Wednesday, December 22, 2004

DSL runs away with premium content

Dutch broadband player Versatel has won the bidding for live pay-TV rights in the Dutch Eredivisie (premier soccer league) for three years, at EUR30.5m per season. This is aimed at driving subscriber growth in its triple play services, which don't even launch until next August. Audacious stuff.
An idiot-proof guide to decentralized media

I have posted a 5MB torrent file to Prodigem, shot on my SPV C500, giving a first-hand account/demonstration of how easy it is to use. The file is called "A Luddite idiot's testimonial on Prodigem." I thought this might be interesting, as there are only 60 people involved in the beta at present. It was also fun. Shame about the resolution, and the on-screen talent. I think we will all agree my face is ideally suited to radio.

Why is this application potentially really important?

1) It is dead easy to use.
2) It is hosted. The user doesn't have to play around with servers.
3) Even a device as relatively primitive as a smartphone can be used as a convenient content capture device, and I didn't have to fork over any cash to the GPRS network to distribute it - plus it has potential to be viewed far more times than if I had forked over that cash.
4) Anyone can play - well in theory at least.

The implications of this really hit me last night when I was at a play in London. During the interval, making our way out into the lobby with the throng, I felt someone rub up against me in the crush, and turned to find myself face-to-face with Sting. I'm not a huge fan, but nevertheless, there I was with my video-enabled smartphone. I'm not the sort of person to take advantage of such a situation, but let's just say it opened my mind to a lot of possibilities. Obviously these extend far beyond invading the privacy of celebrities, and may in fact be quite profound.

Deutschland - Flarion country?

Just received an email from Flarion's Europe office saying that Deutsche Telekom and Inquam have been awarded 450MHz (old analogue) spectrum in Germany. Flarion rightly views this as an opportunity (T-Mobile Ventures is a shareholder and is trialling the technology in the Netherlands). Inquam, as far as I am aware, is a Qualcomm vehicle, presumably to drive continued expansion of CDMA in Europe. Interesting times.

Season's greetings/blog humbug

I'd just like to extend my thanks and best wishes to all those who have read this humble blog over the past months, and moreover to the many who have submitted suggestions and leads which have helped the overall effort. I can very happily report that embarking on this project is one of the best decisions I have ever made. Best wishes to all and enjoy the seasonal celebration relevant to your particular tradition/timezone/browser type. The posts here are going to be (to borrow a trader's phrase) "thin and choppy" over the next several days, as I recharge with kith and kin.

Interesting piece today in the FT (registration/trial subscription required) about enterprise blogging. Not exactly cutting edge coverage, but then again, if it's making headlines in mainstream publications like this, that's certainly a good thing. One fact which caught my eye is that investment bank DrKW is currently running around 120 internal blogs to ease collaboration and information flow. I imagine this has raised a number of issues around Chinese Walls and other sensitive areas, but it does seem as though these have been viewed, appropriately, as necessary evils of capturing the good things. The head of credit trading and debt syndication in the company is quoted as saying, "It's potentially a very interesting tool to tap into the social fabric of the company and better understand where knowledge lies." Indeed.

As for senior management within my own firm, my prediction is that once they discover the internet (will 2005 be the year?), we're halfway there.

Tuesday, December 21, 2004

From novice to Prodigem in five minutes

I just posted a new piece to The Broadband Daily, an interview with Gary Lerhaupt, developer of Prodigem, a web-based application which allows bungling Luddite idiots like me to easily create and syndicate BitTorrent files, which are hosted on his server. I am truly impressed with how easy this was to do. Any BitTorrent users who wish to see my little video shot on an Orange SPV smartphone can add this RSS feed to their newsreader and stay tuned for some future experiments.
French cable consolidation

The long-awaited deal has been agreed, and the FT/Canal+ cable assets (4.2m homes passed, 1.7m customers) are to be merged into a newco under the control of Cinven and Altice, with FT and Canal+ maintaining financial stakes. It's difficult to know what sort of arrangements may be operating below the surface, but on the face of it this is interesting, because Altice is a customer of Net2Phone's VoIP product in Belgium, Luxembourg and France. Along with UPC's plans for the recently-acquired Noos, this could be the beginning of a new VoIP offensive in France from the heretofore under-utilized cable plant.
Dude, where's my 3G?

My monthly newsletter from UK web research specialists Hitwise (registration required) carries some stats on online shopping in the UK. In the first full week of December, the Shopping and Classifieds category hit 13.1% of total site traffic (an all-time high), and over half of that (7.2%) is accounted for by consumer electronics. Unsurprisingly, the top two search terms are mobile phones and digital cameras. Of the top ten names, four are either networks or mobile phone specialists (o2, Orange, Carphone Warehouse, The Link). It's curious that Vodafone's name doesn't crop up in the top ten, considering that it announced 3G products a full month earlier. I would have assumed that, if there were significant interest, consumers would have been flocking to the site to see the handset range, the broadest in the UK by far. This doesn't seem to be the case.

1. Comet 9.85%
2. Currys 8.58%
3. Dixons Online 5.20%
4. Tesco Electrical Warehouse 4.22%
5. O2 Shop 3.33%
6. Carphone Warehouse 3.24%
7. 2.98%
8. The Orange Shop 2.41%
9. The Link 2.15%
10. Maplin Electronics 2.06%

Source: Hitwise

As a further aside, I visited an Orange shop a couple of days back to upgrade my handset to the lovely SPV C500. While waiting for my paperwork to be completed, I asked one of the shop staff if they were selling many 3G phones. He laughed a bit uncomfortably and said, "Not really." I later had to call technical support to resolve an email issue, and asked the technical support person if they were struggling with 3G support issues. He informed me that the Bristol call center has a dedicated team for 3G support, but that at that moment (Friday evening), there were only five people online, and things seemed pretty quiet.

Monday, December 20, 2004

Take my voice - I mean it, really

Deposited to my spam pile a few moments ago courtesy of the Daiwa spam filter (which is surprisingly accurate) was a message from BT Yahoo!, inviting me to their "broadband paradise" and urging me:

HURRY! Offer ends 31st December
FREE UK Local & National calls* from your PC using BT Communicator until 31st January 2006 FREE PC Headset (while stocks last)** to make calling from your PC easier
FREE BT Communicator with Yahoo! Messenger software

BT Yahoo! Broadband brings you the complete Broadband service, providing all the online features you need to get the most out of Broadband internet.

Plus FREE Broadband router and FREE activation if you sign up online!

Last month I noted BT's voice giveaway, which at that time was to be extended to the first 50,000 broadband subscribers to sign up between then (9th November) and 31st December. That was nearly 6 weeks ago. In the previous quarter BT signed up residential broadband customers at a rate of over 11k per week, so at that rate, the 50k mark should have been hit a little under two weeks ago. It would appear that the offering has been extended, which either means that it's going fantastically well, or that Retail's calendar Q4 DSL numbers are looking anemic.

Mystery telco

This press release from Net Insight piqued my curiosity. I probably should know who the "major telco" mentioned is, but I don't. (Personally, if I were a shareholder, I'd want to know a bit more from the press release.) If anyone out there has any ideas, feel free to send them in. I will treat them with the degree of discretion you see fit.
The clever hawk hides his talons (Japanese proverb)

BT Wholesale is certainly up to some interesting things, but the company press release stream doesn't really tell the whole story. Last Friday I wrote about the "Livetime" project (bringing TV to a radio near you...), and now a highly-valued reader points me to a deal last week with Midentity (take the tour), which has over 800k accounts active on its innovative contact/identity management application. An interesting take on this can be found here. The conclusion that I draw is that, as Retail loses "control" of the end user to other platforms (cable, ULL, mobile) and service providers, Wholesale is hedging, seeking ways to remain a relevant part of the value chain through the identity space, which may end up being at least as important.
Resource update - UK broadband

The UK's Office of National Statistics Friday released internet subsciption data for the UK as at the end of October. Broadband connections were up 5.1% month-on-month, and now account for 36% of all connections. Narrowband connections were down 17% YoY, 2.3% MoM.

