ISP

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.

AOL profits way down; Time to sell

Time-Warner’s AOL unit saw profits fall by 26%, and has been in talks to split and sell off AOL to boost the parent company’s financials. The drop in AOL’s fortunes came not because of a shift from an access model to an ad model per se, but because of the shift to broadband Internet.

Broadband is not an ISP business; it’s an access carrier business. However, the fate of AOL as a portal is linked to broader problems on the Internet, which include an increased polarization of sites as search, entertainment or social networks. There are strong incumbents in the first space. The second is yet to be proved as a source of financial gain, and entertainment is where everyone who isn’t a search player wants to be. Crowded markets don’t make money for anyone, and the faddish nature of Internet viewing won’t help. T-W should sell AOL off now while it can.

Earthlink shuts down WiFi effort

Earthlink has decided to shut down its efforts to create a series of municipal WiFi networks to bolster its sagging ISP business. The decision was inevitable in our view, because as we have noted often there is no way that fixed wireless technology can support consumer broadband requirements that are becoming increasingly biased toward high-duty-cycle content delivery. Portable applications are the only way that this type of network could be made profitable, and Earthlink and the vendors supporting its efforts have failed to make that point to the marketplace. We have heard that the issue of “portability versus wireline competition” was at the heart of the Clearwire-Sprint WiMAX breakup; the former was satisfied to continue its positioning of WiMAX as a supplement to wireline but Sprint wanted a more wireline-competitive position, which the technology cannot support