Various sources are reporting (e.g., WSJ, reg. required) that Sprint may jettison Nextel in order to make itself more attractive for its own potential merger or acquisition (possibly with Deutsche Telekom).
Sprint, the number three U.S. carrier, continues to lose subscribers as rivals AT&T and Verizon grow. A combined T-Mobile and Sprint would become the largest U.S. carrier in terms of subscriber numbers but what's to guarantee that such a merger wouldn't be disaster redux. The Sprint-Nextel merger has emerged as one of the most spectacular failures in corporate merger history.
Yet given the negative trends at Sprint vs. its rivals the company is almost compelled to do some sort of deal to regain momentum.
Nokia dominates the handset market globally, with roughly 40% market share. However, in the U.S. it has only about 10% and is an underdog, especially in the smartphone market where Blackberry and the iPhone dominate. (Nokia's smartphone dominance in Europe is one reason the iPhone isn't performing as well there.)
Now the Finnish handset maker is preparing going to flood the U.S. market with a range of new products -- a version of spaghetti on the refrigerator -- to see what gains acceptance and adoption, in the hope of driving more consumer adoption.
Blackberry is making a broader global push itself but will bump up against Nokia too in perhaps the same way the iPhone has outside the US. It needs to do so in order to defend against what will certainly be an eroding U.S.-based smartphone market share as the iPhone gains adoption in the enterprise and Nokia's more aggressive U.S. move puts pressure on the "e-mail device" maker.
Verizon's embrace of "open access" last year ahead of the 700MHz auction was met with skepticism by many. But the rules governing the winner of the "C-Block" spectrum (Verizon) mandated "any legal device" be allowed on the network. Now, Google contends, Verizon is effectively trying to rewrite the rules by taking a position contrary to the intent of the open-access provisions.
Google, in an FCC petition filed on Friday, is accusing Verizon of trying to discriminate against third-party devices and applications. Google summarizes what it believes to be Verizon's position in the petition:
Notwithstanding the clarity of the rule, Verizon has taken the public position that it may exclude its handsets from the open access condition. Verizon believes it may force customers who want to access the open platform using a device not purchased from Verizon to go through “Door No. 1,” while allowing customers who obtain their device from Verizon access through “Door No. 2.”
Presumably Verizon, under such a framework, would give preferential treatment to its own customers and devices.
This is a fight that Google should win. We'll see if it does.
Reuters picks up on a German magazine report that suggests Deutsche Telekom might try and acquire some or all of troubled U.S. carrier Sprint.
If such a deal were to happen between the third largest US carrier and Deutsche Telekom, which owns T-Mobile (the fourth largest), it would create the single largest wireless carrier in the US. Combined subscriber numbers would be approximately 82 million vs. AT&T's 70 million. However, there are technical, infrastructure and regulatory issues that might inhibit or block such a deal.
Skyhook Wireless is updating its SDK for developers and integrating locally targeted ads from mobile ad provider Quattro Wireless. What this means, as a practical matter, is that those who use the Skyhook SDK to develop mobile applications (on phones that are Wi-Fi enabled) can elect to receive text or display ads for those apps as part of the package.
Skyhook CEO Ted Morgan told me this works with the majority of handsets and platforms, but there are some workarounds that need to happen for the iPhone.
Skyhook has observed greatly increased user response rates to locally targeted ads on the desktop compared with similar ads in a non-geotargeted context. That effect should be even more pronounced in mobile.
AT&T is reportedly ready to launch Qualcomm's MediaFLO, as its mobile TV service to rival Verizon's VCast. It will debut on two phones (LG and Samsung) and be available in 58 US markets. Ten channels will be featured, eight of which are common with VCast and two which are exclusive. Here are the common channels: CBS Mobile, Comedy Central, ESPN Mobile TV, Fox Mobile, MTV, NBC 2Go, NBC News 2Go and Nickelodeon.
There's plenty of emprical evidence that the public is not (yet) interested in mobile TV. Mobile video clips (e.g., YouTube or movie trailers) -- maybe. Though reports are that the quality of MediaFLO is decent, the infrastructure doesn't really support mobile TV in the US. Further, as an additional cost item ($15 per mo.) it's not going to fly for most users.
