Recession-Proof Mobile Phone Services

Due to the global economic crisis, there's been a recalibration of consumer purchasing and usage behaviors which will affect all industries -- including the normally recession-proof mobile phone services industry.

Yet despite these market uncertainties, a new ABI Research study shows that even under the worst recovery scenarios, mobile services revenues will continue to grow at nearly 1.2 percent through 2014 -- a 0.5 percent loss over pre-crisis conditions.

According to ABI practice director Dan Shey, "A long economic recovery places pressures on mobile operators to compete on price, particularly with undifferentiated voice services. Mobile data services allow operators to counter that pressure. However each region is different."

Operators should create strategies that lead customers to maintain nice-to-have data services or encourage addition of more utilitarian ones.

Economically, North America has been hit hardest. But mobile data services growth will exceed 8 percent through 2014 even in the worst recovery scenario and will shield mobile services revenues against growing voice pricing pressures.

While stimulus packages are helping power the Asia-Pacific region through the financial crisis and limiting unemployment loss, regional operators derive a large portion of their data revenues from content downloads.

These products would be the first casualties of an extended recession, particularly with APAC's substantial prepay base. But operators can mitigate the impacts of the depressed conditions through appropriate messaging and offer management.

According to Shey, "Mobile operators need to stress the utility of mobile services and pursue appropriate services personalization initiatives that allow customers to buy and use services in ways that best suit their needs."

Business customers should also be a target segment as businesses consider mobile a way to lower communications cost and increase competitiveness.

Mobile Data Usage Drives Network Backhaul

The demand for more mobile network backhaul capacity will grow three fold between 2009 and 2013, according to a recent market study by In-Stat.

Mobile network operators are deploying EV-DO 2000, HSPA/HSPA+, WiMAX, and LTE to meet the growing demand for high-speed mobile data. In the process, the bottleneck affect of cell site network backhaul has become more prominent.

Traditionally, voice has dominated the traffic going across a mobile operator's network. With voice as the primary traffic component, an operator could meet its backhaul requirements with a couple of T-1 lines per base station.

That has all changed with operators relying on data for revenue growth.

"Cellular and WiMAX backhaul provides that crucial link between the mobile operator's radio access network and its core network," says Frank Dickson, In-Stat's VP of Mobile Internet research.

"It does an operator no good to install a base station with 7.2 Mbps capacity if the backhaul is limited to 4.5 Mbps."

In-Stat's market study includes the following highlights:

- WiMAX and LTE will require backhaul needs of 80-100 Mbps. Their deployments will increase the need for new backhaul solutions.

- While microwave will remain the most common last mile link medium, Ethernet is playing an increasing role in supporting backhaul needs for cellular and WiMAX networks.

- 90,000 Gbps of capacity in the last mile of the backhaul network will be needed by the end of 2013 to support the worlds cellular and WiMAX networks.

- In Asia/Pacific, the cellular backhaul last mile backhaul capacity for LTE will be 2,500 Gbps in 2013.

Why Digital Distribution Rocks Entertainment

Change is the name of the game for the entertainment industry. Don't like the new reality? Too bad, because there's more to come. Music, movies and video games are facing economic challenges due to the disruptive influences of digital distribution.

"The music industry was knocked off balance by the emergence of the MP3 in the late 1990s and has not recovered, and Hollywood's two core businesses, box-office receipts and DVD sales/rentals, have stopped growing," says Paul Verna, eMarketer senior analyst.

While the sales of video game consoles and software titles remain relatively strong, the industry's future is shifting to digital distribution and ad-supported models.

Spending on CDs and other physical sound carriers dwindled to $5.8 billion in 2008 -- down a very significant 60 percent from a peak of $14.6 billion in 1999. In 2009, the U.S. recording industry will mark 10 consecutive years of declining CD sales.

U.S. sales of recorded music will drop to $5.52 billion in 2013. This downward trajectory will extend a pattern that began in 2000, when physical sales started to decline after rising dramatically during the rise of the CD.

"Online will experience healthy growth, mobile will trend slightly downward and physical will continue to plummet at accelerating rates," says Mr. Verna. "Unfortunately, the sum of online and mobile will not compensate for losses in physical, but it will slow down the rate of those losses to a 2.9 percent drop in 2013."

In 2008, single downloads made up the bulk of digital music sales, over $1 billion -- ironically, that's the revenue stream that initially the recording industry attempted to terminate in a very public battle with their primary consumers.

An NPD Group survey revealed a nexus between music and social media, finding that the percentage of U.S. teens who downloaded (for a fee) or listened to music via social networks increased from 26 percent in 2007 to 46 percent in 2008.

"Clearly, this is a period of experimentation for the music business and social media," says Mr. Verna. "The next step for these services will be to broaden their offerings into a user experience that straddles platforms and devices."

Digital TV Free Entertainment Consumption

Futuresource Consulting is studying how consumers interact with and consume digital entertainment, whether via the TV, online or mobile.

For the first wave, online surveys were carried out in the UK, France, Germany and the USA with more than 2,500 respondents -- focusing on in-home connectivity and online content consumption.

"This tranche of research has provided key insights into consumer behavior across four major territories, allowing us to compare and contrast viewing habits on a country-by-country basis," says Alison Casey, Head of Global Content at Futuresource.

The study shows that nearly 90 percent of Pay-TV subscribers in France who make additional payments to their provider are doing so for movie titles, and there are substantial differences between countries.

German Pay-TV subscribers came out on top for making additional payments for sport and TV shows, with France (sport) and the UK (TV shows) ranking last.

