As the first decade of the 21st century draws to a close, we are on the cusp of another massive change in technology, one that will involve a new, more dynamic two-way experience with the web. However, instead of making specific predictions as to which technologies will win (or lose) in 2010, I am instead going to focus on five companies that I believe will be making headlines in the coming year (the same ones I ticked off during a panel discussion last week at Media Predicts 2010, an event hosted by PRSA-Silicon Valley in Mountain View, Calif.): Apple, Amazon, Comcast, Twitter and Facebook.

Apple: Whether it was Steve Jobs’ health, booming iPhone sales, its $33 billion cash hoard, criticism of its App Store policies or its new iMacs, Apple kept itself in the news for most of 2009. The next 12 months are going to be no different, especially with speculation over a rumored Tablet expected to reach a fever pitch. Newer iPhones, cooler iPods and perhaps even a new Apple TV — who knows what the Cupertino Dream Factory will release. One thing is for sure: Apple’s gravy train is going to roll on.

Amazon: The media industry is going through some serious convulsions, and certain camps see its future in emerging e-reader devices. That alone will keep Amazon and its fast-selling Kindle e-reader in the news throughout 2010. And as the company adds Kindle functionality to mobile phones and emerging connected devices such as Apple’s rumored Tablet (it’s impossible to overstate Amazon’s one-click buying capabilities), most of the other e-readers, I feel confident in predicting, are going to meet their maker. Meanwhile, Amazon is going to cause further disruption in the computer infrastructure industry as it keeps pushing its web services and cloud computing vision. And while it will see competition from Microsoft’s Azure, the company will continue to win, thanks to a groundswell of support from a new generation of entrepreneurs, developers and startups. The federal government and large businesses are taking Amazon’s on-demand computing offerings seriously as well.

Comcast: A day after I made my predictions at the PRSA-Silicon Valley event, Comcast announced a $37.25 billion deal with General Electric that will marry NBCU and its content machine to the cable operator’s offerings. Paul Sweeting, an analyst with GigaOM Pro, in a research note (sub. req’d) that breaks down the deal and its impact argues that Comcast’s quest to become an entertainment behemoth is going to earn the deal very close scrutiny in Washington. But that’s nothing compared to the attention the company’s going to increasingly receive thanks to its stance on metered broadband and network neutrality.

Twitter: 2009 was practically flawless for Ev Williams & Co.! The San Francisco-based company became the media darling (for proof, look no further than Oprah), which in turn helped grow the micromessaging service’s user base to over 50 million subscribers, which in turn allowed the company to raise nearly $155 million to be valued at $1 billion. So where does it go from here? That’s the big question for Twitter in 2010. The management team — which now includes Chief Operating Officer Dick Costolo, founder of Feedburner — will need to find new users, a revenue model and at the same time stave off its archrival, Facebook. Whether Twitter gets stronger or starts to swoon, it’s going to be one helluva story in 2010.

Facebook: Like an aging slugger, the Silicon Valley ecosystem desperately needs a cortisone injection to alleviate its pains, which the Palo Alto-based social network giant is going to provide when it files for an initial public offering. In 2010, the fast-growing social network is going to cross the 500 million subscribers-mark and showcase a new advertising system, which is only going to boost its revenues and profits, thus making it the hottest IPO since Google. Just as Google pulled Silicon Valley out of its post-dot-com doldrums, by sending a successful poke to Wall Street, Facebook will open the floodgates for dozens of startups that have more than $100 million in revenues, are profitable and are desperate to go public. And that means more venture dollars will flow to startups, thus leading Silicon Valley to another up cycle.

Image courtesy of Laughlin via Flickr.

Comcast today kicked off a trial of a broadband meter that will measure how much data a household consumes over its cable modem, something we’ve been asking for ever since Comcast announced it would implement a 250 GB-per-month cap on data downloads. Comcast had originally said It was rumored that the meter would be available in January 2009, but Comcast was unable to meet that timeline.

Customers in Portland, Ore., will start receiving emails today and throughout the next few weeks telling them they can check out the meter as part of the trial program. Charlie Douglas, a Comcast spokesman, says that he doesn’t know how long the trial period will last, nor when the ISP will be able to roll it out nationwide basis. In the meantime, here are the details:

• It’s software that’s pushed to the cable modem sits at the cable plant and sends the data to a database that is accessed via the web
• Customers don’t have to pay anything for the meter
• To see the consumption, users just log into their Comcast Center portal
• The meter measures consumption by the calendar month, rather than based on the monthly billing cycle
• It also measures consumption at the modem so the meter can track usage by all devices using the home network, which is key for folks running Roku boxes and other WiFi-enabled devices
• Comcast certified the accuracy of the meter through a firm called NetForecast, which has published a report with all the technical details.

