Tech Untangled

Harris Interactive, a market research firm, has conducted a survey of 9,132 adults conducted in 4Q of 2007 to find out the telephony usage patterns of U.S. adults. The survey shows that about 14% of adults are cord-cutters, up from about 10% in 2006. The percentage of adults with landline phones has dropped slightly to 79% from 81%. This shows that the number of people who use a cell phone exclusively for voice communication (i.e. have no landline phone), also called cord-cutters, is increasing.

The Chart and the table below show the telephony usage patterns among U.S. adults, as depicted by the survey taken in Q4 2007 through Q1 2008.

(source: Harris Interactive, techuntangled calculations)

On 3/31, I noticed this new “New! Gmail Custom Time” notice on Gmail. Curious to know what it was, I clicked on it but the link didn’t work at that time. I was surprised that a Google link was not working, but didn’t take much notice beyond that.

Turns out this was an April Fool’s joke (The link started working on 4/1). I didn’t fall for it, because I heard about the joke before I got to the link on 4/1 (shown below), but I didn’t realize the joke on 3/31 either.

I can see how this feature could be used to abuse deadlines. But then again, I consistently get spam (on Yahoo!) that are future dated. That means that mailers (aka sendmail programs) don’t actually check the date field on incoming email. I can’t say for sure that spam filters don’t filter out future dated emails (apparently Yahoo! Mail doesn’t), but it would be mighty hard for filter out past-dated emails based on the time field.

So, the question is - why wouldn’t someone offer the capability to send past-dated emails? After all, there are plenty of companies that let you do all sorts of scams - from getting fake excuse letters (e.g. Print Doctor Excuses, Phony Excuses) to CallerID Spoofing.

Now that Google has made a fool of it, this just may be the catalyst for it. Let’s see if Google’s April Fools Joke becomes reality!

Ericsson Chief Marketing Officer Johan Bergendahl is predicting that as Mobile Broadband takes off (and it is growing faster than mobile or fixed telephony ever did), Wi-Fi hotspots will become as obsolete as telephone booths. The reasoning is simple - As more and more cellular subscribers start using wireless broadband otherwise known as Wireless WAN (WWAN) technologies (e.g CDMA2000 EV-DO, HSPA/HSDPA/HSUPA, WiMAX, LTE) and it becomes available in many areas, WiFi hot spots will no longer be needed. In fact, Bergendahl says that “Hotspots at places like Starbucks are becoming the telephone boxes of the broadband era”.

This is driven by a couple of factors:
1) Availability of devices - More and more wireless broadband devices are becoming available. There are WWAN PCMCIA cards that fit in laptops, WWAN routers, and even WWAN embedded in laptops. Apparently, Ericsson recently signed a deal to put HSPA in some Lenovo notebooks, but HP and Dell already offer laptops with CDMA2000 (e.g. for Verizon Wireless service) and HSDPA (e.g. for AT&T service) built-in.
2) Declining prices and cost - the price and costs of wireless broadband is still high compared to WiFi, but is decreasing. Bergendahl says that in countries such as Austria, Denmark, and Sweden, the average price for a mobile broadband subscription is only €20 ($31) per month. Also, PCMCIA WWAN cards are pretty cheap now, and broadband built into computers will likely go the same route as they become more popular.
3) Coverage - coverage is becoming pretty good - in the U.S., both Sprint Nextel and Verizon Wireless already cover more than 300 million pops with their EV-DO broadband network and AT&T covers more than 160 cities. Indoor coverage issues can be resolved through femtocells.

There are still some issues to be resolved: “Industry will have to solve the international roaming issue,” Bergendahl said. Another problem is that competing cellular carriers use a different technologies. Verizon Wireless, Sprint Nextel, Alltel and U.S. Cellular use cdma2000 EV-DO while AT&T uses W-CDMA (e.g. HSPA/HSDPA/HSUPA), and then there’s WiMAX as well. In contrast, WiFi is a unified standard.

What’s most interesting here is that this is not just a prediction. It is a subtle attempt to manipulate - See WiFi and mobile broadband compete against each other to a large extent in the sense that they both provide IP transport or Internet Access. Ericsson doesn’t have a strong position in WiFi, but has a very strong position in mobile broadband, especially in HSPA/HSDPA/HSUPA, so it tends to benefit immensely when WiFi is no more and cellular broadband covers the world. This is largely a self-serving, hope-filled prediction.

