May 12, 2006
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
April 10, 2006
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
March 05, 2006
Why Google is 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 (22) | Top of page | Blog Home
March 02, 2006
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 (9) | Top of page | Blog Home
February 12, 2006
Content is not king 2
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.
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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 (42) | Top of page | Blog Home
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
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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.
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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.
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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?
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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 (6) | Top of page | Blog Home
January 19, 2006
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 (12) | Top of page | Blog Home
December 27, 2005
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 (25) | Top of page | Blog Home
December 16, 2005
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 (55) | Top of page | Blog Home
December 10, 2005
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 – DE