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Computing giant IBM on Friday unveiled new software and services that redefine the cell phone as a business tool akin to the PC.

 

In doing so the Armonk, New York, based firm joins Google, Apple, Nokia, Microsoft, RIM, and the Linux crowd in carving out and focusing on segments of the mobile web, but unlike its rivals, IBM is not limited to a single operating system.

 

IBM, which does not market a commercial mobile operating system, said its software will work with existing cell phone operating systems and make its business features available on Blackberry, iPhone, Windows Mobile, and Symbian phones.

 

Apple, Nokia, Microsoft, and RIM all support an array of organic and third-party mobile entertainment, personal productivity, information, and business applications designed for the mobile web. But with its new open standards based software, IBM is focusing on extending traditional business communications to the mobile web.

 

IBM said it is providing developers with new tools to make existing applications run on mobile devices, and is offering related consulting and implementation services to businesses.

 

“The key thing for IBM is interoperability and operating system independence because Windows Mobile can achieve most of the functionality IBM is claiming and so too can Blackberry,” said Sameer Mithal, senior principal at IBB Consulting.

 

Designing existing business applications for the bandwidth and display limitations of the mobile web is no slam dunk, Mr. Mithal said, so it may take some time for IBM to fully tune its products and services to the realities of mobile computing.

 

While still in its developmental stages the mobile web, which took a long time to gain market traction, has attracted a lot of attention because of its growing popularity and perceived potential.

 

“The mobile Web presents one of the largest emerging market opportunities we've seen in a decade as billions of people look to access a wide range of services both for business and personal use,” Drew Clark, director of strategy, IBM Venture Capital Group, said in a statement.

 

The U.S. leads the world with a 15.6 mobile web penetration and 40 million active mobile web users according to Nielsen Mobile. The U.K. is second with 12.9 percent penetration, and Italy is third with 11.9 percent.

 

The number of U.S. subscribers who paid for mobile web access increased 28 percent between the first quarter of 2007 and the comparable period of 2008, according to Nielsen Mobile.

 

“With the current state of the economy and gas prices, I think we will see business use of the mobile web grow pretty quickly,” Mr. Mithal said.

A123 Systems, whose lithium ion batteries could determine the fate of the U.S. auto industry, Friday filed for a $175 million initial public offering.

The Watertown, Massachusetts, company has reeled in $160.9 million in venture capital from investors including North Bridge Venture Partners, which has a $13.6 percent stake,  Qualcomm (8.8 percent) and Motorola (8.5 percent). Gururaj Deshpande, co-founder of Sycamore Networks, has a 12.7 percent stake.

A123, whose technology was spun out of Massachusetts Institute of Technology, is competing to be the battery producer for the Chevy Volt, a plug-in hybrid seen as crucial to the recovery of ailing automaker General Motors. The Volt, scheduled for production in 2010, will use an electric motor and battery designed to go 40 miles between charges and a small gasoline engine to replenish the charge for longer trips.

The competition to develop lithium ion batteries safe and durable enough to put on the highway pits A123 and its battery pack integrating partner Continental Automotive against Compact Power Inc., a Michigan-based unit of LG Chem.

A123 also is supplying batteries to Think Global, the Norwegian electric car maker backed by RockPort Capital Partners and Kleiner Perkins Caufield & Byers, and power-tool maker Black & Decker for their DeWalt product line.

The company has 1,160 full time employees and posted a net loss of $13.9 million on revenue of $8.7 million for the quarter ended March 31. Cash flow was negative $13.5 million in the March quarter and negative $56.1 million in 2007.

Morgan Stanley, Goldman, Sachs, Merrill Lynch, Broadpoint Capital and Lazard Capital are listed as the IPO’s underwriters.

A123 was incorporated in 2001 and was based on battery technology developed in the laboratory of co-founder Yet-Ming Chiang at MIT.

Despite month-to-month vacillation in U.S. housing sales, the National Association of Realtors on Thursday said the housing industry may be in recovery because gains in home sales in June were nationwide and could be sustained by a recently-passed economic stimulus bill.

NAR, one of the largest trade groups in the U.S., said that the current growth trend could be bolstered by a tax credit now available to first-time home buyers and a Federal law that makes it easier to secure lower mortgages for more expensive homes.

But there is another less-obvious factor playing into the recovery. The easy availability of real estate data on the Internet is changing consumer behavior patterns, according to NAR, and that had some effect on the downturn and it is influencing the recovery.

“In the past people would buy a new home because they had an additional child or for some other life-changing reason, but people are now market-timing their purchases,” said Lawrence Yun, NAR's chief economist. “This can affect both a downturn and a recovery.”

Good and bad news now travels much faster and farther because even homeowners who are not planning to sell their homes are keeping tabs on both the current value of their homes and the nationwide housing market.

