2005 February | Mark Evans

Marginal Wireless Customers

February 28th, 2005 | No Comments | Posted in Main Page

Hey, it's not only spam that wireless carriers have to worry about. According to a 1,200-person survey done by Bear Stearns, it's apparently going to be far less lucrative to pursue new wireless customers in the U.S. The investment firm said new customers will only spend $30 a month, making it difficult to make much of a profit from them. Given this bleak view on wireless economics, it may mean carriers will take more interest in pre-paid services and MVNO relationships.
The Bear Stearns survey is the second less-than-positive take on a fast-emergingconsumer technology. Earlier this year, J.P. Morgan conducted a survey that suggested only 35% people had an interest in subscribing to satellite radio. J.P. Morgan also discovered that 62% of people interested in satellite radio would want it for commercial-free music, rather than sports or personalities such as Howard Stern, who signed a US$100-milion with Sirius.

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It's Here: Wireless Spam

February 28th, 2005 | 1 Comment | Posted in Main Page

If spam on your personal computer wasn't enough of a hassle, Wireless Services said 43% of all text messages sent on U.S. networks last year were spam, compared with 18% in 2003. The wireless messaging company said it arrived at its figures based on the 1.2 billion spam messages it blocked last year.
If Wireless Services' information is accurate, it could pose a huge issue for carriers that are heavily relying on more data traffic to boost ARPU. Can you imagine the kickback from consumers who incur extra charges due to a flood of spam messages into their e-mail boxes? The carriers are going to have act quickly and decisively to ensure wireless spam hasn't got out of hand - assuming it's not there already, of course! That said, there must be some pretty happy anti-spam software makers looking at another fertile market for growth.

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Vonage IPO?

February 28th, 2005 | 1 Comment | Posted in Main Page

BusinessWeek has jumped into will-they-or-won't-they arena when it comes to an IPO by Vonage, which has raised more than US$200 million in venture capital. According to the magazine, several VCs believe Vonage will go public this year but investors could be spooked by Vonage's less than stellar retention rate. In a recent posting, Om Malik wrote that Vonage is adding 10,000 new subscribers a week, and it has surpassed 450,000 customers. The company has made it clear its subscriber target for this year is 800,000 to 1M.
For those you who read this blog, I'm in the camp that Vonage could do an IPO that would give a market capitalization of more than US$2-billion based on how publicly-traded rival 8X8 Inc. is currently valued. As someone who reported on the dot-com boom and wrote far too many stories about twenty-something billionaires, I'm as cautious as the next guy when it comes to touting IPOs of emerging technology companies. That said, Vonage has subscriber momentum and investors like nothing better than a sexy story involving a business they can sort of understand. Before anyone gets too carried away, it should be noted that Vonage may be bleeding badly given how much it's spending on marketing to attract subscribers, and competition will intensify in a big way when the carriers and cablecos get really serious about Internet telephony.

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Firefox Fixes Flaws; Rolls On

February 27th, 2005 | 1 Comment | Posted in Main Page

Mozilla has released Firefox 1.0.1 that fixes 17 security flaws - the most serious of which lets an attacker gain full control over someone else's personal computer. While Mozilla deserves credit for being quick to release a new version of Firefox so quickly after 1.0, you wonder if computer users will think twice about leaving Internet Explorer for Firefox. Personally, I think Firefox has plenty of early-adopter runway left before it runs into reluctance from potential users concerned about security issues. Most people who decide to switch to Firefox are savvy computer users and should, in theory, be aware of the importance of security. It's when Firefox moves into the mainstream that security will become more of a concern.
Speaking of Firefox's momentum, WebSideStory reports Firefox's market share climbed 15% from Jan. 14 to Feb. 18. The browser now has 5.69% of the market, compared with 4.95% in mid-January. Meanwhile, use of non-Firefox Mozilla and Netscape browsers fell to 2.47% from 2.64%. This spells bad news for Opera, which used to have some of Firefox's cache. WebSideStory CEO Jeff Lunsford said he's increasingly pragmatic about Firefox's goal of 10% market share by the end of this year unless Mozilla spends more money on marketing.

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Skype Back on a Roll

February 27th, 2005 | No Comments | Posted in Main Page

Looks like Skype is coming back into the spotlight as lower prices for Internet telephony service are causing some people to wonder whether VOIP will eventualy be free. A story in the International Herald Tribune quotes FCC chairman Michael Powell as saying “he knew it was all over when I downloaded Skype”. In conversations I've had with telecom consultants and executives, there is a growing notion that carriers and cablecos will simply bundle voice with other services and it will become indiscernible as a “business”. While I'm loathe to dismiss Skype, I increasingly believe features will cause people to pay for Internet telephony as opposed to cheap or free long-distance. The money will be in compelling value-added services that are simple to use. If Vonage and AT&T's CallVantage want to be viable in the long run, they should stop bashing each other over price, and start telling consumers about their cool features.

