voice is being integrated into the fabric of other applications such as email, social networking and blog sites.

Mobile, Landline Have Switched Roles

Since 2002, U.S. consumers have dramatically changed their perceptions of the value of mobile and fixed voice services, according to a new survey by the Pew Internet and American Life Project.

In 2002, 63 percent of respondents said it would be hard to give up their landline telephone. In 2007, just 40 percent say that would be hard.

In 2002, 38 percent of respondents said it would be hard to give up their mobile phones. In 2007, 51 percent said it would be hard to give up their mobiles.

In other findings, a greater percentage now say it would be hard to give up their Internet access. Where 38 percent thought so in 2002, in the latest survey 45 percent said it would be tough to give up.

Fewer people are as attached to their TV services as they were in 2002. But lots more people now expect to have mobile email service. Just six percent in 2002 said it would be hard to give up their BlackBerry or similar device. Now 36 percent say they would find it hard.

Trouble at Clearwire?

Clearwire generated $45.4 million in service revenues in its most recent quarter, a 91 percent growth rate year over year. Not bad. But it is the guidance for 2008 that is troublesome.IT expects a 29 percent to 35 percent subscriber growth to end 2008 with 510,000 to 530,000 subscribers.

Growth businesses aren't supposed to slow that much, so early into their growth trajectory. Average revenue per user doesn't seem to be headed in the right direction, either. ARPU in the fourth quarter was just over $36.00, slightly below the year-ago quarter.

Disney Launches Mobile Service in Japan

Disney's new mobile phone service in Japan, based on use of Softbank Corp.'s mobile network, will be Disney's third attempt to define a new content-heavy or otherwise segmented approach to the mobile market.After experimenting with sports content and service for kids, it now is targeting Japanese women in theirDisney's new mobile phone service in Japan, based on use of Softbank Corp.'s mobile network, will be Disney's third attempt to define a new content-heavy or otherwise segmented approach to the mobile market.After experimenting with sports content and service for kids, it now is targeting Japanese women in their 20s and 30s.

The reeason? The company reasons that since females older than 20 represent 75 percent of the 3.5 million subscribers to Disney's myriad Japanese mobile websites, Disney Mobile can use designer handsets and that content interest to drive adoption.

The new service launches with three phones, each programmed to speed access to Disney websites. Users also can personalize their screens and emails with Disney characters.

You have to appreciate Disney's willingness to experiment. It launched two segmented wireless services in the U.S. market, Mobile ESPN, based at male sports nuts, and Mobile Disney, used by children but aimed at worried parents. Neither got traction. Other retail providers arguably should hope the latest attempt will fail as well.

The reason is that if a content brand can carve out a new space for itself in mobile, with a slightly-different business model (driving traffic to content Web sites, supported by advertising or commerce, for example), it attacks the subscription-based traditional model.

Just as important, it would represent a further shift in value towards independent brands in the communications space, much as Apple as emerged as a mobile brand in its own right, and as Google hopes to. Some will argue that Disney has learned nothing from two earlier unsuccessful efforts. Others will say the Japanese market is sufficiently different that it is a reasonable bet.

It's an experiment of the sort IP Multimedia Subsystem is supposed to provide mobile operators: allow rapid new service trials to see what sticks. One has to appreciate Disney's willingness to keep experimenting, despite earlier lack of success.

Traditional prDisney's new mobile phone service in Japan, based on use of Softbank Corp.'s mobile network, will be Disney's third attempt to define a new content-heavy or otherwise segmented approach to the mobile market.After experimenting with sports content and service for kids, it now is targeting Japanese women in their 20s and 30s.

The reeason? The company reasons that since females older than 20 represent 75 percent of the 3.5 million subscribers to Disney's myriad Japanese mobile websites, Disney Mobile can use designer handsets and that content interest to drive adoption.

The new service launches with three phones, each programmed to speed access to Disney websites. Users also can personalize their screens and emails with Disney characters.

You have to appreciate Disney's willingness to experiment. It launched two segmented wireless services in the U.S. market, Mobile ESPN, based at male sports nuts, and Mobile Disney, used by children but aimed at worried parents. Neither got traction. Other retail providers arguably should hope the latest attempt will fail as well.

The reason is that if a content brand can carve out a new space for itself in mobile, with a slightly-different business model (driving traffic to content Web sites, supported by advertising or commerce, for example), it attacks the subscription-based traditional model.

Just as important, it would represent a further shift in value towards independent brands in the communications space, much as Apple as emerged as a mobile brand in its own right, and as Google hopes to. Some will argue that Disney has learned nothing from two earlier unsuccessful efforts. Others will say the Japanese market is sufficiently different that it is a reasonable bet.

