Internet Changes Everything

DoCoMo to Unveil New Eight FOMA "9 Series" Phones

NTT DoCoMo: Press Releases - DoCoMo to Unveil New Eight FOMA "9 Series" Phones

TOKYO, JAPAN, May 11, 2006 --- NTT DoCoMo, Inc. and its eight regional subsidiaries today unveiled the new lineup of eight FOMA "9 Series" handsets. All 9 Series phones are preinstalled with i-appli™ software required to use DoCoMo's DCMX™ credit card.

The series includes Japan's first HSDPA-compatible handset, the N902iX HIGH-SPEED. HSDPA is a new high-speed packet-transmission technology for downlinks at up to 3.6Mbps, or 10 times faster than current FOMA handsets.

All models in the 9 Series have music players. Some are also compatible with DoCoMo's Chaku-Uta Full® service for downloading full music tracks from i-mode™ sites, as well as Music Channel™ for programmed, automatic downloading of music from i-mode sites during the night (N902iX HIGH-SPEED), and Windows Media® Audio files (F902iS).

Other features common to many of the new 9 Series handsets include:

* Extensive security

Data Security Service™ enables phonebooks to be stored on the DoCoMo network.

Omakase Lock enables users who lost their phone to telephone a 24-hour call center to have the phone's smart card and personal data locked immediately.

Biometric Authentication requires confirmation of the owner's fingerprint, facial or voice features prior to accessing most features of the phone.

Business mopera "ANSHIN" manager enables corporate administrators to lock phones and delete/backup phonebooks remotely via computer.
* Chaku-moji

The caller's phone can transmit a 10-character message that displays on the receiver's screen as the phone rings (5 yen per message excluding tax).
* Transferring contents to external memory

Chaku-Uta, i-motion™, i-appli application data can be stored on a removable miniSD™ disk, as well as internal memory.
* 3G roaming

Compatibility with DoCoMo's WORLD WING™ service for international roaming via W-CDMA networks in 33 countries/regions.
* Deco-mail™ Signature

Decorative Deco-mail graphics can be automatically inserted in e-mail signatures and subject lines.
* Receive videophone calls during packet communications
* Compatibility with 1.7GHz bandwidth
* Compatibility with communication congestion control

DoCoMo will control voice and packet communications separately to ensure that congestion on the packet network will not affect the voice network, and vice-versa (available this summer).
* Remote control of A/V equipment

The "9 Series" handsets can be used outside the home to program audio/video equipment, such as DVD recorders, for recording TV programs.

*Certain charges will be applied for some services.

Many of the new handsets are also compatible with existing 902i features, such as:

* PushTalk™ for simple, walkie-talkie-style communication.
* Osaifu-Keitai™ e-wallet services, including mobile-phone credit cards, e-money, e-ticketing, membership programs and more.
* ToruCa™ for mobile access to information about stores, products, etc. by simply waving the phone in front of a reader/writer at a merchant or other location.
* i-channel™ for news, weather, sports scores, horoscopes, etc., delivered automatically to the phone's standby screen as telop text.

Please see the attachments for further details about the D902iS, F902iS, N902iS, P902iS, SH902iS, SO902iWP+, DOLCE SL (SH902iSL), and N902iX HIGH-SPEED.

About NTT DoCoMo
NTT DoCoMo is the world's leading mobile communications company. DoCoMo serves more than 51 million subscribers, including an unmatched 24 million people subscribing to FOMA™, launched as the world's first 3G mobile service based on W-CDMA in 2001. DoCoMo also offers a wide variety of leading-edge mobile multimedia services, including i-mode™, the world's most popular mobile e-mail/Internet service, used by more than 46 million people. With the addition of credit-card and other e-wallet functions, DoCoMo mobile phones have become highly versatile tools for daily life. NTT DoCoMo is listed on the Tokyo (9437), London (NDCM) and New York (DCM) stock exchanges. For more information, visit www.nttdocomo.com.

i-mode and FOMA are trademarks or registered trademarks of NTT DoCoMo, Inc. in Japan and other countries.
NTT DoCoMo's FOMA service is only available to subscribers in Japan.
i-appli, DCMX, iD, Music Channel, Data Security Service, i-motion, WORLD WING, Deco-mail, PushTalk, Osaifu-Keitai, ToruCa and i-channel are registered trademarks or trademarks of NTT DoCoMo, Inc. in Japan.
Chaku-Uta Full is a registered trademark of Sony Music Entertainment Corporation.
Windows Media is a registered trademark of Microsoft Corporation in the U.S. and other countries.
miniSD is a trademark of SD Associations.
i-channel uses a technology of Flash Cast™ of Adobe Systems Incorporated.
Flash and Flash Cast are registered trademarks or trademarks of Adobe Systems Incorporated in the U.S. and other countries

May 12, 2006 at 10:36 AM in Telecommunications | Permalink | Top of page | Blog Home

Call Forward voip

http://www.financetech.com/printableArticle.jhtml?articleID=184429045

Apr 05, 2006
URL: http://www.financetech.com/showArticle.jhtml?articleID=184429045

With promises of cost savings, enhanced functionality and stronger business continuity capabilities, Voice over Internet Protocol (VoIP) and IP telephony burst onto the scene more than five years ago. But fears about call quality and reliability kept the emerging technology mostly waiting in the wings. Now that it has matured, however, insurance carriers are expected to embrace VoIP and IP telephony solutions more widely in the next two years, according to experts.

"Currently, 27 percent of insurance companies in the United States have implemented IP telephony and 23 percent have applied VoIP," reports Lisa Pierce, vice president at Forrester (Cambridge, Mass.), who predicts that "50 percent of the insurance market will deploy this technology before 2010." Insurers are using the technology within branch environments to bring mobility to agents and brokers who move from branch to branch as well as to enhance customer service in the call center, she explains.

"The technology matured significantly in the last five years," relates Julien Courbe, managing director of service technology at BearingPoint (McLean, Va.). No longer bleeding-edge, VoIP and IP telephony -- the routing of voice conversations >> over the Internet and other IP-based networks in which voice data flows over a general-purpose, packet-switched network instead of traditional dedicated circuit-switched voice transmission lines -- also is no longer plagued with the quality issues it exhibited when it first appeared on the scene in 1998. "The major difference between VoIP and IP telephony is that with VoIP, you keep the legacy environment, whereas IP telephony represents the integration of a telephony application within the corporate environment," Courbe explains.

Both approaches offer opportunities for cost savings, as the technology enables both data and voice communications to share the same network, resulting in a simplified infrastructure and, consequently, streamlined network management. Further, it enables firms to avoid traditional phone charges by routing long distance calls over the Internet. But the advanced functionality, and resulting productivity gains, that VoIP enables may be emerging as an even more important business driver for the technology's adoption.

Feature Rich

For example, with the addition of tools that allow calls to be taken from virtually anywhere -- including via e-mail or BlackBerry devices -- and to be transferred automatically to knowledge experts within a call center, IP telephony provides opportunities for enhancing the overall customer experience. "No individual user needs all 400 features in IP telephony, but all of the options allow companies to choose which functionalities fit their enterprise needs," says Tony Kleckner, director and practice leader of financial services for Avaya, a Basking Ridge, N.J.-based VoIP and IP telephony vendor. Other vendors of converged communications solutions include Cisco (San Jose, Calif.), Nortel (Brampton, Ontario) and Vonage (Holmdel, N.J.).

VoIP can be deployed on any IP network, including those lacking a connection to the rest of the Internet, such as local area networks (LANs), using IP private branch exchange (PBX) ports and legacy digital PBX ports. Methods include connecting traditional telephones to VoIP converter boxes, installing IP-based phones that connect directly to the Internet or deploying "softphone" software that allows users to make calls from any personal computer using a headset or microphone.

VoIP grew from 1.2 million business subscribers in 2004 to 4.2 million business users in 2005. In the insurance industry, the seemingly sudden surge in VoIP and IP telephony adoption actually began several years ago, but companies only recently have finalized updates to legacy network technology that were originally initiated to maximize VoIP functionality and ensure network security.

"In the past year, VoIP grew eight fold," relates Kevin Kalinich, a consultant and national managing director of professional risk at Aon (Chicago). "Insurance carriers are looking at the advantages from a business standpoint and focusing in on network risk prior to implementation -- anticipating the vulnerabilities to security and exposure," he explains.

Yet, security has been the major challenge for insurers adopting VoIP. "Voice data is different from regular data, and CIOs have to devise network plans to include voice encryption, authentication and VoIP-specific firewalls," says Kalinich. The danger is that it is relatively easy to eavesdrop on unencrypted VoIP calls using open source solutions such as VoIPong or Vomit. As a result, many companies implement separate encryption and authentication tools to prevent hacking and eavesdropping.

Although most VoIP vendors include security solutions as part of their VoIP packages, "Security is a big issue," confirms Forrester's Pierce. "Most companies don't deal with security issues very well, and there are a lot of risks out there -- viruses, worms and hackers."

Money Talks

Still, most experts agree that with proper planning and network support, the benefits of VoIP outweigh the risks. In general, phone service via VoIP costs less than traditional landline service because users only need to maintain a single network. "With IP telephony, outgoing costs can be reduced by 15 to 20 percent of the recurring expenses of the matching legacy telephony environment," asserts BearingPoint's Courbe.

Cost was the initial reason St. Paul Travelers (St. Paul; $113.2 billion in total assets) adopted VoIP, according to Jamie Libow, telecommunications director for the carrier. "Initially, it was just cost savings that drove us to look at VoIP as a replacement for legacy phones," he explains. "The market was starting to move toward VoIP, and we knew the time would come soon so we needed to get our feet wet."

Libow began running internal pilots on several VoIP vendors' products in 2000. "I was looking for a stable platform with the utmost performance," he says. "In 2000, the system uptime wasn't what we were looking for."

Libow and his team eventually found more-robust products to meet the needs of the business. They decided that by combining Avaya's S8700 Media Center call center solution and Cisco's CallManager for agents and interoffice use, St. Paul Travelers would be able to maximize both stability and cost savings. "We decided to implement both vendors' solutions during a renovation in Hartford, Conn.," explains Libow. "We were able to run both on one [network] wire with IP telephony instead of two, and that proved to be enough of a cost justification."

By implementing VoIP, the company saves 33 percent of what it was spending on traditional telecommunication. But, gradually, St. Paul Travelers realized other benefits of the VoIP system besides cost. Softphones have enabled the mobile workforce to be more accessible while traveling between the carrier's two key locations in Hartford and St. Paul. "All of our agents can now be reached at a single number internally," says Libow. "Next, we will continue to roll out more functionalities for remote agents."

Cost also was the primary reason Johnson Inc. (more than U.S. $600 million in annual premium), a St. John's, Newfoundland-based personal and group home, auto, and travel insurer, decided to switch to IP telephony. "We wanted to get back some of the communication costs," says Glen Ryan, the carrier's coordinator of technical communications. "We have 43 office locations across Canada, and to keep things flowing on a daily basis was very expensive." Because Johnson Inc. had the existing infrastructure to support Cisco's VoIP product, in April 2003 Ryan tapped Cisco's CallManager for internal communications, and IP Cisco Express and Cisco Unity for the company's contact centers.

Initially, Johnson Inc. implemented the technology at six regional offices. To deploy the solution, the insurer first had to remove rented telephone equipment from Telco (Kfar Netter, Israel) and install a whole new network at each branch location, for which it contracted Aliant (Saint John, New Brunswick). "We decided that trying to merge any old technology with new technology would only cause more of a hindrance," explains Ryan. "Since we were renting, it was just easier to spend on the equipment to get more of a return on investment." Aliant also installed Cisco's solution for Johnson Inc. The entire initiative took two years to complete.

Johnson Inc. already has experienced a significant savings. "Before, our communication costs were around $2.4 million [CAN, approximately U.S. $2 million] annually, and right now we are running at about $1.6 million [U.S. $1.37 million]," according to Ryan. But Johnson Inc. also has recognized the customer service benefits offered by VoIP. Currently, it is working to tie Cisco's contact center features into the carrier's e-business strategy. "We have a 24-hour call center service that allows live chat with representatives," says Ryan. "We want to make sure we are offering the best customer service we can."

Stay on the Line

As Johnson Inc. is discovering, VoIP's benefits extend beyond cost savings. The technology enabled Northbrook, Ill.-based Allstate ($156 billion in assets) to service its customers at a critical time -- after Hurricane Katrina ravaged the Gulf Coast, including several Allstate facilities. With many offices and customers affected by Hurricane Katrina, Allstate was able to immediately transfer call center activity to other locations around the country. "Our business is about putting people's lives back together," says Catherine Brune, CIO for Allstate. "Because of VoIP, we were there for our customers when many of our competitors couldn't be."

But like many other companies, Allstate first looked at VoIP as a cost-savings play. "It has become much more than I think we ever envisioned it," notes Brune. "It is truly an enabler of a new business process and business continuity."

Allstate began exploring VoIP in 2000 and by 2003 decided the technology had matured enough to make the investment. Because Allstate already was using Avaya for telecommunications, the carrier's executives decided to deploy Avaya's Communication Manager in a customer-facing call center in Northern Ireland. "In the U.S., we struggled with how we could build a business case, holistically across the enterprise," explains Clay Roberts, enterprise architect for Allstate. "We figured if we could deploy this properly internationally, we could deploy this properly in the U.S."

Since the IT department had been testing VoIP products internally for several years, implementation went fairly smoothly, according to Roberts. By the end of 2004, Allstate built a business case on the benefits it gained from VoIP in Northern Ireland and decided to roll out the technology on a year-to-year basis. Since then, Allstate has implemented IP telecommunications throughout 20 Allstate service and call centers. "Now, we are in the process of rolling out IP telephony to a majority of contact centers," relates Roberts, who adds that the initiative is scheduled to continue over the next few years.

A Fresh Start

The same advanced VoIP functionality that appeals to established carriers like Allstate also can help start-up insurers provide high-level customer service. And since start-ups don't have legacy systems to deal with, many -- such as Calabasas, Calif.-based Insurance Neighborhood, which was incubated by Indianapolis-based WellPoint ($41.8 billion in total assets) -- are leapfrogging into VoIP. "Since our consumer promise is convenience of the Internet and the service of the local agent, we need to have a local network from Day 1," says Alan Katz, president and CEO of Insurance Neighborhood, who notes that the carrier deployed ShoreTel's (Sunnyvale, Calif.) VoIP solution because of the scalability and expandability of the system's features.

And carriers such as New York-based Integro Insurance Brokers ($300 million private placement) realize that converged communications can provide a competitive advantage right out of the gate. "The telephone is critical in our business," says Craig Lowenthal, CIO for Integro. "VoIP offers a combination of products and services for our employees to be accessible to our clients." The company, which started up in May 2005, chose Nortel's CS1000 platform for telephone switches, Call Pilot for voicemail, MCS 5100 multimedia server for audio and video conferencing, and the IP 2007 Phone -- VoIP phones that can be integrated with each employee's computer. "With this technology, our brokers can collaborate with each other as if they were all local," says Lowenthal. Currently Integro is live with VoIP in nine offices. It is in the process of implementing VoIP in five more offices and extending its features.

Of course, start-ups aren't the only organizations with an opportunity to build a VoIP network from the ground up. As part of an effort to migrate to a new core system, Safeway Insurance (Westmont, Ill.; $15.7 billion in total assets), which first began investigating VoIP in 2001, recently adopted the technology. "We didn't feel comfortable with the technology until recently, where we found ourselves in a unique position," says Mike Leather, network services manager for the insurer. "We were moving one of our offices and decided to investigate VoIP to replace one of our legacy systems." Safeway's legacy telecom system from Tadiran (Port Washington, N.Y.), located in the carrier's Monroe, Calif., office, "was an expensive system because we needed to call someone in to implement any changes," explains Leather.

In June 2005, Leather decided to implement ShoreTel's VoIP solution in the Monroe office. "Although we looked at a couple other vendors, it pretty much came down to ease of maintenance and the ability to manage the system ourselves," he says. The ShoreTel system, which runs on Safeway's Microsoft (Redmond, Wash.) Windows 2003 servers, is a distributed, scalable solution layered on the IP network. Along with ShoreTel's system, the carrier elected to implement Power-over-Ethernet (PoE) switches, which allow technicians to run just one Ethernet cable to the access point for supplying both power and data. Implementation took two days.

Leather relates that Safeway chose to purchase the system with every available feature, including call center forwarding and digital messaging. "In the future, we plan to exploit more features of VoIP, like screen pops, to provide better customer assistance," he explains, adding that the insurer is in the process of rolling out the system to nine more of its offices, a project that should be completed by May. "This is a great investment for Safeway," says Leather. "Overall, the cost of maintenance on the legacy system alone was going to be more than deploying this system."

April 10, 2006 at 09:00 PM in Telecommunications | Permalink | Top of page | Blog Home

Why Google is going mobile

Why Google's Going Mobile

So what's behind Google's mobile strategy, and can it make money from the effort? Nishar fielded those and other questions from BusinessWeek Online reporter Olga Kharif on March 1. Edited excerpts of their conversation follow.

You just announced you'll provide blogging and search tools on Sony Ericsson phones. How will your tools be better than similar applications already out there?

Google will become integrated into the phones. Users will be able to access Google search with just one click. Mobile blogging will be a very integrated experience as well: When people take a picture, they will have an option to blog it -- essentially, to post it online -- with one click.

Google has been making a lot of mobile-related introductions recently. Why are we seeing all of these now?

We are finding that mobile users are getting more sophisticated by the day. They are searching not just for the standard categories like weather and stock quotes, but they are also looking for more content. That symbolizes a certain maturity of the market. So we want to take advantage of that.

Google News for mobile devices, for example, is pretty unique in the mobile world. [It] only provides sources that were created specifically with your phone in mind. These are all sites that we have crawled and indexed that have been especially formulated for the phone or personal digital assistant [PDA]. When you click on something, the story [will be] formatted to fit on your phone.

Obviously, the goal is to make money off of these mobile efforts by offering mobile-search advertising. How much potential do you see there?

Mobile search is definitely a fairly large opportunity. As we examine the volume of mobile and SMS [short-text messaging] search, we find that day-over-day volume is growing nicely. There's quite a bit of appetite among users. We also believe that the recent announcements that we've made -- for example, the agreement with Vodafone -- shows that operators are seeing similar demand from their user base, also.

How do you monetize mobile search? Do you expect to derive revenue only from ads, or also from revenue sharing with carriers?

In general, mobile data services are not even close to their peak. It's too early to talk about heavy monetization. But we are looking at different options. We've recently conducted a trial in Japan of using mobile text ads on search pages. When people do a search on Google.com on their mobile device, they see one or two text ads that are clickable.

Did a lot of people click on those?

These mobile search ads did very, very well. But you have to remember that Japan is a very advanced market when it comes to mobile users. Roughly 25% of Internet usage happens on mobile devices there. It may or may not work as well in other parts of the world. The products and services that we offer in different parts of the world will be different. And even the monetization model could end up being different in different parts of the world.

How important strategically is the mobile business to Google?

For Google, it's extremely strategic. Our mission is, take the world's information and make it universally available and useful for our users. And we don't believe all the users will use PCs to access content. Especially in emerging markets where cell phone penetration is deeper than PC penetration, cell phones might become -- or, in some cases, have already become -- the primary means of accessing data.

What's your overarching mobile strategy?

The phone is not the PC. It's about creating the right experience for the mobile user, so they can find exactly what they want, quickly and efficiently. People search differently on mobile phones; they don't browse as much, as PC users do, for example.

We also focus on personalization. The phone is a very personal device you don't share with your spouse or your children like you do the PC at home. How can we make this interaction even more personal? Well, we launched the Google Personalized Home page, that's also now available on the phone.

Finally, our strategy is really about globalization and how our mobile services and offerings need to be different around the world. I spend 30% to 40% of my time outside [the U.S.], talking to users about various services and how they are using them. In India, people love using wireless data services with interactive voice response. People actually pay extra to use that service. Not so in the U.S. In China, SMS is very, very big. So our goal is to tailor our products and services to these various markets.

This global strategy is going to take a lot of resources. Can you give me some idea of how much Google is putting into it?

The resources are very significant. I have teams in five locations around the world, and many of them work on local problems. The staff is fairly substantial.

March 5, 2006 at 10:52 AM in Telecommunications | Permalink | TrackBack (38) | Top of page | Blog Home

Voice Over Internet Use Soaring

Voice Over Internet Use Soaring - Yahoo! News

Wed Mar 1, 4:53 PM ET

NEW YORK - Last year was a breakout time for Internet telephone services, with the number of U.S. subscribers more than tripling to 4.5 million and industry revenue surpassing $1 billion.

When 2005 began, there were 1.3 million subscribers of Voice over Internet Protocol services, according to a survey by analysis firm TeleGeography. In the last three months of the year alone, 900,000 people signed up for VoIP services.

VoIP requires a broadband Internet connection or a cable subscription, and generally comes in competitive calling plans.

Cable companies are now the largest providers of VoIP services, with 52 percent of the market compared to 45 percent a year ago.

The largest VoIP provider is still independent Vonage Holdings Corp. It had 1.2 million subscribers at the end of the year, just ahead of the 1.1 million at Time Warner Inc.'s cable division. But Time Warner Cable is the fastest-growing provider and appears set to surpass Vonage this year.

TeleGeography predicts that VoIP companies will continue to add about 3 million subscribers a year for the next three or four years.

Even with that growth, VoIP remains a relatively small slice of the phone business. There were 132 million residential and small business phone lines in the United States in December 2004, according to the latest figures available from the U.S. Telecom Association.

March 2, 2006 at 01:35 PM in Telecommunications | Permalink | TrackBack (15) | Top of page | Blog Home

Content is not king 2

Content is Not King

Although social uses are important to the the telephone industry, a glance at Table 1 shows that most of the revenues come from businesses. Household spending on phone service brings in only about a third of the total revenues. (The figures for total revenues, $256 billion in 1997, and consumer spending, $85 billion, come from different sources. It is possible that consumers spend somewhat more, especially for cell phones, than is reported in the $85 billion figure. However, even if one makes the most likely adjustments, it still appears that business spending on telephony is far larger than that of households.) That has been the historical trend, and many communication services, including the phone, were initially devoted almost totally to business uses. Traditionally, commercial users have subsidized residential ones. Sometimes this was done involuntarily, as in higher rates dictated by carriers or by government regulators, and sometimes voluntarily, as in paying for toll-free 800 numbers. It appears probable that similar subsidies will also play a large role on the Internet. (That is also why toll-free numbers for wireless calls may be very important.) We may very well end up with a system in which the largest monetary contribution will come from commercial users, the second largest for households paying for point-to-point communication, and the smallest by the transport component of charges for content.

On the other hand, if point-to-point communications were to dominate, and if Metcalfe's Law were to hold, there would be strong economic incentives to a unified network without barriers. This is considered more fully in Section 4 of [Odlyzko3]. The general conclusion there is that even though Metcalfe's Law is not fully valid, the incentives to maintain an open network are likely to be very strong. This will be largely because content is not king, and effective point-to-point communication will demand easy interconnection.

An extreme form of the "content is king" position, but one that is shared by many people, and not just in the content industry, was expressed recently by the head of a major music producer and distributor:

What would the Internet be without "content?" It would be a valueless collection of silent machines with gray screens. It would be the electronic equivalent of a marine desert - lovely elements, nice colors, no life. It would be nothing. [Bronfman]

The author of this claim is facing the possible collapse of his business model. Therefore it is natural for him to believe this claim, and to demand (in the rest of the speech [Bronfman]) that the Internet be designed to allow content producers to continue their current mode of operation. However, while one can admire the poetic language of this claim, all the evidence of this paper shows the claim itself is wrong. Content has never been king, it is not king now, and is unlikely to ever be king. The Internet has done quite well without content, and can continue to flourish without it. Content will have a place on the Internet, possibly a substantial place. However, its place will likely be subordinate to that of business and personal communication.End of article

About the Author

Andrew Odlyzko is Head of the Mathematics and Cryptography Research Departments at AT&T Labs. His professional interests include computational complexity, cryptography, number theory, combinatorics, coding theory, analysis, and probability theory, as well as data networks, electronic publishing, and electronic commerce.
E-mail: amo@research.att.com
Web: http://www.research.att.com/~amo
Note

For more detailed arguments, data, and references, see the longer manuscript [Odlyzko3].
Acknowledgements

I thank Frances Cairncross, Bob Frankston, Alan Kotok, Monica Marics, Mike Noll, Hal Varian, and Mark Wolfe for comments and useful information.
Bibliography

J. Abbate, 1999. Inventing the Internet. Cambridge, Mass.: MIT Press.

L.A. Adamic and B.A. Huberman, "The nature of markets in the World Wide Web," available at http://www.parc.xerox.com/spl/groups/dynamics/topics/internetecologies.shtml

S. Baker, 2000. "Telefónica: Takeover escape artist? It's fending off predators with spin-offs that boost market cap," Business Week(10 April).

E. Bronfman, Jr., 2000. "Remarks as prepared for delivery at the Real Conference 2000, San Jose," (26 May), available as a Seagram press release at http://www.mpaa.org/copyright/EBronfman.htm

K.G. Coffman and A.M. Odlyzko, 1998. "The Size and growth rate of the Internet," First Monday,volume 3, number 10 (October), at http://firstmonday.org/issues/issue3_10/coffman/. Also available at http://www.research.att.com/~amo

K.G. Coffman and A.M. Odlyzko, 2001. "Internet growth: Is there a "Moore's Law" for data traffic?," In: J. Abello, P.M. Pardalos, and M.G.C. Resende, (editors). Handbook of Massive Data Sets.Boston: Kluwer; available at http://www.research.att.com/~amo

CTIA (Cellular Telecommunications & Internet Association), 2000. "CTIA Reports 1999 Survey Results," press release (11 April), available at http://www.wow-com.com/news/ctiapress/body.cfm?record_id=857

T.S. Denison, 1901. "The telephone newspaper," p. 640 of World's Work, April 1901 edition. Reproduced at http://www.ipass.net/~whitetho/part1.htm

I. de Sola Pool (editor), 1977. The Social Impact of the Telephone.Cambridge, Mass.: MIT Press.

I. de Sola Pool, 1983. Forecasting the Telephone: A Retrospective Technology Assessment.Ablex.

I. de Sola Pool, H. Inose, N. Takasaki, and R. Hurwitz, 1984. Communications Flows: A Census in the United States and Japan.Amsterdam: North-Holland.

S.J. Douglas, 1987. Inventing American Broadcasting.Baltimore: Johns Hopkins University Press.

J.S. Ettema, 1989. "Interactive electronic text in the United States: Can videotext ever go home again?," In: J. L. Salvaggio and J. Bryant (editors). Media Use in the Information Age: Emerging Patterns of Adoption and Consumer Use.Hillsdale, N.J.: Lawrence Erlbaum Associates, pp. 105-123.

C.S. Fischer, 1992. America Calling: A Social History of the Telephone to 1940.Berkeley: University of California Press.

S. Garfinkel, 2000. Database Nation: The Death of Privacy in the 21st Century.Sebastopol, Calif.: O'Reilly & Associates.

B.S. Greenberg, 1989. "Teletext in the United Kingdom: Patterns, attitudes, and behaviors of users, In: J. L. Salvaggio and J. Bryant (editors). Media Use in the Information Age: Emerging Patterns of Adoption and Consumer Use.Hillsdale, N.J.: Lawrence Erlbaum Associates, pp. 87-101.

D.C. Jackson, W.H. Crumb, and G.W. Wilder, 1907. Report on the Telephone Situation in the City of Chicago; In Respect to Service, Rates, Regulation of Rates, etc.; submitted to The Committee on Gas, Oil and Electric LIght of the City Council of the City of Chicago.Chicago: Gunthorp-Warren Printing Co.

R.R. John, 1995. Spreading the News: The American Postal System from Franklin to Morse.Cambridge, Mass.: Harvard University Press.

J. E. Katz and P. Aspden, 1997. "A Nation of strangers?," Communications of the ACM,volume 40, number 12, pp. 81-86.

B. Klopfenstein, 1989. "Problems and potential of forecasting the adoption of new media," In: J. L. Salvaggio and J. Bryant (editors). Media Use in the Information Age: Emerging Patterns of Adoption and Consumer Use.Hillsdale, N.J.: Lawrence Erlbaum Associates, pp. 21-41.

J. Krause, 2000. "Global Crossing plans its media play," The Standard(27 March), at http://www.thestandard.com/article/display/0,1151,13209,00.html

M. Lesk, 1997. "How much information is there in the world?," unpublished paper, at http://www.lesk.com/mlesk/ksg97/ksg.html

J.C.R. Licklider, 1965. Libraries of the Future.Cambridge, Mass.: MIT Press.

J.C.R. Licklider and A. Vezza, 1978. "Applications of information technology," IEEE Proceedings,volume 66, pp. 1330-1346.

P. Lyman and H. R. Varian, 2000. "How much information?," at http://www.sims.berkeley.edu/how-much-info/

M. Margolis and D. Resnick, 1999. "Third Voice: Vox Populi Vox Dei?," First Monday,volume 4, number 10 (October), at http://firstmonday.org/issues/issue4_10/margolis/

A.M. Noll, 1997. Highway of Dreams: A Critical Appraisal of the Communications Superhighway.Mahwah, N.J.: Lawrence Erlbaum Associates.

A.M. Odlyzko, 1997. "The Slow evolution of electronic publishing," In: F. Rowland and A.J. Meadows (editors). Electronic Publishing '97: New Models and Opportunities: Proceedings of an ICCC/IFIP conference held at the University of Kent at Caterbury, England, 14-16 April 1997.Washington, D.C.: ICCC Press, pp. 4-18; and at http://www.research.att.com/~amo/

A.M. Odlyzko, 2000. "The Internet and other networks: Utilization rates and their implications," presented at the 1998 Telecommunications Policy Research Conference. Information Economics & Policy,volume 12, pp. 341-365; and at http://www.research.att.com/~amo/

A.M. Odlyzko, "The History of communications and its implications for the Internet," at http://www.research.att.com/~amo/

U.K. Office of Telecommunications, 2000. "November 2000 Market Information Update," at http://www.oftel.gov.uk/market/miu1100.pdf

Pew Internet & American Life Project, 2000. The holidays online: Emails and e-greetings outpace e-commerce,at http://63.210.24.35/reports/pdfs/PIP_Holiday_Report.pdf

B. Schlender, 2000. "Sony plays to win," Fortune,volume 141, number 9 (1 May), pp. 142+, at http://www.fortune.com/fortune/2000/05/01/mak.html

S. Smulyan, 1994. Selling Radio: The Commercialization of American Broadcasting, 1920-1934.Washington, D.C.: Smithsonian Institution Press.

B. St. Arnaud, 1997. "The Future of the Internet is NOT multimedia," Network World(November), at http://www.canarie.ca/~bstarn/future_internet.html

T. Standage, 1998. The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century's On-line Pioneers.New York: Walker.

U.S. Census Bureau, 1999. Statistical Abstract of the United States 1999. Washington, D.C.: U.S. Government Printing Office, and at http://www.census.gov/prod/www/statistical-abstract-us.html

B. Winston, 1998. Media Technology and Society: A History: From the Telegraph to the Internet.New York: Routledge.
Editorial history

Paper received 8 January 2001; accepted 29 January 2001.
Contents Index

Copyright ©2001, First Monday

Content is Not King by Andrew Odlyzko
First Monday, volume 6, number 2 (February 2001),
URL: http://firstmonday.org/issues/issue6_2/odlyzko/index.html

February 12, 2006 at 11:00 AM in Telecommunications | Permalink | TrackBack (46) | Top of page | Blog Home

Content is not king

Content is Not King

The Internet is widely regarded as primarily a content delivery system. Yet historically, connectivity has mattered much more than content. Even on the Internet, content is not as important as is often claimed, since it is e-mail that is still the true "killer app."

The primacy of connectivity over content explains phenomena that have baffled wireless industry observers, such as the enthusiastic embrace of SMS (Short Message System) and the tepid reception of WAP (Wireless Application Protocol). Combined with statistics showing low cell phone usage, this also suggests that the 3G systems that are about to be introduced will serve primarily to stimulate more voice usage, not to provide Internet access.

For the wired Internet, the secondary role of content will likely mean that the dangers of balkanization are smaller than is often feared. Further, symmetrical links to the house are likely to be in greater demand than is usually realized. The huge sums being invested by carriers in content are misdirected.

Contents
Introduction
Spending on content and connectivity
History of preoccupation with content
Content and the brave new world of the Internet
Wireless communications
The Role of content
The Future of the Internet
Rates of technological change
Content in the future
Value of social interactions
Conclusions

++++++++++
Introduction

The Internet is widely predicted to produce "digital convergence," in which computing, telecommunications, and broadcasting all merge into a single stream of discrete bits carried on the same ubiquitous network. The popular images of convergence are heavily tinged with the flavor of Hollywood. "Content is king" is the universal buzzword, where content is usually taken to mean professionally prepared material such as books, movies, sports events, or music. The race is supposedly to determine which organization or alliance will dominate in providing content to users, ideally in advanced multimedia formats. A recent article concludes that "[the Internet] has become a mass medium used mostly by relatively passive consumers, and as such major content providers will dominate it" [MargolisR]. The book [Winston] also presents the Internet as the next step in the evolution of mass media. Many industry leaders appear to base their strategies on this thesis. For example, at Global Crossing, its recent CEO, Leo Hindery, was attempting

to turn this global Internet-based network into a mature content distributor. ... "I don't want to be anyone's dumb pipes," says Hindery. "If all you do is racks and servers, that's dumb. What we're doing is melding the network and the content." [Krause]

This preoccupation with content is not peculiar to North America. Norio Ohga, once CEO and recently chairman of Sony, says that "[w]ithout content, the network is nothing" [Schlender]. Juan Villalonga, until recently the chairman of the dominant Spanish communications carrier Telefónica, based his strategy on the belief that "[t]he key ... is content. Without it, ... phone companies risk becoming simple commodity pipelines" [Baker].

Unfortunately for these companies, content is not the key. Content certainly has all the glamor. What content does not have is money. This might seem absurd. After all, the media trumpet the hundred million dollar opening weekends of blockbuster movies, and leading actors such as Julia Roberts or Jim Carrey earn $20 million (plus a share of the gross) per film. That is true, and it is definitely possible to become rich and famous in Hollywood. Yet the revenues and profits from movies pale next to those for providing the much denigrated "pipes." The annual movie theater ticket sales in the U.S. are well under $10 billion. The telephone industry collects that much money every two weeks! Those "commodity pipelines" attract much more spending than the glamorous "content."

In the following sections I develop the argument that connectivity is more important than content. The evidence is based on current and historical spending figures. I also show that the current preoccupation with content by decision makers is not new, as similar attitudes have been common in the past. I then make projections for the future role of content and connectivity, and discuss implications for the architecture of the Internet, including wireless technologies.

++++++++++
Spending on content and connectivity

As mentioned in the Introduction, movie theater revenues are tiny compared to spending on communications. Of course, movie tickets are only a small part of the movie industry revenues, and an even smaller part of the entire content industry. This section therefore presents a more comprehensive comparison. The final conclusion is still the same, namely that spending on connectivity is much more important for communication services than spending on content can ever be.

A reasonable objection to the comparison made below is that investments are driven by profits, not revenues. That is true. However, one cannot have profits without revenues. Further, profits of the telephone industry have dwarfed those of Hollywood. Even if we look at profitability in terms of return on investment, it is not clear that movies have been notably more profitable than communications, especially if one adjusts for risks. Those who invested in Disney in the early 1980s (but not recently) have done very well, but Sony took a bath in its takeover of Columbia Pictures. Some creative talent has done very well. An outstanding example is Steven Spielberg, who became a billionaire, while minimizing his risks through careful structuring of his deals. On the other hand, for most actors and writers, the financial rewards are much slimmer and spottier, as Hollywood is very much a "winner-take-all" market. In communications the risks may also be rising, as the Iridium debacle demonstrates, but so are potential returns. At this moment Wall Street gets attracted primarily to the prospects for rapid growth, figuring that profits will show up some time in the future. While the actual returns that Wall Street seems to be expecting are almost surely ludicrously overoptimistic, the general principle appears valid. The histories of the telegraph and the telephone show the same pattern. Usually many companies jumped in with unrealistic hopes, most failed, but the industry as a whole prospered. Therefore this paper concentrates on revenues and growth rates of various sectors of the high-tech economy, and what they say about the current and potential role of content.

Table 1 presents statistics that show the relative sizes of several sectors of the U.S. economy. The data was drawn primarily from [USDOC], and the year 1997 was the most recent for which all the relevant time series were available. The detailed description of how the figures were obtained is given in the the paper [Odlyzko3]. There is considerable overlap in different categories in Table 1. For example, the $187.5 billion of advertising industry revenues pays for almost all television broadcasting, and that provides much of the funding for the movie industry. Further, consumer expenditures on phone services are already contained completely in the general telephone industry figure. Some of the categories, such as sporting goods and airlines, are included just for illustration.

What is striking is how highly valued communications is. If we combine the revenues of the phone industry with those of the postal service, we obtain a figure larger than military spending, and almost three times higher than the revenues of the airline industry. Just the spending on phone services is higher than all advertising outlays. So say good-bye to all those plans for financing the Internet through advertising! Yes, advertising can help fund some services, but it will not provide the generous revenue streams that are needed to support a communications infrastructure as large as the phone system. To obtain the funding that many dot-coms seem to be planning on, it will be necessary to get contributions from more than advertising. E-commerce can help, but even that probably will not be enough, and it will be necessary to persuade people to pay for a large chunk of their communications. The question is, what are people willing to pay for?

Table 1 shows that some advertising-supported business models might indeed be feasible. For example, sales of recorded music come to about $15 billion per year. If one eliminates the overhead costs of the physical distribution system for CDs (including music stores), one could probably provide the artists with as much money as they make now, and the music labels with as much revenue for their central selection and promotional activities (and their profit) as they make now for under half of the $15 billion. That would be about half of the advertising revenues that the radio industry collects for broadcasting music. Getting that much extra funding from advertising might be possible for an Internet music service that allowed listeners much greater selectivity and thereby led to more listening (as Napster appears to be doing on college campuses). However, such a move appears feasible only because recorded music is a relatively small market. We could not hope to obtain enough advertising funding to pay for anything as large as the phone system.

