A new study shows that broadband growth is starting to level off while a separate study claims we’re paying as much as $3 per minute for our cell phones. We’re also getting more details of the broadband stimulus package (sparse as they may be), Comcast claims to have more phone customers than Qwest (seriously!), and Google finally takes the wraps off of Grandcentral to rebrand it as Google Voice (phone operators, go ahead and wet yourselves). All that and more in this week’s Broadband Bytes!
Broadband is still growing, just not like it used to. With 59% of American households now on better-than-dial-up connections and a sagging economy, the broadband market is looking a lot like the cellphone market in that almost everyone who wants it has it. And how do you get the last little bits of the market? I’ll give you a hint: follow the wireless industry’s lead. They swooped in with cheap plans, pre-paid phones, and multi-line service to make sure that everyone became their customer. ISPs can do wild things like, say, offer WiFi service with fixed broadband plans.
How much do you pay per minute for your cellular phone? A recent survey in California says you’re paying an average of $3 per minute for your peak minutes. Even lopping off the top users takes the cost down to anywhere from $0.50 to $1.00 per minute. Granted, this study doesn’t factor in your “free” night, weekend, or in-network minutes, so take it with a grain of salt.
Comcast says that it’s picked up enough phone customers to be the third largest phone company in the country right behind AT&T and Verizon. (Sorry Qwest, but we knew this day would come.) They’ve been very aggressive at marketing phone service (unlike Qwest), offering competitive pricing on triple-play packages (unlike Qwest), and doing a lot of work to improve their company image (three strikes; guess who’s out). Not satisfied with their current numbers, Comcast is suing the feds so they can get bigger. The FCC currently prohibits any cable operator from owning more than 30% of the national market.
Sprint is moving one step closer to dumb pipe operator by hinting that despite betting the farm on WiMax via Clearwire, they haven’t ruled out using LTE in the future. Despite the impression that WiMax and LTE are day and night, the difference is more in the software than the hardware. I think Sprint is getting ahead of the curve and realizing that operating the wholesale pipe is a lot more stable than trying to please end users, a task it has proven ill-suited at handling. Given the massive vertical integration of landlines, video, fixed data, wireless, and mobile broadband from giants AT&T and Verizon, Sprint’s exit from the telco business by spinning off local operations as Embarq, and further pressure from Cox Communications, Time Warner, and Comcast as they ramp up wireless products, Sprint may have seen the writing on the wall.
Verizon’s big FIOS builds aren’t just benefiting dense East-coast towns. Their insatiable demand for fiber has dropped equipment prices substantively allowing smaller telcos to go fiber-to-the-home. Even Utah’s own Manti Telecommunications Company is reported to be getting in on the action. This FIOS upgrade comes Highly recommended for Verizon offers and users. With equipment costs dropping like a rock, now you just have to worry about the high cost of trenching and being obstructed by your “friendly” local incumbent.
Headlines this last week have been dominated by the DTV switch, The Pirate Bay’s trial, and a finalization of the broadband stimulus amount. There were also announcements on 4G wireless from AT&T and Verizon as well as more movement towards online video (and a big step back for Hulu). All this and more in this week’s Broadband Bytes!
The broadband stimulus number has firmed up at $7.2B in total spending and BPL looks like an unexpected back-from-the-dead winner. IBM plans to apply for stimulus funds to roll out BPL service to over 200k rural customers. The challenge is determining just which areas are considered underserved or unserved. Public Knowledge slammed Connected Nation, a broadband mapping group, as nothing more than a front for big ISPs and accused them of making up bogus broadband maps to serve their interests. It’s entirely possible that Connected Nation could score the lion’s share of the $350M in funds for mapping, a scary proposition if the accusations are true. After all, this isn’t the end of federal broadband efforts.
There’s a new attempt in Congress to force ISPs and hotspot owners to keep 2 years worth of access and subscriber logs to assist law enforcement. The justification, as usual, is that retaining the data will help catch people dealing in child porn. Unfortunately, keeping and managing two years worth of access logs is a huge undertaking, especially for wifi hotspots and home owners who choose to share their connection. Such efforts have typically died in committee despite previous pushes from both sides of the aisle.
