Revenue share model works for iPhone software

Submitted by acohill on Tue, 12/30/2008 - 09:29.

I have long advocated a revenue share model for community broadband, in which a single community-owned digital infrastructure is made available to private sector providers to deliver services like voice, video, and Internet access to customers. Service providers would pay a share of their revenue to the network to cover the cost of build out and maintenance.

Critics of this approach argue that it is too "risky," and "unproven," although it has worked successfully for years in other countries.

We have a data point that hints that this can work. Apple has used exactly this approach for marketing software for the popular iPhone, and the results have been nothing short of astounding.

Apple made and continues to make a huge investment in the basic infrastructure needed to market and deliver applications to individual iPhones--the iPhone App Store. Software developers can place their software in the store for free, and pay nothing until they make sales. They pay Apple 30% of their revenue, so an application selling for a dollar means Apple gets thirty cents to cover the cost of hosting that application in the App Store.

This approach is exactly the same as an open services broadband network:

• A single owner/manager creates a fully integrated, high performance infrastructure and makes it available to any provider that meets minimum standards. This aggregates a very large marketplace of potential customers.

• Providers have a very low cost of entry into this aggregated marketplace, which preserves business capital and allows companies to spend more on innovative products and services.

• The low cost of market entry attracts business start ups and levels the playing field, with no "big company" advantage and extensive competition as the market matures.

• Extensive competition keeps prices low, a major benefit for customers.

• Extensive competition also encourages innovation, because highly differentiated products or services can support higher prices.

• A single infrastructure owner/manager provides a level of quality and performance beyond the capacity of any individual company to deliver.

The key concept is shared infrastructure. For both broadband networks and the software marketplace, everyone wins, including service providers and software developers, because costs are lower across the board. In the case of the iPhone marketplace, it is much less expensive for a start up developer to place a product in the Apple App Store than to design and fund a stand alone marketing effort. In the case of broadband, it is much less expensive for a service provider to deliver services like Internet access over a shared network, despite increased competition, because the costs are so much lower than building a private (non-shared) network and because the marketplace of potential customers is much larger.

Mobile phones driving social networking, the Web

Submitted by acohill on Tue, 12/23/2008 - 16:11.

A new report says that mobile phones are playing a bigger role in Web use, especially with social networking sites. Users are updating their social network information directly from their cellphones, adding commentary, pictures, and video with their phones. The iPhone and other iPhone competitors have much improved Web browsers, allowing fast and easy access to social networking Web sites, and the integrated cameras make it easy to upload multimedia content.

Pew Study: TV viewing still declining

Submitted by acohill on Wed, 12/10/2008 - 14:26.

An October, 2008 study released by the Pew Internet and American Life Project supports other data showing that more and more people are not bothering with the TV anymore. Among all adults, Pew reports that TV viewing has declined 25% in the past year. Among 18-49 year olds, a slightly higher average of 28%. What this means is that if the trend continues at about the same rate, no one will be watching TV in less than a decade. What has replaced TV? The Internet.

Get ready for telepresence

Submitted by acohill on Thu, 10/16/2008 - 07:57.

Cisco has announced a new marketing effort to expand the availability of high quality videoconference facilities, or telepresence rooms. What is the difference between these rooms and older videoconference systems? Three things:

• HD quality cameras and monitors provide real "you are there" interactivity. No more grainy television monitors or YouTube style images blown up on an LCD projector.
• High performance, high capacity broadband connections that can carry multiple live HD video streams. How much is enough? Figure about 10 to 15 megabits per location, so if you have are having a conference with two remote locations, you need as much as 45 megabits of bandwidth.
• Dramatically improved audio. No more "I'm talking from the bottom of well" sound quality, where you can't really hear half the people in the room. Multiple microphones and sophisticated sound processing software make it easy to carry on conversations without shouting.

If you are trying to attract businesses to your town or region, you should have at least one well-equipped facility available for rent by the hour. It may be just the thing to get startups and entrepreneurs interested in more rural locations for their businesses. Every business park should have a telepresence facility, and every public library should have a meeting room available for both business and community use.

Air travel becoming an expensive luxury

Submitted by acohill on Wed, 08/27/2008 - 07:48.

