Posts by Ian Fogg (bio)

IanFogg | May 12, 2008, 12:36 AM
Joined Twitter

Decided to try twitter again. Follow me here.

IanFogg | May 07, 2008, 11:13 AM
BT Broadband Goes Mobile, Sortof

[updated 15.04 UK time]

BT has just announced that they are bundling a mobile smartphone service as part of their home broadband package. Interestingly, this new bundle will be presented as a new top tier for BT's Total Broadband home DSL, rather than as a mobile tariff.

The name for this service is BT Total Broadband Anywhere (my emphasis). There's a good product here, struggling to get out, but BT's positioning is in danger of putting the product at risk.

BT have built some nice enhancements to the Windows Mobile UI, similar to HTC's efforts. They've extended the BT Digital Vault, Broadband Talk (VOIP), BT Yahoo email and a number of other BT services out onto the mobile phone, where previously they were limited to use at home on BT's DSL.

Most interesting is BT's choice of Windows Mobile and qwerty for a consumer mobile Internet play: This is BT thinking differently from received wisdom in Europe that qwerty == business. I agree, and think there's a place for qwerty on consumer-centric devices here.

But there are devils in the detail: Broadband Talk only works outside the home within WiFi hotspot coverage. Why? Well, while the proposition talks about broadband, the actual mobile service is limited to GPRS speeds -- i.e. narrowband -- and GPRS is too slow for VOIP.

Equally poorly, the service includes just 10Mb of mobile data in the bundle. BT offer an unlimited mobile data bolt-on for UKP 5 per month. Astonishingly, BT appear to offer no higher amount of bundled mobile data across their four mobile tariffs (e.g. BT BB Anywhere 600 vs Anywhere 250 etc.). This compares poorly with the major mobile players who are moving to between 500Mb and 1Gb data on a fair use basis. For example, Vodafone are bundling unlimited 3g mobile Internet as standard for new contract customers. BT must be careful to ensure their use of the term "unlimited" is clearly linked to the 'DSL' part of the bundle and not the 'anywhere' piece.

BT argues that usage of its WiFi hotspot network is sufficient for them to call this broadband anywhere. BT's challenge is that they intend this to be a mass market product, and only savvy early adopter types are going to understand the difference between unlimited use on (the right) public WiFi hotspots, or at home, but not anywhere else.

BT are also limiting their future positioning when they secure a suitable 3g MVNO/roaming tariff. If this service is marketed as broadband, what will a true 3g service be called?

IanFogg | May 01, 2008, 04:37 PM
Vodafone: Unlimited Mobile Internet Offered for Free

This move by Vodafone is a game changer for mobile Internet usage. In short they are offering mobile Internet access for free to their contract customers. The data limit is generous too: 500Mb (Which is an enormous amount to use on a mobile handset. I consider myself a heavy user, and I consume just 200-300Mb mobile data per month.)

For comparison, T-Mobile UK offer a mobile Internet add-on for UKP7.50 a month, with a 1Gb fair use limit.

This has many many implications. It removes one of the major barriers for consumers to try out mobile Internet. It should help Vodafone to defend its contract average revenue per customer, and will increases differentiation for contract tariffs over pre-pay.

iPhone pricing now looks like an even less attractive offer. Up to now, the circa 270ukp iPhone handset price and 35ukp monthly tariff (and up) costs were offset by the unlimited mobile Internet data O2/Apple included. Now, that advantage vanishes. iPhone will now have to compete with Nokia smartphones, offered for free, and combined with tariffs starting at 25ukp a month with free mobile Internet access. Those Nokia smartphones also have HSPA 3G broadband speeds, not the iPhone's dial-up speed EDGE. I expect O2/Apple to react by further dropping iPhone prices.

The other aspect that intrigues me is how Vodafone will discourage laptop owners from usage. This tariff appears good enough that some Vodafone customers may choose not to pay for mobile laptop broadband access. As 3 has demonstrated, there is a lot of pent up demand among laptop owners for good value mobile Internet access. The devil here will be in the detail of the Vodafone tariff.

The impact for the other operators will be just as great. This announcement will have aftershocks that will be felt throughout the mobile industry.

More to follow, when my French colleagues return to the office after May day.

