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Now, this is interesting.
For the latest state-of-the-art TV viewing, let's go back a few decades when 3-D was the rage -- or at least something to draw folks into movie theaters.
In the "what is old is new again" column, Philips 3-D TVs are using tiny lenses over every subpixel to create a 3-D effect without the need for viewers to wear those funny glasses.
Spy Kids 3D anyone?
Philips is initially marketing the product to retailers who will create 3-D ads to get the attention of passing consumers, presumably a neat retail trick.
Get the full story in Wired, including the first-person report of the sensory sensation ...
If you can't wait, check out the 3D fun at DeepVision 3D.
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Written by VoIP & Gadgets Blog on August 24th, 2006 with no comments.
Read more articles on Wired and Video Hardware & Software.
Flag Telecom, a company owned by India’s ADA Group that also owns Reliance Communications, said it has signed a contract with T-Com, Deutsche Telekom AG’s broadband and fixed line business, to provide 180 gigabits of additional broadband connectivity between Europe and the U.S.
The additional capacity will enable Deutsche Telekom to enhance scalability and reliability of service to its customers. Demand for voice, data, and Internet between these the U.S. and Europe has been growing rapidly and the total used capacity on the. route has grown at around 48% year-on-year between 2002 and 2006, the company said in a press release. Demand is expected to grow at a higher or similar rate in the coming years.
“We have worked closely with Deutsche Telekom to understand their needs, while designing this flexible, scalable and high quality solution. The solution exacting to Deutsche Telekom’s customer service offers them excellent value for money,” said Gary Adey, Flag Telecom’s Vice President Europe.
Written by Om Malik on August 8th, 2006 with no comments.
Read more articles on Uncategorized and Wired and India Telecom.
It is nice to hear a CEO admit to the fact that he might have over-hyped his offerings a bit too much, and without sweating the details. Charles Dunstone, the maverick CEO of UK-retailer Carphone Warehouse confessed to The Sunday Times of London that his company was struggling to meet the demand for free broadband, the company had launched in April 2006. Nearly 400,000 have signed up for the service.
“Free is such a powerful word,” said Dunstone. “It’s a £250-a-year saving for most people. In hindsight, maybe I should have anticipated that a bit more.
Well, that might be only partially right. James Enck, a man who marries the American forthrightness with British understatement writes, “Beneath the media hype about free broadband in the UK lies a sordid underbelly of broken promises and frustrated customers. In the latest example, one of my colleagues has suffered from a complete lack of connectivity on TalkTalk broadband for the past 36 hours (the line is working fine for voice.)”
Dunstone’s good intentions aside, there is a bit of a broadband brouhaha brewing in UK. Rupert Murdoch’s BSkyB has now offering aown free 2MB/s broadband connection to its existing television customers. Murdoch’s plan - make the profit on TV service. Dunstone wants to make money on voice and wireless services - two businesses that are well, under price pressure.
Written by Om Malik on July 31st, 2006 with no comments.
Read more articles on Wired and VoIP and DSL.
Vyatta, a San Mateo, Calif.-based start-up is close to releasing an open source router platform, that runs on standard x86 hardware and can perform equally well as some of the more commercial products. Vyatta plans to target the corporate market with its own devices, but anyone can download the software, officially called, the Vyatta Open Flexible Router (OFR), and roll their own … router.
“Open source has had a tremendous impact on other markets, and if Vyatta’s community gains traction, the same could happen in networking.,” says Matthias Machowinski, Directing Analyst of Enterprise Voice and Data for Infonetics Research.
Vyatta’s software and platform could prove to be attractive to small and medium sized enterprises. Even smaller ISPs could find the offerings more affordable than some of the other products on the market. Vyatta officials say their biggest competitor will be Cisco Systems, currently the 800-pound gorilla in the $8 billion a year enterprise router market.
Vyatta is amongst many telecom and networking companies that are taking the open source route to up-end the existing players. I have previously written about Vyatta for Business 2.0. While researching that story, I saw the parallels between early open source telecom software and Linux. They both started at the bottom, and are now inching higher-up the food chain.
Asterisk has had a perceptible impact on the PBX market. Other open source products are having an impact in firewall, DNS devices and many other product categories. (Details are here.) IBM has built a fault tolerant version of the Asterisk PBX System as well. Since then, I have learnt about many more open source projects. Sangoma Technologies backed Yate, for example. Last week, we reported that an Open Source Wireless Mesh project had received financial backing from the National Science Foundation.
Networking Pipeline reports that a new project dubbed Freeswitch is planning to build a highly scalable switching platform that is meant to meet the needs of carriers. The telecom open source is likely to gather more momentum in the emerging telecom markets where money is tight but desire to build broadband networks is high. Open source can fill in those gaps … perhaps!
Written by Om Malik on July 23rd, 2006 with no comments.
Read more articles on Wired and Start-Ups and Vyatta.
The IPTV bet, in words of Fortune writer Stephanie Mehta is a “pipe dream” for the phone companies. She points to a survey by Accenture that says that only “4% of telecom, broadcasting and media executives think IPTV will generate significant revenue in the coming year.” That is a chilling statistic.
And it also explains the old-fashioned triple play packages the phone companies have started to push. AT&T for example is pushing a bundle of satellite TV, DSL and phone service it calls HomeZone for between $80 and $140 a month. (Good package actually if you can get the satellite dish up on your roof! Of course it is available only in San Antonio and Ohio, though more cities are two follow.)
