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Cable TV Model is Relevant for Telecom as Well

Posted July 1, 2008 by Gary Kim - Comments (0)
"An unconstrained profit-maximizing platform charges a positive fee to the other side of the market if and only if content providers value additional consumers higher than consumers value additional content providers."

In other words, platform and service providers have opportunity to earn revenue from content partners when new, emergine or highly-focused content partners want expedited carriage, placement or promotion on platform portals.

It's the same sort of thing the cable industry long has had as a business practice. Popular networks get paid, low-viewership networks often must pay to get carriage (shelf space). In a service provider context, the analogy is that promotion, targeting, location, billing and other features and services can be so useful a content partner might be willing to pay to obtain them.

If, on the other hand customers highly value a particular content provider, a rational platform simply will make sure the popular provider is well supported, and will do nothing to impede customer access.

It's still an emerging sort of thought, and the services and applications platforms can offer partners isn't so well developed. But it is coming.

T-Mobile $10 a Month VoIP

Posted July 1, 2008 by Gary Kim - Comments (0)
T-Mobile @ Home is a new nationally available over-the-top consumer VoIP service pricied at $10 a month. There isn't much of a catch, aside from the fact that the service only is available to T-Mobile wireless customers on plans costing $40 a month or more.

It isn't so much that T-Mobile wants to be in the over-the-top VoIP business. It is that it needs something jazzy to keep its mobile customers loyal. The company hopes $10 a month home phone service is that sort of thing.

The new service is different from the Hotspot @ Home offering T-Mobile also has been testing. That is a dual-mode mobile service that allows some mobile phone models to connect to an in-home Wi-Fi router.

The real effort here is to insulate T-Mobile from churn. After all, it can't offer the iPhone or 3G service yet.

Still, independent VoIP providers have to be wondering what might happen if others start to emulate the offer.

Peering Potential

Posted July 1, 2008 by Gary Kim - Comments (0)
In principle, most international voice traffic is amenable to interconnection using some type of neutral peering federation.

The reason is that it is expensive and time-consuming to negotiate separate bilateral interconnection agreements with the ever-growing number of carriers.

If all one wanted to do was pass traffic back and forth between mobile networks, a company might have to negotiate more than 300 separate agreements.

The advantage peering federations provide is a simpler, faster way to create those business and technology agreements by joining a federated interconnection provider's community, much as Internet service providers peer with each other.

In principle, much interconnection now handled by bilateral agreements could shift, not to mention wholesale traffic, which generally isn't exchanged using a bilateral agreement because the cost of doing so is prohibitive.

Up to this point, tier one service providers have been somewhat reluctant to embrace hubbed or peered traffic. But now that carriers are agreeing to preserve existing business relationships while doing so, the way seems to be cleared for more extensive peering by tier one providers.

Compute Globally, Assemble Locally

Posted July 1, 2008 by Gary Kim - Comments (0)
There's an obvious relationship between cloud computing, "over the top" applications, open networks, open devices, importance of application program interfaces.

The ability to compute, store data and execute code remotely means it is more affordable than ever for small developers and individuals to create applications that are immediately available to users anywhere. The existence of those applications "on the Web" makes the Web a more-powerful platform for bringing applications of any sort to market. That puts business pressure on walled garden business models of all sorts.

The existence of cloud computing also means software is becoming unbundled from hardware to a large extent. Not completely unbundled; not unbundled for every application or service. In fact, some apps require tight integration to execute with the greatest elegance. But the direction is more in the direction of how people use PCs than how they consume cable television.

The application explosion, built on open platforms and APIs, also means new applications can be built on the shoulders of existing apps and applets. Assembling apps begins to be a process akin to what one does with Legos, to oversimplify.

That also means apps more often are created globally, assembled locally. That has implications for browsers, networks and protocols. To assemble apps locally means a premium for rapid response. If assembled apps are to mimic the feel of locally-stored apps, response time is a crucial requirement. This requires more than big, fast pipes. It means browsers that are much faster than we have used in the past. It means a computing architecture that does not require so much traversing of wide area networks to grab app elements.

The issue is to answer a question: “How do I pair together one customer that’s CPU-intensive and another that’s IO-intensive and have the sum appear just like a single, well performing application?”.

There is lots of room for innovation here. And lots of distance to cover. But it's coming, even if most users only gradually are being exposed to use of remote and locally-assembled apps.

