Are Social Networks More Like Email or Google?

Social networks already have become a lead application for mobile devices. A new study by Accenture finds that “increased demand for smart connected wireless devices such as smartphones is being driven by social-networking applications," in both developed and developing economies.

But you likely still can get a good argument about whether social networking is a "feature" or a business model. Email for the most part remains a "feature." Early in the development of the dial-up business, email was so important it actually drove adoption of Internet access. These days, with the advent of Web mail and business and organization email, it simply is a feature, but not a direct revenue model (except for providers of email hardware and software).

Google and other Web mail providers have started building an advertising revenue stream, but it largely is ancillary.

The same sort of argument can be made about social networking applications. Skeptics point to Twitter, Facebook, MySpace,  Bebo and Geocities, which either are struggling to create a business model, or have been shut down.

Optimists might say that although many attempts will fail, a normal situation for the Internet applications business, one or two of the players will discover a sustainable business model and possibly even achieve "Google" style success.

Most believe advertising will be significant, and skeptics say social networks are not conducive to most types of display advertising, for example.

That would explain why no social networking company has yet emerged as a public company: there is not yet a viable business model.

It is possible that some new model will be discovered in time. Twitter, for example, is nearly at breakeven as a result of a search results deals with Google and Bing. That's not a complete answer, but it helps.

It is not yet possible to determine the final outcome. It is conceivable that some social networks will drive so much engagement and value that some will be acquired by larger firms able to leverage the networks to deepen and extend their other existing business models. In that scenario social networking winds up more like email than Google.

Right now, it likely is a coin toss which model is most believed.

Brands ARE Media These Days

Brands are media companies these days, many marketers would argue. That's a huge shift in thinking from an older world where third parties did "media," and then brands simply advertised in those media.

These days, more and more companies are becoming publishers or content providers in their own right, bypassing "media" outlets.

"The fundamentals of media business are toppling as their 20th century foundations crumble," says Mark Mulligan, Forrester Research VP. "Consumers are falling out of love with paying for media and striking up illicit affairs with free content, not just because it is free, but also because it is on their terms."

This is great news for consumers but terrible news for media businesses that have spent years building revenues upon near-monopolistic control of supply of content, says Mulligan.

"Why all this matters to brands is because the tectonic shifts in media value chains are creating exciting new opportunities for non-media companies to become media companies themselves," Mulligan says.

Just as Apple transformed from hardware company to media services company with the launch of the iTunes Store, so too are brands such as Procter and Gamble with BeingGirl.com, Tommy Hilfiger with Tommy TV and Audi with its UK TV channel.

Why are brands such as these choosing to become media companies? Because they can. Blogs, Web publishing, smartphones, tablets, e-book readers, netbooks and other tools providing access to the Internet allow firms to create media sites as easily as old-line publishers can.

It takes a Web site, but every firm has one these days. It takes an ability to create or aggregate content, but that's easier these days as well, with real simple syndication and other news feeds. But brands also are simply creating their own writing staffs as well.

And the logic of doing so likely makes more sense as well, as audiences fragment. If specialized audiences are what you want to reach, Web publishing makes lots of sense. Instead of creating and placing advertisements that might or might not hit the target audience, brands can create their own content sites, producing their own "media" and then placing messages and interacting in other ways with their intended audiences.

In the new world, the dividing line between "media" and "brand" is more fuzzy.

Skype "Dial Tone" No Threat to Mobiles, Fixed Lines

About 21.5 million Skype users were logged in simultaneously on January 11, 2010, which likely is a record.

Some refer to this as "Skype dial tone."

To give you some idea of how far Skype would have to go to be a credible alternative to other forms of consumer voice, consider that in March 2009 there were 4.1 billion mobile subscriptions in service, according to the International Telecommunications Uniion. The ITU also estimates there are about 1.3 trillion fixed lines in service globally.

So make that 5.4 billion devices that have "dial tone," compared to a third of a percent of Skype accounts, at peak. To the extent communications really does depend on network effects, Skype has quite some ways to go.

Business Prepaid Wireless Heats Up

Business customers have not been big users of prepaid mobile services. But that could be changing. Compass Intelligence expects growth of about 10 percent over each of the next three years.

Estimated to represent approximately five million of the 57 million prepaid subscribers by the end of 2010, prepaid business users make up a small part of the prepaid market at the moment, and is a recent trend.

About 60 percent of of decision-makers offering employees prepaid devices say they have done so far one year or more,” says Kneko Burney, Chief Strategist of Compass Intelligence.

One would be tempted to suggest that a new frugality caused by the recession is the reason business prepaid is picking up, and that likely is part of the explanation. But one might also suggest that more businesses are trying to control fast-growing mobile expenses. Shifting to prepaid is one way to do so.

