Posts by Doug Williams (bio)

Doug Williams | May 01, 2008, 05:16 PM
Western Mass Will Soon Be Surfing Like It’s 1999!

Having read the second line of today’s announcement by Verizon about its to-be-launched broadband services in 23 western Massachusetts communities (see prior post), I was immediately reminded of a scene from Austin Powers: International Man of Mystery, in which the following exchange took place:

Dr. Evil: Okay no problem. Here's my second plan. Back in the 60's, I had a weather changing machine that was, in essence, a sophisticated heat beam which we called a "laser." Using these ‘lasers,’ we punch a hole in the protective layer around the Earth, which we scientists call the ‘Ozone Layer.’ Slowly but surely, ultraviolet rays would pour in, increasing the risk of skin cancer. That is unless the world pays us a hefty ransom.

Number Two: [pause] That also already has happened.

I wouldn’t exactly characterize DSL as a “new service,” but I suppose for those without broadband access, it isn’t a false statement.

I figured Verizon’s PR department probably could have pulled an old press release, swap out a few town names, maybe change the prices, and save a bit of time. Lo and behold, I wasn’t too far off. Check it out: exactly 9 years ago, DSL was rolled out in Boston. Pretty similar message. Pretty similar speeds.

Doug Williams | May 01, 2008, 11:03 AM
Future Looks Rosy for United Online

In what can only be viewed as an effort to diversify, United Online, the discount dial-up ISP, yesterday announced plans to acquire FTD. Yes, that FTD.

This has got to be one of the biggest non sequitur mergers of all time.

Doug Williams | April 29, 2008, 02:16 PM
Verizon Residential DSL Continues Negative Trend

Verizon announced first quarter 2008 earnings yesterday, and revealed some interesting broadband statistics. While Om Malik noted that "Verizon's DSL growth is all but over," when you focus on the residential data, it's clear that residential DSL growth is over.

Verizon reported a net gain of 262,000 FiOS Internet customers this quarter, yet total residential broadband lines increased by just 243,000 -- which means total residential DSL lines declined by 19,000. (They declined by 1,000 last quarter, too.)

It comes as no real surprise that FiOS would cannibalize existing Verizon DSL customers, given the relative difference in speed and opportunity for triple-play bundling. How extensive is the cannibalization? On the conference call, Verizon EVP and CFO Doreen Toben acknowledged that 23% of new FiOS subscribers (about 60,000) migrated from DSL. If you do the math, that means Verizon saw just 41,000 new residential DSL subscribers this quarter. That's down from 194,000 from the year-ago period. Verizon has been hyping the roll-out of 7Mbps DSL service in more and more non-FiOS markets, so it will be interesting to see whether Verizon's future residential DSL numbers are bolstered as a result.

Keep your eyes open for Jupiter's updated Broadband Forecast, which should be out in the near future.

Doug Williams | April 23, 2008, 04:16 PM
Comcast Dumping Pivot?

Omniscient Karl over at DSLReports.com has obtained information from sources at Comcast that the company will cease offering its Pivot/Sprint wireless service to both new and existing customers beginning next week.

Lots of finger-pointing took place back in November between Sprint and the cable operators involved in the joint venture about why things weren’t working out so well. Sprint felt the operators didn’t do enough to promote the service, and decided to cease selling the Pivot offer inside Sprint’s retail stores. The operators claimed everything was rosy, but they failed to price the service at anything resembling a discount. Further, the goal of offering integrated features with other bundled services was apparently not compelling to consumers, particularly at Comcast's price points. That outcome fits pretty well with our survey data, which showed relatively limited interest in integrated media features involving a wireless phone – precisely the type of features that a cable operator like Comcast should have been able to deliver. (See this report for in-depth discussion and data on service integration.)

If Comcast really is dumping Pivot, it’ll be interesting to see how (whether?) they decide to proceed with a wireless play. It is hard to envision a wholesale agreement with AT&T Mobility or Verizon Wireless given the weak negotiating position Comcast would hold. Could it be time for a big facilities-based fixed services player to get behind T-Mobile or Alltel and take one of those providers to the next level?

