Here at GigaOM we’ve pretty much decided that the femtocell market is dead. At the very least, it’s significantly smaller than what was forecast (GigaOM Pro, subscription required) when these tiny base stations for the home first started garnering attention last year. However, analysts at Deutsche Bank beg to differ, arguing in a new report that femtocells will be necessary to deliver fat data over mobile broadband networks. It comes just days after Atlas Ventures, Highland Capital Partners and Pond Venture Partners put $20 million into PicoChip, a maker of femtocell silicon.

The report says that femtocells, which use a consumer’s home connection to provide a stronger cellular signal inside a home or office, are merely at the trough of the S-shaped technology hype curve. It goes on to speculate that the carriers listed below aren’t the only ones conducting femtocell trials as all carriers will have to use them in order to keep up with the demand for mobile broadband. From the report:

One of the dark secrets of mobile technologies is that we are nearing the physical limitations for the speeds we can pump out of mobile networks. Cellular standards manipulate the timing, frequency and amplitude of radio waves. As we move into LTE and its enhancements, we are starting to maximize all those manipulations. Companies like Qualcomm have talked about this publicly, highlighting that the next major wave of improvement of cellular network performance will have to come from in advances in what they call ‘topography’ – the physical planning of network elements. Translated that means a larger number of and more sophisticated base stations. A big part of these topography improvements will come from femtos or some form of in-building coverage.

I’m willing to be surprised by the femtocell market opportunity, but without a compelling business model and consumer price point, the industry won’t make it very far trying to improve carrier networks by using femtocells to ride over consumer’s broadband connections. And even if systems makers can build a cheap femtocell and carriers offer them for free, carriers are already using Wi-Fi to ease the strain on mobile networks, and consumers have already bought into using Wi-Fi as an alternative to 3G in their homes and other settings. The number of Wi-Fi phones rose 177 percent between 2007 and 2008, according to a recent report by In-Stat, a number that’s expected to continue to rise.

So while the carriers and the several companies like PicoChip are probably right with their assertion that some type of network offload will be necessary, the carriers will have to play a huge role in making femotcells acceptable to users. After all, consumers with WiFi-enabled phones are already boosting their in-home data coverage and taking a load off of carrier networks with their in-home Wi-Fi networks. So in order to be viewed as a worthy competitor to Wi-Fi, the femto industry needs to do two things: make a really complicated piece of telecommunications gear cheaply and find some way to sell it to consumers.

Right now, carriers are pretty much charging consumers the price of the base station and a monthly fee to improve the carrier network. But consumers — understandably — aren’t terribly jazzed about paying too make life easier for carriers, especially given some of the limitations on what the femto actually offers. The dark secret here may be that carriers are going to have to improve their networks in a way that doesn’t pass on the femtocell cost to consumers. Are they ready to do that?

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  7 Comments
Tags: Deutsche Bank, Femtocells, picoChip

My building only had one broadband provider until recently, as Stacey reported last week. But that’s changing, as Verizon FiOS just became available in my building, and the company is making a huge push to get people connected. So for those of you in other areas of the country, where broadband competition may be the choice between basic cable and DSL, here’s what true competition looks like.

Verizon made a six-hour marketing push in my building’s lobby to inform residents about its broadband and TV services, as well as the cost and speed difference between its service and that of incumbent provider Time Warner Cable.

Verizon brought out a wall display unit, as well as Subway subs, cookies and water to attract a crowd in the lobby of my 1,200-unit building. But it wasn’t just cookies that the company used to bring attention to its services; Verizon is offering up some pretty dramatic deals to get people signed up as well.

The company quoted me a price of $116 per month for a triple-play bundle that includes more than 300 HD video channels and DVR; broadband Internet for 35Mbps upstream and 20Mbps downstream; and  phone service with unlimited local and long-distance calling in the U.S., Canada, Guam, Puerto Rico and the U.S. Virgin Islands.

But that’s not all. Mike, the Verizon rep I spoke with, said he could cut $20 from the quoted price for 12 months, making monthly pricing $96 for the first year. In addition to that, the company offered a $150 Target gift card on the spot to residents who signed up for the service today and a $150 “cash back” Visa card that representatives say will be mailed out 60 days after service starts.