Transit, Not Access, Getting to be the Problem

Posted July 1, 2008 by Gary Kim - Comments (0)

So we've been kicking around lots of issues around telecom industry transformation at the Voice Peering Forum June 23 and 24, 2008. An attendee from Telecom New Zealand pointed out something interesting.

"In the U.S. market, contestants seem to spend a lot of time fighting over rights to use or lease the access network," he said. "That's not where the rub is, which is in IP transit."

That might strike you as an incongruous statement. After all, isn't long-haul a fairly easy thing to build? Isn't there lots of fiber?

Well, yes, there's a substantial amount of fiber, even though lots of it might not be in the right places, or lots of it concentrated inside the same cable sheaths, on the same routes.

But there's another issue, not related to fiber but to IP transit costs. If a service provider owns its own facilities, there is not much of a problem on that score. No matter how much Internet bandwidth is required, the incremental cost of supplying that demand is controllable.

That is definitively not the case for a service provider that does not own its own wide area network, and has to lease capacity in the form of IP transit. In that case, it is quite expensive if a service provider's users start to download or stream significant amounts of video.

That isn't to say access is not a crucial problem. For many contestants it is a key problem. But let's not forget that IP transit costs are growing as video consumption is growing. Sooner or later, larger service providers who do not own their own WANs will start looking at buying them or building them. That's one good way to save money on spiraling IP transit costs.

Broadband Over-Supply

Posted July 1, 2008 by Gary Kim - Comments (0)
Cox Communications is doubling the download speed of its most popular residential Internet service (Preferred) in Northern Virginia and increasing the speed of its Premier service by thirty-three percent.

PowerBoost, which supplies temporary "burst" bandwidth for uploads, also has been added to the Preferred and Premier packages. PowerBoost for downloads has been available since 2007. This is the fifth consecutive year that Cox has enhanced the speed of its Internet services in northern Virginia (credit Verizon's FiOS service for that).

Verizon has boosted FiOS downstream speeds to 50 Mbps, with 20 Mbps upstream, for its top package, available everywhere FiOS is sold.

Cox customers will get the speed increases automatically in July, without need for a call or technician visit.

The PowerBoost feature means uses of the Preferred package will experience speeds up to 12.5 Mbps down/2.5 Mbps up. Premier customers can achieve 25 Mbps down/3.5 Mbps up.

Policy advocates often complain about the U.S. "broadband problem." Sometimes they mean it isn't available, isn't fast enough or costs too much. The evidence suggests availability isn't a problem. Whether a service is "fast enough" is a matter of interpretation, but I don't see evidence of anything but increasing speeds, often for the same cost. "Price" likewise is an issue.

With the exception of Japan and South Korea, though, cost per Mbps in the United States is quite comparable to nearly all other leading nations.

Complaining about broadband is a bit like similar observations we could easily have made about wireless penetration or use of text messaging, where U.S. users lagged way behind European users for quite some time. That "problem" doesn't exist anymore.

Neither will the "broadband" problem. Have there been issues with availability and speed? Yes. Are those problems in the process of resolution? Yes. Pointing to the existence of problems is fine. Ignoring clear evidence that problems rapidly are being fixed is either misinformed, intellectually dishonest or sloppy.

Some people like to say the definition of broadband is a problem, pointing to data collection that defines "broadband"--at minimum--as 200 kbps. That is wrong, also. The FCC recently changed its minimum definition to 768 kbps. A couple of points.

The only definition the global telecom industry ever has formally set was way back when ISDN was created. Broadband still formally is defined as any bit rate over "voice" rates of 64 kbps. So 128 kbps "traditionally" has been considered "broadband."

Market have moving definitions. But you can hardly fault the FCC for initially setting a minimum standard that is in fact above the recognized global nomenclature. In recent practice, industry executives might have considered broadband to be 1.544 Mbps or above, while anything between 64 kbps and 1.544 Mbps is "wideband."

All that is meaningless. It will be even more meaningless when cable operators start branding some broadband speeds as "wideband," to suggest it is more bandwidth than "broadband." Markets may like that. But it doesn't change the only formal definition the global engineering community ever has embraced.

Also, "minimum" is one thing. "Maximum" or "mean" are other things. Megabit access now is the norm. Targets will continue to shift higher over time. Call it the broadband version of grade inflation. The minimum "passing" grade might be a "D." That doesn't mean people expect that to be the norm.

