Posts by Doug Williams from March 2008

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.