Service Provider Views - New Thoughts About Microsoft

My latest Service Provider Views column on TMCnet is running now, and revisits some earlier pieces I wrote about their Telco 2.0 strategy.

This column focuses on two main ideas. First - why service providers and Microsoft need each other, and second, a look at a few of the key industry trends that are transforming the role and definition of what it means to be a service provider in the Internet age.

There are a lot of interesting and timely themes to explore, and I'll be continuing in this vein over the next 1 or 2 columns. To get started, I'll steer you to today's piece, and hopefully you'll stick with me in columns that will follow it. As always, your comments and suggestions are welcome.


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet, Microsoft

BCE Deal - How Do You Value a Telco?

The BCE privatization saga continues, and now the ball is back in BCE's court as they try to defend their valuation and trump KPMG's solvency opinion. There's a lot at stake here, and both sides are pulling out all the stops to get things to go their way. It's a bit like watching Detroit's auto execs going hat in hand to Washington for a bailout. If the deal falls apart, there are big time winners and losers, and a whole new environment for Canadian service providers.

I'm not following the minutiae of the story, but you can get a good taste of it here. It's high stakes accounting, banking and legalese, with lots of complexities around things like the criteria for determining solvency, the benchmark dates for making valuations, potential conflicts of interest for KPMG between BCE and the bankers, avoidance of paying break fees if the solvency test is the deal-killer, the impact of Canada's suddenly weak dollar, etc.

There are many angles and sub-stories here, and some will only be of local interest. In some ways BCE is better off remaining a public company, and long-standing shareholders will be happy because the huge drop in valuation this week only remains a paper loss. By staying public, BCE avoids taking on the $30+ billion in debt, which would severely restrict its ability to invest in network upgrades to remain competitive. If the deal dies, all bets are off, and BCE's competitors will have to expect a more aggressive posture from them. That in turn should keep the playing field a bit more level since BCE will be jumping back into the pool with both feet.

Not everyone out there will find the BCE story of interest, and that's fine. My main reason for posting about this is to draw attention to the challenges of valuing a telco, especially in tough economic times. I'm not an expert in business valuations, but it sure must be difficult to assess the value of the two primary assets of any telco - its subscribers and the network. BCE is a great case study since it's so public, and if I was a telco, I'd be watching this one closely. I wouldn't be at all surprised to see one or two major telcos/cablecos to falter in 2009, and they'll have the same issues to deal with. In today's world of IP communications it's much harder to place a value on the subscriber, and at some point, revenues from advertisers will be part of the mix, just like they are with the portal players like Google and Yahoo. I'm sure BCE will be a real test to determine just how well auditors can do their job in valuing service providers, and I guess we'll know once the final rulings are decided. Stay tuned.


Technorati tags: KPMG, Jon Arnold, BCE

Service Provider Views - Managing in a Down Economy

My latest column for TMCnet is running now. This edition of Service Provider Views picks up from last month's theme about how carriers are being impacted by the economy. The health of service providers determines the health of vendors, and I have some thoughts on what's happening with both.

The main idea I'm trying to get across is that despite all the bad news, there are a number of companies bucking the trend, and are doing just fine. Apple is a a true anomaly, but there are quite a few companies peforming very well while their peers struggle along.

You can read the article here, and by all means, I'd love to hear your thoughts or other good news stories I've missed.


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet

SaaS Model for VoIP - Ari Rabban's View in IP Convergence TV

I haven't had much to report lately for the IP Convergence TV portal, although the video interviews I conducted at the recent IT Expo have now been posted there as well.

In addition, however, I do regular outreach with industry thought leaders to contribute Guest Opinion articles to the portal. The most recent piece comes from long-time colleague Ari Rabban, who should be familiar to my regular readers. Ari's been in VoIP as long as anybody, going back to the early days of VocalTec. He's currently the CEO of Phone.com, an interesting VoIP startup I've talked about previously.

Phone.com is a great example of a VoIP SaaS solution, and they have pretty cool offerings for both residential and SMB environments. I've used the SMB service a bit, and it's great having an 800 number to give out to people.

In today's economy, SaaS makes a lot of sense, and Phone.com looks to be in the right place at the right time these days. I'm sure we'll be hearing more good things in due course, and until then, I encourage you to give Ari's article a read. It was posted earlier today on the IPCTV portal, and is also runing now on the Phone.com blog.

Let me - and Ari - know your thoughts, and if you like it, you should sign up for the service!


Technorati tags: IP Convergence TV, Jon Arnold, Phone.com, Ari Rabban, VoIP

Service Provider Views - Dealing with a Down Economy

Sooner or later this economy catches up to everyone, and telecom is not immune. My latest Service Provider Views article on TMCnet takes a look at what I think operators need to be doing to minimize the fallout in a down market.

There's a lot to explore here, and this article is Part 1. In light of Skype's strong Q3 numbers, I decided to focus a bit on them as an example of things going right in a challenging environment. Some service providers will fare better than others, and this impacts everyone in the food chain. I'll look at some of these implications in the follow up article. For now, Part 1 is online now, and I'd love to hear your thoughts.

Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet, Skype

Videotron's Wireless Network Plans Announced

This is mostly a news item, and I don't do many of those. For many, it's an old news item by now, but not for everyone. I've been out of pocket almost all week, and this is the best I can do here, and didn't want this to pass unmentioned.

On Tuesday, Videotron announced their wireless network plans, and they're pretty ambitious. I was hoping to participate on the briefing call that day, but was too tied up at the Avaya analyst conference.

In the current economic climate, it's a huge deal to hear about spending like this. After spending $554 million to acquire spectrum during the AWS auction (which I've been following) - table stakes to get into the wireless game - they're now commmitting around $250-$300 million more to build an HSPA network. Videotron has said they were serious about wireless from the beginning and now they're putting their money on the table.

I can't help but think there's got to be a bit of political hubris at work here, as this is a Quebec story, not a Canada story. That message comes out loud and clear in the press release, especially with the proud claim how this investment will create 1,000 jobs for Quebecers. I'd be remiss to mention that the Bloc - their separatist party - fared well in the recent federal election, largely at the expense of the fading Liberals. I digress.

I should also note that Videotron is one of the biggest and best Quebec-based companies, and they are only in the wireless business to serve Quebec. Their population is a bit under 8 million, and I don't know if their Capex plans on a per-capita basis would be high or low relative to other markets. Regardless, it's happening, and that's the story here.

Anyhow, like Rogers, Videotron is a multimedia conglomerate, and have a lot of content at their disposal, so their plans extend well beyond voice. Bell diversified into content a few years back, but could never make it all work. However, networks are faster today, and we have smartphones now, so things will be much different for Videotron this time around. What also makes this interesting is that Videotron has a track record of being disruptive, most recently with their push into VoIP, which has been costly for Bell.

So, I'd expect similar things this time around with wireless. Actually, Videotron does offer wireless today, but over the Rogers network, which really limits what they'd like to do. Once they come to market on their own, Rogers will lose their traffic of course, but more importantly, they'll now be competing directly against each other.

Aside from this being a bold statement of investment in Quebec's communications infrastructure, it's great news for Nokia Siemens Networks (NSN), who were announced as the prime vendor for their network buildout. NSN is on a roll in Canada, having also just been awarded the business to build a jointly-funded HSPA wireless network for Bell and Telus. Wow. Hard to believe how these two competitors are now working together, but it's a necessity. Rogers already has GSM, and once Videotron comes with HSPA, they would be at a huge disadvantage if they sat tight with their CDMA networks.

If you can't beat 'em, join 'em, I guess. It's clear that the economics for each to build separate HSPA networks just don't work, and it sure will be interesting to see how they manage to share things once it's done and they go back to competing against each other. Or maybe - just maybe - they'll join forces to compete against the cablecos. How interesting would that be?

And just to complete the picture, today Shaw announced they were putting aside plans to build their wireless network. They're in a much smaller market than Quebec, but still spent $190 million to acquire spectrum licenses. Maybe they'll sell it to the highest bidder - if that's allowed - or maybe they'll jump back in the game if the market changes. Who knows?

With Videotron's news, the focus now shifts to what the other new wireless players plan to do - namely Globalive, Bragg/EastLink and DAVE Wireless. It's not easy raising money today for anything, let alone yet another wireless network. This sure sets the stage for an interesting 2009 in Canada's wireless marketplace, and I'll be back on this soapbox again soon.


Technorati tags: Videotron, Jon Arnold, AWS auction

Service Provider Views - BroadSoft as a Platform Play

My latest Service Provider Views column is running now on TMCnet. It's another variation on the platform play theme, and my focus this time is on BroadSoft.

This may not be what comes to mind right away for most of you, but you might just think otherwise after reading my article.

