DMA Bluetooth Marketing Guidelines Released

New mobile marketing guidelines for Bluetooth campaigns have been developed by the Direct Marketing Association for the U.K. and other markets, and are designed to protect users from "spam." Good move.

http://www.dma.org.uk/_attachments/resources/4756_S4.pdf

Bluetooth-Based Mobile Marketing Campaigns

Though most mobile marketing campaigns up to this point have been based on use of text messaging (short message service), more common availability of Bluetooth also offers an opportunity for proximity messages over short distances, without the expense of the data network, says Mark Brill, Direct Marketing Association Mobile Marketing Council chairman.

That means creating a local Bluetooth zone at a physical location with high traffic, such as restaurants, public transit stations, bars or retail locations, able to reach users within a relatively confined area of possibly 260 feet in diameter.

"The key to a successful Bluetooth proximity marketing campaign is to provide a clear incentive or offer, explain why you are communicating and gain the trust of the user," he says.

About 30 percent of people have their Bluetooth turned on all of the time, mostly to use hands-free headsets. The TV show "Lost" has used such a technique to promote the new season by allowing users to download wallpaper and ringtones, images or a trailer.

Bacardi Rum has used Bluetooth at music festivals, sending drink vouchers and allowing users to send their own photos and messages to a large screen at an event.

Levi’s Jeans has equipped personnel with backpacks equipped with Bluetooth units and small screens.

Still, there are issues. A Bluetooth connection to a mobile does not provide the marketer with a phone number or user information, so tracking a user requires some form of registration. As always, opt-in rules are needed as well.

http://www.mycustomer.com/cgi-bin/item.cgi?id=134286

Mobile Fusion: Mobile Rendering on the Fly

MoFuse, or Mobile Fusion, is a Web application that allows a user or company to easily and instantly create a mobile version of a blog or Web site.

If a blog or site has an RSS feed, MoFuse will use that as the main source of content for a new mobile site. The advantages are obvious. Content creators can continue to create "PC" sites and MoFuse will do the translations. MoFuse also can create static content pages.

http://fuelingnewbusiness.com/2008/08/28/mobile-marketing-for-advertising-agencies/

Best New Google Voice Feature: Visual Voicemail

Some of us prefer text messages of any sort to voice messages of any sort. So the best new feature of Google Voice, compared to GrandCentral, is the automatic speech-to-text feature, so now I read my "voice" mails, instead of "listening" to them. Very useful.

Mobile Marketing Growth: Inevitable Result of Mobile Web

There's a simple reason so many executives and practitioners now are exploring mobile marketing: Industry executives widely believe mobile computing devices will be the "primary" Internet access device for most people, globally, by 2020.

More than three quarters of the expert respondents (77 percent) recently surveyed by the Pew Internet & American Life Project said they agreed with a

scenario that posited that the mobile computing device will be the primary Internet communications platform for a majority of people across the world by 2020.

http://www.pewinternet.org/~/media//Files/Reports/2008/PIP_FutureInternet3.pdf.pdf

Advertising Hits Tipping Point; Mobile Video Hasn't

It is probably worth noting, with significant attention focused on substitution of mobile and Internet video for traditional packaged multi-channel video, that there's lots of activity, money and attention focused on substitution of other services such as advertising.

And advertising already is at an inflection point: video isn't there yet. That's important for anybody who thinks they may have a chance to build a business based on changes in user behavior.

And inflection points are crucial. Move too early and you die. Move too late and you miss the opportunity.

The analogy: assume firms have a chance to establish themselves when water turns to ice or to steam. Since most major changes in established markets do not occur overnight, the analogy is a gradually rising or falling temperature. For a long time, it appears as though not much is happening.

But then the quantum change occurs. Almost instantly, water changes to gas or forms ice.

That's pretty much what happened to the U.S. newspaper business in early 2009: an accumulation of decades worth of changes produced a quantum change. Video is not there yet. Advertising is, in at least one segment of the business.

Since the tipping point has been reached, we should expect change at a faster rate than has been happening.

http://www.fiercewireless.com/ctialive/story/ctia-scorecard-mobile-content/2009-04-06

Skype Founders Want to Buy it Back

Skype's founders are said to be raising money to buy Skype back from eBay. They sold it for $3.1 billion and eBay appears to want $1.7 billion. Aside from the obvious deal economics, Skype's founders have gone almost nowhere with their follow-on video business.

http://www.nytimes.com/2009/04/11/technology/companies/11skype.html?_r=4&partner=rss&emc=rss

EU Likely to Force Mobile Providers to Permit Skype Use

The European Union (EU) reportedly is preparing to force mobile providers to allow use of VoIP services including Skype over their networks, a move that would not be unexpected. EU Telecoms Commissioner Viviane Reding recently reemphasized her opposition to application blocking of this sort, and that tends to signal action by the EU.

Deutsche Telekom's T-Mobile unit currently blocks Skype access from Apple iPhones, for example, though access is possible using Wi-Fi, roughly the same policy AT&T uses.

It is understandable that mobile providers are not anxious to put themselves out of business. But VoIP blocking just isn't the right thing to do.

http://www.tgdaily.com/html_tmp/content-view-42003-118.html

DirecTV Sees No Signs of Consumer Retrenchment

Despite the widespread conventional wisdom that consumers "must be" dropping a wide variety of communications and entertainment services, the most-recent DirecTV Group Inc. financial results do not support the thesis. DirecTV added 301,000 net subscribers in the fourth quarter of 2008, the most net subs it has added in more than three years.

DirecTV also had what it called its "best year ever," as the company added 861,000 net new customers in 2008. Net subscriber additions of 301,000 in the fourth quarter were nearly 10 percent higher than last year's fourth quarter.

We'll have to see what the company reports for the first quarter of 2009.

Investment Incentives Key for National Broadband Plan, McDowell Says

As part of the recently passed American Recovery and Reinvestment Act of 2009 ("stimulus package"), the Federal Communications Commission must create a national broadband plan.

Commissioner Robert McDowell says “it is essential that our plan give current and prospective broadband network and service providers the proper incentives to deploy new technologies."

