Monthly Archives: January 2014

The Many Takes on the Network Neutrality Decision

Network_neutrality_poster_symbolEarlier this week the DC District Court of Appeals struck down most of the provisions of the FCC’s Net Neutrality rules. There are dozens of web articles and I am not going to repeat a detailed summary of what that decision said. In short, it said that the FCC messed up years ago when they decided that the Internet is an information service and that common carrier rules don’t apply. But the net neutrality rules relied on looking at the Internet as if it is a common carrier service. A lot of legal experts pointed this out when the net neutrality rules were issued and they were right.

What I find interesting is how the press has reacted to this ruling. I went to a Google search and I read dozens of articles about the ruling. There are not too many really controversial issues in the telecom industry and for the most part our press mostly looks at technical and business issues. But it seems that the net neutrality ruling hit people in a more visceral way. Since every article author relies on the Internet they all had a very personal reaction to the ruling and so the reactions to the ruling are all over the board. It is the range of reactions that I find so interesting:

  • The Court itself said that they agreed that their ruling could have a chilling effect on future innovation and if the carriers were to strike sweetheart deals with large content providers on the web it might disadvantage start-up companies who cannot afford to pay to get preferred access. Lots of articles took this perspective.
  • Public interest groups are massively alarmed over the ruling and one article went so far as to say that this ruling marks the first day of the end of the Internet. Most of these reactions were not quite so dire, but in general these groups assume that the ruling means that the large network providers like Verizon, AT&T and Comcast are going to use the Court’s ruling to quickly change how the Internet functions. They think that these large companies cannot resist the urge to monetize the ability to discriminate among content providers and that they will use this power to choke and slow down internet traffic providers that won’t pay them a toll.
  • Legal experts took a very different tact and most of them talked about ways that the FCC could fix what they have done. Almost universally they opined that they saw this coming (and most of them did). They say that the FCC screwed up years ago when they declared the Internet to be an information service and that the only way to fix this is to somehow get the Internet back under the common carrier rules. As a whole the legal opinions were pragmatic and not particularly politically biased or emotionally charged.
  • And there were political opinions. There are those who opined that the new FCC chairman Wheeler is not entirely thrilled with the idea of net neutrality and that he would put a brave face on the ruling but not fight hard enough to overturn the Court ruling. Others thought just the opposite and assumed that the FCC would fight this ruling to Supreme Court while working to craft a new approach to fix the problem.
  • And finally there were the business prognosticators who took at a shot at predicting what this would mean to the business world. These opinions varied widely. At one extreme was an opinion that the network owners would do almost nothing so as to not make the FCC enact a different set of more effective rules. On the other extreme were those business analysts who assumed that the carriers already have a list of changes they will make due to the ruling and that we will see a lot of announcements soon of deals between network owners and large content providers. I also saw a number of predictions that once the cat is out of the bag that the FCC is going to have a big practical challenge to undo the results of this ruling.

I don’t have any better crystal ball than anybody else. I have no idea how hard the FCC is going to fight this. I agree that the only practical solution is to somehow bring the Internet under the common carrier rules. But that is going to be a hard thing to do. I also think that the carriers will start implanting some arrangements that break the spirit of network neutrality. AT&T had announced a plan to do that just a few days before the court ruling. Comcast and Verizon had proposed arrangements in the past that went against the grain of network neutrality. But I can’t see this as the beginning of the end of the Internet. If the big companies abuse this too badly they will give consumers the impetus to look for providers who don’t screw them. So the big companies will find ways to make money off of this, but they won’t be the total demons that are feared by the public interest groups. It’s going to be interesting to watch and I will report back on this from time to time.

Google and the Smart Home

Nest_Diamond_ThermostatGoogle made a bid for $2.3 billion to buy the smart home appliance maker Nest Labs. In case you have never heard of this start-up, you can see their website here. Nest Labs currently makes smart thermostats ad smoke detectors and has plans to make a lot of other smart home devices.

From a pure business perspective it makes sense for Google to get into the smart home business. After all, John Chambers of Cisco has projected the industry to be worth a cumulative $19 trillion dollars through 2020. That is a huge number and there is a lot of money to be made in making the devices that will be in people’s homes.

