Cable VoIP puts pressure on the Vonages of the world
Are the networkless IP phone companies coming to the end of
their play? When eBay
for $2.6 billion, many thought it showed the value of VoIP.
The implication at the time was that VoIP was highly valued.
But perhaps that purchase was indication that VoIP in fact
has diminishing value.
Local calling has long been cheap. Long distance prices started
to plummet in the 1990s. The erosion in calling prices was
accelerated by the introduction of VoIP, which makes telephony
even cheaper than it was and is typically offered for a flat
fee, whether from a pure-play company like Skype or Vonage,
or from a cable company.
For cable companies, VoIP is getting close to being a loss
leader, if it isn’t already. Analyst Richard Greenfield of Pali
Research in a recent report noted that Comcast charges
subscribers only $15 more to add telephony to a bundle of
video and data. “We believe Comcast will increasingly reduce
voice pricing (within a bundle) to mitigate the need to discount
their video and data product offerings,” he wrote.
Greenfield expects that cable companies lowering their VoIP
prices will put price pressure on the likes of Vonage, which
has few competitive options beyond cutting its fees.
One possible option is the one Net2Phone
is pursuing. Net2Phone was at the Independent Show in Chicago
last week offering smaller operators a turnkey approach to
rolling out VoIP.
This option might be open to Vonage, but probably not to
Skype. As it is, eBay seems likely to use the Skype service
to add value to some larger commerce application—just
as cable operators are using it to add value to their video/data
The IMS (IP Multimedia Subsystem) architecture is likely
to damage pure play VoIP companies even further. One of the
ultimate promises of IMS is the ability to have one phone—and
one phone number—that will work everywhere with any
network. Customers will probably get that service cheaply
as one element in an overall communications bundle from a
It’ll be years and years before that happens, of course,
but it bodes ill for networkless VoIP companies. Will that
mean they’ll eventually go away? Probably not. Vonage and
similar companies are likely to continue to find ways to be
a good option for many consumers, but don’t expect them to
turn into the next Google.
Santo, IP Capsule Editor, and CED Magazine
The FCC clearly wants to promote competition, would clearly
like to have AT&T provide a competitive video service,
but if the NCTA prevails with its arguments, that will be
a profound setback for AT&T.
AT&T maintains that its IP-based U-Verse video offering
is not a cable service. If that were the case, AT&T would
not have to secure franchise agreements to offer video. The
state of Connecticut agreed with AT&T, and AT&T is
trying to convince the FCC to accept Connecticut’s reasoning.
The NCTA says Connecticut erred, and that its decision is
being appealed. The organization has picked apart AT&T’s
argument point-by-point previously, and referred to those
In this letter, the NCTA quoted House Energy and Commerce
Committee Chairman Joe Barton saying “[O]ur friends at AT&T
have sent this silly letter [to Congressman Dingell] saying
they’re not a cable service, which they shouldn’t have done…. We explicitly say they’re a cable service.”
NCTA also castigated AT&T for claiming exemption from
franchising by claiming it will be offering new and innovative
services. The organization points out that so far, U-Verse
is, at best, a me-too product.
Report: Expect explosive growth
The number of IPTV subscribers worldwide will grow from 2.4
million in 2005, at a compound annual growth rate (CAGR) of
92.1 percent, to slightly more than 63 million in 2010, according
The IPTV subscriber base will generate more than $27 billion
in overall IPTV services revenue in 2010. While video services
will account for the largest portion of these dollars, the
company projects, value-added media services and IPTV operator
advertising will combine to represent more than 14% of IPTV
services revenue in 2010. Content licensing revenue will reach
$11 billion in 2010.
iSuppli notes the companies providing IPTV are now only in
the process of building infrastructure, but eventually they
will have to compete on services, and service differentiation
will become crucial. The company expects areas of differentiation
Interactivity, such as communication, community, voting,
interactive advertising and television commerce (t-commerce).
Integration across multiple platforms, across voice and
data services and across content types, i.e. video, voice,
music, gaming, data services and user content.
Personalization, including intelligent TV recommendations,
individualized advertising and non-linear video programming,
such as video-on-demand (VOD) and digital video recording
Value-added services, including on-demand gaming, music,
media applications, home networking management, security
The European market has taken the early lead in the IPTV
market, iSuppli finds, but expects Asia will generate faster
growth and will achieve the largest subscriber base by the
end of this year. The Americas region will lead the world
in terms of IPTV dollars starting this year because it will
yield the highest average revenue per user (ARPU).
Nortel, Broadstream tag team
on IPTV for rural providers
is teaming with Broadstream
Communications to provide an integrated IPTV solution
that combines video infrastructure from the former and television
programming packaged by the latter. The two are aiming their
IPTV product at rural telcos in the U.S.
Broadstream brings over 200 channels of IPTV-ready video
content. The content is encoded in MPEG-4 and delivered via
satellite to a video head-end operated by Broadstream, which
relieves telcos from having to build their own. Transmission
is handed off to Nortel-built networks. Nortel’s IPTV solution
enables service providers to deliver video over an IP infrastructure.