Like any technology, one day WiFi will fade away. Especially when we move from today’s 3G mobile broadband to 4G mobile broadband (e.g. LTE). Till then WiFi will continue to be just fine, thriving in its niche market. Take this prediction with a grain of salt.

T-Mobile USA has launched a wired phone service for $10 a month, plus taxes and fees, to its wireless subscribers in the Seattle and Dallas-Fort Worth areas. The service, called “Talk Forever Home Phone”, comes with unlimited local and domestic long distance calls. This is a VoIP service that runs over a broadband connection, and in that sense, it is similar to VoIP offerings from the likes of Vonage. Talk Forever Home Phone will likely be available nationally in a few months. It works via a special Wi-Fi wireless router that you must buy, with a two-year contract, for a $50 one-time fee . The router has two phone jacks to connect 2 standard corded or cordless phones. The router can either replace or supplement your existing wireless router and connects to the T-Mobile cellphone network. No other hardware is required from T-Mobile (e.g. you can use your own cordless or corded phones with it).Talk Forever customers must be on a T-Mobile individual plan costing at least $39.99/monthor a family plan costing at least $49.99/month.Talk Forever Home Phone has some significant downsides. It doesn’t support faxes, home-security systems and other devices that rely on dial-up modems. Also, unlike in POTS phones, your home address is not automatically transmitted to 911 emergency centers - the customer has to manually supply that address to T-Mobile during signup (and then change it whenever the address changes). This issue exists with any residential VoIP service. Cord-cutters can transfer their landline phone number to this new service, but it cannot be shared with the T-Mobile cellphone number. Also, the cell phones addressbook doesn’t transfer to the home phone (after all, addressbooks are generally local to the cellular handset).

This is similar to T-Mobile’s HotSpot AtHome program, which allows subscribers to place calls over their broadband connection using special Wi-Fi-equipped cell phones. The difference is that HotSpot AtHome uses the cell phone, while this Talk Forever Home Phone works with any standards corded or cordless phone. In both cases, T-Mobile is trying to get more people to give up their traditional landlines, but the new plan allows them to keep the familiar home phones as well as the home number.

Again the biggest losers out here will be pure-play VoIP providers such as Vonage! Not that there’s a complete overlap, but T-Mobile is positioning itself to carve out a chunk of Vonage’s customer base. This is waaaay cheaper than Vonage (doesn’t have all the features of Vonage, though) and will provide a better value proposition for those looking for cheap home service AND a mobile solution (users will have one bill for both at home and on-the-go voice service). Plus T-Mobile can market this cheaper than Vonage can because it already has a bigger customer base.

No doubt that this will be another nail in Vonage’s coffin - Vonage will now have to work even harder to survive

Verizon Wireless introduced an unlimited calling plan for $99.99 a month on last week. Verizon Wireless is the first major carrier to make an “unlimited” plan available nationwide with no domestic roaming or long-distance fees. At that time, it must have seemed like a good plan to upsell subscribers to “move up” to the unlimited level, including possibly getting new customers from the other cellular carriers, and to create some extra ‘buzz’.

However, not even a mere five hours had gone by when AT&T announced its own unlimited plan. Three hours later, T-Mobile announced its own unlimited $99.99 a month plan, which even included unlimited text and picture messaging, which otherwise costs an extra $14.99 per month when added to other T-Mobile plans. In the end, only Sprint Nextel hadn’t announced a matching plan, and the stock price of all U.S. mobile carriers had taken a dip.

This is far from a historic day in Wireless. This is merely putting a cap on the high end charge. Given that wireless carriers have a monthly ARPU (Average Revenue Per User) of around $50, it is clear that only a small percentage of customers subscribe to these high-end plans. Of course, one could expect more customers to move to the new unlimited plan, but even that would still be a small number. However, for those high end users, this will increase the rate at which they cut the cord and use cellular exclusively for their voice communication needs.

So why did the stock prices of dip so much?

Curiously missing from this picture is Sprint Nextel. Sprint has been trialling an unlimited plan for $119.99 a month (includes unlimited Web use, e-mail and messaging) in Philadelphia, Minneapolis, Tampa, and parts of Northern California and Western Nevada since May 2007. Sprint is looking at how well the offer is doing in the trial areas, and unfortunately for Sprint, this ‘looking’ has been mooted by the other 3 rivals. Given the recent customer losses and with no apparent advantage over AT&T and Verizon Wireless, Sprint will likely have to offer a cheaper plan, to stem the defection of customers. The dip in the stock price probably implies that Sprint will undercut very aggressively and that AT&T and Verizon will eventually be forced to respond. Rumors are that Sprint will undercut its rivals with a flat-rate calling plans that is as low as $60 a month. If AT&T or Verizon are forced to match a $60 to $80 plan, it can significantly cut industry-wide revenues and potentially sets a dangerous precedent towards downward spiraling price plans.

