Near field communications. Jon Paisner is building out a regional m-commerce forecast and has built an NFC forecast, shortly to be followed by contactless payments, mobile couponing, mobile banking and P2P. Jon’s NFC forecast charts this nascent market from 2009 including NFC-enabled phones, active users and transaction volumes and values. Volumes and values are segmented by denomination because the competitive behavior of transactions under $5 differs from those over $5. Jon shows rapid growth in this market, predicting 4.7 billion transactions globally in the 5 years from 2009-2013. Nearly 9 in 10 of these transactions will be low denomination by volume, but the value of high denomination transactions is 62.4% of the $28 billion that will be transacted globally over NFC over the next 5 years, predominantly in Asia.

IPTV. Vince Vittore has completed his work on IPTV forecasts by touching all 55 countries in our forecast. With 21 million global subscribers in 2008, he shows nearly 80 million IPTV subscribers in 2013, an increase of 58.8 million new subscribers during 2009 through 2013. The most new subs are in Asia, adding 27.9m followed by Western Europe (adding 17.6m), and North America (10.2m). Latin America, Eastern Europe and MEA are only 3.1m new subs. The country view gives us household penetration, and although Hong Kong leads now at 49.7% forecast for 2009, followed by France at 35.7%, in 2013 five countries will have penetration over 30% (France, Hong Kong, Taiwan, Switzerland and South Korea in descending order).

Digital advertising forecast. Carl Howe is leading an integrated digital advertising forecast that includes TV, Internet and Mobile advertising revenues, complementing the carrier mobile advertising forecast that we have had for some time. Mobile advertising in this new forecast defines the entire market for mobile advertising, rather than the piece seen by the carrier. As a share of all advertising, mobile is small, remaining under 1% throughout the 5-year forecast to 2013, but in North America it jumps the half-billion dollar mark in 2013 from a lowly $185m expected in 2009. Set against the $79.3 billion total North American digital advertising market in 2008, which we see rising to nearly $100 billion in 2013 through modest growth in TV and (moreso) Internet advertising, though, and mobile advertising is perhaps not a big play. Carl is currently working on expanding the digital TV forecast into other regions and countries.

Expansion of Middle East and African forecasts: Wally Swain has been spending time focusing on Africa and the Middle East and completed the range of fixed-line forecasts in that region to add to the mobile-related forecasts already available.

What about that “open access” requirement? You mean that big elephant in the center of the room? He’s still there. The U.S. is not moving to an open access requirement but there certain is a desire to get a little taste of it. In the notice’s “Nondiscrimination, interconnection, and choice of provider” provisions, NTIA appears to state that applicants will receive a higher consideration if they provide a plan that “would allow more than one provider to serve end users in the proposed funded service area.” It’s not really open access but it’s a half step in that direction.

Vendors and service providers have struggled with finding a business model that works for fiber to the home (FTTH). The current single source, one service provider for one customer model is too constrained. Rather, companies must look beyond the historical strategy of investment versus competition, embrace interoperability and work together to employ an open-access model for FTTH.

Yesterday, Wally Swain and I hosted a webinar that explored how an open-access FTTH business model works, how to optimize it and what makes it the best solution for vendors and service providers.

The webinar runs about an hour: audio (mp3) and slides (pdf).

The decision lets stand two lower court rulings that will allow Cablevision to roll out remote DVR service. At the heart of the case is whether cable companies’ storage of programming on servers that they control or “in the cloud” as some are slightly misinterpreting, constitutes a violation of copyright laws. Having already lost the battle decades again over VCRs, it’s no shock the studios and leagues didn’t prevail here. That’s even without taking into account the fact that both are already doing the same via Hulu, MLB.com, NFL.com, etc. What’s “enabling consumer choice” for content owners is “copyright violation” for the distributors.