IanFogg | May 01, 2008, 02:29 PM
BT's Long Game, More ADSL2+ and 21CN

BT's launch of ADSL2+ with 21CN yesterday isn't going to make a vast difference to the ISP retail market, or to consumer broadband speeds. Initially, under one million households will benefit, none of which are in London. Even by May 2009, when BT will reach approx half of UK households, its footprint will be largely within the area already covered by the existing LLU ADSL2+ networks of O2 and Sky, and also within VirginMedia's HFC network geography which offers similar speeds.

BT's major competitors -- Sky, Carphone Warehouse, O2, Orange, Tiscali -- have largely switched away from using BT's wholesale packages in urban areas. So, the main short term beneficiary of this launch, will be BT's retail division plus the declining mass of small ISPs that lack their own LLU network. For those independent niche ISPs, this launch may be too little, too late. Further consolidation is likely. Ironically, BT may be the purchaser of the small guys, if regulators continue to allow it.

The long term impact is quite different. BT is building the foundations for putting fibre into the last mile, eventually. To gain speed benefits from fibre, the backhaul capacity to the exchanges and BT's core network capacity needs to be greatly increased. Otherwise, the speed bottleneck shifts from the quality of the copper telephone line in the last mile, to back within the ISP network. (Even now, the UK has seen some issues even with ADSL1 backhaul capacity limiting speeds for users with telephone lines that run at the full ADSL1 speed of 7-8Mbps, i.e. contention.)

BT is playing the long game, and as a result is ceding ground in retail broadband acquisition now. This is a risky strategy given the ability to execute of BT's ISP competitors, most especially Sky.

IanFogg | April 30, 2008, 03:53 PM
BT Goes Slow with New ADSL2+ Broadband Speeds

BT's Broadband Connect is late (originally due January), and yet will initially only be available to a tiny fraction of UK households (under one million homes and businesses *).

BT's launch is even more tardy compared with others:

- BT's UK ADSL competitors -- Sky, O2, Be -- have been offering ADSL2+ to a wider footprint than this for a couple of years.
- Similarly, VirginMedia offer ADSL2+ equivalent speeds, to many more households.
- Elsewhere in Europe, ADSL2+ launched years ago: French ISPs starting offering ADSL2+ back in 2004, and are now in the process of major fibre to the home broadband network (FTTH) rollouts.

If this is BT's 21st century network, then those fibre (FTTH) networks are for the 22nd century.

BT appear to have reverted to the sloth of the Home Highway period, rather than building upon their more recent successes in extending DSL's UK availability so widely. (Home Highway was BT's late 1990s ISDN -- narrowband -- product that launched in the UK at the same time the rest of Europe was rolling out broadband).

I would love to say something more positive about this announcement, but BT appear to have gone very quiet in their analyst communications on 21CN and Wholesale Broadband Connect. So, all I have to go on are the details of the product offer, knowledge of other European markets, and what I hear from UK ISPs that sell BT's wholesale products... and none of that looks good!

* BT say 'available from exchanges serving around one million homes and businesses' therefore, given some of those telephone lines will not support ADSL2+ speeds, the actual number of homes and businesses that will be able to benefit is even lower than one million!

IanFogg | April 30, 2008, 10:48 AM
Why VirginMedia Now Has BBC iPlayer on its TV VOD Service

VirginMedia has secured iPlayer content for its VOD service. This is an approach I advised Internet video suppliers to take in this report. It's great to see that traditional TV industry players like VirginMedia better understand the potential for free Internet VOD than do two out of the three leading games console makers, despite those games console makers' video strategies.

There are two reasons offering iPlayer on the normal TV VOD platform makes sense for VirginMedia:

1. Offers VirginMedia's users better picture quality than the PC Internet version of iPlayer and displays the programmes on the TV through the normal cable set-top box. This increases the value of VirginMedia's TV offering to consumers and should help customer retention.

2. Reduces the pressure on VirginMedia's overstretched broadband system. More here, under fig 3, especially.

IanFogg | April 30, 2008, 10:28 AM
More Console Positioning Fault Lines: TV and VOD

This is a follow-up to yesterday's post on understanding the game console makers' strategies.

