BT Says Wholesale Rates Threaten Broadband Upgrades

BT says new price caps on wholesale services provided to competitors could hamper its ability to invest in the next generation of super-fast broadband networks.

Normally, when competitors squawk about wholesale prices, it is because they have determined those prices are too high to allow making of a profit. When the wholesaler complains, it normally means the facilities provider doesn't think it can make enough money. If both buyers and sellers complain, regulators probably have got the prices just about right.

Some observers will say that such a response by an incumbent is nothing more than typical posturing to get a better deal. That's an apt observation. Still, some note that there are unusual stresses.

Ofcom is refusing to allow the company to include costs of funding its Openreach pension obligations in the rate base. Openreach is the entity that provides wholesale voice and broadband access to competitors.

BT has to contribute an annual £525m into its pension fund over the next three years, one way or the other.

Last year BT announced plans to spend £1.5bn putting a fibre-optic network capable of delivering broadband at almost five times the speed of BT's copper network within the reach of 10m homes by 2012. Since then, not only has the economy hit a wall, but BT Global Services also has suffered significant losses, leading to major layoffs.

Some think that means the broadband upgrade will be slowed, in the absence of a rethinking of wholesale rates.

http://www.guardian.co.uk/business/2009/may/22/ofcom-british-telecom-warning

Why 2013 is an Important Year for Market Forecasts

Ever wonder why so many market forecasts you read these days are for where a particular market will be in 2013?

The rapidly mobile M2M (machine-to-machine) market, for example, suffered a setback in 2008 with growth in cellular module shipments stalling overall compared with 2007, according to Beecham Research.

The decline was caused by projects being cancelled or postponed, particularly in the second half of 2008, Beecham says.

Nevertheless, Beecham sees growth returning by 2010 and reaching annual module sales of over $2 billion by 2013.

The reason is that five years is about as far as any rational forecaster dares see into the future. And the last year for which full-year data are available is 2008. Go out five years and you reach 2013.

Next year you'll be reading about where markets for specific products and services will be in 2014. Same reason.

Green Shoots or Grasping at Straws?

With the caveat that nearly all financial information is backward looking, corporate earnings performance of companies in the S&P 500 for the first quarter of 2009 has been "less bad than expected," according to Thomson Reuters.

With 91 percent of companies having reported first quarter earnings, the blended growth rate for the broad market stands at -35.6 percent.  As of April 1, 2009, analysts were forecasting a first quarter growth rate of -36 percent.

That noted, the first quarter marked the first time the S&P 500 has recorded seven straight quarters of negative growth since Thomson Reuters began tracking the data in 1998.

And, though companies are beating expectations, the fact remains that all ten sectors that comprise the S&P 500 index are expecting earnings to decline in the second quarter.

Telecom companies in the S&P 500 index had a minus three percent growth rate in the first quarter. While discouraging, telecom companies experienced nothing like the negative 95.5 percent decline for consumer discretionary companies or the negative 59 percent showing for energy firms or the negative 60.8 rate of financial companies.

Strategy Implications of Long Tail

Telecommunications is a business of scale, requiring huge capital investments. So it should not be surprising that the number of contestants is limited.

In the legacy wired voice markets, it once was an ironclad rule that the Regional Bell operating companies represented about 90 percent of lines in service.

In the U.S. wireless market, just four providers have about 90 percent market share.

As discrete video, wireless, broadband and voice markets start to merge, different names will start to appear. And it is conceivable that the share held by the few providers with the most share will broaden. Something more like a classic "80/20" distribution could occur, where 20 percent of providers hold 80 percent share.

What seems unlikely is that the roughly "L" shaped curve will change. You would be hard pressed to name a single business category (subscribers, profit, profit margin, revenue) where such a distribution is absent.

The obvious strategy inference is that if one is not likely to be found among the ranks of the 20 percent with 80 percent share, one had better have a clear niche. Geography, packaging, price, lead application, user interface, device, channels, customer segment or intangibles are typical ways providers differentiate.

In a service provider business spinning off more than $1 trillion annually in revenue, even small niches, fairly far out on the "tail" of market share, can be big businesses.

Is TV Advertising Permanently Broken?

TV networks typically get orders for $9 billion or so (nearly half of total annual advertising) in advertising commitments during the "upfront season," and, as you might suspect, expectations are somewhere between shockingly low to dangerously low. Some estimate the major broadcast networks might wind up getting $7.5 billion, a slide of between 13 to 20 percent.

New media is part of the reason; new ad targeting capabilities another. Anticipated dips in consumer spending likely are another reason. People aren't buying cars or financial products at the moment, so some advertisers seem to be scaling back their expectations for what advertising can accomplish, at least in the network TV channel.

So the issue, stated or unstated, is whether the change is temporary or secular (permanent). Certainly supporters of online or other targeted advertising channels would hope for the latter.

Some would argue that even if economic deterioration abates, there is no evidence that consumers and advertisers will revert to their previous spending habits.

So the issue is: is spending for network TV advertising on the cusp of a permanent, negative change, in large part because Web, targeted, mobile and online alternatives are becoming viable?

http://seekingalpha.com/article/139815-advertising-buy-audiences-not-media-brands?source=feed

Add Email Contact Info on a BlackBerry With One Click

BlackBerry users now can add contact information embedded in emails directly to their contact managers, with a single click, using "gwabbit for BlackBerry," now available a BlackBerry App World, Research in Motion's app store.

The app also can be downloaded from www.gwabbit.com. The app can add and update information in the BlackBerry Contacts or Microsoft Outlook directories.

Gwabbit costs $9.99 annually.

The "gwabbit for Outlook" app, released earlier, automatically identifies signatures in incoming emails and creates them as new or updated contacts on a desktop or notebook PC.  gwabbit for Outlook is available for a single, one-time fee of $19.95.  The two products together deliver complete email contact management for any professional on the road or at their desk.

Gwabbit is now available for all BlackBerry smartphones including the BlackBerry Bold, BlackBerry Storm, BlackBerry Curve series and BlackBerry Pearl series of smartphones.

Nearly Half of Consumers Say Lack of Advertising a Sign of Trouble

More than 48 percent of U.S. adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates the business must be struggling says Ad-ology Research.

Likewise, a vast majority perceives businesses that continue to advertise as being competitive or committed to doing business, a recent survey suggests.

The study finds advertising appears to play a key role in consumers’ view of how a business is doing, and by not advertising, businesses may be sending a warning signal to current and potential customers.

“It is critical to advertise in the current economic climate, to maintain long-term positive consumer perception of your brand,” says C. Lee Smith, president and CEO of Ad-ology Research. “Advertising not only assures consumers of a business’ reliability in a soft economy, but it can influence where and what they buy, especially when the ads address concerns about value,” Smith says.

http://www.marketinginsightstoday.com/archives/1223