Behind the scenes it’s nearly certain that every major cable operator already is planning their own remote DVR rollout. To reiterate a prior blog from the National Cable Show: At a panel of four leading technologists–Cablevision SVP Jim Blackley, Time Warner CTO Mike LaJoie, Rogers CSO Michael Lee and Comcast CTO Tony Werner–moderator Jim Chiddix asked if Cablevision wins its Supreme Court case and is allowed to provide NPVR would other follow suit. The silence was deafening.

Just as important, the non-ruling has the potential to open up the set-top box market like no other event. Without a requirement for hard drives for in-home storage and heavy processing power, cable operators suddenly have a plethora of inexpensive IP-based STBs to choose from. Longer term, the decision by the Supreme Court not to hear the case lends some legal cover for the more aggressive and visionary operators that try to blend the traditional viewing experience with the more on-demand fare that is gaining a greater share of viewers’ time.

• Upward of 6 billion minutes are involved, according to my estimates: That adds neatly to Tata’s existing 24 billion;
• With 30 billion minutes under management, Tata tips the scales to become the world’s biggest international voice player;
• Tata handles BT’s international direct dial (IDD) and voice termination for all except a clutch of European countries, and becomes BT’s primary partner for UK IDD traffic.

A break with tradition. This is what I call ‘smart wholesale‘ for both BT and Tata Communications. As Yankee Group has predicted, telcos are breaking with tradition and remoulding their business model. Going forward, that may not involve direct management of commoditized services or networks.

Indeed, BT’s decision is not a sign of weakness in my view. Poor financial results have certainly triggered deep cost cutting across the group. But I believe this marks a bold assertion about BT’s strategic priorities. Managed ICT, cloud and sustainability services come to mind as prevailing core competences for the UK incumbent.

“BT wants to focus on the customer perspective; it doesn’t want to worry about how to manage the back end,” says Srinivasa Addepalli, senior VP of corporate strategy at Tata Communications. “But this is a core business for us.”

Wholesale is reborn. Bucking the recession, wholesale is on the uptick. Savvy wholesalers are set to grab a major proportion of the $145 billion that telcos will spend on outsourcing and managed services over the next five years. And BT is not the first to rethink international voice, it’s just the biggest:  KPN, Swisscom, TDC and Tele2 have already struck deals with wholesalers including Belgacom ICS, Deutsche Telekom ICSS and iBasis.

Let’s also not ignore the ongoing voice revolution in which Tata now has a forcible say. VoIP represents about a third of Tata’s originated voice traffic and almost half of the voice traffic on its backbone, and these proportions continue to rise.

Meanwhile, Tata is also eager to court mobile operators. It is much involved with industry groups seeking to improve voice and content interconnect across fixed and mobile networks. This includes the GSMA-backed IP Internetworking Alliance with its potentially disruptive IPX model.

Competition is reinvented. BT Global Services will continue to cross swords with Tata for consulting and managed services deals targeting communication service providers in other competence areas. Not least, BT will still compete with Tata in the multinational enterprise segment in India and elsewhere.

But so what? The key to success is choosing specific battles to fight, and selecting allies where most logical in order to focus on the core business, whatever that might be.

As Adepalli says, “Other telcos spending tens of millions on international voice are going to ask themselves: Why keep doing this?” Why indeed.

Answer: The balance sheet of the New York Times.

I wish I could take credit for this zinger, but Jon Stewart and the Daily Show delivered this dig and many others when their cameras visited the Times last week. Carl Howe touched on how all media is struggling with changing distribution and business models in his post two weeks ago, but the decline of many of our biggest and best newspapers is the most devastating example of media’s brave new world.

Residents of Boston have had front row seats to this decline. The fate of the Boston Globe has been the focus of daily reporting in the Globe itself, the New York Times (which actually owns the Globe) and especially the Boston Herald (which is clearly enjoying the struggles of its longtime competitor). I’ve read all of these reports (online, ironically) and I have to say it’s pretty depressing stuff. One of the biggest sticking points has been the issue of guaranteed lifetime employment, which is emblematic of the belief that newspapers as an institution will survive forever, despite evidence to the contrary. (I’m not pointing fingers at either management or the union, but I think both parties were delusional to even discuss lifetime employment given current market conditions.)

