Broadband, Video, Mobile: What Will 1Q 2009 Show?

U.S. consumer spending on subscription TV, broadband, and mobile services will be "about the same" for most consumers, but about 15 percent say they intend to cut back in 2009, says In-Stat. The first test will come as first quarter 2009 results are released.

Should consumers do what In-Stat analysts think they might, these three service segments could see nearly a $5 billion decrease during the next 12 months.

The In-Stat might yet prove to be correct. But the latest round of earnings reports do not yet show evidence of the trend. comcast revenue was up 9.2 percent in the fourth quarter of 2008, the latest quarter for which returns are available. Time Warner Cable revenue was up 6.7 percent.

In February 2009 average spending at Verizon and Sprint increased by three percent and one percent respectively. T-Mobile and AT&T saw declines of slightly more than one percent each.

Still, since October, both Verizon and AT&T have seen relatively stable revenues, according to the Geezeo. Main Street Spending Index. Customer spending increased four percent at Verizon while AT&T customers are spending one percent more in the October 2008 to February 2009 period.

Sprint and T-Mobile, have seen a dip since October 2008. T-Mobile’s customer spending dropped by 9.36 percent and Sprint’s customer spending dipped 13.36 percent.

"It important to note, however, that all four of these firms have seen positive spending figures from this time last year, in both overall and year on year statistics," Geezeo says.

In its fourth quarter of 2008, Verizon grew year-over-year revenue over 12 percent in wireless, nearly 37 percent in broadband and video and over eight percent for the key strategic services offered by Verizon Business. In addition, ARPU grew 1.4 percent in wireless and over 14 percent in consumer. In the fourth quarter, Verizon grew revenue 4.6 percent.

At AT&T, fourth quarter revenue grew 2.2 percent sequentially and 3.4 percent year over year.

So it is likely that cutbacks, should they materialize, will have the effect of shifting revenue from some providers to others. It also is possible that aggregate industry revenue in each of the segments--wireless, broadband and multi-channel TV--actually will increase, though just about everybody believes that underlying secular declines in wired voice will continue, and might intensify.

In-Stat suggests that the biggest decrease in spending on mobile, broadband and subscription TV services, though, will come from households with income below $35,000, a finding most would find logical. The offset is that revenue and average revenue per user still seem to be growing, at least based on fourth-quarter results. Of course, the first quarter 2009 results will be instructive.

Verizon Thinks "Hub" Has a Gender Bias

Several notable elements stand out as Verizon starts to market its "Hub" appliance. First, the wireless broadband device aims to displace a standard wired voice line, an example of Verizon essentially cannibalizing itself.

Second, Verizon Hub, the new multimedia phone, might especially appeal to women buyers, who likely will be targeted for adoption, Verizon Wireless says. So though Verizon will market to men as well as women, it plans to make special efforts to market to female buyers.

Third, the device could open up a new "use case" for mobile broadband, essentially as a fixed-mobile implementation.

Women seem to find the "at my fingertips" features of the Hub useful, including such things as a calendar function and its ability to text to multiple wireless handsets.

The Hub sells for $249.99 with a two-year contract and allows users can make unlimited calls; locate family members using GPS; text, e-mail and video message and buy movie tickets, for example.

The findings are the result of two surveys taken by Web site iVillage.

Verizon indicates it does not see demand as exclusively female, of course, but lead users might well be found in the "female user" market. There's nothing wrong with tailoring devices and applications to end user segments. Perhaps Verizon has found another one.

AIM "Call Out" Shutting Down

"AIM Call Out," the VoIP service offered by AOL, is shutting down on March 25, 2009. AIM Call Out allowed users to make long-distance calls from their mobile phone, landline, or through AIM, and was the successor to the original AIM Phoneline service launched in November 2007, with the intention of building not just a VoIP calling service, but one with lots of new applications created by a developer community.

In this case, the direction was solid, but traction apparently became an issue.

AOL launched an Open Voice platform, a developer's toolkit that allows developers to more easily develop products running on AOL's network. Of course, critical mass is really important when taking that approach, and AOL, like some other highly-used instant messaging services, simply wasn't able to establish that mass.

Yahoo Voice also failed to establish itself, and was sold to Jajah, for example. And anybody who has tried to build a robust third-party application development ecosystem can attest to the difficulty. Apple's AppStore has been phenomenally successful, but most of those apps are built for Web apps rather than voice.

Still, you can be sure the general approach is the right one. Lots of other contenders are using the same game plan, for the right reasons. Development of new apps requires the creativity only an open platform can unleash.

As the saying goes, "an API is not a business model." No, not by itself.

Fixya: Social fix-it Site

Fixya is a social site devoted to helping consumers fix their technology products, ranging from mobile phones and PCs to automobiles. 

Fixya is a community resource capable of providing relevant and up-to-date troubleshooting data.. 

Today, with over 12 million visitors and one million products in its database, FixYa empowers individuals to repair and improve upon their already-purchased possessions.

The company also offers business services to manufacturers and retail businesses through its custom partnership opportunities.

FixYa is a place where individuals can share real world experience and connect to provide each other practical advice. From fixing cars, to cameras, to iPhones, FixYans are part of a DIY revolution that helps empower techies, tinkerers and hobbyists across the globe.

FixYa is a venture-funded Web 2.0 company with offices in San Mateo, California. 

Toktumi Business VoIP Service

Toktumi offers a business IP telephony service costing $14.95 a month without contracts, activation fees,  termination fees, equipment to buy or per-minute charges. 

Click the graphic to see a large version of the comparison Toktumi provides.

Toktumi offers a dedicated number local number, an 800 number, or a ported existing number.

Features include call waiting, call transfer, caller ID, call forwarding, auto attendant, as well as a second number for a mobile phone that allows users to place and receive calls on mobiles using the Toktumi number. 

Instant conference calls for up to 20 people, including call recording, visual voice mail, customized greetings  for business and personal callers and PC-based calling are included. Directory-based dialing, unlimited calling, call forwarding, and conferencing to U.S. and Canadian numbers as well as other Toktumi users worldwide also are included. 

