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Showing posts from December, 2006

Oddly Enough, Access Is Where QoS Really Helps

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Brough Turner, NMS Communications CTO, argues that quality of service measures in the Internet backbone provide negligible benefits. It's in the access links where QoS really can make a difference, and that's the area where at&t's merger approval agreement with BellSouth prohibits it from doing so. Oddly enough, the inability to "discriminate" between packets prevents users from experience improvements they might like to have.

Once packets get beyond the access network, every link in the Internet is carrying multiplexed traffic that is statistically relatively predictable, Turner argues. "Traffic volumes vary by time of day, but these links don't saturate, except as a result of poor engineering or forecasting on the part of the ISP or failures in other parts of the network causing rerouted traffic," says Turner. "Either case generates a rapid response from any ISP that expects to remain in business."

"In short, except at the edges o…

Incentives Still Remain the Issue

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Nobody yet knows how much bandwidth typical consumer users will want, and be willing to pay for, in the future. Demand may prove less robust than many now believe. But if customers really want, and will pay for, 50 Mbps or 100 Mpbs access pipes, then a fiber direct to residence network is about the only thing that really works, if demand is strong enough that little sharing is possible.
So the problem is how to get such networks built, at a time when capital providers are skeptical, to say the least, about the wisdom of building such networks.
Perhaps we should simply acknowledge that some partisans in communications policy debates seem to prefer government solutions that remove profit motives entirely from broadband infrastructure efforts. There is a logic there. Some sorts of infrastructure might indeed be natural monopolies that simply can't be created by the private market. And if that is the case we are wasting our time thinking such sorts of networks can be created any way …

ILECs will Lose 30 Percent of Households by 2010

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By 2010, 30 percent of households in the United States will completely cut their service with their local phone company, predict analysts at The Yankee Group. These households will upgrade to broadband and choose VoIP for their home phone service or become wireless-only households. But there are countervailing pressures.
Some 48 percent of households with both a wireless and landline phone say their wireless phone will never replace their landline phone. The main barriers to wireless-only service include reliability and quality. Some 19 percent of wireless users cited quality and reliability as primary reasons for retaining the landline phone. Twenty-two percent of wireless users cited indoor wireless coverage and 28 percent cited battery life as reasons not to cut the cord. Wireless quality and reliability will continue to improve, and will weaken as reasons to keep the landline phone.

About 37 percent of wireless users say Internet access requirements are a primary reason for retaini…

Consumer Directory Services: A Work in Progress

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The majority of consumers still use a traditional paper address book to keep the names and numbers of their friends and families but the mobile phone and instant messaging services are increasingly important, and points out the way service providers or portals can use directory services--especially enhanced with availability features--to "glue" customers to their offerings. Some 25 percent of households recently interviewed by The Yankee Group said that they always or sometimes keep contacts on a web-based e-mail account. About 32 percent of users say the mobile phone is the device where directory information is kept.

Directionally Helpful Trend

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If one is a would-be provider of IP video content provider in the European market, the trend is helpful, if suggestive of the business challenges. As one might expect, few users say they have paid for downloaded or streamed video content. But the percentage of users who say they have done it, or would do so, seems to be growing. If we assume that the primary audience to this point has been younger demographics rather than mainstream video consumers, that's helpful.

How BT Got Its Voice Revenues Down

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A challenge every legacy telco faces is transforming its revenues away from voice. One advantage BT has is that it is a global carrier, able to build a wholesale business, serve transnational enterprises, small and medium business as well as consumer customers. Increasing its efforts in all sorts of new and data-related services has allowed BT to reduce its reliance on voice revenues far below levels typical of other "telephone" companies. Smaller telcos will have a tough time replicating the global enterprise and wholesale parts of BT's strategy.

Email, Web, IM Top Enterprise Mobility Drivers

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Email, Web and instant messaging access are the top three drivers for enterprises adding more mobility support for their workforces. Smart phones are the new black, it seems.

Build Strategy Makes a Big Difference

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Verizon and at&t are fighting local franchising rules of various sorts that the carriers say are deterrents to building new broadband networks. Without fanfare, other providers such as RCN build Triple Play networks without serving the whole community, and find the going tough even without mandatory communitywide buildout requirements. The problem? The economics of competitive local networks are tough, since no single provider can reasonably expect to get much more than 20 percent of potential customers in a market with four providers, for example.

