Tuesday, February 28, 2006

Great Minds Think Alike

I'm not so sure how great our minds are, but the title of this post just seemed to fit right.

Earlier today, Mark Evans posted about Vonage, and how it's just a matter of time until they slip in second place, and cede market leadership to Time Warner - probably for good. He also refers to a very good earlier post from Om Malik, and it's worth referencing here again for those who want some richer insights based on his deconstruction of their S-1 IPO filing.

Always on top of the latest news, Mark also noted Om's posting from today with a rather troubling Vonage update. Om reports that their Chief Marketing Officer, Dean Harris recently left, but no mention of this from Vonage themselves. That has to be a concern given how vital marketing is to Vonage's gameplan. One has to wonder if this signals a change in strategy, or more cynically, if Mr. Harris has seen the writing on the wall. No doubt the Vonage watchers will be following this one closely.

Aside from this last item being newsworthy, I just wanted to comment that Mark's posting has some nice parallels to a recent posting of mine about Vonage.

What would be really interesting is if this news affects the way people are voting on Mark's poll about whether people will buy into the Vonage IPO. However, the poll isn't on the blog now. Hey Mark! Did you take it down? Please put it back up - this should be interesting!

With all this Vonage stuff, I can't help but note how bizarre it is to see a bright orange Vonage ad on Mark's blog. The Internet and the blogosphere sure work in interesting ways. Am not sure if their ad being there is a good coincidence or a bad one. It's just there, and I'll leave it at that!

Oh, there's a Part 2 to this posting...

The other happy coincidence is about my posting yesterday on wireless competition in Canada. Well, Mark also posted about this topic yesterday, and I didn't see it until after I posted. I was pleasantly surprised, actually, since the story was filed by the Globe & Mail, the main competitor to Mark's paper, the National Post. Mark doesn't often comment on Globe stories, but this time he did. I'm happy to report we're on the same page here. Must be something in the water up here.

I'll quickly close out with a short plug for VON Canada, which takes place a month from now - April 3-5, here in Toronto. Soon I'll be posting a bit more about the show, but just thought I'd mention here that you can see Mark and I on the same panel at the show. Surprise, surprise, it's a blogger panel - what a nice tie-in with this post. Joining us will be Alec Saunders, Rob Hyndman, Mathew Ingram and Mr. VON himself, Jeff Pulver. It's going to be a fun, lively session, and I sure hope you come see us!

Monday, February 27, 2006

Wireless Competition Review - Only in Canada

The Globe & Mail ran a piece today about this topic, where the current telecom policy review includes looking at the idea of having a fourth major operator for wireless. Only in Canada, again.

It's been widely documented - here as well - how Canada lags other advanced countries in wireless adoption. All 3 major wireless carriers recently had their Q4 2005 earnings reviews, and the strongest common theme was how there's plenty of upside for wireless growth in Canada, and they expect wireless will continue to be their driver of growth and profits.

True, we basically have an oligopoly for wireless, and it could be argued that more competition will put downward pressure on pricing, and accelerate mass adoption. However, all 3 are essentially national carriers, so consumers do not lack for choice. It's not like cable or telecom where there's basically one choice in each market. You can't get Rogers Cable in Alberta, and you can't get Telus phone service in Quebec. But you can get either of their wireless services in either province - plus Bell, of course.

The reality is that Canada is a small, widely-dispersed market. California has more population than all of Canada - how many wireless carriers do they have? And it wasn't that long ago that we had a fourth operator - Microcell. They weren't really a national provider, but certainly served as a de facto fourth major player to keep everyone else honest. Well, they actually did what I was suggesting earlier - offer lower prices.

It was a desperation move to add subscribers and shake up the market, but all it really did was get the others carriers angry with pricing that cut into their margins. This, of course, is exactly what the regulators are getting at - too much market power in too few hands is a bad thing. Microcell was acquired by Rogers, which took us down to three operators, but they weren't taken out because of their pricing strategy. It was more about consolidating the market for economies of scale, and allowing Rogers to become the #1 wireless operator.

Prior to adopting aggressive pricing, Microcell was in rough shape, and its prospects were not great. Simply put, even though a subscriber base of 1 million made them big enough to be #4, the business was just not viable at that level. I'm not alone in believing that Canada simply isn't large enough to support 4 national wireless operators. Somehow we manage to support 2 national dailies, but 4 wireless carriers is just too much.

My take is that it's really tough to leglislate competition. The investment required to build another network is prohibitive, and that's not going to happen. MVNOs - mainly Virgin Canada - are trying to build up the market, but it's been slow going so far, especially without wireless LNP. There's certainly room for MVNOs to grow, and maybe we need more entries who aren't Canadian that can stimulate the market with more colorful and creative strategies.

There are some regional wireless carriers like SaskTel Mobility, but I don't really seem them doing much to push the market. Allstream/MTS is a potential wildcard here, as they have aspiration to be a national wireline carrier, and could have put themselves on that path by acquiring Microcell (much the way Telus did by acquiring Clearnet to get into the wireless business). And finally, there are the MSOs chasing the Rogers model - Shaw, Videotron and Cogeco. They all have large regional bases of cable subscribers, and could beef up their bundles with wireless.

Many possibilities here, but it's hard to see any of them doing what the CRTC would like to see. And I really don't see any other scenarios, short of dropping foreign ownership restrictions, and letting foreign operators come in and do their thing.

That's probably not what any Canadian wants to see, especially with the Olympics just closing. A big deal was made over how the Hudsons Bay Company won the contract away from Roots to be the official outfitter of our Olympic team. Of all the homegrown businesses remaining, none is more quintessentially Canadian than HBC. We've lost pretty much all our other retailers of note due to American competition, and sadly, they have just gone down the same road. They may never have been that profitable, but HBC sure was a point of pride for Canada in the face of Walmart, Sears, etc. Well, US financier Jerry Zucker just acquired them - over the course of the Olympics - so outfitting our national team is now a bittersweet reminder of just how fragile Canada is in the shadow of the US. That's a long way of saying foreign ownership restrictions for telcos are not likely to be lifted for some time, so I don't see that happening either.