It's an experiment of the sort IP Multimedia Subsystem is supposed to provide mobile operators: allow rapid new service trials to see what sticks. One has to appreciate Disney's willingness to keep experimenting, despite earlier lack of success.

Traditional providers will be watching as well, for signs a further shift in value towards "applications," and away from "access," might be possible. On the other hand, naysayers will say the communications business has only so much room for content-centric approaches. At the end of the day, they argue, the quality of services, measured in terms of dropped calls performance, audio quality, access speed and so forth, plus service attributes, are far more important to the typical mobile user than "content" features.

So far, the naysayers have been largely correct. The issue is who, and where, this might not prove to be such an iron-clad rule. Disney hopes to find out.oviders will be watching as well, for signs a further shift in value towards "applications," and away from "access," might be possible. On the other hand, naysayers will say the communications business has only so much room for content-centric approaches. At the end of the day, they argue, the quality of services, measured in terms of dropped calls performance, audio quality, access speed and so forth, plus service attributes, are far more important to the typical mobile user than "content" features.

So far, the naysayers have been largely correct. The issue is who, and where, this might not prove to be such an iron-clad rule. Disney hopes to find out. 20s and 30s.

The reeason? The company reasons that since females older than 20 represent 75 percent of the 3.5 million subscribers to Disney's myriad Japanese mobile websites, Disney Mobile can use designer handsets and that content interest to drive adoption.

The new service launches with three phones, each programmed to speed access to Disney websites. Users also can personalize their screens and emails with Disney characters.

You have to appreciate Disney's willingness to experiment. It launched two segmented wireless services in the U.S. market, Mobile ESPN, based at male sports nuts, and Mobile Disney, used by children but aimed at worried parents. Neither got traction. Other retail providers arguably should hope the latest attempt will fail as well.

The reason is that if a content brand can carve out a new space for itself in mobile, with a slightly-different business model (driving traffic to content Web sites, supported by advertising or commerce, for example), it attacks the subscription-based traditional model.

Just as important, it would represent a further shift in value towards independent brands in the communications space, much as Apple as emerged as a mobile brand in its own right, and as Google hopes to. Some will argue that Disney has learned nothing from two earlier unsuccessful efforts. Others will say the Japanese market is sufficiently different that it is a reasonable bet.

It's an experiment of the sort IP Multimedia Subsystem is supposed to provide mobile operators: allow rapid new service trials to see what sticks. One has to appreciate Disney's willingness to keep experimenting, despite earlier lack of success.

Traditional providers will be watching as well, for signs a further shift in value towards "applications," and away from "access," might be possible. On the other hand, naysayers will say the communications business has only so much room for content-centric approaches. At the end of the day, they argue, the quality of services, measured in terms of dropped calls performance, audio quality, access speed and so forth, plus service attributes, are far more important to the typical mobile user than "content" features.

So far, the naysayers have been largely correct. The issue is who, and where, this might not prove to be such an iron-clad rule. Disney hopes to find out.

Don't Worry about Blu-ray

There has been some speculation that the Sony victory in the high-definition digital video recorder war is somewhat "Pyhric", to the extent that content is moving to digital distribution, and away from physical media.

That might be premature,if a recent survey of U.K. consumers is any indication. The survey suggests Blu-ray DVRs will have the highest growth of any digital entertainment activity in 2008, according to Russell Hart, Chief Executive of Entertainment Media Research.

The survey asked about usage of 49 digital and entertainment activities. Around 24 percent of consumers surveyed reported they will start watching movies in the Blu-ray format in the next six months. "This is at least double the intention rate of any other entertainment activity," Hart says.

The other issue is that consumers are happy to watch on-demand programming as long as it is free. There's high interest in new movie releases (84 percent are interested and 48 percent say they are definitely interested.

Live music concerts are attractive to 72 percent of respondents. So is comedy, interesting to 79 percent of respondents.

When confronted with three options--subscription with unlimited content, PPV and free ad-supported models--the free model wins. About 70 percent of respondents would rather put up with the ads than pay for the content.

Still, 48 percent of respondents say they are "definitely interested" in new release movies and 53 percent are willing to pay to watch them.

Singapore Gets 10 Bidders for 100 Mbps Network

Singapore’s Infocomm Development Authority has pre-qualified ten bidders for a new optical access network that will be open to any retail providers who want to use it.

The proposed network would feature initial capacities of 100Mbps downstream and 50Mbps upstream, with the ability to upgrade to 1 Gbps.

Alcatel-Lucent Singapore, Axia NetMedia Corporation of Canada, BT Singapore, City
Telecom Hong Kong, NTT West, Nokia Siemens Networks Singapore, Singapore Computer Systems Limited, Singapore Telecommunications Limited, Singapore Power Telecommunications and StarHub are on the list.