International calls cost $.02 per minute for calls to destinations including China, Italy, and the United Kingdom.

Windows IP PBX in 10 Minutes?

Hak5 claims a Windows based IP-PBX can be set up in 10 minutes using software by 3CX. You might wonder why somebody who is fairly technical and in the "do it yourself" mode would not choose to use Asterisk. The answer is that some people will be able to create the functionality in Windows faster than they can using Linux.

Apparently 3CX offers a "free" download and then incremental payment for features such as unified messaging or call parking, for example. Hak5 reports the auto-provisioning to a Linksys Linksys SPA962 IP phone was flawless.

It's just another example of a sort of inversion of value in communications, where important communications functionality and value are very low cost, despite providing high value. It is conventional--and largely correct--wisdom that value is "moving up the stack."

That does not mean "pipes" and "infrastructure" such as call control are unimportant. People might not think electricity is unimportant, but watch the disruption when it suddenly fails. Still, even carriers and service providers increasingly are facing issues familiar to people working in the software business: lots of really valuable utility now is widely available at low cost.

So businesses have to built on incremental value using the still-essential but "utility-like" infrastructure. It's something like a million lines of code becoming an inexpensive foundation and value and revenue built on new apps that might, in some cases, require only scores of lines of additional code.

Setting up 16 phones took about two hours, including a firmware upgrade, Hak5 reports. Basic user maintenance apparently is simple enough that administration can be turned over to people who aren't IT staffers.

"I really would suggest anyone with a Windows machine lying around the house who has a need for a basic PBX for use with either a VOIP provider, or a PSTN gateway look at 3CX," says Matt Lestock, Hak5 contributor and a systems architect.

The analogy is the "freemium" business model, where basic and valuable features are offered "at no incremental cost" and fees support enhanced features.

Communications, Not Entertainment or Shopping, Now Dominates Online Use

As conventional wisdom has it, entertainment, rather than voice and data, will drive the communications business in the future. But recent research by Netpop suggests that even in the online world, it is communications, not shopping or entertainment, that drives usage.

Netpop | Connect Social Networkers 2008 Teaser

View more presentations from Netpop. (tags: advertising marketing)

Wireless Industry "Collapsing"?

Mobile subscriber penetration in the U.S. market is nearing saturation, no doubt about it. But it seems wildly wrong to maintain, as does Craig Moffett, Sanford C. Bernstein &  Company analyst, that “this industry is collapsing”

Slowing subscriber growth will lead to devasting price wars, he believes. To be sure, analysts always are worried about price wars. But "collapse"? Slowing subscriber numbers are a fact. But so is higher average revenue per user. 

Moffett notes that in 2008, wireless carriers added 5.9 percent more subscribers in the United States,  but he thinks they will add only three percent this year. A reasonable assumption, many might agree.

“The fourth quarter saw the lowest growth rate ever for the U.S. wireless industry,” Moffett notes. And yes, that is what happens in a maturing industry, at least on the subscriber front. But Moffett always seems to be more bearish on virtually all telecom companies than on cable companies, which also are losing video customers, though growing voice and broadband accounts. 

Small Business: TARP Failing

Small business customers are a key customer segment for many service and application providers, as they often are more willing to make faster decisions about new communication services and software.

To the extent that firm growth is a direct driver of software, hardware and communications activity, and given that up to 85 percent of new jobs are created by small businesses, perhaps somebody should be listening to them.

A survey conducted in February 2009 by online payroll service SurePayroll found that most small business owners feel the government should be taking a different approach to boost the economy during tough times.

Nearly three out of four small business owners disagree with the way the U.S. government has allocated funds in its Troubled Assets Relief Program (TARP), and believe tax cuts would be the ideal solution.

TARP was deemed effective by only three percent of respondents, while 72 percent were clear on their disapproval and 25 percent did not have a strong opinion.

BlackBerry App World Launches: Implications for Service Creation, Business Models Clear

Research In Motion has opened its new online application store, called BlackBerry App World, according to UPI. BlackBerry App World accepts PayPal for payments and starts prices at $2.99. That move might be an effort to screen apps for quality, something some believe is an issue for Apple's AppStore.

Price options also run up to $999, suggesting RIM will push high-end downloads through the store. To access the store, BlackBerry users will need to have a least a Version 4.2 operating system on their phones.

RIM appears to be negotiating back end revenue shares with vendors of applications that generate revenue through advertising or other means. It’s unclear what the share is, but language in developer contracts suggests that a revenue share is part of the model, Alec Saunders, Iotum CEO, notes.

The broad emergence of app stores, distributing or selling a wide variety of entertainment, utility or business apps, mostly Web related or data related rather than voice related, does raise some questions about the voice "service creation environment."

It is becoming possible to assemble apps rather than "create" them, using open and loosely-coupled processes. The problem would seem to be that "assembled" apps more nearly resemble the old "over-the-top" or loosely-coupled model rather than the high-availability, vertically-integrated model that has in the past been typical of voice applications.

There are obvious business model implications. Independent software developers and device manufacturers obviously participate in the revenue stream. It is less clear how access providers participate, and, if so, to what degree.

The longer-term implications are equally momentous. Up to this point the bulk of revenue has been generated by using "big iron" or "big code." And that might continue to be true for quite some time. Value, though, increasingly is realized by assembling new apps using building blocks essentially abstracted from the "big iron" or "big code" platforms.

That isn't to say that incremental "value" is equivalent to "revenue" in a linear way. Still, it is hard to see where the trajectory leads. To some extent, access, transport, computing, storage or basic features are--though not commodities--perhaps viewed as "table stakes." The new applications, though creating relatively small amounts of revenue, increasingly are viewed as the "secret sauce."

For service providers, there's a sort of inversion of value here. Most of the cost and even the value is provided by the basic infrastructure and connectivity. Yet the "sizzle" is coming from the new apps that represent little incremental revenue. The good news is that given enough sizzle, it will be easier to keep users using the "basic" features.

Broadband Stimulus Meeting in Washington March 10

The National Telecommunications & Information Administration is holding a meeting March 10, 2009 in Washington, D.C. on the "broadband stimulus" provisions of the "stimulus" bill. Click "related article" for details.

