Clash Over Canadian Broadband Caps

Among global nations, Canada is one of the most restrictive in terms of broadband usage caps. Recently, some major Canadian ISPs lowered their monthly caps to 25 Gb (a reduction of 90% or more for some providers), causing a stir among Canadian consumers. Since nothing gets the attention of political folks quite like angry voters, Canada's Prime Minister and Industry Minister have joined the fray, stating that Canada's regulatory agency (the CRTC) needed to rethink their approach. With the increased usage of video streaming and other bandwidth hungry applications, this clash seems like one that was destined to happen.

Will the CRTC back down? What do you think?

UK Government Broadband Plan - The £98 Computer

Borrowing a page from computing projects in developed nations, Martha Lane Fox, the UK's "digital tsar", recently announced a program that will offer refurbished computers to UK consumers. These PC systems will be priced at only £98 and will include wireless broadband, flat panel screens, keyboard, mouse, telephone tech support, and delivery. Over 60 retail outlets are planning to sell these systems.

With a price that low for PCs, the UK will be performing an interesting experiment in supply and demand. The basic assumption of the program is that consumers cannot afford PCs. The interesting question will be whether the PC "have-nots" actually want a PC or to be online. While many of us who live and die by our e-mail and online access, there is a segment of the populace that just does not see the value of being online. So, will those without PCs snap up these £98 goodies? Will they be purchased by existing PC owners as computers for the kids? Will application developers spend their resources to create versions of their apps to run on these platforms (likely to be Linux)? Time will tell...

Calix to acquire Occam Networks

Calix, Inc. and Occam Networks, Inc. announced that the companies have entered into a definitive agreement for Calix to acquire Occam Networks in a stock and cash transaction valued at approximately $171 million.

The combined organization of Calix and Occam Networks is expected to provide communications service providers across North America, the Caribbean, Latin America, and select global markets with an enhanced portfolio of advanced broadband access systems, and accelerate innovation across the expanded Calix Unified Access portfolio.

The acquisition is expected to result in more access options over both fiber and copper for communications service providers to deploy, which could expedite the proliferation of advanced broadband services to both residential and business subscribers, including such services as high-speed Internet, IPTV, VOIP, Ethernet business services, and other advanced broadband applications.

Opposition to Project Canvas

As Project Canvas moves closer to reality, those that have the most to lose are mounting their opposition to the initiative. The Wall Street Journal today writes that Six TV, the largest holder of local TV licenses in the UK, has requested an investigation of Project Canvas by Ofcom. Six is not one of the member companies involved in Canvas and fears that the initiative will reinforce the dominance of the UK's traditional broadcasters.

Virgin Media and IP Vision have also lodged protests with Ofcom in hopes of slowing or derailing Canvas. Virgin is the UK's leading cable firm, and IP Vision currently sells its own Internet TV set top box. Reportedly BSkyB, the major DTH provider in the UK, may file a protest of their own.

In a very competitive market, opposition to Project Canvas is not surprising and will likely increase as we draw closer to the 2011 launch of Canvas-based boxes and services.

Pricing Still an Issue for 3G Femtocells

In a recent interview with Light Reading Ericsson's Vice President of Radio products said that femtocells were beaten by WiFi as the technology of choice for data services within the home. Pricing seems to be the key factor inhibiting wide spread adoption of 3G femtocells.

In 2008, the goal of major chip set providers and femtocell systems providers was to break the $100 barrier. Chip sets were still considered to be quite expensive to make femtocell attractive as a mass market product. In addition to pricing, another key factor that drives the cost of deploying a femtocell is the fact that they operate in a regulated and licensed frequency. As a result, femtocells come with some legal caveats in some markets. Operators are still faced with potential truck rolls to assist customers with setting up their femtocells. Wireless operations at most of the major operators are not set up to handle such onsite support with the same efficiency as their wireline counterparts (even though they are part of the same company).

Net effect is that femtos have to be combined with routers or gateways to really get some penetration. Operators will have to consider ‘HomeZone’ type of services offering heavily subsidized data services as long as consumers are feeding off a femtocell. In our recent study titled 'Broadband, Communications and Entertainment Bundles' we found that consumers are more interested in femtocells for their potential to offer unlimited data services than in their potential to enhance indoor coverage.