Covad Dips Toe into Metro Wi-Fi

Covad Communications is trying a different approach to metro Wi-Fi services, targeting services at businesses rather than consumers to create a revenue base.

Covad will build a Wi-Fi test network in a square-mile business district in San Carlos, Calif., using an approach far more narrow than what a regional nonprofit and a consortium including Cisco Systems and IBM had once envisioned. Covad also will limit its downside by agreeing to operate the network for a period of three months.

An earlier proposal by the Silicon Valley Network and Silicon Valley Metro Connect didn't take off, and revenue was the chief culprit. Azulstar, the startup that was to build and operate the network, couldn't get funding for two test networks at about $500,000 each.

That was supposed to be the start of a project serving 1,500 square miles and about 40 cities.

Technology really isn't the issue. Covad wants to find out whether it can get enough small business users to anchor a larger or more permanent effort.

Covad’s wireless business unit already serves business customers in San Carlos, allowing Covad to overlay the Wi-Fi capability on top of its fixed wireless broadband service. Central to the test is discovery of whether a repeatable financial and operational model exists.

Following the completion of the test, Covad Wireless will explore expanding the mesh service to additional locations in the region.

Covad Wireless operates California’s largest fixed broadband wireless network serving businesses, and the company views the trial as a way to test a theory: that it can reach incremental new customers in the very-small and home office segments it so far has not focused on.

Up to this point, Covad Wireless has focused on business customers requiring a T1 or higher bandwidth. So the issue is whether a sustainable business case exists for users who may not need, or are not willing to pay for, nailed up T1 connections.

P2P Issue is Hairy

P2P users amount to only one percent of Comcast's users, but those users are consuming 50 percent of the company's bandwidth, according to George Ou, an editor at large at ZDNet and the former technical director at TechRepublic.

Some say the ultimate solution is "more bandwidth." The problem is, that doesn't really address P2P bandwidth consumption, which automatically will scale to devour the additional bandwidth as well, some point out.

The problem is figuring out whether or not P2P applications really do pose outsize network loads, and must therefore be managed to preserve quality of experience for the 99 percent of other users, or whether P2P constitutes a lawful application that shouldn't be subject to rate shaping.

It doesn't immediately appear clear that there is a single answer. Traffic shaping isn't blocking. And even outright blocking sometimes is socially desirable. Blocking of viruses and spam come to mind. But even voice networks are designed to block some traffic when peak loads occur. One has to re-dial. Traffic shaping is somewhat analogous to the means used to cope with voice congestion at peak hours.

And, unfortunately, "more bandwidth" isn't by itself a solution to P2P network loading, it wouldn't appear. At some point, market mechanisms will have to be applied. At some point, the business pricing model will be applied in the consumer space: you can use as much as you want; you just have to pay for the usage.

Access Bandwidth: Size Doesn't Matter As Much As You Think

AT&T has been doing some testing recently. It bought cable modem service and then tested peak throughput and average throughput.

As you might have guessed, there's a huge difference. But the point is not to show that Digital Subscriber Line access is any better. It is to emphasize the point that access is only part of what determines end user quality of experience.

Every element of the delivery chain has to be optimized or quality of experience will be bounded by the weakest link. In fact, the tests suggest that real-world performance is precisely what users encounter.

Peak advertised speeds are possible at 3 a.m. During the evening hours, when home usage peaks, average throughput routinely drops as low as 300 to 400 kbps.

And that's just the difference between peak and average bandwidth. IP-delivered communications and entertainment also is subject to degradation because of latency and jitter, port contention and any number of other issues. In fact, port contention might in some ways be a bigger problem for mobile providers than raw bandwidth.

Mobile Broadband is Inevitable: History Will Repeat

About 22 percent of U.S. consumers go online wirelessly outside the home, compared with 16 percent of U.S. online households a year ago, says Sally Cohen, Forrester Research analyst.

Almost half of consumers Forrester surveys say they would like to do so.

Cohen says the growing interest is due in part to familiarity with home Wi-Fi networks as well as public hot spots. About a quarter of of consumers use Wi-Fi at home, she says.

The issue now is how fast mobile operators, Clearwire and Sprint can move to capture additional demand in the form of handheld and PC card forms of mobile Web access.

Because one thing is certain: history tends to repeat itself in the communications business. And that story is that services and features once considered "luxuries" become necessities, and therefore mass market products or even commodities.

Once upon a time families would gather around a phone at Christmas and make a long distance call across the country or world, at some point being exhorted to "keep it short." Once upon a time homes shared a party line.

