Consumer Spending on Internet Access, TV and Mobility is Stable, Poll Suggests

Cutbacks in home communications and entertainment services have yet to emerge as a measurable trend, despite the ongoing recession, say researchers at Pike & Fischer, who recently polled 600 consumers nationwide about their spending on phone, Internet and multichannel video.

Scott Sleek, Pike & Fischer director of broadband advisory services, says the firm conducted the survey because it has been hearing so much "doom and gloom" from service provider executives.

But the study indicates respondents say they would rather keep Internet, video and voice services in their budgets than any other type of expense, including gym memberships, personal care products and apparel.

But the results also point to customers becoming more aware of ways to spend less on those services. That suggests average revenue per user is, or will soon become, an issue for service providers.

"We found very consistent consumer behavior," says Sleek. "We found no evidence of downgrading, for example."

"What I found interesting was that when we asked what people planned to do with their phone and TV services, most said they were planning absolutely no changes," says Sleek.

"Of course, neither are they upgrading, buying more premium channels or adding faster Internet tiers, either," he notes. That is "better than a lot of people thought would happen," he adds.

But one reason service provider executives remain nervous is that there are so many free and cheaper services available now that didn't exist five years ago. Nobody was sure what would happen, this time around.

So far, though, behavior is what one would have predicted, based on behavior in past recessions: stability of subscriptions, but some pressure on average revenue per user.

"The cable guys are worried about over the top video, but so far, it seems to be augmenting video consumption," says Sleek.

People report spending more time at home, so TV and Internet arguably are more valuable.

Energy Consumption up 250% by 2030, but Mobiles Help

Electricity consumption by "electronics" grew by nearly seven percent each year from 1990 to 2008, says Paul Waide, International Energy Agency senior policy analyst. And electricity consumption is likely to grow by 250 percent by 2030, as a majority of growth already is coming from non-OECD countries.

But use of mobile devices, which is growing rapidly, helps, as mobiles tend to be more power efficient. In fact, says the IEA, matters would be worse but for the convergence of technologies and the growth in mobile applications such as laptop computers, which draw less power.

The IEA study finds that over the next seven months, the number of people using a personal computer will pass the one billion mark. Electronic devices currently account for 15 percent of household electricity consumption but their share is rapidly rising.

Already there are nearly two billion television sets in use, with an average of over 1.3 sets in each home having access to electricity.

Without new policies, the energy consumed by information and communications technologies as well as consumer electronics will double by 2022 and increase threefold by 2030 to 1 700 Terawatt hours (TWh), says Nobuo Tanaka, International Energy Agency Executive Director

Higher efficiency technologies that are already available would half this demand, he notes. So aside from more-efficient technologies, unplugging devices when not in use, unplugging mobiles when fully charged and turning off unused applications such as Bluetooth or Wi-Fi when not needed are steps people can take to limit electrical consumption.

http://www.iea.org/Textbase/press/pressdetail.asp?PRESS_REL_ID=284

Grappling with IPTV, Online Video Economics

One of the issues service providers grapple with when weighing IPTV offerings is the financial return. Many executives who have done so say they actually lose money doing so, and others who think they will inevitably have to jump in likewise expect to lose money.

That is one reason some executives think an alternative approach, either based on streaming or downloading, might make more sense. Certainly that is what any number of video distributors are doing, or have done, with modest success.

But the economics of movie rental services might ultimately prove just about as challenging. The home video market represents about 54 percent of the U.S. film industry’s $45 billion in 2008 revenues.

Perhaps 49 percent of the revenue in turn is generated by DVD sales. Perhaps 21 percent is generated by video rentals. The issue, in part, is that profit margins are higher on sales than rentals, and higher for online-delivered products than physical media substitutes.

One wonders how long the content owners will sit by if distributors offering $1 rentals, low cost or even "no additional cost" streaming, continue to gain traction. There just isn't much margin at that price level, for anybody in the value chain.