Another way of putting matters is that 80 percent of the local ports have no customers on them, and no revenue. That's not a prospect likely to make capital providers very comfortable. The fact is that some parts of every community, and some neighborhoods within every community, are more profitable than others, as indicated by Solon Management Consulting. Building in the most-profitable neighborhoods first, to get the revenue flowin…

Arbitrage Won't Drive VoIP Forever

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To this point, global VoIP usage has been driven by price arbitrage. But global calling rates are coming down, so that form of arbitrage will prove less interesting to end users at some point. At the same time, wireless usage continues to climb. And while there might be some room for price arbitrage in the wireless domain, it will be found precisely where arbitrage as proven most significant in wireline calling: international termination.

That probably doesn't mean price arbitrage forfeits its key role in user adoption any time soon, simply because there are other cost elements to arbitrage. The U.S. cable operators, in fact, have extended price arbitrage into the local calling realm, offering VoIP-powered services that simply mimic the PSTN, but arbitrage the recurring access revenue stream, not the minutes. Inevitably, though, at some point, VoIP simply won't be about price arbitrage any longer, because there won't be much left to arbitrage. Users will have found they a…

Piracy Part of the Business Model?

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Up to this point, younger Internet users have been the most active abusers of video content rights on the Web. Much content now is pirated, according to The Yankee Group. We doubt this will continue to be so much the case as downloaded video becomes mainstream and much of the demand shifs to high definition TV fare where image quality and consistency will really be important.

There also is some precedent in the video world for a small amount of piracy to be a good thing for the overall value chain and growth of a new business. In its earlier days, the U.S. cable TV industry used filters of several types to control viewing of premium services such as Home Box Office. So piracy was a matter of securing the proper filter and inserting it between the house drop cable and the distribution cable's "tap." In this scenario, manual audits were the only way to determine whether an installed filter was legal or not. And since assigning technicians to patrol the entire plant looking…

Both Substitution and Augmentation

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The common sense expectation we all seem to have is that VoIP ultimately replaces POTS, and that's correct in a technological sense. Their respective business futures might be less certain. We mean "business" here in the sense of revenues that can be generated from services and features associated with POTS, even if the platform changes. Those of you who lived through the analog to digital switch transformation understand this. Revenues sometimes grow when a new platform displaces the old, because there are new things to sell, and costs sometimes drop at the same time, allowing a retail price to reap more margin, even on the legacy products.

And one of the things about POTS is that there are latent values beyond the switch and transport technology that might be the real reasons customers buy POTS service. If you think in terms of "user communities," the PSTN outstrips nearly anything else we've built so far, with the exception of wireless. But if wireless i…

Metro Ethernet Getting to be a Bigger Deal

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As wider adoption of IP phone systems spurs buying of SIP trunks, so IP itself drives demand for Ethernet access. The Yankee Group sees spending by enterprises in the Asia-Pacific markets doubling in four years, for example. "Year over year we see metro Ethernet becoming a greater percentage of our sales," says David Rusin, American Fiber Systems CEO.
The demand is "steady" at about 40 percent growth this year, Rusin says. And Rusin is very clear about how this market needs to be attacked. "After 10 years and billions of dollars of wasted capital we now know you must have your own network."
Needless to say, Rusin isn't a big fan of mandated wholesale access to high-bandwidth facilities. In the U.S. market, mandatory unbundled network element access should go away, maybe over a five-year period. If all competitors understand that they must have their own facilities to compete in the access market, that is what they will do, or they will do something e…

Mobility is Key for Business Unified Communications

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There's a really simple reason why mobile devices are destined to play a key, perhaps the key role, as unified communications develops. At least 41 percent of the workforce already is mobile, and just about every employee is a mobile user in their personal roles. So to the extent unified communications almost always the ability to send and receive communications on mobile and desktop devices, mobility is a virtual requirement, even for workers who are not "mobile" in the normal course of their work day.

"There are lots of ways people communicate now," notes Sphere Communications SVP Todd Landry. "What does it mean to unify all that?" Some might say it means different media types can be more tightly integrated with other forms, Landry says. "At the lowest level, you want multiple forms of communications unified, plus mobile and desktop integration. "At another level, it might mean availability of presence state and text messaging, voice and v…

Appetite for "Bundles" Varies

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With service providers spending so much attention on creating sticky bundles of services, and with so many suppliers seeking to "move up the value chain" or "add more value" to their existing product lines, it is interesting that businesses of various sizes have apparently distinct appetites for the "one throat to choke" principle that drives buyers to consolidate their buying and use fewer vendors. Very small businesses just don't seem to have the immediately compelling desire to consolidate suppliers. Well over 55 percent of very small businesses don't see the advantage of consolidating their buying of voice, Internet and mobile services.