The console owners approach to video on demand (VOD) and TV also highlights their divergent marketing:

PS3 and Sony - See the PS3 as a TV and video hub, with content available for remote access using a PSP. They will launch a digital TV tuner later this year that will enable consumers to record TV onto the console's hard drive (but the availability date has slipped), and will help expose the PS3's video abilities to consumers. On demand is also a key focus, as is securing pay TV operator partnerships. But, Sony are uninterested, so they say, in securing BBC iPlayer content.

Microsoft Xbox 360 - Have an on demand platform live in the US and UK with pay per view movies and TV. Separately, they've also struck a VOD deal with BT so Xbox can act as a player for BT's video on demand content. Microsoft have little free, or no, on demand TV content with which to grow the consoles video audience. They are trying to monetise a nascent activity -- video consumption on consoles -- before developing a video-watching console audience. Like Sony, Microsoft appear ambivalent to building Xbox360 iPlayer support.

Nintendo Wii - Say video and TV is not a core focus, and the Wii is all about games and expanding the games market. However, together with the BBC, Nintendo have enabled BBC iPlayer support, which Nintendo plan to draw consumers to use their Wii's more. In particular, like the Wii news or weather channel, iPlayer will encourage members of Wii-owning households who do not use the Wii for games, to try it, thus securing more games revenues...

With >1 million weekly users of the PC version of iPlayer, just months after launch, I know which of the above strategies makes more sense.

Unfortunately for ISPs, all of the above will increase their broadband cost base... as consumers watch more high quality Internet-delivered video... which hits ISP networks and for which ISPs currently have no revenue-driving value chain position. More on this point later.

IanFogg | April 29, 2008, 11:33 AM
GTA4 Stolen / Wii Fit for Purpose

Want to understand the positioning of the leading consoles? Ignore the talk. Look at actions. There's nothing that highlights the faultline better than console makers' current marketing campaigns:

GTA IV (MS and Sony) vs Wii Fit (Nintendo).

Microsoft and Sony are pushing GTA4 hard. The former with exclusive downloadable content, the latter with a special edition PS3. The GTA series clearly appeals to core gamers: they're applying its teachings to the real world by stealing the game. Piracy is near impossible to stop through force and legal action alone, tactics to counter piracy need to win over hearts and mind, not encourage theft! Read this Jupiter report to understand the aspects of piracy that most impact ISPs in 2008 and their response.

Nintendo continues to invent new markets for games consoles and to differentiate. With Wii Fit they hope to replicate Brain Training's success on the DS and open up the Wii to new audiences. In Europe, early indications are that Nintendo is succeeding and matching its earlier Japanese success (>1.6 million Wii Fits sold).

IanFogg | April 28, 2008, 12:41 PM
New Skype Mobile App

Skype Tests Software for Mass-Market Mobile Phones. It's interesting but not anything like as earth shattering as their press release headline suggests.

The applet offers text chat, buddy list, and incoming and outgoing calling. But the telephony part uses Skypeout credits for a user to receive incoming calls so is little different to simply using the call forwarding option in the desktop Skype application.

Chat and presence requires the use of a data connection -- unlimited mobile internet tariff highly recommended -- so the applet both costs cash for calls, and needs a mobile data package! This isn't the innovative VoIP world that Skype users have been expecting with Skype's long-planned mobile initiative.

The other downside is the handset support. The application is a java applet that works on a selection of mainstream and smartphones, but there are some odd omissions, presumably due to the problems of mobile application development: Nokia's N95 and N80 are supported, but the similar N82, N77, N96 and N81 are not, for now. Hopefully, Skype will expand the range of handsets before taking this out of beta.

For now, independent start-up Fring, is closer in spirit than this to a true Skype mobile application, and works on many handsets.

There's a few other official Skype mobile options: for Nokia Internet tablet users; for Windows mobile users; or for those in the market for a new phone (3's Skypephone) but none of these are ideal mobile applications for various reasons.

IanFogg | April 22, 2008, 03:11 PM
Competition and FTTH in France

France continues to set the pace on fibre broadband roll outs in Europe. The debate here, is already focused on how to ensure competition between the various under way FTTH network deployments especially with regard to the duct access needed to make deployments efficient and keep costs down.

The alternative operators are unhappy, the incumbent is moving its ground to head off regulatory intervention.

Like the past LLU experience, ARCEP is proving itself to be an savvy and effective regulator in tackling knotty issues, and so enabling both network investment and competition.

