A cloud messaging company called Zipwhip has begun linking landline phone numbers to the SMS grid. Anyone with a U.S. number can now go to Zipwhip.com and register their number. You’ll first have to offer proof you own that number — usually by submitting a scanned phone bill — but if you’re willing pay the $19.95 monthly fee you can make and receive unlimited text and multimedia messages through Zipwhip’s cloud service.

As you might suspect, your home or office phone can’t receive an actual SMS. What Zipwhip has done is virtualize the SMS client, allowing you to access it through a browser or through a PC client. You can even download its iPad or Android tablet app, so even though the SMS service might be attached to your home number it’s completely divorced from your home phone.

In fact, the SMS service really has nothing to do with your home landline connection or the local phone company providing it, Zipwhip CEO John Lauer said. Zipwhip is using your landline number as a universal identifier for routing text messaging traffic across the internet. From the perspective of Zipwhip’s cloud-based SMS infrastructure, your home phone is wherever you happen to be logged in.

The technology has been available for some time to link landline numbers to the SMS grid, and some providers like Comcast allow some two-way texting capabilities between wireline and wireless, Lauer said. But the big barrier has been mobile carriers’ reluctance to bring wireline world into the SMS clubs. Carriers, however, have been working with mobile industry association CTIA and have gradually opened up their networks to make those links possible, Lauer said.

So why would you want to tie your landline to the SMS system? While there may be a novelty factor, an ordinary consumer might find having dual SMS numbers overkill, especially if that extra service costs you an additional $20 a month. Lauer expects that businesses will be the most likely candidates for the service. SMS and messaging have gained acceptance as a means of communicating professionally or with customers, he said, so making your business number SMS capable makes perfect sense.

For instance, customers can text their orders to the local pizza joint using its regular delivery number, and that pizza joint could respond with a confirmation or a receipt from that same number. A salesman could use a single office number for all calls and SMS, rather than confuse a customer or colleague with a text message from an unidentified mobile phone. Mobile marketers could engage in SMS promotions using their own phone numbers rather than rely on complicated short codes.

Though Zipwhip is offering the SMS service independently of wireline operators today, it plans to offer the technology up to local phone companies, which in turn could offer landline texting as a feature in their service bundles.

Founded four years ago in Seattle, Zipwhip has raised $2.2 million form private equity and angel investors. Its first app was an SMS and MMS-forwarding service, offered both as an app for consumers and as a white label technology for carriers. It counts Sprint and T-Mobile among its customers.

With its new landline SMS technology, however, Zipwhip has moved beyond text forwarding to become a virtual carrier integrated directly into the internetworked SMS grid run by U.S. operators. That distinguishes it from MightyText and other text-forwarding apps. Instead of piggybacking on another carrier’s SMS service through software on the phone, Zipwhip can now power an independent messaging service on any advice over any number.

Feature photo courtesy of  roberthuffstutter via Compfight cc; Message image courtesy of Flickr user Patrick Denton;

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Here’s what we found: While the price of these other technology-driven products and services has continued to fall over the last few years—personal computer prices have dropped over 44 percent in five years—the prices for wireline broadband have mostly been flat.

So why haven’t wireline broadband prices budged in recent years? The high, fixed costs of broadband means that there hasn’t been a big rise in competition among providers, according to Scott Wallsten, Vice President for Research and Senior Fellow at Technology Policy Institute. Indeed, most Americans don’t have more than two options when it comes to wireline broadband providers. (See how many your area has here. )

In the meantime, people who don’t have broadband want it badly and the for those who do have it, it’s become increasingly indispensable. The result is that there hasn’t been much downward pressure on prices.

The last few months did see a very slight drop  in the price of broadband. It’s unclear whether that’s just a temporary blip or beginning to use the high-speed wireless network LTE as a substitute for wireline broadband. (Of course, if it’s the latter and that trend continues, that could drive down the prices for broadband.) ”A big, and open, question is whether LTE will begin to compete on the margins with wireline broadband,” says Wallsten.

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Currently 119 million people that live in the U.S. don’t have broadband connections (for many reasons, including not wanting it or not being able to afford it) while 19 million don’t even have the option to get it. Our rate of broadband adoption (62 percent) lags behind countries such as South Korea, the U.K.,and Germany, according this year’s Federal Communication Commission report. (We’re closer to the penetration rates to Japan, Finland, and Canada.) These numbers are not likely to change soon, given that broadband growth is slowing and providers are moving away from wireline infrastructure.