Friday, February 24, 2006

Spring Training - Red Sox Hiber-Nation Over

Yesterday marked the start of Spring Training, and the official beginning of anxiety and fragile promises for the Nation. I just wanted to note the occasion, and say that it will soon be time to wear this hat and share my occasional thoughts on our prospects in the Johnny-Go-Home era.

Here are some fun photos of Day 1, courtesy of Boston.com.

What every kid dreams of.... but those clouds in the sky - looks ominous. I'm worried ALREADY!

06 Sox.jpg

The Fab Four - with David Wells conspicuously absent - gosh, can these guys really carry us to the promised land? Ya gotta believe...

Sox pitchers.jpg

Another question mark. Geez, pitching coach Al Nipper is so thrilled to see Foulkie at camp, he applauds even when he's throwing a water bottle! Hands together now, let's all pray he's still got it....

K Foulke.jpg

Literally, and figuratively, Papi carries this team on his back, Manny included. In Ortiz we trust!


You don't think the fans are happy he's back???? Go Theo!


Nobody looks happier having Theo back than Tito! Gee, he looks a little too happy for my liking - but they do make a nice couple...

Theo and Tito.jpg

Henry Blodget on Google - Really!

That got your attention, didn't it? Well, it's true - he's B - A - C - K - but he's NOT making recommendations. There are rules to follow of course, for both the good guys and the bad guys.

So, long time IP colleague/hedge fund manager/cool urbanite/Gibson-playing guy Cody Willard, sent me this earlier in the week.

Last week, the Financial Times published a roundtable discussion about Google. Titled "Where is Google Going?", it featured Cody, Henry Blodget, investment advisor Jeff Matthews, and FT columnist Stephen Schurr.

It's a good read, and Cody certainly holds his own. He's been holding Google from Day 1, and remains bullish. He feels they're well positioned to compete with all IM-based comers, and if they hold their ground, there's a lot of upside to come.

The overall view is that Microsoft is a bit late to the game, and they need to work hard to protect their franchise, as their competitors have stronger search products, as well as content to generate revenues.

And let's not forget about all the dark fiber Google has, as well as their WiFi initiatives, esp the latest with Earthlink.

That said, the panel does point out the risks of depending too much on their advertising model for revenues. As this space becomes more competitive it's difficult to see how Google can sustain its growth to keep earnings strong. Mobile search is really virgin territory, but it's huge - so that could be the engine to keep the growth coming, but it's too early to tell if consumers will really get into searches on tiny handheld screens.

Henry Blodget doesn't say very much, but his comments are insightful, and if taken at face value, you'd want to hear more from him. For those who wish to do so, check out his blog here.

Thursday, February 23, 2006

Web 2.0 Conference in Toronto

Just wanted to share this for those who care to make Toronto their destination for Web 2.0 thought leadership. There's a cool, grass roots thing happening here in May - details to follow.

Fellow local IP blogger Rob Hyndman has a nice post about it, and I'll provide updates when there's news. Rob is one of people driving this, along with others including bloggers Mark Evans, Mathew Ingram, and Michael McDermont (his company is doing my soon-to-be-launched website).

Based on the number of comments left on Rob's post, as well as Mark's the other day, I'd say interest is pretty strong. Should be an exciting event, and I'd urge anyone in town interested in Web 2.0 to attend.

Canadian IP Thought Leaders Podcast - Dave McCarthy, BCE Capital

This week's segment on the Pulvermedia Podcasting Network (PPN) featured Dave McCarthy, who's based in the Ottawa office of BCE Capital. Dave's been backing companies for a long time, and knows what works for tech startups. Some of the notable IP companies in their portfolio include NexTone, Bridgeport Networks, and Sylantro.

We talked about investing landscape for Canadian startups, and Dave noted that we have some market leadership in areas like video and wireless. You can download the podcast here, and read more about Dave's background. Dave will be attending Spring VON, and is a speaker on the VC panel at VON Canada in April.

Wednesday, February 22, 2006

VoIP Media Coverage of Note

It's been a busy week following 3GSM, today's IMS Forum launch, and major players like Microsoft, Google and RIM being in the news. I get my share of calls from the press, and wanted to note two stories that ran today where I was cited.

First is Paul Taylor's piece in the Financial Times, where the title says it all: "Can there be any future for traditional telephony?"

The link may not provide full text access, but I'm glad to forward a Word version - just let me know! The focus is mainly on enterprise IP - no big revelations, but a nice validation of the dominant trends to bring home the message of IP's ascendancy to mainstream investors.

Second article ran in two markets - Datamonitor ComputerWire in the US, and Computer Business Review in the UK. This was a more news-based article about Microsoft's announcement to support mobililty on its Office Communicator.

It's ominous sounding news, but I don't see it giving Microsoft a lock on this market by any means. I think it just validates the importance of mobility for enterprise communications, and that there's a fundamental shift happening away from desk phones to the PC, and on top of that, a shift from the PC to mobile endpoints. Clearly, MS can't afford to risk a migration from the desktop, so it's easy to see why is a must for them to do.

Again, if the link doesn't give you the text, I can get you a soft copy.

IMS Forum Launch - Following the Bulls-Eye

Today,the IMS Forum was officially launched, and the press release went out around 10am EST. I wanted to blog about this sooner, but have been tied up all day.

The IMS Forum should be familiar to those who have been in the IP space for a while. Going back a few years, there was the ISC - Int'l Softswitch Consortium. As nextgen matured, ISC shifted focus from softswitches to a broader scope of packet communications, which led to re-branding ISC as IPCC - the Int'l Packet Communications Consortium. Along the way, IPCC absorbed another IP industry group, the VoIP Council, which was started by Neal Shact of Communitech. With IMS being bigger now than softswitch ever was, the IPCC executive saw fit to go with the flow and re-focus again around IMS. Are you with me? So, here we are. Consider that the unofficial history lesson - I'm just the scribe.

Michael Khalilian has been the driving force behind most of these re-inventions, and given the current void of any independent industry body (that's not a standards group)focused on IMS, this move seems to make sense.

I'm blogging about this not only because it's a timely news item, and it's hitting the market while the IMS buzz from 3GSM is still fresh, but also because I've been involved in all of these iterations, including the VoIP Council.