"We must also provide entrepreneurs with the flexibility to make full use of all available spectrum, including the television white spaces, to backhaul broadband traffic," McDowell says. "In order to attract investors to fund the build-out of new networks, we must not engage in rulemakings that produce whimsical regulatory arbitrage."

"Rather, we must allow market players to succeed or fail on their own merits and not due to the government picking winners and losers," McDowell says. "In short, our rules must allow network operators to have a reasonable opportunity to pay back their investors. That’s the only way to improve existing networks and build new ones.”

Broadband is Partly an Availability Problem; Partly a Demand Problem

"Predominantly, even in contexts with reliable supply of broadband, it is consumer demand for broadband that is the tallest barrier to adoption and represents America’s competitive vulnerability," says Connected Nation.

It might be worth keeping that in mind as plans for the broadband stimulus program operated by the National Telecommunications & Administration and Agriculture Department's "broadband stimulus" rules are finalized.

There clearly is a physical access problem in rural areas (at least in terms of wired access: though some locations may not have clear line of sight, multiple providers of satellite access are available, and it is possible to supply speeds up to perhaps 5 Mbps using satellite), but broadband availability is not the same problem as lack of adoption. In fact, people have lots of reasons not to buy services they already have access to.

The largest barrier to broadband adoption is a lack of awareness about broadband’s benefits, Connected Nation says. Nearly one-half (44 percent) of those with no home broadband connection say “I don’t need broadband.”

Likewise, the top barrier to computer ownership is also a perceived lack of need. Nearly two-thirds

(62 percent) of those who do not own a computer say “I don’t need a computer,” Connected Nation says.

In other cases, perceived cost is an issue. Nearly one fourth (24 percent) of those who do not own a computer cite the up-front cost as a barrier. Similarly, nearly one-fourth of those without a home broadband connection say broadband is too expensive.

Four out of ten parents with children who are without a home computer see no need for having a computer in the home. And nearly one-third (30 percent) of parents with children who do not have a home broadband connection see no need for a broadband connection.

More than one half (56 percent) of people with disabilities who do not own a computer see no need for having a computer in the home. Four out of ten people with disabilities who do not have a home broadband connection see no need for a broadband connection, Connected Nation says.

Close to one half (42 percent) of rural residents without a home broadband connection say it is because they do not need broadband. This compares with 19 percent of these rural residents who say they do not subscribe because broadband service is not available in their area.

Additionally, 22 percent of these rural residents say broadband is too expensive.

http://www.nga.org/Files/pdf/0812BROADBANDCHALLENGE.PDF

Internet Video Complementary to Cable, Satellite and Telco Video, Study Indicates

Fears that the recession will encourage more and more people to drop cable or satellite TV service and rely on free online video services appear to be exaggerated, Pike & Fischer researchers say. Some might say grossly exaggerated. In a recent survey, less than half of one percent of respondents indicated they would cancel a multi-channel video subscription.

That said, about 15 percent of respondents said they intend to downgrade to a lower-priced video subscription this year, through such means as giving up premium channels. Both the findings are consistent with consumer behavior in past economic recessions.

Typically, consumers hang on to their subscriptions and do not disconnect. They do however tend to downgrade premium services or postpone upgrades.

About eight percent of respondents said they plan to upgrade their service to receive expanded numbers of channels or advanced services such as high-definition TV.

Although there are no signs yet that the Web is on its way to replacing traditional TV, a substantial number of respondents said they are turning to the Web to watch video, Pike & Fischer says. About 32 percent of respondents to the survey said they regularly watch video from Web sites such as Hulu, YouTube and iTunes.

"The results indicate that consumers appear to be willing to continue paying for cable or satellite TV, despite the fact that they can get a vast amount of shows for free or very low cost on services like Hulu and Veoh," says Scott Sleek, Pike & Fischer director. "But they don't appear to be willing to spend any extra money for premium channels or on-demand movies. And they're increasingly willing to go to the Internet to watch their favorite shows."

Telco of the Future is a Software Company

"The telco of the next five years has to be a software company," says John Lazar, MetaSwitch CEO. That statement is rich with implications for business strategy, organization, investment and priorities, but must at least incorporate the ability to "create and tear down" whole applications, service or features very rapidly, without labor-intensive physical processes. That's why MetaSwitch believes in IP Multimedia Subsystem.

The meaning does not extend as far as the notion that access networks and a range of services related to voice, data and video services will be unnecessary. What Lazar means is that since nobody really can predict what the killer app of the future is, providers simply must have the ability to react quickly when users suggest demand exists for any application that benefits from network access.  

And the access and services platform has to transcend silos. "You have to innovate quickly and build links between things," says Lazar. "Things you don't expect will stick," he notes, reminding people that  "nobody predicted SMS (text messaing) would be the huge success it hsa turned out to be."

But addressing both the current recessionary climate, which has nearly everybody reacting caustiously, Lazar also warned that some "people are not thinking ambitiously enough." There are opportunities to be seized, but action is necessary. And Lazar predicts innovators will do well in this recession.

There are constraints, to be sure. "Damn the dollars, full speed ahead" may not be a strategy many firms can embrace. But keep in mind: when somebody, or a company, says "something can't be done," you have to translate.

What the speaker means is that "I, or my organization, for a host of very-real reasons, cannot do it." That is different than saying something really cannot be done.

Other speakers may well say "something is possible, and can be done," because they do not have barriers of one sort or another that prevent them from doing something others say "cannot be done."

Over the next five years, people will do things that "cannot be done." They will be done for one simple reason. Despite a host of reasons why one contestant says something "cannot be done," others will operate without those constraints.

Mobile Broadband PC Data Card Growth Decelerates

Mobile broadband PC card accounts continued to grow in the fourth quarter of 2008, but at a much-reduced rate compared to the prior six quarters, researchers at comScore say. But it is a product that continues to have an enviable growth pattern.

PC data card adoption grew 163 percent overall in 2008, slightly ahead of the 157 percent growth rate in 2007. However, despite this rapid adoption curve, fourth-quarter growth showed the first signs of decelerating growth. On a quarter over quarter basis, the subscriber growth fell to just five percent, following sequential growth of 22 percent in the third quarter of 2008.

One can speculate about the reasons for the slower growth rate, but one obvious explanation is a deceleration of employment, reducing the number of users whose consumption is subsidized by their employers. Add to the that the slowing economy, and one probably has all the explanation one requires.

