Verizon is Right

It might be taking heat from investors for FiOS, but it is starting to look like access bandwidth could be a real strategic advantage. And the reason is what their cable competitors now are thinking. To wit, cable operators are drawing up plans to deal with what appears to be exploding user demand. They will look at the usual methods for doing so: subdividing fiber nodes, using switched digital video, channel bonding, using more complex modulation techniques, using non-traditional frequency plans and adding raw bandwidth. They even will look at building fiber-to-the-home networks and adopting PON architecture.

Which makes Verizon's FTTH plans look like the right strategic approach.

"We know there's a need for more bandwidth," says Bob McIntyre, CTO of Scientific Atlanta . "We just have to decide how to do it."

"Bandwidth consumption is definitely increasing, and the average consumption rate is definitely increasing," says Patrick Knorr, Sunflower Broadband CEO. "There's definitely a storm coming." The new bandwidth crunch is at least partly caused by a surge in high-definition TV viewing.

Watch What People Do, Not What They Say They Will Do

People often tell researchers they might do something, buy something, use something or switch something. Such responses tend to exaggerate actual changes in user behavior, as our recent experience of wireless number portability suggests. Canadian consumers, for example, suggest they are fairly likely to switch providers once number portability becomes law. History suggests they really won't change.

Wireless number portability, in fact, has not proven effective in creating more competition in the wireless market, says Analysys Research. There are few countries where more than 10 percent of mobile phone customers have taken advantage of number portability, but for the most part number portability hasn't been destabilizing.

Alastair Brydon, Analysys researcher, said that in Britain and Italy, just under 10 percent of mobile phone users had taken advantage of number portability, while in France and Germany the number of people keeping their numbers when switching carriers was negligible. In the United States, about 5 percent of cellphone users have taken their numbers to a new operator. One country that stands out is Finland, where about 55 percent of cellphone users have transferred their phone number in the four years since the service was introduced. The survey covered 25 countries.

"The concept of losing your mobile number in Finland is more painful to people because 35 percent of households do not have a fixed-line phone and 70 percent of all phone traffic is on mobiles," says Brydon.

Jon Arnold, Marc Robins Join Forces

Robins Consulting Group and J Arnold & Associates have formed a new partnership to provide an array of marketing, communications, strategy consulting and market research services to their growing roster of IP communications technology vendors and service providers. Jon says they will be jointly developing new information resources, including an electronic newsletter and related Web site, which will offer unique industry analysis, a healthy dose of opinion, provide a new platform for other industry thought leaders, and offer valuable coverage and information not readily available elsewhere about the rapidly evolving IP communications industry.

A Game Changer?

Release date pretty much dictates the financial contributions made by various movie venues, as this data from Adams Media Research suggests. There has been concern recently that DVD sales are slowing. If that continues, it will be easier to shift release dates to some sort of window where DVD release and pay per view or video on demand release dates are concurrent. That would dramatically improve the revenue earned by VOD, PPV or other forms of network delivery, at the expense of physical media. The issue here is fundamentally less cusotmer demand or technology platform, and more the prosaic issue of "when can I watch it?"

Does Vonage Compete with Cable VoIP?

Vonage's fourth quarter results won't be released until next month, when you can bet observers will be scrutinizing the company's marginal cost of acquiring new customers, compared to the marginal revenue Vonage is able to eke out. Which isn't to say Vonage has yet lost its lead in the subscriber race, according to TeleGeography. For a large part of the community, the issue is Vonage's ability to outrun its burn rate. Also, at some level there's a sense that an independent provider can't survive in a mass market dominated by the likes of Comcast, Verizon and at&t. There's truth in the observation: oing toe-to-toe with cable or dominant telcos isn't wise. But that's possibly not the point. The notoriously difficult telecom industry also is a place where specialists always have been able to carve out sustainable businesses. They might not be on the scale of a Comcast, Verizon or at&t. But it's hard to explain away the survival, and in some cases, thriving business models put together by quite indpendent specialists of all sorts.

Many observers, including this one, have been pointing out for some time that stand-alone long distance isn't a viable business model. And though the rule might correct as far as it goes, there are salient exceptions. Skype, for example. Some mobile resellers, IP-based dial-around, smaller integrators, telecom agencies, some interconnect firms and competitive local exchange carriers, some fiber-based access providers, some hosting companies and ISPs are able to make money in an environment that says they can't.

