What the Verizon Verdict Means for Vonage

Olga Kharif (3.9.07)
http://www.businessweek.com/technology/content/mar2007/tc20070309_887320.htm?chan=technology_technology+index+page_today%27s+top+stories
887320.htm?chan=technology_technology+index+page_today%27s+top+stories

More on Vonage patent lawsuit, the larger implications for Vonage.

After a weeklong hearing in the U.S. District Court for the Eastern District of Virginia, a jury ruled that Vonage Holdings must pay Verizon Communications $58 million in damages and a 5.5% licensing fee per subscriber per month. Vonage's costs per line would increase by about $1.6 per subscriber, or almost 20%.

The company's stock fell 3.86%, to $4.85, an all-time low, the day the verdict was announced.

With its financial position corroded, Vonage, long rumored to be shopping around for a buyer, could finally become cheap enough for an acquisition by a cable company, or even a telco like Verizon, whose VoiceWing Web-calling service has so far failed to take off. Indeed, Verizon's 19-page complaint notes: "Vonage's expanded marketing and advertising of its infringing services threaten to shift more customers and goodwill to its business at Verizon's expense"

This decision carries huge implications for the $4.4 billion U.S. VoIP-services industry as a whole. "The message this sends to the VoIP industry is, if you build a patent portfolio, it helps you negotiate in these situations," Rabena. The number of VoIP-related lawsuits mounted by telcos and other entrenched players could rise. According to the U.S. Patent & Trademark Office, there are 2,273 patents related to VoIP, many of them belonging to telecom old-timers like Verizon, AT&T, Motorola, Broadcom, and Cisco.

And that spells more trouble ahead for small Web-calling service providers looking to retain their foothold on the market. In his closing arguments on Mar. 7, Vonage's lawyer said, "this case is about choice." Thanks to the Verizon victory and other potential legal action in the future, the choices for Vonage will be far fewer.

Future of Net phone firm Vonage hangs in balance

Leslie Cauley (2.20.07)
http://www.usatoday.com/printedition/money/20070220/vonage.art.htm

Verizon is taking Vonage to court for patent infringement on 48 counts.

This could stifle growing VoIP companies and have an impact on service and innovation in the future.

Vonage claims Verizon's patents are too broad for any company to work around and still remain in business. Brooke Schulz, a Vonage spokeswoman, said Monday that Verizon's claims are baseless. "This is about Verizon trying to stifle competition," she said. "We have not infringed on their patents, period."

By the end of 2006, there were 8.6 million VoIP users in the USA, estimates JupiterResearch. By 2010, the number is expected to reach 22.5 million. Many of those customers are coming from traditional local phone providers such as Verizon and AT&T.

William Bosch, a Vonage lawyer offered a prediction: "We think there is an extremely good likelihood this jury is going to find that (the Verizon patents) are invalid, that they never should have been granted in the first place."

Jeffrey Citron, Vonage's chairman and chief strategist, has been subpoenaed to appear as a witness — for Verizon. That has put him, potentially, in the awkward position of testifying against his own company. Vonage is fighting the subpoena, Schulz said.

IPTV Market to Surge in Coming Years

Telecommunications Industry News (2.18.07)
http://www.teleclick.ca/2007/02/iptv-market-to-surge-in-coming-years/

Interesting facts on the predicted use and distribution of IPTV, and further shows the impending bandwith crunch.

The number of households using IPTV worldwide will grow to more than 80 million in 2011, from just 6 million at the end of 2006, according to a Strategy Analytics report, entitled “Global IPTV Forecast: Homes Users, and Subscribers.”

IPTV revenue, however, will see considerably less growth over the same five year period, as many customers are given the service as a free perk with their broadband internet access. The number of paying IPTV customers in 2011 will only be around 40.9 million, the research firm predicts.

“The jury is still out on how much consumers are willing to pay telcos for IPTV,” commented Strategy Analytics vice president and principal analyst, David Mercer. “Most telcos will likely offer customers a mix of free, subscription and pay-as-you-go programming models.”

Strong Brand is Key to Future

Laureen Ong (2.8.07)
http://www.multichannel.com/blog/230000223/post/640006864.html

Laureen Ong argues that brands are becoming increasingly important as they codify attributes, personality, and attributes.

Shows interesting statistics about viewer habits based on number of channels available.

Recent studies have consistently shown that as the number of choices increase, the number of regularly viewed networks only increases at a fractional rate. It’s somewhat counterintuitive. More competing options actually results in a concentration of consumer choice. According to Nielsen, homes that receive about 75 channels watch less than 16 of them on average, just over 20% of the networks available. What happens when we double the available options to more than 150 channels? The consumer adds only four additional networks to their average viewing, for a total of about 20, or 13% of the networks available to them. These are indeed sobering statistics.

