AT&T Google Voice Complaint Partly About Traffic Pumping

In asking the Federal Communications Commission to investigate Google's refusal to terminate some calls placed to high-cost rural areas, AT&T is not simply sparring with Google over network neutrality, but rather pointing up a pricing anomaly that distorts behavior and reduces carrier profits.

while suggesting current regulatory rules do not fairly treat competitors in the market, and arguing for narrowing the regulatory differences between VoIP and other carriers and between access, application and content providers, AT&T also is highlighting what it and other carriers say is a pricing distortion in the termination rate regime that directly underpins the businesses of free conference calling services.

At immediate issue here is Google's refusal to terminate some calls in high-cost rural areas. Many of you are familiar with free conference calling services that use area codes in rural areas. You might have wondered what the business model is. Simply, it costs carriers enough money to terminate calls in those rural areas that conferencing services can afford to give away the service and make their money on the termination fees.

Over the last couple of years other skirmishes have been fought about high termination rates in some rural areas of Iowa and some other areas.

Services such as Free Call Planet, freeconferencecall.com and others teamed with Iowa telcos to set up inexpensive or free calling services that generate profits for the providers primarily by collecting millions in access fees.

The local telcos provide the Iowa telephone numbers and voice gateways for the services, bill long-distance companies to terminate calls and then pay“marketing fees” to the conference calling services.

AT&T said in 2007 that the arrangements were costing it $250 million a year. AT&T, Verizon, Qwest and Sprint Nextel have opposed the "traffic-pumping" schemes, and the Federal Communications Commission did move to limit the practice.

Rural phone companies are allowed to charge about 2 cents to 8 cents a minute to connect long-distance and wireless calls to their networks. The fees, up to 100 times higher than rates charged by large local phone companies, are intended to offset the rural companies' high costs and low call volumes.

But that's where the arbitrage opportunity arises. Specialty calling services teamed with some rural phone companies to offer free conference calling, adult chat and other services, splitting the call-connection revenues with the rural carriers.

The FCC did move to suspend the rural companies' rates. But new providers have set up shop.

About 160 million minutes of calls by AT&T customers were routed to rural CLEC networks in March, 2008, surpassing the peak level of calls to rural incumbents, about153 million minutes, in January 2007, AT&T says. Sprint told the FCC that its bill from 11 competitive carriers soared 5,000 percent in 21 months.

Recently, even other rural telephone companies have decided they'd better side with the large tier one providers as well, as the practice might damage the wider rural termination regime.

Google tariff specialists know that, and apparently want to avoid those costs by restricting termination to such numbers, as the tier one carriers themselves did until forbidden to do so.

So aside from the other clear issues about treating like entities in similar fashion, there is the outstanding issue of high termination rates in some jurisdictions.

Twitter Usage Remains a Bit Mysterious

Sometimes numbers can be deceiving. Hitwise data, for example, suggests that Twitter traffic hit a peak in April, and then dropped, peaking again in July before dropping to levels below that of the April peak. In other words, traffic has dropped since April.

But one has to make adjustments. A majority of Twitter users use a third-party client to access Twitter. In fact, only about 20 to 30 percent of people go through the Twitter Web site. So the direct Twitter data does not show the full impact of Twitter usage.

The Hitwise data also suggests the same effect, showing the number of new users--new, not total--coming to Twitter from its top traffic sources, such as Facebook, Google, and MySpace, also has fallen consistently across the board from April to September 2009.

But those statistics only point to a slowing rate of growth, and that always happens to any application or service which starts from a low base, no matter how popular.

The Twitter Web site does attract about 54 million visitors a month, and that does not count the 70 to 80 percent of users who use the application from a third party portal of some sort.

A slowing rate of growth likely is nothing to worry about. Other studies have shown a high abandonment rate for new users, though.

In March 2009, for example, more than 60 percent of Twitter users fail to return the following month, says David Martin, Nielsen Online VP.

That means Twitter’s audience retention rate, the percentage of a given month’s users who come back the following month, is about 40 percent.

To put that in perspective, it is roughly the equivalent of turning over 100 percent of the user base every three months. Such a churn rate is unsustainable. One suspects the churn rate also will drop over time. People either like it, or they don't. But whether they like it or not, even resisters will use the app if their friends, family and associates do. Ultimately, that is going to make a difference.

Back to the Future for Internet Apps?

Time spent on social network and blogging sites accounted for 17 percent of all time spent on the Internet in August 2009, nearly triple the percentage of time spent in 2008, says The Nielsen Company.

