$200 iPhone Subsidy from AT&T in June?

When the 3G iPhone is introduced this summer, AT&Twill cut the price by as much as $200, says Fortune magazine writer Scott Moritz. That would bring the phone's cost down to $199 for customers who sign two-year contracts.

Apple is expected to have two versions of the new iPhone, an 8-gigabyte-memory and a 16-gigabyte-memory model with "list" price tags widely expected to be $399 and $499.

Such a move would create significant churn potential for rivals Verizon Wireless, Sprint and T-Mobile.

The $200 rebate or subsidy would be limited to AT&T customers and not available through Apple’s stores.

The average iPhone user however, runs up a $100 tab each month due to the higher priced data and calling plan. That would give AT&T an quick payback on its $200 outlay.

Such a move also would snare more of the ultimate iPhone market as AT&T moves closer to the eventual end of its exclusive deal with Apple. And since the iPhone has proven to be such a boost for mobile broadband, AT&T logically would believe much-wider iPhone adoption will help it get where it wants to go, in terms of mobile broadband revenues.

Rich Media: 20% of Online Ads by 2012

eMarketer predicts that spending on online rich media and video ads will account for nearly one-fifth of all online ad spending by 2012, up from 9.7% of all online ad spending in 2007.

"Video ads command higher prices than static display advertising," says David Hallerman, senior analyst at eMarketer. "That both boosts overall ad spending and draws in more dollars from traditional brand marketers, who have been reluctant to commit much of their ad budgets to the Internet."

Ongoing experiments with video ad formats and a lack of standards have, in part, kept the online video ad market from even stronger revenue growth.

Other hurdles have included limited high-quality video content to attract big advertisers and unresolved issues such as traffic measurement, which will be needed to gain the trust of the most deep-pocketed marketers.

As those problems are solved, spending will increase. eMarketer predicts that US online rich media and video ad spending will total more than $9.4 billion in 2012, which is more than four times as much as the 2007 spending level.

Windstream Doubles Access Speed

Windstream has doubled the Internet speeds available across most of its 16-state network, offering 12 Mbps service in certain areas and expanding the availability of 3 Mbps and 6 Mbps service. The company now offers 3 Mbps service to virtually all of its broadband addressable lines as a result of the network upgrade.

“Windstream experienced a four-fold increase in Internet usage in 2007 as our broadband customer base grew 28 percent year-over-year,” says Ric Crane, executive vice president and chief marketing officer.

Windstream high-speed Internet service is available at any speed – including 12 Mbps, 6 Mbps, 3 Mbps and 1.5 Mbps – for $19.99 per month for the first six months with qualifying services in participating areas.

Comcast Boosts Business Class Access Speed

Comcast has boosted its "Business Class" Internet access speed from 8 Mbps downstream and 1 Mbps upstream, to 16 Mbps and 1 Mbps, respectively. The increase, offered in all Comcast markets, comes at no extra cost. Prices for the MSO's Business Class Internet service range from $59 to $89 per month.

Unmanaged bandwidth is getting cheaper and faster all the time, despite the fears some have had that a strong duopoly in the U.S. market would inhibit such moves. The task now remains for providers of quality-assured bandwidth to make the case for why managed bandwidth is more important, has value, and is priced accordingly.

Fixed Mobile Convergence Drives Quad Play

Fixed mobile convergence might be shaping up as a key driver of "logical" quadruple play bundles. Of the top values cited by respondents to a Compete survey in early 2008, three of the four most important features involved integration of home (fixed) phones and mobiles.

Another significant finding: 97 percent of consumers were most interested in the broadband Internet service component of the bundle.

These two top findings suggest that FMC is as big a deal as many say, and that broadband has emerged, at least among technology-savvy users, as the single most important service delivered by a wired network.

The new survey also is interesting in suggesting that consumers finally are figuring out conditions under which a wireless service is a "logical" part of a bundle.

In past years, people seem to have better understood or accepted the idea that a voice service and Internet access service "go together." They now are comfortable with the idea that video and Internet access go together, or that voice and video can be bought in a package.

Wireless and wired voice service seems to have been less obviously a logical bundle for most consumers. But the ability to integrate the mobile and landline phone obviously is resonating in a new way.

Compete says interest in bundles increased 55 percent from July 2007 through March 2008.

More than four out of 10 respondents say they would either be "likely" or "very likely" to consider purchasing mobile phone service from their telecommunications provider.

Stronger FiOS Growth than DSL at Verizon

Verizon digital subscriber line growth in the first quarter was up sequentially about six percent, a fact that leads some to conclude that DSL adds are slowing. There's some truth to that, caused primarily by growing saturation of the broadband access market.

FiOS account additions were up to 23 percent, sequentially, though. Some customers logically are upgrading from DSL to FiOS, though.

Some observers might argue that Verizon's churn rate is up. That's obviously caused by current DSL customers upgrading to FiOS. Excluding the internal upgrades, the churn rate for DSL services hasn't budged, Verizon executives say.

In the most-recent quarter FiOS net subscriber counts were up by one million, year over year, while net DSL subs were up about 170,000.

Unlimited Mobile Plans Are Revenue Accretive

Despite fears of a new and devastating price war caused by unlimited calling plans, the opposite seems to be occurring.

Quite to the contrary, the new plans seem to be encouraging users to trade up, and add more-capacious data plans as well, at least at Verizon Wireless.

"In the first quarter our unlimited plan accounted for 13 percent of our single line retail post-paid adds, says Denny Strigl, Verizon Communications COO. "That compares to about four percent choosing the $99 or above tiers before the plan was launched." Lots more users seem to be trading up to the more-expensive plans, in other words.

"We’re seeing good growth in high tier voice plans," says Strighl. There are churn benefits, which was the impetus for the plan. What might have been unforeseen is the increase in usage of data services and aggregate growth of customers moving up to the $90 plan from lower-revenue plans.

"Additionally, a high percentage of the new customers who choose an unlimited plan also choose our select or premium data packages," says Strigl.

"In March, which was the first full month after the launch, our average daily disconnects declined six percent from previous months and that is at the voice access tier $79 and above," says Strigl.

It appears that there are more users willing to trade up than there are heavy users finding they can save money by trading down, in other words.