Spending Wave Buoys Makers of Network Gear

Bobby White (2.14.07)
http://online.wsj.com/article/SB117142538050108158.html?mod=technology_main_whats_news

New Web Services Spur Phone Firms to Invest In Increasing Capacity

Shows increased investment in not only increasing bandwidth capacity, but in alternative solutions to fix the seemingly never-ending demand for broadband. This article also supplies numbers about large telco investment in these technologies.

Companies from Australia's Telstra Corp. to AT&T Inc. are buying up new gear to upgrade the "plumbing" that carries voice and data traffic around the globe.

In recent weeks, Cisco Systems Inc. and Juniper Networks Inc. have posted annual sales growth of nearly 50%, among their strongest performances in years.

The good times look likely to continue for at least a while. Overall, North American telecom companies are projected to spend $70 billion on new infrastructure this year. While that's down from the $110 billion they shelled out during the boom year of 2000, it's up 67% from their 2003 total, according to industry tracker Infonetics Research.

World-wide, spending on new telecom infrastructure is expected to rise to $240 billion in 2008, up 19% from 2005. Moreover, a greater proportion of that spending is expected to be plowed into accommodating capacity-hogging Internet traffic like video

The new spending telecom providers have earmarked for boosting capacity accounts for a relatively small slice of their capital budgets. But it has provided a crucial boost to Silicon Valley networking companies like Redback. In 2003, Redback, San Jose, Calif., filed for bankruptcy protection. Then, in 2004, Redback introduced a new product called the Smartedge router, a device that helps deliver phone, Internet video and other services through a single "pipe."

Redback's Smartedge router was among the first of the new-style gear. It consolidated functions that control video services and customer management into one box. Juniper, among others, is set to roll out a similar device in coming months. BellSouth network officials who now work for AT&T say they haven't used the Smartedge router to prioritize data traffic, but instead for other capacity-increasing functions.

Qwest Treads Slowly in Fiber Rollout

Roger Cheng (2.8.07)
http://online.wsj.com/article/SB117090418422001834.html

Qwest is cautious to enter fiber market, allowing AT&T and Verizon to set the course. Many believe Qwest doesn't have the financial stability to make the upgrades necessary to be competitive against U-Verse and Fios.

Depending on development area, Qwest's slower adoption of fiber will effect choices of service providers for developers. This also shows the increased spending on fiber for faster and greater content to meet and exceed future demand.

AT&T and Verizon have poured billions of dollars into upgrading their systems to fiber. Verizon is spending $18 billion to connect many of its homes to the fiber-optic network. The company hopes to make FiOS TV service available to 18 million homes out of the 33 million homes in its landline operating area by the end of 2010.

AT&T is spending $4.6 billion to upgrade parts of its network with fiber-optic lines while using software to increase the speed of its network, enabling an Internet TV service called U-Verse. It hopes to make U-Verse available in at least 19 million homes by the end of next year.

Dan Yost, who runs product development and marketing for Qwest, said the company is working to replace copper lines with fiber ones in some markets, though he acknowledged the deployment was "not that extensive" in Qwest's 14-state operating territory.

Qwest has recently sold off assets giving them more financial flexibility to potentially put more dollars toward fiber investment; however for the time being they will still depend on DirecTV for television services and Sprint Nextel for wireless phone services. Most would agree that the push for more bandwidth will force Qwest to invest in upgrades regardless of their financial standing sooner than later.

Big MSOs Embrace the Evolving Set-Top

By Alan Breznick (2.7.07)
http://www.lightreading.com/document.asp?doc_id=116644

Three of the nation's largest MSOs are introducing set-top boxes which will open the way for more IP-enabled services in the home.

Docsis Set-to Gateway (DSG) set-tops can act as residential gateways, VOIP terminals, and other IP-enabled devices, supporting such new convergence services as video email and caller ID on the TV screen. They also can be used for unicasting, or delivering a unique video stream to each home and even set-top.

Richard Rioboli, VP of product platform engineering for Comcast, said the MSO's embrace of DSG technology is part of the company's drive to standardize different configurations. Without such standardization it would be tough for the company to introduce new cable services and applications quickly on a national basis.

Time Warner, Comcast, and Cox are beginning to introduce OpenCable Application Platform (OCAP)-equipped set-top boxes and TV sets in select markets. The OCAP middleware stack enables cable operators to offer the same interactive and on-demand services throughout the country. Plus, interactive application developers can create a single piece of software to run their applications on many different cable systems.

Comcast executives plan lab trials to start this winter as well as live OCAP deployments in several undisclosed markets before the end of the year. Meanwhile, Cox has begun testing several interactive TV services in Gainesville. Plans call for expanding the OCAP trial to other Cox cable systems later this year. In those new markets, Samsung intends to try out OCAP-based HD set-top boxes as well.