I followed up with Time Warner Cable to see how its prices compared. For $99 a month, the cable provider offers a similar triple-play bundle, with a comparable pay TV subscription and phone service. But the Time Warner Cable broadband package that is part of that deal is much slower than Verizon’s, with a maximum download speed of 15Mbps and a max upload of just 768kbps. (In my speed test last week, I found my service to be running closer to 9Mbps down and 500kbps up.)

My phone rep at Time Warner Cable — whose name was Brett, and who claimed to be a former Verizon refugee — noted that, unlike Verizon, Time Warner Cable had no contracts or cancellation fees for its services. In contrast, Verizon has a $179 cancellation fee for those who decide that FiOS is not for them before the first year of their contract is up.

Brett also warned me that while I would spend a comparable amount on the broadband package itself, my cost of using FiOS would also include the price of having an ONT installed in my apartment and drawing power. He estimated that the ONT by itself could increase my electric bill by $15 to $20 per month, which would offset much of my savings from a lower initial pricing, as well as some of the “cash back” incentives that FiOS was offering.

In the end, I decided to sign up for FiOS. While I’m not a heavy cable TV watcher, the boost in broadband speed and unlimited calling on Verizon’s phone service seemed a fair enough trade-off for the $70 more that I will spend per month over my current broadband-only bill. Given the amount of video streaming and data transfers that I do, the increase in data speed seems worth it.

Plus, as Mike said when I told him I was a reporter interested in writing a story about broadband competition,”Then you should totally get FiOS. It’ll help you write your stories a lot faster.”

Oh Mike, if only that were the case.

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Posted by Ryan Lawler on GigaOM  |  Permalink  |  7 Comments
Tags: Time Warner Cable, Verizon FIOS

Airlines are pushing hard to bring in-flight Wi-Fi to their customers, but there’s little evidence consumers are willing to spend much to be connected in the air. So perhaps airlines should be looking to advertisers to fund their services. In-flight Wi-Fi faces several challenges, from expensive deployments to a general lack of passenger knowledge. But the biggest hurdle may be the proliferation of ad-funded Wi-Fi services on the ground, which is surely helping create a consumer mindset that wireless Internet access should be free.

Aircell, an Illinois-based startup, now offers its ground-to-air Wi-Fi service on 623 aircraft through partners including American Airlines, Delta, United and Air Canada. The company said its business is nearing 100,000 users per week and is on track to surpass the 2 million-user mark in January.

That sounds impressive, but it’s a tiny fraction of the number of users who fly every month. More than 65 million passengers took to the skies in the U.S. in August alone, according to the latest figures from the U.S. Department of Transportation. Also, Aircell’s data refers to sessions, not unique users, and the company doesn’t disclose paid sessions vs. free promotional sessions, as Wi-Fi Net News reported last week. Portfolio.com recently illustrated how those free promotional offerings are easily available as airlines try to entice passengers to try in-flight Wi-Fi for the first time.

Meanwhile, rival startup Row 44 has installed its system on only five planes — four Southwest Airline jets and one from Alaska Airlines — and, like Aircell, isn’t sharing usage data. Southwest has committed to rolling out the service on its entire fleet of 540 jets early next year. But whether Row 44 can raise the $125 million or so that will be necessary to fill Southwest’s order is far from certain, as Portfolio.com notes.

Air travelers are an especially affluent lot, as a JiWire study showed last week, making them an attractive target for Wi-Fi marketing. Perhaps if airlines can’t convince passengers to shell out for access, they can find ad partners to fund their services.

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Posted by Colin Gibbs on GigaOM  |  Permalink  |  4 Comments
Tags: Aircell, airlines, in-flight, Row 44, wi-fi

AT&T today introduced a prepaid mobile broadband product that exactly matches the pricing of similar plans launched earlier this month by Verizon Wireless. I was skeptical of Verizon’s offering because it’s pretty pricey, and I’m not sold on AT&T’s either, but my colleague Kevin Tofel points out that for folks who use Wi-Fi most of the time, this plan may still make sense. So here’s what AT&T is offering:

• Daily – $15 for 75MB (20 cents a MB)
• Weekly – $30 for 250MB (12 cents a MB)
• Monthly – $50 for 500MB (10 cents a MB)

