Google Voice has 1.4 Million Users

Google Voice has 1.419 million users, some 570,000 of which use it seven days a week, Google says, in information Google apparently released accidentally in a letter to the Federal Communications Commission and discovered by Business Week before the information was discovered and removed.

The early version of the documents also suggested Google has plans to take Google Voice global. Google apparently said it already has signed contracts with a number of international service providers.

How Do You Measure the Value of Something That Has No Price?

Global end user spending on communications services (voice and data, not entertainment video) runs about $1.8 trillion a year or so, one can extrapolate from the most-recent International Telecommunicatons Union statistics.

Fixed line voice probably sits at about the $740 billion range in 2009.

Infonetics Research says VoIP services bring in $21 billion for service providers in the first half, so assume an annual total of $42 billion. Assume 16 percent of those revenues are for trunking services of one sort or another and voice revenues might hit $35 billion or so for the full year.

That suggests VoIP services represent about 4.7 percent of total global voice revenues in 2009.

The point is that VoIP remains a relatively small portion of global voice revenues. But the situation is more complicated than simply how VoIP stacks up as a revenue driver. The larger problem with voice revenues, as everyone agrees, is that it is trending towards becoming an "application," not a service. That means it will sometimes be provided "at no incremental cost," or at "very low incremental cost."

The value VoIP represents cannot be strictly measured using "revenue" metrics, anymore than the value of email or instant messaging or presence can be measured by revenue metrics. Probably all that anyone can say with some assurance is that the value VoIP represents is greater than five percent of the total value of voice communications, as many sessions occur on a "non-charged" basis.

Many years ago, consumers got access to email in one of two ways. They got email access from their employers, or they bought dial-up Internet access and got their email from their ISPs. In neither case has it, or is, possible to calculate the economic value of email, as the measurable "product" for a consumer was the value of the dial-up Internet connection.

Business value is even harder to calculate, as organizations can buy software and hardware to host their own email, and then buy access connections that support any number of applications, without any specific fee required to host email services.

The larger point is that, in future years, the service revenue attributable directly to voice services will be a number that might remain flat, might grow or might shrink. If voice revenues ultimately shrink, as they might in many markets, or if VoIP replaces TDM versions of voice, that will not necessarily mean that people are talking less, or that the value ascribed to voice is less.

It simply will mean that the value is only indirectly measurable. Only one thing can be said for sure. Markets whose products cannot be directly measured will not be measured. The first sign of this is the increasing use of metrics such as "revenue generating units" or "services per customer" or "average revenue per user."

At some point, though it might still be a measurable quantity, the value of voice services will be only partially represented by "service" revenue. It's tough to measure the value of something that has no specific "incremental cost."

So what will market researchers and agencies do? What they have done before: they will measure the value of some associated product that does have a market price. They will measure the value of purchased access connections, rather than particular applications, much as one could measure ISP access subscriptions, but not the value of email.

Will Moore's Law "Save" Bandwidth Providers, ISPs?

In the personal computer business there is an underlying assumption that whatever problems one faces, Moore's Law will provide the answer. Whatever challenges one faces, the assumption generally is that if one simply waits 18 months, twice the processing power or memory will be available at the same price.

For a business where processing power and memory actually will solve most problems, that is partly to largely correct.

For any business where the majority or almost all cost has nothing to do with the prices or capabilities of semiconductors, Moore's Law helps, but does solve the problem of continually-growing bandwidth demand and continually-decreasing revenue-per-bit that can be earned for supplying higher bandwidth.

That is among the fundamental problems network transport and access providers face. And Moore's Law  is not going to solve the problem of increasing bandwidth consumption, says Jim Theodoras, ADVA Optical director of technical marketing.

Simply put, most of the cost of increased network throughput is not caused by the prices of underlying silicon. In fact, network architectures, protocols and operating costs arguably are the key cost drivers these days, at least in the core of the network.

The answer to the problem of "more bandwidth" is partly "bigger pipes and routers." There is some truth that notion, but not complete truth. As bandwidth continues to grow, there is some point at which the "protocols can't keep up, even if you have unlimited numbers of routers," says Theodoras.

The cost drivers lie in bigger problems such as network architecture, routing, backhaul, routing protocols and personnel costs, he says. One example is that there often is excess and redundant gear in a core network that simply is not being used efficiently. In many cases, core routers only run at 10 percent of their capacity, for example. Improving throughput up to 80 percent or 100 percent offers potentially an order of magnitude better performance from the same equipment.

Likewise, automated provisioning tools can reduce provisioning time by 90 percent or more, he says. And since "time is money," operating cost for some automated operations also can be cut by an order of magnitude.

The point is that Moore's Law, by itself, will not provide the solutions networks require as they keep scaling bandwidth under conditions where revenue does not grow linearly with the new capacity.

How Many People Will Buy a 50 Mbps Access Service?

Virgin Media now says it has 20,000 subscribers buying its 50 Mbps service. Virgin Media has about 3.77 million broadband access customers. So that suggests about one half of one percent of its customers are buying that grade of service.

I'd be willing to bet U.S. service providers offering a 50 Mbps service are doing about that rate as well, with one possible exception. SureWest Communications has been offering tiers that fast longer than anybody else I can think of, and probably can claim a higher subscription rate.

