FairPoint Unhappy About Broadband Stimulus Competition

FairPoint lobbyists and officials say the University of Maine System is unfairly competing with them for federal funds available as part of the American Recovery and Reinvestment Act "broadband stimulus" program.

“The fact is, we are competing with the University of Maine,” says Severin Beliveau, an Augusta, Maine attorney representing FairPoint. “I am concerned at what the university is proposing here, because it is receiving a form of subsidy, no, they are in fact receiving a subsidy from taxpayers, in competing with the private sector.”

Jeff Letourneau, the associate director of information technology at UMS, said the proposal is not the university’s but is from a private-public partnership and that the UMS is just one member.

FairPoint is developing a $20 million proposal that builds on its existing Internet infrastructure, the company indicates. FairPoint says the project will bring broadband access to 90 percent of Maine by 2013.

Though the first of the funds have not yet been awarded, organizations and companies now are starting to complain about the rules. FairPoint Communications, librarians and FiberNet in West Virginia are among those who have voiced complaints about the rules.

http://www.bangordailynews.com/detail/114263.html

Video Tipping Point in 2010?

The mass-market tipping point for online video will occur in 2010, when online video will be viewed by 50 percent of U.S. consumers, says eMarketer.

Online video also will achieve a 59 percent penetration rate in 2013, up from 47 percent in 2009.

The number of U.S. online video viewers will grow to 188 million in 2013, up from 144 million in 2009, says eMarketer.

Online video viewers will make up 85 percent of Internet users in 2013, up from 72 percent in 2009.

“This will put online video within range of Web activities such as search and e-mail, which are nearly at saturation points among U.S. Internet users,” says Paul Verna, eMarketer senior analyst.

The ability to share video through social networks, blogs, microblogs, e-mail and other social platforms will play a role. So will mobility.

All of that will hasten the day when changes must be made--especially on mobile networks--relating to end user consumption and pricing.

Is the USPS a Natural Monopoly?

Just thinking out loud, but is mail a natural monopoly?

The U.S. Postal Service has seen a precipitous drop in volume lately.

So they raise their prices, making other alternatives more attractive, which further depresses volume. It sort of looks like a death spiral.

Of course, "mail" can mean messages, so email is a functional substitute, as was facsimile.

And mail and packages can be delivered by any number of competitors (FedEx, UPS and others). To the extent that FedEx, UPS, the Internet and other alternatives aer widely available, perhaps "mail delivery" is not a natural monopoly.

Still, without large subsidies, the network is not profitable. It could not provide universal delivery without subsidies and it certainly does not ever make money. So it is one of the other models one has to look at when thinking about the future of the communications network business.

Communications Spend Down 1% in 2009, Up 2.6% Next 5 Years

Total U.S. communications spending will decline one percent in 2009 to $882.6 billion, but will grow 3.6 percent per year over the next five years to more than $1 trillion, according to Veronis Suhler Stevenson, a normally sober outfit.

The caution there is how one defines "communications." Estimates of this magnitude for the U.S. market necessarily include lots of other activities such as local area network and other premises networking services and products, and is not a direct proxy for "telecommunications."

This growth will make communications the third fastest-growing sector (behind mining and construction) of the U.S. economy through 2013, VSS says.

Telecom's Third Rail

There's a thoroughly uncomfortable question nobody in the telecom business wants to touch. Most people have heard the analogy that communications networks are fundamental underpinnings to future economic success, much as roads, railways or airline routes might be.

Most people are at least casually familiar with the plight of the newspaper business, which seemingly has yet to find a way to remain financially viable in a market that offers many substitutes.

Now there are the first projections that the advertising business, which except for normal economic fluctuations has grown for 30 years or more, might now face a future where brand spending actually decreases over time, in a structural, not secular shift.

So the uncomfortable question is whether the telecom business is in fact becoming a sort of infrastructure, like roads. And what I mean by that is that the business model for roads is largely indirect. True, there are some toll roads, but most roads, though an input to other revenue-generating enterprises, do not make money: they lose it.

So the "roads" or infrastructure analogy should be troublesome in the extreme. It at least implies an industry that has the profit sucked out of it, that is foundational and important, but not profitable in the way it has been.

At some point, should that continue, the industry as we now know it could not continue to exist. There would be a need for big pipes to virtually all locations. We need roads. But all the other economic activity would then be created by industries that support people driving cars.

This is something here more than the fear of being reduced to "dumb pipe" providers. Many businesses operate as low-margin "commodity" affairs, especially when they have large scale.

The newspaper analogy is more unnerving. That analogy suggests that communication networks could become something more akin to "roads," where there actually is no viable business model, and the infrastructure is a societal "cost" borne by taxpayers.

Perhaps you think governments globally have enough extra headroom to increase taxes to do such a thing. If there is no viable business model, that will be your only choice.

Being an optimist, I suspect the analogy is imperfect. I think executives will show enough creativity to avoid the worst case, and that regulators will be prudent.

What seems less debatable is the risk that if enough profit is drained out of the telecom business, even a robust "pipes" business might be tough to sustain.

That's an insight regulators in many countries have learned they must grapple with. Let us hope sane heads will prevail

iPhone Drives 41% Increase in Wi-Fi Sessions in 3 Months

In the second quarter, AT&T handled nearly 15 million Wi-Fi connections on its network, a 41 percent increase over the first quarter of this year. With approximately 25.6 million connections so far in 2009, Wi-Fi connections this year have already surpassed the 20 million connections seen in all of 2008.

In part, that may be the result of an iPhone firmware release that has made it easier for users to log in to AT&T hot spots.

Now, the iPhone automatically detects available networks and logs users in automatically.

Cricket Ratchets Up Prepaid Offers, Unlimited Web Now Included

Cricket Communications, owned by Leap Wireless International, has ratcheted up its own offers in the budding value and price wars in theprepaid wireless business.

Cricket’s $40 monthly plan, which already includes unlimited voice, long distance, domestic and international text and picture messaging, and nationwide coverage, now will include unlimited Web, unlimited 411 and unlimited service to more than 4,600 cities and towns across the US.

In addition, Cricket’s $45 monthly plan in these markets will now include the additional features of unlimited email, unlimited data backup and 30 roaming minutes per month. The $55 plan mirrors the $45 plan but also contains 200 roaming minutes per month.

The new plans take effect August 4, 2009, in select Cricket markets that cover approximately 72.3 million potential customers.

"The new features we have included in our service plans significantly increase the value we deliver to our customers," says Al Moschner, Cricket COO.

And that appears to be the story: the prepaid market is in a new stage of development where the "standard offer" is changing quite radically.