Friday, July 28, 2006

THIRD PIPE://Do the math on Clearwire and Current Communications

Check out some recent developments around these two companies:

WiMAX: Clearwire (Craig McCaw)
  • $900m funding from Intel and Motorola
  • Working on a deal with DirecTV (controlled by News Corp)
  • To join the August 9 FCC AWS auction
BPL: Current Communications (William Berkman)
  • $130m funding from GE, TXU, Sensus and EarthLink (earlier investors: Google and Liberty Media et al)
  • Linked to WiFi through Google and EarthLink (stakeholders)
  • To join the August 9 FCC AWS auction in the POP Wireless consortium

Add some cross-links

  • Google is a candidate for serving ads on News Corp's MySpace.
  • AOL resells Clearwire. Google holds a 5% stake in AOL.
  • Lots of speculation around Google's infrastructure efforts (servers, dark fiber, server chips, WiFi access, FON, VPN) to bring the internet closer to the user.
  • News Corp wants to buy out Liberty Media.
  • Motorola has WiMAX as well as BPL capabilities.

Now do the math.

UPDATE: POP Wireless is on the list of non-qualified bidders for the upcoming FCC AWS auction (#66).


Monday, July 24, 2006

BUSINESS MODELS://Moving from free to for-pay at Amie Street

Moving from free services to for-pay is a hard thing to do. Think of free music/video, free websites and applications, free newspapers, free banking services, free broadband (even if the latter two are not really free). They create a new generation being used to not paying for many products and services.

Move to paid services (TimesSelect form the New York Times), and usage shrinks. Of course, there is always advertising. On the internet, the targeted nature will allow you to grow for several years to come.

Other models include Skype (free voice, pay for features). Noteworthy are Jobster and Amie Street.
  • Jobster, which just attracted funding from Reed Elsevier et al, makes money from corporate customers. The model resembles the Live World (which just attracted funding from WPP) model: build blogs for corporate customers. UPDATE: see also JotSpot's corporate wiki building tool JotSpot 2.0: the whole Web 2.0 range of social networking, blogging and wikis for corporate customers!
  • TechCrunch reports on Amie Street, which has an interesting model: uploaded songs are free to download at first, but as demand rises, so does the price for each song. (In order to enhance this mechanism, people who recommend songs are rewarded.)

Sunday, July 16, 2006

CABLECO V. TELCO://Los Angeles proves KPN is wrong

KPN did not do well in court last week, claiming Dutch cable companies should be regulated the same way KPN is. I have written about it before and believe that the unconsolidated state of the Dutch cable market has a lot to do with it (other arguments include: cable is not unregulated; KPN has managed to acquire 18 companies over the last few years, of which 7 ISPs), even if they together reach almost 100% of all homes.

Last week, the Wall Street Journal ran a story on the LA cable market, which is split by 5 companies. It very much resembles the Dutch market. Some quotes:

"Satellite-TV and telephone-company rivals have been able to outmaneuver
cable companies, which have been hamstrung in their marketing efforts and their
ability to introduce new technology."

"Gaining critical mass in major markets is crucial for cable operators,
which face competition not only from their traditional satellite-TV rivals but
also from phone companies that are upgrading their networks to offer faster
high-speed Internet service and television."

"More than 30% of the households in the region get high-speed Internet
connections from telephone companies, compared with a 20% share for cable
operators."

"Until now, the five cable operators in Los Angeles have been reluctant to
use regionwide advertising because their pitches would be wasted in
neighborhoods not able to get their services."

Thursday, July 13, 2006

STRATEGY SHIFT://AOL could replace Yahoo! and partner with Comcast

Much has been said about the new AOL strategy (August 2), but one element did not get the attention I believe it deserved: alliances with cablecos and telcos. This could be big for two reasons:
  • Potentially bad news for Yahoo!, which has similar deals with Verizon, AT&T etc. Yahoo! was able to squeeze itself in at Verizon, at the cost of Microsoft. Now Yahoo! could be pushed out.
  • When Google bought 5% of AOL (which in itself makes the strategy shift relevant for Google too), Comcast was rumoured to be part of the talks. At the time, I speculated the cableco could approach AOL's dial-up subs, offering them not only 'cheap' broadband, but keeping their email addresses and clients as well. Plus: AOL could do for Comcast what Yahoo! is currently doing for AT&T et al.