I've followed BroadSoft for ages, and after spending time with them last week at Connections 2008, I'm sure seeing a lot of Web 2.0 and mashups, and that says platform play to me. What do you think?


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet, BroadSoft

New Video Interviews on TMCnet

During TMC's IT Expo a couple of weeks back, I conducted a handful of video interviews. As with the Spring IT Expo earlier this year, these were done while wearing my Editor's hat for the IP Convergence TV portal.

These interviews are a co-production between TMC and IP Convergence TV, and they will be available for viewing on both websites. Updates for IPCTV have been a bit slow lately, but TMC's Alan Urkawich has done a great job getting these produced, and they're now running on TMC's video page. Ideally, they would run on IPCTV the same time, and I could cover these in one post, but since they're up on TMC now, I'm posting today while it's fresh.

I did 5 video interviews during the show, with each guest talking about various aspects of convergence technologies and their impact on service providers. We've kept them short this time around, and each runs about 5 minutes. So, in no particular order, here are the links...

Rich Tehrani, President, TMC - talking about some of the more interesting solutions he's seeing on the showfloor, esp mobile VoIP and immersive telepresence.

Dan York - Dir. Emerging Comm. Technologies, Voxeo - good insights from Dan about how voice-enabled communications is becoming integrated with Web services, and what this means for both service providers and enterprises.

Bob Emmerson - freelance telecom writer - Bob brings his deep industry experience to bear in talking about the importance of QoE for video, and how poorly understood it is in North America. He also shares his views on Unified Communications and the trend towards integrating VoIP with business processes.

Eric Burger - Chairman, SIP Forum - Eric updates us on the SIP Forum, especially the SIP Connect initiative, which is enabling plug-and-play solutions across multiple vendors. He also explains why service providers of all stripes - wireline, wireless and cable - are now actively involved with the SIP Forum, and helping drive its recent growth spurt.

David Yedwab - Partner, Marketing Strategy Analytics - always one of my favorite interviews. David knows the SMB space well, and has great insights about the issues/trends/challenges around their adoption of converged communications services. He cites the Microsoft Response Point solution as a good example, whose launch we both saw at the show.

That should give you a good fix of video content for now. I'd love to hear your thoughts, and let me know which one you liked the best!

To close out, I should also mention that video is a big part of TMC's thinking these days, and these interviews have been posted to a TMC microsite dedicated to video. I think it's a great idea, and it's especially helpful for anyone who couldn't get to the IT Expo last month.

There's loads of video content there, starting with a daily news update from Alan Urkawich - not a bad way to get a daily digest on what's new. Search the tabs, and you'll find video from recent events TMC has been involved with. For the IT Expo, in addition to my interviews, most of the keynotes are there, as well as many TMC interviews conducted with various exhibitors. There's similar content there for Astricon 2008 and NXTcomm.


Technorati tags: TMCnet, Jon Arnold, Rich Tehrani, Bob Emmerson, Dan York, Eric Burger, David Yedwab, IT Expo, IP Convergence TV

DNCL - Canada's Answer to the Scourge of Telemarketers

Been trying to get this out all day - just one thing after another.

This post is more of a public service announcement instead of the usual trail-blazing thought leadership you find here - but still of interest, at least to Canadians! :-)

So, we finally have DNCL - our Do Not Call List - to keep those pesky telemarketers away. This just came out about two weeks ago, but it really only popped into my mind yesterday.

It's funny how I spend most of my time with emerging technologies and following trends that may disrupt the world of telecom as we know it - but something as pedestrian as DNCL in my own backyard completely eludes me. Why is that???

I've seen this mentioned here and there in the news and the blogs, but never gave it a thought for what it means to me as a consumer. Yesterday, though, I happened to catch a tiny item in the paper about it, explaining DNCL and how to register. Duh - well, OF COURSE I SHOULD DO THIS. It may get lonely working from home, but it's not so bad that I look forward to hearing about the latest time-shares or home security deals or adult dating services, etc.

So, it took all of about 2 minutes to visit the National DNCL website and register our number. Done. Seems like a good use of taxpayer dollars to me.

They say it will take about a month for this notice to take effect, so I'm hoping these calls will tail off by then. Working from home, I have to tell you, we get about 3-4 of these every day. For those of you working in offices, you have no idea what you're missing, and what goes on during this quiet time at home. Thanks to the magic of call display, any time I see a toll free number calling, you just know it's from one of those people. I always let it ring through to VM - I wonder why they NEVER leave a message??? Hmm.

However - and here's the rub - the DNCL only protects us from Canadian telemarketers. No surprise there. Did you know --- that a lot of these stupid calls come from the US? You know, those area codes from places you barely recognize, like Colorado, Idaho or South Carolina. Nobody I know is calling our house from these places - ever - and the DNCL isn't going to catch them. Not much you can really do there, but DNCL is definitely a step in the right direction.

So, for those of you who didn't know - and need to know - now you know - and I'd encourage you to sign on ASAP. Happy Thanksgiving!


Technorati tags: National DNCL, Jon Arnold, telemarketers

Service Provider Views - Is VoIP Dead?

Well, that's what Skype's Jonathan Christensen thinks. My latest Service Provider Views article ran yesterday on TMCnet, and the focus was on his keynote at the ITExpo earlier this month. I thought it was the most interesting presentation given, and is very much in line with what my Service Provider Views column is about.

Of course, it's a provocative question, so you'll just have to read the article yourself to find the answer. And whether you agree or not, I'd love to hear your thoughts.


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet, Skype, VoIP, Jonathan Christensen

Latest Service Provider Views - Making Voice a Killer App

Got a pretty full plate here at the IT Expo, and I'll have a blog post and some photos coming about Day 1.

Until then, my latest Service Provider Views column on TMCnet was published today, and with the Expo upon us, I think you'll find it a good read. My focus here is what a couple of companies - Mobivox and Jajah - have been doing lately with voice activated services. I think it's a great way for service providers to add value to voice without really doing much. The article was just posted this afternoon, and you can read it here.

Hopefully you'll feel the same way, and I'd love to hear your thoughts. Back to the Expo now...


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMC IT Expo, Mobivox, Jajah

Media Summary - August

August is a pretty slow month all around, so I didn't engage that much with the media. That said, I did manage to turn up in a few places, as well as publish my bi-monthly column, Service Provider Views for TMCnet.

- Chicago Sun-Times - Ifbyphone profile story

- IT World Canada - Q9 Networks privatization

- Ottawa Business Journal - Espial outlook in IPTV market

- Service Provider Views - "Ribbit - Why BT's $105 Million Was Well Spent"

- Service Provider Views - "Platform Play Updates - Solid Proof Points for Service Providers"


Technorati tags: J Arnold & Associates, Jon Arnold

Service Provider Views - Ribbit's Deal with BT

For my latest Service Provider Views column, I've continued the theme of platform plays from the last column - this time focusing totally on Ribbit.

The $105 million price tag paid by British Telecom raises all kinds of questions about the deal and what it means for Voice 2.0 in general. It's a great story, and I've tried to shed more light on it in this column. Last week I interviewed Ribbit's founders - Ted Griggs and Crick Waters, and from that I've written my column.

Basically, I've concluded that BT paid good money for Ribbit. It's a huge exit for Ribbit, but really not such a big deal for BT. In terms of valuation, it's very tricky to say whether overpaid or not. On paper, sure there's little in the way of revenues or customers, and developers can be a very fleeting "asset". This deal is all about promise and potential, and you'll just have to read the piece to see what this means to me.

Hope you like it, and I'd love to hear your take on this.

Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet, British Telecom, Ribbit

Can Bell Canada Stay Competitive? Alec Says No.

Colleague Alec Saunders had an action-speaks-louder-than-words post yesterday that read my mind perfectly.

I had exactly the same reaction as Alec after reading Bell Canada's current position on infrastructure spending in the Globe & Mail.

Basically, the storyline is that Bell does not plan to pursue a FTTH - fiber to the home - strategy to deliver the high end speeds to stay on par or get ahead of the cablecos. They're taking the prudent approach in balancing the Capex required to upgrade their networks versus the fiscal realities that privatization is about to impose on them. It really is a rock and a hard place scenario, and Bell ultimately seems to be playing it safe.

Too safe for Alec's liking - mine too. So much so for Alec that his post was a public declaration that Bell will not be able to meet his needs, and he's making the switch from DSL to cable. I just had to share this with you as I think Alec speaks to an issue that may come to haunt Bell.

Their rationale is that Bell's plans for DSL and fiber will provide sufficient speeds - up to 10 Mbps - for what the market needs. Hmm. That may hold for the general population, but a few years from now, that number is going to sound like it's from a bygone era. Maybe this means that IPTV is not in their plans now and that they'll rely more on Expressvu for video. Or maybe they're going to surprise us or change their plans as market conditions dictate, but for now, this doesn't sound like the way to go for a company that more than ever needs to be on the leading edge.

