Private Line, Ethernet Might be Complementary

One of the confounding thing about "public network" services and platforms is that although many new services logically should displace older services, quite often they do so only in part, acting mostly as a brake on the growth of the legacy services, but not displacing them.

Ethernet and IP, for example, "logically" should replace older private line services based on SONET, SDH or optical carrier. Ethernet offers vastly lower price-per-bit performance and is transparent to the connectionless nature of IP. SONET, SDH and optical carrier can be made to encapsulate IP packets, but at the risk of additional overhead, cost and payload efficiency.

In fact, as IP-based broadband services proliferate over wired and wireless networks, one logically expects that older connection-oriented transport protocols will wither. But nothing in public networking ever seems to work so linearly. Oddly enough, as real time apps start to drive broadband services, connection-oriented transport has appeal, as that's what such protocols were created to do.

Over the past several years there also has been much emphasis on the role of wireless backhaul in driving new demand for private line capacity. Which might strike you as odd, given the relatively small percentage of total private line sales that particular application represents. Of course, there are other forces at work.

Though it clearly is broadband demand that is driving wireless backhaul demand, that demand is spread across traditional private line, Ethernet over copper and optical connections.

"Private line emulation" over optical or metallic media, for example, often makes sense. So does encapsulation of connection-oriented traffic inside a connectionless transport. Though "converged networks" are the future, today it often makes sense to add high capacity connectionless bandwidth for 3G and 4G services, but leave the connection-oriented voice on a separate logical network.

"Private line" sales can grow even as IP bandwidth grows in the backhaul application because a huge existing voice revenue stream has to be supported as incremental broadband apps using IP are layered on. Still, wireless backhaul is a fraction of total private line sales.

So why the buzz? Volume. A single sale to a wireless network provider can involve thousands of sites. A service provider obviously can make a lot more money selling one customer thousands of T1s or hundreds of optical carrier or Ethernet links, rather than thousands of customers single T1s.

Then there is the matter of urgency: wireless carriers have an immediate need that won't wait, and have to put up hundreds to thousands of links at a time. Wireless backhaul is really important to sellers because a handful of buyers represent such enormous volume.

NEC Acquires Sphere Communications

NEC is acquiring Sphere Communications, the latest in a series of consolidations affecting the business phone system market. Mitel and Inter-Tel, as well as Lucent and Alcatel earlier announced mergers. One has to expect more mergers involving companies specializing in small and mid-sized business phone systems, as Cisco and Microsoft are going to muscle their way into the SME segment of the market.

Though managed and hosted services are growing, SMEs still overwhelmingly seem to prefer premises-based solutions, say researchers at Infonetics.

As more voice features and applications are integrated with existing business processes, and as unified communications starts to be seen as the "function" voice is a part of, we can expect similar sorts of ripples throughout the current ecosystem supporting voice services for the SME segment. The ability to design and support a network running voice and communications applications as well as other business apps will become more important in the value added reseller space, as an obvious example.

Channel partners who can handle the "desktop" side of the premises demarc will gain at the expense of partners who only can work on the trunk side of an interface. And more of the value will derive from applications support rather than infrastructure support.

Enterprise VoIP: Not Sexy, Just Growing

Integration of voice with business apps might be the next wave of growth for IP-based voice. But for that to happen, basic VoIP calling has to be ubiquitous. Presence and unified messaging don't make sense until the basic voice platform has taken hold. And that is precisely what is happening in the enterprise space. Give a lot of credit to Cisco for pushing the business in the IP direction. Soon, we'll likely have to credit Microsoft as well for pushing the notion of what "voice" services are in the direction of unified communications. Voice really is becoming an application on the network.

More Online than Print by 2011

Online advertising sales will overtake print advertising by 2011, according to Veronis Suhler Stevenson. VSS forecasts annual online advertising growth of more than 21 percent, reaching $62 billion in 2011, compared to print advertising's forecasted $60B.

TV ad revenues will still hold the top spot at a predicted $80B in 2011. "The path of online advertising and newspaper advertising is a continuation of what we’ve been observing for many years, but it is finally getting to the point where the lines will cross," says VSS's James Rutherfurd.

The study notes that in 2007, the amount of time spent reading online will overtake time spent reading newspapers for the first time. Overall media use was down 0.5 percent in 2006 to 3,530 hours per person, while workplace media usage jumped 3.2 percent to 260 hours per employee per year.