Friday, December 17, 2004

Swarming content distribution simulator

An interesting post at led me to this amazing simulation of Swarmstream, described as "next-gen" swarming technology. I had to download some sort of Java update to see this, but it is worth it. The model allows you to play around with upload/download speeds and other variables. This technology looks really interesting, because it seems to prioritize bit download patterns based on where in the content body the viewer wishes to start or move to. In that sense, it might more closely resemble streaming, thus the name...
Media end-around

Back at the European Media Leaders Summit last week, I made the point that one serious risk to the IP triple play (and indeed to cable and satellite) was that content owners or aggregators decide to go direct. Net Imperative alerted me today to the move by Classic FM TV toward just such a model, sponsored by Volkswagen. For those not resident in the UK, Classic FM is an immensely popular commercial classical music station with seemingly ubiquitous national availability (based on my travels), due to its affiliation with parent company GWR, which also owns 63% of Digital One, the UK's only commercial digital radio multiplex. The Classic FM TV channel is already present on cable and satellite in the UK, but this is interesting in being a broadband-targeted service sponsored exclusively by a single sponsor (a single product, in fact, the Phaeton). This concept begs a lot interesting questions, and the more this happens, the more subscribers to conventional TV services (be they cable, satellite, or DSL-based) may be tempted to revert to a more basic linear TV offering (such as Freeview) and just stream the rest.

It's worth pointing out that GWR's digital radio multiplex is also host to the "Livetime" project (now wholly-owned by BT Wholesale, though GWR will get a revenue share and get paid for the bandwidth). We think this service should be live in time for Christmas next year, streaming video to a variety of devices, including mobile phones equipped with DAB tuners (and of course radio receivers with video screens - TV on a radio, now there's disruption for you!). I wonder if Classic FM TV will be among the programming partners? One last observation is that, with Wi-Fi, DAB tuners, and maybe DVB-H tuners coming into the mix, the innards of a mobile phone in the UK market (at least) are going to be getting pretty crowded next year.
Press release jetlag

This dire prediction from DeTeWe has been doing the rounds on various sites, but I first saw this statement attributed to DeTeWe in the UK weekend financial press back in early October. They sure took their time getting the press release out. My sense is that, like many of the predictions surrounding cellular penetration (I can recall IPO research on Orange nearly 10 years ago which forecast a peak penetration rate for the UK market of 25% - we are now at 95%), this drastic-sounding scenario may be on the cautious side.
More heartwarming corporate seasonal greetings

This time from KPN.

Thursday, December 16, 2004

I'm a studio, you're a studio

Getting to grips with the ever-shorter cycle of innovation may yet fry my brain. My very recent observations on decentralized media creation and distribution may not be as crazy as they sound, in fact it looks as if people in $52bn companies have been thinking the same thing. The Yahoo! video search beta site actively solicits video content from independent producers via RSS enclosures. We're moving now.
Let the games begin

Versus the other major markets in Europe, the UK has so far been distinguished by a laughable level of local loop unbundling (20k, or 0.6% of total DSL connections, at the end of September), though we have speculated that the market would end up looking like France or the Netherlands over the course of the next year. OFCOM has this morning published final determinations on price reductions for local loop unbundling in the UK. The biggest reductions beyond what BT did voluntarily in May are in shared access rental (-42%) and transfer of an existing line to a fully unbundled provider (-60%).

These changes should kickstart more activity, and there is already tangible evidence of a push by the unbundlers (HomeChoice has some outdoor advertising in Southeast London now, and I heard Christmas campaign spots on AM radio in my car last weekend). The key piece to the puzzle - rental for fully unbundled access - is part of a contentious process of valuing BT's copper network, which should not be resolved until spring of next year. However, it is noteworthy that the voluntary reduction made by BT in this area in May was much lower than in other categories, and as a number of competitive business models rely heavily on affordable running costs for unbundling, we expect lobbying around this process to be intense.

Wednesday, December 15, 2004

It's the packets, stoopid

Masochist that I am, I've been watching CNBC's Kudlow & Cramer this evening, and have just seen a feature on the FCC's consideration of allowing broadband wireless services on airplanes, including an interview with FCC Chairman Michael Powell himself. The coverage inevitably also included the FCC's review of cellular usage on planes. During the backgrounder on the cellular issue, CNBC aired footage of Commissioner Kathleen Abernathy remarking that she wasn't sure she wanted to sit on a plane listening to a lot of other people's personal business. So, broadband access is now somehow different from voice services? Is this a different FCC from the one which has heard hours of testimony on VoIP from Jeff Pulver and others? Is this a different FCC from the one chaired by Michael Powell, who has waxed so eloquently about Skype in the recent past? Is it really possible that smart people can be so near the answer and still not get it at all?

Tuesday, December 14, 2004

City Telecom conference call replay

Thanks to those who have expressed an interest in tomorrow's call with City Telecom of Hong Kong, regarding their world-leading deployment of a metro-Ethernet triple play. We have had a nice response, and by popular demand there will be a replay available for three days from the end of the call. In other words, I would expect the replay to be available from around 12:00 noon London time on Wednesday 15th December until roughly the same time on Saturday the 18th. The details are as follows:

UK TOLL: +44-20-7019-0811 PASSCODE: 755320

UPDATE: Slides used on the call were identical to those used in the 16 November presentation, and can be downloaded/viewed at City Telecom's website (see Press/Press Releases/Nov 16).
There ain't no free

Page seven of today's Creative Business supplement in the Financial Times (I would post a link, but this article requires subscription - point proven) carries an article which seems to be advocating a compulsory licensing scheme for ISPs, apparently based on the view that ISPs are in effect enablers of illegal content distribution via P2P to end users. This is an issue I touched on here, including what I view as the almost untenable complexity of administering such a system. Nevertheless, I noted some time back that litigation in Europe might establish some precedent for imposing just such a system, and the FT views the outcome of the Tiscali case as providing just such a precedent. I suspect the same.

What's daunting is that this mounting pressure is only based so far on heat from the music industry. Wait until the broadcasters and film studios get seriously involved. At the European Media Leaders Summit last week, I observed that only four out of 200 attendees claimed to know what BitTorrent was, but with all of the decentralized video sharing going on, and the arrival of Cybersky next year, awareness levels should pick up dramatically. As I wrote back in July, it looks to me as though the media industry is going to attempt to extract blood from whoever it can, and players involved in distribution look like the most obvious and convenient candidates, particularly if the media's view is, like that of SABAM in Belgium, that the owners of the pipes have profited unduly from selling bandwidth which is used for piracy.

However, I come back to my original point - this is going to be exceptionally difficult to administer. Firstly, how do the various rights holders come up with a mutually acceptable framework for valuing different types of content and getting compensated accordingly? Secondly, with data-swarming applications like BitTorrent and Overnet all the rage, assembling a single piece of content may involve multiple contributors from various countries and service providers. Is there any way to account for this in a transparent manner? Thirdly, in the case of a DSL player reselling a plain vanilla product from a European incumbent, does the onus not really lie with the ultimate controller of the pipe, i.e., the incumbent? I could raise a number of other reasons why this is highly unlikely to work, but the main point is that, just because it's a ham-fisted approach doesn't mean that it won't be tried. I suspect that telcos/ISPs will bear the brunt, along with market growth, innovation, and competition.

UK Q3 DTT numbers

UK sooper-dooper regulator OFCOM has released the digital TV market numbers for Q3, revealing the one missing data point for the quarter - DTT units, which grew by 660k (sequential growth of 13.3%). In total there are just over 5m DTT receivers in the UK (about 60k higher than what I was expecting), and after OFCOM adjustments for second sets, this apparently works out at 3.9m households in all. DTT set-top box units added 563k in the quarter (17% sequential growth, and over 10x the level achieved by Sky), and impressive growth also came from IDTVs (14% sequential, or nearly 100k added in the quarter). Curiously, no estimates for TV-over-DSL this time around. At this rate Q4 should be a blow-out for Freeview, as the product is receiving pride of place status in a number of high traffic shopping areas in London, and presumably elsewhere.
My house ate my telco

I have frequently observed that the Dutch incumbent KPN is in a tight spot at home, and one of the emerging pressures I have warned about is the development of municipal and housing corp-funded fiber networks. Well, things are looking considerably tougher for KPN today. It is my understanding that one proposed fiber project from housing company Portaal ( has now been signed off, and digging is to begin in the next couple of weeks, followed by the first 500 customers being connected end of Q1 2005. In total the project is to encompass 55k homes in five municipalities (Utrecht 18k, Leiden 9k, Amersfoort 11k, Nijmegen 11k and Arnhem 6k). We are talking VoIP, TV/VoD, and 10Mbps symmetrical internet for EUR50 per month (including VAT). This in itself is fascinating, but what will be really interesting to see is whether any other housing companies now feel more encouraged to also head in this direction, and on what scale. Other housing corporations are already showing interest in the same model, albeit on a smaller scale. Depending on how this plays out, the implications for KPN (and the cablecos) could be apocalyptic.

