According to ThinkSecret, there is in fact a bigger screen video iPod in the works at Apple. The new iPod, which will supposedly be released in late-March or early-April, has a 4-inch screen, not a 3.5-inch screen as rumored.
What’s holding up the launch are intense negotiations between Apple and the Hollywood studios over the release of feature-length films on iTunes. Although Hollywood is itching to sell its movies on iTunes, the hang-up is the business model: Steve Jobs wants download-to-own while Hollywood is arguing for a subscription model.
Courtesy of John Paczkowski, this YouTube video purports to show the new iPod…and it’s very cool, with a touch-screen electronic wheel.
Posted by Cynthia Brumfield at 3:40 PM | Print
In the midst of the U.S. debate over net neutrality, the challenge by Vonage to Shaw’s $10 surcharge is, as Cynthia notes, a significant development. Though it turns out that Shaw has been doing this since at least last May (see Mark Evans’ post), Vonage’s challenge raises the issue at a crucial time in the development of U.S. Internet policies.
Let’s take a look at the basic economics and competitive dynamics. In Canada, Vonage’s unlimited North American-calling plan costs $39.99, presumably in Canadian dollars. That makes Shaw’s $10 surcharge a 25% increase in the price a Vonage customer would pay. As far as I can tell, Shaw’s IP voice service costs $55 as part of a bundle and $65 a la carte. That means an existing Shaw customer could save $15/mo. by using Vonage service absent the surcharge. But if that customer becomes convinced that reliability will remain an issue with Vonage service—something strongly suggested by the wording on Shaw’s web site— and therefore chooses to pay the QoS surcharge, then the savings is cut by two-thirds, to just $5/mo. That starts to look pretty marginal when you consider convenience and comfort-level issues related to using a new-fangled “VoIP” phone service from a non-local company.
And while it can be argued that Shaw is offering benefits to Vonage and its customers by introducing this QoS capability, Vonage’s complaint raises the question “What is the justification for a recurring charge to the customer for a service that it appears may consist of a one-time configuration of the Shaw-approved cable modem used by Shaw’s high-speed Internet customers?”
My guess is that the justification reflects the thinking of Shaw’s marketers and competitive strategists, not the actual cost of providing the QoS service. That’s not inherently an “evil” thing to do, but it can be competitively lethal in situations like this, where independent service providers’ business models and customer service are fundamentally dependent on the actions of competitors that control access networks as vertically integrated duopolists.
From a competitive pricing perspective, Shaw’s $10 QoS surcharge seems pretty smart. But it also can be seen as evidence that network owners have both economic incentives and abilities to manipulate pricing to squeeze margin and economic vitality from competitive offerings. And, as I discussed yesterday, I think that’s a fundamental problem for the Internet’s future. And, even in cases where actions taken by a network operator may not be purposely anti-competitive, their network management decisions (and problems) can end up hurting competitors’ services more than their own.
It’s interesting that this is happening in Canada. Last week I was chatting with a Canadian telecom analyst who was explaining how high Canadian cell phone charges are compared to their U.S. counterparts, mainly because there are only “two and a half” competitors in Canada’s market. This contrasts with a U.S. market that has witnessed strong price competition and a viable resale market since the days when the high-priced cellular duopoly regime was blasted open by PCS licensing that increased the number of competitors to 5 or 6. And while four players dominate the U.S. mobile market today following waves of consolidation, this appears to be enough players to at least not reverse the process of reasonably healthy competition in the price/value equation that the mobile market has manifested in recent years.
But, in the broadband space, the U.S. has a pretty solidified duopoly market structure. Unfortunately, as the Shaw surcharge suggests, the fundamental economic dynamics and incentives of an unregulated, vertically integrated, duopolistic access market may be fundamentally incompatible with the operating principles and goals of an open Internet.
There are several ways policymakers can respond to this fundamental incompatibility:
In today’s Washington, where bills get passed in the middle of the night when even those voting haven’t read them, its tough to predict which route Congress will take. It’s also tough to be optimistic that a course of action will be based on sound policy analysis and genuine concern for creating and maintaining healthy markets and, where necessary, adopting rules to protect the public interest from market failures.
But, to indulge in some optimism nevertheless, its possible that the uncovering of systemic corruption we’re now witnessing in Washington will have some positive side affects in the telecom arena, perhaps bringing more sunshine and possibly even some real strategic vision into the lawmaking process. The fact that Republic and Democratic Senators recently came together to introduce a bill freeing up unused broadcast spectrum for unlicensed broadband applications provides at least a glimmer of hope in that regard.
But introducing a bill is many steps away from passing a law, so the jury’s still out on both substance and process in the telecom policy space, and also regarding the broader and deeper problems that threaten the health of our democracy. Given the importance and power of the Internet, these two issues are, in my view, fundamentally intertwined.