In the UK, Pay-TV subscribers are adopting free on-demand and catch-up video delivered to their TV. Eighty percent of respondents whose package offered this service used it, with the impact of the BBC iPlayer clearly shown in the research.

When Futuresource asked respondents whether they ever watch TV, movies and video on their PC or laptop, two thirds of people in the UK replied either often or sometimes, with consumers in the U.S. not far behind.

But when they asked people if they connected a laptop directly into a TV to watch video from the internet, the results were inverted, with Germany leading the field, closely followed by France.

And, of those who have never connected a laptop to a TV, many didn't know how to -- or had never thought about doing it. Image the upside potential for OTT video when online viewing via a TV becomes a mainstream activity.

Across all territories surveyed, of those who watched streamed or downloaded video content online around 90 percent have never paid for news content or recently-missed TV shows, gradually sliding down to just over half that have never paid to watch new movies.

However, the survey showed that of those who have never paid, more than half answered yes or maybe when asked whether they would be "willing" to pay in the future. All respondents were also likely to pay, or pay more often, if they were offered online content in HD -- or if they could keep the downloaded or streamed content.

There is a huge appetite for free on-demand TV, and yet adoption of paid content is still low. The propagation of new business models is likely key to market development, with video site location, navigation and meta tagging still causing major problems for consumers.

Advertising on Mobile Phones Seeks a Market

Revenues for mobile advertising (on cell phones) in the U.S. and Canada will grow from $208 million in 2009 to approximately $1.5 billion by 2013, according to the latest market study by Parks Associates.

Adoption of smartphones, 3G network data plans -- or newer wireless services -- and downloadable applications will spur this growth in ad revenues, with significant increases beginning in 2010.

Parks Associates estimates there were 62 million smartphone users in North America in 2008, with user penetration to reach 239 million in 2013.

Parks Associates projects U.S. 3G network data plans will reach 95 percent penetration by 2013, with Canada achieving 70 percent penetration.

"Mobile advertising is poised to take advantage of opportunities presented by the diffusion of 3G networks and devices such as the smartphone," said Heather Way, research analyst, Parks Associates.

Advertisers will begin to incorporate the mobile format into their media campaigns as this medium matures into a viable marketing space.

However, unlike the Asia-Pacific and European markets, where enhanced mobile phone usage is commonplace, I believe that the North American market is still in the early-adopter stage of market development.

Ms. Way also cautions that advertisers could encounter early resistance from consumers. The Parks market study found 38 percent of respondents do not want to receive mobile ads, while 37 percent remain neutral to the idea of ads on their mobile phone.

"However, teens and young adults are more receptive to ad-supported mobile content, particularly in entertainment genres," Ms. Way said. "Advertisers need to develop innovative ways to reach these consumers."

Cable Broadband Market Resists Downside

Infonetics Research released the results of the first quarter (1Q09) edition of its Cable Broadband Aggregation Hardware and Subscribers market study.

"On the heels of record-high revenue in 2008 ($1.23 billion), the cable broadband hardware market held steady in the first quarter of 2009, while the cable CPE segment dropped," said Jeff Heynen, Infonetics Research's Directing Analyst for Broadband and Video.

This first quarter slowdown points to a challenging 2009, in which an ailing economy and aggressive telco competition will make adding new broadband subscribers difficult.

Still, compared to the overall downturn in telecom equipment spending in 1Q09, the cable broadband market was somewhat of a bright spot, and proves that cable operators remain committed to expanding their DOCSIS 3.0 footprint -- transitioning from T-CMTS and I-CMTS to M-CMTS architectures, and introducing hybrid IP/QAM video services to support tru2way and DVB-MHP services.

Highlights of the market study include:

- Worldwide cable broadband hardware (CMTS, universal edge QAMs) revenue held steady in 1Q09 from 4Q08, down just 0.2 percent.

- CMTS sales actually inched up a bit (0.9 percent) in 1Q09 from 4Q08.

- Operators are expected to take as much of a break as they can in 2009 to digest all the downstream capacity they deployed in 2008, and also to be more strategic with their DOCSIS 3.0 related rollouts.

- Although Cisco leads the overall worldwide market, ARRIS extended its key revenue share lead in the pivotal North American market by nearly 7 percentage points.

Rural Consumers Drive Mobile Phone Growth

Annual mobile service revenues in the Asia Pacific region will increase by more than 16 percent from 2009 to $326.37 billion by end-2013 -- with growth driven by the continuing rise in mobile subscriptions and greater usage of data services.

Informa's latest market study forecasts that the region's total subscriptions base will increase by over 500 million, or almost 25 percent, from 2.03 billion at end-2009 to 2.53 billion at end-2013.

"The robust growth will be spurred in particular by immense expansion in China and India, and also higher-than-expected subscription increases in developing markets such as Indonesia, the Philippines and Vietnam," said Nicole McCormick, senior analyst at Informa Telecoms & Media.

Prepaid connections will continue to be the primary tariff option with the number of prepaid users rising from 1.52 billion in 2009 to 1.97 billion by 2013, accounting for approximately 90 percent of total net additions.

As a result, prepaid penetration in the regional will rise from 74.8 percent in 2009 to 77.7 percent in 2013.

"Continued growth is being prompted in most markets by operator expansion into rural regions, as mobile take-up in large cities reaches full saturation," says McCormick. She adds that leading operators in China and India already claim that more than 50 percent of their quarterly net additions now come from rural customers.

