If the authorities remove restriction on live broadcasting, IPTV providers Hanaro Telecom and Korea Telecom plan to purchase $200 million worth of IP STBs together with LG Dacom in 2008. The deregulation to this effect is expected sometime in May this year.

The overall investment amount for IPTV is a whopping $15 billion that includes $10 billion for overall network upgrades and IPTV equipment purchases of about $350 million. IP STB is obviously biggest piece in the equipment purchase. The commitment by the companies to invest may speed up the expected deregulation which allows the IPTV providers to offer all types of broadcast content including live TV.

There is a somewhat similar regulation in Japan where IPTV providers (unless they are cable TV licensees as well) are not allowed to offer live TV. As in Korea, these Japanese providers are offering Over-The-Top TV (OTT TV). OTT in Korea and Japan have a collective subscriber base of over 1 million.

You have introduced CDMA Femtocells. What is the addressable market given that it only works on CDMA networks?

CDMA operators control some 15% of the mobile handset market. But in the US, 60% of all users are CDMA. So the majority uses CDMA. Moving forward, most operators will evolve towards LTE standard. The next Femtocell that we will launch will certainly be an LTE base station.

Among the CDMA operator customers you have, what level of interest have you seen in Femtocell?

Tremendous interest. RFPs are coming out from all the major tier 1s and tier 2s. We have been responding to RFIs on a regular basis over the last one year.

What is happening with Sprint’s femtocell trials?

Sprint began trialing the technology last year, and now offers femtocells in Denver, Indianapolis and Nashville. The company announced when it began the trials that it planned to make the offering nationwide during 2008, but hasn’t yet announced specifics.

Several operators are also reportedly moving away from the softswitch architecture. How do femtocells fit into that move?

Those who have been in VoIP industry since long know that Jeff Pulver has been one of the driving forces behind this industry in its early days. These people probably also know that the future of VON shows is in trouble because Pulvermedia has messed up with its lender/investor TICC. What I thought would be a good idea today is to put Pulver’s contribution in perspective.

I came across some emotional posts and comments on blogger sites. Hard to imagine a tech guy stirring up emotions! You are going to see comments on the blogs debating whether Jeff Pulver is a nice guy or not. Does that really matter sisters? I have had a few interactions with him and I can tell you that I found Pulver rather crude. However I have over the years learned to draw the line …. I am glad to be capable of separating attitude from the equation. I will give him credit where I feel it is due. I once tried to list the ten most influential persons in VoIP history. Each time I shortlisted the candidates, I could not get rid of Jeff Pulver’s name. In self-protest I abandoned the idea of writing such a series on this site!!

We are rather late on the 4Q07 update. So I will keep it very brief. IPTV Set-Top boxes are the main revenue generators in IPTV equipment segment. 1.8 million IP STBs shipped in 4Q07 generated an estimated $202 million in revenues. Motorola leads. Other significant market leaders were Amino and Sagem.

IP STB generates more than the combined revenues of IPTV middleware-security-encoder-vod, all put together. So if you have connections in Taiwan and China, that is where most of the STB manufacturing action is talking place.

The Communications Chip market - which we segment into Broadband, Cellular, 802.11x/Bluetooth, VoIP, Optical, and General Networking - generated estimated $36.6 billion in the year 2007. That revenue was generated by shipping an estimated 3.73 billion chips during the year. The analysis comes from our annual chip report, Global Communications Chip Market 2008, published today.

Texas Instruments leads the market earning around $6.6 billion and thus holding 18% of the communications chip market share. Other leaders in the market include Freescale, ST Microelectronics, Broadcom and Qualcomm. Collectively the top 5 chip vendors had revenues of about $21.3 billion which accounted for 58% of the market revenues.

Broadband and cellular chips were the major contributors of revenue to the overall Communications Chip market. Broadband contributed 22.6% of the total revenues while 21.7% were contributed by the chips consumed by cellular devices. Within our segmentation, Optical Networking chips contributed the least i.e. $1.4 billion of the total communications chip revenues for the year.

During the year, communications chip companies were focused on making their chips feature rich, striking a balance between size optimization and increasing power, and producing multifunctional chips while containing the costs. While the long term migration plans are yet to be ironed out several startups are taking the opportunity to serve the niches and alternatives.

TOC of the report can be accessed here.