The point is that broadband use has expanded pretty much as wired voice did. It was place based. At some point a small number of people started to use mobile voice. Now virtually everybody does.

The same thing is going to happen with broadband. People used to share bandwidth at work. Then they got service at home. The next wave will be mobile broadband used by people, just as mobile voice now is.

U.S. industrialists and entrepreneurs have been turning luxuries into everyday experiences and necessities has been going on since the 1870s, depictions of many as robber barons notwithstanding. As with many other innovations, the key is to systematize and standardize and wring cost out of the production of former luxuries so they can be provided as mass market necessities.

Mobile broadband isn't going to be any different. History does repeat.

Online Video Viewed by Half of U.S. Internet Users

eMarketer predicts that over half of the U.S. population will have watched video on the Web before the year is out.

By next year, more than 80 percent of all Internet users will have done so.

New Peak Load Issues for Mobile

There's only one problem worse than dealing with peak load, and that is average load that starts to look like peak load. In the voice world, peak load has been the bigger issue, not average load.
Data networks have peak load issues as well, but those issues are mostly about the number of bits to pushed through the pipe, not generally use of circuits or network elements or ports.

Wireless is starting to have other problems, though, as data usage grows. And you instinctively would think bandwidth has to be the issue. It isn't. But take the easy stuff first.

Just as there are two “rush hours” on the road (6 a.m. to 9 a.m. and 5 p.m. to 7 p.m.), enterprises typically experience two “rush hours” on their phone systems, says Art Yonemoto, owner of his own telecom expense auditing firm. For most enterprises those PBX rush hours happen at mid morning (10 a.m.) and early afternoon (2 p.m.). Hospitals, though, tend to have one of their busiest hours at 9 a.m., especially on Mondays, as their patients call to schedule appointments.

For the most part, though, enterprises handle their phone system peak loads quite well. Mobile networks cannot say the same. as they generally are designed to handle about 80 to 90 percent of calls on a non-blocking basis. At peak hours, blocking occurs.

Some calls simply go straight to your voice mail. The other obvious issue is a dropped call, which happens because you are moving from one area to the next, and the next cell tower has no free radio assets to hand off the call.

But there are other problems emerging, and that is amount of data traffic, and the different characteristics data applications impose on the network. Bandwidth alone is not the entire problem, any more than bandwidth is really the problem for voice traffic.

The issue is that radio resources are tied up even when not that much bandwidth is flowing over the radio network. An obvious example is a mobile virtual private network client, which essentially nails up a connection even when actual data is not flowing. The issue then is the strain on radio resources, not bandwidth as such. Other applications that don't actually consume much bandwidth might have lots of signaling and pinging. Some social networking applications and even mobile email devices can create that sort of stress.

So for wireless networks, it now appears application interactivity--not just bandwidth--is becoming a gating issue. It is an issue bandwidth alone does not fix. The additional new issue is occupation of radio resources.

Enterprise iPhone? Just talk to RIM Servers

Though there are other issues, Apple would get far down the road as an enterprise device if it did just one thing: ensure compatibility with Blackberry servers.

Though Microsoft Mobile is growing its share, BlackBerry is the device to beat. Apple will keep getting heat for its lack of security as well.

But the main thing is the ability of a user to get company email on an iPhone, not just on a Blackberry.

Sprint Unlimited Plan: Unlimited Everything

Sprint Nextel now has responded with a new “Simply Everything” plan offering not just talk, not just unlimited texting, but unlimited Web surfing, email access, GPS navigation services, DirectConnect, GroupConnect, Sprint TV and Sprint music.

The $99.99 Simply Everything plan is available to customers on both Sprint's CDMA and iDEN networks, and goes way beyond T-Mobile's comparable plan that includes unlimited voice and texting.

Sprint has thrown in the kitchen sink.

Existing Sprint customers can switch to the Simply Everything plan without extending their current contract either by contacting Sprint customer service or by stopping by any participating Sprint retail location.

New line activations require a two-year agreement.

For families, Simply Everything includes an incremental $5 discount for each incremental line, up to five lines on the same bill. For example, two lines would amount to $194.98 ($99.99 + $94.99); a third line would cost an additional $89.99. This is in sharp contrast to the multi-line unlimited rates offered by some competitors. The Sprint plan offers significant savings the more lines a customer adds.

Observers were wondering whether Sprint would go nuclear. This move is more "nuclear" that offering an unlimited voice plan for lower prices than the now-industry-standard $100 a month. Sure, Sprint Nextel would have frightened a lot of people if it had gone with an $60, or even an $80 unlimited voice plan.