One way or the other, the actions by AT&T and T-Mobile show that nifty price plans no longer provide an advantage to any carrier. So why was this done in the first place?

Perhaps Verizon Wireless wanted to pre-empt a price cut by Sprint. Or perhaps it was a plan to kill-off Sprint Nextel. After all, Sprint is struggling and what better time to attack it than while its down!!! But now it may find itself in a downward spiraling pricing game that the industry is ill-designed to match. Nonetheless, if anyone is able to withstand price-cuts, it must be Verizon Wireless, because it has the higher margins that both Sprint Nextel and AT&T.

The cellular market in India is growing rapidly. In 2007 alone the Indian cellular added more than 80 million cellular subscriptions. By end of 2008, India will have more than 300 million cellular customers, according to estimates by Wireless Intelligence. In comparison, the USA is expected to have 270 million customers by the end of 2008. At this level, India will surpass USA to become the 2nd largest cellular market by subscribers after China. In the 1Q 2008, India is forecasted to have 250 million cellular subscribers, which will be on par with the total cellular connections in the USA. To meet this mark, the Indian cellular market with grow 57% year-on-year in Q1 2008, the same growth seen in Q4 2007. India’s cellular penetration will be more than 20% in early 2008. In comparison, China’s cellular base grew by approximately 18% over the same period, but will have 40% market penetration in early 2008.

This continued growth is facilitated mostly by providing cellular service in rural areas, where penetration rates are extremely low (6% in April 2007, according to TRAI). However, providing cellular to the rural masses will also mean charging less, because in rural areas affordability and willingness to pay are lower. This also means that cellular carriers must find ways to reduce their costs, in order to maintain profit levels. As a result, Indus Towers has been formed by Vodafone Essar, Bharti and Idea Cellular to share 70,000 cellular towers units in India, which will reduce OPEX and CAPEX and improve coverage in rural areas.

The figure below shows the number of cellular subscribers and penetration levels 2005-2010 ( courtesy of Wireless Intelligence)

India has ten GSM networks and six CDMA2000 1X networks. In 2007, GSM networks account for about 75% of total subscribers and grew more than 60% year on year. GSM subscribers are expected to pass 180 million in Q1 2008. In 2007, CDMA2000 1X connections grew by around 54% and is expected to have 65 million subscribers in Q1 2008. CDMA2000 networks are restrained by the limited availability of handsets, compared to a wide range of entry level GSM handsets.

AT&T Mobility says it will step up its 3G buildout, expanding its high-speed mobile service to more than 80 additional cities in 2008. The planned expansion will provide AT&T 3rd generation (3G) high-speed data services to nearly 350 leading U.S. markets by the end of 2008, including all of the top 100 U.S. cities. The initiative will entail rolling out 1,500+ additional cell sites in the U.S. The AT&T 3G network now delivers downlink (download) speeds between 600 and 1,400 Kilobits per second (Kbps) and uplink (upload) speeds between 500 and 800 Kbps.

AT&T also plans to complete the deployment of High Speed Uplink Packet Access (HSUPA) by the middle of 2008. HSUPA provides higher uplink speeds and is the next step in the evolution of AT&T’s 3G network that will the transition to High Speed Packet Access (HSPA) standards. With this change, AT&T will catch up to Verizon and Sprint in terms of high speed wireless coverage. In fact, AT&T may even have faster uploads with HSUPA than Verizon or Sprint has with their EV-DO Rev A network.

Currently, there are multiple 3G technologies used by different wireless carriers in the U.S. AT&T uses HSPA that is based on W-CDMA technology, while Verizon, Sprint, Alltel, and U.S. Cellular, use CDMA2000 1xEV-DO technology. Sprint is also building another high-speed wireless network based on WiMAX, which was recently classified as a 3G technology. For 4th generation (4G) services, AT&T will use a technology named Long Term Evolution (LTE), a 4th generation technology that is still in the ‘development’ stage. Verizon too has announced that it will use LTE as its 4G technology, which will align it closely with its half-parent Vodafone, which mainly operates in Europe and Asia.