Yesterday, however, there was finally something positive to report: the Globe and its union agreed to $10 million in wage and benefit cuts, “following three months of bitter labor talks that threatened to close the 137-year-old paper.” This is good news - for the city of Boston, for journalism in general, and for the employees and owners of the Globe who now at least live to fight another day. But the thing that stands out to me is the timing: the agreement was reached after three months of discussion, and that was only after both sides “retreated into nine months of silence,” despite ample evidence that immediate changes were necessary.

Contrast this with what is happening at college campuses across the country. I’m on the Board of Directors of the Heights - the student paper at Boston College, where many years ago I was an editor and columnist. (The Heights is independent, meaning it receives no school funding and has only nominal oversight by the University, so the directors – all former writers and editors, like myself – provide some modest financial and strategic oversight.) The Editor-in-Chief and Managing Editor called an emergency meeting of the board a couple months ago, because for the first time that anyone could remember, costs were outpacing revenues. Like any paper, the Heights sells advertising, and at both the national and local level, ad revenues were down. The editorial board made some simple projections and figured they could lose a lot of money if they didn’t make changes - so they immediately changed everything. They cut down the total number of pages, eliminated sections, moved some of the cut content to their website, renegotiated their printing contracts, and even struck an ad-revenue deal with Google. Without any outside prompting, the editorial board considered dozens of solutions, and then called the directors for advice and counsel.

That a little college paper run by twenty year-olds can respond faster and more appropriately to changing market conditions than a large company of seasoned professionals is actually not that surprising. In many ways, the editors and staff of college papers today have a big advantage over their counterparts at major metropolitan papers. They’ve grown up through – and are responsible for – the permanent displacement of numerous other entrenched communication tools (compact discs by digital music players, voice-centric landline phones by messaging-centric wireless devices, primetime television by timeshifting DVRs, and so on). Unlike the management and staff of the Globe, the editors and staff of the Heights can easily envision a world without printed papers. To them, the permanent displacement traditional newspapers is logical and likely, but not predestined. The editors and staff of the Heights want the paper to live on, not because of concerns about lifetime employment, but because they believe in the product. Instead of wasting time convincing themselves that “newspapers will never die,” they simply said “not on my watch” and worked hard to reverse the paper’s fortunes, if only temporarily. Sometimes it’s easier to save an institution when you don’t assume it will live on forever.

In short, the answer is no. In fact, smartphone owners are MORE likely to buy best of breed devices than standard mobile phone owners as seen in the cart below.

The data shows that not only are smartphone owners likely to buy many best of breed products but they are more likely to buy them than phone owners whose devices do not offer a range of features. This data is important for CE manufacturers hoping to continue selling best of breed devices to consumers who already own a converged device.  Most devices listed, save Netbooks are mature products so even though intent to buy is low that should not scare off manufacturers. Consumers still want discrete products even after they buy do it all devices.

There are a few qualms that I’d like to get out of the way right off the bat:

• DPI is not what Nokia Siemens Networks actually provides.
• Nokia Siemens provided Iran with Lawful Intercept capabilities designed for voice communications, not DPI technology that is being used for censoring Internet traffic.
• Operators and governments worldwide engage in Lawful Intercept (often by regulatory mandate), which may or may not have DPI as a contributing technology.  In the case of the technology that NSN provides, it is not.
• DPI does not allow for the altering of packet content, as the article suggests, to create disinformation campaigns.
• DPI does not have to be inserted directly into the data flow if it is just engaged in monitoring activities, and even when it is, it does not create a slowdown in network traffic that would be perceptible to a large public audience.

The list could go on.

The main point I would like to make though is that DPI is mischaracterized as a “practice” or an “activity”. DPI is a technology. What the article is describing is one potential, particularly malicious, usage of the technology. Yet many things that are potentially benign can also be potentially dangerous. Just because someone can use binoculars to invade another’s privacy does not mean that they cannot also be used for bird watching. To take a more extreme analogy, just because you can get behind the wheel of a car and run someone over does not mean that cars are inherently violent. The onus is on the user of the technology, rather than on the technology itself, and this is what the article misses. The culprits are not Nokia Siemens (leaving aside that NSN does not actually provide DPI technology) or their peers. The culprits are those that would use the technology for malicious purposes. In this case, the Iranian government.

