Sonic's Plea for Help

(Sponsor: Lok Technology)

It looks like the competitive access market is getting ugly for Internet service providers. Attached below is a very important message from Sonic.net, recently emailed to subscribers. If you'd like to see a continued healthy competition for the baby bell in your local market, you should consider sending a letter, as Sonic suggests...

From Sonic:

As an Internet Service Provider, Sonic.net used to operate without much requirement for input from regulatory bodies. However, in recent years, we've found that the changing telecommunications landscape as it relates to Internet access is demanding regular participation.

There is a regulatory item which is underway at the Federal Communications Commission which could badly damage independent ISPs, and we're hoping that you would be willing to participate by sending online comments via the FCC website. The deadline for filing reply comments is this Friday, at 9PM Pacific.

BellSouth has filed a petition at the FCC, asking the FCC to stop regulating broadband service.

If this petition is granted, this would mean that the large phone companies would no longer be subject to regulatory review of their broadband pricing to independent ISPs like Sonic.net. As a result, we would have to individually negotiate pricing and the ability to interconnect, which would undoubtedly raise our prices, and yours in
the long term.

The more serious threat is that it is even possible that the phone companies could, in the long run, refuse to provide the necessary connections for our DSL service, and we would be unable to sell DSL at all.

BellSouth's claim is that because their own affiliated ISP service (which is similar to SBC/Yahoo here in California) already controls a huge majority of the market, so squashing the rest of the competition isn't likely to impact the market much.

Considering that you as customers and Sonic.net as an ISP are the folks who might get squashed, I think we all need to speak up!

While BellSouth doesn't serve California, Verizon and Qwest have followed up and filed similar requests, and we could expect SBC to follow suit. We very much value SBC and SBC-ASI as partners in providing DSL service to California consumers, but we are concerned that if they were not required to provide access to all ISPs, independent ISPs and Sonic.net and our customers could suffer badly.

This is not a near term threat - Sonic.net has contractual agreements with SBC which allow us to sell DSL for a long time to come - but this is a long term potential threat which requires a near-term response. We need to tell the FCC that the companies which built the Internet itself should not be wiped away and replaced by the large telephone monopolies.

The FCC is accepting comments on this petition and I would very much appreciate your support in filing comments. Our goal is to ask you as consumers to explain why you value obtaining Internet service from an independent ISP such as Sonic.net, and why BellSouth's request would badly affect consumers with regards to your available choice of Internet Service for broadband.

You may provide brief comments via a web form, or write a longer comment if you wish as a document which you can upload. Here's the URL for comments:
http://gullfoss2.fcc.gov/prod/ecfs/upload_v2.cgi

You MUST note the Proceeding: 04-405 in the first box, and please select document type: "Reply to comments" from the drop box in the lower right (item 12).

You can then either upload a pre-written document, or you can enter and submit brief free-form comments at the bottom. It just takes a few minutes if you choose to type your comments into the page.

Thank you for your support!

For further discussions on this topic, please see the discussion group
at news://news.sonic.net/sonic.general

For a full copy of the BellSouth petition, Sonic.net's initial response, the response of the California ISP Association and response of the the National Internet Alliance please see:
http://www.sonic.net/whatsnew/fcc/

Publisher's Note: Orb Networks

(Sponsor: Lok Technology)

Despite the fact that bloggers are not journalists, I believe that we have an obligation to our readers to disclose conflicts of interest or appearances of conflicts of interest. In that spirit, I'd like to announce that I have just started a new job, as EVP of Operations for Orb Networks. More information about this new move for me is available on my personal blog.

500 By Wednesday Morning?

(Sponsor: Lok Technology)

As we have been reporting, Pulver's Bellster service has exploded onto the VoIP scene, at least amongst the technorati. This morning Jeff reported that 408 nodes had registered for the service. By evening, in an email to me he reports that there are now 467 registered nodes. 59 new nodes in a little over 12 hours.

