27% of Wireless Users Say They Have Disconnected Landlines

More than one fourth of wireless phone customers have replaced their traditional landline connections at home and are now using wireless service exclusively to communicate on a daily basis, according to J.D. Power and Associates.

The study finds that among the 27 percent of current wireless customers who report replacing their traditional landline phone with wireless service, 61 percent have completely disconnected their home landline service. Additionally, 29 percent of wireless customers ages 18 to 24 report making this switch, compared with only 9 percent of subscribers 65 years or older. 

Customers who have used wireless longer are also more likely to switch exclusively to wireless service. In particular, customers who have used wireless service for three years or more report higher landline disconnection levels than those who have used wireless for less than 12 months (19 percent vs. 9 percent, respectively). 

“The user experience has steadily improved for wireless customers, and the number of features and applications available for cell phones has increased considerably during the past two years, so it is not unexpected to find that many wireless subscribers are choosing to replace their landline phone entirely with wireless service,” says Kirk Parsons, J.D. Power and Associates senior director. “Wireless service has truly improved to the point where quality and performance are no longer barriers in the decision-making process around switching to exclusive wireless service usage.”

AT&T Creates New Consumer Unit, Featuring "Everything"

AT&T is reorganizing its management, creating separate business units focused on customer segments rather than product lines, further illustrating the seriousness with which AT&T now views creating new kinds of services that transcend networks and devices. Part of the reason for creating a "consumer" services unit is that video, for example, now must be licensed, packaged and delivered across devices (TVs, PCs, mobile devices) and networks (wireless and wired). 

The reorganization should make easier the creation of new products that transcend network and device limitations, something AT&T is deadly serious about.

Wireless division CEO Ralph de la Vega now is in charge of all consumer offerings, including wireless, video in all its forms, broadband access and voice. Business services, infrastructure and diversified business are the other three major units.

The reason all of this ultimately will matter for virtually all contestants in the consumer space is that a company the size of AT&T, if successful, can reshape the consumer market and its expectations about what a "service" should be, how it should be packaged, what features such offers "should" feature, how much these features should cost and what payment methods and plans are part of the "new normal."

Local Loop Not a Natural Monopoly?

Fiber to the customer networks are not a natural monopoly, even though industry participants often think of it in those terms, says Vianney Hennes, permanent representative to European Institutions for Orange France Telecom Group.

So the ideal competitive environment in the age of fiber rollouts should be similar to the way mobile competition now occurs, says Hennes, according to CommsDay reporter Luke Coleman. Presumably that means multiple, facilities-based networks. 

It may not mean a call for complete duplication of all physical infrastructure in the local loop. Hennes probably is referring to shared access to ducts and other rights of way, primarily. It seems unlikely an employee of France Telecom would be calling for construction of multiple fully-duplicative local fiber networks by multiple contestants, if only because the economics are prohibitive on the face of it. 

Since most recent studies of fiber-to-customer infrastructure suggest a provider must get something on the order of 30 percent penetration of every high-penetration service to make a financial return, and if penetration of video, voice and broadband is assumed to be in the range of 60 to 80 percent of every household, it seems fairly clear that three head-to-head contestants will have a tough time getting to break even. If there are more than three contestants, most of the providers might fail. 

He said it was a “self-fulfilling prophecy” when operators say fiber-to-customer upgrades inherently are

monopolistic. “If you think there will be a monopoly somewhere, in the end, you will end up with a

monopoly," he says. 

Hennes said that regulatory conditions should be set to allow maximum infrastructure competition,

such as allowing for duct sharing and taking pains to reduce traditional bottlenecks. The industry can move to something that looks like a mobile model, he argues. 

How does that work to France Telecom's advantage? If duct sharing and rights of way are widely available, competitors must build their own active fiber networks, while France Telecom does not have to share access to its fiber network, it likely gains some strategic leverage. Not many contestants actually will conclude that building their own networks makes sense, of it if makes sense, it will occur only in some regions and locales, not all. 

Oddly enough, opening up more access to rights of way, but requiring contestants to lay their own fiber and active opto-electronics, might create almost as much of an entry barrier as not opening the ducts and rights of way. More openness on the physical layer front seems likely in Europe. But so does mandatory wholesale access to new optical fiber facilities. It is an interesting thought, the local loop not being an actual monopoly.

To some extent, it clearly isn't, as evidenced by the flourishing businesses already run by cable companies and telcos. We know there is room for at least two rival physical networks. What remains unclear is the long-term sustainability of three or more physically-diverse networks. We'll have to watch the overbuilder and municipal networks business to collect more data points. There remain few widescale instances where three broadband networks are widely available to customers. 

Warning: Zone Alarm Pro Not Compatible with Norton Anti-Virus 2009

Other users--and now me--have discovered that Norton AntiVirus 2009 is incompatible with ZoneAlarm Pro. on a Windows XP (SP3) machine. Try to load Norton AntiVirus and it will crash your operating system, requiring you to do a system restore. You also will find that you must remove the power cord and battery (if on a lap top) to shut the system down, as the incompatibility also prevents you from using the power button to shut down. No matter what you do, the Norton software will lock up the machine if you try to install it. 