I have to say that while I’m not excited about the cap in place here, Comcast’s efforts to deliver a meter that has been certified by an independent company are a step in the right direction, as is its transparency around the report issued by NetForecast. Plus, it’s also managed to finally get a consumer-facing meter out in the market, which at least gives consumers a way to see how close they may be to hitting that cap.

Even though we’re inching ever-closer towards consumption-based broadband, not all ISPs are implementing metered or tiered plans as a way to punish users who clog their pipes. For example, Verizon plans to may one day move to a consumption-based model as a way to generate additional revenue, not because of any network constraint. Brian Whitton, executive director of access technologies at Verizon, spoke with me earlier this week about that company’s fiber network — and why he believes every other ISP is going to have to embrace a fiber to-the-home strategy, too:

• Personalized Video: As video moves from broadcast to a time- and place-shifted model that lets consumers watch what they want, when they want, sending televisions shows out on demand in a unicast model will overwhelm cable networks.
• 3-D TV: Depending on the technology consumers adopt (GigaOM Pro, subscription required), sending 3-D video content for games and television could consume up to 1.8 times a normal video stream for autostereoscopic delivery, while true holographic TV, which is the eventual goal, would require 100 Mbps per channel.
• Upstream Video: “I think in this whole marketplace of video that oligopoly [of content creation] is deteriorating and HD camcorders and codec tools will lead to different TV programming coming from the masses,” Whitton said. Thanks to YouTube, anyone can create their own content and send it up, so personalized channels are not unrealistic. Whitton said the result will be a burden on the uplink that cable companies can’t current handle.

Despite the trash talk directed at cable companies by Whitton, the companies with the most to fear right now are those relying on copper networks such as Qwest and AT&T, both of which have put their money behind a fiber-to-the-node strategy, which takes fiber out to the existing node and then relies on existing copper wire to get to the home. The cable providers are able to bundle their channels together to provide faster up and downstream access using DOCSIS 3.0, but extracting more performance and speeds from copper is difficult.

That’s not stopping the telcos with copper still in the ground, which is why ASSIA received $10 million in funding recently for its software that helps tweak DSL networks, and why folks are still funneling money into research that boosts copper performance. At some point the telcos are going to have to take a hard look at their aging infrastructure and decide how much longer they should poor money into copper, much like you or I might do when evaluating whether or not to fix or junk a 12-year-old car. In the meantime, I have to agree with Whitton — eventually everyone will need a fiber to their home.

Get ready for the next generation of fiber to the home, which will deliver 10 Gbps downlink and 2.5 Gbps uplink shared across 32 homes. Verizon will announce next year that it has achieved these results in its labs, a huge improvement over the 2.5 Gbps down and 1.2 Gbps up the company is currently deploying. But get ready to dig deeper into your wallet, too, because even if the demand for broadband isn’t breaking the Internet, it’s surely forcing ISPs to rethink how they charge for such a valuable service — even Verizon.

While many ISPs are implementing caps or tiers because they have real resource constraints at points in their network – Comcast’s 250 GB-per-month cap, for example, is aimed at stopping folks from unduly clogging its shared, last-mile networks — some are eying such measures as a source of additional revenue and a way to fend off potential competition from online video. The best example of this is Time Warner Cable’s tiered broadband plan, which caused such consumer ire that the company ended up backing down from it. However, when Verizon’s CTO Dick Lynch said in September that Verizon was also in favor of some kind of consumption-based billing, it was kind of like watching your favorite indie rocker sell out. Why would Verizon, which is building out a fiber-to-the-home network, plan to eventually move to some sort of consumption model?

The answer is because it can. I spoke with Brian Whitton, executive director of access technologies at Verizon, about the FiOS network in an effort to get some clarity regarding the rumor that even it would eventually face constraints under the onslaught of video. Whitton quickly disabused me of that notion, pointing out that the network is built to be upgradeable for decades to come by replacing electronics at the ends of the pipe. He basically told me that Verizon didn’t spend $18 billion (it spent $23 billion in total but some of that would have been spent anyhow) in additional upgrades to its network only to rip it out a few years later, and explained how the fiber stretches from the customer home all the way back to the fiber-based long-haul network.