However, with subscriptions growth being driven by low-income segments, ARPU is also being adversely affected. Informa forecasts that blended ARPU across the region will fall from $12.33 in 2009 to $10.88 in 2013.

At the same time, however, the region is fast becoming a powerhouse of wireless-broadband take-up, with cheap HSPA services helping to fuel both the growth in subscriptions and in revenues.

As voice revenues level off, and actually decline towards the end of the period, data revenues are forecast to rise from 30 percent of total revenues in 2009 to 38 percent by end-2013.

Overall penetration will rise from 53.4 percent end-2009 to 64 percent end-2013, while actual subscriber penetration increasing from 42.9 to 51.2 percent over the same period.

The difference in subscriber versus subscription penetration shows the importance of multi-SIM ownership, with each subscriber owning, on average, 1.24 SIMs in 2009 and 1.25 SIMs in 2013.

Upside for Airline Passenger Entertainment

Video is a high growth market segment. Live broadcast video is poised for significant growth in 2009, according to the latest market study by In-Stat.

While this service is more established than in-flight broadband, usage revenues are still anticipated to nearly double in 2009 to reach almost a quarter of a billion dollars, nearly five times the size of the in-flight broadband market.

However, the compelling demand for Wi-Fi connectivity among airline passengers drives higher growth for in-flight broadband. By 2011, in-flight broadband service revenue will exceed that of direct video broadcast, with in-flight broadband revenues of $761 million.

"The airline industry is desperately trying to better monetize its cabins," according to Frank Dickson, In-Stat Vice President of Research.

"Direct video broadcast services and in-flight broadband services are two compelling ways that provide passengers with a better customer experience while allowing the airline industry to add incremental revenue. It is a true win/win."

In-Stat's market study found the following:

- The majority of direct video broadcast deployments belong to LiveTV, with Panasonic being their largest competitor.

- In-Stat expects that, in later forecast years, IPTV will contribute a portion of in-flight video revenues.

- The number of broadband enabled airplanes will increase from 25 in 2008 to 800 in 2009.

- Airline passengers will generate over $47 million worldwide in 2009. In-flight broadband equipment revenue will nearly double between 2009 and 2013.

- In-Stat forecasts over 200 million annual in-flight broadband connects by 2013, with long-haul connects dominating over short-haul connects.

Marketers Adopt SEO, Microsite Sponsorship

eMarketer posed the question, what's the best way to generate sales online? While the answer may vary depending on the size of your budget, a Forbes study says marketers of all sizes should start with search.

Forty-eight percent of marketers overall said that search engine optimization (SEO) was the "best method" for generating conversions online. More than one-half of marketers with budgets over $1 million agreed.

The next most effective conversion tactic for smaller marketers was e-mail and e-newsletters, followed by pay-per-click and search ads, behavioral targeting and page sponsorships.

For larger marketers, the list of effective online tactics was nearly the same, except search and e-mail were flipped. Pay-per-impression ads were also more effective for larger marketers.

To build, maintain or change brand perceptions required different tactics, however.

For both small- and large-budget marketers, site or page sponsorship and SEO were considered the most effective ways to build a brand online.

Pay-per-impression ads came next on the list for big spenders, while the more budget-constricted focused on e-mail newsletters, pay-per-impression and viral marketing.

Perhaps in anticipation of the end of the recession, marketers are changing their spending priorities in the six months after March 2009 to feature more viral marketing, SEO, behavioral targeting and pay-per-click.

Overall, 57 percent of respondents said they still spend less than 25 percent of their marketing budgets online -- regardless of the fact that online is proven to be more effective.

Note, I've re-launched the GeoActive Microsite Network, to provide new advertising and sponsorship opportunities for marketers in the Technology | Media | Telecom sector who seek a targeted site.

PC Usage in APAC Drives the Market Upside

Worldwide PC shipments fell 6.8 percent in the first quarter of 2009 (1Q09), about 1.4 percent better than expected but still the largest decrease since the third quarter of 2001, according to the latest market study by IDC.

Although volume declined less than expected -- thanks to some positive activity in the latter part of the quarter -- the Commercial sector and key macroeconomics indicators remain weak.

The growth of Mini Notebook PCs is playing a dramatic role in the market. Mini Notebook PC shipments of 5.7 million in 1Q09 were ahead of expectations, but contributed to a decline of 3.1 million traditional notebooks from a year ago.

The impact on shipment value was dramatic, with Mini Notebook PCs contributing $2.2 billion in the first quarter of 2009 while the value of traditional notebook shipments declined by $8.4 billion from a year ago.

Mini Notebook pricing is expected to rise with more robust models, and shipment growth is expected to slow with the release of low-cost, thin-and-light Intel CULV and AMD Congo-based systems this fall. However, the growth of Mini Notebooks to 9.5 percent of total PC shipments (17.3 percent of Portables) in 2009 will help drive shipment value down by 17.7 percent even as volumes decline just 3.2 percent.

Mature markets saw growth drop significantly in the past two quarters, but are expected to stabilize and improve going forward. The United States and Western Europe outperformed forecasts as consumer demand was supported by strong ASP declines that were accelerated by growth in Mini Notebook PCs.

Although 1Q09 was promising, shipments in the United States are still expected to decline by just over 2 percent in 2009 and see less than 1 percent growth in 2010.

Western Europe saw a limited impact in 4Q08, but saw growth disappear in the first quarter and is likely to see further contraction in 2Q09 before stabilizing -- putting 2009 growth slightly below zero while double-digit growth will not return until 2011. Projections for Japan were lowered as 1Q09 activity missed expectations, though we continue to expect low-single digit growth in 2010-2011.