Monday, December 13, 2004

Harnessing the new in a bastion of cultural heritage

Today I spent an enjoyable afternoon at BBC Television Centre with Euan Semple in the Digilab. While I shouldn't go into much detail here and now, I have to say that based on the demo I had today, I think the BBC is on the absolute cutting edge of organizations globally in terms of attempting to harness new tools like blogging (c.70 blogs are running internally), forums, wikis and social networking. One anecdotal case in point was a piece of text in Danish which needed to be translated somewhat urgently. Using the "social networking" element of what the Beeb is running, plus the forums which have been set up, the person in need found a dozen Danish speakers internally within an hour and got the job done at zero cost. This is just a small example, and there is no doubt more profound stuff happening in this sphere at the BBC, which I hope to write on in future. For now it is enough to note that what I saw inspired me, not because it is somehow futuristic, but rather because it is a completely pragmatic and utilitarian application of some workable tools which hopefully make employees feel more engaged and empowered, and which improve human asset efficiency overall. Call me naive, but I think we have to take innovation as and where we can find it, and I don't find anything like this where I work.
VoIP: SIP, don't gulp

My man Andy has two publicly professed passions - VoIP and wine. So why not see where the two meet up? What does any self-respecting wine afficionado love to do? A: have a tasting for those similarly inclined. Andy has done just that today, in a series of Audioblogs, over a variety of US-based VoIP services. Personally, I have too short an attention span to do this sort of thing myself, but I admire Andy and others like him who are devoted to giving the rest of us a hands-on, battlefront account of the look, feel, taste, bouquet and sound of consumer VoIP. Arguably, with an estimated 400 access-independent providers in the US market, this sort of brilliant exercise may be a very valuable tool in helping people decide what to use.
What if they started an IP revolution and no one came?

A downbeat assessment on consumer awareness of, and attitudes toward, 3G from Italian daily Corriere della Sera via It's telling that the only two services which do generate significant levels of interest are voice and faster internet access, further validation of the dumb pipe concept.
P2P anxiety - misplaced?

The wires are humming again in the UK regarding piracy issues, and while the focus is very squarely on physical piracy (I was approached on a quiet backstreet in my London suburb last Thursday evening by a Chinese man hawking DVDs, so the stuff is literally everywhere, make no mistake), there is also included in the discussion a rehash of the data from the Industry Trust for IP Awareness regarding video download activity. Some commentators have spent a lot of time trying to debunk some of the stats being bandied about.

Whatever the realities on the issue of piracy and its impact on industry, as with VoIP in 2004, expect to see the mainstream attempt to harness or contain P2P in 2005. I found it interesting that Dr. Gali Einav, with whom I shared a panel at the P2P Video event at Columbia a couple of months back, was recently hired by the NBC Primary Research and Strategy Department, with the title of Manager of Digital Technology. I believe this reflects her full body of work around new technologies, but it is also not lost on me that the research she presented at Columbia in September was a granular survey of sharing behaviors and motivations among university students in the US.

However, looking at the fairly miserable track record of both media and telecom in tapping into popular revolutions (examples include a complete lack of foresight around email, SMS, Wi-Fi, music file sharing, and Microsoft's very late entry into a hosted blog service), I feel confident that the real P2P breakthrough lies elsewhere - namely in a proliferation of content from independent producers. I posted on Blog Torrent last week, and only one week later we now see the introduction of Prodigem from our friends at Torrentocracy. This is all groundbreaking stuff - a webmail-type interface for posting independently created audio and video to the world. The media world is naturally obsessed with what P2P can do to take control of its product distribution away from it. I wonder how aware Big Media is of its potential to create something in which it isn't even involved? That is ultimately a much harder issue to deal with.
TV-over-DSL adding heat to content pricing?

It's interesting to see Vivendi Universal's Canal Plus satellite business shelling out an almost unbelievable EUR1.8bn for three years' exclusive rights to French first division soccer. Though the strategy elements underlying the bidding probably have more to do with the satellite market in the short term, France Telecom was also a rival in bidding for one package of rights, and Canal Plus' arch rival TPS (the other key bidder), is France Telecom's content partner in the Ma Ligne TV-over-DSL product. While still in its infancy, I would speculate that the TV-over-DSL issue was a scary enough proposition on a long-term view for Vivendi to bid over the odds to deprive the new platform of some key anchor content, which would have given it strong momentum.

UPDATE: I love the interactivity of the blog, but sometimes this unfortunately includes admitting I have published blatant or partial inaccuracies. An on-the-ball French reader rightly points out that in terms of the Ma Ligne service offering itself, Canal Plus is also a content partner. My reference was to the original launch of Ma Ligne, wherein TPS was identified as the content partner of choice. The subsequent Canal Plus relationship notwithstanding, given FT's adversarial relationship with Vivendi Universal units in the mobile, broadband and fixed telephony markets in France, I still believe Vivendi was seeking to limit collateral damage and ensure that if premium content was to traverse Ma Ligne, it should be on Vivendi's terms, if at all possible.
The more mobile, the merrier

UK weekend business paper The Business reports that UK super-uber-mega-hyper-regulator OFCOM is very close to announcing a new round of 3G spectrum auctions. It's interesting to see this spectrum apparently being offered in a technology agnostic manner, and also to see "a source" saying that OFCOM is lobbying other regulators in Europe to embrace alternative technologies in new spectrum allocations. I think this pretty clearly opens the door to some interesting deployments of Flarion, IPWireless/UTStarcom, or both.

Friday, December 10, 2004

The spirit of giving

I know this is really "2004" of me, but I happen to have two spare Gmail account invites for the first two worthy respondents among EuroTelcoblog readers. If you claim to be Mrs. Abacha, or the Mining and Resources Minister of Mozambique, you're disqualified.
Skype ate my smartphone

West Coast serial blogger Andy has a very good post on HTC's interest in porting Skype to the next generation of Microsoft Smartphones. Andy's analysis of the situation is spot-on: while the carriers would continue getting monthly fees for inclusive minutes (which might partly be breakage from the point of view of the user), the potential for this scenario to wipe out termination (a disproptionately profitable revenue line) and roaming revenues is clearly something unpalatable to them. Then again, it's difficult to feel too choked up for the carriers in Europe - they are the only segment of the market which still exerts effective control over call origination. Skype could be carrier pre-selection for the mobile world. Incidentally, French regulator ART has just moments ago announced a 36% reduction in fixed-mobile termination rates over two years, and is also joining in the coordinated pan-European investigation into roaming fees. Clearly more people than me think the cellular industry has had it too good for too long.
Good enough for free

There sure is plenty of good stuff to be had for free on the internet. Take Skype as an obvious example. Or take some of the little teasers that research vendors put out to entice subscribers.

For example Point Topic's updates on global DSL lines (85m in Q3) and voice-over-broadband users (now over 5m). This 5m figure includes only subscribers to the estimated 1,000 commercial services operating worldwide, and excludes Skype. Four million of these users are in Japan. Despite whatever figures Skype may put into the market about users, the concurrent user number hovers around 1.1 - 1.2m recently in my experience, suggesting Skype users at any given time outnumber all the other non-Japanese services combined - everywhere.

Or try (registration required) Telegeography's free executive summaries, which are quite interesting. Their projection of VoIP traffic (which only includes VoIP minutes terminating on the PSTN) for 2004 is 30bn minutes, or 82m minutes per day. At 22m minutes per day currently, Skype on-net minutes are equivalent to over a quarter of "commercial" international VoIP traffic. Commercial VoIP traffic accounts for around 13% of total international minutes on Telegeography's figures (actually it's bound to be higher because international switched minutes include FAX traffic). So, that would seem to indicate that Skype on-net usage is now equivalent to 3.5% of international minutes on any given day.

So, let's get this straight. A Swede, a Dane, a handful of Estonians (not Etonians) and a few other assorted Europeans and mid-Atlantic types, with no gleaming corporate tower, company jet, or flag, have taken at least 3.5% of the international voice market - and generated zero traffic revenue in the process. What's the other 96% of the market worth?

