"Build it and They Will Come..." Again?

"Build it and they will come" became a demolished business strategy in the global bandwidth business, even though for a brief moment around the turn of the century, people believed that to be the case.

Still, the logic behind fiber-to-the-home projects in many ways represents the same sort of thinking. "New applications will flourish on a 100Mbps FTTP rollout even though nobody knows what those apps will be," says Khoong Hock Yun, Infocomm Development Authority assistant chief executive, and reported by CommsDay.

Still, it might still turn out to be correct, at least for providers of access connections, at some point. FTTH Council of Europe President Karel Helsen argues that content, gaming and entertainment companies now aer being invited to join the FTTU Council.

“If you provide the pipes, people will make sure that they fill it,” Helsen says. "Companies such as Nintendo, Sony, and Time Warner we welcome into our council and we’ve started talking to those companies since the beginning of this year.”

“We just had the first gaming association also join the European council and we believe also by having those people as members, you also create the pull effect from the market side to stimulate the rollout of fiber to the home,” Helsen says.

That isn't to argue such networks should not be built, or that new revenue-generating applications will not ultimately be developed. But it is likely to take some time.

Goodbye Sarbox?

The Supreme Court apparently is going to test the constitutionality of Sarbanes-Oxley rules. Personally, I hope the Supremes do rule that way. Sarbox has been a major burden for smaller and mid-sized firms, adding millions of dollar in annual cost, in many cases, and killing the Initial Public Offering market. 

http://www.businessinsider.com/henry-blodget-supreme-court-may-kill-sarbanes-oxley-and-resurrect-ipo-market-2009-5

Why Broadband "Penetration" Measures Often are Misleading

If you were trying to figure out how prevalent televisions, radios, digital video recorders, Slingboxes, PCs or DVD players were in people's lives, would it make more sense to measure how many Best Buy retail locations sold such products, or how many units are sold in any given time period?

Alternatively, if you were trying to measure the penetration of such devices, would you track the number of homes, businesses, or both, that have such devices in use?

Would you try to measure "personal" devices such as mobile phones or MP3 players the same way?

The questions aren't as "academic" as might first appear to be the case.

While it makes sense to measure the penetration of any mobile and personal technology on a per capita basis, because that is the way people buy and use such services and products, it arguably makes less sense to measure other products, such as T1 lines, Ethernet or other fixed broadband connections the same way, because that is not the way people buy or consume such products.

Were we to measure Ethernet connections on a per-capita basis, penetration would be quite low, for example. Most people intuitively would understand that sort of issue.

But where it comes to fixed broadband penetration, that is precisely the problem we face. Agencies are used to measuring fixed broadband in just about that fashion: per capita, even though people do not buy such services that way.

The point simply is that we need to measure things in a way that reflects the way people actually use a given product or technology.

People do not buy fixed broadband subscriptions the same way they buy mobile phones.

So per capita indexes are more suited to some products than others. Per-capita fixed broadband indexes are affected by mundane things such as household size, business adoption and consumer preferences.

"Consider Portugal, in which there are approximately three persons per household," says George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Studies chief economist. "If every household had a broadband connection, then the per capita subscription rate in Portugal would be 33 percent"

"In Sweden, alternately, there are approximately two persons per household," says Ford. "So, if every home had a

connection, then the per-capita subscription rate is 50 percent."

"The number of fixed broadband connections per person is a flawed measure because it will vary based on the average size of a household or business establishment," Ford notes.

"In the United States, nearly every business and household had a fixed line telephone when the 1996 Telecom Act was passed," Ford notes. "Yet, telephone subscriptions per capita were only 49 percent at the time."

"In Sweden, which also had near ubiquitous telephone adoption, the telephone per-capita subscription rate was 69 percent.

The point, says Ford, is that per-capita measures are not meaningful tests of fixed broadband adoption, especially when comparing different regions or nations.

http://www.phoenix-center.org/perspectives/Perspective09-01Final.pdf

Verizon Wireless Reduces Overage Charges

Verizon Wireless has increased the data allowance for all mobile broadband customers on its lowest priced monthly plan and also has reduced overage pricing on the standard plan.