“The prevalence of housing data is making the market far more cyclical than it used to be and the intervals are much shorter as homeowners' activity is being governed to some extent by the news and blogs concerning market conditions,” Mr. Yun said.

Housing sales have been rising and falling in increasingly tighter cycles. The data shows wide vacillation from month to month, according to NAR, making it tougher to identify long-term trends and transitions.

“There must always be caution when reading monthly data because of the bouncing around, but the June increase was much larger than recent months and given the availability of tax credits and lower interest rates, we believe it will be sustained,” Mr Yun said.

Analyst Greg Sterling said that online real estate firms are having only a marginal effect on the economics of the industry, perhaps accelerating consumer trends, but the major trends are still being governed by demand and supply.

“The data available online may factor into consumer perceptions but the market is moved by things like the availability of attractive financing,” said Mr. Sterling, an analyst with Sterling Market Intelligence. “But over time the Internet will play a bigger role as consumer perceptions become more central to the economics of the real estate market.”

Online video calling service TokBox has pulled down $10 million in series B financing as the San Francisco startup seeks to fill out its executive ranks and initiate a global expansion, the company said Thursday.

Bain Capital Ventures, which led the round, was joined by Sequoia Capital, which spearheaded the $4 million A round in 2007. The company also is backed by angels and Youniversity Ventures, whose founders include Jawed Karim, a co-founder of YouTube.

TokBox is taking on larger video chat and calling competitors like eBay’s Skype, AOL’s AIM, Apple’s iChat and Microsoft’s MSN, but seeks to differentiate itself by providing a browser-based service that requires no download and allows users to send a video voicemail to anyone with an e-mail address, regardless of whether they are TokBox users.

Scott Friend, a venture partner at Bain Capital Ventures and a new board member at TokBox, said technology is migrating from computer-based software to programs residing on the Web.

“We think a similar phenomenon will take place in the video-chat world,” he said and while Yahoo Messenger does offer web-based video chat, users can’t connect with people outside the network.

Mr. Friend said TokBox users recently passed the million-minutes-per-day milestone. The 10-month-old company remains focused on adding users for now, he added, but eventually could seek revenue by placing advertisements in and around the video screen and selling professional features to recruiters and business users.

In addition to providing service through its web site and via a Firefox add-on for Facebook users, TokBox powers the video-chat service of instant-messaging aggregator Meebo, which brings together the services of AIM, MSN, Yahoo, ICQ and others.

Mr. Friend noted that TokBox, which already had participation from a premier Silicon Valley venture firm in Sequoia, was attracted to Boston-based Bain Capital Ventures because of its connections to Wall Street and the network of companies in the portfolio of its private-equity parent, Bain Capital.

TokBox, whose users are “predominantly” Americans, plans to push into foreign markets, Mr. Friend said, an opportunity “as big or bigger as what we have domestically.”

The company also plans to offer mobile video mail, though not all handsets have cameras on the same side as the video screen, Mr. Friend noted.

Time Warner will split the advertising and dial-up subscription businesses of its AOL unit in early 2009, the media company disclosed Wednesday as it released its second quarter earnings.

Revenue at AOL fell 16 percent in the second quarter as its dial-up subscription business fell 29 percent. That tempered growth at corporate parent Time Warner, where net income slid to $792 million versus $1.1 billion in the prior year’s period on revenue of $11.6 billion. Diluted net income per share was $.22 versus $.28 in the 2007 quarter.

In a conference call, Chief Executive Jeffrey Bewkes said New York-based Time Warner had made the structural moves to divide AOL’s dial-up business from its online advertising segment beginning in 2009.

Time Warner’s quarterly results got a charge from hit movies, including the theatrical release of “Sex in the City” and the home video release of  “I Am Legend.” The smash summer Batman film “Dark Knight” will add to third-quarter financials.

Time Warner’s “LEGO Indiana Jones” was the No. 1 video game in June and Mr. Bewkes said video games would play an increasingly important role in its media mix.

Overall, AOL’s revenue fell $196 million, or 16 percent year over year, to $1.1 billion. The decline in dial-up revenue was offset in part by a 2 percent, or $8 million increase in advertising revenue.

In recent years, AOL made a wrenching strategy shift as its once-dominant dial-up saw subscribers exit as they moved to broadband.

As of June 30, AOL had 8.1 U.S. dial-up subscribers, a decline of 604,000 from the previous quarter and 2.8 million from the 2007 period.

In response, AOL built its “Platform A” to take advantage of the growth of online advertising by making a string of acquisitions, including the purchases of Advertising.com in 2004 for $435 million and two behavioral-targeting companies in 2007, Tacoda for an estimated $275 million and Quigo for about $350 million.

There has been wide speculation that Time Warner would sell AOL’s dial-up business to Earthlink or another rival provider.

