Is FiOS Slowdown Related to Possible Verizon Restructuring?

Verizon's apparent slowdown of further FiOS construction could be driven by any number of good reasons, including new skepticism about the financial return, alternate approaches to achieving the same goal, or perhaps other required uses for cash flow.

The need to start shifting free cash flow to dividend payments to minority partner Vodafone, or even a more-drastic reshuffling, such as a merger between Verizon and Vodafone, are possible drivers as well. Vodafone is a significant 45-percent minority investor in Verizon, and just about everyone has been expecting some adjustment of the relationship at some point, with the options including each company buying out the other, although a change in the majority ownership status is not inconceivable.

But a full-fledged merger also might be on the table.

"People familiar with the matter say there are three options being considered by the two sides," the Telegraph reports. The first is a full merger of Vodafone with Verizon Communications; the second would be for Verizon Communications to begin paying a dividend to Vodafone; and the third would be for both companies to sell their respective stakes in Verizon Wireless either to each other or to a third party.

It is that second possible outcome that suggests Verizon might have other needs for its free cash.

In fact, some observers have suggested Verizon Communications would prefer to buy out Vodafone's stake in Verizon Wireless. But analysts say selling the Verizon Wireless stake is not an option for Vodafone because it would result in a giant tax charge as well as deprive Vodafone of about 30 percent of its total annual revenue.

While they are “not aware of any increases in market concentration from such a merger that would raise serious antitrust issues at the U.S. Department of Justice,” a deal that is structured to give Vodafone control over all of Verizon's assets, including landline, would raise national-security questions, though.

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eBay Expects $1.5 Billion in 2010 Merchandise Sales Using Mobile Apps

Online retailer eBay is launching two iPhone apps, one for the eBay.com global marketplace and one for eBay’s new classifieds site, eBayClassifieds.com, part of its plan to sell $1.5 billion worth of merchandise directly from mobile sites.

With the new eBay Selling and eBay Classifieds mobile apps, consumers can easily photograph and list an item in 60 seconds or less, eBay says. Consumers can now list for free in eBay’s auction format, reaching 90 million active eBay users around the world, or in eBay Classifieds, to reach buyers in their local communities.

Plus, in addition to selling, buying has never been easier with eBay’s leading mobile shopping app and mobile platform and the new eBay Classifieds mobile app.

On April 3, eBay will take mobile commerce a step further, with a new version of the eBay app for iPad. The company earlier had released a mobile app for Android devices as well.

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Suddenlink Launches 107 Mbps Broadband Access Service

Suddenlink, an operator of rural and suburban cable TV systems, says it has started offering residential customers in several, suburban-Austin communities (Georgetown, Pflugerville, and Leander) its new “High Speed Internet MAX 107.0” service, featuring a download speed up to 107 megabits per second (Mbps) and an upload speed up to 5 Mbps.

The MAX 107.0 service is the result of “Project Imagine,” a new Suddenlink program that calls for approximately $350 million of capital investments nationwide through 2012, above and beyond the company’s traditional capital spending levels.

Through “Project Imagine,” the company aims to expand to substantially all Suddenlink communities: video-on-demand service; the capability for up to 200 high-definition (HD) TV channels; and industry-leading DOCSIS 3.0 technology, which enables Internet download speeds of 20, 50, and more than 100 Mbps.

Suddenlink is preparing to launch either MAX 107.0 or MAX 50.0 Internet service in a number of other communities this year, with details to be announced later. MAX 50.0 service will feature a download speed of up to 50 Mbps.

That will give Suddenlink bragging rights in the speed wars. What remains unclear, as has been the case for other providers offering 50 Mbps service, is how many customers actually will buy the fastest speeds, rather than lower-speed and medium-speed services.

So far, no U.S. provider of access at speeds ranging from 50 Mbps to 100 Mbps has been willing to say, in public, what percentage of customers buy such plans, or even the actual number of customers who buy. One suspects that is because relatively few consumers actually think they need such speeds, or that the value-price relationship is better than that of the medium-speed services.

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Tiered Mobile Broadband Pricing "Inevitable"

Tiered pricing--where higher amounts of use will result in higher prices--is inevitable, say analysts at Coda Research Consultancy, driven by U.S. mobile data consumption toward 327TB per month in 2015.

With compound annual growth rates of 117 percent, tiered pricing for mobile internet access will become unavoidable, the company predicts. Most of that increase will come from video, which is growing at a
138 percent CAGR to reach 224TB per month in 2015. At that point, mobile video will represent two thirds of mobile handset data traffic.

The key problem, though, is peak demand, at only some cell sites, as already is the case.

“As carrier networks now stand, network utilization will reach 100 percent in 2012 during peak times," says Steve Smith, Coda Research Consultancy co-founder. That is going to mean actual blocking of access during peak hours, much as users on older fixed networks once experienced occasional "fast busy" signals that indicated no circuits were available for use.