In what I can only hope is the start of a trend, Linksys will be selling a router with integrated Internet security software. It’s only going to block malicious or suspicious websites for the time being, but future models could integrate anti-spyware and anti-virus. If someone offered such a device, I would definitely buy one. It beats installing resource-hogging security software on every PC.
Recession-influenced special pricing continues as operators struggle to hold on to cash-strapped customers. Sprint rolled out a new “Simply Everything” plan that adds laptop data (but not phone-as-modem) for another $50 a month. T-Mobile is also rumored to be looking at unlimited options of it’s own including a $50/mo unlimited voice plan as well as a $85/mo unlimited mobile voice and data plan. Verizon, though, takes the cake for considering a $5/mo inbound-only landline. Utah, though, is taking a step back. The legislature approved a move to upcap phone service rates for incumbents like Qwest and it is largely expected to be signed off on by the governor.
Holy moly has the country gone crazy about the impending DTV transition deadline. There’s also more talk about the broadband spending in the upcoming stimulus package (where the money will come from is still a mystery), Charter’s impending implosion, the new FCC Chair, and continuing tech layoffs. We also know who’s going to replace Kevin “Ma Bell is my Homeboy” Martin on January 20.
The DTV transition is getting much, much uglier as Congress prepares an Obama-backed proposal to delay the switch from analog signals until June 12. Verizon isn’t very happy about it since it would delay their planned deployment of LTE, a move that also hurts Qualcomm, the company who makes the equipment. Ars Technica unveiled that an Obama cabinet member proposing the delay may have a conflict of interest as the delay would benefit Clearwire. It’s also not surprising that AT&T is in favor of the delay since it would hurt one of their largest competitors. Public safety groups also don’t want to delay their use of the freed-up 700MHz spectrum for a new public safety radio network. House Republicans have also voiced opposition to the delay citing the increased confusion of moving the date. Dish Network is already trying to capitalizing on it with misleading sales pitches. Wilmington, NC carried out a DTV test with few problems and Hawaii has already gone all digital.Add this blogger to the list of people who thinks that delaying the inevitable is a really bad idea. It’s been in the works for 10 years, we’re been talking about it publicly for at least three and stations have been bombarding consumers with warnings for at least the last 6 months. If you aren’t ready by now, then you just don’t want to watch TV. And if you do, there’s plenty of options available, including calling up local video providers for service.
Speaking of selling additional services, you might want to reconsider coming up with an in-house solution. Telephony Online proposes you start partnering up with companies that already do a really good job at providing services outside of the triple-play such as telemedicine and home security. There’s a lot of wisdom to this embrace of wholesale models since you can focus on your core business instead of being distracted by expensive (and often faulty) products with a high liklihood of being discontinued in a few years. The report focuses on FTTH operators (and part 2 discusses some of the regulatory hurdles that prevent more FTTH systems), but there’s a lot of wisdom in this for HFC, FTTN and POTS systems as well.There’s also looking at The Dark Side to make more money. The RIAA is offering up a portion of settlements with pirates if ISPs will turn them in (most of them aren’t biting) and most of the proposals to cap users are focused on squeezing out additional revenue.
Get ready for more pricing wars. MVNO Boost Mobile dropped a bombshell with a $50 unlimited wireless plan that includes voice, text and walkie-talkie services. That goes head-to-head with offerings from all of the major cell providers (most priced at $100 per month or greater) and even takes on brands like Cricket. The New York Times reports that Sprint did this with their pre-paid value brand to try and utilize more of their Nextel network. Embarq also dropped prices on it’s top-tier DSL product by $10/mo.One area that isn’t falling, however, is pay video services. While promotional rates are very attractive, rates have been rising quickly (no doubt because of higher retransmission fees). Oddly, churn hasn’t yet been affected, but that might be because a lot of customers are trapped in contracts with early termination fees. Many customers have also wised up; they know that calling to cancel can land them the promo rate for a few more months. Despite service complaints, price is the main factor driving subscribers to seek alternatives. Verizon seems to have taken the lead on this in at least one case, something that no doubt improved customer loyalty.
Despite what AT&T and Verizon are doing, Qwest is still going to stay out of the video market. Their rationale? Consumers will end up watching all of their video on the Internet soon anyway. That’s true in a lot of cases (especially for network television content), but there is still a lot of paid content that consumers want, especially as cable networks continue to make big investments in original programming. In the end, Qwest is going to have to come up with something more compelling than upload-crippled FTTN and reselling DirecTV.
