VoIP pioneer Skype today made its first bold move to capture U.S. voice market share since its acquisition by eBay. The company announced that all US and Canadian-based Skype customers can now make free SkypeOut calls to traditional landline and mobile phones in the US and Canada, eliminating the $.02/minute charges that had previously applied. (PC to PC calling has always been free.) Phone calls to other countries and within other countries still entail charges. Skype-In, which provides the ability for others to call in to a user’s phones, carries a $38/year charge.
What’s surprising is how little reaction I’ve seen to what in essence is a major competitive threat to traditional (or even cable-based VoIP) telephony services. Perhaps that’s because, as Andy Abramson points out, Skype still suffers from quality of service issues and free or not, Skype’s service isn’t viewed as serious competition.
Or perhaps this news hasn’t stirred a high-level of attention because, in the words of analyst Richard Greenfield from Pali Capital, “Skype still requires consumers to utilize their PC to make phone calls (meaning it is still not targeting the average consumer) versus utilizing consumers’ existing in-home phone infrastructure” and therefore free Skype service is “not a major negative” for leading consumer telephony providers.
But in his research note on this announcement, Greenfield speculates that the real negative impact of free SkypeOut calls hits rising VoIP providers, such as AOL, the hardest.
This is a negative datapoint for AOL as it tries to reposition AIM by adding software based VoIP. AOL has been talking about adding Skype-Out-like features to AIM since last summer and still has not formally launched it (AOL is simply moving too slow).
Greenfield also advocates that cable operators should start pricing their own VoIP services at marginal cost to capture as many voice cusotmers as quickly as possible before these free alternatives have a chance to gain steam. (Note to Richard: This won’t, um, happen.)
Free Skype-out bolsters our view that cable operators should price VoIP services far more aggressively (such as CVC has been doing) to drive the penetration of digital video and broadband, rather than trying to drive incremental voice ARPUs. Cable should price VoIP at marginal cost and try to push as many customers as possible into their triple-play of services.
Update: I must not have been looking very hard because there is a blogosphere tsunami of reaction to Skype’s news.
Posted by Cynthia Brumfield at 6:58 PM | Print | Comments (0)
The firestorm surrounding the NSA’s collection of calling records for millions of Americans continues to rage. The latest fallout is a class action lawsuit against the government and Verizon seeking as much as $50 billion in damages.
“The Telecommunications Act of 1934 is as clear as clear can be,” plaintiff Carl Mayer said. “You can’t turn over the records of your customers and if you do so it’s $1,000 per violation. The Constitution is very clear. The Supreme Court has consistently held that the Fourth Amendment prevents unlawful searches and seizures which we believe this to be.”
But one telco that was originally said to be working with the NSA may be off the hook. BellSouth issued a statement today saying that despite news reports that it too helped the government collect millions of calling records, it did no such thing.
As a result of media reports that BellSouth provided massive amounts of customer calling information under a contract with the NSA, the Company conducted an internal review to determine the facts. Based on our review to date, we have confirmed no such contract exists and we have not provided bulk customer calling records to the NSA.
If that’s the case, kudos to BellSouth (and Qwest, which has never been accused of participating in the massive data collection effort). As was the case with DOJ’s subpoena of search queries and search records, too many communications and Internet providers seem to roll over for government information demands — Google, it bears repeating, was not one of them. Maybe this incident, and the refusal (or at least non-participation) of giants such as BellSouth and Qwest, will stiffen the spines of companies which hold so many of our private lives in their hands.
Posted by Cynthia Brumfield at 6:20 PM | Print | Comments (0)For a long, long time, my job in one way or another was to keep very close track of the cable industry. For more years than I care to admit, I had to analyze in detail the cable industry’s basic subscriber growth patterns, and until about 2001 there was always growth — every quarter of every year, every cable company posted gains in basic subscribers. That was the easy part of my job.
Then, in 2003, with the advent of major competition from DBS operators, cable’s clockwork core video customer growth stopped. And most operators, most quarters, posted basic subscriber losses.
Now, three years later, the engine’s basic subscriber growth engine has started up again and it looks like cable may be back on track…it’s too soon to tell, but triple-play packages of voice, video and high-speed data may be the trump cards against satellite and even telco competition for some time to come.
| Cable Basic Subscriber Counts (in mil.) | ||||||
| 1Q05 | 2Q05 | 3Q05 | 4Q05 | 1Q06 | ||
| Adelphia | 5.18 | 5.13 | 5.11 | 4.94 | 4.93 | |
| BrightHouse* | 2.13 | 2.13 | 2.13 | 2.14 | 2.15 | |
| CableOne | 0.71 | 0.70 | 0.69 | 0.69 | 0.70 | |
| Cablevision | 2.98 | 3.01 | 3.01 | 3.03 | 3.07 | |
| Charter | 5.98 | 5.94 | 5.91 | 5.88 | 5.91 | |
| Comcast | 21.53 | 21.45 | 21.41 | 21.45 | 21.50 | |
| Cox* | 6.33 | 6.28 | 6.29 | 6.31 | 6.32 | |
| Insight | 1.27 | 1.26 | 1.27 | 1.28 | 1.31 | |
| Mediacom | 1.46 | 1.45 | 1.43 | 1.42 | 1.42 | |
| Time Warner | 10.91 | 10.91 | 10.92 | 10.96 | 11.04 | |
| Total | 58.48 | 58.25 | 58.17 | 58.10 | 58.34 | |
| Change | 0.03 | (0.23) | (0.08) | (0.07) | 0.24 | |
| *Estimates | ||||||
| Source: Emerging Media Dynamics Inc. analysis | ||||||
| of company data. © 2006. | ||||||
As the table illustrates, the top ten cable companies combined added 239,685 basic customers during Q1 06, a big improvement over the collective loss of 65,456 during Q4 05 and way up over the net 33,582 basic subscriber gains during Q1 05. The combined basic subscriber base for these companies advanced from 58.103 million at the end of Q4 05 to 58.433 million at the end of Q1 06.
