Tuesday, March 30, 2004

Daiwa Eurotelcoblog No. 12, Tuesday 30th August, 2003: VON/VoIP over Wi-Fi advancements/Disneycell (original email blast 11:29 AM Tuesday, 30th September, 2003)

VON 2003

We're currently writing a note on our impressions and key takeaways from last week's VON (Voice on the Net) Fall 2003 event in Boston, which we're weaving together along thematic lines, rather than mere reportage. We hope to publish our note by Friday. Attendance was apparently up around 40% from previous events, with c.2,200 attendees, and a show of hands on day one suggested that roughly half of these were first-timers. We note with interest (and some trepidation) that there was no representation from the buy-side, and we were one of only two brokers present (the other being the US telecom services analyst team from a very large Wall Street firm). The atmosphere was very convivial and cautiously enthusiastic about the prospects for the VoIP industry, and attendees were treated to a number of very high quality keynote presentations and break-out sessions. Our one and only criticism was that there were simply too many interesting sessions taking place at the same time. We chose to focus on those featuring issues and companies which we have been tracking this year. In our long note we will explore in detail the key themes which came out of our two days in Boston, but we think the key headlines are that 1] quality of service concerns are being addressed proactively, and there was some pretty strong evidence that in some cases, these concerns may not be as great as conventionally imagined for consumers (Vonage claims that 25% of new adds are porting their primary numbers to Vonage, and the cable MSOs pointed to a similar level of interest from VoIP trial households in using the service as a replacement for the PSTN); 2] the Wi-Fi/VoIP virtuous circle is definitely coming together (see items below).

VoIP over Wi-Fi advancements

One of the things we have been writing and thinking about over the past ten months is the potential for Wi-Fi ubiquity to accelerate VoIP migration, and the VON event and subsequent newsflow leave us ever more convinced that it is inevitable. One interesting revelation was the introduction of the WiSIP (Wi-Fi SIP) handset from Pulver Innovations (see it at http://www.pulverinnovations.com/), which claims 3.5 hours of talk time and 21 - 23 hours standby time, with data rates scaling from 1Mbps to 11Mbps. It is optimized for use with the Free World Dial-up service, but also works with IP-PBXs (and given FWD's recent peering/interconnect agreements with other SIP operators, opens up some very interesting possibilities). The handset retails for $249.95, but as yet we have no information on likely shipment dates.

Yesterday Siemens unveiled enhancements to its Hi-Path product family, launching the Corporate Connect v2.0 product (available in November) which extends presence-based communications applications across mobile workforces with a unified voice/messaging platform accessible on multiple devices - including in this version, voice-enabled PDAs with Wi-Fi cards (http://www.siemensenterprise.com/prod_sol_serv/products/applications/mobility/corporate_connect/index.shtml). This is by no means the last example we will see, nor is it the first. TeleSym, a company we wrote about back in February, has been a real pioneer in the voice-enabled PDA space (and their presentation at VON was very impressive), and Wi-Fi handset maker Spectralink (SLNK US), another company we have written about from time to time, recently announced a partnership with Vertical Networks (http://www.verticalnetworks.com/) to integrate the Wi-Fi and collaboration aspects of their two product sets. At VON we also saw a very impressive demonstration of the SIPQuest product highlighted here prior to the VON event. The next extension of this solution will include Wi-Fi access. However, we think the Siemens development is yet another fresh illustration of the growing tension between large vendor/integrator and telco in the corporate market, a relationship in which we think the telcos will fare poorly.


The Financial Times carries a story this morning about Disney's new MovieBeam service (a video rental service distributed to the Samsung-developed MovieBeam set-top box using latent spectrum in the terrestrial broadcast signals of ABC and PBS affiliates - STB cost is subsidized and recovered via a $6.99 monthly equipment service fee and a per movie 24-hour viewing fee of $3.99 for new releases or $2.49 for popular favorites), which in itself is an interesting development in light of the RBOC and PTT push for a triple play solution. What interested us more was a reference, towards the end of the article, to Disney's planned launch, next year, of a US mobile virtual network operator bearing its popular ESPN sports network brand. We recently saw Clear Channel enter the public IM market with an affinity branded product (not to mention their recent moves into the restaurant industry!), and now Disney brings the paradigm of a sports channel moving into mobile, presumably with the kind of premium proprietary content which "pure" mobile operators would kill for. We think the possibilities for this approach in Europe may be significant, in keeping with one of our core themes for the future - voice as a loss leader/brand loyalty driver/means to achieve another agenda.

We are currently reviewing our [NEUTRAL] stance on the PTTs (downgraded from OVERWEIGHT on 27th May), with a view to publishing a sector update (including a newly developed recommendation scheme) within the next few weeks.

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