31 August 2007

Standards committee turf wars

This item, a dispute and "turf war" between two standards committees, is nothing new in this relatively fractured world of standards development. Liaisons between committees help, but, as this article shows, doesn't always solve the problem. IETF is a relative upstart in this world, so it isn't surprising to me that such a dispute would have occurred. It wasn't the first and won't be the last.

CATV vs television manufacturers

Speaking of standoffs ... there is an interesting one that is brewing. Under the auspices of Docket 97-80, the FCC has been seeking competition in the set-top box market. The initial approach has been to require a retail market for set-top boxes through a standardized interface. This was successful in the telephone CPE market and resulted in "Cable Cards", which currently are one-way and do not support interactive services and limit the way in which cable companies can manage cable spectrum, especially in light of increasing demand for high definition television channels. There are two strategies for overcoming this: one proposed by the consumer electronics industry and one by the cable industry. In the Third Further Notice of Proposed Rulemaking (FCC-07-120, dated 29 June 2007), the FCC sought to move the parties to conclusions. In this article Brian Smith of the Consumer Electronics Association (CEA) compared the consequence of the approaches:
Cable does not want their services "disaggregated," i.e. allowing the CE device to become, in their view, a filter for the way they present and market services to the consumer. For example, they do not want their UI to be modified by the CE products, and they want everything on the UI to be available for the consumer to order and pay for. Cable wants copy protection and output control flexibility that they say is necessary for them to compete with other service providers.

CE and IT manufacturers believe that customers should have a choice in the blend of capabilities that they pay for in their products. They don't think that the combination of OCAP middleware and future cable conditional access software should totally control the TV and its access to other services/peripheral devices, or the home network. They don't think CableLabs should be able to unilaterally establish or change the specifications for what constitutes an Integrated cable ready receiver or the test process for approving them. CE wants all downloaded Cable applications to be thoroughly tested on CE devices for robustness.

The comment period for this has now come to an end, which (presumably) prompted this article in Forbes. Quoting the article:

The federal government may be forced to intervene in a long-running dispute between cable companies and the consumer electronics industry over how Americans will someday use their television sets to buy movies, shop and access other services.

The two sides have been at an impasse for nearly four years. And the stalemate continues despite several rounds of negotiations between individual companies and the two industries' powerful Washington lobbyists.

"We have absolutely no agreement with cable right now," said Julie Kearney, senior director at the Consumer Electronics Association. "As far as we are concerned, there is still a huge gulf between our position and what cable envisions."

On one hand are the large cable providers such as Comcast Corp., Time Warner Cable Inc. and privately owned Cox Communications Inc.

They are pitted against household electronics names such as Sony Corp., Pioneer Corp. and Sanyo Electric Co. Ltd.

Both cable providers and television makers believe that controlling the digital programming guide, effectively a television's menu system, is key to guiding the viewer towards products and services they can buy. And both refuse to give up that control.

By the way, this was foreshadowed in this FCC report (Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming).

So, what action, if any should the FCC take? Do you see similarities between these actions and developments taking place in the wireless industry?

Muni WiFi Takes A Beating

This article from TechDirt does a nice job of summarizing the recent negative news about Municipal WiFi (I have blogged about this before here). This article, from CNet underscores this and adds a bit of analysis. Then there is Om Malik's post on the topic. ...

If you're into forecasting, you may wonder whether this news signals the beginning of the end of this phenomenon, or if it is a temporary downturn as municipalities and operators figure out workable systems implementations and business models. The contrarian in me believes that the public analysis bandwagon has shifted ... I will most certainly be posting more about muni wifi in the future ...

30 August 2007

M2Z and 2.1GHz

This article, posted over at Ars Technica, is interesting. It describes a proceeding before the FCC by M2Z networks. What is interesting is that M2Z is proposing that the up-front payment for the spectrum (which is the policy in the US) be substituted by a payment of 5% of gross revenues. In essence, the US becomes an investor in the network, and stakes its return on the success of M2Z's business plan and its management's ability to execute it.