Technorati tags: Bell Canada, Alec Saunders, Jon Arnold, DSL

Mobile VoIP - Easier Said Than Done

Wanted to pick up on a few threads here that I think point to a topic we're going to keep hearing about - why isn't mobile VoIP happening?

Of course the answer depends on who you talk to, but it's certainly getting people's attention and giving rise to some interesting questions. I've always been a fan of a mobile user's best friend - such as Truphone, fring, Jajah, Mobivox, Rebtel, etc. Admittedly, since I don't travel much, I don't have much utility for these services, but in the course of my work, I certainly understand the value proposition.

I think about this topic from time to time, but the ball got rolling for me on Friday when Olga Kharif of Business Week interviewed me on this topic. Whenever Olga calls me, there's usually a good story. She hasn't turned this into an article yet, but she prefaced the story with a post about mobile VoIP to her Tech Beat blog on Thursday. I'll update you if she does get an article running on this.

The theme hit me again with a really interesting post by Om Malik that I saw today. It was actually posted on Saturday - y'know, Om never stops...

His post went into very nice detail about how Nokia is no longer supporting mobile VoIP on certain N-Series phones, and concludes that Nokia is off the mark doing this. It's a great read and basically shows how the mobile operators still have the market power and can call the shots with handset vendors as to what services are going to run over their networks. Very interesting stuff.

This topic has come up a number of times on many blogs in recent months, but this post seemed to tie in nicely with what Olga is picking up on. To me, it's a simply a repeat of how landline operators initially responded to VoIP, and the pattern is very predictable. Eventually we'll get our mobile VoIP, but the carriers will only support it when they're good and ready - and they're not ready yet. As usual, Om's post generated loads of comments, and these are another barometer of how well Nokia's actions are going over - not.

Going in reverse motion, I need to bring in Andy Abramson's post from last week that cited a nice Wall Street Journal article about mobile VoIP. It's not really a critical analysis, but it's great mainstream coverage that I'm sure will eventually get more people wondering about this too.

Oh, and for a nice twist how you can do mobile VoIP even when you're not supposed to, Andy's got a great story to tell about what he did the other day. The tools are definitely there, and for those who are tech savvy enough and willing to experiment a little, mobile VoIP is just a few URLs and downloads away. This is a long way from becoming mainstream, but there's no doubt in my mind that mobile VoIP will get there - just not right away.

Am sure with a bit of digging I could find many other recent posts and news items to support my story here, but I'm satisfied that I've seen enough to conclude we've got a trend here. Aren't you?


Technorati tags: mobile VoIP, Business Week, Jon Arnold, Om Malik, Nokia, Andy Abramson

Blackberry Bold - Rogers is First to Market

Just wanted to briefly share some news that will be of interest to any RIM watcher.

The much-hyped Blackberry Bold was launched yesterday here in Toronto by Rogers, and is worth citing for a few reasons. I'm not much of gadget guy, but the Bold is a big deal, and I'll just wave the flag a bit here to say that Rogers is the first operator in North America to offer it. We're not winning a lot of medals in Beijing (although it's been a very good week!), and it's nice to talk about being first in something.

I wasn't at the launch, but local colleague Jim Courtney was, so I'll leave it to him to tell you about it first-hand. Jim knows RIM very well and had a great writeup about the launch that was posted last night.

Aside from the fact that Jim's post is a good read on the launch event and what the Bold means for Rogers (more than you might think), it was published as a guest post on GigaOm. That was really great to see in terms of giving Jim's post tremendous visibility and letting the world know that Canada does get its share of firsts.

An interesting subtext to this launch is the ever-evolving battle between Rogers and Bell for supremacy in Ontario, as well as nationally on the wireless front. Rogers has a killer one-two punch with the iPhone and now the Bold that keeps them top of mind in both the consumer and business markets.

Bell, of course, is trying to re-invent itself in the wake of privatization, and a big part of that has been their very new and very different branding campaign that's re-positioning them as a leading edge provider. And if you're local, you'll know why I said "providER". Lots to talk about there, but another time - this post is about steering you to Jim's review. Enjoy.


Technorati tags: RIM, Blackberry Bold, Jon Arnold, Jim Courtney, Rogers, GigaOm

Who Still Cares About VoIP? I Do!

Last month, I wrote a post wondering if VoIP is really happening, and it elicited some thoughtful dialog. August has been a busy month for VoIP, and I wanted to revisit things on a more positive note. There are definitely signs of life out there that show the VoIP glass being half full.

I?ll start first with Infonetics Research, as their latest research sets the stage at a high level. Their report show that the global VoIP business is up sharply, with 2007 data being the most current period. Residential and SOHO VoIP is up 52% in terms of revenues and 60% in terms of new subscribers from 2006. Overall, residential VoIP dominates, accounting for 74% of total market revenues. This segment will remain dominant, but business VoIP will grow more quickly, and is forecast to account for 41% of the market by 2011. This is good news for carriers who are targeting the business market, where most of the VoIP growth will come from SMBs. I don?t have access to the full report, but these top line trends tell a good story on their own, and ties in nicely with what some of the industry players are reporting lately.

Vonage is the most visible of these stories, and I?ll comment briefly on them first. Their Q2 numbers were released on August 7, and for my money there was more good news than bad. On the plus side, revenues are up, losses are down, and the churn rate has improved. It?s very easy to minimize this and focus on their challenges ? the cumulative losses, sky-high marketing costs, tough competition, flat ARPU, management turnover, customer service issues, weak stock market sentiment, etc. However, this is a company that?s on track to hit $1 billion in revenues this year, and no pure play VoIP operator is close to this level.

Secondly, if churn continues to improve, so will their financials, and there?s no denying that the Q2 numbers are a big improvement. This is critical, not just to establish some positive momentum with subscribers and shareholders, but to improve Vonage?s chances with Silver Point to refinance their $253 million convertible debt that comes due in December.

While churn has improved from 3.3% to 3.0%, it is still high relative to Tier 1 carriers, and simply allows Vonage to stand still. The company may have acquired some 230,000 new subscribers in Q2, but 3 percent churn means they lost about as many, and reported a measly net gain of 2,080 subscribers. The realistic way to view Vonage now is not as a growth story, but one of maintenance. For all the marketing dollars being spent ? and the spending is coming down ? it is only sustaining the status quo, which is roughly 2.6 million subscribers. In my mind, there is nothing wrong with this as a strategy. Vonage has long been surpassed by the cablecos and will never challenge them again for market leadership. However, if they can defend their customer base, they do have a valuable asset, and one that can be profitable if managed effectively.

This brings me to my final Vonage thought ? the recent appointment of Marc Lefar as CEO. This move was important, and given his roots at Cingular, he sounds like the right choice on two levels. First, I would have to think he knows a few things about retaining customers and hopefully he?ll keep the churn numbers going in the right direction. Secondly, he comes from the wireless world, which I believe Vonage needs to get closer to for survival. This is where the growth is, not just for new subscribers and bundling opportunities, but also for new services. Vonage is not the innovator it once was, but I think Mr. Lafar?s experience will help change this for the better.

Packet 8 is another operator reporting numbers this month, and while not as notable as Vonage, they say a lot about the evolving dynamics of the U.S. VoIP market. This company has a much longer history than Vonage but is only a fraction of the size. That said, they are also the second most important U.S. VoIP pure play, so it?s important to follow them. The main story coming out of their most recent results is the continued successful transition from consumer to business VoIP. This has been going on since late 2006, as they wisely saw the downward spiral Vonage was getting into, along with the ultimate futility of trying to compete with the cablecos. Good move.

Currently, the business market accounts for 56% of revenues, and while they?re chasing far fewer customers, the margins are better and the churn rate is lower. Packet 8 is a long way from being a money machine, but it looks like they?ve found their niche and seem to be doing a good job of defending it.

Aside from providing core VoIP telephony to SMBs, they?re enhancing the value proposition with business-oriented features such as IP trunking, mobility, hosted contact centers and hosted key systems. Peeking over to their residential offerings, they also have video calling and the Audio Production Store, a neat online marketplace for services to customize and enhance your greetings and messages. There?s no single thing here that makes Packet 8 stand out, but taken together, you have to like the moves they?re making to differentiate themselves in a very crowded marketplace.

Telio is not well known in North America, but I?ve been following them and commenting about them since going public around the same time as Vonage back in May 2006. I?m one of the few people in North America paying them much attention, and have long advocated that they have the right formula for success with VoIP. That has never been more apparent than in their Q2 earnings which have just been reported, with record results on many fronts. There are some basic parallels to Vonage, but the market dynamics in their native Norway are quite distinct, and Telio has proven that there is money to be made as a pure play VoIP operator. In my view they are the exception to the rule, but it can be done, and that?s why I?m writing about them here.