Jeff also reports that the terms of service and messaging have evolved in response to slashdot and blog discussions here and elsewhere. It is great to see an entrepreneur who is in a real conversation with his market. Congratulations Jeff.

Powell Out, Stern Happy; Next Up?

(Sponsor: Lok Technology)

As Dan Brekke recently wrote it looks like we have seen the last of Mr. Powell as head of the FCC. Rumors swirl as to his next move, perhaps Governor of Virginia as the Atlanta Jornal Consitition suggested (AJC Registration Required). But the more interesting question, now that Powell is yesterday's news, is who will be replacing him?

CNN's Money reported this morning that Howard Stern said of his friend Powell:

"Thank God he's gone," he said. "This is a great day in broadcasting."

But perhaps Stern is forgetting that Bush will appoint Powell's replacement... This may look more like "out of the frying pan and into the fire" for Stern and others who cross the Fundamentalist position on free speach...

Sympathy for AT&T

(Sponsor: Lok Technology)

Last week the news came out that the AT&T pre-paid calling card plan is about to take a hit from the FCC (perhaps as much as $500 million in fines according to TelecomWeb). A mid-nine-figure hit is not insignificant (even for them) in an industry where disputing, withholding, then mitigating payment on such fees is not just a job, it's a bonus-paying adventure (but enough about MCI...).

However, the FCC fine is just the beginning of AT&T's problems. You can expect the Bells to line up at the courts with lawsuits demanding payments for the card-related connection and Universal Service Fund charges that AT&T hasn't paid for a decade. Investors beware...


This all started as a clever way for AT&T to get around USF and connection fees. AT&T claims that calls placed through these cards is an "information service" because when you use them there's an AT&T "information" ad placed in the middle of the service you use. Not exactly what cable, Vonage, the FCC, any PUC, or quite frankly anyone has in mind when the term information service is floated about.


Despite the fact that this all started long before the industry noticed this upstart VoIP, one can feel a little sympathy for AT&T given the ongoing debates right now about whether there should be USF charges applied to those calls.


But I'll save my sympathy for the men and women of the armed forces with whom the cards are so popular because the likely result (USA Today) is that AT&T will pass the new costs onto them, even though AT&T could charge the same rates on these cards and still make acceptable margins...like "industry leader" Sprint can, for example.

Publisher's Note: VoIP Going Mainstream

(sponsor: Lok Technology) In the previous column Dan wrote about how even most technologists don't care about VoIP beyond that it is another way to make a phone call. And he suggests that the successful strategy for VoIP companies is to just tell people that its a phone service.

I just received an email from Jeff Pulver, promoting the Spring 2005 VON. He opens the letter with:

After spending last week at CES, my take away was that VoIP has gone mainstream. This was evident on both the CES show floor and by those who joined us at our first Consumer VoIP Summit. My experience at CES only increases my excitement for Spring 2005 VON taking place March 7-10th in San Jose, which is shaping up to be our biggest VON ever.

It might be that Jeff is right in a way that he isn't expecting -- there might never again be a VON as big as the one about to happen in San Jose.

If Jeff is right and VoIP has gone mainstream, why will there be a show specifically about VoIP? In the early 90s I was an advocate for object-oriented software development. I spoke at conferences like ObjectWorld, I wrote for magazines like Object Magazine. None exist today. Object oriented development just became the way that ALL development was done. I expect that we will see the same with VoIP -- ALL phones will be VoIP.

IP and Storage In Everything

(sponsor Lok Technology) 1.5 million square feet of show space, 200,000 attendees, and boy are my feet tired after a day in Las Vegas at this year's Consumer Electronics Show. I was really glad to have been at the show this year, but it was completely over-the-top and I hope I never have to go again. Worse than any Comdex I attended, by far. Actually, the death of Comdex last year probably contributed to the size and breadth of the show. I had the opportunity to walk the floor with Satjiv Chahil for a few hours and he observed that "Finally Comdex and CES have been combined..."