If mobile Internet access is not perceived as necessary by many mobile TV is even farther out from the needs of users. The Wall Street Journal cites Yankee Group data that reflects approximately 5% of US consumers are willing to pay for mobile TV. This is attitudinal rather than behavioral; so I would guess the numbers in reality would be somewhat less.
Currently M:Metrics has reported mobile TV viewing among <4.6% of the US user population, while Pew reported 10% (at any time) and 3% "watch video" on a "typical day." Those numbers, extrapolated, do turn out to be a lot of people potentially with an appetite for video on their handsets, though not necessarily mobile TV. Most people are simply going to pass on the offering because of cost and inferior user experience.
Yet there's almost a compulsion among the carriers to develop mobile TV offerings because of the competitive environment and the need to develop new revenue sources. But for some time to come, mobile TV will not be one of them.
Vodafone has announced unlimited data access as part of service bundles:
The move means that pay monthly customers will no longer need to buy an additional internet bundle for £7.50 but instead every plan will automatically include internet access. The new plans will give Vodafone customers reliable and fast unlimited* access to their favourite social network sites, email and the whole of the internet when out and about in the UK. Vodafone customers will now have even greater confidence to browse the mobile internet without the worry of additional charges, no matter what monthly plan they choose.
Flat/unlimited pricing removes uncertainty and motivates more mobile Internet usage.
What's also interesting about the release is the following:
Top 4 searches on the Vodafone Mobile Internet (VMI) (ranked by most searched first)
Top 10 mobile internet sites on VMI (ranked by most visited first)
We just pulled consumer research from North America that shows limited usage of social networking sites in mobile. More on that later.
There was a time not terribly long ago when Yahoo! was described as slow or often having been outmaneuvered by its rivals in particular acquisition deals or business development. Not so in mobile.
Yahoo! is moving more quickly and aggressively than some of its rivals to lock up ad distribution (and mobile search) deals with carriers around the globe. Accordingly, Yahoo! is now in another deal with another carrier -- this time T-mobile in the U.K. for targeted mobile display ad distribution on its "Web 'n' Walk" service.
The company already has a relationship with Vodafone in the U.K. The top five U.K. mobile operators are Vodafone, O2 (which has the iPhone), Orange, T-mobile and Virgin.
We've forecasted that mobile ad revenues in the major countries of Western Europe (16) will reach $2.76 billion by 2012. Total mobile ad revenues for North American and Europe (as we've defined it) will reach $5.08 billion during that time frame.
Wired has a lengthy and relatively entertaining piece, The Untold Story: How the iPhone Blew Up the Wireless Industry about the genesis of the iPhone and some of the drama behind its development. There's no question this is the most significant mobile device of the past decade. Whatever its ultimate sales, it has changed the landscape (at least in the U.S.) for good.
But while it has shaken things up but it's not entirely clear what the ultimate impact of the iPhone will be. As Wired contributor Fred Vogelstein points out:
It may appear that the carriers' nightmares have been realized, that the iPhone has given all the power to consumers, developers, and manufacturers, while turning wireless networks into dumb pipes. But by fostering more innovation, carriers' networks could get more valuable, not less. Consumers will spend more time on devices, and thus on networks, racking up bigger bills and generating more revenue for everyone. According to Paul Roth, AT&T's president of marketing, the carrier is exploring new products and services -- like mobile banking -- that take advantage of the iPhone's capabilities. "We're thinking about the market differently," Roth says. In other words, the very development that wireless carriers feared for so long may prove to be exactly what they need. It took Steve Jobs to show them that.
Carriers thus have an opportunity to avoid the "dumb pipe" scenario. Let's see if they can.
Frontline Wireless, which was backed by Silicon Valley VC luminaries, has apparently folded. The company was unable to put up the $128 million "reserve" required by the FCC as a condition of bidding on the 700MHz spectrum.