Thursday, December 09, 2004

My lethal weapon's my mind

I'm showing my age by dropping an ancient Public Enemy quote, but it felt right. I had a great lunch meeting today with one of my favorite clients, who is a buy-side telecom analyst with a firm I would describe as being not at all small. We talked about a lot of things related to telecom, and as a sign of the times, spent most of the session on content strategies and media issues. We also discussed his views on brokers' research generally, which I won't characterize. What was apparent was that his firm is changing the way it looks at the market and makes stock calls pretty dramatically. The process, as it was explained to me, is more interactive and cross-sectoral in nature, leading to some interesting angles on how to play particular themes. This is closely in line with how I have come to view the world. However, it was apparent from his description of the broker research scene (he sees pretty much all of it, I would guess) that the brokers aren't set up to function that way, and very few seem to be trying to do anything about it. As I have previously tried to highlight here and again here, I see a widening gulf between the approach and needs of investors and the information/analysis they are receiving. There are some hard choices ahead in 2005, but I think a bit of bravery and resolve would be well-rewarded at this point.
VoIP Santa Claus

You know that VoIP has made it to the mainstream when new entrants embrace quirky marketing tactics in an effort to differentiate themselves. OnInstant is launching a consumer voice client called On4 (familiar proposition - on-net calls free, calls to UK PSTN less than 1p per minute, cheap international calls), but as a launch promotion is also offering up a round-the-clock "On4Santa" who will:

"...offer season’s greetings and chat with children - listening to requests for presents and commenting on life at the North Pole. In addition, if he is away getting presents ready, Santa will be giving away a Sony Playstation to the best “ho ho ho” voicemail left for him."

What a job. I wonder if the Vonage UK launch will be ushered in by a team of skydivers with flares, or by John Rego suspended in a glass box over the Thames?
Skype stats

I've had my mind elsewhere this week, but a reader points out that Skype passed the 3bn minute mark, probably on Tuesday. That's 23 days to generate 500m minutes, versus 26 for the previous 500m. This works out at 22m minutes per day on average, up from 19m during the previous observation. The site is currently showing nearly 42m downloads, and my client shows 1.26m concurrent users.
NimCat in action

We were treated to a live demo of the Nimcat Networks nimX middleware today at our palacial London offices. Marc Gingras, VP of Business Development and Marketing, came in with his bag of tricks, containing three Aastra 408i phones with nimX loaded. He set up a mini-LAN in our conference room, plugged in the phones, and they took less than a minute to self-configure. We then ran through a lot of the features available. It was all very impressive, and will probably be even more so when the company starts to build in more presence-related features. This is an interesting company, not only because it has a revolutionary technology, but also because it has relatively humble aspirations and is focusing on a particular market niche in getting established.

Wednesday, December 08, 2004

DTT dark horse

Today I attended day two of the “European Media Leaders Summit” co-sponsored by Informa Media and PricewaterhouseCoopers, and sat on a panel with the title of “Can DSL make the Triple Play work?” or something like that. For this post I will concentrate on the two most interesting and relevant panels I saw – mine and the discussion of digital terrestrial television (DTT).

On the panel with me were familiar faces like Alessandro Petazzi of Fastweb and Roger Lynch from Video Networks, and also new faces Michael Zumsteg of Swisscom’s ISP Bluewin and Alex Ogilvie, European business development point man for Warner Bros. International Television. I think our panel was pretty interesting, given the composition – one content player, one incumbent, two challengers and one of whatever I am. Much of the ground covered in our panel was by now familiar to many readers, but there were some additional tidbits worthy of comment.

There was much discussion of the need to avoid consumer confusion, and to make the interface as seamless as possible, especially for incumbents, because while they have huge customer bases, the mental divide for many consumers between telephony/internet and television is a huge one. This is a point I think I may have touched on in the past as well, and it is probably no less difficult for the newcomers. Alessandro Petazzi pointed out that 40% of Fastweb customers take TV services but do not have a PC at home, so obviously the proposition for these customers is inherently different from what we might consider to be a classic triple play. I earlier overheard him saying to someone in the coffee break that in some cases customers are not initially aware that the internet and television services are actually provided by the same party. Such is the mental gap which must be bridged in selling the two together, and it will be interesting to see how a more mature player such as Fastweb deals in future with a target audience which may be inherently more skeptical and less tech-savvy than those who have taken the service in its first phase of expansion.

We were asked about potential inhibitors to market development, and Warner Bros. along with the two newcomers immediately jumped on the piracy issue. I chimed in with my refrain on generational change and P2P usage, and felt like I was largely greeted with uncomprehending stares by the audience. At this point I asked for a show of hands of those in the audience who had used BitTorrent. Not a hand went up. I then asked how many in attendance had heard of BitTorrent. I counted four out of 200 attendees, which was pretty surprising to me. Given that most of the attendees were in some way involved in the business of media creation, licensing or distribution, and given that the industry has consistently decried the impacts it has suffered from P2P networks, I assumed that they would be more aware of who the enemy/potential ally was. Perhaps this reflects the demographic present, and reminded me of a remark made last year by Jeff Pulver at VON in Boston (if I remember it clearly) – “Never trust a product strategy person over the age of 30.” I’m well over 30, but I have made a point of learning about these developments (there is certainly no shortage of information freely available on the web), and I expected more from people whose livelihoods depend on knowing where the next disruptive shift is coming from. I decided at this point to cut my losses and not even broach the subject of new forms of social or decentralized media created and distributed independently of the major studios, labels or publishing groups. Maybe next year.

I did drop in the French research correlating increased download demand over eDonkey with linear broadcasts, and Alessandro Petazzi remarked that Fastweb sees the same patterns in its legal VOD service. This is indeed good news for players involved in access and distribution. Michael Zumsteg observed that the walled garden approach was not a tenable option, but neither was unbridled illicit access to copyrighted content. He stated that the industry needed to strive for something which is “both open and controlled.” Alessandro acknowledged the need for players in the space to accommodate this demand through DRM which would allow downloaded content to cross device boundaries within the home (TiVO-2-Go anyone?). I agree, and I do not advocate piracy, but I acknowledge it as a reality of the market, and one which probably cannot be dealt with adequately purely through coercive means. I think the real issue lies in how the industry copes with, or even harnesses, this phenomenon. Roger Lynch from Video Networks made a compelling case that investing in a content catalogue of sufficient depth to obviate the need for engaging in file sharing is one answer, and stated that the average HomeChoice subscriber spends 10 hours per week using on-demand services.

I earlier stated that one of my other concerns for market development was that players involved in the access and distribution side were vulnerable to a direct sales strategy from content owners (a la Major League Baseball’s subscription service in the US). Indeed, one question from the floor addressed this issue, as an attendee involved in broadband access provision questioned how he could insulate his business from this type of disintermediation. Roger Lynch observed that the only real alternative was to invest in developing a range of content which could serve as a buffer against this. The other angles mentioned by both him and Alessandro were multiplayer gaming and videoconferencing, though I think this is something users could also self-provision if we subscribe to the “dumb pipe” scenario. Nevertheless, the sentiment is a valid one – access providers have to continually strive to create features of the service beyond TV which differentiate it from competing offerings which may be one-dimensional, but superior in depth or breadth.

This brings us nicely to the last issue of note which I found interesting: the question of whether a DSL triple play platform can maintain its innovativeness in the face of satellite, particularly in a market like the UK. The gaming and interactive services issue was raised again, as well as DSL’s ability to offer true VOD today. In the PVR field, the advent of MPEG4 and ADSL 2+ would make it possible to offer multiple streams (one of the key differentiators of Sky+ at present). No one happened to mention throughout this process that the Sky+ boxes being pushed so hard at present will not be forward compatible with HDTV… Michael Zumberg also made some interesting comments about the potential which DSL opens up for personalized marketing and advertising, which satellite cannot replicate. Lastly, (and partly related to an earlier question about relative strengths and weaknesses of PTTs and newcomers, respectively) Alex Ogilvie from Warner remarked that one of the main criteria for his company in agreeing content deals in the DSL triple play space was long-term sustainability of the partner’s business model. Perhaps I’m reading too much into this statement, but my gut feeling was that this inevitably puts the ball in the court of those with large customer bases and strong balance sheets – and that in my view spells P T T, despite the innovative efforts of the newcomers.

The DTT panel, which followed mine, served as an interesting contrast to some of the more whiz-bang aspects of TV over DSL, and indeed moderator Chris Wynn from Informa remarked in his opening comments that it almost felt like his panel was discussing the poor relation of the digital TV world. However, I found this panel very interesting, as it seems that the entire phenomenon of DTT in the UK and Italy turns a lot of smug industry assumptions about demand and consumer behavior on their heads.

This was particularly well-highlighted by Carolyn Fairbairn of the BBC. She outlined the development of Freeview from its origins in the ashes of the ITVDigital bankruptcy, stressing that the BBC’s research showed strong demand for digital TV with no subscription – plain and simple. Certainly, with Freeview adding 200k viewers per month, it is difficult to argue against this premise. Alberto Sigismondi of Mediaset highlighted the success story of DTT in Italy (1m set-top boxes installed so far, and universal adoption of MHP), including the pay-per-view services possible over the platform. In the case of the Mediaset service, pay-per-view soccer on a prepaid basis is to become a reality, via prepaid conditional access cards, a model which Mr. Sigismondi described as “pay TV lite.” Carolyn Fairbairn remarked that the BBC also saw potential for paid services associated with the DTT platform, so long as they are marketed transparently (she cited Top Up TV as a case in point). She alluded to BBC research showing that one of the primary factors of resistance to pay TV services among non-adopters is that a subscription service may bombard viewers with a bunch of channels which they don’t actually want.