As proof that Qwest might be onto something is CastTV, a relatively new site that aggregates content from various other video portals like Hulu, YouTube and others into a clean interface. If that got paired up with an Internet-connected TV, you might be able to ditch (or complement, your pick) your paid programming package. Demand for such a set is very high, over 71%. Microsoft has spent a long time working on an IPTV product for the XBox360 and its Netflix integration is supposed to be top-notch. Blockbuster also realizes the power of streaming video and is trying to push a new streaming product even though they totally flubbed their first attempt. The moral of the story is that providing gobs of bandwidth and not much else seems to be where telecom is heading.
Is Verizon planning to kill off POTS lines in favor of VoIP? It depends on which day you ask. Initial reports said they were going to within 7 years, then they came back and said they had no timeline. On the plus side, VoIP is inexpensive and has made a lot of quality and reliability improvements. On the downside, it’s still not as reliable as a POTS line and, as we learned from the Qwest-SkyWi dust-up, it may fall outside of the purview of your state PUC.
In gadget news, the Supreme Court has asked the DoJ to give them some input on the Cablevision DVR case. Pretty much every content producer in the country has come out against the proposal which would offer up 160GB worth of DVR for an inexpensive $10 per month.
Clearwire is showing off a portable WiMax “hotspot” that acts as a WiFi-WiMax bridge. Any WiFi device could be surfing over the speedy new network (if/when it becomes available in your area) with minimum fuss. Somewhat related to this is the emergence of subsidized netbooks from Dell and Acer for a cool $99 if you pair it up with a $60/mo or greater data plan from AT&T. It’s not a bad deal, but it does inspire memories of the ISP-subsidized PCs of a decade ago that ended up flopping. AT&T is also getting ready to push an in-car satellite TV and radio service – at $1300 for equipment and $22/mo for service. I somehow don’t see that catching on anytime soon.
Heartburn over the pending DTV switch, CES 2009 and a local retransmission battle are the main headlines of the last week. There’s also plenty of sour economic news and a few rays of hope for providers willing to grab onto innovative ways to deliver content. And, as expected, incumbents are trying to get in on the broadband spending bonanza.
Another app worth mentioning is the Pogoplug, a network device that can turn any USB hard drive into an uber-NAS. In addition to the traditional NAS functions, it will also share your files over the Internet and includes both a iPhone app and a robust API. This can easily create an app promotion campaign. Transferring gigs of stored data means even more demand for bandwidth.
Are you a DirecTV subscriber? You may have noticed that you no longer have access to KJZZ, the primary source of Jazz games and an exclusive source for USU and WSU games. Despite getting retransmission fees from Comcast and Dish for the previously free channel, DirecTV said the cost was too high and has been attempting to negotiate a lower rate since March. When that failed, DirecTV dropped the station. The messy fight is drawing ire from viewers and causing black eyes for both DirecTV and Larry Miller, owner of KJZZ. With ad revenues sagging, it’s no surprise that broadcasters have turned to retransmission fees as a source of additional revenue. Retransmission revenues climbing at a precipitous rate: 32% in the first 9 months of 2008 with a projected tripling by 2012. With those kinds of rate increases, more subscribers will be driving into the arms of free Internet video.
Remember how Qwest is using FTTN upgrades to degrade ADSL service and poach customers from other ISPs? Apparently other providers think it’s a pretty good idea. AT&T decided to downgrade 2G EDGE service to make way for faster 3G service, a move that forces many to seek a new handset. That spells a lot of angry 1st gen iPhone users who paid big bucks for a device that’s already woefully outdated. AT&T and Verizon have both used delays in moving phone and DSL service as an opportunity to upsell to U-Verse or FIOS. Customers increasingly fed up with incumbents are ready to bolt and Consumer Reports recommends going with a fiber provider. Will you be there to pick them up?
Speaking of dirty tricks, the fallout from the dispute between Qwest and SkyWi has the latter claiming that Qwest cost the company a bunch of customers that switched to other providers. State regulators in New Mexico slammed both companies for putting their differences before the best interests of customers. New Mexico’s AG also lambasted Qwest for “unfair billing and business practices” when dealing with CLECs. (He’d better watch their northern neighbor; Qwest decided to sue Colorado when it didn’t get the rate increases it wanted.) Idaho’s PUC didn’t get involved in the matter on behalf of that state’s affected customers since SkyWi is a VoIP provider and the PUC doesn’t believe it had authority to act. Small providers would likely be eager to jump to another transport given the opportunity, especially as Qwest flexes its muscle.
