Free Muni Wi-Fi in Colorado Town: But It's Bad News

Residents of Longmont, Colo. temporary have free access to the municipal Wi-Fi network operated there by Gobility. Access is free because Gobility lost its billing contract and literally can't bill for access. It's bad news because the network is for sale, Gobility apparently finding it cannot raise additional funds to keep the network in operation.

Kite Networks, owned by Texas-based Gobility, provides wireless broadband service in Longmont and to approximately 17,000 customers across 21 markets.That works out to about 809 customers per market. So it is probably no surprise that Gobility is finding the business a really tough proposition.

Longmont’s city council is taking a look at whether the city itself could buy and run the network. But Longmont has Digital Subscriber Line service available from Qwest starting at about $20 a month and Comcast offers cable modem service for about $40 as a stand-alone service. There are no particular signal coverage limitations that prevent use of wireless broadband from the major national suppliers and perhaps a dozen third party ISPs offer DSL service as well. It just isn't clear that a municipal Wi-Fi network is needed or that paying customers exist in sufficient numbers to sustain a business, even if operated by the city.

A vote of Longmont residents would be required before Longmont could consider a bid.

700 MHz Auction: Not the Best, Not the Worst

For many observers anticipating the soon-to-begin auction of valuable 700-MHz wireless spectrum in the U.S. market, there is some combination of great hope and fear that it will all be business as usual and that nothing much will change.

The great hope scenario calls for some new entrant to win the C block and create a national, open, Internet style broadband wireless network. The great fear is that at&t or Verizon will be the big winner, stifling innovation once again.

For mobile industry service providers, you can reverse the hope and fear positions. Incumbents hope at&t or Verizon will win, precisely to prevent the emergence of an open national broadband mobile network. They fear an outsider could snatch the spectrum away and actually do that.

In the end, he outcome will not be so wildly good for innovation, but not stultifying either, even if an at&t or Verizon wins the spectrum. Change is coming simply because the mobile Web is coming, and no contestant can stop that. Innovation will continue to flourish on the Web side of the business, no matter what is done on the walled garden sides of the business.

Consider the mobile music business. We are far from knowing how the use cases and business models play out. But we already can point to some facts. Walled garden services featuring downloads or rental have been seen as the logical evolution, and that certainly is where early efforts have focused.

Over time, users might do other things. They might sideload their music, then share with their friends using Bluetooth, Wi-Fi, 3G or 4G. You might say this is a laborious process, and you would be right, if all we have is today's tools. That will change. Somebody will author an elegant program for syncing sideloaded music with other handsets. It might not be iTunes that drives this, since iTunes is quite sharing-unfriendly by design.

But somebody will do so. And then the business might shift as it grows. Online downloads and sideloading will increase. But then sharing will kick in. Then it might turn out that walled garden download services aren't as big a deal as we once thought, but open download services are. Maybe the sharing software is simple enough that users can see each others' playlists and trade songs, one for one.

Maybe there's even some monetization scheme possible where songs are traded or shared. Most people don't seem to mind paying a fair price to get a song they like. Maybe they won't mind paying some amount to share songs with friends or even bystanders.

The point is that walled gardens might be the logical way a service provider approaches building a new business. That doesn't mean other ways are precluded, especially when the mobile Web really gets to be popular.

In a sense, the very existence of the mobile Web ensures that innovation will happen. Some might argue a better way to approach things is structural separation, where transport and access are separated from the retail side of the business. Others will argue that it is more feasible simply to "functionally" or "operationally" separate wholesale transport and access from retail operations.

Even in the absence of those mechanisms, the mobile Web is going to allow innovators to do things "without asking permission" of the retail wireless operators. The Federal Communications Commission's rules on open network attachment for the C block will help ensure that regime, as the operator of the C block network will not be able to block the use of "open" or "third party" devices.

The likely outcome of the C block auction is that either at&t or Verizon wins it. Whichever contestant does not win the C block will pick up A and B block spectrum where it is needed to reinforce existing operations or extend the current service footprint.

Verizon and at&t simply have the business motivation to win the auction. Sprint won't be bidding and T-Mobile arguably can't afford to bid. Still, it won't halt innovation, though we won't see as much change as if an outsider with no vested interest in today's revenue models were to win the auction.