These points seem to validate statements made by Hans Hege of the Media Authority of Berlin-Brandenburg (which took the radical approach of switching off analogue as an experiment), who advanced the view that the realistic model for pay TV in markets where consumer demand would not support offerings as broad as Sky’s in the UK (he claimed that only 13% of pay TV households in Germany take premium services), would be something along the lines of the prepaid model in the mobile world, where users anonymously buy credits with no commitment or lock-in, and buy additional content such as ringtones or wallpapers on an a la carte basis. Mr. Hege also stressed the potential that the DTT platform has to provide mobile services via DVB-H, which is clearly an area worthy of further exploration.

DTT clearly has taken many by surprise, and has more to offer, but it is not without its teething problems. Sylvain Audigier of TF1 in France highlighted that one DTT channel alone generates EUR5m in annual distribution costs, leaving some programmers with as little as EUR3 – 4m in annual programming budgets. Ironically, channels proliferate, but programming becomes poorer in the process. Moderator Chris Wynn touched on the same point in questions about Channel 4’s appeal to the BBC to cover its transmission costs, and the broader question of what happens if the Freeview service doesn’t achieve ubiquitous coverage with all channels.

The thorny issue of effective state subsidies to DTT inevitably came up, most pointedly towards the BBC, which actively cross-promotes its digital channels on its analogue television and various radio services. Carolyn Fairbairn reiterated that the BBC is platform-neutral. For those not resident in the UK, I have to convey the fact that on BBC Radio 4, for example, there are frequent spots highlighting the existence of BBC’s digital channels, and that these are available on cable, satellite and Freeview. However, the time and detail afforded Freeview, including an explicit reference to entry-level pricing of GBP50 with no subscription, would seem to give preferential treatment to this platform. I later heard one attendee remark that manufacturers of integrated digital TVs, such as Sony and Philips, were “hopping mad” because the BBC has consistently stressed the availability of set-top boxes while never including any mention of the availability of TVs with integrated DTT tuners.

I think this latter situation may reflect a recognition within the BBC that the set-top box holds all manner of wonders over the next year, which will strengthen the proposition for DTT, and also for the BBC’s other content beyond “TV” as such. Specifically, I expect to see in 2005 DTT set-top boxes with embedded DSL modems, hard-drives, Wi-Fi, and possibly VoIP ports (there are already three DTT PVRs in the UK market). In the UK particularly, but also in other markets in Europe, DTT may provide an expedient mechanism for DSL players to deliver TV without all the complications of replicating linear broadcast, leaving them free to focus on on-demand services (obviously subscribers may also be making some other choices regarding sources for on-demand content). From a fundamental demand point of view, I think the industry does really have to ask itself, for the remaining non-converts to multichannel TV, how much TV is enough at what price, and what else needs to be part of the user experience to make it sell? I admire the efforts and achievements of the advanced triple play operators in the DSL sphere, but I am also open to the idea that the way things ultimately pan out will look quite different, and may well involve DTT as the primary TV input.
My sector ate my research team

Yesterday's confirmation of the worst-kept secret in Europe, the buy-in of TIM minorities by parent company Telecom Italia, highlights an uncomfortable scenario coming into view for beleaguered telecom analysts in Europe. Back in 1999/2000, the IPO pipelines were full of deals which would eventually happen (Wanadoo, T-Online, Telefonica Moviles, Orange) and deals that wouldn't (KPN Mobile, T-Mobile, Bluewin), and the analyst team benches were full to meet the demand. New breed telcos were flavor of the day. UPC's market cap at one point exceeded that of GM, and other train-wrecks-waiting-to-happen like Energis and KPNQwest were the prestige stocks to cover. Consensus was that analysts covering the boring old incumbents were roadkill.

Consensus has a tendency to be proven wrong, however, and now the tables have turned 180 degrees. The stable of specialist internet and mobile analysts which emerged from the speculative debacle coming up on its 5th anniversary is now confronted with the evaporation of its coverage universe. France Telecom has bought in Orange and Wanadoo, DT is moving ahead with taking back T-Online, and now TIM is being assimilated back into its parent.

For mobile analysts, there will in future only be one stock of any significant size remaining - Vodafone, which has 40 analysts covering it, according to Bloomberg data. mmO2 is still out there, but it is relatively small, and Telefonica Moviles, though large in nominal terms, has very thin liquidity. For internet analysts, life isn't so restrictive, but in market cap terms the sector will shrink considerably in the wake of T-Online's disappearance. The aggregate market cap of Fastweb, Iliad, Terra, Telecom Italia Media, Tiscali, United Internet and Freenet is only EUR9.5bn. Arguably these analysts should have a better grasp of the dynamics which are going to drive the share prices of the big telcos in future, but politics is politics. Telecom Italia and TIM each have 32 analysts following them, mainly from the same institutions. With the exception of smaller brokers like ourselves, most analysts covering the two are fixed and mobile counterparts within the same firm. I personally think the research effort should be organized completely differently, but that is a story for another time.

Tuesday, December 07, 2004

3M = Martin, my man

I have my doubts that the good people at BT Group are paranoid enough to have clocked the thoughts of Martin Geddes, but since his return to the UK, he seems to have become more than a bit exercised by the company. I had the pleasure of sharing a sumptuous Thanksgiving lunch with him in our palacial staff restaurant (the irony of this was all too clear, with Martin a Brit recovering from a life sentence in Kansas for a couple of years, and me an American in his tenth year of trying to adapt to life in South London), and I feel like I definitely walked away the more-enlightened party. Here are three reasons why I say this, the last one being particularly radical. Any bets on how long Martin will have to wait for a lunch invitation from Sir Christopher Bland?
P2P C'est Mon PVR

A couple of interesting things have come up as a result of my now-infamous post on Blog Torrent for The Broadband Daily (final score from yesterday was: readers 7100 - server 0, with 5000 or so readers left unfulfilled - not bad for a sell-side analyst).

Firstly, a highly-valued French reader clues me in to a post today on French P2P site Ratiatum about the correlation between linear television programming and search queries/downloads on eDonkey. If your French is like mine, you will need the "translate" function on Google, which renders something like Beowulf in the original. But persevere. The authors tracked episodes of television programs aired on French TV and found that in some cases the level of interest in downloading these titles doubled or trebled within one to two days. Interestingly, they seem to speculate at the end of the piece about the potential to harness the unprecedented demand they have observed in the French market into some sort of subscription on-demand service.

The other piece which interests me (from the comments section of The Broadband Daily) is the lengthy post on new-to-me blog j/turn which gives some first-hand user insights into Bredbandsbolaget in Stockholm and how the secret to the success of P2P in the real world is symmetrical access.

Tomorrow I'm set to appear on a "TV-over-DSL" panel at the bombastically named "European Media Leaders Summit" co-hosted by Informa Media and PricewaterhouseCoopers, and while I genuinely like some of the other people on the panel, I'm also eager to introduce the French market information into the mix and see what happens - sometimes good guys don't wear white.
10th Implementation Report

The EU 10th report is out, at least in truncated form (I presume it's truncated - it's certainly shorter than usual). I think from this that it's pretty clear the combined effects of ULL players, MVNOs, CPS carriers, and IP parasites are indeed having a big bite of the market. Here are the salient points:

The number of fixed line voice service providers has grown for the first time since 2001, and fixed number portability is way up across the board in member states;

EU 15 incumbents' average share of local call market revenues has dipped below 77%, from 81% last year;

Broadband lines in the EU 25 are up 72% YoY;

New entrants in the broadband market have expanded their market share by 2.2 percentage points, to 43.7%;

New entrants in the DSL market have increased market share by 8 percentage points, to 30.2%;

Unbundled local loops in the EU 15 stood at 3.8m in July 2004, up from 1.8m in July 2003;

Average market share of leading mobile players has fallen to 43.2% from 46.6% one year ago, a drop larger than in the three preceding years combined.


