The creeping tide
VoIP service providers added 1.27 million customers in the third quarter, for a total of 8.2 million, according to Telegeography. The totals include pure-play VoIP carriers and MSOs.
The VoIP champion is still Vonage, with 1.95 million U.S. subscribers (2.05 million worldwide). The company added 194,000 new subscribers in Q3, no doubt aided by the nearly incessant ads that feature the irresistibly loopy "Woo Hoo," from rockabilly one-hit wonders the Rock-A-Teens.
There's not much that matches rockabilly for pure, wild joy, and Rhino has a great new box set of some of the best of the genre, called Rockin' Bones. It's on my holiday gift list.
But I digress…
Non-stop advertising is Vonage's only recourse against a set of cable industry rivals who are much bigger, much better financed, and who have a built-in market of millions of video and data customers. All other pure-play VoIP companies in the U.S., unable or unwilling to buy national advertising, have managed to grow to only a tenth the size of Vonage. Their subscriber totals were quickly exceeded by cable operators who have just begun offering VoIP.
Worse for "pure-play" VoIP companies is that MSOs have proven they'll cut the prices of VoIP to protect the margins of their video and data services whenever VoIP is bundled with the others. That represents the constant threat of price pressure on pure-play VoIP companies.
Odds are good that Vonage is going to lose its leading position this quarter or next, if not to Time Warner Cable, then to Comcast.
Time Warner Cable added 187,000 subs in Q3, to reach a total of 1.64 million subs. That quarterly add represents a pretty significant drop-off from the new-subscriber increments in the previous two quarters: 270,000 in Q1 and 234,000 in Q2.
Fast-growing Comcast overtook Cablevision Systems Corp. for third place. Comcast signed up 483,000 new subscribers, and picked up another 143,000 in a subscriber swap with TWC, to reach a total of 1.34 million VoIP subs. (Combining VoIP and circuit-switched, Comcast overtook Cox as the biggest MSO telephony provider).
Cablevision added 113,000 subscribers for a Q3 total of 1.1 million. Cablevision was followed by a number of pure-play providers, including 8x8 (169,000 subscribers), SunRocket (156,000), and Primus Telecommunications' Lingo (an estimated 112,000).
Other providers contributing to aggregate figures include BrightHouse, Charter Communications, Cox Communications, and RCN Corp.. If switched telephony subscribers were included in telephone service subscriber totals, Cox would trail only Vonage and Comcast.
Both Verizon and AT&T offer DSL-based VoIP products, neither of which has proved terribly popular. Possibly by the end of next year, and certainly by mid-2008, Verizon should have enough FiOS VoIP customers and AT&T should have enough U-Verse VoIP customers to rank among the leading VoIP providers.
Quarterly aggregate VoIP revenue rose from $298 million in Q3 2005 to $732 million in Q3 2006, according to Telegeography. MSOs claimed $482 million of the Q3 total.
In Q2, MSOs together had a bit more than half (54%) of all VoIP subscribers; at the end of Q3, they claimed just short of two-thirds (62%).
Telegeography projects the total number of U.S. VoIP subscribers will hit 9.7 million by the end of 2006, which it calculates is 8.7% of all U.S. households. And that number will certainly keep growing.
Juniper optimizes for IP video; gets IPTV follow-on order
Juniper Networks released a series of enhancements to its IP networking products aimed at improving IP video transport, and punctuated the importance of optimizing its products for IPTV with an announcement that one of its customers, Zhejiang Telecom, placed an order for equipment to support new IPTV services.
Juniper has made several enhancements to its MPLS-based point-to-multipoint (P2MP) broadcast video distribution and added new capabilities for its software-based SDX-300 Service Deployment System.
Juniper calls one enhancement "Liquid LSPs" (label switched paths). Using SDX-300's open APIs, third-party video serving platforms can now communicate with the SDX-300 and Juniper routers to map the best possible path between subscribers and content sources to increase network efficiency.
The Liquid LSP feature also supports Fast Failover capability for split-second failover, ensuring the quality and reliability of video services even in times of network congestion and equipment failures.
By enabling the dynamic activation and modification of LSPs between video serving locations, Liquid LSPs enable providers to serve video from multiple locations, reducing costs and increasing network design flexibility. Juniper said SeaChange International was first to integrate its open IPTV platform with Juniper's Liquid LSP capability.
Juniper has also implemented a number of enhancements to extend the P2MP capabilities of its JUNOS operating system to provide efficient, scalable and reliable delivery of broadcast TV traffic across a backbone.
One enhancement is the extension of constrained shortest path first (CSPF) functionality to P2MP LSPs, which enables the network to automatically determine the most efficient path through the network for a given video stream. This allows a few super head-ends to service many remote video sites over long distances while assuring delivery quality of the broadcast TV channels, Juniper said.
"Much of the attention around IPTV to date has been focused on the network edge, but efficient delivery of IP-based video through the core IP network is just as important to our customers," Shailesh Shukla, Juniper's vice president of service provider marketing and partnerships, said in a statement.