What are the advantages and disadvantages of this for stakeholders (eg. government, M2Z, M2Z's competitors, and US taxpayers)? If this plan is adopted, should the US government have a voting role in M2Z's board? If so, who would do this?

Update (2007-09-10): While this may be old news at this point, CNET reported that this proposal was voted down by the FCC.

Update (2007-09-24): The Washington Post had this article about M2Z's system.

29 August 2007

US Broadband

There are no shortage of articles like this one in the Washington Post. The theme of these articles compares the state of broadband in the US to Japan and South Korea, where access speeds and prices are better. Quoting the article:
Broadband service here is eight to 30 times as fast as in the United States -- and considerably cheaper. Japan has the world's fastest Internet connections, delivering more data at a lower cost than anywhere else, recent studies show.

Accelerating broadband speed in this country -- as well as in South Korea and much of Europe -- is pushing open doors to Internet innovation that are likely to remain closed for years to come in much of the United States.

The reason for this is given to be (again, quoting the article):
Japan has surged ahead of the United States on the wings of better wire and more aggressive government regulation, industry analysts say.

The copper wire used to hook up Japanese homes is newer and runs in shorter loops to telephone exchanges than in the United States. This is partly a matter of geography and demographics: Japan is relatively small, highly urbanized and densely populated. But better wire is also a legacy of American bombs, which razed much of urban Japan during World War II and led to a wholesale rewiring of the country.

In 2000, the Japanese government seized its advantage in wire. In sharp contrast to the Bush administration over the same time period, regulators here compelled big phone companies to open up wires to upstart Internet providers.

In short order, broadband exploded. At first, it used the same DSL technology that exists in the United States. But because of the better, shorter wire in Japan, DSL service here is much faster. Ten to 20 times as fast, according to Pepper, one of the world's leading experts on broadband infrastructure.

Indeed, DSL in Japan is often five to 10 times as fast as what is widely offered by U.S. cable providers, generally viewed as the fastest American carriers. (Cable has not been much of a player in Japan.)

Perhaps more important, competition in Japan gave a kick in the pants to Nippon Telegraph and Telephone Corp. (NTT), once a government-controlled enterprise and still Japan's largest phone company. With the help of government subsidies and tax breaks, NTT launched a nationwide build-out of fiber-optic lines to homes, making the lower-capacity copper wires obsolete.

This article (as do others of its kind) raise a number of questions that are interesting to consider:

  • Can you really compare developments in Japan and South Korea to the US?

  • The article mentions that the developments in Japan and South Korea are the result of government subsidies. Is this efficient?

  • The article discusses local loop unbundling as one of the supporting policies. These policies have been in place in the US since the mid-1990s, although recent decisions have exempted newer infrastructure builds from this policy. Telephone companies have argued that the rates that were set were non-compensatory ... that is, amounted to a subsidy of their competitors because they were below cost. It turns out to be difficult to determine the truth of this. There were many competitors in the US in the late 1990s ... many of these collapsed during the dot-com bust ... was that due to poor business decisions or changes in the rates charged by telephone companies?

  • Does the US need a different broadband policy? What should it be? There are many opinions on this (see, for example DACA on the one hand and this on the other, though there are many other proposals as well)

28 August 2007

NGN in New Zealand

Last week, New Zealand's Ministry of Economic Development released this document, which, basically, is an investigation into how universal service will be provided in that country.

According to this article this investigation was prompted because
... the PSTN network and so-called plain old telephone service (POTS) will be discontinued came in a document from the country's Ministry of Economic Development released last Thursday. Ostensibly, the document does no more than request comments about what the effect of the NGN plans will be on Telecom New Zealand's (TNZ) so-called "Kiwi Share Obligations" (KSO) - the requirement that the carrier provide basic phone service to all residents of the country, more formally called the Telecommunications Service Obligations (TSO). The KSO, the Ministry notes, was of "crucial importance" when TNZ was privatized in 1990.

The issue now is how TNZ will fulfil the KSO once its planned NGN is in place, and in order to discuss that - public comments are being solicited until Sept. 28 - it was obviously necessary to outline the issues. The biggest issue is turning out to be that, once TNZ converts over to an all-NGN, line-powered telephones won't work any more using power from the phone line because NGNs don't dish up the voltage that's standard on POTS.