But part of that sense that these two shows have combined comes from the collision of the two industries. Computer companies are finally recognizing that they must have great consumer design in their products. For example, check out the products being manufactured by the Taiwanese company BenQ. Remember Acer? That is where the BenQ brand came from. But in just three years they have rocketed into a top position for LCD displays by providing great consumer designs. They now have a product line that rivals Sony for breadth in consumer electronics/computing products with MP3 players, computers, home entertainment systems, etc.

While computer companies are learning about consumer design, the traditional consumer electronics companies are learning about computing. The new religion is IP connectivity and data storage in every device. As one example, Sharp was showing a television set that had a built in DVR which could also connect to your home Microsoft Network via WiFi. Yes, you can record Desperate Housewives and transfer the file over to your home PC just like moving a file around from one PC to another on a home network.

In fact, I would go so far as to say that every interesting new consumer electronics product either has data storage or network connectivity or both. And all of the devices are learning to talk to each other. 2005 will be an impressive year for the digital home movement.

A few other show observations:
Worst Marketing Idea -- SBC's "U-verse" name for its new bundled data services offering

Biggest Marketing Flop -- Sony with nothing new to say, nothing new to show, and even their new Qualia brand is a complete failure with nothing that comes close to last year's B&O lineup (yes, I got into their miserable "invitation only" display area). But the biggest flop for Sony was herding show goers into a 6-minute movie that did more to promote the Ford Mustang brand and the Hummer brands than anything Sony manufactures. Trap me for 6 minutes and all you want to show me is a bunch of kids speeding around in a mustang? Are your marketing people morons?

Weirdest Marketing Idea -- Motorola put a MOUNTAIN in the parking lot, covered it with snow, and hired snowboarders to do tricks. Yes, I am serious, snowboarders in a parking lot in Las Vegas. What were they advertising? Who knows!

Best Flat Screen HDTV Designs -- The new Aquos brand from Sharp. Stunningly beautiful.

Most Amusing Celebrity Sighting -- Watching Jeffrey Pulver lose money playing Poker at the Bellagio.

Most Surprising Celebrity Sighting -- Paul Allen standing around in the Microsoft booth chatting with anyone who walked up ("How about those Seahawks!").

Best Geek moment on the strip -- The news ticker at Bally's streaming the news that Six Apart has acquired blogging company LiveJournal

Weirdest insider tip -- from a Real Media employee who admitted that they went on the web to etradeshowgirls.com to hire their booth staff.

Best CES moment -- getting on the plane to come home.

The Sextuple Play

(sponsor: Lok Technology) Forget the "triple play" and on to the sextuple play -- landline/secure voice, wireless/mobile voice, data/Internet, video/TV, content/programming control, and utilities/security/power/HVAC. Here are some thoughts for 2005 while pondering which Bell CEO would do the best Hans Gruber impersonation to: "You asked for miracles. I give you the F C C."

Microsoft
Bill Gates, the most spammed person in the world he created (he gets 4 million messages a year (ed note*). You've been trying for years to take over the world with the sextuple play. No dice. The Bells cry foul on UNE and withhold investment but continue to innovate, sometimes even with your permission. Cable and wireless plays invest in extending their reach but fail to truly innovate. Finally, it all comes together with the help of some very understanding appeals courts (FCC? Can you hear me now? Good!).


UNE? Going away.


Bells? Investing again, with differing approaches to the role of fiber reach vs. DSL capability, but always always with a discriminating view toward the target market.


Cable? Getting wireless and preparing to advance on their modest triple play capabilities.


Wireless? Consolidating for strength and lining up partners toward the sextuple play march.


Bill? Smiling, but it's all relative (still has that damned EU with which to contend...the world is not conquered without lawyers, guns, and money).


So, Microsoft will be providing software to the Bells to compete against cable. They'll be providing hardware to the cable companies to better compete against the Bells. They've funded the wireless industry in the ten figures to date. And certain to fund nearly equally the Democrats and the Republicans.


