Consumption-Based Billing Coming?

Sandvine has released Usage Management 2.5, a software solution that enables fixed-line network operators to implement consumption-based billing models, real-time subscriber communications and multiple service plan tiers. The move is significant as it suggests retail pricing might move in that direction in the future, representing a major shift in retail pricing models.

Historically, consumption-based billing has been problematic for Internet service providers. Time Warner Cable tested and then decided not to implement metered billing earlier in 2009 after widespread consumer resistance to tests in in Rochester, N.Y., Austin and San Antonio, Tex., and Greensboro, N.C.

User behavior also is powerfully affected by billing methods. At one point in time America Online charged users by the minute for their dial-up Internet access usage. When it converted to flat fee billing, usage and subscribers exploded, and AOL became the largest U.S. ISP.

Similar results have been seen when other types of services, such as voice calls, also moved from per-minute to flat rate or "buckets" of usage. Generally, users spend more time talking or using the Internet when they are not metered for that usage.

Mobile voice services have a half-way approach that combines usage limits with much of the perceived freedom users feel when they are not charged strict per-minute charges. Such "buckets" of usage are a likely direction much retail Internet access pricing will move as bandwidth-intensive applications become more important and if new "network neutrality" rules forbid ISPs from shaping overall demand at times of peak congestion.

The alternative to traffic shaping then would shift to other measures such as increasing raw bandwidth or providing incentives for users to limit their consumption at peak hours. The former obviously requires more investment, which then would have to be reflected in higher prices, while the latter would allow for more gradual investments and therefore stable or more slowly increasing prices.

One problem today is that few consumers have any idea how much bandwidth they use. The new Sandvine tool would simultaneously allow users to monitor and understand their own behavior, as well as provide ISPs with better ways to create plans matched to end user behavior.

The Sandvine tool also would help ISPs create quality-sensitive service or personalized plans, assuming Federal Communications Commission or Congressional rules allow them to be offered.

Wirefly’s Top 10 Most-Anticipated Cell Phones

In a major change, the top-two "most anticipated" new mobile devices are made by Motorola. That hasn't happened for quite some time, and will be a huge test of Motorola's decision to rely on Android as its ticket back into the top ranks of manufacturers of "hot" devices.

The launches are equally important for mobile service providers, who have found devices to be primary ways of differentiating their services. We'll have to see, but it is possible, perhaps likely, that a key new feature of the top-two Android devices will be their methods of integrating contact information and status updates across applications. That's an angle on "unified communications" we have not seen so much in the mobile arena.

Here's Wirefly's ranking and commentary.

1. Motorola Droid (Verizon Wireless) - The most anticipated cell phone launch of the season is just days away, but the hype for this the Motorola Droid smartphone has been building for quite some time.  Verizon Wireless has invested heavily in a national “teaser” marketing campaign, while keeping the details about this Android-based device close to the vest.  The Droid is the first commercial phone released with the new Android 2.0 platform, and has been dubbed the “iPhone killer” by many a technology-writer.  Verizon Wireless is stoking the fire with a campaign that touts all the things the Droid does that the iPhone doesn’t – from running multiple apps, to a full slide-out keyboard, to changeable batteries and memory to a 5.0 megapixel camera that takes photos in the dark.

2. Motorola CLIQ MB200 (T-Mobile) - The highly-anticipated Motorola CLIQ is the new king of the T-Mobile Android smartphone lineup, and the first since the original G-1 to have a full slide-out keyboard.    What really makes it buzz-worthy, though, is that it utilizes the new MotoBlur user interface that syncs your social media, contacts, and e-mail in real time, providing instant access to the latest happenings and messages from friends.  (The Cliq is currently available to existing T-Mobile customers, however, new customers will not be able to purchase the device until November 2nd, and therefore, it still garners a spot on our top picks.)

3. Samsung Moment (Sprint) - Sprint’s second Android device, the Samsung Moment, mark’s Samsung’s entry into the Android smartphone market with a full slide-out keyboard and a first-of-its-kind AMOLED touch screen, providing unprecedented brightness that’s also kind to your battery life.