So, I'd just like to draw attention to the news, and welcome the IMS Forum to the IP sector - not that they need my help. You'll be hearing more about the IMS Forum here, as I will be wearing their hat in an industry liaision capacity - more on that later.

Tuesday, February 21, 2006

Voiponder - New Hub for the IP Community

Voiponder just launched this week, and I'm one of the early supporters, along with the likes of Alec Saunders, James Enck and Martin Geddes. Fellow IP bloggers are welcome to join, so please have a look and see for yourself.

Actually, Voiponder is really in soft launch mode, and this may be the first posting out there talking about them. There should be some real noise about this later in the week.

What I like about Voiponder is that it's more than just an aggregator of IP blog posts. It's also an open platform where members can share ideas (it's free) in a Web 2.0 kind of way. So, it's sort of a virtual hangout for IP bloggers. I also like it because it's another venue to come across bloggers and IP advocates I don't know, such as cyberlaw professor Susan Crawford, or Geoff Huston, Chief Scientist at Telstra.

Another nice-to-know is that Voiponder is global in focus, but are based here in Canada - Vancouver, to be exact. How do you like that?

PC Magazine on VoIP - Many Paths to Follow

The current issue of mega-pub PC Magazine has a terrific full feature on residential VoIP. This is a much more extensive piece than last year's, by the same writer, Cade Metz. I am cited in both articles, but the length and nature of the current piece says a lot about how far VoIP has come in a year.

As with many mass market articles on VoIP, the focus is on saving money, which is understandable. Being geek friendly, this piece also gets into the various routes you can take to subscribe and install your VoIP service. It's good fun, and the online version even has some short slide shows with a step by step storyline of how techies would install VoIP, vs. how regular folks would do it.

It's a wide ranging article, and brings Skype into the picture - and finally, someone in the mainstream who positions them correctly as a POTS complement, not a replacement. There are also a few related features, such as a lengthy listing of VoIP services and ATAs, along with requisite checklists and Editors Choice picks.

Overall, it's great exposure for VoIP, and at least this article gives the consumer something they can use. The moral of the tale is simple - you'll save money with VoIP, but you get what you pay for. Generally, the cheaper the offering the more technical problems they found.

Monday, February 20, 2006

Canada - Leading the Way with Video - Who Knew?

I've long been bearish on VoIP's prospects in Canada, and maybe there's a reason. Maybe it's because we're ahead of game, and are going where the money is - and it's not in voice. It's in video, and I'm in 100% agreement there.

In the big scheme of things, it's starting to look a bit silly with all the fuss being made about voice applications, given how small the revenue streams are compared to video. I'm generalizing here, but there's no doubt there's a lot of money in video, and IP is about to explode on the broadcast front in 2006. We've seen signs of this coming, and Jeff Pulver has been on right edge of the curve here for a while, especially with his early praises for Slingbox.

On that note, I wanted to draw attention to 3 Canadian companies with video-based stories that have all crossed my path in the past couple of days. For two, I have a personal connection, and the third is a large ILEC that just had its Q4 earnings call. As they say, good things come in threes, and when I figured out the common thread to these stories, I say there's a trend happening here.

#1 Telus They had their Q4 earnings call last week, and their story was very much in line with what the majors in Eastern Canada had to say in recent weeks - Bell and Rogers - wireless is booming, wireline is dying and video is happening. More or less.

Aside from these big picture items, Telus has a lot of other very interesting things going on, and it sure looks like we'll start to see more evidence of this in 2006. One item that was noted practically in passing is TTV - Telus TV. Scroll about 3/4 of the way down their Q4 press release, and there's talk about a small scale local launch in Calgary and Edmonton, and further buildouts coming in BC. Canada-watchers know that Telus needs video to compete with Shaw in their home market, and were granted broadcast licenses last year. A content deal is in place with Fox for IP-based VOD, and Western Canada's video wars are about ready to begin.

This weekend's Globe & Mail had a terrific cover story on TTV by Eric Reguly, but unfortunately you need to be a subscriber for online access. It's a great read, and goes into more depth about why Telus is banking so heavily on video - you'd almost think that telecom has become an afterthought for them.

One thing that stood out for me in the feature as a sign they are committed to TV is the fact that Darren Entwistle is bringing on Moses Znaimer to the TTV advisory board. Moses Znaimer may not be well known outside of Canada, but certainly in Toronto he's regarded as the guru of community-based television. He's a legendary character in the Canadian broadcasting industry, and in the 1970s, he was a true innovator, using CITY-TV as his base for creating much of what we take for granted today in how TV interacts with the viewer. If anyone understands the potential for IPTV and VOD, it's Moses Znaimer. Point, Telus.

#2 Itiva Far from being a household name, Itiva Digital Media secured funding about a month ago, and have a beta test going with a Hollywood film studio now. Their Quantum Streaming technology basically allows for very fast downloading of video content over the Internet.

The website shows the company is based in Henderson, Nevada - but there really is a Canadian connection. Itiva evolved out of a Kelowna, B.C. - based company called Crossflux, and one of the founders is a long-time colleague of mine who's based here in Toronto.

If you don't believe me, just ask PC Magazine! They just got a nice writeup there, and if fast downloading of video over broadband is your thing, Itiva is a company to watch. You heard it here first!

#3 - QuickPlay Media Itiva is all about video over broadband, and QuickPlay is all about video over mobile. I first came across QuickPlay earlier this month when I attended the session put on by Deloitte Consulting that featured Jim Balsillie from RIM. Turns out, QuickPlay's CEO, Wayne Purboo sat next to me, and we traded cards. I have been meaning to follow up with him, and now I definitely will! The other day, the Globe & Mail ran a terrific feature on them, with a nice tie-in to the Olympics. The Olympics are a perfect showcase for their platform, and as video-enabled handsets come on to the market, they should be in a great spot for growth. They have partnerships in place with all of Canada's key mobile carriers - Rogers, Bell, Telus and SaskTel, as well as content deals locally with CBC and CHUM, as well as ESPN and Fox in the US. I like this story. Again, you heard it here first!

Friday, February 17, 2006

ChangeWave's Residential VoIP Research - Part 2

I recently posted some highlights from this study, and promised to return with Part 2. So, here we go...