Consumer users might also be choosing to access the mobile Web using their smart phones, as a data plan already is required, and the logic of paying for another subscription plan to access the Internet and Web applications probably is unattractive.

PC Data Cards Cannibalize Landline Usage

Researchers at comScore say PC-based mobile broadband usage largely displaces tethered PC Internet usage. That is not to say wireless broadband is displacing fixed broadband, but only to note that most users do not spend more time online overall, when both mobile and fixed modes are available.

Looking at total hours of use in the fourth quarter of 2008, comScore found that the U.S. Internet user spent 90 hours online, or roughly one hour a day. Users who had both fixed and mobile broadband access spent 89 hours online during the quarter, using mobile or fixed access.

Of PC data card users with both a PC data card and a wired connection, 25 percent of their total online time (22 hours) was spent using a PC data card.

The rather clear implication is that PC mobile broadband is a substitute for fixed access, and does not increase the amount of time the typical user spends online.

There are some obvious implications. Over time, the typical user will start to see broadband access as something they have, irrespective of network. They will start to see this as a value that is measured against the cost of satisfying that need.

They probably are going to approach this as "broadband access is worth X dollars to me every month." They are not going to indefinitely pay for multiple accounts, supporting a single device, much less multiple accounts supporting multiple devices, forever.

The logic likely will parallel the way some wireless-only users behave. They simply decide that the ability to talk and text is worth some finite amount of money, and conclude that paying for that capability twice does not make sense. So they drop landline voice service and use some of that money to pay for heavier mobile usage.

Overall spend probably doesn't change much. As with so much else these days, consumers are willing to switch behavior when functionally equivalent products are available, and when use of those products costs no more than what they already spend, or costs less.

http://www.comscore.com/press/release.asp?press=2771

More Qualms About Broadband Stimulus: This Time From Small Rural Telcos

Large U.S. telcos have their doubts about whether it will make any sense at all to apply for any funds under the National Telecommunications & Information Administration's portion of "broadband stimulus" funds, and generally are barred from applying under the Rural Utilities Service rules.

It appears small, independent, rural telcos have similar qualms. Attendees at a MetaSwitch Forum workshop on the broadband stimulus plan were shaking their heads in disbelief about "strings" attached to receipt of funds under the RUS plan, in particular the nebulous language about investments in access that allow multiple providers to compete.

Depending on how the final rules shape up, it is conceivable that most telcos and cable companies will decide not to participate directly.

Twitter Adoption Surprises: Business Users Key

Twitter already seems to have been embraced as a business tool, new user data from comScore suggests.

You would expect the highest Twitter adoption by the youngest users. But that does not seem to be the case. Instead, older age cohorts are heavier users.

Analysts at comScore think business users explain the pattern. For whatever reason, business users seem to be acting as though Twitter and other micro-blogging tool have immediate business value.

Titanic Battle Shaping Up over Broadband

As busy as people are trying to prepare for the imminent opening of the first of three proposal submission windows for funds authorized by the American Reinvestment and Recovery Act ("broadband stimulus"), a bigger food fight will begin to break out next year as the Federal Communications Commission opens a new rule-making on a national broadband strategy. As much attention as the broadband stimulus program is getting, it is going to be dwarfed by any new framework that emerges from the FCC effort.

The stimulus money is a temporary "shot in the arm." In fact, some question whether there will be much of any long-term impact from the majority of the money that ultimately is allocated, in jobs, an identifiable uptick in broadband use or economic growth.

Any new national broadband policy will reshape the broadband marketplace, creating new winners and losers on the supplier and reshaping the financial terrain for existing and would-be contestants, in ways that contribute "in a material way," to use the financial term, to the health of virtually all service providers, software and hardware suppliers.

Specifically, the FCC now is charged, by statute, to determine how tax dollars will be spent on deploying and upgrading Internet access across the United States. Telcos large and small--and their suppliers--have huge stakes in how those rules are recast. And make no mistake: current business models, revenue streams and company valuations are at stake.

The FCC's responsibility is also to update policies and regulations that have conspicuously failed to keep pace with changes in communications technologies and the different ways in which the US public actually get their phone, cable TV and Internet services.

It would not be overstating the case to say we will witness the biggest single change to U.S. communications regulation since either the 1934 Communications Act, or the Telecom Act of 1996, each of which has been foundational for shaping the U.S. communications environment.

As some of us have been arguing for a half decade or more, it is likely that regulators will be looking at greater structural change involving a form of structural or functional separation, developments which already have occurred in Europe and now are happening in Southeast Asia, and which has happened on a small scale in the United States as well, principally in Rochester, N.Y., where Rochester Telephone agreed to form a new wholesale access company providing local loop services to all licensed providers.

That move will be fiercely resisted by most telcos, you can be sure, as it formally breaks up the vertically-integrated model historically the mainstay in the U.S. market. Cable operators have to worry that they will, for the first time, also be forced to provide widespread wholesale access to competitors as well, something the cable industry always has opposed but which will be hard to avoid if other key providers are required to do so.

Small telcos face equally-large challenges, as a shift to broadband concerns might necessarily reshape rural investment rules in ways that directly harm the existing voice revenue support many hundreds of companies now rely on to support their firms. For hundreds of independent and rural companies, that government support is the single largest income category, vastly outstripping actual direct end user revenues.

The other potential changes are new requirements for minimum bandwidth, control of network management practices and a wide variety of business-model-shaping changes.

If you have any familiarity with the on-going disputes about universal service funds, or the intense pressure created by the debates leading up to the Telecom Act, you have some idea of what is about to happen.

Oddly enough, you will find widespread sentiment that the Telecom Act failed. But you will not find many human beings that believe their own choices, value or communications richness now are worse than they were before the Act was passed. What is clear is the foundational impact any rules changes will have on competitor fortunes. Still, an early prediction: no matter what ultimately happens, no matter which sectors claim they have "won or lost," end users will have richer options than before, with or without rules changes. But rules changes are inevitable.

Comcast to Use Smarter Phones to Enhance Wired Experience

Devices increasingly are key as service providers seek to add value to their wired and wireless experiences. "Compelling end user devices are definitely part of the story," says Chris Mairs, MetaSwitch CTO.