Although Table 1 makes a powerful case by itself, it is worth reiterating the basic theme, which is that the vaunted "content" is not where the action is. The postal system alone collects almost as much money as the entire movie industry, even though the latter benefits from large foreign sales. For all the publicity it attracts, entertainment is simply not all that large, because people are not willing to pay very much for it. The dream of the early 1990s of financing the "Information Superhighway" through "500 channels to the home on the cable TV network" was an obvious fantasy.

Content is not only a small part of the economy, it is often paid for indirectly. Well over two thirds of newspaper revenues, and almost all of broadcast TV and radio revenues come from advertising. Thus content is being given away in order to attract people to goods and services they are willing to pay for. Although spending for content (whether by consumers or advertisers) has been rising, it has been doing so at a sedate pace, and is unlikely to explode.

One could object that Table 1 proves just the opposite of what is claimed above. After all, this table shows that even if no single content segment collects anywhere near as much money as the phone system, in aggregate huge sums of money are being spent on content. In particular, household spending on content is over 50% higher than on phone services. There is some issue of what one means by content, a question we will return to later. If we take a generous interpretation, we can come up with total content industry revenues comparable to the $256 billion that the telephone industry collected in 1997. (This would include household spending as well as business information services and advertising revenues of broadcast industries.) However, comparing just the total revenues of those two industries is misleading. In the case of the telephone industry, the $256 billion does include some service revenues as well as yellow pages advertising, but the overwhelming majority of that money is for simple transport of voice and data. The content industry as a whole, though, has to use its revenues to pay for content as well as the delivery of the content. The creative souls who command $20 million per movie know their value, and do manage to appropriate the lion's share of the profits from such enterprises, while keeping their risks lower than those of the investors. Similarly, the professionals who compile the Lexis database, or assemble and monitor Reuters' financial data feeds, have to be paid, just like movie actors and musicians. Even if their average pay is lower, there are more of them, and their payroll, as well as all the equipment and overhead needed to support their work, are not inexpensive. Hence only some of the revenues of the content industry contribute to the communications infrastructure. Since this work is concerned with the future of the Internet, it is the present and potential funding for the network that matters.

Table 1: Selected sectors of U.S. economy

Industry

1994 revenues
billions

1997 revenues
billions

annual growth
rate

telephone

$199.3

$256.1

8.7%

long distance

81.0

98.5

6.7

wireless

16.8

33.5

25.9

U.S. Postal Service

49.6

58.3

5.5

advertising

151.7

187.5

7.3

motion pictures

53.5

63.0

5.6

movie theaters

6.2

7.6

7.0

video tape rentals

7.0

7.2

0.9

broadcast industries

television broadcasting

31.1

36.9

5.9

radio broadcasting

10.5

13.5

8.7

newspapers

47.2

55.3

5.4

magazines

17.4

19.9

4.6

consumer spending on "content"

113.9

133.5

5.4

subscription video

29.2

41.5

12.4

home video (rental and purchase)

17.8

20.4

4.6

home video games

3.1

4.4

12.4

newspapers

12.8

13.6

2.0

consumer magazines

9.5

10.1

2.1

consumer books

20.2

20.9

1.1

recorded music

14.7

14.9

0.5

consumer spending on phone service

70.5

85.4

6.6

sporting goods sales

53.5

64.1

6.2

airlines

88.3

109.5

7.4

national defense

281.6

270.5

-1.1

That only a fraction of the revenues of the content industry go for delivery is an important point that has analogs in the context of e-commerce. E-commerce is already big, and is exploding. However, what does that mean for the network? A dollar of e-commerce transactions does not mean a dollar devoted to the network. When that sterling example of e-commerce, Amazon.com, sold $1.6 billion of goods (primarily books) in 1999, it is likely that only a few million dollars of the $2.3 billion of its costs went for Internet connectivity. Considerably more, but (judging from its financial reports) still only around $150 million, went for the servers, software development, and other information technology products and services that are needed to stay competitive in this rapidly changing field. If the Amazon figure of $1.6 billion is to represent the e-commerce opportunity for the Internet, then t-commerce ("t" standing for "telephone", and covering all deals that use the phone in any way) amounts to tens of trillions of dollars. (Yes, more than the GDP, since the wonderful accounting of the e-commerce world surely would let us count the same value several times, as it passes through multiple transactions that all use the telephone at some stage.) The contribution of e-commerce to communications is growing, but it has to be kept in perspective.

Communications is far from being the largest segment of the economy. It is smaller than cars, housing, food, and especially medicine. It is also about two thirds the size of the primary and secondary education sectors, and comparable to the higher education enterprise. The main point, though, is that communications is huge, and represents the collective decisions of millions of people about what they want. It is also growing relative to the rest of the economy in a process that goes back centuries. As a fraction of the U.S. economy, it has grown more than 15-fold over the last 150 years. The key point of this section is that most of this spending is on connectivity, the standard point-to-point communications, and not for broadcast media that distribute "content."

There is at least one prominent technology that initially moved from connectivity towards content, namely radio. It started out as a point-to-point communication system, the "wireless telegraph." After about two decades of experimentation, it became primarily a broadcast medium. (For the history of this transformation, see [Douglas; Smulyan].) However, the role of radio in the economy as a content delivery technology is tiny compared to that of the telephone, as Table 1 shows. Further, in the last few decades, with the development of cellular services, radio transmission has started to move back to its roots as a point-to-point communications service. The revenues from wireless telephony already far exceed those from radio broadcasting, as Table 1 shows ($33.5 billion versus $13.5 billion in 1997, with the disparity much greater today).

The predominance of point-to-point communications spending is not new. That has been the historical pattern for ages. For example, in the early 19th century, almost all the revenues of the U.S. postal system came from letters. Yet about as many newspapers as letters were being delivered.

++++++++++
History of preoccupation with content

The preoccupation of decision makers with content and broadcast communication is also not new. In the early 19th century, the explicit policy of the U.S. government was to promote wide dissemination of newspapers. They were regarded as the main tool for keeping citizenry informed and engaged in building a unified nation. Hence newspaper distribution was subsidized from profits on letters, as is discussed at greater length in Section 12 of [Odlyzko3]. The extent of the subsidy may be gauged by the fact that "[i]n 1832, newspapers generated no more than 15 percent of total postal revenues, while making up as much as 95 percent of the weight" (p. 38 of [John]).

The policy of the U.S. government to promote newspaper "content" at the expense of person-to-person communication through letters may or may not have been correct. It would be a hard task (and one well beyond the scope of this work) to decide this question. However, there are reasonable arguments that the preoccupation with newspapers harmed the social and commercial development of the country by stifling circulation of the informal, non-content information that people cared about. In the 1840s, responding to public pressure, Congress did reduce letter rates, which resulted in increased usage, and changed patterns of usage, as is described at greater length in Section 12 of [Odlyzko3]. In those days, the government understood clearly that what people were willing to pay for was letters, and that newspapers were being subsidized. The Post Office would have thrived on letters alone, but would have gone bankrupt instantly had it been forced to survive on newspaper deliveries. Thus content was king in the minds of policy makers, but it was definitely not king in terms of what people were willing to pay for. That is similar to the current situation. However, this differential in willingness to pay does not seem to be understood as well today as it was then.

Preoccupation with content has historically been common. For example, it was often thought (even by Alexander Graham Bell) that one of the principal uses of the telephone would be in broadcasting [deSolaP1; deSolaP2]. Several substantial experiments in delivering content over the phone were attempted, including the Telefon Hirmondó in Budapest that lasted from 1893 past the end of World War I, and the Telephone Herald in Newark, New Jersey, which folded soon after its start in 1911 [deSolaP1]. In the end, though, the phone emerged as the prototypical example of point-to-point communication. The standard history books do not explain convincingly why this occurred. However, there is plenty of evidence for anyone interested enough to investigate this issue. For example, according to [Denison], the annual subscription for Telefon Hirmondó was 18 forints (about $7.50 in U.S. currency of that time), while regular phone service cost 150 forints per year. With customers willing to pay over 8 times as much for connectivity as for content, is it any wonder that the Telefon Hirmondó did not flourish?

++++++++++
Content and the brave new world of the Internet

A skeptical reader might say that all this historical stuff is amusing but irrelevant. We live in the 21st century, and our high-tech present as well as our future are on the Web, where content is universally regarded as king. Studies of the Internet regularly find that Web traffic makes up 60 to 80% of the bytes that are transmitted. Certainly most of the commercial development effort on the Internet and almost all the attention are devoted to content. Thus even if content was not king in the early 19th or late 20th centuries, it might be king in the 21st.

There are three counterarguments to the above objection, all of which support the "content is not king" thesis. All argue that the dazzling success of the Web has created a misleading picture of what the Internet is, or is likely to evolve towards. One argument, to be discussed in more detail later, is that the future of the Internet is not with the Web, but with programs like Napster or (even more, because of its decentralized nature) Gnutella, which allow for informal sharing of data.

The second argument is that content is not king of the Web. Most of the traffic on the Internet is corporate (especially if we include internal intranet traffic that is not visible on the public backbones). It is likely that in early 2000, under a third of the volume went to residential users [CoffmanO1; CoffmanO2]. Intranet traffic appears to be much less heavily biased towards the Web than that of private individuals. Furthermore, even the traffic that appears to be Web-based frequently represents a variety of database transactions that are not properly speaking "content." Because browsers are a user-friendly tool that is ubiquitous, a multitude of services have been squeezed into a Web framework. They help perpetuate the image of the Internet as primarily a content-delivery mechanism. (Note that the Web was invented to allow scientists to communicate with each other and access data, not for content delivery.)

The third and final argument is that even if content were king on the Web now, the Web is notking of the Internet. This may again seem absurd, especially in view of the statistics quoted above, that most of the Internet traffic is Web transfers. However, consider again the U.S. postal system of 1832. Content certainly dominated in terms of volume of data. Newspapers sent by mail weighed about 20 times as much as letters. Further, the density of printed matter is higher than of handwriting, and a typical copy of a newspaper was likely read many more times than a typical letter. Hence newspaper "content" was probably delivering at least a hundred times as much information as letters. But volume is not the same as value. Letters were bringing in 85% of the money needed to run the postal system in 1832. On the Internet in 2000, it is e-mail that is king, even if its volume is small.

Today, Web traffic dominates the Internet in volume, with about 20 times as many bytes as e-mail. (Netnews traffic volume is of about the same order of magnitude as e-mail. The fractions of total traffic created by these two services vary from link to link and from day to day.) Even a decade ago, before the Web, e-mail typically accounted for under 10% of Internet volume. Yet e-mail has been and continues to be the real "killer app" of the Internet. The ARPANET (the progenitor of the Internet) was built primarily to connect computers. Yet e-mail quickly emerged as the application that mattered the most to users, even in the early days of the network. This was much to the surprise of the system's designers [LickliderV].

The popularity of e-mail was not foreseen by the ARPANET's planners. Roberts had not included electronic mail in the original blueprint for the network. In fact, in 1967 he had called the ability to send messages between users "not an important motivation for a network of scientific computers" ... Why then was the popularity of e-mail such a surprise? One answer is that it represented a radical shift in the ARPANET's identity and purpose. The rationale for building the network had focused on providing access to computers rather than to people. [Abbate]

More recent surveys (e.g. [KatzA; Pew]) show that e-mail is still the most valuable service. Ask people whether they would rather give up e-mail or the phone, and the responses will typically be split. However, when a similar choice is offered between the Web and e-mail, there is no contest. This is true for both individuals and large organizations. Intranets are all the rage, but it is e-mail that makes enterprises run.

The perception that content dominates the Internet is fueled by studies such as [AdamicH], which show the winner-take-all phenomenon, with a few sites dominating Web transactions among residential users. However, one should not read too much into such results. In the early 19th century postal system, studies of usage of information would undoubtedly have reached conclusions similar to those of [AdamicH]. Most data from distant locations that people consumed came from newspapers. Further, circulation figures of individual newspapers probably followed the standard Zipf-type distribution, with the most popular papers attracting a disproportionately high fraction of readers. Yet that does not say much about the value derived from the postal system, which was elsewhere, in letters.

To reemphasize the importance of point-to-point communication in the online environment, consider the disappointing reception that WebTV has had. It seems that inexpensive Web browsing is not such a great attraction by itself. Also consider the innumerable failures in teletext experiments (cf. [Ettema; Greenberg; Klopfenstein; Noll]), as well as the initially promising start but disappointing end of the French Minitel. Their inadequate or even totally missing facilities for point-to-point communication appear to have been fatal errors. Next, consider the fates of CompuServe and Prodigy. Set up primarily for database access and online shopping, respectively, both were forced to emphasize communications and are now basically standard ISPs. Finally, the currently most successful of the public online services, AOL, started out as a game network. The figure in Table 1 showing small video game spending explains why that approach was doomed to failure. (The game market is growing, and in any case is larger than the figure in Table 1, which covers just the home part of it. It can certainly contribute to profits of large networks, or support some specialized service providers. However, it simply cannot fund anything as large as AOL.) AOL survived and prospered because it was nimble. After several changes in strategy, it partially opened itself up to the Internet. While it has content of its own, and access to the Internet, the majority of the time its subscribers spend online is devoted to e-mail and chat.
What this argument suggests is that the Web (and browsers in particular, which made the Web user-friendly) may have created a misleading impression. By focusing attention on centralized delivery of content, the Web may have prevented a proper appreciation of the importance of the often chaotic and generally unplannable point-to-point communications. The Web and the browsers may have played two main roles. One was to force online service providers to accept an open interoperable standard that made the entire Internet accessible for communications for everyone. The other was to introduce a user-friendly graphical interface for e-mail, chat, and netnews, which made such communications easier. However, the Web is not as important to the Internet as is commonly thought.

++++++++++
Wireless communications

As an example of the relative value of content and simple pipes, note that the revenues of the entire cable TV industry in 1997 were only slightly higher than for the cell phone carriers. Furthermore, as Table 2 shows, cable TV has been growing far more slowly than the wireless industry. Yet cell phones currently provide primarily simple, low bandwidth pipes. By early 2000, even the gross revenues of radio telephony exceeded those of the cable TV industry. Further, a large chunk (estimated at a quarter to a third) of cable revenues was devoted to paying for content, so in terms of basic network revenues, the cellular industry had pulled ahead even before 1997. The comparison is even more favorable to low bandwidth wireless pipes when we go outside the U.S. In other industrialized countries, cell phones are often much more widely used, while cable TV penetration is almost always far lower than in the U.S. Thus on a worldwide scale, the comparison is skewed even more heavily against content. The cable TV industry does have excellent prospects for faster growth. However, that growth will surely come more from improved communication capabilities, and less from content.

Table 2: Revenues of U.S. cable TV and cell phone industries

year

cable TV
millions

cellular
millions

1987

$11,563

$942

1992

21,079

6,688

1997

30,784

25,575

Although the wireless industry has done very well selling low bandwidth pipes for connectivity, it appears determined to repeat the mistakes of the previous communications technologies in the near future. In particular, this industry appears preoccupied with content. The new third generation (3G) systems that will be introduced around the world in the next few years will provide considerably higher bandwidth than current ones. This bandwidth is universally touted as a way to provide Internet access, and in particular to sell content to users. Yet the Wireless Application Protocol (WAP), designed to deliver content to wireless devices, has been a disappointment so far, surprising the industry. On the other hand, the Short Message System (SMS), providing low bandwidth digital messaging between users, has surprised observers by its success. For example, in the U.K., between the second quarter of calendar year 1999 and the second quarter of 2000, the number of SMS messages grew from 159 million to 1.42 billion [Oftel]. Yet in view of history, there should have been no surpise here at all. SMS provides connectivity, WAP provides content. Therefore it is completely consistent with all of human history, and should have been completely predictable, for SMS to be more popular than WAP.

What should the cellular operators do? They should be striving to increase voice calls on their systems. Although this is not widely known, cell phones are used very infrequently. For example, in the U.K., average usage of a cell phone dropped from 4.8 minutes per subscriber per day in the second quarter of 1999 to 4.2 minutes a year later [Oftel]. (To be more precise, the drop was from 3.5 minutes of outgoing calls and 1.3 minutes of incoming calls to 3.2 and 1.0 minutes, respectively. Similar drops, and similar average usage figures, apply also to many other countries, including Denmark, Finland, and New Zealand.) At the same time, the average usage of a wired phone in the U.K. increased from 15.7 minutes of outgoing calls per day in 1999 to 17.3 minutes a year later. Although up to a third of the wired minutes are for Internet access, this does show that wired phone usage is far higher than that of cell phones. The reason for the drop in average daily usage is that new subscribers are being recruited largely through the pre-paid plans, which tend to limit usage.

The low usage of cell phones refutes the frequently heard claims that wireless telephones are beginning to displace wired ones. Given the higher growth rates in wireless minutes than in wired ones, such a displacement will likely occur, but it is still far in the future. At this moment, wired phone usage is growing. In the U.K., for example, looking at the data in [Oftel], we see that between the second calendar quarters of 1999 and 2000, fixed line calling grew by 7.03 billion minutes, from 47.22 billion to 54.25 billion, while cell phone calling grew from 5.0 billion minutes to 8.39 billion minutes. Thus the growth in wired phone usage over that year was larger than the total volume of cell calls at the beginning of that period. A closer analysis of the statistics in [Oftel] suggests that this growth was due entirely to increased Internet usage, and that voice usage did drop slightly, presumably because it was diverted to cell phones. Still, total wired usage grew vigorously. Even if we consider just voice calls, each wired phone in Britain is used for about 22 minutes per day for voice calls. One does not replace that with a cell phone that is used 4 minutes per day! On the other hand, it suggests that there is much more that can be done to stimulate voice usage. That this is feasible is shown at least partially through the experience of the U.S. Historically, in all countries average cell phones usage has been decreasing steadily, as the influence of the early heavy users has been diluted. However, recently usage in the U.S. has increased. According to a press release from the Cellular Telecommunications & Internet Association [CTIA], between the last quarter of 1998 and the last quarter of 1999, subscribers have increased their local calling from an average of 130 minutes per month in the last quarter of 1998 to 180 minutes per month in the last quarter of 1999. (Wired phones are used for about an hour each day in the U.S.) This increase was almost surely caused by the spread of block pricing plans, starting with the introduction of the AT&T Digital One-Ratetm plan in 1998. In these plans users purchase a fixed number of minutes to be used in a month. Such plans have the effect of stimulating usage [Odlyzko3]. Their success in the U.S. demonstrates that creative pricing can be used to increase voice usage. (For those complaining of "cell-phone rage," this must be a frightening prospect!) In addition to generally lower prices, as well as block pricing plans, or flat rate plans, the industry could stimulate more voice usage through introduction of toll-free numbers for wireless calls. If United Airlines is willing to pay for people to call it on wired phones, shouldn't they be willing to pay for them to call from cell phones?

The arguments above suggest that the main role of 3G wireless systems should be to stimulate voice usage. That is not what the industry is planning, but the systems that are being developed are flexible enough so that even if their intended purpose of providing content is not lucrative, they can still be used for more voice calls. The arguments of this paper predict that the industry will end up doing this without planning on it. However, it would be more productive for them to think along these lines from the beginning. In particular, content, location based services, and related novel features are probably best thought of as ways to induce more voice usage, through making the cell phone more widely useful. The Japanese i-mode system may foreshadow how other countries' wireless industries will evolve. Reportedly, the spending on digital data transmission (much of it SMS) by i-mode users is matched by their increased spending on voice calls.

As a final historical perspective, let us note that the wired telephone industry did not attain its current role until it started to encourage usage, especially social calls. The fascinating story of this development is told in [Fischer]. It is also discussed later in this paper.

++++++++++
The Role of content

The general conclusion is that content has been less important than point-to-point communication in the past, including the recent past involving the Internet. Still, the argument that "content is notking" that is presented here should not be taken to an extreme. All it says is that most of the money is in point-to-point communication. It does not say that content does not dominate in volume of data. Historically, as we have noted above, content has often dominated, and probably dominates now. (There is some uncertainty, since there are difficult questions about measuring the volumes of broadcast communications.) There are arguments, to be presented later, that in the future, content will not provide most of the bits traveling on the Internet. However, even if that prediction is wrong, it will not affect the argument, which is about value to customers, and not about volume.

That content is not king does not mean that content is unimportant in shaping political or social views. The attention paid to writers, and the political advertising on radio and TV, testify to the influence of content. This also is not a new phenomenon. Over the centuries, millions of people based their opinions of Richard III on Shakespeare's play, just as today millions base their opinions of John F. Kennedy's assassination on Oliver Stone's film.

The argument about the value of content says little about the dispute in early 2000 between Disney and Time Warner over carrying ABC channels on cable TV. That issue is about division of revenues between content creation and content distribution. The argument of this paper is that the entire content piece of the economy is not all that large, and its contribution to network costs is much smaller than that of point-to-point communication. It does not deal with how the content piece is divided.

Content can be profitable. Numerous media companies are doing very well. Content can also be of value to a network, even aside from providing traffic for the network to carry. However, it is probably best to think of content as either catnip or icing on the cake; something to attract new users, or enhance user experience. That is what broadcast TV programs do for the advertisers who pay for them. That may also have been the main role of the Web and browsers in bringing more people to the Internet.

++++++++++
The Future of the Internet

What the argument that content is not king does say is that people are willing to pay far more for point-to-point communication than for the famed content. That is likely to be reflected in what kinds of networks are built, and which companies succeed. It inverts the usual ordering of priorities, making point-to-point communication central, and content secondary. The fights over control of movie distribution may be a distraction from the main business of communication. As a simple example of what this may mean in practical terms, most broadband access links, such as cable modem and DSL ones, are designed to be asymmetrical, with higher capacity on the link to the home than to the network. The expectation is that these connections will be used primarily to pull content to the consumer. However, if the consumer places much higher value on personal communication than on content, the case for symmetrical connections becomes stronger. That may mean that fiber to the home may be justified sooner than expected. In the wireless arena, it suggests (as explained in an earlier section) that for much of the next decade, the best strategy will be to emphasize regular voice transmission, supplemented by e-mail and various low-bandwidth data transfers. Music and video services are likely to be delayed until much later.

Before continuing, it is worth considering a basic issue, namely, what is content? This word derives from the Latin "contentum," which means "that which is contained," but this derivation is not very descriptive. There is no precise definition, but generally content is used to denote material prepared by professionals to be used by large numbers of people, material such as books, newspapers, movies, or sports events. That is the sense in which it is used in this work. In general, content is distributed by "mass" or "broadcast" communications systems. Until a few decades ago, such services could be distinguished easily from "point-to-point" (or, more precisely, "person-to-person") communications, which included first class letters and phone calls, and were specific to the people involved in the transaction. These two types of communications were sometimes combined during distribution, as in the postal system, which carried both letters and newspapers, in an early example of "convergence." However, there was a noticeable distinction in how these two types of communication were prepared, handled, perceived by the recipients, and (a point discussed at great length already) in how much people were willing to pay for them.

During the last few decades, the distinction between point-to-point and broadcast communication began to blur. Computers allowed for the mass preparation of personalized letters offering credit cards, say. Answering machines and voice response systems led to machine-mediated point-to-point communications. Individuals were able to reach large audiences through postings to netnews, or, more recently, through their personal Web pages. We can expect this evolution of communications to continue, and eventually to achieve that convergence in which there will be a continuum between point-to-point and broadcast communication. However, we are not there yet, and won't be for a while.

In this work I do not classify information services such as weather, directory assistance and airline schedules as content. Many of the standard phone calls access just such services, and the Internet is leading to increasing usage of them. I also do not classify most of e-commerce as content. Somebody going to the Godiva Web site may be exposed to creative work in the ads flashed on the screen, but is interested in purchasing a tangible good. These types of interactions will flourish on the Internet, and some will be merging with content, but they are more typical of the standard point-to-point communications.

++++++++++
Rates of technological change

One of the main lessons from the history of communications is that technologies are often adopted rapidly, but seldom at the astronomical rates that popular imagination associates with the Internet. This applies even to the Internet, where change tends to be less rapid than is often thought. Browsers were adopted rapidly. The first informal release of Mosaic took place in the spring of 1993, and in under two years, the majority of Internet traffic was Web-related. However, that was an exception. Other changes have been slower. Just consider Internet telephony, introduced back in 1995. It is finally beginning to have a noticeable effect, but it is far from dominant. As another example, Amazon.com has had a striking impact on perceptions of e-commerce. Yet after more than six years, less than 10% of book sales take place online, and Amazon.com's investors are learning the virtues of patience. "Internet time" is a myth. In general, the time a new technology takes to become widespread has not changed much in the last half century.

A modern maxim says: "People tend to overestimate what can be done in one year and to underestimate what can be done in five or ten years." (footnote on p. 17 of [Licklider])

Even technologies with compelling advantages tend to take a decade to dominate markets. Fax machines took about 10 years, from the introduction of the first inexpensive models until they became ubiquitous. Cell phones, one of the fastest growing industries, have taken about 15 years to reach their present level. Cable TV has taken over three decades to reach about 60% of U.S. households. Music CDs and more recently DVDs show similar patterns, taking on the order of a decade to reach dominance. For more examples and a discussion of rates of change, see [Odlyzko1]. Aside from the unusually rapid ascendency of the browser-Web combination, fast change is usually associated with the presence of forcing agents. These can be either governments or a small number of key decision makers who can shift an industry's direction. An example of such forcing agents are the information technology managers at large banks and other enterprises. When they decided that mainframes were obsolete, they did so over a short period of time, and this led to a catastrophic decline in IBM's fortunes. A transition of voice phone traffic from circuit switched transmission to the Internet might occur rapidly for just this reason. The carriers might be able to implement it rapidly, since it could be done essentially invisibly to the end users, and the decisions would need to be made by only a few people.

The decade-long diffusion periods listed above for consumer goods and services are due to the inertia of the millions of people who have to individually decide to adopt a new technology. Most new products and services are in that category. Sociological changes are even slower, taking a generation or two. Normal change, with a simple shift in technology that offers serious advantages over older, more established competitor (as with CDs over vinyl records, which provided higher quality sound reproduction, or cell phones, which offered mobility, even at the cost of sound quality), takes on the order of a decade.

++++++++++
Content in the future

The speed with which new technologies diffuse has a direct relevance for the question of whether content might be king of the Internet. It is possible to make a case that even if content is not king now, it might be king in the future, when convergence does occur. Some evidence for this can be derived from the comparison of cable TV and cell phone industries. Their revenues and growth rates were cited as demonstrating that point-to-point communication is more important than content. However, there is another way to look at the data. As was mentioned, about a third of the cable TV revenues go to pay for content. What that means is that two thirds pay for the network. (According to some reports, carriers receive up to 90% of the revenues from some content, such as hard-core pornography pay-per-view movies.) If convergence moves delivery of most of the content to the Internet, and transport grabs two thirds of the total revenues from content, then the network will get a huge new source of revenue. Total content spending in the U.S. is comparable to that on the phone system, so two thirds of that would make a huge difference to network financing. This scenario is not totally implausible, since the current content distribution system is grossly inefficient. Book authors and musicians typically receive in royalties less than a tenth of the price consumers pay for their creations. It is a striking observation that a participant in Amazon.com's affiliate program can sometimes get more money from a book sale generated by a link from his or her home page than the author does from royalties! The Internet offers a chance to reduce some of the inefficiencies of the current system. For the current dominant content producers, the real threat from the Internet is probably less from piracy, and more from disintermediation. New producers can come in and, unburdened by the high overheads and obsolete habits of established players, can offer better deals to both the creative talent and the consumers.

The scenario outlined above, in which Internet transport grabs the lion's share of revenues from content, is conceivable, but very unlikely. One argument against this scenario is based on a simple historical observation. No broadcast medium has ever been replaced by another; despite predictions to the contrary at various times in the past, newspapers were not killed by radio, nor radio by television. However, that argument may not be valid. The Internet is a disruptive technology, it does have unprecedented ability to emulate other delivery mechanisms, and we are already seeing rapid growth in music delivery on it. As an example of what can happen to even the most solid-seeming businesses, just consider the Encyclopaedia Britannica. (Its problems started even in the pre-Internet days, with CD-ROMs.) In spite of having the greatest brand name and by far the best content in the encyclopedia field, it has been floundering, and has yet to find a viable business model. Thus dramatic changes are indeed possible in the electronic environment. Still, there are other, more substantial, arguments against the content thesis.

The Internet will surely have a major impact on the content industries. However, as was discussed above, consumers are slow to change their behavior. Even the Encyclopaedia Britannica has had more than a decade in which to flounder. Couch potatoes are not going to abandon their TV sets right away, especially when computer and cable TV penetrations in the U.S. are under two thirds of households, and not growing rapidly. Even in the business environment, adoption of new technologies that require a thorough re-engineering of all internal processes is slow. The business-to-consumer dot-coms have discovered this already, and the business-to-business ones are in the process of learning. Although we are living in the Internet era, fundamental change is not all that much faster than a century and a half ago. The adoption of the telegraph by railroads, discussed in Section 13 of [Odlyzko3], did lead to huge efficiency gains, but it was slow as well.

Slow adoption of new technologies means that convergence will be spread over a decade or more, and there will be continuing competition from traditional media, as well as increasing diversity of delivery mechanisms for content. This may mean that writers and artists will get a bigger share of the pie. That appears to have been the trend over the last few decades, with movie actors and professional sport stars increasing their share of the revenues their work brings in. It is less certain whether carriers will manage to improve their share of the content pie to the same extent. There will certainly be a shift of revenue towards broadband services, but content distribution may not be the largest contributor to it.

The main reason to question whether content will ever make giant contributions to network costs is that by the time convergence is likely to occur, at least a decade into the future, content transmission is likely to be a small fraction of total traffic. Further, most content will probably be distributed as ordinary file transfers, not in real-time mode. The various rates of growth that contribute to these predictions are discussed later. Right now we note that if these predictions come true, then it will be hard for networks to charge much for the transport of content. High prices could be charged for content distribution if content made up most of the traffic, or else if content required special transmission quality (such as that needed for real-time streaming traffic). Since neither of these conditions is likely to be satisfied, though, content will probably constitute just some of the huge number of large files, many encrypted, that will be flying around the network. How could carriers pick out the content files for special pricing?

Let us next consider the predictions for Internet traffic mentioned in the preceding paragraph. I will treat them briefly, and refer the reader to [CoffmanO2] for more detail. Internet backbone traffic appears to be about doubling each year. Further, advances in photonics and additional fiber deployment appear to allow for a doubling of network capacity each year for the next decade. In early 2000, Internet backbone traffic in the U.S. appeared to be less than a third of voice traffic in volume, but is likely to become larger by about 2002, with the transition point slightly later for the rest of the world. However, if voice traffic were to be packetized, it would almost surely be compressed, and then its volume would already be less than that of Internet traffic (at least in the U.S.). Broadcast TV would still overwhelm the Internet of the year 2000, but at 100% annual growth rates, it will not be too long before there is more than enough capacity to provide a high quality video channel for every person on Earth. This is because bandwidth that is likely to be required to satisfy any single person's real-time transmission needs will not be increasing fast.

The versions of Moore's Law that hold in different industries operate at diverse rates. Microprocessors are doubling in computing power every 18 to 24 months, while fiber transmission capacity is doubling every year. On the other hand, display technology is advancing extremely slowly. Broadcast TV resolution has been static for several decades, and even the planned move to HDTV will require only a modest increase in bandwidth. Thus satisfying the needs for real-time multimedia transmission will not require much of the Internet's capacity.

Content is likely to form only a small fraction of Internet traffic for reasons explained above. In addition, real-time delivery of content is likely to be an even smaller factor, for reasons discussed in much greater detail in [CoffmanO2]. Transmission capacity is approximately doubling each year, which is a much faster rate of improvement than Moore's Law for semiconductors. However, hard disk storage capacity is also about doubling each year. Furthermore, that capacity is already huge. At the beginning of 2000, the U.S. Internet backbones appeared to be carrying about 12,000 TB (terabytes) of traffic each month. However, the total world hard disk capacity was 3,000,000 TB. Thus it would take about 20 years to transmit all the data on those disks over U.S. Internet backbones. Nobody proposes to do that (and why would anyone want to send all the duplicate copies of Windows 98 around, in any case?), but this comparison helps in visualizing the technology landscape. The presence of huge local storage capacity in local PCs or cable TV setup boxes will make it much more attractive to send even content as files, not as real time transmissions. There will be a growing volume for real time multimedia traffic, for applications such as videoconferencing. However, such applications are likely to be swamped by ordinary file transfers. The dominant mode of operation is likely to be fast (eventually much faster than real time, but initially often slow) download to local storage, fast transfer to whatever display device one wishes to use (often a mobile information appliance), and then playback. That is already the model we see emerging with MP3, Napster, and TiVo. The advantages of this model include the ability to implement it now, before the Internet can be made ready for real-time streaming media. It also accommodates gracefully the forecasted explosive growth in small mobile devices, which will often have small storage and low bandwidth over wireless links, and thus will be most useful if they can get data from local storage. This model also allows for easy integration with special hardware for intellectual property protection.

That real-time multimedia traffic would not dominate the Internet has been predicted several times in the past. It is an obvious conclusion from the rapid increase in traffic. Already the authors of [deSolaPITH] noted that in the early 1980s data traffic was growing much faster than voice communication. They observed that if that trend continued, eventually most transmissions would not be seen by human eyes nor heard by human ears. In a similar vein, in discussing general digital data volumes in 1997, Michael Lesk predicted that "the typical piece of information will neverbe looked at by a human being" [Lesk]. Bill St. Arnaud appears to have been the first one to predict in the specific context of the Internet that the general expectations for streaming multimedia domination were unlikely to come true [StArnaud]. Further arguments were presented in [Odlyzko2].

The huge volume of local storage will surely stimulate the generation of non-content traffic. Both corporations and individuals so far have had no difficulty filling their disks with data. We can expect this to continue, although predicting the exact source of that data is uncertain. For firms, various databases will likely continue to proliferate and grow. For residential users, pictures are the leading candidates for filling those disks. Ease of use, lower cost, and instant gratification all stimulate use, and digital camera owners appear to be taking many more pictures than they ever did with regular film. The same electronic technology that is producing better disks and processors is also producing better cameras. Historically, it appears that privately taken pictures have traditionally been the dominant source of data. An interesting accounting of all the information stored in the world in 1997 by Michael Lesk [Lesk] found that home photographs were the dominant component. (For a more complete and up-to-date accounting of information, see [LymanV]].) They contributed about 500,000 TB each year (even when one assumes that each picture is stored as a modest 10 KB JPEG file). By comparison, all the texts in the Library of Congress amounted to around 20 TB, while the graphics and music in that collection came to about 3,000 TB. Thus even this great library contained less than 1% of the world's information. (The publicly accessible Web pages currently contain a few tens of terabytes, just a few percent of what the Library of Congress has, but comparable to the text collections in that library.)

An obvious comment to the estimates above is that the purpose of a library is to select the most valuable material, and that most of those photographs contributing to the 500,000 TB are of no interest to most people. That is true, but that does not stop those pictures from being taken, and it will not stop an explosion in volumes of data collected this way in the future. A few pictures or video clips will turn out to be of great interest, in spite of amateur production. Just think of the Zapruder film of the JFK assassination, or the Rodney King video. More importantly, many of the pictures being taken are of interest, or might be of potential interest, to at least one person. Most of the world will have no interest in a picture of your newborn baby, but your mother will cherish it. Similarly, in the future you will be taking digital video clips of your children and sending at least some of them to your mother. Many of the video shots will intentionally be made with the hope of that nobody will want to see them, as with security monitors. (Note that some of the earliest applications of miniature taperecorders and video cameras has been to snoop on child care providers. There are obvious privacy implications of current and future camera technologies that are not pursued here, but are discussed in [Garfinkel], for example.)

Other examples of data that may be filling our disks are suggested by the entry in Table 1 for sporting goods. Spending in this area comes to about half of consumer spending on content, showing how highly these products are valued. One can easily imagine future generations of body and equipment sensors that would record precisely all details of a player's movements in tennis, say. These details would then be fed into systems that would analyze the motions, compare them with previous games, and produce high quality graphical displays to help improve the player's game. There is practically no bound on the amount of data that could be generated this way.

The data that will be generated is likely to be shared using programs descended from Napster. E-mail and the Web may not be flexible enough. Napster is currently attracting huge attention because of the threat it poses to conventional music distribution channels. However, that may turn to be less important than its ability to facilitate sharing of files. Napster itself is too limited, as it is designed to handle just MP3 music files, and is also centralized. Yet it has already inspired creation of tools such as Gnutella, which are much more general and decentralized. Given the growth of local storage, and the increasing availability of tools to fill that storage with video clips and other material, it is possible that tools like Gnutella may become more important to the Internet than the Web.

++++++++++
Value of social interactions

The discussion above is futurology. We cannot be certain how the Internet will evolve. However, history teaches us several lessons. One is that the growing storage and communication capacities will be used, often in unexpected ways. (For a careful study of the many early predictions about the future of the telephone, and the actual evolution of that service, see [deSolaP1; deSolaP2], for example.) Another important lesson is that the value of the myriad social interactions has often been underestimated. Only a tiny fraction of the information passing through communications systems has ever been high quality scholarly knowledge. Even in more prosaic transmissions, we have moved from Samuel Morse's solemn "What hath God wrought?" to Alexander Graham Bell's utilitarian "Mr. Watson, come here, I want you," to the banal "How was your lunch?" that is so common today. The volume of communication has increased, the importance of a typical message has decreased, and the attention we pay to such a typical message has decreased. However, the aggregate value of all these exchanges has increased.

