Posts by Doug Williams from April 2008

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.