Bottom line - the FTTH situation and necessary debate in France is far advanced of elsewhere in Europe.

IanFogg | April 22, 2008, 03:07 PM
The F Word

Isn't digital all about freedom and flexibility, not just free?

IanFogg | April 17, 2008, 01:32 PM
One Small Step for Ofcom on UK Fibre

Ofcom has just announced a consultation into 'Next Generation Fibre for New Builds'.

Key points here, many have been missed by the press coverage:

• This is just a consultation, not a decision on how to regulate such networks.
• Looking at green field housing developments is the easiest regulatory aspect of fibre for Ofcom to consider, but it only covers a fraction of total households. For new build developments, there are no existing LLU operators using the copper telephone network that fibre would bypass, and no existing HFC cable networks (i.e. VirginMedia) that will lose catastrophic value when overbuilt by (true) fibre.
• Again, as ever, the UK is slow to the party with fibre. France, Sweden, Netherlands, Japan, even the US, as well as the rest, are and will remain, far ahead.
• The real reason for doing this consultation now, is the very small difference in cost for laying new copper vs fibre for green field sites, and not a business case on the revenue side (which is problematic). Additionally, there seems to be little real enthusiasm on Ofcom's part to assist with accelerating fibre builds by laying down clear ground rules for operators.
• Without an Ofcom statement on its fibre regulatory approach -- a consultation isn't sufficient -- it is impossible for an operator to create a solid fibre broadband business case.
• For the immediate future, UK residents will need to move house to receive fibre, for example to Ebbsfleet.
• When they happen, fibre broadband roll outs will inevitably lead to a new digital divide.
• For all the talk of fibre here, the UK's incumbent is astonishingly still to roll out ADSL2+ over copper.

IanFogg | April 16, 2008, 03:50 PM
Fring VoIP on iPhone First Take

A beta of Fring has just been launched for Apple's iPhone. The downside is that it's only available for jailbreaked iPhones (ie those that have been hacked to allow unauthorised third party software to be installed).

Quick observations, prior to trying it out:

• Skype calls on iPhone are now possible.
• As VoIP applications are not going to be allowed on the official iPhone application store, Fring has nothing to lose in releasing its application for jailbreaked phones now.
• The limitations on official iPhone applications look like they will give a prolonged lease of life to the unofficial jailbreak community. Essentially, tight restrictions on the official development SDK are leading to a black market situation with the jailbreak folks. I'm slightly surprised here: I've not been wildly impressed with any of the unofficial applications so far and prior to February had been expecting Apple's iPhone SDK to be jailbreak's death knell.
• Fring is not the first commercial application to be released for use with the jailbreak installer (see Devicescape), but with the official option looming, Fring won't open flood gates to commercial apps on jailbreaked iPhones unless developers are unable to do what they want with the official SDK.
• Consumers will be drawn to Fring for IM text chat as much, if not more, than for its VoIP abilities.
• Fring for iPhone is still a beta. The jury is out on whether it will match or surpass the Series 60 version's quality, or whether iPhone Fring will be close or below the more cumbersome Windows Mobile port. All mobile applications are not created equal, even if they are from the same company and try to do the same thing: the various mobile phone OS's are better or worse at different things.
• It's iPhone only. The Touch lacks a microphone and speakers.
• Fring's VoIP will only work smoothly on WiFi. Edge latency is too poor for VoIP. On other mobile phone platforms, Fring switches to a push-to-talk type experience for VoIP on GPRS or Edge connections. Here, it looks like Fring have chosen to limit VoIP to WiFi only. When a 3g iPhone arrives, Fring should be able to work over the cellular connection too.

Everyone, please take note, I'm not against developing mobile applications or widgets. I like Fring.

But my view continues to be that given the cost of development of mobile software, and the highly balkanised handset market and mobile audience, creating a mobile application is only worth the trouble if the result delivers a product that couldn't be done with a cheap mobile website. Fring's VoIP and IM application meets those criteria.

More on mobile VoIP in this report:
Competing with Free Communications

and more on IM here:
Instant Messaging Growth, Quantifying the Link Between Skype, IM, and Social Networks

IanFogg | April 16, 2008, 02:33 PM
The VirginMedia Brand and Net Neutrality

So, net neutrality is bollocks? Virgin Media's CEO Neil Berkett sounds like he's a little out of his depth here. In Europe, bus lanes help buses go faster, as the lanes are less congested with other traffic, and not slower as he implies.