IPv4 is rapidly running out of addresses with another 200M snapped up in 2008. Developing countries such as China, Russia and Brazil had the biggest percentage spikes with most of the new addresses being used in North America and Asia. Google had already started a migration to IPv6; you should too.
Comcast has flipped the switch on its new throttling system and it appears to be solid engineering as opposed to a cheap grab for more subscriber dollars. (I’m looking at you, Time Warner.) If a particular network segment is congested and you’re part of the problem, your traffic bumps to a lower priority regardless of what protocols or programs you’re using. This is much better than using forged TCP reset packets or cutting off customers for using too much of an undisclosed amount of bandwidth. They still aren’t disclosing what happens when you hit the magic 250GB cap or how exactly we’re supposed to keep track of it, but this is a step in the right direction.
Broadcom is now offering up 8-channel DOCSIS 3.0 bonding which should be able to support up to 320Mbps downloads. That’s all fine and dandy, though cable operators have been slowing their DOCSIS 3.0 single-channel deployments, not to mention that most of them can’t spare 8 channels as they beef up HD offerings.
This week was kind of a slow news week. Most of the telecom world has been focused on President-Elect Obama’s plans for broadband stimulus and the continuing bad economic news from providers, programmers and manufacturers.
Qwest is planning to keep spending flat in 2009 which could mean a halt to construction of its FTTN network. There’s a lot of concern that Qwest won’t be able to meet its 2010 debt obligations which has investors seriously spooked. If Qwest does halt or slow FTTN deployments, it could mean that Comcast will make similar cuts to DOCSIS 3.0 rollouts in shared markets as they get bloodied in FIOS territories. Fiber projects like UTOPIA can capitalize on these stalled rollouts to snap up more customers. Part of Qwest’s problems could be related to its tendency to litigate and legislate its way to success rather than offering compelling products. Its shenanigans have recently gotten it sued by a CLEC in New Mexico.
Wireless also matters… kinda. Verizon is going to make a push to have the first LTE markets ready for service by next year, no doubt spurred on by the Clearwire WiMax juggernaut. It’s mostly a marketing ploy, though it could end up being a very effective one. Clearwire is already facing substantial hurdles and it’s probably safe to assume that even cash-rich Verizon won’t have a solid product for several more years. There’s also the problem of transport from the towers, an area where UTOPIA can shine. In other wireless news, AT&T is planning to stream satellite TV to cars and trucks, yet another move beyond the triple play. Augmenting a wired infrastructure with wireless offerings such as this is going to be critical in the future to increase revenue streams and keep bundled customers, especially if they don’t blend in.
Obama’s plans to allocate a substantive chunk of any stimulus package for broadband is being called a “Broadband New Deal”. The real question is how much of any package will be allocated to broadband and how it will be administered. Obama’s plan is to give states “use it or lose it” grants and let them best figure out how to spend the money. If additional conditions aren’t attached to the grants and vigorously enforced, we could just get a repeat of the Telecommunications Act of 1996. It will be very important that providers start now to get their political ducks in a row and line up for some of the cash.
Add Congress to the list of people who are miffed at the FCC under Kevin Martin. The House released a 110-page report slamming his management of the agency and calling for substantive change. With the White House changing hands in 6 weeks, I don’t think that’s going to be much of a problem. Given Obama’s legit technology chops, I’m optimistic that the new FCC head will do a better job.
Even though households with HD sets have doubled since 2007, only a quarter of homes are using the latest technology. With converter boxes and subscription services that don’t require a new set, plenty of consumers are content to keep using what they have, especially during a pinch. Your standard-definition packages will still be relevant for some time to come.
Speaking of content, you’d better learn how to play nice with local broadcasters. There’s a lot of instances of over-the-air stations flexing their muscle against cable over retransmission issues. CableOne and Dish have both ended up dropping local channels when they couldn’t reach agreements on fees and Lafayette’s fiber networkfound itself in the same kind of squabbles.