Volpi, who was one of CEO John Chambers’ hand-picked men to help Cisco navigate the post-bubble crisis, has not decided where he will go next. The very continental Michelangelo, who was the senior Vice President and General Manager, Routing and Service Provider Technology Group is leaving on a high note – the router sales are strong again.

Volpi is also an ambitious man, would love to add the “CEO” title to his resume. He has done it all for someone so young – he is only 40 - He has made enough money, and has earned enough respect in the networking world to ride into the sunset. But Mr. Five-Lattes-a-Day Volpi isn’t ready for a Starbucks AARP discount just yet.

We had heard rumblings of this exit about three weeks ago, but could not find the second source to provide more background on the exit. Why would Volpi leave? Well, he has got nowhere to go. Even in a best-case scenario Volpi had a good 10-to-15 year wait before he got to the CEO’s office on Tasman Drive.

Chambers is only 56 years old and is going nowhere. The company has recovered nicely from the post bubble setback, and if recent quarter is any indication, is firing on all cylinders. Cisco reported Q2 net income of $1.9 billion on revenues of $8.4 billion, up from $1.4 billion and $6.6 billion in the same quarter last year.

Even if Chambers decides to retire in say five years, his heir apparent, Charlie Giancarlo, the Chief Development Officer and also the president of the Cisco-Linksys business unit — one of the fast growing groups within Cisco — will be in no hurry to leave his gig. He is only 49 as well, and clearly relishes the spotlight.

Interestingly, two other VPs — Pankaj Patel and Tony Bates — will team up to lead the new Service Provider Technology Group (SPTG), according to Light Reading. They are going to be reporting to Giancarlo.

Volpi’s decision highlights two things: first that Cisco has a really deep bench when it comes to filling senior management ranks, and secondly, if you are a Cisco executive with grand ambitions, well don’t stick around too long –- the top slot might not ever be yours for taking.

Share/Send

According to a Dutch newspaper report, a massive new server farm is being built in the Eemshaven (Eems harbor) and will be able to store 100,000 servers and will have access to 30 megawatts of power, mostly coming from a huge power plant that is just a stone’s throw from the new proposed server farm. As a comparison, we have heard (not confirmed) Level 3 uses around 40 megawatts of power in all its server farms.

The server farm is pretty close to the Amsterdam Internet Exchange, one of the largest Internet exchanges in the world, and has direct connections to the U.S. The report suggests that Google might be one of the main tenants at this new server farm, even though they are big customers of the Zernike server complex in nearby Groningen City.

The new server farm and its location is part of a larger industry trend: locate data centers close to locations with access to cheap power. Power is viewed as a major bottleneck in the web infrastrucure. Google, Yahoo and Microsoft are spending billions in the Pacific Northwest to build out their web infrastructure. Google also inked a deal to build out a big data center in North Carolina for pretty much the same reasons - power.

Hat tip, Vincent Dekker via The Cook Report.

Share/Send

Delays with IPTV mean that AT&T will have to continuously push the HomeZone triple-play package, which in turn means more subscriptions for DISH Network, which is fighting tooth and nail with DirecTV.

So DISH doesn’t have to spend the dollars on marketing and can ride AT&T’s coattails to a bigger subscriber base. For argument’s sake, if things really go to hell, AT&T might have to buy a satellite TV Company, which again is good news for DISH.

Share/Send

A resolution requiring a more thorough study of citywide broadband options has made it through committee, and now awaits a vote by the full Board of Supervisors in two weeks. If passed, this resolution would delay any finalization of the contract with Google and Earthlink for at least a “couple of months,” according to Supervisor Jake McGoldrick, who sponsored the resolution.

The resolution was drafted after the city’s budget analyst recommended considering alternatives to the deal, which is being championed by the Mayor’s office. The board’s support for the contract is mixed. I have a hunch that the board will vote for further study, but will face a veto from Mayor Gavin Newsom that they won’t have enough votes to overturn.

The hearing brought out a number of familiar faces. McGoldrick, the resolution’s sponsor, sat in attendance along with committee members Chris Daly, Bevan Dufty and Tom Ammiano.

Daly can generally be counted on to oppose moves by Mayor Gavin Newsom, and may feel more strongly doing so now given Newsom’s recent rash of embarrassing personal news; Dufty, long considered a staunch ally of the mayor, has become much less predictable; and Ammiano, the senior member of the board, has been a champion of a municipally owned and operated fiber optic backbone network for years.

Google, which recently made a move into The City, was representated by Megan Quinn. She was joined by Alex Clemens, who’s Barbary Coast Consulting specializes in helping companies navigate the murky waters of San Francisco politics. Google is one of his clients, and I had received an email from him earlier in the week asking folks who supported the Google deal to turn out for public comment at the meeting.

And the public certainly did turn out to comment (video will be available here). In an unscientific survery, I counted about two supporters of the contract for every detractor, though Google hosted a number of community events to drum up support during 2006. Members of the community who hope the deal includes funding for ‘digital inclusion,’ such as Sister Petra Chavez of Caminos, argued that the faster the deal goes through, the sooner they can begin working on bridging the digital divide.

Thankfully, all the discussion focused on the merits of the case — all too often in San Francisco, policy often boils down into a fight between the mayor’s office and the board, and considering Newsom’s recent struggles, it could have gotten very, very ugly.

For their part, Google doesn’t seem terribly discouraged. “We look forward to continuing our work with the Mayor’s office and EarthLink to provide free Wi-Fi access to the over 1 million residents and visitors of San Francisco,” said Quinn.

Share/Send

Our good buddy John Hodulik at UBS points out that the only thing weighing down on AT&T is Project LightSpeed and the IPTV rollout that is running behind schedule. There have been scalability problems that AT&T hopes will be fixed by later this month. In a note John points out that there are technical snags and that is why AT&T is not marketing the service aggressively.

