FiOS Best, Says Consumer Reports

The February issue of Consumer Reports features a survey of broadband access providers, and names the Verizon FiOS service, best for reliability and performance for its Internet, television, and telephone services.

Better cable companies include Cox, Bright House and Wow, the survey indicates.

For Internet service offered through a cable company, Wow, Cincinnati Bell and Bright House also did well in the survey. Verizon's DSL Internet service was rated "average" for value, reliability and support, but scores for performance were lagging, according to Consumer Reports.

Slowing Economy or Just Slowing Growth?

That's the question as at&t Chief Executive Officer Randall Stephenson claims slowing economic growth has led to "softness" in the home-phone and Internet businesses while Verizon COO Dennis Strigl says that's not the case.

“We have seen virtually no economic impact,” Strigl says. "Any challenges facing the company have more to do with competition," said Strigl, than the economy.

It is possible Verizon's customer base simply isn't feeling the economic pinch or hasn't felt it yet. It is possible Verizon simply is faring better in the competitive battle with cable and other contenders. Maybe there is some other explanation.

Could it be FiOS? Also, Stephenson pointed to wireline voice and broadband growth. In some ways, that is no surprise. Landline share continue to shrink, in large part because of wireless substitution and cable market share gains.

Broadband adds have been slowing for a couple of quarters, at least, in part because most people who rely on the Internet already have broadband, and suppliers now are facing customers who don't own PCs, so have no need for broadband; customers who think dial-up still is adequate; and customers who have PCs but don't use the Internet. It is no surprise that broadband additions are slowing.

Telcos More Open to 3rd Party Partners

One difference between 2006 and 2007 was that global telco executives began to shift attitudes about the importance of working with third party application and service providers. Where they might arguably have been more focused in 2006 on cost cutting and other internal measures, 2007 found executives more focused on how to position themselves for new services.

Though there arguably is more recognition that advertising operations will demand partners, there also seems to be more recognition that core communications capabilities can be leveraged as a revenue stream if those features are made available to other application and service providers.

This is a very big and quite important shift in thinking.

Why VoIP Won't Escape Voice Regulation

Telephone subscribers in Oklahoma City and 223 other communities throughout the state will be required to pay a two percent "line inspection fee” on the basic residential rate beginning in February. The fee has been assessed by cities for decades, but up to this point at&t has simply "eaten the cost." It now will pass the fee through to users.

Apparently at&t pays a fee to maintain the rights of way for its telephone lines in 224 of about 490 communities it serves in Oklahoma.

And that's one of the reasons VoIP-as-a-replacement-for-wired-voice will not forever escape regulation of the sort legacy voice services are subject to. There are many vested interests at the local and state level, as well as at the national level, that generate revenue from voice services. As IP-based communications begin to displace huge chunks of the services base, those interests inevitably will move to protect the revenue by pulling VoIP into the older framework.

Now, the way this gets done might change. Where a "subscriber line charge" now is assessed for each "voice line," it might someday be assessed on a "broadband access connection." The revenue won't be allowed to evaporate.

Startling BT FTTH Trial

BT is installing what amounts to a test fiber-to-the-home network at Ebbsfleet, Kent, U.K. What's interesting about the 10,000-home network is the early announcement of prices.

Because U.K. broadband access operates under the wholesale Openreach model, the first thing BT is doing is announcing wholesale prices to be charged to competing service providers and BT itself to use each of the lines. Retail pricing will be set by each of the wholesale partners.

Rates range form £100 a year ($195) for a basic line to £530 ($1,038) a year for the fastest connection, at 100 Mbps.

BT still is wranging with U.K. regulators about the ultimate shape of regulations surrounding widespread fiber-to-customer networks. BT wants more freedom to use its own assets, of course, including freedom from mandatory wholesale regimes of the current sort, in the best case scenario.

From a U.S. perspective, it is striking that the first pricing information is about wholesale rates rather than retail pricing, a measure of how different the regulatory frameworks now are.

What's Good for Suppliers Also Good for You?

If you casually stroll past displays of PCs on the shelves of any electronics retailer, you'll see at least a few notebooks preconfigured for one brand of wireless data card access. Now, in one sense this is the same strategy used when software comes preloaded on your brand-new machine. Dial-up Internet access services, anti-virus, firewall and security, media players, browsers, games and so forth provide examples.

In the same vein, there has been an argument that the notebook screen represents real estate that a provider's icon must occupy to get more usage or attention. Up to a point there's a clear logic to such thinking.

But there's some point at which the strategy breaks down. Lots of machines sport RJ-11 connections for dial-up Internet access. I don't know how many of you think that's a "feature" instead of a "bug" anymore, but it's clearly not an important feature for many.

The point is that USB and Ethernet ports, like RJ-11 ports, are general purpose computing capabilities. They don't lock anybody into a continuing commercial relationship with any single provider. The user has choice.

Providing that a new notebook has sufficient hard disk capacity, most users probably just ignore all that preloaded software and most of the offers. Norton might disagree, of course, and that might be one of the salient exceptions. Others of us have to spend some time removing all the unwanted software from the machine or at least disabling their ability to start up automatically.

Suppliers might think otherwise, but the incremental cost of preconfiguring a PC for one flavor of 3G data card access probably outweighs everything but the revenue the manufacturer gets from the service provider for preloading the software.

Most people don't seem to have any problem buying a card when they want to use wireless broadband services. To be sure, there might be some instances where a particular buyer of a particular model actually wants to buy wireless broadband from the precise supplier whose access software is preloaded on that machine. But not very often.

Perhaps an argument can be made that the revenue gotten by the PC manufacturer from such deals helps in some small way to control the overall cost of the device. In that sense, there is a consumer benefit. So maybe this is the PC equivalent of advertising. Users might not "like" it, or "want it," but it might help lower the cost of acquiring and using something else (their PC).

Still, it's hard to imagine that preloading broadband wireless for a single provider can be done on a wide-enough scale to produce incrementally-significant customer additions.

The way this could work, though, is to do the reverse: sell a cheap device that actually is configured to use one broadband access provider. Consumers can do the math. If the value of getting a general-purpose computing device is low enough, and the price is lock in to one broadband access supplier, some buyers will do so.

YouTube, Video Site Visits Double

It isn't your imagination: more people are going to YouTube and other video sites than did a year ago. So say researchers at the Pew Internet and American Life Project.

Nearly half of online adults now say they have visited such sites. On a typical day at the end of 2007, the share of Internet users going to video sites was nearly twice as large as it had been at the end of 2006.

About 48 percent of surveyed Internet users say they have visited a video-sharing site such as YouTube. A year ago, in December 2006, 33 percent of internet users said they had ever visited such sites. So year-over-year growth was 45 percent.

About 15 percent of respondents said they had used a video-sharing site “yesterday". A year ago, just eight percent said they had visited such a site “yesterday.” So, on an average day, the number of users of video sites nearly doubled from the end of 2006 to the end of 2007.