Apparently these two companies don't like each other very much because it isn't the first time I've had issues with Norton and ZoneAlarm causing me to remove one or both from my machines. It is quite annoying. 

47% of Cable Subs Might Be Willing to Switch

About 47 percent of cable company video subscribers say they are willing to consider switching their video service from cable to an IPTV service, say researchers at CFI Group. That level of interest occurs when customers are presented with a 100-plus channel menu and monthly prices in the $40 to $50 range.

At that level of retail prices, the upside for telcos is not gross revenue nor margin. The upside lies in reducing churn and preserving both unit sales and profit margin for legacy voice and data services. At the moment, bundle customers are about twice as likely to be cable customers as telco customers. One reason for that is the fact that telcos have not had the ability to provide video entertainment services until recently. 

If telecom companies are able to provide fiber services to new access areas quickly, and market them effectively, the split of new bundled customers between telecom and  cable could widen to 63 percent and 29 percent respectively, CFI argues.

Fluid Cable-Telco Marketing Battles

Nearly 60 percent of surveyed households now have bundled services (telecommunication, internet, and video services), a 13 percent increase since 2007, according to new research by CFI Group. So far, though, cable companies are much more likely to serve bundle buyers, compared to telecom companies. Cable companies subscribe twice as many customers to bundled services as telecoms do, CFI Group says. 

And telcos have some work to do: Digital subscriber line services appear to be losing ground, compared to cable modem alternatives. Still, the battleground is fluid: customers increasingly asensitive to rising rates and poor customer service coming from cable providers, CFI suggests. 

Some 70 percent of customers cite high rates as one reason for canceling cable TV service, while poor customer service accounts for 40 percent of churn from cable TV service.

Of customers who will switch carriers, 40 percent say that the competition offers better rates and plans. 

Customers also seem to be more willing to switch wireless carriers than they were in 2007. Verizon leads all wireless carriers in customer satisfaction and Verizon customers are the least likely to switch carriers. Sprint/Nextel customers are the least satisfied and the most likely to switch.

Nearly 50 percent of households are interested in VoIP and IPTV, but awareness for either has changed little over the past year.

Bundling preferences are likely to change as telcos turn up new video services. Despite cable’s current lead, customers would prefer to bundle communications services with telecommunication companies over cable companies by a two to one margin, CFI Group says. However, 29 percent of customers have no intention of bundling at all, preferring instead to pick and choose the services that best meet their needs.

And though consumers often say "convenience" is why they buy bundles, lower costs probably are the primary driver. The vast majority of customers who choose bundled services make the decision based on price, CFI Group says. Still, 46 percent of customers say they chose a bundled plan because it simplifies billing. Most customers who intend to switch carriers will also choose better pricing and a simplified bill, CFI Group says. 

The predicted growth rate for bundling is nine to 17 percent over the next 12 months, slowing slightly over previous years. The greatest opportunity is in meeting the growing market demand for video services provided by telcos. If telecoms are able to provide fiber services to new access areas quickly, and market them effectively, the split of new bundled customers between telecom and  cable could widen to 63 percent and 29 percent respectively, reversing the present pattern. 

Xohm Launches in Baltimore

Sprint Nextel Corp.has  launched its Xohm WiMAX-powered service for mobile customers in Baltimore. Contract-free service options include a $10 day pass, $25 monthly home Internet service and $30 monthly laptop service. Xohm modems cost $60 for a laptop card, an $80 home modem and has average downlink speeds of 2 to 4 megabits per second.

“This is truly an historic day with the birth of a completely new Internet-based business model that alters the dynamics of the traditional telecom industry,” says Barry West, Xohm president. 

Xohm hasn't yet achieved that with the launch; it couldn't have done so. It has created a new packaging for mobile access pricing. The day pass, reminiscent of Wi-Fi day pass pricing, is helpful. The $30 card or dongle pricing does undercut rival pricing from other providers. Prices for tethered service are roughly in line with what Clearwire already was offering. 

So far, though, Xohm does not appear to differ much from fixed broadband service, save for the pricing level. Where it clearly hopes to pose a challenge is to contract-based voice service, but Clearwire isn't promising it is going to make that its battleground. Right now, it mostly looks like a less-expensive, contract-free version of 3G mobility service, with better throughput. 

That's not a bad thing by any means. Still, Xohm's rhetoric is ahead of its vision, at the the moment. There are lots of reasons. One business model Xohm really wants to create is a simple, low-cost, casual use model beyond the day pass. That will require the ability to discover and authenticate new devices registering to the network. That means creating means to deal with MAC addresses and IP addresses not already registered in its authentication servers as a "current customer."

Supporting the typical user input operations on smaller devices other than PCs is an issue, but probably not so much as the authentication of new MAC and IP addresses whose users want to register for some relatively-casual use of the Xohm network. That means processes for 

discovery, certification, and management of new devices on the WiMax network, when network usage might be quite episodic. Right now it probably just means supporting WiMAX modems, whatever the form factor. 

What Xohm really wants is the ability to authenticate and provide service to MP3 players, electronic book readers and other devices mobile networks have not had to deal with in the past. We might be a year away from that. 

And that's when Xohm will start to fulfill its promise.