This seems odd, if the Triple Play is seen as viable for small businesses as well as consumers. In contrast, well over 65 percent of enterprises with 250 to 10,000 or more employees prefer to consolidate their buying. Still, 40 to 50 percent of small businesses with two to 49 employees say they prefer the bundl…

So Far, Short Form Rules

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About five percent of North American users who watch video on the Internet, and polled by ABI Research, say they have rented or purchased a digital movie download, a lower overall number than indicate they have downloaded a movie free from a peer to peer sharing site. Movie downloads, both legal and illegal, remain the least watched genre of online video on the Internet, where short-form content such as sports and news clips is watched by nearly 7 in 10 of those that watch Internet video.

"The vast majority of those watching content online are watching short-form content such as news and sports clips," says ABI research director Michael Wolf. "Older users in particular watch primarily news and sports, while younger users are watching more entertainment content, including viral media provided by sites such as YouTube."

You probably aren't surprised by this finding. For starters, movie downloads are something of a nuisance at the moment. First of all, the whole cat…

No Doubt About It

Regular weekly usage of new media is growing at high double digit rates, while regular usage of legacy media is dropping, albeit only at single digit rates, with the exception of magazines, which are dropping at about a 12 percent rate. All of the growing formats have a network delivery or core communications element to them.

Percentage Growth of Regular Weekly Media
Medium Regular Weekly Usage
TiVo/Replay TV 88.1%
Satellite Radio 79.9%
IPOD/MP3 Player 72.1%
Blogs 63.2%
Picture/Video Phone 59.2%
Text Messaging 58.8%
PDA 14.0%
Traditional Media
Magazines -11.7%
Newspaper -7.1%
Radio -5.7%
TV -5.2%
Source: BIGresearch, December 2006

Mutliple Wars Raging

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Scoff if you like about the ultimate business models that might develop around user generated video content, but the trend will intensify competitor triangulation in the coming market share wars that are ranging at multiple levels. The access battle has telcos and cablecos, plus specialized wireless and other players competing for "lines." The "services" battle is being waged between portals and between portals and the access providers.

In some respects the "access" providers will bundle and tweak their walled garden and possibly some Internet applications so they work better, experience-wise. The portal and app providers will seek to create interesting community interaction or portal content experiences so users can be enticed to use other features. The key here is that rich communications and entertainment will be primary forms of "bait" to entice users to show up and stick around. So far, the main battle has been between the major "acces…

SME Business VoIP Uptick

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SMEs seem, at least according to one projection by Infotech, to be getting the message on hosted and premises-based business phone services. Adoption rates are tracking large enterprise deployments pretty closely, after initially trailing. There's growing evidence that prices also are getting more interesting as well, in large part because premises-based systems are becoming more affordable, thanks to Asterisk and other open source platforms, as well as suppliers such as Samsung staking out new price point terrain.

WAN Will Be Driven by Video, Obviously

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Until recently, global backbone traffic was driven by voice. Then email, Web browsing and peer to peer traffic became significant traffic contributors. Clearly, though, high definition and other television-based traffic will be the dominant driver of global bandwidth demand, argue researchers at Information Gatekeepers. By 2010, as much as 94 percent of global traffic will be HDTV or IPTV content, IGI predicts.

Late 2008 Consumer VoIP Mainstream

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Telecom industry executives and analysts generally believe consumer VoIP will hit mainstream status by late 2008 or early 2009, according to stl. They also believe that sometime in 2010, voice revenue will represent 20 percent or less of wireline service provider revenue. Mobile operators will be in the same position by 2011. Some 90 percent of respondents say the global telecom industry is undergoing a fundamental structural change.

Lots of Niches

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Google is rumored to be talking to France Telecom's Orange unit about a Google phone optimized to support Google search functions. In Romania, Zapp is targeting the SME space, especially frequent business travelers and expatriates, with a prepaid EVDO mobility service. The point is that Web and IP platforms, as well as open source and other Web 2.0 programming tools and concepts will enable creation of many new service niches. The Google phone might ultimately appeal to specific groups with high needs to conduct search operations when away from their PCs, sort of a new subset of the "BlackBerry" and "push email" user base.