John predicts that AT&T will have 93,000 subscribers for its IPTV service at the end of 2007, and is generally upbeat about the prospects for AT&T’s U-Verse services that will ride atop the LightSpeed infrastructure. The Wall Street Journal, on the contrary, published a pretty damning update on Project LightSpeed & U-Verse earlier this week, outlining various problems with the company’s IPTV plans. The story noted that:

1. AT&T U-Verse had 4,000 users at the end of the fourth quarter 2006, pretty much unchanged from the third quarter of 2006 that ended on Sept. 30. AT&T wants to offer U-Verse to 20.5 million customers by end of next year. (Readers, please add your own choice of snark here!)
2. There are problems with the Microsoft IPTV software, which the companies say need fine-tuning. Unfortunately, this fine-tuning has been going on for too long.
3. The problem is “channel switching” which is slow according to the WSJ. The fix is to add more servers, which means operational expenses go up, and well the whole thing is a mess, which is not going away with spending some serious dollars. Microsoft has said in the past that it has fixed the problems, and we saw some pretty fast channel switching, but then that was in Microsoft Demo room, so that really isn’t a true real life situation.
4. U-Verse apparently needs 20 megabits/second of bandwidth to transmit video, WSJ says. I am not sure on the exact details, but I remember reading somewhere that the bandwidth requirements are much slower.
5. There are problems with the video compression technology AT&T is using to cram high definition signals over copper.

So what does this all mean? Over next few months expect AT&T to push the satellite TVit offers via its Home Zone service, something we have written about in the past. They own 2Wire, the set-top box maker, and can easily boost the bandwidth available to the homes to create a rather meaningful interactive experience. That may do for a short-term fix while Ma Bell gets its IPTV act together.

Share/Send

Filed in the U.S. District Court for the Southern District of Iowa, Central Division, AT&T’s lawsuit seeks to stop FuturePhone as well as the telcos who provide local infrastructure from continuing with their operations that use regulatory-fee arbitrage and VoIP to provide international calls for only the price of a long-distance call to Iowa. Though the case was just filed on Jan. 29, it has already apparently caused FuturePhone to shutter its service, and has produced nothing but “no comment” replies from the Iowa LECs we contacted who were also named in the suit.

“This is just the latest in a long line of get-rich-quick schemes that bilk others to make a profit,” said an AT&T spokesperson. The lawsuit claims that operations like FuturePhone’s are in violation of several statutes, including Iowa state laws as well as previous FCC decisions.

Some background, for those not familiar with how intricate cross-network billing can get: When a long-distance call is “terminated,” if a long-distance provider like AT&T doesn’t own the local lines where that call is going to, it must pay a fee to the company that does. Even though such termination fees are typically higher in rural areas, since there are usually relatively few customers in the sticks big long-distance providers can easily balance the cost with their other businesses.

In Iowa, higher than average termination fees (as much as 13 cents per minute, according to AT&T) have been lately combined with fiber-based Internet access to provide a pretty good place for a VoIP-based gateway, which can then provide a way to cheaply reach foreign PSTNs. The loophole comes from some method of subtracting the money paid for foreign terminations from the amount gained by terminating calls in Iowa. While the margins are pennies-or-less per call, the lure of avoiding the high cost of international calls apparently caught on quickly, to the tune of hundreds of thousands of minutes a month, according to AT&T.

And when AT&T’s average monthly bill to one such Iowa telco, the Superior Telephone Cooperative, went from $2,000 to $2,000,000, it was time for Ma Bell to call the fine-suited folks at Sidley Austin LLP to try to close the loophole down.

Boiled down, AT&T’s main argument is that because the calls are not actually “terminated” in Iowa — AT&T says Iowa is just a midpoint in what is really an international call — AT&T shouldn’t have to pay the LECs the termination fees. Telco legal sources we talked to said that while the suit’s merit can certainly be contested, what it does immediately is give AT&T a legal reason to stall payments of such monthly bills, which could effectively strong-arm the startups out of business.

In FuturePhone’s case it seemed to have done the trick, since FuturePhone’s website still carries a big red “this service is discontinued” banner, and contact numbers for the company have all apparently been disconnected. The person who answered the phone at Superior Coop referred us to another Iowa LEC, Great Lakes Communications, which was also named in AT&T’s suit. There, we talked by phone to someone who would only identify himself as “Josh,” who said when asked about FuturePhone, “I’m not going to tell you that stuff.”

While some free-call operations (including Free Call Planet, also named in AT&T’s suit) still seem to be operating in Iowa, AT&T did leave room for yet-unnamed firms at both the website and telco level to be added to the suit. The bottom line, for firms seeking to make a buck by using regulatory loopholes: Good luck in court, because the legal equivalent of the Yankees just showed up in Mudville.

Share/Send

Regardless of what is the final outcome, the swarm of these little creatures are utilizing the Internet to give the communicating public an alternative to sending checks to the incumbents. What they are doing is challenging the telcos’ share of the relatively fixed time people devote to communication. The telephone network functions more like a giant billing system than a communications platform, and by making people “bill less” on that platform, the mice hurt the elephant.

In the U.S., the Big Four - AT&T, Verizon, Time Warner Cable and Comcast - would get away with their oligopoly unless the mice who represent the Disruptive Communications sector keep doing what they do. The consolidation in the phone business is a sign that they are having an impact.

Consolidation arises from an effort to resist change. Comcast uses a model introduced by Vonage to compete with Verizon for voice customers. Verizon reacts to the same development by deploying VoiceWing as an option for customers calling to discontinue service. These are uncomfortable times for the incumbents, because they now need to adapt and compete with the “mice” despite their size.