“The real finding here is that the 'corporate liable' segment of the overall wireless market (representing roughly 14 percent of all wireless subscribers) is expected to change as a result this increase in business prepaid," ays Burney. Contracts will need to become more flexible and carriers will be wise to find a way to accommodate business needs for “prepaid-like” options in contracts, particularly for mobile broadband and possibly even push-to-talk.”

Decision-makers are most likely to provide prepaid devices to “sales people,” executives, business owners, IT or telecom staffs.

For many, the primary reason that prepaid is attractive is because it is “less of a hassle compared to a monthly contract.”

Prepaid mobile broadband also is getting traction. Many respondents to the Compass Intelligence survey say they will be buying nearly as many prepaid mobile broadband devices as prepaid mobile phones in 2010.

Despite the Noise, Broadband Subscribers are Highly Satisfied

Judging by some commentary one hears on the Internet and blogosphere, customers are very unhappy with their broadband access services.

After all, isn't the United States woefully behind other nations in speeds?

A new study by Parks Associates shows the opposite. The overwhelming percentage of U.S. broadband customers, across every single platform are "highly satisfied."

There is, to be sure, a small percentage of users on every type of access network who say they are "highly dissatisfied" with their service. The shock might be how few actually are really unhappy.

Granted, continual improvement is a good thing. But the Parks Associates study suggests providers need to keep improving a service that provides overwhelming "high" satisfaction, rather than scrambling to update services that basically are seen as somehow inadequate.

Rural-Urban Broadband Customers Not so Different

Are rural broadband customers all that different from suburban or urban customers? Not so much, a new analysis by Parks Associations suggests.

The percentages of rural broadband households who are very satisfied and very dissatisfied with their broadband services are within the margin of error for all U.S. broadband households, Parks Asociates notes. In other words, they are no more inclined to be pleased or upset with their service and service provider.

Rural broadband consumers desire value-added services on par with all U.S. broadband households, with premium technical support services and online backup as the top-two desired value-added services.

And the overwhelming percentage of U.S. broadband consumers are highly satisfied with their access services, despite a small percentage that say they are highly dissatisfied.

Overall, the rural status of a household has little impact on level of satisfaction with its broadband service. The type of access service does seem to have some bearing on high and low satisfaction.

Households with fiber broadband services report high satisfaction ratings in larger numbers, and households receiving satellite and wireless broadband services exhibit lower satisfaction ratings. But there is an important caveat. Customers who buy bundles of service are happier than customers who do not buy bundles. So the key variable seems to be the ability to buy a bundle, more than the type fo access.

The business implications would seem to be clear enough. Bundles create higher satisfaction and higher satisfaction reduces churn.  A highly satisfied broadband subscriber is 46 percent less likely to churn from a current provider, whereas a highly dissatisfied customer is 384 percent more likely to leave a current broadband provider.

A subscriber to a triple play of access services (broadband, television, and home telephone)
 is 15 percent more likely to be a highly satisfied broadband customer.

More than 70 percent of cable broadband households subscribe to a bundle, about 25 percent of which buy a triple play. But most, about 66 percent, buy a dual-play bundle of video and broadband access.

DSL providers have 58 percent bundle penetration, with 25 percent of customers opting for a dual-play package of  broadband and video while 17 percent buy a triple-play bundle.

Fiber broadband providers have 78 percent bundle penetration, with 64 percent buying a dual-play broadband and video bundle and 49 percent buying a triple-play package.

Rural broadband customers are 10 percent to 20 percent less likely than broadband subscribers on a national level to subscribe to the most-common broadband bundles. One would therefore expect lower satisfaction in rural areas, since satisfaction and bundles seem to be directly related.

To Solve the "Broadband Access" Problem, You Have to Know What Causes It

Solving the problem "people who don't use broadband access at home" hinges on the actual barrier to usage. Some people don't use the Internet; some don't use computers; some are unwillingness to pay current subscription prices while others would buy but literally have no physical access at their remote locations.

All too often the problem is viewed uni-dimensionally, as though lack of supply is the key problem. But there is increasingly acknowledgement that there are other barriers to surmount, such as users who would like to use the Internet, and could afford it, but who do not own PCs, and are unlikely to buy one.

The U.K. government believes "lack of PCs" is among the barriers, and now plans to give away
270,000 low-income families with free laptops and broadband access, as part of its £300 million broadband stimulation program.

Since the fall of 2008 U.K. officials have been training "well off" families about the value of broadband for users who can afford to buy broadband, but do not see the value.

The new inititiative aims to address a different problem: people who would use the Internet and see its value, but cannot afford the PC or recurring cost of a connection.

The program is to be included in the Children, Schools and Families Bill for 2009/2010, which is yet to be debated in the House of Commons. The legislation aims to ensure that all families with children aged between seven and 14 will be able to apply for a grant to buy a computer and broadband connection.