Continuing the trend from the fourth quarter of 2008, emerging markets continue to account for the most dramatic shipment declines. Lack of credit along with continued currency devaluation continued a cycle of shrinking resources for channel financing that severely affected Latin America and Central/Eastern Europe.

Canada, along with Latin America and CEMA combined are expecting 2009 to see a decline of more than 13 percent although the region will see double-digit growth in 2010 as it rebounds from 2009.

In contrast to other emerging regions, Asia/Pacific excluding Japan (APeJ) came in slightly above forecast as government spending funneled money to infrastructure improvements and vouchers to stimulate consumer spending.

China in particular fared better than hoped. For the rest of 2009 PC growth should accelerate in APeJ, reaching near 12 percent for 2010, and leading other regions through the end of the forecast.

Consumers Resist Upgrading Mobile Phones

The worldwide mobile phone market shipped 35 million fewer units than it did during the same period in 2008, and all indications point to that trend continuing throughout 2009.

The mobile phone industry has long been characterized by its seasonal trends, where the first quarter always delivers a sequential decline after a busy holiday season. However, the drop in this first quarter was especially sharp, according to ABI Research practice director Kevin Burden.

"The 255.6 million handsets shipped represented a 20 percent decline from Q4 2008, which was already a down quarter, and a nearly 12 percent decline from Q1 2008."

Shipment reductions are a new reality for the mobile phone market. "The industry and consumers have gone into protection mode," says Burden. "Protecting profitability has led handset manufacturers to produce less and to operators and retail outlets holding smaller inventories."

Consumers are also realizing that many of the features they desire are already in the handset they currently use, and are willing to forego an upgrade until they have more confidence in their own futures.

The Asia/Pacific region, with handset volumes triple that of the next largest region, had been widely expected to feel more than a fair share of pain due its very troubled economic conditions.

However it posted only an 8 percent YoY decline, which was a spot of encouragement. The Latin American market, however, tempered any encouraging news with a reminder of how deeply the recession can cut.

The region had a nearly 28 percent decline in shipments, the largest decline of any region, due in large part to the devaluation of its currencies leading to higher prices of imported mobile phones.

Americans Adopt Pre-Paid Mobile Phones

comScore released a quarterly review of the U. S. prepaid wireless industry based on online visitation and online search referral activity to six leading prepaid wireless sites.

The study showed strong gains in online activity as consumers increasingly use keyword searches t0 turn to cost-effective wireless service alternatives during the current economic downturn.

The combined visitation to these sites grew 37 percent versus year ago to nearly 8 million visitors, representing more than 4 percent of the total U.S. Internet audience.

Growth in the category was driven primarily by MyCricket.com (up 107 percent) and Boostmobile.com (up 105 percent), both of which more than doubled in visitation versus year ago. MetroPCS.com and Net10.com also experienced strong gains, growing 63 percent and 37 percent, respectively.

Although the marketing messages of most prepaid wireless providers target the youth market, prepaid wireless site visitation data suggest considerable interest in the plans among 35-64 year olds.

In fact, the majority of visitors to Net10.com (60.3 percent) and TracFone.com (58.7 percent) were from this older age segment. Even for sites where the majority of visitors were under 35 years of age, such as Boostmobile.com and MetroPCS.com, 35- 64 year olds still comprised at least 40 percent of visitors to the site.

While it is likely that some of this older skew can be attributed to parents purchasing phones on behalf of their children, the data nevertheless underscore the appeal of prepaid wireless beyond the youth market.

In order to understand the marketing factors driving traffic to prepaid wireless sites, comScore also conducted an analysis of search referral activity. The results showed that while both paid and organic search are driving increased referral activity, organic search is substantially outpacing paid search referrals on the whole.

IPTV Operators Adopt OTT for Differentiation

According to the latest market study by MRG, 2008 IPTV subscribers reached 1 million over its last forecast in late 2008, or 21.3 million, resulting in projected subscriber growth of 26.9 million in 2009 to over 81 million in 2013.

Systems vendor combined CapEx revenue plus service revenue will grow from $9.7 billion in 2009 to $25.6 billion in 2013.

Their new IPTV forecast for 2009-2013 is based on very detailed semi-annual analysis that MRG does on individual Service Providers and on a country-by-country basis -- including six IPTV CapEx products broken into 4 regions.

"The relatively strong market in 2008 caused CapEx transactions to flourish through the end of 2008," says Jose Alvear, MRG Analyst.

That anticipatory wave of orders kept vendor pipelines full all the way through 2008, but in Q1/2009, many IPTV vendors reported single-digit reduction in revenues, which is reflected in our flattened 2009 forecast.

One indicator that new subscriptions will remain strong is the Q1/2009 IPTV subscriber growth of 583,000 combined for U.S. Verizon and AT&T compared with 114k new subs added by the two largest U.S. Cable Operators, Comcast and Time Warner for the same period.

Also a signal of new growth is the number of new IPTV Operators in Eastern Europe and the Rest-of-World (ROW) region. The number of Service Providers in the ROW category went up from 64 companies to 84.

Countries like Colombia, Qatar, United Arab Emirates, Montenegro and the Russian federation have seen new growth in their operations, and, the ROW region will be among the fastest-growing market from 2009 to 2013 with a 29 percent CAGR.

As the IPTV market matures, many innovations are emerging, including Service Providers turning to Over-the-Top (OTT) Video applications to supplement their video-on-demand offerings.

