Swisscom Launches MS IPTV – After numerous delays and headaches

October 31, 2006

Swisscom Launches MS IPTV – After numerous delays and headaches: ”

Swisscom today launched their IPTV service, which like AT&T’s U-Verse is running over copper and is powered by Microsoft software. In June of 2005 a report surfaced that claimed Swisscom was having significant problems with Microsoft’s software, complaints that seemed validated recently when Verizon stated they had to re-write a significant amount of Microsoft code because it was unwieldy. While earlier incarnations of Swisscom’s system faced hiccups (like channel switch lag), the Swiss telco claims they’ve resolved most of the problems.

Swisscom is offering TV service to both ADSL and VDSL customers, but the former will only be able to watch and record one program at a time, according to the company’s press release. The company states that 75% (or 2.3 million) of Swiss households have access to the IPTV service, while 65% (or 2 million) of households have access to VDSL technology needed for multiple channels. No mention is made in the release of high-definition offerings.

(Via broadbandreports.com.)


Scaaaary

October 31, 2006

yet another scary telco number …. ouch — iain —

Scaaaary: ”

Happy Halloween. Suitably scary numbers from KPN’s consumer fixed line division today: annualized line loss of 23.5% in Q3, a level nearly four times that of Q3 2005, with EBITDA margin down four percentage points from this time last year. A full 58% of net adds on DSL in the quarter were on Direct ADSL, i.e., the raw connectivity product (H1 was 45%). Hats off to KPN for giving the people what they want.

(Via EuroTelcoblog.)


Akamai Alpha No More

October 31, 2006

Aargh :-(
Akamai is one of the few service provider bright spots going today! I agree with this hypothesis that GOOG, MSH, & YHOO may use their muscle to try dominate this business. They already have their own datacenters & back-bone networks, this is yet another thing that they can do with it. But many people may not want to use a possible competitor for their hosting. I think there is a strong argument for keeping layers separate. At the moment GOOG, YHOO, MSN are hosted application providers who have there own “hosting solutions”. It’s is not clear to me that they’ll let others use what they believe is a competitive advantage. I think there is room for a specialist. — iain —

Akamai Alpha No More: ”

Akamai (AKAM) was an exception in my portfolio. I typically avoid high P/E high market cap companies, but’Akamai had a unique and dominant position in the marketplace that I felt people overlooked. But I’ve synthetically hedged out Akamai’holdings since September 22.

I’m writing this post today because I haven’t written anything substantial for a week and a half and readers deserve better. Brightcove, a company I have written about, released their video content distribution platform today‘(WSJ Link, free’article here). It seemed necessary to footnote what I’ have written before and summarize why I’ve closed the door on Akamai.

First and foremost: Everyone’is talking about Akamai and how great they are (This is a great example, and is what catalyzed me to action). ‘I rarely read articles or speak with anyone who has anything bad to say about Akamai. This indicates the market has built in perfect expectations to the price.

Of greater concern is whether Akamai is a high margin service provider, or a low margin hosting service.

Today, Akamai exists to outsource hosting for companies using their large, distributed datacenter. Whether it is Salesforce.com, NBC, Apple iTunes, etc. – Akamai sells a distributed hosting infrastructure that ultimately is application agnostic.’

Building and operating large data centers is a depreciating barrier to entry. Google (GOOG) has them. Yahoo (YHOO) has them. Microsoft (MSFT) is building them. This blog is hosted on one. They are not the unique resource they used to be. Therefore, Akamai’s hardware infrastructure is no longer a unique’advantage.

They do have a compelling advantage on the sales side, with a large direct Salesforce and great connections into the big media companies. This advantage is eroding as well. The issue is Akamai offers nothing but hosting. Companies like Microsoft, Google, and Yahoo can add value beyond hosting. These companies all have the infrastructure to not just host content, but also pair it with the appropriate advertising to extract revenue.

From ‘The Inevitable Competition of Akamai and Google‘:

Our assumption appears to be breaking down, as Google deftly repositions itself a more of a mediator of video content rather than an author/owner. The WSJ article captures the leading edge of this trend very well. Google appears to be convincing major networks like CBS to allow them to host and monetize high value content. This is very negative for Akamai.

This was before Google bought YouTube. Google bought YouTube because they wanted to monetize the video content. Akamai provides an agnostic solution that requires the content owners to monetize the content. Extracting value from content is inherently a higher margin business than hosting it on a server.

I believe that Google, Yahoo, Microsoft can better pair content and advertising for each individual viewer. NBC, CBS, ABC, etc. evolved in a world where 50mm people all view the same content and advertising (broadcast TV). It is hard to imagine they will evolve better advertising systems than the ones already evolving within the search behemoths.