Pricewise, we’re not in the top 10 in any speed tier, and in the in the highest tier — 15-25 Mbps — we’re 26th out of 32 countries. Hong Kong and Denmark both have cheaper internet — and faster average broadband speeds.

In this infographic, we highlight some key facts on broadband in the U.S. We obtained the data from the FCC, the National Broadband Map and Akamai.

ADOPTION

196.7 million (62%)

Americans who have broadband

15th

rank in wired broadband adoption per capita

Green denotes areas with at least two wireline broadband providers. Click to see how well your area is covered by both wireline and wireless broadband providers. Source: National Broadband Map.

SPEED

6.6 Mbps

average U.S. broadband speed

9th

U.S. broadband speed rank worldwide

The average internet speed worldwide is 3.0 mbps. While the U.S. beats the average, it doesn’t stand out among other developed nations. Source: Akamai

1Gbps

speed in Kansas City, using Google Fiber

Google Fiber has by far the fastest speeds in America. Click to test your speed. Source: Google/Ookla

COSTS

$249

amount telcoms invest in U.S. broadband, per person annually

$155

worldwide broadband investment, per person per year, by OECD countries

$528

what Americans on average pay for a standalone broadband subscription every year (5-15 mbps)

21st

rank out of 33 countries in  price for that speed tier 

This map shows which broadband technologies serve different parts of the U.S. Click to see what type of infrastructure your hometown has. Source: National Broadband Map

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AT&T accrued only 320,000 new net contract subscribers in the three month period so many of those gains were replacements for departing customers as well as existing customers upgrading. In all, AT&T activated 5.1 million iPhones, Android devices, BlackBerrys and Windows Phone handsets. In comparison, Verizon Wireless sold 5.9 million smartphones in the second quarter.

AT&T remains the destination of choice for iPhone users. It activated 3.7 million of the Apple devices between April and June, beating out Verizon’s 2.7 million iPhone sales. That’s nowhere near AT&T’s record of 7.6 million activations from the last year’s fourth quarter, but then the iPhone 4S had just been released. As the year goes on, subscribers are starting to anticipate the arrival of the new iPhone this fall. AT&T said that 22 percent of its new iPhone activations were customers arriving from other carriers.

AT&T’s total net subscriber gain was 1.3 million, giving it a grand total of 105.2 million. Its strongest growth area was in the reseller category, which is a good indication that AT&T’s new more open attitude to mobile virtual network operators is paying dividends. AT&T also saw 382,000 new connected device activations

In wireline, AT&T added 553,000 U-Verse internet and 155,000 TV subscribers, which helped offset the loss of 96,000 DSL subscribers. AT&T now has 6.8 million U-Verse customers.

Photo courtesy of Shutterstock user Reno Martin

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NSN's headquarters

Nokia Siemens Networks said it will sell its wireline broadband assets to ADTRAN for an undisclosed amount. The deal is the second in as many months for NSN, which had previously been hoping for a buyer for its entire business. The company, which is a joint venture between Siemens and Nokia, says it is planning to exit lines of business that fall outside the bustling mobile broadband industry, but it may also be an effort to slim down to find a buyer.

Nokia said it expected to close the sale of its fixed line broadband access business and associated professional services to ADTRAN, a wireline gear provider, in April 2012. NSN in November had sold its microwave packet business to DragonWave in a cash and stock deal.

NSN has had a rocky time along with the rest of the telecommunications gear industry as consolidation among customers and competition from Huawei and ZTE have put the squeeze on vendors such as Nortel (it filed for bankruptcy), Motorola (it split its businesses), Ericsson (it has decided to focus on mobile broadband as well) and Alcatel-Lucent (it is trying to worm into the cloud market). The company has attempted to find a private equity buyer, but gave up and announced a restructuring in November.

Image of NSN’s HQ courtesy of NSN.

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FCC Chairman Julius Genachowski

Verizon filed its second suit against the network neutrality laws submitted last December by the Federal Communications Commission, sparking what is certain to be more debate over who has what rights to regulate the content on the Internet. Meanwhile a policy paper out today suggests the Internet so far delivers between $4,155 and $5,686 in economic value to each consumer: a number that may decline or stagnate if net neutrality disappears.