Wednesday, July 12, 2006

ONLINE PUBLISHING://News Corp's strange move in Australia

There seems to be some sort of understanding that publishers should merge their print and online staff. Today, the Financial Times joins the fray and Conde Nast rejoins Wired magazine and site. Some time ago, Dow Jones made a similar move.

All the more striking then that News Ltd (Australia) is moving in the opposite direction, creating News Digital Media. And this is part of the company that made such a seemingly smart move buying MySpace.com for 'only' $580m (monetising this is a whole different matter).

Tuesday, July 11, 2006

COMPETITION://Physical restraints stand in the way

What should the future of telco regulation look like?

Facilities-based competition would be preferable to reach a vibrant communications market:
  • Operators can distinguish their services.
  • The economy is stimulated through hardware sales.
  • Consumers have a real choice.
  • Bandwidth is best used.

There is however a number of physical restraints:
  • We don't want the streets dug open time and again (soil or rights of way or whatever you want to call it is scarce).
  • WiMAX, 4G and BPL aren't ready yet.
  • Wireless spectrum is scarce.
  • And also: the further fiber is pushed into the network, the smaller the cabinets, the less space there is for colocation.

Where does that leave us:
  • US: No LLU, a telco v. cableco market. Slow BB adoption, high prices, slow speeds.
  • UK: LLU and structural separation (BT Openreach). Finally high growth.
  • France: LLU. A very competitive market.
  • Germany: LLU (if not regulated very effectively). The government is trying to adopt the US model (at least temporarily).
  • Australia: comparable to Germany, accept that the government will not give in to extortion. Altnets have united.

The EC seems to favor the UK model (even if Ben Verwaayen warns that any model cannot be exported very easily). But that leaves the matter of the physical restraint of street cabinets. Another problem is that ultimately, providing telco and cableco are worthy competitors, regulation of both should be equal.


STM://RCUK proposal dilutes the case for OA publishing

The RCUK issued its open access (OA) publishing policy as regards to scientific research. It supports availability in repositories "as rapidly as is practical".

I believe this is not good for the OA cause. There is confusion enough as it is, with some publishers and grant giving institutions supporting OA journals (authors pay), and others stopping at demanding OA archiving (self-archiving in acknowledged repositories). The timing of the latter however still hasn't been worked out: what does "as rapidly as is practical" mean? Should it concern preliminary versions (not yet peer-reviewed)? And then there is the question of which repository should be recommended and how all these could be joined.
At the same time, OA journals struggle to reach profitability.

Publishers like Reed Elsevier will only profit from this unclarity. There is however the possibility of EU regulation.

ONLINE PAYMENTS://Google v eBay

Checkout this: eBay v Google.

Monday, July 10, 2006

RESELLERS://Is there a future in non facilities-based competition?

Keith McMahon's piece on current turmoil in the MVNO space got me going on (non) facilities-based competion.

First, the MVNO market:
  • Netherlands: EasyMobile quits; Debitel (not an MVNO but a reseller) is losing share, as MVNOs approach 15% market share (whatever that is supposed to mean: comparing apples to pears).
  • France, Spain: E-Plus/KPN, Iliad, ONO, Fnac, Tele2, Jazztel are reported to plan services.
  • US: Disney reportedly has trouble attracting subs. Microsoft could launch an MVNO, to accompany the music player launch late this year.
  • Japan: is preparing open access.

To my understanding, MVNOs do have a place under the sun, as long as they have a clear understanding with their capacity supplier. MNOs potentially can squeeze them out, if they wish and if the regualtor would allow them to do so. Some rationale:

  • MNOs can keep regulators at bay by allowing MVNOs.
  • MVNOs usually target niche audiences. These should be uninteresting for the MNO for any reason: too small, unattainable for the MNOs brand (danger of brand dilution), too expensive to market, no content available (see the Disney MVNOs).
  • MNOs add a revenue stream (wholesale) and fill up their networks.