Use of pricing mechanisms will help, as it always does, by allowing consumers to make choices about their consumption. Many object that tiered pricing will face huge opposition from consumers conditioned to "unlimited" usage.

I suspect that will prove wrong. Buckets of usage already have been accepted by consumers who understand they can pay less for lower buckets of use, or more money for higher or unlimited use.

What users manifestly do not like is unpredictability; uncertainty about how high their bills will be at the end of the month. So long as consumers have accurate ways to measure their own usage, and an ability to adjust their plans as needed, without penalty, users will adapt easily to buckets of broadband usage.

In fact, consumers may well appreciate being able to decide for themselves whether they want to pay more to get more, or can simply adjust their usage at certain times of day, or at some places, or delay using some applications, in exchange for lower prices.

Mobile video users will grow at about a 34 percent CAGR, to reach 95 million users in the U.S. market in 2015. Use of mobile social networking will grow at a 21 percent CAGR to 2015.

Non-text-messaging-derived data revenues will climb at a 17 percent CAGR, and will comprise 87 percent of all data revenues in 2015, says Coda.

IBM Likes M2M or "Internet of Things" Potential

Why IBM, among others, is bullish on the potential for using mobile broadband networks for all sorts of useful things other than Web surfing or voice calls from mobile phones.

Operator App Stores Get More Traction Than You Might Think

Though many observers, including many service provider executives, might be skeptical about the long-term viability of operator-sponsored mobile application stores, a new study by Nielsen suggests consumers are favorably impressed with operator app stores, as compared to handset stores such as the Apple App Store.

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Many observers believe device app stores will ultimately gain favor, but a new Nielsen survey finds ongoing loyalty to carrier stores.  As of the end of 2009, half of all applications users were accessing carrier app stores according to Nielsen’s new App Playbook service.

That is not to say the Apple App Store has lost any luster in the United States. The relatively new BlackBerry App World Store also was the second most popular app store, in part because of BlackBerry’s industry-leading installed base.

But carrier application stores were not as far behind as some might think. About 84 percent of respondents said they were satisfied with the Apple App Store, while 81 percent said they were happy with the Android Market.

Some 59 percent of respondents said they were satisfied with the BlackBerry App World. About 56 percent reported satisfaction with the Windows Marketplace.

Most mobile carrier stores compare favorably with BlackBerry. About 64 percent of respondents were satisified witht he AT&T Application Store, while 65 percent said they were satisfied with the Sprint Application Store.

Some 66 percent said they were happy with the T-Mobile Application Store and 62 percent reported they were satisfied with the Verizon Application Store.

Nielsen’s App Playbook  surveys more than 4,000 application downloaders in the United States every six months about their mobile application usage.

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Ofcom Wants Better Consumer Information About Broadband Access Speeds

Ofcom, the U.K. communications regulator, is not happy with the accuracy of information provided consumers about their real-world broadband access services, and wants to revise the reporting process so better information is provided.

Mystery shoppers commissioned by Ofcom have found that 15 percent of the time, "potential customers" were not given an estimate of their access line speed, and 42 percent were only given one after prompting the sales agent near the end of the sales process.

The accuracy of the information proved to vary. In some cases, users were given double the line speed of another provider for the same line and technology, and sometimes received different answers over the phone when compared with the website of the same service provider. The majority of line speeds also did not match (within 1Mbps) the speeds given by the BT Wholesale line checker.

There is no question but that "best effort" broadband services are difficult to accurately predict or describe. It is true that users will sometimes experience bursts that correspond with the advertised "up to" speed. Most of the time, actual experienced sustained rates are lower, because of contention ratios and actual end user volume.

So Ofcom proposes that ISP's provide speed estimates based on line length, line capacitance and line attenuation, all measures that will provide a better approximation of typical download speeds.

Ofcom also wants to ensure that shoppers are given this information early in the sale process, particularly before payment information or a request for service is made.

Ofcom also seek to ensure that factors that affect broadband speed are explained. Specifically, Ofcom wants to ensure that shoppers are told how network capacity, congestion on the Internet and traffic management policies could affect performance. Consumers also should be told that actual throughput speeds will be lower than advertised or theoretical line speeds.

U.K. consumers already have the right to be moved to a cheaper, lower speed option when the plan they bought does not measure up. In cases where their is but one tier of service, Ofcom wants to allow consumers to leave their contracts without penalty.

Ofcom apparently will try to get such changes made voluntary. If changes aren't agreed to, or implemented, a regulatory review may occur, which could lead to formal regulation.

Such policies are not unreasonable consumer protection efforts. The problem is that formal guarantees are next to impossible so long as connections operate on a "best effort" basis.

Even on a quality-assured connection, which would have to be based on packet prioritization policies, throughput will vary throughout the day, based on overall contention for network resources, though far less than is the case on a "best effort" connection.

To closely match expected routine performance with an advertised top speed will require packet prioritization.

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