$69 billion in 2007 Unlicensed Music

The value of unlicensed or pirated music trafficked on P2P networks in 2007 was $69 billion, according to new MultiMedia Intelligence research.
 
"Content owners of TV episodes and full length movies are seeing a growing impact as well," says Rick Sizemore of MultiMedia Intelligence .
 
MultiMedia Intelligence's new research also found the number of unlicensed full length movies "shared" will grow almost four times from 2007 to 2012.

Not all P2P content is unlicensed, though. P2P Internet traffic, despite having grown at a torrid pace for years, will grow almost 400 petrcent over the next five years, growing from a level of 1.6 petabytes of Internet traffic per month in 2007 to almost 8 petabytes per month by 2012. 

Covad Launches Channel Offer

Covad Communications has launched a new integrated access service for its channel partners. The new service features a new online quote and order system that Covad says can cut days to weeks off provisioning time.
 
The service is aimed at firms with up to 35 employees per location. Covad delivers the service over a voice-optimized T1 line, and the service works with customers' existing phone systems.
 
Customers can start with as few as four phone lines, and new lines can be added one by one, rather than in the more typical "blocks".

Covad completely overhauled its ordering process for this service. The new online ordering system handles quotes, pre-qualification and contracts all in one place and all in real time. Partners can store and manage quotes and orders through the website, and can check potential deal-killers—such as number portability—at the beginning of the process, rather than at the end.
 
"This is the voice and data service we've been asking for. The new online ordering system is easy to use and lets us know right up front that we can make a deal work," said Dan Keane, Director of Partner Sales with Keane Telecom Consulting, LLC, in Atco, New Jersey.
 
Covad Integrated Access now also utilizes SIP trunking and supports a wide range of IP, digital and analog PBXs.
Pricing starts at $435 per month with no installation fees.

The service uses Covad's voice-optimized technology to dynamically allocate bandwidth between voice and data.

Consumer Electronics Dip Predates "Economy"s

As evidence mounts of business slowdowns, it will be tempting to point to "economic weakness" as the reason for consumer and business spending weakness.  There will, to be sure, be such effects.

But not all spending changes are the result of the near-term economy issues, as some trends predate the such pressures.

Consider consumer buying of digital cameras, camcorders, audio players and hand-held game platforms. Sales of all four categories of devices have been declining for three years.

That could suggest product saturation, with the corollary that upgrades need to move beyond incremental changes.  There will continue to be replacement buying, to be sure. But incremental upgrades to memory or megapixels of resolution, for example, might not provide as much sales lift as one might have seen in prior years.

Category saturation is a normal part of the consumer electronics business, which is why consumer electronics retailers always are on the look for the next big "gotta have it" product.

DT Results: Still Tough to Sort Out "Economy" Impact

As further evidence of just how complicated it now is to figure out what actually is happening operationally in the communications business, Deutsche Telekom's overall year-to-date revenue has fallen about 2.5 percent. 

But international revenue has grown 1.1 percent, despite an unfavorable currency impact from U.S.dollar and U.K. pounds sterling denominated revenues. 

Deutsche Telekom generated revenue of EUR 45.6 billion in the first nine months of 2008, a decrease of EUR 1.2 billion or 2.5 percent year-on-year. To put the currency effect in perspective, revenue was negatively affected by exchange rate effects totaling EUR 1.5 billion. 

DT's T-Mobile USA revenue grew by 13.7 percent, but partly because of the acquisition of SunCom.

T-Mobile reported a 1.2 percent drop in its U.K mobile customer count, year over year. Mobile subscriber counts grew 8.3 percent, year over year. 

But mobile revenue was up 1.1 percent, year over year, overall, though there was weakness in the German, U.K., Austrian and "other" markets. 

So far, it might be reasonable to conclude that competitive conditions explain much of the weaker performance, though economic conditions could be contributing. 

We don't have the data yet, but what will be instructive is whether the overall mobile revenue in each of the countries is available, as that will provide a better sense of whether there actually is some slowing of consumer spending. 