In the conference call, Mr. Bewkes said the company will “assess all options,” including the possibility of retaining the unit if its  “cash flow from operations is superior to any deal we can get…from the usual suspects.”

For the company overall, Time Warner said it continues to forecast full year 2008 earnings per diluted share from continuing operations of $1.07 to $1.11.

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Despite overwhelming evidence to the contrary, a majority of U.S. homeowners believe the value of their homes has either increased or remained the same in the last year, according to the results of a survey conducted by online real estate firm Zillow.

 

The survey found that 62 percent of homeowners have held this optimistic view of the value of their homes over the last year despite the fact that 77 percent of U.S. homes have actually declined in value in that period. Only 19 percent of homes actually increased in value, while 5 percent remained the same, according to Zillow.

 

Seattle based Zillow found the perception-versus-reality gap or misperception index as the company calls it to be highest in the South at 36 percent and lowest in the West at 23 percent.

 

Zillow attributes the misperception index to homeowner inattention and denial that the ongoing subprime mortgage crisis and the resulting foreclosures are having significant effect on the value of their homes.

 

Greg Sterling, an analyst with Sterling Market Intelligence, believes that there is indeed homeowner misperception about the value of their homes and that it could be understated by the fact that Zillow typically inflates the value of the homes it lists.

 

“It's kind of ironic that Zillow is the one talking about homeowners' optimism since they have historically overvalued homes, although they have gotten a little better recently,” Mr. Sterling said.

 

But Lawrence Yun, chief economist of the National Association of Realtors, a real estate trade group, said that Zillow's proprietary estimates are probably inflating the misperception index.

 

“Zillow's estimates have been found to be wrong by measurable amounts, so the homeowners' could be correct and Zillow's estimates could be off,” he said.

 

He asserted that the survey does not take into account the wide neighborhood to neighborhood variations in the market.

 

“Prices are falling steeply in neighborhoods with large exposure to subprime loans while neighborhoods with very little subprime loan exposure are doing fine,” Mr. Yun said.

 

The fact that only 9 percent of U.S. homes are exposed to the ravages of the subprime mortgage crisis means the other 91 percent could indeed be seeing far more stability in the value of their homes, he said.

 

Homeowners responding to Zillow's survey could be making longer-term assessments of the value of their homes that goes past Zillow's one year snapshot. Also, most homeowners are not selling their homes in the next year, and that affects their assessments.

 

“Their home values may be better now than two years ago so they see much of the current data as short-term statistical noise,” Mr. Yun said.

 

The Zillow survey actually found that homeowners' short-term outlook is even more bullish than current perception as three out of four homeowners, 75 percent, expect their homes' value to increase or stay the same over the next six months.

AT&T on Tuesday announced its first cloud computing service, a business popular among startups and established firms such as Microsoft, Google, Amazon.com, IBM, and perhaps even Dell, but one that the major U.S. carriers have avoided until now.

The service, called AT&T Synaptic Hosting, is made up primarily of technology AT&T got when it acquired application hosting specialist USinternetworking (USi) for $300 million in September 2006, and AT&T's networking services.

AT&T, the largest carrier in the U.S., will have direct competition early next year when Verizon, the country's second largest carrier, is expected to test and launch a similar service.

“This is a big stretch for both AT&T and Verizon because computing, applications, and operating systems require a much more intense level of customer service than networking, and carriers are generally bad at customer service,” said Mike Eaton, CEO of Cloudworks, a hosted computing service based in Thousand Oaks, California.

Cloud computing, which is also called hosted services, is corporate computing that does not reside at the users' premises. Instead, the computing resources are owned and managed by a service provider, and the businesses access the resources via the Internet.

Customers pay for only the amount of computing resources they need so they can dial up more resources or dial it down based on their business needs. AT&T's first customer Teamusa.org, the official Web site of the U.S. Olympic Committee, is a highly seasonal consumer of computing resources.

Both AT&T and Verizon have managed traditional computing, communications, and storage resources primarily for larger enterprises, but both are making their first foray into cloud computing.

“AT&T and Verizon have recognized that there is now demand for cloud computing and they already have the network and the data centers, so the timing makes sense,” said Sameer Mithal, senior principal at IBB Consulting.

AT&T will use the capacity in its 38 data centers to drive its service but there are questions about AT&T's ability to gear its internal culture to the rapid-response required when customers are unable to access their applications because of an outage or software problem.

“There is a tremendous amount of expertise and cooperation required to offer things like enterprise ERP applications for instance, so I suspect there will be a lot of collaboration with other vendors to seamlessly pull that off,” Mr. Eaton said.

Unlike AT&T which is doing the bulk of its hosted services internally, Verizon is currently negotiating with at least two companies which will act as independent partners to deliver the New York-based carrier's cloud computing services.