They have managed to avoid reducing VoIP to a commodity, and the numbers reflect this not just at the subscriber level, but operationally as well. Naturally, Telio operates on a much smaller scale than Vonage, and while they are fundamentally in the same business, the performance metrics are quite different. Telio reported 151,700 subscribers in Q2, which is up 13% from a year ago. They do not disclose churn, but I know it?s orders of magnitude less than Vonage, and largely explains why they?ve continued to grow. ARPU has remained steady at around $48 US when converted from NOK, and as the subscriber base grows, so does the top line.

Conversely, Opex per subscriber is about 20% lower than last year, demonstrating that economies of scale can be realized with their business model. As a result, profits are up, and gross margin has increased from 58% last year to 61% today. Telio is now solidly profitable, they remain the dominant provider for broadband telephony in Norway, plus they are expanding both geographically and into the business market.

I think it?s a great story and to me, Telio is the benchmark for success among pure play VoIP operators. It strikes me that if they can find a way to replicate their business model, Telio could become a platform play of sorts for expanding into other markets. Having established a base of profits and retained earnings, I wouldn?t be at all surprised to see them move in this direction in the near future.


Technorati tags: VoIP, Vonage, Jon Arnold, Telio, Packet 8, Infonetics

Service Provider Views - Updates on Jajah, Ribbit and Ifbyphone

My latest Service Provider Views column is running now on TMCnet. I've decided to revisit some companies from earlier columns who embody various aspects of the platform play - Ribbit, Jajah and Ifbyphone.

They've all had important news announcements recently that show how quickly this space is evolving. Actually, the news from Jajah was only announced this morning, so it's very fresh. I don't want to divert you from reading my article yet, but for convenience, you can pick up the press release from Jajah and Intel here - it's pretty interesting stuff.

Hopefully that will pique your interest in my article, and you can read that here. As always, comments are welcome, as are suggestions for other platform plays you'd like me to look at.

Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, TMCnet, Jajah, Ribbit, Ifbyphone

July Media Roundup

I recently started doing a monthly roundup of media citings and now that I'm back from vacation, here's a quick summary of where I turned up during the month of July.

Ottawa Business Journal - Espial's outlook after acquiring Kasenna: "Taking Stock: Espying a Tough Road Ahead"

Business Week - "Can Cingular's Savior Work His Magic at Vonage?"

Chicago Sun-Times - Ifbyphone profile: "Answering the Call"

ITWorld Canada - "Rogers iPhone Rates Draw Canadian Users' Ire"


In addition, the following articles and commentaries of mine were published during July:

Service Provider Views - "SMB VoIP Trends -- Q&A with John Macario, Part 2"

Service Provider Views - "Tier 2/3 Service Providers: Leading the Way with VoIP"

Unified Communications News - "Social Media Challenges Reside with Users, not Technology"

SearchUnifiedCommunications.com - "Can I Keep my PBX While Migrating to VoIP?"

SearchUnifiedCommunications.com - "How Will Employee Desktop Video Use Affect our Network?"

SearchUnifiedCommunications.com - "Making the Decision to Shift to Hosted VoIP"


Technorati tags: Jon Arnold, J Arnold & Associates

Service Provider Views - Savatar Q&A, Part 2

My Part 2 Q&A with John Macario of Savatar is running now on TMCnet. I was hoping to get this posted before going on vacation last week, but it wasn't published until after we'd gone away.

This article is for the bi-monthly column I'm writing for them - it's called Service Provider Views, and it covers the broad spectrum of topics that I find topical for this space.

The previous column was Part 1, where John and I talked about some of the bigger trends around the adoption of VoIP and IP communications and the challenges facing Tier 2/3 operators. Part 2 focuses more on the current findings of Savatar's research and how these operators are tackling the SMB market. John touches on some interesting nuances of this space and shared a few graphic highlights. We hope you like it.


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, John Macario, Savatar, VoIP

The Case for SIP Trunking - Marc Robins in No Jitter

Colleague and partner Marc Robins has written a nice piece about SIP trunking that ran in No Jitter earlier this week. I just got around to seeing it, and wanted to share it here for a few reasons.

First, SIP is a hot topic on many fronts, and Marc's article does a good job outlining SIP's ascendancy in the voice space. More importantly, he explains how VoIP and IP PBX solutions cannot reach their full potential running off legacy TDM infrastructure. This brings us to SIP trunking, a term that is widely used but poorly understood - which is a key reason for Marc's article. Overall, the article ties these pieces together, and I'm glad to see Marc include some discussion about the limitations of SIP. It's not perfect, and SIP has its share of detractors, but there's little doubt this is where the industry is going.

Second, No Jitter is the online voice of Techweb, which covers a lot of ground in enterprise communications, and pretty much ensures that Marc's article will be widely read. There is lots of good content there, including many familiar bloggers and analysts, so it's a great resource to keep on your radar.

Finally, given that Marc and I are partners in our IP Communications Insights venture, it's always good to support each other when we can. In addition to this activity, Marc serves as Executive Director of the SIP Forum, and his article goes on to explain how their SIPconnect initiative is aimed at addressing some of the challenges around SIP to help enterprises maximize the benefits of migrating to IP.


Technorati tags: Jon Arnold, SIP trunking, Marc Robins, No Jitter

Wireless Spectrum Auction Completed ? Status Quo or Real Competition?

Canada?s AWS auction finally finished yesterday, and there should be no doubt about the perceived value of wireless spectrum. The final take was $4.25 billion ? that?s a lot of free money for the federal government, and that raises an issue unto itself. How those proceeds are spent ? or invested ? will say a lot about what kind of a country Canada wants to be.

To me, it?s a philosophical issue as much as economic ? these windfalls don?t come along often. It?s like getting a one-off giant tax refund that sets your head spinning about what to do with it. Pay off the credit card, take a family vacation, pay down the mortgage, fix up the house, top up the college fund? It?s not enough to retire on, but enough to make a significant dent in any of these noble causes. Any of these will improve your quality of life, so it?s a matter of figuring out what?s the highest priority.

It?s no different for the proceeds from this auction. If Canada wants to do the practical thing that no voter would oppose, they?ll just pay down the federal debt. If there?s some vision behind this, they?ll see this as an infrastructure issue to help Canada become more competitive and connected in the information economy. Of course, that?s what the auction is all about, as the winners will now get busy spending even more money building new networks or expanding/upgrading the ones they have already.

Fair enough, but what about people in remote or poor communities who cannot afford wireless and/or Internet services? This may not be a core issues for voters, but it sure represents a prime opportunity to take some leadership in terms of having some form of a national broadband policy. Countries like Korea and Sweden have gone down that road and the benefits are as clear as day. This is a rich topic that warrants more focus, and for that, I?m going to steer you to fellow local blogger Mark Goldberg, who is well versed, vocal and worth following. Mark also had a very insightful post this morning that puts a lot of this in perspective. Spend some time there - he'll be glad you did!

Back to the auction results. I posted about this recently and am not going to get into a long discussion ? just wanted to touch on a few things that stood out.

- Not surprisingly, the incumbents ? Bell, Rogers and Telus ? did about 2/3 of the spending. This is pretty much in line with the amount of spectrum that was available for them to bid on. In the spirit of defending their turf, that?s to be expected, and validates how important any form of wireless spectrum is to them once it?s up for grabs.

- Globalive and Videotron were the next biggest spenders, but these two are on very different paths. Globalive has national ambitions, and I see them emerging as the fourth Canada-wide competitor ? which is about all I think Canada can really support long-term. They have coverage pretty much everywhere but Quebec, and to address that, they?ll likely have to make a deal with Videotron, who is solely focused on Quebec. That will be an interesting scenario to watch.

- Notably absent was MTS/Allstream and the U.S. operators. MTS has had opportunities to become a national wireless player before, and however you want to spin that, it just doesn?t seem to be in the cards for them. I don't see this as a plus for their future.


More importantly ? and to the question posed in the title of this post ? what?s the score? Will this really give Canadians more choice, better services and lower prices? I think the status quo has largely been maintained, and that will hold if the new players ? whether national or regional ? simply play to the mass market and just focus on price or tweaking the everyday services ? you know, voice 1.0. I could be glib and say that?s the Canadian way, but I?ve got to look for the silver lining here. As I?ve said before, there?s a great opportunity for new players to be disruptive and come to market straight out of the gate with voice 2.0 services.

Even better if it?s telco 2.0 or wireless 2.0 or web 2.0 or communications 2.0 ? you get the idea. How about 3.0 ? whatever that means? The main idea here is that they?re starting with a clean slate and can build the kind of networks to support market needs for the next 10 years. In my view, the incumbents are more motivated to acquire spectrum for defensive reasons. I think they will be as innovative as they need to be to keep this a 3 horse race - and no more than that.