Amazon has the Amazon Unbox on Tivo service, and both Netflix and Apple recently announced online movie rental services, and eventually you will be able to see Joost and Babelgum programs on TV. All this point to a market crowded with new ways to get movies fast and cheap over the Internet

Naturally, the incumbents - cable TV providers such as Comcast that deliver movies and TV programming over cable and satellite systems risk getting swept aside. Comcast is not waiting like a sitting duck. In early January, Comcast, the largest cable MSO in the U.S., announced Project Infinity to upgrade of its video-on-demand offerings and boosts the number of on-demand movies from 1,300 a month to 6,000. The cable operator says its video-on-demand services account for roughly 275 million viewings a month.

What Comcast has done to expand its movies-on-demand offering is to leverage its existing deals with Time Warner’s HBO, CBS’s Showtime, and Liberty Media Corp.’s Starz, something most others will find hard to do immediately.

At the same time, Comcast also announced the launch of Fancast, an online service at fancast.com [http://www.fancast.com] where subscribers can watch more streaming videos of TV shows from the likes of CBS and Fox and also use the site to order videos, get iTunes downloads, and program their digital video recorders to record TV shows while away from home. Comcast also plans to offer the service to other cable operators, making money from advertising and affiliate fees from DVD or download sales.

In the voice telephony world Comcast and others Cable providers are successfully taking on both VoIP providers such as Vonage and telephone companies such as at&t. In similar fashion, Comcast has a strategy to ward off anyone in the Movie and TV programming space. Comcast will not be able to stop Apple, Amazon, and Netflix completely, but will make a big enough dent in their profit plans.

A software error during routine maintenance at Charter Communications has resulted in the permanent deletion of 14,000 customer e-mail accounts. All contents in these email accounts, including messages, photos and other attachments have been erased and there is no way to retrieve contents from any folder.

Charter Communications is large cable TV operator in the U.S., and also provides telephone and high-speed Internet service. Charter provides service in 29 states and has about 2.6 million high-speed Internet subscribers. Charter gives each new Internet user a free e-mail account, but some customers opt to use other accounts instead. So every three months the company deletes inactive accounts. This gaffe apparently happened during one of those moments. Affected customers are not from a specific geographic area, but are from different parts of the Charter’s service areas. Charter will give a $50 credit to each customer affected by this “Oops” and is taking steps to make sure it never happens again. They Better!!!

Hopefully, Charter’s customer agreement has clauses freeing Charter from damages from lost email - such as lost business - otherwise, they’ll be in a lot more trouble if a customer sues Charter for loss of an important document - after all, people are known to use emails as a document repository of sorts.

I for one don’t use accounts from service providers because I don’t want to have an email associated with a specific service provider, don’t know when I might change my service provider, don’t want to take a chance with the service provider interrupting service for non-payment of bills and then deletes the email account, and mostly because there are better known email services around (think Yahoo!, Gmail, MSN Mail, etc).

Frankly, I’m surprised that the email boxes were not backed up! A good lesson for CIOs!

  Netzero has decided to shut down its PrivatePhone service on February 19, 2008. Subscribers of Netzero’s PrivatePhone can keep their number by transferring the service to Packet8. Netzero has worked out a deal with Packet8 to transfer existing PrivatePhone numbers to Packet8 at a special price.

What is PrivatePhone? PrivatePhone is a free phone numbers with voicemail - in other words, a free voicemail service where all incoming calls are diverted to a voicemail number. The customer is notified of voicemail via email or SMS/text. Customers can check voicemail via the web or by calling the PrivatePhone number from any phone. Each customer can store up to 10,000 voicemails.

PrivatePhone was billed as “Just a life-changing social tool and revolutionary movement all rolled up into one”. The proposition being that it is another number one could give out to for specific purposes (e.g. hotties, potential employers, etc). Netzero envisioned this as a social networking opportunity, thinking that people would leave cool voicemail messages, which then could be embedded on a Myspace, mashed up with Gangsta rap, or do something ‘kewl’ in the social networking space.

It didn’t strike me as a valuable social networking concept and I always wondered how feasible this free voicemail service would be. The revenue model seems to be based on advertising and perhaps by selling people’s email addresses (??). Even though the website was supported by advertising, subscribers didn’t have to utilize the website, as they could simply check voicemail by phone. In fact, regular users would find it a lot more convenient to check voicemail by phone!

Hey, this was a free phone number and probably the main reason people signed up. So I doubt subscribers will migrate their phone number to Packet8 and convert it to a paid service. That’s one of the pitfalls of offering free service - once you offer something for free, it’s very hard to charge for it. Of course, in this case, Packet8 service offers a lot more than a phone number with voicemail.