The United States once had a major "broadband" availability problem. It no longer has. There are places where "access" by wire remains a problem. Most of those places have satellite alternatives, though. And many places have fixed wireless access as well.

Honestly, most potential users have one or two wired networks to choose from, two satellite providers and two or three mobile providers. Many consumers soon will be able to choose from as many as five mobile broadband providers.

Under-supply won't be an issue for most, much longer. Over-supply is the looming problem.

Browsers Matter, Again

Posted July 1, 2008 by Gary Kim - Comments (0)
It has been quite some time since anybody seriously thought "control of the browser leads to control of the customer." But mobility and Web-based applications--especially on mobile devices--might be developing in a new way. In some cases, the browser could be the path to delivering applications to "locked" devices.

Consider the iPhone and Android and LiMo devices. The iPhone is now a true software platform with a rapidly growing installed base. But it isn't an "open" platform. There are things a developer cannot do, and users cannot access, for that reason.

As it turns out, though, the browser is the way around such closed or controlled environments. Web browsers from firms such as Mozilla and Opera obviously want to be available on every device, for example. And the browser, in a mobile environment, can create a different user interface and application experience.

Mozilla’s recently introduced Firefox 3.0 differs significantly in form and function from Apple’s Safari for Mac OS X and Windows. A different rendering engine and fresh take on a browser’s touchscreen-optimized interface might be preferable to to some iPhone users.

A third-party browser could incorporate one of the most-requested features not on the iPhone at the moment: an accessible third-party plug-in architecture that would allow the inclusion of Adobe Flash, RealPlayer and other apps.

We'll have to see where this goes. Still, it's an interesting development. Browsers might matter more in a mobile context than they do in a PC context.

Cloud Computing after Bill Gates

Posted July 1, 2008 by Gary Kim - Comments (0)

What is the core value of enterprise application? What is the core value for any PC application used by consumers? In times past, one might have answered "productivity" for an enterprise. In the consumer space, entertainment probably rivals productivity.

And though those might still be the right answers going forward, there's something new afoot. How are productivity and entertainment realized?

Increasingly by use of social and communications mechanisms, ranging from email, messaging, downloads, uploads, managed and hosted services, cloud computing and social networking.

Software increasingly works because it is connected to other software and other people. In some real sense, even when productivity or entertainment is the "value," value is realized only in the form of communications and connected computing.

As Bill Gates steps from history's computing stage, that's the observation that occurs. Bill Gates deserves thanks for personifying the "PC era." Maybe we don't have a name yet for what is coming, or any single person, company or application to define it.

Who could forget Time magazine naming the "PC" the person of the year? Who thinks it will be so easy to tag what is coming?

Comcast Launches Global Calling

Posted July 1, 2008 by Gary Kim - Comments (0)
Comcast has struck a deal with some IP voice provider, as it is launching calling to Western Europe, Latin America and Mexico. I'd guess it is Jajah underneath the hood, given the amount of activity Jajah is pouring into relationships with telcos and cable companies, as well as the spare capacity it has built into its global backbone network. Whomever the deal is with, the move by Comcast shows that telcos and cable companies can leverage over-the-top or Web activated forms of IP voice for out-of-territory calling.

"No Danger" of Price War, Carriers Say

Posted June 20, 2008 by Gary Kim - Comments (0)
Long-haul network providers in the Southeast Asia market say they aren't worried about a new round of price-based competition now that many new regional undersea networks near completion, reports Grahame Lynch, CommsDay reporter says.

Skeptics might note that such are the things one would expect them to say, despite the obvious observation that there are new sources of demand.

The construction boom has roots in real business drivers such as the genuine need for route diversity, traffic growth in South Asia and the Middle East, broadband penetration growth and the increasing popularity of rich media content are the demand drivers, says Byron Clatterbuck, Tata Communications SVP.

“Few of the cables are being built by pure play wholesalers or speculators, a majority of systems
are uniquely differentiated, there is an emergence of a hybrid private and consortium model, traffic demand is steady and funding is now tied to strict covenants,” he says.

There is no longer room in the market for pure-play wholesale, Clatterbuck says. Other Tata executives have made the same observation: these days, a core network provider must compete on both retail and wholesale sides of the business. So much for the "we don't compete with our customers" argument.

Traffic patterns also are changing: there's less emphasis on traditional landing and more traffic headed for major data center locations.