Separately, Mark Seifert, formerly with the Federal Communications Commission, has been tapped to head up the policy side of the NTIA's allocation of broadband stimulus grant and loan money. Bernadette McGuire-Rivera will be handling administrative duties.

Representatives of the NTIA, the FCC and the Ag Department's Rural Utilities Service are meeting next week to talk about how to hand out $7 billion-plus set aside in the Obama administration's economic stimulus package to provide Internet to un-served and underserved areas.

VMWare Cloud Computing Initiative

VMware has released its new Virtual Data Center Operating System (VDC-OS), software that creates an on-demand computing capability integrating computers, storage devices, and networking equipment.

"Virtualization," the ability to partition storage so more apps can  be run on fewer servers, used to be a topic computing staffs and storage suppliers were interested in. These days, it is beginning to be interesting on a wider scale, to more enterprises, developers, content, software and service providers because of the way whole computing infrastructures now are capable of "virtualization."

The software, due later in 2009, reflects VMware's push into cloud computing, essentially a virtualized data center. By making the leap, VMware joins Microsoft, Google and Amazon.com as providers of cloud computing infrastructure. 

The world's next generation of software may well hinge, in large part, on use of cloud-based computing, especially for high-volume Web-based applications. 

Hal Varian: Data is Cheap, Ubiquitous, So Value Lies in Meaning

More than ten years into the widespread business adoption of the Web, some still fail to grasp the economic implications of cheap, ubiquitous information and communications and modular, open software. But executives are learning fast precisely what the implications are.  

Inside enterprises, ubiquitous information is reshaping and flattening organizational structures. In the broader economy, retailing and distribution processes are transforming. 

The impact is perhaps nowhere more startling than in print media, music and pre-recorded video, where value is so much altered that some distribution channels are being destroyed, others merely reshaped. 

For communications providers the changes are less direct, if no less challenging. Value and revenue now are shifting inexorably towards "data" experiences rather than simple "voice." But data experiences are precisely where loosely-coupled software, hardware and communications change value contributions so much. 

In a broad sense, the global telecom industry is going to have to learn to do what others are being forced to do: assume an environment of cheap, ubiquitous "things" and learn to create value by extracting meaning and usefulness out of those ubiquitous things. 

Global Telecom Dip in 2009 to Reverse in 2010, Climb for 4 Years

Analyst Simon Sherrington says global telecom capex is set to decline by about 0.7 percent in 2009 to around $297 billion, with steeper declines in mature markets such as the United States and Western Europe offset by investments in growth markets such as China and India, and regions such as Africa and the Middle East.

But the contraction should be short-lived. Sherrington forecasts an increase in global spending in 2010 and in the following three years, with the global capex total hitting $350 billion in 2012.

By the Time the Broadband $ is Spent, It Won't be "Stimulus"

For all of the interest companies now are showing in the $7.2 billion broadband access spending that is supposed to happen as part of the "stimulus" package, it is possible the only people who will "get" any incremental money any time soon are lawyers and consultants who claim they can help clients get some of the money.

A large percentage of the money for broadband in the stimulus package won't be spent until 2011 or later, says Jeffrey Eisenach, chairman and managing partner of Empiris, an economic consulting firm. The money, split between the U.S. National Telecommunications and Information Administration (NTIA) and the Rural Utilities Service (RUS) of the U.S. Department of Agriculture, will go out in the form of grants, and neither agency is currently set up to allocate billions of dollars, he says.

"In 2014, you're not going to need stimulus in this economy," says Robert Atkinson, president of the Information Technology and Innovation Foundation, a tech-focused think tank. "There's a sort of half-life for stimulus spending."

Blockbuster Defies Expectations

The conventional wisdom is that Blockbuster's business model is the equivalent of "toast." In fact, fears of an impending bankruptcy filing caused shares to fall as much as 86 percent early in March, as a result. 

But Blockbuster says domestic same-store sales increased 4.4 percent in the fourth quarter of 2008, representing a 5.3 percent increase when compared to a decline of 0.9 percent in the same period in 2007. 

The increase in same-store sales was comprised of a 2.6 percent decrease in domestic same-store rental comparables and a 36.5 percent increase in domestic same-store retail comparables, which was largely driven by increased sales of games, game merchandise and consumer electronics.

For the full year of 2008, Blockbuster achieved a 6.4 percent increase in domestic same-store sales, compared to a decrease of 6.9 percent in 2007. The 2008 domestic same-store comparables included a 1.2 percent increase in domestic same-store rental comparables and a 37.4 percent increase in domestic same-store retail comparables.

Companies and executives frequently manage to outperform conventional wisdom, and it appears Blockbuster has done so. 

Mobiles are Disruptive to Ad Business

Media and advertising professionals say the pullback of ad dollars and mobile devices becoming personal computers are the most disruptive forces in media today, according to a recent survey by KPMG LLP, the U.S. audit, tax and advisory firm. With media time and spending seen moving away from traditional channels, attention to social media and mobile consumption is expected to increase.

In polling more than 200 media, marketing and advertising executives, KPMG found that 49 percent of respondents indicated that the pullback of advertising dollars is the most disruptive force in media today, followed closely by mobile devices becoming personal computers (40 percent).

The KPMG survey also found that some 75 percent of executives predict that advertisers will move more than a quarter of media time and spending away from traditional channels in the next five years, while social networks and mobile marketing are expected to see increased activity.

While the marketing and branding power of social networking is expected to be increasingly harnessed in the future, 61 percent of executives indicate that fewer than 30 percent of ad agencies have a plan in place to leverage the medium for their clients.

A Humorous Look at Soccer

In my case, something more true of my grandkids than my kids, who preferred football, track and wrestling. Then again, I only have one daughter and three sons, and they managed to get to high school before the soccer craze hit. 

The grandkids have tons of "gold medals" hanging on their bedroom walls, many earned for seasons where no scores were kept and no goalies played. 

Mobile Marketing Evolution: A Prediction

There's one consistent pattern I have noticed for decades in the telecom business, and I'd be willing to bet the same pattern plays out in the mobile marketing business as well. New things start out when pioneers, typically exemplified by new companies, start making a business of the new innovations. 