This brief report discusses the fact that airlines are dropping nonstop flights even to and from major cities like New York. For business, this is devastating, as the increased cost of tickets can, to some extent, be moderated via other cost-cutting measures. But sending business people on trips that take all day instead of three or four hours is devastating, because you can't recover the lost time spent traveling.

Like it or not, business videoconferencing is going to become much more important more quickly, and bandwidth (or the lack of it) will determine how much it is used in any particular community or business area.

Video link to the elderly parents

Submitted by acohill on Sun, 08/24/2008 - 09:41.

This Slashdot article quickly gets into a down in the dirt technical discussion, but the question about full time video to elderly parents is an indication of what is coming. If you browse through the comments, what you quickly realize is that people are already doing this routinely. What is missing is high quality "like you are there" connectivity. Some companies like Accenture are already experimenting with full time HD video links for exactly this application, and telehealth and telemedicine uses of the same equipment are not far behind. We just need networks capable of providing the bandwidth.

9% of workforce already working from home

Submitted by acohill on Wed, 08/13/2008 - 09:07.

A new study out from Forrester says 9% of the workforce is already working from home for their employer, and another 22.8 million are running their own businesses out of their home. This adds up to a major demographic that is turning neighborhoods into business districts.

The report also highlights what Design Nine has been telling communities for a long time--you have to have business class broadband services in residential areas or you are choking off economic development. A major reason for communities to get involved in broadband infrastructure is to ensure the community can compete economically. If people can't work from home in your town, businesses and workers are going to go elsewhere. In other words, do you want to lose 10% to 20% of the jobs in your community because of a lack of broadband in neighborhoods?

iPhone breaks more records

Submitted by acohill on Mon, 08/11/2008 - 12:59.

The iPhone continues to break records. According to some estimates, Apple has sold 3 million phones in the first 4 weeks after the updated iPhone 3G was released. Last year, it took Apple three months to sell 1 million. One estimate suggests that Apple will continue to sell 800,000 phones a week for many months.

The App Store, which supplies hundreds of software applications, has also broken records, with more than 60 million downloads of software for the iPhone in the first month, and the store has been averaging $1 million per day in sales (some apps are free).

T-Mobile is feeling the pressure from the iPhone, as the company has announced it is also pursuing an online software store that will work with any of the phones it provides--a rather ambitious undertaking that spans several different cellphone operating systems. T-Mobile has been losing customers to AT&T as customers switch providers to get the iPhone, which only AT&T has.

NBC upset that people use on demand video

Submitted by acohill on Mon, 08/11/2008 - 08:15.

NBC, which has exclusive rights to broadcast the 2008 Olympics in the United States, is apparently upset that people are simply not bothering to wait for prime time to watch NBC's repackaged broadcasts. Instead, viewers are simply going to the Internet and watching the Olympics on the Web sites of media outlets in other countries.

The Olympics is a long and complex series of events that has never fit neatly into a two hour evening broadcast, but in olden days (say four years ago), that was about all we had. The much wider availability of broadband connections and the widespread use of online video sites like YouTube provides people with alternatives to broadcast and cable TV. Right now, the video folks are watching is of generally low quality, but demand for HD online video is going to increase rapidly, and more and more people are going to want to watch live events in real time, not NBC time, and will want those broadcasts in HD format. And the current DSL and cable modem systems simply don't have the horsepower to deliver it.

No one wants to drive anymore

Submitted by acohill on Tue, 07/29/2008 - 15:12.

As I predicted months ago when gas prices first started to rise, the suburbs are about to undergo a transformation. USA Today had a front page article about the 'burbs and the changes. In Arizona, they are doing what planners have been recommending for at least thirty years, which is to redesign suburbs as destinations, rather than just a place to sleep.

By "destination," that means adding stores, office buildings, sidewalks, parks, and new downtowns, so that residents don't have to drive thirty miles to and from work.

Small towns and rural communities with traditional downtown Main Streets can also capitalize on this trend converting Main Street buildings into office space--with fiber broadband services. Small towns like Galax, Virginia, better know for some of the country's best barbeque and the Fiddler's Convention, is doing just that as a partner in the Wired Road.