Get 'Em in the Gate, They'll Spend in the Park

Six Flags says spending by customers inside its theme parks increased 13 percent over prior quarters, in the fourth quarter of 2007, the first quarter of 2008 and the first two months of the second quarter.

With just about everybody now skittish about the impact of economic sluggishness on consumer spending, that's not only reassuring for Six Flags, but a metaphor for what service providers might consider as well.

"Getting people inside the park" in that case means creating and sustaining a relationship, with virtually any single service. Once that is done, there is an opportunity to sell other things. In Six Flags' case that is food, beverages and souvenirs.

For service providers, it is an array of other services, applications or usage upon which partner revenue streams can be created. An entirely new "targeted" advertising business might be created on the back of widespread "video on demand" or "content on demand" offerings, for example.

It isn't yet clear how current charging mechanisms might change, and there is lots of standardization work to be done so potential advertisers can buy what they want conveniently. Not to mention the "danger" that Google and other application providers get there first.

Still, the analogy, though imperfect, is instructive.

42 Mbps iPhone?

An unnamed Telstra executive tells Australia-based ChannelNews that the Telstra version of the Apple iPhone will run at download speeds as high as 42 Mbps.

"We know what is coming we have seen the new device and it will be available on our network as soon as it is launched in the USA," the executive is reported as promising. "By Christmas this phone will be capable of 42 Mbps which will make it faster than a lot of broadband offerings and the fastest iPhone on any network in the world."

Whether fully correct in all details or not is less important than the ultimate reality of the claim. Wireless providers indeed are readying networks that will run that fast, and faster in the future.

Mobile devices capable of communicating that fast might not be as disruptive as mobile voice threatens tethered voice in some markets.

The larger issue is that once mobile broadband connections run that fast, and ultimately faster, some percentage of single-household users might well find mobile broadband a suitable replacement for fixed connections.

My gut level expectation, though, would be that most mobile broadband connections will supplement rather than supplant fixed broadband. There simply are too many other interesting reasons to maintain a fixed broadband connection.

Mobile voice does not suffer from form factor issues that make it a convenient replacement for tethered voice, for example.

Mobile broadband might cannibalize fixed broadband in some cases, but logically as a substitute for PC connections.

An iPhone operating that fast will enable sessions that largely are supplemental to fixed broadband.

SureWest: Broadband Exceeds Telecom

Make no mistake: transforming a legacy "telco" into a "broadband" company is tough, expensive, often-slow work. But SureWest Communications, for the first time, now makes more money from broadband revenues than from traditional telecom segment revenues.

A couple of observations. SureWest lumps its out-of-region services in the "broadband" category, so the growth is not all in-region broadband access connections and video, though both are growing.

Still, the milestone is important. SureWest is in some ways a "classic" smaller, independent "telco." But it has invested heavily in fiber-to-home networks based on Ethernet standards and IPTV. It has no mobile assets and has "bet the farm" on broadband.

But the strategic implications are impotant. It has gone "out of region" in an important way. Most smaller entities, as well as tier one providers, now find that out-of-region growth is crucial.

Also, business customer revenues are important. Over time, as it faces heightened competition from cable companies in the consumer space, SureWest has found business customers a more important customer segment.

That will be true for most smaller providers that cannot rely on mobility or mobile broadband to fuel growth.

Will Millennials Use Email?

Email is not going away, isn’t dead, and won’t be dead for a long time, says Media Post's Loren McDonald. The statement might seem odd, except it occurs after a panel of college-age Internet users at the Email Insider Summit.

One of the difficulties, when trying to predict how enterprise communicatons might change as Millennials enter the workforce, is precisely the fact that most of them are not in the active, full-time workforce.

Just as a "lone eagle" professional does not need a full enterprise-grade, premises-based phone system, so a college student has no need for one either. So it is hard to extrapolate from one stage of life pursuits to another than requires collaboration with other people in an existing social ecosystem, with established rules for communicating.

Today, the commonplace and accurate observation is that instant messaging and text messaging are preferred over email. But pre-workforce users will change as their life circumstances change.

That doesn't mean "nothing important will change." At a minimum, Millennials will retain the IM and texting habit for purely "personal" communications, even if they get used to email for business-related communications.

Beyond that, the additional implications are hard to predict.

Viacom CEO: No Way to Tell What Will Work

”We come at Joost or other platforms from the point of view that we cannot predict, nor did we in that case or any other case, predict which ones are going to be hugely successful, moderately successful, which won’t work," Viacom CEO Philippe Dauman says, reported by according to paidContent.org co-founder Staci Kramer.

“This is an age of experimentation," Dauman says. "Some models that sound great don’t work that well."