When faced with such odds the incumbents resort to using government and legislation as their competitive edge. Government fiat created the telcos. Influence with government remains the primary means of survival. The telcos push government to raise barriers to entry for disruptors (FCC mandates on VoIP companies regarding registration, E911, Calea, and USF), clear obstacles to adjacent markets for themselves (national or state video franchise rules), and facilitate price increases on captive customers (eliminating UNE-P).

Yet, the “mice” keep breeding and coming back. The availability of faster cheaper hardware and software improvements make instant messaging, email, web based communication, and the many flavors of VoIP increasingly better alternatives to plain old telephone service. Consolidation does not change the fact people find fewer and fewer reasons to create a billable event by picking up a telephone. As long as one of them hits the jackpot like Skype did, there will always be funding available to nibble away at the revenues.

You know what they say - there is no mice-free elephant stable.

Share/Send

Share/Send

His politics notwithstanding, his column over on Forbes.com, Internet Super Traffic Jam, blaming network neutrality for what he thinks is a coming traffic jam is just asinine piece of drivel, which doesn’t take into account how networks are built and how technology has evolved.

Kerpen uses a study by Deloitte & Touche, which says that the Internet backbone speeds are going to be reduced to a crawl if there isn’t substantial infrastructure investments and deployments, to argue against net neutrality legislation. DT, Accenture, McKinsey and others showed their true worth when they advised companies like Enron. So why take them seriously! But that’s a different rant.

The infrastructure investments in the backbone have been an ongoing process. Level 3 and Global Crossing, despite all their issues, have been using technologies such as boxes made by Infinera to lower their costs, and add more capacity. Since Kerpen doesn’t actually link to the study, we are left to wonder what his conclusions are based on. It looks like DT doesn’t even believe there’s a problem, since another research paper there predicts that “unrelenting progress in processing power, network bandwidth and storage capacity” will let electronic games proliferate.

What you’re seeing in Kerpen’s missive is another offering from the “telco chorus,” a group of bloviators who are paid either by conservative advocacy operations, or indirectly supported by telco contributions. These astroturfers have been outed before, and their goals of trying to provide “expert” or “unbiased” opinion are pretty transparent.

It’s surprising that a generally reputable outlet like Forbes is giving airtime to someone like Kerpen and his by-the-Ma-Bell book net neutrality opinions (service providers need incentives to invest!). Even if Ed Markey & Co. get a net neutrality bill to the President’s desk this year, there’s no guarantee it will be signed. The only thing stopping providers from building the network of the future is their decisions to spend money elsewhere, like in spending $89 billion to buy BellSouth and its networks of the past.

Luckily, the industry has innovators like Cisco building its CRS-1, and deployers like the folks behind the 10-gigabit Internet2, who are helping build the bigger pipes of the future. The “Internet is falling” argument is just another telco talking point, tailor-made to add more FUD instead of clarity to the debate. Too bad Forbes doesn’t have the time to find writers who actually know what they are talking about.

(Om Malik contributed to this post.)

Share/Send

Like AT&T, Verizon needs to do all it can to retain customers as it slowly rolls out its costly advanced FiOS services. Even though Verizon’s overall numbers from Q4 beat analyst predictions, there’s no hiding the landline losses for the big telcos. Monday Verizon said it lost 366,000 landline customers during the past quarter, just more than 4,000 disconnects per day.

Despite rosy predictions about uptakes for FiOS Internet and TV services, Verizon itself knows that it can ill afford to lose current customers, since those are probably the hardest to win back. Strigl admitted as much in response to another analyst question, claiming that Big Red will have “a significant focus on retention of access lines in ‘07.”

What will be interesting to watch Tuesday is how Verizon structures its wireless bundling plan, since unlike AT&T, Verizon does not own its wireless business outright but rather partners with Vodaphone.

The fiber-based FiOS, Verizon’s big moneymaker for the future, continues to add customers but it won’t be challenging cable anytime soon. While Verizon reported gains of an additional 89,000 FiOS TV subscribers during the quarter, its total of 207,000 TV customers is somewhat dwarfed by say, Comcast’s 24 million TV viewers. Verizon said Monday that it expects to pass another 3 million homes in 2007 with FiOS fiber; even at its current take rates (of around 9 percent, according to the company), that’s at best another 270,000 video customers by next year. Meanwhile, the company expects FiOS spending to dilute earnings by about 35 cents per share in 2007.

Strigl did add, however, that Verizon is doing all it can to make installation quicker and cheaper. “We’re really focused on eliminating wasted [installation] time in the home,” he said. So, you can waste time watching FiOS TV that much faster.

Share/Send

Granted, the President and the nation should focus first on pressing matters like wars and health care. But that doesn’t mean it’s OK for U.S. politicians to ignore this country’s broadband infrastructure. In fact, without political leadership and national-goal objectives, the current dismal state of American broadband penetration isn’t going to get better soon. The combination of archaic regulations, big monopoly service providers and the perform-now mentality of Wall Street simply won’t allow for any risky experimentation or network buildout that doesn’t have fast, demonstrable ROI. So we need politicians to take charge.

Already, you see such leadership happening on a local level, with municipalities and even some states drafting their own broadband plans, usually revolving around wireless (because wireless technologies offer the attractive if unproven idea of circumnavigating the telco infrastructure to deploy faster technologies more quickly). Maybe starting locally is the best way to go, since experiments can happen faster and more methods can be tested. Given the current President’s preoccupation with weighter matters like Iraq, and the current apparent unwillingness in Congress to take on big-picture telecom reform in 2007, local experiments may be all we have for the near-term future.