But Google is an information company more than a bricks and mortar company, so one must ask why they want to get into a business that sells household appliances? The answer is obvious in that devices that are part of the Internet of Things do not just perform functions around the house. They are connected devices, and an IoT thermostat does not just control your homes temperature, but it’s connected to the web so that you are able to communicate with your thermostat from anywhere. Looked at from that perspective every smart home appliance is also a data gathering portal.

Google already gathers more data about people than anybody else. To the extent you use Google products they know what you search for on the web. They know who you write emails to and what you say in them. They know what you do with your android smartphone including where you are 24/7. They know the games you play and what makes you laugh and cry. Google is the first step towards the big brother that George Orwell warned us about.

By getting into the IoT device business Google is going to multiply its data-gathering capabilities many fold. They probably don’t even know yet what they are going to do with all of this extra data, but they are certainly are going to be able to profile you even better than they do today. They will know how you move around your home or what temperature you keep your various rooms. They will know you are up with insomnia at 2:00 in the morning. As Nest Labs branches out into more devices they might know your blood pressure and body temperature and red blood cell count throughout the day.

All of this extra knowledge is going to allow Google to be better at their core business, which is selling data about you to advertisers. Google is going to be able to understand things about you that you may not even understand about yourself. They will be watching little details about people’s lives 24/7 and they will be able to profile you in amazingly accurate detail. They will often know what you want before you know it. What more could an advertiser want?

I read one article today that said that that the government should block this sale for antitrust purposes. But I have to be honest and I think that ship has already sailed. Google already knows an incredible amount about people. And Google doesn’t have to really buy an IoT device company to gather IoT data. They can certainly find other ways to get that data such as creating the software platform for others’ devices.

But this purchase gives them a giant laboratory to play around with to see just how useful such data might be. I must say, at least for now I am a lot less nervous about Google watching my smart thermostat than I would be if they were buying a firm that makes medical monitors. But there is no doubt that someday they will find a way to get that too.

I have read many experts who have said that people have already lost the privacy battle. Unless you are ready to move to a log cabin in Montana you are being monitored and profiled constantly today. And every year the large data gathering companies are going to know more and more about you. Some people aren’t bothered by this. I have very mixed feelings about this about this, but I might even come to like this if Google can tell me every day where I left the damned car keys.

The FCC and State Laws

FCC_New_LogoThe DC Circuit Court of Appeals issued a long decision yesterday that says that the FCC’s rules on Network Neutrality were unenforceable as written. A large number of experts saw this coming and the general belief in the industry was that it would eventually be overturned. I will talk more about this topic in a later blog.

But the court order had another interesting discussion that could have a big impact on fiber deployment. Here is the Court’s decision. In paragraph 706 the court option says:

The statute directs the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing . . . price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”

What this paragraph means is that the Court thinks that the FCC already has the regulatory authority to get rid of state-imposed barriers against competition from municipal networks. There are a number of states that have created barriers against municipal competition over the years. Some large states like Texas and Florida basically have an outright ban against municipalities building fiber networks for commercial purposes. Other states instead have restrictions that make it hard for a municipality to get into the fiber business on one way or the other.

As my blog showed yesterday there are large swaths of the country that have below average Internet speeds due to the incumbent providers not building or upgrading networks that can provide fast Internet. And yet, there are hundreds of communities that are clamoring for faster Internet. Roughly 150 communities have already built a fiber network to serve business and residential customers. Hundreds more have built networks that serve government locations and sometime larger business customers.

I have seen numerous surveys where 70% or more of the households in a given community want faster Internet. Many towns, particularly smaller rural ones are falling onto the wrong side of the digital divide. They live in areas where DSL is still only delivering 1 – 3 Mbps speeds and where cable networks have not been upgraded to DOCSIS and newer technologies.  And in these town whatever Internet they have generally doesn’t reach very far outside of town borders, so people within a short distance from town are still stuck today with dial-up or satellite Internet.

While the Courts opinion yesterday is not going to change any of the state laws, it might encourage the FCC to tackle this issue again. It’s common knowledge that the Internet speeds in this country are below average, and it’s finally dawning on a lot of people that Internet networks are being built in a patchwork manner, with some places with blazingly fast speeds and others stuck with decades-old technology.

