Fear over landline losses has prompted analysts to reduce estimates for third-quarter profit from telecom companies. The shares of Verizon and AT&T have been under pressure since last they reported earnings in late July. AT&T has slid 20% and shares of Verizon are down 21% over the last three months.
According to Thomson Reuters, analysts have reduced estimates for earnings per share and revenue for both Verizon and AT&T over the fear of landline losses. In its last quarterly report, AT&T said total connections fell 8.1% from the year ago period, worse than many anticipated.
Verizon’s landline revenue has also fallen 1.8% from a year ago. Total landlines fell 8.5% in the second quarter from a year ago, with a large amount of that decline coming from the residential segment.
With wireless penetration above 80% in the U.S., there is a limited pool of new subscribers for AT&T and Verizon to compete for.
But how VoIP fits into these figures? Simply we don’t know because VoIP subscribers are using cable services, naked DSL, WiFi/WiMax networks, direct links and not a landline service. So its difficult to count the penetration of VoIP service at this time.
About 8.5 million more U.S. households will start using Voice over Internet Protocol (VoIP) for their home phone service over the next two years, according to a new forecast from Pike & Fischer’s Broadband Advisory Services.
The number of VoIP-connected households in the United States will approach 30 million by the end of the decade, generating more than $11 billion in revenue for cable operators, telephone companies and network-independent providers such as Skype, P&F predicts.
The Silver Spring, Md.-based market research group reports these projections in a new report, “Residential VoIP Market Outlook.” P&F reached its conclusions by examining recent growth trends in consumer adoption of VoIP services, and factoring in the growing prevalence of digital service bundles that include multichannel video, high-speed Internet and home phone. VoIP-connected households are expected to grow at about 14 percent annually over the next five years, P&F projects.
Although top telephone companies such as Verizon and AT&T will see their overall residential lines continue to decline, they will see their VoIP customers increase steadily as they attract more customers to their fiber-optic service packages (Verizon’s FiOS and AT&T’s U-verse), according to the analysis. The cable industry, which is much further along in capturing VoIP customers, will see subscriber growth slow somewhat from its torrid pace, the report states.
It is unlikely that the smaller VoIP service providers such as Vonage will see much growth because, unlike the facilities-based providers, they lack the advantage of wrapping their service into discount bundles.
The CTIA Wireless Association is celebrating the 25th anniversary of the first commercial cellular call in the United State this month.
The first commercial cellular call was placed on October 13, 1983 to the grandson of Alexander Graham Bell in Germany from the president of Ameritech Mobile Communications at a ceremony held outside of Soldier Field in Chicago, IL. It launched the nation’s first citywide commercial cellular system.
The Motorola DynaTAC 8000X had only 30 minutes of talk time, weighed nearly two pounds and cost some $3,995 (in 1983 dollars).
Martin Cooper (right), a former manager at Motorola, is considered the inventor of the first portable handset. The first call he made in April 1973 was to his rival, Joel Engel, Bell Labs head of research.
Today there are now more than 262 million wireless subscribers in the United States – 83 percent of the total U.S. population – and 3.3 billion active cell phones worldwide, making it one of the fastest global dispersions of any technology in history.
By the end of 2007, one in six households (16 percent) was wireless-only. According to CTIA:
- In the first six months of 2008 (Jan. 1 – June 30) U.S. consumers talked on average a total of 187 billion minutes each month. That is more than 6 billion minutes each day, and amounts to nearly 13 hours (766 minutes) per customer each month.
- Text is the New Talk: More than 384 billion text messages were reported by carriers this year between Jan. 1 – June 30 versus 295 billion voice calls. Text messaging is doubling every year.
- Subscriptions Soaring: The wireless industry saw almost 20 million new subscribers in just the last 12 month period (July 2007 – June 2008).
- Monthly Bill Decreasing: During the last 21 years, the average wireless subscriber’s local monthly bill has decreased by 50 percent, dropping from nearly $100 per month in 1987 to less than $49 in June 2008.