My post from yesterday on Blog Torrent, which appeared first at The Broadband Daily, has been Slashdotted, a first for me. The surprisingly huge number of comments generated can be seen here. Looks like a helluva lot of fairly jaded people have way too much time on their hands, but there are some interesting points raised which are worthy of following up. Unfortunately, as The Broadband Daily site was crippled by the traffic, many of the comments being made seem to be based on a premise that the intent is to steal existing copyrighted content. The obvious point of the piece was about creating an easier mechanism for distributing independently-created content. Then again, I guess there's no such thing as bad publicity.

Monday, December 06, 2004

Skypin' all over the world

We've expected for some time that more was to come from Skype in the Asian partnership arena, and our sense was that there was a vague kimchi aroma on the wind. Today Skype announced a partnership with Daum of South Korea. This now puts Skype in four of the most interesting and robust broadband markets in the world - Taiwan, China, Japan and South Korea. If the more recently signed agreements repeat the effects apparently delivered by the Taiwan deal, we are probably looking at the Asian century of Skype. On demographics alone it's a pretty good bet.
Looking East

EuroTelcoblog readers with an interest in issues around FTTx and next generation services in Europe are cordially invited to look East with us and participate in a call with an early pioneer in this space, City Telecom of Hong Kong next Wednesday, 15th December, at 10:00 AM London time. We think the early experience of the company in the metro Ethernet arena affords it unique insights into the economics of new services, which may be of interest/benefit to both investors and carriers in other markets. The call will be hosted by City Telecom's co-founder and Chairman, Mr. Ricky Wong.

[So as to ensure that adequate lines can be provided for the call, please RSVP me at confirming your participation, and I will provide you with dial-in information, demand levels permitting.]

More on Norway 3.5GHz

A timely bit of market intelligence from Scandinavian reader Röyks Opp regarding the Norwegian FWA auction from last week. Well-established broadband player Catch Communications, which won licenses in all six regions, is part of the investment portfolio of VCs Kistefos, along with none other than Global IP Sound - and the same Kistefos man chairs both companies. I smell a wideband codec consumer VoIP service just around the corner.
The web is my pallet

This is timely given the preceding post on Blog Torrent, and I just stumbled on to it now. Released yesterday, it is an interesting-looking paper from the excellent Pew Internet & American Life project on attitudes of artists and musicians towards the internet.
I want my decentralized TV

I just completed my second post for The Broadband Daily and it goes like this:

As a couple of recent developments have suggested, 2005 should be the year when Big Media attempts to come to grips with P2P in a meaningful way, with a view to co-opting or "monetizing" it. Watching this unfold should be something akin to viewing a car crash in slow motion - horrible, but strangely mesmerizing.

These sorts of big splash announcements may gain the media spotlight, but the real story for 2005 probably lies in something else - the development of de-centralized media. Big Media may titter at the idea that people could ever want something other than the airbrushed smiles of the latest Boy Band, or the hard-hitting insights of correspondents "embedded" in Fallujah. Then again, there are reasons that the open source approach should be taken seriously. Firefox is a pretty good example (it accounts for 35% of the traffic to this site at this writing), and if the just-launched Wikinews service repeats the experience of Wikipedia, then Fleet Street, we have a problem.

If anyone thought the sacred cow of television was somehow immune, they should spend some time with Nicholas Reville of independent music activist group Downhill Battle. A couple of weeks back, the group launched Blog Torrent, with a pretty interesting quasi-manifesto explaining its intentions. I caught up with Nicholas last Friday and interviewed him.

Nicholas, for those who aren't familiar with Downhill Battle, could you give us a bit of background?

We started in the summer of 2003, with the goal of balancing the debate about filesharing and the future of the music industry, which was being completely dominated by the RIAA. We saw that the only real push-back was coming from internet sites that were generally more interested in the technology than in the music side of things. We wanted to talk about why decentralizing the music industry would mean very good things for artists, fans, and culture as a whole. There's an opportunity right now to finally get the major record labels out of the way of creativity and independent music-- we didn't want to miss that chance. Since we started, we've been able to reach millions of people through our websites and concert flyering campaign. We've probably reached even more through the press.

I'm very excited about the potential of your new Blog Torrent project. In particular I liked your comment about reality TV having lowered consumer resistance to production values which aren't perhaps of usual network TV standards. Tell us about Blog Torrent and and how it works first, and then give us an idea of where you see it going.

Blog Torrent adds features to BitTorrent that make it much easier for people to 'publish' files. We've made a simple, web-based way to create a 'torrent' and upload it in a one step. We've also made it easier to install a 'tracker' which is necessary on the server side to connect everyone who's sharing the files. This makes it much easier for video artists, documentarians, or anyone with a camcorder and iMovie, to share their video content on a blog or website. To this point, BitTorrent has been complicated enough that it hasn't been adopted by artists, which means that most of the content people are sharing is being posted by people who didn't make it themselves, mostly Hollywood movies and TV shows. But what's exciting about peer-to-peer is that it's a free distribution method for people who could never afford distribution. With Blog Torrent, anyone can share what they make and that means totally new alternatives to mainstream media, in this case, television. We ultimately want to see internet "TV Channels" that download video in the background and let you watch at your convenience (a TiVo for the internet). All the basic technology is there, it just hasn't been packaged intuitively yet. But it's going to happen soon and I think people will be very, very surprised at the quality and diversity and popularity of what's going to sprout.

With all the news surrounding Shawn Fanning's return with Snocap, what's your view on the likely success or failure of attempts to harness P2P as a commercial distribution platform?

I'm pretty skeptical. I'm not sure why people who want to buy music online will care about using P2P to get the same thing they can get on iTunes at the same price, especially when it will be slower. Now, if the major labels take advantage of cost savings to lower prices, then there might be a benefit to consumers. But really, I think it's got to be a power play-- Shawn Fanning isn't really offering a music selling technology, he's offering a copyright detection technology. And once they demonstrate it, it will take about 2 seconds before the major labels start demanding that every P2P software company get a license and use it to filter out their content, which they won't. So Hollywood will take that demand to Congress and see what they can do.

Turning that last question on its head, what do you see as the potential for Blog Torrent content publishers to actually get paid for what they're producing? I'm thinking here of models like the Morpheus/Heart tie-up, where Heart got their cut, but paid a commission to people who shared the content which triggered annother sale, and also of what Tune Tribe are trying to do in the UK (though it's not P2P).

I think the people that are most successful distributing video with Blog Torrent will make money the same way bloggers do-- through donations, sponsorships, and by gaining a reputation and getting hired by a company. I think that we're going to see some drift, especially among younger artists, away from the idea that digital art is something which can or should be sold like a physical good. I don't see the Tune Tribe / Weed share model working as well for BitTorrent, simply because the technology isn't designed for individual to individual transfers -- it's all about group sharing, which will be harder to monetize.

I know we're probably talking intuition rather than hard data here, but what is your sense of the potential audience for Blog Torrent (I mean content creators), and why? Is there any particular experience you've had which made you think "We have to do this and it is going to be huge."

I think the audience is very, very broad and varied. I have friends, for example, that make artistically serious video work but have never considered offering it online, because it was never practical for them. I hope Blog Torrent will let them jump in. I also expect documentary filmmakers will love this technology-- they can make a name for themselves if they're new, or they can share extra footage and full-length interviews, they can offer old content that they aren't selling anymore, and I bet they'll even start to share first-run material for everyone who doesn't live near an independent cinema. People who make videos and movies always want people to see it and there's hundreds or thousands of times more content being created than gets out through mainstream channels. Not only that, but the number of content producers is set to explode: video has finally become practical on the desktop and small, hard-drive camcorders are right around the corner. We called it "Blog Torrent" -- forgoing our original, and much cooler name "Battle Torrent" -- because it makes sharing video as easy as blogging text or photos and, in doing so, might be able to do in the video world what blogs have done in the news world (or more). And whether it's our software or someone else's, I think TV is about to face more serious competition than they would ever imagine. There are too many talented people out there that have no space on the dial. And access to television channels is much narrower in terms of access than music, books, newspapers, or magazines-- that means new pressures on the system could be even greater when things open up.
Putting the T back in Christmas

This is the time of year when the cramped desks of telecom analysts become festooned with Christmas cards from their beloved companies, though in recent years the e-card has certainly become more prominent. Here's a disturbing little ditty from T-Online, showing Santa Claus bombing Alpine chalets with T-DSL subscriptions. That's probably how it feels for the German cable industry, anyway.
Pipex dials up VoIP for UK business market

UK independent ISP consolidator Pipex (400k customers) is launching a hosted IP PBX product for enterprise, and is coming to market next year with a bundled VoIP/DSL consumer offering. The press release (strangely absent from the company website) also contains suggestions that Pipex may actually do something in the broadband access arena with its 3.6 - 4.2GHz spectrum.