WiFi is a good interim solution, but it drains the battery rather rapidly. 3G radio by itself is quite demanding in terms of power requirements and WiFi exacerbates that situation. Femtocells certainly have a future. Femto adoption depends highly on what the price point is going to be and more importantly what sort 'subsidies' wireless operators will be able to offer on services riding femtocells and ensuing broadband connections.

Consumer viewing of movies and TV shows online doubles in 2009

The number of U.S. broadband households watching premium online content, including movies and TV shows via the Internet, doubled in the last year, according to Broadband, Communications, and Entertainment Bundles, a new study from Parks Associates. Currently over 25 million U.S. broadband households regularly watch full-length TV shows online, while over 20 million watch movies online.

The international research firm reports that the growing popularity of online portals such as Hulu.com shows rapid growth in the number of viewers who use the Internet to watch long-tail and premium content. This shift highlights the opportunity for service providers to extend their current pay-TV and video-on-demand services to include online and mobile video features. In fact, providers will have to embrace online video services, including the ability to deliver content across multiple platforms, if they are to remain competitive and attract new subscribers.

Consumer interest in time-shifting content through online portals has increased significantly. Close to 40% of broadband households today watch full-length television shows over the Internet. Enabling access to content anytime through any broadband-enabled device will be a significant challenge for the service providers. However, broadband video opens new revenue channels and opportunities to upgrade subscribers into higher tiers of services.

For the full press release, click here.

Parks Associates supports 4G World, Chicago

Parks Associates is a research sponsor of the 4G World Conference this September 15-18 in Chicago.

4G World is the first industry conference and expo covering the entire ecosystem for next generation networks supporting high speed broadband and full mobility, anywhere Internet access, mobile content, applications and transactions. 4G World will showcase the first 4G mobile broadband networks being launched in 2009 using mobile WiMAX technologies and the evolution of 3G mobile networks to support mobile Internet using HSPA and LTE technologies.

For more information about this event, visit http://4gworld.com/

Broadband Forum to announce midyear IPTV and broadband Stats

The Broadband Forum, a global consortium of approximately 200 member companies dedicated to the development of global broadband network specifications, will be unveiling the Q209 global broadband figures and IPTV statistics at this month’s Broadband World Forum Europe event in Paris.

The research will be made public by Robin Mersh, Broadband Forum’s Chief Operating Officer on September 8, 2009. He will also provide a brief update on BBFs latest work, and new developments around the areas of broadband network energy efficiency, fiber integration and new quality measure.

Parks Associates is an analyst sponsor of the Broadband World Forum Europe event. In addition, Kurt Scherf is speaking in the session Bringing the Network into the Home: From Connected Home to Real Digital Home, Tuesday, 8 September, 14:00 – 15:30.

Rick Cotton, EVP, NBC to Keynote at SuperComm - Parks Supported Event

Rick Cotton, EVP and general counsel of NBC Universal, will share his insights on digital media and broadband business developments in a keynote address at SUPERCOMM 2009, a Parks Associates supported event.

Cotton’s keynote presentation on Friday, Oct. 23 will address the critical need for cooperative efforts and dialog between technology companies, content developers and media distributors to build sound business models to ensure the market's continued innovation and fiscal viability in the face of rapidly evolving technology and the current regulatory environment.

For more information about SUPERCOMM, click here.

Over 100 million households worldwide to have telco IPTV services by 2013

Microsoft keynote to address Customer Service and IPTV at CONNECTIONS™ Europe Summit--

Parks Associates welcomed Roger Pitton, Program Director, TV, Video & Music Business, Microsoft Corporation, as the Keynote speaker for CONNECTIONS™ Europe Summit, taking place March 31, in Nice, France. It has a full agenda featuring consumer data and expert analysis on advanced video solutions, digital media solutions, and connected consumer electronics.

The worldwide market for telco IPTV services will exceed 100 million households by 2013, a CAGR of approximately 38%, according to international research firm Parks Associates. Mr. Pitton’s keynote “IPTV and the keys to keeping customers” will address the best business strategies to gain and retain customers in the highly competitive European market for these services.

Mr. Pitton has several years of firsthand experience in marketing and selling IPTV services. In his keynote, he will specify the keys to differentiation, including unique content, an unmatched user experience, and the convergence of technology and content, required for sustaining success.
CONNECTIONS™ Europe Summit Sessions:
>> European Consumer Trends
>> Broadband and Value-added Services
>> Video Services
>> Digital Media Content & Delivery
>> Connected CE
>> Digital Home Tech Support

Event sponsors include Affinegy, Enure Networks, and HomeGrid Forum. Global Sponsors include ActiveVideo Networks, Affinegy, Cloakware, DSC, HD-PLC Alliance, Icron, Macrovision, MoCA, ProVision Communications, Radialpoint, Telcordia, and Zilog.