- Today, wireless service revenues reached $138.9 billion at the end of 2007.
China is by far the largest wireless market on the globe, with a subscriber base of 574.63 million by the end of March, 2008. India is now the second largest wireless market in the world, topping the 258 million total wireless subscribers in the United States this Spring.
- India is the fastest-growing telecom market in the world thanks to India’s large population, low telephony penetration levels, and rise in consumer income.
- China has 362 million landline phones [27 per 100 persons] and 565 million [42 per 100 persons] cellular phones (February 2008)
Informa forecasts subscriptions to UMTS/HSPA will number nearly half a billion worldwide by the end of 2009, and will pass the one billion mark in 2012. Currently some 88% use GSM standards while 11% use CDMA.
Pakistan, a pioneer in developing a nation-wide WiMAX communications network, has announced that Motorola has won a $30m WiMAX contract to provide infrastructure and wireless broadband services. Wi-tribe, a wireless ISP, will use Motorola’s WAP 400 WiMAX basestations with diversity (MIMO) antenna capabilities for indoor penetration.
The deployment of the WiMAX network will start from this month in the 3.5GHz spectrum while the commercial launch is expected during 2009. Wi-tribe Pakistan is a joint venture between Qatar Telecom (Qtel) and Saudi Arabia’s A.A. Turki Group.
At the same time, Wateen Telecom, an Abu Dhabi venture, is making WiMAX available in 22 cities in Pakistan. It is expected to herald a broadband revolution in Pakistan, catering to more than one million users. Motorola will supply 198,000 end-user WiMAX customer premises devices for both indoor and outdoor use.
Wateen intends to roll out its WiMAX network to 100 cities in Pakistan by the end of 2008. Pakistan, with a population of 164 million, is an attractive market for new entrants. It had less than two percent broadband penetration at the end of 2007 and only 45,000 DSL subscribers at that time. Poor quality copper lines and high prices have held back DSL growth.
Motorola is on a tear. In August, Motorola also won a contract to enable REDtone to launch East Malaysia’s first WiMAX broadband services. In April, it won a $19.7m contract from Taiwanese WiMAX license winnerFirst International Telecom to provide base stations, and in March it won a $165m contract from Etihad Atheeb Telecommunication to provide WiMAX network in Saudi Arabia.
Wholesale Internet access prices are declining rapidly in much of the world, but particularly in the U.S. and Europe, where median monthly prices for 1,000 Mbps Gigabit Ethernet ports in the second quarter of 2008 varied between $10 and $14 per Mbps, according to TeleGeography. Prices are still double or triple those rates in Asian countries and even more expensive in Latin America, despite at least modest declines in both of those regions. Competition, declining equipment and lower transport costs are some of the reasons for the price drop-offs.
Telegeography: Wholesale internet prices decline globally; vary sharply across regions.
In 2007 phone record inspection went up 38 percent in South Korea and wiretapping (what we call legal intercept in the U.S.) went up 11 percent.
South Korean lawmakers in the opposition party say that police, prosecutors and the National Intelligence Service inspected almost 142,000 telephone records in 2007, and the three government groups wiretapped 1,147 calls. The numbers were compiled by the Korea Communications Commission, the nation’s top body on communications and broadcasting policies.
Under Korean law every investigator has to win court approval before carrying out intercept activities and telephone record inspection, but – as in the U.S. – it is easier to get court approval to review and capture call data records.
The Korean government is seeking to review communications law to widen opportunities for the NIS to intercept phone calls, with a bill pending in the National Assembly.
The Korea Times: Wiretapping, Phone Record Inspection Surge.
”Breaching Trust,” a 16-page report released yesterday by Nart Villenveuve of the University of Toronto Citizen Lab, has unearthed disturbing monitoring practices of TOM Online, Skype’s partner in China.
