Recently in Telecommunications Category

Senate Commerce Committee Chairman Ted Stevens introduced legislation Monday that would make it easier for telecommunications companies to get local video franchises but that ducks the controversial "net neutrality" issue. For details, see our story from Newsbytes, "Bill on Video Franchises Introduced."

Called the "Communications, Consumer's Choice, and Broadband Deployment Act of 2006," S.2686 (also being called the "Communications Act of 2006"), the bill would still require phone companies to get local franchises, but would also require municipalities to act on applications within 30 days; if they don't, the application will be automatically granted. Newsbytes says this provision is more restrictive than that in the House bill, which would create a nationwide franchise process.

With regard to net neutrality, Stevens's bill would require the FCC to conduct "an annual study on the flow of information over the Internet and make recommendations."

In his statement of introduction, Sen. Stevens emphasized broadband development as the driving force behind the bill's provisions:

"The overarching theme of the bill we introduce today is deployment of broadband nationwide. Today the United States is less than 16th in adoption of broadband worldwide. We are not only behind most of the developed world, we even lag behind some of the less developed parts of our globe. To address this broadband gap, the bill we introduce today will allow local governments to offer their own broadband service, so long as they do not compete unfairly with the private sector."

The Newsbytes report cites analysts who think it is unlikely that new communications legislation will get enacted this year because of the discrepancies between House and Senate versions.

A copy of the bill is available here in PDF format.

AB -- 5/2/06

The other day the WiFi card in my PC picked up eight wireless networks within range around the courtyard of the condo complex where I live. "Wow, I'm living in a WiFi cloud!" I thought to myself. Most of the networks on my availability list were unsecured, which was no surprise to me -- I'm sure the other network owners around the courtyard suffer as much frustration and confusion as I do trying to keep a stable WiFi signal and get their computers and printers to keep talking to each other. More often than not, making the network secure just completely disables it.

So I was intrigued to learn about Sereniti, a company that provides a "smart" home networking service that includes a wireless G gateway device, security applications and 24/7 tech support for a reasonable monthly fee. The company is marketing its solution as a value-add offering for service providers. I thought it would be interesting to get some comments from Wade Callison, vice president for program management at Sereniti, about current trends in the service provider business and in the world of home networking. Wade responds to some questions in the exchange quoted below.

What would you say are the important trends for cable service and ISPs to take note of?

The most important trend is bundling, that is, the integration of other hardware and services in with basic service provision, as a way to increase revenues and reduce subscriber churn.  Delivering new value-added services on top of basic broadband service is essential for service providers to maintain customer loyalty and counter the constant price decreases for basic service.  (A comparable example receiving mainstream promotion is the bundling of DVR services with cable and DBS services.)

How can providers cope with or make the most of those trends?

Providers need to be looking at value-adds like serving content, remote 24/7 tech support, automatic backups and VoIP services, which make the basic broadband service little more than a commodity in the eyes of customers.

Your brief says that Sereniti is in the business of providing a solution for home wireless networking.  Can you say more about what your product does?  And how do you define your market?

Sereniti Inc. makes wireless home computer networking, security and technical support safe, easy and affordable.  Sereniti's network and PC support services combine hardware and software, security and parental controls software, an easy-to-use graphical user interface and 24/7 technical support.  It also includes $25,000 in identity theft protection insurance per household and $1,000 virus protection.  A unique feature of Sereniti's service is 80GB of network storage, for automatically backing up important files from PCs as well as digital media in the household, such as photos and music. 

Our channels include any service provider, whether they provide high-speed Internet access, or other services to consumers, such as technical support or security services.

What are the big challenges in the home wireless networking area, and what are the best strategies for handling those challenges?

The biggest challenges faced by most consumers are too much complexity and not knowing who to call for technical support.  The proliferation of digital devices in the home drives support incidents when consumers cannot intuitively make their gadgets connect to the Internet and work together.

Most people do not know how to set up and secure their wireless home network.  Others are limiting their usage because of fears of identity theft and inappropriate content finding its way into their childrens' in-boxes.  Right now, many service providers are missing the opportunity to provide a solution to their problems, passing up a chance to build real loyalty with customers and monetize the support burden they are nonetheless forced to shoulder.

Does Sereniti have any news coming up soon?  New products or services?