4. LG Chocolate Touch (Verizon Wireless) – The LG Chocolate is an iconic Verizon Wireless phone, and this new touch version should be even sweeter than its predecessors.

5. Samsung Behold II (T-Mobile) – The Behold II is the sequel to the very successful Samsung Behold but with one MAJOR difference - the latest version runs on the Android smartphone operating system.  The Behold II also features a "cube menu" that provides quick access to six multimedia features at the flick of a finger: music, photos, videos, the Web, YouTube, and Amazon MP3.

6. HTC Desire 6200 (Verizon Wireless) – Verizon Wireless is making headlines with the Droid, but is expected to follow quickly with a second Android-powered smartphone dubbed the Desire.  The Desire will not have a keyboard, and will boast HTC’s touch screen “Sense” interface that has won rave reviews on the HTC Hero.  

7. Sprint Palm Pixi (Sprint) – The Sprint Palm Pixi is being touted as a tiny, sleek webOS-based handset that offers many of the same features and functionality as the Pre without the hefty price tag.

8 . BlackBerry Storm 2 (Verizon Wireless) – This next generation of the touch screen BlackBerry Storm looks similar to the original model on the outside, but boasts notable improvements on the inside such as a Wi-Fi radio, sleeker design, and an improved SurePress typing system.

9. BlackBerry Bold 9700 (AT&T & T-Mobile) –This smartphone is an updated version of the high-end Blackberry Bold that hit the market last year.  It is thinner and lighter with a faster Web browser than its predecessor and replaces the original Bold's track ball with an optical track pad.

10. LG Shine 2 (AT&T) – The successor to the immensely popular Shine; but as its name indicates, it promises to be twice as sleek and sexy.

Real-Time Internet Traffic Doubles

Real-time entertainment has almost doubled its share of total Internet traffic from 2008 to 2009, while gaming has increased its share by more than 50 percent, says Sandvine. Real-time entertainment traffic (streaming audio and video, peer-casting, place-shifting, Flash video) now accounts for 26.6 percent of total traffic in 2009, up from 12.6 percent in 2008, according to a new analysis by Sandvine.

As the percentage of real-time video and voice traffic continues to grow, latency issues will become more visible to end users, and will prompt new efforts by Internet access providers to provide better control of quality issues not related directly to bandwidth.

One reason is that video downloads, for example, are declining in favor of real-time streaming. Downloaded content is less susceptible to latency and jitter impairments.

Traffic to and from gaming consoles increased by more than 50 percent per subscriber as well, demonstrating not only the popularity of online gaming, but also the growing use of game consoles as sources of “traditional” entertainment such as movies and TV shows, says Sandvine.

Gaming, especially fast-paced action games, likewise are susceptible to experience impairment caused by latency and jitter.

.The growth of real-time entertainment consumption also is leading to a decline of peer-to-peer traffic. At a global level, P2P file-sharing declined by 25 percent as a share of total traffic, to account for just over 20 percent of total bytes, says Sandvine.

The changes have key implications for ISPs and end users. One way to protect real-time service performance for applications such as voice, video, videoconferencing and gaming is to take extra measures to protect latency performance for such real-time applications. And that is where clumsy new network neutrality rules might be a problem.

Whatever else might be said, user experience can be optimized at times of peak congestion by prioritizing delivery of real-time packets, compared to other types of traffic that are more robust in the face of packet delay. File downloads, email and Web surfing are examples of activities that are robust in the face of congestion.

So it matters greatly whether ISPs can condition end user traffic--especially with user consent--to maintain top priority for streaming video, voice or other real-time applications when networks are congested. Enterprises do this all the time. It would be a shame if consumers were denied the choice to benefit as well.

Broadband Stimulus Delays Continue

It should not come as any surprise--given earlier delays--that the first project awards under the the American Recovery and Reinvestment Act's "broadband stimulus" program will be late. Some might not happen at all, unless they can adequately document that there is no existing provider able to provide service in project areas.