It doesn’t have the latest or the greatest, but AT&T says more content will come from its partners like Yahoo soon. (Point to note - the new offering doesn’t have Akimbo packaged into its version of their service as yet. Akimbo functionality rolls out on Homezone in the fall software update. Akimbo, you might remember just got funding from AT&T)
BellSouth, which is in the process of being acquired by AT&T, is now offering a $99 a month voice, DSL and Direct TV package. Or you can swap the satellite TV service for Cingular Wireless. These two packages are part of a new reality for the phone companies which are losing customers to the cable providers quite rapidly. Despite the IPTV lip-service, they need to shore up the losses as quickly as possible.
Here is another reality check, also from Fortune article:
A separate Accenture survey of 6,000 consumers worldwide asked respondents if they knew what “IPTV” was. Some 4% said they thought IPTV was a reality television show.
Written by Om Malik on July 19th, 2006 with no comments.
Read more articles on Wired.
Today is the deadline for updating applications for the upcoming wireless spectrum auction, but we thought we’d dig through some more spectrum documents. One bidding team caught our eye. Telecom investor Willian Berkman couldn’t let Paul Allen get all the wireless action without a fight.
According to FCC filings a consortium backed by William Berkman, and the broadband over power lines company Current Communications Group that he co-founded and is Chairman, and including Current investors Goldman Sachs and TXU Utility Services, is looking to bid in the upcoming wireless spectrum in August. As you might remember, Current is also backed by companies interested in wireless–Google and Earthlink.
While Google’s and Earthlink’s individual investments are not disclosed Current has raised over a hundred million in capital to build its BPL network. There was a lot of speculation over Google joining the spectrum auction–this seems as close as the company was willing to get.
While Current refused our requests for the details on their wireless plans, wireless is already being used in conjunction with broadband over powerlines by companies like Motorola and Communication Technologies Inc (ComTek). BPL runs over electrical outlets and is touted for its ease-of-access, though has few deployments to date.
Wireless could help extend those deployments. ComTek’s VP for Broadband, Walt Adams, said in a few cases the company is already powering WiFi hotspots with BPL, and that the company is planning to grow its wireless offering later this year. So if Berkman and Current buy some wireless spectrum, the company’s slow-moving BPL plans could get a real boost.
For now how the consortium plans to use any wireless spectrum in tandem with their BPL plans remains unclear. The application is officially incomplete but the company has until 6PM today to update the filing.
Written by Katie Fehrenbacher on July 18th, 2006 with no comments.
Read more articles on Unwired and Wired and Google and Earthlink and Wireless Broadband and spectrum and broadband over powerline.
In the words of Yogi Berra, its like déjà vu all over again. Back in the first Internet bubble, we were all entertained and amused by legal wranglings of various content delivery networks. For a while it was all quiet, but the fireworks are starting again. Limelight Networks, a Tempe, AZ.-based start-up that is quite the buzz amongst digital content players has been sued by old dog, Akamai Technologies and the Massachusetts Institute of Technology for patent infringements.
Chief executives of both companies, Paul Sagan Akamai and Bill Rinehart of Limelight have been contacted and we are waiting to hear from them about these lawsuits. Nevertheless, court documents show that, the lawsuit was filed in the US District Court in the State of Massachusetts in late June 2006. MIT and Akamai allege that Limelight is infringing on Patent # 6,108,703 and patent # 6,553,413. Both patents were issued to MIT and are licensed exclusively to Akamai.
The lawsuit comes at an awkward time for Limelight Networks, which is the CDN for hot young start-ups such as You Tube among its 500 customers. Other notable customers include Brightcove, and CBS Sportsline.
Well-placed technology sources say that Limelight is in the process of raising a monster round of financing, which would value the company well in excess of $200 million. Goldman Sachs’ private equity arm is said to be the driving force behind the round, and we will report more details as they become available, but at this point consider this reports as “highly rumored.”
Still, the word of this monster round should not come as a surprise. Limelight has been one of the few beneficiaries of the digital content boom. Their customers, swear by the company’s technical capabilities. In a press release, the company claimed that its first quarter (2006) revenues had reached $10 million, up 40% compared to the fourth quarter of 2005. Limelight says that first quarter was its 10th consecutive quarter of net income profitability and monthly revenues exceeded $4 million for the first time in March 2006.
In the past, Akamai and MIT have aggressively protected these patents. The two sides were locked in a legal wrestling match with Cable & Wireless. Akamai had also sued Speedera, another CDN, but in the end bought the rival company. We have said in the past, the eyeballs are back, and so are the CDN lawsuits. Let the fireworks begin.
Written by Om Malik on July 11th, 2006 with no comments.
Read more articles on Wired and Start-Ups.
Clearwire pulled back its IPO plans yesterday, and turned to the more generous and less demanding private sector, scoring more than double what it planned to raise from the public markets. It was a smart move in the light of the sorry state of tech IPOs.
Despite a sense that tech IPOs are returning in certain sectors, the public markets are still tepid for the most part. Everyone knows the Vonage story. Likewise Omniture, a web analytics firm inched down on its first day in the public markets, and network processing comany Wintegra pulled its IPO plans in the final hour last month. Yesterday telecom hardware maker ECI Telecom, a substantial company with big revenues, withdrew its IPO. It makes you wonder about the prospects for companies like Acme Packet, which has filed to go public as well. What about Optium?
According to a report released yesterday by the National Venture Capital Association, tech IPOs rose significantly in the second quarter of the year, but are still pretty tepid. NVCA President Mark Heesan, puts it as, “The growth in tech IPOs is encouraging, but we are certainly not out of the woods yet. We will need to see those levels increase throughout the rest of the year to characterize the U.S. public markets as available to venture backed companies.”
There are quite a few stellar technology companies waiting in the wings for the IPO window to open up. Force 10 Networks and Infinera come to mind. Tell Me Networks is another mature company that could tap the IPO pump. But if Clearwire is any indication, they will all have to wait.
Written by Katie Fehrenbacher on July 6th, 2006 with no comments.