But he did acknowledge how valuable broadband has become — valuable enough that people will pay for premium access to it, especially those using up a disproportionate amount of network assets. “Ultimately this is the fairest cost recovery model, and with a tiering plan or a meter everyone is paying their fair shares to finance the network,” Whitton said. Unlike other ISPs, Verizon doesn’t view heavy bandwidth users as hogs, but it does view them as potentially high-end customers.

What’s frustrating as a consumer is that because of the fragmented nature of competition in U.S. broadband markets, providers offering these consumption-based plans don’t have real competition to keep prices in check. Most places have two providers that offer slightly different sets of services and plans, making it hard to compare prices. I don’t mind paying more for a better network (I do so for my cell phone), but most consumers don’t have that option when it comes to wired access. While Comcast (which competes against Verizon in about 12 percent of its footprint) is rolling out faster broadband to ensure its customers don’t leave the cable provider for fiber, in other areas of the country, such as here in Austin, Texas, folks get the choice between DSL (with some U-verse) and cable that hasn’t been upgraded to the faster DOCSIS 3.0 speeds. So while Verizon’s FiOS will deliver faster service to customers, as it implements consumption-based billing of some sort, there’s no real competition to keep its pricing in check for those who have a need for speed. And eventually, we’ll all have that need.

This article also appeared on BusinessWeek.com.

Broadband growth in the U.S. has slowed considerably in the last two years and future growth for online access technologies will come less from people adopting broadband for the first time and more from people upgrading from one technology to another, according to a report out today from Forrester. In addition to new technologies, Americans will also see speed boosts — even those on the slower service tiers — as providers attempt to offer more value on the low end rather than lower prices.

For many, the elimination of the 768 kbps or 1.5 Mbps connection options will go unnoticed, but for those that really only use email, a price decrease for barely broadband speeds will be welcome indeed — it could even spur a few laggards holding out on broadband because of pricing to step up. However, the big takeaway of the report is that most of the U.S. — at 80.9 million homes — has some access to broadband, and that such access will continue to improve.

When it comes to ISPs, subscriber growth will only help drive sales through the next two years; after that, revenue growth will have to come from new technologies, services and pricing schemes. Cable companies so far are winning, with 45 percent of homes expected to be subscribing to cable broadband by the end of 2009, but fiber to the home will make the most gains over the next five years, by which time it’s projected to grow to account for 10 percent of all access technologies from just 4 percent. And during that time, alternative wireless technologies aren’t forecast to be competitive to cable, fiber or even DSL.

While the speed boosts are welcome, I think the report needs to spend more time discussing how to make broadband access a differentiated service, beyond price and bundles. It recommends that providers focus their competitive strategies less on a bundle and more on  access to online storage, TV Everywhere and in-home entertainment that require higher speeds, and help keep subscribers from switching. The irony, of course, is that such high-bandwidth applications are apparently the same ones leading providers to cry uncle under an onslaught of heavy usage.

As ISPs have introduced capped or metered broadband, the one element that’s been missing is the meter. Over at my old hometown newspaper, the Houston Chronicle, columnist Dwight Silverman points out that Comcast’s meter still isn’t ready, but is being tested in the homes of its employees. I chatted with Charlie Douglas, a Comcast spokesman, about this issue last week, and was told that the problem is that not only does a meter need to be part of the modem or router itself, but it has to work with the multiple routers, end computers and other devices that may feed off the network. And it needs to be easy to use. All of which requires a lot of testing.

That’s a fairly daunting task, especially as we connect ever more devices to our home network. For example, measuring consumption used by my computer isn’t very helpful since I also stream a lot of content to a Roku set-top box inside my home, especially MLB.tv. There’s also game consoles, iPod touches and phones sucking up my home bandwidth. Meanwhile, all the extra consumption has led to a median use of 2-4 GB a month inside Comcast homes and a more representative consumption of 11.4 GB a month, on average, worldwide, according to Cisco’s Visual Networking Index figures released last week.

Since ISPs are champing at the bit to charge us based on our ever-increasing consumption, they’d better get those meters running.

With broadband, as with other utilities such as electricity and water, people should pay for what they use, according to an editorial in The Financial Times today.  Demand and use of the Internet has risen faster than capacity can keep up, which means that the all-you-can-eat model of unlimited broadband per month no longer applies, argues Andrew Harries, chief executive of Zeugma, which makes equipment that can be used to provide metered service. However, he neglects to explain that the ISPs’ version of metered broadband isn’t priced like your water or electricity, but is instead priced like a cell phone plan.