Worse, there is a knotty communications conundrum for ISPs here: For consumers, boosting one company's content delivery speeds, will look just the same as slowing or blocking others. Consumers will just see the difference in relative speeds. They will have no idea whether one content site is being degraded, or the other boosted, or whether both processes are taking place.

Also, taking payments from the content industry for higher quality and higher speed content delivery, damages ISPs' goal of being seen as just a mere carrier that is not responsible for what passes over their networks. This is a pandora's box of future problems for ISPs...

VirginMedia looks to have decided to go down this path: it's talking to Phorm on behavioural targeting; open to payments from content companies; is traffic shaping users heavilly to control its bandwidth costs; and is the lead UK ISP advocate of three strikes bans for persistent file sharers.

The problem for VirginMedia, is that these actions are at complete odds with its strategy of differentiating from other ISPs on broadband speeds as well as sitting extremely ill at ease with the Virgin brand.

VirginMedia is rapidly gaining a reputation as the friend of large companies, rather than the consumer champion that other Virgin-branded businesses have successfully positioned around in the past. So much store was placed on the Virgin name when ntl and Telewest switched brands in February last year that it's a travesty not to play to the brand's strengths as the consumer's friend.

IanFogg | April 10, 2008, 11:14 AM
Phorm and ISP Business Models

Phorm's model is yet another example of ISPs looking for revenue sources beyond the consumer, as consumer broadband prices have been falling. This is a further example of the net neutrality debate, although the various articles about Phorm haven't used the 'n' words.

I've held off writing about Phorm until I had the time to speak to the company and delve a little deeper into how it works.

John and Nate are both right that there is nothing inherently wrong with advertising using behavioural targeting. But there are several key differences that make ISP-level monitoring more scary and intrusive for consumers than the existing approaches of companies like Google:

• An ISP is able to use behavioural modelling to track every site a consumer visits, not just a selection of sites.
• Consumers are often locked in to 12 or 18 month broadband contracts. So, there is a considerably greater switching cost for consumers than there is for current behavioural tracking where consumers may simply choose not to use a particular search engine.
• As we identified in the net neutrality report, the consumers that care most about the performance of their Internet connection are both high value and very vocal.

For these reasons, ISPs that seek to exploit this new advertising revenue opportunity should deploy it differently to the current approach of Phorm and its partners:

• ISPs that are positioned as quality brands, such as BT, must ensure that targeted advertising models do not tarnish their brand. Running a series of trials with tens of thousands of live consumers, without their consent, was a stupid thing to do and should not be repeated.
• ISPs should consider deploying Phorm-style behavioural tracking on lower priced broadband package tiers rather than on higher priced products or on all products. If the ISP has a quality positioning this differentiates the tiers and will assist the ISP in up-selling consumers. ISPs positioned around value and low pricing, such as Carphone Warehouse, are the natural ISP partners for Phorm.
• Opt-out is inherently more scary for consumers than opt-in. The problem for the ISP is that this is a scale business and with an opt-in model, Phorm will need to improve the consumer carrot from its current anti-phishing functionality. ISPs that differentiate on what they do based on package tiers will be better placed - ISPs could have opt-out on lower priced broadband package tiers, and opt-in on quality tiers.
• ISPs need to reconcile different parts of their package and remove contradictions.There is little point in stressing and supplying for free online security and privacy products as part of the bundle on the one hand, and yet separately deploying Phorm-style behavioural modelling which may create privacy worries.

IanFogg | April 09, 2008, 06:58 PM
iPlayer and ISP Business Models

The debate raging between ISPs and the BBC over the iPlayer catch-up TV service highlights the strain that ISP business models are under.

In essence, a combination of fierce inter-ISP competition and the confusing marketing of broadband packages, has led to a tailspin of residential broadband pricing as consumers choose the cheapest offer. ISPs are simply receiving less and less (broadband Internet) revenue from each consumer, so they are seeking revenues from other sources such as content providers ie the net neutrality debate (read this net neutrality report), or through behavioural advertising models (e.g. Phorm and soon others), or through multiplay bundles (read this report on multiplay).