Read more articles on Vonage and Wired and Start-Ups and Clearwire.
A mysterious bug is affecting websites hosted by Verio, awholly owned subsidiary of Japan’s NTT. It has become a recurring problem for nearly 48 hours, and as a consequence, Internet users accessing the Net using British Telecom’s ADSL offering and some that connect few via Deutsche Telekom’s network, T-Online, were temporarily unable to access sites hosted by Verio UK.
Reports vary as to how long it took Verio to identify the problem initially. Our sources claim the first problem lasted from approximately midnight to 4 pm the next day on Friday 30th June. It certainly does appear that the problem emerged during overnight routine maintenance. According to Verio’s vice president of operations, Craig Pennington, the mysterious bug appeared within the company’s Cisco 6500 series routers which were showing everything to be fine, while denying access to specific British Internet users.
Verio now says … “We have seen a recurrence of the recent connectivity issue in the Verio’s London Datacenter. At this time, the vast majority of users are able to connect to the facility as normal - it appears that the issue is affecting a small subset of users primarily originating from British Telecom ADSL.”
Pennington implied that the fault lay within the Cisco OS employed by Verio’s core routers. Subsequently Verio has stated that its “core routers were rebooted in serial; whilst this helped mitigate the problem temporarily, it did not fix it. We are working with Cisco to resolve the problem, and are currently working to roll out an emergency upgrade to the Cisco IOS operating system on the core routers.” Pennington conceded that Verio was looking at the standard SLAs (Service Level Agreements) signed with major customers and predicted that there may have to be some payments made as a consequence. The company offers a 99 percent uptime guarantee.
The frustrating aspect for Verio’s customers has been a lack of information. Some sites weren’t aware anything was awry until Verio sent an email out at 4.30 p.m. last Friday announcing that the problem had been dealt with. These sites had been advising their own customers that the problem probably lay with the surfer’s browser. Today, those same sites appeared blissfully unaware the situation had re-occurred.
Written by Tony Dennis on July 6th, 2006 with no comments.
Read more articles on Wired and Cisco.
Infinera might not be the first optical IPO after all. It might be pipped to the post by Optium Corporation, a Chalfont, PA-based companies that makes a variety of optical components and other transmission modules. Morgan Stanley and CSFB are running the book. Jeffries & Co, and Cowen & Co., are also underwriting this offering.
In particular, we provide high-performance optical networking products to network systems vendors servicing carriers. The products include transceivers and transmitters usable in FTTH networks and transmitters usable in hybrid fiber coaxial, or HFC, networks.
The company’s gear is used primarily for RF-over-fiber and CATV networks. The company’s management team is mostly ex-JDSU. Optium, started in September 2000, seems to have benefitted in the big network makeover undertaken by cable companies. It has products that are used in the FTTH networks as well, which indicates future demand for its products.
Optium counts Alcatel, Cisco Systems, Lucent Technologies, Marconi, Scientific-Atlanta, Siemens and Tellabs as its main customers. Its two major customers are Scientific Atlanta which accounts for 18.8 % of its total sales and Ericsson/Marconi which accounts for 13.2% of its sales. Tellabs, for instance is one of the major suppliers to Verizon’s FiOS network project.
Optium has filed an S-1, which shows that they had sales of $37 million in FY 2005, and a net loss of $1.5 million for that same period. In Q1 2006, they scored $48 million in sales and lost about $9.3 million. That loss might be because of a big acquisition they made - Engana, a Sydney, Australia-based wavelength modules maker.
The company raised nearly $65.9 million in four rounds of financing from four venture firms - Battery Ventures (which owns 34.9% of the company, KPLJ Ventures (15.7%), TL Ventures (5.4%) and TPG Ventures (7.3%). [ via ]
Written by Om Malik on July 4th, 2006 with no comments.
Read more articles on Wired and Start-Ups and Fiber Networks.
When the telecom bubble of the late 1990s popped, it took down with it the aspirations of hundreds of optical start-ups, not to mention billions of venture capital investment. And just when things couldn’t get any worse, an optical start-up, Infinera, was liberally funded by some of the savviest investors in Silicon Valley. The investors including optical rainmaker and former Kleiner Perkins Caufield and Byers general partner Vinod Khosla, played yet another hand, betting on the co-founders - Jagdeep Singh, Drew Perkins and David Welch.
The company has developed interesting technology that lowers the cost of fiber networks drastically. It has found buyers - from upstart carriers in Asia to large backbone providers such as Level 3 Communications. It has launched a new foray into the cable markets, and well, it has done what the three co-founders had promised to do when I wrote about them back in the (old) Red Herring.
Now, a news report in Telephony suggests that Infinera might be headed to the public markets. They are taking their cue from the appointment of a new chief financial officer, Duston Williams, who comes to Infinera from Maxtor, a company that recently merged with Seagate Technology. With nearly 400 employees, and $100 million (plus) in revenues, Infinera is a definite IPO candidate.
Still, it is hard to say if the markets are ready for an optical-only public offering. Technology IPOs (Vonage for instance) haven’t really performed well. Last week, Wintegra, a network processor maker pulled its IPO at the proverbial last minute, after the market showed luke warm interest in the company’s offering. Wintegra had $20 million in sales and about $194,000 in profit for the first quarter of 2006.
In light of that deal, there is a good chance Infinera team and their backers would wait a bit, and show some more growth and higher profitability. Infinera, and to some extent Force 10 Networks are two Silicon Valley start-ups that are doing well enough to reignite the demand for telecom/networking stocks. When that happens, is anyone’s guess!
Written by Om Malik on July 3rd, 2006 with no comments.
Read more articles on Wired and Start-Ups and Fiber Networks and Infinera.