Lightspeed's Slow Start

Business Week Online

http://www.businessweek.com/magazine/content/07_07/b4021067.htm?chan=technology_
technology+index+page_more+of+today%27s+top+stories

Despite AT&T proclaiming that it will pump $4.6 billion into building enough fiber-optic cable and supporting technology to reach 19 million homes by the end of 2008, many to believe that AT&T will have a hard time cornering the internet/TV market as soon as they claim.


Technology glitches hobbled the rollout of Lightspeed last year. And though the TV service is up and running in fewer than a dozen markets with prices that undercut cable bills, a growing chorus of rivals, analysts, and engineers are skeptical that the network will offer enough bandwidth a few years from now to handle phone service, high-speed Internet, and multiple streams of high-definition TV.

Other operators have taken advantage of this slow start. Verizon is placing the most ambitious and risky bet. It plans to spend $18 billion—three times as much as AT&T—to lay fiber to every one of the 18 million homes it hopes to cover by 2010. AT&T is laying fiber into neighborhoods but is using existing copper phone lines to carry video the last few thousand feet. As a result, it will cost Verizon $1,750 to connect each home, vs. $450 for AT&T. Despite the higher price tag, ubs Investment Research expects Verizon to produce a return on its investment by 2011. The reason? It believes the Verizon network's higher bandwidth will lure more phone, Internet, and video customers—at higher prices—and thus generate about four times as much revenue as Lightspeed. On Jan. 29, Verizon backed up the theory when it announced that it ended its first full year of operations with 207,000 TV customers, representing 9% of the 2.4 million homes capable of receiving its video service in 2006. Just a few months ago, the company was hoping to finish 2006 with 175,000 video customers.

Doubts about AT&T's video project are fueling speculation it will have to buy one of the two U.S. satellite operators, DirecTV Group Inc. (DTV ) or EchoStar Communications Corp.(DISH ), to accelerate delivery of TV service.

AT&T remain confident in their decision to bet on a system that's more technically complex than Verizon's, arguing it will result in a TV service superior to anything else on the market.

687,000 FiOS Customers

http://www.dslreports.com/shownews/81280

"Verizon's fourth quarter earnings are in, and we'll skip right to the part we're interested in: Verizon says that FiOS TV was available to 2.4 million households at the end of last year. According to Verizon, 89,000 customers signed up for FiOS TV in the fourth quarter, bringing their total TV customers to 207,000. There's 687,000 FiOS customers in total, with 165,000 added in the fourth quarter. "Verizon Telecom added 142,000 more net broadband and video customers during the fourth quarter 2006 than it lost in primary wireline voice access lines," states the company."

Cable Confronts Bandwidth Crunch

Alan Breznick (1.24.09)
http://www.lightreading.com/document.asp?doc_id=115344&site=cdn&WT.svl=news1_1

Cable companies are finally recognizing impending bandwidth limitations, and gathering resources to address the problem.

Cable operators are now drawing up plans to boost capacity at both the headend and plant levels. Instead of debating whether the coming bandwidth crisis is genuine, they're looking at ways to confront the crisis by splitting fiber nodes in half, converting systems over to more efficient switched digital video delivery, testing pre-Docsis 3.0 channel-bonding technologies, and expanding their systems' RF capacity to 860 MHz or 1 GHz.

Cable technology strategists are also looking at boosting their QAM power, instituting out-of-band spectrum overlays, and upgrading to MPEG-4 video compression standards. They're even weighing such previously unthinkable moves as building fiber-to-the-home (FTTH) networks and adopting PON architecture, just like some of the big phone companies.

At a conference sponsored by PK Worldmedia Inc. in Houston Tuesday, found that increasing bandwidth consumption is threatening to overwhelm even their fastest broadband piplines. Conference speakers also noted that such prime cable rivals as DirecTV Group Iinc. and Verizon seem determined to outflank MSOs by offering several dozens or, in DirecTV's case, even hundreds of HD channels to their customers.

Dom Stasi, CTO of TVN Entertainment Corp., pointed out that his company now supplies 3,500 hours a month of VOD content to cable operators, up from a mere 150 hours per month in 2001.

Localizng the Internet: 5 Ways Public Ownership Solves the U.S. Internet Problem

By Becco Vargo Daggit, Institute for Self Reliance
http://www.newrules.org/info/5ways.pdf

This 32 page document, Localizing the Internet, outlines the benefits of publicly owned fiber lines. It summarizes quickly both pre and post-Telecommunications Act of 1996 regulations, the basics of broadband techology, the risks involved, and case studies of successful implementation of public owned fiber.

