telx|vision:IP Business's Gary Kim TMC's Conference Topic #1

enterprise peering

telx|vision:IP Business's Gary Kim TMC's Conference Topic #2

Is voice a commodity?

Ad-Supported Calling?

There can be no doubt about the direction of advertising. So if the trend is so clear, it is inevitable that ad-supported calling will get closer attention. Jajah has been trying this in Germany and Austria, for example. Jajah has partnerships with three large media companies, including Bild, Germany’s largest newspaper; ProSiebenSat1, which owns two major German TV stations, and NewsAT, an Austrian station. The partners will spend seven million euros to advertise Jajah’s Internet phone service.

They will point users to their own Web pages, which will have a co-branded Jajah service from which people can make calls. Essentially, the media companies will subsidize voice to build traffic on their sites. Deutsche Telekom, Germany’s large phone company, is part owner of Bild. So, in a sense, DT is kicking the tires to see what's there.

Jajah will keep 50 percent of any advertising revenue that it sells on the pages it shows people while they make calls. It will sell a banner and a skyscraper on each page.

Separately, Globe7 offers a softphone-based approach integrated with video streaming. The play seems to be that the content downloading creates an ad potential. Ad viewing then earns calling credits. The angle here is possibly more interesting than the old "listen to a short ad and then I will connect your call" approach. PC-based or Web-activated sites can show ads on a home page, without disrupting a call.

Duh! at&t Should Have Talked to Some Cable Guys

at&t is promoting U-Verse IPTV services in Connecticut from an Ice Cream truck outfitted with a flat panel HDTV showing off the service. at&t also is holding U-Verse block parties and free concert or movie nights. It sounds as though the new tack is being taken because mass media advertising is a mixed blessing when a company is in the middle of a network build. Apparently at&t has finally discovered that it creates problems for itself when it advertises new services that only are available in a portion of a service territory reached by the mass media where the ads run.

Potential customers call in to get it and then have to be told service isn't available in their neighborhood. That's why cablers used to send out people with door hangers block by block as networks were built out. They tended to use the same "micro" targeting as their networks successively were upgraded. at&t couldn't ask anybody who had ever done this before what the pitfalls would be? It's not like it would have cost any money to get the insight. It's a one-sentence question and a one-sentence answer.

Healthy SME Communications Spending Forecast

The typically highly reliable Knecko Burney, owner of Compass Intelligence, predicts that U.S. spending for nearly every category of small and mid-sized business spending for information technology and communications will be headed north for the next five years. About the only things SMEs will be spending less on are PCs, truly a commodity, as well as personnel. Software, communications, network infrastructure and support all are headed north at about an eight to 10 percent rate over the forecast period.

(By the way, you can just click on any image in any post on this site and the larger version of the graphic will appear...just in case you are reaching for your magnifying glass to read the numbers!)

Ad Supported Wi-Fi?

Nobody knows whether ad support for municipal Wi-Fi services will work, though most seem to have given up on the notion that a network can be supported solely by advertising. Perhaps the more germane question at this point is how much ad-support models will complement subscription and municipal underwriting models (where a government entity becomes an anchor tenant).

Microsoft's own polling on the subject suggests a combination of free and subscription is viable. Penetration for a fee-based service might range from five to eight percent, while a "free" service might be used, some times, by 21 percent of people. Offer free and fee service and overall penetration could rise to about 26 percent.

Of course, the issue is whether an operator can get any significant amount of ad support. And as others in the field now have found, user potential in dense urban areas might be four times more than in a suburban area. All of which suggests muni Wi-Fi will be a supplemental form of access, useful at times but with single-digit subscriber potential. That's not shabby. Even independent WiMAX providers can't expect to do much better than that.

Significant capture of most of the access market by telcos and cable companies is part of the answer. But increasing use of 3G and 4G services by mobile users will be a significant factor as well.

If independent providers of mobile WiMAX can offer service cheap enough, they might yet carve out a niche in the "connected personal devices" space. The issue is competition from the likes of Sprint Nextel or others who may adopt mobile WiMAX as their 4G platform.

If the equivalent of "multi-user" plans were to be offered aggressively by a mobile carrier, with reasonable broadband plans plus significant discounts for plan member use of additional devices (gaming consoles, PDAs, cameras), that will prove attractive for much of the market.

Mobile voice and broadband to a "mobile phone", plus PC data card, plus connections for other devices from a single provider offering price discounts for each additional unit. That's especially true if the user-perceived value of connectivity for things like cameras is seen as low. A mobile carrier can afford to price such connectivity at low levels if it is capturing reasonable value from 3G phones and PC cards from a single customer.

But tethered PC connections used by the mass market will be dominated by cable and telco providers. Broadband for mobile "phones" will be dominated by the wireless carriers. What remains uncertain is how the "connected personal devices" segment might develop (cameras, iPods and MP3 players, game players, PDAs). There will be niches. The issue is how big any of those niches will be, and whether providers can operate at costs low enough to serve those niches.

This Explains It...

Not to pick on Marriott, but if you travel, you know that hotel Internet access can be spotty and troublesome. Unexpected guest demand for video bandwidth turns out to be an issue. Neil Schubert, Marriott International VP says the Courtyard segment ran ads announcing "free access" and showing a guest using that connection for video telephony. Courtyard then experienced a four-fold increase in bandwidth consumption.

“This ad came out before we knew about it,” Schubert says. So why was this a problem? Courtyard typically was allocating a single Digital Subscriber Line circuit for 160 customers. "It didn’t work real well at first,” Schubert says.

Slingbox was a factor, apparently. It seems more and more travelers are toting their Slingboxes around with them. So the next time you see a forecast for at-home video consumption (such as this one from Telecom Futures originally created in 2001), remember that users consuming that bandwidth at home are going to keep some of the same behaviors when they are not at home. We're going to need more bandwidth, at more locations, than just office and home.