A year ago almost to the day we called for Ofcom to put an end to ISPs’ ridiculous practice of describing broadband speeds with the meaningless phrase “up to”. Now Ofcom is again skirting around the issue in its latest survey of UK broadband speeds. Its own data shows that while “headline” speeds (ie the theoretical maximum – and even they are not true) have increased significantly over the past year, the actual speed achieved as a proportion of that “top” speed has actually fallen, from 58% to 46%. The craziness is illustrated further by the fact that the average speed attained by customers subscribing to “up to 20Mbps” packages is only 6.8Mbps, ie lower than the “headline” speed of inferior “up to 8Mbps” packages. The average download speed for all DSL connections has increased by only 10% over the past 12 months, from 3.7Mbps to 4.0Mbps, in spite of the fact that many more customers are being offered “up to” 20Mbps packages (ie DSL 2+). Note that the primary factor behind the higher increase in UK speeds overall is because of Virgin Media’s upgrading of its cable service: average cable broadband speeds have more than doubled, from 4.9Mbps to 9.9Mbps. That’s a testament to the growing strength of the UK’s cable operator, and an indictment of the recent supposed improvements in the DSL network. Ofcom’s excuse regarding regulating the “up to” nonsense is that this is not its job, but that of the advertising regulator. We regard this as a cop-out. Ofcom does have a Voluntary Code of Practice which “ensures that consumers are given the clearest possible information on access line speeds at point of sale”, and if that doesn’t relate to advertising, I don’t know what does. The Code of Practice talks a lot about maximum speeds, but not about minimums. This now has to change. Even with the well-known limitations of DSL technology, in the second decade of the 21st century customers have a right to know what minimum level of service they should expect to receive in return for their hard-earned pounds. BT will moan that it cannot yet deliver a minimum of 2Mbps to some parts of the country, so those remoter rural areas should be considered a special case, where “true” broadband (however that is defined) is technically (and temporarily) unavailable. This all goes back to early political demands that broadband be made “universally” available, and the politically inspired nonsense that 99% of UK homes can get DSL broadband services. Yes, but only if you count 250kbps as broadband. We need to step back so that we can move forward. The reality is that a small percentage – perhaps 5% - of UK homes are currently out of reach of 1-2Mbps+ broadband services, and remain “geographically challenging”. That needs to be accepted as a policy issue and targeted accordingly. The market as a whole should no longer be distorted because of this artificial and technical constraint. Once those homes are identified, the rest of the country should be given guarantees of minimum service, and tiered services will emerge which will give customers a great deal more clarity and confidence than they have had until now. Client Reading: Global Broadband Scorecard: 2010 Broadband Composite Index (BCI) Rankings

Microsoft Xbox is at the moment very focused on reigniting stagnating sales of Xbox 360 consoles and elongating the 360’s lifespan. It is pursuing a two part strategy to accomplishing this; 1) launching an updated Xbox 360 “Slim” console, and 2) expanding the Xbox footprint by focusing on the “social gamer” segment with its controller free motion capture platform Kinect for Xbox 360.  Early sale trends from the US and UK markets suggest that the new Xbox 360 Slim has indeed accelerated console sales and now Xbox is turning its attention to the second part of the strategy – expanding its footprint into the social gamer segment. As we wrote in our recent report on Kinect, we believe that one of the key factors that will make or break Kinect will be if Xbox can get the pricing and bundle strategy correct for the price sensitive social gamer segment. We suggested at the time that Xbox need to have an entry level bundle (e.g. Xbox Arcade, Kinect, Dance Central game) starting at below $300 to succeed in breaking into this segment. Well it seems as Xbox may have listened to us as they today officially announced an estimated retail price (ERP) bundle of $299 (€299/£249) for an entry level Xbox console which will come with 4GB storage (compared to the current 256MB Arcade version), Kinect hardware and the “Kinect Adventures” game. The standalone Kinect hardware will get an ERP of $149 (€149/£129) as has been widely rumored for some time. While we think this latter price point is likely too high to entice most existing Xbox owners to upgrade to the Kinect platform, we believe it makes sense for Xbox to focus on the entry bundles for now, in order to accelerate console sales, and keep the standalone Kinect price high until a larger catalog of Kinect games has been launched. All in all, we think Xbox has skilfully negotiated the first major hurdle for Kinect – getting the price point for an attractive bundle correct. It now needs to focus on getting third party developers to embrace the Kinect platform and quickly build up an attractive catalogue of Kinect compatible games.  Martin Olausson

Returning to temperate climes after my first “summer” visit to Las Vegas, I am more amazed than ever at Nevada residents’ ability to withstand daily temperatures of 40 degrees plus and practically zero humidity. At least I now know what 108 Fahrenheit feels like. The contrast between this and a proper British summer (a few days of 25C followed by cool cloud and rain) could not be more stark. Las Vegas’ Mandalay Bay was the venue for Cisco’s annual customer gathering, which this year also brought together a hundred or so analysts for in-depth discussion of product and commercial strategy. The highlight product announcement was the Cius, as reported by my colleague, Susan Welsh de Grimaldo. While the company has not officially announced pricing, I expect it to be closer to $1000 than $500. Cisco is quite clear that the Cius is positioned as an enterprise solution, and these prices are likely to prevent much leakage towards “unofficial” consumer markets. What was most interesting, perhaps, is the genesis of the Cius within the Cisco organisation. It was obvious from many conversations that few people were aware of its development until very shortly before its unveiling. Even John Chambers himself claims to have been unaware of it until two months ago. If the product proves successful it will be further justification of Cisco’s innovation in organisation and management which allows dynamic cross-fertilisation of ideas across multiple teams. The other news centered on home energy management, where Cisco is launching a “Home Energy Controller” allied to Cisco Energy Management Services, which will be offered by utility companies to help consumers understand and control their energy consumption. The Controller uses Zigbee, WiFi and other home networking technologies to exchange data with and, potentially, control a variety of home devices. Much of our discussion with Cisco execs centered on the challenges and opportunities for service providers offered by OTT video, as well as the potential for telepresence in the home environment. Telepresence has a been a success for Cisco in the corporate market, and it is still on track to bring a consumer solution to the market by the end of 2010. It still strikes many people, both in the industry and consumers, as odd that Cisco should have a serious consumer strategy. While its brand presence is growing, not many would consider it as a competitor to the Sonys, Samsungs and Apples of the world. And there is no doubt that the company’s financial power is built on its core network switching and routing market dominance. Cisco does have key positions in home networking and set-top boxes, as well as the TV and broadband service provider space, but the jury is still out on whether Cisco itself will become an overall leader in consumer markets over the next decade. But consumer players cannot ignore Cisco as an influence on market direction. Its innovation processes, as demonstrated by Cius, will combine with its financial strength to create a wave of consumer innovations over the coming years. Many may fail, but it will only take a few to be successful for rivals to feel the heat. Client Reading: Chasing the Elusive IPTV Business Model: NDS, Cisco and Comcast to the Rescue?