So it comes as no surprise that Comcast plans to roll out new cordless phones that add email and other Internet features, as Verizon is doing as well.

http://www.lightreading.com/document.asp?doc_id=174853&site=cdn

Conference Calls Really Do Need Live Blogging

Seth is right: conference sessions are more valuable--or can be, when a large call is in process--when there is a live blogging or chat function.

http://sethgodin.typepad.com/seths_blog/2009/04/reinventing-the-conference-call.html

More Signs of Prepaid Wireless Surge

MetroPCS added more than 1.5 milion gross customers in the first quarter of 2009, up 59 percent over the same point a year ago, and 684,000 customers after accounting for quarterly churn of five percent.

The growth suggests one thing: more wireless users are keeping their mobile service, but downgrading to prepaid plans. We can make a couple of observations: despite fears, wireless is now so embedded in user lives that it cannot be dispensed with.

On the other hand, there are ways to satisfy that need at lower cost, and consumers are taking that option.

Australia to build $31 Billion Fiber to Home Network

The Australian government is moving ahead with a $31 billion national broadband network that will operate on a structurally separated, wholesale-only basis, with all licensed retail providers able to buy and use the network. The network aims to connect 90 percent of Australian homes with service at speeds up to 100 Mbps. 

Every private company bid submitted in any earlier tender process earlier had been rejected by the Australian government as inadequate.

Instead, a public-private partnership will be commissioned to construct the network, with provatization planned for five years after network operations begin. But construction might take seven to eight years, so it will be some time before an privatization event occurs. 

The network would operate on a wholesale-only, open access basis, separating retail operations and allowing Optus, Telstra and other companies to build services into the system.

Telstra, though, will not be barred from applying to manage the wholesale network, once built. In some ways, the scrapping of the original plan might be positive for Telstra, which now will face for the first time a high-speed optical fiber network that virtually any other retail competitor can use. 

The upside is that although Telstra might not savor the new and more-competitive marketplace, it might be able to salvage a role as the wholesale operator, even as it has to compete as a retail provider buying access from the wholesale entity. 

There are other, shorter-term sub-plots as well. One is the mix of motives, from economic stimulation and job creation, that are blending with the concrete goal of creating a broadband platform; as well as the issue of how well the plan will work out in terms of end user pricing, which affects the ability to raise investment capital to build the network in the first place.

Still, the move potentially ends the stalemate that has prevented Australia from moving ahead on badly-needed broadband upgrades that have been stalled by inability of regulators and policymakers to come up with a solution acceptable to Telstra, the national incumbent. 

http://www.bloomberg.com/apps/news?pid=20601081&sid=aBA74wtO9nDc&refer=australia

IM Most Popular French Online Activity

French Internet users in February 2009 spent more time uisng instant messaging than any other application, including email. Instant messaging claimed the highest share of total time spent at 14.3 percent, followed by social networking at 5.7 percent, say comScofre.  In combination, the two categories accounted for one out of every five minutes spent online during the month. 

Online entertainment accounted for 8.6 percent of time spent and online gaming 2.9 percent share of total time spent online. 

http://www.comscore.com/press/release.asp?press=2763

Wireless "Net Neutrality" Will Lead to Higher Prices

There's a sort of inescapable logic to what wireless network access providers will do if or when mobile VoIP applications are freely enabled, as some policy proponents advocate. Since the entire business model rests on voice revenues, the loss of those revenues will be compensated for in the form of higher mobile broadband access prices.

Existing best-effort plans might be the baseline. But new plans optimized for voice, or conferencing, or other applications, might well emerge. Of course, optimizing might violate some notions of "net neutrality," unless optimizing is available to any provider of voice over a mobile IP network, in which case it might not be a neutrality violation.

But those optimizing services will be an add-on.

You might argue providers can create replacement revenues some other way: selling content or advertising, for example. But the numbers don't work. Build your own spreadsheet and you'll figure that out. There is no conceivable new revenue stream that replaces voice revenues "one for one."

After some years of watching what happens in a robust, mandatory wholesale environment, even European regulators are starting to see what happens. Service providers start spending their money outside the home market, where financial returns are higher.

Investors aren't dumb. Businesses with low growth and margin prospects get less investment than competing alternatives promising a higher return. The current capital stringency is bad enough. Wait until you see a capital strike.

http://www.eweek.com/c/a/Mobile-and-Wireless/Skypes-iPhone-App-May-Force-FCC-Hand-on-Wireless-Net-Neutrality-527564/?kc=rss

Enterprise Twitter is Coming, Gartner Says

Analysts at Gartner predict that micro-blogging tools such as Twitter will be widely available in enterprise versions, and will be used in four ways.

Firms will use Twitter as a marketing or public relations channel, using them as part of wider corporate communications strategies such as corporate blogs.

Firms will tweet about corporate accomplishments, provide links to press releases or promotional Web sites, and respond to other tweets about the brand. Inevitably, some firms will "overreach" and publish uninteresting or obviously self-serving tweets.

Employees also will use Twitter or other micro-blogging applications to enhance and extend their personal reputations, thereby enhancing the company's reputation, Gartner says. Employees will enhance their personal reputations by attracting followers who go on to read their blogs.

As people enhance their personal brands, some of this inevitably rubs off on their employers, says Gartner.

Employees use the platform to communicate about what they are doing, projects they are working on and ideas that occur to them, though Gartner does not recommend this, for security reasons.

Inbound signaling also will be a value for firms, which will find micro-blogging posts a rich source of information about what customers, competitors and others are saying about a company.

http://www.gartner.com/it/page.jsp?id=920813

Communications Still Trumps Entertainment

Getting ready for an upcoming presentation, I've been thinking about the relative value of entertainment services, as compared to voice and data applications.

As important as video is for a telecom provider's business case, as well as its foundational role for satellite and cable companies, my thinking has been that voice and data apps of various sorts have been, and likely will be, more important for firms with roots in the telecom business.

Part of the argument rests on profit margin. Cable and satellite providers can assume they will have high margins. Attackers tend to find more-modest margins, in part because of scale economies that favor providers with high penetration.

