25% of Business Apps to be Created by Amateurs, Gartner Says

By 2014, citizen developers will build at least 25 percent of new business applications, according to Gartner analysts. If that is shocking, consider the amount of Web content now freely contributed to Wikipedia or many of your favorite blogs, microblogging sites and YouTube.

Gartner defines a citizen developer as a user operating outside of the scope of enterprise IT and its governance that creates new business applications for consumption by others either from scratch or by composition.

"Future citizen-developed applications will leverage IT investments below the surface, allowing IT to focus on deeper architectural concerns, while end users focus on wiring together services into business processes and workflows," says Eric Knipp, Gartner senior research analyst.

Better technology has also lowered the bar for becoming a developer, while at the same time, users have become less intimidated by technology, empowering citizen developers to do more than they ever could before, Knipp says. Y

"The bottom line lies in encouraging citizen developers to take on application development projects that free IT resources to work on more complex problems," Knipp says.

"Citizen development skills are suited for creating situational and departmental applications like the ones often created in Excel or Access today," he says.

Will Hulu be a For-Fee Service in 2010?

It looks like much Hulu content, especially network TV fare, will move to "for-fee" status sometime in 2010.  Hulu, owned by News Corp, NBC Universal and Walt Disney Company, is quite popular, attracting more than 300 million views in the month of February 2009, but ad revenues have been disappointing.

 “It’s time to start getting paid for broadcast content online,” says News Corp. Deputy Chairman Chase Carey.

“We’re exchanging analog dollars for digital dimes,” and that simply cannot continue, Carey says. “I think a free model is a very difficult way to capture the value of our content."

"I think what we need to do is deliver that content to consumers in a way where they will appreciate the value,” Carey adds. “Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business.”

Precisely what content will be "behind a pay wall" is not yet clear. Hulu is not likely to charge fees for all content on its site, but what it intends to do is not yet clear.

The planned move illustrates the continuing problem virtually all content providers and distrbutors are having with IP-delivered content: gross revenue in legacy channels is not being matched in digital channels.

Will Net Neutrality Curtail Broadband Investment?

Nobody knows what final shape of proposed new network neutrality rules might take. What already is clear is the debate over the impact of such rules on network investment. Predictably, proponents of strong new rules say carriers are bluffing about the stifling effect new rules might have.

Just as predictably, leading industry executives say that is precisely the danger.

“We’ve invested more than $80 billion over the last five years to build these platforms for growth, and that’s Verizon alone,” says Verizon Chairman Ivan Seidenberg.

Speaking about the transformative role communication and information technologies can, and should have, Seidenberg cautioned that “while this future is imminent, it is not inevitable, and the decisions we make today – as an industry and as a country – will determine whether the benefits of these transformational networks will be felt sooner or much, much later.”

“Our industry has shown that we can work with the government as well as our partners and competitors to achieve mutually desirable goals of more competition, consumer choice and broadband expansion," Seidenberg says. "But we can’t achieve these ends if we interrupt the flow of private capital and delay the cascading productivity impacts of a more networked world."

“Rather than impose rigid rules on a rapidly changing industry, the FCC should focus on creating the conditions for growth,” he says.

Frank Gallaher, Stifel Nicolaus analyst, warned of just that outcome. At least some policy advocates are too sanguine about the impact on investment if harsh new rules are inacted. Likewise, Matt Niehaus, Battery Ventures analyst, warned that telecom investment capital has been declining over the past 10 quarters. The capital flight is caused in large part because of a perception that there is too much competition in telecoms, and therefore further investment is less likely to provide an adequate return on capital investment.

 "It's a perception in Wall Street, there's too much competition, and therefore it's difficult for entities to obtain a great return, " he says.

  "One of the things that worries me, is you can execute very well, and the problem is you may do all those things right, yet it's not clear you will be rewarded on the back end for it," Niehaus says.

But S. Derek Turner, Free Press research director, says carrier investment decisions are driven by a variety of factors, but regulation plays only a minor role.