The cost of hosting quality content that can generate revenue will be zero. Google, Yahoo, Microsoft, and others will line up’for the chance to cache content for free in order to’pair advertising with it (extracting a success based fee). Akamai has no means and has shown no interest beyond operating a’very sophisticated’hosting company (see Brightcove vs. Akamai from Feb ‘06). This business model does not deserve a triple digit P/E.

Hosting is a commodity. Akamai’s service’is no different. The market will’eventually’price this in; next week, next month, or next year. I don’t want to be a stockholder when it does.

I can calculate the movement of the stars, but not the madness of men. – Isaac Newton

(Via Nyquist Capital.)


Google buys JotSpot

October 31, 2006

I use jotspot wiki for all my kids teams. It is great. Hope it does well under google. — iain —

Google buys JotSpot: ”

We will dig into this later, but for now, go read what JotSpotters have to say about the deal.

(Via GigaOM.)


IMS is all back to front

October 30, 2006

Telco 2.0 Guys thrash IMS again. Good detail.  In summary, think the main point is that IMS looks & feels like the Internet, but allows for “walled garden” services. Many carriers & their vendors are not giving up on the ability to provide walled garden services. It appears that Telco 2.0 believes that they should give up and get on with it. No question that building in ability to provide walled garden services costs more. — Iain —

Monday, October 30, 2006


IMS is all back to front

In August the IEC, which runs major events for the telecoms industry among other things, published an article entitled “IMS – Putting Value Back into the Network and Increasing the Revenues Flowing Out” by Telcordia, an IMS vendor. Full transcript here.

It concluded: “Now that the long awaited ‘network of networks’ looks like it’s finally emerging from the complex cat’s cradle of coexisting and often competing technologies and protocols that have grown up in recent decades, it’s important to remember that IMS is there as a true business enabler. Just as the invention of money revolutionized entire economies and social structures, replacing the inevitable time and space limitations imposed by bartering, so too is IMS set to open up the communications environment to new ways of doing business. In the process, new value–and new wealth–will be created.”

We were stunned that this level of vendor hype still exists! Our large survey earlier in the year showed that people in the know really don’t believe this. And our industry brainstorm in October – where for the first time at a major event all the participants were allowed to debate the issue anonymously and simultaneously in a structure manner and in real-time – confirmed very clearly that The IMS Emperor (as originally promoted by vendors and, it seems, still promoted by some) Has No Clothes. It’s amazing what can happen when you let everyone to have their say without fear of ridicule… Summary: There’s plenty of technical usefulness within IMS, but not to the degree espoused here.

I asked our Chief Analyst, Martin Geddes, for his view:

Essentially, we at STL and Telco 2.0 disagree with Telcordia’s premise. Yes, there are APIs needed into authentication and other services. But a lot of this stuff doesn’t need the IMS architecture. You just do it over the current Internet, and roll a suitably lightweight protocol to exchange the data.

Things like QoS have been tried and largely rejected before. The problem is that asking all the nodes in the network to reserve some capacity takes time. Indeed, so much set-up time, that it becomes a problem. If a telco has one advantage over the Internet, it’s the ability to deploy boxes geographically/topologically scattered around the network, to minimise latency. This is how cellular works: many HLRs and switches, rather than backhaul to a central location. We’ve already been here before with ATM (an earlier telecom protocol that many wrongly thought would displace IP.)

We’ve thrashed over the other supposed “benefits” of IMS before (see previous postings in this blog) — the words sound good, but the business case is hollow because the same end-user value can be delivered too consistently over the Internet.

Telcordia in their article say: “The prime purpose behind IMS is to enable the seamless convergence of all the communications services that we currently use but are partitioned by the nature of the networks that they run on. While we have become used to using fixed Internet for some transactions, our mobiles for others, and so on, this silo concept is increasingly inefficient and expensive for both user and service provider. …

With traditional voice revenues under constant erosion, it is essential that service providers of all types are able to move up the value chain, away from basic connectivity and toward more advanced communications services that include multimedia, messaging, and business and lifestyle applications.”

But Telcos have no history of success in rich application development. Furthermore, the assumption that you move *up* the value chain is Telco 1.0 thinking. The world is flattening, and most operators are going to have to relinquish dreams of being more than a utility pipe. The rich multimedia stuff is also contextual (e.g. as part of a game), and the owners of those services have no intention of sharing the pie with the telcos when there’s an alternative, cheaper distribution mechanism (the Internet).

There are two possible exception areas: We basically agree with Telcordia’s security pitch, although again I’m not convinced IMS is the right architecture. And the PSTN/legacy interconnect issue won’t go away.

