Wireless Carterfone on the Way?

Despite all the attention that will be paid to the $7.2 billion "broadband stimulus" provisions of the American Recovery and Reinvestment Act of 2009, it is a sideshow compared to the much more important activities now building at the Federal Communications Commission, which is conducting an inquiry into national broadband policy, and a new inquiry that could radically change the way consumers and businesses buy their handsets and mobile service.

Mandatory bans on bundling of handsets with wireless service—referred to by many as “wireless Carterfone”—could be the result of a new proceeding the Federal Communications Commission already has directed staffers to open.

Acting FCC Chairman Michael Copps, in fact, says he already has authorized FCC staffers to open an inquiry into the handset subsidy issue, and that the commission will "take action if required."

Many warn that the result will be higher upfront device costs for all consumers, as the trade off for service without contracts. But others say the rules will spur innovation and free consumers from contracts that tie them to their service providers.

And though some praise wireless Carterfone (unlocked devices) as a way to spur innovation, some think the opposite could happen, as higher phone costs lead to less-frequent handset replacements. And since higher-functionality handsets are a spur to innovation and new services, slower diffusion of new handsets actually will retard innovation.

The FCC national broadband policy also could radically change the way the communications business operates, instituting strong forms of "network neutrality" that some say would radically affect the profitability of the broadband business, minimize techniques for managing network congestion and drastically affect the equity values, borrowing capability and retail strategies service providers could contemplate.

In some cases, the ability to offer higher quality of service might be limited or impossible because no packets could be offered higher priority than any others.

Depending on one's point of view, will drag the entire industry backwards into old regulatory models that will stifle continued investment, or alleviate what Acting FCC Chairman Michael Copps is the problem of "all of America being an under-served area" in terms of broadband.

The coming debates over the shape of national broadband policy,  and possible wireless Carterfone rules, will dwarf the broadband stimulus in impact.

IBM to Invest $100 Million on Easy-to-Use Mobile Internet Apps

IBM is investing $100 million over the next five years on development of easy-to-use mobile Internet services. The number of mobile Internet users will grow by 191 percent from 2006 to 2011 to reach roughly one billion users, IBM says, and emerging markets like India and China will be a main area of focus for the company.

One initiative will be developing ways for users to speak into their phones to grab content, so Web-enabled smartphones are not even needed. Two other areas IBM will concentrate on include mobile enterprise enablement and enterprise end-user mobile experiences.

http://news.bbc.co.uk/2/hi/technology/8106293.stm

U.S. Broadband Usage Grows Despite Recession

Broadband adoption appears to have been largely immune to the effects of the current economic recession, say researchers at the Pew Internet & American Life Project.

In an April 2009 survey, more than twice as many respondents said they had cut back or cancelled a cell phone plan or cable TV service than said the same about their Internet service.

About nine percent of Internet users (seven percent of all adults) say that in the past 12 months they have cancelled or cut back online service.

Some 22 percent of adults say they have cancelled or cut back cable TV service in the past 12

months.

About 22 percent of cell phone users (19 percent of all adults) report that in the past 12 months they have cancelled or cut back cell phone service.

The latest survey also shows that U.S. home broadband adoption has reached 63 percent of adult Americans as of April 2009, up from 55 percent in May, 2008, say researchers at the Pew Internet & American Life Project.

Perhaps the better news is that the greatest growth in broadband adoption in the past year has taken place among population subgroups which have below average usage rates.

Among them, broadband usage among adults ages 65 or older grew from 19 percent in

May, 2008 to 30 percent in April, 2009.

Respondents living in households whose annual household income is $20,000 or

less, saw broadband adoption grow from 25 percent in 2008 to 35 percent in 2009.

Respondents living in households whose annual incomes are between $20,000

and $30,000 annually experienced a growth in broadband penetration from 42 percent

to 53 percent.

Overall, respondents reporting that they live in homes with annual household incomes

below $30,000 experienced a 34 percent growth in home broadband adoption from 2008 to

2009, Pew says.

Among adults whose highest level of educational attainment is a high school degree, broadband adoption grew from 40 percent in 2008 to 52 percent in 2009.

Among adults ages 50-64, broadband usage increased from 50 percent in 2008 to 61 percent in 2009.