Globalive can certainly make it a 4 horse race if they really take it to them, and that would help make this a more interesting market. Same goes for the regional players, especially Videotron. They have been very successful with VoIP in Quebec because they were disruptive, not just on price, but with faster speeds and creative bundling packages. I fully expect more of the same with them for wireless, so this will be another market to follow closely.

So, is it a brand new day for wireless in Canada? It?s too early to tell, but if it?s the same-old with both the operators and the federal government ? we?ll just be getting Canada 1.0, and that?s a step backwards, not forward. Let?s hope not, and as subscribers, we have to vote with our wallets.

Consumer activism paid off around the recent iPhone launch here, and that?s a sign of hope that we have a say in this too. And believe me, the last thing the government wants to see after going through this exercise is the status quo. They?ll have a lot of ?splainin? to do if that?s the end result, so their job is far from done.

While I'm not wanting to end on a down note, I can't help but ask the bigger question that's driving all this spending in the first place. If you build it, will they come? What if... what if the market actually is in equilibrium right now? The gold rush mentality today is based on the premise that wireless adoption lags other modern economies, so there's lots of upside to go yet.

Hmm. I'm not so sure. Adoption is lower here, no doubt - largely because prices are high, and the value just isn't there for everyone else. Sure, there are pockets where wireless service isn't available or good enough. By and large, however, I would argue that anyone who wants a cell phone these days in Canada has got one by now. Basic economics would dictate that if prices fall, demand will rise - so sure, new entrants will be fighting for the scraps, and they'll have to do it on price.

How on earth are these guys going to turn a profit after spending so much money to get into the game? I just don't get that. What if the mass market doesn't want 2.0 services? Then they all become Vonages, and the incumbents will cut prices until they all go away and we're back to square one again. Ugh. Let's hope not. All I can say is the faster the new players can bring 2.0 to the market, the better - it's our only hope for true competition.

Technorati tags: Jon Arnold, AWS auction, Canadian wireless, Mark Goldberg

New Mobile VoIP Market Study Released

I was recently contacted by a U.K.-based consultancy called Technology Appraisals Ltd. about a new study that I'm pretty sure you'll want to learn more about.

I don't often talk about industry reports - especially those that aren't mine! - but mobile VoIP is such a happening market right now, and I don't think there's anything out there like this.

They've just released a report on the mobile VoIP landscape, and for anyone following this space, it's a pretty comprehensive overview of the players and the market pulse. The reports profiles 30 mobile VoIP providers/solutions, with many familiar names, such as Truphone, Talkster, Rebtel, Mino, fring, Jajah, Mobivox, Skype, iSkoot, EQO and PhoneGnome.

The report covers a lot of ground - it's 175 pages (and is reasonably priced) - with profiles of all these providers, as well as a section explaining all the various mobile VoIP solutions, and country-by-country tariff comparison tables to illustrate the varying range of mobile telephony rates.

The market researcher in me feels obliged to explain that the study is not a strategic analysis of the space, and is not based on primary research or direct interviews with these providers or their customers. If that's what you have in mind, then let's talk! I'm sure we could work something out along with the folks at Technology Appraisals.

That said, for a space that is so du jour, it's a great snapshot of the current market environment. I could see this report being of value to anyone looking to enter the mobile VoIP space or pitch value-added apps to the providers, as well as investors looking for companies to get behind or possibly acquire.

To learn more, I've provided some links to the study in this post, but would also be happy to put you in touch with Alan Paton, the primary author behind the study.


Technorati tags: Technology Appraisals Ltd., Jon Arnold, mobility, VoIP

Service Provider Views - VoIP in the Tier 2/3 Market

My latest Service Provider Views column is running now on TMCnet. It's the first segment of a two part Q&A interview with John Macario, and our focus is on the Tier 2/Tier 3 carrier market. His firm, Savatar, provides some leading edge research on the SMB market, and he shares his insights on how these carriers are going to market with both their residential and SMB customers.

Lots to talk about - that's why it's a two part interview. You can read Part 1 here, and we'll have the second segment later this month. Hope you enjoy it.


Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, Microsoft Telco 2.0, John Macario, Savatar, VoIP

Consumers Speak - Rogers Listens

Wow - chalk one up for free speech and the power of the Internet! Just before the official launch of the iPhone in Canada, Rogers has caved to the mounting consumer backlash and revamped their price plans.

I think it's a great story showing how well people can rally about something they really care about. The iPhone is such a must-have gadget, especially here in Canada where we've been watching our U.S. neighbors lap it up in no time. Clearly Rogers realized it has mis-judged market sentiment and is making some concessions to avoid losing face altogether. Today's Globe & Mail has a good piece about this, and refers to other well-known Rogers gaffes - such as their "negative billing option" - which they had to go back on once they realized how strongly the market felt about it. As I've said before, they behave like this because they can, but when consumers speak with a strong unified voice, they simply had to do something. Once again, the online versions of articles in the Globe are the best barometers of Main Street - with almost 200 reader comments, this is a pretty strong validation that Rogers came half-way in a nick of time.

I say half-way, of course, because while the rate plans are more competitive, they still won't follow the U.S. model of unlimited usage pricing plans. And you still have to take out a 3 year contract to get the phone, so why lock them in from the start with the best possible plan?

I'm sure unlimited usage is the last straw for them, and I can see why they're holding back. No doubt, once we have new competitors following the spectrum auction, all the mobile operators will have to be more price competitive. I'm sure Rogers is holding unlimited as their trump card for when that time comes. For now, though, the plans are atractive enough that the iPhone will have a healthy debut, but probably not as strong as it could have been.

While we're on the topic of pricing plans, I'll point you to a nice post that Mark Evans wrote yesterday comparing pricing plans in various countries. There's a great comparison chart showing just how out of line Canada's pricing plans are for the iPhone.

Finally, I can't help but mention one other factor that may be at work here. Just after Rogers first announced its pricing plans last week, Bell countered with much more attractive pricing to go with its upcoming launch of the very hot Samsung Instinct smartphone. This is the closest Bell can come to the iPhone, and for people looking an alternative, this is a pretty good choice. Not only is the phone comparable feature-wise, with better pricing options, but they also offer 2 year, 1 year and no contract deals. I didn't see any takeup on this news, and Rogers cannot afford to ignore the competitors in its own back yard. Bell may still be in lame duck mode until the privatization deal closes, but Bell Mobility is the #2 mobile provider and is in a great position to offer something more interesting to counter Rogers. In mind view, this had to have played a role in Rogers's thinking around today's news.

Sure will be interesting to see how busy the Rogers stores will be tomorrow.


Technorati tags: Rogers Wireless, Jon Arnold, iPhone, Canada

Globalive Set to Enter Canadian Wireless Market - It's the Network, Stupid!

I'm not following the AWS auction blow-by-blow, but it's pretty clear at this point that Globalive is set to emerge as the big winner - so to speak. The federal government stands to earn a huge windfall - over $4 billion - for auctioning off the spectrum licenses - and I have no idea what they're going to do with all this loot.

Anyhow, once the dust settles, it looks like Canada will get a few new regional wireless operators, such as Shaw in the West, Videotron in Quebec and Bragg in the Maritimes. I don't think the market can support much more than that, as Manitoba and Saskatchewan already have local wireless operators of their own.

Aside from Globalive, there's one other bidder who will have quasi-national coverage - DAVE- Data, Audio Visual Enterprises. It's a venture between John Bitove (satellite radio) and Microsoft co-founder Paul Allen. To me, they're a real wild card since they don't have any operating experience in this space, and it's a new, unproven venture.

So, that leaves us with Globalive, which is a pretty interesting company. They are poised to come out of this with spectrum to cover all of Canada except Quebec, which about as close as anyone is going to get up here. For sake of transparency, I will say that I have done work on and off for Globalive, but nothing connected to wireless, so there's no hidden agenda here.

I can't think of anything like Globalive up here, but telecom is definitely their business. For a variety of reasons, they are well positioned - and financed - for becoming a wireless player, and that's what matters. If you want to delve more into the details, you'll get some of it from their website, but today's wireless story in the Globe & Mail is a better place to get yourself up to speed.

For a variety of other reasons, I've also been skeptical that the Canadian market can support another national provider. We used to have four players, and now we're down to three. The costs of entry, of course are huge, and it's hard to see how anyone can hang in long enough to recoup their investment for spectrum and network buildout. Sure, wireless penetration is on the low side here compared to other developed country, and margins remain high. However, by the time new players come to market - which could be as long as two years - we'll pretty much all be mobile users, so the new business is going to have to come at someone else's expense.