For more information, visit http://www.connectionseurope.com/.

Who's Going to Administer the Broadband Stimulus and How Long Would it Take?

Now that the U.S. Senate may be making substantial changes to the economic stimulus bill that passed the U.S. House last week, the Congressional Budget Office has offered its take on what some of the new provisions might mean. The CBO's explanation goes a long way to answering some questions I've had about who would oversee the broadband deployments that are intended under the $9 billion grant program to extend access to unserved and underserved areas.

The grant funds would be given to the National Telecommunications and Information Administration (NTIA) to administer. CBO estimates that we wouldn't see an immediate stimulus from these funds, however. They note that grant recipients would still be required to raise 20% of the rollout/upgrade costs from non-federal sources. And, CBO notes that only 30% of the allotted grants would be spent between fiscal 2009 and 2011.

Still, I wonder if this isn't a bad thing. I'm still wondering how the planning for this is going to take place. We keep hearing that the road and bridge infrastructure portions of the stimulus package could be implemented immediately (according to the Obama administration). We're told that there are road and bridge construction contracts just waiting for funding, and that people could hit the streets in very rapid fashion to start the work. On the broaband side, I wonder if this is the case? Are the state and local governments in a position to rapidly determine the best bang for the buck? Are there some other areas- like telehealth and distance learning - that would benefit from the broadband deployments? If so, how is the coordination between health and education officials, the government authorities, and the operators who will be laying the broadband infrastructure? I'd sure like to get a sense of the coordination (or lack thereof) that's occuring here?

Reshaping the Broadband Market

The incoming administration has made clear their intentions to put the U.S. back in the top 10 for broadband penetration. While the U.S. ranks number one in terms of the number of subscriptions, it comes in at number 15 behind France and Germany in terms of penetration per 100 inhabitants. In that regard, the legislative activities in Washington are setting the stage for another move in the chess game between the cable operators and the Telcos. The cable operators have been offering relatively higher broadband download speeds than the Telcos who thus far have relied on their ADSL infrastructure for broadband offerings. The MSOs would like the minimum download speed for broadband connectivity to be set at 5Mbps which would automatically disqualify the bulk of DSL connections which average at 2Mbps or less as broadband connections. It will be interesting to follow this tussle as the outcome bears significant implications for network infrastructure providers who could really use some good news heading into 09.

Parks Associates research indicates growing consumer demand for remote access to stored media content

One-third (33%) of U.S. broadband households are looking for ways to access their stored media content from outside the home, according to international research firm Parks Associates. The firm reports 35% of these households consider remote viewing a highly appealing ability.

This demand for remote access will guide future networking plans among service providers, Parks Associates reports. The firm forecasts that over 50 million households worldwide will be using place-shifting solutions outside the home by 2012.

The research firm notes that the sphere of content access will continue to expand and currently there is no coherent strategy to facilitate remote viewing of content stored in the home. As a result, third-party vendors have moved into this space, hoping to establish themselves within this developing market.

For more information, click here.

Broadcast industry needs to improve the quality of video content and lower the cost per deliverable

AmberFin releases the results of a research survey conducted at this year's IBC conference in Amsterdam.

The results clearly demonstrate the use of multiple platforms such as broadband, IPTV and mobile handsets as key drivers for the industry moving forward. The quality of content was named as a key factor affecting take up of these newer delivery platforms.

For more information, visit: http://www.amberfin.com/

Premium Technical Support Services Lead to Broadband Value-added Services Revenue

...White paper encourages service providers to use remote and automated digital home customer support solutions for cost savings and as tools to drive new services revenue.

Broadband service providers will benefit significantly from the deployment of premium technical support services that not only contribute to cost savings but allow them to use analytics to better target additional value-added services revenue, a new white paper from Parks Associates reports. Parks Associates, author of Customer Analytics to Drive Value-added Services, predicts that premium technical support services will grow from $400 million in 2008 to $900 million by year-end 2012, accounting for 70% of value-added services revenues.

Customer Analytics to Drive Value-added Services includes industry forecasts, consumer data, and data from premium support programs by HiWired Inc., a company specializing in customer support and marketing campaign support technologies.