- Satisfaction with VoIP provider - the million dollar question, esp in light of Vonage's IPO intentions, and all the resultant scrutiny that has focused on their churn stats. The good news is that subscribers are generally pretty happy - 81% are "somewhat" or "very" satisfied. Furthermore, this level has steadily increased since they started tracking this in late 2003.

Vonage will be pleased with this research, as the data shows their satisfaction level is right up there with cablecos - and - this finding has held steady since the mid-year data from June. In other words, there is no visible slippage in satisfaction ratings among Vonage users over the last 6 months.

Packet 8 will also be pleased with the results. They are the only other VoIP pureplay aside from Vonage to generate enough data to be broken out in the stats. Back in June 2005, only 24% of 8x8 users were "very" satisfied. Well, the current data shows a doubling to 48%, which is a pretty healthy improvement. Clearly, 8x8 must be doing something right recently, and they're showing to be a competitive offering, at least in the eyes of their subscribers.

Note - for all of the above highlights, the sample was 467, which I view as being sufficient for the validity of these high level findings.

- How VoIP is used in the home. Another million dollar question. The sample here is a bit smaller - 381 - and was not enough to break out by each provider, which is too bad. However, the overall findings support what I have long suspected - only a minority use VoIP as a primary line replacement service. 34% use it this way, and another 10% say it's their only home phone service. Conversely, 36% rely primarily on POTS, and use VoIP a secondary service, and another 15% rely primarily on cell phones for home phone service.

Granted, what people say and what they do can be very different, but still, most people don't seem ready yet to put their full faith in VoIP, which isn't what the pureplays want to hear.

- What's most important in a VoIP service? I thought you'd never ask. I'm still convinced VoIP is a price game, but surprisingly, call quality was rated tops overall. However, the next 3 most important factors were related to price - "lower price", "flat rate pricing", and "lower int'l calling rates". This still says to me that price rules for VoIP.

The remaining factors rated much lower in priority, and it's real interesting to see how relatively unimportant "value added services" are, and that "videophone" barely registered a blip. Same story for LNP - porting your existing number over to a VoIP service isn't that important - at least compared to price, and call quality.

- Which VoIP service you plan to use. Well, could there a be a more important litmus test question to see who's going to win this race? This question was answered by 397 people who plan to deploy VoIP in the next 12 months. The big winner? Nobody knows! 40% said they don't know. Translation - the field is wide open, folks.

Vonage can take small comfort in being #1 among those who do know - 16%, followed by 13% for the cablecos. So, at least they've got mindshare, and still look to be competitive with cable.

Let's do some quick math. This sub-group represents 19% of the overall sample in this survey. If we project that to the general population, and for simplicity, let's say there are 100 million lines out there in the US. It's actually closer to 90 million, but let's keep it simple. Let's also say that 50% have broadband - not unreasonable, and round 19% up to 20%. This gives us - in ballpark terms - 10 million lines that plan to take VoIP in 2006. Well, if only 16% go with Vonage, that's 1.6 million new customers for them - which would roughly double what they have today.

Keep in mind, we're not factoring in how many of those 40% who don't know will end up with Vonage. That aside, it's not inconceivable for Vonage to double its numbers in 2006. I suspect they will fall short for a variety of reasons, but if they get to 3 million, will that be enough to keep them in the game? And at what cost in terms of marketing spend?

I invite your comments on this hypothetical scenario. Based on all this research from Changewave - for which I'm grateful to have access to - I'd say Vonage will be hard pressed to hit 3 million US subs by end of year. I don't know what their IPO plans are forecasting, but 3 million would put them close to $1 billion in revenues. I'm sure shareholders will be more interested in lower customer acquisition costs than the gross subscriber totals, and I'd say hitting 3 million is only meaningful if they can somehow start creating some economies of scale. Otherwise, if they raise the proposed $250 million, I can't see it carrying them for more than another year.

I didn't intend this posting to be about Vonage, but it's turning out that way, so I'd better stop now. Any takers?

Wednesday, February 15, 2006

Canadian IP Thought Leaders Podcast - Iotum Becomes a Demo God!

This week's podcast recounted Iotum's Oscar moment at Demo last week. As posted here and elsewhere, Iotum came away with the highest honor from the event - Demo God. That's a pretty lofty title, but that's what it's called, and it's cause for celebration for the Canadian tech community. It sure would be great to see this serve as a wake-up for more support up here for our tech startups, but for now, just listen and enjoy! Click here to get to the pod link and some background on the story.

Just a quick coda - during the pod, Howard Thaw mentioned a great sign of the times. While driving around Phoenix, they noticed a gas station sign showing not just the price of gas, but the price of prepaid long distance. Now that's what I call going mainstream. Here's Alec's post about it - great photo.

Tuesday, February 14, 2006

Blog Page Improvements

Just a quick note to say that I've been meaning to upgrade the look and feel of my blog page for the longest time. With Jeff Pulver's Pulverati just being launched, there's even more reason to get this done.

So, if you notice, I've just had RSS icons added so you can subscribe to feeds from any of the categories on my blog, or to the whole thing itself.

Coming in the next few days will finally be links to other blogs of interest, as well as....

- more background information about myself, this blog and how to reach me

- recent citings and quotes in the media

Looking a bit further ahead, my website is coming along, and I hope to have it ready by Spring VON, which will be just past my first anniversary as J Arnold & Associates.

For reference, my URL is www.jarnoldassociates.com. For now, that link just takes you here to the blog page.

Monday, February 13, 2006

Vonage IPO - Good Idea or Bad Idea? Cast Your Vote.

Fellow blogger Mark Evans has recently added yet another cool feature to his blog - polling. It's real easy, and any blogger can do this. Being a market researcher by trade, I think it's safe to say you'll see some polls coming from me in the near term. The researcher in me just can't resist. They're fun and fast.

So, Mark put up a new one to get your take on Vonage's IPO. I just came across it today, and cast my vote earlier. Let's just say my vote isn't quite going with the flow. Bottom line - voting is cool - get out there and support Mark! I'd love see his numbers get a boost. So, vote now!