But the mobile networks are going open in some significant ways, even if the basic business model doesn't change as fast. But T-Mobile already offers a "data-only" service plan, with no need to buy voice to get the data. In principle, it should be possible for this to happen on a much-wider scale, and then users can draw their services entirely from the mobile Web, rather than using walled garden services.

The auctions probably won't be as good as some hope, but certainly not as bad as feared. And that might be case no matter which viewpoint one has. Those who want change will see measurable "goodness." Those who have reason to fear the coming changes will have time and resources to adjust and embrace the change.

When all is said and done, the auctions will neither be a disaster nor a revolution. Neither will they honestly be anything other than another important step towards more openness and choice, however. It's coming.

New Verizon FiOS Offers Will Cannibalize Data T1s

Verizon now is selling symmetrical FiOS connections aimed at small and mid-sized businesses at speeds of up to 20 Mbps as well as 50 Mbps downstream with a 20 Mbps upstream. The new offerings will put pressure on data T1 sales, but not necessarily integrated T1s used to support both data and voice, in all likelihood.

In some states (Connecticut, Florida, Massachusetts, New Jersey, New York and Rhode Island) small- and medium-sized business customers can subscribe to 20M/20M service with a dynamic IP address for $99.99 per month; or with a static IP address, the 20M/20M service is $139.99 per month -- both with a two-year term agreement.

The fastest speed available in these states is now 50M/20M for $199.99 per month with a dynamic IP address, or $239.99 per month with a static IP address -- both with a two-year term agreement.

In other states (California, Delaware, Indiana, Maryland, Maine, New Hampshire, Oregon, Pennsylvania, South Carolina, Texas, Virginia and
Washington) small- and medium-sized business customers can subscribe to 15M/15M service with a dynamic IP address for $99.99 per month, or with a
static IP address, the 15M/15M service is $139.99 per month both with a two-year term agreement.

The fastest speed available -- 35M/5M with a dynamic IP address -- has been increased to 30M/15M for $199.99 per month, or $239.99 per month with a static IP address both with a two-year term agreement.

The plans are also available with 12-month agreements at higher prices.

Along with the introduction of FiOS Internet service at symmetrical speeds of 20 Mbps or 15 Mbps, the company has also increased the speed on its fastest business Internet plans and lowered prices by as much as 35 percent.

Verizon FiOS Internet Service for Business allows business owners to choose either a dynamic Internet protocol (IP) address or a static IP address.

FiOS Internet service for small businesses is available as part of a bundle including local and long-distance calling services from Verizon, or as
a stand-alone Internet access service.

Why Video Isn't Like Voice and Data

The entertainment business--music, concerts, TV, movies, downloads, streaming, mobile, magazines, audio broadcasting, CDs, DVDs and other display devices--is fundamentally different from the voice, text and visual communications business in one really important way.

Entertainment is all about the "content" or "stuff" anybody wants to watch, listen to or interact with. For communications, you and I supply our own content, so all we need are compliant networks and devices. Other humans or in some cases machines are the "content."

Everything else about the value chain--discovery, delivery, navigation, display, audio, format, business model, pricing and packaging--is subsidiary to the availability of content one wants to view, hear or interact with. Unlike the communications business, then, it is not possible to "disrupt" or "disintermediate" any parts of the value chain without the willing cooperation of the entities that own the content people want to access.

That's really different from communications, where people can build whole networks to disintermediate or disrupt the dominant providers. You might need permission for rights of way, or a license, or an operating permit. But you don't need the permission of the dominant provider to do so.

And that is what makes video a harder business to "disrupt," even if all one wished to do is create a new distribution channel. Content owners are well aware of how they make most of their money and even how they make that last incremental five percent of their money.

So they are not going to give you access to the best content before they have wrung the expected profit out of that content using the current distribution methods. Of course, that doesn't apply to user-generated content, but the point is that most people still watch commercial video most of the time, despite UGC growth.

That makes it tough for any new distribution platform, much less any new contestant using a new platform, to get access to the "really good and highly-viewed stuff" until it is proven that the new distribution method produces more revenue for copyright holders than the older methods.

The other problem is that "when" a provider gets access is as important as "what" a distributor gets access to. This is a sheer matter of exposure. By the time a popular movie or TV show gets to online or on-demand distribution, people have had a chance to watch in movie theaters, in hotels, on airplanes, on DVDs, on premium cable channels or cable or satellite TV. Not to mention illegal viewing along the way, as well.