"In general, firms’ investment decisions are driven primarily by six factors: expectations about demand;
supply costs; competition; interest rates; corporate taxes; and general economic confidence -- making
the overall decision to invest a complex process that is highly dependent on the specific facts of a given
market," says Turner. "It is simply wrong to suggest that network neutrality, or any other regulation, will
automatically deter investment."

Turner argues that "at the end of 2006, AT&T, as a condition of its acquisition of BellSouth, was required by the FCC to operate a neutral network for two years. During this period, while operating under network neutrality rules, AT&T’s overall gross investment increased by $1.8 billion, more than any other ISPs in America."

"In its wireline segment (which was specifically subject to the FCC’s fifth principle of nondiscrimination
in addition to the other four open Internet principles in the agency’s Internet policy statement, AT&T’s
gross capital investment increased by $2.3 billion," says Turner.

As a percentage of wireline revenues, AT&T’s wireline investments grew from 13.5 percent in 2006 to 20.2 percent in 2008, he also argues.

"During the years following the imposition of pro-competitive regulations on incumbent phone
companies as stipulated in the 1996 Telecom Act, investment as a percentage of revenue by these
companies rose from nearly 20 percent before the enactment of the law to a high of 28 percent in
2001," Turner argues. "In the years following the dismantling of these rules, relative investment levels declined to below 17 percent in 2008."

In fairness, the issue is fairly complex. One might argue that AT&T was willing to invest, even under temporary "neutrality" rules, precisely because those rules were temporary. One might argue that some investment was driven by competitive concerns, not necessarily because of high return on invested capital.

Indeed, the fact that investment, as a percentage of revenue, has grown is precisely because returns are lower than before precisely because the returns from broadband services are lower than for voice services.

Also, investment might have declined in 2008 because of the recession, or because such investment is powerfully affected by the general level of competition. In other words, executives might have been investing more than they believed they "should," not to gain revenue or share but simply to hold it. That, in fact, is precisely what executives say privately.

The other imponderable is that current net neutrality rules are fairly benign, and simply allow end users access to all lawful applications. Proposed new rules might go much further, and prohibit development of new services, driving new revenue, at a much more serious level.

To argue that benign rules have had benign impact is one thing. It is quite another thing to extend rules in ways that might actually choke off needed new revenue opportunities, at a time when everybody agrees the current revenues are unsustainable. Forcing wireless companies to follow the same rules that might be applied to wired networks with vastly more bandwidth is one example.

Net Neutality: What Verizon and Google Can Agree On

Though there are many issues upon which Verizon and Google disagree, both companies say they agree on some elements of network neutrality.

"For starters we both think it's essential that the Internet remains an unrestricted and open platform. where people can access any content (so long as it's legal), as well as the services and applications of their choice," say Lowell McAdam, CEO Verizon Wireless and Eric Schmidt, CEO Google.

That should come as no surprise. Those rules already are part of the Federal Communications Commission "Internet Freedoms" principles.

Both executives say the current debate about network neutrality is about the best way to "protect and promote the openness of the Internet."

Both executives say "it's obvious that users should continue to have the final say about their web experience, from the networks and software they use, to the hardware they plug in to the Internet and the services they access online."

"Second, advanced and open networks are essential to the future development of the Web," McAdam and Schmidt say. "Policies that continue to provide incentives for investment and innovation are a vital part of the debate we are now beginning."

"The FCC's existing wireline broadband principles make clear that users are in charge of all aspects of their Internet experience--from access to apps and content, so we think it makes sense for the
Commission to establish that these existing principles are enforceable, and implement them on a case-by-case basis," McAdam and Schmidt say.

"We're in wild agreement that in this rapidly changing Internet ecosystem, flexibility in government policy is key," they emphasize. "Policymakers sometimes fall prey to the temptation to write overly detailed rules, attempting to predict every possible scenario and address every possible concern," and that
"can have unintended consequences."

Both executives say "broadband network providers should have the flexibility to manage their networks to deal with issues like traffic congestion, spam, "malware" and denial of service attacks, as well as other threats that may emerge in the future, so long as they do it reasonably, consistent with their customers' preferences, and don't unreasonably discriminate in ways that either harm users or are anti-competitive."

"They should also be free to offer managed network services, such as IP television," both men say.