Alongside this declining per user revenue, Internet traffic is increasing due especially to the rise of video services such as iPlayer (UK), Hulu (US), 4oD (UK), Sky Anytime (UK), Joost, Babelgum, Youtube, Flickr, etc. etc. as well as the pirating of tv programmes and movies using peer to peer networks. So, ISPs' bandwidth costs are rising.

ISPs are attempting to control these traffic costs. Some ISPs have opted to impose explicit data volume usage limits on broadband users. Others have increased the degree of traffic management they deploy so reducing broadband speeds for consumers that exceed (sometimes secret) preset thresholds, or lowering speeds for certain applications (e.g. p2p) . Some of the ISPs that used the above tactics, have continued to market their broadband as 'unlimited', or in a couple of cases as fibre optic. Both of these tactics are misleading and encourage consumers to pick the cheapest broadband product available.

So, it's not a surprise that Tiscali are complaining about iPlayer and are looking to achieve revenues from content providers rather than consumers. As a service, iPlayer has gone from having zero users to a reported more than a million weekly users in just nine months.

Unless either: (1) ISPs can agree on a way to market broadband clearly, so consumers can differentiate between them, and understand the benefits of more expensive packages; or (2) charge content providers for priority carriage, then ISPs will continue to struggle to make any money out of broadband directly and will have to reply on other parts of a bundle to drive profitability.

iPlayer could be the final nail in the coffin for pure-play ISPs. I don't see blocking or degrading iPlayer as being a viable option for any ISP as it is a BBC service. So, iPlayer could drive further ISP consolidation and lead to less consumer choice.

Most pure play ISPs are small operations, Tiscali are alone among the UK's main ISPs in being mainly a broadband play: Carphone Warehouse have a stated strategy to use broadband to drive profits from the bundled telephone service with broadband serving as an acqusition carrot; likewise VirginMedia see broadband as an acquisition tool for the other parts of their quad play; Sky plan to use broadband to deliver on demand TV; BT likewise, see broadband as a strategic plank of their business and central to retaining retail customers; Orange and O2 seek to do fixed-mobile bundles and will in time attempt to offload mobile traffic onto consumer DSL connections.

Only Tiscali is a classic ISP business and tellingly they are almost certainly up for sale.

IanFogg | April 02, 2008, 01:25 PM
Unlimited Broadband = 12 Minutes

Below are the data limits listed on VirginMedia's traffic management page. These data limits apply during the peak hours between 4pm and 9pm. When a customer hits the data limit their speed is cut and then the lower speed stays in force for five hours.

Separately, on VirginMedia's own broadband frequently asked questions, Virgin say:

"What does unlimited broadband mean? No download limits. Unlike some of our competitors, you get unlimited° downloads as a basic right so you can load up on music, films...whatever you're into.

VirginMedia traffic management page:

This, remember, is the ISP that has persuaded the ASA to allow it to advertise "super dooper fibre optic broadband", when VirginMedia's network is really a standard hybrid fibre-coax network (ie HFC, and which because of the coax element has tremendous issues if consumers on the same street use the service too much, unlike a true fibre to the home network).

And, the ISP industry wonders why they aren't able to persuade consumers to pay more for quality, unlimited, broadband! If the industry wishes to increase its ARPU then it needs to be genuinely open and honest about how it communicates broadband package details. Consumers need to know which packages offer better features and performance, or more data usage.

The implications of the above table for the content industry are hideous as most consumers will be using either the M or L package tiers:

• A single iPlayer TV programme download is likely to trigger the speed drop on the M tier.
• One Playstation 3 game demo download will trigger it on both M and L package tiers.
• One (paid and legitimate )movie download will likely trigger a user's speed to be cut on both M and L package tiers.
• Most consumers will probably not realise why their download is going slowly, and will likely blame the content provider rather than VirginMedia, or just give up.

IanFogg | April 02, 2008, 11:59 AM
Brand Madness

If other mobile operators copy T-Mobile and trademark similar aspects of their brand, and worse then enforce them as T-Mobile appears to be with Engadget Mobile over the latter's use of the colour magenta... I can see some nasty implications for anyone writing about the UK mobile industry.

Or, at least, this will overly restrict the options when creating a logo for a mobile-related site or service.