What DPI does is what it says it does: packet inspection. It is a technology used to gain Layer 3 through Layer 7 packet visibility (from the network layer through the application layer) to determine the source, destination, application type, etc of network traffic. It does not read emails. It does not alter Internet content. It does not slow down the Internet. And, directly to the point about Iran, it does not intercept or block traffic. The Iranian government can choose to take action in these regards based on the intelligence about traffic flows that DPI can provide, but again, that is independent of the technology.

This is actually a more extreme (and more politically charged) example of what got Comcast into hot water last year with how it chose to use network information. For those unfamiliar with the case, Comcast raised the ire of public interest groups and the FCC for blocking BitTorrent traffic that it deemed to be overly burdensome on its network. The FCC deemed this inappropriate not because of how Comcast obtained traffic information (using DPI), but because of what it chose to do with that information. In a similar fashion, a number of operators in the US were chastized by the House of Representatives Subcommittee on Telecommunications and the Internet for using DPI-acquired intelligence to do behavioral-based ad-targeting. This ultimately led to behavioral targeting vendor NebuAd getting dragged before Congress for a tongue-lashing, and ultimately folding in the face of public and legislative pressure. Again though, the issue was how the technology was used by NebuAd and its operator customers, not the technology itself.

The technology itself has a number of legitimate uses that are in line with the public good (and operator profits, for that matter), including security threat detection, threat mitigation, enhanced network management, enhanced quality of user experience, the ability to introduce new services, etc. Yankee Group has written a number of pieces on this issue in the past that examine how operators are using the technology today and what the potential opportunites are in the future. These often go unmentioned though when DPI is reported on, because they don’t arouse public debate the way that “Iran’s Web Spying Aided by Western Technology” does.

My goal here is not just to argue with the Wall Street Journal though (an argument I’m sure I would lose) or point out inaccuracies in the article. It is to underscore the consequences of misrepresenting something like this. In the past two years, DPI providers have run afoul of issues around privacy, net neutrality and now censorship, due to the ways in which customers have chosen to use the technology. These issues have attached a scarlet letter to a technology and companies that can provide legitimate value to operators and consumers, when used properly. Instead though, competitors have been forced to retreat from the market, the maturation of the technology has stalled, and operators have turned towards potentially less efficient solutions for network visibility, security and traffic management for fear of igniting a firestorm amongst those that would misconstrue their intentions.

It is a fine line to walk in regards to what is and is not acceptable in the world of traffic inspection, to be sure. But that’s all the more reason why the technology must be accurately understood and represented, rather than demonized off-hand.

It’s not surprising that RIM has shied away dual mode FMC as carriers are less than enthusiastic about removing minutes from their cellular network. RIM, having built its company on the back of carriers, hasn’t wanted to bite the hand that feeds it. However, as the balance of power between device manufactures and carriers shifts away from wireless operators - RIM is feeling its oats. The first sign was Lenovo Constant Connect. This joint Lenovo / RIM product allows Lenovo users to send e-mails from their laptop using their Blackberry cellular connection. The obvious consequence is wide area wireless broadband service becomes unnecessary for many subscribers. Uh oh….that won’t make operators happy.

Agito’s newly announced capabilities also serve to offload minutes from the cellular network. In both these instances RIM can claim to stand at arms length from the solutions. Constant Connect is only being sold through the Lenovo channel and isn’t currently available with other brands. Agito developed the Blackberry dual mode solution via the RIM Alliance developer program. While RIM offered up some of its APIs it was Agito who did the heavily lifting. However, when you open your developer program to a dual mode FMC player you have to know what’s coming down the pipe.

One such announcement could be considered an anomaly but two is a trend. What’s next – a RIM retail outlet?