Separately, Juniper said that Zhejiang Telecom, China Telecom's largest subsidiary, has deployed Juniper Networks E320 Broadband Service Routers and T-series core routers to introduce new advanced IP television (IPTV) and other multiplay services.
Zhejiang will be using the unique MPLS-based Point-to-Multipoint (P2MP) capabilities on the T-series, to improve the efficiency of video distribution in the core network. Both the E- and T-series are critical components of Zhejiang's long-term IPTV strategy. Zhejiang Telecom has deployed Juniper E- and M-series platforms since 2001. The company has over 3 million subscribers.
Orca middleware ties together Sonaecom's IPTV system
Orca Interactive's IPTV middleware, RiGHTv, is being used by Clix, the mass market brand of Sonaecom, a telecommunications provider in Portugal. Sonaecom is using set-tops from both Amino and Kreatel/Motorola, Tandberg's SkyStream encoders, Kasenna's video server, and Widevine content protection over the network architecture of Huawei.
Clix SmarTV will offer live broadcast television and radio channels, an electronic programming guide (EPG), video on demand (VOD) and subscription video on demand (SVOD).
The service is currently available in Lisbon and Porto. Sonaecom's plan is for all major cities in Portugal to be covered by year-end 2007.
Haggai Barel, CEO, Orca Interactive, said "RiGHTv's SUI SDK has given Sonaecom the ability to develop their own SUI on various STBs, the middleware's APIs allowed them to conduct the CRM and billing integration, and they were able to independently install the solution on their preferred hardware platforms that were not certified by Orca prior to the project. Sonaecom also upgraded to the latest RiGHTv version on their own."
Optibase's MGW 5100
streaming video platform
Viet IPTV provider to offer VOD
Optibase earned some additional business from FPT Telecom, a multimedia and Internet service provider in Vietnam that Optibase helped with the deployment of an IPTV system last year.
FPT is beefing up that system with a series of Optibase streaming platforms and other equipment to enable video on demand (VOD) and other video services.
AT&T sews up NBC Universal content for U-verse TV
AT&T has contracted to distribute linear, high-definition (HD) and on-demand programming from NBC Universal as part of the AT&T U-verse TV channel lineup.
AT&T bought rights to analog and digital signals of the NBC and Telemundo owned-and-operated broadcast stations, as well as NBCU's cable properties, including CNBC, CNBC World, MSNBC, Telemundo, mun2, Telemundo Puerto Rico, Bravo, the SCI FI Channel, Sleuth, ShopNBC, USA Network, Universal HD and the Olympics on Cable. The deal also includes video-on-demand (VOD) rights for Universal Pictures' movies.
U-verse is the brand name for the service AT&T is delivering through its Project Lightspeed fiber network. The upgraded network will also carry AT&T Yahoo! High Speed Internet, U-verse Enabled and, in the future, Voice-over-IP services.
AT&T reiterated that it expects to reach nearly 19 million households by the end of 2008 as part of its initial deployment, using fiber-to-the-node (FTTN) and fiber-to-the-premises (FTTP) technologies, with FTTP deployed largely in greenfield developments.
Chunghwa returns to Widevine for IPTV protection
Widevine Technologies said Taiwan's state-owned Chunghwa Telecom has purchased an additional 300,000 Virtual SmartCard clients to secure premium linear broadcast and video-on-demand delivery across a range of consumer electronics devices, including set-tops, PCs, and mobile phones. Chunghwa purchased half a million of the cards in 2005. The cards will be used to protect Chunghwa's interactive IPTV service, Multimedia on Demand (MOD).
BroadSoft makes VoIP work for Irish ISP
Digiweb will provide VoIP service using the BroadWorks VoIP application platform from BroadSoft, which has just opened its new European Operations Centre in Belfast. Digiweb's new VoIP product will complement its WiMAX and fixed broadband services. Digiweb will initially focus on the consumer market, but plans to eventually offer hosted PBX services to Irish enterprises. Digiweb also plans to use the BroadWorks platform to extend VoIP capabilities to mobile phones in the coming year.
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PacketCable 2.0 paves path to service convergence
While voice services will be among the first to leverage the emerging CableLabs PacketCable 2.0 architecture, the convergence of cable services over myriad networks and service cost reductions are among its longer-term goals.
That was one of the big takeaways from a Webcast titled "The Urge to Converge-Tearing down the service silos with PacketCable 2.0." An archive of this Nov. 16 Webcast is now available (registration is free).
One key role of PacketCable 2.0 is to give cable operators the ability to offer IP-based services beyond carrier-class VoIP, the hallmark of the existing PacketCable 1.x architecture.
Kevin Johns, CableLabs
The new specs, explained Kevin Johns, the project director for PacketCable communications protocols at CableLabs, will set the stage for cross platform, fixed mobile convergence services, and enable new applications such as videophones.
Among potential applications that illustrate the coming convergence of traditional telephony and traditional video services, Johns pointed to a "Click to Dial" example, whereby a call is initiated through the customers' set-top via a global contact list residing on the operator's network that is also accessible by the customer's cell phone, computer or another device.