So, why on earth would anybody want to do this? As the title of this post says --- it's the network, stupid. Here's what I think. I really can't see how anybody can make money long term up here being a new entry by just providing service in the mobile space. There just aren't enough subscribers to go around. However...

There are a few factors that make Globalive's situation unique, and may give them enough of an edge that will make this viable. Consider the following:

- They're building a network from scratch, and yes, this will be very costly. However, they'll be building it for today's market, which is all about video and data - not voice. It's a bit like fiber vs. DSL. Presumably, Globalive will be building a network around the applications that make money and sell smartphones. As good as the existing wireless networks are in Canada, they were not built this way, and will likely have to do some upgrading to keep pace once Globalive comes to market. The way I see it, whenever they are ready, Globalive should have the most advanced network, which should give them a nice window to capture their first round of subscribers.

- Globalive's backers have a LOT of experience with large scale mobile operations on an international scale. That means they have experience with spectrum auctions and they must have leverage with vendors that Canadian operators probably don't have - such as Alcatel-Lucent. In other words, they will likely be able to build their network cheaper than other new entrants, which will mean a faster payback on their investment. Because they have so much global expertise, they may very well be able to partner with major vendors and get financing or preferable terms. In other words, they may not have to lay out so much money, which would put them in a very good position to enter the market. Oh - and by extension, the same goes for handset vendors, which means they should be very competitive against the other operators in terms of both device selection and pricing.

- Globalive already has an established telecom operator in its stable - Yak. So there is some brand presence already, and ramping this up into a mobile carrier would really be a matter of scale.

- They also have several other telecom companies in their stable, so there's a built-in pool from which to draw for both talent and developers. Because they'll be coming to market with a state of the art network, Globalive will have a clean slate to truly become a 2.0 type of provider. This is not really a made-in-Canada business model, and Globalive brings an international mindset which I think will give them an edge for bringing innovative services to market. I'd be very surprised to see them simply copying what the incumbents are offering.

- Last but not least, as I say in the title of this post - it's the network, stupid. I'm thinking differently now about Globalive, and believe it's the network that's going to make them successful - not the services. We all know why the Vonages of the world are doomed - it's almost impossible to make a go when you don't have the network. Aside from all the advantages discussed already, another factor in Globalive's favor is that networks are cheaper to build today than in the cellular world. This is still the biggest barrier to entry, but it's not as high as it used to be, and Globalive has deep pockets. Once you get past that hurdle, you will be on an equal playing field with the incumbents. At that point, all bets are off as far as I'm concerned. Sure, the incumbents will have the subscribers and established brands, but the pressure will really be on them to defend their territory. Globalive won't be coming to market to compete on price - they'll be doing it with cool services that make smartphones worth every penny. If they hit the market with really innovative services, I think they'll give the incumbents a good run for their money. Looking at it this way, it really is about the network. Once that big barrier falls away, we'll see how well the incumbents will be able to compete with some real competition. In my mind, it's a bit like calling your bluff. If Globalive comes to market with the best network around, things could get very interesting.

- Oh - here's another reason why I think the network is the key to making Globalive a potential winner. I'm pretty sure they will end up being the only real rival to the 3 incumbents in terms of market coverage. They may choose to stay out of Quebec, or simply partner with someone like Videotron there, which would give them Canada-wide service. Either way, Globalive will be a natural magnet for regional carriers looking to expand coverage or MVNOs seeking to capture some niche markets.It's hard imagine anyone else having the means or motivation to build yet another national network once all the licenses are spoken for. MVNOs have had a hard time succeeding anywhere, but hey - if Globalive has a really great network, they will be able to support a much more interesting range of services than what MVNOs are offering today. So, if they were thinking along these lines, they will overengineer their network to provide enough capacity to accommodate over the top providers. This will generate more revenues, with hardly any additional expense, which in turn will accelerate their ROI. Nothing wrong with that.

I still have a lot of reservations about how successful any new entries will be to our wireless market. Now that I look at where Globalive stands today, I'm a lot more optimistic about their chances. The odds are still long, but Globalive brings a lot to the table, and I really don't see how anybody else comes close.

The big question now becomes how will the incumbents respond? If they still feel this will remain a cozy club of three and stand pat, I think they will be in trouble if my view of Globalive is on target. What if they don't upgrade their networks? What if they don't innovate with new services and just try to compete on price? Just look at the way Rogers is coming to market with the iPhone. No way this tactic is going to work once Globalive comes to town, especially if they're GSM.

Pretty interesting scenarios to say the least. Y'know, this Globalive thing might just work. Thoughts???

Technorati tags: Globalive, Jon Arnold, AWS auction, Canadian wireless

IP Convergence TV Update

I haven't blogged much about the IP Convergence TV portal lately, but it's time. Our latest update has just gone live, and as usual, there's lots of new and interesting content.

As portal Editor, my role is to keep the content honest and of a high caliber. I'd like to think I'm doing my part as we continue to get great feedback about the portal and traffic continues to be healthy.

So, I'd just like to draw your attention to the new content in our latest update.

We have two Guest Opinion pieces, and I think you'll really enjoy their personal views on convergence technologies. They're from new voices who may be familiar to you, and if not, I hope they will be soon - Garrett Smith and Brady Gilchrist.

On the video front, we have 3 interviews, conducted at recent industy events in Europe. Two focus on the state of IMS - Joe McGarvey of Current Analysis, and Peter Galyas of Tilgin. We also have Intel's John Woodget talking about what's driving WiMax now and how it compares to competing wireless technologies like 4G and LTE.

Finally, we have a really great primer article from Dickel Sooriah of Comverse on femtocells. It's a very timely resource for a technology that's becoming pretty central for FMC, especially SIP-based services.

I should also add that the Convergence Blog serves as my own voice for IPCTV. Sometimes I write exclusive content there, and sometimes I re-post relevant content from this blog. If there's something you'd like to see me blog about there, I'd love to hear from you.


I hope you enjoy the latest content, and to stay up to date with us, it's real easy to sign up for an RSS feed. Just look for it on the ride side of the home page.



Technorati tags: IP Convergence TV, Jon Arnold, J Arnold & Associates

Rogers Backlash on iPhone Pricing

Well, in the wake of Canada Day, you'd think we'd be feeling all good about ourselves. Perfect time to get excited about the iPhone, which has finally come to Canada - legally, that is.

What a golden opportunity for Rogers to bring the gift that keeps giving and endear themselves to the wireless digerati.

We sure have a strange market up here for wireless, not to mention a wildly successful wireless spectrum auction that has been brought in some $4 billion for the government. Can't get enough of a good thing, I guess.

Because Rogers holds so many trump cards, they've chosen to come to market with some pretty expensive and restrictive pricing plans, and the pushback from consumers is really starting to kick in. I'm not going to get into the details, but their pricing plans are in stark contrast to the U.S., and I don't think there has ever been an instance that so baldly shows how different our market is here, and how much more people have to spend to get wireless services.

By nature, we're a polite people and don't complain too much or too loudly. That's why I'm posting about this, especially for those of you not that familiar with the Canadian telecom market. Let's just say that a lot of consumers are speaking out, and in true Web 2.0 fashion are self-organizing, and using all the tools. It's a great example of Internet democracy in action, and it will be interesting to watch how Rogers reacts.

I haven't blogged about this yet, but you can get my take in one of the articles that just ran this morning.

There's lots more out there of course, and I'll steer you next to a feature piece that ran in today's Globe & Mail. It covers the ground pretty well, but what I love the most about online versions of newspaper articles is the commentary from readers. As of this moment, there are 135 comments, and it's a great way to take the pulse of Canadians. Most of them are slamming Rogers, but there are also pro-Rogers voices, explaining that it's a free market, and they have every right to maximize their revenues and profits. After all, they took the risk, so they should gain the rewards. I suppose, but there's not a lot of risk here really, right?

On the blogger front, I'd also urge you to review Kevin Restivo's recent posts - he's been following this pretty closely.

Of particular interest on his latest post is a link to a online petition that has been getting lots of grass roots support. The Web works in strange ways, folks, and his link takes you to a URL that is too obscene to mention here, and you get the "Forbidden" 403 code, so you won't have any luck finding it. I think Kevin's intent was to steer to you to a different website, more appropriately titled "Ruinediphone.com". That makes more sense, but guess what - that URL also comes up "Forbidden" 403. Very interesting, huh? You'd think we were in China, where dissent is not often tolerated. I suspect this website is a bona fide place to rant and rally around a bone fide issue. Am I being blocked from this site because I happen to be a Rogers broadband subscriber? There's a scary thought, huh.

A sidebar thought that I can't figure out. If this website has been set up to organize Canadians against these pricing practices, why is it a .com URL, and not a .ca URL? Is it just me?