Leaving broadband build outs to the big telcos and cablecos — an idea that probably passes as strategy for the current administration — isn’t going to get us to ubiquitous broadband anytime soon. Both Verizon and AT&T are struggling to bring their networks up to speed, and are likely to focus on providing services to high-paying customers first to satisfy Wall Street.

As long as there aren’t too many more Katrina situtations to expose the underlying fragility of their networks, the telcos and their armies of lobbyists and lawyers should be able to stand their ground under the current byzantine structure of telecom laws, moving forward on a timetable that benefits their shareholders first. That’s as it should be for any public company worth its market cap. But is it good policy for all?

In the meantime what’s not happening is anyone building new networks on a national basis for the greater good. Rich folks with disposable incomes should have no problems. The worry should be about the classrooms and homes of mainstream America, and whether or not broadband will allow everyone a chance to participate or prepare for the digital economy of the future.

We are headed for problems as a nation if the best thinking that comes out of Davos is that YouTube is going to pay for videos, or that Bill Gates thinks the Internet will give us better TV. Now that politicians are finding the Internet as a communications vehicle, they should focus a bit on the medium as well as the message. Because it needs their help.

Share/Send

While Avaya’s overall results seemed in line with analyst expectations, the IP numbers are increasing lines in the sand pointing toward an overall move from TDM to IP in the corporate communications arena. Avaya also said that investments like the Ubiquity buy will help it increase the integration of communications and business applications, a direction Avaya said it will look to for growth beyond its traditional telecom-supply businesses.

During the conference call Tuesday, Avaya gave an example of some early work in this direction, claiming it had helped a manufacturing company build direct communications functionality into a supply-chain application, that allowed the application to communicate levels of inventory and trigger replenishing actions. By “communications-enabling” such core business apps, Avaya is seeking to differentiate itself in the telecom business while seeking bigger margins and more overall growth.

“We’re embedding communications into the fabric of our customers’ core business,” said Avaya president and CEO Lou D’Ambrosio, who added that Ubiquity is “an important element as we extend that functionality in a SIP environment.” Expect to hear more IP telephony news when Cisco announces its financials Feb. 6.

Share/Send

You didn’t have to tell us that public use of MuniFi networks isn’t likely to be the saving grace it’s often painted as, and carries some real business concerns. The more we test out and examine city-wide Wi-Fi deployments like Milpitas and Mountain View, the more we are starting to realize that resident use based on a $20 plus subscription, might end up being pretty limited. Free services will likely be used more frequently, but the ad-based revenue model for free service is also so far unproven.

What we are starting to realize is that MuniFi isn’t a very attractive replacement for DSL or cable service, as use within homes isn’t always guaranteed, particularly without extra hardware. In San Francisco, EarthLink says a third of the households could need additional hardware ($50 to $100) that pulls in the Wi-Fi signal. When we previously reported on Google’s Mountain View network, the company had said that it is unlikely that a Wi-Fi-enabled laptop or computer with a conventional Wi-Fi card will work indoors at most locations — ie, extra hardware is needed.

For a free service, like in Mountain View and Portland, residents are more likely to use the service, even with some spotty connections. But in a city like San Francisco, (if the deal is approved,) EarthLink’s 1Mbps service will be offered for $21 per month to most residents. If I lived in San Francisco I’d likely choose any of the other options over that choice — Google’s 300 kbps for free, $15 to $20 for comparable speeds with DSL, or cable’s more expensive but often faster options.

Settles says: “Public wireless access is good political sound-bite marketing, but the beef is mighty hard to round up.” We’re not sure how much of EarthLink’s profits are based on those $21 subscriptions, but given EarthLink is looking for revenues, not running for office, that could be its business model’s biggest concern.

Share/Send

While you may not want to dive so deep into the particulars of Stoke’s carrier-infrastructure offering, Kleiner Perkins’ and Sequoia’s willingness to keep investing in Stoke indicates that telco capex spending is back. DAG Ventures leads this round. With this round of funding, Stoke has raised a total of $50 million.

The carrier-closet box, which Stoke says is already in trials, is designed to help service providers better manage subscribers from multiple types of emerging access technologies, including WiMAX and dual-mode Wi-Fi/cellular handsets.

Before we get too bubblicious, even Stoke execs don’t see a huge runup for their Stoke Session Exchange offering, which will likely cost service providers who buy it a couple hundred thousand dollars per box. Stoke marketing VP Keith Higgins, who briefed us last week, notes that the market for new-technology FMC subscriber-management gear (which includes startups like Airvana, Starent and Reef Point) may reach $1 billion total by 2008 or 2009.

“[The market] is not really big enough yet to move the needle at Cisco,” Higgins says, answering why the router giant hasn’t built something similar itself. By that measure, Stoke seems like any number of historical networking startups in the telco infrastructure market, with management experience like Randall Kruep and other ex-Cisco, ex-Juniper folks around who had an idea, got tired of the big campus off Tasman and rounded up some venture dough, and went off to start their own company.

What’s fueling the resurgence? Things like expected WiMAX and dual-mode rollouts, says Higgins, who adds that existing gear can’t handle the expected complicated subscriber management needs as cleanly as a new, focused design.

“We are starting to see the RFPs for access-independent gateways,” says Higgins, who added that Stoke hopes to announce a big OEM partner sometime soon, so it doesn’t have to cold-call Verizon itself.

Share/Send

According to the AP story, the service covers about 100 million numbers, which are phones held by users who are suddenly saving money without doing a damn thing. Sounds like that iPhone just got a lot cheaper, one more excuse for Om to indulge himself come June. And VoIP providers who thought they could win by underpricing the incumbents? Welcome to round two.