“There are hardware and software components of our platform that will be developed and delivered by key partners,” said Chris Gesell, Verizon's global director of IT solutions product marketing. “We have no plans to acquire a cloud computing company.”

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FUJITSU AND SIEMENS CONSIDER SPLIT

Germany’s Siemens reportedly wants to end its PC joint venture with Japan’s Fujitsu. The Financial Times reported that Fujitsu Siemens, as the unit is called, has not competed effectively against Dell and HP, as had been hoped. With revenues of €6.6 billion ($10.3 billion) in its last fiscal year and a pretax profit of €106 million, the unit also makes minicomputers and servers.  

The two companies have a 100-year history of working together but management shakeups at Siemens and a sale of assets have led to a closer look at the FSC unit. Analysts say that Fujitsu has a right of first refusal on Siemens’ 50 percent stake in the venture. The unit could also be sold to another PC maker, like Lenovo or Acer. Analysts estimate that a sale would cost €2 to €3 billion.

 

HOW DO YOU SAY IT IN GOOGLE?
The world may be getting smaller but it is still a tower of Babel. Google is working on a translation service that will include human intervention, reports French tech site www.01net.com. There are a number of automatic translation services on the Web. Google has long offered a “translate this” button. But results are usually crude, giving viewers the gist of messages rather than an accurate translation.

Google admits so in a FAQ on the translation service, defining the machine translation as Google Translate and the human version as Google Translation Service. While still undergoing tests, the service will address 40 languages, covering 98 percent of the world’s Internet users, according to Google. Translators will not be Google employees but will use Google tools including the Translate service now available. Sounds like Google is setting up a kind of exchange where translators and clients can negotiate on terms.  Anything to make the Web more accessible.

 

NOT TOO GAUCHE TO BROWSE          

While U.S. cities and telecom companies battle over free Internet access, Paris has embraced and implemented municipal Wi-Fi. The service was launched a year ago and is available in many city parks, gardens and libraries. The city of Paris reported today that the city had a record number of users of free Wi-Fi in May. Some 23,113 users connected to the Internet using the city’s free service. Some 399 transmitters are located at 258 locations. This doesn’t include free Wi-Fi that is increasingly available in bars, restaurants and other locations. So why is it that you almost never see someone with a laptop open at one of the outdoor café? It must be considered gauche to Google.

 

ASIA U? NOT SO GOOD.

Asia is growing in importance as a new source of technology innovation but its universities still get no respect. The latest ranking of the world’s universities by Shanghai Jiaotong University ranks Asian universities far below those in North America and Europe. The list, which uses such factors as the number of Nobel Prize winners, highly-cited researchers and per capita academic performance, gives eight of the top 10 spots to the U.S. and two to the U.K.  Harvard University is No.1, followed by Stanford and UC- Berkeley. Oxford and Cambridge listed 4th and 10th  respectively, according to Singapore’s Straits Times.

Tokyo University (picture) was the highest ranked Asian university at No. 19. China’s Nanjing University was rated No. 223, two spots above Peking University, usually considered China’s best. Taiwan’s National Taiwan University was also rated higher at 159. Two universities in Hong Kong also won better ranks than those in China.

 

 

 

 

 

Friendster, the most popular social network in the Asian-Pacific region, on Tuesday announced the appointment of Richard Kimber as CEO, as well as $20 million in new VC funding from IDG Ventures and return backers Kleiner Perkins Caufield & Byers, Benchmark Capital, DAG Ventures, and Founders Fund.

Mr. Kimber who previously oversaw South Asian operations and business partnerships for Google is filling a position that had been left empty for more than two years.

Friendster’s former president Kent Lindstrom who was the company’s senior executive since 2006 remains with the company as senior vice-president of corporate development

The social network has a strong grip in Asia where it ranks number one in traffic with a claimed 55 million registered users, ahead of world leading social sites Facebook and MySpace.

“In Asia, Friendster is almost twice the size of any other social network,” the company said.

The San Francisco-based company became popular in Asia through friends and family of  Asian-Americans users based in California.

The leading social web site in the Asian-pacific region, Friendster has offices in the Philippines and Singapore, but still needs to gain popularity in China, which is dominated by Chinese social-networking web site QQ.

The $20 million in additional funding, which will be used mainly for new offices and employees in Asia, brings the total amount raised by the company to nearly $50 million.

With the new funding Friendster will continue to expand its worldwide footprint and take advantage of its leadership position in Asia Pacific,” said Russ Siegelman, partner at Kleiner Perkins Caufield & Byers and chairman of the board for Friendster.

A leadership, which might be at stake, with fierce competitors MySpace and Facebook launching new sites in Asia and heavily promoting the existing ones.