I am often amazed at folks who buy fancy scream machines such as Ferrari and continue to live in cities such as London, or Bombay where driving at over 25 miles an hour is a challenge. I can understand the desire to own something that sleek, expensive and fast. But you certainly almost never get a chance to live the speed.
I feel the same way about the much ballyhooed Verizon FiOS router which can shunt data at 100 megabits per second. After all VZ is still selling speeds of 15-to-30 megabits to a small number of its customers. The 100 MB/s connections are a myth, and will remain so, at least for near foreseeable future.
Of course you have a need for speed, you could always opt for many of the current options - Netgear, Linksys and Ruckus Wireless all have something to offer. Previously, Robert Young had pointed out that the bandwidth demand inside the home is going to explode, and the WAN access will have no bearing on it. (My article from Business 2.0 on this very topic is here!)
Written by Om Malik on June 29th, 2006 with no comments.
Read more articles on Wired.
This news about Nokia and Siemens merging their telecom carrier equipment businesses to form a new $30 billion joint venture company, made me think about two things: the low cost competition from China has everyone spooked, and more importantly, where does this leave Juniper Networks, which is dealing with what could be a problematic options-scandal related inquiry.
Siemens’ has been a key Juniper partner and reseller, just like Ericsson. Now if the new Nokia+Siemens is going to compete with Ericsson, then Juniper will be selling to both. It is also reselling its routers via Alcatel-Lucent combined company (though who knows what happens there.) Interesting turn of events: on one hand it could turn into a massive opportunity for Juniper, or well…
The news of the announcement did not surprise me at all. Talking about the low cost competition - Europe telecom vendors have been more severely impacted by the rise of Huawei and ZTE, so we in the United States are not realizing and panicking over these guys… yet.
Written by Om Malik on June 19th, 2006 with no comments.
Read more articles on Unwired and Wired.
Telegeography estimates that there were 221 million broadband lines worldwide at the end of 2005, and that number will reach 286 million by end of 2006, and 448 million by 2010. (Of course, this doesn’t include those who will be using 3G and other wireless technologies to access the Net at high speeds.)
Asia-Pacific 89,573,436
Europe 63,455,527
U.S. & Canada 53,270,000
Global total 221,818,261
Written by Om Malik on May 25th, 2006 with no comments.
Read more articles on Wired.
Router guru and networking industry veteran, Tony Li, has joined the board of advisors of Vyatta, an open source router company I had written about earlier, here and for Business 2.0 magazine. This is quite a coup for the tiny company, since Li is widely regarded as one of the smartest guys in routing, having worked at Cisco and Juniper Networks. He was working on his own start-up, Portola Networks alongside former Procket executive Vito Palermo, but now his bio says he is working as Software Architect for Tropos Networks. Whatever happened to Portola?
Written by Om Malik on May 24th, 2006 with no comments.
Read more articles on Wired.
At E3, the game confab in Los Angeles, the big news this week was new consoles and online gaming. In this week’s PodSession, we look the impact of online gaming on broadband, and demand for high-speed connections. We also talk about the current state of the video game industry as well as the new demand created for servers, networking gear, software, and home connectivity as new devices make their way into the home. The new consoles are increasing demand for high definition televisions and always-on broadband connections. We also look at how the WiFi connected portable devices will impact the future in this week’s PodSession.
Written by Om Malik on May 14th, 2006 with no comments.
Read more articles on Wired and Podcasts.
It is time to add coverage of the hyper local problems of broadband, video franchising, and other issues such as problems faced by municipalities. Patrick Hynes focuses on the battle between Cablevision and Verizon in the New York’s Long Island region. And if somewhere along the way, we find a success story, brilliant. Since I cannot be everywhere, it would need some help from the readers/community. If you are a citizen reporter, and can shed light to the issues involved, drop me a line, or a link. Any suggestions on how best to track it all would be welcome. - Om
By Patrick Hynes
While America loves an underdog, there is no real underdog in the telcos v. cable battles raging across the country and in Washington, DC. Nevertheless, it is hard not to cheer for the telcos. The cable companies have so abused their position in the market place over the years, many Americans are just fed up. I have likened the battle to a political campaign. The cable companies represent the incumbent and the telcos represent the challenger, albeit a well-funded one. In New York, the incumbent is getting nasty. Cablevision launched an aggressive, some would say dirty, campaign to keep Verizon out of Hempstead, a Long Island community of over 700,000 residents. Consistent with my political analogy, this battle featured a much-publicized negative ad.
Cablevision helped finance a television ad and a direct mail campaign that cleverly hinted that Verizon had “red lined” the map of Hempstead while deploying its FiOS product. (Cablevision didn’t actually say Verizon “red lined” for that would have been a crime.) In an editorial, Newsday said the smear campaign was” poisoning the debate” and the maps submitted to the city by Verizon “gutted their argument.” In the end, the city of Hempstead granted Verizon a franchise to compete for customers. As consultant Jeff Kagan told The New York Times:
What’s happening there in New York is an early curve of what’s going to be happening around the country in the next few years. … This is a new wave of competition. Basically the telephone and cable television companies are both rushing to offer the same bundle of services: television, phone, Internet and wireless. The sooner they do, the sooner prices will come down for all the customers.
And prices have already come down in the few California communities that have opened the door to video competition. University of California Professor Yale Braunstein released a study earlier this month in which he found “prices in the California cable TV market dropped 15 to 22 percent when the Cable giants competed with wireline paid- TV providers such as Verizon and AT&T.” The study was financed by AT&T, it should be noted, so take it with a pinch of salt.
The traveling road show now heads to New Jersey. Meanwhile, Verizon continues to lay fiber in Massachusetts, Maryland, and Pennsylvania.
