Wi-Fi Plus Bluetooth Coming in 2009

A new standard will allow Bluetooth devices to switch to Wi-Fi for file transfers if Wi-Fi is available, according to Michael Foley, director of the Bluetooth Special Interest Group. The new features should be available in 2009.

Bluetooth also is compatible with ultra-wideband technology, but Wi-Fi now is seen as important as well. It is expected that chip vendors will start putting both Wi-Fi and Bluetooth functions onto a single chip, instead of the separate approach now popular.

The combination devices will use the regular low-power Bluetooth radios to recognize each other and establish connections. If they need to transfer a large file, they will be able to turn on their Wi-Fi radios, then turn them off to save power after finishing the transfer, Foley says.

It's just one more detail for consumers to track.

More Trouble for Cable?

Once upon a time, the cable TV industry was a struggling insurgent industry, long on hope, short on finding, basically a rural market service retransmitting urban market off-air signals to areas that couldn't receive them.

All that changed during the 1980s when major metro markets were wired, channel capacities grew into scores and independent programmers changed the business from "remote channel importation" to an "add choice" model.

By the 1990s cable gradually captured 70 percent of homes. Over the last 19 years, as video penetration saturated, cable modem and voice services emerged as the growth drivers. But cable now is an incumbent. Like the telephone companies, it faces negative growth in its legacy business, partly from satellite providers but increasingly from at&t and Verizon.

As a result, cable stocks have dropped about 35 percent since last summer. UBS analyst John Hodluk thinks more pain is coming, as consumer spending slows, broadband access additions decelerate and the telcos start to make themselves felt in video service.

Hodulik says the two telcos will double the reach of their video services this year to about 18 percent of homes passed, and will double again by the end of 2010. As a result, cable basic sub losses could triple in 2008.

On the other hand, Qwest Communications might lose nearly 10 percent of its consumer lines this year as well.

The good news for most telcos is that revenue sources have diversified quite a lot over the past decade. Consider Cincinnati Bell, an independent telco.

About 83 percent of its service revenue in 2007 was earned from areas other than the traditional consumer wireline voice traffic. In 2006, Cincinnati Bell earned about 80 percent of its total revenue from sources other than consumer landlines.

Business market revenue is part of the reason. Revenue from data center managed services increased 43 percent in 2007, for example. Wireless service revenue from business customers grew by 17 percent and business access lines were actually up almost two percent. As a reflection of this growth business markets revenue represent a 57 percent of total 2007 revenue compared with 55 percent in 2006.

Which is largely what the Federal Communications Commission forecast would happen when it decided the basic competitive framework for the U.S. market would be to encourage the telcos and cable companies to have at it. That hasn't been helpful for other would-be competitors, including competitive local exchange carriers and independent VoIP providers.

But there's reason to believe the framework is working, at least to a significant extent. A great deal of the credit, though, is because of the contributions made by Internet-based application providers. That payoff seems clearer every day.

Writers Strike Encourages YouTube Sampling

There often are unanticipated consequences in life, and it appears that the U.S. entertainment industry writers strike has given people an opportunity to sample more online video clips than ever before, comScore suggests.

Its December 2007 report suggests U.S. Internet users watched more than 10 billion videos online during the month, representing the single heaviest month for online video consumption since comScore initiated its tracking service. Google saw substantial growth and extended its video market share gains, now accounting for nearly one out of every three videos viewed online.

The issue isn't so much that online videos are a replacement for network TV shows. The issue is that online video viewing is a substitute use of time and attention. Ultimately, that is crucial for any media segment and the contestants within any segment.

Essentially, the writers strike has encouraged users to sample a new product. And sampling typically is one of the best ways to encourage users to adopt a new behavior. One of the unanticipated effects of the writers strike may be that a new group of online video viewers has been added, with a permanent change in at least some of their entertainment video habits.

“December represented a considerably strong month for online video viewing,” says Erin Hunter, comScore EVP. “With the writer’s strike keeping new TV episodes from reaching the airwaves, viewers have been seeking alternatives for fresh content. It appears that online video is stepping in to help fill that void.”

Online viewers watched an average of 3.4 hours (203 minutes) of online video during the month, representing a 34 percent gain since the beginning of 2007.

The average online video duration was 2.8 minutes and the average online video viewer consumed 72 videos.

More VoIP Patent Trouble

Verizon now is suing Charter Communications as well as Cox Communications for infringing eight VoIP patents. Included are the three patents Vonage was found guilty of infringing last year, plus several that relate to maintaining quality of service. In principle, it is not clear why every major cable company in the U.S. market is not guilty of infringement if Cox is found to be infringing, as virtually all the cable operators use the PacketCable framework.

United Online: Harvesting Cash Flow

With the latest fourth quarter and year-end reports now out from United Online, AOL and EarthLink, the expected trends continue. Dial-up Internet access, like stand-alone long distance before it, throws off cash flow, but less every year. All three leading independent Internet access providers are in the midst of transformation projects, with United Online succeeding most clearly, though it failed to pull off an initial public offering of its Classmates.com unit.

All three ISPs essentially are managing their dial-up bases to harvest cash flow and control costs, the standard prescription for managing a declining business, while seeking a new path to growth. That's the same path the independent long distance industry took as well.

Perhaps the best historical analogy is not long distance but paging. Basically, mobile phones replaced pagers, as broadband is supplanting narrowband access. But paging remains a business. It simply isn't as large a business as it once was, and is the province of specialists. That's the ultimate future for dial-up services in the medium term as well.

As this data from the Canadian Radio-television and Telecommunications Commission indicates, paging use and revenues have been declining steadily since 1998. Dial-up will be around for a while, but as a small niche within the broader range of access services.

VoIP Inc. Gets Out

VoIP, Inc. has gotten out of the independent VoIP business as a provider of services that replace standard phone line service. It has decided instead to recast itself as a provider of "click-to-call" applications. The Company therefore has suspended all of its telecommunications network operations including all current revenue generating operations.

The company also reduced its workforce by 25 persons, eliminating most of its network operations and software engineering staff.

Some participants in the U.S. VoIP marketplace think the next two years will see the demise of most of the independent U.S. providers who do not own their own access networks. The average revenue per user is simply too low, the profit margin too thin and the volumes too low.

Hoping is not a business plan.

Content, TV Display Key to Online Success

The most-important things online movie download services can do to succeed is offer a broad selection of content and make it possible to view that content on TVs, which is the expectation users now have for movie content. That's because the single most important ingredient for success for any video offering is the content.

That isn't to say content pitched to mobiles or PCs can't find a niche. It is to say that the broad mass market for online-delivered movie viewing won't become a mass phenomenon until user behavior is consistent with what consumers expect today.

"When it comes to movie rentals and purchases, the quality of content matters," say analysts at The Diffusion Group. The second crucial element is that "getting video downloads to the TV is absolutely imperative."

The ability to view movie downloads on any TV in the home is of critical importance, both to those that have used online movie download services and those likely to do so soon, The Diffusion Group says.

The use of mobile phones for video viewing is not considered sufficiently desirable to justify using an online movie download service, Diffusion Group researchers find. "As such, cell phone video viewing will not in-and-of-itself be a compelling attribute for an online movie download service, especially of full-length movies.

And there's a difference between users and proponents. Proponents emphasize the interactive capabilities online content enables. But users don't seem especially enamored of those sorts of features, as fond of them as interactive proponents are.

Adult broadband users don't agree. "Only 28 percent rank this attribute positively and 42.3 percent rank it unimportant," Diffusion Group researchers say.