Sociability was frequently dismissed as idle gossip, and especially in the early days of the telephone, was actively discouraged. For example, a 1909 study of telephone service commissioned by the city of Chicago advocated measured rate service as a way to reduce "useless calls" [JacksonCW]. Yet the most successful communication technologies, the mail and the telephone, reached their full potential only when they embraced sociability and those "useless calls" as their goal [Fischer]. That seemingly idle chit-chat not only provided direct revenues, but it encouraged the diffusion of the corresponding technology, and made it more useful for commercial and other applications. Such social interaction frequently function to grease the wheels of commerce.

This work is based on a more extensive study [Odlyzko3] of the development of the communications infrastructure from the point of view of the user. Usually an infrastructure is noted for being unnoticed; it is simply there, something we come to rely upon, do not have to think much about, and are horribly inconvenienced when it malfunctions. Electricity, water, mail, and the phone are excellent examples. Yet they all took much effort to reach this stage. The key failing of the telegraph was that it never became a true infrastructure component. It was a revolutionary technology, the "Victorian Internet," as one writer has called it [Standage], but it was too cumbersome and too expensive to attract much usage, and in particular never carried much of that "useless" social traffic that pushed the mail and the telephone to their eminent positions.

++++++++++
Conclusions

Although social uses are important to the the telephone industry, a glance at Table 1 shows that most of the revenues come from businesses. Household spending on phone service brings in only about a third of the total revenues. (The figures for total revenues, $256 billion in 1997, and consumer spending, $85 billion, come from different sources. It is possible that consumers spend somewhat more, especially for cell phones, than is reported in the $85 billion figure. However, even if one makes the most likely adjustments, it still appears that business spending on telephony is far larger than that of households.) That has been the historical trend, and many communication services, including the phone, were initially devoted almost totally to business uses. Traditionally, commercial users have subsidized residential ones. Sometimes this was done involuntarily, as in higher rates dictated by carriers or by government regulators, and sometimes voluntarily, as in paying for toll-free 800 numbers. It appears probable that similar subsidies will also play a large role on the Internet. (That is also why toll-free numbers for wireless calls may be very important.) We may very well end up with a system in which the largest monetary contribution will come from commercial users, the second largest for households paying for point-to-point communication, and the smallest by the transport component of charges for content.

The value of a broadcast network is usually regarded as proportional to the number of users in it. On the other hand, a point-to-point communication network is often said, by Metcalfe's Law, to have value proportional to the square of the number of member. This then leads to the conclusion that eventually, once a single network like the Internet reaches a large enough size, point-to-point communications will provide much higher value than broadcast. There are some problems with this argument. (See [Odlyzko3] for detailed arguments.) In particular, Metcalfe's Law does not reflect properly several other important factors that go into determining the value of a network. However, the general thrust of the argument and the conclusion are valid. Certainly all the historical evidence cited throughout this work supports the conclusion that connectivity (or point-to-point communication) is what matters the most.

Since connectivity matters the most, and voice usage in cellular systems is low, the main function of 3G wireless systems is likely to be in stimulating more voice calls. Content data services are likely to function primarily as enticements to induce more voice usage. True wireless broadband data access is likely to have to wait until 4G systems arrive, at which time the potential for increased voice usage is likely to be exhausted.

General connectivity is likely to lead to demands for symmetrical links on the Internet. Hence fiber to the home may be needed sooner than is generally expected.

Whether content is king or not has direct relevance for the question of whether the Internet will continue to be an open network, or whether it will be balkanized. If content were to dominate, then the Internet would be primarily a broadcast network. With value proportional to the number of users, there would be few inherent advantages to an open network. The sum of the values of several completely or partially separate networks would be the same as of a unified network.

February 12, 2006 at 10:57 AM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

Tesco wades in to web phone calls

Tech & Net - news on technology and the internet from The Times, Sunday Times and Times Online

y Miles Costello

Supermarket giant Tesco has thrown itself into the fast-growing market for internet-based phone calls, claiming it can slash the cost of the average household bill with a new, broadband-based telephony service.

In a move that will see Tesco go head to head with established telecoms groups such as BT and more recent arrivals such as Skype - the retailing giant today claimed its new service will bring internet telephony to the mass market for the first time.

Tesco has now started selling an "internet phone pack", available in its stores for £19.97. Each pack contains a phone handset, installation CD, a guide and £5 of free "airtime". Customers who use Tesco's loyalty Clubcard can also use this to top up their allowance.

Users just load the software onto their computer, register their details and then choose their own phone number. The handset is plugged into the USB socket on a PC and calls can be made immediately. Customers can then top up their credit online using their credit or debit cards.

Calls using the pay-as-you-go service will cost 2p to UK landlines and the top 20 call destinations at all times. Calls to mobiles in the UK will be 10p a minute, also at any time.

Tesco is aiming to take advantage of the arrival of "voice-over-internet protocol", which means that computer users with a broadband connection can use the line to make cheap telephone calls to other people with a similar set-up.

Users of Tesco's new service will need to have a broadband connection.

Andy Dewhurst, the chief executive of Tesco's telecom division, said the new service will "finally make this amazing technology accessible to millions of households throughout the UK and allow everyone to benefit from free or low-cost internet calls.

"As consumers catch on to the internet phone trend, people will see a real difference in the amount they are spending on their calls."

Tesco reckons subscribers could cut their bills by £218.40 a year on hour-long calls to the United States made once a week at the weekend.

It compares the price of its service with BT's Together Option 1 which charges 9p a minute for a weekend call to America as against its price of 2p a minute to one of its top 20 destinations.

Tesco claims that internet phones should be the "breakthrough" technology for this year amid the belief that millions more people will start using the internet to make phone calls.

The retailer will face fierce competition from established players such as BT, which has been fighting hard to build up its customer base for broadband and has a service of its own that doesn't need a computer.

There has also been a surge in popularity for Skype, whose software is available to download free of charge. While calls to other Skype users are free, customers pay a reduced charge for calls to fixed line phones and mobiles and are unable to use the service for 999 calls.

January 19, 2006 at 08:59 PM in Telecommunications | Permalink | TrackBack (27) | Top of page | Blog Home

Yahoo and Google go mobile

Telecoms, telecom news, Times Online

By Rhys Blakely

Mobile phones may yet fulfil the potential foreseen during the dot-com boom, following reports that Yahoo and Google are to roll out services through wireless networks.

To date mobile internet - or "3G" - services have proved a disappointment for users, who have had to contend with patchy network coverage and lengthy download times.

Telecoms companies paid £22.5 billion in 3G license fees in the UK alone, hoping to cash in on the new market. But half a decade later a study by Ofcom, the telecoms watchdog, found that 85 per cent of the British population did not know what "3G" meant.

That could change with the news that two of the internet's largest players are renewing their attack on the mobile market.

Yahoo is planning to form is partnership with SBC Communications of the United States, to launch a mobile telephone, the Wall Street Journal said. Such a model could then be extended to the UK. The service will link mobile phone services to Yahoo users’ accounts and personalised features such as address books.

SBC executives said the SBC-Yahoo phone, which will be manufactured by Nokia, is expected to be ready early in the new year.

Google has already launched internet services for mobile devices in the UK. From today, users of some mobile phones will be able to use the internet advertising giant's satellite map service.

Last year, Google began allowing US consumers to get search results by sending text messages from mobile phones. In June it began letting users get search results from an index of web sites optimised for mobile phones.

Yahoo and Google are not alone in wanting to put themselves in their customers' hands. Last week Microsoft said that its new web-based services, which include online versions of its most popular software packages, would be available from mobiles supporting windows software.

Television and music companies are also keen to reach customers who will watch TV or listen to music on the move through their phones.

Sony has already teamed up with Orange to offer a Walkman phone in a bid to revive the iconic 1980s music player. Meanwhile, Apple's iTunes software, the market leader in online music, is now found in some Motorolla phones.

In Britain, Vodafone and BSkyB, which is 37.2 per cent owned by News Corporation, the parent company of Times Online, recently announced that they would work together to offer television content through telephone handsets.

Mobile operators O2 and Orange have already launched trial mobile TV services in the UK and France, but the Vodafone-Sky package is the most advanced offering yet in an area viewed by television and mobile executives as ripe for expansion.

Hollywood studios and television producers have also tuned into the idea and have begun to pilot "mobisodes" specially developed for small handset screens.

December 27, 2005 at 10:08 AM in Telecommunications | Permalink | TrackBack (31) | Top of page | Blog Home

Will U.S. carriers switch mobile standards?

Will U.S. carriers switch mobile standards? | CNET News.com

North American telecom operators may end up shifting to the GSM mobile standard from the rival CDMA system, according to senior executive at Siemens.

"Latin America is already moving from CDMA technologies to GSM," Christoph Catselitz, the head of Siemens' mobile networks business, told Finnish business daily Taloussanomat in an article published Thursday.

"I would not bet on North America continuing with CDMA."

CDMA (code division multiple access) technology was invented by San Diego-based Qualcomm, and the company delivers virtually all chips needed in CDMA networks and mobile phones used by some 500 million consumers mostly in the Americas and Asia.

The rival European-invented GSM (Global System for Mobile Communications) has 1.6 billion users globally, according to the GSM Association.

"CDMA is losing market share globally as the new mobile phone users live mostly in the areas where GSM is the leading technology," Catselitz said.

Catselitz said Siemens aims to expand its network infrastructure services operation faster than the market grows. It has 80 deals with operators in 50 countries.

China is among the markets where the company is active. Catselitz expects China to issue third generation (3G) licenses in several stages, starting early next year.

"I believe China's 3G licenses will be given in the early part of 2006; it could be the first quarter," he said.

China is expected to spend more than $10 billion to set up its 3G networks after licenses are awarded.

Story Copyright © 2005 Reuters Limited. All rights reserved.

December 16, 2005 at 02:53 PM in Telecommunications | Permalink | TrackBack (57) | Top of page | Blog Home

Cingular Launches 3G Network: BroadbandConnect Service Offers Ultra-Fast Connections

Cingular MediaRoom - News Releases

CINGULAR LAUNCHES 3G NETWORK

BroadbandConnect service offers ultra-fast connections

ATLANTA – DECEMBER 6 – Cingular Wireless today launched its super-charged wireless network capable of providing customers with high-speed access to information in a world that has gone mobile. Customers can use the third-generation (3G) network to access Cingular BroadbandConnect, which is available to nearly 35 million people in 52 communities throughout the United States. The company will continue to extend the network rapidly next year.

Stan Sigman, Cingular’s president and CEO, announced the service at an investor conference in New York City: “Make no mistake about it: Wireless users want the speed and services they’ve come to expect from their wired connections. And today Cingular is delivering on its promises to provide both the speed and reliability customers need.”

December 10, 2005 at 01:01 PM in Telecommunications | Permalink | TrackBack (24) | Top of page | Blog Home

Branson plots £4.5bn cable deal to create media giant

Telegraph | Money | Branson plots £4.5bn cable deal to create media giant

By Andrew Murray-Watson (Filed: 04/12/2005)

Sir Richard Branson, the billionaire entrepreneur, is set to transform the British TV and telecoms landscapes by merging Virgin Mobile with NTL, the cable company. The move will create an entertainment and communications giant worth £4.5bn and with more than 9m customers.

The deal will see Branson swap his 72 per cent holding in Virgin Mobile for a 14 per cent stake in the enlarged cable and mobile group. He will be the largest single shareholder in the new company.

NTL will be rebranded Virgin following the deal. The transaction, which amounts to a reverse takeover, will extend Branson's business empire into the sitting rooms of an additional 5m British homes.

The new Virgin media and entertainment group will also have 2.5m broadband internet customers, 4.3m fixed-line telephony accounts, more than 5m mobile phone customers and revenues in excess of £4bn.

It will be a major force in the pay-TV market and pose a strategic threat to the dominance of British Sky Broadcasting, headed by James Murdoch and 37 per cent owned by News Corporation, the global media group controlled by his father, Rupert Murdoch. News International, a wholly owned subsidiary of News Corp, owns the Times, Sunday Times, Sun and News of The World newspapers.

One banker said yesterday: "James Murdoch is going to choke on his muesli when he hears about this one. It's going to be the battle of the brands - Virgin versus Sky."

The Sunday Telegraph can reveal that Simon Duffy, the chief executive of NTL, first approached Branson nine months ago. Secret talks between the two sides have been continuing since then. They culminated on Friday at a hotel in Hampshire where T-Mobile, the German mobile group that carries Virgin Mobile calls on its network, was informed of the deal.

Virgin Mobile is expected to make an announcement to the stock market tomorrow confirming that it has received a takeover approach. But with Branson backing the deal, it looks certain to go ahead.

NTL will then begin the process of winning support for the takeover from the shareholders who own the 28 per cent of Virgin Mobile that is publicly traded.

It is believed that the cable company, which is listed on Nasdaq in the US, will make an offer for Virgin Mobile's listed shares at a premium to their closing price on Friday of 311p. The deal between Branson and NTL will need support from Virgin Mobile's board and Tom Alexander, the chief executive, in order to proceed.

Alexander was informed of the existence of talks between Branson and NTL only on Friday.

The coming together of Virgin Mobile and NTL, which is subject to the cable company's completing its £3.4bn merger with Telewest, will create the first company in the UK with the ability to offer a "quadruple play" package of mobile, fixed-line, TV and broadband services.

Customers will be able to cherry pick which services they want and will receive a single bill even if they choose to subscribe to all four. The enlarged group will also be able to offer its TV content on mobile phones.

BSkyB, following its £211m acquisition of Easynet, will be able to offer only a triple play of fixed-line telephony, broadband and pay-TV services.

Bankers in London will be kicking themselves at being largely excluded from the deal. Branson has relied on his own in-house corporate finance team for advice and NTL has been advised by Goldman Sachs in New York.

Branson is also determined that the new Virgin TV business will snatch Premiership football rights from Sky when they come up for auction next year. It could also compete in the bidding for other content such as movies and downloads.

The enhanced financial firepower of the enlarged cable group will alarm Sky, which is set to lose its monopoly on broadcasting live Premiership football following a European Commission ruling expected early next year. The commission proposes to break Premiership rights up into six blocks of matches, with no broadcaster allowed to win all six.

Duffy will remain as chief executive of the new Virgin group. It is believed Branson is optimistic that Alexander can also be found a role.

December 4, 2005 at 02:37 AM in Telecommunications | Permalink | TrackBack (24) | Top of page | Blog Home

A connected world

Sep 11th 1997
From The Economist print edition

The telecommunications revolution, driven by liberalisation and the Internet, will change the way people live and work, writes Frances Cairncross

IN ANDERSEN CONSULTING’S smart new offices in Wellesley, just outside Boston, Mark Greenberg is entitled as a senior partner to three filing-cabinet drawers of storage space. In one, he keeps a bubble-wrapped package, containing the sort of personal mementoes—family photographs, shields and so on—with which businessmen like to decorate their offices, together with a diagram to show how they should be arranged. On the rare days when Mr Greenberg is not visiting a client or jetting around the world, he reserves an office. When he arrives, his treasures are neatly laid out on the desk for him to make him feel at home.

But this is, in effect, a virtual private office, his just for the day. Struck by the waste involved in maintaining expensive permanent offices for people with itinerant lives, the partners in the world’s largest management consultancy have created something that feels like a cross between a hotel and a luxurious club. The Wellesley office is staffed by the cream of Boston’s hotels: people who understand the business of providing services for important and self-important people. The reception desk looks like a hotel foyer; each floor has lots of little “huddle rooms” with comfortable armchairs, as well as brainstorming rooms with less comfortable ones; and there are open spaces for coffee and conversation with colleagues.
19970913survey_out
19970913survey_out

Love it or loathe it, this office of the future is made possible principally by the revolution tearing through telecommunications. Before the move from its old Boston offices, the company threw out 120 tonnes of papers. So where, you ask another senior partner, does he file his papers? He taps his laptop. “That’s my filing cabinet.” Some of the savings on offices have been invested in building what is grandly called the “Knowledge Exchange”: a vast on-line database containing the company’s accumulated wisdom, available to Andersen people anywhere in the world seven days a week (provided, of course, they can get their laptops to connect). The benefits, partners claim, are not merely the more efficient use of property, but easier and speedier access to information for everyone. The result is “better, faster, cheaper”—the battle-cry of the communications revolution.

Plenty of other companies will, in the next decade, undergo similar upheavals, fired by a change even more far-reaching than the harnessing of electrical power a century ago. The transformation of telecommunications networks, brought about mainly by a marriage with computers, is simultaneously driving down the cost of communicating and driving up the amount of information that can be exchanged. Where once people had to go to a particular place—a telephone box, a computer—to communicate, now communications come to them, in the form of a pager, a mobile telephone, or a laptop with a phone jack. And where once greater distance made communications progressively more expensive and complicated, now distance is increasingly irrelevant.

But it is not yet obvious where all this will lead. For about a century after its birth, the telephone network became more and more extensive, but not much more sophisticated. Only in the past two decades have three great innovations—the fax, the mobile telephone and the Internet—shown how the network can be used to create new mass-market products that change the way people live and work. Many more such novelties probably lie ahead, for telecommunications is at the centre of the most intense innovation that any industry has ever seen.

The innovations themselves are only a first step. Beyond that lies the evolution of ways to use them, a much more gradual and unpredictable process. Think of the myriad ways electrical power has shaped the 20th century. The impact of the communications revolution on life in the next century will be just as pervasive.

All things change

One of the few certainties of this new world is that it will change the communications business itself beyond recognition. Indeed, this has already begun to happen, impelled by the combination of liberalisation and technological innovation. So far the pace of change has been uneven: in some respects, bewilderingly fast; in others, infuriatingly slow.

In many countries, the fixed telephone service is still a public-sector monopoly. By this time next year, the monopolies will, in theory, have been swept away in most countries, as agreed earlier this year in the World Trade Organisation. Its timetable for opening markets at the start of next year parallels an earlier agreement by the countries of the European Union to create a single market for telecommunications services.

But experience in those countries that have already begun to dismantle their monopolies—including the United States, Japan, Britain, Australia, New Zealand and Scandinavia—shows how hard it is to create competition in telephone networks. The old telephone monopolies will almost certainly still be powerful companies ten years from now—though in 20 years’ time some of them may be gone.

Long before then, the industry will have become much more like other industries. New companies are already elbowing into the business. Some come from other industries; some are cheeky upstarts, founded by youngsters. Eli Noam, an economics professor at Columbia University in New York who is also a telecommunications guru, speaks with wonder of one of his graduate students who started a company to resell telephone capacity, and now has 100,000 customers. “The amount of young people going into competition against big companies is remarkable,” he says. “They are not afraid. The advantage of 25 years of experience is irrelevant in such a high-growth industry.”

Already, telecommunications services are starting to be internationally traded—and occasionally dumped, giving rise to a novel sort of trade war. And—another novelty—some telephone companies will go bust (as one or two tiddlers have already done). Many will have foreign owners. No longer will all big telephone companies do more or less the same things; instead, like car companies or banks, they will specialise and diversify, sometimes wisely, sometimes not. And, once there are many providers of communications, government’s role will shrink.

Although regulatory change may be slow, the speed of technical transformation is breathtaking, as information is increasingly handled in digital form and as the capacity of networks soars. As a result, activities that were strictly for nerds one year (say, voice telephone calls over the Internet) are hot commercial prospects 12 months later; and technologies that started as a businessman’s luxury (say, cellular telephones) quickly become a mass-market gadget. No wonder Andrew Entwistle of Analysys, a consultancy in Cambridge, England, confesses: “We’ve gone from clarity about the future to explaining why we can’t answer with certainty.”

Wireless and data sum up the two main uncertainties. Ten years from now, it seems probable that wireless will have become the main conduit for voice conversations, as people come to think of the telephone as a personal, portable gadget rather than a static object which they share with others in a fixed place. Moreover, wireless, including satellite telephony, will eventually be the main guarantee that everybody has a choice of telephone service.

Talking technology

At the same time, telecommunications will be increasingly about carrying data. Some of that data will be the human voice, carried in new ways. Some will be moving pictures, converted into digital form, and some will be information sent from one machine to another. Whereas even the most loquacious humans eventually dry up, machines can go on communicating for ever. Carrying voice calls will remain the industry’s biggest money-spinner for many years—in the time it has taken Internet telephony to become a $2m business, international telephone sex chat has become a $2 billion business. But data will be what fills the pipes.

These changes will transform the industry. “The Internet is just as significant for the telecoms industry as the PC was for the computer business,” says Tim Kelly, head of operations analysis for the International Telecommunication Union (ITU), an intergovernmental body in Geneva. “It brings new companies and cuts margins.” But, he adds, the telephone companies are more entrenched than the mainframe computer makers ever were: they have run a highly effective cartel, they are closely bound to governments, and they usually control the final gate between the network and the user. For all these reasons, change may take longer to come about.

This survey will review the changes that have already taken place, and preview the bigger ones waiting in the wings: in competition and regulation, and in the technologies developing at such a breakneck pace. It will end by giving a few tentative answers to the biggest question of all: how will all this change our lives? A decade or two down the road, will we bless the telecommunications revolution—or wish that it had never happened?

An earlier survey by the same author, “The Death of Distance”, was published on September 30th 1995 and is available on this site. To find it, go to the archive and search for “Frances Cairncross”. Both surveys form the basis for a book, also called “The Death of Distance”, to be published in November. If you would like information about pre-ordering this book, please e-mail shop@economist.com. See also www.deathofdistance.com

September 16, 2005 at 01:34 PM in Telecommunications | Permalink | TrackBack (30) | Top of page | Blog Home

How the internet killed the phone business

Sep 15th 2005
From The Economist print edition

Almost-free internet phone calls herald the slow death of traditional telephony

http://www.economist.com/printedition/displayStory.cfm?story_id=4401594&fsrc=RSS

THE term “disruptive technology” is popular, but is widely misused. It refers not simply to a clever new technology, but to one that undermines an existing technology—and which therefore makes life very difficult for the many businesses which depend on the existing way of doing things. Twenty years ago, the personal computer was a classic example. It swept aside an older mainframe-based style of computing, and eventually brought IBM, one of the world's mightiest firms at the time, to its knees. This week has been a coming-out party of sorts for another disruptive technology, “voice over internet protocol” (VOIP), which promises to be even more disruptive, and of even greater benefit to consumers, than personal computers (see article).

VOIP's leading proponent is Skype, a small firm whose software allows people to make free calls to other Skype users over the internet, and very cheap calls to traditional telephones—all of which spells trouble for incumbent telecoms operators. On September 12th, eBay, the leading online auction-house, announced that it was buying Skype for $2.6 billion, plus an additional $1.5 billion if Skype hits certain performance targets in coming years.

This seems a vast sum to pay for a company that has only $60m in revenues and has yet to turn a profit. Yet eBay was not the only company interested in buying Skype. Microsoft, Yahoo!, News Corporation and Google were all said to have also considered the idea. Perhaps eBay, rather like some over-excited bidder in one of its own auctions, has paid too much. The company says it plans to use Skype's technology to make it easier for buyers and sellers to communicate, and to offer new “click to call” advertisements, but many analysts are sceptical that eBay is the best owner of Skype. Whatever the merits of the deal, however, the fuss over Skype in recent weeks has highlighted the significance of VOIP, and the enormous threat it poses to incumbent telecoms operators.

For the rise of Skype and other VOIP services means nothing less than the death of the traditional telephone business, established over a century ago. Skype is merely the most visible manifestation of a dramatic shift in the telecoms industry, as voice calling becomes just another data service delivered via high-speed internet connections. Skype, which has over 54m users, has received the most attention, but other firms routing calls partially or entirely over the internet have also signed up millions of customers.

A price of zero

The ability to make free or almost-free calls over a fast internet connection fatally undermines the existing pricing model for telephony. “We believe that you should not have to pay for making phone calls in future, just as you don't pay to send e-mail,” says Skype's co-founder, Niklas Zennstrom. That means not just the end of distance and time-based pricing—it also means the slow death of the trillion-dollar voice telephony market, as the marginal price of making phone calls heads inexorably downwards.

VOIP makes possible more than just lower prices, however. It also means that, provided you have a broadband connection, you can choose from a number of providers of VOIP telephony and related add-on services, such as voicemail, conference calling or video. Many providers allow a VOIP account to be associated with a traditional telephone number—or with multiple numbers. So you can associate a San Francisco number, a New York number and a London number with your computer or VOIP phone—and then be reached via a local call by anyone in any of those cities.

Furthermore, your phone (or computer) will ring wherever you are in the world, as soon as it is plugged into the internet. So you can take your Madrid number with you to Mumbai, or your San Francisco number to Shanghai. Skype and other VOIP services, in other words, are leading to lower prices, more choice and greater flexibility. It is great news for consumers—but terrible for telecoms operators. What can they do?

Watching the elephants dance

As is always the case with a disruptive technology, the incumbents it threatens are dividing into those who are trying to block the new technology in the hope that it will simply go away, and those who are moving to embrace it even though it undermines their existing businesses. Since VOIP will cause revenue from voice calls to wither away, the most vulnerable operators are those that are most dependent on such revenue.

In particular, that means mobile operators, which have been struggling for years to get their subscribers to spend more on data services, but are still hugely dependent on voice. Worse, the very “third generation” (3G) networks that are supposed to provide future growth for these firms could now undermine them, because such networks make mobile VOIP possible too. Least vulnerable, by contrast, are those fixed-line operators that are now building new networks based on internet technology, which will enable such firms to benefit from the greater efficiency and lower cost of VOIP compared with traditional telephony.

These operators are taking an “if you can't beat 'em, join 'em” approach and getting into the VOIP business. While their voice revenues will slowly evaporate, they will then be well placed to offer fee-based add-on services over their new networks. Again, this is a common pattern with disruptive technologies: forward-looking incumbents can end up giving upstart innovators a run for their money.

It is now no longer a question of whether VOIP will wipe out traditional telephony, but a question of how quickly it will do so. People in the industry are already talking about the day, perhaps only five years away, when telephony will be a free service offered as part of a bundle of services as an incentive to buy other things such as broadband access or pay-TV services. VOIP, in short, is completely reshaping the telecoms landscape. And that is why so many people have been making such a fuss over Skype—a small company, yes, but one that symbolises a massive shift for a trillion-dollar industry.

September 16, 2005 at 12:50 PM in Telecommunications | Permalink | TrackBack (18) | Top of page | Blog Home

Wireless carriers back in N. Orleans

Wireless carriers back in N. Orleans - Yahoo! News

Sun Sep 4, 4:26 PM ET

NEW YORK (Reuters) - A number of wireless carriers said this weekend they are starting to restore service in the New Orleans area in the aftermath of Hurricane Katrina, in some cases with generators on the roofs of hotels.

The collapse of the communications network in the New Orleans area has been widely blamed for contributing to the disaster there, as local officials were unable to talk to each other and to federal authorities to arrange relief in the days after Katrina laid waste to the city.

Verizon Wireless said it is at work restoring parts of New Orleans and surrounding areas including Mandeville, Lacombe, Hammond and Covington. It has also restored Louis Armstrong New Orleans International Airport, which is being used for relief airlifts.

The company, a venture of Verizon Communications Inc. (NYSE:VZ - news) and Vodafone (VOD.L), said it has restored service in Baton Rouge and Jackson, Mississippi, and is working to bring back Mobile and Biloxi. In addition, Verizon said late Saturday it was awaiting approval to deploy COWs -- Cells on Wheels -- to boost coverage in the affected areas.

T-Mobile USA said late Saturday it has set up a cell site on the roof of a hotel on Canal St. in New Orleans, running on a generator, and has reestablished service in many areas of the flooded-out city. T-Mobile said its network is now available at the Superdome, the convention center and Armstrong Airport.

The company's main hardware in the area survived the storm, it said. T-Mobile is a unit of Deutsche Telekom. (DTEGn.DE)

Sprint Nextel Corp. (NYSE:S - news) was more cautious on New Orleans, saying as of Saturday night that it remained challenging. The company said it has assembled a team in Baton Rouge to make repairs in areas where it was deemed safe. The company, whose Nextel phones are popular for their walkie-talkie capabilities, has provided 3,000 phones to relief officials.

A spokesman for Cingular Wireless was not immediately available to comment on the state of their network in the region.

September 5, 2005 at 03:30 PM in Telecommunications | Permalink | TrackBack (7) | Top of page | Blog Home

European cellphones to get faster data

European cellphones to get faster data - Yahoo! News

Thu Sep 1,11:08 AM ET

BERLIN (Reuters) - T-Mobile International, Deutsche Telekom's mobile division, will launch the new HSDPA high-speed mobile service in four European countries by March to improve Internet speed on mobile phones.

HSDPA is a special version of third generation (3G) mobile phone services, offering data speed which allows clients to watch television on mobile phones and is even faster than many fixed-line broadband connections.

"High-speed 3G will be available wherever T-Mobile already offers 3G coverage," T-Mobile Chief Executive Rene Obermann said at the IFA consumer electronics show in Berlin. T-Mobile has 3G services in Germany, Britain, Austria and the Netherlands.

The new service, also dubbed the "data turbo," will deliver transmission rates of up to 1.8 megabits per second initially, and 7.2 megabits per second eventually, Obermann said. Typical DSL fixed-line broadband delivers 1 megabit per second.

T-Mobile will also launch a new subscription plan in Germany called mobile@home, designed to fully replace a fixed-line connection at home, mimicking a popular plan offered by rival O2's German arm.

Subscribers of mobile@home will pay the much lower call fees used in fixed-line networks if their mobile phones are detected to be in their homes.

September 5, 2005 at 03:28 PM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

Taking the battle online

Taking the battle online | Economist.com

Sep 1st 2005
From The Economist Global Agenda

Microsoft has become the latest big technology company to make a move into telephony over the internet. The low cost of calls is attracting customers in ever-greater numbers and robbing traditional phone companies of business. How worried should they be?

WHEN occasion permits, it is salutary to remind oneself how the conduct of business and leisure has changed since the advent of the internet. Gathering information, written contact (through e-mail) and other tasks have been speeded up immeasurably thanks to the forward march of technology. One is often pressed to remember how people got by before the internet became widespread. In fact, many of the tasks taken up by the web were conducted over the telephone. And if Voice over the Internet Protocol (VOIP), a new type of web-based telephony, continues to takes off, we may one day ask how we made phone calls before the internet took that strain too.

Microsoft is the latest big technology firm to embrace VOIP. This week, the software giant announced that it had bought Teleo, an American VOIP-technology firm, for an undisclosed sum. Days earlier Google, a leading search engine, announced that it would launch Google Talk, an instant message and voice service, in competition with other leading web portals. In June, Yahoo! bought Dialpad, a firm offering the same sort of technology as Teleo.

At the moment, the technology giants generally only allow computer-to-computer voice services. But they may soon extend their offerings to compete with the likes of Vonage, Skype, 8X8 and a host of other new firms that concentrate on providing VOIP services. These companies allow customers to plug their phone into a gadget connected to the internet. By offering this service they have shown they want to compete directly with traditional telecoms firms and the cable companies that have recently joined the fray.

However, VOIP differs from the usual phone services in that it sends calls as digital packets of information over data networks rather than relying on a dedicated circuit-switched network. As a result, calls are charged at a much cheaper rate: long-distance and international calls can be made for the price of a local call and a home broadband-internet connection. Furthermore, a VOIP user can keep his old fixed-line phone number, which will work not only at home but anywhere in the world where he chooses to use the device (as long as a broadband connection is available).

Not surprisingly, consumers have shown more than a little interest in the new technology. TeleGeography, a research firm, estimates that VOIP providers offering similar services to traditional telecoms firms in America had amassed over 1.8m subscribers by the first quarter of 2005. This number is set to grow to over 7m by the end of 2006 and 17.5m by 2010 (see chart). These figures do not take account of the growth of Skype, whose software permits free calls between computers. The Luxembourg-based firm says it already has 51m registered users and a further 2m that have signed up for paid services, such as voicemail and connections to landlines and mobile phones. Skype claims to carry 45% of all American VOIP traffic.

Despite the relatively modest size of the market for VOIP at present, its quick advances and potential for growth have forced traditional phone companies and cable firms on to the defensive. Fixed-line operators in America have suffered a torrid few years as cable firms and mobile operators have eaten away at their business. Revenues at America’s fixed-line local and long-distance carriers have fallen back since peaking in 2000, and forecasts suggest that revenues will slip further over the next few years partly as VOIP providers grab their business. The number of fixed lines in America has been declining as consumers switch to mobile telephony. One estimate suggests that revenues at fixed-line firms may fall by another 25% between now and 2010.

The appearance of new VOIP providers in the past two years has come amid a battle for customers between traditional telecoms firms and cable operators. The latter have built fibre-optic networks across many countries and can offer not only telephones but broadband connections and television too. Many traditional telecoms firms are upgrading their lines to offer the same services and may also be in a position to add mobile telephony to the bundle. And both the telecoms firms and their cable rivals are aggressively, though somewhat reluctantly, offering VOIP telephony. Profits are slimmer for VOIP—the service yields up to $10 less monthly revenue per customer for traditional phone companies, according to some estimates. But telecoms firms reckon it is better to cannibalise revenues than to lose a customer altogether.

Some analysts reckon that the inability of pure VOIP firms to offer the bundled services that telecoms and cable companies can provide (which include the all-important broadband link) may limit the appeal of internet telephony. Other problems also beset VOIP. America’s Federal Communications Commission has insisted that some VOIP phones are made able to access America’s emergency services. The expense of complying with this and the possible imposition of other regulations that govern traditional telecoms providers could add to the costs of VOIP firms and eat into their competitive advantage. And customers may balk at relying wholly on phones that are affected by power cuts, not to mention the viruses that trouble the internet.

Despite these concerns, VOIP's rapid growth is set to continue for the foreseeable future. And mobile operators have as much to fear from it as fixed-line firms do, thanks to the roll-out of WiMax or other forms of wireless broadband delivered over the airwaves, which will offer mobile VOIP across many countries. As a result, the more established mobile operators, still trying to recoup the vast sums spent on third-generation (3G) licences, could see revenues fall.

It is too soon to sound the death knell for traditional fixed-line telephones. The ability of wires to deliver a variety of services, and the drawbacks of VOIP, should keep fixed-line firms in business for some time. But the coming of VOIP will provide cheaper calls for customers and help to keep fixed-line prices down. The consumer with a far-flung network of friends or business contacts may soon wonder how he paid the bills before the internet brought the cost of calls crashing down.

September 2, 2005 at 04:01 PM in Telecommunications | Permalink | TrackBack (12) | Top of page | Blog Home

British police launch trial text message and e-mail terror alerts

CBC News: British police launch trial text message and e-mail terror alerts

Last Updated Tue, 16 Aug 2005 16:37:07 EDT
CBC News

On Tuesday, British police launched a system to send news of terror alerts to commuters by cell phone and e-mail.

Metropolitan Police said Londoners would be able to sign up to receive cell phone text message, e-mail or voice message updates on terror alerts, major incidents or station closures, as well as updates on police investigations into the July 7 and July 21 bomb attacks on London's transit system.

A spokesman said the police hoped that the public would also use the service to respond to appeals for information.

Fifty-two commuters were killed when a series of bombs exploded on London Underground trains and a bus on July 7. No one was injured when more bombs were planted on the transit system on July 21 but failed to fully detonate.

August 16, 2005 at 06:52 PM in Telecommunications | Permalink | TrackBack (23) | Top of page | Blog Home

India adds 2.49 mln mobile users in July

India adds 2.49 mln mobile users in July - Yahoo! News

By Shailendra Bhatnagar Tue Aug 9, 8:27 AM ET

NEW DELHI (Reuters) - India's booming wireless sector, the world's fastest growing major mobile market, added 2.49 million new users in July, taking the total number of customers to 60.366 million, industry bodies said on Tuesday.

The Cellular Operators' Association, representing nine carriers offering mobile services based on the widely prevalent Global System for Mobile (GSM) communication, said 1.954 million customers signed up for its services.

Overall, GSM carriers had 46.874 million customers at the end of July, up 4.35 percent over June.

The strong growth in the past month came despite heavy monsoon rains that wreaked havoc in Bombay, a top market for cellular services, T.V. Ramachandran, director general of the Cellular Operators' Association, said.

"Traditionally, July shows weak demand because of widespread rains," Ramachandran said. "So this growth is all the more heartening."

He said he expected monthly additions to rise further in the coming quarters as carriers were expanding in rural areas.

Local mobile call tariffs of as low as 2 U.S. cents a minute are driving cellular usage in India, where less than six people in 100 in the more than a billion-strong population use mobile services.

India's top mobile services firm, Bharti Tele-Ventures Ltd. , added 533,218 GSM wireless users, taking its customer base to 12.789 million subscribers.

After the announcement, Bharti, 30.8 percent owned by Singapore Telecommunications Ltd., closed 0.15 percent higher at 291.10 rupees in a weak market.

State-run Bharat Sanchar Nigam Ltd., the second-ranked GSM player, had a mobile user base of 10.724 million customers. It added 494,469 subscribers in July.

Hutchison Essar Telecom Ltd., the Indian wireless operation of Hong Kong's Hutchison Telecommunications International Ltd., added 494,469 mobile users last month. The firm's user base stood at 8.844 million customers.

GSM companies compete with carriers such as Reliance Infocomm Ltd. who offer similar services based on code division multiple access technology.

The association representing
CDMA operators said these firms signed up 535,330 new users in the past month, taking their combined user base to 12.341 million customers.

Bombay-based Reliance Infocomm accounted for the bulk of the new CDMA additions. The firm attracted 360,110 customers and raised its mobile user base to 10.647 million.

August 9, 2005 at 09:33 PM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

Vodafone Adds 500,000 3G Users in Germany

Vodafone Adds 500,000 3G Users in Germany - Yahoo! UK & Ireland News

ComputerWire Staff

Days after mobile giant Vodafone Group Plc (LSE: VOD.L - news - msgs) announced that it would open its Japanese network to VNOs, the Newbury, UK-based operator has revealed that over 500,000 Germans have signed up to its third-generation services.

In a statement released to coincide with a strategy presentation in Dusseldorf, Vodafone said 411,000 consumers had bought 3G devices in Germany and that a further 117,000 had signed up for 3G data cards.