What it has done, at least for users who really like several of the enhanced features, is create a package so compelling lots of people are going to upgrade lower-priced plans to get them. Don't worry about some high-end voice plans being downgraded.

The big issue here is a potentially significant upgrade of lots of other plans, to get the huge palatte of upgraded features. It is the sort of move one would expect from Dan Hesse.

For users who don't mind the lack of subscriber information modules (SIMs), the plan offers more value than competing plans offered by T-Mobile, which bundles unlimited voice and text messaging. Both at&t Wireless and Verizon Wireless plans provide unlimited voice for $100 a month.

For users who simply want unlimited voice, Sprint will offer a $90 voice-only plan. So far, the feared price war has not broken out.

As for why unlimited plans might not damage wireless carrier revenue, take a look at what Sprint has been finding with its Boost mobile prepaid business. After launching unlimited plans, traditional prepaid growth slowed, but unlimited plans more than made up for the slower growth for the traditional plans.

Luster Off MVNO in U.S. Market

Ed Mueller, Qwest Communications CEO, now can be counted among executives who believe their mobile virtual network operator ventures have been a bust.

After operating an MVNO using the underlying Sprint network, Qwest now has concluded it simply hasn't worked well enough to keep doing. "We have a hole in wireless and we don't have the assets and we aren't going to invest," he says.

In Qwest's case, at least, an MVNO isn't financially attractive, but also is weak in the market place," Mueller says. One of the issues is access to the latest, greatest phones. "We don't have scale to get the new phones," he says.

"The financials and economics are really difficult," he says. "Only six percent of our customers bought, where the national average is 200 percent."

"Even if we had access to all the new phones, it would still have been difficult," Mueller says. And he also acknowledges a historic reality resellers of basic communications products of all sorts have faced: low margins. "We won't get rich on this, even if we have wireless that works," he says.

So why bother? "As part of a bundle, though, wireless gives us great stickiness," he says. He likes the resale agreement with DirecTV just fine, for many of the same reasons. "We have nine percent penetration of video," Mueller says.

That's about the same penetration as at&t or Verizon get in some of their markets in the first year. But at&t as well as Verizon expect, and get, higher penetration than that after as few as six to nine months. By the end of a year of full marketing, penetration can be in the 13 percent range.

The real money in wireless over a three-year time frame is data, not voice, Mueller says. "Voice will be a ride-along on the data," he adds.

The other thing is Qwest's interest in fixed mobile convergence, especially ways to use mobile handsets inside the home. "FMC is about strong signal inside the home," he says. "So we want a partner with a data network."

Nor does Qwest want to wait for handsets. "We want to be equally advantaged on the product set immediately, not in six months," Mueller says. "Two of the four wireless networks do not have wireline assets and should be a good fit for us. "

In other words, Qwest doesn't want an MVNO agreement, even if it is reselling another provider's network services.

Fiber to Home: Density Matters

When evaluating prospects for fiber-to-home deployments, density really does matter. As recent data from the Fiber to the Home Council shows, countries with higher rates of fiber access tend to be highly dense, where a "fiber to the basement" approach is feasible. Japan is the exception. Generally speaking, fiber to the home penetration is high in countries with high density, though other factors, such as government financial support and regulatory framework, also play an important role.

50 Mbps from Comcast by 2010?

Comcast will offer customers 50 megabit-per-second service, upstream and downstream, available to half its subscribers and homes passed, by 2010, DSLPrime's Dave Burstein argues. What remains unclear is how many customers Comcast or any other cable company will be able to support at those rates, in any single neighborhood of 500 homes or so, unless a very large amount of analog video bandwidth is freed up by moving them to the digital service tiers.

Apple Inches Closer to Enterprise iPhone

Apple is convening a meeting to unveil its software development kit on March 6. For critics who have panned Apple for producing a closed device not suitable for enterprise users, Apple now will begin to prove at least some of those critics wrong. Salesforce.com, for example, already has moved to position its services for iPhone users. In fact, its own sales force demanded that this be done. And small business users, who don't have all the enterprise software issues to face, already are using the iPhone as their preferred device.

Why Netflix is Not "Toast"

On-demand video might affect the DVD rental business someday, but apparently not this year. Netflix just revised first quarter and full-year 2008 guidance. For the year, Netflix expects to have 8.9 million to 9.5 million subscribers, up from the prior forecast of 8.4 million to 8.9 million subs. It expects revenue of $1.345 billion to $1.385 billion, up from $1.3 billion to $1.35 billion. It expects unchanged GAAP net income of $75 million to $83 million. But GAAP earning per share will be higher. The new forecast calls for $1.18 to $1.30 per diluted share, up from $1.12 to $1.24 per diluted share.