Video Making Web 2.0 Look Good

Video has long held out promise for making VoIP interesting, and it's starting to look like the way to go is with PC-based applications rather than phone-based video calling.

SightSpeed is one of the companies making this real, and today they announced their latest release, which looks very Web 2.0. Much like RIM, the value-add isn't the endpoint device - it's the software platform that supports all the cool features and services that people will be willing to pay for. Sounds like a good business model to me.

Their updated release is very much about building web-based communities. Sure, you can use it to make one-to-one video calls, but that's so Web 1.0. The cool factor is to use it like Skype - build a community of users, and make video-conference calls - in a secure setting. The community idea is built around the use of "public community directory", which will allow users to quickly affiliate with like-minded people. Furthermore, this release includes video publishing tools, so users can easily create their own video content and video blogs. The possibilities for both consumers and small businesses are pretty interesting, and I'm sure we'll be seeing other video-based applications and tools soon to make video - VVoIP - as easy to use as VoIP.

Along those lines, I'd be remiss to not mention another strong player in this space, B.C.-based Eyeball Networks. A couple of their twists include "Anti-SPIT" technology, and a beta version video softphone.

Pulverati - the place to be seen and see who's who

The Northeast may be digging out big time from the storm, but it's business as usual on the Net.

Today, Jeff Pulver posted about the early version release of Pulverati, a great idea for those of you trying to keep up with the IP blogger set. In the bigger scheme of Web 2.0, this is a small step, but I think it's a great way to make blogs more relevant and valuable. Think of it - as Jeff says - as a playlist like iTunes, where you get to search by topic and find all the posts about it in one place. I know for me, I don't have time to read everyone's posts - it's much easier to just hone in on the topic I'm interested in and see what's being said.

It's still a work in progress, but I think people will find this a very useful tool, and a one-stop-shop to keep up with those in Jeff's circle. And Jeff is encouraging your suggestions and feedback, so don't be shy - Jeff is a very good listener.

Friday, February 10, 2006

Rogers Cable Ramping up for VoIP - Maybe?

Yesterday, Rogers announced its year-end 2005 numbers. Not quite as fancy an event as BCE's earlier this month, but the overall performance is quite good. Revenues are up, profits are up, subscriber growth is up, and churn is down.

As with BCE, wireless is the story, and the basic results reflect a healthy market that has relatively little competition. One thing is for sure, as oligopolies go, Rogers and Bell are pretty well managed. Their vision is another story, but for the most part, they're pretty good at keeping the markets to themselves.

Not much to talk about there. I just wanted to focus a bit on their telecom operations. Unfortunately, I missed the call, but from all accounts, Rogers plans to add 200k to 250k cable telephony subscribers in 2006. That's a healthy number for this market, and at face value, should give Bell - their main, and practically only rival - cause for concern. Mark Evans had a nice post on this, and served as a coda to a recent post of his about the overall outlook for cable telephony subs in Canada.

Having had a quick read through their reported results on telephony, I'm not so sure about where they're coming from on this, and am wondering how they're going to get this kind of takeup.

From what I can see in their filing, Rogers only had about 48,000 cable telephony subscribers at the end of 2005. The service launched on July 1 (Canada Day if you're keeping score), and coincided with the closing of their Call Net acquisition, where they inherited about 500,000 residential POTS subscribers.

So, 48,000 subs in 6 months - I'm assuming these are new adds for their VoIP service. It's not clear if these are coming at Bell's expense, or just conversions from their Call Net subscribers.

Nevertheless, any guesses as to how much we're talking about in terms of revenues? Well - it's $3.8 million. That's not much of anything, and I'm sure Time Warner spends that much on lunch money every few weeks. Of course, there's a honeymoon period with free service for new subs, etc. But, really, this is not going to scare anybody.

Stepping back, Rogers had about 2.3 million cable subs at year end, and a little under 50% have broadband - about 1.1 million. With 48,000 subs, that's a 4% penetration of broadband users. Not bad, actually.

For Rogers to hit their target of 200-250k additions, that means coverting something like 20-25% of their Internet customers. That sounds pretty amibitious to me, especially when you consider how low key their marketing has been so far. So, if that's the plan, we should expect to see some pretty sexy advertising any day now, and some pretty happening bundles to get this machine going.

I'm not saying that it can't happen, but Rogers is pricing VoIP "rationally" and not leaving money on the table the way Videotron is. So, I wouldn't look to Videotron's numbers for a precedent for Rogers.

Ditto in the West, where Shaw is having pretty good success, with what I would consider a premium-priced offering. However, they are in a less competitive market, and their main competition - Telus - is not as formidable as Bell in the East. Telus has had a host of problems that are largely over, but they have created enough dissatisfaction to cause many to jump at the first available alternative - Shaw. Secondly, Telus does not have a consumer VoIP offeirng yet, and cannot counter Shaw the way Bell can with Rogers.

So, I just don't know. It doesn't really add up for me, but you never know. There are many wild cards here, such as where the CRTC VoIP regulations will fall, how aggressive Bell will be with IPTV, and how much priority Rogers will give to its real money-makers - video and wireless - compared to the pocket change they're getting so far from VoIP.

Thursday, February 9, 2006

Vonage IPO - Media Citings

The general tone in the media so far about Vonage's IPO announcement has been wary, skeptical, cautious, etc. This is to be expected given the realities of Vonage's business model, but the real test will be the appetite for their stock among the general public.

Despite all the concerns - which are valid - Vonage has built a brand every bit as strong and pervasive as Skype. It's too early to tell if we're in a bubble economy again, where revenues and profits were afterthoughts, but a strong brand can go a long way. Investors looking for a pureplay in the VoIP gold rush may find the Vonage brand too alluring, and put money on a horse that isn't a thoroughbred, but might be some day.

With over a million people using Vonage, it's hard not think that many will buy simply to support the company that's delivering them a terrific phone service. And if mainstream investors are looking for a VoIP vehicle, what else will they recognize besides Vonage and Skype? A handful will look at 8x8 or Primus, but they lack Vonage's cachet. There are better public companies out there in terms of financial prospects, but most of these are infrastructure plays that won't be on the public's radar. So, you never know - the stock market marches to a different beat, and time will tell just how badly Main Street wants in on VoIP.