Vodafone Germany's 3G network coverage now extends to 1,200 towns and cities in Germany, which translates to about 60% of the population. It hopes that 70% of the population will get 3G coverage by the end of March 2006.

Meanwhile, it said its MobileTV service attracted some 100,000 German customers during June. These customers are able to watch 15 TV channels online on their mobile handsets, and it also includes four live TV channels including CNN and Eurosport.

It has also successfully launched Vodafone Zuhause, a mobile service offering an alternative to fixed-line services within the home zone.

Vodafone launched 3G in 13 countries last November, with a target of signing up 10 million subscribers to the new offering by the end of March 2006. Due to the high saturation rates of mobile phones in Western Europe, Vodafone has to maximize customer ARPU if it is to meet its target of organic growth in the 6% to 9% range for the year.

For the year ending March 31, Vodafone reported a loss of 7.5bn pounds ($13.8bn), down from a loss of 9bn pounds ($16.5bn). Revenue rose 1.7% to 34.1bn pounds ($62.4bn).

July 19, 2005 at 08:22 PM in Telecommunications | Permalink | TrackBack (23) | Top of page | Blog Home

Police appeal for bombing footage

BBC NEWS | UK | Police appeal for bombing footage

Police are appealing to the public to hand over mobile phone images, video footage or photographs taken after Thursday's bomb attacks on London.

They believe the footage could provide vital clues as the search for bodies and forensic evidence continues.

As prayers were said for the 49 killed and 700 injured, police insisted: "London is open for business".

Police revealed 1,700 people had already contacted the anti-terrorist hotline since the bombings.

Scotland Yard has set up a special e-mail address, images@met.police.uk, to which the public can send their footage.

Deputy Assistant Commissioner Brian Paddick said: "We believe these images could contain vital information to assist us in the investigation."

Mr Paddick said some of the calls were "proving to be very, very valuable".

As for the police hunt for the perpetrators, Deputy Chief Constable Andy Trotter said: "Forces from across the country and the world are united in the effort to catch these murderers."

Police say the final death toll is likely to remain at 49.

Emergency teams have removed all the bodies from the train which was blown up between King's Cross and Russell Square, but are continuing to search the carriages to make sure there are no more.

Mr Trotter said all the bodies were now at the mortuary.

"We hope and pray that they don't find any more under there," he said.

'Challenging and demanding'

Forensic teams are continuing their search of the sites of the three underground bombs and Tavistock Square where a bomb tore apart a bus.

Despite Tube closures around the affected lines and road closures around Tavistock Square, police said most transport would be working normally on Monday and urged people to return to work.

Responding to claims by former Metropolitan Police chief Sir John Stevens the bombers were "almost certainly" British, Mr Paddick said no lines of inquiry had been ruled out.

Lord Stevens had said the attackers would not "fit the caricature al-Qaeda fanatic from some backward village in Algeria or Afghanistan".

On Sunday, three people were arrested at Heathrow Airport under anti-terror laws, but no link to the attacks was made. They were later released without charge.

Where the blasts happened

Earlier on Sunday religious leaders issued a statement condemning the bomb attacks.

Sheikh Dr Zaki Badawi, head of the Council of Mosques and Imams, said the assault was "totally contrary to Islam".

The Archbishop of Canterbury Dr Rowan Williams said: "It is a huge fallacy to suppose that one community is somehow more intrinsically prone to violence or outrage than any another."

EMERGENCY NUMBERS
Anti-terrorist hotline: 0800 789 321
Missing relatives: 0870 156 6344

A service at St Pancras parish church, held near King's Cross underground station where at least 21 people died and Tavistock Square where 13 people were killed by the bus bomb, was attended by hundreds of people.

Father Paul Hawkins said: "This will only make us more determined to live in peace and respect each other and we can all play our part in that."

Meanwhile, it is understood the UK's threat assessment has been returned to its highest level, having been lowered soon after the general election.

Overnight, up to 20,000 people were evacuated from Birmingham city centre following what West Midlands Chief Constable Paul Scott Lee called "a real and very credible threat". The area has now been fully re-opened.

Other developments:

* A two-minute silence will be held at noon on Thursday to remember the victims
* A national memorial to the victims could be built, Culture Secretary Tessa Jowell has said
* Hospitals are treating 65 victims, 15 of whom are in intensive care or described as "critical"
* More than 100 London schools are to reopen on Monday
* Passengers on public transport in London have been warned it is "intolerable" to leave unattended packages or parcels
* British Transport Police has dealt with 22 malicious bomb threats and 150 reports of suspect packages since the attacks
* A reception centre has been opened at the Queen Mother Sports Centre in Victoria, to help the families of people not seen since the explosions
* An emergency call centre has taken more than 120,000 calls.

July 10, 2005 at 11:59 PM in Telecommunications | Permalink | TrackBack (16) | Top of page | Blog Home

Mobiles capture blast aftermath

BBC NEWS | Technology | Mobiles capture blast aftermath

By Jo Twist
BBC News website technology reporter

Mobile phones provided some of the more immediate and vivid images of the bomb attacks in London.

Mobile video footage shot by commuters from inside London Underground carriages appeared quickly on global news networks and across the net.

As video mobiles grow more popular in Europe, they are letting people capture the first scenes of chaos before TV.

The attacks on the London Underground and a double-decker bus killed more than 50 and left 700 injured.

Flood of photos

Hundreds of mobile photos and several mobile videos have surfaced documenting the moments after the four blasts.

Blogs, photo sharing websites, online news sites, and TV news used their images in the minutes and hours immediately following the attacks.

Many people commenting on online photo sharing community site Flickr said it was their first port of call to get news and images.

Within minutes and hours, news of explosions filtered through other blog sites and many moblogs - blogs which use mobile phone photos - collected the images.

The BBC News and Sky News websites, among others, immediately responded and called for readers to send in their images, footage and accounts of the events.

Around 1,000 photos and 20 pieces of amateur video were sent in to the BBC News website, with many being featured on the site.

"Within minutes we were receiving people's written accounts and their still pictures," said BBC News Interactive editor Pete Clifton.

"An image of the bus with its roof torn away was sent to us by a reader inside an hour, and it was our main picture on the front page for a large part of the day.

"By the end of the day many of the images on the site had been provided by our users, and many of them were subsequently used by many other BBC services and national newspapers as well.

"It certainly showed the power of what our users can do when they are close to a terrible event like this," said Mr Clifton.

Pocket journalism

Although data transfer and calls cannot be made on a mobile in most of the London underground network, photo, video and other such functions do work.

The first images showed people making their way out of smoke and soot-filled carriages, while other footage showed the rescue efforts that took place above ground.

Third-generation (3G) and second-generation phones that can shoot video are becoming more popular in the UK, where mobile penetration is more than 80%.

The use of mobile reporting in mainstream news is a sign of the changing relationship between journalists and non-journalists, and is proving a powerful way to report events before TV cameras arrive.

It has been called "open source news" or citizen journalism and was well-used during last year's US election campaign.

News organisations in Japan were the first to recognise the power of mobiles, and often turn to such electronic newsgathering to get the first images.

In the aftermath of the Asian tsunami last December, mobile footage of the moments the waves crashed in were beamed all over the world.

In November last year, the dead body of Dutch film maker Theo van Gogh was snapped by a passer-by on a mobile before professional photographers reached the scene.

The picture appeared on the pages of Telegraaf, a daily Amsterdam newspaper, and made the news globally.

The BBC also tested mobile technology formally in a trial broadcast last year.

Tools of the trade

Unlike TV cameras, mobile phones only need a functioning network to send back moving images. This can be done at the touch of a couple of buttons.

TV crews often need feed links and complex set-ups to file back their high-quality images.

The grainy quality of the moving mobile images will improve over time, but news organisations say viewers forgive the quality as they understand the circumstances in which such footage is often shot.

Websites and moblogs have also started to appear with images of support for those affected by the blasts.

One such moblog, We Are Not Afraid, features dozens of images of people, many from the US, holding up messages reading "We are not afraid".

Such images have also been appearing Flickr, which quickly became an easily searchable depository for images of the events.

Mobiles are also proving crucial investigative tools too. Authorities will be scouring mobile records in the bid to find who was responsible for the attacks.

July 9, 2005 at 12:04 AM in Telecommunications | Permalink | TrackBack (9) | Top of page | Blog Home

Moving Beyond Ringtones

Moving Beyond Ringtones - Yahoo! News

By Yuki Noguchi, Washington Post Staff Writer Sat Jul 2, 1:00 AM ET

First, there were musical ringtones. Then came "ring-back" tones -- tunes that play while a caller waits for someone to pick up a mobile phone. Now cell phones are offering streaming music, with access to online music stores on the way.

The wireless industry is making a big push into the music business, taking cues from Apple Computer Inc.'s iPod and from its own success selling more that 182 million mobile phones.

Verizon Wireless said this week that it would offer a music-store service and a music-player cell phone around year-end. Cingular Wireless LLC is considering a similar deal with Motorola Inc. and Apple's iTunes music store;
Napster Inc. and Swedish phone maker Ericsson plan a similar joint venture. In December, Sprint Corp. launched a music channel service that streams commercial-free music and music videos, and it plans to work with Sirius Satellite Radio Holdings Inc. to offer more music channels by the end of the year.

"Apple really pioneered digital music and has created such success that everyone's eyeing it and wants a piece of it," said Darcy Travlos, an analyst with market-research firm CreditSights. But there are pros and cons to making cell phones multitask as music players.

The primary appeal of the cell phone is its ubiquity; nationally, more than 60 percent of people carry a cell phone, making the potential audience huge. The success and profitability of other add-on functions, such as picture messaging, ringtones and various entertainment services, is bolstering the case that the cell phone could become the Holy Grail of consumer electronics: the all-in-one device.

"I strongly believe people will use cell phones as their multipurpose tools, and one of the most logical choices for that is music," said Roger Entner, an analyst with research firm Ovum who said he recently observed teenagers on Boston's subway system playing loud music on their cell phones.

Last year, ringtones generated $400 million in sales in the United States, and the total will reach $600 million this year, he said. "I see all the success of all the MP3 players . . . [and] they beg to be integrated into something that is already providing a great level of utility. Cell phones will do to the music market what they have already done to the camera market."

But some skeptics point out mobile music has yet to make a big splash in Europe and Asia, which tend to lead the United States in wireless trends.

"The question is, how do carriers make money?" said Ping Zhao, a senior analyst with CreditSights. In Korea, news and entertainment content combined only make up about 0.5 percent of carriers' revenue -- not enough to create a big incentive for cell phone carriers to discount music-ready phones for customers, she said.

Besides, Zhao added, music on cell phones comes with some trade-offs. Playing music can limit the phone's battery life. It's also difficult to replicate the iPod's simplicity on cell phones. Cell phone headsets often come with one "earbud," for example, a potential turnoff for consumers who want to listen to music in stereo. Finally, to make mobile music profitable, cell phone companies must strike a price low enough to appeal to customers and high enough to cover licensing payments to the artists and recording labels.

But digital music in general is far outpacing its hard copy equivalent, growing rapidly while sales of CDs have declined at a rate of between 5 percent and 7 percent a year since 1999, Travlos said.

Mobile music in the phone industry could eventually make up half or more of the digital music business, Entner said, if the price is competitive with iTunes, which charges 99 cents a song. If the songs are sold at $2 or $2.50 each, as some services have suggested, the sales could be much lower, he said.

"The music category -- everything from ringtones to ring-backs to video -- is just beyond hot," said Jeffrey Nelson, a spokesman for Verizon Wireless. "But we are still looking at a whole host of business issues before we launch the service," he said, including ironing out how to pay artists and recording labels and making it a profitable business for the company.

Sprint keeps track of ringtone sales the way the music industry keeps billboard charts.

"Beyonce has gone platinum with more than 1 million sales of ringtones," said Nancy Beaton, Sprint's general manager of wireless music and personalization. Rap star 50 Cent and R&B singer Usher have reached gold and platinum levels in sales, she said. "We're trying to create a whole eco-system around music," Beaton said, so customers start to think of their phones as substitutes for their music players.

D.C. resident Nicole Fann, a Sprint customer, hasn't yet made that transition. "Right now I am thinking nothing could replace my iPod," said Fann, who carries both cell phone and iPod with her everywhere. But, she added, "It would be nice if I could have both in one."

July 4, 2005 at 09:43 PM in Telecommunications | Permalink | TrackBack (39) | Top of page | Blog Home

France Telecom Outlines Future Strategy

France Telecom Outlines Future Strategy - Yahoo! UK & Ireland News

ComputerWire Staff

France Telecom SA (Paris: FR0000133308 - news) has outlined a new three-year "transformation" program, which includes adopting Orange as its international commercial brand for mobile, broadband, and combined offerings. It also revealed plans to double its dividend, reduce net debt, and launch a number of new services.

The strategy plan for 2006 through to 2008 is known as Next (New Experience in Telecom services). The new offerings include combined mobile and internet access, remote surveillance of the home through a mobile phone or computer, as well as LiveMusic, a wireless transfer of music from computers to home-based sound systems.

The operator repeated a forecast for 2005 sales to rise between 3% and 5%, and gross operating profit of more than 18.5bn euros ($22.38bn).

Chief executive Didier Lombard also pledged to continue the carrier's policy of debt reduction, and repeated an outlook for net debt to be less than 2.5 times gross operating profit by the end of the year. The carrier said it would more than double its dividend for 2005 to 1 euro ($1.20) per share from 0.48 euros ($0.58) last year.

Lombard also said it would now look at a "selective" acquisition strategy. This commitment to seek further acquisitions is concerning considering the carrier's enormous debt pile. Debt levels at France Telecom recently rose alarmingly after the carrier adopted International Financial Reporting Standards instead of French GAAP. Its debt has risen by 6bn euros ($7.7bn) to a staggering 49.9bn euros ($64.48bn), as it conforms to the new accounting rules.

It built up its vast debts as a result of a reckless expansion strategy in the late 1990s that saw debt peak at 68bn euros ($87.87bn) in 2002. This led to questions over the carrier's viability, and it took a state aid package from the French government, plus a change of management and massive job cuts to get the carrier back on its feet.

In early June, the French government reduced its holding in the carrier, but demand was so weak for the shares that the banks underwriting the offer have been apparently left holding an unspecified number of shares that will have to be sold at a later date.

The French state had been hoping to sell between 6% to 8% of the carrier in order to raise 3.5bn euros ($4.30bn) to 4.53bn euros ($5.56bn) for the state coffers. However, poor demand for the stock meant it was only able to sell a little over 6%, which raised only 3.4bn euros ($4.19bn).

Over the next 18 months, France Telecom will increasingly adopt the Orange name as its international commercial brand for mobile, broadband, and multiplay offerings, as well as for all enterprise businesses. The carrier's name however remains unchanged.

It is targeting more than 12 million clients for broadband fixed-line connections by 2008, including more than 8 million subscribers for its Livebox wireless device, with which users can link their telephone, TV, and internet using Wi-Fi. The Livebox target includes 6 million users in France. It also expects more than 12 million customers by 2008 for broadband mobile services, which include so-called third-generation services, including 6 million in France and 5 million in the United Kingdom.

France Telecom is hoping to gain more than 1 million subscribers for MaLigne TV in France, its offering for television via the internet, with more than 400m euros ($483m) in revenue from direct paid content.

July 3, 2005 at 10:40 AM in Telecommunications | Permalink | TrackBack (23) | Top of page | Blog Home

Vodafone, MSN plan PC-to-mobile messaging service

Vodafone, MSN plan PC-to-mobile messaging service - Yahoo! News

Thu Jun 30, 4:16 AM ET

LONDON (Reuters) - Vodafone Group Plc and Microsoft Corp's MSN unit plan to launch an instant messaging service that will allow communication between mobile phone users and computers, the companies said on Thursday.

They aim to launch the messaging service in several European countries before the end of the year, the companies said.

Users will be able to see the presence of their contacts and exchange instant messages between MSN Messenger on a computer and Vodafone Messenger on mobile phones and vice versa, the two companies said in a statement.

The service aims to bring together more then 165 MSN Messenger users with nearly 155 million Vodafone customers around the world, and increase traffic on their networks.

British-based Vodafone, the world's biggest mobile operator by revenues, said the service will be charged on the commonly-used mobile commercial model of "calling party pays" and contract customers would be able to pay for the service through their mobile bills.

"By bringing our collective customers together, we'll deliver more options for staying in touch when messaging. Our agreement will grow IM (instant messaging) and SMS (text messages), meaning additional revenue for Vodafone," Vodafone's Chief Marketing officer Peter Bamford said.

July 3, 2005 at 10:38 AM in Telecommunications | Permalink | TrackBack (37) | Top of page | Blog Home

Over 26 million text messages sent backing Live 8

Over 26 million text messages sent backing Live 8 - Yahoo! News

Sat Jul 2,10:11 PM ET

PHILADELPHIA (Reuters) - More than 26.4 million people from around the world sent text messages on Saturday in support of the Live 8 campaign to cancel the debts of the poorest countries, setting a world record, organizers said.

"This is definitely going down as the biggest political call to action," said Ralph Simon, who was coordinating the text messaging campaign in Philadelphia, the venue of the largest of 10 concerts around the world to demand relief of African poverty.

He said the previous record for the most text messages sent on a single day for a single event was around 5.8 million for an episode of the television talent show "American Idol" where viewers vote for the winner.

"I think it would be fair to say we're getting texts messages from people from Albania to Zimbabwe," Simon said, adding that lines would be open until the end of July. He said Western Europe probably accounted for the most messages, though he did not have a breakdown of countries.

"This shows how you can make an imprint with your thumb which becomes your voice which becomes a call to end world poverty," he said.

Irish rocker Bob Geldof and Bono of U2 arranged the concerts to push the Group of Eight leaders of the world's richest nations who meet in Gleneagles, Scotland, next week to take action to eliminate poverty.

"What this means is Bono and Bob Geldof can go to Gleneagles in a few days' time and say we have created the world's biggest text book," Simon said.

AOL.com, which streamed video of the concerts, also claimed a world record, saying that more than 5 million logged on globally to watch, making it the biggest streaming event ever.

July 3, 2005 at 10:35 AM in Telecommunications | Permalink | TrackBack (5) | Top of page | Blog Home

Lloyds TSB touts text alert service

Finextra: Lloyds TSB touts text alert service

Research from UK bank Lloyds TSB shows that nearly a fifth of adults (18%) avoid checking their bank statements, but 17% of these believe an SMS text alerting service would help them keep on top of their finances.

Over a third of adults in the UK (36%) only check their bank balance once or twice a month, while one in six never check their statement. Of those that do bother to look, over half (60%) use Internet banking, 44% choose to check their balance at an ATM while 28% wait to receive paper statements.

Two thirds of respondents said they avoided checking balances because they are scared that they'll have less cash than they thought, while 27% don't check because they are worried they'll be in the red.

Commenting on the research, Matthew Timms, Lloyds TSB Internet & ATM director, says: "Nearly three quarters of the population say that they read all of their text messages so if you have your bank balance sent to your phone by text you probably won't be able to bury your head in the sand."

Lloyds TSB launched in text alert service for its personal and business Web banking customers last December. So far around seven per cent of the bank's 1.8 million Web banking customers are thought to have signed up to the free service.

HSBC's direct banking subsidiary First direct launched its text alert service in 1999. The bank sent its 100 millionth text message in February when almost half a million customers were regularly using the texting service. Nationwide has also recently launched a text alert services while MasterCard has released an SMS-based anti-fraud system that enables banks to report suspicious card transactions to customers via sms.

July 1, 2005 at 03:06 PM in Telecommunications | Permalink | TrackBack (113) | Top of page | Blog Home

Mobile users face return of an old foe: the virus

Britain, UK news from The Times and The Sunday Times - Times Online

By Sean O’Neill
A NEW generation of computer viruses, that can infect individual mobile phones and could threaten to collapse wireless networks, has been unleashed.

More than 50 viruses targeted at mobiles have been detected in the first six months of this year. The figure has alarmed security companies because it is only a year since Cabir, the first mobile phone virus, was identified. Most of the bugs discovered so far are “proof of concept” viruses that carry a threat of only minor disruption.

However, at least one, Commwarrior, is malicious and virulent. It infects a handset through a Bluetooth connection. During the night it sends out text or picture messages to all the numbers on that phone’s address book. In the daytime it searches for other Bluetooth-activated phones to which it can spread. Bluetooth is the wireless system that allows short-range communication between devices such as wireless headsets or printers.

Commwarrior has been detected in five countries, including Ireland and Finland, but is not thought to have reached Britain. People whose handsets have been taken over can be hit with huge phone bills for messages they are unaware that they have sent.

The viruses are created by rival groups of “script kiddies” — young mischief-makers who are good with computers — who devise ways of infecting networks and boast about their achievements in internet chatrooms and newsgroups; but their ability to develop threats could be exploited by cybercriminals who could develop more malicious software to steal data, commit fraud or hold businesses — including mobile networks — to ransom. The same pattern was followed in the development of PC viruses from a pastime for computer geeks to an extortion weapon for organised-crime syndicates.

As mobile phones become more sophisticated, they will become more vulnerable. “The situation is very similar to the early days of PCs,” Sal Viveros, the head of security with McAfee, the computer protection company, said. “Most of the viruses we are seeing are just trying to spread. Some try to delete data, but that will change. They are being written by what we call Grey Hats, people who are just trying to prove a point, to show that the technology can be corrupted.”

F-Secure, a Finnish anti- virus company, has been commissioned by people involved in billing disputes with their networks after their phones were infected by Commwarrior and ran up huge bills. Anton von Troyer, of F-Secure, said: “The networks have told these people they have to pay their bills; but they are fighting the operators, saying their phones were infected through the network. A much bigger level of threat is coming, however, when mobiles are going to be widely used for internet connectivity. Very few people have firewalls on their mobiles.”

A virus known as Skulls has appeared in several variations. The most recent infection, Skulls.L, pretended to be a pirate copy of a popular anti- virus software program. It targets smartphones — those with computer, camera and phone applications — and has the ability to disable the handset.

Mobile phone operators say that the threat from viruses is limited at present. A Vodafone spokesman said: “The problem is still relatively small . . . but we are not complacent. There is also the question of educating phone users not to download material from unknown sources.”

June 14, 2005 at 09:22 AM in Telecommunications | Permalink | TrackBack (13) | Top of page | Blog Home

Canadian wireless use reaches 20-year mark

ITBusiness.ca

6/8/2005 5:00:00 PM - A research firm estimates we've reached 47.6 per cent penetration, lagging far behind some other countries. Motorola, Nokia and others put the growth in perspective and discuss future trends

by Sarah Lysecki

Since the first wireless phone such as Motorola’s “brick�� hit the Canadian market 20 years ago, the number of subscribers here has grown to just over 15.2 million or 47.6 per cent of the population, according to the Yankee Group.

By
2009, that number will grow to 52 per cent � 13 points behind the current number of subscribers in the U.S. and much less than the adoption rate in countries like Scandinavia, which has 100 per cent penetration, said Yankee Group analyst Marina Amoroso, who covers the wireless markets in the U.S. and Canada.

While Canada�s wireless industry Wednesday celebrated 20 years of wireless phones at a conference in Ottawa, limited spending on wireless services, easy and inexpensive access to wireline telephone service and delayed movement from analogue to digital technology have contributed to Canada�s lower penetration rate relative to other countries in the world, according to wireless experts.

Despite how far wireless phones have come in the last 20 years, Canada still has a long way to go over the next few years, said Nada Usina, general manager and president of Nokia Canada.

�There are still only one in two people in Canada that have handsets,� said Usina. �You look at other markets in the world where there�s 100 per cent penetration.�

Amoroso likens the growth of the wireless industry in Canada to the Internet.

�I don�t think anybody could doubt that the wireless industry has surpassed the expectations of 20 years ago similar to the way the Internet has surpassed expectations of 50 years ago,� said Amoroso, who attended the conference, adding Canada�s cultural mindset is different than that of other countries when it comes to disposable income. �The willingness to pay is not there from Canadian subscribers compared to other countries.�

Motorola Canada president Frank Maw said 20 years to get to 15 million subscribers in Canada is a milestone in of itself.

�Celebrating 20 years of cellular in Canada for most of us marks what we think is a halfway point to where we see ourselves being in a 25 to 30-year timeframe,� said Maw. �Within the next 10 years we�ll see 100 per cent penetration when all 32 million Canadians have a cell phone.�

Maw added that not every single Canadian will have a cell phone; rather there are going to be many people that will have more than one device or have devices other than voice.

Maw also pointed out that countries like India, unlike Canada, doesn�t have a wireline infrastructure in place to impede growth of wireless.

�We have terrific networks, good competition and the lowest rates in the world,� said Maw. �We have all the ingredients for high level adoption and penetration but the impediment has been good wireline service.�

In rural Canada, economics has been the biggest obstruction to high speed connections, said Maw. IMS and inexpensive broadband will allow these areas to connect relatively inexpensively, he added.

The latter is one of several key drivers that will push adoption rates upward in the next few years.

�There�s going to be an explosion in bandwidth as broadband continues to grow,� said Maw, adding he agrees with Industry Minister David Emerson�s view that broadband connectivity to every Canadian is essential to prosperity. �Most of us in the industry equate bigger broadband capacity with lower prices.�

Both Amoroso and Usina noted that interoperability between carriers on SMS and now MMS have and will continue to help further wireless adoption.

�MMS interoperability in Canada and the interoperability of voice, text messaging are having an incredible impact on power-packed devices that are easy to use and understandable,� said Usina, adding that unlike the other five means of communication (print, recording, radio, television and Internet), mobile connects everything together.

�Mobile has become the sixth medium,� she said. �It�s truly the only medium that can incorporate the other five into one device.�

Maw added the digitization of all types of information including voice, entertainment and now office applications will also help fuel wireless adoption rates.

While experts agree that the market will continue to grow, Amoroso pointed out that the wireless industry in North America is saturating as it reaches its limits as far as subscribers are concerned. Because traditional revenues from voice are declining in price, carriers need to broaden their offerings, she says.

�Carriers need to start differentiating their service products so they no longer have to resort to the knee-jerk price wars every quarter,� said Amoroso. �They can actually focus on attracting subscribers based on their brand and quality of service.�

Bell, for example, recently adopted a multi-branding strategy with the signing of a joint equity share agreement with Virgin Mobile in the hopes of capturing the youth market with Virgin�s image resonating with the lifestyle of that market.

Product differentiation aside, Maw said there are going to be a lot of new disruptive technologies like Wi-Max coming along that will present challenges to the wireless industry.

�There�s a debate going on if Wi-Max can replace traditional cellular telephony in a fifth-generation (5G) level,� said Maw. �Will it compliment it? Or will it be used in underserved areas or overlay in metro areas?�

June 8, 2005 at 05:53 PM in Telecommunications | Permalink | TrackBack (7) | Top of page | Blog Home

Nokia, Yahoo Team Up on Phone Internet

Yahoo! News - Nokia, Yahoo Team Up on Phone Internet

Tue Apr 26,10:33 AM ET
HELSINKI (Reuters) - New smartphones from top global mobile phone maker Nokia (NYSE:NOK - news) will have pre-installed Internet services, like email, from internet media company Yahoo Inc. (Nasdaq:YHOO - news), Nokia said on Tuesday.

"We aim to get Yahoo's services on the phones in as many countries and channels as possible," a Nokia spokesman said.

In the first quarter, Nokia shipped 5.4 million smartphones, accounting for a 50 percent share of the global smartphone market, research firm Canalys said earlier.

Smartphones run computer-like applications such as navigation programs, e-mail and enterprise planning software.

April 27, 2005 at 12:18 AM in Telecommunications | Permalink | TrackBack (4) | Top of page | Blog Home

Rogers vs. Bell: Reliability the issue

TheStar.com - Rogers vs. Bell: Reliability the issue

TYLER HAMILTON

Come July 1, millions of cable customers throughout Ontario will have the option of getting home telephone service from Ted Rogers, the man most associated with cable and cellular phones.

Rogers, founder and chief executive of Rogers Communications Inc., is aiming for July 1 because it's the 20th-anniversary of Rogers Wireless and, well, it doesn't hurt that it's Canada Day � uncle Ted being a die-hard Canadian and Rogers' logo sporting the colours of our national flag.

It all stands in contrast to those faceless blue management types over at Bell Canada, who themselves are trying to muscle into Rogers' television business.

Assuming all goes as planned, and there are no promises that it will, people will be able to sign up for a telephone service that transmits our voices through a high-speed cable modem, onto Rogers' cable backbone and across Canada � sources say � through Allstream Corp.'s national network.

This phone-over-cable approach is similar at its most basic level to the Voice over Internet Protocol services offered by Vonage and Primus Canada. Where it's supposed to differ dramatically is on quality.

Rogers is promising eight hours worth of back-up power in case of outages, as well as 911 calling in the event of an emergency. And unlike services from Vonage or Primus, which are designed to piggyback high-speed access services they don't control, Rogers will be in solid control over the access points and network its telephone customers will rely on.

Shaw Cable, Videotron and Cogeco Cable have their own phone-over-cable plans. Shaw is expected to come to market with a service within a few weeks, beginning in Edmonton.

Will these cable companies be able to deliver the "carrier-grade" quality and reliability being promised?

It's easy to have doubts. The Star still gets emails � not so infrequently � from Rogers' high-speed customers whenever their service goes down. Earlier this month, a few hundred people scattered throughout Rogers' territory didn't have high-speed service for nearly an hour.

Not a major deal, but something that simply doesn't happen with Bell's local phone service.

"It's going to be interesting to see how they do voice over Internet protocol telephone if they can't keep the high speed up," wrote one reader.

Good point. Cast back to early 2001, when disruptions or slowdowns or outages on Rogers' high-speed network were so frequent they were hardly newsworthy. It became such an annoyance to customers that a $75 million class action lawsuit was filed, though it never went anywhere.

Many of those problems were rightly blamed on Rogers' relationship � and dependence � on Redwood City, Calif.-based At Home Corp., which remotely managed many of the services Rogers' customers relied on. Then-CEO John Tory, now Conservative leader for the province, eventually severed Rogers' alliance with At Home and spent more than $300 million reclaiming control over the service, with a focus on improving quality.

Much has changed, no doubt. At Home Corp. is dead. The outages and disruptions are much, much fewer. But they still crop up now and again, enough to raise concern over a future telephone service. Rarely does Bell's local service go down, and it's even less likely that it would happen to hundreds or thousands of people at the same time � ice storms the exception.

"It has to be 100 per cent reliable," says Kona Shio, a media and telecom analyst with Conscius Capital in Montreal. "If you're going against Vonage, it's another story, but if you're going against BCE, you have to offer a comparable service."

Can Rogers achieve the so-called "Five Nines" of telecom, meaning your service works 99.999 per cent of the time?

"They're going to have their challenges," said Iain Grant, managing director of the Seaboard Group, a telecom research firm and consultancy. He says there will be many growing pains for Rogers, and early adopters of the service could face frustrations.

Dermot O'Carroll, senior vice-president of network engineering and operations for Rogers Cable, is fully aware of the challenges and says a plan is in place to reach the Five Nines.

First, Rogers isn't going to run voice packets through the same channel as other high-speed data. Two different channels are being created, and the voice channel will be given priority. Subscribers to the phone-over-cable service � both new customers and existing high-speed subscribers � will be issued an upgraded modem to handle the channel division.

Under this setup, "You could have Internet outages for a wide variety of reasons, none of which would affect the telephone service," said O'Carroll.

This priority for voice also flows down to Rogers' backbone. Again, voice packets � that is, our voices broken down like a puzzle into different bits of data � are given higher priority than other types of data, such as requests for Web sites or email, which aren't as time-sensitive. This will prevent latency in conversations or jittery sounds.

Rogers is also adding redundancy to what it calls its CMTS, which stands for cable modem terminating system. This is a point in the network that communicates with a particular cluster of cable modems being used in a neighbourhood � usually there are about 500 per cluster. Consider it a kind of gateway or traffic cop, directing high-speed traffic onto and off of Rogers' larger backbone.

"That redundancy should eliminate the majority of outages," says O'Carroll. "We're also building redundancy on the backbone itself and right across the network, so we minimize the outages that would impact voice."

This is a reason why Rogers has committed to spending $200 million to bring such a service to market. Testing is supposed to begin in April.

"The phone companies have been doing it for 100 years," said Ted Rogers, when he first revealed snippets of his plan last February. "After our first hundred days I think we'll be in the same league."

The pressure is on. As Mr. Rogers must surely know, after the first 100 days the service could also be a public relations disaster capable of hurting the entire Rogers brand.

It's a major gamble, and while one could argue that going into wireless was a risky bet that paid off for the Rogers family, the difference here is that many view local phone service as essential � as a lifeline.

When a worried mother with a sick baby picks up the phone in the middle of the night to call TeleHealth, the damn thing better be working. In such situations, the fancy features promised by VoIP services won't matter. Neither will a credit on next month's bill.

January 24, 2005 at 08:12 AM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

Google gears up for a free-phone challenge to BT

Times Online - Britain

By Elizabeth Judge, Telecoms Correspondent
GOOGLE revolutionised the internet. Now it is hoping to do the same with our phones.

The company behind the US-based internet search engine looks set to launch a free telephone service that links users via a broadband internet connection using a headset and home computer.

The technology that will enable Google to move in on the market has been around for some time. Software by the London-based company, Skype, has been downloaded nearly 54 million times around the world but no large telecommunication firms have properly exploited it.

BT, which connects seven out of ten British households, has developed its own internet-telephone service. However, the telephone giant, which has the most to lose if the new technology takes off, has been reluctant to promote it heavily.

Julian Hewitt, senior partner at Ovum, a telecoms consultancy, said: �From a telecoms perspective there is a big appeal in the fact that Google is a search operation � and of course the Google brand is a huge draw.�

Mr Hewitt said that a Google telephone service could be made to link with the Google search engine, which already conducts half of all internet inquiries made around the world. A surfer looking for a clothes retailer could simply find the web site and click on the screen to speak to the shop.

The basic cost of making calls across the internet is almost nil. The real cost is in developing the software; after that, the service exploits available internet capacity. However, charging does become necessary to link internet calls with the traditional phone network.

In addition, the sound quality of calls across the internet can be poor and the connections can be less reliable.

A recent job advert by Google�s on its website calls for a �strategic negotiator� to help the company to provide a �global backbone network� � a high-capacity international infrastructure.

By investing in capacity, Google could circumvent the problems of quality and reliability and guarantee better service.

Although Google is reluctant to talk about its plans, the logical use of such a network would be to help to support a new telephone service. The company would buy capacity cheaply, by taking up slack capacity left behind when the internet bubble collapsed in 2001.

Around the world, thousands of miles of fibre-optic cable remain unused because the amount of speculative development vastly exceeded demand. Such capacity would be available at rock-bottom prices today.

Elsewhere in the world, using the internet to make phone calls has caught on more quickly. In Japan 10 per cent of households already use the so-called �voice over internet protocol� and an internet service offered by Softband has 4.4 million subscribers. Its growth has depressed revenues of the local telecom group, NTT.

In the US, a company called Vonage offers customers unlimited calls each month for as little as $24 (less than �13).

Big companies and multinationals that make huge numbers of long-distance calls are also increasingly switching to internet calls to try to slash their bills.

Google, which was founded in 1996, built its business from scratch by offering a fast, reliable and free internet search. It gradually transformed into a highly profitable company by offering commercial services, including sponsored web links.

Its most up-to-date figures show that, in the first nine months of 2004, Google made a profit of $195 million on revenues of $2.1 billion.

START OF THE BIG SEARCH
# Stanford University graduate students Sergey Brin and Larry Page began working on Google�s search-engine technology in 1996 when they were in their early twenties

# They tried to find a buyer for their work but were forced to set up their own company in 1998 because nobody was interested

# Two years later Google became the biggest search engine on the web

# Google was forced to go public during 2004, so that some of its founding investors could make a profit. The company raised $26 million; its initial market value at float was one thousand times greater
# The company�s motto is �Don�t Be Evil�

January 24, 2005 at 07:38 AM in Telecommunications | Permalink | TrackBack (17) | Top of page | Blog Home

IBM Signs Seven-Year Deal with Lloyds TSB

Yahoo! Finance - IBM Signs Seven-Year Deal with Lloyds TSB

ComputerWire Staff

IBM Corp has signed a seven-year deal to manage the voice and data services of London, UK-based financial institution Lloyds TSB (LSE: LLOY.L - news - msgs) . The contract is estimated to be worth 500m pounds ($972.5m).

IBM (NYSE: IBM - news) will oversee Lloyds TSBs move to a national high-capacity fiber, DSL, and MPLS network supporting both voice and data communications. The implementation will include about 70,000 VoIP telephones.

The network integration and management will be provided by Isleworth, UK-based Vanco Plc (LSE: VAN.L - news) , while Hertford, UK-based Vtesse Networks will supply the fiber network. The new infrastructure is expected to be in place in early 2006.

December 13, 2004 at 07:10 PM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

Bank of America begins roll out of Cisco VoIP telephony technology

Finextra: Bank of America begins roll out of Cisco VoIP telephony technology

29/09/2004 14:29:00
In one of the largest VoIP implementations of its kind, Bank of America has begun deployment of Cisco Internet Protocol (IP) telephones across 180,000 desktops at its 5800 branches and office locations in the US.

The bank will replace its existing disparate collection of 362 private branch exchanges (PBXs) with a single IP-based voice, video and data system supplied by the vendor.

More than 100,000 employee voice-mail boxes installed on a variety of voice messaging platforms will be replaced with a single Cisco Unity voice messaging system.

The bank is also implementing IP-based trading turrets from IPC on its trading floor.

Cisco says the IP communications system will reduce operating costs and increase productivity at the bank.

Commenting on the technology, Steve Venezia, MD of the network computing group and network services for Bank of America, adds: "This will help us realise operational and telecom cost savings as well as improved system management and employee productivity."

Systems integrator EDS will help Bank of America manage the migration to the new voice and data network infrastructure, which is expected to take three years.