Technical upgrades also contribute to growth, including DVRs, High-definition programming, MPEG-4/H.264, and first class system integration. Professional services growth is brought on by stronger regional partnerships of vendors and resellers that continue to move into smaller markets.

Growth in System Integration and Professional Services will also be spurred by the growth of turnkey system sales where all the components are heavily pre-integrated.

Video Game Consoles Enable OTT Adoption

The range of connected consumer electronics devices delivering over-the-top (OTT) video into the living room is growing. Device types include digital media adapters (DMAs), pay-TV set top boxes, Blu-ray player or recorders, HDTVs and media-center PCs.

However, networked video game consoles are currently the most utilized devices for bringing web video to the TV -- and will remain so through 2013. By 2013, over 10.7 million consoles will be used as Web-to-TV mediation devices in the U.S., according the the latest In-Stat market study.

While still at the early adoption stages, the impact of bringing web video to the TV will bring both opportunity and threats to a range of companies in the traditional electronics and TV markets. By 2013, the revenue from Web-to-TV streaming services will grow to $2.9 billion.

"Currently Web video is largely additive to traditional TV revenue streams," says Keith Nissen, In-Stat analyst. "However, ultimately web video to the TV will force a complete restructuring of today's video distribution ecosystem."

Service provider decision makers that are responsible for approving an additional investment in IPTV infrastructure therefore need to reconsider their prior market development strategy, in light of this growing trend.

In-Stat's market study found the following:

- Two separate in-home content delivery networks (CDNs) are evolving in the digital home -- one for broadcast media services (e.g., cable TV), the other for Internet-based broadband services.

- Within five years, the number of U.S. broadband households viewing Web-to-TV content will grow to 24 million.

- Already, 29 percent of U.S. 25 to 34 year olds with game consoles use the devices to watch streaming video off the Internet.

- Video content will be optimized for broadcast or Web-to-TV based on content type.

Why Online Video Sharing is a Social Media

eMarketer reports that a few short years ago, the term "online video" had a different meaning. Clips were downloaded very slowly, and had to be viewed in tiny windows. Sound and graphics were primitive. Clearly, it wasn't a popular media.

But, then came YouTube in the U.S., Dailymotion in Europe and Tudou in China -- video-sharing sites that all had three basic elements in common:

Flash Player technology that enabled instant viewing in the browser, without downloading. Upload capability that made file-sharing with friends, as well as viewers around the world, quick and easy. Embedding code that allowed users to post video clips on their Web pages and blogs.

Suddenly video was an open, consumer-driven platform, with virtually no cost of entry. As a result, online video moved from niche to mainstream, and in the process became one of the fastest-growing media platforms in history.

According to The Global Web Index from Trendstream, with research conducted by Lightspeed Research, early this year 72 percent of U.S. Internet users watched video clips monthly -- making video bigger than blogging or social networking.

According to the survey, 62 percent of U.S. Internet users watched at least one clip a week, a figure that Lightspeed analysts translated into 97 million weekly viewers. By contrast, Nielsen Online pegged the number of U.S. online video viewers in April at nearly 117 million.

That scale of usage would mean online video in the U.S. is now as pervasive as network television.

The age of online video viewers trends younger: 82 percent of teens (16-to-17-year-olds) and young adults (18 to 24) streamed video, compared with 73 percent of Generation X (25 to 34) and 65 percent of older boomers (55 to 64) who said they watched.

Online video-sharing was less common, with only 46 percent of users participating. While teen, young adult and Gen X sharing percentages hovered around 50 percent, the older the Internet users, the less likely they were to send links to videos.

One-half of all respondents shared videos via e-mail to friends and family. Twenty-three percent sent video out to friends on social networks, 21 percent by instant messenger and 14 percent to their friends on video-sharing sites such as YouTube and Hulu.

The most widely used platform for discovering and viewing video online was YouTube, followed by e-mail, music sites, Yahoo! and news sites. Sharing appears to happen mainly among close friends, as 72 percent of video-sharers sent to just one, two or three people. Video sharing is clearly becoming the ultimate social media.

Top-Four Local Content Needs via Mobile

comScore, Inc. reported that the number of people who sought local information on a mobile device grew 51 percent from March 2008 to March 2009.

The mobile browser is the leading access method for seeking local information, with 20.7 million users in March 2009, up 34 percent versus year ago. Moreover, the strongest growth in the category is coming from downloaded applications, which grew 83 percent versus year ago, followed by SMS at 72 percent.

However, despite the attention mobile applications have received from developers, carriers and device OEMs, they remain the least popular access mode for mobile access of local information, with 11.3 million users in March.

A marginally more often used channel for obtaining local information is SMS, with 11.7 million users, and an impressive 72-percent growth rate. Overwhelmingly, though, the preferred mode to access local content remains the mobile browser.

"Given the explosion in application stores and associated marketing efforts, along with the growth in mobile phones using faster data networks, it would not be surprising within the next six months to see the number of people using downloadable applications surpass SMS for the accessing of local information via mobile devices," said Serge Matta, comScore senior vice president.

Among the various local content categories, the number of people accessing online directories has seen the greatest increase during the past year (73 percent), followed by restaurants (70 percent), maps (63 percent) and movies (60 percent).

"The mobile medium is an ideal fit for local directories," said Deborah Eldred, Director, Mobile and Personalization for R.H. Donnelley.