I think by now that it’s pretty obvious that some incumbent providers are not ever going to make the investments in smaller towns to upgrade the networks. So people in these areas are going to fall further and further below the national average Internet speed, currently at around 18 mbps download. And for those communities this is dire. We tend to think of fast Internet as mostly a tool to watch movies online. But it’s easy to forget that fast Internet is needed for a lot of daily functions. For example, many college courses are now offered only online and somebody on a slow connection is shut off from getting college credits in this way. So much of what we do has now moved to the Internet, and many sites that we all take for granted every day are nearly non-functional on a slow Internet connection.

People with slow Internet are moving into the slow lane of our economy. So one can hope that the FCC will be emboldened by this language from the DC Circuit Court of Appeals and will tackle this issue again. They looked at the issue in 2004, but the FCC was not even sure then that they had the authority to do this. Hopefully this will give them a reason to look at it again. There are a whole lot of people who live in places that will never have fast Internet unless their local government steps in to fill the gap. It’s nice to think that commercial companies ought to do this everywhere, but that just is not the reality.

Broadband Map of the US

broadband-by-congressional-districtConsider the following map of US broadband. This map was compiled by Gizmodo using data on broadband usage gathered by Ookla. This is a rather different map than the official US Broadband Map that is generated by the FCC. The official map uses data that is self-reported by the carriers. However, this map has been created by sampling and pinging actual Internet connections. Ookla owns speedtest.net and tests millions of connections from all across the country and at all times of the day.

This map is at a fairly high level and is shown per congressional district. But more detailed maps are available at the state and County level.

broadband-by-congressional-district

This map shows that there is a wide disparity of broadband speeds around the country. One surprising finding to me is that the average Internet connection is now at 18.2 Mbps download. The map then goes on to show those areas that are faster than average in blues and slower than average in reds. The 18.2 Mbps number is faster than I expected and goes to show that carriers around the country have been increasing speeds. This is certainly faster than the speeds that have been reported by other sources.

When you look deeper than this map at the broadband statistics you see a lot of what you would expect to see. Urban areas generally have faster broadband than rural areas. And the Verizon FiOS areas have much faster broadband than other parts of the country.

And this map shows some areas with fast broadband that might surprise people. For example, North and South Dakota have faster than average broadband. This is because the states are largely served by independent telephone companies that have built fiber into small towns and rural areas. And central Washington has some of the fastest broadband in the country thanks to several municipal networks that have built fiber-to-the-home.

One thing the map doesn’t show, at this high level, is that there are pockets of fast Internet scattered in many places. There are FTTH networks built in many small towns but these towns are not large enough to skew the data for the larger congressional districts shown on this map.

One state with high broadband is Florida, where I live. I have speeds available up to 104 Mbps from Comcast. The map for Florida shows what the cable companies are capable of and it’s a shame they have not improved their networks in more places to be this fast.

Ookla reports that the fastest town in the US is Ephrata, Washington with an average download speed of 85.5 Mbps. Second is Kansas City at 49.9 mbps. One would assume that with gigabit service that Kansas City will become the fastest place as more people are added to Google’s fiber.

One thing the map shows, is that an awfully lot of the country is below the average. Ookla reports that the slowest places are Chinla and Fort Defiance in Arizona which both have an average speed of less than 1.5 Mbps. These towns are within the Apache reservation and many native American towns are woefully underserved. The map shows large swaths of poorly served areas like West Virginia and Kentucky in Appalachia, like north Texas and Oklahoma, like Wyoming and Montana, and Maine.

I know at my house I have a 50 Mbps cable modem service and to me it feels just right. It allows us to watch multiple streaming videos while also working and using  computers for on-line gaming. I just moved from a place where my speeds would bounce between 10 Mbps and 20 Mbps and I can see a big difference. In my line of work I talk to people all of the time in rural areas who are still stuck with only dial-up or satellite as their broadband options. I know I could not do my job from such areas. These areas probably are not even showing up on this map because people who have connections that slow are probably not doing speed tests very often. They know they are slow.

The good news to me from this map is that the average speed in the US is up to 18 Mbps. But the bad news is that there are so many large areas left without good broadband. We still have a lot of work to do.