A reasonable approximation of just about every new application, or major change in use of an existing application, don't you think?

SaaS: Aggressive Mid-Market Adoption

A recent Saugatuck Research worldwide survey of enterprise executives finds continued, strong growth in the adoption and deployment of software-as-a-service (SaaS).

According to the latest data, mid-sized firms are the most aggressive, and most satisfied, SaaS users.

Overall, the research indicates that nearly 40 percent of companies across all size categories will have adopted at least one SaaS application by year-end 2008.

Saugatuck believes that the number of firms that are likely to completely avoid SaaS is likely to drop to less than 5 percent within 3 years.

By 2012, 70 percent or more of businesses with greater than 100 employees (worldwide) will have deployed at least one SaaS application.

Interestingly, the largest of firms (with greater than 5,000 employees) appear to have gone through the most significant learning-curve – as they seek to understand how SaaS (as well as Open Source) will become fully interwoven into the fabric of enterprise architecture. In fact, only two years ago, our research indicated significant resistance to SaaS among large-company CIOs – but our most recent research indicates that only 4 percent of companies with greater than 5,000 employees are planning not to deploy SaaS.

This is a significant change – and shows how SaaS will reach into the largest of companies, as well as small-to-mid size enterprises.

Executives at mid-sized firms indicate greater familiarity with SaaS than executives at other sizes of firms. Firms with between 100 and 499 employees showed by far the greatest familiarity with SaaS (86 percent – "familiar", "very familiar", or "extremely familiar") – 5 percent to 20 percent higher than all other company sizes.

A greater percentage of mid-sized firms are using or planning to use SaaS. Forty five (45) percent of firms with between 100 and 499 employees are using or expanding their use of SaaS by year-end 2008.

The next-closest group, "Large" firms with between 1000 and 4999 employees, showed 43 percent either using, planning to use or expanding their SaaS usage by year end 2008. 

While satisfaction with SaaS solutions is very high across all sizes of customer firms, executives at mid-sized firms show higher satisfaction with their current SaaS solutions than do executives at other sized firms.

And that high satisfaction includes more areas of SaaS than with either Small or Large firms. Amazingly, 95 percent of executives at firms that we surveyed with 100 to 499 employees (representing almost 25 percent of our sample) indicated they were "satisfied" with their overall SaaS experience – with the average of all firms registering a whopping 84 percent satisfaction rate.

Saugatek defines "Small" companies as those with less than 100 employees.
Mid-sized firms are those with 100 to 999 employees.

Large firms are those with 1,000 or more employees.

New Zealand Tries to Earmark $252 Million for "Open Access" Broadband

The New Zealand government has proposed creating a Broadband Infrastructure Fund of NZD325 million (USD251.6 million), to be spent over five years. NZD250 million would be earmarked for fiber and other high speed open-access networks in urban areas, and the remaining NZD75 million would help fund broadband infrastructure in rural areas.

Applications would be taken August 2008, with the first decisions on projects made in June 2009.

The urban grants require a match from the applicant. The rural fund would have ‘less onerous’ application criteria.

It normally is perilous to compare countries too closely in the area of what works and why. Loop lengths, density, geographic size, household size, demographics, taxation policies, prices, terms and conditions, government policies and any number of other factors condition the success of particular applications and services.

In the U.K., for example, cable has not emerged as such a powerful competitor in triple play markets for the simple reason that satellite-delivered video is so dominant there. Also, robust wholesale unbundling of copper access loops encourage competitors to lease capacity from BT rather than wasting time and money building facilities.

Still, one wonders how successful the New Zealand plan might be. Open access networks in the sense of robust wholesale have not worked all that well in the U.S. market, though one can point to Western Europe as a place where access to the incumbent access facilities has worked.

And where it has been successful, open access appears to have worked best on incumbent, rather than competitive networks. Sheer payback issues might suggest why. An incumbent almost always has written down the value of the copper assets, so a business can be made on lower-priced wholesale loop rentals.

A brand-new network has to recover the full cost of new construction, again using the lower-priced wholesale revenue model. Huge volume makes a difference, but huge volume is tough to get.

Some executives speculate that wholesale networks sometimes attract competitors with little operational knowledge of voice, data, networking or video. Those contestants often are underfunded and ill-equipped for the long term tasks of providing a high-quality service to mass market customers, with the almost-inevitable result that high initial take rates are followed by high customer churn in a year or two when quality issues have surfaced.

Hopefully, the New Zealand initiative will operate in some like manner to rural telecom subsidizes in the U.S. market, essentially helping defray high capital investment costs. Subsidizing insufficient demand, on the other hand, will doom the projects before they begin.