The name iPhone conjures up images of early internet telephony. One of the earliest products made by Vocaltec was named iPhone. I am not sure how the name changed hands from Vocaltec to Cisco to Apple but it would be nice to give iPhone its original meaning. And that is what some of the smart VoIP developers will be doing this summer.

One such developer, Jajah, with a hip Bollywood name and a tremendous following at iLocus, has derived great encouragement from its callback application that it customized for iPhone users a while ago. The company is now developing a blended VoIP-Callback client for iPhone.

True to the great North American tradition, the press release is out well before the guys start work on the product. In the meantime, Asian developers are wondering why their bosses stack up their press releases for the Hereafter. But jokes aside, Jajah has already developed a native mobile VoIP client for an MVNO called EMobile. The company delivered Windows Mobile 6 based native VoIP client which now ships pre-installed with all Sharp EM One Alpha devices. It seems that all the technology is in place, and Jajah is re-designing the same for the Apple iPhone based on the SDK.

Within a triple play bundle, the actual IPTV usage may be limited. If IPTV is relegated to a secondary TV service, what implications does that have for the industry?

The telecommunications market is very price sensitive and subscribers generally migrate to the operator who can give them best value for their spend. Service providers have realized they can increase subscriber stickiness with bundles. In some cases, their bundles are on such favourable terms that a household ends up with 2 TV services. The reality, though, is that as the introductory bundle pricing expires, customers are likely to settle for a single service. In the long term, the economics have to work both ways – the consumer will migrate to the best value and the operator has to offer profitable services. The consumer may end up with a combination of IP-only or IP plus cable or terrestrial. From their perspective, the delivery infrastructure is less a concern than the level of service and the richness of the TV service.

With consumers in France getting IPTV from the likes of Free and Neuf, there is no way of knowing how many are actually using the service. In the UK, BT customers do not rely on its IPTV service as their main TV source. This is something additional on top of the Sky service they have. A bit like using VoIP as a secondary line.

From what we’re seeing, this is likely geography specific. For example, the UK has a Freeview service which has about 3 to 4 million subscribers. It is a terrestrial service which you do not find in, say, North America because North America relies on cable as the distribution network of choice. Freeview provides around 50 digital channels. BT is piggybacking on Freeview for linear TV and they are using IPTV for on-demand TV. In this case, these services co-exist since the TV economics in the UK allow this.

691.6k VoIP subscribers at end 1Q08

55.3k new additions during 1Q08

Customer satisfaction rate with VoIP service is "95% according to Léger Marketing survey carried out in December 2007"

Packet8 introduced mashup that lets a Salesforce.com customer use Packet8’s virtual office PBX offering. Broadsoft and Sylantro – both virtual office (hosted) PBX vendors – have also brought in salesforce.com mashups through their developer programs.

However, while Broadsoft type mashup makes sense for large enterprises and SMEs, Packet8 serves smaller business customers. The service provider carried out development of the mashup inhouse. Packet8’s parent company, 8x8, manages an open source developer program at http://croczilla.com/zap. Zap! aims to produce open source SIP client using Mozilla as a platform. Developers are free to develop applications on this platform under standard Mozilla open source licenses.

While it is not known exactly how many developers are currently augmenting the ZAP project, 8x8 has about 5 internal developers who spend some portion of their time on the project.

Faisal, our chip man, suggested mobile VoIP as an alternative to expensive in-flight calls. But we struggled to conclude who the right service provider candidate would be. Faisal also argues that in-flight mobile VoIP does not make sense unless you offer it to all mobile phones including the low end devices.

Let us for a minute focus on the handsets that can offer some kind of soft-client based mobile VoIP. Someone like Aircell, the in-flight broadband access provider, could be a possible candidate to offer mobile VoIP on-board the aircrafts. This would add to the service provider topline just a bit. Private label mobile VoIP is not much different from private label PC-to-Phone. It is definitely not rocket science to private label it for an ISP like Aircell. There is one hitch though: who distributes the soft-client on board? You will require cooperation from the airlines.

That then leads me to suggest that the airline carrier itself would be a great candidate. Imagine boarding a British Airways aircraft and being sent a light weight mobile VoIP soft-client via Bluetooth. You have 10 minutes of free calling. Beyond that you pay by credit card. I would definitely want to kill time by calling people whom I have not phoned for long.

What else is in it for someone like British Airways? Well, what more could you want if you have a presence on someone’s mobile phone? You can push any sort of promotional info over the client (whether in-flight or after it). You can convert your customer’s air miles into free mobile VoIP minutes. 33 million passengers flew BA last year. That can’t be a small market in terms of potential. There is also a huge domestic air traffic in countries like USA and India. Mobile VoIP for airlines is, I think, a good opportunity.