Customers get a SIM card specifically for the plan and can activate it and replenish it with megabytes online. AT&T will send customers a text and email message after either 30 minutes or 20 percent of allotted data usage remains in their session. At that point, consumers have the option to purchase more time or allow the session to expire. I just wish AT&T and Verizon would stop hemming the megabytes in with a time limit, or folks could buy an unlimited chunk of bytes without having to worry about when their minutes expire. That would speed mobile broadband adoption and make it far more flexible.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  4 Comments
Tags: AT&T, T, Verizon wireless, VZ

The rise of video streaming is dramatically affecting the Internet, according to a two-year study of Internet traffic trends that Arbor Networks recently presented to the North American Network Operators Group. Two years ago, Internet traffic was distributed evenly among a dozen Tier-1 network providers, but today the majority of traffic flows through direct peering agreements among large content providers, content delivery networks and ISPs. Consequently, Tier-1 networks have shifted their business models from simple packet delivery to richer cloud computing and content hosting services, and new players Google and Comcast have joined the top 10 list of Internet traffic producers — and the more traffic they put on the Internet, the more control it gives them over your online experience.

Traffic is growing much faster than the 50 percent year-to-year rate found by studies such as the Minnesota Internet Traffic Study; yet the “exaflood” of video traffic hasn’t drowned the Internet because network operators have found more efficient paths. The dramatic shift in traffic patterns has to do with the rise of what Arbor calls “the Hyper Giants,” 30 large companies that contribute 30 percent of Internet traffic. Thanks to YouTube, Google alone is responsible for 7 percent of all the traffic on today’s Internet, which puts it in the privileged position of prioritizing its VoIP and video calling services over YouTube without FCC permission.

The onslaught of video is also changing the nature of peering agreements. Traditionally, peering and so-called transit were very distinct from a revenue perspective: Peering agreements were “settlement free” arrangements in which packets changed hands between networks of roughly equal size and scope, but money didn’t. Fee-based network interconnects were confined to “transit agreements” in which a large network operator connected a small player to the entire Internet for a fee; peering is also strictly a “one network to one other network” arrangement. The new wrinkle is “paid peering” agreements in which a large operator permits direct connection for a small fee. Paid peering replaces transit fees that run $2-9 per Mbps with direct connection at $1-3, and enhances service, according to an article on Bill Norton’s “Ask Dr. Peering” web site which explains the value of Comcast’s paid peering and its potential collision with net neutrality regulations:

Paid peering provides better performance than transit, since the traffic takes a less circuitous route. Paid peering allows Google competitors to more easily compete with Google on performance and price without having to reach Google scale.

But paid peering may be forbidden by Question 106 of the FCC’s proposed Open Internet rules because it’s essentially two-tiered network access, Norton points out.

Paid peering illustrates how hard it is to write an anti-discrimination rule for the Internet that doesn’t have harmful side effects for all but the largest content networks. Paid peering is a better level of access to an ISP’s customers for a fee, but the fee is less than the price of generic access to the ISP via a transit network. The practice of paid peering also reduces the load on the Internet core, so what’s not to like? Paid peering agreements should be offered for sale on a non-discriminatory basis, but they certainly shouldn’t be banned.

Video is rising on the Internet, with more of it coming from legal sources such as content delivery networks and less from piracy-oriented systems like eDonkey and BitTorrent. Regulators need to look before they leap into wholesale bans on practices like paid peering that enable the Internet to carry increasing volumes of traffic. The FCC’s last net neutrality order (issued against Comcast in 2008) was an unintentional gift to purveyors of pirated content because it banned P2P throttling; going forward, the FCC should be at least as kind to network operators coping with the rise of video traffic by creative means.

Richard Bennett is a research fellow with the ITIF with 30 years of network architecture experience.

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Posted by Richard Bennett on GigaOM  |  Permalink  |  101 Comments
Tags: internet, paid peering, Tier-1, Video

Air Canada is testing an in-flight Wi-Fi service from Aircell on its flights between Toronto and Los Angeles and Montreal and L.A. From now until Jan. 29, passengers can plunk down $9.95 per flight to surf on a laptop and $7.95 to access the Internet on smaller devices such as a smartphone or WiFi-enabled media players like the iPod touch. AirCell also provides its GoGo in-air Wi-Fi service on Delta and American Airlines flights in the U.S.