Share/Send

Share/Send

Gude said that while Sprint eventually wants to embrace the open Internet-centric model for devices that connect to its WiMAX network — browseable devices and open platforms — the company is still wrestling with whether it should lean toward a closed or open model when it launches. “Do you start with an open model, or start with a closed model and move to an open model,” he asked. (Don’t ask consumers, that would be too easy.)

For example, Gude wondered whether the open Internet and browsing is necessarily the best service for WiMAX-connected dedicated devices like a camera or a gaming device with no keyboards. Gude seemed to think it was in the consumer’s best interest to take baby steps with a closed model and then slowly open it up. Yuck.

While companies that make consumer electronics like Sony (PSP), and Microsoft (Zune) have been going over this connected devices debate for awhile, it’s funny that U.S. phone companies are just starting to hash out these issues. I guess the carrier’s answer has been so obvious when it comes to mobile devices and the Internet, that it takes WiMAX to start up the conversation again.

Gude said a few other interesting things like how the consumer might pay for its WiMAX service: “An individual customer can have a subscription for multiple devices. . . ‘X’ number of devices. . .say an Internet connection is $30 or $40, then we think there will be a mobility premium of $10 or $15. We’re still figuring it out.”

On the topic of VoIP, Gude says, “In the Internet world VoIP is an application. . . we will be deploying VoIP as a service of our WiMAX network, but a dedicated standalone device? — the point is not to go back to the [voice-only] cellular network.”

Share/Send

Sprint projects it will spend a total of $1.1 billion on WiMAX in 2007, “$300 million of start-up operating costs associated with WiMAX 4G broadband services,” and $800 million on WiMAX capital expenditures this year, according to the latest update. In the original release the company said “Sprint Nextel is expecting to invest $1 billion in 2007 and between $1.5 billion and $2 billion in 2008 relating to the 4G mobile broadband network.”

When I asked a Sprint spokesperson, “Isn’t that actually more than originally projected,” the spokesperson said, “Yes. But to be frank I think most interpreted the original release to read as capex instead of both.”

Splitting up the costs is a nice way to make the company look like they’re spending less on WiMAX, though, in case Wall Street was worried about that. Perhaps this means the company will end up spending over its $3 billion outside figure on the network.

Share/Send

AT&T does not plan to roll out two physical pipes to every end point in order to sell Google enhanced access. The new telco plan calls for content-based routing to separate traffic into media and destination specific VPNs (Virtual Private Networks). Laws exist to address the substantial privacy threats created by the fact telephone companies know Mr. Smith called Mr. Jones, but the privacy risks associated with “content routing” replacing “end point routing” enter an different realm.

Coping with billing disputes still means retaining data. Under what circumstances might a third party get access to the data derived from content routing? Content routing in one context enables content filtering in another. Lessons Cisco accumulates in providing content filtering equipment for the Great Firewall of China apply to directly to content routing ambitions of telcos in the U.S.

The telcos do not claim a right to listen in on calls to enforce the business versus consumer pricing policies. What makes it appropriate to use packet inspection to accomplish the same thing? The pitch for content routing gets presented in terms of quality of service guarantees that benefit users, but there are other customers for content routing. Law enforcement and criminal enterpises will have plenty of uses for data obtained through deep packet inspection. One can imagine champagne will flow at the NSA should the telcos get their wish.

What is driving telcos’ desires to charge by the application?

The fact that their delivery pipes are being commoditized. Internet access pricing reflects the cost of building broadband networks (e.g. location, bandwidth, performance, and reliability), so moving a video bit costs the same as moving an email or voice bit. This turns the traditional telco pricing model (charging more per service, or per minute) upside down. Packet inspection would allow telcos to charge more for high-bandwidth applications, or to charge for preferential treatment.

One such method is already in practice: The Verizon Wireless EV-DO broadband service does not suffer net neutrality obligations, so the Acceptable Use Policy includes prohibitions against using VoIP applications. Verizon cannot enforce the provision without content routing (aka content filtering). So Verizon can and does track bit consumption and boots customers who take the advertised “unlimited usage” too literally. But just counting bits does not work where bits carry different values.

Content routing does not entirely shift the balance of power toward carriers. People sensitive about who might get access to their communication already implement encryption that, by definition, defeats packet inspection efforts. The decline in trust between carriers and users shows up in the growth of so called Darknets (encrypted communication among a closed group of trusted end points.) Progress toward implementing content filtering will turn the entire Internet dark, so efforts to make encryption illegal will likely follow any success in undermining net neutrality obligations. And then how secure will your bits be?

Daniel Berninger is a Washington, D.C.-based financial analyst working for Tier1 Research. He is a veteran of the telecom industry.

Share/Send

The previous top speed was 30 Mbps/5Mbps, on the high end. In the medium tier, Verizon upped the speed from 15 Mbps downstream and 2 Mbps upstream to 20/5 Mbps, and the top-tier service was increased from 30/5 Mbps to 50/5 Mbps.

The higher speeds were available in New York, Connecticut and New Jersey previously. Massachusetts and Rhode Island were added to the list recently. Verizon had 522,000 FiOS Internet customers across 16 states at the end of the third quarter of 2006.

Though the company did not announce any more specifics, one has to note that the high end service is expensive, like really expensive. The 30 Mbps service costs $179 a month. There was some talk that this service is going to cost $90 a month, but not sure what price Verizon is offering. In comparison, Cablevision’s 30 Mbps service is a third of that price.

Pssst.. hey Verizon, guys at HK Broadband are selling these kind of speeds for like $20 bucks a month. Come on, how about cutting us all a deal here?

Photo via Flickr by Aschmitt

Share/Send

(Disclosure: Earthlink is an advertiser on the GigaOM network.)