UPDATE: No big surprise here, but it's not just Comcast. Time Warner and Cox have also confirmed that they too are pulling the Pivot plug. No word yet from Advance/Newhouse.

Doug Williams | April 22, 2008, 10:33 AM
More Attempts at Monetizing Skype

Yesterday, eBay’s Skype announced a new monthly flat-rate pricing schedules for domestic, North America, and international calling using SkypeOut. These plans include calls to both landlines and cell phones within the US, Canada, China, Hong Kong and Singapore; “free” calls to the other 30 countries are limited to landlines. “Unlimited” calling is actually restricted to 10,000 minutes per month (roughly 5 ½ hours per day) per Skype’s fair usage policy, but that is actually quite generous. Many U.S. incumbent local exchange carriers have a presumed ceiling of 6,000 monthly minutes for their own residential flat-rate local services, above which the carrier would suspect business use of a residential service.

Will these calling plans encourage use of SkypeOut in the U.S.? eBay/Skype are notorious for limiting the release of useful subscriber metrics, so that question will likely go unanswered. My sense is it will have a limited impact here in the U.S., for three reasons:

(1) Those consumers who previously used SkypeOut for international calling did so to take advantage of Skype’s relatively lower rates, so while the number of minutes may increase, there is not a tremendous opportunity to increase subscribership above current levels;
(2) Skype still offers free PC-to-PC voice chat and video chat, and to my knowledge free is still a lot cheaper than $9.95 per month; and
(3) The added convenience of placing a call to an actual phone rather than a computer will likely be outweighed by the inability to take advantage of unlimited calling to cell phones in most countries.

Clients are invited to view this recent Jupiter report on PC-based communications for data and analysis regarding consumer IM, voice and video chat, Skype, USB headset and webcam adoption and use.

Doug Williams | April 16, 2008, 03:50 PM
Who "Wears" a Yellow Highlighter, Anyway?

The FCC is holding its second public en banc hearing on broadband network management practices at Stanford University tomorrow, April 17. You can see the agenda and list of witnesses here.

The good news is that Comcast does not have any employees on the witness list, which means the public may actually get a chance to attend, rather than Comcast’s paid seat holders, who were identifiable at the February en banc hearing in Cambridge, MA by the conspicuous yellow highlighters clipped on to their shirts. Oh yeah, they were also the folks caught napping during the hearing.

Interestingly, no broadband service providers are on the witness list, so who’s going to argue against net neutrality? Oh wait, I forgot Martin, Tate and McDowell will be there.

For those of us not in Silicon Valley, you can watch a webcast of the hearing at VON TV. Seven hours staring at a 3" box on your PC screen? How compelling is that?

That VON TV is streaming the video is interesting in and of itself. Yes, it’s a division of Pulvermedia, widely reported to be in shut-down mode a couple of weeks ago. Could the rumor of its demise be greatly exaggerated, or is it just a slower-than-expected death?

Doug Williams | April 03, 2008, 12:49 PM
Comcast Launches DOCSIS 3.0 Broadband Battle Against…Qwest?

The folks over at Light Reading report that Comcast has launched its first DOCSIS 3.0 wideband service in Minneapolis/St. Paul. While capable of eventually achieving 160 Mbps download speeds, the wideband service is being launched with a cap of 50 Mbps shared downstream bandwidth and 5 Mbps upstream.

According to Mitch Bowling, Sr. VP of Comcast’s high-speed Internet division, the roll-out of wideband service in Minneapolis “had nothing to do about competition at all.”

That’s an understatement. Rather than tackle Verizon's super-fast FiOS service head-on in one of the many overlapping markets the two companies share, Comcast’s first bout will be against Qwest, in a market where Comcast already offers the faster broadband service (12-16 Mbps with PowerBoost, vs. 5 to 7 Mbps from Qwest). It is a cautious approach, and not altogether surprising, since it is nice to work out the kinks of any beta-type test before going prime-time. Comcast is targeting 20 percent of its footprint for DOCSIS 3.0 upgrades by year-end, so it probably won’t be ducking Verizon for long.