Users of the $39.99 monthly access plan used to have a cap of 50 Mbytes with an overage charge of 25 cents per megabyte. The new plan includes a 250 MByte monthly allowance and 10 cents per megabyte overage.

Users of the $59.99 monthly access plan have an unchanged 5 GByte monthly allowance and five cents per megabyte overage charges, compared to the older overage charge of 25 cents per megabyte.

4G will Grow 33% Faster than 3G, Juniper Predicts

It took nearly six years for third generation mobile services based on UMTS/HSPA to reach 100 million subscribers but it will take Long Term Evolution just four years to reach the same milestone, say researchers at Juniper Research.

The number of LTE subscriptions worldwide will grow at a cumulative average growth rate of 404 percent from 2010 to 2014 and reach 136 million subscriptions by year-end 2014, Juniper forecasts.

You might think this has something to do with spectrum efficiency, more efficient coding, signal propagation or some other technology attribute, but if the forecast proves accurate, it will be more a result of a changed mobility market than anything else.

When 3G networks were launched, the expectation was that new data services would fuel revenue growth. That largely failed to happen, at least early on. What is different now is that mobile broadband is approaching mass market status.

Mobile broadband demand is growing about 30 percent a year, while video usage is growing only a bit slower.

DPI Raises Consumer Ire, Should it?

"Network bandwidth is a finite resource, especially so in wireless networks, so it is reasonable and indeed expected that carriers will manage their network bandwidth to assure sufficient quality of service for all subscribers," says Brian Wood, Continuous Computing's VP. That tends to mean use of deep packet inspection, and that tends to raise hackles in some quarters.

The problem is that Internet access, and Internet backbones and servers, are shared resources. There is a "tragedy of the commons" problem if a few users have behavior patterns dramatically different from those of the typical user, because all networks are engineered statistically.

Nobody builds a network that provisions bandwidth on a "nailed up" basis, because nobody could afford to do so. Instead, bandwidth is "underprovisioned," on purpose. Network architects assume that not every user will be putting load on the network, all at the same time.

That works remarkably well most of the time. What causes problems are unexpected loads that haven't been engineered into the network.

"Without traffic management, a few 'bandwidth hogs' can easily degrade the user experience of many other users on the same network," says Wood. That might especially be true in the access network, but the entire Internet transmission  network, including all the servers, are shared resources.

"For consumers, DPI-based traffic management ensures that subscribers get the quality of service that they expect, or at least that they pay for," says Wood.  So, for example, a business user might opt to pay a slight premium for a guaranteed level of service (e.g., guaranteed minimum bandwidth) while a frugal college student might go for a cheaper "best effort" rate plan.

Basically, DPI or other traffic shaping mechanisms are about fairness: making sure most users get reasonable performance most of the time. The other advantage is the ability to learn or be instructed by a user on what activities are most important, so those activities get the highest priority during congested periods.

DPI can be viewed as an automated away, or a self-learning kind of way, for the network to provide those kinds of benefits, says Wood. "It's all a matter of filtering out the stuff that, based on past behavior or the behavior of similarly-profiled individuals, is deemed to not be of value and, instead, prioritizing the stuff that is deemed to be of value."

Behavioral tracking is an issue, though. "Cookie-based tracking seems to be a generally-accepted practice with web sites these days, but there was great concern when cookies were first introduced," says Wood. There are end user advantages, of course, such as sites "remembering" who you are and what your preferences are.

Behavior-based tracking has raised more concern. Deep packet inspection is deemed by some as intrusive and too personal, says Wood. The same sorts of concerns are raised about DPI-based ad insertion.

"What's interesting to me, though, is that Google has been offering Gmail for free to users in exchange for content-based advertisements being displayed next to their emails, and I haven't heard of any uprising against Gmail," he says.

Subscriber notification, how subscribers are notified, and whether those subscribers have any say in the matter, seem to be the key sticking points here, he muses. "Nobody likes the idea of being monitored without their consent, especially if they feel like information gathered through such monitoring will be used in an attempt to profile or manipulate them in the future."

But behavior-based marketing seems to work well for Netflix and Amazon, Wood notes. The difference seems to be one of perception. Lots of people are afraid technology will be used "on" them, rather than "for" them.

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.