What’s the end game? These local battles seem to be the proving ground for the war in Congress over national franchising. There is a mark up on the national franchise bill which risks being stymied by otherwise ancillary issues. These aren’t irrelevant or inconsequential concerns. But it is time Congress thinks about the consumers for once, and not the big industry players.
Patrick Hynes is a freelance writer from New Hampshire. He runs the blog the Channel changer
Written by Om Malik on May 10th, 2006 with no comments.
Read more articles on Wired and IPTV.
By Daniel Berninger
Definition: Net Neutrality - Internet access without discrimination by use or user except as required for network management purposes.
The FCC’s decision to relieve AT&T and Verizon of net neutrality requirements in August 2005 definitively broke the chain of events the companies use to assert right-of-way privileges. The Bells claim privileges based on over 100 years of practice that may or may not coincide with the intent and limits of the original deals, but the resulting laws explicitly require a public purpose in exchange for the right-of-way concessions.
The obligations established on a state by state basis sometimes include build-out requirements or other compensation, but they all specify that access to state right-of-way at largely no cost or limit requires common carrier status (aka net neutrality.) The loss of common carrier status invalidates the contracts. The Bell companies have no access to state right-of-way for deployment of private, closed, non-neutral, non-common carrier network deployments.
There may exist many unfulfilled obligations in the century old details of these arrangements, but there exists no doubt right-of-way access requires common carrier status. Maryland represents a typical case. The terms of right-of-way obtained by the Chesapeake and Potomac Telephone Company (now a unit of Verizon) after its founding in 1883 persist in the Maryland Code section covering public utility companies. Title 1-101 defines a telephone company as “a public service company that owns telephone lines to receive or transmit telephone communications.”
The same section defines a public service company as a “common carrier” company. Title 8-103 “Construction of lines and fixtures” defines the right-of-way available to the public service telephone company. The authority of Maryland to regulate telephone companies shows up in the Maryland Constitution Article 12 titled “Public Works” noting among other things that “the Directors of all said Public Works guard the public interest, and prevent the establishment of tolls which shall discriminate against the interest of the citizens or products of this State.”
Another interpretation to the plain language requiring a public purpose for right-of-way concessions does not exist. Does anyone believe government should grant public assets to private entities for private purposes? The loss of net neutrality changes the terms under which the Bells enjoy access to right-of-way. The non-neutral private network deployments associated with the Bell company broadband offers look like the non-common carrier networks of the cable companies.
Cable companies do not enjoy the same no cost access to right-of-way and pay franchise fees that typically equal 5% of gross revenues or $30 billion over the last ten years. The assertion that property rights convey an ability to leverage any business model regarding the Internet seems ironic given the telephone companies own less than 2% of the property where they deploy infrastructure. The real estate Verizon owns directly represents less than 3% of the value claimed for equipment and infrastructure.
The exposure to litigation for private use of public right-of-ways already exists. Verizon deployed FiOS as a entirely non-common carrier private network. Scrutiny of right-of-way arrangements could change the balance of power in the battle between the Bells and municipal wireless projects. Ed Whitacre and Ivan Seidenberg might regret their push to remove government oversight.
The regulatory sphere offers cozy warmth compared the to risks that await their plans to extract increasing private returns from public assets and government granted monopoly. Regulation has proven a potent defense from antitrust litigation while still allowing price increases, industry consolidation, and the use of the risk free returns from local telephone monopoly to subsidize expansion in new markets like wireless and broadband. The tariffed rate doctrine has long protected the Bells from pricing litigation. Verizon does not report R&D as a separate expense on income statements like Intel, Microsoft, or Google, because lobbying and litigation rather than technology dominates spending.
The Bells want Congress to believe ignoring net neutrality requirements will incent investment in broadband networks, but their idea of return on investment means monopoly rents. The Bells only invest in more monoply which usually means buying each other. The track record shows steadily lower spending on networks to increase free cash flow for acquisitions. The $140 billion SBC spent acquiring Ameritech, PacBell, SNET, AT&T Wireless, and AT&T lifted the company’s market cap by only $40 billion. The fact that $100 billion disappeared might suggest the need for a different strategy, but the new AT&T seeks government approval to spend $67 billion to acquire BellSouth. SBC missed an opportunity as $140 billion happens to be about what it would cost to run fiber to every home in America.
The Bells fund think tanks to explain why private organizations need to privatize a public asset, but the decision process in Congress should consider the public’s return on investment from the previous 100 years of access to right-of-way. It hardly qualifies as a public good that the Bells trimmed the number of people they employ by 40% and doubled the price of local service since 1984. The $200 billion in profit generated by Bells over the period did not even benefit investors as their chosen investments left equity values relatively unchanged.
Ed Whitacre might want to pay fair value for the public and private property utilized by the telephone network, before asking “…why should they be allowed to use my pipes…” when explaining to a Business Week reporter why Google, Yahoo, and Vonage should pay new usage based fees. There will be arguments Internet access represents an “incidental use” allowed by state laws, but these arguments will succeed only at the cost of the Bell’s much promised transformation plans. The desire to extinguish net neutrality does not arise from worries about incidental use.
The Bell companies need to stop the neutral Internet from erasing the legacy telephone network’s voice revenues. Price discrimination enables metering of Internet access by keeping per bit price of low bandwidth voice relatively high while offering relatively lower per bit prices to initiate a video revenue stream. Net neutrality stands in the way of their becoming digital economy toll collectors.
Daniel Berninger is a senior analyst at at Tier1 Research.
Written by Om Malik on May 9th, 2006 with no comments.
Read more articles on Wired.