As the new practices, channels, services and applications start to become mainstream, larger and established players move in and ultimately represent most of the sales volume. We saw that in the mobile business, in digital subscriber line, VoIP, the dial-up Internet access business, content distribution networks and cable TV, for example.

The big exception to this general rule is that a few of the upstarts will so dominate new parts of the ecosystem that they themselves will become the leaders. Google and Amazon come to mind. Still, over the long term, even large assets of this sort might ultimately be absorbed by other contestants in the ecosystem. 

In the mobile advertising business, that means specialists will prove the channel works. Later, though, the full-service agencies will simply incorporate mobile channels within their larger practices. We are quite some way from that sort of consolidation, however. Right now, it's a specialist's game. 

The Outcome Might be Inescapable, But Plan on 20 Years

If the newspaper and magazine business model increasingly is "toast," is TV next? You will find no shortage of observers who say the answer is "yes;" that over time, more content will shift to some Internet-delivered modality. 

It might also be worth keeping in mind that transitions of this sort typically take decades. As a journalism graduate student I worked on a Gannett-funded project on the future of journalism education as electronic forms of media became more important. Keep in mind, the World Wide Web had not yet been invented at the time we conducted that exercise. 

I hate to admit it, but that was nearly 30 years ago. Only this year have we seen massive signs that the transition is hitting print media on a permanent basis. 

So the direction might be there, but the transition will take far longer than most expect. In fact, most technology-driven displacements of this sort take longer than most observers expect. If the Internet TV displacement follows the typical curve, progress will be far more stubborn than people expect, in the early years. And "early years" can last for decades. Once the inflection point is hit, change will occur faster than people expect, though.

For those of us who have been anticipating a major shift to electronic forms of all media for quite some time, it has taken quite a long time to get here. Now that we have, watch out. The structural change now will occur far more rapidly than anybody suspects. 

That you are reading this on a blog is but one example. 

I do not think it will take 30 years for stunning change to occur in the packaged, linear video business. But neither do I think anything other than relatively incremental changes in revenue volume will occur in the near term, if only because technology substitution, and the changes in industry structure technology enables, take time to unfold.

I do believe the inflection point for print media already has been reached, and do expect massive changes on a scale and pace most practitioners are not expecting. That is one reason why I began to shift gears two years ago. Well, maybe shifting gears is too incremental an analogy.  Jumping ship is the better, if imperfect, analogy. 

Somehow, I still find myself doing "print" content. But it is not the future. 

A similar inflection point for mainstream replacement of multi-channel video services by Internet replacements is far off, yet, even though we now can see the change coming. It might be inevitable or inescapable. It will not be transformative for some time to come, though. Think decades, not years. History suggests that is the right time frame.

Help! We Need Unified Communications

Communications barriers and latencies can cost small and medium businesses up to 40 percent of their productive time, according to a Siemens-sponsored global study suggests.

On average, 70 percent of of small and medium business execitives recently surveyed say they spend 17.5 hours each week addressing the pain points caused by communications barriers and latencies, according to a global study sponsored by Siemens Enterprise Communications and conducted by SIS International Research.

Researchers at SIS International Research determined that the time spent per week dealing with communications issues was more than 50 percent higher in companies with more than 20 workers.

Companies of 100 employees could be losing more than $500,000 each year by not addressing their employees’ most painful communications issues, considering only "hard costs."

The top five pain points are inefficient coordination; waiting for information; unwanted communications; customer complaints; and barriers to communication.

Premium Video Not Conforming to Historical Patterns?

In past recessions cable operators and other multi-channel video suppliers have seen a dip in growth rates for premium services such as HBO, Showtime or Starz. That might not be happening this time. Or at least the impact has not yet been seen.

At the same time, Netflix growth seems to have accelerated as well.

Perhaps consumers will behave differently this recession than they have in the past, and in ways that are good for video providers. Better promotion from more providers or a change in the value of in-home entertainment might be explanations.

So far, this is a bit of a surprise to the upside.

Smaller Businesses Warming to Cloud Computing

The most important factors driving businesses of all sizes to implement cloud computing solutions are the same factors that have prompted companies to outsource IT services for years: lower costs, better performance and agility, according to Hosting.com, which recently surveyed 644 executives in a broad range of industry verticals, and including firms with fewer than 100 employees as well as firms with more than 1,000 employees. About 69 percent of the respondents say they have fewer than 100 employees.

The driving factors for adopting cloud services are nearly the same for all company sizes, the report suggests, and business size plays no role in how quickly the executives believe cloud technologies will be adopted.

Cost savings, availability and performance are the top three values respondents believe cloud computing represents, but scalability also ranks high.

Security and support are seen as the two top obstacles cloud computing providers must surmount.

But roughly a third of executives in the small business and mid-sized business categories think they will be using cloud computing in some way at their firms within the next 12 months.

About 70 percent of respondents say Web applications are best suited to cloud computing, but 41 percent say data base operations are best suited to cloud computing. About 37 percent see application servers as ideally suited for cloud computing.

About 18 percent of respondents prefer to buy using annual contracts while 48 percent prefer month-to-month payment schemes.

It is worth noting that Amazon Web Services (Amazon's cloud computing service) says it now has 490,000 developers in its program.

Voice Mail to Text Using Skype

Skype now offers voicemail-to-text conversion for all Skype voicemail users. SpinVox converts voice messages to text in English, Spanish, French and German and the messages are then sent by Skype as an SMS text message directly to a designated mobile phone.

The intended use case for 'visible voicemail' is an on-the-go user away from a PC and using a phone not equipped with a data plan and smart phone to receive those messages directly on the mobile device.

Recipients of converted voice mail messages can listen to the full voice message by either signing into Skype or by calling their "Skype To Go" number. Skype users may choose instead to receive voicemail notification using SMS or for free by email.