Telecom providers tend to see higher margins on voice and data services.

Revenue opportunity also plays a part. The voice and data business simply is far larger than the video entertainment business. Depending on how one categorizes the business, the voice and data service business is twice to three times bigger than video services business.

With the advent of Web and IP-based communications, including email, text messaging, instant messaging and "non-traditional" communication modes such as micro-blogging, blogging, I'd argue the centrality of "communications" has grown, even for activities that might arguably be considered "media" or "content."

Consider that social networking among U.S. broadband users has grown 93 percent since 2006, and has increased the amount of time people spend  communicating online 18 percent, to 32 percent of total online time, according to Netpop Research.

As online communications has increased, the time spent on traditional forms of online entertainment has declined 29 percent, and is now down to 19 percent of total online time.

Video is important; just not as important as voice and data. Communications remains more important than entertainment, at least for firms with a telecom rather than entertainment orientation.

http://www.marketingcharts.com/interactive/social-networking-grows-93-communication-becomes-entertainment-8576/netpop-social-networking-time-spent-communicating-entertainment-online-2009jpg/

Bandwidth is YouTube's Main Cost Driver

YouTube still hasn't figured out a sustainable business model. Ad revenue is the objective, but

most of YouTube's content remains outside the category of "inventory."  Credit Suisse analysts estimate that YouTube will bring in about $240 million in revenue in 2009, mostly provided by home page  placement ads and in-video overlays and adjacencies.

Credit Suisse estimates that YouTube generates approximately $86.7 million a year on homepage placement ads, or about $7 million per month.

In-video ads and banner adjancencies contribute another $87 million, according to the analyst estimates. Sponsored videos ($37.1 million) and sponsored links ($30.1 million) also contribute to YouTube's revenues.

On the cost side, Credit Suisse estimates that Google spends $711 million in operating expenses related to YouTube. Those costs include bandwidth, content acquisition, partner revenue shares, site overhead, and storage.

The biggest expense for YouTube is bandwidth, as you might guess, as YouTube streams about five million videos a month. That costs YouTube about  $360 million a year, or $1 million a day. Keep in mind that observers believe Google pays about half the the lowest "market" rate for

bandwidth.

And Google gradually is assuming some roles more analogous to a traditional network. Credit Suisse estimates that YouTube will pay $260 million in content acquisition costs in 2009.

And despite the estimation that YouTube buys its bandwidth at discounts as high as 50 percent of the lowest "market rates," bandwidth still is the biggest sunk cost.

General overhead represents about $24 million worth of 2009 cost. Storage costs $12.7 million a year.

http://seekingalpha.com/article/129505-google-may-lose-big-on-youtube-in-2009?source=feed

Media at the Tipping Point

IP doesn't just reshape the telecommunications, video entertainment and advertising businesses. It reshapes the rest of the media as well. This trend has been underway for decades, but the tipping point has been reached.

http://247wallst.com/2009/03/24/ten-major-newspapers-that-will-fold-or-go-digital-an-update/

Trade Show Blues

As somebody who spends lots of time at industry trade shows, I'd have to say the temporary economy-induced decline in attendance at virtually all major industry meetings is not the biggest problem. There's less real news or value at these venues than there used to be, in part because information moves with the speed of Twitter and the Web.

That doesn't mean these venues are not important for some attendees. They're still valuable for sales people meeting with prospects in suites, away from the sessions and exhibits. But trade shows now seem to be less mission critical for lots of participants in the ecosystem, if only because the industry is developing other ways of replicating the marketplace functions trade shows and industry media once were a larger part of.

Webinars, podcasts, Web conferences, user group meetings, channel partners, Google and Twitter, Real Simple Syndication, blogs, wikis, even email and YouTube, are rival conversation channels.

Attendance likely will pick up again once the recession is over. But I have greater doubts that the value and effectiveness of the bigger industry meetings will improve.

That doesn't mean all "live meetings" are in this bucket. The more-specialized meetings provide more value, at least from my perspective. A few new or emerging venues have "buzz." EComm stands out in that regard.

But it is the "user group" venues that have, over the last couple of years, started to assume more importance, at least from my perspective. The Voice Peering Forum and MetaSwitch Forum, for example, have been quite useful.

So I've been spending much more time at user group meetings. That's where service and application providers are most concentrated and most easy to engage in conversation. That, after all, is why many of us attend such meetings.

http://www.pcworld.com/article/162551/top_10_signs_of_the_economic_slump_at_ctia.html?tk=rss_main

Grudging Embrace of Skype, Other IP Providers is Rational, If Maddening

Major U.S. carriers haven't been happy about the emergence of Skype and other third-party VOIP clients, which threaten to undermine the global industry revenue model.

One can hardly blame them for not rapidly embracing new technology that threatens to bankrupt them, anymore than politicians will embrace being voted out of office by more attractive candidates, labor unions will embrace automation or outsourcing,  accountants and attorneys will get excited about really-simple tax codes or Microsoft is happy about effective and free operating systems and business productivity suites.

Nor can one blame VoIP enthusiasts, application providers or users for wanting VoIP to work on whatever devices they typically use.

As VoIP gets better and better, more and more users are going to conclude tha all they really need from their service provider is good broadband. Someday, service providers will have weaned themselves off a reliance on voice revenues and found other business models that work as well, or better. In the interim, service providers will not move any faster than they have to.

So disputes are going to keep occurring.

The Free Press has asked the Federal Communications Commission to investigate whether or not the restriction of Skype use on AT&T Apple iPhones, except when in Wi-Fi access mode, is in violation of federal law.

The Voice on the Net coalition Europe, which includes Google, Microsoftand Intel, has asked European telecom regulators to ban blocking of VoIP apps on 3G networks an devices. T-Mobile Deutschland blocks use of Skype application on the iPhone, for example.

AT&T allows use of Skype when users are connected to Wi-Fi, rather than the 3G wireless broadband network. That's AT&T's way of not prohibiting use of the applications, but also not encouraging them to replace voice directly. Inability to control network quality sometimes is invoked as the reason for not encouraging Skype or over-the-top VoIP over the existing network.