"While Verizon supports openness across its networks, it believes that there is no evidence of a problem today -- especially for wireless -- and no basis for new rules and that regulation in the US could have a detrimental effect globally," they say. "While Google supports light touch regulation, it believes that safeguards are needed to combat the incentives for carriers to pick winners and losers online."

That isn't to say the two firms have identical interests or views. But as we have seen in prior discussions about net neutrality, there is more room for compromise than sometimes seems to be the case. That undoubtedly will be the case this time around, as well.

9% of SMBs Use Twitter for Marketing

About nine percent of small and medium-sized businesses currently use Twitter to market their businesses, say researchers at BIA/Kelsey.  In addition, 32 percent of SMBs indicated they plan to include social media in their marketing mix in the next 12 months by using a page on a social site such as Facebook, LinkedIn or MySpace.

Furthermore, 39 percent of SMBs plan to include customer ratings or reviews on their own Web sites, and 31 percent plan to include links or ads placed on social sites or blogs.

"Social media is clearly gaining traction among SMB advertisers," says Steve Marshall, director of research and consulting, BIA/Kelsey.

You might not be surprised if any study suggests Twitter is used disproportionately by younger people. What the BIA/Kelsey study suggests it also is used by "younger businesses."

About 16 percent of SMBs in business three years or less say they use Twitter for marketing or promotion. About 11 percent of SMBs in business four to six years say they use Twitter for such purposes.

Some six percent of SMBs in business seven to 10 years say they use Twitter for some form of marketing while just two percent of firms in business for 11 or more years say they do so.

Social Media, Networking Now 17% of Total Internet Use

Social networking and blogging sites accounted for 17 percent (about one in every six minutes) of all time spent on the Internet in August 2009, nearly three times as much as in 2008, according to the Nielsen Company.

“This growth suggests a wholesale change in the way the Internet is used,” says Jon Gibs, Nielsen VP. “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.”

The popularity of social networking sites such as Facebook, MySpace, Twitter, LinkedIn, and Classmates.com more than quadrupled from 2005 to 2009 as well. In September 2009, Facebook had 90 million U.S. users and 300 million users worldwide. Also, those users increased the amount of time spent on social sites 83 percent from 2008 to 2009, Nielsen says.

As always is the case, marketing and advertising efforts "follow people."  U.S. advertisers spent an estimated $1.4 billion to place ads on social networking sites in 2008 and advertising expenditures are predicted to rise to $2.6 billion by 2012.

More specificially, advertisers in some verticals made huge new commitments to social media as an advertising medium. The entertainment vertical, for example, increased its spending 812 percent year over year. The travel industry increased its spending 364 percent, year over year.

To be sure, aggregate social site advertising remains a small percentage of overall ad spending. But rapid growth is the story.

Verizon Introduces Quad Play Bundles

Verizon customers in Northeast and Mid-Atlantic markets now can buy quadruple-play packages of wireless, TV, Internet access and home phone service in configurations costing as little as $135 a month with a one-year contract, for FiOS locations. Customers served by digital subscriber line service can get packages as low as $125 a month.

The basic Verizon quad-play FiOS bundle consists of the national Verizon Wireless calling plan of 450 minutes, "Freedom Essentials" voice service, FiOS Internet service with 15 Mbps downstream, 5 Mbps upstream connection speeds and FiOS TV "Essentials" service.

For customers served by Verizon's copper network, the lead quad-play bundle consists of the national Verizon Wireless calling plan of 450 minutes, a "Freedom Essentials" calling plan, broadband access with downstream connection of up to 3 Mbps and the DirectTV Plus DVR package.  A one-year Verizon commitment and a two-year DirectTV commitment with hardware lease are required with these bundles.

With four services all on one bill, qualifying quad-play customers will save from $59 to $179 a  year, depending upon which bundle they order.

New customers who sign up by Jan. 16, 2010 for FiOS quad-play or triple-play bundles that include broadband and TV also will receive a $150 Visa prepaid card. New customers who subscribe to quad-play or triple-play bundles that include Verizon Freedom Essentials, Verizon broadband access with an up-to-3 Mbps or 7 Mbps speed, and DIRECTV service will receive three months of free broadband access service.