Separately AT&T cited economic weakness to explain large numbers of customers not paying their bills. I wonder if AT&T (a potential bidder) will decline to bid accordingly. In addition, of the more than 250 firms that applied to bid on the wireless spectrum, it's not clear how many will actually put up the reserve payment and show up to bid in earnest.
The fewer the bidders, the more likely Google will have a real shot at winning the auction.
One of the featured products at this year's Consumer Electronics Show introduces simplified access to free directory assistance from a fixed line telephone. A GE-branded cordless home phone (model # DECT 6.0) features single-button, speed-dial access to GOOG-411 (normally accessed by dialing 1-800-GOOG411). This is a hardware-based, preemptive strike resulting from a partnership between one of the leading providers of cordless phones and the undisputed leader in Web-based search.
Google introduced GOOG411 roughly a year ago as its brand of speech-enabled mobile search. It has not yet added the sorts of audio-based advertising that provide an obvious revenue model around category search and location-based marketing. Instead, Google is still in development mode, introducing a trialling a multiplicity of access methodologies for its local search service. The button is hard-wired into the GE handset, but it could just as easily be rendered as a soft-key or widget on the touch-sensitive screens of forthcoming smartphones.
Meanwhile, because automatic connection is baked into GOOG411, it should not be long before DECT 6.0 owners begin to use the button as an intelligent speed dialer. The good news is that the original query is through a tool free number and, thanks to IP connectivity, Google provides call completion for free.
Single button access, offered by Google and others, are poised to change long established user behaviors, like dialing 411 or longer, toll-free access numbers. This is a major threat to incumbent, fixed line DA providers that generated something like $3.5 billion in highly profitable revenue from roughly 4 billion calls last year. Meanwhile, thanks largely to the fact that Google has yet to attach either connection fees nor promotional charges to its service, advertiser supported, "free" DA services generated less than $20 million in top line revenue.
The partnership with Thomson/GE shows that Google will pursue a number of avenues to generate more call origination. No firm has been better at converting activity to revenue and profits.
By agreeing to by subscriber data specialist Apertio for $205 million, Nokia/Siemens highlights the importance of real-time access to a flexible database of subscriber data to telephone carriers introduce and support services that cross customary boundaries between fixed line and mobile communications. Red Herring considers the price to be a hefty premium over previous assessments of the firm's value.
A Spokesperson for Nokia/Siemens noted that the companies have already worked together for a number of years and that Apertio already has Orange, T-Mobile, Vodafone, and O2 as customers and is testing Apertio's technology with at least three U.S. carriers
This morning Yahoo announced that it had inked another major wireless distribution deal, this time with Latin American wireless services provider America Movil. Yahoo's oneSearch "will be the default mobile search service on America Movil's wireless carriers' portals," which cover 16 countries and roughly 143 million mobile subscribers in Latin America and the Caribbean.
In response to a question I posed about the advertising component of the deal, a Yahoo spokesperson said:
Yahoo will work with each AMX affiliate (regional carrier) to determine the advertising model that best supports their efforts. Yahoo will be integrating their "consumables" content (aka ringtones, wall papers etc), as well as tailoring the mobile search experience to best suit consumers in the individual countries.
These global carrier (and several OEM) relationships either mean Yahoo Go will be preloaded or oneSearch will be on the so-called "carrier deck." That arguably gives Yahoo more direct access to mobile consumers and reach than its main rivals. However, one of the outstanding questions is whether the carrier deck will continue to hold sway over consumers as they become more sophisticated about the mobile Internet.
At least in the U.S., preliminary data from an iCrossing survey conducted earlier this year indicated that consumers were pursuing the major search sites on mobile devices "off deck." However, Yahoo is one of those sites too.
Here's more from Reuters.
The Wall Street Journal reports this morning that the FCC has released the list of bidders for the 700MHz spectrum auction set to begin next month. Beyond the handful of players (AT&T, Verizon, Google, et al.) already reported, the list includes a whopping 266 firms or investors (96 of those applications were actually accepted.)