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Big, Fat Pipes and the power of Internet services

February 26th, 2005 | 2 Comments | Posted in Main Page

I've been playing around with the idea high-speed Internet networks dramatically change how Web-based applications and services are delivered to business and residential customers. The theory is that barriers to entry are pretty much eliminated because services can by delivered to anyone anywhere in the world. While Internet telephony has captured most of the attention as the emerging Web-based services, VOIP just scratches the service of what's coming down the pipe (excuse the pun!). As carriers and cablecos look for more revenue, they are going to be pumping down all kinds of services developed internally and through partners. Then, there will be third parties such as Vonage, Salesforce.com and Apple (iTunes) that will try get a piece of the action.
My initial thinking is network operators that have customer relationships (a.k.a carriers and cablecos) have an inherent advantage because they can easily layer services on the network and selling them to an existing customer base. For people interested, I wrote a lengthy feature on the emergence of Web-based service in the National Post earlier this week. I'd be curious if the theory I'm espousing resonates with anyone or whether there are other takes out there.

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Wireless Party!

February 24th, 2005 | No Comments | Posted in Main Page

If you're looking for the right word to describe how Canadian wireless CEOs are feeling these days, it's chuffed..
With pesky Microcell Telecommunications taken out of its misery by Rogers, the Big Three (Rogers, Telus and Bell Mobility) are enjoying a stable pricing environment, strong subscriber growth and more revenue from data services. As Rogers Wireless CEO Nadir Mohamed said today at an RBC Capital Markets conference in Banff, “it's a great time to be in the wireless business”.
If you figure penetration in Canada will likely settle in eventually at 70%, there are probably four or five years of really good times ahead for wireless carriers. With everyone focused on ARPU and profitable growth, you can expect there will likely be across-the-board approval of price increases. In fact, we're alreadying seeing indications pricing is on the rise. Telus, for example, is thinking about moving the start of its free weekend calling plan to 9 p.m. on Friday night from 8 p.m. for new customers. Anyone who wants the start time to be 6 p.m. will pay a $7 or $8 monthly fee. It's a small change but it illustrates how carriers are always thinking of any way to boost ARPU.
Unless Virgin or the introduction of local number portability changes the competitive dynamic, you can expect to see your wireless bill go up, up and away.

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Bell's Bargain-Basement LD Draws Wrath

February 24th, 2005 | 1 Comment | Posted in Main Page

A common theme during the first day of RBC Capital Markets' conference was the carping about Bell Canada's $5 a month long-distance plan that it introduced last summer. Everyone not only had to match the Wal-mart types prices to stay in the game, but now everyone launching VOIP service - at least in Eastern Canada - has to take into account they are unable to use cheap LD as a selling feature because Bell has taken the bottom out of the market. One CEO dismissed Bell's LD pricing as “a disaster”.
For consumers, a troubling undercurrent is the feeling among CEOs that prices need to be increased to justify ROI and return on equity. There seems to be a common belief Canadians have been spoiled by cheap communication services, particularly compared with the U.S. Of course, these executives are anxious, if not desperate, for ways to boost revenue so price increases are an easy way to do it if all your “competitors” abide by the same rules.
We're not talking about collusion here, are we?!

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Vonage: Belle of the Banff Ball

February 24th, 2005 | No Comments | Posted in Main Page

Amid the large, publicly-traded companies at RBC Capital Markets' conference this week, a somewhat surprising participant was Vonage, which was part of a panel on the outlook for the wireline business. It turns out Vonage Canada CEOBill Rhamey was popular as it held several long meetings with invesotors and had to schedule conference calls on his way back to Calgary. Perhaps RBC's interest had something to do with courting Vonage as it heads for a possible IPO this year. Maybe RBC wanted a shit-disturber on hand just to make things interesting. In any event, Vonage scores again.
In other VOIP news, Cogeco Cable will launch its service by June but do not expect the same kind of discount prices that Videotron Ltee introduced last month. Cogeco CEO Louis Audet is looking for a quick ROI. Meanwhile, Videotron CEO Robert Depatie said that despite the company's low Internet telephony prices, don't be surprised if price hikes happen down the road.

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The Wait is Over - we think - for Virgin Canada

February 23rd, 2005 | 1 Comment | Posted in Main Page

After much speculation and a few off-the-mark target dates, Virgin Mobile Canada will launch March 1. At least, that's what a corporate press release said today that promises an appearance by Richard Branson. Virgin says its new service “will change the face of the Canadian mobile phone industry”.
For ex-Bell Mobility president Michael Neumann, who “resigned” yesterday, he will at least have the satisfaction of watching smugly from the sidelines as Virgin tears into the pre-paid market and steals casual wireless users from the Big Three - Bell, Telus Mobility and Rogers Wireless. As much as no one wants to under-estimate Richard Branson, I get the feeling the Big Three may be surprised with how well Virgin Canada fares.

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