Hawaiian Telcom (HT) filed for bankruptcy protection in Dec 2008. While management problems and billing issues helped accelerate HT’s financial problems, the company also encountered a trend that is hitting the fixed-line telecom industry on a global scale.
A Berstein report in April 2009 showed residential access lines in the United States decreased at a rate of 11.6% throughout all of 2008, while decreasing at 11.5% in just the 1st quarter of 2009. As fixed-line revenue decreases, there is a parallel decrease in state and federal tax revenues being collected, further contributing to budget shortfalls in states such as California. We expect that tax revenue recovery for telecommunications will find its way into broadband Internet, higher taxes on mobile phones, and voice over Internet protocol (VoIP) phones.
The old argument of having the safety of a fixed-line telephone in the case of an emergency is also fading away as E911 emergency services using GPS (global positioning system) chips can identify a caller down to about a square meter. Persons needing to contact a first responder find it much easier to hit their mobile phone’s panic button than try to find their way to a traditional handset.
Without federal tax collection on telecommunications (known as the Universal Service Fund), programs such as rural fixed-line and broadband initiatives are likely to be discontinued or delayed.
In the United States, according to sources such as the Centers for Disease Control and US Telco Association nearly one in four US households no longer have a fixed-line telephone, preferring to use mobile phones or Internet broadband phones. As of June 2009, broadband Internet phones are not taxed in the US, enjoying a tax holiday that will most likely come to an end within the next couple years. States and the US government will not be able to continue absorbing the loss of telecom tax revenue as the fixed-line market dissolves.
However the short term effects will probably be most acute in small regional incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs) as their fixed-line business continues to implode. Hawaiian Telcom, as an example, lost an average of 1.6% of its fixed-line subscribers each quarter starting in the second quarter of 2006. Overall fixed-lines subscribers fell to 573,000 from 725,000 from 2Q2005 to 1Q2008. The loss of fixed-line revenue also restricted cash and investment potential in other emerging technologies such as broadband Internet and wireless technologies.
As mobile telephony and mobile Internet access continue to make advances in features and quality, there seems to be little hope the fixed line business will recover – unless the ILECs and CLECs are able to integrate advanced features such as television into their product line. Given the loss of revenues in fixed-line, and constricted capital markets, in most cases finding lenders or further investment for those projects seems unlikely.
The final factor in the fixed-line melt down is with employees and retirement funds. As ILECs are in many cases one of the largest employers in a region, failure to remain competitive is resulting in layoffs and early retirements. According to the Honolulu Advertiser Hawaiian Telcom had laid off several hundred employees by the time Chapter 11 was filed in December. More for the unemployment line, less tax revenue, and probably a dilution of customer service quality for HT services.
While the problems faced by Hawaiian Telcom may seem harsh, the largest telecom companies in the US are suffering a similar fate, as shown by Verizon aggressively selling most of its rural telecom holds during the first half of 2009. Cash acquired (and saved through reduction in rural support expenses) is being dumped into their fiber optic fixed line FIOS product, which brings “triple play” (television, Internet, telephone) services to residential and business subscribers.
Through an informal poll of about 50 new apartment residents in Long Beach (in the author’s building), only four reported ordering fixed-line telephone services. All others stated they only used their mobile phones, or in a couple of cases utilities such as Vonage or other Internet broadband phone.
In Hawaii the winner appears to be Time Warner Cable (under the local operating name Oceanic). Oceanic continues their penetration of the residential market, with more than 400,000 business and residential subscribers within the state. Oceanic does offer triple-play services, and has the backing of Time Warner Cable, one of the largest cable operators in the United States.
With advanced wireless telephony and data features commonplace in US and international markets, and high performance broadband expansion into both business and homes, the fixed-line telephone operators may soon be a technology of the past. Now we need to deal with the backlash – unemployment and loss of tax revenue.
John Savageau, Long Beach
MISSION – Give people the power to share and make the world more open and connected.
Josh Elman, Senior Platform Manager at Facebook, shared some of the ideas and visions behind one of the fastest growing and most successful social networking sites in the world.
The monthly meeting of the Silicon Valley Product Management Association (SVPMA) provided the stage, and around 150 interested attendees gathered to learn some of the techniques used by Facebook to recruit more than 200 million members within the space of only two years.
Josh emphasized that Facebook tries to promote a truly global community by “giving social groups and like-minded people a way to find each other.” He went on to describe an idea which may be unique in the product marketing world, which is to not only have a company mission statement, but also a user mission statement:
USER MISSION – Create opportunities for people to share, and make the world more open & connected.
To accomplish the task of bringing people together, Facebook promotes a three stage process for new members:
- Create your identity. The most important thing about Facebook identities is to create credibility. Once people know who you are, and are confident you are authentic, it is much easier for them to make a connection and bring you into their community.
- Establish a network of friends.
- Begin sharing.