Share/Send

Here is what is happening:

Mark Feidler, BellSouth President and Chief Operating Officer, will leave the company to pursue other opportunities. He is not alone. (The company list of departing BLS people is below the fold… enjoy) Some other old skool AT&T guys are also leaving the company. I am going to do an map of who is doing what and where they came from a little later, when there is a little downtime. (Any tools you can recommend for this?)

Herschel Abbott, Jr., Vice President - Governmental Affairs Valencia Adams, Vice President - Chief Diversity Officer Barry Boniface, Chief Strategy & Development Officer Keith Cowan, Chief Field Operations Officer Francis Dramis, CIO, E-Commerce & Security Officer Mark Droege, Vice President and Treasurer Rebecca Dunn, Senior Vice President - Corporate Compliance and Corporate Secretary Ron Frieson, State President - Georgia Margaret Greene, President - Regulatory & External Affairs Don Hallacy, CIO - Communications Group Donna Lee, Chief Marketing Officer - Business Markets John McCullouch, State President - Mississippi William Pate, Chief Marketing Officer - Retail Markets Eddy Roberts, Jr., State President - Kentucky Patrick Shannon, Chief Financial Officer Krista Tillman, State President - North Carolina Lynn Wentworth, Vice President and CFO - Communications Group

Share/Send

The kids in Youngsville, Louisiana, however are not feeling any jealousy, thanks to Lafayette Utilities’ Fiber for the future plan. Youngsville has signed a deal with the utility where LU is going to provide 100 megabit per second connections to the school district.

The bandwidth will be made available to students of three schools in the district by Fall 2007, when the project is set to be completed. Several other school districts are signing up for similar plans, according to a local daily.

Share/Send

For fourth consecutive year, the deal of the year came from the telecom sector, which continues to consolidate in the wake of turn of the century meltdown. In 2006 it was AT&T-BellSouth merger (just approved by FCC); a year earlier it was Telefonica buying O2.

2006 was a hectic year for telecom and broadband merger’s and acquisitions. Here is a list of some of the notable deals. The deal patterns indicate that Ericsson, Cisco, Motorola, Lucent-Alcatel are now the dominant equipment providers. They are increasingly shifting their business focus and trying to capture opportunities offered by the expansion of broadband and video networks.

(Huawei is missing from this list. The Chinese hardware vendor did partner with Nortel and bought DSLAM maker, Harbour networks for an undisclosed amounts of money.)

The chip sector saw some hectic action as well.

• Freescale Semiconductor went private in a $17.6 billion buyout led by Blackstone Group and other private equity investors.
• Phillips Electronic’s chip division went private in a $10 billion-plus deal led by a KKR/Silver Lake consortium.
• LSI Logic http://www.thevoipdigest.com/chambers-video-is-the-%e2%80%98killer-app%e2%80%99.htm http://www.thevoipdigest.com/chambers-video-is-the-%e2%80%98killer-app%e2%80%99.htm#comments Tue, 12 Dec 2006 17:06:34 +0000 Paul Kapustka India, Inc. Broadband http://gigaom.com/2006/12/12/chambers-video-is-the-killer-app/ SAN JOSE, Calif. — 8:50 a.m. PST — Cisco CEO John Chambers just said that “if there is a killer app, it is video,” as part of his keynote speech kicking off the Cisco C-Scape analysts conference here.

  “Things like YouTube are just the baby steps of the impact video will have on networks,” said Chambers, who has already introduced the company’s new big-vision theme (”The Human Network”) and the technology vision that supports it (”Network as the Platform.”)

  Live-blogging this, so quotes may not be word for word… Chambers opened talking about how Cisco differentiates by combining vision, strategy and execution… said it took 6-7 years to change the company internally (”changing the reward system, who got promoted or not”) to get buy-in on the current track.

  Singapore to get 1 Gbps to the home: Getting to some good stuff now about India, focus on globalization… “moving 10 of our top execs into our globalization center in India. Use our own technologies… (videoconferencing) to change support… Drive all four elements of our strategy from India. This is a huge investment for the future.”

  Says Singapore is planning for 1 Gbps to the home… “not that much more expensive to do a gig.”

  now transition into service provider market

  why did US stop innovating? Stopped investing

  SPs going to be experience providers, not plumbers.

  “we define service providers today by their access technologies. Who cares! Want to define them by the experience [they deliver].”

  More as we catch up!

  8:50 a.m. — Showing off now… it is impressive though how Cisco strategy slides from the past are pretty good at predicting the future, especially the gradual improvements in networks.

  Next level: Quad play

  9:07 a.m. — Jim Grubb demo now, showing a Cisco media player — small box with Ethernet jack and video input/output to make any display a smart device on the network.

  Waiting for the inevitable Grubb salary/budget joke… there it is, Chambers says Grubb’s staff doesn’t need to be that big… ha ha ha

  Before demo, Chambers said about video: “I really do not want to store all the “Desperate Housewives” and Duke basketball games on the DVRs in my house.” Content should be in the network, he says.

  Applications are going to drive the service provider business… and video is going to be a large part of that. Telepresence (Cisco expensive teleconferencing). The data center will be virtualized first, and then it will go all the way out to the end…

  9:12 — We are now hearing about Cisco plans with Oakland (Fremont!) Athletics to build a new baseball stadium.

  (Will reserve my arguments against this stuff)… he is talking about watching multiple replays, multiple cameras (because of how wired/networked the stadium is)… use cell phones as credit cards… “we’re learning how to push experiences.”

  End to end SP quad play. Consumer iHome end to end play. New services.

  Telepresence? “It’s my favorite new technology.”

  save $140 million? “it will change the way we collaborate” play texas hold em, see pupils dilate.

  Thought this year was all about execution… wrong. Need to keep innovating as well.