Text messages and call logs of communications on the TOM-Skype network are being stored on poorly secured public servers along with the encryption codes for the transmissions, according to the report. Text messages are filtered for keywords that trigger logging of the message, namely, messages mentioning dissidents, Taiwan, Falun Gong, or independence. These texts are not delivered to the intended recipient; instead, the full text of these messages is stored on the publicly-accessible servers, which the study’s author was able to access and decode. Also, many texts were filtered and stored that did not contain any of the flagged words on the file the report’s author was able to access. This, according to the report, insinuates that individual users of the software could be flagged for surveillance of all communications, once a banned word has been found in messages of voice transmissions.
The findings of the report suggest that TOM Online and perhaps Skype itself are much more complicit with the Chinese government than they will admit. Skype has denied cooperation with the Chinese in call and text monitoring numerous times, and responded to the author of the survey asserting that records of texts were discarded and not displayed or transmitted anywhere, according to the report. But Villenveneuve was able to find records of IP addresses, usernames and other identifying information on the servers dating to August 2007. Skype representatives attribute the security issues to TOM’s practices, not Skype’s, but the evidence is rather damning that they at least had to be somewhat aware of the volume and sensitivity of data being stored by the Chinese.
Breaching Trust Report.
Time Warner Cable filed a request with the Federal Communications Commission last month asking for the agency to fully deregulate the TV services market in the Manhattan portion of New York City. Cable TV incumbents must prove that they face “effective competition” in a market to have rate controls and other regulations relieved, and TWC believes it can with the recent addition of Verizon Communications to the Manhattan TV services market.
The bar for proof of competition is somewhat low. All TWC has to prove is that Verizon is offering a comparable service, as the number of households being served by the competing service provider is not a criterion. However, the FCC, according to Multichannel News, has not been nearly as quick to act on cable TV deregulation requests as it has been to act on telephony deregulation requests.
MultiChannel News: Time Warner Cable Seeks Manhattan Deregulation.
California Governor Arnold Schwarzenegger has signed a pair of bills designed to preserve phone services to people in rural and high-cost areas of California.
Under the new laws, funding will continue to flow into subsidy programs for basic phone services in rural areas. The California Public Utilities Commission (PUC) has deregulated all phone rates, with the exception of basic residential phone service. Since deregulation took place in 2006, rates on caller ID, call waiting, unlisted numbers and directory assistance have all gone up.
AT&T, the largest provider of service in so-called “Fund-B” areas, has submitted a proposal to increase the basic residential rate from $10.69 to $25.
The Humboldt Beacon: Gov. Schwarzenegger signs bills preserving rural phone service.
During the opening session, WiMAX Forum President Ron Resnick touted the progress WiMAX has made in various markets, saying that more than 100 networks worldwide are in commercial deployment. He also said that the industry group predicts there will be 133 million WiMAX users by 2012.
But he noted that there are some challenges ahead–particularly roaming. The WiMAX Forum has been working on this issue and Resnick said the group will introduce a roaming readiness program in December where it will work in conjunction with roaming clearinghouses (such as iPass) to develop roaming specifications for all WiMAX operators.
WiMAX may have had great growth overseas but all eyes at the conference are on the U.S. WiMAX players. In particular Clearwire, which earlier this year announced a joint venture with Sprint’s WiMAX business to create the “new” Clearwire. That joint venture is expected to close by year-end. Clearwire CEO Ben Wolff told the WiMAX World audience this morning that his company currently covers 16 million POPs and has about 500,000 subscribers using its “pre-WiMAX” service. He added that nearly one-third of those customers have access to cable and DSL and that about 20 percent still keep their wireline broadband service even though they are subscribing to Clearwire.
He described the company’s future relationship with cable companies such as Comcast and Time Warner (both of which are investors in the “new” Clearwire) as being both competitors and collaborators. “They will resell services to their customers and so will we,” Wolff said.
Like Time Warner and Comcast, Google is also an investor in the new Clearwire. Wolff said that he envisions Clearwire taking advantage of that relationship by using the Android platform in its devices. “We will embrace this platform,” he said. In addition, he said that Clearwire will likely take advantage of Google’s search platform and advertising model.