"Skype is the first internet communications software provider to deploy SpinVox, further reinforcing our position as the only provider of voice to text messaging services which are used daily by millions of people on five continents," says SpinVox co-founder and CEO, Christina Domecq. "Our user base has grown over twenty-fold in the last 12 months and bringing Skype's voicemail subscribers on board will accelerate this trend."

PC Subsidies Now Joining Phone Subsidies at AT&T

AT&T wants to move beyond subsidizing mobile phones with that strategy to other hardware, led by netbooks, that use the AT&T wireless broadband network. After rebates, consumers can buy netbooks from Acer and Dell for $99 and AT&T says it is in talks with other computer makers as well.

The payback is substantial, as AT&T gains customers paying $60 a month under contract and spends a couple hundred dollars upfront on the subsidies. The move also should help offset weakening sales from enterprise customers.

AT&T says it will expand its subsidy program to cameras, portable video game machines, GPS devices.

Depending on how AT&T decides to price those connections, the firm could undercut some of the demand Clearwire has been talking about stimulating. "Casual use" plans are a prime example.

Where this all culminates, of course, is an omnibus plan that allows users access for a number of devices as part of a single account, much as users now buy "family plans" for multiple mobiles.

Viewers Want Widgets, Parks Associates Says

Video-on-demand libraries and widgets will be the first generation of video services driving adoption of connected television experiences in the U.S., according to Parks Associates.

Some 33 percent of respondents are interested in widgets, and almost 50 percent are interested in premium Web content, including TV shows and movies, through a connected set-top box, says Parks Associates.

Among TV widgets Parks Associates believes have appeal are customized news, weather, sports, or traffic information.

“Broadband households are growing accustomed to viewing video off the Internet,” says Kurt Scherf, Parks Associates VP.

Scherf says consumers are willing to pay – either on the price of a television or as an additional subscription cost – for certain features.

iPhone is Global Mobile Web Leader

Apple's iPhone is now responsible for 66.61 percent of global mobile Web traffic according to a NetApplications.

The Java ME platform follows a distant second at 9.06 percent, trailed by Windows Mobile at 6.91 percent. NetApplications notes that despite the iPhone's commanding lead in mobile browsing share, Android (6.15 percent, tied with Symbian) and BlackBerry (2.24 percent) are rapidly gaining market share, but the report notes that doesn’t mean Apple's lead is shrinking, but that the overall market is growing fast.

Though one must be wary about imputing too much, the current figures indicate that there are clear end user behavioral differences between iPhone and BlackBerry users. That might be caused by user interface barriers or other user preferences, but the differences are striking.

Mobivox Introduces CRM Capabilities

Mobivox has introduced "CRM over Voice," allowing insertion of context-sensitive, unobtrusive messaging into user interactions while they are occurring, Mobivox says. That capability is made possible by two innovations, the ability to integrate and update a unified address book into the voice session, irrespective of what type of voice device or access network is used, and the ability to connect to transaction data bases.

“Mobivox partners can now perform all-important CRM in the course of service delivery, rather than before or after it, by dynamically inserting context-sensitive, unobtrusive messaging into user interactions,” said Diedrich.

Messages about special rewards or promotions based either on past behavior are one example.

“Over time, the platform’s multilingual voice user interface, or VUI, establishes a unique and very cost-effective relationship with the user,” Diedrich said. “Our network-hosted address book and user database allow for insightful user profiling throughout the customer lifecycle. By mashing the VUI with rich and relevant behavioral database information, we have created an unprecedented set of highly contextual CRM processes, executed in real time.”

Thomas Howe to Head Jaduka

Jaduka has promised "big news" at eComm, and one would have to say that some of that news already is leaking out. Consultant Thomas Howe has shut down his consulting business and now is the new Jaduka CEO.

NetworkIP, Jaduka's parent, clearly has decided that it cannot get the traction or valuation it seeks without a recognizable name at the top of its executive ranks.

I believe people refer to this as "street cred."

Social Network Humor

An amusing bit of social networking humor. Click on "related article" at bottom of this post.

It isn't quite the classic that "if operating systems were airlines" (http://ipcarrier.blogspot.com/2007/12/if-operating-systems-were-airlines-part.html) is, but is chuckle-inducing, nevertheless.

Shorter Sales Cycles for Communication Services?

Life always is so much more interesting than one suspects. Consider the conventional wisdom that enterprise buyers are spending more time than they used to making communications decisions.

Arunas Chesonis, PAETEC CEO, says sales cycles now are shorter than they were three to six months ago. "People are being forced to make decisions much faster," he says. A client was looking at buying an MPLS network. The chief information officer said he was going to make a decision in about 10 days. 

"Typically, you'd see something like that goes 60 days before they make a call," says Chesonis. "I can't quantify exactly for you how fast people are making decisions, but the economic pressures are absolutely affecting sales cycles on operating type services, something that would affect operating expense.

"If you're talking CapEx, a lot of these people are just deferring the decision till later this year, early next year, they're trying to conserve cash just like a lot of folks that are out there," he adds.

Lots of executives say sales cycles are stretching out. But Chesonis may be on to something. 

Nokia Mulls Making PCs

Nokia CEO Olli-Pekka Kallasvuo has hinted that the Finnish handset giant could soon enter the laptop market, reports Reuters.

IKallasvuo says the firm is "looking very actively" at the opportunity. His comments appear to confirm long-running speculation that the world's largest handset vendor will diversify into laptops. "We don't have to look even for five years from now to see that what we know as a cellphone and what we know as a PC are in many ways converging," Kallasvuo said.

The vendor is rumoured to be developing computers based on ARM's new 'Sparrow' processor for netbooks and Mobile Internet Devices (MIDs) and is reportedly looking at a 2011 launch.

Ethernet Installs: Mostly Follow-Ons?

IU.S. demand for business Ethernet service ports expanded at a rate of 43% during 2008, Vertical Systems says.

Spurred by lower bandwidth costs and higher service availability, enterprises of all sizes purchased carrier-based Ethernet to support their business networking applications, according to Vertical Systems.
 
"Despite a near paralysis of new telecom spending at the end of the year, there were tens of thousands of new Business Ethernet service installs during 2008," said Rick Malone, principal at Vertical Systems Group. "Deployments were most active in the third quarter before many enterprises implemented spending freezes or staff reductions. Customer installations in the fourth quarter consisted primarily of follow-through on in-process network conversions."
 