According to recent resesearch from Avaya and the Economist Intelligence Unit, 43% of companies are either using, testing, or planning to implement VoIP within the next two years.

December 7, 2004 at 07:17 AM in Telecommunications | Permalink | TrackBack (14) | Top of page | Blog Home

Lloyds TSB to switch to new fibre core in �500 million IBM deal

Finextra: Lloyds TSB to switch to new fibre core in �500 million IBM deal

UK bank Lloyds TSB has struck a seven-year �500 million voice and data services deal with IBM, entailing the introduction of a new high-speed network core and an order for 70,000 Voice over IP telephones.

Under the agreement, IBM will act as the "strategic technology partner" for Lloyds TSB as the bank moves to a national dedicated high-capacity fibre, DSL and MPLS network supporting both voice and data communications. The network integration and management will be provided by Vanco, and will include technology from a variety of carriers to provide connectivity to all Lloyds TSB branches and cashpoint machines.

Vtesse Networks, a gigabit optical networking provider, will supply the fibre network, while Cisco will supply the VoIP phones.

Lloyds TSB currently operates a traditional voice infrastructure, including PABX switches, PSTN, RAS, VPN and managed services with approximately 30 supplier contracts, with the largest share of the business held by BT and C&W.

The current Lloyds TSB WAN is deployed solely to support data traffic - no voice convergence exists. Although historically the network has supported many legacy protocols and technologies, today's network is an IP/Ethernet only environment, with the main focal point being the principal data centres.

The new infrastructure, which will be rolled out over the next 20 months to approximately 2500 branches and 1000 other UK sites, will feature a single network for voice, data and video with direct links to mobile and call centre services.

The new fibre core will supply almost limitless bandwidth, allowing Lloyds TSB to consider alternative Web-based or bandwidth-hungry applications that would not previously have been viable.

Efficiency gains are also expected in network branch connectivity, with projections for an expected eight-fold increase in throughput for approximately a quarter of the previous overall cost.

Wayne Churchill, managing director, Vanco Northern Europe, says: "We view this deal as an important first step towards releasing the carrier stranglehold on the financial services market. Our teaming with IBM will change the telecoms market for the benefit of the financial industry and the clients they serve."

December 7, 2004 at 07:14 AM in Telecommunications | Permalink | TrackBack (15) | Top of page | Blog Home

My F900iC .. now thats a phone

This is the best phone in Japan right now ... read Joi's comments on his new phone.

Joi Ito's Web: My F900iC

I spilled juice on my phone and had to get a new one. I got a F900iC. It's the first 3G phone with the new FeliCa contactless IC card built in.

October 30, 2004 at 12:13 AM in Telecommunications | Permalink | TrackBack (11) | Top of page | Blog Home

KPMG issues stark warning over VoIP

KPMG issues stark warning over VoIP

By Kristyn Maslog-Levis, ZDNet Australia

A stark warning over the security and quality of voice-over-IP services has been issued by KPMG

KPMG has released a new whitepaper warning businesses to consider the risks involved in implementing voice over IP (VoIP).

The new whitepaper entitled "Voice-over-IP -- decipher and decide" warns that organisations who that fail to fully understand and address risks associated with VoIP could find their security compromised.

Although there is extensive information available from numerous sources regarding the benefits of VoIP and IP Telephony, there is a "distinct absence of information detailing the risks and associated risk management practices," KPMG said.

KPMG said that the introduction of VoIP means that voice traffic needs to be treated in the same context as data for security purposes, since it will share a common medium.

"The increased technical complexity of integrating voice and data into one network further increases an organisation's dependence on network availability. Many organisations fail to recognise that with this increased technical complexity comes increased security and availability risks that must be appropriately assessed, and the necessary risk management measures applied."

"As hardware PABX systems are replaced with computers and network hardware running common operating systems, networks will become increasingly vulnerable to common threats such as viruses and denial of service [DoS] attacks. Exposures that were experienced with traditional systems are more prevalent with VoIP and IP Telephony, as networking awareness is more widespread. Each entry point to a network is a potential point of attack and therefore risk management is essential."

DoS attacks can occur when a network or device is overloaded with meaningless traffic or sent a specific command that will disable it, rendering the network unavailable. One example of a DoS attack is repeatedly sending a hang-up command to each handset, which is difficult to detect or prevent.

"As voice is sharing a network with traditional data, it is susceptible to the DoS techniques that have been applied against data networks for many years. A malfunctioning or manipulated handset has the ability to cause a DoS attack by flooding the network with traffic."

KPMG added that VoIP is also susceptible to viruses and therefore requires an appropriate management framework. Depending on the telephone handset operating system, handsets might also require virus protection.

KPMG also stated possible confidentiality problems that businesses will face when changing to VoIP.

"In the event that voice traffic is carried over an external network -- such as the Internet -- eavesdropping would be a risk. An example of the potential implication of not encrypting is having a user's phone banking details -- account number or pin tones -- intercepted across the network."

The paper said that encryption can minimise the threat of VoIP eavesdropping. However, a risk assessment is needed based on the sensitivity of calls and the level of control over the network infrastructure.

"Traditional telephony operating over a dedicated PSTN network does not require encryption. A confidentiality breach in the traditional network generally requires physical connection to the network to eavesdrop on conversations from selected lines. This can be complex in large networks."

KPMG emphasised that the implementation of VoIP and IP telephony "must be driven by the organisation's business strategy and not technology imperatives".

"Business benefits can be achieved from the adoption of VoIP and IP Telephony if the decision to implement is business driven rather than technology driven. Project success is dependent on having a clear understanding of the business needs and strategic organisational goals that can be satisfied by new IP Telephony applications."

KPMG said that based on their discussions with a number of clients, many organisations in the Asia Pacific region only consider implementing VoIP when traditional PABX systems have reached the end of their life.

"As a result, organisations' preparedness for these new technologies is inadequate. Without adequate risk management, VoIP implementations can result in reputation damage, a negative impact on customer service or affect the bottom line. The overriding risk is that the implementation of VoIP and IP Telephony will not meet the requirements of the business. Organisations need to understand the impacts that these technologies have on their business processes, and then match them to the business strategy."

KPMG also questioned the integrity of VoIP in the whitepaper.

"VoIP packets travel independently of one another, and like data packets are vulnerable to loss. This does not generally pose a problem for data packets, however, this may have implications for VoIP communication. Out-of-sequence or lost data packets can result in degraded voice quality. With voice and data now sharing the same medium, the risks associated with availability increase and require appropriate assessment by management."

The paper advised organisations to assess and understand the business benefits and opportunities that VoIP brings to their individual businesses.

KPMG said that organisations should "familiarise themselves with the appropriate processes to identify technologies, suppliers and implementation requirements" as well as the maintenance and operational requirements. The organisation should also "assess the security and availability risks relative to the business' risk profile and how these will be dealt with".

October 29, 2004 at 08:42 AM in Telecommunications | Permalink | TrackBack (9) | Top of page | Blog Home

Powell Calls For Regulatory Rein on VoIP

Powell Calls For Regulatory Rein on VoIP

ComputerWire Staff

The US Federal Communications Commission must assert its regulatory authority over voice over IP as a matter of priority, FCC (Madrid: FCC.MC - news) chairman Michael Powell said in an address at the VON Fall 2004 Conference and Exposition yesterday.

Comparing VoIP regulation to, among other things, the US Constitution, Powell said: "The first step in getting policy pointed in the right direction is for the Commission to step forward and affirmatively establish jurisdiction over these services."

Powell said he will, within a month, present his fellow commissioners with a proposal that will state the FCC should assert Federal authority over VoIP services, rather than leaving it to individual states to regulate.

"We cannot avoid this question any longer," he said. "To hold that packets flying across national and indeed international digital networks should be subject to state commission economic regulatory authority is to dumb down the internet to match the limited vision of government officials. That would be a tragedy.

In February, the FCC issued a Notice of Proposed Rulemaking that stated "internet services should continue to be subject to minimal regulation". Powell, a Republican, is generally known as having a hands-off approach to the internet.

The VoIP market has been heating up in recent months, with a handful of successful startups beefing up to fight off imminent competition from the big incumbent carriers and cable operators.

October 20, 2004 at 08:03 AM in Telecommunications | Permalink | TrackBack (8) | Top of page | Blog Home

SBC to Combine E-Mail, Voicemail, Faxes

Yahoo! News - SBC to Combine E-Mail, Voicemail, Faxes

Mon Oct 4, 9:48 AM ET

Add to My Yahoo! Technology - AP

DALLAS - It's what executives of SBC Communications Inc. call their vision for the future: combining voicemail, e-mail and incoming fax messages in one system that can be accessed on the Web or on the phone.

The San Antonio-based company was expected to announce Monday that it is melding home and wireless voicemail and the other components to eliminate having to check messages on multiple systems.

"It brings together what had previously been four separate sets of messages," Donna Harrison, SBC's vice president of product marketing for voice services, told The Dallas Morning News in Monday's editions.

For the nation's second biggest local phone company, which still makes most of its money from old-fashioned residential service, profits have tumbled in recent years as millions of customers switched to rivals and millions more began using cell phones.

SBC's Unified Communications plan is designed to help answer that challenge. The service could be most appealing to customers who buy the phone company's most comprehensive, and expensive, All Distance packages.

Although telecommunications executives and visionaries have long promised unified messaging systems, they have only now become a reality. Such systems are a key feature of voice over Internet protocol services sold by companies such as Vonage Holdings Corp. and AT&T Corp.

The SBC bundles, starting at $48.95 a month, will include local and long-distance service. Cellular service from Cingular Wireless may also be added.

For All Distance customers, Unified Communications will cost $3 a month if a cellular plan is included and $1 if it isn't. It will be $12.95 a month for customers who don't buy the big bundles.

October 4, 2004 at 01:23 PM in Telecommunications | Permalink | TrackBack (11) | Top of page | Blog Home

Rogers Wireless hatches GSM plan with $1.4B Fido bid

ITBusiness.ca

by Shane Schick
9/20/2004 5:00:00 PM - Microcell's white knight says it will create an improved wireless network if its move to stop a hostile takeover by Telus is successful. Executives discuss the dog-eat-dog nature of industry consolidation.

The $1.4-billion bid to take over Microcell Communications by Rogers Wireless announced Monday would create Canada's most powerful GSM network without disrupting existing Fido users, executives promised.

Days after confirming it was in talks to buy Microcell, which has been subject to a hostile takeover bid by Telus Corp. since May, Rogers said it would finance the deal with a combination of cash on hand and a loan from its parent, Rogers Communications. The combined firm would have 5.1 million customers, the companies said.

Rogers Wireless recently spent $1.8-billion to buy back a stake owned by AT&T Wireless Services Inc.

Microcell is the country's smallest cell-phone provider but also one of its most competitive. Earlier this year, for example, it announced plans to expand a low-cost service called CityFido -- which offers unlimited local talk time for $45 a month -- to Toronto. Since its launch in Vancouver, CityFido has prompted fierce countermarketing efforts from other wireless carriers.

In a teleconference Monday, Rogers Wireless president Nadir Mohamed would not confirm the company's plans for CityFido, saying it was too early to speculate.

"I'll tell you what I like about CityFido," he said. "It really attacks the premise of the wireline local business and allows customers to take advantage of wireless for all of their needs."

Apart from its presence in Quebec, Rogers Communications chief executive Ted Rogers said Microcell's most attractive asset is its network, which like Rogers operates on the popular global system for mobile (GSM) standard.

A takeover would mean Rogers would be able to quickly expand its GPRS and EDGE services to Microcell customers without asking them to get new phones or numbers, said Rogers.

"That would be done by just turning on a switch -- it's not that hard," he said. "I would say it would take about an hour, but we'll say a day just to be safe."

Microcell chief executive Andre Tremblay noted that its network already has interoperability between Nortel and Ericsson products, which would make the transition easier. "I don't believe that there will be any major issues," he said. "I think it's clear that we have been upgrading our network a lot in the last year. Everything that was installed for the launch of CityFido in different cities was state-of-the-art equipment."

A Telus Mobility spokesman said the company was examining Rogers' bid and would comment shortly. The deadline for its most recent $29 per share offer was set to expire Monday. Telus had said a recent CRTC decision to lift the spectrum cap would clear the way for its takeover of Microcell.

Iain Grant, managing director of research firm the Seaboard Group, said if the deal from Rogers is successful, it would vault from the No. 2 position in the Canadian wireless market into first place.

"This is bragging rights. This is huge," he said. "Wireless is really important to the financial analyst community. (Ted Rogers) is now the largest player in Canada. GSM is the largest standard in Europe. He's the only one who has it here."

Rogers was opposed to a program like CityFido principally because its network was engineered without a lot of overhead, said Grant, and it couldn't handle the potential surge in usage.

"(Ted) Rogers could see that if that was to happen on his network, it would crash and burn -- you'd see the smoke coming off of these cell sites and they would burst into flames."

Microcell, in contrast, built a brand-new network with empty lanes, and its job was to fill them, Grant added.

Besides its network equipment, Mohamed said Microcell would bring Rogers an increased number of cell sites and increased density of signals. Microcell is a partner in a joint venture called Inukshuk Internet with NR Communications and Allstream, providing fixed wireless service to remote communities like Yellowknife. The future of Inukshuk has not been decided, but Mohamed said Rogers supports the notion of wireless portability and recently acquired spectrum in the 2.7 and 3.5 range for the purpose of offering fixed wireless.

"Contextually, (Inukshuk) is something that I think fits in."

Ted Rogers said there were obvious benefits to what his company is proposing than what Telus would do with Microcell.

"We're talking about merging two GSM networks -- keeping what we have and building on it instead of someone coming in and tearing everything down, closing it up and firing the people," he said, though he noted Telus could still make a play for the company. "We're here reporting (the proposal), but we're not celebrating."

Even if it loses Microcell, Grant said Telus may have gotten what it needed from the process.

"Microcell has been looking at selling the company and defending its turf when it really ought to have been focused on its day job," he said. "All it really cost you, if you're Telus, is a couple of stamps."

Comment: info@itbusiness.ca

September 20, 2004 at 06:10 PM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

Defense in Depth for VoIP Networks

Technology News: Security: Defense in Depth for VoIP Networks

By Dave Roberts
09/13/04 6:00 AM PT
VoIP networks are susceptible to all the same security risks as traditional IP data networks-including denial-of-service (DoS) attacks, viruses, worms, unauthorized access, privacy and spoofing, as well as a host of others.

As the quality of Voice over IP (VoIP) offerings continues to improve, many organizations are beginning to adopt VoIP services to handle intra-office calls, international calls and overall corporate voice communications. Though initial uptake of VoIP has been relatively slow, the converged technology is certainly gaining momentum, with Forrester Research noting that VoIP-based phones are expected to overtake traditional phones by 2007.

The recent surge of interest in converged technologies can be chalked up to the increased performance and quality of new VoIP-based converged offerings as well as the overwhelming economic benefits. While both the economics and increased performance of VoIP are compelling, VoIP does present a slew of new security risks and challenges that must be considered when deploying a converged voice and data network.

VoIP networks are susceptible to all the same security risks as traditional IP data networks-including denial-of-service (DoS) attacks, viruses, worms, unauthorized access, privacy and spoofing, as well as a host of others. Therefore, as companies deploy converged voice and data networks, they must take the necessary security precautions to protect against attacks that could potentially affect the entire communications network.

Common Security Threats
To ensure secure, reliable voice communications and reap the benefits of convergence, organizations must understand the security risks and formulate strategies to mitigate them. Following are some examples of how many common security threats affect voice networks.

Denial of Service, Viruses, and Worms: Many VoIP systems rely on Windows operating systems, and thus are susceptible to DoS, virus, and worm attacks. One attacked component can bring down an entire phone system and serve as a starting point from which the attack can spread throughout the converged voice and data network.

Toll Fraud and Unauthorized Access: Theft of service, or "phreaking," has long been a problem in traditional phone networks. This risk increases in converged VoIP networks due to the open nature of many enterprise data networks and vulnerability to service theft via spoofing or man-in-the-middle attacks.

Spoofing: Unauthorized access to the VoIP network allows attackers to spoof known source or destination addresses of VoIP terminals, creating both privacy and theft-of-service risks.

Port Scanning: Port scanning is a common first step in many attacks on VoIP and data networks. Detecting and preventing this activity can stop attacks before they happen.

Data networks have suffered a dramatic proliferation of new Internet-borne attacks and malicious activities in the past five years, and despite the influx of money and technology that IT managers are throwing at the problem, the number of threats is predicted to continue to increase in 2005.

VoIP networks are not immune to this epidemic. In many cases where security ends at the perimeter, these attacks are able to bypass perimeter security, exploit data and VoIP vulnerabilities and then run unimpeded throughout the network. IT managers are quickly learning that a perimeter-only security strategy is not enough.

Deep, Pervasive Security
In today's security landscape, organizations need deep, pervasive security that goes beyond the perimeter. While there's no silver bullet in the security world, one effective way to minimize the proliferation of fast-moving attacks is for enterprises to adopt a layered, defense-in-depth security strategy.

With defense-in-depth, the network is compartmentalized and segmented into secure zones protected by layers of firewall, intrusion prevention, and other security services.

This enables organizations to logically separate and secure voice and data networks in front of individual voice and data components and between interactive points in the network. Unlike perimeter security functions, these zones can inspect and broker access between VoIP and data interaction points, detect attacks that bypass perimeter security and prevent rapid spread throughout the converged network.

Security Strategies
A defense-in-depth security strategy also enables security staff to fine-tune policies. For example, rather than putting a single intrusion detection system at the core of the network or close to the ISP access point, intrusion detection capabilities are moved closer to each of the individual assets that are being secured. This allows security staff to tune policies for the specific protocols and types of traffic on those servers.

While a layered security approach can significantly increase the protection of converged networks, to date this strategy has been prohibitive due to the high cost and effort of deploying hundreds of disparate security devices throughout the network.

Even in a moderate-sized network, a defense in depth strategy can require dozens to hundreds of additional security appliances, such as firewall and intrusion prevention systems. Plus, these additions to the network can introduce latency to the voice stream and degrade voice quality, which are unacceptable by-products of a sensible security plan.

Virtualized Security Systems
Virtualized security systems offer one solution for implementing layered security in VoIP networks while preserving voice quality. Virtualization technology allows one device to offer multiple virtualized instances of several security services, such as firewall, VPNs, intrusion detection and prevention, and more.

With a virtualized security system, users can place firewall, intrusion prevention, and other security resources near each of the assets that need protection throughout the converged voice and data network-all with point-and-click simplicity. These virtual services meet logical security needs with fewer physical devices, so a layered security model is more cost-effective to deploy and easier to manage.

While the introduction of many disparate security devices into a converged network can cause latency and reduce voice quality, virtualized security devices maintain voice quality. In comparison to traditional single-function security devices, a virtualized security system introduces minimal latency to voice streams because it reduces the number of parsing and reassembly points a packet traverses when traveling throughout the network.

Security Zones
By using a virtualized defense-in-depth solution to compartmentalize and secure zones within the network, users can protect themselves from widespread damage wrought by VoIP application layer attacks, call interception and packet sniffing, unauthorized management access, toll fraud, DoS attacks, and broadcast storms.

A VoIP network with defense in depth security can effectively contain attacks that make it past the perimeter and minimize damage to critical communications assets.

The convergence of voice and data networks has changed the security landscape significantly. Making defense in depth a part of this new landscape is a necessity for users planning to migrate to VoIP.

Virtualized security systems can help make layered, defense in depth security a reality while reducing the cost of deploying security measures, simplifying deployment and management, and maintaining voice quality in VoIP environments.

� 2004 Primedia Incorporated. All rights reserved.
� 2004 ECT News Network. All rights reserved.

September 15, 2004 at 07:33 PM in Telecommunications | Permalink | TrackBack (50) | Top of page | Blog Home

Net calls get their own area code

BBC NEWS | Technology | Net calls get their own area code

In the UK, the telephone area code for cyberspace will be 056.
Government regulator Ofcom has picked the prefix for customers who sign up to make calls via the internet. Users can also opt for geographic numbers.

The decision on numbers comes as Ofcom reveals how it plans to regulate services that use the net rather than the old fashioned telephone network.

Ofcom says it will use a light touch when regulating voice over net services to help the new market flourish.

Call charges

"Broadband voice services are a new and emerging market," said Stephen Carter, Ofcom Chief Executive. "Our first task as regulator is to keep out of the way."

Services that route voice calls via the net, using a technology called voice over IP (Voip), are becoming increasingly popular as more and more people sign up for the broadband net services that they piggy back on.

As well as letting people talk via the net, voice over broadband services also let companies offer all kinds of sophisticated message handling options that are much trickier, and expensive, to do with the old-fashioned phone network.

Getting an 056 phone number will also mean that you can use it where-ever you are as long as you are connected to the internet.

Ofcom believes that the move to Voip will be broadly positive and could mean call costs drop sharply because it costs a lot less to offer such services than it does to set up an old-fashioned phone system.

Ofcom has also published a plain-English guide to Voip services to help consumers find out what benefits they could get from these services and what they need to do to sign up.

But as it was announcing the decision to adopt 056 for Voip users, Ofcom also kicked off a consultation period designed to find out what it should do to protect consumers using the new services.

There are a long list of obligations that anyone providing old-fashioned phone services must comply with. Ofcom wants to find out if the same set of obligations should apply to Voip suppliers.

For instance, phone suppliers must guarantee access to 999 emergency numbers and Ofcom wants to see if the same responsibilities should be placed on Voip firms.

The consultation period runs until 15 November.

September 6, 2004 at 11:06 AM in Telecommunications | Permalink | TrackBack (6) | Top of page | Blog Home

Wi-Fi phones make a splash

Wi-Fi phones make a splash - News - ZDNet

By Ben Charny
CNET News.com
August 5, 2004, 4:00 AM PT
Cell phone makers plan to release so-called Wi-Fi phones ahead of schedule, bringing new threats and opportunities to wireless carriers and traditional phone service providers.

The highly anticipated hybrid phones let people make connections using a local wireless Internet access point and seamlessly switch over to a cell phone network whenever necessary. The net result is greater flexibility in mobile communications as well as potential cost savings gained by shifting call minutes that would otherwise count against a cell phone plan onto the Internet.

New phones and handsets that promise to accomplish this feat are due later this year from Motorola, Hewlett-Packard and NEC. Each is different, but all combine into a single device three hot technologies that are transforming the telecommunications industry: high-speed Wi-Fi wireless networks, voice over Internet Protocol (VoIP) and wireless broadband.

"If you go into any major carrier in North America or Europe today, they are at the very least in the strategic planning phases of integrating Wi-Fi and cellular into a package," said Novatel Wireless Vice President Brad Weinert. "What's holding them back is the infrastructure to manage this on a large scale. But the operators are certainly driving in this direction quickly."

The marriage of short-range, high-speed Net access and cellular service brings together two technologies that have sprung up side by side, creating opportunities for both collaboration and competition. Cellular carriers have spent billions of dollars to upgrade their systems for high-speed data, or third-generation (3G), services. These offer wide coverage that exceeds Wi-Fi's short range, but bandwidth tops out at less than 500kbps (kilobits per second), and thus can't compare with wireless LAN (local area network) technology that blazes at speeds up to 54mbps (megabits per second).

Combining the ability to use both kinds of networks on a single device allows consumers to take advantage of the best each has to offer.

Hybrid handsets can use both data and voice applications, with most of the attention focused on data until recently. But that's changing, thanks to technology improvements for managing call transfers between Wi-Fi and cell phone networks and the increasing popularity of VoIP on corporate networks.

Early versions of Wi-Fi cell phones failed miserably because of the enormous drain on the batteries--which must support two chipsets rather than one--and because users were forced to manually switch between networks. But at least one phone maker, Motorola, now claims to have solved the automatic transfer problem. As a result, carriers are promising some dizzying scenarios by Christmas. For instance, a customer could start a call on an office Wi-Fi network, switch to a cell phone network as he or she travels outside the office building, then conclude the call on a home wireless network, all with no interruptions.

T-Mobile USA plans to offer a hybrid phone developed by HP, designed to allow someone to use a phone to carry on the same conversation while traveling on the highway or sitting in an office cubicle. Meanwhile, Sprint may soon opt to distribute one of the phones. The company has already had some success selling a more cumbersome service that doesn't automatically toggle and which was created primarily for data transfer rather than voice sessions.

AT&T Wireless, Verizon Wireless and Sprint are also likely candidates. They are reselling access to a 3,300 hot-spot wide network owned and operated by Wayport. The hot-spot company two years ago signed roaming agreements with cell phone service providers "just in anticipation" of the debut of cell phones with Wi-Fi radios inside, said Wayport Vice President Dan Lowden.

Although carriers could wind up losing some revenue if Wi-Fi users shift a large number of minutes off their networks, some see the new phones as an opportunity to cement the cell phone as a true replacement for traditional wired phone service.

"I see an opportunity to attack the regional Bell operating companies," said Barry West, chief technology officer at Nextel Communications and an early fan of such hybrid phones.

The handoff
Motorola, in cooperation with Proxim and Avaya, has developed one of the most significant of the new hybrid phones. The phone, unlike those from competitors, switches automatically between cellular and wireless Internet networks.

While careful not to give up too many trade secrets, Chris White, Motorola's director of business development, said network software helps the cell phone sense when it's about to reach the end of Wi-Fi coverage. While the call is still traveling through the Wi-Fi network, the phone will register onto a cellular network, in essence creating a second phone line for the call.

The phone has been in the works since last year, when Motorola struck a deal to use chips from Texas Instruments designed for the purpose.

When the Wi-Fi signal degrades to a preset level, the call is bridged onto the cell connection through means that Motorola declined to discuss in detail.

The only thing a consumer will notice is the change in the quality of the caller's voice--for the better if the phone is switching to a Wi-Fi network and for the worse if it's hopping onto the cell phone network.

"What's happening here is we're setting up two different IP addresses for the same call, and that's something that's never been done before," White said.

Pocketbook panic
The handsets will be expensive and marketed primarily toward business customers, at least for now.

For instance, HP's 6315 iPaq, which switches between traditional cellular and Wi-Fi networks, costs $500, and that's with a $100 discount for signing a one-year contract with T-Mobile. The carrier will begin selling the device around Aug. 26.

That price is likely to be too high for most cell phone users, who are used to paying less than $50 for a color camera phone that might cost carriers $300.

Plus, wireless broadband would cost consumers between $40 and $80 a month, and unlimited access to a nationwide Wi-Fi hot-spot network would add another $20 to $40 a month.

"There are a lot of cost barriers," a Sprint representative said. "There aren't a lot of customers willing to pay what a carrier will be charging for things like an automatic handoff between networks."

Motorola has said its new hybrid phone will be used primarily by businesses. The handset maker chose to use the 802.11a Wi-Fi standard, which is found almost exclusively in offices, rather than the more widely used 802.11b or 802.11g standards.

"These phones are not in the consumer end of the business," Motorola's White said.

It could take up to two years before carriers focus their Wi-Fi phone efforts toward consumers, some experts believe.

"Most carriers haven't evolved the business model for consumers," said Mack Weatherby, marketing alliances director at Avaya. "But there will be more carriers selling to consumers."

August 6, 2004 at 04:29 PM in Telecommunications | Permalink | TrackBack (12) | Top of page | Blog Home

SaskTel tests e-messaging for SMB customers

ITBusiness.ca

by Shane Schick
8/3/2004 5:00:00 PM - Service provider plans offering based on Sun Java software

SaskTel is in the testing phase of a project to roll out an e-mail messaging and calendaring service to 454,000 business and residential customers based on Sun Microsystems' Java Enterprise System software.

The service provider has already rolled out its forthcoming eMessage service internally but is going over a series of reliability and compatibility checks with other desktop products like Microsoft Outlook. SaskTel will primarily market the service to small and medium-sized business customers.

SaskTel general manager Curt Smith said the company developed its last messaging service about five years ago with older sets of software which haven't keep up with the same level of functionality it wants to offer. Although its development team did custom coding to add some features, the layered nature of products like identity servers, directory servers and operating systems made it difficult to keep up, he said.

"We had let some of the layered products in particular kind of lapse in terms of versions that they were running," he said, adding that compatibility was also an issue. "When we actually figured out the whole ripple effect, we would have had to have gone through several stages of doing upgrading and testing."

The company chose Java Enterprise System, Smith said, because it had the pre-integration and pre-testing necessary to reduce its time to market. It would also set the stage for potentially introducing added features like wireless and storage on the server to SaskTel's customers.

"(Messaging) is really becoming more about collaboration and the full environment of how people work together," he said. "I guess we were probably talking about portals five years ago, but not nearly to the extent where we can understand what they can do."

Five years ago, most users had only one e-mail address, added Joely Urton, senior product marketing manager for the Java Enterprise System at Sun. File-sharing and the movement of instant messaging into enterprise environments have also changed expectations among customers, she said.

"They buy Java Enterprise System for a particular project that they have in mind that is a dire need," she said. "Once that's done, we're seeing customers implement the second or third project . . . there's been a change in the customer behaviour in how they view what they select. It's not as constrained."

As a kick-start to the project, SaskTel employees also took a two-day workshop from Sun Services, which Smith said gave the company a better sense of what it needed to do.

"Being a service provider, I think we have a more complex environment than just an enterprise would have," he said.

The eMessage service, which Smith said would be available in a few months, will also take advantage of Sun's Directory Server and its Access Manager for authentication.

August 3, 2004 at 09:07 PM in Telecommunications | Permalink | TrackBack (28) | Top of page | Blog Home

Skype phone service closer

Yahoo! News - Skype phone service closer

Sat Jul 24, 6:46 AM ET

By Dawn C. Chmielewski, Mercury News
Internet telephone upstart Skype on Friday moved one step closer to offering local phone service.

The Luxembourg company finalized deals that will let 7 million Skype users make phone calls from their computers to standard phones for less than 1.5 cents a minute. However, a person using a land line phone will not be able to call Skype users over the service, called SkypeOut.

It's a milestone for Skype, the Internet phone service launched in August by the two technology renegades that created the Kazaa file-sharing phenomenon. The software allows people to place free phone calls anywhere in the world. But previously both the caller and the person receiving the call had to talk over computers that had downloaded Skype's software.

"For Skype it's a big deal, because it takes them out of the computer-to-computer only calling and it puts them into the computer to real-world calling sector," said Ben Silverman, a telecommunications analyst for FindProfit.com, an investor newsletter. "It's significant especially in light of what's been going on."

Said Skype co-founder and Chief Executive Niklas Zennstrom in a statement: "We will now move quickly and offer SkypeOut calls to land line and mobile phone numbers around the world."

The announcement comes at a time of upheaval in the telecommunications world. AT&T announced Thursday it would no longer seek new residential customers. And Verizon Communications introduced its own Internet phone service.

Daryl Schoolar, a senior analyst for researcher In-stat/MDR, said traditional phone companies are under attack from all sides. Once-lucrative long-distance revenue is being undercut by cellular phone plans that don't charge for nationwide calling.

And flat-rate Internet telephone services, such as Vonage and AT&T's CallVantage, are cutting into the market for second home phone lines and advanced calling services, said Schoolar.

The early popularity of Skype, with more than 16.8 million downloads, only fuels such competitive pressures.

On Friday, Skype announced a deal with Level 3, a leading telecommunications wholesaler with a fiber-optic network of 23,000 miles throughout North America and Europe. Level 3 provides what is known as voice termination: taking a phone call placed from a computer and seamlessly connecting it to the local phone network. It's a significant player, with $4 billion in revenue.

Skype also unveiled agreements with Colt, iBasis and Teleglobe to provide the same sorts of call termination services worldwide.

Analysts say it's too soon to predict winners in the fast-emerging realm of Internet phone service, where Skype will compete for business with Verizon, AT&T and Vonage.

"The people they've attracted so far, between this and Kazaa, are people who don't want to pay for something," said Schoolar, the analyst. "It's like inviting 2 million shoplifters into a store hoping to have a sale."

Contact Dawn C. Chmielewski at dchmielewski @mercurynews.com or (800) 643-1902.

July 24, 2004 at 06:45 PM in Telecommunications | Permalink | TrackBack (18) | Top of page | Blog Home

Struggling for New Role, AT&T to Stop Marketing to Consumers

The New York Times > Business > Struggling for New Role, AT&T to Stop Marketing to Consumers

By KEN BELSON
Published: July 22, 2004 AT&T Corp., which for more than a century has been synonymous with phone service in the American home, announced today that it will no longer market it services to consumers. The move comes as the venerable company struggles to find a role in the volatile and competitive telecommunications industry that was created from the breakup of the AT&T monopoly in 1984.

The announcement is setback for one of the most significant companies in American corporate history and one of the nation's most storied brands. The company, once known as Ma Bell, in one form or another has been at the center of phone service in America since Alexander Graham Bell invented the telephone in 1875.

In the two decades since AT&T lost its exclusive franchise to sell phone service, the company has moved in and out of businesses at a frenetic pace, trying everything from selling computers to providing cable and wireless services, often with dismal results. While it has maintained a big business in long-distance calling, the collapse of the telecommunications bubble four years ago has hastened its decline as the cost of phone calls have plummeted.

The company made the decision to abandon the consumer market after the government in June reversed rules that helped AT&T provide local phone service at subsidized rates. Without those subsidies, AT&T said it can no longer offer affordable local service to consumers, who are more and more buying packages of phone, data and video services from cable, satellite and phone carriers.

"Whether I'd call it is strategic, financial or practical or pragmatic, the fact is we can read," said David Dorman, AT&T's chairman and chief executive. "American households are buying bundles, and these bundles are getting more complex and sophisticated, and we have to face the fact that without a local component, a basic component, were at a disadvantage."

AT&T will continue selling telephone and data services to corporate users, a business that already generates nearly three-quarters of its revenue. As the battle for the consumer market intensified, the company has tried to reposition itself as the telecommunications provider of choice to corporate America. But this market, too, remains in flux as rivals like MCI and Sprint try to grab big-name customers that demand ever-cheaper service.

Still, AT&T's retreat from the consumer market is a startling admission of defeat for a company that is still the market leader in long distance calling. It still serves about 35 million consumer customers, but is third behind Verizon Communications and SBC Communications. Though AT&T remains a well-known name with American households, it has had a hard time competing with other phone carriers, cable companies and cellular providers, all of which are selling phone service.

AT&T customers are not likely to be immediately affected by today's decision, and the company said it would not turn away new customers who ask for its service. But the company will stop trying to attract new customers or to retain those who wish to defect to other providers.

Additionally, the company will offer Internet phone service to consumers, though it did not say whether it would aggressively pursue that market.

AT&T hopes to build up its corporate business by using money generated by its consumer operations and spending less on advertising, direct marketing and others costs associated with acquiring retail customers. However, industry analysts say AT&T will only be able to harvest these savings for a year or two because the consumer business is deteriorating so quickly.

"It was a matter time before they would have more steady erosion on the consumer side," said Michael Weaver, a telecommunications analyst at Fitch Ratings, which cut its credit rating for AT&T's debt to BB+, a speculative rating, after today's announcement. "It's kind of a race."

That erosion was starkly apparent in the company's second-quarter results, which were also announced today. AT&T's revenue in the period plunged 13.2 percent to $7.6 billion, with sales from the corporate group sliding 12.7 percent compared to the same quarter a year ago. Sales in the consumer group fell 14.6 percent.

The company overall earned $108 million, or 14 cents per share in the quarter, 80 percent lower than in the second quarter of 2003.

In an ironic twist, AT&T's decision to leave the consumer market makes it more likely that the four dominant local phone providers � Verizon, SBC, Bell South and Qwest � can reassert their increasing market power. With the Telecommunications Act of 1996, these so-called Baby Bells were allowed to enter the long distance market and compete head-on with their former parent, AT&T.

July 22, 2004 at 07:26 PM in Telecommunications | Permalink | TrackBack (3) | Top of page | Blog Home

Rogers to bundle Wi-Fi hotspot access with cell plans

ITBusiness.ca

7/22/2004 5:00:00 PM - Prepare to say goodbye to subsidized handsets, exec says
by Greg Meckbach
TORONTO - Rogers Wireless Inc., which announced its EDGE high-speed data service Tuesday, plans to bundle Wireless Fidelity (Wi-Fi) hotspot access with its personal communications service (PCS) rate plans.

The Toronto-based carrier has not announced pricing plan for the bundles, nor has it set a launch date, but it's unlikely it will be available before 2005, said David Robinson, Rogers Wireless' vice-president of business development.

Combining Wi-Fi with its general packet radio services (GPRS) and Enhanced Data Rates for GPRS Evolution (EDGE) would allow Rogers to offer "3G-like services," Robinson said during a keynote address at the Wireless & Mobile WorldExpo, held Wednesday and Thursday at the National Trade Center.

He was referring to third-generation cellular services, which are supposed to allow transfer rates of 2 Megabits per second (Mbps) to fixed locations and 384 Kilobits per second (Kbps) to mobile users.

EDGE allows data transfer rates of up to 200 Kilobits per second (Kbps), about three to four times the speed of GPRS, which is comparable to dial-up Internet service.

Wi-Fi hot spots, which connect access points to wireless PC cards using IEEE 802.11 standards, are available in public places such as coffee shops, airport terminals, train stations and hotels. They typically let users connect to the Internet at speeds of 1 Megabit per second (Mbps) or better.

But the range of 802.11 is limited to 100 metres. As a result, customers who want network access outside of hotspots need a wireless plan such as Rogers' EDGE, GPRS (available in Canada from Rogers and Microcell Telecommunications) or 1XRTT (available in Canada from Telus Mobility and Bell Mobility).

But mobile workers who want to use Wi-Fi hot spots typically have to sign up for a given period of time with the individual operator and pay through their credit cards.

Robinson said Rogers wants to let customers sign up for Wi-Fi access from hot spots operated by its partners as part of a PCS plan, meaning they would not have to pay hotspot operators separately.

Wai-Sing Lee, an industry analyst for Frost & Sullivan Canada, said a bundled package would discourage subscribers from canceling their Rogers PCS plans and signing up with rival carriers.