  9:20 a.m. — Big close, puts up the slide that shows how Cisco market cap dwarfs that of closest 10 competitors combined.. says the opportunity “to be the major company in IT and communications is in front of us.”

  Whew! Watch this space for more from the conference today and tomorrow. (As long as the Cisco folks don’t kick me out of my “reserved Cisco” seat up front, heh)

  

  
  ]]> http://www.thevoipdigest.com/chambers-video-is-the-%e2%80%98killer-app%e2%80%99.htm/feed/ http://www.thevoipdigest.com/utorrent-users-upset-over-bittorrent-deal.htm http://www.thevoipdigest.com/utorrent-users-upset-over-bittorrent-deal.htm#comments Tue, 12 Dec 2006 08:01:31 +0000 Om Malik Startups Broadband http://gigaom.com/2006/12/12/utorrent-users-upset-over-bittorrent-deal/ uTorrent users are not too thrilled about BitTorrent buying their favorite torrent client, and they are speaking out about it. In a response to Bram Cohen’s message on the uTorrent forums, many expressed dismay, though some were optimistic about the future of their beloved client. BitTorrent’s agreements with MPAA and big studios are a cause of much hand wringing on the forums, though it is too early to say how it all shakes out.

  uTorrent was created by a Swedish developer, Ludvig (Ludde) Strigeus, and was well known for its lightweight and efficient implementation of the torrent protocol. Our good pal Henri Torstensson has described the client as “exceptionally well-written codebase” and “compelling UI.”

  The deal just might be what BitTorrent needed to become the client of choice, to help realize its dreams of becoming a P2P backbone for the legit content. Still it had us wondering what was BitTorrent doing this past year. Its much-awaited store is delayed, and other torrent based clients — uTorrent, Mainline, Azureus and tTransmission — have gained in popularity.

  Shouldn’t innovations and lightweight implementations that have come from competitive clients emerged out of BitTorrent? Hopefully, the uTorrent acquisition is a step in the right direction for the San Francisco-based start-up that has raised over $28 million in venture financing.

  Found via Clicked.MSNBC

  

  
  ]]> http://www.thevoipdigest.com/utorrent-users-upset-over-bittorrent-deal.htm/feed/ http://www.thevoipdigest.com/can-personal-cellular-sites-boost-cell-service.htm http://www.thevoipdigest.com/can-personal-cellular-sites-boost-cell-service.htm#comments Sun, 10 Dec 2006 11:00:43 +0000 Guest Columnist Featured Mobile Broadband http://gigaom.com/2006/12/10/femto-cellular/ By Allan Leinwand 

  Mobile operators are on the verge of asking you to help them solve one of their biggest problems – how to get more signal strength where you need or want it most. Their plan? Allow end users to buy personal devices that act like Wi-Fi routers, providing nearby cellular bandwidth in hard-to-reach places like offices and homes.

  These next type of cell sites, named femto cellular (femto being smaller than pico, the term used by mobile operators that refers to smaller cell sites) are setting out to solve carriers’ often-expensive problem of providing complete coverage. Mobile phones usually work well in metropolitan areas, but travel a few miles off the Interstate or into the country and signal bars drop rapidly. Most frustrating to many people is that the signal strength at their homes or inside offices is often unusable.

  The forthcoming femto solution? Having end-users buy a small femto device, similar in concept to a Wi-Fi access point, that is a personal cellular site. The femto cellular device has a cellular antenna to boost the available signal as well as an Internet connection. The device uses your Internet connection to connect to your mobile provider’s’ network and route your phone calls.

  There are a few limitations, or benefits, to this approach, depending how you see it. First of all, the femto device you buy will probably only connect to a single mobile provider’s network. That’s good if you like your mobile operator and bad if you want to switch operators on a regular basis. This approach is clearly good for the mobile operator because you buy a device that uses your Internet connection to extend their network and gives you less incentive to switch providers.

  Since femto cellular devices are not available yet, there are some unknown issues – will mobile operators charge the same for minutes via femto cellular devices? Will enterprises buy femto cellular devices like Wi-Fi access points to extend cellular coverage? How do you stop your neighbors from using your femto cellular device and the associated broadband bandwidth (or do you care)? And how much are you willing to pay for a device that lets you use mobile phones in your house?

  Allan Leinwand is a venture partner with Panorama Capital and founder of Vyatta. He was also the CTO of Digital Island. 

  

  
  ]]> http://www.thevoipdigest.com/can-personal-cellular-sites-boost-cell-service.htm/feed/ http://www.thevoipdigest.com/fcc-clears-mcdowell-to-join-merger-vote.htm http://www.thevoipdigest.com/fcc-clears-mcdowell-to-join-merger-vote.htm#comments Sat, 09 Dec 2006 00:12:26 +0000 Paul Kapustka Broadband http://gigaom.com/2006/12/08/fcc-clears-mcdowell-to-join-merger-vote/ Late Friday FCC lawyers said that commish Robert McDowell could indeed participate in the review of the AT&T-BellSouth merger, a process McDowell had been abstaining from due to possible conflicts of interests with a previous employer. Watch next week to see if McDowell, a Republican, listens to Democrats like Ed Markey and keeps himself out of the merger discussions, or whether he bends to chairman Kevin Martin’s wishes and ties the deal up in a big bow for the holidays. Equipment providers like Cisco, who are waiting for the deal to go through so that AT&T can start spending BellSouth money, are likely to give McDowell a ring soon.