Based on retail customer port installations, AT&T maintained its U.S. market leadership in 2008, although considerable momentum by Verizon narrowed the gap. Attaining a position on Vertical Systems Group's 2008 Business Ethernet Leaderboard with 5% or more of the market are eight service providers in the following order by share: AT&T, Verizon, tw Telecom, Cox, Qwest, Cogent, Time Warner Cable and Level 3.
 

Will Rural Broadband Create Jobs?

The general notion about broadband spending mandated as part of the national economic “stimulus” plan is that it will create jobs. To be sure, construction of the access networks will drive some direct employment.

Some 128,000 jobs (or 32,000 jobs per year) could be generated from network construction over a four year period, and each job would cost $50,000, according to Dr. Raul Katz, adjunct professor at the Columbia Business School.

Beyond that, such new broadband facilities are supposed to spur economic development as well. But will it?

Unfortunately, says Katz, research on the productivity impact of broadband indicates the potential for capital-labor substitution and consequently, the likelihood of job destruction resulting from broadband deployment, as well as some incremental job creation. So the issue is whether net job creation exceeds net job destruction, and by how much.

You might think bringing broadband access to any community can only be a plus. As it turns, out broadband creates jobs and destroys them as well.

Since broadband tends to enable the outsourcing of jobs, a potential displacement of employment in the service sector from the area targeted for deployment might also occur, says Katz.

Also, some job creation in the targeted areas could be the result of relocation of functions from other areas of the country, and therefore, should not be considered as creating incremental employment, he adds.

Still, Katz says, the study results indicate that some job creation aside from the actual construction jobs is feasible. “Our estimates indicate that over four years the network effects could range from zero to 270,000 jobs over four years (approximately 67,500 jobs per year), although anecdotal evidence would point to the lower end of this range,” says Katz.

Firms Losing 40% of Time Because of Communications Inefficiency?

On average, 70 percent of of small and medium business execitives recently surveyed say they spend 17.5 hours each week addressing the pain points caused by communications barriers and latencies, according to a global study sponsored by Siemens Enterprise Communications and conducted by SIS International Research.

If Siemens results are typical, mid-sized organization personnel might be wasting as much as 40 percent of their available time dealing with communication latencies of one sort or another. Most small businesses probably will not agree, but communications inefficiency obviously scales with organization size.

Tracking Service Provider Capex

People who track telecom service provider capex are going to have to account for some likely shifts in the composition of that capital investment. For telcos providing IPTV, a significant percentage of ongoing capex is related to providing customers with relatively-costly in-home decoders. Comcast, which has built its business on the use of such terminals, is about as efficient as any provider can be, and gets the absolute best volume pricing on its gear. Yet it still devotes at least 18 percent of overall capex to the purchase of such boxes.

Telcos, who likely are not yet getting volume discounts as large as Comcast's may find as much as a fifth of their overall capex now devoted to customer premises equipment. That is going to shift thinking in the direction of variable CPE investment rather than the network transmission categories that traditionally have dominated spending. 

The other change is that IP-based gear in most cases costs less than legacy equivalents, so any given dollar of capex spending buys more capabilities than used to be the case. The clear implication is that less gross capex might be needed for any given unit of derived revenue. 

The other long-term change is that more of the value of capital comes from software investments rather than hardware. So telcos will be spending more capex on software, and less, proportionally, on hardware, or transmission hardware. More of the hardware spend is going to be premises based. 

One probably can see that in the case of Ethernet, DSL, video, telepresence or virtual private network services, for example. 

Where's the Competence?

Financial markets hate uncertainty. Right now, all we've got is massive uncertainty. Where's the governmental competence?

U.S. Tops Global List of Broadband Countries

If one measures the value of broadband not by simply "organizations that can buy broadband" (availability) or "homes buying broadband," (demand), but rather as a the ability a nation has to harness broadband to drive economic growth, the United States ranks first in the world, says Leonard Waverman, Fellow of the London Business School and Dean and Professor at the Haskayne School of Business at the University of Calgary. 

The United States has seen more clear-cut productivity gains than has Europe, and a major source of this U.S. productivity advantage is broadband usage by businesses that are not themselves producers and providers of broadband services, Waverman says. 

The concept of “useful connectivity” is based on the notion that the economic value generated by connectivity depends not just on conventional measures such as broadband lines or computers

connected, but also on who is using those lines—businesses or consumers—and how

well they are able to use the lines, says Waverman. 

"The notion of connectivity should be expanded to include also the complementary assets (software) and skills — embodied in people, governments and businesses — that determine just how productively the hardware and infrastructure are used.

"We use the term 'connectivity' to refer to the totality of interaction between a nation’s telecommunications infrastructure, hardware, software, networks, and users

of these networks, hardware and software," he notes.

Thus broadband lines, PCs, advanced corporate data networks and advanced use of wireless data services are certainly measures of connectivity, but so are human skills relevant to the usage of these

infrastructures, technologies and networks.

Consider the case of Korea, which has a very advanced fiber to the home capability. However, Korea is also a very heavily business-driven economy in that the levels of business investment and intermediate consumption  are very high compared to the level of consumption by the consumer sector.

On measures such as business spending on enterprise telephony and data services, Korea’s performance might be termed “lackluster,” Waverman says. By way of contrast, U.S. businesses are leaders in use of IP telephony and other broadband-based technologies, as well as the more subjective ability to use technologies as sources of business advantage, and drive innovation.

As with all such cross-nation "rankings," there is some element of subjectivity. Still, the point is well taken: broadband economic benefits cannot be measured by simple reliance on penetration or availability data. Human, cultural and institutional capital play a big role. 

Apple, Acer, Asus, Schumpeter

"Schumpeterian" times of "creative destruction" seem to be upon us. Note a recent ChangeWave poll on PC purchasing. You wouldn't be surprised to learn that Apple ranks number one in customer satisfaction. 

You might be shocked to learn that Asus and Acer rank second and third, above Sony. As satisfaction rankings are about value and price, something is going on here. 