Assigning value to the web

A study by the Institute of Policy and Integrity at New York University has crunched some numbers and determined that the combination of network infrastructure and content that comprise the Internet offers significant economic value to consumers. The authors describe their methods below:

The results suggest that the consumer surplus generated by the Internet is very large. The average survey respondent spent 114.5 minutes a day on the Internet recreationally. The benefits that use generates are equivalent to 5.2 percent to 7.1 percent of income. If we use the median income value of Pew’s survey, we find that individual consumers collect between $4,155 and $5,686 worth of value from the Internet per year. This estimate is big, but it is in the same neighborhood as those found by Goolsbe and Klenow. They found that the consumer benefits of the Internet were somewhere between 2 percent and 3 percent of total income. The amount of time consumers spend on the Internet suggests that they receive a great deal of benefit from access.

How much is the web worth to you?

Of course this number is debatable, as are many number associated with the economics of broadband and the web. While the dollar value may be up for debate, the intrinsic value of having faster and more connectivity is not. As Om has pointed out, broadband is the processor of the next generation of the economy–as we move from the Information Age to the Insight Age. And for those not worried about broad economic shifts, there’s also the value to consumers from telecommunications services such as Skype or over-the-top video services such as Hulu or Netflix. These services are what’s at stake in the overall net neutrality issue. Which brings us back to the rebirth of the network neutrality fight that commenced last week with Verizon’s lawsuit.

A refresher in network neutrality and why it matters

So it’s once more into the breach on the net neutrality as the courts weigh in on the FCC rules published last December. Verizon’s first lawsuit was filed prematurely according to a judge, who said the telecommunications company had to wait for the rules to get published in the Federal Register, which finally happened last month. As I wrote at the time of the original lawsuit, the rush to sue isn’t just a fight over the rules, but also a fight to control the venue of the trial, and perhaps get a judge that’s more sympathetic to either the telcos or the FCC’s arguments.

As the lawsuits revive the contentious debate over whether or not ISPs can interfere with the traffic flowing over their networks, it’s worth looking at what has changed in the last nine months. The rules say wireline networks can’t interfere with traffic, but those same rules muddy the waters when it comes to wireless. And today, with the world going wireless, that’s an important distinction.

Call it what you willl, but a lack of competition makes net neutrality policies essential.

Since the rules were passed, we’ve seen AT&T attempt to scoop up T-Mobile and reduce the number of players in the wireless industry significantly. Given that net neutrality is necessary because we don’t truly have competitive broadband networks in the U.S., a reduction in wireless competition is significant. For example, if my local wireline ISP charges Netflix  more money to send me content, and Netflix decides to raise prices for customers of that ISP, then I may only have one other option to get my Netflix bits from — an option that tends to work in lock-step to match the pricing and services available from the other ISP in my area.

Bring that dynamic to a wireless market, where there isn’t a firm guarantee of network neutrality ,and now factor in the prospect of fewer players and the lack of wireless network neutrality is troubling. So far, the AT&T-Mo merger is in doubt, but it isn’t completely shut down.

There’s also the appearance of more sophisticated carrier equipment that can now monitor the bits flowing over ISP pipes and show ISPs exactly how much traffic (and how much money) they are losing to other services. Sandvine, for example, showed off such gear in September. Google and its planned purchased of Motorola Mobility also have the potential to change things, although I’m not entirely sure how that could play out. It could end up bringing Google closer to the carrier perspective because it now has a handset business that is under carriers’ thumbs. But a handset business might also become a platform for new services that make wireless net neutrality more important for Google.

This is an economic, not a technical argument

This is all about money, honey.

The fight on network neutrality essentially is a fight between ISPs that see companies such as Google or Netflix getting rich off the pipes provided by the telcos and cable companies. The ISPs argue that these content providers are overwhelming their networks, cutting into their profit margins. So they’d like to create a two-sided business model whereby ISPs charge content companies and consumers, so every bit you download from Netflix is paid for by Netflix and by you.

Content providers don’t want that, because it lowers their margins on service, and potentially could halt innovation because a smaller startup couldn’t pay an ISP to deliver its packets ahead of a larger web company. However, it also acts as a disincentive to investment in an ISP network. As the NYU study argues, under a traffic prioritization scheme, ISPs benefit when networks are congested, because it means paying for expedited delivery makes sense. Thus, why invest in adding more capacity to the network to make prioritization unnecessary? The report argues:

If the status quo is changed and ISPs are allowed to prioritize content, they will likely earn more money, but there is no guarantee that they will invest that additional revenue in their networks. Much of that additional revenue will reward past investments, rather than incent the development of new infrastructure. If they return the additional revenue to shareholders, or use it to invest in their own Internet content, then the future benefits from the Internet are at risk.