Throw it On the Wall and See if it Sticks

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Though it isn't the way service providers are used to doing things, allowing customers to discover services they like is about as rational as anything else a provider might try. Especially when everybody is in discovery mode anyways. Mobile providers "discovered" the popularity of short message service, rather than being able to predict such success. And if it doesn't die of its own weight, IMS is supposed to allow such discovery and trial processes. The Web is the other way discovery processes happen every day.
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In 2005, Forester Research estimates, just 2.6% of Western European broadband consumers used VoIP for almost all their fixed-line calls from home. But matters will change dramatically. Forrester Research expects three in four European telco network broadband subscribers to use VoIP within 10 years. But the average incumbent telco will not get more than €63.58 (a bit less than $7 a month) in net annual VoIP revenues per broadband user in year 10. That, plus a dramatic shrinkage in revenue-beating access lines, as indicated by Technology Futures Inc. forecasters, highlights the urgency and strategic importance of new revenue streams. There simply isn't going to be all that much consumer voice revenue to get.

Churn: Watch What :People Do, Not What They Say They Will Do

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As wireless number portability comes to the Canadian market, consumers seem to be telling The Yankee Group there is a significant chance they will use the opportunity to switch providers. But that's what people told researchers when number portability came in the U.S. market as well. While one has to be careful about inferring too much from experience in other markets, there is a fair to good chance not much incremental churn is going to happen. People often say they will do this or that. Sometimes there is a huge discrepancy between what they say they will do, and what they actually do. This is probably one of those cases.

50 Mbps Symmetrical Access From SureWest

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SureWest Comms. soon will offer a 50 Mbps Internet access service (up and down!) for residential customers with access to the company's FTTH network. The company has been selling 10 Mbps and 20 Mbps symmetrical services for some time. SureWest is bundling the 50 Mbps offering in its newly-created “Ultimate” quadruple play package, which includes the 50 Mbps access service; a 250-channel digital TV service; National Unlimited local and long distance telephone; and Unlimited wireless with 1,000 travel minutes each month. The package costs $415.18 a month. If it were offered on a stand-alone basis, SureWest says the 50 Mbps service would be valued at $259.95 per month.

So think about it this way: A DS3 service should cost less than $300! And we can only hope that Verizon is able to stick to, or increase, its own FTTH deployment. Not that all that many residential customers need symmetrical 50 Mbps access today, at least not for any purpose within the scope of "acceptable use"…

Many Internets, Many Models

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Whatever positions one takes on the "future of the Internet," or the "future of the telecom business," one thing seems clear enough: The Internet is going to change, because it is fragmenting into multiple Internets, private Internets, regional Internets, application-specific Internets (as odd as the concept seems). We aren't going to live in a world with a single Internet, but rather a world in which there are many types of IP networks, some more open than others.

Mike Volpi Cisco SVP, argues that service providers (telco and cable, for example) can reshape at least parts of the legacy Internet. For starters, transport and access providers probably will be able to charge differential rates for varying levels of quality and higher levels of policy management, especially for real time services. Providers probably also will find they can charge different amounts of money for different amounts of upload bandwidth as well.

Stepping back from the inevitable policy de…

VoIP Mostly Works

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Recent Mean Opinion Scores of VoIP traffic by Minacom show that VoIP audio quality pretty much works. Quality isn't uniformly high, because of the unmanaged nature of access bandwidth and the general state of networks some places in the world. But it works well enough to be useful. This obviously raises a question.
At some point, when the technology underpinning voice is nearly 100 percent IP, there may yet be ways to differentiate services based on levels of assured audio quality.
Managed networks probably still will be able to provide higher MOS scores on a consistent basis, compared to unmanaged networks, even though performance on unmanaged networks also will improve.
Of course, the other quality metrics should be capable of differentiation as well. Session integrity is the other current example of varying quality. Even when a VoIP call "sounds good," the integrity of the session might not be as good as a PSTN call. Voice VPNs will help, of course. So the issue is t…

Simplicity Wins

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U.K. small and medium enterprises surveyed by the Bathwick Group say they prefer to limit the number of suppliers they must deal with. Some companies are large enough to aggregate large amounts of value and can satisfy more wants and needs with one relationship. The other approach, better suited to smaller or specialized suppliers, is to provide a managed solution that removes complexity from the premises. Either approach will work.