Are we facing the same debate in the US as Verizon and AT&T's efforts to replace the copper local loop with fiber? Will New Zealand once again be leaders in telecom policy?

CRS report on spectrum auctions

If you are interested in this subject, you might enjoy reading this report from the Congressional Research Service, courtesy of the OpenCRS project of the Center for Democracy and Technology. Quoting the summary:

The FCC has issued the rules it will set for the upcoming auction of the old TV channels. Issues that have been raised in the discussion over how best to allocate this spectrum include the creation of national licenses with open access for wireless devices, the treatment of designated entities — with references to NextWave, blind bidding, how much spectrum is needed for public safety communications, and proposals to provide spectrum for shared use between public safety and the private sector. In particular, proposals put forth by Cyren Call, Frontline, and Google, Inc. have sparked an ongoing public debate about the “highest and best use” for the spectrum currently designated for auction by the Deficit Reduction Act.

Safaricom in Kenya

I had posted an item about Uganda earlier. This story about Safaricom is a somewhat similar story with a different ending. In this story, we see a mobile phone company being successful in a largely poor market by aligning its business to the practices and means of its customers. What this story doesn't tell is the value that customers in developing countries get from mobile phone providers in improving the productivity of the microbusinesses in these countries.

iPhone and unlocking

The unlocking of Apple's popular iPhone has been widely reported. As this article points out, the legal basis for their concerns (and threats) is murky at best. On the one hand, carriers argue that locking GSM phones is necessary for them to recover their investments in both the network and the phone subsidy. Consumers, often bound by multi-year contracts, often prefer the freedom that an unlocked phone provides, especially when roaming.

If you have most any brand of GSM phone, getting it unlocked is a relatively easy matter and can be achieved through an Internet search. While this is increasingly popular, its legal basis is unclear. The Register of Copyrights is working to clarify this (see p. 68476 in this Federal Register notice).

Some researchers have gone further, suggesting that we need a "wireless Carterfone", which would decouple handsets sales (and choice) from the network provider, much as consumers were free to choose customer premise equipment (CPE) independently of network provider under the FCC's Carterfone proceeding. There are clearly technological issues with this, at least in the US, where carriers have different air interfaces.

Should consumers be legally able to unlock their phones? Should carriers be required to attach to third party telephones? How do you think the market dynamics of the mobile telephone industry would change if handsets were no longer bundled with services?

27 August 2007

Aspen Summit videos

The Progress and Freedom Foundation holds an annual summit in Aspen Colorado. Here are the webcasts from this year's summit. There is a lot of interesting stuff here ... it is well worth spending some time listening to the panels.

Comparative mobile rates

I have compared US and European mobile rates in previous blog posts. Along that line, this paper (by way of the PFF blog) is relevant. It contains a systematic comparison of the US mobile communications market to those of our main trading partners. The results of this analysis might be surprising to some.

Difficulties with the data remain, for example:
This report has shown that the U.S. market has lower market concentration, more competitive prices and greater acceptance among consumers. However this finding is counter to published international data on market penetration. The problem with these international statistics is that they do not count the same things. In the U.S., wireless subscriptions primarily reflect the number of handsets in operation. However, in the Europe, the statistics reflect the number of Subscriber Identity Module (SIM) cards. Because European roaming rates are so high between countries, it is sometimes economical for consumers to have more than one SIM card per handset, in order for consumers to take advantage of lower in-country rates.

This figure says a lot about the conclusions:

The report's conclusion reads:
The data from the OECD and FCC show that European wireless markets have higher concentration, higher prices and lower usage. From this analysis, the U.S. wireless market gives consumers more choice, offers more competitive prices and encourages more consumption. Compared to Europe, reported problems of high market concentration, high consumer prices, low usage and decreasing consumer welfare do not appear to be a U.S. problem. In summary, there is no evidence of market failure or that the U.S. wireless market somehow lags behind the European wireless market. In fact, if anything, basic comparisons of consumer welfare between these markets demonstrate the opposite conclusion.

