Dave Burstein at DSL Prime reports that Ivan Seidenberg effectively says the the wireline voice telecom business is dying:

“we have to pivot and make a shift from the voice business to the data business and eventually to the video business. … we must really position ourselves to be an extremely potent video-centric asset.”  He further states, “The issue there is perhaps it is like the dog chasing the bus a little bit. So what I need to do is get ourselves focused around the following idea, that video is going to be the core product in the fixed line business. … I shed myself of the burden of chasing the inflection point in access lines and say I don’t care about that anymore.”

Despite Seidenberg having been one of the few telecom industry visionaries to truly embrace data/video as the future of the industry as long as 10 years ago, it still sounds strange (heretical, in fact) to hear a telecom CEO say “I don’t care about that [access lines] anymore.”  On the other hand, I believe Seidenberg is correct in focusing Verizon’s strategy on the combined communications capabilities of its wired and wireless footprints.

Googling for further insights from Seidenberg’s comments at Goldman Sachs Communicopia Conference, I found this statement, made a week earlier at SuperComm:

“But here is what is happening in our view,” Seidenberg said. “The Internet, the PC and the TV are integrating at the fastest rate you can possibly imagine. So this is not a matter of only putting video on mobile; that will happen. We are also talking about turning the TV into an interactive device. And the experience we have had with that is just off the charts. So we have this Widget Bazaar on FiOS, which is kind of like our apps store. And so in addition to getting the weather and the news and that kind of stuff, traffic, now you can do your Twitter, your Facebook, your YouTube, you’ve got a Kodak Gallery, you have got fantasy football, you have got the RedZone ticket and there probably are 50 other things we have in negotiations right now to take the interactive capability of the TV and turn it into a hilarious issue.”

Next up, Seidenberg said, is the likelihood that a mobile smartphone interacts with the TV, as part of the convergence process. That’s why, he said, Verizon is focused on having fewer total access lines but hosting them on a “much higher potency platform to take to the customer.”

Unlike Ed Whitaker and Duane Ackerman, Seidenberg truly grasps the converged future of communication networks, and more importantly, is willing to act upon that vision.  In addition to developing the platform to focus on the common interactive experiences to be encountered on mobile, video and computer devices, Seidenberg is also focused on the operating efficiencies to be found in the flat architecture of the fiber network.  According to the New York Times in its article titled “Verizon Hangs Up on Landline Phone Business”:

By converting most of its landline operation to FiOS, Mr. Seidenberg said Verizon had a new opportunity to cut costs sharply. FiOS uses the decentralized structure of the Internet rather than the traditional design of phone systems, which route all traffic through a tree of regional, then local offices.

“We don’t look any different than Google,” he said. “We can begin to look at eliminating central offices, call centers and garages.”

Mr. Seidenberg said that he was just beginning to work through the implications of this and that he planned to reorganize the company in order to emphasize this strategy. He told investors it may take a year or two for the financial impact to be apparent.

Plant and operations in the legacy telco network is insanely complex, labor intensive and consequently expensive.  An all optical network will prove much cheaper to operate.  One of Seidenberg’s challenges probably has been and may continue to be overcoming the copper voice-centric Luddites within his own organization.  My guess is that when you see Seidenberg publicly announce the cost savings to be realized via the replacement of the copper with fiber, you will know for certain that he succeeded in that endeavor.  Unfortunately, that will mean a lot more people looking for new jobs and careers.  Given that many of those are members of the CWA and IBEW, you can also bet those unions will seek to delay that process as long as possible, just as they are also doing in attempting to impede Verizon’s sale of unprofitable rural operations.

The Internet is in the process of aborbing wireless telephony. The constantly improving economics of optical and/or digital networking infrastructure and innovation enabled and fostered by entrepreneurs leveraging of IP (Internet protocol) internetworking technology (browsers, hyperlinked web, free email, graphic design, etc, etc,) has and will continue to drive the merging of all heretofore physically discrete analog networks (each being a separate business unto itself) into a single interconnected set of commonly structured and operated digital networks, all of which transport and connect video, voice and data applications – the “converged network”. Text/sms messaging is but one of thousands of applications that operate on and interconnect through the Internet. It is, in fact, the highest revenue /bit form of communications service for which consumers pay (by a factor of 1000), primarily because of the telecom operators end-to-end control of that network. For details see The Evolution of Price Discrimination in Transportation and its Implications for the Internet (especially Table 1 on second page of this pdf). The author, a mathematics/computing professor at U of Minnesota, is widely regarded for his fact-based approach to the economics of telecommunications networks.

Despite the convergence phenomenon, the US lags Europe and Asia in its usage of mobile telephony and mobile Internet (you can mostly thank the FCC’s bureacracy’s money-grubbing wireless spectrum lotteries for that). Nevertheless, US usage of wireless Internet will pick up dramatically in the next couple of years, as ATT/Cingular, Verizon and Sprint/Nextel have deployed their 3G (they call it broadband, but its really medium band) networks. (Europe/Asia finished theirs 3-5 years ago). Here is a chart showing Internet enabled mobile phone penetration as of a couple of years ago.

Let me begin by commending the staff for this Report. It begins the process of identifying guiding principles for our growing Internet competition mission. At least as importantly, to my mind the Report provides a powerful basis for the Commission to oppose, as part of our advocacy program, future attempts by states to limit or prohibit municipalities from offering broadband to their own residents. Some of these proposed laws address legitimate questions, but others are simply unconscionable.