Features include on-screen instant messaging, mobile-to-TV
picture sharing, and on-screen caller ID.
“As rural telcos look to offer their customers new IPTV services,
a significant hurdle they face is access to a complete media
and entertainment content bundle that can effectively compete
with today’s existing cable and satellite services,” said
Walt Megura, general manager, Broadband Networks Solutions,
Nortel. “By teaming up with Broadstream to leverage their
expertise in managed content services, Nortel can offer rural
telcos a turnkey IPTV solution that helps enable more rapid
and cost-effective introduction of these new revenue-generating
Eagle signs up with IPTV distribution
Broadband has found a national distribution hub for
its IPTV service. The company signed a multi-year renewable
co-location agreement to deliver IPTV content throughout the
United States from
Terremark Worldwide‘s NAP of the Americas facility.
Eagle IPTV services include direct access to more than 200
channels of programming from entertainment providers, using
a mix of standard-definition and high definition set-top boxes.
Terremark is looking for other IPTV service providers to distribute
video from its facility.
AmiNET 130 STB.
Amino to provide IPTV set-tops
for service in Croatia
said it was selected to provide set-top boxes for IPTV in
is rolling out what Amino says is not only the first IPTV
deployment in that country, but also the first triple-play
Nikola Tesla is building Vodatel’s FTTH system.
VoIP Inc. launches test marketing
Inc. has launched a testing/marketing Web site through
which it will make available new telephony products and features
not only for consumers but also for business customers. Visitors
will be able to try the new products for free, and provide
feedback on them.
Products and services that VoIP Inc. currently has under
development and expects to be made available for review and
testing on its VoiceOne
Lab Development Web site include Click-To-Call; Web-Calling;
enhancements to popular instant messaging services like Video
Conferencing for Google’s Desktop, or enhancing gTalk to support
true communication to and from the telephone network; additional
services for IP PBXs such as instant phone service, free Directory
Assistance, Weather, and more, developed by companies such
as Cisco Systems,
Lucent Technologies, and others.
CEO Shawn Lewis said, “Great ideas for new services and applications
often go unnoticed because they don’t reach the mainstream
public, or people just don’t understand all the various uses
available for that new service or application. We hope to
bridge this gap with Labs.VoiceOne.com.”
GlobalTouch to resell WorldGate
Telecom has agreed to resell WorldGate
Communications‘ Ojo and Ojo Shadow personal video
phones. The companies also plan to work together on strategic
business opportunities for existing and prospective customers.
Ojo is a broadband video phone that works with DSL and cable
8×8 debuts software ‘phone’
released Packet8 Softalk, a video-enabled SIP softphone for
use with Packet8 voice and video Internet phone services.
With Packet8 Softalk, subscribers can make and receive voice
and video phone calls directly from their personal computers.
The product was originally scheduled for release in the first
quarter of 2006.
The Packet8 Softalk softphone provides a graphical key pad
as the main user interface, allowing for quick access to both
basic and advanced calling features including, call forwarding
and call waiting. Packet8 Softalk also supports E911 nomadic
The Softalk Basic plan allows unlimited Packet8 to Packet8
IP voice and video calling between Softalk users and other
Packet8 subscribers free of charge. Softalk Premium users
receive 500 minutes of outgoing and incoming minutes on calls
throughout the US and Canada.
In addition to a PC or laptop, the equipment required to
use Packet8 Softalk includes a headset and microphone or USB
phone. For video use, a standard, digital camera or off-the-shelf
webcam is required to send video and images, though none is
required to receive video images.
CableLabs issues DOCSIS 3.0
specs, to test pre-3.0 gear
has issued the long-awaited specifications for DOCSIS 3.0,
the basis of a new platform that calls for the bonding of
a minimum of four channels and shared data rates of 160 Mbps
downstream and 120 Mbps upstream.
Potential speeds can surge much higher if operators opt to
bond even more channels. Generally speaking, each 6 MHz channel
set aside for data can support an additional 40 Mbps down
and 30 Mbps up.
The new specs will also support a test plan for “partial
feature compliance” to DOCSIS 3.0. That option,
initially given the internal moniker of DOCSIS 2.0b,
will be available for DOCSIS 1.1 or 2.0 cable modem equipment
and cable modem termination systems (CMTSs) that support downstream
channel bonding. This test option also is designed to ensure
that the equipment is compatible with forthcoming DOCSIS 3.0
By not assigning an “official” name or designation to these
tests, it should also suppress fears that vendors would focus
their energy on pre-3.0 implementations and, therefore, possibly
slow down the DOCSIS 3.0 effort.
Some cable operators, particularly those in Asia, are deploying
pre-DOCSIS 3.0 technologies on a limited basis to compete
on speeds offered by telcos that are leveraging fiber-to-the-premises
(FTTP) or advanced DSL systems. In the U.S., cable operators
are also facing pockets of FTTP competition, but there remains
some debate as to whether DOCSIS 2.0 is enough for now, or
if they should enlist downstream channel bonding techniques
before DOCSIS 3.0 becomes commercially available.