This writeup on Variety suggests that Korea Telecom has 550,000 IPTV subscribers. That means there must be a lot more Over-The-Top IPTV subscribers in the two countries than what I have estimated on last week's post.

So I guess collectively between Hanaro, Korea Telecom, and someone like USEN in Japan, the OTT IPTV subscriber base must be between 1.6m to 1.8m in the two countries. Of course the reason we bundle the two for OTT IPTV is because in both countries IPTV providers are not yet allowed to offer live TV.

You let service providers outsource some of their VoIP infrastructure. How many service providers use such services and what kind of growth are you experiencing?

We now work with 150 service providers. Our average revenue growth is in the region of 50%.

What is a typical profile of the service providers you serve?

About 5 to 10% are Voice 2.0 companies. Another 30 to 40% are traditional VoIP providers. The remaining are wholesalers.

With an outsourced model we typically see service providers initially use the service but as they move up the knowledge curve and the subscriber base gets bigger, they tend to have preference for deploying their own infrastructure. What kind of implications does that market behaviour have on your model going forward?

That is exactly what has happened to some of the white label hosted PBX service providers in fact. Sometimes your customers might counter problems that are platform related and therefore not under your control. As a provider of managed system we asked ourselves where the leverage was. And the leverage is really in our OSS/BSS.

How many customers of yours use your outsourced OSS/BSS?

We have 8 such customers now.

Content wouldn’t be king without broadband. And broadband would be a waste without the content. It has now become a ‘virtuous’ cycle of one driving the other. There are now 162 million websites (one form of content) worldwide. That sort of content both sustains and requires a huge broadband services and equipment market.

Broadband technology related chips - whether used in core infrastructure or the CPE devices - generated $8.4 billion in 2007. There are other allied equipment segments also that have grown due to broadband. One segment that I can immediately identify is 802.11x market. We are seeing growth in WiFi equipment mainly to access broadband from devices like laptops, PDAs and mobiles.

For VoIP and IPTV type applications, broadband is a pre-requisite. It took years for telcos to bring broadband services to the market. While the bloggers like us may choose to endlessly blog about mobile and web 2.0, the fact remains that broadband is the single biggest telecom success story of the past 10 years.

What is driving mobile telephony arbitrage in form of callback and VoIP?

Skype is not covering mobile VoIP well. There is demand for intelligent and cost-efficient apps on mobile. From user perspective mobile prices are high. So there is an opportunity there. Why should a call from fixed line be nine times cheaper than from mobile?

Xing was the first Web 2.0 company to go public. You were co-founder at Xing. What is common between that experience and your present one at Cellity?

Like Xing, we are developing the market because this is all new. People are not used to things like mobile LCR and mobile callback. Going back to my Xing days, there was no market for social networking. The market was developing while we developed and created it. People were not used to putting up their details online.

Your application is based on Least Cost Routing.

Yes it is based on LCR and no VoIP. That app is available to German consumers only because you need to have a German SIM card. Another offer we have is mobile callback which you can use in any country. We also do SMS via GPRS.

The top 5 communications chip makers hold nearly 60% of the market share. The rest is shared by over 200 other chip vendors. Of the top 5 vendors, only Qualcomm has a specific market that it addresses. Others have a wide portfolio serving multiple areas. It seems plausible therefore to assume that only Qualcomm will have inherent capability to maintain its market position while other vendors will be facing stiff competition from the startups.

As the communications market gets fragmented into more specific applications the current market leaders would not have the bandwidth serving these specific markets. In such a scenario startups like Sequans, Artimi, etc. may have better prospects as they are just focused on specific technologies.

Truphone has acquired SIM4travel, mobile operator focused on bringing affordable roaming to travellers, for a little over $5 million. Truphone is a privately held startup. The company has so far raised $25 million in funding. What could the acquisition mean for Truphone? In short, this acquisition allows Truphone to do two things: (1) offer bridged mobile VoIP to an established SIM4travel customers and (2) offer a more attractive private label solutions package to MVNOs. The other bit I would highlight here is the fact that the combined Turphone-SIM4travel type solution could have a major impact on wifi-gsm handover (dual mode FMC) type services.