Apple doesn't win because of its price. Asus and Acer play there, but I think something more profound is going on. 

Both firms have created a new value position in the market with their hot-selling netbooks. Prior to that, both firms had staked out positions in the value-priced notebook segment as well. But it is probably the netbook that will have the greatest implications for Asus and Acer over the next couple of years as each attempts to establish a retail brand. 

It isn't simply that their netbooks sell at retail for a bit less than $300. It also is that the value of a netbook might be higher than the notebooks it is intended to "complement or replace."

That's disruptive, at least for PC retailers. What isn't clear yet is whether netbooks will be disruptive in other ways. It is clear that lower-end PCs and higher-end mobile phones are heading for each other.  In fact, Acer already has unveiled a line of smart phones. 

Content, Distribution, Attention: What is King?

Many years ago, as a graduate student in managment, Herbert Simon was taught to us as a theorist with a lot to say about the way human beings in organizations behave. These days, he returns anew as a theorist whose work informs us about the logic of digital media. 

"What information consumes is rather obvious: it consumes the attention of its recipients," Simon once said. "Hence a wealth of information creates a poverty of attention, and a need to allocate that attention efficiently among the overabundance of information sources that might consume it."

In a world where so much content exists, the key problem now is "getting noticed." That tends to mean "distribution" is less important than in the past. Think of a past world with limited outlets for radio, TV or print content, so unlike our present world where there is almost no physical distribution barrier, while the true barriers essentially amount to affirmation by audiences. To use the overworked phrase, "users rule."

One doesn't sell, one invites. One doesn't push, one pulls.  "Attention" scarcity also puts a new perspective on the old debate about whether "content" or "distribution" is king of the value chain. "Both" or "neither" are equally good answers in a world of content abundance where the objective simply is "attention."

Across consumer markets, attention is becoming the scarcest, and so most strategically vital, resource in the value chain. Hence marketing now becomes both tougher, and more necessary, and more attention now is shifting to "inbound" rather than "outbound" marketing, pull rather than push. 

Since the business foundation for much of media is marketing, media are bound to change. So are lots of other things. If you think about it, Google's page ranking mechanisms continue to emphasize "linking," which is seen as a proxy for "attention." 

It's interesting how a theorist you once "met" in one context now seems so relevant in an entirely-different context. 

Use Enterprise Sales to Drive Consumer Web Apps?

It might sound counter-intuitive, but at some observers think Web-based software products not only can span enterprise and consumer user segments, but can leverage enterprise deployments to spur consumer penetration.  Some even think Web apps specifically seen as consumer tools can be sold directly to enterprises with little or no modification. 

That is roughly the reverse of what has tended to happen in recent years as the normal technology transmission belt has been inverted.  But the process would be something of a return to past adoption patterns, in roughly the same way that "software as a service" and cloud computing now "returns" us to an earlier era with some resemblance to a mainframe or centralized model of computing.

In the past, software and hardware innovations tended to be "discovered" in the universities then commercialized first in the enterprise buyer segment. Over time the price and feature set would be "de-tuned" for the mid-market, with adoption then spilling over into the small business market and then sometimes even in the consumer market. 

Now some observers say targeting the enterprise "edge" can stimulate buying in the broader consumer market. 

What is different, and might enable this to work, is that Web apps are much easier to adopt in an enterprise environment. Less customization is needed. Also, the user interface, designed for consumer use, tends to require less training, again reducing the hassle factor for adopting in an enterprise environment.

Volume Discounts Wrong for Social Software?

Volume-discount pricing structures are the norm in the computer and most other businesses. 

But Julien le Nestour, an adviser, investor, and manager at Schlumberger, argues that for some "products" such as social networking, value grows as users grow ("network effects"), making the value of an application with 70-percent use much more valuable than an application with 10-percent usage.

But under typical volume-pricing practices, buyers pay more for the less-efficient than for the highly-efficient "product." So pricing should invert. Discounts should be offered for low-penetration use, and rising prices for high-penetration use. 

If customers extract more value (higher returns) per user as the number of users increases, yet pay an ever-decreasing price per user (which is VD pricing), value and price have diverged. 

41% of U.S. Internet Users are "Social"

Researchers at eMarketer estimate that in 2008 nearly 80 million people, 41 percent of the U.S. Internet user population, visited social network sites at least once a month, an 11 percent increase from 2007.

By 2013, an estimated 52 percent of Internet users will be regular social network visitors, according to eMarketer.

80% of Broadband Users Prefer Traditional Video Viewing

Parks Associates research finds 80 percent of broadband users in key European markets prefer traditional video viewing to online viewing. Depending on how you want to spin it, that is a glass half empty or half full. 

“Broadband has transformed video viewing habits in Western Europe, where over 20 percent of broadband households have watched a film or TV program online in the past six months,” say researchers at Parks Associates. 

European consumers are adopting online viewing habits with some reluctance, however, Parks Associates says. For all the countries surveyed, the U.K., Germany, Spain, Italy, and France, over 80 percent of broadband households prefer a more traditional option for viewing video, including going to the cinema or watching a DVD. 

Many consumers are watching video online only because of the availability of free content, both legitimate and illegitimate, the researchers note. 

Broadband to the Farm?

About 57 percent of U.S. farms had Internet access in 2007, up about seven percentage points since 2002, and 58 percent of U.S. farms using the Internet in 2007 bought high-speed Internet access, according to the U.S. Department of Agriculture. 

In 2002, the Census found that half the farms in the country were connected to the Internet in some way, using either broadband or dial-up services. 

So 33 percent of farms in 2007 purchased broadband connections.  Penetration likely is higher now, though most observers think rural broadband, to say nothing of use by rural farmers, remains lower than usage by urban or suburban customers. 

Researchers at the Pew Internet & American Life Project say 55 percent of homes now buy broadband access, up eight percentage points since 2007. If rural use grew at a comparable pace, farm use of broadband could now stand at 41 percent. 