"It does make sense for them to bundle everything, because you basically lock in the customer and there's less chance of the customer straying if they find a better service elsewhere."

But he added a recent Frost & Sullivan online survey of U.S. customers indicated most would rather pay for Wi-Fi service separately.

"I'm just really curious as to how much more a person will have to pay for this," he said. "I'd love to know what their footprint's going to be, what their pricing's going to be like and how convenient it's going to be. There are a lot of unknowns here."

Robinson said Rogers is not disclosing details like pricing yet.

Last March, Rogers signed a co-branding agreement with Bell Mobility, Microcell, Telus Mobility, which would allow all four carriers' customers to access hotspots operated by all carriers or their partners. For example, Rogers customers would be able to access a Bell Mobility hotspots as if they were accessing Rogers hotspots. The carriers plan to allow subscribers to roam this fall.

Allan Rosenhek, Telus Mobility's director of business development, said his company "will likely" offer a bundled Wi-Fi and PCS service.

Robinson said during the next six months, Rogers will work on resolving the technical issues involved in both the Wi-Fi networks and the back-end billing services.

Wi-Fi service is a "best efforts" technology normally used by workers with above-average technical knowledge, Robinson said, noting the 802.11 standard was originally designed for wireless local-area networks, rather than public access.

"It was designed to extend (the range of) your blue (Ethernet) cable by 300 feet," he said. "It was never intended for my computer to plug into someone else's network and to do it securely."

During his keynote address, he suggested Rogers would soon charge more for handsets. Carriers typically subsidize customers' handsets, reselling them to customers at a loss of $100 or more per unit.

This means if 1.5 million customers sign up or buy new handsets this year, Rogers profit drops by $150 million.

"The faster we can run away from this (business model), the faster we add $150 million to the bottom line," Robinson said.

July 22, 2004 at 07:02 PM in Telecommunications | Permalink | TrackBack (23) | Top of page | Blog Home

Japanese Carrier Makes Cell Phone Wallet

Yahoo! News - Japanese Carrier Makes Cell Phone Wallet

Wed Jul 21, 9:05 PM
By YURI KAGEYAMA, AP Business Writer
TOKYO - As it is, you don't leave home without it. In a world of cashless payment, why not simply make your cell phone a wallet? Japan has long been phasing out the hassle of coins and bills with microchip-laden "smart cards," which let people make electronic payments for everything from lunch to the daily commute.

But even smart cards could be on their way out, their plastic presence overtaken by virtual-wallet technology now available in the everyday cell phone.

Other nations, led by South Korea (news - web sites), already have so-called mobile commerce payment schemes in place that let people punch keys on their cell phones so that the devices trigger transactions.

But a series of phones going on sale this summer in Japan, for use on NTT DoCoMo (news - web sites)'s wireless network, are the world's first with an embedded computer chip that you can fill up with electronic cash.

The wireless company loaned me a P506iC handset from Matsushita Electric Industrial Co. and I was in business. Well, almost.

First I had to find a machine that's used to stoke smart cards with cash. They can be found in some convenience stores and offices in Japan. You place the phone in a special slot and slip bills into the machine. The phones have a 50,000-yen ($450) limit.

Now you can spend.

To pay you simply wave your cell phone within a few inches of a special display found in stores, restaurants and vending machines around Japan. A fairy-like tinkling sound means your purchase is being deducted from the embedded chip using radio-frequency ID technology.

It's instantaneous.

Unlike infrared or other mobile payment schemes that require clicks on the handset, you don't even need to open your clamshell-shaped phone, the style of choice here.

It's rather fun to pay for things this way.

It's also an idea that makes sense, given that almost every Japanese has a cell phone and relies on it so much that being stranded in the street without one almost causes panic. There are 81.5 million cell phones in this nation of 127 million people.

For the wallet phone tech to really take off, stores, theaters and restaurants that accept electronic payments need to become more widespread. They total around 9,000 in Japan so far, and the number is quickly growing.

To buy a diet Pepsi from a vending machine, I pushed an "electronic payment" button on the machine and pushed another button to pick the soda. When a display the size of a small greeting card lit up with the price, I put my phone next to the display.

Shazaam. The soda pop rolled out, and the display blinked with the amount of money left in the phone.

To pay for my fried-rice lunch at a restaurant in our office building, I brought my bill to the register and told the clerk I wanted to pay electronically. When he rang it up, the little display lit up with the price. I just flashed my phone.

I also played Virtua Fighter arcade games at one of the two Sega amusement centers in Japan where the phone payments work. And I bought gum and bottled tea at a convenience store with the phone.

Like millions of other Japanese, I have a few smart cards. One, the Suica, works as my commuter train pass. The other, an Edy card, works as a wallet at some stores and its "cash" machines are the ones NTT DoCoMo uses for its phones.

I carry my Suica practically every day. But I don't always remember my Edy. So the P506iC wallet phone was handy, indeed. After all, what reporter is without a cell phone these days?

Computer experts have suggested that hackers could develop a way to pickpocket cell phone wallets merely by getting close to people's handsets. That hasn't happened � yet.

Another concern is that a telecom company � or a government � could find out too much about your spending proclivities and your physical movements. But other features on Japan's richly endowed cell phones offer marketers plenty of information on consuming habits as it is: Almost all phones have e-mail and Internet connections for restaurant searches, ringtone downloads, news and weather.

One Japanese airline lets passengers use the wallet phone to speed up check-ins at airports and next year you'll be able to use the phones to begin paying for train rides and video rentals.

Later this year, Japanese credit-card company JCB Corp. plans to offer a service that will let corporate clients use chip-embedded phones as electronic keys to get into office buildings.

And if you lose your wallet phone?

Well, DoCoMo can lock it. Which means no one else can use it for calls. And no one else would be able to add more money to the cash-dispensing chip.

But whatever money is stored on the phone is like a virtual wad of cash. The clerk at the DoCoMo store repeatedly told me not to put any more money into the phone than I could afford to lose.

July 22, 2004 at 01:25 PM in Telecommunications | Permalink | TrackBack (30) | Top of page | Blog Home

Digital TV switchover delayed

Digital TV switchover delayed

LONDON (Reuters) - Television watchers will not be forced to switch over to a digital signal until 2012, two years later than originally planned by the government.
"While the broadcasters have not reached a full consensus on the optimum timetable, some -- including the BBC -- have suggested that 2012 may be the most appropriate date for the completion of switchover," Culture Secretary Tessa Jowell told Parliament on Thursday.

Digital television providers, which offer a wider array of programming beyond the five channels available with an antenna, have been stepping up their efforts to lure new customers in anticipation of the analogue switch-off.

Some regions could see their analogue signals of BBC, ITV, Channel 4 and five, turned off as early as 2007, however, as the switchover is gradually rolled out, she said. The government originally had hoped to finish the switchover by 2010.

The BBC, the publicly funded broadcaster, said last month it would not be against an earlier switchover to digital, but suggested that 2010 would be a "stretch". It has been considering a stand-alone free digital satellite service or partnering BSkyB on its recently announced free venture.

Jowell also served notice that televisions should be marked with dates to indicate when their usefulness will run out as part of an effort to encourage the purchase of digital sets.

"We are therefore engaged with retailers and manufacturers -- who also need to plan ahead -- to see that good clear information is given to consumers currently planning to buy a television or an item of recording equipment," Jowell said.

She asked media regulator Ofcom to devise a plan to ensure that help is provided to "vulnerable consumers", such as the elderly, who may be unable to afford digital upgrades.

"The government's final endorsement of a timetable will be subject to being satisfied that adequate measures are in place to meet this objective," she said.

About half of households already have digital TV in some form. Freeview, a digital service without subscription fees, has boomed, reaching 3.5 million households in less than two years.

Digital satellite service from pay-TV provider BSkyB has about 7 million subscribers, and cable providers NTL and Telewest have another 2.4 million digital viewers.

July 22, 2004 at 01:22 PM in Telecommunications | Permalink | TrackBack (4) | Top of page | Blog Home

Uncertainty clouds Voice over Internet's future

CNN.com - Uncertainty clouds Voice over Internet's future - Jul 8, 2004
Thursday, July 8, 2004 Posted: 10:26 AM EDT (1426 GMT)
NEW YORK (AP) -- AT&T Corp. says it expects to have 1 million Voice over Internet customers by the end of next year, while cable TV giant Comcast Corp. has said it anticipates offering the service to all its customers by the end of 2006.
A flurry of recent announcements by telecom companies paints the hot technology as the industry's future.

So should consumers ditch their traditional land lines now and opt for the cheaper new service? Maybe not yet.

Voice over Internet may be shaking the foundations of telecommunications, but it's hardly mature, and its regulatory future remains uncertain.

"If you were to look at it in 10 to 15 years time, everyone will be using Voice over Internet Protocol," said Mark Main, senior analyst at Ovum, a British consulting firm. But getting there "will be quite varied, quite torturous and not at all clean."

Voice over Internet Protocol (VoIP) uses technology that packages voice calls as data and sends them over broadband connections.

The technique is less expensive because it avoids some access charges inherent in the traditional phone network, and opens up new features, like Web-based management of voice mail. Such advantages have prompted British Telecommunications PLC to plan on converting its entire network to Internet Protocol technology by 2008.

VoIP obstacles
But some obstacles may delay VoIP's status as a popular consumer phone service:

-- People have to know it exists. A June 24 study by the Pew Internet and American Life project found only 27 percent of U.S. online users have heard of VoIP service; 4 million are considering getting it at home.

-- To get VoIP service, you need a broadband connection.

Even AT&T, which seems to be hoping VoIP will energize its shrinking business, said last week when it introduced the service in 10 states that VoIP "is not a complete substitute for traditional telephone service because it does not serve the needs of millions of Americans who cannot obtain or afford the high-speed Internet connection required."

TNS Telecoms estimates that only 18.1 percent of consumers in those 10 states have broadband. And AT&T's VoIP service isn't open to everyone in those states -- only residents of certain cities.

-- Service is only as good as your broadband connection. If your network hiccups while sending a document or receiving a big movie file, it means a delay that most people would ignore or not even notice. But delays on phone calls are harder to tolerate.

"VoIP probably wouldn't have done real well when the Ken Starr report came out," and data networks were swamped, said Farooq Hussain, a principal at Network Conceptions, a telecom consulting firm.

Such reliability issues have led Carnegie Mellon University to wait to introduce VoIP on campus until it upgrades its network over the next three years, said Joel Smith, the university's chief information officer.

Quality of service
Network problems are more complicated for consumers because they're often buying broadband from one company and VoIP from another.

Regional Bell companies, such as Verizon Communications Inc., are the primary sellers of DSL broadband service, while their competitors in the long-distance and cable TV businesses are the primary sellers of VoIP.

"If you are providing phone services on someone else's broadband access network you have no control over the quality of service," Main said.

That said, some VoIP carriers have struck agreements with broadband providers. A good agreement can mean your call travels only on one broadband network.

A bad agreement -- or no agreement -- means your call could get switched from network to network, which can hurt quality. "It's like hopping on the Acela train versus switching trains four times," said Andy Abramson of Del Mar, California, who owns an advertising firm and runs a consumer VoIP Web journal, or blog.

-- The prices, which start at $19.99 a month, are "competitive, not breathtaking," Main said.

The standard price for VoIP packages from AT&T and Cablevision Systems Corp. is $34.99 a month for unlimited local and long-distance calling, voice mail and call forwarding -- but that doesn't include a broadband connection, which generally costs at least $30 a month. Verizon's local and long-distance packages for traditional calling range from $49.95 to $64.95 a month.

-- A lack of regulation -- and taxes -- are a factor in keeping prices down. That may not last forever.

The Federal Communications Commission is considering whether to treat VoIP as a taxable telecom service or an untaxed data service. Beyond that, "half the states in the country are looking at regulating and taxing VoIP," said Gregory Rosston, deputy director of the Stanford Institute for Economic Policy Research.

If the service does gain a following, taxes on it might increase. "As cell phones have grown, the taxes on wireless have gotten much, much larger," Rosston noted.

-- Voice over Internet service depends on the regular power grid, so if that goes, you have no phone. The traditional phone network has its own power and generally works even in blackouts.

The industry has already tackled some of VoIP's problems, such as connecting calls to 911 dispatchers.

Still, some investors are hanging back.

In one recent report, Banc of America Securities analyst David Barden noted: "This profits-are-huge, the-market's-exploding, the-opportunity-is-ripe-for-picking mantra seems eerily reminiscent of past disappointments."

July 19, 2004 at 09:48 PM in Telecommunications | Permalink | TrackBack (18) | Top of page | Blog Home

VoIP: The Next Household Word?

Yahoo! News - VoIP: The Next Household Word?

Mon Jul 19,10:25 AM ETAdd Technology - washingtonpost.com to My Yahoo!

By Cynthia L. Webb, washingtonpost.com Staff Writer
More companies and consumers, especially in urban areas, are tapping into VoIP. That's shorthand for "voice over Internet Protocol," which is nothing more than industry lingo for a simple but extraordinary concept: using the Internet to make telephone calls.

Using the Internet instead of the telephone network has its perks, but there are still plenty of stumbling blocks keeping it from becoming the de facto way of making phone calls. The San Jose Mercury News produced a series on the VoIP phenomenon that looks into all these facets. Here, according to the Merc, are some of the advantages: "Software applications can be added to phones, turning them into mini-computers for such tasks as tracking inventory or looking up a number on the company directory. It also offers potential big savings by allowing companies to change the way they manage their phone systems."

And some more: "In addition to voice mail, call waiting and caller identification, Internet phone customers can retrieve voice mail online as e-mail. They also can arrange conference calls with point-and-click ease on their computers and sometimes even pick their area code. Allen Long, president of Long and Associates consulting firm in Castro Valley, said today's Internet phone price savings may shrink, especially if authorities decide to regulate the service. Federal and state regulators are weighing whether to treat the technology as a phone rather than information service. If it's a phone service, the government may require payment of access charges and universal service fees."

The Merc also noted some of the drawbacks, and they are significant. "A traditional phone system for a 50-person company may cost around $30,000. The cost of an Internet telephone system could range from about $35,000 to $75,000 depending on its features, estimated Mike Plumer, senior director of sales for AltiGen. ... With corporate budgets still tight, the price tag of putting in a whole new phone network is holding back many companies from embracing Internet calling when the old system isn't broken," the paper wrote. "Security is another top concern � a company's phone system is vulnerable to the same attacks as its personal computers. Experts even warn about the possibility of 'voice spam' � imagine hearing: 'You have 98 new voice messages.'" The paper also ran a helpful sidebar VoIP's pros and cons.

Another Merc article noted some other potential snags. "[C]onsumer advocates caution that residential customers should weigh potential downsides of the new technology � limited 911 emergency functions, home-alarm incompatibility and dead lines during power outages � before signing up," the article said. "It's very attractive if you're a heavy phone user," Janee Briesemeister of Consumers Union told the paper. "But it comes with some risk in terms of reliability, particularly in an emergency situation."
� San Jose Mercury News: Companies Cautiously Switch To VoIP (Registration required)
� San Jose Mercury News: VOIP On The Verge (Registration required)
� San Jose Mercury News: To VOIP, Or Not To VOIP (Registration required)

CNET's News.com also wrote about potential VoIP problems: "Protecting your home could get tougher, as well. Some home alarm systems have trouble with broadband connections, or their manufacturers don't yet trust the reliability of the Internet. Also, there's still no way to guarantee VoIP phones will work when power is lost, and not all VoIP providers offer 911 service. During a power outage, a VoIP phone is only as good as any battery backups on hand, because delivering power through the broadband connection isn't possible on a wide commercial basis. An emerging alternative broadband-delivery technique, broadband over power line, will solve this problem, but wide deployment is years away."
� CNET's News.com: The Price of VoIP's Thriftiness

The VoIP Wave Machine

Drawbacks aside, some people are expecting VoIP to continue making waves. "Today people look at it almost as a fashion statement, but the reality is that the fundamental shift to [Internet]-based telecommunications will change the face of telecommunications forever," Internet phone pioneer Jeff Pulver told The Washington Post. "The Internet calling experience is still clunky. Sound quality can be spotty, and it doesn't work at all if the high-speed Internet connection is down. But early adopters of the technology are willing to put up with a few glitches in exchange for big savings and the satisfaction of thumbing their noses at the nation's dominant regional telephone companies."
� The Washington Post: Dialer's New Choice (Registration required)

July 19, 2004 at 08:31 PM in Telecommunications | Permalink | TrackBack (9) | Top of page | Blog Home

Canadian carriers wonder: 3G or not 3G?

ITBusiness.ca

by Shane Schick
7/19/2004 5:00:00 PM - AT&T is expected to launch third-generation cellular services in four American cities. We ask Bell, Telus and Rogers when we can expect the same up here. The answer: sooner than you think.

Canadian wireless carriers say the arrival of 3G services south of the border isn't enough to convince them to make similar investments in high-speed data services here.

Media reports in the United States say AT&T Wireless Services Inc. will launch its third-generation (or 3G) services to transmit e-mail, pictures and video over high speed as early as next week. The rollout is expected to begin in Seattle, San Francisco, Phoenix and Detroit and will include two phone models from Nokia and Motorola, as well as a data card.

Vendors have been promising 3G for years but the concept has been marred by conflicting definitions. AT&T is getting to 3G by adopting Universal Mobile Telecommunication System (UMTS), a standard generally based on Wideband Code Division Multiple Access (W-CDMA).

Rogers Wireless in Toronto, which operates a general packet radio service (GPRS) network, will announce this week the completion of an Enhanced Data rates for GPRS Evolution (EDGE) rollout and the availability of a Sony Ericsson GC82 EDGE PC card. Rogers began a trial of EDGE late last year through a software upgrade on its network in Vancouver. AT&T Wireless already offers EDGE to its customers.

David Neale, Roger's vice-president of new product development, said the company was already confident in the technology but wanted to take the time to gauge the user experience.

"What they were seeing was genuinely three times faster than what they were seeing with GPRS," he said. "That meant people were seeing 90 Kbps quite regularly."

That means IT managers could finally have enough throughput to make desktop applications like Citrix viable, Neale said.

The alternative to EDGE, EV-DO, cranks up the data rate from current U.S. cellular networks (CDMA2000 1xRTT) to a theoretical 2 Mbps and has already been rolled out by Verizon and Sprint in the U.S. In Canada, 1X carriers include Bell Mobility and Telus Mobility, who have so far made no announcements about moving to EV-DO.

"Most carriers are only getting a couple of dollars of their average revenue per user out of data services," said Bell Mobility president Michael Neuman, adding that those services typically include low-bandwidth applications like e-mail and short text messaging. "To put out an even higher-speed network at this point before the adoption rates are sufficient to suggest that very high-bandwidth services are required on a mobile basis would really be putting the cart before the horse."

Telus Mobility spokesperson Julia Quinton said there was no reason to change the status quo.

"We're more than satisfied with what we offer through our 1X network," she said. "Obviously it's fast, at 140 Kbps and of course it's national . . .we're content on that front."

Last year Allen Nogee, an analyst with Scottsdale, Ariz.-based research firm In-Stat MDR, published a report that indicated little demand for 3G services. He said he's seen little since then to change his mind.

"Even if there is somewhat of a demand -- and Verizon is exploiting that with EV-DO -- the AT&T move is a little bit different because it requires all new handsets," he said. "They're only planning coverage in four cities. That would be kind of liming for the first adventurous people that want to shell out their money to get these phones."

EDGE, like UMTS, qualifies as 3G because it fits in with the International Telecommunications Union's definition of services, Neale said.

"Most of the time, what you've got to look at is, what is the benefit to the customer, what's the cost to provide the service," he said. "When you look at the capital cost of deploying EDGE on our existing investment, it was very small for quite a significant improvement."

Neuman said Bell Mobility does have its eye on "medium-speed" data applications like e-mail with heavy attachments and picture messaging, which has become popular. He also pointed to customers like Hamilton Police, which is using ruggedized laptops with Sierra wireless cards that have been installed in every car, as signs that 3G will eventually be ready for prime time.

"Now that they've stepped up to the challenge of determining what their wireless strategy needs to be for competitive or budget reasons, it won't be much of a segue for them to go to even higher-bandwidth applications," he said.

Nogee said the transition has been difficult for all cellular carriers.

"On one hand, they certainly don't want to be left behind," he said. "On the other hand, if they spend all their money on this technology that doesn't become very popular, they've wasted a lot of their resources."

AT&T Wireless's move may only be a contractual concession to Japan's NTT DoCoMo, Nogee added, which has a 16 per cent stake in the firm.

July 19, 2004 at 08:03 PM in Telecommunications | Permalink | TrackBack (10) | Top of page | Blog Home

PluggedIn: Mobile Phones Aim to Take Load Off Wallets

Yahoo! News - PluggedIn: Mobile Phones Aim to Take Load Off Wallets

Sun Jul 18, 7:28 AM
By Yukari Iwatani Kane
TOKYO (Reuters) - Look inside almost anyone's purse or pocket, and it probably contains at least a mobile phone and a wallet bulging with bills, coins, receipts, credit cards, IDs, train or bus passes and any number of membership cards.

In Japan, that may soon be a thing of the past as the mobile industry aims to combine the two with a small embedded chip that can also store money and personal information.

NTT DoCoMo (news - web sites) Inc.(9437.T), Japan's largest mobile operator, on Saturday became the first operator to launch a wallet phone, equipped with Sony Corp (NYSE:SNE - news) (news - web sites).'s (6758.T) FeliCa smart chip, which can be quickly read by passing it over a scanner.

No. 2 KDDI Corp. (9433.T) plans to launch phones with similar functions next year, while the Japan unit of Vodafone Group Plc (VOD.L) is testing the technology.

"FeliCa is going to be a basic requirement for me when I upgrade my phone," said 31-year-old Norihiko Fujimori, who works for a Japanese Internet startup in Tokyo. "It'll be extremely convenient if my phone can contain everything."

GETTING RID OF COINS AND SHAVING TIME

The concept of a wallet phone is just getting off the ground, but the smart chip technology is not new in Asia.

Tokyo commuters have used "Suica" train passes with an embedded FeliCa chip for nearly three years, and 9,000 convenience stores, restaurants and retail outlets around the country accept pre-paid rechargeable debit cards known as Edy.

East Japan Railway Co.(9020.T), which plans to offer mobile Suica late next year, said it has over 8 million Suica users, while 4.5 million Edy cards have been issued.

"The biggest advantage of Edy is that it gets rid of coins ... and transactions are faster," said Takashi Nakamura, manager at bitWallet Inc., which operates the Edy network.

"Users are also attracted to additional benefits that retailers offer like special discounts, membership points or mileage in the case of ANA (All Nippon Airways Co. Ltd. (9202.T))."

Nakamura said it was too early to consider taking the technology overseas to Europe and the United States, but admitted that bitWallet decided on the name "Edy," which stands for euro, dollar and yen, with global ambitions in mind.

In other parts of Asia, Hong Kong residents use "Octopus" smart cards to access trains, buses, and ferries or pay for merchandise or parking. Singapore also has a similar system.

"I can see phones embedded with FeliCa chips taking off in almost any city with a large population and a need for efficiency," said Kazuyo Katsuma, a Tokyo-based telecoms analyst with J.P. Morgan.

Katsuma added that the relatively cheap cost of both the chip, at a few dollars each, and the initial set-up cost for the retailer, at a few hundred dollars each, are also in its favor.

SMART PHONES AS MONEY, ID, HOUSE KEY

In Japan, expectations are high that FeliCa will change the way consumers and businesses function on a daily basis.

Videogame maker Sega Corp. (7964.T) tested a service in which customers at its entertainment centers can use FeliCa-compatible mobile phones to play games.

Credit card company JCB gave employees mobile phones that could be used as company identification cards and for purchases at vending machines and in the company cafeteria.

Financial services firm Kokunai Shinpan Co. Ltd. and real estate company Hayakawa Fudosan provided residents of a new apartment complex in southern Japan with FeliCa-equipped phones that function as keys to both the main entrance and their homes and can be used to pay bills when swiped against a reader at the building entrance.

Convenience store chain am/pm Japan Co. Ltd., a subsidiary of Nippon Mining Holdings Inc. (5016.T), said it asks Edy users, who sign up for its frequent user club, to provide basic information such as age to identify purchase trends and help with supply decisions.

While some consumers express concerns about carrying phones that contain electronic money and personal information or having their purchases monitored, J.P. Morgan's Katsuma said it was no different than carrying a wallet or credit card.

"Everybody doesn't need to carry them," said Katsuma. "Only people, who are into that sort of thing or are high-end users, should use them. It's like an airline mileage membership."

July 18, 2004 at 05:18 PM in Telecommunications | Permalink | TrackBack (21) | Top of page | Blog Home

PC: Hey, your mobile's being stolen!

PC: Hey, your mobile's being stolen!

By Matt Loney, ZDNet UK
Researchers at Leeds University are developing technology that will allow Bluetooth devices to keep tabs on - and potentially protect - each other

Bluetooth, the short-range personal area networking technology, may have found a new application as a guard dog for notebooks and smartphones.

Researchers at the University of Leeds say they have figured out a way of measuring the distance between Bluetooth-enabled devices such as notebook computers, PDAs and mobile phones. They say the development could be used to track movement of devices; for instance, if a computer is moved, an alert could sound and a record of its unauthorised movement could be used in court.

Dr David Walsh, of Leeds University's department of electronic and electrical engineering, said: "The main application is for crime detection and prevention. By locating equipment to half a metre radius or less it will be a deterrent to crime. If something is stolen it will be possible to pinpoint the exact location it was stolen from."

Sadly, the technology on its own is unlikely to be able to pinpoint where the stolen equipment has been taken to. As a crime prevention measure the technology is also limited in that it can only help protect against physical loss. Leaving Bluetooth switched on can place devices at risk of Bluesnarfing -- a technique in which an attacker reads, modifies and copies a phone's address book and calendar without leaving any trace of the intrusion. But, although the tracking only works over a short range -- typically a few tens of metres -- it could still find a large range of applications, said Dr Walsh. "If it works well enough it could be used for locating firefighters in a burning building or to keep track of equipment on large industrial sites, instead of blueprints which have to be constantly revised."

The joint two-year �240,000 project with Imperial College is being carried out with the Home Office Police Scientific Development Branch and the Forensic Science Services.

July 7, 2004 at 08:22 PM in Telecommunications | Permalink | TrackBack (15) | Top of page | Blog Home

SK Group to invest billions of dollars in telecom by 2007

SK Group to invest billions of dollars in telecom by 2007

SEOUL (AFP) - South Korea's SK Group said it plans to invest more than eight billion dollars in information and telecommunications business over the next three years.

The conglomerate which controls South Korea's largest mobile carrier SK Telecom said the major investment plan was aimed at maintaining its leadership in the sector and promoting growth.

"We will spend more than 10 trillion won (8.6 billion dollars) in the information and telecommunications area by 2007," South Korea's third largest conglomerate SK Group said in a statement.

The initiative would focus on "platform business" whereby it seeks all the relevant business areas encompassing service, equipment and content, it said.

With a budget of two trillion won set aside, much of its resources would go to the new satellite digital broadcasting business where customers can watch TV programs on their mobile handsets, the group said.

It added it would expand its own research on service and equipment sectors, while fostering collaborative work with partners on developing programs.

SK Telecom has 18 million subscribers, 54 percent of South Korea's total mobile communications market.

July 7, 2004 at 08:17 PM in Telecommunications | Permalink | TrackBack (6) | Top of page | Blog Home

T-Systems Aims to Make WiFi as Easy as Phone Call

Yahoo! News - T-Systems Aims to Make WiFi as Easy as Phone Call

Tue Jul 6, 7:30 AM ETAdd Technology - Reuters to My Yahoo!

AMSTERDAM (Reuters) - T-Systems, a unit Deutsche Telekom, is linking together 10,000 locations for wireless computer access and aims to connect half of the world's public hotspots to a seamless network, it said on Tuesday.

The company in February began to connect wireless LAN (WLAN) hotspots -- found in coffee bars, airports and hotels -- from different providers across all continents.

Its roaming service has been set up for business travelers who want fast wireless access to the Internet on their laptop computers, but who do not want to sign up and pay separately every time they log on.

Hotels and conference centers in Europe typically ask between five and 10 euros for one hour of WLAN access, also known as Wi-Fi. Hotspots connected by T-Systems allow subscribers of one service to log onto any of the other 120 participating services and pay one bill at the end of the month, similar to the international roaming agreements between cellular operators.

"We have 10,000 hotspots signed or under negotiation. Our strategy is to become the leader in WiFi roaming. We would be content when we come to the point where we have half of the hotspots that exist," said product manager Christian Wollner.

The number of public hotspots worldwide is expected to grow to 135,000 by late 2006 from some 35,000 at end-2003, according to estimates by Datamonitor.

T-Systems, through its International Carrier Sales & Solutions unit, does not operate hotspots itself. It focuses on tying together hotspots from different providers, including those owned by sister companies within Deutsche Telekom.

"We do not have the intention to acquire any hotspots ourselves," Wollner told Reuters in a telephone interview.

This position allows T-Systems to work with many different telecom operators which have come to realize they cannot cover the world with their own hotspots.

A linked system, however, will allow business travelers to use the WLAN hotspot in an airport, for example, then continue to work on the plane over the Connexion WLAN network from aircraft maker Boeing, and finish work in a hotel room.

As well as manually selecting the WLAN providers from the host company page, the connection could be made automatically with software on the laptop or a SIM card, similar to mobile phones. This has been tested in trials, but is not yet commercial.

Wollner believes prices for WLAN will drop in Europe, to come more in line with lower levels in the United States.

"I don't think it will be free of charge, but the very high prices in Europe will have to come down," he said.

July 7, 2004 at 08:15 AM in Telecommunications | Permalink | TrackBack (13) | Top of page | Blog Home

Post Office takes on BT with phone offer

Post Office takes on BT with phone offer

LONDON (Reuters) - The Post Office has unveiled plans to launch a home phone service by early next year, hoping to poach a million households away from market leader BT and explore new revenue streams.

The state-owned Post Office has for some time been looking for new ways to boost revenues, under threat from e-mail and falling use of its network for welfare and other payments.

Having already ventured into car insurance, financial services, foreign exchange and phone cards, the 350-year-old Post Office sees the home phone service as the next major area where it can use its 16,000-strong branch network.

"Ours is one of the most trusted and most recognised brands in the country, which we are looking to leverage," said Simon Carter, head of marketing at the Post Office, on Thursday.

BT owns the 'last mile' of phone line connecting telephone exchanges to virtually all of the country's households but it is forced to rent line capacity to carriers that offer phone services in direct competition with BT.

Called Post Office HomePhone, the new service will join the ranks of similar services offered Carphone Warehouse's TalkTalk, Central Communications' OneTel and Sweden's Tele2. BT is the clear market leader with 21 million customers.

The Post Office, which will also rent BT lines, hopes that its brand will appeal more to consumers than those of other BT rivals, aided by its huge branch network, one of the biggest in Europe. It plans to poach one million users within five years.

The Post Office has signed agreements with Cable & Wireless, the UK's second biggest corporate telecoms provider, and two other firms, Inkfish and Servista, for its service.

C&W will handle all the operational and technical parts of the service, with Inkfish providing call centre support and Servista the billing system. The Post Office will pay all three fees for their services, details of which it did not disclose.

HomePhone will also be amongst the most competitive in the marketplace, the Post Office said, but did not disclose tariffs.

Carphone Warehouse kicked off a major price war last March, offering free calls to customers between TalkTalk numbers. TalkTalk, launched in February last year, had over 385,000 by the end of March 2004 and is targeting 900,000 by end-March 2005.

July 4, 2004 at 03:11 AM in Telecommunications | Permalink | TrackBack (3) | Top of page | Blog Home

Orange to launch 3G in Britain this month

Orange to launch 3G in Britain this month

LONDON (AFP) - French cellphone operator Orange said it would launch third generation (3G) mobile telephone services in Britain on July 19, though customers will have to wait until later this year for the new handsets.

The first 3G product to hit the market from Orange will be a data card, aimed at business customers, offering high-speed Internet access for laptop computers.

Orange said Thursday that it would launch the new 3G handsets in Britain and France later in the year, offering video calling and messaging, naming SonyEricsson and SKorea's LG as suppliers.

The network will initially cover 66 percent of the population in Britain.

"Today brings us a vital step closer to realising our vision of a truly integrated communication offering, giving our customers simple and convenient ways to access the people, places and content they want," said Orange chief executive Sanjiv Ahuja.

Orange's British rival Vodafone announced the launch of a 3G mobile data card for laptops in February and rolled out the technology for cellphone users in several European countries in May.

Hutchison 3G was the first company to launch the new services in Europe in March 2003 but has had a chequered start.

July 2, 2004 at 11:08 AM in Telecommunications | Permalink | TrackBack (13) | Top of page | Blog Home

Justice Dept. Worries About Internet Calls

Yahoo! News - Justice Dept. Worries About Internet Calls

By Christopher Stern, Washington Post Staff Writer
A Justice Department (news - web sites) official told a Senate panel yesterday that law enforcement officers might lack the authority to monitor the phone conversations of terrorists and criminals under a proposed law governing calls that travel over the Internet.

Deputy Assistant Attorney General Laura H. Parsky, testifying before the Senate Commerce Committee, said the growing popularity of Internet-based telephone services presents a new threat to law enforcement officials who are already struggling to keep up with an increasingly complex world of wired, wireless and Internet communications.

Parsky testified at a hearing on a Senate bill sponsored by Sen. John E. Sununu (R-N.H.) aimed at ensuring that Internet-based phone services are not subject to the same regulations that govern traditional telephone networks.

Parsky said the deregulatory approach of the bill could undermine the legal authority of law enforcement officials seeking to investigate criminal activity. She also said that the Internet-based phone technology could provide a haven for criminals seeking to avoid the kind of surveillance allowed on regular telephone systems.

"While I obviously cannot go into detail on this point, suffice it to say that criminals do not want to be caught, and they are quick to take advantage of any gap in our ability to detect and disrupt their criminal activities," Parsky said.

Parsky's testimony prompted sharp questions from both Democrats and Republicans.

Sen. Ron Wyden (D-Ore.) asked Parsky if investigators had ever been hampered in their efforts to track the Internet communications of criminals. Parsky offered no specific examples.

"You are now looking for a solution for a problem that has not been documented," Wyden said.

Wyden also asked Parsky if companies the provide Internet telephone services are cooperating with federal investigators.

"Some are cooperating, some are not," Parsky said.

Internet-based phone technology allows users to make telephone calls over the Internet. The technology makes it more difficult, but not impossible, for law enforcement officials to listen to conversations.

Internet phone calls are still a tiny percentage of all telephone traffic, but the technology is growing rapidly. The service is available to anyone with high-speed Internet access and is generally cheaper than a regular phone connection. Relatively unknown companies such as Vonage Holdings Corp., helped popularize the technology, but it also is being adopted by industry giants such as AT&T Corp.

The debate over Sununu's bill mirrors tensions between law enforcement officials and Internet phone companies at the Federal Communications Commission (news - web sites). The Justice Department has asked the FCC (news - web sites) to require Internet phone companies to design electronic conduits in their networks that would make it easier to tap conversations.

James X. Dempsey, executive director of the Center for Democracy and Technology, said the authority to eavesdrop would not guarantee that law enforcement officials would be able to do it. Technology evolves so quickly that it's virtually impossible for companies to keep up with the detailed demands of law enforcement, Dempsey said.

Dempsey suggested that rather than imposing strict requirements on companies, investigators would be better off working cooperatively with Internet phone providers.

June 16, 2004 at 11:08 PM in Telecommunications | Permalink | TrackBack (4) | Top of page | Blog Home

Nokia launches flip phones

Nokia launches flip phones

By Jennifer Tan and Brett Young
SINGAPORE/HELSINKI (Reuters) - World-leading mobile phone maker Nokia has launched five new models, including flip phones that were lacking in its range, and says it is confident it can claw back market share in a booming sector.

The company, which has been losing out to rivals which have designed more advanced phones, showcased its first mass-market flip phones, plus a new handset which it claims is the world's smallest model for fast networks.

"We have now sharpened our product portfolio in key areas, bringing to the market new phones in the mid-range, and adding more clamshells to our offering," Chief Executive Jorma Ollila said in a statement.

The Finnish company, whose brand name and smart designs had given it a commanding lead of more than 35 percent world market share, said in April that it had started to lose out because of a lack of attractive phones in the middle part of its portfolio.

Ollila told journalists at a company event in Helsinki that he would continue to chase a global market share of 40 percent, despite having drifted off to 32 percent in the first quarter.

Market researchers like Gartner say that Nokia's share has dropped even further, to 28.9 percent -- still almost twice as much as nearest rival Motorola of the United States.

Among Nokia's latest models are a 6260 smartphone with a flip that could swivel, and a 6630 third-generation (3G) phone, which Nokia says is the world's smallest camera phone for fast 3G networks, equipped with wireless email, Web browsing, video calling and other smartphone features.

It unveiled more clamshell camera-phones with the 6170, and a cheaper model, the 2650. Its new line-up also includes the 2600, a traditional low-budget phone for first-time customers.

Analysts had blamed the absence of flip phones as one of the main reasons for its falling market share. Nokia's first models will compete with a broader line-up of clamshells from its rivals.

"It's a step in the right direction but still a couple of paces behind the competition," said Gartner analyst Ben Wood.

RIVALS FASTER

"I wasn't that enthusiastic about the new clamshells, even though the 6260 looked okay. I'm not really sure it can match the competition," said Erkki Vesola at Mandatum Stockbrokers.

He expressed concern that Nokia had cut the number of new product launches in 2004 to 35 from 40, while much smaller rivals plan equal or more new products this year.

Other analysts were more upbeat about Nokia's chances.

"The clamshell phones are exactly what's needed so they're filling the right gaps." said Jussi Hyoty, FIM Securities, who rates the shares "neutral". Nokia shares were off two percent at 11.68 euros at 12:45 p.m. on Monday, underperforming a 1.5 percent lower Eurotech index. The stock has lost almost a third of its value since the company said its market share was eroding.