To continue this journey, it's always good to pick up on what Mark Evans has to say, and Jim Courtney's take on Skype Journal.

Bottom line - Rogers is behaving as one would expect an oligopoly to behave, and in response, it will mobilize our desire to see a more competitive market. The consumer will ultimately decide and will show Rogers just how much they really want the iPhone. Rogers may take the hint and follow Apple's footsteps by lowering prices, or they may hold their ground and exploit this window where they're the only game in town.

Based on a sample of one, my oldest son Max has gone back to using an iPhone, but I can't print here what he thinks of what Rogers is doing. Let's just say a lot of Canadians are seeing red right now, and I'm not talking about our flag or the Rogers logo.


Technorati tags: Rogers Wireless, Jon Arnold, iPhone, Canada

Service Provider Views - Microsoft Telco 2.0, Part 2

The second installment of my look at Microsoft's Telco 2.0 has been posted now on TMCnet. It's part of my ongoing Service Provider Views column I write for them, and you can view the article here.

In the first article, I looked at the drivers behind Telco 2.0, and in this piece I provide some examples of how telcos can bundle various Microsoft hosted services to address different audiences within their subscriber bases.

As always, your comments are welcome, along with suggestions for future topics.

Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, Microsoft Telco 2.0

Bell Deal is a Go

Without a doubt, the privatization story around BCE is the biggest telecom story in Canada this year, and today was the big day in terms of whether the deal will be a go or not.

I'm bit after the fact, but at 4:30 today, the Supreme Court of Canada announced a unanimous ruling in favor of the deal, which led to a huge sigh of relief for just about everyone in Canada except BCE's bondholders and Telus. You can read about the highlights here, and you won't have to look far across the Canadian telecom landscape to find further commentary. BCE's bondholders are a story unto themselves, and a recent lower court ruling in Quebec came out in their favor, which was an unexpected obstacle as the deal was nearing closure. The Supreme Court ruling trumps this, though, and now the deal faces pretty clear sailing for being finalized by month end.

Telus would be disappointed in that they would be the logical suitors for BCE if the privatization option failed. At this point, there's no turning back for BCE to remain a public company. The income trust route was killed off late last year, and as the stocks of BCE's rivals - namely Rogers and Telus - continue to outperform them, privatization became the most viable option for long term survival. There is certainly recent precedent out there for telcos doing this, so it's not such a hare-brained strategy. You may recall that last year, Telus played the white knight card as a pre-emptive option to going private, but that move came late and fizzled quickly.

Much like the way SBC acquired its parent AT&T, Telus would love to do the same to BCE. If the deal had failed today, BCE would be in a need of a Plan B, and given our foreign ownership restrictions, a domestic buyer would need to be found. With BCE being so dominant, we don?t have many other big carriers up here, and Telus would be the only one in a position to step up and effectively take over their largest competitor. That sure would make for an interesting scenario with all kinds of regulatory implications, but it?s moot now.

Once the deal closes, Canada?s most widely-held stock will be no more and a new page will be turned in our corporate history. Investors will have one less blue chip company to own, and one of our most storied and loved companies will pass on into something else. For all our complaining about corporate concentration, BCE was a very illustrious company and world class on many levels. Others can give you the history lesson better than me, but suffice to say, that BCE will be missed.

Of course the new owners have grand plans to re-invent the company and restore it to glory, but it won?t ever be the same again. No doubt BCE will be broken up, but it?s anyone?s guess if the new consortium of owners will make the right moves. This story has a few more chapters to go, and I?m sure it will someday become a textbook example of how to take a company apart and ? hopefully ? put it back together again.

Technorati tags: BCE, Jon Arnold, Canada, privatization

Telus EVDO Mini Review

As most of you know I'm not much of a gadget guy, but I do trial
products and services every now and then. I was recently given a chance to try out Telus Mobility's EVDO service, which basically gives my laptop mobile broadband service in Canada.

In principal, mobile broadband is a great idea, but for someone who works at his desk 95% of the time, it's not exactly a must-have. However, that didn't stop me from using it on an everyday basis at my office. I just didn't bother using my Rogers broadband service while this trial was on. It's still a bona fide environment to use the service, but of course, it's not the intended one.

I'm more than happy to review the service and share my experience with
you, but there's not really much to say, so that's why I'm calling this a mini review. In short, I plugged the USB modem into my laptop and it didn't take long to configure at all. Once it was installed, the signal kicked in automatically whenever the PC was turned on, and voila, it worked like it's supposed to.

I'm not much of a power user, so I didn't bother testing speeds and
feeds or trying to download big files. All I can tell you is that the
speed and performance was on par with my Rogers service, so for me, it was business as usual.

The USB modem was a Sierra Wireless AirCard 595U - which may mean more to you than to me. It's a bit bulky, but the long portion of the modem was hinged, so it could swivel away from its normal vertical position. In my case, I usually had the modem connected to the USB port on the back of my PC. Sometimes I tilt the PC screen down and away quite far, and in these cases, the modem just eases backwards along with the screen. So, it keeps on working and doesn't get bent out of shape. That's a small thing - and is probably pretty standard design for these devices - but this type of flexibility is important as PC's have all kinds of configurations in terms of where the USB ports are located.

The main attraction, though is the Telus EVDO network. All mobile
operators want to sell you mobile broadband - after all, we're all using laptops these days, right? Some of us can live entirely on their
BlackBerry, but most of us would rather be using their PC's when away from home/office. So, whether EVDO is your only broadband option, or a handy complement to BlackBerry, there's no denying it's a great thing to have.

Telus is also offering a faster Rev A network, but I really didn't bother looking to see which version of the service I was on. It didn't much matter to me, as the service worked as expected whenever and wherever I used it.

That said, I did have a couple of chances to take this on the road - a
trip to Ottawa and a few meetings downtown here in Toronto. My
experience was pretty consistent for all these instances, so I would have to conclude that wherever they have good coverage, the service should work pretty well.

I wish I had more opportunity to travel with this, as it's a very
liberating feeling to know that pretty much wherever you go there's
broadband ready and waiting. No need to hunt for WiFi hotspots or worry about how much the hotel charges for Internet access. And of course, the freedom to use your PC anywhere else - where in most cases you're probably the only person on the Net.

Other than the fact that the modem ties up a USB port, there's not much to complain about, really. I can't vouch for how secure the signal is, or how well it holds up for high-bandwidth usage, but for everyday usage, it's a great service. Telus also has various rate plans to suit all types of users, which only makes sense. So, there are 3 tiers of monthly plans depending on usage levels, and shorter term plans for day long needs. Nothing unique there, but I just wanted to point out the flexible nature of these plans, which to me is important to make this service more appealing to the mass market.

I know lots of people who live by EVDO, especially in the U.S., and if
I had their lifestyle, I'd be doing the same. I love the freedom of
BlackBerry for my email (but it also makes you a slave...), but really, it's much more practical for receiving and reading emails than it is for sending. Once you've got mobile broadband, there's a lot more you can do on the PC than any mobile device, and with laptops getting smaller and more powerful, the case for EVDO will just keep getting stronger. Seems to me that Telus should be looking to partner with laptop makers as much as with all the other devices featured on their website. In my view, EVDO is the best reason for upgrading a laptop, and a nice bundle here would make a lot of sense.

Anyone out there using this service? Would love to hear from you.

Technorati tags: Telus Mobility, Jon Arnold, EVDO, Sierra Wireless AirCard

Service Provider Views - Microsoft Telco 2.0

My latest article for Service Provider Views came out yesterday, and focuses on Microsoft's Telco 2.0 strategy. My recent focus in this column has been on the platform play approach for service providers, and I'd have to say that Microsoft could be the biggest platform play of them all.

There are lots of ways to define and execute a platform play, and clearly, Microsoft has a lot to offer. This article provides an overview of what's driving their Telco 2.0 roadmap, and I'll touch on some of the specific offerings and bundles in the next writeup. You can read the article here, and as always, your comments are welcome.

Technorati tags: Service Provider Views, Jon Arnold, J Arnold & Associates, Microsoft, Telco 2.0, TMCnet

magicJack - Another VoIP Disruptor?

Anybody out there heard of magicJack? Love the name, and it sounds magical - maybe a bit too magical...

I hadn't until a few days ago. It's yet another device/gadget you can connect to your PC, and voila, you've got VoIP. Very quickly and quietly - well, maybe not so quietly - they've sold 400,000 of these in the U.S. Or least that's what they're telling us.

Check out this story that ran on Friday in the venerable U.S News and World Report, which was kind enough to include my comments in. Not having heard of magicJack before, Ooma came to my mind right away, which raises a whole other set of ideas and concerns.

But then as you look a bit further into this, magicJack strikes me as a bit of a Frankenstein creation that has a little bit of....