In 2000 I read that Microsoft's stated platform was to "partner with industry players and to act as a catalyst to build out broadband networks; provide a software platform that enables innovative services and revenue opportunities; and develop services, applications or content on Microsoft platforms." And this year, they settle all unsettled scores: most notably the European Union. It's not horse's heads and kissing pinky rings, but it's not far from it either.


The Digital Home
At the heart of the sextuple play is the quest for the digital home. A new Forrester Research report gives cable the lead on the battle for the supremacy over your home, but the Bells are armed with the kind of legal mu$cle that got reciprocal compensation reversed when the CLEC/ISP combo began draining the coffers and maneuvered PUCs into saying there are 200 competitors in each market (six of whom actually exist). Next the Bells will leverage the courts and FCC in 2005 to declare them to be impaired in their access to video content and they will surely find their way back into the lead by whatever means necessary. They will lead the battle, and anybody else is purely a niche play, like a UTOPIA, municipality, pure wireless, or CLEC. With Bush declaring universal access to broadband in two years and the decennial Telecommunications Act rewrite forthcoming, the battle for ownership of the digital home will start to cook this year.


It will not be enough to provide a pipe and leave it up to you as to what you smoke in it. SBC announced yesterday its Home Entertainment Service through a venture with EchoStar, Yahoo!, and 2Wire that integrates digital video recording, Internet content (including music and photos), satellite TV programming, and video-on-demand into an in-home entertainment home network that brings computers and TV together. At the heart of the service will be a satellite TV receiver with a built-in digital video recorder that will ultimately serve as an interface of sorts between one's PC and TV. Whether the personal content you transfer to your TV or the programming content you load into your PC is actually entertaining will be up to you and Michael Powell to decide.


Wi-Max
I'm thinking not this year either, but I remember when I was saying the same thing about VOIP and DWDM, and they both eventually came and conquered (yeah, a little early on VOIP, let's just say conquering is the thing). What's exciting to me about Wi-Max, and I think everyone will have to have a strategy that includes it to be viable in the sextuple play world (and yeah, I'm looking forward to the advertising campaigns for the sextuple play), is that when it becomes truly viable and reasonably perfected, then almost anyone will be able to compete for just about anything in the telecom world because the access hurdles to the premises will not be anywhere near as severe as they are today, provided municipalities, community associations, and property managers don't get...oh yeah, they probably will...but still, the genuine reasonable opportunity to get connectivity to any given premises will increase considerably through this technology. Wi-Fi will be nice for LAN campuses for schools and businesses, but Wi-Max will be the thing...just not this year, but making progress.


CES
This week's International Consumer Electronics Show and CES extravaganza in Vegas certainly showcase that the tech world is ready to unleash the delivery of all things digital: music, photos, video; huge, flat-panel TVs with 100+-inch plasma screens, media servers to store and play back digital content, next-gen digital video recorders; and, slim, flat-panel high-def TVs; devices that will further bridge the gap between PC and TV; and, creative new wireless modes of communication (some of which are highly niche, like Motorola's products designed for skiers and motorcyclists). The race is not to get each of these fine products to you ... it's to be integral to delivering all of them to you on one nice, simple three-figure/month service bill that you'll view online, pay online, customize online, and take with you everywhere you go, tempted by plus-sales features at every turn. George Jetson never knew to call it the sextuple play, but I'm guessing Spacely always did.


*Ed Note -- orginally published with the now widely dispersed comment that Gates gets 4 million spam message a DAY -- but Mike Masnick wrote in to point us to this techdirt post that debunks this claim...

Welcome Shelby

(sponsor: Lok Technology) A warm welcome to our third contributor, "Shelby," who prefers to remain anonymous as he currently holds an influential position within an industry player. We'll be getting an insider's view from Shelby, starting with his first post, Sextuple Play. Welcome Shelby!

