IP services

AT&T’s “business U-verse”: Focus on data

AT&T is launching a business service on U-verse, but the service focuses on data delivery rather than on video. The new offering will offer users 18 Mbps download speed and the option for static IP addresses to allow businesses to host their own sites or provide services on the web via their links.

It is likely that operators worldwide will increase their targeting of SMB users and secondary sites in 2009 to help ease any revenue hits they might take.

FCC to address free wireless

The FCC is expected to take up the issue of a free wireless Internet service, must-carry rules, and other pending issues in December, the last meeting in which Republicans will be in control. The wireless Internet issue has been the most visible of the group to be discussed. The industry clearly doesn’t like free Internet no matter how it’s obtained, and privacy advocates are objecting to the proposal that the sites filter traffic to eliminate adult material. It’s still not clear how all of this would be funded, so the wisdom of reserving spectrum for it eludes us.

Metered Internet use causing a stir

October 24 2008 regarding metered Internet trends.
Metered Internet usage is stirring comment in the UK and the U.S. trials of the idea, put on hold by the hurricane season, are now expected to get underway shortly at TW Cable.

The notion of reducing capacity growth and slowing the decline in revenue per bit has become more and more popular globally as providers throw up their hands on the issues of monetizing their networks. We have already noted here and in other publications that operators are universally at risk to squeeze in margins because traffic increases are not compensated by revenue increases with classical Internet pricing models.

We believe that unless service-layer improvements add revenue to the pot, spending on transport capacity will begin to slump as early as 2010.

Who’s growing the managed services trend?

There are indications that some smaller providers are going to make an entry into the enterprise managed services and applications market, including Reliance and Tata. The goal is to make a wide-ranging network with ample capacity into a financial asset by relying less on its commoditizing bits and more on what can be done with the capacity—services, in short.

We believe that the decision is also linked to a slow response from incumbent providers to the sudden interest in managed services, interest that was mounting even before the current economic bust. In tough times, enterprises often want to trade expense for capital investment, particularly in markets where credit is tight or expensive.

Software-driven network services — lots of talk

Network operators at a UK software event talked about more aggressive plans to focus on software-driven network services and features, and included goals of delivering software modules as elements or units of basic service functionality. This vision mirrors what we have heard in private dialogs and public presentations alike, beginning almost 18 months ago, but there are more public articulations of the view today than there have been in the past. Some operators are reportedly avid supporters of Web 2.0 (BT included) and others (like Telstra) are more skeptical. We believe that despite all of the talk here, there is actually relatively little real progress in transforming operator business models to a more software-driven, partner-developer-focused, form.

Verizon’s FiOS plans cause more cable angst

Verizon’s FiOS plans in 2008 include obtaining some franchises in major metro centers and increasing its HD channel count to 150, both of which are likely to cause further angst for the cable companies. In the former area, Verizon faces the issue of efficient delivery to multiple dwelling units (MDUs), a technical step that it’s been working to resolve through the use of in-building fiber or MoCA cable. The latter step is simply a matter of getting the business relationships in place, since FiOS has ample capacity to deliver virtually any number of HD channels. The current Comcast-satellite war over who has the most HD will be moot when Verizon gets its full complement of channels. All of this will be fueled in part by the digital transition that is scheduled for mid-2009. The coupons for customer conversion for over-the-air sets limited to analog tuning will launch shortly, and the campaign to prepare the market is expected to create a major surge in HDTV sales in 2008 and 1H09, making the question of who has the most HD channels an important marketing point.

AT&T To Revamp BellSouth FTTC strategy?

AT&T is rumored to be considering a revamp of the BellSouth FTTC strategy, based on Tellabs, in favor of an FTTC/FTTP strategy based on Ericsson. Ericsson had, via its Marconi unit, a history with BellSouth’s fiber plans and there is some sign that the carrier is now breaking its original plan to have a uniform infrastructure in favor of a more regionalized approach. We have noted in the past that BellSouth’s internal review of fiber options prior to the merger had favored a Verizon-like plan, and this may be an indication that AT&T will now consider that for at least that region. We also believe AT&T may consider broader FTTH deployment and also the Verizon linear RF approach to broadcast.

Sprint readies for IPv6, federal mandate or not

The Federal government agency mandate to run IPv6 by the summer of 2008 is now approaching, and Sprint at least is planning to be ready in case the government actually goes through with what it has mandates, far from a sure thing. IPv6 is a new version of IP that has considerably more address space, enough to address all the devices on the Internet and PSTN with room to spare. The problem is that it requires changes in the network and user equipment to use. It is expected that it will roll out commercially in a gradual way, and that IPv6 may not be really used universally on the Internet for a decade.

Dueling Cisco/Juniper Ethernet switch rumors

Rumors continue to spin around a new Juniper enterprise Ethernet switch and a competing Cisco product launched, not surprisingly, at about the same time. As we reported last week, financial analysts were predicting that Juniper would launch its Ethernet switch on January 29th in New York at a meeting scheduled for the financial and media communities, and Cisco has traditionally worked to trump competitive announcements by making one of their own just before that date. All of this is aimed at the larger “data center” or enterprise headquarters market, a market that in 2008 may be more challenging than it was in 2007 according to our research.

Motorola shakeup to cause industry trickle-down?

Motorola’s president, Ed Zander, stepped down and will be succeeded by Greg Brown. The company has been under pressure because of poor stock performance, and it is this that makes the departure of Mr. Zander interesting. There are many companies that Wall Street believes have not met shareholder appreciation goals, including Cisco, and the pressure for the change came as private equity companies were working with some board members and investors to break Motorola up to create several units whose combined performance would better suit shareholder goals. We believe that this kind of pressure will spawn aggressive product moves among other network companies in 2008 to prevent being fragmented.