 

 

Sponsored Data . . Huh . . What is it Good For?

Internet_Explorer_e_and_Nuvola_red_XAdmit it, your mind finished that headline with ‘absolutely nothin’. And rightfully so. AT&T Wireless announced last week that they are starting a new program they are calling Sponsored Data. This is a plan that let’s content providers pay for data usage for their customers, and any data used by a sponsored plan would not count against their data caps.

Of course, this announcement came along with the promise that this does not violate Network Neutrality. In fact, AT&T swears that they are big fans of Network Neutrality. Nothing could be farther from the truth. You know the big network providers have always wanted to get into the revenue streams from content providers. After all, they spend a lot of money always upgrading their networks to be faster and each time those nasty content providers find content that makes customers use the new bandwidth. It must be very frustrating to be a huge network owner.

Of course this idea violates Network Neutrality. One has to wonder how long the AT&T marketers had to work to spin this to sound like a good idea. And they have done so. What they want to do is to let large app providers pay for the bandwidth for customers who use their app. What customers isn’t going to think this is a great idea?

But it’s a dreadful idea. This is exactly the kind of scheme that Network Neutrality is supposed to stop. In reality, under this plan, large wealthy content providers will pay AT&T a big fee to cover the bandwidth that customers use for their apps. This will let them get even more customers, at a cost. But this idea will have two consequences. First, a handful of large companies will do this if they believe it will get them more users. Because user is what creates value on the Internet. The more faces you have, the more billions a company is worth.

But the corollary of this is that small start-up companies won’t be able to afford this. And so the next big app may never get off the ground when competing with companies who can afford the sponsor fees. Over time, getting content providers to pay for bandwidth is going to kill innovation and stop the next generation of companies from getting started. And that benefits nobody.

It’s not like the wireless carriers like AT&T aren’t already getting a fortune for their data. The US already has some of the highest data prices among developed nations and cell phone data is by far the most expensive data in the US. So cellphone companies like AT&T are already gouging their users for their capped data plans.

There is no doubt that customers would like this, at least at first. After all, who wouldn’t like playing the newest game on somebody else’s dime. But we all know that programs and apps on the Internet come and go quickly and over time all users will suffer from lack of new content and new content providers.

It’s also pretty easy to envision that if this is allowed to stand that it won’t be too many years when only large ‘sponsors’ are expected to pay for their users’ data, but that AT&T will have their hand out to all of the app providers on the web.

The whole point of Network Neutrality is to not let content providers and network owners conspire to make some content preferred over others. Because once that barrier is broken then the Internet will stop being a source of innovation and will become the playground of a handful of large wealthy companies who will control the content. The big carriers come up with some scheme to get around Network Neutrality every few months and this is the latest. It’s quite clever, but it can’t be allowed to stand.

Don’t Be the Big Guys

Hurricane_Katrina_August_28_2005_NASALarge telco and cable companies took a pretty good beating in the press in 2013. There were tons of articles that don’t present them in a very good light. For all of my clients and friends in the industry who are not these large companies, I think it might more important right now to show your customers why you are not like the big guys.

Here are just a few things that made headlines this year:

  • Verizon said they would not replace the copper on Fire Island and parts of New York City that were destroyed by Hurricane Sandy and wanted customers to instead use cell phones.
  • AT&T told the FCC in a filing that they were planning on ditching ‘millions of access lines’ and wanted to transfer rural areas to cellphone-only.
  • The large ISPs, both telcos and cable companies came in at the bottom again on the national customer service satisfaction polls that measure the companies that the public most dislikes.
  • Almost every large carrier has been accused of handing over all of their telephone and email traffic to the NSA.
  • Cable rates had continued dramatic increases everywhere.
  • It was reported in California that telephone rates have nearly tripled since they were deregulated in 2008.
  • Verizon customers have accused the company of pressuring them to convert to FiOS and then not having access to older copper products.
  • All of these large companies announced record profits.

There is such a widespread dislike of these companies that we need to be careful that the dislike of them doesn’t wipe off onto the rest of us. In large cities many customer talk about holding their nose and picking the incumbent they dislike the least.