“While the phone companies are only just starting to dig up your yard, cable is already in your house,” Dick Parsons, CEO of Time Warner laying down the smack on the phone companies. He has a point…
On the data side, phone companies added 1.513 million broadband connections, while cable companies added 909,000 connections so far, with Cox and Cablevision yet to weigh in .. my guess is that the quarter will be a tie for the two companies.But cable companies are hitting phone guys where it hurts the most…the voice business.
- BellSouth - total access line declined 6.1% (238,000), residential lines declined 8.8% (120,000) to bring down the total access lines were 19.8 million.
- AT&T saw 6% (600,000) drop in access lines to bring down the total to 48.8 million
- Verizon lost 7% (830,000) access lines to bring the total down to 47.97 million
- Qwest lost 5.2% of total access lines.
That works out to about nearly 1.75 million lines. I suspect some portion of it is going to wireless providers (which are mostly Bells without wires…) because people just want a cell phone. Still, in comparison to phone companies, cable guys added 550,000 voice customers. Cox/Cablevision are yet to report.
- Time Warner Cable added 270,000 VoIP customers.
- Comcast added 211,000 (lost about 70,000 old voice connections bringing the total net new adds is 141,000)
- Charter added about 69,600 Voice customers.
- Vonage added 283,000 new customers.
Hat Tip, Keith
Written by Om Malik on May 3rd, 2006 with no comments.
Read more articles on VoIP (the New Phone) and Wired and DSL and Cable Broadband.
Tim Berners-Lee, the father of the web, so to speak, weighs in on Net Neutrality.
When, seventeen years ago, I designed the Web, I did not have to ask anyone’s permission. [3]. The new application rolled out over the existing Internet without modifying it. I tried then, and many people still work very hard still, to make the Web technology, in turn, a universal, neutral, platform. It must not discriminate against particular hardware, software, underlying network, language, culture, disability, or against particular types of data.
The Internet is increasingly becoming the dominant medium binding us. The neutral communications medium is essential to our society. It is the basis of a fair competitive market economy.
More than anyone, I think it is time for start-ups and their backers to take stock of what the loss of network neutrality would mean to their business. Win or lose, this one has business implications, more so for many of the smaller corporate citizens.
Written by Om Malik on May 2nd, 2006 with no comments.
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Net activists have launched a Save the Internet campaign, hoping to build a grass roots groundswell in order to maintain the status quo over network neutrality.
You can read about the reasons in great detail here or simply watch a two minute video here to get a sense of why network neutrality effects everyone.
I admire the work being done by the activists, but I have some what will be unpopular observations. For instance, the campaign has a very US centric view of the Internet, especially at a time when the global Internet is becoming bigger and bigger. Shouldn’t the campaign be, Save The US Internet – after all most of the problems are very US centric.
While the campaign tries to reach out to Joe & Jane Citizen, the leading web companies are not taking the issue seriously. In reality they should be reaching out to Silicon Valley. Everytime I have a chat with folks in the Valley, there seems to be little awareness of this issue.
Similarly, the start-ups that are most likely to affected seem to be in the dark as well. Niall and I have discussed this time and again in our pod sessions. And its the big web companies who have to step up and state their position on this issue, and not just pay lip service.
Word from sources in Congress say that the major companies arguing for network neutrality have failed so far to demonstrate they are seriously committed to seeing legislation passed. While the CEO’s from the Bell companies, we were told, glad-handed members of Congress, leading online companies have been largely MIA. [ from Jeff Chester’s Democratic Media]
These companies are fighting a battle against highly organized phone companies, who use their immense knowledge of legislative procedure as a competitive strategy. The real innovation, for oligopolies is lobbying. The big web companies it seems are busy fighting the petty battles, when they stand to lose the war.
I cannot but agree with Jeff Chester, the author of this essay:
“Yahoo! and Microsoft also have deals with many of the phone and cable companies. They and other online giants will need favorable access to their broadband lines, network neutrality or not. Perhaps it’s concern over their business relationships that have contributed to their political timidity.”
One can argue that they are doing right by their shareholders, just like the phone and cable companies. And they should, after all that is capitalism 101. Given that they have a big cash hoard, maybe vanishing network neutrality would also help get rid of competition.
Any even as your listen to the messages from the net activists, it would also be wise to pay heed to words of former FCC chairman Michael Powell.
It is too facile to say the Internet belongs to the public. People are married to the metaphor of the public space, but they run into trouble when it comes to who should pay for this stuff. They think it should be the government. That’s not going to happen. The government is broke, It’s going to stay broke.
What do you folks think?
Written by Om Malik on April 24th, 2006 with no comments.
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Given how expensive optical equipment is these days, it is laughable to even suggest that we will have local area networks based on optical networking technologies. But in not so near distant future it is going to be a distinct reality.
Japanese giants Fujitsu and Mitsui have formed a new start-up, QD Laser, ,to explore opportunities in quantum dot lasers. The technology was developed by Fujitsu Ltd., Fujitsu Laboratories, and Professor Yasuhiko Arakawa’s laboratory at the University of Tokyo.
Quantum dots are a “single nanometer” semiconductor particles, and can be used as the basis of Quantum Dot Lasers, which are said to be far superior to conventional lasers. They have the ability to work over longer distances and can also support higher speeds. The Japanese companies contend that the QDLs will become light sources for optical networks, and will eventually find their way into optical access and local area networks. What really is strange about this deal is that the companies are investing about 290 million yen, which works out to about $2.5 million.
Written by Om Malik on April 21st, 2006 with no comments.
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Siemens, which sold off its mobile handset business to BenQ is said to be exploring the sale of its communications business, aka Siemens Communications, according to a German news daily. Frankfurter Allgemeine Sonntagszeitung reports on rumors of talks between Siemens and Motorola.
It was reported earlier that company might consider breaking up parts of its business and selling them off on piece meal basis. German publication Manager Magazin reported that there were talks between Siemens an Nokia.