Even those companies who lost subscribers (Mediacom and Adelphia, for example) lost them at a greatly reduced rate than in previous quarters. (For more on this trend, see today’s issue of IP Media Monitor — disclosure: my publication, registration required.)
Posted by Cynthia Brumfield at 5:55 PM | Print | Comments (0)
Just in time for advertising upfronts, The New York Times’ Sharon Waxman has this piece on an intriguing test-bed set up by major advertising agencies to measure the degree of viewer/user attention during times of multitasking. The Interpublic Group of Companies, a holding company for ad agencies and media buyers, has established in Los Angeles the Emerging Media Lab, an advanced home petri dish equipped with the latest in communications and video technology.
In the Lab the companies watch test consumers use new and existing technologies, all with an eye toward measuring what’s really going on in their heads when they multitask.
“Multitasking is not quantified yet,” said Greg Johnson, the lab’s executive director. “The metrics of all this is a big piece of what our clients want to know, and they want to know desperately. They don’t know where their customers are, and it’s our job to find them again and what they’re doing.”
One theme that runs through the piece is, I think, a common misbelief and it is this: multitaskers can only truly focus on one thing at a time.
It does seem certain, though, that a viewer who is multitasking is not doing those activities with equal interest. “Terms like multitasking imply equal attention,” said Mike Bloxham, director of testing and assessment at Ball State. “But cognitive science tells us this isn’t possible. You have to give priority to one in order to absorb the messages.”
It’s a fallacy of composition to assume that what’s true for me, or those close to me, is true for everybody. But at the risk of making this common logical error, based on personal experience and observations of adolescents around me, I think people can pay equal attention to multiple activities — they just do it in rapid-fire shifts.
For example, my daughter can write a paper and engage in multiple IM discussions in a fashion that seems simultaneous. But what’s really going on is fast shifting of attention from writing to replying to IMs and back again to writing and so forth.
Still, this ability to engage in multiple activities at once is new stuff and fertile grounds for measurement. That’s why the term “engagement” is gaining stature among advertisers.
For advertisers, the challenge is getting their message across in one medium while the consumer is active at the same time in several others. The buzzword these days is “engagement” — as in how engaged, or involved, the consumer is in a particular activity, a notion that is still relatively new in a media world that has for decades relied on stable indicators like the Nielsen ratings.Posted by Cynthia Brumfield at 8:49 AM | Print | Comments (0)
Business Week Online has this fascinating look inside how the FBI investigates and busts “warez” groups, rings of smart computer programmers that filch movies and put them online. With colorful descriptions, the piece walks through a sting operation called “Operation Copycat” that went down last summer.
This FBI operation was a massive net that ensnared quite a few top players in the growing field of unauthorized film distribution.
That’s why federal prosecutors and undercover sleuths have labored for the past two years to put some muscle behind the warning that’s so familiar to home movie viewers (“Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution or exhibition of copyrighted motion pictures…”). The California sting is part of a global investigation that is methodically targeting piracy rings from Chicago to Charlotte, N.C., to China. To date, the California investigation has won 24 convictions. Five more arraignments are expected in May, according to Assistant U.S. Attorney Mark Krotoski, who is prosecuting the case. Sentencing begins late this summer.
Unlike the record industry, Hollywood is aiming its legal ammunition at the big boys, and not at individual users.
Think of piracy as a pyramid. The power sits at the top, where guys like Patel enable others to get content. By the time a movie shows up on peer-to-peer Internet networks, it can be downloaded, often for free, by anyone capable of typing “Mission: Impossible” into a search engine. That’s why the feds zero in on the most sophisticated pirates and mostly ignore end users. “Targeting the top tier is a key way to catch these industry parasites,” says intellectual property attorney Alan Fisch of Kaye Scholer LLP in Washington.
The term “boys” is right for film thieves — most are in their early twenties and are in the unauthorized film distribution business for the thrill of it all. To trap the warez groups, the FBI has to fight fire with fire. The federal law enforcement agency has hired its own computer programming talent to infiltrate the macho groups.
The Silicon Valley sting centered around a server that was leased by agents from an Internet service provider in the Bay Area. Agent Jolie’s real coup, though, was in recruiting a thirtysomething Oakland agent (initials A.J.) who used to work in the computer industry. He proved to be a quick study. Shortly after interviewing with Jolie, A.J. discovered that warez groups used Linux server coding, which he learned in one night. “He can teach himself anything,” Jolie says.Posted by Cynthia Brumfield at 8:32 AM | Print | Comments (0)
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