“This growth suggests a wholesale change in the way the Internet is used,” said Jon Gibs, vice president, media and agency insights, Nielsen’s online division. “While video and text content remain central to the Web experience, the desire of online consumers to connect, communicate and share is increasingly driving the medium’s growth.”

In some ways that is a "back to the future" move, as it was email that drove the dial-up Internet access business. After waves of growth driven by online commerce and then entertainment, it appears communication might again be moving to the forefront.

70% of Mobile Users Planned Mobile Spending Cuts. Have They?

An October 2008 survey by Getjar suggests users were planning significant changes in mobile consumption in response to the recession. It still isn't completely clear whether people actually followed through with action, what adjustments they might have made, or how how much less they might have spent.

About 70 percent of mobile phone users who partcipated in the survey suggested they planned to reduce the amount they spend on phone usage. So far, the revenue impact remains hard to quantify, though.

Water is the Issue in West, Solar No Exception

A National Park Service official has warned the Bureau of Land Management that approving dozens of solar power plants in southern Nevada could dramatically impact water supplies across the arid region, the New York Times reports.

An estimated 63 large-scale solar projects are proposed for BLM lands in the region, and the plants are expected to use a large amount of groundwater to cool and wash solar panels, according to the Feb. 5 memorandum sent by Jon Jarvis, director of the Park Service's Pacific West Region, to BLM's associate state director in Nevada.

Jarvis also wrote that the Park Service is concerned that the projects could produce air and light pollution, generate noise and destroy wildlife habitat near three NPS properties: the Devils Hole section of Death Valley National Park, the Lake Mead National Recreation Area and the Mojave National Preserve.

"In cases where plans of development have been submitted, the vast majority of these projects propose to use utility-scale, concentrating solar power technologies" that "can be expected to consume larger amounts of water" for cooling than other technologies, Jarvis wrote.

"In arid settings, the increased water demand from concentrating solar energy systems employing water-cooled technology could strain limited water resources already under development pressure from urbanization, irrigation expansion, commercial interests and mining," he wrote.

As such, the proposed solar plants "potentially face several water-rights related obstacles in obtaining the necessary water for their projects."

There always are trade offs in real life. Water-cooled solar farms are no exception.

Net Neutrality: Do You Want Random or Planned Blocking?

Strong forms of "network neutrality" that allow no prioritizing of Internet traffic pose clear issues for real-time services such as video and voice, at times of peak load. Since all real-time services are highly susceptible to congestion, peak hours may not be optimal times to use them. The problem is that "peak hours" are when users most want those services available.

So the issue is simply whether users prefer random disruptions of quality, or planned disruptions of the quality of some applications, in order to provider optimal performance for real-time services. Since no federal rules are going to abolish peak consumption hours, the only practical issue is what methods are used to limit network access at times of peak congestion.

One can specify that no packets are blocked or intentionally slowed. But that only shifts the congestion control mechanism. Users will find their voice and video sessions don't work that well, and will restrict their use of those services at times of peak congestion.

The other approach is to prioritize applications so the burden of congestion is shifted to lower-priority communications or applications; to users with demonstated "very-high usage" profiles; users who already have exceeded fair usage caps or users at congested cell towers.

Some service quality degradation, at peak hours, will happen. The only issue is how the congestion issues are distirbuted.

One might argue that congestion effects also could be distributed based on whether users have opted to buy "best effort" usage plans or "assured access" plans. But higher-quality, assured access is not possible when packets cannot be prioritized.

Congestion issues, despite network upgrades, always will be a fact of life for networks. The only practical issue is how network degradation is handled. It can be random, or it can be planned. How any new network neutrality rules are framed will determine whether planned mechanisms are allowable.

AT&T Launches Picture, Video Communication for iPhone Today

Apple iPhone users likely will be putting strain on the AT&T wireless network today, Sept. 25, 2009,. as multimedia messaging service, which allows iPhone users to send and receive pictures and video, is made available for the first time.

But the issue is going to grow in significance. Pyramid Research estimates mobile video usage will grow at a compound annual growth rate of 28 percent over the next five years. By 2014, more than 500 million users worldwide will subscribe to mobile video services, equal to 8.5 percent of all mobile subscription services.

That might not seem like much, but video requires about one to two orders of magnitude more bandwidth than voice (10 to 100 times).

YouTube says mobile uploads over the last six months have grown 1700 percent. and users have grown 70 percent.