"We have the content to provide customers with the most relevant and up-to-date information to meet their needs while they are on the go. In fact, we have seen a significant increase in queries specific to visiting a local establishment, as people are looking for information about where to eat and what to do when they are out and about."

However, phone directory information usage innovation, and local Yellow Pages applications in particular, has clearly been led by non-traditional vendors in the U.S. market -- such as Tellme.com and Google 411 free voice-activated services.

Wireless Home Network Setup Simplification

A consumer survey conducted by ABI Research has found that while most owners of home networks find their equipment works reasonably well, they would be willing to upgrade -- if that resulted in easier troubleshooting.

The conclusion: there is an opportunity for home network equipment vendors if they can automate some of the commonest diagnostic and configuration tasks. Meaning, just in case you have any doubt, the digital home device usability issue is still a barrier to exploring new applications adoption.

According to industry analyst Michael Inouye, "Although nearly 30 percent of the 1007 respondents to the U.S. consumer survey reported some initial difficulties in setting up their equipment, only 11 percent actually returned products as being too complex."

Most of the problems occurred with wireless setup, suggesting that vendors have an opportunity to make wireless network setup and security a much easier process through software and hardware solutions.

More than half of the survey respondents indicated that troubleshooting software would be extremely or very valuable to them. Automating simple tasks such as hardware resets would be even better.

At present the overwhelming majority of those surveyed use their home networks to provide basic Internet access to more than one computer; printer sharing and (with those under 35 years old) online gaming ran distant second and third.

However that usage pattern -- and the associated setup and maintenance -- will soon become much more complex, as networks increasingly assume the role of distributing multimedia content around the home.

As more mainstream users attempt to connect a PC to their TV set, to stream live online video or playback video on demand, I anticipate that home networking Wi-Fi router vendors who provide support for the optimization of this connection will gain market share.

To date, I've not witnessed any noteworthy marketing differentiation effort -- from a networking or PC vendor -- that specifically targets this nascent consumer demand, and the associated growth opportunity. Tech-savvy friends and family are still the primary consumer support advocates for multimedia applications.

Pay-TV Set-Top Box Demand Peaks in 2009

Shipments of set-top boxes (STBs) are expected to peak this year, at least in mature markets, and then commence a gradual decline. However, the analog TV shut-offs in countries around the world, combined with the strong uptake of high-definition (HD) TV sets, mean that HD STBs will form a growing part of the total market.

HD STBs are expected to account for about 30 percent of all STB shipments as soon as 2010. This is accompanied by a progressive movement from MPEG-2 to MPEG-4 for content delivery.

According to ABI Research industry analyst Michael Inouye, "Closely related to MPEG-4 is a growing affinity for HD boxes over SD. As more HDTVs find their way into homes, the demand for HD content grows in kind. Anticipating this demand some countries and operators have elected to support the more efficient standard up front or to begin deployments of upgraded CPE."

The price points of boxes are converging; MPEG-4 and in some cases HD are getting sufficiently inexpensive that some operators will be providing them to their customers by default.

Some STB vendors feel that demand for standard models will be around for a long time, but some of the infrastructure vendors report seeing a push towards MPEG-4 encoders. So vendors will have to support MPEG-4.

In markets primarily served by digital terrestrial broadcasts where most sales of STBs are retail, especially those with a large MPEG-2 installed base, this means that vendors will have to encourage consumers to switch by reducing the prices of upgraded boxes.

The new report updates ABI's previous STB study. It includes forecast analysis of STBs by platform (CATV, IPTV, DBS, DTT), region (North America, Western Europe, Central/Eastern Europe, Asia Pacific, Latin America, Middle East Africa), compression technology (MPEG-2/4), and shipments of HD boxes (standard and PVR).

In addition the report outlines the aggregate TV household landscape by region and platform.

Service Delivery Platforms are Key to Growth

Infonetics Research released its Service Delivery Platform (SDP) Software and Integration Services report, which tracks fixed-line and mobile SDP software and integration services.

"While the service delivery platform market has not been immune to the current economic climate, operators continue to view SDPs as key investments to ensure continued growth by streamlining how they create and deliver new services," said Shira Levine, Infonetics Research's Directing Analyst.

The primary impact of the economy on the SDP market is a more measured and incremental approach to investments, with large-scale multi-year projects being replaced by more focused solutions with shorter implementation intervals.

Even so, the SDP market is much less affected by current economic conditions than other communications sectors.

Highlights from the Infonetics market study include:

- Worldwide sales of service delivery platform software and integration services are expected to double between 2008 and 2013, when they will reach $4.09 billion.

- Fixed-line operators are accelerating SDP deployments, initially for enterprise VoIP applications, and later to support IPTV and other video applications.

- In the short term, operators will use SDPs to help streamline the creation and delivery of basic services -- including VoIP, ringtones, and streaming video services.

- Later, SDPs will be used to create "mashups" and other Web-based applications to compete with those offered by Google, Yahoo, and other Web 2.0 Internet content providers (ICPs).

- Enhanced content services and content management capabilities, including mobile advertising and cross-network video sharing, will be a key driver behind SDP growth.

- Operators are particularly interested in deploying SDP capabilities that support "app stores" as a wide range of market players prepare their content storefront rollouts.

Will the Demand for PC-TV Tuners Recover?

Demand for PC-TV tuners has fallen off from the 2008 levels due to the worldwide economic recession, according to the latest study by In-Stat. Perhaps broadcast signal reception quality is also still an issue -- that was my prior personal experience with analog tuners.