All this is simple speculation, but one cannot deny that the telecom equipment industry is going through a serious realignment largely because of shrinking service provider base, and competition from low-cost suppliers from China.
The networks themselves are going through a change, creating new opportunities for some, and snatching away business from others. Lucent-Alcatel merger is only the beginning of an industry wide consolidation, many predict.
Written by Om Malik on April 18th, 2006 with no comments.
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Iceland has replaced South Korea with the highest broadband penetration, according to 2005 broadband statistics released by OECD. Iceland now has 26.7 subscribers per 100 inhabitants, ahead of Korea with 25.4, and Netherlands with 25.3. US has 16.8 broadband connections per 100 subscribers.
Actually in sheer numbers Iceland has 78017 subscribers while Korea has 12.19 million subscribers. US has 49.39 million broadband subscribers, and represent 31% of all broadband connections in the OECD.
Korea, is getting ready for fiber band it seems. In Korea, fibre-based broadband connections grew 52.4% during 2005, OECD data shows, while there was a net loss of DSL (-3.3%) and cable (-1.7%) subscribers during the year.
Written by Om Malik on April 11th, 2006 with no comments.
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Forrester Research just released a new report, The State Of Internet Access, based on a survey of more than 4,500 US households and here are some of the key findings.
- More than 50% of online US households are using broadband.
- DSL is gaining ground on cable.
- Consumers are still more interested in price than speed.
- Broadband users show little desire to switch providers.
- ISPs will have to re-orient their marketing programs to simpler pricing, product offerings, and distribution in order to attract less tech-savvy mainstream consumers.
The report indicates that when it comes to broadband, we are moving towards the base of the pyramid and making money is going to be tougher, and both the phone and cable companies will have to come-up with a simpler way of selling broadband. In addition, the burden of sale is going to fall on cable guys who frankly have not done a good job of selling a cut-rate service.
Take for instance, Cox which is selling a lame 256 Kbps synchronous link for $24.95 per month in middle Georgia. Why would you buy that when DSL is cheaper! If cable cos don’t start pushing the budget offerings don’t, then perhaps they will lose the chance of stealing customers from the Bells. For the Bells, well, another sign, that despite all the talk about cool technology, the IPTV thing is not going to be that easy.
Written by Om Malik on April 11th, 2006 with no comments.
Read more articles on Wired and DSL and Cable Broadband.
Freedom 2 Connect conference organized by David Isenberg is proving to be a network neutrality lovefest. I was scheduled to attend, but work commitments prevented me from going. Filling in admirably is my colleague Erick Schonfeld who is blogging up a storm on Business2blog. He writes about Michael Powell’s speech. Former FCC commish was pretty blunt in saying that legislating network neutrality is not going to happen, and it is a bad idea anyway.
“It is too facile to say the Internet belongs to the public. People are married to the metaphor of the public space, but they run into trouble when it comes to who should pay for this stuff. They think it should be the government. That’s not going to happen. The government is broke, It’s going to stay broke.”
Powell’s thoughts were matched by Martin Geddes, one of my favorite broadband pundits. “Network neutrality can’t be made to stick. Telcos will evade whatever definition you put up; it’s easier than fighting UNE-P unbundling rules. It’s easy to create atilted playing field,” he said in his speech today. Martin, makes a lot of sense, and offers a very coherent reasons why getting politics involved in NN is going to create one messy situation.
Written by Om Malik on April 3rd, 2006 with no comments.
Read more articles on Wired.
Lucent (LU) and Alcatel (ALA) merger might just ruin Juniper’s Monday (and days to follow) according to some analysts. Lucent has been a major OEM partner for Juniper, and has been selling a lot of routers for the #2 router maker. Lucent helped Juniper win contracts at China Telecom, Sprint, Vodaphone Australia and KPN in the Netherlands.
Lucent now accounts for about 8% of total Juniper sales, according to Mark Sue of RBC Capital Markets. That is at risk he says, and in a note to his clients writes, “With the availability of Alcatel’s routers however we believe Lucent is increasingly likely to promote Alcatel’s routers versus Juniper’s routers. Alcatel’s family of routers has thus far won significant customers both here and abroad.”
Ovum-RHK had reported that Alcatel router revenues were up 45% in 2005. So what will Juniper do? If you believe this report, Juniper might actually go out and buy Huawei-3Com combo. Given that the report emerged out of China, I am not putting too much credence in it - at least for now.
PS: Going forward, I am referring the combo Lucent-Alcatel as LuLa (LU+ALA).
PS2: Check out the transcript of LULA announcement here.
Written by Om Malik on April 3rd, 2006 with no comments.
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All talk of broadband proliferation, IPTV, and consolidation in the telecom hardware business is lifting optical stocks. Mind you, they are still a very pale self of their former bubblicious self. These stocks used to trade in triple digits, but nose-dived once the telecom bubble burst. TheStreet.com noticed that as well. Actually the entire telecom ecosystem is trading at near 12-month highs. Check out Qwest, Level 3, Ciena, Tellabs and JDS Uniphase! If you get a chance, read my story on the telecom turnaround from CNN Money. Here is Real Money’s take.
Written by Om Malik on April 2nd, 2006 with no comments.
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Alcatel and Lucent Technologies have finally decided to tie the knot and merge their two companies, in what amounts to be a gigantic first step in the telecom hardware consolidation. The combined company will have a market capitalization of $36 billion, and will have sales of around $25 billion and will have 88,000 employees. This is not really a merger of equals, and if you read the terms of the deal, its Alcatel swallowing Lucent.
