In the News

Published May 1, 2006

More Americans ‘Cut the Cord’

Some 8 percent of U.S. households have cut the cord completely on conventional land-line phone service, opting instead for full-time use of wireless services, according to a report from Forrester Research released in late March.

“Cord-cutters,” as the report terms them, continue to grow as a share of all U.S. households, up from 5 percent in 2004 and 4 percent in 2003. Forrester also found the wireless shift is becoming more prevalent among older users. “As this group grows, its attributes look increasingly like the rest of the mobile population, especially with regard to age,” reads an excerpt from the report. While the trend toward cord-cutting is more common among those under 35, 9 percent of U.S. mobile subscribers between the ages 35 and 44 gave up their home phones in 2005, up from 3 percent in 2004.

The report did not measure migration to Voice over Internet Protocol (VoIP), which estimates place at 3 million.

Telcos Are Buying More IP Gear

U.S. manufacturers of telecom equipment are seeing an uptick in business as legislators across the country loosen regulations and permit telephone companies to enter video and broadband service.

Contrary to popular assertions, the phone companies are no longer sitting on legacy copper infrastructure. Infrastructure manufacturers have seen significant growth in sales of Internet Protocol (IP) and packet networking gear to carriers, reported Telephony Online, citing a new report from Infonetics, a market research firm.

At Cisco Systems, the world’s leading manufacturer of IP routers, service provider sales increased $300 million last year, for a total of $2.6 billion. Even so, Cisco lost market share to Juniper Networks, which also saw a heavy increase in service provider business.

Meanwhile, sales of multiservice switches, which support legacy networks, continued to tail off, dropping to $1.98 billion. This compares to their peak sales of $5 billion in 2000.

The report, among the first since wholesale price controls dictating terms of telco line-sharing were relaxed, supports predictions from free-market analysts that telephone companies would increase broadband deployment once regulators ended restrictions that limited their return on investment.

CERN Bans Skype

CERN, the Geneva, Switzerland-based physics lab credited with inventing the World Wide Web, has barred the use of Skype, a Voice over Internet Protocol (VoIP) service, by users of its corporate network.

As reported by Wall Street Journal columnist Bruno Giussani on March 29, CERN (the French initials for the European Center for Nuclear Research) has deep reservations about the way Skype service usurps the processing resources of user PCs in the routing and switching of phone calls. Plus, CERN says Skype violates its own computing rules by bypassing firewall protections.

CERN’s decision could play into the larger debate over network neutrality. Among the worries of the network neutrality set is that carriers who control broadband access, namely the telephone and cable companies, may block or prevent access to VoIP services, like Skype, if neutrality is not enforced. This was attempted only once (and not against Skype) by a small rural phone company, which was promptly chastised by the FCC and forced to stop. Another element in the debate is whether carriers, as bandwidth providers, should be permitted to prioritize high-bandwidth traffic for a fee.

The Skype business model is built on the notion of using computers it does not own as “supernodes” to support the VoIP service it sells. Much of the work CERN has done has helped create the open, interconnected, and decentralized Internet users enjoy today and Skype makes use of. Yet, by its own actions, CERN suggests that even when its computers and servers are connected to the public Internet, it still retains the right to control them.

Steven Titch ([email protected]) is senior fellow for IT and telecom policy at The Heartland Institute and managing editor of IT&T News.