On-demand viewing is convenient, to be sure. But there are countervailing values as well. On-demand purchases introduce an element of uncertainty into monthly budgeting of expenses. On-demand rentals can be cash transactions, with no later unexpected financial impact. It's an underestimated value for physical rentals rather than on-demand purchases.

Flat rate is important for many consumers. So is the "unlimited" number of titles one can buy on some Netflix plans. That adds more value. Think of how parents view texting charges. Why do so many people buy relatively large plans? Because they don't want overage charges.

On-demand viewing leads to "overage" charges. Flat-rate or "cash on demand" services eliminate that uncertainty.

Citizens Sees Slowdown in California and Arizona

It's just another small data point, but Citizens Communications says it does detect a slowdown in sales it believes is related to economic sluggishness in areas serving about 12 percent of its customers.

"We do see a slowdown in the economy in our California and Arizona markets," says Maggie Wilderotter, Citizens Communications CEO. And it seems to be housing related.

California and Arizona are "the only two markets that we have that have definitely had the housing issues," Wilderotter says.

"So, from the gross add perspective, what we have seen is a slowdown in gross adds out there, but it is not about the competition necessarily getting them," she notes.

"It is also about housing remaining vacant at the moment until inventory starts to get absorbed," Wilderotter says.

So what might be notably different about this particular dip in economic growth, compared to earlier slowdowns the telecom and cable industries have weathered, is the overhang of unsold homes whose owners might be disconnecting services.

That doesn't mean disconnection or downgrades at the primary residence, but at the second or investment homes.

So far, though, Citizens hasn't seen anything material in terms of bad debt on the small business side of its business. That's important, as small businesses represent roughly 50 percent of company revenues, and about 92 percent of our business customers.

Slowdown Coming, But It Won't Affect Us, Execs Say

Though Goldman Sachs analysts now forecasts that U.S. IT spending outlook for the remainder of 2008 will slow perhaps two points compared to 2007 levels--meaning growth will come in at fiver percent rather than seven percent--IT suppliers predictably say the slowdown won't hurt their firms.

Executives "said that while they’ve seen some small impacts from the U.S. economy with respect to IT spending, there is little to fear in the bigger picture," reports eWeek reporter Reness Boucher Ferguson.

The good news for IT suppliers is that a decline this time is simply a slowing of the rate of growth, not an actual negative downturn. The rationale is that IT spending in recent years has tracked fairly closely with gross domestic product, growing just a bit faster than GDP.

Of course, what else would you expect a CEO to say? It's a bit like running into associates in the hall at a trade show, and asking them how business is. No matter what the reality, the answer always seems to be that "business is great."

And since GDP is forecast to grow at about 3.5 percent for 2008, IT spending should come in above that rate.

IT spending is a different thing from communications spending, to be sure. There is no linear extrapolation from the one to the other. But neither are the two types of spending completely uncorrelated. A deceleration from seven percent growth to five percent growth isn't a disaster by any means.

Dish Network Reports Slower Growth

Dish Network experienced slower subscriber growth during 2007, though it is hard to separate out the impact of better performance on this score by competitors, internal issues, slower housing starts and macro economic factors. “During 2007, our subscriber base continued to grow, but at a slower pace than in previous periods,” the company says.

“We believe that our slower subscriber growth was driven in part by competitive factors including the effectiveness of certain competitors’ promotional offers, the number of markets in which competitors offer local HD channels, and their aggressive marketing of such advantages," the company says.

In part, Dish Network was hampered by a delay in the launch of new satellites to support high-definition services. The company argues that the delay lead to gains by competitors better equipped to deliver lots of HDTV signals.

Dish executives also say subscriber growth was affected by worsening economic conditions which included a slowdown in new housing starts.

But there also were "operational inefficiencies" as well, and piracy and other forms of fraud seem to have been issues as well. All of those developments "affected both the growth of new subscribers and the churn of existing customers," Dish says.

Although video entertainment traditionally has been viewed as "recession proof," that thesis might be tested this year if there in fact is an economic slowdown underway, or starting. The problem is that economists need six months worth of data to declare that a recession started, six months earlier. We might not know for sure until the summer or fall whether that is the case.

Any one of the aforementioned developments could lead to slower growth. The problem is that it isn't clear how important each of the factors was. Given the number of new HDTVs being sold, it is conceivable that relative lack of HDTV programming alone could account for slowing growth, even if the other forces were not at work.

To some extent, the satellite delay is simply bad luck. But the fraud issues ought to be largely under Dish Network's control.

Neither are housing starts under company control. The issue is that more weakness likely will follow, not because of housing starts, but because in many markets owners seem to be selling second homes bought largely as investments. In the interim, it is likely many of those locations will be disconnecting some services.