Underscoring the “not about competition” position is the fact that this consumer-grade service carries a luxury price tag of $149.99 per month, more than triple its current $42.95 per month non-bundled cable modem offer. Our research confirms that a reasonably large segment of consumers are interested in paying for faster broadband connection speeds, but adding $100+ to the monthly broadband budget in a tedious economy is likely way beyond the pain point for the vast majority of households. I suspect Comcast may need to do some behind-the-scenes discounting in order to achieve meaningful penetration levels for the market test.

Doug Williams | March 24, 2008, 10:55 PM
The Rich Get Richer

That’s kind of an odd title, considering that I’m referring to the fact that Verizon and AT&T just shelled out $16 billion in the FCC’s recent spectrum auction. While the balance sheet may be a little lighter for these companies, it is undeniable that they have acquired very valuable assets in the process.

While the bidding exceeded the threshold for triggering the “open access” standards lobbied for by Google and adopted by the FCC, we’ll all have to sit and wait to find out exactly how this plays out for consumers. The open access standards are certainly beneficial in terms of providing choice for devices, features and content provided wirelessly. Still, the issue of access to the network – the wireless local bottleneck, if you will – means that Verizon and AT&T have only increased their already strong position in the market.

I think a lot of people were hoping for a new entrant like Google to come along and shake up the market, but that was never Google’s intent. Google’s angle is to control the customer experience on the device, which the open access standards will enable, while leaving the heavy lifting of network operation to the operators themselves.

Looking farther down the road, it is realistic to expect seamless integration between wireless services and their wired counterparts in the home. AT&T and Verizon are already strong participants in the home broadband space, which is currently a duopoly market structure between telcos and cable operators. The spectrum auction results make the incumbent telcos even stronger, particularly when taking the longer-term view of the market.

How will the cable operators react to this? How will the auction results affect the smaller national wireless providers, like T-Mobile, Sprint and Alltel?

For now, the status quo remains. I’m anxious to see if WiMAX providers like Sprint and Clearwire can take back the mic.

Doug Williams | March 20, 2008, 12:26 PM
FCC Adopts New Broadband Reporting Requirements

Yesterday, the FCC adopted an Order seeking to “increase the precision and quality of broadband subscribership data collected every six months from broadband service providers.” The Order has not yet been released, but the bottom line appears to be that data will be gathered at a more granular level, relying on census tracts rather than geographic zip codes. According to the Census Bureau:

Census tracts are small, relatively permanent geographic entities within counties (or the statistical equivalents of counties) delineated by a committee of local data users. Generally, census tracts have between 2,500 and 8,000 residents and boundaries that follow visible features. When first established, census tracts are to be as homogeneous as possible with respect to population characteristics, economic status, and living conditions.

Carriers are also required to report subscriber speeds according to the following tiers:

1st Generation Data – 200 kbps to 768 kbps
Basic Broadband Tier 1 – 768 kbps to 1.5 Mbps
Broadband Tier 2 – 1.5 Mbps to 3 Mbps
Broadband Tier 3 – 3 Mbps to 6 Mbps
Broadband Tier 4 – 6 Mbps to 10 Mbps
Broadband Tier 5 – 10 Mbps to 25 Mbps
Broadband Tier 6 – 25 Mbps to 100 Mbps
Broadband Tier 7 – Greater than 100 Mbps

(These are download speeds only, so it is unclear at this time whether carriers will be required to report upload speeds, and if so, what speed tiers have been defined.)

Kudos to the FCC for (finally) moving in this direction. This is clearly a policy-making tool, which the FCC will be able to utilize to develop further policies to encourage broadband deployment.

Ironically, the FCC concurrently released its latest High-Speed Services for Internet Access report and adopted (but has yet to release) its Fifth Section 706 report to Congress, in which it concludes that broadband services are currently being deployed to all Americans in a reasonable and timely fashion. (See press release above.)

Of course, these reports and the conclusions drawn rely on the policy guidelines and data-gathering that the Commission just determined to be insufficient.

Doug Williams | March 18, 2008, 05:28 PM
Service Integration JupTel - March 19th

Please join me on Wednesday, March 19th at 11:30am EST for a JupTel on my latest Vision Report, entitled "Service Integration: Enhance the Bundle to Promote Retention."