By definition, people have had lots of chances to see something before it is made available to emerging distribution channels such as online and streaming services. All of that limits the actual market for online or streaming delivery of content.

In principal, downloads can replace DVD rentals and sales, but only once those older formats generate less than, or equivalent amounts of money as online sales do. And that is going to take some time.

So we shouldn't be too surprised that early forays into online or streaming services face a tough, uphill battle.

Any distributor needs access to the popular content, soon enough to capture some volume, on devices with high penetration of users, in a very easy and convenient way, at prices that make sense to people.

Google has stumbled, Joost might not be doing much, Wal-Mart has folded and even Apple has had to reposition and relaunch its Apple TV service from a "buy" to "rent" model.

Video won't be as easy to disrupt as voice or data.

Uh Oh. Verizon Sues Cox Communications

Verizon Communications has sued Cox Communications Inc., claiming infringement of eight patents for providing telephone services on a data network. So far, only Vonage has had to face lawsuits over VoIP intellectual property. What isn't clear is what happens if Verizon wins the lawsuit, either outright or through a negotiated settlement.

After Vonage was found to infringe patents Verizon, Sprint, Nortel and at&t, many of us have wondered whether lots of other service providers might be found to infringe the same patents. Many independent VoIP providers and even some technology suppliers apparently have wondered the same thing, even if they won't say so in public.

Apparently we might find out relatively soon. The wider implications are pretty clear: it is not clear what Cox might be doing that any other cable company affiliated with Cable Television Laboratories is not doing. So the damage conceivably would not be limited to independent providers of VoIP services but possibly every leading cable company operating in the U.S. market.

And since Cox does not create its own technology but buys it from the same suppliers thouse other cable operators are using, one has to wonder whether there might not be exposure even on the supplier side of the business, though it is extremely unlikely Verizon or other telcos would bother their own suppliers.

Granted, any damage would be annoying, not a grave danger to any leading U.S. cable company. It isn't so clear what the damage might be at a smaller cable company, though arguably the potential size of the infringing revenues wouldn't be that great, so the penalties would be commensurate.

Atlanta-based Cox, the third-largest U.S. cable TV company, should be ordered to pay cash compensation for using the inventions, Verizon says in a complaint filed in federal court in Norfolk, Va.

Vonage's troubles, it appears, might not be confined there alone.

Google 700 MHz Auction: "Bid to Lose"?

Perhaps nobody outside Google really knows how serious the search giant will be in the auction for C block spectrum in the 700 MHz range. There remains some thinking that Google's primary objectives--getting more openness in wireless networks--are well on the way to being satisfied.

Using that line of thinking, Google will submit the minimum required bid, but nothing more, essentially "bidding to lose."

But one never knows. Given the current economic climate, and the failure of any takers for a smaller segment of spectrum that carried a requirement for public service services, the final auction price might not be as high as some had forecast just a year ago. If it appears prices might be low enough, even Google might decide it is worthwhile to play a while longer.

The 700 MHz spectrum is attractive for any number of reasons. It is the last chunk of spectrum likely to be made available for mobile use. And it's nice spectrum, with greater range than the 2.5 GHz spectrum used for much of today's mobile service. The signals also have greater ability to penetrate walls and buildings, a big advantage, as anybody who uses a mobile phone inside a building can attest.

Those signal propagation characteristics also might mean lower costs to construct the network. True, it can be argued that Google doesn't need to own that, or any other spectrum, to accomplish its mobile Web and mobile advertising objectives. But you never know. The auction might not require as much capital as many had thought just a short while ago. An opportunistic buy always is possible.

Fuzzy Thinking on Network Neutrality

With the caveat that "network neutrality" means different things to different people, it is striking that some observers think bandwidth caps for excessive use have anything whatsoever to do with network neutrality.

That's a little like arguing bigger or smaller buckets of mobile voice or text usage constitute some sort of "neutrality" issue. It's a business issue, nothing more.

The discussion is sparked by news that Time Warner is testing usage-based pricing for broadband access in a few markets, for new customers. The idea undoubtedly is that the new plans will be price neutral for 95 percent of customers, and affect only "extreme" downloaders or really-heavy peer to peer customers.

Once the test starts, new customers will be offered a choice of four plans that allow them to download set amounts each month--5, 10, 20 or 40 gigabytes. The typical user now consumes something on the order of three gigabytes a month.