Their 5 arguments for public ownership are:

1. High-speed information networks are essential public infrastructure.
2. Public ownership ensures competition.
3. Publicly owned networks can generate significant revenue.
4. Public ownership can ensure universal access.
5. Public ownership can ensure non-discriminatory networks.

U.S. Broadband Penetration to Hit 60% in 2007, Led by DSL Growth

SILVER SPRING, MD -- (MARKET WIRE) (1.8.07)
http://www.marketwire.com/mw/release_html_b1?release_id=200951


About 60 percent of all U.S. homes will subscribe to broadband service by the end of the year, but cable operators will come precariously close to losing their majority market share, Pike & Fischer concludes in a new report published by its Broadband Advisory Services unit.

Cable operators will see their share of the high-speed Internet market fall to slightly more than 50 percent as adoption of standard DSL and, to an increasing extent, fiber to the home or node (FTTx), continues to help the major telephone companies net the largest number of new broadband customers, Pike & Fischer forecasts in its "Broadband Business Outlook 2007."

However, a growing array of on-demand and high-definition programming, together with aggressive promotional offers, will lead digital cable subscriptions to make up the majority of the industry's core video customer base.

Internet telecom blossomed, but payoff was elusive in '06

Bruce Meyerson (12.28.06)
http://www.azcentral.com/arizonarepublic/business/articles/1228biz-telecom1228.html

While 2006 showed less than stellar returns for IP telephone services like Skype. With Skype and similar innovators cable companies are prepared to strike back at in 2007.

No doubt the main event for 2007 will be the impending smackdown between the traditional phone and cable TV industries. The regional Bell companies, after losing millions of customers to rival phone services from cable providers in 2006, are just starting to ramp up their risky push into TV.

Verizon Communications Inc. expects its FiOS TV service will be available to 1.8 million homes by January. AT&T Inc. finally appears to be pushing past technological holdups with U-verse, maintaining the IP-based service will be offered in parts of 15 markets by the close of December.

The competitive response couldn't come a minute too soon, as cable companies have had a field day in the phone business thus far. Just over 6 million homes will have switched to cable phone service by the end of 2006, a gain of 2.5 million for the year, the industry research company TeleGeography estimates.

TeleGeography estimates that Skype users are on track to make over 27 billion minutes of computer-to-computer calls this year, with about half of them used for international long distance (all free).

While that sounds like a lot, it still represents just 4.4 percent of total international traffic in 2006, up from 2.9 percent in 2005.

YouTube generation needs more broadband

Robert Mullins, IDG News Service (12.27.06)

http://www.pcworld.idg.com.au/index.php/id;727534747

The increasing popularity of high bandwidth sites means a larger push for higher quality high speed broadband access.


Technology industry experts meeting in Silicon Valley recently said broadband Internet access in the U.S. needs to improve for the "YouTube generation" to really flourish.

An improved broadband network will better serve users of sites such as YouTube.com, at which millions of videos from the general public are shared online. YouTube was acquired earlier this year by Google, and Verizon Wireless announced in November plans to offer YouTube videos over its wireless phone network.

Although the U.S. broadband penetration rate topped 75 percent of households in September and is expected to reach 80 percent by the end of 2006, according to WebSiteOptimization.com, China is expected to surpass the U.S. as its broadband base grows rapidly. But more importantly, says Mossberg, U.S. broadband networks are generally slower than those in other countries. Faster connections will be needed to deliver full-motion video to portable devices. Services that deliver as little as 768 kilobits per second (Kbps) are considered broadband in the U.S., while services in Europe and elsewhere are much faster.

Panelists said 2007 will see more growth of on-demand content, such as music videos, television shows and movies, and more demand for easier connectivity between devices.

The growth of sites like YouTube is creating "massive amounts of content and there is going to be a continuing need to take and distribute that content. That will spur innovation of more consumer devices," said Chad Hurley, cofounder of YouTube.

The Internet accelerates while U.S. trails behind

Charles H. Giancarlo (12.14.06)

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/14/EDGOULJ5TB1.DTL

US internet speeds continue to fall behind the rest of the world.

Household bandwidth demand continues to increase and is expected to reach approximately 1.1 terabits per month per household by 2010 in the United States. For comparison, 20 of these homes would generate more traffic than the entire Internet of 1995. However, the demand is not being met by increasing supply.

The United States now ranks 12th in the world in the total percentage of citizens that subscribe to broadband access, lagging behind such countries as Iceland, Korea, Sweden, Belgium and Canada. The trend line is even worse. The United States ranks 17th for the growth of these high-speed connections, outpaced by nearly all of our economic peers. Our broadband speeds don't measure up either. Korea's citizens, for example, have access to 50 megabits per second connections, making Internet services at typical U.S. speeds "broadband lite," at best.