The market also faces fundamental challenges, including slow consumer demand, increased competition from online television and other programming sources, and lower prices due to a shift from hybrid analog/digital tuners to digital-only tuners.

One hopeful development is that Microsoft's Windows 7 and the new version of Media Center will apparently include better connectivity solutions for PC-TV Tuners.

"Opportunities for growth will be for hybrid analog/digital tuner manufacturers to increase share by lowering prices, or for new entrants to leapfrog the analog and hybrid segments by aggressively targeting the emerging digital-only segments, albeit with lower margins," says Gerry Kaufhold, In-Stat analyst.

I'm actually wondering if there's such a thing as a USB Digital-Only TV tuner that delivers consistently good quality reception on a notebook computer screen -- I'll gladly write a review of a product. Contact me directly if you represent a vendor, and can provide a review sample.

Overall, selling PC-TV tuners is going to be a tougher business going forward. Will the market fully recover? We'll have to wait and see.

In-Stat's market study found the following:

- 2009 unit shipments will see a net decline of nearly 11 percent. Moderate unit growth will resume in subsequent years, driven nearly exclusively by digital-only tuner shipments.

- Worldwide PC-TV Tuner revenue likely peaked in value during 2008, at about $1.4 billion.

- The European region is by far the largest geographic market for PC TV Tuners, representing more than 50 percent of worldwide revenue.

- PC Tuner growth in Notebooks will significantly outpace other segments, which include desktops, retail sticks, and retail add-in cards.

- ATSC M&H mobile video in the U.S. may create significant upside for digital-only tuners.

Why Search Engine Marketing is Growing

According to a joint study by Econsultancy and search engine optimization (SEO) firm Guava, online marketers around the globe -- but particularly in the UK -- are increasingly turning to search engine marketing practices for growth.

eMarketer reports that fifty-five percent of respondents said they planned to raise spending on SEO, and 45 percent said the same of paid search.

In addition, 31 percent of SEO and 32 percent of paid search users said they intended to maintain their budgets.

However, search marketers use paid search and SEO to accomplish different tasks.

In 2008, marketers said that the main objectives of paid search were to capture online sales, generate sales leads, drive Website traffic and enhance the brand.

Regarding objectives for SEO, most marketers said its primary purpose was to drive traffic, create leads, generate sales and brand awareness. In 2009, marketer's perceptions are in similar proportions across the board.

With the global economy faltering, and money in short supply, search marketing is often the tool that marketers rely on most to attract new customers. In addition, SEO offers pluses over paid search -- though its advantages must be built up over time.

"SEO improves organic listings, which Internet users prefer over paid search, and it is cost-effective," said eMarketer senior analyst David Hallerman. "Furthermore, optimization works across all search engines, and an optimized site does not drop off the first results page even when marketer spending slows or stops -- as it can with paid search."

IPTV in France, South Korea and Hong Kong

The bleak market outlook in the last quarter of 2008 did not seem to deter the global growth of pay-TV services. Service operators, especially those in mature high-speed Internet economies -- many of which are in the Asia-Pacific region -- continue to strive towards providing interactive bi-directional television.

According to new pay-TV market data from ABI Research, APAC will continue leading subscription growth, delivering a 37 percent CAGR (compound annual growth rate) over the next three years.

Telco TV in general will grow at an estimated CAGR of 29 percent over the next three years to 47 million subscribers globally by the end of 2011.

ABI Research industry analyst Serene Fong notes that, "By the end of 2008, telco TV usage continued to be concentrated in countries such as France, South Korea and Hong Kong. Massive countries such as China and India are still very much inhibited by the lack of sufficiently broad bandwidth but they are expected to be high growth markets in the years to come."

User experience and individualization is of absolute importance in the telco TV realm. As more operators leverage alternative service platforms (telco TV especially) in a desperate bid to save their dwindling revenues, the fundamental goal is to achieve user stickiness.

And the eventual winners will be those who have a good variety of content, are able to handle user participation, and can aggregate and even reconstruct user content wherever necessary.

As the popularity of telco TV grows nearly exponentially, legacy satellite, cable, and terrestrial TV formats will also witness cannibalization.

However Fong believes that, "They will continue to retain their footholds in their key markets for some time. And we will continue to see overall growth heading north for a while, but it will become more and more constrained."

I believe that the real volatility in the pay-TV sector continues to surface from free over-the-top live TV streaming, and numerous video-on-demand options that include ad-supported full length popular feature films and documentaries.

ICT Industry Historic Market Declines in 2009

For the first time in its history, the Telecommunications Industry Association (TIA) is projecting a 3.1 percent decline in revenue for the overall global Information and Communications Technology (ICT) market in 2009 -- due to global economic conditions.

In the U.S., revenue will suffer a 5.5 percent decline in 2009.

While revenue will remain weak in 2010 -- with a modest 1.2 percent increase -- the longer-term outlook is apparently brighter. Globally, TIA projects a strong rebound for the ICT industry after 2010, citing a 6.4 percent revenue growth in 2011 and a 7.9 percent increase in 2012.

For the U.S., telecommunications revenue is expected to decrease by 6.4 percent in the next two years, but rebound by 14.4 percent during 2011-12. The effects of the current Stimulus Package, which carves out investment dollars for broadband, will enable growth throughout the ICT industry and beyond.

"Broadband will be a driver for recovery in all areas, from healthcare IT to smart grid technology, public safety networks to education, as well as for businesses and consumers," said Grant Seiffert, TIA President.