2005 -- Year of IPTV

(sponsor: Lok Technology) The San Francisco Chronicle today headlined their technology section and their CES coverage with Benny Evangelista's article Video to go. Go where? Everywhere if companies like Orb, SBC Media Solutions, Sling Media, and Tivo deliver on the promises they are making at this year's consumer electronics show.

Whichever one of these approaches is ultimately successful, I predict that this is the year that our cultural addiction to television will finally merge with the IP networks, allowing television to invade our computer screens, our PDAs, and even our cell phones. Another market where the IP Inferno will burn down existing business models, transform industries, and create a bunch of new exciting markets.

The basic idea is simple -- TV is a content type, just like MP3s, JPEGs, and Word documents. The hard part has been in capturing that content type and moving it around. IPodding TV, if you will. This article will talk about the four appraoches that companies are pursuing to solve this user experience problem.

The PC is the Center of the Universe
For Orb Networks the starting point on the road to IPTV nirvana is your home PC. After all, this is the device that is already connected to a high speed network and you already store a lot of other content on this device (music, photos, etc) that you also want to access when you are away from home. Solution -- a TV Tuner card installed in your PC, or a Media Center PC, pre-configured with a tuner card and Orb's software that turns your home computer into a media server. Once installed and configured, your television, videos, music, and photos can be accesed via a web browser and media player software from ANY computer or device in the world -- as long as the person accessing your content has your username and password. Yes, this means you can now watch Desperate Housewives on your Real Player enabled cell phone. As long as no one else is trying to watch it at the same time. You can download the Beta from Orb today.

The DVR is the Center of the Universe
Tivo has done some terrific pre-CES publicity on their new "TivoToGo" concept and there will certainly be many loyal Tivo customers eager to get the new features. Already the new TiVo Desktop allows a user to transfer shows from a TiVo box to a PC and to publish music and photos to a TiVo box. In the future TiVo also promises a feature called Sonic MyDVD which will allow users to burn shows to DVD. But this model, unlike Orb, requires that the show is transferred, as a file, to the PC on which you wish to watch the show. While this is likely to provide higher quality, the Orb option allows for streaming of video to a variety of devices that are unlikely to be able to hold a full show (such as a PDA or cellphone) and allows the streaming of live content (as opposed to a pre-recorded show).

The Cable Box is the Center of the Universe
SBC Communications and 2Wire have announced a joint venture to deliver an integrated Media Server product called MediaPortal to SBC's 40 million customers by mid-2005. I spent some time on the phone today with Brian Sugar, 2Wire's vice president of marketing, and chief marketing officer of the newly announced joint venture, SBC Media Solutions. Brian claims that his car has a TiVo bumpersticker but he was quick to point out what he thinks is the biggest flaw in TiVo -- that the TiVo box and the cable box are two distinct devices requiring the signal to be decoded and re-encoded as it transfers from the cable providers network through the set top box and then into the TiVo. Brian claims that this significantly degrades the quality and that the dual-box setup limits some kinds of functionality (channel changing, etc) that must then rely on box-to-box communication. Instead SBC wants you to purchase a single integrated solution and the MediaPortal brings this altogether for you in what Brian claims is a "mom" friendly device. But strangely, the Digital Media Server that is included in the MediaPortal does not allow you to take your TV on the road... SBC claims that they have the technology and can turn it on at any time but that they are taking a "conservative approach" and will wait and see how Orb and Sling do...

The Sling is the Center of the Universe
What the heck is a Sling? Think of it as a THIRD box (remember, you've got the cable set top box and the TiVo) which Sling Media calls a "Personal Broadcaster." We haven't seen it yet but we'll look it up when we get to CES... from the hype bubble it sounds like Orb but only for TV and using hardware instead of software...

The big IP story in 2004 was VoIP, and while that isn't going away, expect the big story in 2005 to be IPTV.