With more than 75 million members worldwide Friendster is the world's 9th largest web site and the 3rd largest social network in terms of traffic according to Internet marketing research company comScore.

Microsoft plans price cuts for its Xbox line that will bring the tab for its low-end console below that of Nintendo’s popular Wii, an analyst forecast Tuesday.

In a research note, UBS analyst Benjamin Schachter (no relation to the reporter) said that he expects Microsoft to cut the price of its low-end Xbox Arcade to $199. That would position the box below the price of the $250 Wii for the first time.

The price of the Xbox Pro, meanwhile, would fall to $299, while the Elite model, with a 120 GB hard drive, would sink to $399, “comparable” to Sony’s new $399 price point for its PlayStation 3.

Circuit City lists the Xbox 360 Elite at $449, the 60 GB Pro at $349 and the Arcade at $279.

Mr. Schachter said Microsoft hopes to use the price cuts to blunt the impact of major upcoming PS3 software releases, including LittleBigPlanet and Resistance 2. The analyst said that Sony is unlikely to return fire with its own price cut, though “Sony might have to reassess” if PS3 sales slump.

Citing figures from researcher NPD, Mr. Schachter said Xbox prices spiked by about 35 percent after Microsoft cut Xbox prices in August 2007.

Cablevision Systems, a sprawling cable TV, Internet and media company controlled by the Dolan family, Tuesday said it would explore strategic options, including a dividend and spin-off of assets.

The news was the latest turn in a long-running saga of internal conflict, attempted buyouts and tabloid headlines.

Investors cheered the news, pushing Cablevisions shares up $1.56, or 6 percent, to $27.49 in mid-morning trading.

In a statement, the company, based in Bethpage, New York, said its board of directors has authorized management to evaluate dividends or stock buybacks as well as business spin-offs and other options.

David Joyce, an analyst at Miller Tabak & Co. said the announcement adds substance to hints dropped by Chief Executive James Dolan on the company’s earnings conference call last week where they “did sound more shareholder and debtholder friendly.”

In recent years, the Dolan family, which holds a minority economic interest in Cablevision, but controls about 74 percent of shareholder votes through “super-voting” stock, had sought to take the company private. The family’s offers, including a $10.6 billion bid in 2007, were rejected by the board’s independent directors as insufficient.

The company also was the scene of internecine warfare between founder and Chairman Charles Dolan, who backed the company’s Voom satellite TV service, and his son, James Dolan, who wanted to shutter the money-losing operation. After a board room soap opera, James Dolan gathered sufficient board support to close the short-lived satellite unit.

In a separate development, a federal appeals court reversed a district judge’s ruling that stopped Cablevision from introducing a digital video recorder system where content is stored on the company’s servers instead of hard drives in consumers’ homes.

Media companies, fearful that more viewers would skip through commercials, had maintained that central DVR systems violated their copyrights. Cable companies, meanwhile, see the new systems as a way to rollout DVR services with minimal capital expenditures.

Cablevision, whose cable assets are centered in the New York metropolitan area, is facing fresh competition from Verizon’s FiOS service, which delivers video, voice and Internet through fiber-optic lines.

Analysts have speculated that Cablevision, which last week added the tabloid Newsday to its sprawling collection of assets, might try to unload its Rainbow Media unit, which includes IFC, Sundance Channel and AMC, home of hit show “Mad Men.”

Cablevision also owns Madison Square Garden, Radio City Music Hall, Clearview Cinemas, the New York Rangers and the New York Knicks, whose coach, Isaiah Thomas, was found guilty in a head-line grabbing sexual-harassment lawsuit. The victim was awarded $11.6 million in punitive damages in that case.

Shares of Motorola leaped $.91, or 10.3 percent, to $9.72 in late morning trading Monday after the former Qualcomm executive Sanjay Jha was named co-chief executive and leader of the mobile device business scheduled to be spun off in the third quarter of 2009.

Analysts cited Mr. Jha’s record at Qualcomm as a positive development for Motorola, which has struggled to keep pace against Nokia, Samsung, LG, newcomer Apple and others in the competitive mobile handset business.

“We believe Mr. Jha has a proven operating execution history and see this as positive for Motorola,” UBS analyst Maynard Um said in a research note. “We continue to believe turning the tides for Motorola will take time and new product portfolios (still a tough road ahead). But investors may have more confidence in the probability of turning the business around.”

Greg Brown shifts from chief executive of the entire company to co-CEO in charge of the company’s broadband network unit. Mr. Jha had been chief operating officer at Qualcomm, a supplier of semiconductors for wireless handsets that use the CDMA (code division multiple access) standard.

Last week, Motorola posted a second-quarter profit of $4 million versus a loss of $28 million in the prior year’s quarter as a wider loss at the cell phone unit was offset by cost-cutting and gains in the broadband business.