That number of bidders almost guarantees that the winning bid will exceed the $4.6 billion that Google said it was willing to put up (presumably that's not the ceiling for Google).
The WSJ speculates that the auction might fetch up to $15 billion for the spectrum licenses. Here's more from BusinessWeek.
Related: Forbes reports on a further release and auction of wireless spectrum in the UK.
Fortune writes about the brewing 4G wireless standards battle. It's an interesting piece but the issue, as the article points out in the end, is about consumer demand for services like mobile video.
One of the top consumer complaints about the "mobile Internet" is that network speeds are too slow. Advanced mobile networks will help address that but there's also a very mundane issue here in the form of pricing. Many people currently do not have a mobile Internet plan. One reason is that they don't perceive a need, another is price.
Carriers and other content producers should not expect consumers to fork over money for premium services too much beyond what they're paying for mobile voice and data now. For example, people will NOT be willing to pay for voice, text messaging, mobile Internet -- and mobile TV. These services will all need to be bundled in a relatively affordable package to get consumers to bite, otherwise they'll just avoid things like mobile video or go to where they can get it for free.
Here's the news from the release that went out this a.m.:
CallGenie, a leading provider of localized, voice-enabled search solutions to Yellow Pages publishers, directory assistance providers and wireless carriers, today announced that it has entered into an agreement with AT&T, in which Call Genie will provide its EVD (Enhanced Voice Directory) business category search product and related services to support the AT&T business category search feature. This feature will give users of AT&T directory assistance the opportunity to search by type of business in addition to searching by business name in the 9 Southeastern states.
CallGenie recently acquired mobile content provider and ad exchange PhoneSpots, as well as EU-based DA services provider BTSLogic.
Number three U.S. wireless carrier Sprint has named Daniel Hesse the new CEO of the embattled company. Hesse was formerly the CEO of Embarq, a local phone company that was spun out of Sprint after the Nextel merger. The Wall Street Journal explains the rationale behind the appointment:
One reason Mr. Hesse was attractive to Sprint Nextel's board -- beyond his telecom industry experience -- was that he was not a longtime employee of either Sprint or Nextel. The two companies merged in 2005 but their cultures have never really integrated. Many Sprint employees say Nextel's poor network infrastructure was the root of the combined companies' recent turmoil, while Nextel views Sprint as overly bureaucratic and slow-moving. Since he joined the company after the Sprint-Nextel merger, Mr. Hesse isn't infected by the bitterness of the merger and is less likely to be perceived as biased to either camp.
One outstanding question is whether Sprint will go through with its planned build out of a national WiMax network, estimated to cost more than $5 billion. Sprint's mobile data service operates on a 3G network and it's behind most of the MVNO services in the US, including Helio (partly), VirginMobile and the connectivity behind Amazon's novel Kindle eBook reader and service.
For $4.99 per month (for 20 messages) Alltell subscribers can now receive voicemail messages as text. The service is provided by SpinVox, which converts speech to text messaging. It costs $19.99 monthly for 100 "conversations."
Price is an issue here. Even though text messaging is a convenient way to receive voicemail messages and corresponds to the way that messages can be consumed in VoIP systems on the desktop, the additional $5-$20 a month may not seem "worth it" to many mobile users.
However, the service will likely be coming to more carriers in the future.
MetroPCS, the number seven U.S. carrier, has joined the ranks of those seeking to bid in next month's auction. It now will be competing with Google, Cox Cable, EchoStar, Frontier Wireless, Cablevision, Leap Wireless, AT&T and Verizon in bidding for the spectrum licenses.
As we discussed and argued previously, Verizon's open access inititative was partly a response to Google's Android and the announcement effectively made Verizon a de-facto member of the Open Handset Alliance. Now the company, according to BusinessWeek, is formally embracing Android:
Chief Executive Officer Lowell McAdam says it now makes sense to get behind Android. "We're planning on using Android," McAdam tells BusinessWeek. "Android is an enabler of what we do."
Not only did the company decide to support Android, but McAdam says the new platform was a key influence in adopting open access. "Android really facilitated this move,"says McAdam.