Right now, all we can tell is that DT operates in competitive markets, has a secular wired voice lines problem as do other telephone companies, and that broadband access remains fiercely competitive.  

Economy Not Responsible for All Revenue Shortfalls

The temptation these days is to blame the "economy" for every slowing or decline in sales of communication products. We have to resist that temptation. At least so far, more companies reported robust third quarter growth in broadband, mobile and video sales than slowing. And there always are market share shifts to account for, a trend that should be in play for at least a year.

The content delivery business, for example, has to be judged a disappointment for Internap Network Services Corp., which saw sales in its contend delivery network segment decline for the third straight quarter.

Internap reported third-quarter revenues up eight percent to $65.4 million. But CDN sales in the quarter dropped to $5 million, down from $5.4 million in the second quarter and $5.6 million in the third quarter 2007.

We may well see economic effects in the fourth quarter or in 2009. But not all the negative impact will be a direct result of economic factors. In many cases, simple shifts of market share will be the driver.

Cbeyond: No Evidence of Slowing

If one wanted to point to a highly-successful provider of small business VoIP service, it would be hard to pick any single company doing better than Cbeyond. Third quarter revenue growth of $90.2 million represents 24.6 percent over the third quarter of 2007. 

Total adjusted earnings before interest, taxes and amortization of $16.9 million during the third quarter of 2008 was an increase of 25.5 percent from the third quarter of 2007. 

Cbeyond  had net customer additions of 1,993 in the quarter, to reach 40,569 in total.

The company also had average monthly revenue per customer location of $760 during the third quarter of 2008, compared to $754 in the second quarter of 2008 and $749 in the third quarter of 2007. 

Monthly customer churn of 1.3 percent in the third quarter of 2008 was stable compared to 1.3 percent in the second quarter of 2008. That is significant as Cbeyond experienced a temporary increase in churn several quarters back when it tightened credit polices. 

Windstream Results Point to Possible Shift

Windstream Communications third quarter results, like those at Charter Communications, do not yet support the theory that economic stress is changing basic consumer habits in the video entertainment and communications areas. 

Also, Windstream might finally be approaching a time when its voice lines stop shrinking. So there might be something to the argument that if executives think "lines will keep shrinking," they will.  Conversely, a belief that line losses are not inevitable might lead to efforts that in fact produce that result. 

Keep in mind that both Charter and Windstream operate in more-rural areas, so it may be that "big city" and "rural" patterns are diverging. 

Beyond that, neither company seems to be seeing any real slowdown in growth for broadband or video products, as some might expect in the face of the economic slowdown. 

Windstream added 28,000 new high-speed internet customers in the quarter, bringing its total broadband customer base to roughly 963,000, an increase of almost 16 percent year-over-year, and Windstream executives believe there still is room for additional growth. 

Windstream also added nearly 21,000 digital TV customers in the quarter. Long distance service revenue also increased five percent year-over-year.

To be sure, traditional voice lines declined by approximately 38,000, but that was an improvement in absolute lines lost of more than 8,000 units  year-over-year. In total, Windstream access lines declined by 4.8 percent year-over-year. But note: Windstream thinks it might finally have turned the corner on landline losses. 

Though competition has increased, Brent Whittington, EVP, thinks the company might have "turned the corner" in the third quarter, in terms of landline losses. That would be a significant development indeed.

Though some probably reflexively think telcos will keep losing voice lines forever, logic suggests the losses will stabilize at some point. Keep in mind the example of broadband access. Aggressive cable operator marketing of high-speed access went virtually unchallenged by telcos for some time. Then telcos decided they simply could not ignore getting into the business, despite some qualms about cannibalization of existing special access services.

As it turns out, the cannibalization fear was overblown. T1 lines in service increased even as cable modem and digital subscriber lines proliferated. Something along those same lines will happen once telcos decide it is time to market VoIP and IP telephony aggressively. As a byproduct, the shrinkage of voice lines will slow, then halt. 

Maybe Windstream is getting close to that point, even in advance of a major technology shift to IP-based voice.