“This new option presents suppliers with a chance to have
their product tested in the world class CableLabs facilities,
and offers cable operators the opportunity to have interoperability
testing on pre-3.0 equipment,” said
Charter Communications Chief Technology Officer and
DOCSIS Business Team Member Marwan Fawaz, in a statement.
“The test option really hits a sweet spot.”
CableLabs has posted
the new specs on the Web. There three 3.0 specs (security,
physical layer, and MAC and upper layer protocols) comprised
of more than 1,140 pages of documentation.
In addition to describing upstream and downstream channel
bonding, DOCSIS 3.0 also incorporates IPv6, a next-gen addressing
system that will become a requirement as the number of available
IPv4 addresses continues to dwindle and the number of IP-based
devices hanging off of broadband networks continues to proliferate.
CableLabs will begin to conduct interops, certifications
and qualification testing against DOCSIS 3.0 products “whenever
suppliers are ready, as is our normal position,” said CableLabs
VP of Broadband Access, Michelle Kuska, in a statement.
CableLabs has already made some headway with the first item
on that list: interoperability.
The Louisville, Colo.-based R&D house noted that it conducted
a DOCSIS 3.0 interop event the week of July 17 with CMTSs,
test equipment, and modems and other consumer premises equipment
from vendors such as ARRIS, BigBand Networks, Broadcom Corp.,
Casa Systems, Conexant Systems, Filtronic Signal Solutions,
NETGEAR Inc., and Cisco Systems and two of its divisions—Scientific
Atlanta and Linksys.
The event successfully demonstrated downstream channel bonding,
and included some “limited” IPv6 testing, CableLabs said.
BellSouth Extends Metro Ethernet
to Network VPN Customers Throughout Southeast
has extended its Metro Ethernet coverage for access to business
IP services, which should make it easier for large enterprises
to maintain consistent access to their virtual private networks
(VPNs) across the entire company.
BellSouth said it had integrated Metro Ethernet as an access
option on a limited basis in 2004 but has now expanded this
capability throughout its operating area in the Southeast.
BellSouth said that large enterprises with multiple offices
all over the country often leave it up to each individual
office to link in to corporate communications facilities.
BellSouth says its Managed Network VPN service relies on MPLS
(Multi-Protocol Label Switching) to now allow internetworking
of multiple access methods across networks for a consistent
customer experience in any service location.
Level 3 paid consideration to Looking Glass security holders
of 21.3 million unregistered shares of Level 3 common stock
and approximately $8.7 million in cash. Level 3 also repaid
$67 million of outstanding Looking Glass debt. Assuming the
value of Level3 stock on the day the deal closed, the total
value of the deal was upwards of $153 million.
ACS combos wireless data with
Communications Systems Group is coupling unlimited
high-speed wireless mobile data with DSL in a service it is
calling Internet Anyplace. With the program, ACS DSL customers
may add unlimited mobile broadband access for $30 a month
with a two-year commitment. ACS provides these customers a
wireless AirCard at no additional charge.
AOL to provide 5 GB of storage
is going to become a free ad-supported service, it is going
to have to attract eyeballs, and this week it offered one
of its first enticements. Starting in early September AOL
will make available to every one of its Web users 5 GB of
free online storage. AOL said there will be no charges for
user to upload or download.
The service will allow users to back up photos, documents,
and music. Five gigabytes will not store a lot of video, but
that is capacious enough to store some. Users will be able
to access their files from any PC or mobile device with a
Web connection, share them with others by granting file/folder
permission, move them via easy drag-and-drop tools, automatically
back up important files or folders, and auto-upload any e-mail
attachments they receive via major providers.
The free 5 GB of storage will be available to any users with
an AOL or AIM screenname starting in early September. All
files stored on AOL’s Xdrive service are protected in secure,
data facilities. Users can access their files via the Web
at http://www.xdrive.com or through Xdrive software.
Users can upgrade to a premium service with 50 GB of storage.
FCC vows to resolve BPL interference
issues as they arise
Communications Commission decided to forge ahead with
its current favorable policy toward broadband over power line
(BPL) systems, with a few minor concessions, the most notable
to the ham radio community.
Hams have long complained about interference from BPL systems,
and petitioned the FCC to recognize the problem and put a
halt to the rollout of BPL until the interference problem
could be studied and fully understood.
The FCC in its announcement today denied the request to put
a hold on BPL development, but said it will maintain safeguards
against harmful interference to existing radio services, and
that if harmful interference does occur, the Commission will
take appropriate action to remedy the situation.
The agency also upheld a requirement that information regarding
BPL deployment must be provided in a public database at least
30 days prior to the deployment of that equipment, and it
updated rules that create exclusion zones around radio astronomy
Claim to Fame: Level 3 has built one of the largest
Internet backbones in the world, and has become one of the
first companies that service providers call when they need
to either start providing connectivity or want to offer increased
connectivity options. The company claims as customers the
10 largest U.S. ISPs, and the 10 largest European telecom
Recent news of note: The company completed acquisitions
of Looking Glass Networks and ICG; is in the process of acquiring
Telcove; is working with Internet2 to deploy a next-generation
Internet network; and just announced Q2 revenue increased
to $1.5 billion.