Unfortunately, some of my smaller telco clients have policies in place that also don’t win them any love in the marketplace. As an example, I ran across one company this year who would only accept customers who would pay with direct bank debit. I found another client who would only let somebody reconnect after being disconnected by coming in live with cash or a money order. I suspect many companies have policies that are not customer friendly. In the long run any such policy is going to cost you revenues and profits.

It’s easy to understand how such policies get started. Perhaps a company was having a high level of bad debt. But you can’t punish all of your customers for the behavior of a few (and in fact, you really shouldn’t punish anybody). I know personally that if I had to bring cash into my telco in person that they would never see me again, and I can’t be unique in this.

I think the constant bad headlines about telecom companies probably paint us all in a bad light. So I would advise that you take a fresh look at your company and figure out how you are going to let your customers know that you are not the same as the big guys. You may assume they know this, but these is a very good chance that they think of you just as the phone or cable company and that over the years you have done something to annoy many of your customers.

So take this new year as an opportunity to think about how you tell your customers who you are. Certainly you can always tell them with your actions, but it never hears to remind them in other ways. So what do you want your customers to most know about you? Figure out a way to get out that message.

Always More Bandwidth

UHDTV_resolution_chartNetFlix has announced that they will be shooting the second season of ‘House of Cards’ in ultra HD. This is a video technology that uses over 4,000 pixels per frame. Obviously this is going to result in really amazing picture quality.

But this is also going to mean a big increase in the bandwidth needed to deliver the show across the Internet. SONY is working on TV that can display this new technology and they estimate that it is going to require about a 15 Mbps streaming download in order to view an ultra HD video without interruptions. And long before TVs are ready to view this it’s going to be available on computers and tablets.

This is going to increase the pressure on networks to increase speeds yet again. There are a huge number of households in the country who can’t get 15 Mbps downloads. But even a household who gets 15 Mbps download speeds is going to have problems streaming this big of a stream. We all know that the amount of bandwidth that comes across an Internet connection varies constantly, and thus somebody who has a 15 Mbps data connection has that speed sometimes, but often has less than that.

Plus, households today routinely are using their Internet bandwidth for multiple functions simultaneously, and while one family member is watching ‘House of Cards’ it is likely that there are other family members who want to watch some different video, play a game, browse the Internet, offload data from a cell phone or make a VoIP call.

I am going to be the first to say that many network providers have worked hard over the last few years to increase their bandwidth. Cable companies have converted to digital to free up bandwidth formerly used for TV channels. DSL providers have gone to more bonded pair DSL and have also moved DSLAMs closer to homes.

But the unfortunate truth for network providers is that every time they increase the bandwidth available on their networks, the world finds a way to use the new bandwidth, and usually in short order. There is no end in sight of this escalation. Looking out just a few years it’s easy to see even more uses for the bandwidth in our homes. Modern security alarms are putting ubiquitous HD video cameras throughout the home that can be viewed remotely. Multiple companies are working on medical monitoring products that will constantly monitor our health. More and more devices in the home are being made smart and will be integrated into the Internet of Things. And there is already an 8,000 pixel ultra HD video standard on the drawing boards.

There is a move in the country today to create gigabit communities. This means communities that are capable of delivering 1 Gbps download speeds to homes and businesses. It is really hard to think of enough uses today to fill up a gigabit of capacity. But it is not a big stretch into the future to look at homes routinely needing wanting 100 megabits, 200 megabits and more.

It’s easy to forget that it was just back in the 90’s when we were all using dial-up Internet that got 56 kbps bandwidth at best. Homes have grown from that tiny trickle and twenty years later it’s not hard to find homes that need 50 mbps to function smoothly. That is a thousand-fold increase in bandwidth over twenty years. And we are nowhere close to the end game.

In the not too distant future we are going to routinely need to be delivering more than 100 Mbps. That is going to require fiber networks or cable networks that have been converted to a full digital capacity including IPTV. Both of those networks will provide the capacity to grow to a full gigabit. After that speed we probably exhaust the capacity of coaxial cable and ultimately everything is going to have to be fiber.