Adults living in rural America had home high-speed usage grow from 38 percent in 2008 to 46 percent in 2009.

Big Brand Online Advertising Grows 27% in First Quarter: Momentum Shift?

Anamolies always are interesting, and sometimes they are important. No doubt advertising is down overall because of the recession. 

But ad spending for display ads placed by some of the biggest brands actually increased 27 percent in the first quarter this year, compared to the first quarter of 2008.

And note where that spending went: YouTube. In fact, display ad impression volume on the site jumped by nearly 580 percent year-over-year, says Nielsen. 

Large consumer packaged goods brands have generally been incrementally increasing their digital spending. The latest shift indicates some momentum for online video and online venues generally.

http://paidcontent.org/article/419-what-display-meltdown-big-brands-actually-upped-their-spending-in-q1

Online Video Viewing Up 49%, Nielsen Online Says

People who watch online video spent 49 percent more time doing so in May 2009, compared to May 2009, says Nielsen Online. The "average" viewer watched 189 minutes of video during the month.

Unique viewers grew 13 percent over the same period, while total streams viewed grew 35 percent and streams per viewer also grew 20 percent.

None of that would surprise anybody.

http://www.nielsen-online.com/pr/pr_090615.pdf

U.K. Officials Expect 10 to 100 Times Digital Content Growth in 3 to 5 Years

U.K. officials believe the volume of digital content used by consumers will increase 10 times to 100 times over the next three to five years.

So officials at the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport have proposed an interim goal of 2 Mbps connections to all U.K. residences by 2012, and also propose a new tax of 50 pence per month on all fixed copper lines to fund the next generation of access networks.

The "Digital Britain" report suggests the funds raised by the tax will be available to fund construction to the one third of U.K. homes that are unlikely to get next-generation access because costs are too high.

"We are at a tipping point in relation to the online world," the report says. "It is moving from conferring advantage on those who are in it to conferring active disadvantage on those who are without."

The report also notes that the broadband "problem" has a few sources, not just "access." Though availability is an issue, affordability, ability to use the Internet and PCs, as well as the perceived relevance of broadband all are issues.

Building facilities addresses one of the problems. The others are more difficult, ranging from disinterest to the price of service. Ofcom, the U.K. communications regulator, points out in a recent survey of its own that 42 percent of U.K. residents say they would not use broadband even if the service were provided free, and they also got a free PC to use.

Buyers are Shfiting Behavior: Will They Keep Those Behaviors After the Recession Ends?

Recessions are important not only because people spend less money, but because they sometimes change their buying behaviors, and the behaviors persist even after the immediate recession driver has past.

In the telecom space, there already is some indication this is happening in mobility services, where more users are shifting to prepaid plans, comparted to postpaid. There is evidence of a slowdown in uptake of new handsets overall, though perhaps not of smart phones in the North American market, at least.

But everyone should be prepared for other shifts, if recent sentiment is any indication.

Some 75 percent of U.S. consumers, for example, say they are making big changes in their supermarket shopping, GfK Custom Research North America says. Among the changes, more than 30 percent say they are buying more store brands. In 2006, 22 percent of respondents said they were buying more store brands.

Nearly 23 percent say they will be purchasing more private label goods next yera.

Nearly 55 percent of respondents in the GfK study say they buy private label “frequently,” up

substantially from the 41 percent who said they bought private label frequently in 2006.

About 75 percent of shoppers surveyed now say store brands are as good as national brands.

While traditional supermarkets are still the most popular place for grocery shopping, 59 percent of respondents say they now shop at someplace other than a traditional supermarket.

In 2006, 70 percent of consumers said they preferred supermarkets for their main shopping.

What people do, not what they say they will do, will prove decisive. People might not continue to behave the way they now are, they might permanently shift their behavior or they might simply express new behaviors more than they did prior to the recession.

So far there is no strong evidence that behavior in other entertainment or communications areas is changing significantly. It does not appear there has been a pronounced change in use of multi-channel video services, or some change in IP telephony adoption rates, or evidence of customers downgrading broadband services to dial-up, for example.

But it would be unusual if some permanent shifts in behavior did not occur elsewhere in the communications business, even if such changes primarily are of the market share shift variety.