The other angle is that farmers in the West have the better access than the rest of the nation to high-speed Internet, the Department of Agriculture indicates. Nationally, 31.3 percent of farms in rural counties had broadband connections. In urban counties, by way of contrast, the survey showed almost 40 percent of farm operators had high speed Internet connections.

The rural West led the nation with 38 percent of farms reporting access to high-speed Internet. Of the states in the Rockies, Colorado had the highest percentage of farms with broadband access with 47.9 percent, about 45.4 percent higher than the national average. 

New Mexico was the only state in the West (including Hawaii, California and Alaska) that had rural farm broadband penetrationlower than the national average.  

Statewide, 43.2 percent of farmers had access to broadband, 10.4 percent below the national average. 

Nationally, 31.3 percent of farms in rural counties purchased broadband connections. In urban counties, nearly 40 percent of farm operators had high speed Internet connections.

Smart Pipes, Smart Move

BBC, mBlox and Vodafone Group, working with the Mobile Entertainment Forum, have launched "Smart Pipe Enabler Services," a way mobile operators can offer third-party content and app providers a variety of services including age verification, location, identity authentication, reliable phone applications, specific tariffs to consumers and delivery with specific quality of service.

Enabled by these services, content providers can offer the consumer a better user experience, a key objective for much of MEF’s work.

The move is a major step towards creating an entirely new revenue source: business partner revenue streams, while improving end user experience and moving beyond any notion of access networks as "dumb pipe."

At the moment, of the $32 billion worth of revenues in the mobile entertainment industry, about half is based off-portal. The new "smart pipe" approach is aimed at offering those providers the option of features now available primarily to operator-provided services.

Among those features are bulk SMS capabilities, premium billing, short code rental and location look-ups.

Enabling services operators can offer include handset features, user presence information, age verification, "sender-pays" data, user demographic profile, handset application control, electronic wallet, credit status and location.

ITU Issues Views on Recession Impact on Telecom

At a high level, nobody is completely sure consumer behavior in this recession will match behavior in past recessions, for any number of painfully obvious reasons. There also is some thinking that as broadband had not attained mass adoption status during the last recession, this will be the first test of demand elasticity for fixed broadband.

And nobody seems to believe that wireline voice will in any way be helped. There is probably less consensus on what will happen in the wireless business, but wireless service providers likely are among the best-placed industry segments during the recession, in part because of greater "flexibility in their cost structure and capex and fixed-mobile substitution," a new report by the International Telecommunications Union says.

And though broadband access demand is believed to be relatively inelastic, that almost certainly will not be the case for fixed voice.

"Telecom services are likely to come under further price pressure, as operators will fight for a more cost-focused customer, resulting in further erosion of margins," the ITU suggests. And that is going to favor mobile operators as well.

"The more flexible cost structure of mobile networks means that mobile operators are winning more of the lower usage end of the fixed services customer base," the ITU says. "This has happened in voice, and 2008 has demonstrated that mobile broadband can substitute for light-usage DSL."

For countries where data services are popular, data revenues could be adversely impacted by a reduction in consumers’ real incomes, ITU says. Also, more consumers are likely to opt for prepaid and flat-rate packages for telecom services to try and control their expenditure.

Unemployment may accelerate fixed-mobile substitution, with consumers preferring to switch
fully to mobile services. Young people may delay decisions to adopt a fixed broadband or voice line in addition to mobile service.

Unemployment will accelerate households’ decisions to give up fixed services, either because they are unaffordable, or because a mobile alternative is cheaper.

"In terms of practical pricing strategy, the economic slowdown will increase pressure on operators to reduce prices," the ITU says. Operators will find it harder to promote value-added services and the adoption of new services such as mobile TV will be affected, ITU believes.

$200 Million More in Videoconferencing Service Revenue This Year?

An Association of Corporate Travel Executives survey shows that 71 percent of its member companies plan to spend less on travel this year than in 2008.

According to the trade group, that’s a huge and unprecedented shift in corporate travel mangers’ plans from just five months ago.

ACTE’s new survey shows most companies are seeking to spend 10 percent to 20 percent less on travel than they reported in September of 2008.

Using the most conservative figures for estimating the dollar impact of such cuts, ACTE suggests that the 176 member companies responding to the survey will spend about $880 million less on travel this year than they had planned. If the same estimate is applied to the ACTE’s full membership of 2,400 companies, the impact would be more than $2 billion.

That should lead to opportunities for Web and other conferencing services and applications to get more traction, undoubtedly including many users and companies that have not historically relied on conferencing services, especially those with a video component.

Assume just 10 percent of the avoided $2 billion is spent on video-enabled conferencing services. That's a gain of $200 million in service provider revenues.

Enterprise IP Telephony Slows, In-Stat Says

The struggling economy will slow the growth of enterprise IP telephony adoption, In-Stat researchers suggest. Some 32 percent of enterprise-size businesses say the economic situation has slowed their VoIP deployment plans.

Broadband IP telephony remains the most common carrier-based business VoIP solution with revenues exceeding $1.1 billion in 2008, compared to $857 million for hosted IP Centrex service within the United States, In-Stat says. 

Adoption varies significantly by size of business, with enterprise-sized businesses preferring a partial deployment, while small office and home office users are more likely to go IP-only.

About 13 percent of U.S. businesses use both carrier-based and premises-based IP solutions. 

Slightly more than one in three US businesses that have deployed VoIP use it exclusively, In-Stat says.  Many more businesses use VoIP as a partial voice solution. U.S. businesses are also beginning to embrace voice-enabled IM capabilities, particularly among younger workers. 

Mobile Backhaul = 30% of Opex

Mobile backhaul now represents more than 30 percent of mobile service provider operating costs, says Juniper Networks. If one looks at opex and adds depreciation, backhaul can represent 70 percent of on-going costs.

Up to this point, most of the mobile backhaul has been provided by T-1 lines or DS-3 connections, in some cases.

But deployment of 2.5G and 3G technology has lead to an increased backhaul requirement, to say nothing of coming 4G requirements. So where base stations that previously required one or two T1/E1’s for backhaul now need four to six T1/E1’s. The result has been a 200 percent to 400 percent increase in required backhaul capacity and its associated increase in operating expense costs.