If a slowdown in growth continues, it will be tough to figure out, in retrospect, what actually caused the slowdown, as several forces are operating at once, at least at Dish Network.

Verizon to Hold "Open Network" Conference for Developers

Verizon Wireless will convene an Open Development Device Conference on March 19 to acquaint developers with its version 1.0 of the technical specifications for wireless devices that will work on its “Any Device, Any App” network-only service option.

The conference will discuss the certification of devices that users can use on the Verizon network, without having to buy a device directly from Verizon.

Broadband Penetration: How You Count Makes a Difference

Comparing broadband penetration across country boundaries is a tricky matter. It makes most sense to measure some services or products, such as cable TV, broadband access, TVs, HDTV, IPTV or telephone lines, on a "per household" basis, since that is how the service tends to be consumed.

Other services or products, such as mobile phones, MP3 players, Skype, smart phones or notebook PCs, might more accurately be counted on a "per user" basis.

The difference in broadband penetration, for example, can vary dramatically by the size of a household. In countries where households tend to be larger, for example, "per capita" and "per household" penetration will show a weaker correlation. Countries with lower household size will show a higher correlation between the two measures.

The latest ECTA data shows broadband penetration "per capita." So where we might be used to seeing "household" penetration figures in the 50-percent range, counting on a per-capita basis leads to penetration in the 15 to 35 percent range.

Planning on Buying a New Phone?

ChangeWave Alliance surveys suggest demand by consumers for new mobile phone has been weakening since July 2007.

Weaker Consumer Spending

Consumer spending turned south in the summer of 2007, according to surveys conducted by the ChangeWave Alliance. ChangeWave also found that business IT spending dipped in the first quarter of 2008.

In January, 34 percent of ChangeWave respondents said they planned to spend less during the next 90 days than they did a year ago. About 29 percent said they would spend more.

Business Hiring Heads South

Business hiring declined in the fourth quarter of 2007, according to survey data compiled by ChangeWave Alliance. That lead ChangeWave to declare that a recession already was underway.

Enterprise IT Spending Heading South?

ChangeWave’s latest enterprise IT spending survey points to a negative growth rate for the second quarter of 2008, suggesting that U.S. business spending has already in a recession of sorts.

Some 23 percent of respondents report their company’s IT spending will decrease--or there will be no spending at all--in the second quarter.

About 15 percent say spending will increase.

A total of 2,013 respondents involved with IT spending in their organization participated in the February survey, ChangeWave says.

The last time such negative growth was reported was August 2001. And you might recall that was the time when the Web and telecom industries melted down. The ChangeWave data show a slowdown in businesses of every size.

About 43 percent of respondents say their companies will spend normally. About 53 percent say their firms will slow spending.

In the first quarter, about 10 percent of respondents reported they had spent more than planned.

Another 27% say they’ve spent less than planned. It appears storage has been hardest hit. But spending on enterprise applications, servers and security also are weaker.

That doesn't seem to apply to smart phone activity, though. Respondents say their firms will be spending more on smart phones than before.

It's starting to look like the spending slowdown by business users already has begun, whether or not we find out later that the U.S. economy entered a formal "recession," which is to say back-to-back quarters of negative growth.

Consumer, SME Spending Tightening?

Large incumbent telco and cable companies say they haven't yet seen any adverse sales or churn impact because of economic stringency. But there are some signs this is not true, and has not been true, in parts of the consumer and small business and medium business market segments since perhaps last summer.

Cbeyond, which sells to small business, reports it began to see higher than normal credit issues in the third quarter, forcing it to tighten its credit rules. The result was a churn rate 40 percent higher than is typical for Cbeyond.

Leap Wireless, which sells heavily into lower-income customer segments, likewise saw an unusual and high rate of customer churn in the third quarter last year, an anomaly the company says can be explained by expansion into less mature markets as well as deliberate policy changes in the prepay and handset areas.

Now Henry Blodget of Silicon Alley Advisor says he detects real softness in small and medium business spending on advertising since the Christmas or holiday season. He says a source workking for a digital advertising company has seen severe drops in digital ad spending at small- and medium-sized enterprises in the past few months.

Blodget says he was told one client that had $4 million to $5 million in sales in the 2006 Christmas season had only $1 million in sales this season.

The source believes that Google is seeing, or will soon see, similar drops in spending in the SME segment.

It will be hard to separate out the many threads here. Both Cbeyond and Leap Wireless are in the middle of major market expansions, and each has taken internal actions which could account for nearly all, if not all of the unusual churn activity.

Beyond that, Leap Wireless executives have been watching for signs of economy-specific impact for quite some time, as the background rise in gas prices, sub-prime lending and housing slowdowns also could create higher churn, lower net addition effects.

