Mark Evans

Tech Urban Myth: The Workaround

Is there such a thing as a “workaround” that actually, well, works? It strikes me that whenever a company gets in trouble for infringing on someone else’s IP, the company doing the infringing says “No worries, we’ve got a workaround somewhere around here that we had put aside for a rainy day”. Vonage, for example, claimed it had a workaround after a U.S. judge ruled it had infringed on technology owned by Verizon, while Research in Motion talked about a workaround during the latter stage of its legal woes with NPT Inc.

We never found out whether or not RIM did have a workaround because it ended up forking over more than six hundred extra-large ones (aka millions) to make NTP go away. Now, Vonage has admitted it doesn’t have a workaround after suggesting last week it had a workaround in development . Even worse, Vonage isn’t sure that a workaround is “feasible” given the extent of Verizon’s patents. This is bad news because it means Vonage will likely be unable to sign up new customers unless it reaches a patent deal with Verizon. Maybe Vonage’s new CEO, Jeff Citron (who used to be the old CEO), will be able to strike a deal with Verizon CEO Ivan Seidenberg.

For more, check out Thomas Howe, who is incredulous Vonage can’t create a workaround, as well as Engadget.

Technorati Tags: Vonage

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Why is Bell the Belle of the Ball?

Thoughts for a Sunday morning: Over the past week or so, I’ve read countless stories on how Bell Canada (aka BCE Inc.) has become the target of private equity investors willing to spend as much as $30-billion. As far as I can tell, the biggest motivation for a private equity buy-out is unhapiness among institutional investors about BCE’s stock price, which has sadly lagged behind the performance Telus, Rogers and Shaw in recent years.

There’s also a sense that part of the stock “problem” is BCE senior management’s lack of aggressiveness in restructuring operations. I guess there’s something more that investors want BCE to do in addition to the moves it has made to cut thousands of jobs, sell off non-core assets (CGI, Telesat), reduce operating costs, etc . If private equity investors believe they can spend $30-billion, and still see a healthy return on investment, how are they going to do it? One suggestion is BCE can focus on its high-growth businesses such as satellite-TV and high-speed Internet at a time when its traditional businesses are under competitive siege. The problem with this theory is satellite-TV is not a high-growth business while the high-speed Internet unit has seen its growth go from strong to modest recently. So is the answer simply cutting more jobs or spinning off/improving Bell Mobility, which has struggled over the past couple of years while Rogers and Telus have enjoyed robust growth?

Frankly, the private equity focus on BCE is a mystery. For one, if private equity investors with billions of dollars burning in their pockets want to invest in a Canadian telecom company, they should take a run at Telus. Second, there has to be sexier places for private equity than the Canadian telecom market.

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Finally, Someone Gets It!

It has taken awhile but someone - Globe & Mail columnist Derek DeCloet - has spelled out what the deregulation of Canada’s local phone market means: it’s highly unlikely there will be prices wars. Why not? It’s simple: the major carriers (Bell, Telus, etc.) can’t afford it because they’re struggling to grow revenue and cash flow any way they can. Think about it: if Bell decided to slash local phone prices by $2 a month to keep customers happy, it would be walking away from $300-million a year in sales. This explains why Rogers and Shaw have been able to sell digital phone service at premium prices, which feeds into their mantra of healthy ARPU and profitable growth. So, let’s just brush aside the idea of price wars because they simply don’t exist anywhere within Canada’s telecom landscape.

Update: Rob Hyndman has some thoughts as does Andy Abramson, who politely disagrees with my thesis based on the idea that Web-based services such as Skype will force prices lower. (Now, if we could only get SkypeIn in Canada!)

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GoogleClick to Rock Online Ad World

Talk about a disruptive move: Google buys DoubleClick for $3.1-billion after a bidding war with Microsoft.  Without being too dramatic, the online advertising market as we know it is now an entirely different beast. Strategically, it’s a great move for Google, which has been arguably dabbling on the edges of the advertising market as it scrambles to find another horse other than AdSense. Look at the modest moves Google has so far made in the print, television and radio markets, which come across as dabbling as opposed to bold strategic forays. The biggest challenge facing GoogleClick is avoiding a conflict of interest given DoubleClick does business with of the Web’s largest advertisers such as AOL, who will be watching closely to see if Google favours its own ad activities.

Note: There’s no lack of comment on the blogosphere but if you want to wade it, check out Mathew Ingram, who notes the happiness of the private equity investors who bought DoubleClick in 2005 for $1.1-billion. Howard Linzon also points GoogleClick deal should also be good news for rival ValueClick, which closed just below its 52-week high of $29.75 yesterday (Its market cap it $2.9-billion)

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Rogers: It’s Bandwidth Management; Not Throttling

Amid TorrentFreak’s contention Rogers is throttling encrypted traffic, I decided to do some “reporting” earlier today to find out what exactly Rogers is doing with its traffic. Here’s what I learned/was told by my “sources” within Rogers. 

For the past few years, Rogers has been partitioning its bandwidth with a certain percentage (probably not a lot, mind you) dedicated to P2P traffic, and the rest allocated for “regular” traffic such as Web surfing and e-mail. Rogers says there’s no blocking going on but, rather, bandwidth resource management. This means that if a whole bunch of people want to access P2P services at the same time, the bandwidth will reach capacity fairly soon, and traffic could slow down. With more P2P traffic being encrypted, Rogers is taking the same partitioning approach – bandwidth allocation rather than packet blocking. When they find the performance is degraded due to capacity constraints they re-segment the network to relieve the congestion. This is done regularly as traffic and usage increases.