We'd all have to stop using the letter T, the number 3, we'd need to find something else to breathe, only talk about stale food, avoid using the colours orange (plus red, blue, green, and of course magenta).

Crazy.

Common sense needs to prevail here.

IanFogg | February 28, 2008, 12:56 PM
VirginMedia Results: Multiplay good, but ARPU down.

Today, VirginMedia report their q4 2007 results. As usual, as an industry analyst I'll comment solely on the operationals. Note - this is being written ahead of the conference call.

Key points:
- Broadband customers are up year-on-year to 3.5m using VirginMedia's hybrid coax-fibre (HFC) network -- plus another 287k using DSL -- and also up compared with the previous quarter. But the growth is slow, especially when compared with arch-rival Sky's recent broadband successes.
- Cable triple play penetration increases further. Double play is now 79% of customers, and triple is almost half.
- Churn down to a monthly 1.4%, from the flat 1.8% -> 1.6% -> 1.8% -> 1.7% of each the previous four quarters. This quarter's churn may be a blip. Certainly, across the previous four quarters churn was flat while the penetration of bundled customers was increasing. Churn levels remain far too high.
- Telephony customers and total customers fell. I suspect the latter is due to the former as VirginMedia has more telephony customers than either TV or broadband subcribers. Remember, unlike many cable companies, VirginMedia is effectively a home telephony incumbent that is at risk from cheap VoIP and CPS offers, rather than a cable company that could benefit with increased ARPU.
- Per customer [home] ARPU is slightly down to £42.24 from £42.82 a year earlier. Given the penetration of bundled customers has increased during the same period, this reflects the tremendous competitive dynamics of the UK market in driving down prices (broadband especially) has proved a more significant factor than bundling.
- No reporting of quad play penetration that I can see. I presume it is either not at a significant level yet, or is not progressing as well as VirginMedia would like.

Outlook - this is a challenging market for a cable company. VirginMedia must execute well, or Sky and BT will continue to cause VirginMedia problems.

There will be more analysis on the relationship between churn and multiplay in a forthcoming Jupiter report.

IanFogg | February 28, 2008, 12:19 PM
Mobile Web vs Applications/Widgets

Michael Mace nails it: mobile devices are different from PCs, the market for add-on software is stumbling, and has not been as great a success as most would like. (+ also see my footnote).

The issue for the handheld software industry now, is that the number of mobile platforms that developers must target is increasing. In the handheld world we are moving ever further away from the PC Internet model whereby a PC software developer can reach almost everyone with a single download, based on one piece of application development.

Apple's iPhone SDK announcement will further increase the number of mobile platforms that developers have to choose between when allocating their development dollars and Euros.

This is one of the many reasons that building mobile websites is attractive. They can work across different handheld devices. They are relatively cheap to build. They work within the familiar handheld UI of the handheld browser. With 3G, they are very quick to load. With bookmarks, users can navigate directly to specific information. Users are in control of what they want to access and when (unlike push mechanisms like SMS or MMS, or of many intrusive home screen applets).

The number of mobile platforms in the market now or soon is, and I'm sure I'm not listing all of them:
Nokia's Series 60.
UIQ
Windows Mobile Professional (v6) / Window Mobile 5 Pocket PC.
Windows Mobile Standard (v6) / Windows Mobile 5 Smartphone.
J2ME.
Brew.
Google Android.
Apple iPhone / iPod Touch (announcement due any day now on the SDK).
Palm OS.
Yahoo! Go Widgets.
Nokia Widsets.
Blackberry.
Nokia Internet Tablets (OS2008 vs OS2007 etc).

And, worse, within most of the above handset platforms, there are different versions of each platform which leads to issues for application developers. Plus, many users will have no idea what platform, precisely, is on their phone as the mobile industry chooses not to communicate those details, and so users have little clue about which applications will work on their phone model.

+ although as an ex-Psion'ite I'd question his assertion that we all believed even back in the 1990s that add-on software was so essential. We didn't. Even in 1993 with the Psion Series 3a launch, or even in the 1980s, everyone at Psion knew that delivering high quality standard built-in applications is critical for a handheld. That's the reason that every Psion, and every Palm for that matter, shipped with a suite of fully functional applications that met most users' needs most of the time.

