Google Says Skype Not Blocked on Android Phones

As Apple now it admits it alone was responsible for the initial rejection of the Google Voice app for the iPhone, and AT&T reaffirms that it had no say in the decision, Google has found itself in a bit of the same position as Apple, as Android mobiles are alleged to use a "less than fully functional" version of Skype on Android devices.

Some have suggested that Skype had been similarly blocked from Android phones, but the issue really is the functionality of Skype on Android devices. Google says on its blog that the Android operating system did not, at first release, support any full-featured VoIP applications.

That now has been rectified, Google says. That said, both Apple and Android devices are subject to any existing carrier policies on use of VoIP over their mobile networks, though it does not appear any such policies are involved either in the initial attempt to make Google Voice available on the iPhone, or the initial attempt to get a full-fledged version of Skype running on Android devices.

Apple, Not AT&T, was Behind iPhone Google Voice Rejection

So it turns out AT&T was telling the truth all along: it had nothing to do with Apple's rejection of the Google Voice application for the iPhone.

"Apple is acting alone and has not consulted with AT&T about whether or not to approve the Google Voice application," Apple says on its Web site. "No contractual conditions or non-contractual understandings with AT&T have been a factor in Apple’s decision-making process in this matter."

AT&T has been insistent on this from the start of the controversy. "Let me state unequivocally, AT&T had no role in any decision by Apple to not accept the Google Voice application for inclusion in the Apple App Store," says Jim Cicconi, AT&T senior executive vice president for external and legislative affairs.

To be sure, Apple claims the rejection of the application was because of user interface implications, not a blanket rejection of VoIP or Google's approach to providing services, which is better described as Web activated than VoIP.

Apple says it has not rejected the Google Voice application, and continues to study it. The application has not been approved because, "as submitted for review, it appears to alter the iPhone’s distinctive user experience by replacing the iPhone’s core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voicemail," Apple says.

"AT&T was not asked about the matter by Apple at any time, nor did we offer any view one way or the other," Cicconi said in a statement, accompanying a response to a regulatory inquiry into the rejection of Google's voice application by Apple.

On an iPhone, the “Phone” icon that is always shown at the bottom of the Home Screen launches Apple’s mobile telephone application, providing access to Favorites, Recents, Contacts, a Keypad, and Visual Voicemail.

The Google Voice application replaces Apple’s Visual Voicemail by routing calls through a separate Google Voice telephone number that stores any voicemail, preventing voicemail from being stored on the iPhone, Apple says.

"In addition, the iPhone user’s entire 'Contacts' database is transferred to Google’s servers, and we have yet to obtain any assurances from Google that this data will only be used in appropriate ways," Apple says.

AT&T, Apple and Google have been asked by the Federal Communications Commission for clarification of the issue.

What is interesting is that most observers seemed to think AT&T was behind the ban, attempting to protect its mobile voice business. Some suggested Apple was developing its own voice service.

To be sure, the wording of the Apple statement seems to imply that if the user interface issues and data privacy issues can be worked out, that the Google Voice app would be reconsidered.

In fairness to Apple, its stated reasons for rejecting Google Voice--user interface and functionality--are things the company tends to be meticulous about. Given Apple's past fastidiousness on that score, the initial rejection is not unusual.

What remains to be seen is whether Google Voice can be reconfigured to Google's satisfaction, as well as to Apple's. The big news is that AT&T was not involved in the decision.

Smart Phone Sales Soar, Feature Phones Narrow Gap

Feature phone sales fell five percentage points to 72 percent of new handset sales in the second quarter of 2009, while sales of new smartphones reached 28 percent of overall consumer purchases, a 47 percent increase in the category’s share since last year, according to The NPD Group.

Lower prices appear to be the reason. “Despite their ties to pricey data plans, the rich Internet access capabilities of smart phones are attracting consumers wooed by lower device prices,” says Ross Rubin, NPD Group director of industry analysis.

Overall handset sales volume in the U.S. grew 14 percent year over year in the second quarter, as sales revenue increased 18 percent.

The average selling price of all mobile phones increased four percent year over year, reaching $87.

Wi-Fi capability increased three-fold since last year, with 20 percent of all new handsets equipped with this capability. Touch screens on both feature phones and smartphones grew to 26 percent of all new handsets purchased in the quarter.

QWERTY keyboards were available in 35 percent of handsets sold.

In some ways, the differences between feature phones and smart phones are decreasing, NPD Group says.

“Feature phones are taking on more of the physical characteristics of smartphones, and often offer greater exposure to carrier services,” Rubin says. “Although their user interfaces continue to improve, the depth of their applications generally lags behind those of smartphones. With the price gap between smartphones and feature phones narrowing, to remain competitive feature phones need to develop a better Web experience, drive utility via widgets, and sidestep the applications arms race.”

VoIP Pioneer Elon Ganor Starts New Firm

Former VocalTec CEO Elon Ganor has started a new company, Nucleix, in the life sciences area. You might say it is a case of an entrepreneur doing wht entrepreneurs do: start new companies.

Though anecdotal, you might also conclude something else: venture capital is looking at life sciences more than VoIP, and entrepreneurs are responding to what they see as higher-growth, more-lucrative fields.

