Droid Incredible..Is That...

Consumer Satisfaction With Video, Wireless Up, Sprint Gains Most

Customer satisfaction with cable and satellite TV rises to its highest level in 10 years, up five percent, with nearly all companies registering improvements, according to the American Customer Satisfaction Index.

Sprint Nextel seems to have made the largest gains over the last two years, jumping by double digits for each of the past two years. That's important as Sprint Nextel's customer service was widely seen as the cause of its high churn over the past several years. The improvement in customer satisfaction is mirrored by steadily better churn performance over the last couple of years.

Both Verizon’s FiOS and AT&T’s U-verse lead the way with scores of 73 and 72, respectively. Satellite TV still leads over traditional cable, with Dish Network soaring 11 percent to 71 to overtake rival DirecTV for the first time since 2005.

DirecTV fell four percent to 68 as aggressive pricing promotions by DISH, coupled with a price increase by DirecTV, has the two satellite TV providers moving in opposite directions.

All four of the largest cable providers show some improvement. Charter Communications makes the biggest leap, gaining 18 percent to 60. The company is now statistically tied with Comcast and Time Warner Cable, both up three percent to 61.  Cox Communications gained two percent to 67 to lead all traditional cable companies for a seventh straight year.

“Having enjoyed near-monopoly status in most areas for many years, cable companies had little incentive to provide quality services at a good price,” says Claes Fornell, founder of the ACSI.  “Now that satellite and fiber-optic TV providers have created a competitive challenge to cable, the cable companies have started to step up customer service and realize some gains in customer satisfaction, but they still remain far behind both satellite and fiber-optics.”  

Traditional local and long distance service improved four percent to 75, the highest level in more than a decade.  AT&T is on top after a six-percent surge to 75, followed closely by Cox Communications, unchanged at 74, and Verizon, up three percent to 73. CenturyLink and Comcast round out the bottom of the industry, with CenturyLink gaining three percent to 70 and Comcast rising two percent to 68.

Customer satisfaction with wireless telephone service set a new all-time high for the second consecutive year, rising four percent to 72.  T-Mobile gained three percent to 73, tying for the lead with Verizon Wireless, which declined one percent.

AT&T Mobility improved three percent to 69. Two years after the iPhone was introduced as an exclusive product, AT&T seems to have made strides to relieve some of the strains on its network caused by the rapid influx of iPhone customers.

Sprint Nextel had the largest improvement, gaining 11 percent to 70 a year after a similarly large 13 percent jump, pushing the wireless carrier from well below to very close to the industry average.

Perhaps the most-intriguing bit of commentary provided by ACSI was the brief note that "with wireless looking to be the future of telephone service, providers are ramping up efforts to provide new services, simplified usage plans, and better pricing." Note the language: "wrieless looking to be the future of telephone service."

Google Buys GIPS

Google is acquiring Global IP Solutions for about $68 million in an all-cash deal for the firm whose technology is used to reduce delay, jitter and echo in real-time audio and video on the Internet.

“The Web is evolving quickly as a development platform, and real-time video and audio communication over the Internet are becoming important new tools for users,” said Rian Liebenberg, Engineering Director at Google. “GIPS’s technology provides high quality, real-time audio and video over an IP network, and we’re looking forward to working with the GIPS team at Google to continue innovating for the Web platform.”

GIPS technology is widely used. In fact, Global IP Solutions bills itself as the world’s most widely deployed technology for processing real-time voice and video over IP networks, used by over 800 million end-points. As is always the case when a widely-used "original equipment manufacturer" is acquired, Google will have to balance use of the technology in a "captive" mode as well as supporting the product as an OEM offering for many third parties, some of whom may be Google competitors.

As well as providing technology that allows users of Yahoo Instant Messenger to make voice calls, GIPS technology also powers voice calls for Cisco’s WebEx system and voice and video technology for IBM’s Lotus Sametime, for example.

Google already has some voice services, including Google Talk, Google Voice, and video and voice chat on Gmail. It expanded these services last year with the acquisition of Gizmo5.  The GIPS acquisition will allow Google to create more powerful voice and video services, both for the consumer and enterprise.

Inevitably, the deal is going to raise more questions about whether Google plans to compete more directly and robustly with Skype and other IM-based services. At one point, telecom service providers might have taken the acquisition as a sign Google planned to compete more directly in the basic voice business. These days, most executives seem more resigned to changes in the voice market that are only indirectly related to "Google becoming a service provider."

The same GIPS technology that makes IP voice perform better also make IP video work better, and that may be the more-important part of Google's thinking.