Posted by Mitch Shapiro at 3:12 PM | Print | Comments (0)ZDNet’s Russell Shaw has this amazing item that will likely send chills throughout the VoIP and online content community. It seems that Canadian cable operator Shaw is asking customers to pay a $10 surcharge if they want to receive high quality VoIP service from an unaffiliated provider. This QoS (quality of service) fee doesn’t apply, of course, to Shaw’s own VoIP service.
Shaw’s web site explains the surcharge this way:
Shaw is now able to offer its High Speed Internet customers the opportunity to improve the quality of Internet telephony services offered by third party providers. For an additional $10 per month Shaw will provide a quality of service (QoS) feature that will enhance these services when used over the Shaw High Speed Internet network. Without this service customers may encounter quality of service issues with their voice over Internet service.
Shaw is quick to point out that this fee is unnecessary for Shaw voice customers.
Quality of service issues do not apply to Shaw Digital Phone because Shaw Digital Phone operates on its own separate, managed network. Voice traffic distributed along this network is never shared with public Internet networks, so you can be confident Shaw Digital Phone will deliver the service reliability and performance you expect. As an added safeguard, Shaw Digital Phone includes its own QoS Enhancement feature.
Vonage Canada is up in arms over this fee, which hikes the cost of its service to consumers. The VoIP provider has asked the Canadian Radio-Television and Telecommunications Commission to investigate the matter.
Among the questions raised by Vonage is what, exactly, is Shaw doing to adjust customers’ service so that its service is improved and what evidence does Shaw documenting any improvements and why levy a recurring charge when it seems that only a one-time adjustment is required?
Posted by Cynthia Brumfield at 10:02 AM | Print | Comments (4)
Stephen Labaton has this article in today’s New York Times that recaps the real legal impact of the AT&T-BellSouth merger; namely that although the antitrust authorities will likely green light the deal, AT&T could pay a political price in telecom reform legislation. Specifically, the deal could weaken the upper hand the phone companies have had lately in warding off net neutrality rules, gaining relaxed video franchising requirements and limiting municipalities’ ability to mount broadband competition.
But the continued consolidation of the telephone industry that the latest deal contemplates gives the phone companies’ opponents significant political leverage in all three debates — and for the time being, could make it harder for AT&T and Verizon, the two largest phone companies, to prevail on all fronts.
One interesting point that Labaton makes is that AT&T Chairman Ed Whitacre, in his infamous Business Week “they’re-my-pipes” interview said that a BellSouth acquisition wasn’t in the cards because regulators wouldn’t sanction it. Here’s the original quote:
It sure would be nice, but it doesn’t have much chance of happening because of market power, size, etc. I think it would be real hard to do. I don’t think the regulators would let that happen, in my judgment.
While it’s a nice rhetorical knife to throw at AT&T, Whitacre’s earlier belief that regulators would bar an AT&T-BellSouth merger doesn’t really mean much.
Posted by Cynthia Brumfield at 8:41 AM | Print | Comments (0)VoIP pioneer, investor and net-neutrality advocate Jeff Pulver is funneling his rage over the AT&T-BellSouth merger into…poetry. Not just any ordinary rhymes, but stanzas filled will telco-geek common carrier law-speak.
It started yesterday when he penned this poem “Baby Bells Grow Up with Dr. Seuss.” A sample verse:
Oh, dear! Oh, dear!
How can I get in gear.
With all these free-riders stalking near?
FCC and DOJ must prick up your ear.
Approve our mergers or I fear
I will not build the broadband pipes.
And then what of the VONs, what of the Skypes?
They cannot serve without my pipes.
So back to the era of Al Sykes.
But that’s not the best part — Pulver also taped a dramatic reading of the poem, a video of which can viewed here.
Today Jeff has posted another anti-telco poem of sorts, a rhyme entitled “We Couldn’t Stop the Mergers,” to be sung in one’s head to the tune of Billy Joel’s “We Didn’t Start the Fire.” A sample:
Free-for-all, ICC, change the name to FCC.Carterphone, Hush-a-phone,
throw Ma Bell another bone. MCI, MFS, Bill McGowan had to press.
DOJ, Judge Green, MFJ, change of scene.
CHORUS
We couldn’t stop the mergers
They were always clinging
Since the phone was ringing
We didn’t start the mergers
No we couldn’t take it
And we tried to break it.
Poetry and telephone industry consolidation don’t, to me, go hand-in-hand. But, to paraphrase Thomas Hardy, poetry is nothing more than emotion put into measure. So clearly Jeff Pulver is upset and if the picture continues to darken for VoIP providers, he might end up with enough material for an anthology.
Posted by Cynthia Brumfield at 7:21 AM | Print | Comments (0)
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