A Decade After the Bubble, Another Round of Spectrum Auctions

It has been roughly a decade since European mobile operators placed big spectrum bets on "third generation" mobile broadband, and then largely watched as killer apps failed to emerge, customer use of the new networks remained sluggish, and executives ruefully noted they had overpaid for spectrum.

Now European mobile operaters are about to embark on a new round of broadband spectrum investments for fourth-generation mobile networks. You can expect them to try to be more-prudent investors this time around. In the 2000 round the German government, for example, raised 50 billion euros, or about $67 billion, on 3G licenses. Some anticipate the government will raise five billion to 10 billion euros this time around.

We'll see. The difference between the 2000 auctions and the current 2010 round is that Internet access has emerged as the "killer app" for mobile broadband, and the difference between 3G and 4G is that 4G looks to be a potential replacement for fixed-line broadband.

"With LTE, mobile phone networks will become a real alternative to cable or DSL (broadband telephone connections)," says Herbert Merz, head of the German hightech association Bitkom.

link

Value Chain Conflict Takes Contradictory Forms

Struggles over value and revenue in the Internet ecosystem take the form of "network neutrality" debates in the United States, and oddly enough may take the reverse form in the European market. In the U.S. market, the effort is to induce the government to bar revenue sharing, where in the European market there may be pressure to get governments to compel revenue sharing.

Telefónica, France Telecom and Deutsche Telekom all say Google should start paying them for carrying bandwidth-hungry content such as YouTube video over their networks.

César Alierta, chairman of Telefónica, said Google should share some of its online advertising revenue to compensate the network operators for carrying the technology company’s bandwidth-hungry content over their infrastructure.

Alierta says that if no revenue sharing agreement was possible between the internet search engines led by Google and the network operators, regulators should supervise a settlement.

“Let’s see the development of digital society in terms of the winners and the victims," says Stéphane Richard, France CEO. "And today, there is a winner who is Google, there are victims that are content providers, and to a certain extent, network operators."

"We cannot accept this,” says Richard.

René Obermann, Deutsche Telekom’s chief executive, likewise says Google and others should pay telecoms groups for carrying content on their networks. “There is not a single Google service that is not reliant on network service,” he says. “We cannot offer our networks for free.”

source

Will Apple Make History?

Those of you familiar with the evolution of computing technology over the past few decades are aware of the way historians describe the key "eras" of that history. We begin with mainframe computing, transition to mini-computers, then to personal computers, then to a period we generally call the "Internet" or "Web" era and now seem to be at the beginning of the next era, for which we do not generally agree on a name.

The point we like to make is that, in each era, and eras do not break cleanly and neatly into 10-year periods, there are some firms which dominate the business in terms of market share and influence. What we also have seen, though, is a different set of leaders in each era.

(click on the image for a larger view)

The leaders of one era do not lead the next era. Again, this is a matter of relative influence and character, not an indication of enterprise death, though that has happened in some cases. So the interesting question right now is what companies, or what sorts of companies might arise to challenge even firms that are dominant today, such as Google.

All of this matters to companies in the communications business because each era of computing has created new requirements and opportunities for providers of computer communications. Generally speaking, as computing has migrated into the fabric of everyday life, the need for communications has grown steadily.

Arguably the biggest change in volume of devices requiring communications came with the "Internet" era, when virtually every computing appliance began to require communications.

Today, we can point to smartphones as the latest wave of computing devices that require communications.

To be sure, executives in the business are well aware of the historical implications of changing eras. And the fascinating question right now is  whether any company that has been a leader in any of the previous eras can make the transition to leadership in a subsequent era. The question is interesting simply because it has not ever happened.

But then there is Apple. And one way to make Apple "fit" into the typology is to remove it from the ranks of 1980s leaders, and then place it into the era of mobile Internet computing. Or one can leave Apple where it logically is categorized, and then assume that it is a candidate to make history, by becoming one of the dominant firms in the coming era.

That, in any case, is why some observers might believe Apple is better positioned than Google, as fearsome as Google seemed two or three years ago, as a possible "leading" firm in the era that is coming. Already there is some thinking that "desktop search," as key as it has been to Google's prominence, will be challenged in the era to come by "mobile applications."

It might seem odd to say Apple is a more-likely candidate to lead the next wave of computing than Google. The "safe" answer is to say neither will be a market leader in the next era. But Apple could make history, in more ways than one.

Apple always has been a believer in the power of "closed" ecosystems, at a time when the rest of the world has shifted to "open" systems. Observers who think "network neutrality" is important because it is seen as related to the preservation of an "open" applications environment could well be "barking up the wrong tree" entirely.

"Video Will Replace Voice and Text" for Business Communications in 5 Years"

Video will become the new business norm for communication and collaboration over the next five
to 10 years, says Henry Dewing, Forrester Research analyst. In fact, says Dewing, "video will replace voice and text communications as the preferred method of communication in business and personal life."

Those of you accustomed to technology projections might agree that the direction is right, but the timing is probably wrong. Still, three years ago, most buyers and users perceived the predictions of impending video traffic as all hype, says Dewing. But a combination of technology maturity, end user demand and competitive pressures are driving interest.

As often is the case, the initial business case starts with saving money on travel costs. "Every business case for video starts with time and travel savings and describes the more effective communication possible with video, but the real value is in improving the way firms operate and conduct business with their clients to build competitive advantage without breaking the bank, says Dewing.