The program is supposed to allocate $7.2 billion to provide broadband services or training to rural and other underserved communities, through the Department of Commerce’s National Telecommunications and Information Administration and the Department of Agriculture’s Rural Utilities Service.

The problem is that the work load required to evaluate and award funds so vastly exceeds the volume of work either agency has handled in the past. The NTIA must now disburse sums that are about 4.7 times greater than normal, while the RUS faces the task of disbursing amounts 192 times larger than normal.

Those would be challenges under the best of circumstances, so it is no surprise that the first awards may not be made until December, about a month later than anticipated. There are other risks, says the Government Accountability Office, including a lack of funding for oversight beyond fiscal year 2010 and a lack of updated performance measures to ensure accountability for NTIA and RUS.

Some awards might never happen. The program rules relating to new services in "unserved" areas forbid projects in areas already served by existing providers. Comcast and other cable providers believe some projects violate just those provisions. Comcast says it will file supporting data Oct. 28, 2009, supporting its contentions.

The National Cable & Telecommunications Association claims funding has been sought in "hundreds" of areas where its members already provide broadband service.

For Lots of People, This Will Be Unified Communications

Impulse Purchases Key for Mobile Marketing Messages

A significant number of American consumers are interested in receiving opt-in marketing messages, according to a new survey by Harris Interactive. It also appears impulse purchases are prime candidates for mobile marketing messages.

The survey of 2,029 mobile phone users, ages 18 and older shows 42 percent of users between the ages of 18 and 34 and 33 percent of those between 35 to 44 are at least somewhat interested in receiving alerts about sales on their cell phones from their favorite establishments.

Men are more interested than women. About 51 percent of men ages 18 to 34, and 34 percent of women of the same age range are at least somewhat interested in receiving opt-in shopping alerts on their cell phones.

Only one percent of cell phone owners currently receive alerts about sales at their favorite establishments on their phones, yet 26 percent would be at least somewhat interested in receiving such alerts, assuming they were permission-based.

Of those interested in receiving alerts, 53 percent would be at least somewhat interested in being notified about restaurant specials around them.

About 43 percent say they would be interested in getting information about movie or event tickets. About 39 percent are interested in getting weather information, while 37 percent indicated interest in information about clearance sales.

Sizable percentages expressed interest in specific products such as pizza, clothes, fast food, electronics, music, happy hour specials or bar and night club offers.

Impulse purchases seem particularly germane. The survey found that about 90 percent of U.S. adults have made an impulse purchase when they were out shopping in a store, based on a sale or special offer going on around where they were.

Nearly a quarter of adults owning cell phones (22 percent) make this type of impulse purchase at least once per week or more often.

Might Verizon Still Get the iPhone?

Given the direct knocks on the Apple iPhone in Verizon's latest "Droid Does" marketing campaign, there has been speculation that Verizon has given up on any plans it might have had for offering the iPhone on the Verizon network.

But Verizon chairman and CEO Ivan G. Seidenberg surprised observers by saying Verizon has not given up hope of offering Apple's iPhone.

"This is a decision that is exclusively in Apple's court," Seidenberg said on Verizon's third quarter 2009 earnings call. "We obviously would be interested in any point in the future they thought it would make sense for them to have us as a partner."

"We have expanded our base of other devices," explained Seidenberg. "So our view is to broaden the base of choice for customers and hopefully along the way, Apple as well as others will decide to jump on the bandwagon."

Although AT&T's exclusive deal to offer the iPhone in the US is thought to be nearing an end, Verizon Wireless, which uses the CDMA air interface, is viewed by some an unlikely candidate to offer the iPhone, which currently is designed to run on GSM networks.

AT&T's iPhone exclusive is seen as a key factor in differing net new subscriber performance in the third quarter. Verizon Wireless added 1.2 million new mobile customers during the quarter to reach 89 million in total, while AT&T had earlier reported growth of two million net new subscribers, to reach 81.6 million total subs.

AT&T said it activated 3.2 million iPhones in the third quarter of 2009, the company's largest quarterly total to date.