Customer Analytics to Drive Value-added Services is a free white paper available for download at www.parksassociates.com. Parks Associates will discuss customer support value-added services in a special panel of industry experts at the upcoming CONNECTIONS™ leadership conference in Santa Clara, California, June 24-26, 2008. More information on the panel discussion can be found at http://www.connectionsconference.com/.

An Analysis on the Demise of Muni-wireless Projects

May 2008 is definitely a dark month for the muni-wireless advocates. After EarthLink pulled the plug on its Philadelphia municipal WiFi network last week, MetroFi also indicated a sale signaling an end of its muni-WiFi initiatives in nine cities, including many Silicon Valley towns. By now, almost all major city muni-WiFi projects have died. You may wonder that when broadband activities are more embedded in our lives than ever before and Wi-Fi networks are gaining widespread adoption both at home and in the office, why did these good-willed muni-wireless projects go sour? Well, we believe there are many factors contributed to the demise of these initiatives. First, many projects in major cities went over budget and solution providers such as EarthLink were unable to finance it. As a result, deployments in Houston, Philadelphia, Cincinnati, and a few other cities were either delayed or shelved. Second, the business model of muni-wireless was difficult and contradictory. The commitment from the municipal governments, who wished to leverage the projects to bridge the digital divide, attract business visitors, and increase the productivity of public workers, was shaky to say the least. Many could not reach agreement with the providers, and the use of public funds has become a debatable political issue. For instance, Pennsylvania pushed through laws restricting municipal-backed broadband services in December 2004, with Philadelphia being the only exemption. Further, competition has become stronger. DSL providers are deploying super-fast fiber networks and affordable mobile broadband services. In addition, a nation-wide WiMAX network is imminent. So, whether or not it is worthwhile financing the network or to just use some third-party service providers such as Verizon or AT&T became a big question for the city governments.

However, as we discussed in our recent report North American Broadband Market Update, on this subject, “there have been success stories in smaller cities such as Corpus Christi, TX, and St. Cloud, FL, where it is less costly and complex to build a network. But these small deployments are largely dependent on specific cities’ needs and situations and will not have material impact on the overall broadband market.”

Online Storage and Backup Add Value to Broadband Service Provider Offerings

How can broadband service providers keep customers and make money? Online storage and back-up services!

"Enabling Solutions for a Rich Broadband Experience" examines the global broadband market and analyzes the drivers, demand, deployments, and critical enabling technologies for broadband value-added services. According to the report, providers will see $188 million in subscription revenue by 2012 if they provide these value-added services.

Online storage and backup services will spur revenue generation and customer retention over the next five years for U.S. service providers, bringing in more than 1.5 million subscribers, according to Parks Associates’ Enabling Solutions for a Rich Broadband Experience.

“Online storage and backup services are great customer retention tools and upgrade incentives,” said Yuanzhe (Michael) Cai, Director, Broadband and Gaming, Parks Associates. “They fit with broadband service providers’ strategic advantages, complementing existing trust and billing relationships, network ownership, and guaranteed quality of service.”

The report recommends that as broadband service providers reposition themselves as experience providers, they should introduce a variety of value-added services to strengthen customer relationships, increase ARPU, and showcase the benefits of high speed. Such value-added services include broadband entertainment, management and support, and control and monitoring services.

“Service providers need to offer a portfolio of new offerings to create meaningful revenue growth,” said James Kuai, Research Analyst, Parks Associates. “BSPs need to experiment with different services and white-label solution providers.”

Michael Cai will discuss broadband service strategies in the session Solutions for Broadband Providers: Carriers as “Experience Providers at the CONNECTIONS™ conference, June 24-26.

Analysts from Parks Associates will present new digital media research in San Jose next week.

Analysts from Parks Associates will present new digital media research on April 10th at the Fairmont Hotel in San Jose. Its a must attend event with the ability to meet with analysts and senior-level executives from various industries. "The Business Cases for New Media Workshop," hosted by Parks Associates, scheduled from 8:00 A.M. to 4:30 P.M.

Featured analysts include: Kurt Scherf, VP and Principal Analyst; John Barrett, Director of Research; Michael Cai, Director of Broadband & Gaming; and senior-level executives from various industries.