Clients can register here, and you can access the report here.

Broadband service providers (BSPs) are in the early stages of integrating services within their bundled offerings. In so doing, BSPs will differentiate their products and enhance the value proposition of bundling beyond a single bill offering at a discounted price, which is an important strategic step as the consumer broadband market continues to mature.

Join Doug Williams, JupiterResearch's Home Broadband and Communications analyst, for a presentation on Service Integration that addresses the following key questions:

• Which service bundles have the highest penetration rate among consumers today? • In which integrated service features are consumers most interested? • Which strategic steps must BSPs take as they implement service integration?

Doug Williams | March 12, 2008, 03:01 PM
Marketing Telco TV

Yesterday, Light Reading reported that AT&T claims 90 percent broadband penetration of its U-verse TV subscribers. This statistic highlights an important difference between how AT&T and Verizon are attacking the TV market with their new fiber-enhanced services.

AT&T is focusing on acquiring the TV subscriber first and foremost, and hoping that broadband and voice services will follow. In fact, customers cannot subscribe to AT&T Yahoo! High-Speed Internet U-verse enabled (that just rolls off the tongue, doesn’t it?) on a standalone basis. Perhaps this was an implicit acknowledgment that no one would do so, since it was only recently that AT&T began offering U-verse broadband at download speeds exceeding its current DSL speeds.

Verizon, on the other hand, offers up FiOS Internet or TV on a standalone basis, if the customer so desires. In the past, Verizon has even launched FiOS Internet prior to receiving its local TV franchise agreement. Results from the fourth quarter of 2007 reveal that Verizon has 61 percent overlap between FiOS TV and FiOS Internet, up from 30 percent overlap a year ago. Clearly, customers are moving migrating toward the Internet/TV bundle despite the availability of the standalone offerings.

So not only have these companies approached the last-mile network design differently, they’ve each chosen distinctly different marketing approaches as well. It is of course too early to tell which approach is working better, but it's something I'll be keeping an eye on.

Jupiter recently collected consumer survey data on factors that influence the purchase of bundled services; clients should stay tuned for a Vision Report on this issue towards the end of the summer. If you can’t wait that long, set up an Inquiry through your CSM and we can talk about some of the topline numbers.

Doug Williams | February 29, 2008, 03:09 PM
There’s One Lantern in the Old North Church

Greetings and salutations, and thanks for reading my first JupiterResearch blog. Many more to come.

Word came yesterday from Verizon that the company is upping its broadband investment in Massachusetts by $200 million this year. That’s another 1% on top of the $20 billion commitment to rolling out FiOS. So what's the fuss?

A while back, Verizon told state leaders on Beacon Hill that the company would take its ball and go home if a statewide cable television franchise bill was not approved. It wasn’t, so Verizon stopped petitioning for new local franchises while it completed existing projects in the state. I’m guessing those in-progress projects must be nearing completion, because Verizon’s announcement states that it is planning to bring FiOS TV and Internet services to an additional 30 communities in the state. I am personally excited about this because my town is now on Verizon’s list of FiOS-worthy communities. Never mind that the company hasn’t yet negotiated a franchise arrangement with the local authorities in Marblehead, which allegedly was the cause for delaying further deployment in communities throughout Massachusetts over the past year.

Less personally gratifying yet no doubt of greater importance overall is Verizon’s announcement to roll out its DSL service to 23 communities in western Massachusetts that currently do not have access to broadband. Our survey data indicates that 29 percent of dial-up Internet access subscribers have not migrated to broadband due to lack of service availability. The FCC and individual states have begun investigating how to improve broadband availability in rural areas. It’s nice to see that Verizon has acted first in this instance…or have they? Back in August 2007, Governor Patrick announced plans for a $25 million broadband incentive fund that Verizon would likely look to tap, which could be the reason why these communities are only now getting their first taste of broadband. What will it take to bring broadband to the remaining handful of unserved Massachusetts communities?

Hope you got the Revolutionary War humor in the blog title. Marblehead does have its own Old North Church, but it isn’t the famous (sacred?) one.