Communities that have fiber today are the ones who are not going to get throttled as the bandwidth needs continue to grow. The need for faster bandwidth is growing so rapidly today that cities that look to have good bandwidth today – say 15 mbps to 30 mbps networks  – are going to look very slow in five years. Network providers who are doing anything other than fiber are going to be constantly frustrated as people always want more bandwidth.

Lessons to Learn from Google

GooglelogoGoogle has been one of the most successful companies in the US over the last decade. And their success is not random or lucky; they do some things that all companies can learn from. Obviously a lot of Google’s success comes from their size and market recognition, but there are a lot of things that they do right that lets them continue to thrive. Every telcom in the US ought to look at the following traits of Google and think about how you can integrate these ideas into your company.

Keep It Simple. Google has always strived to boil every product they have down to the simplest presentation for customers. It started with the Google search box which was nothing more than an empty square and consumers quickly got it. But they do this with other services as well. In Kansas City they sell very high speed data and two cable TV options. That’s basically their telecom portfolio. I’m not suggesting that we all limit our product line to just two things, but rather than you consider making your products as easy to use as possible for your customers.

Measure Performance. One thing Google always does with any product it launches is to gather as much data as possible about how the product performs. They wants to know why and how people use a product. They want to know what people like and don’t like about it. In order to emulate this trait a company has to go beyond simple customer satisfaction surveys and talk to customers in detail about how they perceive your product and your company. If a company as large as Google can know how their customers are using their products it ought to be possible for companies in smaller markets to this even better.

Innovation. Google is never satisfied with any product and they always are poking and prodding and seeing if they can make things better. Part of this is due to the last item above where Google takes customer feedback into consideration. But if you are going to copy Google you are going to want to always be kicking the tires on what you are doing so that your products don’t become stale and inflexible.

Empowers Employees. Probably the one single trait that Google has done is to empower employees to bring them new ideas. They take this to a larger extreme than many companies can afford and they give employees the opportunity to spent 20% of their time exploring projects that are outside their main focus. Employees are not required to do this but many of them take advantage of this and have been the driver behind many of the new Google products. Every company has the ability to empower your employees to make and implement changes that can make the company better.

Willingness to Admit Failure. Google does one thing that many companies are afraid to do. Google is ruthless about admitting failure and they ruthlessly eliminate products that are not profitable. Without slipping into too much of an adage, companies need to know when to fold ‘em.

Satisfy Customers. Google is really good at satisfying customers. They elicit feedback and they really listen to what their customers tell them. Every company can learn this simple lesson – give your customers what they want and you will thrive.

Do You Hadoop?

Hadoop clusterOne of the big area of IT growth is in providing solutions for big data. Big data is defined as any data set that is too large to conveniently compute with traditional methods. The breakeven of what constitutes big data gets larger each year as computers get more powerful and today traditional computing can handle up to a few exabytes of data.

However, many computing problems have much larger data sets and the field of big data was formalized as techniques and technologies to handle big data have been developed. Analyzing big data sets is now big business and a report by the McKinsey Global Institute estimates that the worldwide market for big data will be $32 billion by 2017.

What are some of the places that big data has a practical application today?  The most obvious are the social networking sites where companies like Facebook and Linked-In are faced making sense with monstrously large amounts of data. Apple’s Siri is based upon big data. Mining big data for marketing purposes is one of the hottest uses big data and there is a whole new field called consumer genomics is trying to understand consumer behavior through application of big data techniques.

Of course there are the more traditional sources of big data in such areas as weather analysis, astronomy, particle physics, oil exploration, medical diagnosis and genetics that require looking routinely at massive data sets. And just starting is probably the biggest future use of big data – the Internet of Things – where ubiquitous sensors in the environment are going to spit out huge amounts of constant data.

The business of big data has expanded so quickly that some large corporations now have a chief data officer. There are numerous industries that can benefit from manipulating and making sense of big data sets. The Obama administration announced the Big Data Research and Development Initiative in 2012 to explore how using big data could make the government more efficient. I suspect the NSA beat them to the punch a few years earlier.

There are a number of different techniques used to analyze big data. The most common one so far is to use a series of small servers to look at chunks of the data rather than to try to process it all on one large computer. There have been arrays of tens of thousands of individual blades used in the manner in a few applications.