Friday, December 03, 2004

Inventing the new research

Added to my newsreader today, and recently highlighted in David Jackson's excellent Seeking Alpha, is Inventing Money, by a shadowy figure named Slash, who is pretty clearly an investment pro (if he isn't he should be), and who has a clear predilection for chips, though not exclusively. Is Slash the Rance of the Wall Street world? I think the proof that he is genuine is in the description of the blog in the masthead, which almost reads like a broker's disclaimer. Maybe it's tongue-in-cheek. How does Mr. Spitzer, despite his numerous positive qualities and best intentions, deal with the identity issue on the internet? This is decentralized media at its best - enjoy it while it lasts.
Can the best get better?

My cyber-buddy Damian (one of the growing number of very bright and interesting people I have come into contact with solely by virtue of maintaining this blog - makes you wonder about Country music songs in the future: "From now on, all my virtual friends are gonna be virtual strangers...") has an intriguing post on the concept of an Apple MVNO. I really like the idea of a network strategy being driven by a device, rather than the other way around. With MVNOs proliferating in Europe at an almost alarming pace, this might be one of the few differentiators beyond price and network quality.
Broadband Daily

I just made my first post to Om Malik's blog quilting party known as The Broadband Daily.
Final score in Norway 3.5GHz auction

Just to dot my i's and cross my t's, here is the actual result of the auction, courtesy of an on-the-ball reader.

Thursday, December 02, 2004

IEEE 802.22 meeting documents

I've got to go to a series of meetings for the rest of the day, but before I go, in case no one has seen them, the slides on the 802.22 meeting held recently are here (look under Meeting Documents).
Japan gets it

One of my Japanese colleagues brought this to my attention yesterday. I haven't seen it reported anywhere in English (though I admit that I'm woefully behind in my reading at the moment). It seems that at an event in Tokyo a couple of weeks back, Keiichi Enoki, VP of Products and Services at DoCoMo, sat on a panel wherein he expressed anxiety as to whether 4G technology would ever come about in the way people expect. The article is here, and while it's in Japanese, luckily that's a language I read. On top of the predictable discussion of licensed vs. unlicensed spectrum coming into conflict in Japan, Mr. Enoki says (my translation), "There's also Skype. Maybe we're moving to a situation where it will be enough just to have an internet connection." I and others have been saying that for two years, but it's interesting to hear such a powerful figure from a behemoth like DoCoMo going anywhere near this thesis, at least in a public forum.

I have also been spending a bit of time with one of my Japanese counterparts from Tokyo, Jun Hasebe, who covers the likes of Softbank and Yahoo! Japan. He is currently on a worldwide marketing tour, and while many find Japanese analysts somewhat circumspect, he has some punchy messages, which are probably familiar to anyone reading this. One of his best slides is entitled "The Fatal Flaw of Communications as an Infrastructure Service" (personally I like the use of the word "fatal"). Over lunch the other day he said, as if voicing my own thoughts, "2004 was the year when the internet declared war on telecom, and 2005 is broadcasting's turn." If I ever actually finish this note on BSkyB (70 pages and counting), I hope to show why.
Norwegian 3.5GHz auction done and dusted

The Norwegian auction is done, and here is my current understanding of events from the field:

There were 87 rounds of bidding between eight bidders, though I'm not entirely sure who all of them were. Apparently 13 bidders in all started, but five dropped out. Total proceeds were NOK49.9m ($8m), versus a reserve price of NOK3m. Of the 150 frequency blocks available in six regions, Telenor got six blocks in each region (36 total) for NOK13.5m, UPC paid NOK11m in all (but there are no details yet on allocation), and big-winner NextGenTel got 47 blocks for NOK13m.
Bandwidth envy

Completely non-European, I know, but think about it - City Telecom in Hong Kong is going to offer 1Gbps to the home. Even the comparatively un-macho 100Mbps service for $35 looks exceptionally good value. Hell, that's 28% less than I am paying for 750kbps cable modem currently in the UK - and I am relatively lucky. Even after I am very generously upgraded to 2Mbps at the same "low-low price," I will still be paying 69x more per megabit than customers on this service. And this is a market where Vonage plans to enter as a voice-only newcomer and make money?

NiQ Lai, Director of Corporate Development at City Telecom, is coming to Europe in early February for a planned FTTH conference. I am looking forward to meeting up with him and learning more about the economics of what City Telecom is pursuing, and also the implications for pockets of Europe where this may become an increasingly relevant issue.

Wednesday, December 01, 2004

Rich Wi-Fi, poor Wi-Fi

Two announcements today highlighting the ineptness with which the carriers have misread the popular groundswell which is Wi-Fi. First, the marketing people at TeliaSonera have apparently decided that a price cut is in order, and have today cut the price for monthly unlimited usage on the HomeRun network by 40%, to SEK800. That's still $119 per month, excluding 25% VAT.

Meanwhile, the lovely people at Consume in the UK are staging an event on 9th December at Limehouse Town Hall in East London to discuss further developments in the Wireless London node database. A working concept page can be found here. I had the pleasure of sitting on a panel at an event this time last year with James Stevens and Julian Priest of Consume, and Adam Burns of free2air, and what struck me is the different perspective they bring, being both technologists and artists. The node database white board link above shows that this project is looking at drawing in all sorts of information about the local areas around the nodes listed in it, to make it a richer and potentially more useful experience.
Blogs beat Christmas

As part of a piece of research I'm writing, today I Googled the word "blog," and it returned 129m hits. Then I thought I should try to put this into context, so I entered the word "Christmas," and was disappointed to see only 96m results. Jesus Christ himself only generates 12.2m hits, only slightly more than Madonna, but less than Michael Jackson. The Beatles, however, are not, in fact bigger than Jesus Christ, at least from a Google perspective. You have to add all of these together (Christmas, Jesus Christ, Madonna, Michael Jackson and the Beatles) to get a number bigger than that of the humble blog. Not far to go then to beat the 776m returns for the word "internet," and TV is definitely looking precarious at only 356m returns.

What a relief

This site has been down all day, and I have been very concerned that it was looking terminal, so concerned in fact that I went to the trouble of creating another site as a hedge. Today's problem, whatever it was, has now been resolved, though I am none the wiser. However, I am toying with the idea of keeping the other site as a side project. I like the idea of EuroTelcoblog having an evil twin. You can find it here, along with a couple of posts from earlier today.

As an aside, the Om Malik group blog is going live today, and Andy scores the first hit with an interesting interview with Jeff Pulver.

Tuesday, November 30, 2004

Bloomberg as telco

Validation that anyone can telco. This, from a reader in the US, an email from Bloomberg:


Voiceglo IM

Voiceglo is certainly getting hipper by the second in terms of pushing all the youth buttons. First eDonkey, now the GloConnect IM service, which sounds from the description like some sort of Jabber plug-in integrating the Glophone. It's ambitious, aiming to tap 600m IM users worldwide, and seems to be a validation of the Skype IM-centric proposition.

Last night I stumbled on an interesting group blog devoted solely to UK super-mega-uber-hyper-ultra-regulator OFCOM.

Monday, November 29, 2004

Takeaways from Osney Media Voice over IP Forum

Today I presented at the first day of the Osney Media VoIP Forum at Le Meridien Picadilly. It was an interesting event overall, partly because almost everyone there was from industry (I was a rare exception) and partly because Osney events are based on a roundtable format, encouraging discussion and debate in mini-breakout sessions along the way. I met some interesting people and heard some interesting things. I didn't meet everyone, but carriers I saw being represented included BT Group, Vodafone, mmO2, Telefonica, TeliaSonera, Telenor, Cable & Wireless, Swisscom, Matav, Inmarsat, and Glocalnet. I also saw/met representatives of both OFCOMs (the Swiss and the UK). Rather than go through each of the presentations, I'll just highlight a few things of interest.

John Blake from BT's Hosted IP Services division gave a very detailed and interesting presentation, outlining a lot of BT-specific information, but also more general industry drivers relating to the enterprise space. From this it was clear that awareness of what IP can offer enterprise is spiking, with a general technology refresh wave coming through now, five years on from investments made in more optimistic times and ahead of Y2K. Customer interest is generating a lot of enquiries, if not outright sales leads.

He also discussed in some detail BT's deployment for UK bank Abbey, though the really interesting information came later during the roundtables, when he shared the fact that only 10% of the project value actually related to VoIP itself, though voice was the central, mission-critical element, the pull-through that made it an attractive proposition for the customer. It was also revealed that in the current £15m BASF deployment, only around £32k of the project value relates to VoIP proper. This seemed to highlight an interesting and disturbing facet of the entire VoIP phenomenon for many in the audience: while voice may be the essential driver for both enterprises and consumers in making purchasing decisions (technology refits for the enterprises, broadband adoption for consumers), it may not have as strong a business case as a standalone entity. The overall tone in this regard grew noticeably more bearish as the day wore on.