Someday that will change. At some point all networks will be IP-only. For wireless providers, that generally coincides with the arrival of fourth-generation networks. For wired network providers, a switch to all-fiber or high-bandwidth digital subscriber line access (plus robust wholesale regulations) typically is the driver.

But so long as the entire network is supported by legacy voice, services providers are not going to encourage IP-based voice any more than they have to. Do you know any executives, at any company, in any industry, willing to put themselves out of business as fast as possible by enabling customers to avoid buying their products?

http://blogs.computerworld.com/skype_for_iphone_doesnt_bode_well_for_at_t_telcos

Google Trying to Buy Twitter?

Like it or not, Google seems to be the most-logical buyer. One can argue that Google could write an app that replicates Twitter.

But that's only part of the value Twitter, as opposed to any other micro-blogging and real-time search app anybody might produce.

Twitter has gone viral. It has mindshare. People like it and use it.  Sometimes that trumps every other consideration.

A sale to Google alleviates the need to  "find a business model." Google already has one.

And if one assumes Twitter always has been an acquisition candidate (for most firms the "going public" exit does not presently exist), then Google simply is the most-logical buyer. The value Twitter provides is congruent with the value other Google tools provide.

http://www.techcrunch.com/2009/04/02/sources-google-in-late-stage-talks-to-buy-twitter/

Random VoiceCon Observations

Here's a set of fairly random observations from VoiceCon, ranging from "slow" return on IP telephony to "no return," as well as the usual cautions about buyer resistance. Joe Abate, Mounrt Kisco Medical Group director of IS says " I don’t think we’ve seen any productivity gains at all after deploying IP telephony. Ouch!

Conrad Cross, City of Orlando CIO, says he "expects the return on investment on the city's TDM-to-IP migration to take four to five years. Three years or less is what most buyers probably would want to see. Small businesses won't even be willing to wait that long, I'd guess.

But Gary Grissum, BNSF Railway VP Telecom, estimates that 40 percent of his company's workforce will retire in next few years, and unified communications might be a way to attract a new generation of workers. That's a big deal. Some of us have argued we need to see a change of buyer influences (younger, in other words) before we can really assess how far technology buyers are willing to shift their preferences.

Overheard a VAR mention that the problem with selling unified communications to smaller businesses is that they don't see the benefits, forget about the price. I'd say that has emerged over the last year or so as a key impediment. Buyers in the small business segment discount all "soft" gains such as productivity, less wasted time and unified message boxes. Really, you have to show them how they save money--hard dollars--right away.

Kevin Gavin at ShoreTel points out that the tough economy is focusing IP PBX buyers on return on investement, even more than typically is the case. Duh! Customers demand very-clear ROI before buying.

Wells Fargo to Replace 50% of Desk Phones

Karen Bailey, Wells Fargo director of voice services, says her firm plans to replace 50 percent of employee desk phones with soft clients and mobile phones.

Disney Willing to Challenge Video Ecosystem

Walt Disney Co. CEO Robert Iger is not so sure it is wise to tie consumption of online content to the purchase of a multi-channel video (specifically cable TV) subscription, though cable operators tend, for obvious reasons, to favor the idea.

Cable operators obviously dislike the idea that the content they sell in subscription packages might be found online, at no incremental cost. They like better the idea of being able to charge a bit extra to their subscribers to enable online viewing. Disney doesn't agree.

"Preventing people from watching any shows online, unless they subscribe to some multi-channel service could be viewed as both anti-consumer, and anti-technology, and would be something we would find difficult to embrace," Iger says.

Of course, Disney also was early to move its content to iTunes and to stream content over the Internet, and is seen as "more open" to the idea of allowing its content to be viewed in new ways.

Nor does Iger share the view that people who stream video frequently are substituting that behavior for multi-channel video. They are more apt to watch television, buy HDTV sets and subscribe to digital and premium services, Iger maintains.

That doesn't mean Disney is casually willing to jeopardize its multi-channel video distributor partners. It does mean the company is more open to side-loading, downloading and streaming.

Sprint Upgrades Cable Digital Voice

Sprint has added new features such as Caller ID to the TV, Caller ID to the PC, and new voicemail features that include a home voicemail alert sent to a customer's mobile phone, and voicemail to email, for its cable operator customers. Sprint provides wholesale cable VoIP services to 14 leading cable companies and supports more than 4.5 million cable VoIP/digital phone subscribers, covering more than 31 million cable households-passed.

Perhaps the development to note is that the innovations are "both practical and fun." "Fun" and "playfulness" and "personalization" are among elements that have made the mobile end user experience so popular. Wired phone service has always been useful, but not as much "fun."

The new features are ways cable operators will try to change the wired voice experience, beyond simply offering tradtional value at a lower price.

AT&T Tests New Bundle: Netbook, Wireless and Wired Broadband for $59.95 a Month

AT&T is testing its new netbook-plus-wireless broadband bundle in its Atlanta and Philadelphia markets, offering a ultra-portable netbook with built-in AT&T 3G wireless capabilities when bought with a $59.95 per month "Internet at Home and On the Go" broadband service that includes both at-home digital subscriber line service plus wireless broadband.

Mini laptops available in selected AT&T stores in Atlanta and Philadelphia include the Acer Aspire One, Dell Inspiron Mini 9 and Mini 12, and LG Xenia. Promotional prices range from $49.99 to $249.99 with the purchase of an "AT&T Internet at Home and On the Go" plan, which includes an AT&T DataConnect plan and AT&T Fast Access DSL, starting at $59.95 per month. Without those AT&T services, these mini laptops range in price from $449.99 to $599.99.

AT&T is offering two mobile DataConnect plans in the trial, including a 200 MByte plan for $40 per month and a 5 GByte plan for $60 per month.

For users who wnat more standard notebooks, the trial also will feature the Lenovo X200 for $749.99 with "Internet at Home and On the Go." The laptop is available for $849.99 if a user buys only the two-year DataConnect plan.

The embrace of traditional mobile phone subsidy models is part of the story. The bundling of wireless and wired broadband might ultimately be just as big a part of the story. Consider that the $60 a month plan includes both wireless broadband and DSL as well.

