Verizon: 2.7% Consumer Wireline Revenue Gain

In football, they'd call his "tough yards on the ground." Verizon's four percent increase in fourth-quarter profit came primarily from the mobile business, as traditional land-line metrics continue to drift lower, despite gains in FiOS broadband access, Digital Subscriber Line sales and FiOS TV services.

Still, quarterly revenue in the consumer segment was up 2.7 percent, a significant achievement against a backdrop of share losses in the legacy consumer wireline voice business.

Verizon added about two million net wireless customers in the quarter, offsetting wireless declines of about 616,000 lines. For the full year 2007, Verizon lost about three million residential lines, or 10.6 percent of total, while business lines dropped 3.7 percent.

In essence, Verizon is getting higher average revenue per unit in its wireline business, even as the total number of customers is dropping. If you wanted any proof about the revenue impact product bundling has, Verizon is providing the evidence.

Though there are important churn reduction effects, the primary reason dual play, triple play and quadruple play offers work is that they raise ARPU dramatically, allowing service providers to build businesses based on scope (selling more things to customers) rather than scale (selling the same thing to more customers).

The company added 245,000 net FiOS broadband access customers as well as another 226,000 net FiOS TV customers in the most recent quarter.

Communications-Enabled CRM

C3IP Communications, a privately-held VoIP provider based in Scottsdale, Ariz., has integrated its communications functions with the Act! customer relations management software. As a result, C3IP clients using Act! have access to customer histories, account information and other resources whenever customers call in.

These days we might call the availability of communication features inside an application a "mashup." Decades ago we would have called this an example of computer-telephony integration. By either name, the idea is roughly the same: embed communications inside a business process.

Verizon FiOS TV up 356% Year Over Year

Verizon has broken the one million TV customer mark for the first time, growing its subscriber base 356 percent in 2007. Clearly, Verizon's network construction and video franchising phase now is yielding to the marketing phase. The next couple of years will provide us with a better handle on just how well Verizon will do as a provider of video entertainment services, but FiOS TV does not appear to have suffered the technology or performance challenges that have beset at&t's U-verse offering in the past.

So the issue now is how well Verizon will do in the market share battle with cable companies, as each swaps share in their legacy businesses while trying to gain the upper hand in the broadband access business. Up to this point cable has had the advantage, gaining more voice customers than Verizon and at&t have gained video customers.

Depending on whose data one wished to cite, telcos either have closed the gap with cable or are taking more new share in the broadband access business than cable companies are. The installed base generally is seen as reflecting a lead for cable, but the installed base gap is expected to close over the next couple of years, by most estimates.

Packet 8 Grew Customer Base 66% Last Year

It appears 8x8's Packet 8 hosted VoIP service for businesses gained about 4,000 net customers last year. In December 2007 the company reported having 10,000 customers. In December 2006 it had about 6,000.

FiOS, FTTN as Marketing Platforms

BT plans to launch its 24 Mbps service in April 2008 with available coverage reaching in excess of 50 percent of the U.K. market by April 2009. It will be using a fiber-to-node network very similar to at&t's FTTN network, with copper drops. Both BT and at&t believe that is sufficient bandwidth for anticipated customer demand. In at&t's case that also includes IPTV and HDTV services.

They might be right. But there is something more than bandwidth at issue here, and that is the marketing platform. If you have Millenial children, ask yourself what their preferences are in the area of broadband and video entertainment providers (You know they all rely on their mobiles).

Up to this point, though, it has been the common pattern to buy both video and broadband from the cable company. What we need to watch is what happens when services such as Verizon's FiOS fiber to home service are available. The issue is not just how much bandwidth they need or will pay for.

The issue is whether FiOS or fiber to home services are a more compelling product than cable modem services.

TowerStream: 8 Mbps for $1,000 a Month

Wireless has been the perennial favorite for believers in facilities-based access competition to the entrenched telephone and cable companies. Some 25 years ago, proponents argued that Multichannel Multipoint Distribution Systems (MMDS) based on 2.5 GHz spectrum were going to be the way new video entertainment providers would gain a foothold.

That effort failed. Similar spectrum then was touted by the likes of Winstar, Teligent and others as a solution for high-speed access in the business market. The effort failed.

Much spectrum then was acquired by firms such as Sprint Nextel, BellSouth and MCI and spend years essentially languishing. Now Clearwire and Sprint say the former MMDS spectrum will be the foundation for WiMAX.

We shall see. A smaller new company, Towerstream Corp., is selling 8 Mbps broadband connections for $1,000 a month in eight markets, and currently plans to operate in 20 cities within two years.

In its Seattle market, starting February 1, new customers will be able to buy 3 Mbps connections bandwidth for $499 a month, with free installation. Towerstream offers businesses a range of bandwidth options including T1, T3, 100 and 1000 Mbps connections

The company has established networks in Los Angeles, Miami, Chicago, Seattle, the San Francisco Bay Area, and the greater Boston, Providence and Newport, R.I.

Using WiMAX technology, the company can “light" a city with just a few antennas. Its New York City network uses four antennas, including one on the Empire State Building.

TowerStream undercuts competitor prices for a T1 line by 50 percent or better. The small antennas that the company locates at the customers’ premises are installed by contract DISH or DirecTV installers.

Provisioning intervals normally are two or three days, compared with three to six weeks for a T1 line from a telephone company or competitive local exchange carrier.

Mid-band speeds in the 8 Mbps to 10 Mbps range seem to be the "sweet spot."

TowerStream appears to be using both telesales and direct sales approaches. It is said to have a 180-seat telemarketing center and is in the midst of expanding its sales force to 160 people, according to Morgan Joseph analysts, who say the company won 27 contracts in eight days, on the strength of 58 proposals. The company appears to have 100 or so direct sales reps trained and ready to call on prospects.

If history is any guide the company should enjoy at least modest success. By avoiding the mass market, it stays out of the way of 3G and other 4G networks aimed at consumers and small business. That's a strategy that lots of other wireless access providers also use.

So far, however, no single entity has managed to build a big business on the backs of fixed wireless broadband in the small business, medium-sized business or enterprise markets. And it may be that the path to success is precisely to operate as a niche provider, in high-density markets, without getting grandiose. That's typically where operators have stumbled in the past. But we'll have to watch and see.

In many cases the business case rests on prosaic concerns. LMDS operators found they had trouble getting access to rooftops once landlords decided they were sitting on a gold mine. It wasn't, but the incremental real estate access charges were enough to kill the business case.

Then there is the availability of riser and conduit space, access to it and the cost of new cabling. Assuming those sorts of issues can be managed, TowerStream might have a shot, at least in some markets, such as New York.

Bandwidth in the 8 Mbps to 10 Mbps range is a bit more than the 4 Mbps to 6 Mbps mid-band Ethernet service some other providers are finding attractive.

"Year of the..."

Be careful when anybody declares this or next year the "year of X." Such predictions inevitably are wrong. That doesn't mean the direction of a trend is wrong, just the timing.

So when Google CEO Eric Schmidt says the recreation of the PC and Internet stories are before us, he's right about the direction. When he says it is "very likely it will happen in the next year," he's most likely wrong about the timing.

The mobile Web will be a "huge revolution", as Schmidt argues. But it isn't going to reach the tipping point next year. Proclamations of the "year of the anything" are universally incorrect.