It's anecdotal, but possibly telling. Lots of others are focusing on micro-blogging or wireless, especially mobility applications.

Rural Broadband Penetration Close to 100% of Internet Users?

Use of broadbnd in rural areas now is close to 100 percent of Internet users, new data from comScore suggests. In 2007 the U.S. Department of Agriculture Economic Research Service estimated that 63 percent of all rural households had at least one member access the Internet.

If rural broadband penetration now is up to 75 percent, as comScore indicates, that would imply that Internet usage is at least that high, allowing for some households that continue to use dial-up access.

That would seem to have implications both for setting of national broadband policy and policy in rural areas. For starters, the new data suggest that rural broadband is growing robustly, without any additional government activity.

Some might argue that broadband usage remains lower in rural areas than in metro areas, and that remains true. Metro broadband penetration is at 89 percent. But virtually every study has shown that Internet usage also is lower in rural areas.

Broadband pentration in U.S. rural areas increased 16 percent from 2007 to 2009, while metro area broadband penetration grew 11 percent, according to comScore.

In part, that is because rural markets have more room to grow. The analogy is wireless voice growth, which is highest in places such as India, China and Africa, where penetration is lowest.

“With low-speed DSL priced at about the same level as dial-up in many areas, there is little incentive for households to remain on dial-up,” says Brian urutka, comScore VP.

Rural markets with a population less than 10,000 grew broadband penetration by 16 percentage points. Areas with population between 10,000-50,000 grew penetration 14 percentage points while metropolitan areas with populations of 50,000 or more grew penetration by 11 percentage points.

Critics sometimes say that even if access is not a problem, access speeds are, and that is an argument that makes more sense. The issue there, though, quite often is the "middle mile" trunking between major points of presence and the actual rural communities.

Basically, the problem is not the Internet backbones, and not even so much the local access networks, as it is the trunking network to backhaul traffic to the Internet PoPs. Many rural ISPs find, for example, that they have access to a T1 or two T1s in the middle milde. That makes it tough to deliver faster broadband access to customers on the local access networks, for obvious reasons.

The Internet backbone is a firehouse. So are the access networks, for the most part. But the middle mile is a straw.

That isn't to say there are no communities or isolated locations without broadband access availability from at least one terrestrial provider, and two satellite providers. It is to point out that the "problems" often have more to do with trunking facilities than local access, and that any gaps between urban and rural use of the Internet and broadband are rapidly closing.

Cost to Acquire, Sustain, Retain Customers Rising, Execs Say

There is fairly broad agreement among chief marketing officers at global telco, cable, wireless, satellite, Internet service provider and long distance carrier firms that competition is having a huge effect on customer retention, acquisition and broad company strategies, primarily affecting product pricing and customer retention.

Over 84 percent of respondents to a survey conducted by the CMO Council report increases in the cost of acquiring and sustaining customer relationships and, not surprisingly, 63 percent are seeing higher rates of customer churn and attrition.

The new global study by the Customer Experience Board of the Chief Marketing Officer Council also shows that price competition, for example, now is a chief issue. According to 55 percent of respondents, emerging competitors and market disrupters are undercutting or discounting prices, with an additional 37 percent indicating these contenders often target the most lucrative customers.

So there's a new focus on customer experience, as satisfying and retaining current customers is three to 10 times cheaper than acquiring new customers, and a typical company receives around 65 percent of its business from existing customers.

A five percent reduction in the customer defection rate can increase profits by 25 to 80

percent, McKinsey analysts say.

Also, seven out of 10 customers who switch to a competitor do so because of poor

service, McKinsey says. And the small number of customers a firm normally hears from are typically just the tip of the iceberg.

A typical business only hears from four percent of its dissatisfi ed customers, while the other 96

percent leave quietly. Of that 96 percent, 68 percent never reveal their dissatisfaction

because they perceive an attitude of indiff erence in the owner, manager or employee, researchers at the University of Pennsylvania.

In a more-crowded and competitive environment, 56 percent of respondents also say they are finding the task of creating brand preference more difficult. In fact, creating a differentiated presence in the marketplace was seen as the top challenge, overall.

But 55 percent of respondents also say the need for innovation, price pressures and competition from new and adjacent competitors is among the top-five challenges.

About 47 percent of surveyed executives say the need to rapidly develop new services and applications was a top concern as well. Churn likewise was seen as a top issue by 40 percent of executives. Also, 66 percent of executives say churn rates are increasing.

One major trend of key importance for operators of wired networks is a shift to increased wireless dependence, as 36 percent of marketers see a growing shift to wireless-only households and 32 percent see a trend towards wireless dependence for life, work and community tasks.

People Would Give Up Vacations Before Broadband

Recession-hit consumers would sooner give up vacations and dining out than spend less on communications services, Ofcom, the U.K. regulator says. While 47 percent of people would cut back on eating out and 41 percent on vacations, just 19 percent would lower their mobile spending , 16 percent their TV subscriptions and 10 percent broadband.

And while customers are making adjustments, those attitudes seem to mirror what we also have seen in the U.S. market.

Those findings are roughly in line with recent surveys of U.S. consumers, which tend to find that broadband access is the single most-important service.