Old, dumb, edge nodes aren’t going to suddenly get smart, so you need some smart network node to act on their behalf to integrate them into new services. But my desk phone isn’t about to spout a screen, so forget those multimedia combinational services. They’ll emerge from the PC world (and indeed already have).

Fine-grained billing isn’t loved by users. Predictability is in, and flat rate is one way to deliver it. The dream of a telco is to have a zillion rating rules, and for it to be impossible for users to comparison shop.

Ultimately, IMS is all back-to-front. Rather than trawling all the network traffic trying to find billable events, you just offer a bunch of service APIs that can be invoked under the control of the edge points (or third party servers). The billable event, if any, is under the control of the third party. Session control in the network doesn’t add much value, and ultimately can’t be charged for. Skype proves it — we talked in wideband audio yesterday, no QoS or IMS needed.

Here’s the crux: the telecom industry believes there are (i) new, mass-market services along the lines of voice telephony and SMS to be built, and (ii) they will be sold along the same lines — metered service, connectivity puchased as part of the services and not separately provisioned (as with broadband).

We think #1 is false. There are some extensions to existing talk and messaging apps that will “go universal”. But not many. There may be a few IMS-enabled apps that become popular within single carriers or regions (PoC, Video Sharing), but it’ll be an exception.

There never will be a global, interoperable push-to-talk network from the telcos. There will never be a telco IM system independent of the existing Internet portal players. There isn’t a “one size fits all” conferencing system out there waiting to be built.

However, #2 is probably something that we’d want to move forwards with still. The end-to-end principle that defines Internet architecture says nothing about how the pipe is sold.

So there’s probably a simpler architecture than IMS still waiting to be built. Telcos would still be involved in accounting for network traffic and billing it to either the user or application providers (or advertisers). But they wouldn’t know anything about what the traffic really represents.

IMS can be used to do this, but it’s a horribly complex way of doing it.

An alternative approach could be “a billion Internets”. Create an endless succession of copies of the Internet address space. It’s still a dumb (virtual) network, but you’ve got some kind of control over who is admitted. “Internet #18237232″ might be for a particular purpose
like gaming. It gets a certain priority of service, and network traffic is billed to particular nodes. It’s a bit like Paris Metro Pricing (see the IMS Insider Summer Report), but on a grander scale — or on existing enterprise VLAN (virtual LAN) technology scaled up globally.

I think we’ll do an article on this for our next IMS/Telco 2.0 Quarterly Report…

(In the meantime, a far more pragmatic discussion here on Telecom TV by some friends of our’s).

The Editor, IMS Insider



Slingbox

October 30, 2006

I’ve been using I/O Data’s networked DVD player for over 18 months. It works very well. Been wondering if I need to look at SlingBox. It sure gets a lot of press. — Iain —

Slingbox: ”


I ♥ Slingbox
‘ Originally uploaded by Kaptain Krispy Kreme.

I finally got around to setting up the Slingbox I got back in the spring when I met Blake at a conference and he talked me into getting one.

It hadn’t been a priority because we all use Macs in our family and there is no SlingPlayer for the Mac yet.

But the rumormill suggests that the Mac SlingPlayer is going to come out in beta any day now.

So I spent an hour or so today setting up the Slingbox in my family room entertainment cabinet.

It was relatively painless. I only had one ethernet jack in there and it was being used by the xbox 360 so I had to put in an ethernet switch. Now I’ve got 5 ethernet ports in my entertainment cabinet. I bet I’ll be using more of them soon.

The Slingbox does a nice job of controlling my DirecTV Tivo and the software installed fine on my old ThinkPad.

I’ll let you know what I think when I install the Mac Slingplayer. I think its going to be a hit with my kids.

(Via A VC.)


FON Gives Away More Free Stuff

October 30, 2006

Can FON be successful? This will be a wild ride to observe. — Iain —

FON Gives Away More Free Stuff: ”

We stopped by the so-called FON Freedom Friday event in Union Square this afternoon, and watched the WiFi-sharing company give away 500 FON routers to those milling around, mostly workers on their lunch break. By the time we left, around one P.M., they had given away about half of the routers. It’s not too hard to give away free routers and get people to take them — the hard part will be making any money, especially in the U.S.

Joanna Rees Gallanter, the company’s new executive in charge of U.S. operations (we previously covered the departure of former US chief Juergen Urbanski) was there handing out the goods with the rest of the crew.

We asked her how giving away routers combined with free WiFi access would make a good business model. She said the low cost subscription fees for non-community member day passes will bring in revenue, plus once the company gets to a sizable amount of users there are other ways to bring in revenue from a large community.

FON is a noble idea, but still it might take a lot of investment for them to get a great user base. Then again Google and Skype are investors, so maybe they know something we don’t.

(Via GigaOM.)


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