And because Aircell currently only has regulatory approval and the antenna coverage that enables airlines to offer Wi-Fi in the U.S., Air Canada passengers can only get their Wi-Fi fix when flying over U.S. soil. Perhaps that accounts for the slight discount on Air Canada’s prices for Wi-Fi when compared to American’s charge of $12.95 for in-flight access.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  2 Comments
Tags: Air Canada, Aircell, American Airlines, Delta, gogo

The New York City Council is voting on a resolution this morning supporting the idea that Internet service providers cannot discriminate against web traffic on their networks. As gestures go, this resolution supporting net neutrality is more symbolic than it is useful, and to that end has already yielded a couple of photos of FCC Chairman Julius Genachowski and New York Mayor Mike Bloomberg shaking hands and looking concerned about the future of NYC broadband.

However, New York City is a nice case study for competitive broadband, so I hope Genachowski took notes while he was there. Verizon,  Time Warner Cable and  Cablevision all serve the city (although they don’t all compete head to head in every block), so some residents there have access to both fiber to the home and cable’s wideband service using DOCSIS 3.0. Our own Ryan Lawler, who lives in Harlem, is paying $33 a month for Internet service from Time Warner Cable, which currently has the monopoly in his building. However, he says he just got a note informing him that Verizon FiOS will also soon be available, so we’ll see what happens to his cable speeds (which are currently 9 Mbps down and 500 kilobits per second up) and service in the next few months.

The state’s CIOwants to collect real data on broadband penetration and speeds so that it can get a sense of customers’ level of satisfaction with their service as opposed to just knowing which areas have broadband and which don’t. A Congressman from the state is also attempting to pass legislation that would give the FCC the power to regulate certain aspects of net neutrality and broadband access. So given the competition, better data collection and consumer-friendly legislative efforts, I hope Genachowski is doing some learning, not just politicking for a symbolic victory on net neutrality.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  3 Comments
Tags: Cablevision, CVS, Time Warner Cable, TWC, Verizon, VZ

Verizon Test

WiMAX Test

Sprint held a happy hour last night to show off the WiMAX launch in here Austin, Texas, so I wandered over for some BBQ and broadband. I want to love WiMAX, but I can’t get excited about the promise of upload speeds of some 400 kilobits per second, which are only a wee bit more than what my Verizon 3G connection delivers. However, on the download side things are decent for a wired network and awesome for a wireless one.

And before any WiMAX boosters despair, I was told that the local 4G network should continue to improve over the next few weeks, which is why I’m holding off on an all-out review. For a sneak peak, check out the experience in the video below. You can see some freezing in the Hulu video stream during the demo; John Taylor, the Sprint spokesman I interviewed, said the location we were in had only two bars of coverage, which may have been the problem. Given the paucity of devices on display for mobile use and the lackluster network quality so far, I’m still thinking the bet that Clearwire (which is powering the 4G part of the Sprint network) and Sprint made on WiMAX is a bad one, but I’m hoping to be proven wrong.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  10 Comments
Tags: CLearwire, CLWR, S, Sprint, WiMAX

AT&T isn’t the only operator whose network shortcomings have been exposed by data-hungry iPhone users. O2 — which until recently was the only UK operator to carry Apple’s gadget — said it will spend $166 million over the next several months to shore up its network to meet ever-increasing demands from smartphone users. Additionally, the carrier said it will build 40 new cell sites in and around London in advance of the holiday season.

Like AT&T, O2 has drawn criticism regarding its network performance as smartphone usage increases. The increased traffic is directly attributable to the iPhone 3G S and the Palm Pre, which are the best-selling devices on its network, CTO Derek McManus said in a release:

“World-class smartphones have brought about an unprecedented demand on mobile data networks,” according to McManus. “Data on our network has increased 20-fold in the last year alone. As a result, we have recently experienced some isolated pressures in London where there is the highest concentration of smartphone users.”

O2 has effectively leveraged its exclusive iPhone deal, gaining nearly 300,000 net mobile subscribers in the third quarter and emerging as the only UK operator to increase revenue in the first nine months of the year. The company isn’t likely to keep up that pace as rival carriers begin to offer the iconic device, but if O2 can address its network problems it could retain its crown as the top carrier in the region — until Orange and T-Mobile consummate their merger, anyway.