We will launch the next generation of our service, EasyCare 360, this spring.  It will include 80GB of network storage built into a smart home server, providing automatic wireless backup of all home computers on the system.

What's the most exciting thing about the market space you're working in?

Most ISPs are using the "homes with high speed access" metric as the measure of penetration.  To be sure, many homes with high speed access are not making good use of the available resources because of a lack of customer sophistication and fears about viruses, identity theft or online predators.  Adoption of iPods and digital cameras is nonetheless driving a "wave" of digital complexity in the home.  We are now achieving critical mass of devices and applications that will require the adoption of home networks.  Overcoming complexity remains an issue.  The market could be so much bigger for the firms that crack this problem - we think we have that solution, and we want to work with service providers bring it to their customers.

What do you think is the solution to some of the big technical challenges in the area of wireless networking, especially spectrum conflicts?

The frequency range used for Bluetooth and Wifi (802.11b and 802.11g wireless networking) are other in the 2.4 GHz band.  In addition, these channels are also used for such devices as wireless video cameras and cordless phones.  Spectrum conflicts are inevitable, but are mitigated by new technologies, such as Adaptive Frequency Hopping, which is designed to switch channels dynamically and reduce RF interference issues.  New specifications for these wireless standards will offer continual improvements to address this challenge.

Another technical challenge will be compatibility among the multiple flavors of wireless standards, but in time we can expect this will also be addressed by the adoption of new standards.

AB -- 4/4/06

The U.S. Senate Commerce Committee has approved the Protecting Consumer Phone Records Act, which will now move to the Senate floor. This act would bolster protection of consumers' phone records, which are vulnerable to scamsters and private investigators who sometimes obtain them through ruses.

See the following TMCnet stories for more details on the new bill:

Senate panel approves phone-records privacy bill

Legislation targets pretexters and websites selling consumers' personal calling records.

And this article covers some lawsuits being pursued by telcos against pretexters: The company is in legal pursuit of a PI firm illegally obtaining confidential phone records.

I notice that the companies that are getting sued for pretexting seem to have removed mention of that service from their web sites, but if you search hard you can still find outfits advertising access to phone records. Here's an example I found today:

No, I'm not going to tell you the name of the company.

AB -- 4/4/06

TMCnet's Patrick Barnard wrote a great article today about the status of U.S. telecommunications legislation. Patrick refers to a quote in BusinessWeek in November 2005 by AT&T's CEO Ed Whitacre:

"Why should they be allowed to use my pipes? The Internet can’t be free in that sense, because we and the cable companies have made an investment -- and for a Google or Yahoo! or Vonage or anybody to expect to use these pipes (for) free is nuts!"

This quote struck me because Stanford law professor Lawrence Lessig used this same quote in a presentation I attended last week in New York City, sponsored by the ILO Institute. Lessig is founder of Creative Commons, an organization set up to initiate new approaches to intellectual property. Lessig has also commented on the Net Neutrality question, one of the central issues in the current U.S. legislative battle.

In his presentation, Lessig likened the Internet to a highway in that the infrastructure is designed so that "any kind of vehicle works on it." What the telecommunications giants are proposing to do now, he says, is "set up reserved lanes" on the highway, "like Moscow under communism." The network owner can then "sell the reserved lanes, and the rest of the people using the Internet will be pushed into the slow lanes."

Lessig says allowing the network owner to exert this kind of control works against innovation. The Internet, he says, was originally designed as an end-to-end (e2e) network without central control. An "end-to-end Internet is massively more valuable than an Internet centrally controlled by AT&T." Giving control to the network operator allows that operator to say, "Vonage, you're making it harder for me to sell telephone service. If you have an innovation, bring your permission slip."

AB -- 3/30/06

Susan Campbell's article from today explains what's behind the conflict between AT&T and cable providers Comcast and Time Warner Cable -- see "AT&T Fires Off FCC Letter Accusing Cable Operators of Thwarting Public Debate."

AT&T has been running issue ads trying to gain support for legislation that would make it easier for telcos to bypass local franchise requirements and roll out video services in communities nationwide. Comcast and Time Warner Cable have refused to run the ads, so AT&T is accusing them of trying to stifle public debate.

