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March 6, 2006 Provided by System Dynamics Inc.

Briefly Noted: Updates, Observations and Trends

Each month, we collect miscellaneous happenings, studies, trends or observations you might have missed. This month we feature some market statistics, muni Wi-Fi, BPL and a perspective on projecting the future.

Market Growth

European DVR Growth: A study by IMS Research estimates that by the end of 2005, over 2.6 million households in Europe were using a DVR and that by 2010, the market will swell to over 41 million households. They expect the main source of growth to be operator deployments of integrated DVRs, although Digital Terrestrial Television (DTT) will also contribute. DTT DVR shipments grew significantly in 2005 due to strong adoption of DTT services in the UK, France and Germany. According to the report, DTT is expected to remain the second largest platform, after satellite, for DVR adoption in Europe through 2010. ( )

Cable Digital News reported that "cable operators and phone companies wrapped up 2005 with record quarterly gains in broadband subscribers, raising the total number of high-speed data customers over the 47 million mark in North America." They also report that DSL providers captured 54.1% of all new residential high-speed data customers in the fourth quarter while cable operators took home the remaining 45.9%—the fifth time in the last seven quarters that DSL providers have gained more subs than cable operators. ( )

Muni Wi-Fi Keeps on Rolling

The municipal wireless phenomenon is staying on a roll. A sampling of some recent developments includes:

  • MichTel has an initiative to blanket all 910 square miles of Oakland County, Michigan with free wireless Internet by 2007. The network is expected to cost $100 million to build and $1 million a month to operate. It is pursuing a fee-based model and expects revenues from extensive advertising. There are seven pilot communities -- Troy, Birmingham, Madison Heights, Royal Oak, Oak Park, Pontiac and Wixom. ( )
  • City officials in Chicago announced that the city will invite technology companies to submit proposals for wireless broadband this spring and that the system would be paid for by whatever private vendor is chosen to build it.
  • The City of Houston intends to issue an RFP to solicit proposals from private sector companies for the financing and management of a Wireless Broadband Network. The City posted a draft of the RFP ( ) on February 17 to allow interested parties to comment or suggest improvements to the RFP.
  • Miami Beach's Mayor laid out a vision for connecting all of Miami Beach wirelessly ( ) and for free. Two companies -- IBM and Wireless Facilities Inc. have been given permission to set up Wi-Fi antennas in two neighborhoods -- one in North Beach and one in South Beach -- as part of a pilot system.
  • Cincinnati has a different approach for delivering Wi-Fi free of cost and free of pop-up and banner ads. Project Lily Pad ( ) is a volunteer-driven initiative spearheaded by Give Back Cincinnati to bring free wireless internet access to public spots, business districts and common areas throughout the Cincinnati Region. It has the cooperation of the City of Cincinnati and Time Warner Cable and follows the model of "Adopt a Highway" in the US, in which donations are used to sponsor individual hotspots for three years. Time Warner Cable, for example, is the sponsor of the riverfront hotspot.
  • Meanwhile, the city of Philadelphia finalized its plans for muni Wi-Fi by signing contracts with EarthLink and Wireless Philadelphia (WP), the nonprofit group overseeing citywide Wi-Fi network development. ( ) ( )

Houston BPL: Internal Use For Now

CenterPoint Energy and IBM announced that 44,500 Houston Electric customers will participate in a broadband-over-powerline (BPL) rollout as a stepping stone toward an intelligent grid system for electric and gas companies. The deployment will center on utility company applications and not on broadband for high-speed Internet in homes. Houston Electric is piloting an "intelligent grid" that will allow the power grid to transmit its status using sensors and new "smart" electric meters to be installed at its customers' homes. The BPL equipment, being supplied by Corinex, is based on 200mbps chipset from DS2. ( ) ( ) ( ) ( )

Projecting the Future

We noted with some amusement a recent survey by Royal Bank of Canada's RBC Capital Markets. The Wall Street Journal reported the survey finding that 75% of U.S. mobile phone users aren't interested in watching TV or movies on their handsets.

25 years ago, before voice mail had been deployed, AT&T researched consumers' reactions to whether they would want such a capability. Answers included: "I wouldn't use it", "I don't want to talk to a machine" and (from the department of the really old) "I'd be upset if I made a long distance call and got a machine. I wouldn't want to be charged for that call".

By any measure, voice mail is a widely deployed and used service. We may not always love it, but it is an invaluable tool for most people today.

The lesson is that you can't ask people whether they are interested in some new service that they haven't experienced and for which the applications are not yet well understood. We think it's prudent to approach consumer surveys for new services with a very large dose of skepticism.