So, the lawsuits set in motion last week will release another torrent of debate — this time in the courts — about the merits of net neutrality. But aside from fear mongering associated with “regulating the Internet,” the real debate is one that will matter deeply — to consumers and tech companies alike. We may have to help lawmakers realize the true value we derive from the Internet, and ensure that value continues to accrue.

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A study released Thursday by the Utilities Telecom Council estimated that utilities will spend 21 percent more than they spent two years ago, but a mere 3 percent more than they did last year. Two-way metering and associated networking represents about $1 billion of the total utility telecom spending in 2011, according to the UTC. Backhaul and transport networks represent the second largest category as electric companies try to connect their smart meters back to the web.

But surprisingly, smart meters and backhaul aren’t the big opportunity, the report found — mobile is. Spending on wireless communications as a proportion of overall telecom spending could double over the next five years, growing from 28 percent of telecom spending in 2011 to half of all telecom spending by utilities in 2016, according to the research.

The utility industry isn’t alone in its decisions to spend more on wireless; in fact, it may be running a bit behind. In August, In-Stat, another research firm, said wireless spending by small businesses will exceed their spending on wireline in 2012. At that point, wireless will become the largest portion of telecommunications spending for small biz. That’s certainly the case in our office, where cell phones dominate and mobile data plans are essential. What’s unclear is if the spending will be up so high because wireless service costs more than comparable wireline services, if the mix of services are expanding (i.e. moving from voice-only plans to data plans) or if it is being embraced by half of the SMB workforce.

Additional In-Stat data suggests that businesses are doing a mix of all three, with 44 percent more adding messaging to their voice plans between now and 2015 and forecasting that spending for voice, messaging, and data plans will rise 37 percent from 2010 through 2015 across all businesses.

This shift means enterprise apps will become much more important in the next few years as will figuring out how to secure mobile phones and tablets. Equally important, once someone is connected 24/7 and anywhere they go, is how to think about drawing a line between work and play– and then communicating that line to colleagues and superiors. Seems like the utility industry will soon get the practice that some other professions have had navigating this transition. Hopefully the end result is a safer, smarter and more efficient grid.

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Motorola's new Google-Ga-Ga baby monitors?

Google’s planned buy of Motorola Mobility is about patents and the war of mutual destruction in the mobile space. We get that, but it’s also about connected TV and carriers and how the convergence of broadband and data will change our lives. And so I found myself thinking about how, if Google wants to use Android as a way into the home, Motorola’s home automation, set-top box and broadband gear businesses now gives Google a platform from which to jump.

The mobile phone is poised to become our interface with the digital world, including the devices that control our lighting, in-home music and even home temperature. Don’t believe me, ask Qualcomm’s Paul Jacobs or the folks at Sonos or anyone building Android or iPhone remotes for cable. Even Sanjay Jha, the CEO of Motorola Mobility has absorbed a bit of this thinking in some of his comments over the last few years.

So even as the world wonders if Google knows what it wants to do with Motorola’s home businesses, which include baby monitors, Bluetooth headsets and cable gear, it has the potential to make waves with consumers and especially with service providers.

This puts Google back in the home automation market.

Motorola Mobility clearly has been working on the home automation space for awhile. It purchased the startup 4Home last December. 4Home’s software enables home owners to access information — from digital media to energy info, home security and health data — across devices, and remotely and is used by Verizon in home automation/energy management pilots in New Jersey.

On the Google/Android side, Google has been looking to use Android as the layer to connect home devices, from connected light bulbs to other devices. So while, Google killed its separate home energy software PowerMeter earlier this year, it could end up back in the home automation game, this time with Android. And if Android is the dominant layer, Google didn’t really need PowerMeter, which was aimed at utilities. Android and Motorola’s 4Home software is aimed at carriers, a relationship Google is more familiar with, especially on the wireless side.

Wait, we’re buying our gear from Google?

However, on the wireline side Google may still have some fears to lay to rest. The company, which used to be ISPs’ favorite whipping boy (until they moved on to hating Netflix) will soon find itself owning through Motorola Mobility a large portion of the set-top box market as well as some of the gear inside the cable plants. According to Multichannel News this deal has created some strange new bedfellows in the service provider world:

In any case, the deal has shifted dynamics in the industry quite significantly: “Comcast overnight has become a huge customer of Google, and Comcast has no way out of that in the short run,” the executive said.