Motorola and third-ranked South Korea's Samsung Electronics Co Ltd boosted their market shares in the first quarter to 16.4 percent and 12.5 percent respectively.

FOCUS ON ASIA

Nokia first showed its new models at a company event in Singapore, underlining its focus on the region. Flip phones are the gold standard in Singapore.

Simon Beresford-Wylie, Nokia senior vice president for Asia-Pacific, said he expected "dynamic" growth in regional mobile subscribers, estimating that by 2007 for every fixed line user there would be more than two mobile phone users.

In the three years to 2007, the number of mobile subscribers globally will have climbed by some 700 million to two billion and Nokia expects about 300 million of the new subscribers to come from growth markets in the Asia-Pacific region.

"Clearly the industry is thriving. Throughout 2004, around 800,000 new subscribers have joined the mobile world every day," said Nokia board member Matti Alahuhta.

Nokia said it expects mobile phone sales for the industry to reach 600 million units this year, up from 520 million in 2003 -- a forecast that is in line with industry estimates. Camera phones are expected to make up one third of total sales.

Nokia officials estimated that more than 60 operators will have launched commercial wideband-CDMA 3G services by the end of 2004, up from a previous estimate of 50, and that currently there are close to six million W-CDMA 3G subscribers worldwide.

Nokia is generating 20 percent of total network sales with 3G systems, Nokia Networks chief Sari Baldauf told Reuters in an interview.

June 14, 2004 at 03:08 PM in Telecommunications | Permalink | TrackBack (6) | Top of page | Blog Home

Players in mobile market ordered to slash a third off

Scotsman.com News - Top Stories - Players in mobile market ordered to slash a third off

FRANK O’DONNELL CONSUMER AFFAIRS CORRESPONDENT

MOBILE phone operators Vodafone, Orange, T-Mobile and O2 were yesterday ordered to cut charges for calls to their networks by up to 34 per cent.

Telecoms regulator Ofcom said the cost of connecting incoming calls to mobile networks - known as termination charges - should be cut in the six-month period between September and next March.

In a 200-page document which ends a six-year investigation that has enraged the UK mobile industry, Ofcom said the new prices would allow consumers to save "hundreds of millions" of pounds.

Ofcom chief executive Stephen Carter said: "Today�s decision closes a lengthy process, whereby we have concluded that price controls are currently a necessary market mechanism."

BT immediately pledged to cut the costs of calling a mobile from its landlines while the National Consumer Council broadly welcomed the news as good for the public.

However, the major networks, who are struggling with the consequences of overpaying for third generation licences, hinted that the regulator�s decision may not be all good news for consumers.

An mmO2 spokesman said the company had already delayed the introduction of 3G technology and postponed price cuts on calls from mobiles to help offset the reduction in termination charges, which account for around 20 per cent of the UK mobile industry�s revenues.

Vodafone, Orange and T-Mobile have already indicated that the cost of handsets, outgoing calls and text messages were all likely to rise as a result of the decision.

The argument for regulation rests on the fact that although there is fierce price competition for mobile subscribers, there is no such competition with termination charges as a caller to a mobile phone has no choice but to pay what the operator demands.

Attempts to cut termination charges were first floated by Ofcom�s predecessor Oftel and upheld in January 2003 after a year-long investigation by the Competition Commission. Oftel accused the industry of overcharging consumers by up to 40 per cent for connecting calls from rival networks and said the new rules would save consumers �190 million each year until 2006.

The Commission said the big networks should reduce their charges immediately by RPI inflation minus 15 per cent, followed by a further three identical annual cuts. The decision would result in Vodafone and O2 cutting their wholesale charges from about 8p to 5.63p a minute and T-Mobile and Orange reducing charges from about 9.5p a minute to 6.31p a minute.

One of the annual cuts has already taken place and the other two are expected between September this year and March 2005. The lower charges, which do not apply to new, high-speed third-generation (3G) networks, will remain in place until March 2006.

Vodafone, Orange and T-Mobile last year challenged the decision in the High Court and lost.

An Ofcom spokesman yesterday said BT was directly regulated and would have to pass on the reductions to customers in the form of lower fixed-line phone bills. He said other fixed-line operators such as NTL were not directly regulated, but had passed on the first round of savings to customers and were expected to pass on the others.

"No-one in the industry sees any reason why the next two cuts shouldn�t be passed on to customers as well," he said.

BT said the decision was a good one for both consumers and the communications industry as it should encourage more calls.

Orange said it did not agree that detailed regulation of charges on incoming calls to its network from landlines was necessary.

A spokesman for mmO2 described yesterday�s announcement as "harsh", but said it had factored the wholesale price cuts into its business plans.

Diane Gaston, of the National Consumer Council, said: "We�re glad to see that NCC�s campaigning has paid off and Ofcom has finally decided to press ahead with cuts in rip-off call termination charges."

However, she said Ofcom was wrong not to regulate call termination charges levied by 3G operators on calls from fixed line and other mobile networks.

June 1, 2004 at 08:49 PM in Telecommunications | Permalink | TrackBack (16) | Top of page | Blog Home

Ofcom forces action on broadband unbundling

Ofcom forces action on broadband unbundling - ZDNet UK News

ZDNet UK
May 13, 2004, 13:55 BST

Tell us your opinion

BT has announced a massive cut in the cost of local loop unbundling products - on the very day that Ofcom urged the telco to address the issue

Ofcom announced a range of measures on Thursday designed to create more competition in Britain's wholesale broadband market, a sector which is currently dominated by BT.

The communications regulator has demanded that BT lower the pricing it charges rival operators who want to install their own equipment in its local exchanges and offer competing wholesale services -- a practice known as local-loop unbundling (LLU).

It will also appoint an 'independent telecoms adjudicator' who will be charged with establishing better relations between BT and LLU operators.

BT has already announced that it will launch a new LLU product and cut pricing by up to 70 percent over the next few months. The telco says the move will give a very significant boost to broadband competition in the UK, but some observers believe that BT is having to dancing to Ofcom's tune.

Ofcom has welcomed BT's move, and hopes that its own actions will help to create a better market for broadband services in the UK.

"Until today, LLU prices and operational delivery in the UK have been poor by EU standards," said Stephen Carter, Ofcom chief executive. "Now, for the first time, cable operators will be able to roll out DSL services. Until now, the cost of moving off their own networks has made this difficult to fly."

LLU has largely been a flop since its introduction in the UK in 2000. It was meant to help alternative operators to compete with BT on a level playing field by letting them take control of the copper lines between a customer's premises and the local telephone exchange. However, only a few thousand lines have been unbundled, compared to the millions of ADSL customers that BT Wholesale has attracted. This has led to criticism that the cost of getting involved with LLU is too great, a view that Ofcom has now endorsed.

BT, which was aware of Ofcom's thinking in this matter, somewhat pre-empted the regulator's announcement by declaring its planned LLU changes early on Thursday. It will cut the price of its existing LLU product by some 35 percent from 1 June, and later this year it will launch a cut-down version that will allow it to slash prices by another 35 percent.

According to the telco, this move will "usher in a new era of broadband investment".

"Our announcement marks a major move towards the telecommunications market of the future. BT has always argued that a market needs to develop in which those who are willing to invest and innovate can reap the rewards. This is a significant step in that direction," said BT chief executive Ben Verwaayen.

Analysts and rival operators have welcomed BT's move, although not too effusively.

"BT's price cuts look dramatic, but they are designed to bring prices in line with the rest of Europe. BT has obviously decided to act now, before regulatory intervention from OfCom. BT's current price for shared access is around 38 percent higher than the EU average. Today's reduction brings it below the EU average. However, BT's reduced connection fee will still be 50 percent higher than the EU average," said Ovum analysts Serafino Abate and Stefano Nicoletti.

"We at Tiscali think this is very good news for the industry and for the consumer. It opens up access to the BT network at a more basic level, the customer's local BT exchange, to other network operators like us and this will only promote more competition and a better deal for consumers," said Mary Turner, chief executive of Tiscali UK.

"The average broadband user is currently paying between �27 and �30 a month and this announcement means that there is continued downward pressure on price to make broadband more affordable for the mass market," Turner added.

Ofcom is just four months into a year-long review of the UK's telecommunications market that could conclude that BT should be split up. BT has repeatedly argued against this move, and there was speculation on Thursday that the telco is trying to appease Ofcom in the hope of proving that tougher measures can be avoided.

June 1, 2004 at 11:49 AM in Telecommunications | Permalink | TrackBack (25) | Top of page | Blog Home

Cable & Wireless surges back into broadband unbundling

Cable & Wireless surges back into broadband unbundling

By Graeme Wearden, ZDNet UK
By snapping up Bulldog, Cable & Wireless is taking aim at BT's wholesale broadband market. Innovative high-speed services for businesses could follow.

Cable & Wireless opened up a new assault on BT on Friday by purchasing Bulldog Communications for �18.6m.

This acquisition will give Cable & Wireless a foothold in the UK local-loop unbundling (LLU) market, letting it create and sell businesses broadband packages that are different and potentially more innovative than those sold by BT Wholesale.

Bulldog is one of the few companies attempting to compete with BT by installing its own equipment in its telephone exchanges. So far it has unbundled 38 exchanges.

Cable & Wireless now plans to raise this number to 200, which should give many thousands of businesses more choice when selecting a high-speed Internet connection.

The telco isn't yet revealing which exchanges it will unbundle or what products it will offer, but says the deal will give it valuable experience.

"The purchase will enable us to develop our own broadband services, rather than just including products from BT Wholesale as part of our portfolio," explained Peter Eustace, head of media relations at Cable & Wireless.

LLU has largely been a disaster. It was meant to give rival telecoms operators a chance to compete fairly with the incumbent, but in most European countries relatively few lines have been unbundled.

Britain's regulators finally lost patience with the process earlier this month, when Ofcom demanded that BT cut the cost of unbundling. BT actually pre-empted some of Ofcom's actions by announcing significant price cuts on the same day.

Eustace denied that the purchase of Bulldog was a direct response to Ofcom's tougher line on LLU, insisting that Cable & Wireless had been considering a move into LLU before this happened.

Jan Dawson, senior manager at Ovum, believes that the takeover is a smart move for Cable & Wireless because it gets its hands on four years of unbundling experience.

"Most likely, Cable & Wireless will use this advantage to secure wholesale contracts with the larger ISPs looking to migrate their customers from bitstream to LLU services, although we may also see C&W providing retail DSL services to businesses over unbundled loops. All of which should help to fill up what is still the UK's second-biggest fixed-line network," Dawson said.

June 1, 2004 at 11:47 AM in Telecommunications | Permalink | TrackBack (88) | Top of page | Blog Home

Comcast Plans Internet Telephone Service

The New York Times > Technology > Comcast Plans Internet Telephone Service

By REUTERS

y Reuters
The Comcast Corporation said yesterday that it would offer telephone service over the Internet to more than 40 million households by 2006, as it follows a host of other cable operators challenging local telephone companies.

Comcast also announced that its chairman, C. Michael Armstrong, 64, had stepped down a year earlier than planned. He was succeeded by the chief executive, Brian L. Roberts. Mr. Armstrong was the chief executive of the AT&T Corporation before Comcast acquired AT&T Broadband in 2002.

Comcast, the nation's largest cable television company, said it would begin an aggressive rollout of telephone service with a technology known as VoIP, or voice-over-Internet protocol, which allows phone calls to be transmitted using a cable modem over high-speed data lines.

Comcast follows Time Warner Cable, Cablevision Systems and Cox Communications in combining phone service with video and Internet service in an effort to take business from the Baby Bells, while giving consumers an incentive not to switch to satellite television.

But with 21.5 million subscribers, Comcast is far larger than its competitors, and analysts say it offers the biggest long-term threat to telecommunications carriers in the areas it serves.

"Comcast will likely become one of the biggest phone companies over the next decade," said John Hodulik, a UBS analyst. "We expect these carriers to see accelerating pressure on residential access lines in 2005 as these deployments occur."

Shares of Comcast rose 12 cents yesterday, to close at $29.69. Shares of SBC declined 55 cents, or 2.3 percent, to $23.50, and Verizon fell $1.05, or nearly 3 percent, to $34.40.

Comcast's service area encompasses large chunks of the markets of larger carriers, including 30 percent of SBC Communications, 27 percent of Verizon Communications, 23 percent of BellSouth and 28 percent of Qwest Communications International.

The largest Baby Bells have been bracing themselves over the last year for tougher competition, and some have experimented with VoIP offerings of their own.

Verizon is expected to introduce its nationwide VoIP service before the end of June, while Qwest has tested a VoIP service in Minnesota.

A spokesman for SBC, Michael Coe, said that while the company saw cable companies as a long-term threat, SBC had time to respond.

"It's going to take a while for consumer VoIP to take off," he said. "SBC won't be standing still."

Copyright 2004 The New York Times Company

May 27, 2004 at 10:32 PM in Telecommunications | Permalink | TrackBack (36) | Top of page | Blog Home

Vodafone rings up bumper headline profits

Vodafone rings up bumper headline profits

LONDON (AFP) - Mobile telephone giant Vodafone said that annual profits jumped by almost one-fifth, driven by double-digit revenue growth and the addition of almost 14 million new customers.

Vodafone reported a net loss but posted a 19-percent rise in profit before tax, goodwill amortisation and exceptional items to 10.0 billion pounds (14.9 billion euros, 18.0 billion dollars) for the year to March.

Group revenue rose by 10 percent to 33.6 billion pounds, the company said in a statement.

Vodafone added 13.7 million new mobile customers in the year, bringing the total to 133.4 million around the globe.

"These results reflect a strong operational performance with an excellent level of free cash flow generation," said chief executive Arun Sarin.

Free cash flow, a key measure of a company's cash-generating ability, increased by 65 percent to 8.5 billion pounds.

Vodafone said it would buy back a further three billion pounds' worth of its own shares over the next year and raised its dividend by 20 percent.

The group forecast high single-digit customer growth in the coming year from existing operations, leading to similar growth in wireless revenues.

Despite a strong operating performance, however, Vodafone made a net loss of 9.0 billion pounds, down eight percent from the previous year, owing to significant goodwill amortisation -- the writing off of an investment in an intangible asset -- related to past takeovers.

Vodafone's bottom line is still suffering from an aggressive spending spree that has seen the group gobble up rivals such as German telecommunications group Mannesmann in a multi-billion-euro takeover in 2000.

In February, however, the company exited a multi-billion dollar bidding war for US cellphone operator AT and T Wireless, to the relief of many investors.

The group has also spent heavily on investment in third-generation (3G) mobile telephone licences and technology.

Unlike some rivals, however, Vodafone has opted for a gradual approach to the launch of the new technology, which has been plagued by delays.

Last month it announced a low-key roll-out of the long-awaited technology in Europe with a launch in Germany and Portugal.

Users have been promised improved quality, sound, pictures and videos, as well as increased speed when downloading games and ringtones.

They will also benefit from new services such as video calling, downloads of video clips such as sport and news, as well as the streaming of live events to their handset.

In February Vodafone announced the launch of its first third-generation (3G) mobile service: a data card giving users high-speed Internet access for their laptop computers.

"With the advent of our Mobile Connect 3G/GPRS datacard and Vodafone live! with 3G, we are well positioned for a future of transition as we take the lead in expanding market boundaries through new technologies and industry partnerships," said Sarin.

May 25, 2004 at 07:47 AM in Telecommunications | Permalink | TrackBack (45) | Top of page | Blog Home

Analysis: The new confident and comfortable BT

Analysis: The new confident and comfortable BT

By Ron Coates, silicon.com
It's amazing what a little bit of success can do to people. As the BT management rolled out to present their annual results this time around, they exuded an air of comfort confidence.
They'd been confident on previous occasions, but it was a tight, contained confidence – they knew they were going to face a wall of polite scepticism and hard questions. The questions were just as hard this time but they had most of the answers.

They'd been confident on previous occasions, but it was a tight, contained confidence � they knew they were going to face a wall of polite scepticism and hard questions. The questions were just as hard this time but they had most of the answers.

So the team was, as chairman Sir Christopher Bland said of himself, "comfortable, but not complacent". He could afford to be, for he was in a position to make his presentation short and sweet and loaded with success.

He said: "Our strategy is working and we'll continue to accelerate change." To back this up, he pointed to the financials - earnings per share were "really good" or almost doubled and dividend payout was just over 50 per cent and headed to 60 per cent next year. These are the figures on which chairmen are judged.

He was definitely ebullient when he pointed out that: "We beat off all comers to the �2bn NHS deal." BT also plans to extend broadband to 99 per cent of the country by the middle of next year and has partnerships with major companies such as Yahoo, Microsoft, Hewlett-Packard and Vodafone. These he took as votes of confidence in the company.

He concluded that BT had "more earnings, more cash and more dividends. And we'll continue to invest in the future".

It was left to the main board to fill in the details. And these looked very good. Every analyst had wondered if BT could move fast enough on its announced plans to expand in ICT, mobile and broadband.

The headline news was that they could. Revenues stayed even, which meant that the 'new wave', as BT calls it, was making up for the fact that it was losing fixed-line customers at the rate of 100,000 a month.

Ovum principle analyst Mike Cansfield said: "It looks as though their strategy is bearing fruit. They have been very strong in ICT and it will be difficult to keep that momentum. In broadband the question is whether they can make money out of content. Their rich media announcement in February gives them lots of material."

BT has won �7bn worth of ICT deals and announced another two today, one for �330m with the Suffolk Councils and another for �73m with global staffing giant Manpower. The company has 49 contracts on the go worth more than �5m and has admitted to its surprise over its success in the US.

It's poised to hit 2.5 million broadband connections, making it well on its way to its target of 4 million sometime next year. Four million is, incidentally, the current nationwide total.

Cansfield points out that BT has done little in the mobile market and the company has been generally criticised for the fact that it doesn't have a mobile arm as its European competitors do.

"But," he said, "they have that agreement with Vodafone and they're set to launch the consumer and the business product just in time for Christmas. Christmas is the time that people change handsets and, for 70 to 80 per cent of them, it's when they change contracts.

"You've got to give them the benefit of the doubt."

Still, wireless specialist Neil Mawston, senior analyst at Strategy Analytics, is not so sure. He said: "The interesting part will be getting the Bluetooth access points into the home. The range is only about 20 feet, so you'll need two or three of them.

"But it's a good idea � most people use their mobile in the home for the convenience, even when they have fixed line. And they have a good brand and good distribution. Cost, style and design will be crucial."

A few interesting and previously unannounced facts about the company came up during the presentation.

One was the fact that it has been quietly shedding staff. A voluntary redundancy program this March and April should see 4,000 to 5,000 people go at an average cost of �40,000 to �50,000 to the balance sheet. And BT has topped up the pension fund on its way to meeting the deficit which has hit all the UK's final pension schemes.

Another fact is that the company's having to put major investment into India and China to satisfy those large customers who are shifting parts of their business there.

It also currently has the capacity to boost any of its 512Kpbs broadband customers to 2Mbps, which is the threshold for compressed video and television. Pierre Danon, head of BT Retail, plans to make a lot of money out of this.

He said: "We can bill for incremental usage. The days of everything free are over."

BT is currently running trials to extend the range of its broadband product. Some people, even in London, are simply too far from their exchange for the current technology to work.

The presentation ended with BT's refrain of how nice it is to work with a regulator that understands. The BT line, which is quite reasonable, is that particularly in broadband there have to be rewards for the risk of investment.

This means it can now continue to invest and give access to anyone else who can pay the charges - and it's ready to take on all customers on a level playing field. Broadband is the true heart of the company's strategy for the future, both for consumers and for business.

May 20, 2004 at 06:57 PM in Telecommunications | Permalink | TrackBack (20) | Top of page | Blog Home

AT&T Back in Wireless Business

Yahoo! News - AT&T Back in Wireless Business

Wed May 19, 9:02 AM
By Yuki Noguchi, Washington Post Staff Writer
AT&T Corp. announced yesterday it is again going to sell mobile-phone service, rebuilding a business it spun off three years ago and potentially giving new life to the AT&T Wireless brand name.

The nation's largest long-distance carrier, which also has more than 4 million local phone customers, will use Sprint Corp.'s wireless network but negotiate its own deals with device manufacturers and handle its own marketing and software development.

It wants to reenter the cellular business in order to offer its 30 million business and residential customers bundles of telephone and Internet services. With cable companies coming out with local telephone service this year, and with regional Bell companies like Verizon Communications Inc. and SBC Communications Inc. offering package deals with their affiliated wireless companies, AT&T must have wireless service to be competitive, said Blair Levin, an analyst with Legg Mason Wood Walker.

Customers who subscribe to bundles are less likely to cancel service than those who subscribe to any single telecommunications service, and a bigger bundle means bigger money for the telecommunications providers. "It's the battle of the bundles, and you can't compete without a bundle of service," Levin said.

For companies without a wireless business of their own, resale is becoming increasingly common. Earlier this year, Qwest Communications International Inc. announced it would use Sprint to resell its own brand of wireless service. Virgin Mobile USA Inc. also resells mobile-phone service using Sprint's network. Some analysts believe cable companies, and AT&T's long-distance competitor MCI Inc., will also start signing resale deals to add to their video, local telephone and Internet service offerings.

"This is an industry that has exploded, in terms of demand," said Kevin Crull, general manager for wireless services and senior vice president of AT&T. "Wireless is clearly a huge growth market."

Sprint will carry the AT&T cellular calls to radio towers in a five-year deal. AT&T is negotiating similar deals with other wireless carriers, spokesman Jim Byrnes said.

A precipitating event for AT&T was the $41 billion merger of Cingular Wireless and AT&T Wireless, announced in February. Completion of that deal, expected later this year, will allow AT&T to regain control of its former affiliate's brand name, Crull said. The company hasn't decided whether to use AT&T Wireless as a separate brand or market the new wireless service under the general AT&T brand.

The AT&T Wireless brand name has suffered in recent months, after a persistent software problem and reports of poor customer service. It lost 367,000 customers in the first quarter.

Crull said the AT&T Wireless brand remains attractive to consumers. "The AT&T brand is remarkably powerful today, despite the customer reports coming out of AT&T Wireless," he said.

Either way, integrating another wireless operation into AT&T's operations is a risky one, according to some analysts.

"WorldCom Wireless tried the resale model and it didn't work," because it wasn't well run, said Jonathan Atkin, an analyst with RBC Capital Markets.

Bob Egan, president of industry consultancy Mobile Competency Inc., noted AT&T itself has had a mixed record in delivering wireless services. "Before, they had the right vision, and they had bad execution," so the question is whether the company can deliver better service this time, he said. The company can't afford to fail, he said: "I think wireless is a matter of survival for AT&T."

May 19, 2004 at 07:31 PM in Telecommunications | Permalink | TrackBack (32) | Top of page | Blog Home

Internet telephony rides back into fashion

Internet telephony rides back into fashion - ZDNet UK Insight

Winston Chai
CNETAsia
April 22, 2004, 16:00 BST
Linksys chief executive Victor Tsao unfolds the networking-gear firm's expansion plans

If Victor Tsao has his way, your next broadband router could bear an uncanny resemblance to your living room telephone.

Ten months after his company was bought by Cisco Systems for $500m (�282m), the founder of consumer networking-gear maker Linksys plans to embark on an aggressive product expansion trail this year.

Beyond latching onto the digital entertainment wave with more offerings for multimedia streaming and wireless console gaming, Tsao will venture into an area where many before him have seen limited success -- Internet telephony.

With the proliferation of the Web in the 90s, the ability to make cheap long-distance calls over the Internet -- based on a technology called voice over Internet Protocol, or VoIP -- was often touted as the next big thing for consumers. Of little surprise, the market soon witnessed an onslaught of hardware and software that aimed to ride the Net phoning tide. However, poor voice quality and frequently dropped calls soon drowned much of the consumer enthusiasm surrounding IP telephony.

Thanks to improvements in quality of service and Internet bandwidth in recent years, VoIP has again caught the attention of telecom carriers around the world. During a recent Singapore stopover, Tsao, now vice president and general manager at Linksys, tells ZDNet UK sister site CNETAsia about his plans for VoIP and future directions for the company.

Q: How has Linksys changed after the acquisition?
A: There is no change to the business model. Cisco is the leader in the enterprise networking field. Linksys is a brand of Cisco, but the brand Linksys covers the other side -- small businesses, home users and consumers.

As for market focus and product focus -- they haven't really changed, although, yes, some things have changed. Before the acquisition, 95 percent of our revenue came from the US and Canada. With Cisco's worldwide presence and infrastructure, we started branching out. We had never really focused on this, due to constraints as a privately held company.

Back on 14 October, we launched the Linksys brand in China. We created an entity in Chengdu, focusing on (aftermarket) sales, technology support as well as marketing and promotions.

April 29, 2004 at 01:33 AM in Telecommunications | Permalink | TrackBack (12) | Top of page | Blog Home

Skype Launches Mobile VoIP

Yahoo! News - Skype Launches Mobile VoIP

Jay Wrolstad, wireless.newsfactor.com
Voice over Internet calling is now available for PDA users from the same folks who also launched Kazaa, the widely distributed music file-sharing software.

The beta version of PocketSkype, from Luxembourg-based Skype Technologies, is for users of handhelds powered by a 400 MHz processor with Wi-Fi capability and running the Microsoft (Nasdaq: MSFT - news) PocketPC OS. It is essentially a mobile version of the company's global VoIP service based on peer-to-peer software.

The Wi-Fi Connection

PocketSkype is designed for a Wi-Fi broadband wireless local area network connection, although it also delivers instant messaging without voice over GPRS wide area networks. Conference calling is available, but cannot be initiated by the software.

Versions of PocketSkype for other operating systems are in the works, the company said, as are those that support languages other than English. Registered Skype customers can download the free software at the company Web site, and are advised to purchase a headset.

According to Niklas Zennstrom, Skype CEO and co-founder, the major benefits for users are free phone calls -- no mobile roaming fees -- and increased productivity for businesses with mobile workforces. "The powerful combination of Wi-Fi and free telephony can fundamentally improve business communications processes," he told NewsFactor.

Wireless VoIP Arrives

Making Skype available to the expanding Wi-Fi community helps Skype deliver "always on" connectivity to customers anywhere at any time, Zennstrom said.

PocketSkype retains the same basic attributes of regular Skype software, including free Skype-to-Skype worldwide calling, instant messaging, access to the global directory, online presence and contact lists.

Now that laptops have been VoIP-enabled, PDAs are following suit. SoftAir Microsystems recently licensed an application from San Jose, California-based HelloSoft that adds VoIP capability to its line of products for PDAs and notebooks.

Cisco (Nasdaq: CSCO - news) and Nortel (NYSE: NT - news) also provide VoIP over wireless local area networks, Yankee Group analyst Zeus Kerravala noted, but he says that using a peer-to-peer connection is a new twist.

Limited Appeal?

"If this works as well as they say it does," Kerravala said of the mobile Skype software, "they could move closer to the goal of integrating messaging and voice." While there is no true "killer app" for VoIP, he told NewsFactor, there is a focus on presence, with the ability to gather, use and manage communications devices and infrastructure.

Because this software is based on peer-to-peer technology, the service is limited to small groups of users, said IDC analyst Will Stofega. "If you can't call anyone outside of your group, that certainly limits the appeal," he told NewsFactor. "Who you can talk to is what it's all about, and the big wireless carriers are still working on that."

Stofega compared Skype to VoIP startup Vonage, noting that such companies provide a service by drawing more attention to Internet-based calling and pushing other service providers to explore the technology.

April 7, 2004 at 08:02 PM in Telecommunications | Permalink | TrackBack (7) | Top of page | Blog Home

Pulse Software & Consulting Inc. Releases IVR Over IP Technology!

Pulse Consulting - IVR, Computer Telephony, CTI, AudioText and Call CenterPulse Press Release 3

The importance of customer contact solutions has prompted Pulse Software to offer companies the ability to converge global call centres over existing infrastructure.
Toronto, Canada - April 6, 2001. Pulse Software and Consulting Inc. has recently announced the release of its IVR over IP technology.
This technology allows companies to utilize their existing network infrastructure by offering voice traffic over data lines. Customer contact centres worldwide can be seamlessly linked to offer transparent customer contact solutions.
An IVR system can be located anywhere on the network allowing customers in different locations the ability to interact with the services offered.

Companies can operate call centres in various time zones in order to seamlessly service customers at any time of the day while reducing overall operating costs. The IVR systems come standard with Pulse�s Professional Development kit, which provides GUI-based rapid deployment of IVR changes and new call flows.

The IVR features many optional add-ons such as voice recognition (through a partnership with Nuance), text to speech, connection to any ODBC compliant database, connection to most mainframe and legacy systems, outbound calling capabilities, web interface, e-mail and fax capabilities.

Pulse offers total turnkey solutions including on-site installation and testing.

With the dominance of the Internet and IP networks worldwide, it is easy to see the growth potential of this product. With the infrastructure already in place, an organization can easily make the shift over.

For more information on this technology, contact Pulse Software at (905) 415-0010.

For More Info Contact:

Pulse Software & Consulting Inc.
500 Alden Road, Suite 216
Markham, Ontario L3R 5H5
CANADA
Tel: (905) 415-0010 Fax: (905) 415-1558
E-mail: sales@pulsesc.com Web: www.pulsesc.com

March 4, 2004 at 06:54 PM in Telecommunications | Permalink | TrackBack (26) | Top of page | Blog Home

Qwest to Offer DSL Without Voice, National Mobile

Yahoo! News - Qwest to Offer DSL Without Voice, National Mobile

Wed Feb 25, 1:26 AM ETAdd Technology - Reuters Internet Report to My Yahoo!

NEW YORK (Reuters) - Qwest Communications International Inc. (NYSE:Q - news) will reveal plans on Wednesday to become the first major U.S. telephone company offering broadband Internet separately from traditional phone services in a bid to hang onto customers in a cutthroat market.

The fourth biggest U.S. local telephone company and the dominant provider in 14 states from Minnesota to Washington also plans to launch flat-rate nationwide mobile phone services, using Sprint PCS's (NYSE:PCS - news) network next Monday.

Qwest and bigger rivals such as Verizon Communications (NYSE:VZ - news) have been trying to expand their product lines amid growing competition as local, long-distance and wireless companies battle it out in each other's markets with new packages of service, discounts and heavy advertising.

Qwest, which faces a lingering accounting probe by federal regulators, reported a wider-than-expected quarterly loss last Thursday as local telephone sales dropped.

From Saturday Qwest customers will not need to pay the company's monthly telephone service fees of $14.95 if they only want to subscribe to its broadband or Digital Subscriber Line (DSL) customers in a service it nicknamed "Naked DSL."

Local phone providers such as Verizon require DSL customers to also subscribe to at least basic telephone services.

"We're in a competitive situation in all our markets," said spokesman Tyler Gronbach, noting that Qwest is losing local phone line sales as some customers prefer to have just a cellphone or others favor cheaply priced Internet telephone services.

"If we can keep a customer by giving them a broadband service that's what its all about," he said.

The company, which also runs a wireless phone service in its 14 operating states, plans to move local consumer and business clients to Sprint's mobile network in these states.

It will let these customers roam onto Sprint's national network outside of its states for a flat fee and will offer them Sprint's fast wireless data services in a month's time.

February 25, 2004 at 08:00 AM in Telecommunications | Permalink | TrackBack (13) | Top of page | Blog Home

Symbian shareholders set to block Nokia control

Times Online - Newspaper Edition

By Nic Hopkins and Dan Sabbagh

MINORITY shareholders of Symbian, which makes technology for mobile phones, are aiming to prevent Nokia from acquiring a 63 per cent stake in the group through the purchase of Psion’s 31.1 per cent stake for �135 million.
The shareholders, which include Sweden’s Ericsson and Siemens, of Germany, are understood to have decided to take up their right to acquire a share of Psion’s stake on a pro rata basis, which would limit Nokia’s possible shareholding to 46 per cent.

Nokia, of Finland, the world�s biggest maker of mobile handsets, agreed this month to add Psion�s share in Symbian to its own 32.2 per cent holding. This triggered speculation that Nokia was seeking control of Symbian.

However, under Symbian�s shareholder agreement, control is granted only when a shareholder acquires 70 per cent or more of the company.

Psion had hoped to float Symbian but Nokia is keen to keep the business private. Nokia is understood to be pleased that other shareholders are increasing their stakes.

David Levin, Symbian�s chief executive, said he had �heard positive sounds from the other shareholders, but I wouldn�t expect them to show their hands just yet�.

February 23, 2004 at 11:11 PM in Telecommunications | Permalink | TrackBack (22) | Top of page | Blog Home

T�l�com offers �4bn for internet provider

Times Online - Newspaper Edition

By Nic Hopkins

FRANCE T�l�com yesterday offered €3.9 billion (�2.62 billion) in cash and shares to acquire the remaining 29.4 per cent of Wanadoo, Europe’s second largest internet service provider and the owner of Freeserve.
The French group said that by taking ownership of Wanadoo it hoped to take full advantage of surging profits at the company.

Adding the 29 per cent of Wanadoo it does not own would increase France T�l�com�s annual earnings before tax, interest, depreciation and amortisation by �150 million and would also give it access to �2 billion in cash.

The bid, which it said represents a 17.2 per cent premium to Wanadoo�s Friday closing price of �7.56, values Wanadoo at about �13 billion.

Thierry Breton, France T�l�com�s chief executive, aims to make the state-controlled firm�s debts of about �44 billion more manageable by boosting cashflow from subsidiaries. The former monopoly bought out minorities of Orange, its mobiles arm, last year. France T�l�com shares fell 65 cents to �22.12, while Wanadoo�s rose by �1.17 to �8.73.

Separately, France T�l�com said that it planned to spin off and float as much as 49 per cent of Wanadoo�s phone directory business in the second quarter of this year, making the overall deal cash neutral for the heavily indebted firm.

Analysts at Dresdner Kleinwort Wasserstein recommended that Wanadoo shareholders accept the offer, which they said values the company at an 11 per cent premium to their fair value of �8 per share.

However, other observers gave warning that the deal would dilute France T�l�com�s earnings per share. �I�m not convinced of the synergies,� one analyst said, noting that the strongly competitive internet broadband market meant that aggressive spending on marketing would be required for years to come.

France T�l�com expects the offer to begin on March 9, once it obtains approval from France�s stock market watchdog. The company is also awaiting approval by Wanadoo�s board, which should be obtained over the next eight days.

The offer may see Dixons, the British high street retailer that founded Freeserve, take a �71 million windfall on the remaining 37.5 million Wanadoo shares it owns, having already raised �517 million from previous share sales. The remaining shares held by Dixons underpin a �260 million convertible bond that matures in July with a conversion price of �6.94. France T�l�com�s offer values Wanadoo shares at �8.86 each and Dixons� stake at �331 million. A spokesman for Dixons said it was examining the terms of the offer.

February 23, 2004 at 11:10 PM in Telecommunications | Permalink | TrackBack (9) | Top of page | Blog Home

DoCoMo does not rule out future role in AT&TW

Yahoo! News - DoCoMo does not rule out future role in AT&TW

By Michiyo Nakamoto in Tokyo
NTT DoCoMo said on Wednesday it would consider taking a stake in the new company to be formed through the planned merger of AT&T Wireless and Cingular although it expected it would initially have to sell its 16 per cent holding in AT&T Wireless.

"We hope to continue exploring ways to co-operate with the new company to take advantage of what we have built together in the US," a DoCoMo (news - web sites) representative said.

But the Japanese mobile operator believes it will initially be forced to sell its 16 per cent stake in AT&T Wireless if the Cingular offer is approved, because of US securities rules.

"Once the acquisition is completed, it is highly likely that our stake will be automatically converted into cash," DoCoMo said. This is because Cingular is paying cash for shares in AT&T Wireless and must make its offer to all shareholders, according to US rules. And if DoCoMo does not tender its shares, it would be seen to be opposed to the deal.

DoCoMo said it it was not clear whether it would be able to invest in the new company, and had held no discussions with Cingular on its intentions. The company said it was still waiting to receive details of the deal.

Analysts welcomed the possibility that DoCoMo would sell its stake and said it should return part of that to investors by buying back shares or raising the dividend.

DoCoMo shares jumped 2.7 per cent on Wednesday as investors greeted Cingular's deal.

DoCoMo has already written down its Y1,196bn investment in AT&T Wireless to Y266bn and is expected to pocket about Y680bn on its sale.

However, Japan's largest mobile phone operator considers a presence in the US to be critical to its overseas strategy. Therefore, it still retains a keen interest in maintaining a relationship with AT&T Wireless in which it has invested considerable time and energy. It is likely to consider positively an offer by Cingular to take a stake in the enlarged group, a DoCoMo official said.

Keiji Tachikawa (pictured), DoCoMo's president, has made clear his ambitions for the company to become a global powerhouse, although those ambitions were reined in by Cingular's winning bid for AT&T Wireless.

Although AT&T Wireless has refused to adopt i-mode, DoCoMo's mobile internet service, the Japanese carrier has provided technical support in the US group's own version of mobile multimedia service.

DoCoMo has sent staff to work with AT&T Wireless on its third-generation mobile phone infrastructure, which will use the same W-CDMA (news - web sites) standard that DoCoMo uses. Under its agreement with DoCoMo, AT&T Wireless was committed to completing 3G networks in at least 4 main cities in the US by the end of this year and work has already begun on building that infrastructure.

Most importantly, perhaps, AT&T Wireless is DoCoMo's best hope of keeping a significant foothold in the US. Most other US mobile operators use a different 3G standard or are too small to help it realise its US ambitions.

February 19, 2004 at 12:46 AM in Telecommunications | Permalink | TrackBack (14) | Top of page | Blog Home

3 UK set for pre-pay 3G offering

ZDNet UK - News - 3 UK set for pre-pay 3G offering

A pay-as-you-go plan could boost sales of 3G handsets, following a drought of devices in 2003.

Third-generation (3G) mobile network operator 3 UK is putting the finishing touches on a pre-paid package, after a problem with handset shortages was resolved.