Business Week and ComputerWire ran good pieces on Vonage this morning, and both were nice enough to cite me.

And the winner for best new artist....Iotum

Iotum scored the big prize at Demo yesterday, one of ten companies to win the Demo God Award. That's a pretty impressive accomplishment, and hats off to Alec Saunders and Howard Thaw for bringing their vision this far along. Lots more kudos are in order, and you can follow these in the links in this post. Now it gets real interesting, as they move into fund raising mode to make their Relevance Engine relevant to you and me.

Watching the Grammys off and on last night, I couldn't help think of how Alec and Howard must feel getting this kind of a rush. Alec isn't quite Bono - now that he's a Demo God, that makes him a demi-god in the IP world. But when you see him at the next conference, don't expect to see him in leather and orange tinted wraparound sunglasses - he's not that kind of a guy! At least I think not.

Just a few things to pass on for reference about Iotum's win...

- Here's a full list of the 10 Demo God winners

- Alec Saunders' acceptance speech - well, this is what he would have said...

- Andy Abramson - more well-deserved kudos there - he has been a real driver behind Iotum's momentum, and he's gotta be a happy guy today too

- Jeff Pulver's congrats posting. Jeff had a very good day yesterday. Not only is he an advisor and investor in Iotum, but he's also the Von in Vonage.

- Mathew Ingram of our hometown Globe & Mail ran a nice piece about Iotum today. Unfortunately, it ran too early to include the news of their win, but I just love the fact that Iotum's story got more ink than Vonage's IPO news buried deeper in the business section. Here's a nice tie-in for anyone planning to attend VON Canada in early April. Mathew will be joining Alec, Mark Evans, myself and a few other local IP bloggers (and Jeff Pulver) on the Blogger Roundtable. This was a big hit at Fall VON in Boston, and it's great to see the session being reprised with a Canadian twist.

- it's early in the day, but I would expect to see posts from Mark Evans, Al Bredenberg and other Iotum watchers later on - it's a great story, esp for anyone following the Canadian tech sector

- finally - making it real. There actually is a product launch around all this. Iotum's initial offering is a conferencing application, called Pronto Conferencing - the news hit the wires late yesterday.

Wednesday, February 8, 2006

V-V-V-Vonage IPO Announced - Film at 11

Their j-j-jingle sure is catchy. Probably the most anticipated IP news since the Skype acquistion, the word came out this afternoon. Couldn't help notice the juxtaposition of Vonage banner ads riding next to blog posts I've seen today about their going IPO and Jeff Citron stepping aside as CEO.

No surprises, really, but this sure is interesting timing in the wake of yesterday's Senate hearings on net neutrality, which included Jeff Citron.

This is the stuff journalists live for, and the wires are buzzing right now. I just spoke with Business Week, and their take should be posted by the morning. Got a few other media calls lined up now, and will revisit this story later when things quiet down.

Big hat tip to Andy Abramson, who called this story way ahead of the pack.

Also courtesy of Andy, Iotum's official product release - called Pronto - hit the wires this afternoon. It's great news, and I'll have a separate post about that later.

Where to Find the Next BIG THING - DEMO

I've blogged a few times recently about Iotum, and their upcoming Hollywood screen test today at Demo, out in Phoenix. I know a number of Iotum fans, and they're all rooting for them to do well today. Go Canada, eh!!!

Looking at the bigger picture, Demo is a great showcase for truly promising companies. Much like American Idol, these companies have made the cut from hundreds of worthy applicants, and now they get to audition for their version of a record deal - VC funding.

Andy Abramson has done a great job summarizing the final set of Demo presenters, so if you want to quickly scan the best of the best, have a scroll through the list from his February 7 series of posts.

Tuesday, February 7, 2006

Canadian Podcast Series - John Ruffolo on High Tech Investing

This week's Canadian IP Thought Leaders podcast was with John Ruffolo, of Deloitte management consultants. John leads the firm's Canadian Telecom/Media/Tech practice here in Toronto, and knows the investment landscape quite well. Today, we talked about the dynamics of the market here, particularly the differences between larger and smaller startups, as well as Canada/U.S. contrasts. Very interesting, especially for U.S. VCs looking at Canadian startups, or vice versa. The market is different here - not better or worse - just different! Sort of like a lot of other things in Canada.....

You can pick up the podcast link and John's profile here. John will also be speaking on the VC panel at VON Canada on April 5. Hope you can check it out - I won't miss it.

Quick sidebar - I finally met John at last week's Deloitte event, which featured RIM's Jim Balsillie - you can read about that here.

Sunday, February 5, 2006

Fill 'er Up - and Gimmee 100 LD Minutes Pleez

Well, the Super Bowl is in full swing, but I got stuff to do. It's just about half time now - and the Stones do their thing - and so far,Seattle's the better team. I think the refs blew the call on Pittsburgh's TD, but it stands. Lots of time to go. We all know Mr. Pulver is at the game, but so far, no Jeff sightings on TV. Maybe he'll join Mick on stage - well, it could happen - better get back to work.. :-))

Anyhow, I just scanned today's email, and I just HAD to share Alec Saunders' post today. Great slice of Americana, and a sign of how mainstream VoIP and cheap LD is becoming.

Alec and his Iotum posse are in Phoenix, preparing for their Hollywood moment. They're on the slate at Demo, and are presenting next week. This is a major league opportunity for Iotum, and if it goes well - and I suspect it will - they'll be well on their way to realizing their vision. Another Canadian vendor making a difference in this market - I'm sure rooting for them, and will provide an update when I have some news.

Friday, February 3, 2006

ChangeWave's Residential VoIP Research Usage Update - Part 1

Occasionally I post high level findings from Changewave Alliance's research that's related to IP communications.

They recently published their latest research on residential VoIP usage, drawn from 2,138 Alliance members who were polled in December 2005. Higher priorities have kept me posting about this until now.

Changewave research is not usually offered to the public, but as a member, I get the reports. Since this isn't my data, I just want to focus on some key findings without giving it all away. I'm going to do this in 2 posts, as time is short today, and I'll finish this up early next week.