Session topics include: Strategies for Broadband and Bundled Services Providers, TV 2.0 Critical Links in the Value Chain, Buying and Using Digital Media Platforms, Electronic Gaming: The Fastest Growing Entertainment Media, Broadband Video: To the PC & Beyond, and The Monetization of Digital Media: Advertising and Alternative Payment Solutions. The full agenda can be viewed here.

Event Registration. Media can register for a free press pass.

North American Broadband - Webcast Update

North American broadband service providers face increasing in-kind and over-the-top competition. As a result, their focus is shifting from selling bandwidth and competing on price to competing on applications, services, and consumer experiences.

Michael Cai, Director of Broadband & Gaming at Parks Associates, presented insights on the following topics during a webcast this week:

- Changing competitive dynamics in the NA BSP market
- Trends and outlook for the deployment of a variety of access technologies (DSL, cable modem, FTTx, broadband wireless, BPL)
- The impact of 700MHz
- Carrier deployment of value added services
- Strategies for broadband service providers to fend off competition from over-the-top service providers
- Market forecasts

Here's a look at some of the numbers and forecasts included:

- 80% of Internet households connect through broadband, and four service providers split 70% of the market
- WiMAX particularly interesting with FMS potential but Sprint's financial woes might slow the process
- Telcos will focus on multi-play bundles and VAS services that incorporate their wireless assets - Investments in new technologies like IMS, Femtocell, DOCSIS 3.0
- Service provides will face competition from not just in-kind competitors, but also emerging over-the-top providers
- Loyalty programs and other customer retention tactics will soon be deployed
- 75%+ of Internet Households connect through Broadband and four SPs split 73% of the market

Don't forget to checkout future webcasts!

Who Won the C-Block of 700 MHz?

The national C-block of 700 MHz auction hit $4.6 billion yesterday. Reportedly, the bidding price was $4.7 billion, just $100 million over FCC’s reserve price. Although the news came at no surprise because Google announced it harbored just $4.6 billion before the auction, the win represents a stride for a proposed “open access” mobile network in the U.S.

Just for some background information, despite early opponents, Google had successfully lobbied the FCC for the “openness principles” including open application and open device attached to the current auction, debating that they will result in a proliferation of better wireless Internet services for American mobile users.

The interesting and critical question right now is who won the C-block? It is like we watched a good movie without knowing the ending. No one but the FCC knows at this point because the agency decided that the bidders’ identities will remain secret until after the auction closes. But we have the right to guesstimate, don’t we? The winner must simultaneously have three characteristics:

1. A deep pocket to pay $4.7 billion for the spectrum, or at least having enough credit to leverage the payment
2. It must be motivated enough, or even desperate to hold the spectrum
3. It must be confident or experienced to assemble an ecosystem of network gear vendors, mobile device manufacturers, CE manufacturers, software developers and financial community to support the open access network

Google, AT&T and Verizon are the usual suspects among the bidders. I think, however, AT&T and Verizon, especially Verizon, are more likely to be the winner. Why? For Google, at this point we don’t know much about its plan except its determination to ensure the open-access rules. Does it really want to build a network or just grab a large piece of mobile advertising and mobile services market by forming wide partnerships? On the other side, both AT&T and Verizon have all the motivation and ability to build a national 4G network. But, AT&T already paid $2.5 billion last year for Aloha’s 700 MHz spectrum that covers 196 million populations. Will it splash $4.7 billion again to beef up its 700 MHz assets? It may, but I doubt. While Verizon initially opposed the open-access rule, its CTO acknowledged that 700 MHz is optimal for its 4G LTE network because of its physical merits. And, it may have sanely realized, learning from Facebook maybe, an open ecosystem could be beneficial to everyone.

If Verizon is the likely winner and AT&T already has some assets in its barn, what about the other two mobile operators – Sprint and T-Mobile? Well, Sprint just joined hands again with Clearwire to set up a national WiMAX network, which champions an open network. Its new CEO is also working on some major deals and reconstructions that hopefully will push the Xohm project forward rapidly. The smallest of the four, T-Mobile needs to hurry up on its mobile broadband network construction. True, its operational results look good so far thanks to smart marketing, fixed-mobile convergence initiatives and superb customer service. But, its long-delayed 3G network may squeeze it into sidelines when all the other three become entrenched in mobile broadband offerings. Someone may argue that a late comer could potentially enjoy the benefits of heightened consumer awareness of advanced data services, more mature ecosystem and cheaper devices. Yet, even taking these factors into account, T-Mobile may still fight not to become the child left-behind.