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Posted by Colin Gibbs on GigaOM  |  Permalink  |  0 Comments
Tags: Apple, AT&T, iPhone, O2, palm, Pre, smartphones

The iPhone has not only changed the way people consume data on their mobile phones — thanks to its touchscreen, and the myriad of apps that make grabbing such info from the web on a small device easy — it’s changed assumptions as to which devices consume the most data on mobile networks. Bytemobile, a company that provides equipment for carriers to help deliver video and data to mobile devices using less bandwidth, issued a report today that shows the difference in data consumption by device among carriers that have the iPhone and carriers that don’t. It’s pretty significant.

Laptops are still consuming most of the data on carrier networks that don’t have iPhones on them, but once folks get a touch-based smartphone such as the iPhone (and right now it’s the most popular touch-based smartphone out there), the volume of data used by those devices far exceeds that of laptop usage. In other words, when it comes to the network and data consumption, the device does matter. The report also offers some self-serving data about video consumption on mobile devices that may help carriers save on bandwidth consumption. (GigaOM Pro, subscription required).

Cisco expects mobile data traffic to increase 63-fold over the next five years, driven in part by video. But while it’s clear that laptops and touch-based smartphones make video consumption easier, the rise may not be as steep as Cisco predicts. The report found that while the average video online is about 5 minutes in length, about half of the people only watch 60 seconds of a video, which means that sending the entire file to a user would be a waste of bytes and bandwidth. Only 31 percent of people watched all of a video, and 30 percent watched less than 10 percent. The rest of the viewers stopped watching somewhere in the middle. In addition to bandwidth consumption, such findings also could help determine where best to place ads. Although I for one hate getting pre-roll ads on my phone because that data consumed counts against my mobile bandwidth cap. But maybe I’m just super cheap.

Regardless, the problem with the iPhone is that it’s both a gateway drug for consumers, who’ve now tasted the mobile web and want more of it, as well as a canary in the coal mine, as it shows carriers what’s likely to happen as other touch-based smartphones become more popular on their own networks. Curtailing video, as suggested by the report, will solve some issues, but once you give folks a taste of broadband, they’re going to want more.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  7 Comments
Tags: ByteMobile, iPhones, smartphones

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.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  6 Comments
Tags: AT&T, T, Verizon

The Asia-Pacific region is getting ever-closer to faster mobile broadband, with network operators in Japan, Singapore, Australia and Indonesia readying their Long Term Evolution networks. Today NTT DoCoMo, Japan’s largest mobile operator, affirmed its plans to deploy LTE in 2010; it also said it would shut off its 2G network in March 2011 since most subscribers now have 3G phones. NTT DoCoMo had previously said it would keep the 2G network running until December 2012. Speaking at the GSM Association’s Mobile Asia Congress 2009, Ryuji Yamada, president and CEO of NTT DoCoMo, said LTE data cards will be ready in 2010 and handsets will be ready in 2011.

Singapore Telecommunications, the largest carrier in Singapore with operations in Australia, Indonesia and the Philippines, also disclosed plans for LTE trials. SingTel has chosen Alcatel-Lucent as its equipment vendor for the trials, which will begin in the first half of 2010 and take anywhere from six to nine months. The network operator hopes the trial will help it and its regional associates and joint ventures better understand LTE and determine the best approach and strategy for its adoption in their respective local markets. Meanwhile, here in the U.S., we await Verizon’s and MetroPCS’ 2010 deployments, with netbooks and smartphones in hand.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  0 Comments
Tags: LTE, MetroPCS, NTT DoCoMo, PCS, SingTel, Verizon, VZ

Qualcomm holds about a quarter of the patents required to make the Long Term Evolution wireless standard happen on mobile devices and networks, according to an ABI Research report published earlier this week. Other big holders include Interdigital, with 18 percent; Huawei, with 10 percent; Nokia and LG, with 9 percent each; and Samsung, with 7 percent. Which basically means Qualcomm may not be the patent shark that it could be with the CDMA 3G standard, but it’s still going to make some serious money with LTE. In fact, Len Lauer, COO of Qualcomm, confirmed that the company’s royalty rate for LTE would be about 1 percent lower than the royalty it charges for 3G.