The word “sharing” is a common thread in all Facebook discussions. You share your ideas. You share your personal status. You share your interest through joining groups of other people sharing similar interests. You share your interest in Internet marketing, and suddenly you are a member of a community of 100,000 others around the world who share your interest in Internet marketing.
As you continue expanding your presence and circle of friends, the power of community becomes exponential. If your interest in eating sushi brings you into a community of 5000 others who like sushi, and each of those people is connected to 100 others, then your community is one step away from extending into a very large number of potential contacts. Facebook refers to the multi-dimensional extended community as their “social graph.”
If you are familiar with the ideas of one-to-one, one-to-many, and many-to-many communications, Facebook takes that concept and adds the ability to take any of those ideas and build them into three-dimensional clusters. This is the idea of many, many-to-many relationships all interconnected through common human or social group conduits.
Josh used the example of Facebook communications during President Obama’s inauguration as an example of how quickly Facebook can be used to spread a message. While online, more than 2 million comments and status updates were made through one-to-many messages, with spikes of more than 8500 status updates per second during Obama’s speech. Obama-related messages touched a majority of Facebook users, making this perhaps the fastest, most effective information or message distribution platform, ever.
Communicating with the Global Community
Just a few years ago life for many was restricted to a small geographic area, where your community consisted of others sharing your own culture, language, and traditions. When outsiders entered the community communication was strained, as there may not have been a common language, and cultural differences created a lot of stress.
Even in a global community, it is still difficult for a native Japanese speaker to easily communicate with a native French speaker – particularly if the common language (probably English) is not native to either speaker.
Facebook tries to break down those cultural and language barriers with a dynamic translation engine that allows members to communicate in their own language, while the other party receives the message their own native language. This makes, at least the language part of a relationship, transparent to both communicating parties.
Josh Elman is the perfect evangelist for Facebook. With prior experience in companies such as LinkedIN, he has the social networking technology down cold. Combine that with his enthusiasm in bringing both Facebook, as well as the vision of creating a connected world together, and you have an uplifting evening that would motivate even the most skeptical web user.
John Savageau, Long Beach
The Silicon Valley Product Marketing Association (SVPMA) meets every first Wednesday of the month at TechMart in Santa Clara. “The Silicon Valley Product Management Association (SVPMA) is an organization that was founded to address the needs of Product Managers, Product Marketing Managers and other professionals working within the Product Management field.”
On May 20th the Office of the US President released a new planning guide for US Government agency adoption of the Internet Protocol, version 6 (IPv6). As the world’s largest IT user, once the US Government finally starts moving ahead on a project, the rest of the world will finally need to take some serious notice.
IPv4 addresses are the machine language which tells Internet-connected applications how to find each other throughout the global network of networks. Humans are familiar with names such as www.yahoo.com, however Internet applications and routing devices would see the same thing as 209.131.36.158.
The problem is that Internet Protocol, version 4 (IPv4) address space is nearly exhausted, with less than 15% of available address space remaining (of 4,294,967,296 total available IPv4 addresses). Some experts, such as Paul Wilson (Dir Asia-Pacific Network Information Center) believe IPv4 addresses will start to dry up as soon as soon as June 2011.
The need to adopt IPv6 is becoming acute. In North America Internet address space is managed by the American Registry for Internet Numbering (ARIN). In May 2007 ARIN published a resolution which included the dire warning:
“WHEREAS, ongoing community access to Internet Protocol version 4 (IPv4) numbering resources cannot be assured indefinitely; and,
BE IT RESOLVED, that this Board of Trustees hereby advises the Internet community that migration to IPv6 numbering resources is necessary for any applications which require ongoing availability from ARIN of contiguous IP numbering resources; and,
BE IT ORDERED, that this Board of Trustees hereby directs ARIN staff to take any and all measures necessary to assure veracity of applications to ARIN for IPv4 numbering resources (American Registry for Internet Numbering)”
Until now the US Government, although they have touted the need to adopt IPv6, has lagged the commercial community in actual deployment of IPv6 within government networks and applications. This follows the Office of Management and Budget’s directive (M-05-22) to all government agencies to “prove IPv6 capability through core network infrastructure testing by June 30, 2008.”
The US Government also recognizes lagging IPv6 deployment puts us behind other government initiatives in China (China Next Generation Internet/CNGI) and the European Commission’s i2010 project, which is driving all European countries to implement IPv6 into networks and applications by the end of 2010.
The benefits of IPv6 are fairly well known and documented, including features such as:
- Greatly increased address space (340,282,366,920,938,463,463,374,607,431,768,211,456 total IPv6 addresses available, or 2128)
- Better security
- Mobility
- And lots of other great features including interoperability and integration into nearly any device that can be connected to a network
If the US Government is serious about pushing through their IPv6 initiative, many people will benefit, including consultants, equipment vendors, and software engineers, as most of the government IT architecture will need to be rebuilt. This is a good thing, as the rebuild will no doubt drive further innovation within the American IT community, and this will find its way into both the academic and commercial world, as the world’s largest IT user forces the community to re-engineer.
John Savageau, Long Beach