Though the DSL likely will not include the faster speeds many users now require, you might think of the offer as something like a "free DSL" program, as wireless broadband access now costs about $60 a month for 5 Gbytes of usage. The new AT&T includes the heavily-discounted PC plus wireless and DSL broadband for just $59.95 a month.

http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=26676

Verizon to Activate 25 to 30 LTE Markets in 2010

Verizon Communications CEO Ivan Seidenberg says his firm will begin deployment of its fourth-generation Long Term Evolution network "later this year with a few commercially-ready markets and will roll it out to 25 or 30 markets in 2010."

But the infrastructure only is "just one piece of the puzzle," he says. "It's the combination of devices, applications and network capabilities that will really cause this market to take off," Seidenberg says. "No single company will be able to envision, let alone provide, every aspect of this whole 4G ecosystem on its own."

That is a primary reason why the 4G business model will be different from what we have seen with 2G networks, with 3G being someplace in between. Where 2G was largely a vertically-integrated business, 3G has been more open, at least to the extent that broadband access to the Internet itself is an "open" environment.

The 4G model inevitably will be more of an "ecosystem" approach, in part because many applications are seen as "machine to machine," and in part because device and application openness will be much more central ways of creating new applications.

http://sev.prnewswire.com/telecommunications/20090401/NY9285501042009-1.html

Big Telcos Bluffing about Broadband Stimulus?

Some people think the "big telcos" are bluffing about refusing to apply for funds to be awarded under either of the programs authorized for "broadband stimulus" programs as part of the American Recovery and Reinvestment Act.

There are concerns about strings attached to the grants, to be sure. But there are other, more practical issues that suggest many "big telcos" will be unable to apply, or will find the "strings" too onerous.

"Big" companies serving "urban" areas, or even rural areas within states where they also serve classic small and rural communities, are generally barred from getting Rural Utilities Service funds, and RUS is in charge of some of the funds. So "big companies" cannot apply for RUS funds.

Big companies might be able to apply for NTIA funds, if they get waivers. But the clear logic and language of the statute makes clear a preference for non-profits and government-related agencies as "eligible" applicants. That's why the language about "waivers" exists. "Big telcos" are seen as exceptions to the rules about eligible applicants.

You can make your own educated guesses about the likelihood of applications from "big companies" being funded, under those circumstances. "Big companies" aren't seen as the logical applicants, even if the final rules might allow them to bid. At this point, waivers seem to be necessary, in any event.

Aside from strings that also bother some U.S. governors about accepting funds authorized by other parts of ARRA, it is possible bigger telcos might just take a pass for those reasons alone. The statute is written in ways that make clear an intention to fund non-profits and projects that primarily create jobs (it is part of the "stimulus" bill, recall), and only secondarily create infrastructure.

There are lots of reasons for carriers to think they will not be allowed to apply for some of the funds, and are not the most-favored applicants for most of the funds.

http://blog.wired.com/business/2009/04/big-telcos-bluf.html

Is Cable's WiMAX Business Model Anything Like Wi-Fi?

Cable operators continue to have more questions about wireless services than they do about any other products delivered over their wired broadband plant. They should. Wireless would be the first service not delivered over networks they fully control, and which build relatively logically on what their existing networks offer, in terms of value.

Wireless wouldn't be the first service they've ever offered that must take share from other providers in a saturated market. Cable digital voice clearly has had to take share from incumbent telcos. But core video entertainment and cable modem services essentially were "green field" services that only had to grab attention, not steal market share.

Wireless voice and data are not businesses where cable has existing core competence, and a price "race to the bottom" is not where cable traditionally is most comfortable.

Everybody seems to think mobile video and content is where cable might leverage its formidable assets in a more-logical way. But no killer app yet has emerged.

Should that tack succeed, the business model for WiMAX might be along the lines of how Cablevision Systems Corp. positions it own metro Wi-Fi offerings. Essentially wireless access drives the value and profitability of cable modem service.

So if "cable modem services" provide the business model for providing free metro Wi-Fi, perhaps wired video entertainment will provide the ultimate business model for WiMAX.

Thinking About Absconding with a Netbook Under Contract?

LM Ericsson has developed a new modem, intended for use in netbooks sold at a discount by wireless providers, that will remotely disable the computer if a customer on a contract stops paying his or her bills. Of course, there are other applications as well. An enterprise information technology manager dealing with a stolen laptop could lock down data on the machine to ensure security.

Lenovo Group, which makes the enterprise-oriented IBM ThinkPad line of PCs, has said it will build this sort of feature into its laptops.

The new Ericsson modem also is said to have the ability to remain active even when a PC is turned off, perhaps listening for messages such as email or Skype calls.

http://tech.yahoo.com/news/ap/20090331/ap_on_hi_te/tec_techbit_laptop_modems

Opera for Virgin Mobile

Opera Software will be available on some Virgin Mobile USA handsets as part of a deal that makes Virgin Mobile USA a distributor of the mobile browser. Helio was the first U.S. carrier to sign a deal with Opera Mini in the United States.

Open Range to Bring WiMAX to 6 Million Rural Homes

For those of you who might be wondering, high-speed broadband in rural America is not in as dire straights as you might think. There's a problem, but it is being solved. Consider that estimates of rural un-served or underserved households range from six million to 10 million.

Then consider that just one company--Open Range Communications--has raised enough money to bring fourth-generation wireless to about six million U.S. households in rural U.S. areas. And construction is about to begin.

Level 3 Communications has announced an agreement with Open Range Communications, which intends to deliver wireless broadband using WiMAX to 500 rural communities in 17 states, reaching an audience of six million potential subscribers.

Open Range will leverage Level 3’s extended on-net services to offer high-speed Internet and voice services to millions of previously un-served or underserved communities across North America.

Open Range has gotten a $100 million investment by One Equity Partners, the private equity arm of JPMorgan Chase and a loan provided by the United States Department of Agriculture's Rural Development Utilities Program (RDUP) for $267 million.

Personally, I'd argue Open Range is going to build more broadband facilities, reaching more potential customers, than every single project funded under the American Recovery and Reinvestment Act ("broadband stimulus"). And for a lot less money.

U.S. Telecom Capex to Drop 7% in 2009

U.S. communications carrier capital spending will dip 7.3 percent in 2009, Yankee Group analysts now predict. That's less than the 10 percent figure some of us have speculated about, purely on a non-scientific “gut feeling” basis.