Under the terms of the agreement, Lucent shareowners will receive 0.1952 of an ADS (American Depositary Share) representing ordinary shares of Alcatel (as the combined company) for every common share of Lucent that they currently hold. Upon completion of the merger, Alcatel shareholders will own approximately 60 percent of the combined company and Lucent shareholders will own approximately 40 percent of the combined company.
For more on this deal, here are links from previous posts.
- Telecom Feeding Frenzy
- Life After Lucent: Telecom Feeding Frenzy
- Telecom Gear Mergers Ahead
Serge Tchuruk, chairman and CEO of Alcatel who will become non-executive chairman of the combined company and Patricia Russo, the chair(wo)man and CEO of Lucent will become CEO of the combined company. There are two compelling reasons for this deal - the carriers desire for IMS, the technology that would let them merge the wireline and wireless networks. Lucent has done great work in that space, and the combined company will do well because of that. In addition, it solves Tchuruk’s transition dilemma. He did not have a #2 and with his time was running out - well you know how it is!
Written by Om Malik on April 2nd, 2006 with no comments.
Read more articles on Wired.
Hong Kong Broadband Network, a division of Citi Telecom of Hong Kong has launched a free legal movie download platform. This service allows any user in Hong Kong, irrespective of their Internet Service Provider, to legally download five exciting movies for free. Here is the catch - there is an 18-minute download time out, which means if you are using DSL services sold by HKBN’s rivals, you are not going to get too far.
On the other hand, if you have HKBN’s Metro Ethernet bb100 (symmetric 100 Mbps) service, then you can download a 4GB DVD format movie in less than 7 minutes. Okay, that’s a creative way to get people to switch to their service. HKBN has been doing these seemingly crazy things, as it competes with deeper pocketed rivals such as PCCW, iCable and HGC Telecom. I wrote about these guys earlier in the year. (See: Business 2.0, Broadband Utility Player.)
Written by Om Malik on March 29th, 2006 with no comments.
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Readers here shouldn’t be surprised about the broadband miracle in France, for we have written about it again and again and again. But it is good to see the Wall Street Journal write about how France went from a laggard to a broadband leader, mostly because of a quasi-socialist government that pushed sharing of networks as a concept. You know the same concept that was supposed to take root after 1996 Telecom Act.
WSJ writes about Iliad, that has 1.1 million customers, and charges $36 a month for 81 TV channels, unlimited phone calls within France and to 14 countries, and a high-speed connection. And they are not alone. It is one aggressive market, and despite all the challenges, even France Telecom is doing well, mostly because it has adopted the “broadband mantra.” There are others, and you can get the complete lowdown on the France Page on the Broadband Wiki. [It also reminds me, if anyone can help me translate this, I can bring the numbers up to date.]
Written by Om Malik on March 27th, 2006 with no comments.
Read more articles on Wired and DSL.
The incumbents world wide are facing a difficult time, according to research firms, Gartner and In-Stat. They are caught between a rock and a hard place. A whole generation is leaving behind wireline voice and switching to a wireless only lifestyle. On the other hand, VoIP is having a deflationary effect on prices, and is siphoning off dollars from the wireline revenues.
In-Stat predicts that the US wireline revenues are going to decline 3.3% annually up through 2009, and even the broadband sales may not be enough to make up for the losses in the consumer wireline voice revenues. “Voice services, which have experienced persistent pressure from wireless alternatives, are increasingly being challenged by VoIP solutions,” says David Lemelin, In-Stat analyst.
I am not sure, if entirely agree with these conclusions, because right now Bells are selling low-cost plans. They can increase prices, which they might when they have premium speed offerings. There is enough evidence that the consumers are happy to happy for higher speeds. And with the most recent wave of consolidation in the US service provider industry, the Bells will come out even, because of their wireless holdings.
The big x-factor in this whole equation is cable - which is doing a good job of their triple play offerings. Of course, they never complain about Skype and other VoIP plays, because ultimately those offerings siphon off voice dollars from the Bells, and also attract customers to their higher capacity (and higher margin) broadband access offerings.
Written by Om Malik on March 27th, 2006 with no comments.
Read more articles on VoIP (the New Phone) and Wired.
James Enck, while visiting San Francisco, was unabashedly enthusiastic about many European countries moving aggressively towards what he thinks is a “municipal fiber revolution.” Ireland, for example is building 120 metro area networks (aka rings around the cities, not last mile connections), while France has similar fiber ambitions. In addition, Muniwireless says that the European regulators are forcing the incumbents to give open access to rivals, hoping that this is going to get the broadband penetration numbers up dramatically, which are lagging when compared to Asia.
Broadband ‘take-up’ or ‘penetration’ rate is measured as the number of lines per 100 of population. In January 2006, broadband reached almost 60 million subscriber lines in the EU25 and a penetration rate of about 25% of households. (EU view of the broadband penetration and subscriber data.)
Netherlands is being the most aggressive and is jump starting Muni deployments along with forcing incumbents to toe the line, and give open access to competitors. (Netherlands stats from Broadband Wiki)
Now compare this with Germany, where Deutsche Telekom is asking the regulators for “regulatory holidays” so it can build out its fiber networks, and not share them with their competitors. Just like US. “We want the same competition rules as in the U.S.,” Peter Heinacher, who oversees regulatory affairs at Deutsche Telekom told the Wall Street Journal last week. The company has been threatening that it will layoff workers, stop spending on the networks and basically do everything to scare the hell out of politicians. The German government, which owns a large minority position in DT is thinking about getting rid of the line-sharing rules. Much like our FCC! (Germany stats from Broadband Wiki)
I wonder if DT is cutting its nose to spite the face? According to a study (download PDF) by the German Ministry for Economics and Technology and the German IT industry, a 14% decline in prices increases the broadband coverage by 8 percentage points by 2010, while broadband take up continues to increase at an annual 15-25% ra