if connected

Virgin Media, the largest UK cable ISP, have announced a tight peak time usage policy:
“Virgin have announced that at peak times from 4pm to midnight, those users will find their speeds will be ‘moderated’ (i.e. slowed down). The extent of the traffic management will depend on which package you’re subscribed to. If you are slowed down, this will last for four hours from when the traffic management is applied.

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Here’s the irony: While Virgin Media have tried to market the consistent performance of cable broadband and higher top speeds — against the more popular DSL which is limited by telephone quality — they are now introducing peak time speed drops triggered by customer usage. For Virgin, this policy undermines their broadband market positioning.
The problem for Joost, Babelgum, or any other online video streaming services is that it will not be just the top 5 percent of Internet users that will hit these slow downs. Many many video consumers will hit them if they are watching online TV at the natural time of the day to watch.

Swisscom intends to acquire Fastweb. There are tremendous potential implications for this offer. I’ll split my first takes into the benefits for Swisscom, and the impact on the Italian market.
Swisscom:
Swisscom gains an experienced competitive unbundled local loop and fibre operator. This will help Swisscom understand future unbundled threats in its home market and secure FTTH expertise.
Fastweb’s IPTV platform may also be of interest given the widely reported teething problems Swisscom has faced with its Microsoft IPTV solution. Microsoft needs to move quickly to ensure that if the IPTV platforms are standardised between the two companies, Microsoft wins a new client rather than losing its lead operator customer. On this, Swisscom states:

“Fastweb also has a competitive edge in terms of expertise in the strategically important field of multimedia applications based on broadband, and has been delivering IPTV to its customers since 2001.”

Swisscom sees the fixed broadband market in Italy as highly attractive, with strong growth to complement Swisscom’s steady home market. Such a home and away game is far from a unique incumbent strategy in Europe, but it is a major break from Swisscom’s previous domestic-centric strategy. Swisscom implies that this is a one-off expansion as the company reiterates a continued Swiss market focus.
Italian market impacts:
Swisscom plans to support Fastweb’s plans for an MVNO. Such support should strengthen Fastweb significantly both through cash, mobile expertise and Swisscom’s existing Vodafone relationship.
Telecom Italia now faces a mammoth competitive alliance. Fastweb must ensure that its existing partnerships with Vodafone and Sky Italia survive its change of ownership both intact and stronger. They should. Telecom Italia’s modest VDSL2 build out plans provide the Fastweb alliance with a tremendous opportunity to enhance their very high speed broadband and IPTV customer base.

Interesting data on actual end user broadband speeds in this Australian government report.

On these figures, 62 percent of consumers connected at 512Kbps or slower, and a staggering 42 percent ‘enjoyed’ under 256Kbps, at the end of September 2006.

The impact, for online video services and other emerging broadband applications of low speeds, data volume limits, and other package constraints is immense and an area we’re tracking carefully in Europe. For comparison last time I tested it, Joost — formerly the Venice Project — really needs 512Kbps to 1Mbps broadband and an unlimited data volume to fly. More on this in several upcoming reports.