Actual declines will vary based on industry segment. Wireless investment is going to continue at healthier levels, as will broadband investments related to IPTV rollouts and broadband access generally. As you would predict, investments in legacy voice are going to be starved, by comparison.

Telecommunications carriers globally will chop about $12 billion from their capital budgets, decreasing their spending from $284 billion in 2008 to $272 billion in 2009.

Some observers will find that figure relatively heartening news, as it represents a bit more than a four percent dip, at least globally. And some regions and countries actually will increase spending, the Asia Pacific region in particular.

Globally, capex, as a percentage of revenue, will decline from 15.2 percent of revenues in 2008 to 14.1 percent in 2009.

U.S. IT Forecasts Revised: Down in 2009 (no surprise)

Gartner and Forrester have both lowered their expectations of U.S.technology spending this year.

Gartner now forecasts a 3.8 percent drop in spending worldwide to $3,200 billion, compared with the $3,400 billion recorded in 2008. Three months ago, it was predicting a modest rise in spend this year over last year. Gartner points out that the decline it now predicts is worse than the 2.1 percent fall in IT spending in 2001, after the dot-com bubble.

Gartner predicts a 15 percent decline in computer hardware shipments, a three percent fall in telecom spending, a two percent drop in IT services and 0.3 percent growth in software sales.

Forrester now expects information technology sales to shrink by 3.1 percent in 2009, compared with the 1.6 percent it previously suggested.

All analysts overshoot. We extrapolate from past trends, which generally works fine so long as markets are not at turning points. One can almost predict an overshoot to the down side at some point, as trends change again.

Ribbit Announces KillerApp Winners

Ribbit has announced the winners of its "KillerApps" challenge, a contest for developers of new applications using the Ribbit voice platform.

Lucid Viewer won the "Media, Advertising, Entertainment" category for its authoring tool that allows developers to create immersive experiences. The tool allows users to call up stores directly from a Flash interface, such as a three-dimensional view of a street in Rome, Italy. Lucid Viewer also won the Grand Prize in Ribbit's KillerApps contest.

Sugared Frog won the "Business" category, with an app that integrates SugarCRM's open source solution with Ribbit voice apps. Sugared Frog allows users to organize their voicemail, and dictate notes and memos right from their mobile phones.

Save A Life won the "Social Networking and Communication" prize by creating an Adobe AIR app that allows you to quickly reach a group of friends or community members by phone. Currently, the application focuses on blood donations, though the program could be used for other donation campaigns or emergency services as well.

CYHAA won the "Breakthrough" category. CYHAA, which stands for Control Your Home, Anytime, Anywhere allows users to control their smart home devices with their voice right from their phones.

Verizon and AT&T: No, Thank You, to Stimulus Funds

Verizon Communications Inc. and AT&T might very well pass on applying for any of the "broadband stimulus" programs, at least in part because of "strings" attached to the money.

Neither company is well placed to apply for the Rural Utilities Service portion of the funds targeted at rural areas, and access provisions might be unpalatable for the National Telecommunications & Information Administration grants. 

http://www.bloomberg.com/apps/news?pid=20601109&sid=aXx.QVEa9vpM&refer=home

More Wireless Broadband Substitution Coming?

It is no idle speculation to consider that more users will look at wireless broadband substitution as downlink speeds rise into the 50 to 60 Mbps range in the near future. And Verizon might be thinking along those lines itself, though mobile providers without wired assets to cannibalize have been more aggressive, so far.

There is speculation Verizon will introduce such a router at CTIA this week.

http://www.phonearena.com/htmls/Verizons-MiFi-2200-is-your-own-personal-Hotspot-article-a_4570.html

Zer01 Plays the "Interconnecting Carrier" Angle

Some observers might wonder how the new mobile service created by Zer01 is different from existing applications that provide VoIP calling over a mobile handset. Recently, Skype for Apple iPhones has gotten lots of attention, for example.

“I do not really see any comparison to the Zer01 value add here,” says Mark Richards, Pervasip CIO. Pervasip provides the underlying network, billing and customer care for the Zer01 effort.

The Skype calling feature uses a Wi-Fi connection, not the AT&T data network, and can require per-minute calling charges, where Zer01 uses an IP wide area network and a GSM wireless network for access.

And Richards argues there is a difference between an downloaded application running on top of a mobile operating system, and a native application. “To run VoIP over GSM is stodgy,” Richards says. “It is not simple.”

One problem is that the downloaded app is always contending for processor resources. To run a VoIP path on top of the OS, rather than natively on the phone, compression and decompression is required, and that uses processor resources.

Calling gateways is more complex, so there is some kind of inconvenience, he argues. “I have not yet seen a seamless desktop process that really changes habits,” says Richards.

United Technologies Group has developed a mobile application that seamlessly sits on the cell phone and takes over a phone’s dial pad by replacing it with its own, Richards notes.

The other great confusion is over the business model. To date, many firms that do not own their own mobile networks have operated as mobile virtual network operators, leasing wireless capacity and services on a wholesale basis, and then selling at retail.

Those of you familiar with the “unbundled network element-provisioned” (UNE-P) model will see the similarity. An MVNO or UNE-P reseller essentially is engaging in price arbitrage.

The difference here is that Pervasip is a licensed carrier. It has the legal right of interconnection with other carriers. So Zer01 essentially and simply interconnects with GSM mobile providers around the world. It is not a reseller of their services.

Private Interests, Public Purposes

For every public purpose, there is a corresponding private interest.

http://arstechnica.com/telecom/news/2009/03/microsoft-broadband-stimulus-should-help-hospital-schools.ars

VoIP Revenue Will Grow 20% in 2009, IBISWorld Says

Telecommunications and internet related services are now so ingrained in the daily lives of businesses and consumers that they will hold up relatively well compared to other areas of the economy, say analysts at IBISWorld.

"One shining light will be VoIP, which competes on price against more established service providers," the firm says. "Consumer substitution from wired telecommunications to VoIP will accelerate but a weaker economy and lack of available finance will result in many smaller VoIP providers exiting the industry."

VOIP revenue is expected to grow 20.1 percent in 2009.

http://www.ibisworld.com/recession2009/default.aspx