 Revenue was $8.08 billion, a decline from $8.73 billion in the 2007 quarter. Per share income was break even. Both revenue and net income exceeded the consensus forecasts for Wall Street analysts.

In a conference call Monday Mr. Jha said he planned to hit the ground running, making changes in the business within 90 days.

He cautioned, however, that those moves will take time to percolate through Motorola’s business.

The changes, he said “are most likely to have an impact in the second half of 2009.”

In last week’s earnings call, Mr. Brown said that separating the mobile phone unit is a necessity given the speed at which that business moves.

“It's faster. It's more software oriented. It's more full and rich experience-driven,” he said. “I think that a focused management team as well as recruiting a world-class CEO, which I think is increased from a recruiting standpoint, getting a world-class CEO at the prospect of running their own public independent company lends itself well to compete more effectively, to drive with greater speed and agility and also have a capital structure and an investment base that's more reflective of the markets that they serve.”

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Last week’s slap on the wrist for Comcast was one of the more curious chapters in the incoherent effort to regulate the Internet in the United States. The Federal Communications Agency reprimanded the largest U.S.  cable TV operator  for interfering in data exchanges between its customers. Comcast had slowed transfers between users of BitTorrent on the grounds that the sending of large files (often illegally-copied music and video) was clogging up its network.

The FCC did not fine the company for its actions but said its targeting of peer-to-peer applications like BitTorrent was discriminatory. The agency also chided Comcast’s failure to let customers know what it was doing. The company, hardly satisfied despite getting off scot-free, announced it would consider appealing the decision. “We believe that our network management choices were reasonable, wholly consistent with industry practices,” Sena Fitzmaurice, a spokeswoman for the company, said in a statement. “We are considering all our legal options and are disappointed that the commission rejected our attempts to settle this issue without further delays.”

An appeal would open a can of worms because the FCC has no clear authority to regulate the Internet. And its efforts so far have not worked very well. Consider the cost of Internet access in the U.S., one of the highest in the industrialized world.  For a triple-play subscription in Paris with Free, a French provider, I pay $45 for 70 TV channels, many of them high-definition, Internet access (20 megabit download speed) and free telephone service to more than 70 countries.

That’s about a third of what I pay in New York for services that include much slower Internet access. One reason: competition. A hesitant FCC never truly enforced rules that were meant to make Internet access a competitive sport. Instead of forcing carriers to allow independent Internet Service Providers (ISPs) access to their facilities, the big players delayed and obfuscated until many of the ISPs were practically out of business.

The Comcast case touches uneasily on the issue of Internet “neutrality,” which may be why Comcast is considering an appeal. Proponents of “neutrality” argue that all Internet traffic should be treated equally. Internet service providers say they should be able to charge different rates for different types of traffic and limit transmission rates, on the grounds that a few users can monopolize and slow the system.

Congress has considered enshrining net neutrality into law, an option that other telecom companies are not excited about. Last week, many supported the FCC’s decision, pointing out that the issue was resolved without the input of legislators.

The U.S. has rightly allowed the Internet to flourish with as little regulatory interference as possible. But was we have learned from the mortgage crisis and the Internet bubble, self-correction can elude the players in a heated market. At some point, the U.S. Congress will have to set some rules for the Web and provide the FCC the guidance it needs to create rules that make sense.

 

Microsoft dodged and weaved but never stepped up to conclude the takeover deal it initiated January 31, Chairman Roy Bostock said Friday at Yahoo’s annual shareholder meeting.

“In a deal this complex, the non-deal terms are absolutely critical,” he said, and when Yahoo’s board sought additional information on issues like regulatory clearance, Microsoft “never significantly engaged.”

Mr. Bostock, apparently seeking to refute suggestions that founder and Chief Executive Jerry Yang had sabotaged the takeover, also stressed that the board of directors maintained control over the negotiations.

“We called the shots,” he said.

When the board decided to treat a $2 per share increase in the takeover offer to $33 as a “real proposal”--even though it was conveyed in an offhand comment by a Microsoft executive—the Redmond, Washington, software company halted negotiations, Mr. Bostock said.

Mr. Bostock also said he would remain in his post despite the suggestion by Eric Jackson of Ironfire Capital, an investor who mounted a YouTube campaign to oust management, that he step down if investors withheld sufficient votes.

Mr. Bostock said the board was looking forward to the participation of Carl Icahn, the activist investor who mounted a proxy fight against the incumbent board.

When it became clear that he would not be able to dislodge a majority on the board, Mr. Icahn negotiated a deal with Yahoo to give directorships to the billionaire investor and two allies.

Carl is a “good guy” despite some negative press reports, Mr. Bostock said.