What SMEs Will Buy in 2007

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Pretty much what they bought this year. This chart from the Bathwick Group shows tools U.K. small and mid-sized businesses, for example, say they already have in the installed base.
So if you ask what they will buy next year, what do enterprises report? Intentions to buy that mirror the size of the installed base, for the most part, as shown in the second graph.
We always want to find the growth "silver bullet," but we have yet to see a case where buying priorities changed all that much from one year to the next. Over a five-year period, one can see significant shifts, of course.
But it is unusual, highly unusual to see buying behavior at an enterprise change more than five percent or so from year to year, in part because such a large percentage of spending is upgrades to the existing base.
So whenever you hear analysts, reporters or bloggers proclaiming this the "year of the X," take it with a grain of salt. The direction is probably right. The magnitude of spen…

Now This Makes Perfect Sense

Telecom New Zealand has formed a joint venture with Yahoo!7 (the Australian JV that Yahoo has with media company Seven) to be called Yahoo! Xtra.
The point is that most of the wealth-creating innovation that will happen around the IP communications and IP media spaces will be created by people outside the telco orbit.
So instead of trying to do things that simply aren't in the company DNA, or buying and then destroying the DNA of innovator companies, just partner up, take minority stakes, co-develop and co-sponsor.
The cable companies figured this out a while ago. The other thing is that one doesn't have to own all of everything, or even all of some things. One simply wants to participate in the upside one's partners can provide. That's tough for control freak companies, to be sure. But it works.

Absolute Craziness

According to VoIP Weblog the Indian government is thinking about banning VoIP, because it is choking off tax collections. Apparently there has been some action around blogs as well, though we cannot confirm this. It's crazy!

Mobile Broadband Is Next, And Not Because Customers Now Want It

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It takes no great insight to predict that the next great wave of growth in broadband access will come on the mobility front. The reason is simple enough: the consumer and business fixed line markets are close to saturation. This bit of data shows SME adoption of broadband. Recent reports from November consumer usage of broadband show that more than 80 percent of consumers who used the Internet that month used broadband access. And the point to remember is that "saturation" means nearly every customer that wants the product buys it. Some 20 to 30 percent of U.S. households don't buy broadband because they don't want it, in many cases because they don't own PCs, or own PCs but find their usage is so limited that dial-up actually works.

We expect the penetration figures to climb once broadband becomes a mass market platform for entertainment video, but the fact remains that buying of broadband for Internet access is close to its peak. And since suppliers always look…

Value Chain Choices Have to Be Made

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For most service providers, the biggest fear is a future where they are relegated to being providers of low-value, commodity-priced "dumb pipe." Which is why just about every telecom executive is looking at ways to "move up the value chain." Which isn't a misguided thought. The risk is that network companies will forget that the one unassailable value they do bring to the party is precisely their "dumb pipes." Which is not to say they have no experience with applications. POTS is after all, an application. But there's a gnawing, nagging sense that most innovation is going to come in the form of applications that ride on top of pipes, and that today's service providers might not be well placed to capture much of the value from those innovations. Again, not a random thought.

The problem is to find some path forward that maximizes the permanent value of access, transport, directory and other services in a world where some applications will be of…

Content Prices Sticky to the Upside

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Pricing dynamics for content goods delivered over networks are fundamentally different from communication goods delivered over networks. And while "cost" is not necessarily "price," prices for video content seem to suggest recovery of costs in a way that is a bit more difficult in the core communications business.

Not Great for ARPU, Real Helpful for Churn...

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Family plans have been really helpful to mobile service providers as a way of attracting more teen users, the last major customer demographic. And though family plans aren't great for average revenue per user metrics, they are quite effective at preventing churn.

Once teens sign up as part of a family plan, they are virtually committed and out of commission as a prospective new customer—often until they go to college or beyond. Only 12 percent of teens on family plans have switched service providers since they first got their mobile phones. As it turns out, hooking teens on a mobile provider is much more effective than getting a customer for their first new car, in hopes they will stick with the brand as they age.

The ARPU of a mobile user that is not on a family plan is $63.27, in comparison to the ARPU of $45.27 per person on a family plan, Yankee Group researchers note. Of course, these are "on average" figures. Many of us have teens using plans that are far in exces…

SME VoIP: Buyers Interested, But Hesitant

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Some 60 percent or more of small and medium business owners say they are interested in VoIP, but they also say they have concerns about the quality and cost, say researchers at The Yankee Group. Fortunately, these are the sorts of problems that get sorted out over time. Those of you who were early Digital Subscriber Line adopters know what I mean.

