Ovum says Demand, Not Access, is Chief Broadband Problem

Digital divides in developed economies are less about limited broadband availability and more about a lack of broadband demand and complex interfaces, say analysts at Ovum. In that that regard, Ovum joins a growing number of policy advocates who now recognize there is a difference between broadband availability" and "broadband use."

Though there clearly are some locations, largely in rural areas, that do not yet have a choice of wired providers, most rural U.S. locations, for example, can receive satellite service from two providers, HughesNet and WildBlue. And as many as 96 percent of U.S. homes can receive cable modem service, while 90 percent or so of U.S. locations can get digital subscriber line service from a telephone company as well.

 

“There has been significant focus on the limited availability of broadband as the main factor in creating digital divides” says Charlie Davies, Ovum senior analyst. "In fact, Ovum, as well as other consumer surveys and studies, have shown other factors such as a lack of demand as being a more significant barrier”.

That's an important distinction, since solving a problem requires defining accurately what the problem is. One might argue that not enough people buy BMWs because they can't get to a nearby dealership (an access problem). One might alternatively argue that more people do not buy BMWs because it isn't the right vehicle or because it costs too much (a demand problem).

Observers increasingly are acknowledging that demand, not access, is the main problem, though some areas are remote enough that physical access by wired facilities remains a problem.

In many developed markets, broadband penetration is now well over 50 percent but overall broadband growth is slowing, despite the fact that broadband availability is at an all-time high. Ovum says this situation is due to  a significant minority of people not being interested in taking up broadband, or other significant barriers in doing so (not interested in using the Internet, not owning a PC, not knowing how to use the Internet or not able to, or willing to pay for service, for example).

"Many people without broadband or the Internet are put off by overly complex devices and interfaces that cater to the technically literate," says Ovum. "In addition, users with disabilities are largely under-served."

The cost of using the Internet also is a barrier. So demand stimulation, not physical access, is the chief impediment to higher broadband usage.

Recession Drives Video Conference Interest

Among respondents that do not currently use video conferencing, 68 percent say expections they can save money on travel expenses is the most important factor driving their adoption of video conferencing in the next 12 months, says In-Stat.

One might safely assume the recession, and the desire to cut discretionary expense, accounts for much of the current interest.

Some 57 percent of decision-makers indicated their organizations have formal video conferencing policies in place and those policies are designed to maximize return on the video conferencing investment, particularly when it can be used to mitigate travel, says In-Stat.

“U.S. business users find video conferencing to be more appealing and beneficial when the sessions involve sharing files, collaborating on documents, and adding or including key individuals in the sessions dynamically,” says David Lemelin, In-Stat analyst. “There is also a strong desire to use video conferencing capabilities at the desktop, where users have better access to their complete set of communications and collaboration capabilities, including IM integration.”

http://email.in-stat.com/cgi-bin4/DM/y/hBREt0LeRpW0K560DHgc0EQ

BT Model for United States?

Competitor mandatory wholesale access to voice and broadband access services has been good for BT and the United Kingdom, and might be useful in the United States, says Sir Michael Rake, BT chairman. Though rules are not completely finalized for new optical access lines, BT's massive loss of market share in the landline voice and broadband access markets has forced the company to be more aggressive about new services, he says.

"It was painful at the time but has been better for the country and consumers in the long run," Rake says.

Today, BT generates annual revenues of about 20 billion British pounds, the same as five years ago. Accounting for inflation and new services, one might argue the results have been negative for BT, as good as they have been for retail consumers.

The average speed for broadband access has nearly doubled to 2 megabits a second and the price for service has been reduced by an average of 50 percent from five years ago.

The best way to get more people to adopt high-speed Internet is to create competition through a regulatory framework that forces the biggest players to open their networks, Rake argues.

http://voices.washingtonpost.com/posttech/2009/05/british_telecom_chairman_rake.html

Separate NOFAs for Broadband Stimulus

Get ready for the broadband stimulus fire drill. Sometime in June, the thinking goes, the National Telecommunications & Information Administration and the Department of Agriculture's Rural Utilities Service will issue the required Notice of Funds Availability (NOFA) outlining criteria and application processes for the $7.2 billion in "broadband stimulus" funds the agencies will be disbursing, presumably in three rounds.