Today’s IPTV announcements are not about today, or about tomorrow. This is BT positioning for the medium and long term.
BT knows it must resist downward pressure in broadband prices, which we forecast earlier this year will continue. BT’s Total Broadband is the response and BT Vision is a major part of that strategy.
BT are setting modest initial expectations of BT Vision customer numbers (tens this year, couple of hundred thousand next). They do not expect BT Vision to be profitable in its own right for 3 to 4 years.
But Total Broadband is about adding value for consumers to enable BT to resist churn and price pressure. By linking BT Vision to sign up for their retail broadband services they are hoping to boost broadband subscriber acquisition. By requiring an 18 month contract for customers signing up to the cheapest BT retail broadband service, but just a 12 month contract for customers committing to higher priced broadband, they are encouraging higher tier upsell. By offering BT Vision to existing BT Broadband customers willing to re-commit to a new contract lock-in, BT hope to boost customer retention.
The BT Vision service looks to be well put together. It has a shrewd mix of content offered at highly competitive on demand prices (at least until Blockbuster, ntl and Sky respond).
The problem for BT, is that their home market is tough: the UK has one of the strongest satellite TV players in the world, Sky, who will surely increase HDTV marketing in 2007 to expose BT Vision’s Achilles’ heal(1); the UK has a wildly successful free to air digital terrestrial TV offering with Freeview; and has a newly united cable provider that has a largely upgraded cable network.
The UK is a hard place to be a new entrant TV operator.
Yet BT have played a difficult hand well, so far. However, BT’s success with BT Vision should be judged after many months or years, and not tomorrow. The score sheet will have to include BT Vision’s impact on their retail broadband customer metrics and revenues, as well as more traditional TV service numbers.
This will be especially true if BT are forced by TV market pressure to cede the living room TV to satellite or cable. In this situation, BT Vision still adds value to BT’s customers, but as a service for a homes’ second or third TV set. As BT Vision has no mandatory subscription, but offers both a PVR and rich content, it is ideally suited to this role.
(1) Happy to explain about HDTV and BT Vision in more detail. Please ask: press or clients.

Yesterday, the Slingbox launched in Sweden, but in an extremely interesting development it’s being sold by leading satellite TV operator Viasat under the name Viasat Everywhere. So, rather than Sling threatening the pay TV market, Viasat is looking to add additional value for their pay TV customers by offering Slingboxes alongside their NDS-powered DVR.

Sling Media’s tactics in Europe are much to be admired. Rather than throw over the same product as in the US. Sling has looked at the different European broadband and TV markets and tailored its product and route to market before launching. Last spring Sling launched in the UK, but added a built-in digital terrestrial TV receiver (i.e. Freeview) to its US capabilities. Sling provided an exclusive to dominant digital electronics retailer, PC World, part of the Dixons Stores Group.

If other operators adopt the same strategy as Viasat, then the Slingbox will break out of its current early adopter niche, and become a conventional part of the TV landscape.

French innovator Free is launching a new Freebox model (in French) available to new unbundled households or to existing customers as part of the renewal process. Unlike previous versions this is a two box solution, as we’ve previously advised ISPs (clients see here for specifics, otherwise go here for a report summary).

Other points of interest:

- Free’s existing VOIP service is going location independent (see the mandate). Users will be able to make calls on any Internet-connected computer and those calls will be billed to their Freebox account.
- Includes support for VOIP over WiFi/GSM support of some kind, yet no mobile subscription appears to be included as standard. This is one to watch but Free need to make it really simple to set up to be anything more than an early adopter feature.
- Still ADSL2+. There are no moves yet to build in VDSL capabilities to support more simultaneous HD channels.
- High Definition TV support and acccess to Digital Terrestrial TV too, as well as the existing IPTV.
- Both boxes have MIMO-based Wifi, but there are also five ethernet ports; wired networking isn’t dead yet. The two boxes can connect to each other across either network.
- Installation is no longer free, but will cost Euro 9.99.

Over the holiday weekend, my home PC’s digital tv card stopping showing channels. I also emailed a friend to ask him to record a TV programme and discovered his Sky DVR had also developed a fault.
Upshot of respective experiences:
Me:
I was unsure whether the problem was a fault with the electronics, or a software problem on the PC. To diagnose it I had to delve around in Windows settings, re-install software, open up the PC, research the problem via Google and Internet forums and email the manufacturer (who, after a day, responded with more arcane Windows troubleshooting that I’d already tried). I emailed back more details… and waited for a reply. End result is that the card has a hardware fault and needs to be swapped. So, overall: many hours taken up, and a fair bit of techie knowledge needed.
Friend with Sky DVR:
He phoned a call centre, talked with an agent who followed a script that made it fairly clear the box had a fault and would need to be replaced. Only about an hour of frustration overall, and little technical knowledge needed.
Media PC’s are wonderfully flexible, but that freedom comes at the cost of a greater number of hours of pain when things don’t work…. this has to improve if PC peripheral makers are to seize the opportunities in the digital home.