Do you believe the results? If it is true that the market concentration is low compared with many of our trading partners, is it still high enough to be of concern to regulators?

Update (29 Aug 2007): You might be interested in this related item over at ARS Technica.

Technology history of WiMAX

If you're a fan of technology history, you will enjoy this article in BusinessWeek. The article describes Intel's role in the development of this technology, that may well prove to be a marketplace disruptor.

This article reminds me of the early days of Ethernet, when Digital Equipment Corp (remember them?), Intel and Xerox teamed up to develop the DIX Ethernet standard, which preceded the IEEE 802.3 Ethernet standard. As Marvin Sirbu and Kent Hughes, in their 1986 TPRC paper point out, each member of the DIX alliance played a role that allowed Ethernet to succeed ... DEC to incorporate the standard in minicomputers (this preceded PCs), Intel to provide chips, and Xerox to provide workstations and software. In similar fashion, this article points out that Intel (chips), Sprint (network) and Nokia (handsets) allied to make this happen. The handset alliance has since come to include Samsung (see this).

This paper also highlights the rivalry in standards committees. This was the case with Ethernet (IBM was a proponent of token ring); in this case it was Qualcom, according to the article.

Anyway, this is an excellent read. This strategy was clearly successful with Ethernet ... time will tell if it will prove successful with WiMAX. Can you think of other technology standards that emerged out of a partnership like this one (and like Ethernet)?


This article is interesting. There have been numerous schemes over the years that have been designed to facilitate micropayments, but none of them have taken off.
Quoting the article:
Amid the disdain, and without many people noticing, micropayments have arrived — just not in the way they were originally envisioned. The 99 cents you pay for a song on iTunes is a micropayment. So are the tiny amounts that some operators of small Web sites earn whenever someone clicks on the ads on their pages. Some stock-photography companies sell pictures for as little as $1 each.

“Micropayments are here,” said Benjamin M. Compaine, a consultant and lecturer at Northeastern University who specializes in media economics, “they just have not evolved in the way that everybody expected.”

Why do you think they have "not evolved in a way that everyone expected"? Do you think micropayments will continue on their present trajectory, or do you see big changes coming?

23 August 2007

Telecoms, taxes and growth in Uganda

I found this item interesting. Many studies of telecoms adoption, penetration and growth focus on industrialized countries, so it is nice to see a thorough analysis of telecoms in a developing country, such as Uganda. Also, this study clearly shows that people respond to prices and taxes in their consumption and use. In many cases, high taxes on telecoms are justified because they are thought to be either "luxuries" or business-oriented, which are thought to be more able to afford higher taxes. This report would seem to suggest that there are unintended consequences of that view.