The Coming Measurement Problem

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Measuring the size of the voice market is a problem the industry will start to face in greater measure as "telephony" becomes "voice" and "IP communications." The fundamental issue is that as voice and IP communications become embedded in the business models of other applications, it becomes harder to quantify the actual financial and business impact. Up to this point, quanitifying the size of the telephony business has been pretty simple. One has public reports by governemental agencies on the amount of wireline volume and revenue, as well as mobile volume and revenue. You add them up and derive th first order, retail revenues. Then economists can start adding in the full economic impact by applying multipliers.

But what does one do when voice and communications features are a "no incremental cost" sort of item? Voice will arguably be more important in the future, as it is embedded into gaming, documents, collaboration, portals, desktop apps. B…

Easier Management, Cost Savings Top Hosted VoIP Drivers

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Enterprises consider "simplicity" and "cost savings" the top two reasons to consider a hosted VoIP solution, according to Forrester Research. Which makes perfect sense: enterprises tend to have technical staffs, so "lack of in-house resources isn't so often the case. Enterprises do tend to operate out of multiple, scores or hundreds of locations, though, which makes support of consistent voice features difficult. Neither are enterprises too worried about protection from technology change. Apparently IT managers are used to change, and confident of their ability to manage it.

Why Content Prices Rarely, If Ever, Drop

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Telcos getting into the media business, despite the significant investments to do so, might enjoy the extreme differences between retail pricing dynamics seen in media as compared to communications. To wit, prices in the media world rarely, if ever, drop. In large measure, the reason is simply that costs in the media business are driven by content creation, and content creation is affected only marginally by Moore's Law, which operates to push down retail prices in the communications and computing space. There are, in short, some businesses that simply are resistant to operating cost reductions propelled by normal advances in chip technology, and the rapidly declining costs of processing and storage that result from such advances.

Not that media is the only endeavor that is not seriously aided by Moore's Law. To be sure, content creation is supported by Moore's Law. It's just that such costs are a small fraction of the total cost of producing content good enough to cre…

One Way Enterprise VoIP is Different From SME

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The number one reason an enterprise IT manager looks at VoIP is to manage multiple phone systems at multiple locations, according to Infonetics. This is much less likely to be the top driver at a small or mid-sized business, simply because managing remote sites is typically less of a headache. Of course, some enterprises or SMEs might find a reduction in toll charges interesting, depending on where the sites are located. Still, SMEs are going to be much more worried, on average, about how well VoIP will work, and about costs of on-going support. Features still aren't paramount, but is steadily gaining importance as a decision driver, at least in the North American market. We hear this is less true in Western Europe.

This Might Mean iPod is Grabbing Even More Share

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Digital music sales are stalling, according to the Wall Street Journal. It could mean all sorts of things. Apple's iTunes sales might be grabbing more share in a market that has hit a threshold of usage, as there still is no evidence iTunes sales have slowed. The market might be saturating, on at least a temporary basis, possibly because some users are pondering a change of platform and don't want to buy music in file formats that cannot be transferred to the new player. Illegal file swapping might be accelerating. Or it could be that the next group of mainstream adopters simply is discouraged from buying for all sorts of reasons, ranging from the cumbersome nature of digital rights management to the non-portability of files. Buyers who are committed to the iPod might be quite happy. More casual users might not.

LAN Certification, Monitoring for Business VoIP

We have been hearing from LAN certification and installtion companies that 30 percent or more of enterprise or small/medium business local area networks are not able to support VoIP services without modification. Others say their own experience is that half of all LANs need rework or upgrades before VoIP will work. It might well be worse. As many as 90 percent of local area networks are not completely prepared to support VoIP services, says Lawrence Trifiletti, NetStar-1 executive.

The other thing: "More than 70 percent of enterprises do not make baseline performance measurements before they deploy business VoIP", says Scott Safe, Network Physics VP. That's a problem because "data volume grows 40 to 50 percent a year," Safe says. So a network that might have been in tolerance a year ago might well not be in that state today.

Brightcove + YouTube = Disruption

Brightcove's Brightcove Network, backed by AOL/Time Warner, Hearst and General Electric (NBC), is on the path to being a true game-changer in the broadcast media sector, say analysts at Mercator Capital. "It has become evident that IP is going to disrupt the broadcast sector in much the same way it has already reshaped telecom," they say. So how is Brightcove different from YouTube?