Vonage Enhances Visual Voicemail

Vonage's enhanced Vonage Visual Voicemail now is available, and strikes me as more than visual voicemail, though there is not an elegant way to describe the feature. It is a premium service that transcribes voicemail into email. Most visual voicemail features put a message into a user email inbox, but do not provide transcription into text.

Voicemail transcripts can be sent to up to five email addresses at the same time, and to a user mobile phone using text messaging. The service costs $0.25 for each transcribed voicemail (plus applicable network fees for wireless text messages).

Some observers have been suggesting that Vonage do more in the "rich features" area and stop flogging the "lower price" angle for some time, so they will see this as a step in the right direction. I don't know offhand how long a voice message can be, but there are times when it might be really handy to have a transcript. Lists of things come to mind. Street addresses and phone numbers. Driving directions.

Google Phone Again?

Speculation about Google getting into the mobile phone space have been circulating all year. Most recently, the Wall Street Journal reported that Google has "invested hundreds of millions" into cellular phone development, and that the project goes far and beyond current incarnations of Google products on today's mobile handsets. So what is Google up to?

It isn't necessarily that complicated. Google might be simply be trying to show existing and would-be device manufacturers what can be done. Google doesn't necessarily have to be thinking about becoming a device manufacturer or "service" provider.

Google already has moved to put Google Search, Gmail and Maps onto phones. Google might be trying to illustrate, concretely, what a device can do, and look like, if unencumbered by all sorts of walled garden software. Call it a Google-optimized mobile Web approach, if you like. An approach that offers opportunity to exploit advertising revenues. If Google can get serious traction, it not only creates an important beach head in the mobile ad space, but also helps create the mobile version of the broadband Internet.

Ad-supported communications are a possibility, but not the only possibility. The "open" whole Web framework plays to Google's strengths. That might be the more important objective.

Expect to see Google pushing hard not only to get its software on more clients but to get users accustomed to behaving the same way with the mobile Web as they now do with the tethered Web. After all, the whole point of targeted advertising is to reach people where they are.

Three times as many mobiles are in use as landlines, and landlines don't offer much upside in the advertising space.

Voice is Not a Commodity

New communication modes complement, rather than substitute for, older modes, says Stefana Broadbent, who leads the User Observatory at Swisscom. That ought to lead service providers to think in different ways about the "commodity" nature of voice, for example, since it does not appear that voice and new forms of communication, though widely used, are consumed in ways that make them functional substitutes. And if they are not substitutes, neither are they commodities.

Different modes are viewed as best for some sorts of communications, and get usedthat way, she essentially argues. And while you'd expect wired voice, mobile, email, text messaging (short message service) and instant messaging to be key modes, you might not expect blogging to be a communications mode, though Broadbent says blogging is, in fact, a form of communications, not media.

So what are the key user perceptions of appropriateness (Broadbent studied consumers, not enterprises)? Wired phones are for "public" communications and intended to communicate lots of information that is of general use to all members of a family, for example.

Mobile voice, on the other hand, is a personal channel. About 80 percent of calls from any user's handset are with just four other people, Broadbent finds. Mobiles are used for regular communication with best friends and family.

SMS is seen as more intimate channel, oddly enough with more perceived "emotional capability" than voice. SMS gets used only with best friends and family and "grooming" messages ("thank you", "I love you") represent about half of the messages. SMS is seen as a way to keep relationships alive. More than 50 percent of all grooming communications happen through SMS.

Email is used as an administrative channel to get tasks accomplished and share attachments such as photos with networks of friends or social groups. Email also gets used for communications of an "impersonal" nature (contacting retailers, for example).

Instant messaging tends to be a multitasking medium, with a live channel opened in the background while a user does other things. People just step in and out of conversations.

Blogging is a "networking channel," used in place of email in many cases and a way to extend the total number of "friends" one can interact with, as it allows one-to-many communications much more simply than email.

Significantly, says Broadbent, the new forms are not substitutional. Each new channel slowly redefines the uses of older media, and uses are very sophisticated about the strengths and weaknesses of each form. SMS gets used with people one knows very well because they have the context to decipher very short and cryptic messages.

A key takeaway from Broadbent's research is that though "price" is a factor in just about any purchase, communications are about other things as well, providing some space to innovate on the value front to create new levels of comfort with "price."