While TIA was instrumental in obtaining the $7.2 billion for broadband, other funding for energy, health IT and R&D will also spur recovery, especially in reviving some of the many jobs losses.

The sum of increased productivity and revenue amongst all other industry segments whose growth broadband deployment contributes to is often underrated and perhaps immeasurable.

Growing demand for high-volume data applications is driving all segments, say the independent, unbiased analysts at Wilkofsky Gruen Associates who help to develop the TIA Market Review & Forecast.

Despite the current recession, TIA predicts that wireless and business data revenue will grow by 73 percent during the next four years to $110 billion in 2012 from $64 billion in 2008.

Further analysis shows that economic recovery during 2011-12 will be driven by pent-up demand for ICT equipment upgrades.

Growth in data traffic will strain network capacity and stimulate investment; availability of financing will fuel investment; and broadband growth will expand the platform for VoIP and IPTV.

Canada Beating U.S. Broadband Penetration

Worldwide broadband subscriptions will reach 466 million in 2009, representing 1.1 billion discrete broadband users, according to the latest market study by Strategy Analytics.

The total number of broadband subscriptions will surpass 800 million by 2013, implying a 14.6 percent CAGR. DSL continues to be the dominant access technology, accounting for nearly two-thirds of worldwide subscriptions.

Fiber and WiMAX, however, continue to grow share and together will account for over 25 percent of all broadband subscriptions by 2013.

The Asia Pacific region claims 41 percent of all broadband subscriptions, followed by Western Europe and then North America. North America and Western Europe likewise lead in terms of household broadband penetration.

Global penetration stood at 23 percent in 2008, and will reach 44 percent by 2013. The Central and Eastern European Region (CEE) is the fastest growing market, and is expected to grow 28 percent in 2009.

Global Broadband ARPUs will decline approximately 4 percent between 2009-2013, with service revenues reaching $291 billion by 2013.

A challenging economic environment coupled with high market maturity is putting downward pressure on subscriber growth in North America -- Strategy Analytics estimates a slight deceleration for the region.

In 2008 the North American broadband market added 6.7 million new subscribers, representing 9 percent growth over the previous year.

U.S. household broadband penetration is expected to reach 63 percent in 2009, growing to 82 percent by 2013. Penetration is significantly higher in Canada, where 79 percent of households will have broadband access in 2009.

Cable is the dominant access broadband technology in North America, accounting for over half of all household connections. Fiber rollouts by Telcos are gaining momentum, and 12 percent of broadband connections will be delivered via FTTx technology by 2009.

Service revenues for the region will grow from $46 billion in 2008 to nearly $80 billion in 2013. That said, North American broadband services still can't compete with market leaders in the Asia-Pacific and European regions -- on both competitive price and bandwidth offered.

Significant Digital TV Growth in Latin America

New research from Informa Telecoms & Media shows that digital TV will make significant growth progress in Latin America over the next five years. Digital TV households will more than treble in that time -- from 12.2 million at present to 37.1 million by 2014.

Informa discovered that while Brazil and Mexico now combine to account for half of the region's digital subscribers, this will drop to 45 percent in 2014 -- as other countries see their services start to take off.

Adam Thomas at Informa said "While the global economic situation is bound to have some impact, Latin America's economies now appear more robust than they were in the 1990s. We therefore see a positive outlook for the region's TV sector."

Major players such as Telmex and Telefonica continue to invest, which contributes to the upbeat sentiment.

The Informa research found that deregulation in the telecoms sector has encouraged cable TV operators to invest in network improvements, or face the risk of getting left behind. This has created a cable sector that is much better positioned to compete in terms of content and functionality.

Consolidation in the satellite sector has also started to pay off for DirecTV and the renewed confidence in DTH is illustrated by new entrants looking for a piece of the market.

The battle for dominance of triple-play between Telefonica and Telmex is affecting all sectors of the broadcast TV market.

According to Thomas, the two giants are exploiting opportunities created by the lack of investment from the pay-TV incumbents. They are investing heavily to increase their presence across several platforms, including satellite, cable and potentially IPTV.

The fully-updated Pay-TV research report is published by Informa. It analyzes the region's top 20 markets -- including Brazil, Mexico, Argentina, Chile, Venezuela, Peru, Puerto Rico -- as well as the U.S. and Canada.

New Telco TV Investment Hits a Reality Wall

The IP digital set top box market grew 55 percent in 2008, but apparently such high growth will not continue, according to the latest market study by In-Stat.

Many telcos have already launched digital pay-TV services, so there are fewer new customer prospects. In addition, the economic climate is sapping investment in new telco TV systems.

"Established telco TV providers like France Telecom, AT&T, Free, British Telecom, Deutsche Telekom, and China Telecom provided much of the subscriber growth that drives the demand for IP set top boxes," says Michelle Abraham, In-Stat analyst.

In-Stat expects that this situation will continue in 2009 and 2010. However with few new deployments, unit shipments of IP set top boxes will see only slight increases in 2009 and 2010.

In-Stat's market study found the following:

- More than 50 percent of 2009 IP set top box unit shipments in Western Europe will have hard disk drives.

- Among the key technology trends are improved power management and support for 3D graphics, multiple codecs, and open software platforms.

- The average bill of materials for an HD IP set top box will fall below $50 in 2010.

- Among the semiconductor competitors providing solutions for the IP set top box market are Broadcom, CopperGate, Intel, NXP, Sigma Designs, and STMicroelectronics.

- Motorola held onto the top market share position in IP set top boxes in 2008, but its market share slipped from 2007 as Cisco ramped up shipments.