IanFogg | February 07, 2008, 02:55 PM
Real French Fibre from Orange

Moving on from the crazy UK situation on fibre, Orange in France offers real fibre broadband at 100Mbps (download speed), complete with a full IPTV service, and VoIP telephony.

Unlike fibre wannabe's, Orange's upload speed is also staggeringly fast at 10Mbps, which makes the service ideal for uploading high quality videos to websites.

This is a commercial service that is already available to 147,000 homes. Full details are published in Orange's annual results. France has become one of the most interesting broadband markets in Europe and continues to far outpace the UK.

IanFogg | February 07, 2008, 12:34 PM
Real UK Fibre Broadband

[BT] Openreach has announced plans to install fibre optic cable instead of traditional copper to connect houses on a 1,000-acre new-build project at Ebbsfleet Valley in Kent. At this site Openreach will offer all of its products on a wholesale basis to all UK CPs. From August 2008, CPs at Ebbsfleet will be able to support data at speeds of up to 100Mb, the fastest headline speed available to residential customers in the UK, allowing high-definition television (HDTV) channels to be watched simultaneously and enabling HDTV gaming and near-instant music downloads.

(from BT's results today)

Go on Virgin, with your "fibre" network, why not deliver real fibre speeds like 100Mbps or even 1000Mbps per home?

And, why not deliver those speeds without your current evening volume limits that drop speeds in half if your customers use the service a little too much during one evening?

IanFogg | February 06, 2008, 02:20 PM
UK Advertising Body Standards Needs Some Broadband Expertise

update 7.12pm - This is even worse. Now VirginMedia are claiming "The UK's fastest broadband is fibre optic and it's only available from Virgin Media." !!!!! and: "Virgin Media is the only place to get fibre optic broadband, and the good news is more that half the homes in the UK can get it." !!!!!!

Reality: Half the UK's home are reached by HFC (see below), no homes are reached solely by fibre outside of a very small scale trial. Note to ASA - JupiterResearch has very reasonable consultancy rates.

[original post is below]

I'm astonished that VirginMedia has escaped sanction by the ASA this time. (read my original blog entry on the advertising here: Truth, Lies and Broadband, which includes a photo of one of the misleading adverts).

Virgin's Hybrid Fibre Coax (HFC) network -- the standard cable network tech used worldwide -- is not fibre, despite Virgin's advert's strong implication, and regardless of the ASA ruling. The 'coax' part of the name means that the data traffic of their customers passes over a shared capacity coax cable along the street on the way from a home to a street cabinet which greatly reduces performance at busy periods, unlike DSL (where the last mile connection from a home to the telephone is not shared with anyone else and so is actually superior in that regard to HFC).

Plus, as everyone in the UK ISP industry knows, VirginMedia has had a tight usage policy and has had explicit traffic limitations during peak evening periods (latest)whereby consumers that exceed a given usage limit see their speeds reduced by VirginMedia's equipment (plus several outages, and more).

If consumers are (mis)led by adverts now, and believe Virgin that Virgin's network is really "super duper fast fibre-optic broadband" then there is no way that those consumers will understand the difference when a UK ISP finally launches a real fibre network (as is happening elsewhere in Europe now).

The ASA is just increasing opacity in the market, making it harder for consumers to understand what packages deliver good or bad broadband, and so whether the price represents value for money. This opacity benefits no ISPs in the medium term: The result will be that consumers will continue to be price sensitive, they will continue to opt for the cheapest broadband deal available, resulting in lower broadband revenues and profits for all UK ISPs, including, ironically, VirginMedia.

And, as a result, UK consumers will have to wait even longer for true fibre as low broadband revenue per user will make the business case for fibre investments much more difficult.

IanFogg | February 05, 2008, 09:21 AM
Quantitative 3 Screen Research: Microsoft/MTV/Sony BMG

Today Microsoft are announcing new online video initiatives in Europe plus new partners.

We've published extensive quantitative research on video and TV across the "three screens" and on social portals. Clients or journalists - please contact us for our analysis of these areas.

Key reports:

European Three-Screen Audiences
Leveraging the PC and Mobile Opportunity

European Online Video Consumption
Assessing the Evolution from Short-Form Content

European Media Consumption Consumer Survey, 2007
Understanding the Impact of the Second Screen

21st Century Portals
Thriving in the Google-MySpace Era