One of the issues being faced by consumers is the bandwidth allocated by Rogers to P2P traffic is fixed – irregardless of the time of day. So, if there’s a surge in P2P traffic – encrypted or unencrypted – Rogers doesn’t change the bandwidth allocation percentage on the fly. They do re-evaluate the allocation regularly as traffic patterns change. So what you get is what you get, and if you and your friends clog up the P2P highway, there’s little Rogers is going to do to ease your pain right away.

Update: If you want a really smart look at what Rogers is doing, check out this post by Matt Roberts.

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Leopard Will be Late. So What.

Caught between launching the iPhone and Leopard in June, Apple has decided to delay the official launch of Leopard until October. While the Mac-Nation will likely be disappointed it has to wait another four months for a major OS update, Apple loses nothing strategically or goodwill-wise from delaying Leopard. The current OS is great - and more than holding its own against Vista - while Apple continues to bask in the glow of the iPod and strong MacBook sales. With so much momentum, there’s no reason to rush Leopard out the door and release something not fully-baked. Of course, the decision to delay Leopard until October also lets Apple put the marketing spotlight entirely on the iPhone - and let’s not forget that Apple’s strengths are savvy marketing and excellent design. Rather then forcing the Mac-Nation - and the media, which embraces new Apple releases with unbridled enthusiasm - to focus on two product launches, Apple will spread the love throughout the entire year. Smart.

Here’s Apple’s official statement:

iPhone has already passed several of its required certification tests and is on schedule to ship in late June as planned. We can’t wait until customers get their hands (and fingers) on it and experience what a revolutionary and magical product it is. However, iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price — we had to borrow some key software engineering and QA resources from our Mac OS® X team, and as a result we will not be able to release Leopard at our Worldwide Developers Conference in early June as planned. While Leopard’s features will be complete by then, we cannot deliver the quality release that we and our customers expect from us. We now plan to show our developers a near final version of Leopard at the conference, give them a beta copy to take home so they can do their final testing, and ship Leopard in October. We think it will be well worth the wait. Life often presents tradeoffs, and in this case we’re sure we’ve made the right ones.

Update: Apple Insider suggests Leopard is still plagued by a lengthy bug list, while Herb Greenberg said investors should focus on the IPhone rather than Leopard.

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Rogers Throttling Traffic?

It’s not terribly well known but Rogers “massages” the packets on its high-speed networks so that P2P traffic gets bumped to the back of the line during particularly busy periods. Well, according to CrunchGear, Rogers has started to throttle all encrypted traffic - including secure e-mail - to control excessive bandwidth consumptions. Update: Rogers spokeswoman Taanta Gupta said the company is not blocking encrypted traffic. “We do traffic shape to ensure that time sensitive traffic - voice, e-mail, Web browsing - gets precedence. Been doing that for a couple of years.”

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Vonage: From Bad to Worse

If losing a crucial legal decision to Verizon recently isn’t bad enough, Vonage now has find itself a new CEO after Michael Snyder resigned. As important, the company said it plans to slash operating costs by $140-million to “enhance shareholder value and improve its competitiveness in the marketplace”. This is particularly bad news for Web sites that have reaped the benefits of Vonage’s aggressive marketing efforts given the company has been spending nearly $200-million online a year.

Since Snyder joined Vonage in March 2006, Vonage’s shares have tumbled from about $14 to $3.09. The company has been battered by an ocean of red ink, increasing competition from cablecos getting into the VOIP business, inconsistent service, and a high churn rate that has forced Vonage to spend like a drunken sailor on marketing to attract new customers. From the very start, Vonage’s prospects as a business have been unclear given its growth strategy was tied to attracting as many customers as fast as it could by offering a low-cost product in a market with little barriers to entry.

To me, Vonage was always more of an investment play by co-founder (and now interim CEO) Jeffrey Citron, who figured someone would snap it up to establish a foothold in the VOIP market. As it turned out, no one was willing to step up to the plate. This forced Vonage to make a $17-a-share IPO, which amazingly was over-subscribed. You could make a solid argument that Vonage single-handedly killed the tech IPO market, which isn’t such a bad thing given it has forced many companies to focus on growing their businesses, while keeping overly-enthusiastic investors from throwing themselves into risky investment vehicles.

Note: Check out this ClickZ story on how Vonage’s trouble could impact the online ad industry. As well, Jon Arnold has an extensive post on Vonage’s conference call this morning.

Technorati Tags: Vonage

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Hey, I’m in the G&M

I talked to a reporter yesterday at Canadian Press about Tim O’Reilly’s proposed Code of Conduct. Lo and behold, there’s a story with several quotes from yours truly running on the Globe & Mail’s Web site. Can’t wait to tell my folks…:)

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Let’s Talk Politics 2.0

While the Web has been enthusiastically embraced by the political community south of the border, there has been far less activity in Canada. Sure, there are some political bloggers such as Andrew Coyne and Jason Cherniak but politicians, for the most part, are still trying to figure out how to effectively use the Web. With that in mind, the mesh gang is hoping to provide a spark by holding a meet-up on May 9 in Toronto for the political crowd. You can find all the details on Upcoming. Speaking of mesh, our political panel this year will feature Andrew Coyne, blogging M.P. Garth Turner, former Paul Martin speechwriter (and of late writer, humourist and blogger) Scott Feschuk, and Phil de Vellis, the creator of the “Vote Different” Hillary ‘08 YouTube sensation.

Technorati Tags: mesh, Politics

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