I’m still a bit bearish on the long-term outlook for revenue generation from value-added services. Already, many BSPs (AT&T, Comcast, Time Warner, Cox, Charter, Cablevision…) are bundling security service into their broadband access product. And as the broadband market continues to mature, BSPs will look for ways to sweeten their offers in order to retain current customers and encourage defectors from competitors. I’d argue that nickel-and-diming consumers is not the best long-term strategy here, based on our consumer survey data demonstrating relatively low interest in paying additional fees for value-added services. In terms of attracting and retaining customers, I think this is a good example of how free is worth more than $5 per month. It only takes 50,000 triple-play customers to generate $60 million in annual revenue.

I can’t help but wonder whether a $5 Internet security fee is today’s version of the ILECs’ inside wire maintenance charge. And that in turn makes me wonder whether Verizon has an inside wire charge for its FiOS-wired homes, and whether it is the same as the charge for copper-clad households. I’ll find that out and report back here.

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.

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

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.

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.

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.

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?

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.

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.

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.