So Qualcomm’s sitting pretty with regard to 4G (this includes WiMAX, thanks to its 2005 Flarion buy). However, at least three different entities are attempting to get companies and people to create an LTE patent pool. I’ve covered efforts by Via Licensing, which operates the Near Field Communications patent pool, and MPEG LA, which controls the patents for MPEG-2 video codec. There’s also an attempt to pool patents by Sisvel, unveiled Monday. I’ve been skeptical of these from the beginning, however. As I noted in my Via story:

Via can’t force patent holders to play, and without a majority of solid patents with which to negotiate, its attempts will fail. There’s little reason for a larger company to join a patent pool, unless it wants to help push through a standard, which isn’t the case with LTE (for the skinny on patent pools, check out this article I wrote back in 2007).

Now that we know the leverage Qualcomm has — and the fact that Qualcomm doesn’t swim in patent pools (it has a dedicated staff to handle licensing and as such, no need to do so) — I’m pretty confident that these myriad efforts to get an LTE patent pool going are already sunk.

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Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  2 Comments

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.

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The Party Line — Phone Buzz of the Day jkOnTheRun – by Kevin C. Tofel "; Radical New Smartphone Appears — Emblaze First Else jkOnTheRun – by James Kendrick "; New Avatar Trailer Is Interactive, Spoiler-Active NewTeeVee – by Chris Albrecht "; How Low Can TiVo Subs Go? NewTeeVee – by Chris Albrecht ";

Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  23 Comments
Tags: Broadband, Comcast, tiered broadband, Time Warner Cable, Verizon

If free Wi-Fi marketing is a good idea, as Om and Stacey argued last week, free Wi-Fi marketing in airports is an especially good idea, according to a new study from JiWire. The San Francisco-based mobile advertising company — which, of course, has skin in the game — found that more than half of airport Wi-Fi users hold an executive or management position, more than half have annual household incomes of more than $100,000 and 75 percent plan to make a big-ticket purchase in the next 12 months.

And of those logging on ahead of their departures, more than 80 percent spend in excess of 30 minutes online, with nearly one-third of them connected for over an hour. Which means there’s plenty of time for advertisers to make their pitches. As David Staas, senior VP of marketing for JiWire, said in a release:

“Business travelers are a highly coveted audience for both business and consumer-oriented advertisers due to their purchasing power, but are traditionally very difficult to reach.”

The surge in Wi-Fi use on  mobile devices provides <a href=”http://gigaom.com/2009/11/11/if-mobile-carriers-dont-address-demand-for-wi-fi-ad-supported-services-will/”">an opportunity — and a challenge — for network operators looking to provide connectivity over multiple networks. But it also provides a channel for advertisers willing to pay the cost of connectivity in exchange for the opportunity to reach consumers on the go. And as JiWire’s study highlights, some of those users — especially the ones in airports — are very attractive indeed.

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The Party Line — Phone Buzz of the Day jkOnTheRun – by Kevin C. Tofel "; Radical New Smartphone Appears — Emblaze First Else jkOnTheRun – by James Kendrick "; New Avatar Trailer Is Interactive, Spoiler-Active NewTeeVee – by Chris Albrecht "; How Low Can TiVo Subs Go? NewTeeVee – by Chris Albrecht ";

Posted by Colin Gibbs on GigaOM  |  Permalink  |  3 Comments
Tags: mobile carriers, wi-fi

Sprint announced WiMAX service today in San Antonio and my hometown of Austin, Texas, so this is just to tell y’all I’m playing with a modem and will be letting folks know how it all works, once I activate the darn thing. Currently Sprint doesn’t support a USB modem for Macs (but I’m assured that one is coming, likely in time for the holidays), which means I need a PC to activate my modem on. But then I can use a personal hotspot product that converts the WiMAX signal to Wi-Fi to test it out on my MacBook (and iPod Touch)! So send me your questions, concerns and anything else WiMAX-related, and I’ll try to address them or get them answered. Personally, I want to see if this is something I could replace my wired connection with, or if it’s really just what I’d use instead of my 3G MiFi while I wait for LTE.

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The Party Line — Phone Buzz of the Day jkOnTheRun – by Kevin C. Tofel "; Radical New Smartphone Appears — Emblaze First Else jkOnTheRun – by James Kendrick "; New Avatar Trailer Is Interactive, Spoiler-Active NewTeeVee – by Chris Albrecht "; How Low Can TiVo Subs Go? NewTeeVee – by Chris Albrecht ";

Posted by Stacey Higginbotham on GigaOM  |  Permalink  |  15 Comments
Tags: S, Sprint, WiMAX