PacketCable 2.0 borrows from the IP Multimedia Subsystem (IMS), a technology spawned by 3GPP that was designed around the priority of wireless carriers. However, it was also developed by be application and access network agnostic, able to work on a wide range of wired and wireless platforms, including those powered by WiFi or cellular technologies.
In turn, that means the architecture can support new services without affecting (or requiring changes to) the core network, because IMS does not define services or specific features, Johns said.
He noted that CableLabs is working with 3GPP to incorporate enhancements into IMS and merge and converge those onto a single IMS solution to suit the needs of wireless and cable operators. Once that point is reached, the focus can shift to applications rather than the core architecture.
John Ulm, Motorola
"PacketCable 2.0 becomes the guiding force for IMS in the cable world," added John Ulm, fellow of the technical staff for Motorola's Connected Home Solutions division, who also presented during the Webcast.
That will also enable mobility in myriad forms, Ulm added, noting not just device mobility, but user mobility - enabling consumers to access their personalized services on any device. It also puts into play "session mobility" - moving an ongoing video or voice service between devices, for example.
As another application example is something Ulm referred to as "SocialTV," which adds personal instant messaging (via a buddy list managed on the network) capabilities to television, allowing viewers in different locations to chat about the show they are watching.
"New applications like these will dramatically change our television viewing experience," Ulm said
Although vendor-readiness will drive the overall timing, Johns expects PacketCable 2.0 interop events to begin in early 2007, with qualification testing following, based on product availability.
But how far along on the road to IMS are cable operators these days?
The good news for cable operators is that the additions of PacketCable 2.0 and IMS won't require them to abandon their existing PacketCable 1.x gear and architecture, said Brad Alexander, the senior cellular architect for Cox Communications, which is adding mobility to the bundle via its participation in the cable-Sprint joint venture.
But the "victor in this upcoming battle" with the telcos will be those that can recapture revenue from new services while also reducing the costs of delivering those services, he added.
By collapsing the traditional silos for cable video and IP (data and voice) services, PacketCable 2.0 will position operators to address both.
"In the future we want one silo that decouples the applications from our existing silos," Alexander explained.
While IMS is applicable to the Sprint J.V., the next steps in the process is to move the existing circuit switched telephony and PacketCable 1.x voice customers to the PacketCable 2.0 platform, and then integrate the video platform to IMS, he added.
Johns of CableLabs later addressed the frequently asked question about the relationship between PacketCable 2.0 and PacketCable Multimedia (PCMM). PCMM, he explained, provides the over-arching QoS policy framework, while PacketCable 2.0 covers the service delivery network. Although PacketCable 2.0 leverages PCMM for QoS, PCMM can be used for applications that are separate from PacketCable 2.0.
— Jeff Baumgartner, Editor-in-Chief, CED
Huawei to build Versatel next-gen network
Huawei Technologies said Versatel has selected it to build an Internet Protocol (IP) and dense wavelength division multiplexing (DWDM) based network. Versatel, a fixed network operator in Germany, has embarked on a comprehensive reconstruction and upgrade of its current networks. Huawei will provide Versatel with its Quidway NetEngine series of high end routers.
Ruckus touts ambitious Pre-N demo at CES
In keeping with the new tradition of not waiting for final ratification of standards, Ruckus Wireless has scheduled a demo of a Smart Wi-Fi system based on 802.11n technology at the upcoming Consumer Electronic Show (CES) in Las Vegas, January 8-11.
Using a prototype of its Smart-N system, Ruckus intends to simultaneously transmit three HD video streams over 802.11n to three Ruckus Smart-N receivers, each attached to an HD set top box.
The draft 802.11n specification describes how to enable devices to transmit at speeds greater than 70 Mbps. According to Ruckus, pre-N products to date all have problems sustaining those transmission rates over distances, in challenging locations, or in noisy environments.
Ruckus says its "Smart-N" technology rejects noise and delivers consistent throughput closer to the maximum potential rates regardless of location and device placement. The company achieves this through the combination of its BeamFlex smart antenna technology and SmartCast traffic engineering software with commercial 802.11n silicon from Atheros Communications.
The latest issue of DSL Prime includes some interesting reading, including Dave Burstein's speculation (always carefully considered) that AT&T may not be so hot on acquiring BellSouth anymore. He also has a report of a mysterious explosion of some AT&T Lightspeed equipment in San Antonio.
In my "Smell of money" IPso Facto column two weeks ago, I reported that as of September, it cost Verizon about $900 to connect each subscriber. That is correct, but not the whole FiOS cost story.
Verizon has to pass each home first, and that cost $845/home as of September. To connect each home was $900 additional, for a combined cost of $1,745/home.
In addition to that, there are video/network & support costs. Verizon did not report what those were in September. In a separate presentation on FiOS in September, however, the company projected that by the time it completes its FiOS build, the average cost of video/network & support will end up being about $366.
So, the cost per FiOS connected home as of September is somewhere in the neighborhood of $2,111 ($1,745 + $366), give or take a few bucks, given that the network & support cost is an estimate.