- Vonage

- Skype

- Ooma

- Google

That's quite a voice mashup, and I'm sure Mr. Howe would agree. Anyhow, this may well be the first time you've heard about magicJack, so I'll give you the high points about what I'm seeing here.

Why Vonage? Well, they're going after the residential landline subscriber, selling them on the benefits of lower LD costs. However, it's not a replacement service with a monthly fee - just a cheaper way to make domestic calls. Oh, and like Vonage, it's a gadget that connects your phone to your PC. The website lists all kinds of features - similar to Vonage - that can approximate this as a landline replacement service, but that sure looks like a big stretch to me.

Why Skype? magicJack is all about PC-based telephony, which is how Skype started. Skype is moving well beyond this, of course, but the magicJack folks still seem to see a market here. Like Skype, calls are free between magicJack users, and otherwise, calls within the U.S. and Canada are free - and they will soon be offering international calling. A lengthy menu of overseas locations is posted on their site, along with "projected rates". This is a pretty good sign that unlike Skype, their offering is for heartland USA, where international calling is not an everyday occurrence. Actually, I should clarify that Canadian calling is not not available yet either. This is explained more clearly on the website of their Canadian distributor.

Like Skype, they have options for "In" and "Out" numbers, which allow calls to bypass your local carrier to go over their network. Much like last year's SkypeOut program for North America, domestic calls are unlimited. Skype has since moved to a monthly fee, which guarantees them recurring revenues, and more options to upsell users to new services. This also makes the service more like a subscription, which to me, is what builds value over time. Right now, magicJack is working on the annual fee model, which is a subscription of sorts. Skype has moved on from this approach, but SunRocket didn't and well, we know how that story ended.

Finally, like Skype, you need to have your PC running to use it. That's no longer true with Skype, but that's how it was initially. I guess the expectation is that magicJack's customers are always-on kind of people, and in that case, this shouldn't be a problem. I'm just not so sure that's really what's happening out there.

Why Ooma? It's a gadget, but not nearly as slick. But it's also passive, which to me, is a problem. In other words - out of sight, out of mind. Since there is no monthly fee or statement, it just sits there, but doesn't really engage you. It's actually more of problem here since it takes up a USB port on your PC, so you need to be conscious of it, and sometimes you'll need that port for other things. Another important parallel is that magicJack has its own "network", which, like Ooma is a key selling point for a higher quality calling experience. There's not much talk about what this network is, but at least they recognize the importance of this in providing a decent service.

A couple of other things that are similar to Ooma. For now, you can only get magicJack by ordering from their website. That's a pretty limited channel, but it sure keeps your costs down. I'd be impressed if they really have sold 400,000 units this way so far - I'm more than a bit skeptical. Mind you, the website is touting this as a free 30 day trial - which expires today - so maybe the numbers are there, but I'm not so sure about the revenues.

Another interesting parallel is the physical nature of the product. magicJack is a USB card with a conventional phone jack at other end. It's like an ATA, but here, you literally tether your home phone to the PC. Is that Voice 1.0 or what? Sure, it will work with your cordless phone, but like Ooma, you need a separate gadget - for lack of a better word - for each phone you want to hook up. Is this really a market you can build a business around? And, unlike Ooma, there's really no integration for multiple line use. It's very much a serial type of product - one magicJack, one phone, one PC. At least with Ooma you get the instant second line and the ability to conference the lines together - I always loved that feature.

One more thing. Like Ooma, this venture has come out of the blue from people not well known in VoIP, although they definitely have a telco pedigree. This venture is led by Dan Borislow, the Founder of YMAX Communications - "a modern phone company with the largest CLEC network in the U.S." Am not sure what modern means, and I can't verify their claim for size, but I sure like the way they do business. What's not to like about being based in West Palm Beach, with the management team photos showing them very relaxed on the beach. You'd think a company of this stature would be easy to reach by phone. Well, the only way to contact them is by "Airmail" to a P.O. box in Florida. Is it just me?

Anyhow, magicJack actually comes across like a K-Tel or a Ronco product, being pitched by Mr. Borislow in a very folksy way. The demo video on the website shows his "title" as Inventor - not CEO or Founder. And he's demoing the product with his daughter. I wouldn't exactly call this Web 2.0 marketing, but it probably resonates with the middle America audience he's catering to.

Finally - like - Ooma, magicJack has a lot of hype around it, making this sound like a slam dunk to be next big thing. There are lots of bona fide media kudos on the homepage, and even an FCC logo on the bottom, which I've never seen before. I guess that gives it the Good Housekeeping seal of approval to show how legit this telco-killer really is. Are you convinced yet?

Why Google? If you're still with me, the slog will be worth it. I'm saving the best for last here. If you're the least bit curious, you've got to be wondering how one product could possibly have elements of all these services. I think the above three are easy to gauge, and it's clear - at least to me - where magicJack is borrowing wisely - and not so wisely.

Ready for this? The service is very well priced, which explains its apparent early popularity. It lists for $40 a year, unlimited domestic calling - that's a good deal. Skype's plan is about $3 a month, so the annual cost is comparable. To build trial, magicJack has this free 30 day offer going on. Well, considering how long it took Vonage to get 400,000 subscribers, and how much money they spent, this could be a good strategy.

It also looks like a Trojan Horse strategy to me. The name of the game for magicJack is numbers - get lots and lots of subscribers. Yes, this drives subscription revenues, and maybe even a bit of international calling, but there's a Web 2.0 element to this, and you're not going to like it.

Whether you like it or not - want it or not - magicJack is going to serve up advertisements. It's not clear if these are just audio ads coming over the phone line or also on your PC screen, but they're not just mass-market messages. Nope - they're context-based, derived from your personal information. It's not clear what they're basing this on - it may just be your phone number, but I fear it could be other personal information which would be used to target advertising much the way Google serves up ads when using their search engine.

So, with a large enough subscriber base, magicJack would theoretically be able to derive premium advertising revenues by allowing advertisers to more selectively target their message to a decent sized audience.

WHOA! I guess with search we accept this since it's a free service, plus we're not leaving personal information on file with Google. But magicJack is making a very clear connection between the two, and if you care to read the fine print, it gets even scarier. Just scroll down to Item 11 of their Terms of Service Agreement - here's a sample of what I'm talking about...

"You also understand and agree that use of the magicJack device and Software will include advertisements. Advertisements will be served through the magicPage? Software. magicPage? Software attempts to serve local advertisements and classifieds using a completely automated process that enables us to effectively target dynamically changing content."

And...

"You also understand and agree that use of the magicJack device and Software may include certain communications, such as service announcements, administrative messages and newsletters, and you will not be able to opt out of receiving them."

I don't know about you, but this doesn't sound like much good can come from it. I've got a feeling that if people read the fine print before buying, they might look at magicJack a bit differently - and warily. The scary part, of course, is that people rarely do read the fine print, and this could sure come as a nasty surprise.

And, by the way, this is not the only caveat for magicJack. If you care to review all 24 Terms of Service conditions, you'll find a whole lot more to be asking questions about. For those of you who have tried Ooma, you may recall similar concerns. At the very end of the sign-up process, Ooma states all these conditions about how they basically take over your phone service and can terminate existing calling plans to keep calls going over their network.

I'm going to leave it at that for now. I could go on and on, and have not even touched on many other features and aspects of magicJack that you just have to wonder about. This post is long enough as it is.

In short, it's a neat gadget, but it's chasing a declining market on several levels. I'm all for cutting down telecom costs, and perhaps they'll find a viable market for this. Ease of use is a huge selling point, and that seems to be one of their strong points, and maybe that will be a real differentiator.

Even if it was, though, the advertising element really kills it for me, and just seems to be on the wrong side of the good vs. evil continuum. Strikes me more as a business idea to drive traffic over YMAX's network, and there's nothing wrong with that. It's certainly a major reason why this is different from the other offerings I've been talking about here.

However, there are just so many questions and missing pieces here. And I haven't even touched on issues such as customer service and call quality, both of which have been problematic. To be fair, though, I haven't tried magicJack, so I won't say any more. Last year I wrote a review on Ooma following my trial with it, and to go much further with magicJack, I'd have to do the same. At gut level, though, I still feel my initial reaction is valid.

You may wonder why I'm giving so much attention to this. Well, I'm not really sure myself, but part of it is an endless fascination for the entrepreneurial spirit and/or hucksterism that comes with mass marketing. You have to wonder in this day and age why anyone would follow down the path that Vonage, SunRocket, Ooma and many others have gone - with varying degrees of failure. I'm still wondering, and if you have the answer, I'd love to know.

Technorati tags:

magicJack, Jon Arnold, VoIP, Vonage, U.S. News and World Report, Ooma, Skype, Google