The shareholder meeting, webcast from San Jose, California, also was marked by numerous questions about Yahoo’s human-rights policy. The company has come under fire for divulging information to the Chinese government that identified democracy advocates.

Entone Inc., a San Mateo, California, company that helps telecom companies drive their TV services, Friday announced that it has closed on a $14.5 million financing round to fund a new box designed to integrate TV and broadband services while cutting installation costs.

The series B round was led by new investor Coral Capital Management with participation from prior investors Menlo Ventures and Scale Venture Partners. In the company’s A round in 2007, the company had raised $12 million.

Jim Jones, managing director at Scale and a member of the Entone board of directors, said Motorola is believed to be the largest vendor of Internet protocol TV boxes with Entone in second or third place.

Entone provides IPTV boxes for tier two and three telecom providers that have moved into competition with cable and satellite companies. Customers include Hong Kong’s PCCW, CenturyTel, which has a deployment in Wisconsin and Consolidated Communications with installations in Illinois, Texas and Pennsylvania.

Mr. Jones said Entone’s new Janus media hub, scheduled for rollout in November, contains software that emulates full IPTV and broadband services without requiring telecom operators to upgrade their networks and add extensive equipment at their central offices. The savings can run up to $2,000 per household compared to companies like Verizon that run fiber-optic cable to the home, he said.

Beyond cost savings, Chief Executive Steve McKay said Janus will enable users to view TV, user digital and web content on the high-definition TV that are increasingly common in U.S. households.

“I can access my TV, my web video, photo libraries, video libraries all presented on my TV,” he said.

He contrasted Entone’s approach, which includes professional installation from the telecoms, to the “racks and stacks” alternative that would require consumers to integrate multiple devices like Tivo, AppleTV and a digital media adapter.

“There will be a graveyard of companies doing this,” he said of the firms offering discreet services.

On the financial side, Entone is not cash-flow positive, “but it’s close,” Mr. Jones said.

 

 

UK VOD JV Kangaroo, which was already facing an antitrust inquiry of six months before even launching, is now being delayed by a further month - because the trio behind the venture haven't yet agreed on key terms. The Competition Commission (CC), which in June began an investigation in to possible market distortion, last week asked the partners for important bits of information - but BBC Worldwide, ITV (LSE: ITV) and Channel 4 said they were still negotiating on those areas and will instead supply the info in September. CC today said this puts its provisional conclusion back to November and the final deadline to mid-January.

Commercial TV leader ITV was particularly critical when the commission started its inquiry - it's facing a TV ad drop-off and banking on Kangaroo to help meet its optimistic £150 million ($285 million) web sales target, which it this week postponed by two years to 2012. Kangaroo will offer ad-supported and pay-to-view shows from the main three networks after they have been shown on free, public-service channels. But CC has already identified potential competition concerns on VOD wholesale rights and retail prices.

Related

• OFT Refers Kangaroo To Competition Commission, Launch Delayed By Up To Six Months
• Joost, Time Out Take BBC Worldwide Concerns To OFT
• Kangaroo Faces OFT Questions; Minor Inquiry

Our mobile application for Blackberry and other Smartphones brings you the latest headlines when you're on the go. Go here to download.

Telefonica's (NYSE: TEF) LE Holding Corporation, the subsidiary through which it owns 32 percent of Lycos Europe, has filed an application for an inquiry in to the "policy and conduct of business" at the once-mighty portal. The complaint was made at the Amsterdam Court of Appeal's enterprise chamber in Lycos Europe's native Holland. paidContent:UK understands the application complains that Lycos Europe management has not examined fully enough all options for sale of the company.

Lycos Europe, a JV with Bertelsmann, put itself up for sale in a strategic review back in April. But, though CEO and Bertelsmann family heir Christoph Mohn suggested AOL (NYSE: TWX) and German ad net Tomorrow Focus were bidding around €200 million, it's clear the sale process is dragging; last week Lycos Europe told me: "For the moment, there are no updates to be made." Reporting further losses this week, it said it expects to sell in the second half of this year. Dresdner Kleinwort is conducting the search.

Lycos Europe said it would review Telefonica's request. The situation is sticky as it pits the joint majority shareholder against the CEO, who himself owns 12 percent according to Telefonica.

Lycos Europe has always been a separate company to America's Lycos Inc but both sites have suffered since they were the web's most-visited back in the portal days of 1999. The US company has changed hands twice since then and the European venture has failed to capitalise on the online ads boom - though it still trumpets recent product releases like Yahoo (NSDQ: YHOO) Answers clone Lycos iQ, it's been losing money at a particularly chronic rate in the last two years. Emblematic of the state of affairs, Lycos Europe last year paid Lycos Inc $5.2 million to renew its license to use the brand, while entering the US itself under a completely different name, Jubii.