It now appears there will be separate NOFAs.

"There will be separate NOFAs," says MarkTolbert, NTIA spokesman. "To my knowledge, NTIA and RUS will each issue their own NOFA."

http://www.stimulatingbroadband.com/2009/05/obamas-federal-broadband-stimulus.html

Verizon Signs Landmark FiOS Wholesale Deal with DSL Extreme

Verizon Communications has signed a deal with DSL Extreme allowing that firm to resell Verizon's FiOS Internet service in 17 states. The move is important for several reasons. Most observers think wholesale access on incumbent access networks is a key underpinning for a wide range of competitive offerings, and the status of such access when access loops are converted to optical technology remains unsettled.

Most observers might agree that Verizon's move also helps it counter mandatory access regulations. Verizon and other service providers have opposed mandatory access rules that do not offer a reasonable return on investment, preferring voluntary business arrangements.

Others will argue that Verizon's move aims to head off such regulations by providing some degree of wholesale access, to some providers, but in ways that protect wholesale margins. Time Warner Cable did something similar with its wholesale broadband efforts, allowing a few competing providers access, but not to any and all other contestants. 

DSL Extreme's Fiber Extreme is now available to 10.4 million households in 17 states where FiOS Internet service is available, including California, New York, New Jersey, Pennsylvania, Texas, Virginia and Washington.

Introductory residential pricing for Fiber Extreme is $99.95 per month for up to 50 Mbps; $54.95 per month for up to 20 Mbps; and $39.95 per month for up to 10 Mbps.

It is uncertain how this move will affect later wholesale access to FiOS broadband facilities, or even what positive impact might ultimately result for broader support of broadband competition on a voluntary or mandated basis. 

What is clear is that DSL Extreme will have ample opportunity to add on its own applications and value to the "dumb pipe." 

http://www.multichannel.com/article/231631-Verizon_Signs_National_Reseller_Deal_For_Fiber_To_Home_Broadband.php

Pull, Not Push, Obviously is the Way to Handle Mobile Marketing

No question about it: mobile marketing has to be "pull" rather than "push" oriented. Otherwise, it's pretty close to spam. But I think most people have got that figured out.

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=105751&lfe=1

Is There a "Dumb Pipe" Business Model?

No question so occupies wired network service provider attention as the recrafting of the business model known as the "dumb pipe." In some ways, it is an unusual question, if only because virtually all retail service providers say that is the one way they will not plan to grow their businesses.

If anything, virtually every executive wants, where feasible, to "move up the value chain," adding more value and functionality, not less.

There are isolated examples of "dumb pipe" models, such as in Singapore, where a new wholesale-only network access company will sell service to all other retail providers. There are more examples of hybrid models, where a functionally separate wholesale entity provides services to all retail providers, but where actual ownership of the assets might remain with a former incumbent or new provider.

Virgin Media, for example, has at least considered offering other retail providers wholesale access to its access network, though company executives publicly deny a recent report that it has concrete plans to do so.

So wholesale is the only area where there might be some modicum of serious debate is over the role of wholesale services. And in most cases, the only reason wholesale is a subject of serious investigation is because regulatory authorities have forced service providers to operate in a robust wholesale environment leading to huge loss of market share.

That said, in most cases it quickly will become obvious that "dumb pipe" operations have to be managed just as any other element of the business, but cannot, in and of themselves, support all the current or future operations of a service provider business at a time when the current revenue base is eroding.

Whatever one might say, it seems generally clear that "dumb pipe" can be a business for a wholesale-only entity, but not so clearly, thus far, a retail operation. Even some firms that have tried the wholesale-only route typically wind up getting into their own retail operations as well.

So far, executive preferences notwithstanding, market experience tends to suggest there are some successful "dumb pipe" business models, primarily found in the wide area network backbone, where "capacity" is the product, and some limited evidence that wholesale-only access opportunities may exist where regulators require it.

So far, though, in the retail, end user business, dumb pipe has not yet proven to be sustainable.

http://www.guardian.co.uk/business/2009/may/04/virgin-media-cable-network-internet