- 18% of the sample use a consumer VoIP service. This is up from 14% in June's survey, and from 7% in September 2004. That's a nice uptrend.

- Adding to this, 19% intend to use VoIP in the next 12 months. More good news. Does this mean that 37% will be using VoIP a year from now? Not likely. What people say in surveys is not always what they ultimately will do, but the intent level is still pretty significant. I'd put that one in the plus columm.

- Conversely, 53% have no plans for VoIP. Still the majority, but a shrinking one - this camp has steadily been trending down since last year.

- Who's #1? Vonage - no surprise there. They hold a 31% share - down from 36% in June. That's a notable slide in 6 short months - shows you how young and volatile this market really is. Keep in mind that only 18% of the full sample use VoIP, so this sub-sample is only 381.

- Who's #2? The cable guys - 16% now, up from 10% in June. So, Vonage's losses are essentially cable's gains. The only other VoBB provider of note is 8x8 - Vonage's perennial runner-up. They registered 6%.

- Here's my favorite finding. For the above usage question, respondents were given a checklist of VoIP providers. Appropriately, Skype was not on the list, but 19% wrote them in. This actually puts them ahead of cable, but in my books this isn't apples to apples. However, perception is reality, and this speaks volumes about Skype's brand and their mindshare when it comes to VoIP.

Isn't this interesting, folks? Sure is for me. I have to leave you hanging for the rest of the story I'm afraid. Here's what's coming in the next post to finish things up....

- Satisfaction with VoIP providers

- How VoIP is used - primary vs. secondary line

- What's most important in using a VoIP service

- Who you're planning to use when you sign up in the next 12 months

The suspense is killing me. How about you?

Thursday, February 2, 2006

RIM Speaks/Deloitte Looks Into Telecom's Future

It's been a busy week for local events. Yesterday was BCE's annual review day, and today I attended a really good forum about the outlook for communications technologies in 2006.

Today's event was sponsored by the global management consulting firm Deloitte, and I got introduced to this from a good friend who's with their Business Valuations practice (thanks Steve!). They're running a series of these events, titled "Predictions 2006", and today's was a review of what their research is finding in terms the big trends driving communications technologies.

To sweeten the mix, the guest speaker was Jim Balsillie, Chairman and Co-CEO of RIM, fresh off some good news (finally) in their agonizing battle with NTP.

The trends analysis presentation was made by Paul Lee, Deloitte's Director of Research. I thought the caliber of his work was very high, and his insights were quite relevant to the IP space. All told, he's got 30 predictions for 2006 in his research oeuvre - 10 each for technology, media, and telecom.

He could only focus on 3 predictions/outlooks in the presentation, and I wholeheartedly agree with them all. Here's a summary...

1. Search technologies are becoming a key tool as we rush to digitize everything. The mass market doesn't really understand search tools to get the most out of them, and there's room for tools - both free and paid - that go beyond Google's context-based search engines.

2. Technology humanizes technology. As the price of memory falls, the scope of applications to make technology more user-friendly and valuable to us gets bigger. He cited the automobile industry as an example where cars continue to add computer and memory-based features, such as distance monitoring and voice control. No doubt these things make for better cars, and a better driving experience.

3. Life changing technologies are the real winners. Paul noted that when companies or their products become verbs - Skype, Google, eBay - you know they're life-changing. These are true drivers of change in our behavior, and that's what creates market leaders. The implication is that - like the pharmaceutical sector - R&D costs in tech are huge, and the stakes are high for picking the right technologies to invest in.
Paul made many other cogent observations, but for me, his final thoughts resonated the most. His main wrapup takeaway was the message that carriers need to focus more on margins than speed. Amen.

He rightly pointed out that many of the apps that make money for carriers require very little bandwidth - SMS, voice, mobile email, etc. The race to build fatter pipes seems to be singularly focused on upping the ante for more megabits. No doubt consumers will eat this up, and like moths to a flame, they will never tire of downloading movies, music, videos, etc. However, the carriers see relatively little margin from these when the dust settles. Most of it goes to the content providers, the retailers, and even the end-user device manufacturers.

To make this work for the carriers, Paul is of the mind that they are justified in somehow having the content providers bear some of the cost of building all this capacity for consumers. Well, economically, he's correct, but this sure gets us into Ed Whitacre territory, which was not in scope of today's discussion. We may have to pick that one up offline.

After digesting Paul's presentation, things moved on to RIM. Jim Balsillie provided a very good overview of where RIM is going, and what has made it so successful. RIM has built a great brand, and Jim pointed out how RIM is rated as one of the top 3 tech brands, right up there with Apple and Google. Pretty nice company, given that RIM only has 5 million or so subscribers. It's a great business model, and I can never get over how strong the brand has become with such a relatively small user base. And Canadian to boot!

Jim talked a fair bit about how RIM fits into the enterprise workspace, and how well the Blackberry addresses the increased need for real time communications. He actually spent very little time talking about the Blackberry as a device. The strongest message for me was his focus on what RIM's real value proposition is - it's a "secure pipe to move packets", and the Blackberry is just a "presentation terminal".

I hadn't really thought about it that way before, but it's clear to me now that the security of RIM's network is what provides CIOs with the greatest comfort level. I get it - I think he's right. Security is a big deal these days, especially for IP, and secure systems or networks are the holy grail for enterprises.

My trusty travel companion, the Nokia N90 was put to work again. These are the best of the bunch...
Q&A panel - from left to right, Paul Lee, Jim Balsillie, and John Ruffolo, who leads Deloitte's Toronto tech/telecom/media practice.
Jim Balsillie - a bit grainy, sorry - this setting is not a strong suit for the N90 I'm afraid

Jim and I shamelessly plugging RIM - why not?

Wednesday, February 1, 2006

Bell Canada 2005 Review - No Mention of the V-Word

Today, BCE - Bell Canada's corporate holding company - held their 2005 Business Review here in Toronto. It's a widely followed and well attended event - lots financial analysts in blue suits, along with a handful of industry analysts and media types. While most of the people were there to hear about the numbers, people like me were looking for where Bell is going and how they're going to get there.