This sort of convergence may have been unintentional, but it’s also something that should be expected as broadband, not only brings people closer together, but also forces our networks and devices to merge. So soon Google will have not only have close relations with wireless carriers because of Android, but also wireline ISPs that have traditionally been cooler to the search giant.

Will it help wireline carriers keeps consumers in a pay TV world, or help ISPs deliver differentiated home automation services so they can forestall the process of becoming dumb pipes? Or might Google look at the unexpected businesses it picked up with its patents and dump them like I dump that insanely pink lipstick color I get whenever I get my “free gift with purchase” at the makeup counter?

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It's communal broadband, man.

A Boston company wants to offer people free access to a communal broadband network if a user pays for about $300 in equipment, according to an interesting summary over at Stop the Cap. The site profiled NetBlazr, which hopes to deliver free broadband with speeds of up to 60 Mbps to companies that will share that access with others in range while turning over management of the gear to NetBlazr. From the post:

NetBlazr starts with gigabit fiber from Cogent Communications, and then delivers free or low-cost access to any customer willing to do two things:

Spend $299 for the basic installation kit, which includes a high-speed router, three antennas, and some cabling;
Use the included equipment to receive service from NetBlazr and agree to share it with anyone in range of the wireless antennas included in the kit.
Reception of the wireless broadband signal, comparable to Business Class DSL, comes with no ongoing fees. If you want dedicated, guaranteed speeds, NetBlazr will sell them to you at an added cost. The more customers exchanging signals, the more robust and faster the network becomes, says NetBlazr CEO Jim Hanley.

This is a pretty cool idea (seriously go to Stop the Cap and watch the video), although it doesn’t look like it would help with the rural broadband problem. What’s cooler is Hanley’s idea that services like this could commoditize broadband. Has he talked to Google yet?

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Recently a number of ISPs have been caught improperly redirecting end-user traffic in order to generate affiliate payments, using a system from Paxfire. A class action lawsuit has been filed against Paxfire and one of the ISPs.

This is a serious allegation, but it’s the tip of the iceberg. I’m not sure if everyone understands the levels of sneakiness that service providers can engage in. So, while I’m no expert (as we are an ISP who doesn’t do these things), but as a broad overview, here is my quick guide to the five levels of ISP evil, and the various “opportunities to monetize customers” that we’ve passed on:

5: Improper NXDOMAIN handling, also known as “Domain Helper” applications. When a customer attempts to visit an invalid site, instead of returning the RFC standard “no such domain” response, the servers provide a search result which includes sponsored links. Sometimes the results are not well matched to the mis-typed domain, and they promote ads instead with broad commercial appeal like insurance, which will generate a high payout if the customer clicks. Extra evil points for making it difficult to opt out of this, requiring opt-out via a cookie or browser setting rather than providing “clean” DNS servers. (Paxfire’s system is positioned as a search/helper application, but these systems can be easily converted, even without the ISP’s awareness, to an affiliate pumping system.) Evil score: 2 evil points, somewhat evil, but now every major access provider provides helpful results for address typos.

A diagram showing how Phorm's "Webwise" system creates copies of its tracking cookie in each domain the end-user visits, based on the report published by Richard Clayton. Wikipedia.

3: Ad Swapping. Transparently proxy all web traffic, and when ad banners are in transit, perform real-time swaps of the ads for other ads for which the ISP is getting a cut of the revenue. Legitimate advertiser ads are sometimes fetched so that no one notices the decline in impressions. The pitch to ISPs from companies like NebuAd sometimes included claims of “partnerships” with content sites to better target ads. Extra evil points for ISPs who provide demographic data to the firm running the ad-swapping system. Evil score: 6.

Our reply: "No, not interested, thanks. -Dane" Email reply to Mark Lewyn, President, Paxfire Inc., Wednesday, October 29, 2008 3:35 PM

1: Rolling Over. In an attempt to avoid costs or under pressure from government or content creators, ISPs have handed over customer information, and even subjected customer traffic to broad snooping. Allegations range from service providers simply quietly handing over customer info to law firms with improperly filed lawsuits and incorrectly served supoenas, to the physical wire-tapping of major fiber optic lines. We’ve got your back. Evil score: 10. Potential for human rights violation.

I’ve got more to say on this last topic, but there is a clock that must run out before I am permitted to write. Tick-tock, a couple days to go.

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