In the same report, he also observes:

As an agency charged with enforcing the antitrust laws, we know the importance of competition well. Increased competition means lower prices and higher quality for consumers. But the lack of competition along the “last mile” of the Internet to consumers can have an even more profound effect than high prices in local markets. It can interfere with the growth and development of the Internet everywhere.

I suppose we should be happy that at least one commissioner "gets" it, and that his commission’s mission is to promote and advance the cause of fair competition, especially when the competitors and regulators in the communications industry seem to prefer unfair competition in spite of the harm it brings to our country, its commerce and its citizens.

"During the hurricanes, Google didn’t pay to have the DSL restored," said BellSouth spokesman Jeff Battcher. "We’re paying all that money."

Additional quotes from Bill Smith (BellSouth), Whitacre (SBC/att) and Seidenberg (Verizon) to be added later

"Cellular networks haven’t taken off [for data] because cellular networks currently suck. Badly. It’s our fault – we’ve done it badly," states Nokia’s Markku Hollstr�m to Silicon.com. Hollstr�m insists that while Wimax wireless broadband will have its niche, "WiMax is hype at the moment – and it’s pretty bad hype."

Should WiFi Be Public Infrastructure? (continued)
I hate logging in to all of these various hot spots. Each one has a different login, a different account, and the process is one big hassle.
I’ve begged for better wifi roaming and I’ve wondered if Wifi should be public infrastructure.
Yesterday, a reader sent me a link to this story about a silicon valley firm called AnchorFree that is putting up free hotspots that are sponsor supported.
That’s a lot better than the paid hotspots we have now, but what I really want is free Wifi everywhere. Or at least let me pay a monthly bill to someone and then get free wifi everywhere I go without having to deal with different vendors with different payment schemes and different login systems.
This is only going to become more important as we get wifi voip phones, wifi iPods with podcasting built in, wifi cameras, and wifi video.
I honestly believe that the cost of supporting public wifi is not that expensive and the benefits to the citizens of every city that does it is enormous.
UPDATE: A great post on the comparisons between public water projects in the 19th century and wifi today. It’s a very interesting read.

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Simply stated, PrimeRevenue helps companies do more business with less working capital.

Although apparently not a new concept (there’s a link on their website
to a fairly sophisticated vision of it in an article written in 2000),
the integrated communications and software infrastructure for implementing it are
only now reaching the maturation to support it.

On another Web sojourn, I encountered Wells Fargo’s Commercial Electronic Office (CEO), a proprietary financial portal that claims to provide "cash management, credit, international, and trust and investment services all in once place with a single sign on".  Maybe so, but my experience with banks suggest that would be something of a stretch.  (Wells had even applied bankers’ bureaucratese to the term e-commerce, turning a concise word into a mouthful of multi-syllabic mush.)  My instincts and experience with online media content tell me that a proprietary business model will not stand.  For the same underlying economic reasons that it would make no sense for Yahoo, MSN or AOL to limit their available market to that of one communications company (as in cable or telco), it would make no sense for a true financial portal to limit its market to the available market of a given depository institution (even if owned by that institution). 

This is worthy of futher "focused" Web wanderings, thought and conversation.

I also pointed out to Smith that Wal-Mart, all by itself, was responsible for a significant amount of the productivity miracle we have seen in this country over the last decade. In a 2001 report, the McKinsey Global Institute, a respected think tank, concluded that Wal-Mart’s managerial innovations had increased overall productivity by more than all the investments in computers and information technology of recent years. Wal-Mart’s innovations include large-scale (big-box) stores, economies of scale in warehouse logistics and purchasing, electronic data interchange, and wireless barcode scanning. These gave Wal-Mart a 48 percent productivity advantage over its competitors, forcing them to innovate as well, thus pushing up their productivity. The McKinsey study found that productivity improvements in wholesale and retail trade alone accounted over half of the increase in national productivity between 1995 and 1999. A new study from the prestigious National Bureau of Economic Research found that Wal-Mart has a substantial effect on reducing the rate of inflation. For example, it typically sells food for 15 percent to 25 percent less than competing supermarkets. Interestingly, this effect is not captured in official government data. Fully accounting for it would reduce the published inflation rate by as much as 0.42 percentage points or 15 percent per year.

Ignoring these beneficial macroeconomic effects, Frontline focused almost exclusively on the loss of jobs allegedly caused by Wal-Mart. Acting as what economists call a monopsony, it supposedly forced countless American manufacturers to close their domestic operations and move to Asia in order to get their costs low enough for Wal-Mart to sell their products. It is also said to have caused innumerable local retailers to go out of business, further adding to the job loss. In fact, academic research by economist Emek Basker of the University of Missouri contradicts this last point, finding that Wal-Mart permanently raises local employment.

"…it’s important to really understand what happened over the last five years. A trip to Korea can give you an understanding. We didn’t have a fundamental bubble that consisted of Ponzi schemes and accounting frauds. That wasn’t the basic thing that happened. The basic thing that happened was that we launched a broadband revolution and didn’t consummate it because of regulatory mistakes. So it moved to Asia. Korea has 40 times the amount of bandwidth that we do. And they accomplished that in three years." Gilder continues, "When you have a true deployment of broadband in a country, including wireless broadband, the whole economy changes. In 2003, there was around $450 billion a year of commercial transactions on the Internet in Korea. A third of their economy was transacted on the Internet."