Someone I chatted with in passing (who preferred to remain anonymous) alluded to an impending VoIP initiative from Macromedia. This is the first news I have had of this development, but it seems credible and potentially somewhat frightening. It also makes me anticipate what sort of shape this might take (readers will remember the coverage I gave to Gush early this year), i.e., it could be very differentiated and interesting. This came as interesting news, considering that paranoia levels regarding the global internet brands seem to be exceedingly high among the carriers. This is an issue I sought to stress in my presentation, and independent consultant Matt Winckless later highlighted in his case study just how much was possible on a DIY basis if enterprises merely enabled the correct features in existing versions of Windows.

John Rego from Vonage made a presentation, straight from an overnight flight from Philadelphia, clutching a UTStarcom Wi-Fi handset with 6-hours talktime and 70-hours standby. John is a charismatic and entertaining presenter, but the much-anticipated revelations about the UK did not materialize, and the presentation was pretty much the standard Vonage story. He did reiterate that the company will launch in the UK before the end of the year (or heads will roll, apparently), and also Switzerland. Following on from this, Vonage will move to establish beachheads in Hong Kong (a market which strikes me as a bloodbath for new entrant triple play operators, let alone voice-only players, no matter how good) and Singapore early next year, before returning to the European market. Vonage expects to be in 12 countries by year-end 2005.

He also gave some other interesting insights on operating stats. Apparently 20% of net adds are coming from retail partners (Best Buy, et al), 25% of customers take a number from an area code other than the one they inhabit, and about 5% of total volumes (3bn minutes since launch) are on-net. This latter stat, if I remember correctly, is pretty much unchanged from this time last year. The other interesting observation John had was that roughly 65% of call center calls are pre-sales enquiries, and half of these are from people who are interested in the service, but who don't have broadband. This echoes statements from cable players like UPC and Cablecom, that VoIP and broadband are mutual accelerators - though this inevitably brings us back to the observation above, that voice may be an essential means to an end, rather than an end in itself.

One last point of note was that a representative of Swiss regulator OFCOM stated to John Rego in the Q&A round that OFCOM would be "very happy" to see Vonage come to Switzerland. During the Q&A the UK OFCOM was also asked to clarify its stance on VoIP, and a representative stated unequivocally that not only is it adopting a "light touch" approach, but more importantly, was actively lobbying other national regulators in Europe to follow suit (obviously this hasn't reached Germany yet!).

I had a chance to catch up with Alan Duric, CTO of Telio. The company is closing in on 30k subscribers in Norway. Apparently 80% of subscribers port their PSTN number over to the service, and the really interesting thing is that a significant proportion of the other subs are younger consumers who never previously had a fixed line connection. (Surely there's a message here for other European regulators as regards naked DSL.) Telio is now in 500 Narvesen convenience stores across Norway, and it appears that the retail presence is generating a significant uptake, if mainly through interested consumers picking up the literature in the stores and going home to sign up on the website. This is an interesting development also in light of the fact that the Narvesen chain's parent, Reitan, also has a range of stores in Sweden. (My own observation is that Reitan's ownership of Norwegian MVNO Sense also offers some interesting cross-marketing opportunities, particularly if we think about the sort of possibilities which open up when we connect SIP to the HLR in the GSM world - though there was no sense that this was happening currently.)

It is difficult to draw too much in the way of conclusions from the event, though some interesting issues/concerns were highlighted in the roundtable breakouts:

  • VoIP may be booming, but the impacts are entirely unclear, at least in the consumer space, where market fragmentation looks set to increase;
  • Seamless, ubiquitous IP communication may not necessarily be a productivity enhancement in the enterprise, as employees then have to combat constant interruption;
  • Numbering/identity issues are a mess;
  • It is exceedingly difficult to identify what portion of the VoIP adoption/usage pattern is outright substitution, and what is new usage, or usage which would have found a different outlet (or no outlet) if not for the availability of IP;
  • If voice is the essential glue which holds a lot of other business models together, yet voice may be a strategic weapon for those with an entirely different objective than making money from voice itself, then how is anyone going to make money from a pure voice offering in future?
All of these are interesting observations and hard questions, and as an outsider, I was struck by the apparent lack of any real answers among the very bright and hugely experienced audience assembled. That's not a criticism by any means, but it is a pretty good measure of where the industry stands - balanced circus-elephant-like atop a ball of confusion.

Friday, November 26, 2004

European VoIP harmonization

The European Regulators' Group, made up of national regulators from all EU member states, is set to discuss a common approach at its next meeting in Brussels next week. Judging from the bizarre decisions coming out of Germany these days, it should be an interesting discussion, and I would love to be a fly on the wall.
Innovation in action

This isn't strictly related to any of the themes I normally write about, but it seems to validate the idea that innovation at the edge can have a sudden and visible impact. As Om and others noted a couple of days back, OneStat has observed a sharp increase in Mozilla browser usage, which they make out to be 7.35% of the global total. On this site today, Firefox's share is currently 22% (note that when you click through you will almost certainly see a different number - just a couple of hours ago, before the US was awake and most of my traffic was coming from Europe, the figure was over 25%).
Big fun on the bayou

The guys at Jambalaya do enjoy mixing it up, and their monthly newsletter is something I look forward to reading, because it often highlights the contortions regulators and industry groups go through to attempt to maintain control in the IP world. The recent edition contains a link to this acerbic take from the Boston Globe. We've highlighted previously how devices like the Bug in the UK raise interesting dilemmas for copyright holders, and it will be interesting to see if developments in Europe evolve along the dystopian lines envisaged for the US in the Globe article.
Norway 3.5GHz auction - live and in color

A kind reader points me to live updates from Norway's ongoing 3.5GHz auction. At the current exchange rate, round 32 has seen combined bidding totalling $5.4m, by my reckoning, which seems to be over ten times above the reserve price. Detailed rules are here in English. No sign of who's taking part, as far as I can see.

Thursday, November 25, 2004

Supersize my BitTorrent

National Public Radio in the US yesterday ran an item on the growth of BitTorrent (Real Player) on the All Things Considered show, no doubt causing some dangerous driving from mediaco execs heading home. Probably nothing new for those familiar with it, but this kind of mainstream coverage is important as a measure of just what sort of impact it is having more generally.
Go outsource yourself

Just a couple of weeks after presenting a Walton's Mountain-esque united front at the interim results presentation, BT Group management has a Pierre Danon-shaped hole in it today. The head of Retail has agreed to join Cap Gemini. This may be something of a relief for BT Group on the broadband front, because previous speculation was that he was mooted as successor to Thierry Breton at FT. However, Cap Gemini is an arch rival to BT in the IT services space, and Mr. Danon's knowledge of the BT playbook may be a very valuable asset.
This turkey votes for Thanksgiving (that's Christmas, for UK readers)

A few weeks back I caused a fair bit of agitation with some thoughts on disruption in investment research, and completely contrary to my expectations (which were mainly to be ignored, particularly by my own folk), this post has been linked to more than any other, and in places I never expected. Still, I'm amused, more than surprised, at the dearth of Bulge Bracket URLs turning up in the site. Never mind, people at the edge are getting busy. Stephen Castellano's Mosaic project had a conference call this week (sorry folks, I couldn't make it because I'm swamped, but I was there in spirit), and Om Malik is moving forward with a concept for a group blog, of which I'm honored to be a part. I'm sure there's other stuff happening out there, given the apparent widespread yearning for something different. I await more news.
Blog Torrent

At the end of a post yesterday, I made an off-the-cuff remark about the potential for the conference industry to take a hit from unauthorized audio/video content being either blogcasted in real time or distributed via P2P later. One very switched-on reader in Belgium (thanks/merci/dank u) has pointed out that Downhill Battle's Blog Torrent launched in beta format yesterday. Nicholas Reville's introductory remarks pretty much sum up what I (and many others) have been thinking for some time, and big media probably should listen up:

"Blog Torrent is a key first step of our plan to make software that builds
participatory culture. Video (specifically television) is a huge part of
culture. But it's still an extremely top-down medium-- even as the tools to high
quality video and animation have become extremely cheap, very few people watch any significant amount of video other than what's on networks and cable. We
think homemade video can compete directly against professional television,
especially as reality shows have brought down viewers expectations about the
production values needed to make engaging TV."