I only stayed for the first set of presentations, which were given by Bell's top 3 execs - Michael Sabia, George Cope, and Robert Odendaal. That was enough for me, and during this time, plenty of key messages and strategic directions were provided. However, to the best of my recollection, not once did I hear the V-word mentioned - VoIP. I found that pretty amazing, and I'm sure most people who read my blog would concur. There's absolutely no doubt that VoIP is having a major impact on Bell, both in their consumer and enteprise lines of business. As big carriers go, Bell is actually very tech savvy, and in my view, ahead of all the RBOCs. But they just can't bring themselves to say VoIP. VoIP. VoIP. VoIP. Say it - VoIP. It's not that hard. V - O - I - P.

For those of you who don't know, Bell is actually a really great company, and they are very much the 800 pound gorilla in Canada. They pretty much hold a monopoly in telecom, have very deep pockets, and are active in virtually all segments of the communications market.

Michael Sabia certainly talked about how Bell is embracing IP, and how it is driving growth. He said that nextgen revenues accounted for 47% of the total in 2005, compared to 53% for legacy. By 2008, the target mix is 65% nextgen/35% legacy. Similarly, nextgen only accounts for 25% of EBITDA today, but this is expected to rise to 50% in 2008. So, Bell fully expects that revenue growth will come from IP, and with its higher margins, nextgen will also drive earnings. Sounds like a plan.

That said, he acknowledged that cable telephony is eroding their landline franchise, but never said it was VoIP. To stem the tide, he said Bell will focus on the brand and customer service. So, it's a marketing and customer support plan - a defensive strategy to protect their customers. No mention about Bell's own VoIP offering - which could be used either defensively to retain customers, or offensively to enter new markets. That's VoIP, but they just don't seem ready to talk about that. Is it just me?

There were many interesting performance metrics cited throughout the presentations, and I'll just quickly reference a few that caught my eye.

- 2005 operating income for residential service was $2 billion. Local access may be in its early stages of terminal decline, but there's still money to be made there. Perhaps more telling is the comparison to 2004 - operating income was down 5.6%. I'll bet the decline will be even higher for 2006.

- Buried a bit deeper in the handout was the number I was looking for - landline losses. In 2005, Bell lost 324,000 landlines, which is 2.5%. This is quite a bit lower than the 4+% level hitting the RBOCs, largely because wireless substitution is less of a factor in Canada. Nonetheless, 2004 landline losses were only 1.1%, so the incidence has more than doubled in a year's time. Mr. Sabia noted he expects that number will continue to rise due to competition, so we can rest assured Bell isn't being caught off guard! Just don't call it VoIP.

- Not surprisingly, long distance revenues are dying. 2005 LD revenues were $2.0 billion, down from $2.3 billion in 2004. This is a drop of 12.2%, by far the biggest percentage decline among all of Bell's revenue buckets. Now, here's the twist. LD minutes were actually up 1.3% in 2005 to 18.3 billion minutes. Interesting, huh? One factor would be their $5 flat rate LD offer which ran in the first half of the year, but was later dropped. It was just too good, and downright uneconomical. Oh well. They're still earning about 10 cents a minute on LD, and given how cheap LD is these days from just about everybody else, their margins must still be pretty good.

- As we all know, the real growth is elsewhere - video, wireless and Internet. Video subscribers were up 15% in 2005, reaching 1.7 million. Not bad for satellite TV. Wireless subs were up 11% to 5.4 million. That's a lot of cell phones for a country of 33+ million. High speed Internet subs were up 21% to 2.2 million.

I'll stop here with the numbers, and wanted to add a few more takeaways.

- Bell announced they are spinning off much of their rural business into an Income Trust. This has been in the works for a while, and will take 1.6 million lines off their books. The rationale is that these lines are in a more stable, slow growth, and less competitive market, which I guess is the ideal scenario for an Income Trust. The RBOCs are certainly thinking along these lines, and the basic message is they want to get out of markets where the upside for IP services is limited. Just a business decision - plain and simple.

- Guess what folks? Now that I've spun a tale of strong growth and profits, here's the bad news. Price increases are coming! They managed to slip that in oh, so subtlely. So, all those high growth, high profit services will now become even higher profit services - Internet access, wireless and video. I guess as long as the market isn't yet saturated, and subscribers continue to love the bundle, we'll pay for the privilege of getting it all from Bell. Chances are we'll barely notice if the hikes are buried in the fine in that all-too-convenient single bill we get in the mail.

- IPTV is coming - no surprise there. During the breaks, they had some live demos of new services and gadgets - it was pretty good. I thought the IPTV demo looked good, and the date for commercial rollout was supposed to be announced today. I haven't seen that yet, though.

To wrap up, I quite liked what I saw, and Bell seems patently aware of the challenges it faces with growing competition, along with managing growth across so many lines of business. I missed the Q&A sessions, but Mark Evans of the Financial Post was there, and he added some cogent commentary about what he saw on his blog post from earlier today.

Here are photos from the event, again, courtesy of my Nokia N90...


First up, Michael Sabia. I'm afraid the N90 does not capture detail very well when shooting from a distance.


Latest gizmos and gadgets


All flavors of video - IPTV (top), HDTV (left), regular (right)


IPTV - PIP - picture within a picture - neat!


Mark Evans, National Post


Ian Angus - not his everyday attire, but he wears it well. We both live in a parallel world - the Toronto Blues Society - you can find him in this batch of photos from last month.

Canadian Podcast Series - Henry Dortmans on Enterprise IP

Happy February!

Apologies for not podcasting last week - was just too difficult being away at the TMC show.

This week's Canadian IP Thought Leaders pod was with Henry Dortmans. He's the President of Angus Dortmans Associates, one of Canada's top telco consultancies.

The other half of this firm is Ian Angus, another well regarded telco consultant. It's a small world - I was with Ian this morning at the BCE 2005 Review event here in Toronto. I'll be posting about that later today, along with a photo of Ian in a suit - something he doesn't wear very often. Stay tuned.

Henry has seen it all, and had some great insights about why and how Canadian enterprises are adopting IP, as well as what goes into their decision-making about it. We could have gone on and on - will have to have him back soon. Here's the link - posted now on the Pulvermedia Podcast Network. And if you really like these podcasts, there's a link there for you to subscribe or open iTunes.