2007 OFCOM Communications Review

The British regulator OFCOM released its 2007 review. The report is worth reading ... here are a few of the report's key points:
  • The availability of broadband to more than half of UK households has driven the development of converged services and devices.
  • Convergence has opened up major revenue opportunities for the producers of many content types. Over the first half of 2007 90% of UK singles sales by volume came from digital downloads to the computer or a mobile handset. The market for computer game playing has also been transformed, with millions of consumers worldwide now engaging in shared online gaming experiences.
  • Audiovisual content, by contrast, continues to be largely broadcaster-funded, although independent producer revenue from new media rights more than doubled to £42m in 2006.
  • The traditional advertiser-funded model of broadcast audiovisual output faces pressures both from the growing popularity of online advertising (it rose by nearly half in 2006 to £2bn) and from the multichannels (which attracted advertising revenue of over £1bn in 2006).
  • Increasingly sophisticated devices are beginning to influence consumer behaviour. Fifteen percent of individuals now have a digital video recorder (DVR) and up to 78% of adults who own them say they always, or almost always, fast-forward through the adverts when watching recorded programmes.
  • Bundled communications services are increasingly popular with consumers, with 40% of households now taking more than one communications service from the same provider (up a third on last year). A majority of broadband customers take it as part of a bundle.
  • Each person now consumes more than seven hours of media and communications services cumulatively per day. However, the tendency to consume some media simultaneously means that the actual time spent on media is likely to be less than this.
  • Digital television penetration broke through the 80% barrier in Q1 2007, taking the total number of homes with multichannel television to 20.4 million (80.5% of the total).
  • Radio reach has been stable over the last five years at around 90%. However, total listening hours fell by 1.4% in the year to Q1 2007, and are down 4.0% on five years ago. Listening hours have fallen furthest among 25-34 year olds, down by 17.3% over five years, and among children, down 8.7%. However, the over-55’s are now listening to more radio, with hours up by 5.5%.
  • Some 58% of listeners say they have accessed radio through one of the digital platforms (up seven percentage points on last year); 41% have listened via DTV, 24% over the internet, and 8% via mobile phone. Twenty seven per cent of UK adults now own an MP3 player, with 5% using them to listen to radio podcasts.
  • Average household spend on telecoms services fell by nearly a pound in 2006 to £64.73 per month. For the first time, average mobile spend fell (by 70p to £31.72) as falling prices more than compensated for an increase in the total number of connections and in the average number of voice calls and text messages per subscriber. Like-for-like prices (based on a basket of services with average usage at 2006 levels) fell by nearly 9%.
  • Total industry revenue in 2006 was £47.0bn, of which £38.5bn was retail revenue (i.e. revenue from end-users). This was an increase of 1.4% on 2005 but represents significantly slower growth than the previous five years as fixed-line revenues declined and growth in mobile and broadband revenues slowed.
  • More than half of UK households had broadband by March 2007. The average (blended) headline speed in June 2007 was 4.6Mbit/s, although actual speeds experienced are often considerably lower, varying according to the quality and length of line from premises to exchange and the number of simultaneous users.
  • Households with a mobile connection (93%) exceeded households with a fixed connection (90%) for the first time in 2006. Average calls per mobile connection rose above 100 minutes a month for the first time, while average calls per fixed-line connection fell below 300 minutes.
  • Local loop unbundling accelerated through 2006 so that by the end of March 2007, 72% of UK premises were connected to an unbundled exchange (an increase from 45% in March 2006). The proportion of premises in unbundled areas taking LLU services rose from 3% in March 2006 to 9% in March 2007.
  • Analysis of time spent online reveals that Britain is a nation of shoppers and social networkers. More time was spent on eBay than on any other web site, and social networking sites Bebo, MySpace, Facebook and YouTube are all in the top ten sites by time spent.
  • Women aged 25-34 spend over 20% more time online than their male counterparts. ‘Silver surfers’ also account for an increasing amount of internet use with nearly 30% of total time spent on the internet accounted for by over-50s (although, as over-50s account for 41% of the UK population, their internet usage remains significantly lower than average).
How many of these facts and trends are unique to the UK? What are the implications of these trends for regulatory policy and the strategies of the firms in the marketplace? Are consumers better or worse off, on balance? Are social goals (eg. universal service) being met?

21 August 2007

Municipal WiFi

I have blogged about municipal wifi networks before. I have been a bit skeptical about these networks from the beginning. Recent articles, such as this one in BusinessWeek add credibility to my skepticism. I have a paper in the upcoming Telecommunications Policy Research Conference with Kevin Huang on this topic.

Do you see a role for muni wifi networks? What would that be? Should this be left to the private sector?

DVD Wars again

The next generation DVD format war has been a persistent theme on this blog, given my longstanding interest in standards processes. This format war is far from over, though this story has given the HD-DVD camp renewed momentum.

Given that the penetration of HD television sets is still relatively small (and the penetration of HD-capable players even smaller), this is clearly not about profitability.

What matters in this war? Price of players? The Sony PS-3 (even though its sales are languishing)? Availability of movies?

Update (2007-08-30): Take a look at this article over at CNET. How much of a difference will this make? If many consumers are enticed by this and purchase it, will that drive the Blu-Ray only studios to provide HD-DVD content? Or, will consumers shun this inexpensive device because of the division in content?

Update (2007-08-31): Do you think the points raised in this article, if true, will make a significant difference?

Update (2007-09-07): I found this commentary illuminating ... and there was a small bit of data included, instead of only announcements that amount to posturing.