Even slowing broadband or wireless subscriber growth alone will not be evidence of economic weakness, as both of those markets are nearing saturation. Growth necessarily will slow, and the economy has little to do with the slowing.

Lower housing starts plausibly are an issue, but only at the margin. The simple fact is that both broadband and wireless penetration rates now are nearing a natural limit.

Both Cbeyond, Leap Wireless and any other service providers expanding rapidly into new markets are going to have higher churn for new customers than is typical for customers they have had for several years. The reasons are simple enough. Customers who leave have found reasons not to continue. By definition, customers who stay for several years have found good reasons to do so.

They have learned how to use the services, are getting acceptable levels of service, correct bills, prompt resolution of issues and other "use" experiences that confirm they have made a wise choice.

So higher churn, in and of itself, will not mean economic softness is the culprit, at least for firms expanding rapidly into new markets and adding new services.

Over the next couple of quarters, all observers are going to remain watchful for any signs economic issues are coming into play. So far there are signs--not conclusive by any means--of increased pressure in some consumer and SME segments. But so far it is hard to isolate economic issues from other background factors.

Slowdown? "Not Yet" Says Siemens

Siemens AG, Europe's biggest engineering company, probably will meet its 2008 sales and profit goals, and sees no sign that a global economic slowdown is affecting business, Chief Executive Officer Peter Loescher says.

That despite the statement that "it's clear that we're entering a phase of slowdown in the world,'' Loescher says. ``The impact for us as a company, we don't see it yet.''

Mobile Revenue Surpasses Landline in 2009

"Mobile service revenues will pass landline in 2009," says Arthur Gruen of Wilkofsky Gruen Associates, reporting on the latest Telecommunications Industry Association expectations for U.S. communications revenues. "It now is primary line erosion, as second lines erosion was finished some time ago."

That means there will be 150 million landlines in service by 2011, where there once were 286,000 in service in 2004.

About 82 percent of consumer voice subscriptions are sold as part of a bundle, up from 14 percent in 2005 and 40 percent in 2007.

Wireless growth slowed to single digits in 2007 for the first time, however. Still wireless revenue of $200 billion in 2011 will exceed wireline revenue by 26 percent.

About 84 percent of wireless service revenue growth comes from data and data will be 35 percent of total revenue in 2011, up from 16 percent in 2007 and six percent in 2005.

Overall wireless penetration will hit 90 percent in 2011, up from 79 percent in 2007.

In 2011, Gruen also predicts VoIP will represent 37 percent of landlines, serving 33 million subscribers.

EU Approves UK Broadband Deregulation

The European Union Telecoms Commission has approved an Ofcom proposal to deregulate the U.K. broadband market UK broadband market where there are four or more actual or potential providers serving areas with more than 10,000 homes and businesses.

In practice, that means deregulation for areas covering around 65 percent of all homes and businesses.

T-Mobile USA Continues Fixed-Mobile Trial

T-Mobile USA continues to test a Wi-Fi-based, dual-mode phone approach to fixed-mobile integration, allowing users to send and receive calls and messages using their in-home broadband network and a Wi-Fi router instead of sending and receiving messages and calls over the mobile network. The user advantage is that the airtime plan isn't decreased when using the Wi-Fi connection.

The tests began last June in Seattle and now is providing service in Seattle and Dallas.

The additional monthly cost is $10 for the "Hotspot at Home" feature, which isn't much of an issue. The issue is that the service only works with two phone models, the BlackBerry Curve and the Samsung T409.

Someday handset limitations won't be so big a deal, as more devices come natively equipped with Wi-Fi, and when operators stop disabling the function. But right now, the limitation to just two devices is an issue that will limit adoption.

TA 96, Digital One Rate: Which was More Important?

Though the subscriber stats don't paint the picture quite so clearly, wireless minutes of use exploded after 1998, when AT&T Wireless Services introduced "Digital One Rate," a new plan that eliminated the difference between local and long distance services, and used a "bucket" of minutes packaging approach.

U.S. competitive local exchange carrier lines in service, on the other other hand, ramped up through about 2004, and then began to decline, even as more telephone and cable companies themselves became "CLECs" for purposes of providing services outside their historic service territories.

In 1998, when Digital One Rate was introduced, mobile subscribers numbered about 69 million. By the middle of 2007, mobile subscribers numbered more than 243 million. At this point, the time is long past when wired lines exceeded wireless lines. These days, wireless accounts far outnumber wired accounts.

In many respects, and without belittling the Telecommunications Act of 1996, Digital One Rate has had far more impact than anything that has happened on the wired side of the business.