Sure, Vonage is trying to beat the odds. Providing it can carve out a niche, it will. The issue is whether it can do that. Of late, Vonage chief strategist Jeffrey Citron has been arguing that Vonage has unexpectedly left the "early adopter" and "early majority" markets and begun to target the core of the mass market. One would have to argue that cable companies are doing exactly the same thing. But it doesn't feel right. Surely the typical cable customer isn't the same customer that Vonage continues to attract, even though both would say they are selling into the core of the mass market.

To be sure, I can't put my finger on precisely why the Vonage "mass market" customer is psychographically different fromt he typical "cable voice" customer. Citron points out, and we have no reason to doubt him, that the incremental customers Vonage now is picking up have demographics of any core mass market customer. There's little doubt, though the cable companies provide no evidence for the thinking, that the typical cable customer also has pretty "normal" demographics.

It just doesn't feel right. The demographics might be similar. But there is something about a typical Vonage customer that is distinct from a typical cable customer. They are, in other words, distinct segments of the mass market. I'd bet that Vonage customers are more likely the "traveling" or "untethered" sort of worker, for example. Neither can I believe the typical Vonage customer is the same age as a typical cable customer. Vonage customers, even the mass market customers Vonage now is getting, have to skew younger, and have to be more comfortable with technology, compared to the typical cable customer.

Cable customers, in other words, likely are a "segment" of the mass market, as are Vonage's customers. If that is true, then Vonage's efforts to add other features, such as Wi-Fi support, more mobile calling features and so forth, shoudl pay off. Vonage's customers have to be more venturesome where it comes to replacing traditional calling services, even if Vonage is said to be a simple "minute stealer" service.

Is Vonage a competitor to cable voice? Most might say "yes." I don't think so. I think both are appealing to distinct customer segments within a broad "demographic" that only appears to be the same. Demographics, in other words, don't tell the story. There still is something about the psychographics of the customer bases that is distinct.

100 Gig Ethernet Coming

As WAN backbones begin to move to 10 gig Ethernet pipes, scientists already are at work on 100 gig versions of Ethernet. Demand for 100 gigabit per second Ethernet is being driven by Iternet exchanges, Carriers and high-performance computing organziations and applications. "You’re also seeing a need when you look at what’s happening with personalized content, which includes video delivery such as YouTube, IPTV and HDTV," says John D’Ambrosia, chairman of the IEEE 802.3 Higher Speed Study Group and a scientist at Force10 Networks Inc. "There’s also video on demand.

"You do have 10G Ethernet already, and if you use link aggregation you can go higher," he says. "But bandwidth needs are quickly surpassing these bandwidth limits." That means we will see new optical transport, backplane and chip technologies.

So even if higher bandwidths are needed, why not just contatenate 10 gig waves? "Depending on who you to talk to, you’ll hear that two, four or eight links can be aggregated together before you have management and troubleshooting issues," says D'Ambrosia. "Also, those cables take up precious real estate, and you have power and cooling considerations." Aggregation also ties up ports that can't be used for anything else, such as bringing in additional revenue. Basically, scaling becomes an issue.

Differentiating Downloaded Music

It migh be argued that downloaded music is a commodity. A song is a song. But broadcast radio, though skewed to large national audiences, does have specific formats that appeal to specific demographics. Then there are "talk" formats, "language" formats, "subject" formats. Then there's XM and Sirius, that slice and dice the domographics into much more granular listening segments. That being the case, whys shouldn't every form of Internet-centered media also be capable of segmentation? Keep in mind that segmentation can occur on any number of levels. Type of content, method of delivery, geographic focus, device support, storage, navigation and other elements of a user experience can be targeted.

So it is that Ruckus Network, which distributes movies and music online to colleges nationwide, now is attempting to exploit a college niche by expanding its ad-supported music download service to any user with a valid university email account.

The Herndon, Va.-based company aims to boost the rolls of college students who use its service to woo more advertisers seeking to market to young audiences. The company adopted the ad-supported business model about a year ago.

Previously, Ruckus' service was only available to students at universities that had entered into agreements with the company.

Students outside Ruckus' network of affiliated universities will not be able to download movies, but will have access to Ruckus' more than 2.1 million tracks, which they can download to their computer for free. To transfer audio files to a portable music player, however, users must pay either $5 a month or $19.99 per semester.

Previously, students at universities without an agreement with Ruckus had to pay $5.99 a month to download music from the service and couldn't move the tracks from their computer.