South Korea to Cap Telecom' Marketing Costs - WSJ.com

Here's one way to boost profits for mobile service providers operating in intensely-competitive markets: forbid them from spending so much on marketing.

South Korea's telecommunications regulator will limit the amount telecom companies spend on marketing, in a move aimed at cooling intense competition and boosting profits in one of the world's most saturated telecom markets, the Wall Street Journal reports.

The Korea Communications Commission says that the country's major mobile operators—including KT Corp., SK Telecom Co., LG Telecom Co. and SK Broadband—shouldn't spend more than 22 percent of their respective revenues from fixed-line and wireless businesses on marketing.

The regulator said it expects the move, which take effect from May, to help lower total marketing costs to around 7.03 trillion won ($6.14 billion) in 2010, sharply down from the 8.02 trillion won spent last year.

It's hard to predict in advance how such restrictions will play out, but the limit obviously favors contestants with larger gross revenue, since the marketing cap is based on a percentage of revenue. Smaller providers might have benefited more if the restrictions were set at a flat amount per company, or some other formula that limits the ability of the larger carriers to outspend carriers with lower market share.

Phone.Com Launches Channel Program

There comes a point in a company's development when it makes sense to market to new customer segments. So it is that Phone.com is launching a channel partner program expected to extend the company's sales effort to businesses with five to 20 employees. Up to this point, Phone.com has sold directly and exclusively from its website, and many of its customers are small businesses that understand the value of a hosted business IP telephony service.

The new channel programis expected to be based on partners such as phone interconnect dealers, value-added resellers and other relatively technical firms that might normally sell premises-based phone systems, but find they are leaving business on the table because some firms cannot justify buying a new IP phone system, but might be amenable to buying a hosted equivalent.

"I have found that Phone.com's best channel partners are existing customers of ours," says Joel Malof, channel partner program manager. "Our target markets for channel partners are firms with two to 30 lines."

The ideal channel partners are firms that can provide first-level customer support, and typically will be more-technical firms such as phone interconnect dealers, for example.

Partners can earn a success fee for closing a new account, equivalent to a month's recurring revenue after a new customer has been on board for 90 days. Then there is a recurring revenue payment based on a percentage of revenue, and depending on volume of revenue.

The program starts at three percent and goes up to 10 percent, says Malof. "A $20 a month residual is not so interestingm, but at 100 of those, it is interesting," says Malof.

A customized web address is given to customers, with the agent's ID embedded in it," says Malof. "That's how we give them credit for the sale."

"We will have no direct sales force that agents are competing against," says Ari Rabban, Phone.com CEO.

What is iPad Cannibalizing?

If Apple Macintosh computer sales are up 39 percent, while iPod sales are down 17 percent, might that imply that sales of the Apple iPad are cannibalizing iPod sales? That is what Piper Jaffray research analyst Gene Munster appears to believe.

U.S. Mac sales are up 39 percent year over year for the month of April, and in fact have been up, year over year, every month so far in 2010, according to researchers at NPD. NPOD's data also suggests Apple iPod sales are down 17 percent year over year for the month of April, and have been down for half of the initial months of 2010.

It stands to reason that at least part of the market share the Apple iPad is getting is coming at the expense of other products or suppliers.

At the various least, consumers might be forced to put off buying something else if they decide to buy an iPad. But at least some observers think Apple is cannibalizing itself.

"April NPD data gives us the first sign of the degree to which the iPad cannibalizes iPod or Mac sales," says Munster. "From the early NPD data, it appears that the iPad has a minimal cannibalization impact on Mac sales, and could be slightly cannibalizing iPod sales."

Given the average selling price of the Mac, which is about four times greater than that of a typical iPod, that likely is good news for Apple, at least in terms of revenue, Munster thinks.

link

Will 4G Adoption Mirror 3G?

Adoption of fourth-generation network services likely will miror adoption of 3G services in Europe, says Decaln Longeran, Yankee Group analyst, and that has to be seen as modestly good news, but not "great" news, as adoption will not be as fast as many will hope.

"Our assessment of the early days of 3G, from spectrum auctions through to the first one or two years of commercial services, tells us a lot about where 4G is today and where it’s heading," Lonergan says. The big danger is massive overpaying for spectrum, which happened with the 3G spectrum auctions.

"Overpaying for licenses will quickly destroy the 4G business case, just as it did for 3G in several countries, including the U.K. and Germany," says Lonergand. On the other hand, if bidders show reasonable restraint, they should be in a better position to the extent that the auctions will be dominated by incumbents, unlike the situation when 3G licenses were awarded.

There will be no new 4G contestants, Lonergan predicts.

Adoption will take longer than expected, he says. "Remember, it was a full five years after commercial launch before 3G handset ownership reached 6.5 percent penetration globally, and 4G will follow a similar path," he says.