A pre-pay 3G service that will let users pay as they go rather than having to sign up for a contract could help boost 3's subscriber figures, which failed to meet a target of one million by the end of last year. That was partly due to delays in obtaining handsets from NEC, which makes most of 3's hardware. Three is understood to have hoped for a Christmas pre-pay promotion, which was also put off due to lack of handsets.

Now, with a delivery of 1.5 million phones due to be completed by March, 3 is gearing up its pre-pay plans. A spokeswoman confirmed on Wednesday that the company expects to have a pre-pay offering on the market before April. The launch could happen as early as this month, according to industry rumours.

The company is said to be looking at the NEC e313 handset as its main pre-pay handset, reserving models such as the e616 for subscribers. Both the e313 and the e616 still must be tested on 3's network. Other new models on the way are the Motorola A925 and LG 8100.

Hutchison Whampoa, 3's parent company, recently launched 3G services in Hong Kong, and also operates next-generation networks in the UK, Italy, Austria, Sweden and Australia. Before Christmas it had signed up around 750,000 users worldwide, and the lower-than-expected subscriptions led Hutchison financial director Frank Sixt to comment that 3G operations could need up to 2bn euros extra funding.

Pre-paid services are popular with many users because they eliminate the need to pay a set monthly fee, but are riskier for operators.

Three has had the UK's 3G market to itself for nearly a year, but will soon face competition from T-Mobile, Vodafone, O2 and Orange, which have all either switched their networks on or are planning to do so later this year.

The new entrants are likely to shift the focus of 3G from consumer-oriented video downloads and video calling to business-oriented wireless data services. Such services are currently catered for by Wi-Fi access points and GPRS offerings, which offer lower speeds than 3G.

Some new handsets do not support video calling, a further blow to 3's strategy of distributing as many as possible video-call-enabled phones as possible to help push two-way video into the mainstream. Nokia, the largest handset maker, has said it does not see video calling as a popular service in the near term, and its first 3G handset for the UK supports only video downloads.

Currently, only a small range of mobile phone handsets are available for 3G services, but major manufacturers are finally beginning to add to the selection. Sony Ericsson's Z1010 is to launch sometime this quarter, as the company's first 3G entry. Nokia launched its 3G-capable 7600 handset last month.

February 18, 2004 at 08:35 PM in Telecommunications | Permalink | TrackBack (4) | Top of page | Blog Home

FCC Wades Into World of Internet Calls

Yahoo! News - FCC Wades Into World of Internet Calls

Thu Feb 12, 4:13 PM ET
By Jeremy Pelofsky

WASHINGTON (Reuters) - The Federal Communications Commission (news - web sites) on Thursday took an initial step toward a policy on cheaper telephone service via the Internet, asking what rules, if any, should apply.

U.S. telephone companies like AT&T Corp. (NYSE:T - news) and Verizon Communications (NYSE:VZ - news) have been looking to the Internet as a way to cut costs and the FCC (news - web sites) asked for public input on what kinds of connection fees should be apply to online calls.

Voice over Internet Protocol (VoIP) uses high-speed Internet lines to carry voice traffic as digital packets, instead of the traditional wires and cable that make up the public switched telephone network, allowing the companies to avoid connection charges and other fees.

The agency said Internet services should be subject to only minimal regulations but must find ways to achieve goals like providing universal telephone service and ensuring law enforcement agencies can conduct necessary surveillance.

"IP networks cost much less to build and operate," FCC Chairman Michael Powell said. "We will not dumb down the genius of the Web to match the limited vision of a regulator."

As competition intensifies as consumers abandon traditional communications methods for e-mail, wireless and instant messaging, telephone, cable and Internet providers are all beginning to roll out VoIP service to try to keep up.

AT&T and SBC Communications Inc. (NYSE:SBC - news) are already battling over what connection fees should apply to traffic that travels partially over IP networks. SBC says some $800 million in revenue is at risk annually.

Those questions were left unresolved by the commission and some speculated that it would be some time before the whole regulatory framework was set.

"This is going to be a work in progress for quite a while," said Jeff Kagan, an independent telecommunications analyst. "The FCC is choosing to take its time and not over-regulate, at least not at this early stage."

The agency must also resolve several major issues, including how to ensure universal telephone service, preserve the ability of law enforcement agencies to conduct surveillance and to make sure that 911 emergency call services function properly.

"Some of these goals may well be achieved without heavy-handed regulation, but I am willing to support targeted governmental mandates where necessary," said FCC Commissioner Kathleen Abernathy.

The commissioners voted 4-1 to take one small step by agreeing for now to Pulver.com's request to classify its Free World Dialup Internet telephone service as one that prevents it from being heavily regulated.

The system approved by the commission allows users to communicate with each other using a technology known as peer-to-peer communications rather than using traditional telephone numbers and networks.

FCC Commissioner Michael Copps opposed the decision stating that it was premature and that issues regarding wiretapping and national security needed to be resolved first.

"I do not understand why it is not practical to pause and resolve these concerns before proceeding to categorize Free World Dialup service," he said.

Analysts do not expect many decisions by the FCC on the broader issues until after the presidential election and any decision could be challenged in court, as is often the case with telecommunications regulations.

February 12, 2004 at 11:31 PM in Telecommunications | Permalink | TrackBack (10) | Top of page | Blog Home

Thorny Issues Await F.C.C. on Internet Phones

Thorny Issues Await F.C.C. on Internet Phones

By STEPHEN LABATON

ASHINGTON, Feb. 8 - The effort to write the rules for Internet telephone service begins this week, and whether it succeeds may ultimately come down to a matter of money.
On Thursday, the Federal Communications Commission is set to consider approving a notice of proposed rulemaking, the first step in a lengthy process of writing regulations for Internet-based phone services. The commission is also set to issue a final decision on a petition by one of the new Internet phone companies, Pulver.com, which has asked the commission to rule that it does not need to pay interconnection access fees to phone companies for any calls made and received between computers through Internet connections.

Experts say that a ruling in Pulver's favor will not have a major effect immediately on the nascent industry because there are so few Internet phone users. But one analyst, Blair Levin of Legg Mason, said that a favorable ruling for Pulver could have a significant effect if a company with a huge consumer base, like Microsoft, were to begin offering computer-to-computer voice services.

The commission scheduled this week's proceedings after the Justice Department reversed its earlier position that anything less than stringent regulations would pose legal and technical obstacles to the ability of law enforcement agencies to do wiretapping for criminal and terrorism investigations.

Entrepreneurs and optimists, along with companies like AT&T and Verizon Communications, say that Internet-based telephony could revolutionize the telecommunications industry. The new technology allows calls to be placed or received through the Internet. Voice transmissions are broken down, transmitted in data packets through multiple paths and reassembled on the receiving end, much like e-mail. Users are supposed to find the service indistinguishable from traditional phone connections.

Although even the most optimistic projections predict that only about a million consumers - a small fraction of the overall phone market - may make use of the service by the end of this year, industry executives hope that Internet phones will ultimately become as common as e-mail and will significantly displace traditional wired phone connections in much the same way that cellphones have.

But that cannot happen before Washington decides how the technology ought to be regulated. And the potential obstacles are myriad, because although Internet phone service represents a technological convergence of communications and computers, the regulatory world remains neatly divided: different rules apply to phones, cable, wireless services and data transmission.

The commission proceedings, which will take many months to complete and may outlast the term of the agency's chairman, Michael K. Powell, present a thicket of policy questions. For one thing, if Internet calls are less regulated, traditional phone companies may migrate to the new technology to get relief from telephone regulations that they maintain are overly burdensome.

For Mr. Powell, the proceedings are also significant because he has come through a year of bruising political fights within the agency, on Capitol Hill and in the courts.

Last year he lost a pivotal fight at the agency over telephone access fees, and his decision last summer to loosen the rules governing the size and reach of the nation's largest media companies came under heavy assault in Congress. A federal appeals court in Philadelphia has temporarily blocked those rules. On Wednesday, a three-judge panel will hear oral arguments in what could be the most significant F.C.C. case in years.

Mr. Powell is seen as generally supporting a deregulatory approach to Internet phone technology. Some of his critics say that if the commission's notice of proposed rulemaking this Thursday is simply a list of questions to be debated - rather than a detailed statement of the agency's position - it will suggest that Mr. Powell is having trouble marshalling a majority of commissioners to carry out a deregulatory vision.

"If Powell really wants to be a hero, because he's had a tough time in the last 12 months, he'd line up three votes and put something substantive out rather than simply a mishmash," said Reed E. Hundt, who served as chairman of the commission during the Clinton administration.

Industry executives and analysts say that the biggest issue facing the agency involves the fees that Internet phone companies will have to pay to local phone carriers for connecting their customers' calls to Internet telephone customers.

The interconnection and access charges in the telephone industry have long been the cause of bitter fighting between local and long-distance carriers, and the new technology raises a host of complex and arcane issues that will ultimately play a huge role in the profitability of the new services.

In recent months, lawyers representing both the large and small phone companies have been meeting and negotiating in an effort to come up with a new access fee system. The project, if successful, could relieve the commission of the burden of coming up with a fee system on its own.

"Once you solve the intercarrier compensation issues, everything else is relatively easy," said Mr. Levin, who was a senior official at the commission before he became a regulatory analyst at Legg Mason. Jeffrey A. Citron, chief executive of Vonage, one of the larger Internet phone companies, agreed.

"The problem is how do you get from one system to another?" he said. "The real problem is intercarrier compensation. Everyone can agree no matter who you are that the intercarrier compensation scheme is broken."

The regional Bell operating companies, which have received the bulk of access fee payments from originating and ending phone calls, have also begun to recognize the need to change the fee structure, particularly as those companies gain a bigger share of the long-distance market.

"Industry access revenue is declining," said Tom Tauke, a senior lobbyist for Verizon, which is also interested in getting a share of that new market.

"It's not dissimilar from what happened during the development of wireless," Mr. Tauke said. "People said at that time, 'Why would you want to do it and cut into your business?' We're happy we did it."

The access fee question is not the only important issue before the commission. The commission will have to decide how to apply a host of other regulations to Internet phone services, like fees to support 911 emergency services and rules ensuring that phone service is universally available.

The proceedings were nearly stalled by objections from federal law enforcement agencies which have complained to the commission that any attempt to deregulate the service could pose legal and technical obstacles to their ability to monitor phone conversations in criminal investigations.

Under heavy political and industry pressure, the Justice Department, which had complained earlier that it was having problems monitoring Internet-based voice calls, abruptly reversed course last week. It rejected the position of the Federal Bureau of Investigation, which had insisted that law enforcement issues had to take priority over other regulatory questions involving broadband access to the Internet.

In a series of letters and discussions over the last few months, the law enforcement agencies insisted that the commission first resolve the issues surrounding the wiretapping of Internet phone calls.

Last month, John G. Malcolm, a deputy assistant attorney general who has played a lead role for the Justice Department on the new technology, said that as a result of legal uncertainties created by the commission, prosecutors had encountered obstacles in executing surveillance orders.

And on Jan. 28, Patrick W. Kelley, a deputy general counsel at the F.B.I., asked the commission to resolve the law enforcement issues before considering other new rules and petitions from some Internet phone companies seeking regulatory relief.

But on Feb. 4, Mr. Malcolm sent a letter to the commission that both contradicted Mr. Kelley and reversed the direction of the Justice Department.

"I consider it regrettable that articles appeared last week that were prompted by Pat Kelley's letter," Mr. Malcolm wrote, referring to newspaper articles on the controversy. "While it would obviously be our preference that the F.C.C. decide these issues prior to considering other broadband proceedings, we recognize that this is not practical, and have no desire to prevent the F.C.C. from doing its work."

February 10, 2004 at 08:58 AM in Telecommunications | Permalink | TrackBack (19) | Top of page | Blog Home

The IP route to call centre savings

Telegraph | Money | The IP route to call centre savings

By Roger Stephens (Filed: 02/02/2004)

Call centres have been making headlines recently as companies look to cut costs by moving them offshore to countries where staff can be hired cheaply, such as India.

But another, less public, revolution is under way, changing the way call centres operate by introducing new technology, based on internet protocol (IP) technology. And while it might not grab the headlines, these technology changes could have just as big an effect on the way call centres are designed and operated.

IP allows voice calls to be sent over the same network that data and video are sent over. On an IP network the voice call is broken down into very small pieces, sent over the network and reassembled at the other end, in much the same way as any other type of data, such as email.

Some consumers are already using this technology to cut phone bills by using their home internet connection to make calls. And companies are waking up to the possibility of using the same technology to boost the performance of their call centres - or contact centres as they are becoming known.

Until recently, different types of communications - such as phone calls and email - would have to travel over their own networks. In the last few years, as IP networking technology has matured and bandwidth has become cheaper, businesses have started running different sorts of traffic on the same network. Companies offering this sort of technology include Cisco, Avaya, Nortel, Alcatel and Siemens, among others.

This cuts down the number of networking skills a company needs as the telephones and computers are plugged into the same network. Using the same cable infrastructure reduces the initial investment and makes ongoing management and maintenance easier. Customers calling into a contact centre running on an IP network would not notice any difference in call quality.

This sort of network is becoming more popular - a survey by market analyst IDC found that one in eight companies is already running a combined voice and data network, with another third planning to invest in one in the next two years

According to Ian Sherring, Cisco's business development manager for contact centres and messaging, companies can get a lower total cost of ownership and in some cases a return on investment in two years with this technology. "With voice and data and video on one network it's cheaper to maintain," he said.

As well as cutting cost, IP contact centres can also create a number of other benefits. Rather than having all the call centre agents sitting in one big warehouse, companies can have agents spread around the country and operating as a virtual call centre.

This means that if a company is struggling to hire call centre staff in one area, it can hire them elsewhere. Companies can connect up call centres in other countries, so rather than employing staff to work a nightshift in the UK they could have a second site in India, without the need for an additional private branch exchange (PBX) at the Indian site.

Rogier Mol, analyst in IDC's European telecommunications and networking team, explained: "An IP call centre offers more flexibility. You can have your IP PBX and call manager in the UK managing a call centre in a different country."

Managing the contact centre - such as adding staff or moving calls around, is also easier with an IP network. Staff can either work using a headset plugged into their PC, which uses software to make the phone calls - known as a softphone - or specially designed IP handsets. These phones, which work straight off the IP network, can be easily moved - either inside an office or even moved to a different location and still keep the same number.

Companies can also use call routing software to redirect calls, so if the main call centre is busy, staff in branch offices can pick up the overflow.

Some companies even want to use this technology to generate additional revenues by taking on work from other companies when their own call centre is quiet.

Customer calls can be distributed according to agent availability and skill, regardless of location, so the most valued customers can be connected with the most experienced staff.

"Companies can locate agents in their head office or the branch office. If you can deploy agents anywhere in the business you are increasing customer satisfaction with a larger pool of agents," said Mr Sherring.

Some call centres staff are working from home. For example, mothers can answer calls from home while looking after children. Mr Sherring warns this is not an option for everyone because not all residential broadband links offer the 'quality of service' features necessary to make this possible.

Because all the information coming into a call centre over an IP network is digital, it is also easier to connect the call centre to systems such as customer relationship management (CRM) which are to improve sales.

For many CRM systems there are standard modules that can be plugged into IP telephony system with little integration. With many existing call centre set ups to do the same would involve a costly and time-consuming migration programme.

Important customers, recognised by their phone number, email address or other information, can be sent to the best agent via email or phone. And at the same time, information on the customer can be pulled out of the database and forwarded to the call centre agent so customers do not have to repeat themselves. "It gives customers more options to connect, such as internet chat sessions or call back," said Mr Mol.

But what if you already have a call centre which you think is operating pretty well? Many hardware vendors are offering an IP-enabled PBX, which allows companies to put a toe in the water and move some call centre staff over to IP while keeping the rest on the traditional system. This allows you to test the technology while squeezing as much life as you can out of the old system.

"If you have an existing system that is running reliably and you don't see any need for more flexibility or adding new options then I can see that you might not need to upgrade." concedes Mr Mol.

But for companies building a new network, the advantages of IP networks are likely to win out.

Because the IP networks are flexible, it is relatively easy to add new features. For example, some companies are using voice recognition software that can recognise when a customer is getting into an argument with a call centre agent, and alert the manager who can then give additional help.

Which may be of some comfort next time you end up having a row with a call centre because you cannot get what you want.

February 9, 2004 at 10:54 PM in Telecommunications | Permalink | TrackBack (32) | Top of page | Blog Home

IBM to Take Over Some Sprint Call Centers

washingtonpost.com: IBM to Take Over Some Sprint Call Centers

By AMY SHAFER
The Associated Press
Wednesday, February 4, 2004; 5:16 PM
KANSAS CITY, Mo. - International Business Machines Corp. will take over much of Sprint Corp.'s customer services operations, Sprint confirmed Wednesday.
The five-year agreement calls for IBM to manage 21 Sprint call centers already owned and operated by outside contractors, as well as a Sprint-owned call center in Nashville, Tenn.

In addition, a Dallas center serving Sprint long-distance customers will be consolidated into a center in Fort Worth, Texas. Sprint will continue to operate its seven other customer service centers.

No jobs are expected to be lost as part of the outsourcing deal. However, the 300 workers at the Dallas facility may lose their jobs if they cannot relocate to Fort Worth or another call center, a Sprint spokeswoman said.

The IBM deal also calls for the computer company to sell its customers Sprint phone and data services, and for Sprint to pay nearly $100 million to deploy an IBM technology that enables customers to transfer desktop computer applications to a mobile device.

No other financial terms of the agreement were disclosed.

Separately, at a meeting with investors in New York, Sprint also raised its earnings forecast for 2004 and 2005.

Sprint, based in Overland Park, Kan., estimated the IBM arrangement will reduce its customer service costs by $550 million over the next three years. Bob Dellinger, Sprint's chief financial officer, said at the investors meeting the deal and other recent cost-cutting measures would save the company $500 million per year.

The 4,500 workers at the 21 vendor-operated centers won't be changing employers, but will be under new management, said Angie Makkyla, a Sprint spokeswoman. The 1,100 employees in Nashville will now be employed by a subcontractor of IBM, Convergys Corp.

Sprint President Len Lauer said the company hoped to improve customer satisfaction and wanted an experienced partner who could help redesign Sprint's customer service centers.

IBM Business Consulting Services has announced similar initiatives with Sprint cell phone rival Nextel Communications as well as major corporations including Procter & Gamble, Raytheon, and United Technologies.

Gary Forsee, chairman and chief executive of Sprint, said the deal represents "a major collaboration between Sprint and IBM, allowing Sprint to simultaneously move forward on our top priorities: improving customer satisfaction, driving new sources of revenue and operating our business more efficiently and with greater flexibility."

Meanwhile, Dellinger also revised the company's earnings forecast.

The wireless business, Sprint PCS, expects an operating loss of between 13 and 18 cents per share in 2004. But in 2005, the business is expected to turn profitable with earnings within a range of 20 cents to 30 cents per share.

The wireline division, Sprint FON, expects an operating profit of between $1.37 and $1.42 a share, excluding higher pension and stock compensation costs of about 7 cents per share. In 2005, earnings are expected to grow by a high single-digit to low double-digit percentage.

Analysts surveyed by Thomson First Call expected Sprint PCS to show a loss of 21 cents per share this year and a profit of 12 cents a share in 2005. They expected Sprint FON to earn $1.37 a share for this year and $1.31 a share in 2005.

In Wednesday's stock trading, Sprint PCS shares rose 43 cents to close at $8.56, while Sprint FON shares fell 88 cents to close at $17.07.

Forsee said that while the company continues to face challenges related to competition, pricing, regulation and technology, he senses "an underlying momentum at Sprint," driven by an improving economy and an improving financial performance.

"I believe we've turned the corner," he said.

Jeff Kagan, an independent telecom analyst who attended Wednesday's meeting, said Sprint was forecasting "a moderate uptick" in its financial performance.

"I think they're accurately reflecting the sentiment of the industry, the mood of the industry, which is: The worst is over; We're starting to see forward momentum," Kagan said.

February 4, 2004 at 11:12 PM in Telecommunications | Permalink | TrackBack (109) | Top of page | Blog Home

FCC Chief: Regulating Internet Phones May Backfire

Yahoo! News - FCC Chief: Regulating Internet Phones May Backfire

By Ben Berkowitz
LAS VEGAS (Reuters) - Rapidly expanding voice communications over the Internet should be protected from excessive government regulation and from being pigeonholed as traditional phone service, the top U.S. telecommunications regulator said on Friday.

Harm from misregulation of Internet phone service could take "decades to fix," said Federal Communications Commission (news - web sites) Chairman Michael Powell, speaking at the Consumer Electronics Show here. "You (can) create a very hostile regulatory environment for voice-over-IP providers in the United States," Powell said.

Powell's comments were welcomed by the largest provider of Internet-based phone service, Vonage Holdings Corp., which has 92,000 customers and is expecting 250,000 customers by the end of the year.

"One thing you don't want to do is accelerate the movement of technology, jobs and infrastructure away from the United States, and outside the reach of the government if they ever want to reach into it," Vonage Chief Executive Jeffrey Citron said in an interview with Reuters.

Companies like privately held Vonage have seen rapid growth in recent months as people embrace lower-cost communications online with quality comparable to traditional phone service. The technology has recently attracted the attention of large telecommunications providers including AT&T Corp. (NYSE:T - news), which also intend to provide Internet phone service.

In other comments, Powell said his commission needs to do more work this year on promoting and expanding high-speed communications over the Internet, which he said is crucial to the economy's future.

"I think it is the most dramatic and meaningful stimulus to our economic productivity and growth," he said. "I think it is the most promising development for job creation."

Powell, however, was most vocal about the technology known as voice over Internet protocol, or VoIP.

He added "there is nothing to stop" the companies from moving to other countries and setting up computer systems to serve U.S. customers.

A major danger, he said, is people saying "'Oh VoIP, it's just telephony. It looks like a duck; it quacks like a duck; regulate it like a duck."'

GRAPPLING WITH REGULATIONS

Last year, the state of Minnesota tried to impose telephone regulations on Vonage, a leader in the VoIP business that lets a user hook up a regular telephone to a special adapter and in some cases even keep their traditional phone number.

But a federal judge ruled in October that Vonage was an information service rather than a telecommunications service, and that state regulation of it would run counter to congressional intent to keep the Internet free of regulation.

"We should be starting on the cleanest slate possible," Powell said. "I don't think you should ask a Vonage ... to hire an 80-person lobbying staff and legal staff."

Indeed, Vonage's Citron said the Minnesota case was very costly to the Edison, New Jersey-based company, even though it prevailed in the case, which he called a "travesty."

"It's very expensive to fight the government," he said. (Additional reporting by Daniel Sorid in San Francisco)

January 10, 2004 at 03:31 AM in Telecommunications | Permalink | Top of page | Blog Home

Texas Instruments, Vonage in Internet Phone Deal

The initiatives to implement internet based long distance are coming fast and furious now, as the telco's move to adapt to the new realities they face.

Yahoo! News - Texas Instruments, Vonage in Internet Phone Deal

Fri Jan 9, 1:43 PM ETAdd Technology - Reuters to My Yahoo!

SAN FRANCISCO (Reuters) - Vonage Holdings Corp., seeking to make Internet-based phone service simpler for home users, said on Friday it has inked a technology deal with Texas Instruments, the supplier of most voice-over-Internet microchips.

Under the deal, Texas Instruments (NYSE:TXN - news) will design its voice-over-Internet chips to work with the Vonage service.

Currently, users of Vonage, the Edison, New Jersey-based company that has become the largest provider of Internet-based phone service, need special adapters to connect their phones to the Internet-based service.

Vonage hopes the deal with Texas Instruments could eliminate the need for extra equipment, which remains an impediment to wider consumer adoption of the service. In theory, cable modems and wireless phones that include Texas Instruments chips could be switched on to Vonage service in an instant.

"What we want to do is jump start VoIP (Voice over Internet protocol) in the home," said Fred Zimmerman, the director for voice over Internet for Texas Instruments, in an interview.

Vonage currently has 92,000 customers, and is targeting 250,000 users by the end of the year. Large telecommunications service providers like AT&T Corp. (NYSE:T - news) are rolling out new service, or tests of service, for the technology, which proponents say has the potential to unseat traditional telecoms service.

Internet-based phone service is generally less expensive than traditional service, and voice quality of calls -- previously a complaint about such service -- has improved in recent years.

January 9, 2004 at 06:47 PM in Business Models, Telecommunications | Permalink | Top of page | Blog Home

Verizon Wireless Plans $1 Billion High-Speed Upgrade

Telco's are quickly moving to high speed and data (vs voice) based networks.

Verizon Wireless Plans $1 Billion High-Speed Upgrade (TechNews.com)

Thursday, January 8, 2004; 3:42 PM
NEW YORK -- Two months after AT&T Wireless launched the nation's fastest wireless Internet service, Verizon Wireless says it will spend $1 billion to reclaim the lead with an even speedier technology that just months ago the company insisted was not an urgent need.
The next-generation technology being used by Verizon, which can provide wireless downloads to a laptop between five and 10 times quicker than a dial-up connection over a wired telephone, will be rolled out nationally over the course of two years, with some cities getting the service by this summer.

In tandem with Thursday's wireless announcement, parent company Verizon Communications announced a $2 billion investment to accelerate the upgrade of its traditional wireline telephone network with Internet Protocol technology. The decision comes amid a scramble by top rivals to offer services using so-called "Voice over IP," or VoIP, a cost-cutting technology that converts the sound of phone conversations into digital packets just like e-mail and computer data.

Verizon also announced plans to launch products this year that integrate a person's assorted communication devices, enabling customers to centrally manage phone calls, voice mails, calendars, address books and e-mails.

Verizon Wireless, which is also part owned by Britain's Vodafone PLC, introduced a speedier cellular data service during September in two test markets, Washington and San Diego, but asserted that a wider rollout was not planned or necessary anytime soon.

That strategy may have changed with November's national launch by AT&T Wireless of a mobile network that enables laptop connections up to twice as fast as the cellular-based Internet access currently offered across most of the country by Verizon, Sprint PCS and Cingular Wireless.

Sprint, which uses the same wireless standard as Verizon, stood firm Thursday in its decision not to upgrade with the "EV-DO" version of the technology that Verizon has now decided to deploy nationally.

Because the technology doesn't improve call capacity and quality, "Sprint considers it to be an inefficient use of the spectrum when voice is still the primary and dominant driver of traffic on our wireless network," spokesman Charles Fleckenstein said. "Based on our current projections regarding wireless data market growth, Sprint ... is instead focused on the next release of technology beyond EV-DO," which the company expects to deploy in 2006.

AT&T Wireless, which spent $300 million to introduce its "EDGE" service in the fall, is already testing a more advanced technology called UMTS. The company expects to offer UMTS, which can provide comparable speeds to the service Verizon plans to roll out, in four cities including Seattle and San Francisco by the end of 2004.

For now, there's no plan to accelerate that rollout in response to the announcement by Verizon Wireless, said Ritch Blasi, spokesman for AT&T Wireless.

The arms race in mobile data comes as cellular companies grapple with new federal rules that took effect in late November allowing customers to switch wireless services without losing their phone numbers.

The improved wireless data services are most appealing to valuable business users. Notably, the faster laptop connections offered by AT&T Wireless and Verizon Wireless are priced at $80 per month for unlimited usage on top of the monthly charge for cell phone service.

But in addition to improving laptop connections, cellular companies hope snappier data services will finally make Web surfing on a phone or handheld computer appealing, boosting sales of multimedia handsets and driving new revenues from data usage.

The current generation of cellular data technologies, rolled out to customers last year, disappointed many users in terms of speed, offering downloads that rarely surpassed a telephone dial-up connection.

As a result, many cell phone companies have embraced Wi-Fi technology to deliver faster wireless connections in at least some locations, such as cafes and airport terminals, that business customers frequent.

But they have also pressed ahead with plans to deploy speedier service over their cellular networks, which offer the advantage of covering far more territory than the 300-foot range of a Wi-Fi signal.

The EV-DO service Verizon plans to launch is billed with average download speeds between 300 and 500 kilobits of data per second, almost on par with the wired broadband connections provided by DSL and cable TV. During off-peak network usage, the technology could provide speeds twenty to forty times faster than dialup, which has a maximum capacity of 56 kbps.

By contrast, the "1xRTT" technology that both Verizon and Sprint are now using nationally is capable of delivering speeds of up to 144 kbps. In practice, however, download speeds tend to average between 40 and 70 kbps, depending on the customer's location and the number of other subscribers using the network.

The laptop card required to access the EV-DO service, offered by Verizon at $150 after rebate, will also be compatible with the network in markets that have yet to be upgraded, so users will not need to carry two wireless cards.

January 9, 2004 at 01:31 PM in Internet evolution, Telecommunications | Permalink | Top of page | Blog Home

Primus offering first local Web calls

TheStar.com - Primus offering first local Web calls

Phone service to use the Internet
Consumers could save 25 per cent

TYLER HAMILTON
TECHNOLOGY REPORTER

Long-distance provider Primus Telecommunications Canada Inc. became the first in the country yesterday to offer an Internet-based local phone service to compete head-to-head with Ma Bell.

The subsidiary of McLean, Va.-based Primus Telecommunications Group announced a new phone product that lets consumers and small businesses make local calls through their existing high-speed Internet connections using a technology called Voice over Internet Protocol, or VoIP.

Primus said the service, dubbed TalkBroadband and starting at $19.95 a month, will offer average savings of 25 per cent compared to traditional local services offered through Bell Canada and other carriers.

"We felt the time was right to enter the market," said Ted Chislett, president of Toronto-based Primus Canada. "There are advantages to being first."

Chislett said having a local phone offering "doubles" the market opportunity for Primus, which has 900,000 long-distance customers across Canada. The company has about 700 employees and had nearly $300 million in revenue last year.

Mark Quigley, research director for the Yankee Group in Canada, said it makes sense for Primus to offer the service because it has a large customer base and strong national brand from which it can build. "It's certainly an important step that the marketplace has been waiting for.''

VoIP is rocking the telecom industry because of the ease with which companies can enter the business. Older circuit-switched networks are prohibitively expensive to build, and many well-funded competitors have gone bankrupt over the years trying.

Using Internet protocol technology, companies can turn voices into packets of data that can be routed efficiently and less expensively across Internet-based networks. The technology has matured to the point where most of the big phone and cable companies in North America have been forced to announce their own VoIP initiatives.

On Wednesday, shares in Nortel Networks Corp. soared 19 per cent after the company announced a major VoIP contract with U.S. telephone giant Verizon Communications.

Bell Canada said last month it was testing a "high-quality" residential VoIP service as part of a dramatic transformation of its networks. Bell, which has asked the federal regulator to establish rules for VoIP services, said it would likely launch its own product in 2005 to coincide with similarly planned services from the cable companies.

Meanwhile, leading VoIP provider Vonage Holdings Corp. of Edison, N.J., recently delayed plans to enter Canada but expects to launch before the summer.

Under development for more than a year, TalkBroadband can be used with any high-speed cable or phone-based digital subscriber line service using a "voice gateway" box supplied by Primus.

Local service plans range from $19.95 to $34.95 based on the number of chosen features, such as call waiting, call display and call answer. Savings rise as more features are chosen, the company said.

Customers have the option of keeping their existing phone number but can chose their own area code, meaning a person in Toronto could have a 504 area code that treats calls from Montreal as local flat-rate calls. Secondary numbers from a variety of areas codes � including major cities from Vancouver to Montreal � can be purchased for an additional fee.

Users of the service can receive and make calls no matter where they are in the world, as long as they have their voice gateway and access to a high-speed Internet connection.

Brian Sharwood, a telecom analyst with Seaboard Group, commended Primus for being first and "legitimizing" the market, but said the company could have been more aggressive on the pricing.

"Savings of 25 per cent is not the tipping point for trying something out."

He pointed out that customers must still purchase separate long-distance packages and don't get the convenience of checking and managing calls online through the Web.

Both Sharwood and Quigley said the lack of an Internet-based 911 emergency location service also poses a problem, one of many quality-of-service issues that Primus executives acknowledged.

Chislett said a Web interface for the service will become available "within the next couple of months" and that Primus is working with a number of carriers to add e911 capability to the service.

January 9, 2004 at 09:24 AM in Business Models, Telecommunications | Permalink | Top of page | Blog Home

Nortel shares soar 19% on Verizon deal

The move toward internet networks for voice, and the cost reductions which accompany are a real business model change for telcos'. This quote sums it up:
"Because IP basically makes long distance transport-free, anyone whose business is built around long distance is dead,"

TheStar.com - Nortel shares soar 19% on Verizon deal

Will supply voice-over-Internet technology to phone giant

DAVID PADDON
CANADIAN PRESS
Nortel Networks Corp. shares jumped to their highest level in nearly two years yesterday after major U.S. phone company Verizon Communications Inc. said it had selected Nortel to transform its networks with voice-over-Internet technology.

Nortel stock closed up $1.18, or 19.3 per cent, at $7.30 yesterday with almost 110 million shares traded on the Toronto Stock Exchange. During the day it hit $7.52, its highest intraday price since March 18, 2002.

The stock also benefited from an improved rating from UBS Investment Research, a major brokerage firm, issued before the Verizon contract was announced and by short-sellers who were forced to buy shares to cover their bets that Nortel stock would fall after its big recent gains.

Financial details of the Verizon deal were not disclosed.

But Verizon, which has been working with Nortel on the transition since 1999, said it plans to accelerate deployment of the new Nortel equipment � which allows a single network to carry voice, data and video transmissions over the Internet.

Jon Arnold, a Toronto-based analyst at international technology consulting firm Frost & Sullivan, said Verizon's decision to grant an exclusive contract indicates Nortel is "solidifying its position as the leading VOIP (voice-over-Internet protocol) vendor."

That's important for Brampton-based Nortel because the big U.S. long-distance and local phone companies, among its biggest customers, are increasingly willing to spend on Internet technology.

Arnold said Internet networks that carry voice traffic are erasing the distinction between long-distance and local phone service, increasing competition among the major carriers and making it imperative for them to invest in new technology.

"Because IP basically makes long distance transport-free, anyone whose business is built around long distance is dead," Arnold said.

Nortel has been recovering from the sharpest and deepest downturn in the telecom industry's history, which affected virtually all the Canadian company's peers as spending by their customers dried up about three years ago. The company's stock, which peaked at $124.50 in July, 2000, fell to an all-time low of 67 cents in October, 2002. The shares have since increased nearly 11-fold on the strength of recent modest profits and the prospects of winning major contracts.

In 2002, Verizon began installing the VOIP technology in parts of the company's inter-city network, and last year the firm deployed it for some of its long-distance network. Verizon said yesterday the new technology will "dramatically accelerate" the evolution of its network.

The companies expect to fill out the letter of agreement announced yesterday with a firm five-year contract within a few months.

January 8, 2004 at 10:57 PM in Business Models, Telecommunications | Permalink | Top of page | Blog Home

To-day's great trunk call

Note the date on this news item from 1927 as reported in the Guardian. I categorised this under internet evolution deliberately, because this was one step towards global communication and unlimited bandwidth around the world.

Guardian Unlimited | Special reports | To-day's great trunk call

Saturday January 8, 1927
The Guardian

No Opening Ceremony

Experimental tests were made and satisfactorily completed yesterday by the Post Office authorities in London in readiness for to-day's opening of the public London-New York transatlantic wireless telephone service. When the clock at St Paul's chimes at 1.45 this afternoon an operator of the American service in the main London trunks office will operate a call to New York, and within a few seconds Sir Evelyn G. Murray, secretary of the General Post Office, hopes to be in telephone conversation from his own room in London with Mr Walter S. Gifford, president of the American Telephone and Telegraph Company in New York.

Sir Evelyn will simply speak for a few minutes across the ocean and then the public bookings will be dealt with in order of precedence. Post Office officials would not disclose yesterday the actual number of calls booked from the London end, but it is known that the service will be kept going at full pressure until the nominal time of closing down at 6 p.m. There has been a hustle for calls from the New York end, and calls from both the London and New York ends can only be dealt with through one channel.

Assuming the service will be fully engaged for the 4 1/4 hours it will have cost subscribers, at �5 a minute, something like �1,200. Some callers, it is stated, have booked for the full twelve minutes at a cost of �60.

When the service opens it will be 8.45 a.m. in New York. When the service closes down in London the business man on Broadway will be thinking of lunch at one o'clock. The Lord Mayor of London, Sir Rowland Blades, will expect a call from the Mayor of New York in the afternoon, when greetings will be exchanged.

January 7, 2004 at 11:09 AM in Internet evolution, Telecommunications | Permalink | Top of page | Blog Home

Ma Bell remodels for Internet

TheStar.com - Ma Bell remodels for Internet

Bell is a large telcom, and this is a significant move by them, which mirrors one of the big American telcoms a few months back.

Telephone company to drop old technology
Move will allow it to offer new telecom services

TYLER HAMILTON
TECHNOLOGY REPORTER

An aging Ma Bell is getting a 21st century makeover.

BCE Inc., Canada's largest telecom company, announced an ambitious plan yesterday to convert all of its network traffic to an Internet-based infrastructure within three years.

The Montreal-based company said 90 per cent of its customers will be able to access a number of Internet protocol services that treat phone calls and video as "packets" of data, similar to the way we send e-mail and access Web sites through the Internet.

By moving a number of different voice, video and data networks on to a single IP infrastructure, the company said, it will lower capital costs by as much as 25 per cent, simplify the way it deals with customers and be able to offer new multimedia services � including TV and video messaging � that older circuit-switched technologies can't deliver.

"We're embarking here on the remaking, the repositioning, of one of Canada's great companies," said BCE chief executive Michael Sabia, speaking to reporters after the company's annual business review conference in Toronto.

"There aren't that many telecoms in the world undertaking those kinds of commitments in the time frame we are."

Sabia said the company will gradually stop selling certain products and retire older networks, such as Frame Relay, that are showing no growth.

As the plan unfolds, it will prompt "modest" job cuts in 2004 and a reshuffling of about