Finally, the NO versus the VNO (altnets do not have the last mile) case in fixed telecoms:

  • The US have effectively banned altnets. Now there is a duopoly of telco v. cableco. End result: high prices, low speeds.
  • Europe is struggling with the issue: Germany wants to adopt the US model, but the EC opposes this. The LLU model has proven effective in France, the UK, the Netherlands and elsewhere. Interestingly, KPN is trying to get the cablecos regulated, instead of getting itself unregulated. It believes in the British model (even if they don't want an Openreach style solution). The 64k dollar question is: how do we get fiber deeper into the telco networks, without banning LLU? Street cabinets simply offer no room to altnets to co-locate VDSL-DSLAMs.

Altnets are too entrenched in Europe, unless the incumbent simply buys them all. Then we could move to the US model: another dilemma, because that is not exactly a consumer friendly solution.

It's about time that BPL/PLC, minufiber and WiMAX become viable third pipes (but then, why on earth does Spain allow Telefonica to takeover Iberbanda?).


MULTIPLAY://Comcast expands triple play, delays quad play

Comcast launches the triple play (digital cable with 100 channels and VoD, 6 Mbps internet, unlimited local/NLD calls with features) in the Bay Area for 99 $/mo, just like earlier launches in Boston, Philadelphia, Indianapolis and Pittsburgh (compare that to prices in Europe or Asia).

At the same time, Comcast plans adding wireless from Sprint Nextel ... in 2007. Last time I checked it was planned for 2006, so that looks like a delay.

Friday, July 07, 2006

MTA://EC will press ahead for lower charges

The same day the Financial Times reported on the EC split on MTA tariffs, Roman Scharf of Jajah complained about the high level of MTA charges in Europe.

Jajah recently launched a free web-activated VoIP service among members, fixed or mobile, with some country limitations (such as: no mobiles in Europe, because MTA tariffs are too high). Scharf's complaint is a case in point for lower wholesale tariffs. If it gains in popularity, retail price regulation may at some point be dropped.

Wednesday, July 05, 2006

INNOVATION://France Telecom creates Livebox Lab

France Telecom is establishing Livebox Lab, a nursery of incubator for third party development of innovative products and services. At the Livebox Lab website the APIs are published.

This comes as no surprise, after Norman Lewis's great keynote at eTel.

FTTH://Lijbrandt is going full steam ahead

Lijbrandt Telecom (huh?) is apparently doing well. This privately funded FTTH player in the west of the Netherlands is ordering HD IPTV STBs from Amino for deployments in 'Northern Europe'.

For all I know, Lijbrandt was established in 2002 by a former Casema exec and started in Haarlem. The company offers service in the nearby towns of Hillegom and Lisse. By now they have invested EUR 150-200m and aim for 120k subs in 3 years. Lijbrandt uses the kadaka label: 'kastje dat alles kan', which translates into something like: 'box that does it all'.

The rates are very competitive, at 45 EUR/mo for the triple play. Still, 120k subs is ambitious. Hillegom and Lisse have a combined 42k inhabitants, so they have something up their sleeve. Haarlem itself could be next.

Also: Paris is still on track for munifiber (80% coverage by 2010) and plans muniwifi from 2007.

Tuesday, July 04, 2006

THIRD PIPE://Endesa in PLC, NetCologne and Chunghwa in FTTx

Even if WiMAX has an uncertain future, presumably as a 4G technology, there are plenty of alternatives lining up as fixed line replacement.

PLC
Endesa is working with DS2 to turn the power grid into an intelligent network, for both triple play services and utility functions such as meter reading. There is an International Intelligent Network Day in Madrid on July 17.

FTTHx
Both Chunghwa in Taiwan and NetCologne in Germany have big FTTH/FTTB plans.

Bad news as ever for PTTs, especially in Spain where Telefonica finally is experiencing increasing competition (also from ONO, MVNOs and TeliaSonera/Xfera).

EMERGING MARKETS://Vodafone ready to expand

If Vodafone and Telkom cannot work out a deal for Africa, maybe the Brits can turn to Millicom, if they are willing to pay up.