Trouble Ahead for Mobile Data ARPU?

"There are no more killer apps," warns The Yankee Group analyst Charles Moon, of mobile operators in the Asia and Pacific region. Short-messaging service (SMS), ringtones and—to a lesser extent—graphics and gaming have made huge contributions to mobile data revenue, he says.

"Yet since their introduction many years ago, nothing else has made a similar impact, despite ten- to twenty-fold improvements in wireless download speeds," says Moon. "All things being equal, data revenue will fail to offset the decline in voice," says Moon. "Our current forecast, based on present business models and current operator strategies, shows overall mobile data revenue growing at a relatively tepid 7% per year from 2006 to 2010."

Moon says mobile operators must embrace all-IP platforms such as mobile WiMAX. Walled garden strategies should be disgarded in favor of more openness to third party developers. Speed isn't the issue. Variety is, he maintains. And operators need to learn how to segment customers better.

Biggest Community on the Planet

So think about it: at&t says all members of its community, wireline or wireless, can call each other "on network," for free. Wireless users apparently must also reside within the wireline service territory, and also have a wireline account with at&t, but the implications still are huge.

We will leave for the moment the issue of whether this actually will work. If it works, at&t creates the world's biggest "friends and family" network. If Verizon and Qwest somehow wind up peered with at&t, most "callers" within the United States will be part of a single, peered network with free calling on the entire network.

Which changes he competitive landscape prety dramatically, don't you think? Whatever version of Metcalfe's Law you subscribe to (the value of the network increases as the square of the number of nodes, the value of the network increases less than that, or more than that), this is a huge deal.

Consider that a global, tier one carrier calls its customer base a "community." Consider that the deal essentially eliminates the distinction between TDM and IP calling. Consider that the deal could put a huge damper on POTS line defections in territory, and somewhat complicates the "lower price" positioning of most VoIP offerings. at&t just has made the value of an in-region POTS line much more valuable.

A Significant Move, Architecturally Speaking

Comcast says it is testing switched digital video. Cablevision already added SDV capability and Time Warner has been saying it would likely be necessary. All of this is important because the historic argument made by the cable industry is that its hybrid fiber coax, hybrid analog and digital delivery network was the right way to approach access networks. The argument has been that telco fiber to the home networks were a needlessly expensive way to provide broadband services, and a particularly expensive way to deliver digital video. The latest move by Cablevision and the testing by Comcast and Time Warner suggest that the telcos might have been right all along.

That's a huge shift in thinking, and should cause at least some skeptics to rethink their positions. To wit, as cable moves to SDV over an HFC network, it becomes essentially the same network at&t says it is building. And there are two ways to look at matters. One can argue that at&t's approach is good enough to compete with cable. One can argue that telco-style SDV was the right approach all along, and cable has had to acknowledge that fact. Or one can argue that a full-bore FTTH network is a better choice, where it can be done, because it is a way to leapfrog the bandwidth limitations of any HFC network, either of the cable or at&t varieties.

Or, put it this way: is an optical Ethernet network, all the way to the customer premises, the best wireline platform for launching all sorts of new IP services, including, but not limited to video. And if that is the case, is there not strategic value for the network operator that builds such a network? And if that is the case, maybe some people should cut Verizon a bit of slack....

Cbeyond, Geek Squad

In many ways, Cbeyond sells VoIP like cable companies sell digital voice. The focus is on drop dead simplicity and maximum ease of use, with all the messy technological details hidden. There's a deliberate effort to avoid introducing new technology into a customer's world in a visible way. Think "it just works." There are other businesses out there with similar approaches. Among the most customer-friendly technology support efforts one sees out there in the consumer world is the Geek Squad. Like the office superstores of the world, it just is something small businesses will turn to for predictable, approachable service. So don't be surprised when Geek Squad starts selling Cbeyond services.

SunRocket Launches Asia Pacific Plan

SunRocket now offers a calling plan that drops rates to Asia Pacific locations including China, Japan, Hong Kong and Vietnam to as little as one cent per minute. The annual $199 Asia Pacific Edition features per-minute calling rates well below traditional phone service offerings and as much as 90 percent less than other major VoIP providers, SunRocket says.

The Asia Pacific Edition reduces international rates to $.01 per minute on all calls (landline and cell) to China, Singapore and Hong Kong; and on landline calls to Taiwan, Malaysia and South Korea. Landline rates fall to $.02 per minute for Japan; while SunRocket's rate on all calls to Vietnam is cut nearly in half to $.10 per minute.

Not All Calls are the Same

There are no market studies on how people use phones, says Manuel Wexler, CopperCom CTO. So one can argue that "not all calls are the same," he says. "You might want to be paid for taking a telemarketing call." In other cases, you just want to block some calls. Others are really important. "So maybe all phone calls aren't the same," Wexler says. "I haven't seen a study where people attach value to a minute of talking."

Skype calling arguably is used differently than mobile, inbound differently from outbound, IM differently from SMS, video differently from voice-only, voice-only differently from multimedia sessions. Users have different preferences for one mail box or multiple mailboxes, one device or several, soft client versus ATA-based calling.

Cable sells voice as part of a bundle. Vonage customers probably are different, he maintains. Vonage sells VoIP. Cable sells voice, but not VoIP. "Right now telcos sell two sizes of voice: consumer and enterprise," he says. There's "not much segmentation."

SIP Trunking Help for Independent ISPs?

We never cease to be amazed at the way lots of specialized providers are able to make a living in a telecom world dominated by giants. Consider ISPs, operating in a tough business by almost anybody's estimation. Broadband Internet access offers less margin than the dial-up business broadband is replacing. And while wireless access is an option for lots of rural ISPs, there's typically less opportunity in urbanized areas, simply because the telco and cable providers do a pretty good job of providing "commodity" access.

And then there's VoIP, which many ISPs really don't want to undertake. They often don't want to become voice providers in their own right. They typically don't want to become channels for sales and installation of premises phone systems. And they typically don't want to become LAN specialists. But they do know IP-based access services. And many serve at least some business customers, so they understand special access (T1) services.

So what might be interesting is for some provider of SIP trunking services, with a national footprint and the right back office systems, to create a service allowing ISPs to sell SIP trunks just like they sell T1 connections. That way, ISPs could insert themselves into the VoIP value and revenue chain, but without becoming voice providers in their own right, becoming interconnect companies or system integrators. Somebody will figure out a way to do this, and independent ISPs then will have a VoIP value chain play, and a much more lucrative way to play in broadband access, while making some money at it.