The technology won’t sell itself, he says. Faster speeds will only provide so much incentive, and it is applications that could provide the bigger push to adoption.

Handsets matter more than most people think, as well. Early 3G players failed to understand the importance of quality and choice in their handset portfolios, Lonergan says. Prepaid plans might also be essential, as 3G adoption in Europe was severely hindered in the early stages due to limited availability of prepaid plans.

Coverage also matters less than most people think. Consumers don’t obsess about coverage, except in the places where they use their devices most. That might especially prove true where 3G service is available as a backup.

On the other hand, 4G is being deployed in different circumstances, where a reasonable base of mobile broadband customers exists, and new applications that take advantage of higher bandwidth and lower latency already are getting traction, ranging from video and social networking to mobile apps related to navigation and location.

The first commercial European 3G service was launched by Telenor in December 2001, with commercial 3G services launched in 2003 by 3 in the U.K. and Italy.

But it is worth remembering that 3G also promised major performance enhancements to existing mobile services, . new services, including video telephony, multimedia content and enhanced end user experience. Right now, 4G mostly promises "faster" broadband.

The issue is whether the shift from 1 Mbps to 3 Mbps, or 3 Mbps to 6 Mbps, represents so much a change in end user experience. One might argue the Apple iPhone or iPad represents something users find tangible, not the additional bandwidth.

One might argue that mobile Web access, like mobile email before it, and smartphones, are what is driving 3G adoption. Applied to 4G, will there be unique drivers, or will 4G simply be a 3G experience, albeit with more bandwidth?

In August 2005, for example, the Yankee Group predicted, at a time when 3G penetration in Western Europe was in the range of 0.5 to two percent, that by 2009, 3G penetration would reach 52.6 percent of the population. In reality, average 3G penetration in Western Europe was 27 percent as of December 2009.

The key takeaway from this comparison is that even 3G forecasts that were regarded as too conservative five years ago have proved to be too aggressive.

A new wireless technology will not in itself excite most consumers, no matter how amazingly super-fast its proponents claim it performs. Back in May of 2006, when 3G services had been actively promoted for at least two years in several European countries, Yankee Group conducted an end-user survey that suggested 29 percent of end users had no idea whether they had a 3G phone or not. About 27 percent of respondents claimed they owned a 3G phone. Of course, it is not always the case that a 3G phone uses a 3G connection, either.

In the U.S. market, matters are even more complicated, as various 3G platforms will be available nationwide by the end of 2010, and T-Mobile USA's network might actually operate faster than 4G networks, so even speed will not be a clear differentiator.

Handsets, on the other hand, could be more important. In the first 18 months after launch, Japan's DoCoMo failed to build any real momentum behind its 3G service, and 3G users accounted for well under one percent of the company’s total mobile customer base. Then DoCoMo moved aggressively on handsets, and penetration grew.

At least in the European market, prepaid service plans have been important. Prepaid was first introduced to Europe in 1995, and it was a major factor in the rapid growth in mobile services during the past 15 years, Lonergan notes. Mobile services penetration has now reached 130 percent of the population, and prepaid accounts for the majority of these connections, fully 54 percent at the end of 2009.

Back in the early days of 3G, most of the focus (misplaced, as we now understand) was on video telephony because this was one of the few services that 3G could support and 2.5G could not. It should therefore have been a 3G marketing manager’s dream, but it turned into something of a nightmare due to unreliable performance and largely apathetic consumers.

But the single biggest difference between 3G and 4G is the world of demand into which they were born. Smartphone penetration and use of mobile broadband applications clearly is different today than was the case when 3G first was being introduced.

Mobile broadband (the laptop/dongle version) is a good example. This service didn’t exist when 3G was introduced. Neither did the iPhone.

Consumers in 2010 understand the differences between a 2 Mbps, 7 Mbps and 20 Mbps connection. In 2001, most did not.

It took five years for 3G penetration to reach 6.5 percent of global mobile users. Our projections for 4G follow a similar curve: relatively slow adoption in the first three years, with a noticeable pickup in years four to five, says Lonergan.

Some possible areas of upside include handset options, retail pricing plans and indoor coverage. "No matter how lousy the service provider's network or customer service, if they achieve the right balance and choice in their handset portfolio and price plans, just about any provider can build market share," Lonergan says.

Indoor coverage possibly could be a differentiator as well. In the early days of 3G, it was assumed 3G would be used by individuals out and about and as a complement to home land-line broadband service. 4G might be different: onsumers might use it more as a substitute for some home broadband usage, as they already use their 3G mobiles indoors.