According to Harries:

A little history might shed light on this topic. In the early, pre-bubble days of the mid-1990s, broadband technology was still experimental. There were a variety of digital subscriber line (DSL) technologies vying for supremacy and DOCSIS 1.0 was still in development and it was primarily technical limitations that resulted in broadband being marketed as a flat-rate service. Further, with Napster and streaming of high-definition video not even on the horizon, broadband operators believed that counting bytes was more trouble than it was worth. Hence, broadband was ushered in as a flat-rate service.

Broadband wasn’t marketed as a flat-rate service solely because of technical limitations. It was marketed as such in order to get people to sign up for it. This is how companies, even back in the dial-up days, got people to go online and explore. AOL stopped charging people by the hour back in 1996. When snappier speeds came on, ISPs had to convince people those speeds were worth it, and so they offered flat-rate pricing and talked about faster surfing. And people took them up on it.

Speed is still a huge element of the ISPs’ marketing, even if many folks can’t tell the difference between a web page loading at 5Mbps and 15Mbps. So why push speeds? Because people can tell the difference between tiers for heavy-data services such as video steaming and large downloads. Carriers may complain that we’re using more broadband, but they are actively exploiting that demand in their marketing of faster (and more expensive) service tiers to customers.

But they want to exploit their customers’ wallets as well. And here’s where I have the biggest issue with Harries’ article. He bases his entire argument about metered billing, when in fact he’s talking not about true meters but about a consumption- or usage-based plan analogous to those offered by cell phone companies. This causes him to back off from his most interesting statement (emphasis mine):

To make matters worse, broadband prices have generally declined over the same period – possibly not fast enough to satisfy some. But when coupled with the increase in average speed, the price-per-bit paid by consumers has dropped like a rock. From where does the capital come that is needed to expand broadband capacity further? Even the academics that populate “public interest” organisations lobbying for greater net regulation recognise, at least abstractly, that broadband operators need to earn a profit if they are to continue to invest in infrastructure. Given these circumstances, don’t usage-based billing frameworks make sense?

Whoa. In the first part he’s talking about the decline of prices per bit paid by consumers, but he later switches from his use of the phrase “metered broadband” to “usage-based billing frameworks.”  There’s a simple reason for this. Metered billing is something I can’t argue against intellectually as long as my ISP charges me based on an actual price per bit. I would be paying for my actual usage, exactly as I pay my water or electric company. But carriers would never want to do this because it would reduce their profits.

Instead, when ISPs talk about meters they’re talking about different service tiers that don’t reflect actual usage, but herd customers into set plans where most will be paying a monthly fee for more than they use. And if they go over their tier, they get walloped with fees. Last month when Verizon CTO Dick Lynch talked about meters, it wasn’t an accident that he compared the future of metered broadband to wireless plans, which are tiered service plans that have proven hugely profitable.

Verizon in its third quarter  reported 28.3 percent operating income margin for its wireless service, and for more of a hint, check out its statements last year to investors when it introduced an unlimited $99 plan. Basically it argued that the revenue lost from the few who would benefit from the plan would be more than made up by those joining it out of fear that they may go over their minutes.  Of course wireline ISPs want a piece of that.

Economists gathered in Washington, D.C., this morning to debate how the wireline duopoly affects the market for broadband in the U.S. at an open meeting held by the FCC. The majority of the speakers, including representatives from the Federal Trade Commission and the Department of Justice, insisted that when it comes to broadband access regulators need to also look at the wireless market. While typically a region will be served by one DSL provider and one cable provider, explained Marius Schwartz, a professor of economics at Georgetown University, there are also four national wireless carriers that can provide broadband service as well.

If the FCC is going to view the wireless providers as a true nationwide substitution for wired broadband, then I suppose it’s good that it’s trying to bring the same set of rules and standards for net neutrality to play for wireless operators. However, believing that wireless is a credible substitute for wired broadband is like believing that Molly McButter’s powdered flakes are a credible substitute for the real thing.

Sure, if you’re in a place with no wireline access, a 3G card and down the road possibly a 4G wireless service is better than nothing. But you’d pay considerably more for less, in terms of speed as well as download capabilities. Not that wireline carriers aren’t trying to take some of the pricing packages from the wireless world and apply them to the wireline one.