  

  
  ]]> http://www.thevoipdigest.com/fcc-clears-mcdowell-to-join-merger-vote.htm/feed/ http://www.thevoipdigest.com/fiber-%e2%80%a6-now-faster-and-cheaper.htm http://www.thevoipdigest.com/fiber-%e2%80%a6-now-faster-and-cheaper.htm#comments Fri, 08 Dec 2006 14:20:38 +0000 Om Malik Broadband http://gigaom.com/2006/12/08/fiber-cheaper-cable/ If you live in the US, probably you haven’t noticed it. But fiber networks are growing in popularity, luring people with faster speeds, and now lower prices. PointTopic, the company that tracks the broadband markets says that fiber networks for consumer broadband access are now in fact cheaper than cable connections.

  According to a PointTopic report, FTTx tariffs went down 12% to US$28.1, three percent than the average monthly rental for cable modem services. Average access price for a monthly DSL connection is about $25; while cable costs $29.50 a month. Fiber is now going for $28.10 a month.

  

  Fiber is getting a lot of traction in the overseas market, and has higher visibility in Asia and Europe. In the US, Verizon FiOS is the most visible manifestation of the FTTx trend.

  Now we might not care much for the Verizon Wireless phone UI, but we would switch to FiOS with all its issues in a heartbeat. Especially if Verizon promised us a future bandwidth upgrade, and of course if we live in Verizon territory. And better pricing.

  Currently, for a 30Mbps/5Mbps Verizon FiOS connection you pay $179.95 per month and for a 15Mbps/2Mbps connection you pay $44.95 per month. Regardless, the falling fiber access prices are going to help convince consumers switch away from DSL and cable.

  ‘DSL rentals had been undergoing major price reductions since the beginning of 2006′, points out Vince Chook. ‘But with such a small drop over the quarter, cable modem is certainly losing its price competitiveness.’

  

  
  ]]> http://www.thevoipdigest.com/fiber-%e2%80%a6-now-faster-and-cheaper.htm/feed/ http://www.thevoipdigest.com/comcast-they-got-gaming.htm http://www.thevoipdigest.com/comcast-they-got-gaming.htm#comments Tue, 05 Dec 2006 15:39:50 +0000 Om Malik online games Broadband http://gigaom.com/2006/12/05/gameinvasion/ Online gaming just might be the next source of revenues for carriers. A few months after Verizon announced its plans to offer a special gaming service over its fast FiOS connections, now Comcast is saying that it loves to game. Today they are making their GameInvasion.net available nationally.

  Game Invasion was previously available only to Comcast’s High-Speed Internet customers and is now being made available to consumers everywhere at www.gameinvasion.net. Comcast’s 8Mbps High-Speed Internet subscribers will continue to receive the added value of a free membership to the IGN Founders’ Club, a premium gaming package.

  Comcast has partnered with Major League Gaming (MLG), and will also distribute MLG’s television show, MLG Pro Circuit, on GameInvasion.net and on Comcast’s ON DEMAND service. Comcast as you remember bought TechTV and rebranded its as G4 TV, with a heavy focus on Games.

  Verizon’s Jason Henderson had told us that “gaming is a leading activity for over 75% of broadband users, and since we have over six million DSL subscribers, we had to develop a portfolio of services built for the preferred product models of each.”

  

  
  ]]> http://www.thevoipdigest.com/comcast-they-got-gaming.htm/feed/ http://www.thevoipdigest.com/now-nortel-goes-for-a-reverse-split.htm http://www.thevoipdigest.com/now-nortel-goes-for-a-reverse-split.htm#comments Thu, 30 Nov 2006 14:06:42 +0000 Om Malik Broadband http://gigaom.com/2006/11/30/nortel-reverse-stock-split/ First it was Ciena, and now Nortel is doing a reverse split, hoping to add some respectability to their stock price. The beleaguered telecom equipment maker which has been constantly resetting itself since the telecom bust, is going for 1-for-10 reverse split. The current share price is about $2.15, and after the split, the price will be $21.50 a share. The total share count will decline from around 4.34 billion to about 505 million shares.

  “While nothing changes from a structural point-of-view, our analysis of companies who have recently completed a reverse stock-split suggests that the average share-price may decline up to 8% during the first-week,” RBC Capital Markets analyst Mark Sue wrote in a note this morning to his client. Never mind all the splits — this is window dressing, and the company problems still continue, though some analysts are forecasting a 5%-to-7% increase in fourth quarter 2006 revenues.

  

  
  ]]> http://www.thevoipdigest.com/now-nortel-goes-for-a-reverse-split.htm/feed/ http://www.thevoipdigest.com/bell-cableco-turf-wars-the-poor-customer.htm http://www.thevoipdigest.com/bell-cableco-turf-wars-the-poor-customer.htm#comments Fri, 24 Nov 2006 21:00:10 +0000 Om Malik Broadband http://gigaom.com/2006/11/24/bell-cableco-turf-wars-the-poor-customer/ The New York Times has a hilarious tale of turf wars between phone companies and cable companies reaching new ridiculous heights. Both sides are pointing fingers at each other, bemoaning that their rivals are damaging their equipment and causing service problems.

  In Phoenix for example, Qwest charges that Cox Communications’ technicians left a hole in the telephone box, which allowed Bees to make a hive and has caused problems. Cox counters by saying that Qwest is using their conduits, cutting cables and other such cheap tricks. They have photos to prove it.

  The root of the problem is that the phone companies are losing phone customers to cable companies in ever increasing numbers, and are complaining bitterly. I am sure when cable companies lose video customers, they are going to be equally bitter.

  Still, the story managed to ignore the customers, and how they really feel about this growing pettiness. The bickering between the two camps, cut cables, and other such cheap tricks in the end cause most inconvenience to customers, the same sucker who ends up paying for these pranks and business tactics. My inner cynic says – so what’s new!

  

  
  ]]> http://www.thevoipdigest.com/bell-cableco-turf-wars-the-poor-customer.htm/feed/