The Brightcove Network is a platform to allow professional creators of video content to bring their product to market in a commercially viable manner. It is a platform, a distribution channel and an ecommerce portal. YouTube’s content is essentially user-generated and not geared for a broadcast audience, whereas content running on the Brightcove Network is produced by professionals who are commercially driven and seeking an audience, says Mercator. "These are very different positions on the spectrum," Mercator says. At least for the moment, we'd say. YouTube's monetization mo…

Adobe Acrobat Connects

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Adobe Systems has announced the immediate availability of the Adobe Acrobat Connect product line for web conferencing. You might wonder why. The way Adobe sees things, documents are about collaboration. Users routinely create and share .pdf documents with others. So why not enable rich media communication about those documents? Why not try to turn the Adobe Reader client, present on most user machines, as a VoIP or conferencing client? After all, among the largest challenges for any IP communications provider is to get enough clients into the hands of users to create critical mass.

The Acrobat Connect products enable users to create personal web sites that serve as meeting rooms. A standard Web browser and the Adobe Flash Player software, installed on more than 97 percent of Internet-connected computers worldwide, completes the task. There's no software to download, because the client already exists on most PCs.

The Connect hosted service, which allows a user to moderate a web confe…

90 Percent Broadband by 2008

Cowen & Co. expects the dial-up Internet access market to have declined by 29 percent by the end of the year. Analysts also expect broadband share of U.S. Internet households to reach 72 percent by year-end. "We expect U.S. broadband penetration to reach 72 percent of total Internet households in 2006, 84 percent in 2007, and 90 percent in 2008," Cowen analysts say. "We believe dial-up access...will disappear within the next six to eight years," the analysts say. "We estimate that dial-up subscribers will decline to 20.6 million in 2006 and 12.4 million in 2007."

Cable companies reported 1.3 million net broadband additions in third-quarter 2006, up 20 percent from 1.1 million in the year-ago period. DSL service providers added 1.2 million residential subscribers in third-quarter 2006, down from 1.3 million in the year-ago period, assuming 10 percent of total DSL net additions are nonresidential.

AOL is a big reason for the decline. "We estimate tha…

Metro Ethernet Market Appears Robust

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Growth rates for metro Ethernet services are 40 percent and higher annually, says ANDA Networks Tony Tran, senior product manager. Some of that growth is coming at the expense of traditional T1 and DS3 services, and much of the growth rides on copper access rather than optical facilities.

Dedicated access services (T1, DS3 and other private line) represented about $16 billion in revenues for the largest incumbent telcos in 2005, says the Government Accounting Office. Some of that was DS3 and higher rate access, but more than $8 billion was comprised of T1 services.

And as is always the case, few actual business locations are directly served by optical access from any provider, much less multiple providers. In the 16 major metropolitan areas the Government Accounting Office examined, competitors to the incumbent telco are serving, on average, less than 6 percent of the buildings with demand for dedicated access in these areas. For buildings with higher levels of demand, facilities-base…

A Choice to Make

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If, or perhaps just "when" SIP mobile devices get traction in the mobile market (Disruptive Analysis argues naked SIP device adoption will outpace IMS), mobile operators will face a choice. Do they "play nice" and allow third party entities to set up SIP sessions, or do mobile providers want to impair or block such sessions. The issue isn't "whether" they can do so. The issue is "will" they do so. Organizational DNA will scream "block," more so in the U.S. and Canadian markets than in Western Europe, we suspect. The current user agreement for Verizon Communications 3G service already bars its use for VoIP, for example. Ultimately, this strategy seems likely to fail.

And there are a number of scenarios that could produce an "open" result. The industry might find that enough revenue is captured from walled garden services that the value of a "naked SIP" feature, though it causes some revenue loss, is tolerable, an…

Why SIP Trunking is Hot

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Companies can extend VoIP beyond the company private networks already in place, and reach off network customers, suppliers and business partners. Companies eliminate the need to buy and operate voice gateways and T1 connections, using less expensive IP connections. Ultimately, there are new applications taking advantage of SIP.

Why In-Home Networking Will Grow

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People will buy more content on a download basis if they can port it to a TV for viewing. And because moving video content or voice around a network is quite a bit more complex than simple non-real-time data files, more value and revenue will be created in the system integrator and value-added distributor parts of the value chain. So traditional data networking, LAN specialists and high-end audio-video installers will wind up doing consumer home network installations. Up to a point, so will cable and telco installers.

Good News, Bad News

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There was good news last year for U.K. service providers, according to Ofcom. Household usage and adoption of communications services accelerated. The number of households with broadband connections increased by 63 percent between 2004 and 2005, to a total of 9 million and the number of households with digital television also increased by 18 percent between March 2005 and March 2006, to a total of 18.3 million. Mobile phone usage also increased, accounting for 31 percent of all call minutes, up from 28 percent in 2004 and 20 percent in 2001.