In 2004 Google published a paper called MapReduce that discussed using a distributed architecture and parallel processors to handle large amounts of data faster. In this architecture the data queries are ‘mapped’ across multiple processors. The results are than gathered back from each processor in a ‘gather’ step. The Google effort was followed by an Apache open source project named Hadoop. Hadoop loops are still a fundamental piece of many of the big data techniques used today.

Probably the most visible result for most people of big data is going to be in targeted advertising and the use of personal assistants. Who has not looked at a product on a web site and then seen advertising for similar products pop up all over your web and social sites? Advertising is getting very personal and routine ads aimed at just you are right around the corner.

Some people are familiar with personal assistants from using Apple’s Siri. But future assistants are going to be far more sophisticated and will learn you over time. People will become personally integrated with their own assistant and having a constant computer companion will change the way that most people live.

Some Telephone Statistics

Fuld-modell-frankfurtSince it’s the start of the New Year I thought I would take a look at the most recent statistics that have been released for the telephone industry The U.S. Department of Health and Human Services recently published the latest Wireless Substitution Report which looked at household penetration rates for landlines and cellphones. This seems like an odd branch of the government to be tracking telephone penetration rates. But this agency is tasked with tracking child poverty in the country and they began asking questions about telephone usage years ago because they were concerned that their normal way of doing telephone surveys was becoming inaccurate.

And they were right. I wrote a recent blog talking about how surveys done to only landlines are no longer statistically valid. And this latest report shows this to be the case. It shows that landline use in general has continued to decline. But it also shows that this decline is not across the board.

For example, the study summarizes the percentage of people living in wireless-only households for two categories – those with at least one child under 18 in the home and those with no children. In every state the percentage of wireless-only households is larger for families with children than for those without. And the difference are significant. For example, for Alabama (the first state on the list) there are 13% more homes with children that are wireless-only (47% versus 34%).

This big difference means that if you conduct a survey using landlines you are statistically much more likely to be calling homes without children. And that is very likely going to slew your results for any survey that might be affected by having kids in the house. For example, if you are asking about broadband, homes with kids are generally the ones who need the most bandwidth.

It’s interesting to see how the wireless and wireline penetration rates vary by state. For example, there are a few states where the percentage of families who are wireless-only is relatively high like Mississippi (59%), Idaho (58%), and Arkansas (57%). But there are also states where homes with children still have landlines. Consider the wireless-only penetration rates for homes with families for New Jersey (20%), Connecticut (21%), Vermont (23%) and New York (23%) and Massachusetts (24%). While this report doesn’t report on the correlation of these penetration rates to household income, it looks like the more wealthy states still have more landlines than poorer states.

There is also a difference in wireless-only homes between urban areas and rural areas. In a number of the states the survey looked deeper at the penetration rates in certain urban areas, and in almost all cases there are more wireless-only homes in urban areas than in the state as a whole (meaning that the penetration rates for wireless-only must be lower in suburban and rural areas). Some of the urban areas have a very high wireless-only penetration such as Dallas (63%), Montgomery (57%), Nashville (56%) and Detroit (54%).

The survey also breaks down homes into several categories of telephone usage – wireless-only, wireless-mostly, Dual-use, landline-mostly, landline-only and no telephone. These statistics should worry anybody who builds a business plan off selling a lot of residential landlines.

First, the number of homes with no phones is still at 1% – 2% in most states as it has been for decades. But the number of households that have only a landline is around 10% in most states with a few places at half of that. The lowest landline-only penetration is in the twin cities in Minnesota where only 3.2% of households only use a landline.

But what is probably most striking from the report is looking to see how many homes have a landline at all. In the tables the percentage of homes that have a landline would be those that are not wireless-only who have a phone of some kind. There are states and cities where less than half of homes still have landlines. For example, in Arkansas only 48% of homes have a landline. In Idaho it’s 45%. In Dallas it’s only 42%.

Of course there are still places where most homes have landlines such as in Connecticut where 79% of homes still have a landline. But for a lot of the country the percentages of homes with landlines has dropped significantly over the last few years. I look forward to seeing these same statistics in another year or two. These numbers are based upon 2012 surveys and it’s likely that the numbers are even lower than shown in this report.