CES Will See More Download Video Rollouts

The International Consumer Electronics Show is the first major U.S. trade show of the year that has direct implications for the communications and Internet apps industries. It is a logical place to launch a new "download-to-own" service or expanded Web video initiatives. We would expect some of that to happen. Sonic Solutions this week launched Qflix, a licensing and certification program approved by the studios, which will allow online retailers to sell movie downloads that can be burned onto DVDs.

CinemaNow currently sells a limited number of download-to-burn movies (using a different technology) and iTunes sells movies for viewing on iPods and PCs/laptops. Such services essentially use different distribution channels and are direct challenges to cable, satellite and upcoming telco video distributors of on-demand or pay-per-view fare, as well as to Netflix and Blockbuster Video. The key strategic change is the willingness of content owners to embrace the new channel. That's the single most important factor driving the new market.

It isn't clear yet how business models will shake out, but ad support already looks to be an important factor. In most media industries, advertising plays a significant role. Potential customers also indicate they prefer "free" ad-supported video as well, even though this preference coexists with a demonstrated to buy movie content in many forms (theatrical release, PPV, DVD, DVD rental).
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Declining ARPU Drives Thinking

Even in the robust mobility segment, growth is slowing. The decline in per minute pricing of voice calls is leading in turn to lower average revenue per unit, in North American and Europe, according to The Yankee Group. All of which makes the search for new services and revenues of all sorts mandatory, rather than optional, of course.

Nine Million VoIP Households

In-Stat says more than nine million households have at least one active VoIP user.
The top five facilities-based services used by households in the United States are Vonage (1.7 million households), Time Warner Digital Phone (1.6 million households), Comcast Digital Voice (1.3 million households), Cablevision/Optimum Voice (1.1 million households) and Cox Digital Phone (420,000 households.

The top five client-based VOIP service providers used by U.S. households are Skype (2.1 million households), MSN (1.1 million households), Yahoo Messenger with Voice (1 million households), Google Talk (658,000 households) and AOL Phoneline (266,000 households).

Price still remains the driver in the consumer market, though some marketwatchers are calling 2007 the "year of VoIP apps," at least in the enterprise space. That prediction probably will prove to be off the mark in the sense that all such "year of the..." proclamations are. In 2006 the International Consumer Electronics Show proclaimed last year "the year of the digital connected home". Guess what. So is this year.

WAN Ethernet Market to Hit $5 Billion in 2007

The global wide area Ethernet market will be something on the order of $5 billion in revenue in 2007, say Yankee Group researchers. The U.S. market for Ethernet revenue should grow at a blistering 50.3 percent cumulative annual growth rate between now and 2010, Yankee Group analysts predict.

Don't Have It, Don't Want It

One line of reasoning about broadband deployment is that carriers and government have failed to push it hard enough. There's another way of looking at matters, however. In the U.K. market, for example, respondents who don't buy broadband access services recently told researchers that they didn't want broadband, or didn't own PCs.

Some 27 percent just didn't want it, and some 22 to 23 percent don't own PCs in the home, so broadband has no value. About 15 percent said they couldn't afford it. This will change as compelling services aimed at TVs and game consoles, for example, become available.

In some cases, the ability to use mobile handsets inside the home for a flat fee each month might be so compelling that will drive broadband adoption. The point is that people buy things when they find things valuable, and many end users still haven't been persuaded.

Wireless IS Voice

This probably won't be the year that everybody agrees mobile voice is THE way to do voice. In fact, mobile might never be THE way to do voice. But there's no question that mobile handsets are becoming the convenient single device to use voice and other apps. There's no question the amount of conversation initiated and terminated on mobile devices is increasing. Nor is there much doubt that tethered devices and apps have to start offering value beyond "simple" conversation to remain highly relevant.

P2P Could Drive Architectural Change

Some trends we now are seeing in the Japanese broadband access market raise potential issues for all access network architects. Specifically, the issue is that consumer networks are designed asymmetrically, and P2P uploading requires symmetry. One might like to design a network so flexible that bandwidth can be provisioned "on demand."

The problem is that such a network typically implies an optical infrastructure with a fairly sophisticated degree of intelligence, to supply granular increases in bandwidth, on a "dial it up and it happens" basis.

And that's expensive, particularly so since the network has to be built past all potential end user locations, even when actual demand will vary widely, stranding some of the assets.

Some networks, with short access loops, might finesse the issue by deploying VDSL. Others are simply going to have to look at fiber-rich networks. Expensive stranded assets might result, in that case.