It's hard for me to feel strongly that there's a good guy in this conflict. Seems to me that both the telcos and the cablecos have a long record of getting away with providing minimal service and pulling any strings possible to stifle competition. ("We don't care. We don't have to. We're your phone company.")

That said, all in all it probably is better if consumers have more than one choice for local video service. In fact, recent research indicates that increased competition in Texas is resulting in lower rates for consumers. (See my previous entry, "Survey Reports Results of Texas TV Competition.")

Even better would be a scenario under which consumers could have even more choices beyond the high-cost poky "broadband" choices available from the entrenched incumbents in the current market.

AB -- 3/28/06

Here's an interesting report from ABI Research: "Metro Wi-Fi Network Coverage to Top 126,000 Square Miles by 2010, Says ABI Research."

ABI says municipal wifi only covered 1,500 square miles in 2005, so this sounds like a fast growth rate. 126,000 square miles, the report says, is a little larger than Poland or New Mexico! ABI estimates these deployments will result in sales of more than a million wireless mesh routers at more than $1.2 billion.

ABI identifies four trends behind this growth:

1. Local governments are backing deployments for government operations and public safety.
2. ISPs see mesh networking as a possible way to compete with incumbent providers in the broadband market.
3. Wireless mesh networking is emerging as a way to serve smaller and more isolated markets.
4. The technology also might work for cable companies in competing in broadband markets.

ABI Analyst Sam Lucerno doesn't think incumbents will pursue wireless mesh extensively "because it does not provide adequate bandwidth for bundled video, voice, and broadband data. Also, they have already invested significant funds and effort in deploying their current networks."

AB -- 3/16/06

A little while ago we were following a webcast of a hearing titled "Wall Street's Perspective on Telecommunications," from the U.S. Senate Committee on Commerce, Science and Transportation.

Commerce Committee Chairman Ted Stevens spoke with a group of Wall Street analysts. TMCnet's Patrick Barnard will shortly be writing a summary of the proceedings, and we hope for analysis by Rich Tehrani later.

An archive video of the hearing (about 45 minutes long) should be available soon at this page.

I will let Pat and Rich relate specifics later, but the witnesses spoke to concerns around Net neutrality, regulation and the concept of a '2-tiered Internet.'

Witnesses included:

Aryeh B. Bourkoff, UBS Investment Research

Kevin M. Moore, Wachovia Securities

Craig E. Moffett, U.S. Cable and Satellite

Luke T. Szymczak, JP Morgan Asset Management

AB -- 3/14/06

The American Consumer Institute released a study today finding that cable television subscribers in Texas are already saving money as a result of wireline competition (mostly by Verizon) introduced in the state subsequent to state legislation that helped competitors bypass slow local franchising processes.

The report, called "Does Cable Competition Really Work? A Survey of Cable TV Subscribers in Texas," is based on a survey of 883 cable customers in three towns in Texas where competing services have penetrated within the last six months -- Keller, Plano and Lewisville. (Go here for a full PDF version, go here for a summary.)

The survey found that new competitors have claimed almost 20% of market share in the short time since the markets opened up. 22% of respondents say they have switched TV providers within the past six months. 48% of those who switched to a competitor reported that they saved money, an average of $22.50 per month. But that 48% figure indicates that many switched for reasons other than cost savings. Besides pricing, respondents pointed to better quality and better packages as reasons for switching.

Not only did those who switched save money, but the survey found that those who did not switch saved money as well, as incumbents reduced prices because of competitive pressure.

The study's authors say competition increases overall demand for TV services: "The survey finds that 23% of Verizon's customers did not have cable TV service prior to Verizon's entry." This could be due in part to falling prices, but the authors also think that greater consumer choice might have an 'invigorating' effect on the market, bringing in first-time customers and bringing back those who had dropped out previously because of poor service on the part of the incumbent.

The authors describe the consumer benefits of increased competition in these Texas video markets as "immense" and say:

"Currently, the competitive portions of these communities are realizing $2.4 million in consumer benefits per year as a result of lower cable TV and video prices. That number will likely increase to $14.1 million per year as competition continues to develop in these areas, and as consumers become more aware of competitive choices and prices. If these estimated consumer welfare benefits could be replicated across the U.S., this study finds that consumers would receive $23.0 billion in benefits per year, or approximately $19 per month per household."

AB -- 3/2/06