Another big point of debate at the meeting was the issue of transparency, especially when it comes to how a network operator or ISP discloses their network management policies as well as their various pricing plans. Schwartz argued against disclosure, citing consumers’ limited willingness and ability to process all that information while also referring to network management as a competitive secret — a carrier’s “secret sauce.” Though as two other panelists pointed out, that “secret sauce” has been used in the past by Comcast to throttle P2P traffic, a fairly egregious example of how a lack of disclosure can cause harm to both consumers and those in the software industry.

The panel also briefly mentioned the need for more data on what types of service packages consumers were buying and what speeds and products they actually had access to. The need for more spectrum was addressed as a way to bring wireless networks closer to parity with wired networks. Shane Greenstein, Elinor and Wendell Hobbs Professor of Management and Strategy at the Kellogg School of Management at Northwestern University, tried to engage regulators with information on how today’s market affects entrepreneurs and small business, but his efforts fell flat.

The best line came from Joseph Farrell, director at the FTC’s Bureau of Economics, who noted that the broadband market “is not exactly a monopoly and it’s not exactly competitive — it’s somewhere in between.”

Exactly. So instead of having long debates over whether wireless is a substitution for wired broadband and if consumers can handle disclosure, let’s get the data needed in order to determine where in our country broadband is a monopoly and figure out policies to address that. Transparency will help, and everyone’s favorite panacea of more spectrum will, too, but until we have one nationwide network, this will remain a local issue. As such we have to get into the weeds and figure out how to deliver competition to those poor souls who have no choice but to use the equivalent of butter-flavored flakes.

Verizon Chief Technology Officer Dick Lynch said today that in the coming years, wired broadband will likely be sold in packages based on the amount of data a person wants to consume, much like wireless broadband is sold today. In comments made to press at the 2009 Fiber to the Home Conference Expo in Houston, Lynch stressed that he wasn’t announcing a shift in pricing for Verizon, but that: “We’re going to have to consider pricing structures that allow us to sell packages of bytes, and at the end of the day the concept of a flat-rate infinitely expandable service is unachievable.”

He went on to explain that the pricing paradigm shift will mirror what already exists in the wireless world, rather than a per-GB pricing model. Verizon has been one of the last holdouts on the idea of metered broadband, in which an ISP charges users based on the amount of data they consume as opposed to charging a flat-rate fee for an always-on connection. The company has never said it would meter its broadband, but has defended the right of other carriers to do so.

Lynch’s comments came amid a broad discussion about net neutrality, notably how a carrier can manage its network and deliver quality applications without running afoul of the principles. Given the rise in high-bandwidth applications and services Lynch said, “We believe that you have to be allowed to have a level of service that is not on a public Internet. What you’re suggesting is different kind of IP service that’s not delivered over the public Internet and that needs to be part of the option set in the argument.”

While he admitted that there are legitimate fears around net neutrality that need to be addressed, he differentiated between the public Internet and the idea of services that will require more than a best effort attempt at delivery. However, he said, “There are services that will not be happy on the public Internet, and we don’t want to be in a place where we have to provide the public Internet as the only place to deliver those services.”

Below I’ve also include a video taken the evening before with Mark Wegleitner, senior VP of technology for Verizon. We talked about the history of Verizon’s FiOS push, a bit about what one might do with a symmetrical 100 Mbps connection (which Verizon doesn’t offer today, but could) and why wired will never be replaced by wireless broadband as the home connection to the web.

Time Warner Cable today finally launched its super high-speed wideband consumer and business Internet service in New York. It’s been a long time coming, for as we’ve noted before, Time Warner Cable is a laggard when compared to other cable providers.

The company has already tried to force metered broadband on its customers, and when that didn’t work, responded by refusing to boost its speeds. But competition, as they say, is a beautiful thing, for Time Warner Cable has been losing ground to Verizon’s FiOS broadband service in New York while Cablevision, a Long Island-based cable provider, has been offering super high-speed connections (up to 100 Mbps) to its customers for many months now.

As the demand for broadband has slowed down, service providers have turned to selling premium (higher-speed) packages in order to increase their revenues. Time Warner Cable has been hit hard by the slowdown. The company added a mere 94,000 net new subscribers in the second quarter of 2009.

Here are some details about the Time Warner Wideband service:

Residential: Up to 50 Mbps downstream and 5 Mbps upstream for $99.95 per month Business: Up to 50 Mbps downstream / 5 Mbps upstream and up to 20 Mbps downstream / 2 Mbps upstream. Includes 5 static IP addresses. Availability: Available starting today in Manhattan (below 79th Street), Staten Island and Queens (Fresh Meadows, Forest Hills and South Flushing). It will be available throughout the company’s entire NYC service area by Spring 2010.