But if you are familiar with the business case for IP communications and IP telephony, it was the same there. People understood they could save money. But all the other advantages remain a bit unclear.

Hard dollar savings like travel costs are being used to pay the bills for all types of communications and collaboration solutions, he says. "Many businesses we speak with struggle to define the value of video beyond travel savings from implementing videoconferencing," he notes.  "The value of digital signage, video blogging, broadcast state-of-the-company speeches, and even video-enabledcollaboration is still fuzzy in the minds of IT planners today."

The hurdles might be even worse than that. Business owners might not be able to measure the "soft" advantages from collaboration very well, if at all, as generally is the case with IP communications, where, no matter what anybody tries to say, still is seen as a cost-reducing innovation.

Business video use will ramp steadily over the next five years as employees who experience video at home will demand it at work. After successful deployments at work, employees will demand more video solutions and make video a standard mode of communication, Dewing says. Follow-on deployments will occur rapidly when use is easier, when resolutions deliver more lifelike images, and when reliability makes video dependable.

"Go Screw Yourself, Apple" Flash Evangelist Says

Apple doesn't support "Flash"-authored applications, favoring HTML5, a move that obviously harms Adobe's efforts to maintain an "open" standard for authoring Web video. Apple prefers HTML5 at least in part for technical reasons: it makes easier the task of inserting video-based advertising into video content.

Lee Brimelow is a Platform Evangelist at Adobe focusing on the Flash, Flex, and AIR developer communities, and has a succinct comment on what he thinks of Apple's position: "Go screw yourself Apple."

That's one way of assessing the threat Apple's approach to video applications causes in some quarters.

"Any real developer would not in good conscience be able to support this," Brimelow argues, calling the Apple move "hostile and despicable."

A move like this clearly shows the difference between our two companies, he says. "All we want is to provide creative professionals an avenue to deploy their work to as many devices as possible," he says. "We are not looking to kill anything or anyone."

The clear implication is that Apple is trying to "kill" Adobe's Flash business.

"This is equivalent to me walking into Macy’s to buy a new wallet and the salesperson spits in my face," says Brimelow. "Chances are I won’t be buying my wallets at Macy’s anymore, no matter how much I like them."

Lee's post

U.S. Broadband by Satellite Fared "Relatively Well" During Recession

U.S. providers of broadband access by satellite services did roughly as well as fixed-line providers during the recent recession, Northern Sky Research says. "After a year of uncertainty, the majority of signs indicate the sector made it through the worst economic crisis since the Great Depression relatively well," researchers at NSR say.

"North America set a milestone by becoming the first region to top one million subscribers, and Western Europe will likely exceed 100,000 subscribers well before the end of 2010, says NSR.

According to Hughes Network Systems November 2009, the company was adding about 17,000 gross subscribers a month. Wildblue, now part of ViaSat, added roughly 8,333 new customers a month in 2008, for a total gain of 100,000, and about the same number, it appears, in 2009.

Satellite broadband access providers saw that few consumers and businesses were willing to give up their broadband service in difficult times, NSR also says, as was the case in the fixed-line market as well.

Satellite services tend to get brutal complaints about speed, cost and customer service on some discussion boards and forums, but for many consumers, satellite broadband might be the only current option. Faster speed services are coming, though, as a new generation of high throughput satellites will provide higher-speed connections.

It seems unlikely the faster speeds will silence all complaints, but should help.

Globally, NSR projects that broadband VSAT networking, satellite broadband access, and broadband trunking and backhaul services will generate nearly $8.8 billion by 2019, which is a 135 percent increase over 2009.

Global satellite broadband access will add the most new revenues, some $4.1 billion between 2009 and 2019, to become the leading market segment and bypass traditional broadband VSAT networking in revenue terms as of 2013. Traditionally, commercial customers ordering up private satellite networks have been the revenue driver, so the switch to consumer services is a big change.

Manassas Pulls Plug on "Broadband Over Powerline" Service

The Manassas City Council unanimously voted to discontinue offering its municipal broadband over Powerline access service. The Manassas service had been touted in the past as an example of how municipally-provided broadband service could succeed, as well as a proof of concept of the idea of using power lines as the access mechanism.

The shutfown affects about 520 residents and businesses who currently subscribe to the service, which will end in three months.

The council cited three reasons for the decision. First, customer penetration had been declining. Also, the service was costing more than it took in as revenue, and a determination that meter reading services do not require broadband access.

Observers note that the business case never proved as robust as expected. "It's costing a little more to maintain the system than we projected in the budget," Manassas Director of Utilities Michael Moon said. "The original projections were that the customer base would be double this."

The city has been running the service since the private operator, COMtek, found it also could not make a profit on the system.

In January 2009, there were 637 residential and 51 commercial BPL subscribers in Manassas. In February 2010, those numbers had shrunk to 457 residential and 50 commercial subscribers.

 The Utilities Commission said that the total revenue brought in by BPL for fiscal year 2010 was almost $186,000, but the expense of keeping up the City-owned system was costing the ratepayers a little more than $351,000, resulting in a net loss of almost $166,000.

"In October 2003, the Manassas City Council was told that it could expect as much as $4.5 million in revenue from awarding a 10-year BPL franchise," said American Radio Relay League CEO David Sumner. "Instead, six months later, BPL had turned into a money pit for the City of Manassas. Anyone thinking of investing in BPL would do well to learn from the Manassas experience."

source