Interview: SBC and 2Wire announce JV

(sponsor: Lok Technology) I was able to speak with Brian Sugar, 2Wire's vice president of marketing, about today's announcement of a joint venture with SBC Communications to launch a home entertainment service for SBC. I had a bunch of questions and will summarize his answers here:

Q. The press release talks about access from mobile devices -- but in the context of a section about programming set top boxes... so will I be able to watch content from say my cell phone?

Brian -- Technology wise - we have it, we can do it, but when we have shown this to consumers they aren't interested in it. You'll be able to remote schedule your DVR, schedule video on demand, virtually return checked out videos and such. You will be able to stream audio, see your photos.. but not TV.

Q. Other companies are jumping in to the TV and Video distribution side -- why stop at audio and photos? What is different about the consumers you expect to be selling to?

Brian -- There is a "do-it-yourself" group vs "mom" group -- all that stuff that you used to have integrate yourself, we want to wrap it up and sell it as a service. This is what we were focused on before our company was acquired by 2 Wire

Q. What company was that?

Brian -- SugarMedia, we were a 12 person software company in San Francisco that did software and backends for set top boxes

Q. So the MediaPortal product from 2Wire came from the acquisition of that company?

Brian -- Yes.

Q. OK, switching gears, let me ask about Microsoft -- IPTV is the name they use for their big Microsoft TV initiative, and SBC is a "tester" -- how does this relate?

Brian -- All 40 million homes that SBC serves can be served with satellite -- but Microsoft will only be able to address the 15-20 million homes that will have fiber. Ours is a strategy to complement the MSFT TV2 strategy and fill in the holes.

Q. So if the satellite, media portal service can do what Microsoft's IPTV can do, why bother with Microsoft? Will SBC discontinue their work with Microsoft?

Brian -- SBC wants to control both the network and the content, so the Microsoft TV IPTV play is still important. With Echostar, SBC doesn't have any influence over the content

Q. The press release today talked about a Joint Venture. What does this actually mean?

Brian -- We probably overstated that in the press release. For example, I have a card that says that I am the Chief Marketing Officer of SBC Media Solutions, but my paycheck still comes from 2Wire. And SBC doesn't own any piece of 2Wire. The point of talking about this as a JV is to communicate to the marketplace that we are operating with joint interests in mind.

Q. Lets talk about the other features in the product -- a USB port? CD/DVD Burner?

Brian -- The CD/DVD Burner will remain dormant until the SBCs of the world decide to turn it on, same with the USB ports. We are taking a conservative approach -- we don't think people (the "moms") are going to worry about watching video outside the home so we'll watch the Slings and Orbs of the world and see how they do.

Q. You have a set of other partners listed on your website -- BellSouth, BT, Telemex. Is this deal exlusive to SBC or are you pitching these others as well?

Brian -- We are currently pitching all of these partners with a satellite partner but I don't have anything to announce.

Q. With a satellite partner -- so is the magic DSL and Satellite as a pair?

Brian -- The two wires coming into the home are Satellite and DSL - with our product we can provide a completely integrated experience and easy to use interface.

Q. When will this be available to consumers?

Brian -- Mid-2005 roll out with SBC

Publisher's Note - Lok Technologies

(sponsored by Lok Technology) Welcome to IP Inferno 2005! We have two major changes in store for this year. First off, we have started our own experiment in blog commercialization, accepting sponsorship funding from WISP solution provider, Lok Technology. Our editorial policy regarding sponsors -- sponsors have no influence over our coverage of the news. In fact, in order to emphasize editorial neutrality toward our sponsors, any time we happen to mention our sponsor's name in an article -- within one year of their sponsorship, it will be accompanied by a comment such as this one (Lok Technology was a paid sponsor of IP Inferno in January, 2005). That way you, our reader, can decide if we are continuing to be fair and unbiased in our coverage.

The other big change for 2005 is the addition of new voices. You may have noticed Dan Brekke getting a headstart in December -- you'll be hearing more from him this month. We also expect a few others to join in the fun here at IP Inferno as the year progresses.

Happy New Year!