The bad news is that aggregate customer spend seems to have dropped, despite the upsurge in usage.

Between 2004 and 2005 typical household telecoms costs fell by 5 percent, from £80 a month to £76 a month.

Ofcom data also shows that younger consumers are turning away from television, radio and newspapers in favour of online services , including downloadable content used on mobile devices. Television is of declining interest to many 16 to 24 year old…

Different Platforms, Same Problem

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A common challenge faced both by wired and wireless providers is the huge capital recovery challenge each faces from building of broadband networks at a time when voice revenues are dropping. Which is why the search for video, content and ad revenues is so urgently a priority. Sun Microsystems, for example, is adapting its Java System Content Delivery Server for mobile networks.

Sun's CDS provides a common infrastructure for delivering all types of content, including Java applications, games, ringtones and wallpaper. It also lets operators create storefronts, viral marketing tools and payment systems. It lets the carriers and other content providers set up services more easily and quickly, the company said.

Sun's move also illustrates another change that has taken place in the global telecom industry. Once upon a time, service and technological innovation was driven by the carriers themselves. That, after all, was what Bell Laboratories was all about. These days, innovation is …

Consumers Confused, Long Tail Reigns

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Consumers are confused and overwhelmed by the vast array of services telcos now offer, say analysts at Ofcom, the U.K. telecom regulatory agency. A "significant minority" of consumers have trouble working out which company offers the best value or quality of service on particular packages, Ofcom says. As it turns out, the huge range of services available, from phone line and broadband to cable television and mobile phone, confuses consumers.

Twenty-seven per cent of people find it hard to make cost comparisons for fixed-line phone services, Ofcom research reveals, while 34 per cent find it difficult to choose internet suppliers based on quality of service.

All of which points out why the "long tail" of telecom will continue to operate. Which is to say that cable company and telco basic packages will continue to maintain dominant market share. In an effort to reduce complexity, many consumers are simply going to choose from a small subset of relatively complete packa…

BT Sharply Reduces Reliance on Voice Revenue

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BT has done a far better job of diversifying its revenue streams, by some measures, such as the percentage of total revenue coming from voice. BT gets less than 20 percent of its total revenue from voice. Most other tier one providers still generate 60 percent of more of total revenues from voice. In at least some cases, voice represents 80 percent of total revenue. In this regard, BT arguably outperforms all other tier one service providers.

This might explain BT's bullishness about its new all-fiber, all-IP network. It already can see its own future as one in which voice is not the dominant revenue driver. Nor is BT suffering from the scale of its capital investment. BT's profit in its second quarter rose 28 percent to £475 million, or $905 million, on sales of broadband Internet access and corporate computer-network contracts. BT's revenue rose 3.7 percent to £4.94 billion in the three months ended Sept. 30. We still will argue about the wisdom of 21CN and the pace of b…

VoIP Audio Quality is Better, says Minacom (Tektronix)

Since late last summer, VoIP phone service has sounded better and connected faster than the public phone network, according to data collected by Minacom (Tektronix). Results show that VoIP service quality has increased steadily, with an average Mean Opinion Score (MOS) of 4.2, compared to 3.9 for the PSTN (scores range from 1 (worst) to 5 (best). Based on a MOS threshold of 3.6, only 1 out of 50 calls in North America were considered to be unacceptable (about 1 in 10 worldwide)while greater than 85 percent of VoIP calls exceeded average PSTN quality. In addition to superior sound quality, calls over VoIP connected quicker overall (8.2 seconds on average, compared to 8.9 seconds for those placed over the PSTN).

As happy as you might be about improving VoIP audio quality, uou might wonder about the performance of the public network. There are a couple of things at work here. First, lots of calls are now mobile to mobile or have mobile on one end. That automatically hits quality. The othe…

Video Downloads, PPV, VOD Won't Top DVD Sales Any Time Soon

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Though most people think video downloading will wipe out the DVD business, Kagan Research forecasts that U.S. consumer spend on VOD by 2016 will still be smaller by a wide margin. The company forecasts that U.S. consumer spending on video on demand and pay per view will be one-quarter the consumer spend on U.S. home video in a decade.

U.S. on-demand programming is forecast to grow at a 12 percent compound annual growth rate over the next decade, reaching $8.7 bil. by 2016. The CAGR for U.S. home video software will be under 3 percent over the same period, yet on a total dollar basis it still remains much larger, Kagan researchers argue.