With this acquisition, Truphone as an “MVNE” is bringing a more appealing package to the table. It is able to offer MVNOs a softclient based mobile VoIP as well as bridged VoIP. The original Truphone plan was to offer a platform rather than a service. Bridged VoIP picks calls from GSM switch and dumps it on the IP cloud. Truphone will be able to offer its own customers (as well as MVNOs) these two types of VoIP plus low roaming charges – all on one SIM. And it can offer these services worldwide.

Surpassed 500,000 VoIP lines during the quarter.

VoIP lines were up 56k during the quarter to 492k (out of 1.52 million Internet subscribers).

Subscriber numbers include pending installs.

VoIP service margins strengthening.

VoIP footprint grew in the quarter with launches in Moose Jaw, Saskatchewan; Thunder Bay and Sault Ste Marie, both in Ontario; as well as continued expansion of the surrounding areas of Victoria and Vancouver, British Columbia.

The service is now available to approximately 90% of homes passed.

In my interactions with telecom companies – both vendors and service providers – I have used terms like Voice 2.0, Mashups, Voice-Web mashups, Telco 2.0, VoIP-Web mashups etc etc. I can tell you that none of these fancy terms have cemented themselves yet. I end up having to explain what I mean. There is no single industry term that encapsulates the evolving communications.

If you use the word Mashups, it can mean anything that is mashable with web. There are thousands of mashups that have nothing to do with communications. If you use Voice 2.0, that implies greater user control and feature generation. If seen in that context you are borrowing a term from Web 2.0 that does not quite apply in the communications world. If you use Voice 2.0 term to represent the next version of voice communications (which can mean any new advances), that does not (1) reflect the web as the dominant underlying platform and (2) does not include non-voice communications applications. So the use of Voice 2.0 has its issues.

Genband has established a history of acquiring stressed companies and assets. I hope it works out for the company. But there are just too many media gateway platforms in its portfolio now. The latest one that it has acquired is Nokia Siemens Networks’ high density trunk gateway. That is probably the third high density trunk gateway platform in its product portfolio. Even Ciscos and Nortels do not have that kind of redundancy and variety available in this product segment.

My first impression after coming across the Genband-NSN announcement was that the previous acquisition of Tekelec gateways has probably failed. However we are told that T-Mobile, one of the main customers using that former Tekelec product, is 100 percent committed to the Genband product. The only possible competitor to Genband’s media gateway deployment at T-Mobile could have been the Telica product acquired and actively promoted by Alcatel-Lucent which has some traction in the wireless market (Alcatel-Lucent brings in the call control element in T-Mobile Voice-over-Packet deployment OEMing Genband trunk gateway). However Telica platform is CDMA based and does not interface as desired.

TringMe does not have millions of subscribers yet. Over the last few months that TringMe has been in business, it has managed to sign up over 100k subs. You would normally expect a huge subscriber base prior to open APIs from a VoIP company. But there are not many choices for developers when it comes to flash phones. As of now, apart from TringMe, there is only Ribbit that offers Flash based APIs. Ribbit business model is completely different. Ribbit did not have to wait for a million downloads prior to making APIs public.

There is another difference between Ribbit and TringMe approaches. Ribbit APIs do not come entirely free. TringMe on the other hand does not charge anything to developers for using APIs.

We are beginning to see flash phones come out in the market, but to really see what they offer, you need to peel the covers off of the flash-phone and understand the technology they are using to build them. Some of them are merely a flashy representation to essentially use web to activate a call.

Our friends at Infonetics Research put out a press release last week that states that FMC phones made $27 billion in 2007. It is not a typo. So a bit of correction is in order.

I think Infonetics is referring to dual mode GSM/WiFi phones in general. Having a WiFi radio in a GSM phone does not make it a FMC phone. You would require a VCC or a UMA client to turn such a phone into a FMC phone. That is a requirement for a single number service. If you are content with two numbers on the same dual mode WiFi/GSM phone you would still be required to use some sort of a VoIP client for voice usage over WiFi. The two-number service is not really true FMC by the way.

Added 33 million users during 1Q08. Total subscriber base now stands at 309 million registered users worldwide.

$126 million in revenue for the quarter, representing 61% year-over-year growth.

Skype-to-Skype (PC-to-PC) minutes are estimated 14.2 billion and representing 30% year-over-year growth.

Skype Out Minutes (PC-to-Phone) are estimated 1.7 billion and representing 33% year-over-year growth.

What made you choose the name mig33?