Virgin Media's current promotion for the 50 Mbps product offers a price of £18 a month (about $29.74) for three months and £28 (about $46.26) a month after that, when bundled with aVirgin Media phone line.

Those sorts of prices will make U.S. consumers jealous, but it is hard to compare pricing across regions and nations. Voice and text message prices on mobiles are far higher than in the United States, though broadband and video entertainment prices seem to be lower, across the board.

SureWest's 50 Mbps and 100 Mbps products are different, though, as they offer symmetrical bandwidth, not asymmetrical as is typical of DOCSIS 3.0 services such as provided by Virgin Media.

When SureWest first introduced its 50 Mbps symmetrical product, it was available as part of a high-end quadruple play bundle including the 50 Mbps access service; a 250-channel digital TV service; unlimited local and long distance telephone and unlimited wireless.

The package was priced at $415.18 a month. If it were offered on a stand-alone basis, SureWest said the 50 Mbps service would be valued at $259.95 per month. Not many consumers are interested in paying that much.

FiOS Does Not Sell Itself

Even FiOS Doesn't Sell Itself

Verizon's third quarter FiOS revenues totaled more than $1.4 billion, up 56 percent year over year. And FiOS average revenue per user also hit more than $137 per month.

Verizon also added about 18 percent more FiOS TV and Internet customers than in the same quarter last year, including 191,000 FiOS TV and 198,000 FiOS Internet customers, increasing Verizon's penetration to 25 percent for TV and 29 percent for Internet.

Still, net adds were less than the record adds of the last two quarters, Verizon says. Gross sales were lower primarily due to a change in promotional activity, the company says.

"As it turns out, we had a couple of promotions that worked, didn't work as well," says Ivan Seidenberg, Verizon CEO. "What happened is we had a couple of better quarters and we toyed with how we could sustain that and found that it was difficult in light of maintaining a fiscal discipline against it."

In other words, Verizon probably did not spend as much as it could have on marketing FiOS services, and the results probably slowed because of that conservatism.

The point, perhaps, is that as powerful a marketing platform as FiOS represents, the value proposition appears to remain less obvious to consumers than we inside the business sometimes think.

Verizon remains committed to adding about one million new FiOS customers every year, on a base of homes passed that stands at about 45 percent of all Verizon residential passings, with video available to about 34 percent of total households passed.

That illustrates part of the problem. Whatever Verizon does, it potentially can sell video services to about a third of all residences, though it can sell FiOS broadband to about 45 percent of homes. It always is tough to market services when a third of homes can buy them, not all.

And as service providers have learned in the past, easing up on promotions, or banking on the wrong promotions, can have significant effect on results. Not even fiber-to-the-home service, in and of itself, seems to "sell itself" to most customers, as powerful as those sorts of connections always have seemed to people in the business.

Twitter Stats Still a Puzzle

Twitter continues to be a bit of a puzzle, for reasons beyond its search for a viable business model. It has enthusiastic users, but also high apparent levels of abandonment. And some studies might lead to the conclusion that Twitter growth is slowing sharply, while other social sites such as Facebook might be accelerating.

Data from hitwise, for examples, shows a peak in Twitter in July 2009, with declines since then. The caveat is that many Twitter users appear to use third party sites to access the service, so the actual Twitter.com visits do not fully capture actual Twitter use.

The hitwise data also might suggest that user engagement with Facebook, a larger and more-established social networking site, is growing much faster than Twitter seems to be growing.

One fact seems clear enough, though, and that is the increased amount of mobile use of the social tool. Although 60 percent of Twitter users say they only use their computers to access the service, about 40 percent say they do so using their mobiles, according to a study of Twitter use during August 2009, Crowd Science.

Crowd Science reports that in August 2009, although only 27 percent of Twitter users posted daily, 46 percent checked for updates every day.

Is Mobile Handset Market Heating Up?

Handset shipments suffered another annual decline in the third quarter but are forecast to rebound in the key final quarter of the year, according to Strategy Analytics and IDC. Virtually all observers attribute the slowdown to slower handset replacement caused by consumer caution in the face of the recession.

Strategy Analytics estimates that global handset shipments reached 291 million units in the third quarter, down four percent from 304 million units year over year.

IDC estimates third quarter 2009 shipments totalled 287.1 million units worldwide, down six percent from a year earlier, but up 5.6 percent from the second quarter.

"The mobile phone market is showing the first signs of improvement since the onset of the economic crisis," says Ramon Llamas, senior research analyst at IDC. "During the third quarter, we saw a number of channels promoting older devices at significantly lower prices. For many, this was enough to spur demand and push volumes higher."

Strategy Analytics forecasts that 300 million handsets will be shipped in the key fourth quarter, an increase of three percent increase on the 294 million units shipped in the last quarter of 2008.

"We believe this will be the first time the industry has returned to positive growth since the third quarter of 2008, signalling an end to the handset recession after four quarters of decline," Strategy Analytics says.

Of course, industry-wide averages sometimes obscure market share changes. Nokia sales dipped eight percent, year over year, while Samsung grew 16 percent. LG grew 37 percent. Both Sony Ericsson and Motorola reported declines.