We received speculation that one bid would be put in from a suitor teaming up with Lycos Inc's Korean owner Daum, in a move that would reunite the two sites - but both Telefonica and Lycos Europe told us they knew nothing of such an approach.

Related

• OFT Refers Kangaroo To Competition Commission, Launch Delayed By Up To Six Months
• Joost, Time Out Take BBC Worldwide Concerns To OFT
• Kangaroo Faces OFT Questions; Minor Inquiry

Check out the best business jobs in digital media. Go here for paidContent.org Job Board.

The offer for Miva, a struggling ad firm from the Web 1.0 days, is $1.20 per share--a 54% premium over its recent closing price.

— Best Buy Mobile Selling More Multimedia Handsets: If you want to sell more feature-packed phones, it looks like the best way to do it is to hold a customer's hand. Best Buy Mobile units are proving a hit in shifting high-end multimedia phones. Electronics retailer Best Buy said the "store-within-store" units had seen a ten-fold increase in the number of higher end and multimedia handsets sold compared with last year, thanks to its intense focus on customer service. The nearly 2-year old joint venture with UK's mobile phone retailer Carphone Warehouse sells handsets from a variety of makers and carriers and helps customers figure out which features they want and how to use them before they leave the store. For example, they will set up a customer's email and data transfer and ensure it works. The retailer also said it had completed its roll out of Best Buy Mobile throughout its 965 US stores three months ahead of time (release).

— Google (NSDQ: GOOG) Translate On iPhone: Just in time for the Olympics. Google engineers have created an iPhone interface for Google Translate, according to Google's Mobile Blog. For those not a flat rate data plan, Google estimates that you can get between 200 and 400 translations in 1MB of data download. Google also said today that it has launched new component to its mobile search tool that will deliver sport results, country medal counts and even schedules for the Olympics. The company developed a mobile website (http://www.google.com/m/summergames) where users can browse through all the events planned for the summer games.

— ABCNews.com Mobile Page Views Up: ABCNews.com said that according to its own measurements its mobile site, m.abcnews.com, increased page views 77 percent versus the same time last year (release).

— Mippin Creates Olympics Channel: Mobile media service Mippin has created a channel dedicated to the Olympics. So far it has some 30 sites categorized from all over the world, including the BBC, CNN, AOL (NYSE: TWX), Reuters, Yahoo (NSDQ: YHOO), Google, and NBC, with plans to add more.

— GoTV Networks Host Wins 'Last Comic Standing': Iliza Shlesinger, a host for GoTV Networks, won NBC's "Last Comic Standing" last night. "Everyone here at GoTV Networks is proud of Iliza and we wish her continued success as she enjoys the year as the Last Comic Standing," said Daniel Tibbetts, EVP and studio chief at GoTV. "We've seen her talent come through on Rock On Altitude's acclaimed show, "Sex, Liza And Videotape," so she already had our vote!"

Our mobile application for Blackberry and other Smartphones brings you the latest headlines when you're on the go. Go here to download.

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The excitement hangover from the recent launch of the iPhone 3G is breathing much-needed new life into the sluggish mobile data business in the United States, according to a new research report.

 

In the report released on Thursday, research firm SNL Kagan upped its mobile data projections in the wake of the frenzy generated by the iPhone and other new smart phone models.

 

The firm now expects mobile data revenue in the U.S., which has lagged both Europe and Asia, to increase by a compound annual growth rate of 16 percent from $24 billion in 2007 to $100 billion in 2017. By comparison, the total wireless service revenue will grow by just 5 percent for the same period, the report said.

 

The firm expects data subscribers to grow at a 5.8 percent clip to $249.5 million by 2017, while total wireless subscribers will grow at just a 2.9 percent clip over the same period.

 

Price pressures on mobile voice, along with rapidly approaching mobile market saturation, and slowing service revenue growth are transforming mobile data from an immature secondary service to the primary driver of revenue growth, the report said.

 

“Right now the visible top line growth outlook in wireless is relatively modest, with declining sub gains and so much pressure on voice revenue countering the surge in data,” SNL Kagan analysts John Fletcher and Sharon Armbrust said in the report.

 

“But we think the open-endedness of wireless data options, especially related to location sensitive and personalized mobile commerce and advertising opportunities, could give wireless a second wind in the not too distant future,” they concluded.

 

To date, with the exception of SMS and MMS, mobile data, which includes services such as mobile video/TV, mobile Internet, music, and e-mail among others, has not spurred robust demand in the U.S. or elsewhere.

 

Mobile data generated about 20 percent of total worldwide mobile revenues in the first quarter 2008, according to a recent report from Informa Telecoms & Media.

 

At least part of that grow could come from cannibalized voice service. SMS and MMS, both voice substitutes, were responsible for more than 70 percent of the $49 billion mobile data generated in the quarter.