We wanted something simple, memorable and not tied to a functional name like ‘chat’ so that we keep the flexibility to grow and evolve the product as we like. We wanted something that would translate well across different markets easily too. After evaluating a few options and working closely with our early beta testing group, the name mig33 emerged. Our users love it so it’s worked out well.

What has been the key in signing so many subscribers?

A few factors: The product delivers a compelling proposition of communications and social network features like chat, IM, SMS, picture sharing, profiles, cheap calls and email. This combined with an effective seed strategy helped us grow over 11 million users in over 200 countries.

Has the marketing been mostly word of mouth thing?

Word of mouth, in addition to other marketing.

What is your Facebook strategy? Are those sort of social networks important for you?

Ad supported telephony as a concept is not proven yet. But it is the new rage nonetheless. I think it is possible to build sustainable business model just because there are lots of talented people out there working hard to prove the concept. I am a strong believer in creating demand for a product where it may not exist.

One of the tools that could help drive ad supported telephony is a speech-to-text engine that converts the audio contents of a phone conversation into text in realtime, scans that text, picks keywords from the conversation, and requests an appropriate Google ad to be streamed over the phone client (let us say over a VoIP client).

It is quite usual for enterprises to have multiple IP bandwidth links. That increases churn in business IP trunking. Obviously as a service provider, you would try to provide better QoS in order to counter that churn. If however your partner carriers use voice quality solutions from different vendors, I am told that you would have problems implementing QoS end-to-end. Twelve years of VoIP and you still have interop issues!

There are over 65 million fixed line VoIP subscribers worldwide. Nearly all of them – as well as a lot of business VoIP customers - are being served by public Internet. Being able to manage voice quality over public Internet has to be an important issue unless the service providers are content with keeping VoIP as a secondary option. Most of the service providers are burying their heads in the sand hoping the bandwidth in the backbones will remain abundant. That is a bad assumption. Shared transportation will not always work, especially since video is going to consume a lot of capacity.

Skype is one of those faces that launched a thousand ships! Its big bang acquisition and open developer program led to the formation of numerous VoIP startups. But the company itself got entangled in a loveless relationship that …. as expected …. never proved synergetic. At this juncture when eBay is understood to be exploring different options for Skype, I am going to suggest a couple of places where Skype could find love.

Let me first touch upon the reasons why the eBay-Skype synergy never materialized. eBay acquired Skype in order to woo large retailers into setting up their storefronts on eBay. That did not happen. Even if it had, the kind of click-to-call capability that Skype would have been able to bring in would not have sufficed. The reason for that is the missing third ‘C’. The Context. Click-to-call in a consumer driven environment is what some of you would call a Web 3.0 application. We are not quite there yet. Translation: Suppose a retailer such as Apple set up a storefront on eBay. In order for its customer services agent to better serve the click caller, the agent needs to know the profile of the caller as well as the caller activity on the site prior to the call. That piece of info flashed to the agent screen at the time of the call is Context.

Telcos looking to secure their long term prospects have no choice but to invest in triple play. The voice and the data services are available from all. IPTV however is not yet widely implemented by telcos.

Those telcos who are planning to offer IPTV are upgrading their broadband infrastructure to support speeds of 8mbps and above. But by doing so they are enabling Over-The-Top TV or the Internet TV, which is being positioned as the biggest competitor to IPTV right now. Although I have come across speeds as low as 250kbps as requirements for streaming video, but the typical sort of throughput you require is in the region of 500kbps.

Altera reported $336 million revenue representing 4% increase q-o-q. New category products saw revenue growth of 14% sequentially in this quarter. These products constituted 40% of the total revenue in the first quarter. FPGA and CPLD products showed higher demand rates with revenues increasing by 6% each.

Communications segment grew by 4% while other segments remained flat. Within communications, Telecom showed a decline while wireless and networking grew in double digits.

Q1 revenues were $18.3 million up by 13% q-o-q. Net income was $838k for the period. Enterprise and Datacenter continued to be the main contributor of sales with contribution of 68%. Remaining 32% was brought in by access service provider, and consumer broadband software services segments. Geographically Asia (mainly China, Japan and Taiwan) and Europe were significant business contributors for the company

For the quarter Cisco was the biggest customer of Cavium.

Revenues for Q1 2008 were $125 million, which was up by just a percentile q-o-q. Net Loss during the period was $22 million which increased from the past quarter’s $5 million.

During the quarter the company saw strong demand for the FTTH