At some point, lots of service providers without the scale economics of AT&T or Verizon Communications might conclude that online video is a "cost of doing business," not a "revenue" item.

http://seekingalpha.com/article/137502-netflix-movie-studios-pose-greatest-threat?source=feed

Social Network Ad Revenue to Stall, Blame it on MySpace

Total social network ad spending in the U.S. will drop 3 percent to $1.1 billion in 2009, from $1.2 billion last year, says eMarketer, and the falloff is almost solely attributable to what will happen at MySpace.

MySpace accounts for nearly half of all U.S. advertising spend in the social networking space. Analysts at eMarketer now forecast that MySpace advertising will fall 15 percent in 2009, compared to 2008.

MySpace booked an estimateed $585 million in advertising in 2008, but will earn just $495 million this year, down 15 percent from last year.

Facebook advertising and widget placements do not seem to be affected, eMarketer says.

Facebook advertising is expected to grow nine percent in 2009, to $230 million. Ad spending on widgets and applications also will climb $70 million in 2009, up 75 percent from the year before.

In general, U.S. ad spend on all other social network sites combined is expected to rise abou one percent to $345 million.

This is a major reversal, but perhaps to be expected, given the overall economic climate. Spending grew an estimated 33 percent in 2008 and 129 percent in 2007.

60% Unified Communications, Video Adoption by 2010?

Some 60 percent of enterprise executives polled recently by Network Instruments say they will have implemented unified communications capabilities at their organizations by 2010, while 57 percent say they will have implemented video solutions by 2010.

Some 66 percent of the 442 network engineers, IT directors, and CIOs in North America, Asia, Europe, Africa, and South America also report they will have teleconferencing solutions in place by 2010.

VoIP adoption continues to rise, as 75 percent of companies will have installed VoIP by the end of 2009,  compared to 61 percent in 2007.

One has to interpret such findings. When enterprise executives are asked whether they will deploy a given technology, it does not mean they will deploy throughout the entire enterprise. Also, plans typically slip a bit; rarely are they accelerated.

That's about the only way to make sense of survey findings that often show a third of respondents plan to do something "within the next 12 months," virtually every time a survey is taken.

Dramatic Shift for Telstra?

Australian incumbent telco Telstra would be split in two if a government proposal is accepted voluntarily. Under the deal, the Australian government would offer Telstra the chance to buy up to 49 per cent of a new national broadband network if Telstra agrees to separate itself into a wholesale access company and a separate retail service provider business.

In a first step, Telstra would be "functionally" separated into a wholesale access company and a retail business. As part of this deal, where Telstra would still own both businesses, Telstra would have the chance to buy as much as 20 percent of the new broadband access company to be formed, but would contribute its present optical network to the new entity.

Such approaches to stimulating broadband competition are in place in the United Kingdom and coming in Singapore, with both Australian and New Zealand regulators looking at the concept as well.

Such institutional frameworks would allow a different answer to the question "can a service provider make a business out of dumb pipe" than is conceivable in North America or most other markets globally. By definition, one provider would sell broadband access connections to all other retail service providers.

http://www.australianit.news.com.au/story/0,25197,25467023-15306,00.html

Android Will Grow 900% in 2009

Global Android smart phone shipments will grow 900 percent in 2009, say analysts at Strategy Analytics. Of course, very-rapid growth on a percentage basis often is possible for firms, services or products starting froma very-low installed base, but the growth forecast is indicative of a product expected to gain market acceptance. 

The Apple iPhone operating system will be the next fastest-growing smartphone operating system in 2009, with a 79 percent growth rate, Strategy Analytics says. 

"Android has fast been winning healthy support among operators, vendors and developers," says Neil Mawston, Strategy Analytics director.

"A relatively low-cost licensing model, its semi-open-source structure and Google's support for cloud services have encouraged companies such as HTC, Motorola, Samsung, T Mobile, Vodafone and others to support the Android operating system."

The upshot: "Android is now in a good position to become a top-tier player in smartphones over the next two to three years," Mawston says.