May, 2009

Kindle earning Sprint just $2 in ARPU/month?

Sprint’s been happy to boast about WhisperNet subscriber additions to its network that come in the form of Amazon Kindle users, but those same metrics don’t look so pretty when Nielson breaks down the estimated Kindle ARPU for Sprint: Just $2, compared to approximately $56 to Sprint’s average post-paid phone service subscriber.

Ouch! Is Sprint breaking even on this thing? All the while, Amazon is using the Kindle as an Oprah-endorsed money mint, profiting not only on every Kindle book sale, but on the pricey eReader itself.

Looks like Jeff Bezos can drive almost as hard a bargain as Steve Jobs. Why can’t service providers negotiate a reasonable cut with these gadget superstars? (Let’s make that a rhetorical question)

What’s most worrying to me, as Kate noted previously, is that telcos are racing to duplicate the Kindle’s “success”. Are carriers in a mad dash to the bottom? Am I missing part of the picture here, or is Sprint somewhat crazy for touting its success in rock bottom-ARPU services? Why not just sell an extra couple ringtones and call it a day?

[Via FierceTelecom]

Will telco shareholders really revolt over executive pay?

Despite gloomy news for BT execs (BT CEO Ian Livingston was the only one to get a bonus), Fierce Telecom’s Dan O’Shea predicts telecom upper management will be safe from shareholder pay activism:

Still, as Washington Technology recently reported, “say on pay” measures and other shareholder activism moves have yet to find sustained footing at many telecom firms. For example, the publication said that proposals related to shareholder input on executive compensation failed to find enough support from Qwest Communications shareholders. A similar proposal misfired at Frontier Communications. Also, while Verizon has its “say on pay” advisory vote, a proposal that would require shareholder approval of death benefits for executives failed to garner enough support.

… It also is not clear how seriously corporate boards might take “say on pay” votes as they actually address the issue of executive compensation. To date, there doesn’t appear to be such a thing as a binding “say on pay” vote.

Are the industry’s shareholders really all bark and no bite, even as executive counterparts in finance and the auto industry bite the dust daily? Maybe, and if so, it’s probably due to the fact that with all the doom and gloom, telecom remains a relatively stable bet.

Just compare stock prices from some major service providers vs. major auto manufacturers the past few months:

While oversized executive pay is still definitely a topic worthy of conversation, it seems like telecom, at least as far as shareholders are concerned, might be treading relatively safe waters.

BT’s own employees, however, might be a more skeptical audience. As the Times Online reported:

The telecoms group, which recently announced plans to shed 15,000 jobs after huge losses in its IT unit, said that the award was based on “non-financial” elements, including improved customer service and “environmental and social measures”. … the move is bound to anger unions and workers who have been shed by the group.

New Obama cyber czar must balance security/economic needs

After months of speculation, this promises to be the week that Washington and security experts have been waiting for – the announcement of President Obama’s cyber czar, along with a 40-page report that evaluates the government’s cybersecurity initiatives and policies, according to The Washington Post. The report is expected to take a broad-brush approach to the issue rather than delving into details, which will no doubt lead to an intense security industry debate.

Rumor is that the security adviser will report both to the National Security Council, as well as the senior White House economic adviser. And while no one is against network security, there’s a legal and political hot potato here: What role with the adviser have in protecting private-sector networks? The word “protecting” has become politically charged because the real question is what kind of authority the National Security agency will have over “protecting” private email and phone calls.
Continued »

Huawei gains optical market share during recession, Asia-Pac build-out

China-based Huawei is at the top of the optical networking vendor pile for the first time in Ovum’s preliminary Q1 2009 results. The bigger news is that this puts Huawei ahead of optical-stalwart Alcatel-Lucent in the first three months of the year, but not for the past 12 months overall. And while optical network spending is down compared to 2008 for the past two quarters, Asia-Pac spending was remarkably strong.

Specific reasons for Huawei’s performance are varied, but they include China’s 3G network build-out race, in which Huawei figures prominently as a vendor of choice, according to Ovum’s Dana Cooperson, VP of optical networking. And like Las Vegas, what’s sold in Asia-Pac is often deployed in Asia-Pac.

Continued »

More LTE vendors join the 4G party (but no cake for Nortel!)

Lately, 4G is starting to seem like (relatively) easy money for everyone … or rather, everyone but poor, beleaguered Nortel, which is starting to remind me of Milton from Office Space, never getting a piece of the cake even as they watch it distributed all around them:

Nina: Now Milton, don’t be greedy, let’s pass it along and make sure everyone gets a piece.
Milton Waddams: Yeah, but last time I didn’t receive a piece. And I was told…
Nina: Just pass.
[while the cake passes Milton mutters - eventually everybody but Milton gets a piece]
Milton Waddams: [muttering] I could set the building on fire.

Today, Verizon announced that Giesecke & Devrient will be the supplier of the telco’s LTE smart cards, one step closer in bringing its planned 4G juggernaut to the masses. It will be a long, long time until we see LTE phones, of course, but already G&D and other suppliers are starting to see the 4G stimulus roll in.

Verizon also announced today Gemalto would offer the company’s OTA platform for LTE.

Meanwhile, FierceWireless notes a UBS report that claims AT&T has shortlisted Continued »

Wireless wizard: AT&T partners in search of valid revenue stream

AT&T has taken on a partner in Sunnyvale-based Jasper Wireless, a company that will provide the technical infrastructure so AT&T can support a new generation of wireless devices like navigation systems, e-readers, mobile Internet devices, netbooks, healthcare and tracking systems, to name a few. The target markets? Consumer and business.

In the old days, AT&T probably would have developed the inner-workings itself. But this partnership is about speed to market, and Jasper Wireless’s whole reason for existence is to “provide the platform, applications and design services needed to profitably connect and manage devices worldwide.”

By using the billing capabilities in Jasper’s software and AT&T’s wireless network, AT&T hopes to create a billing “relationship” with customers more quickly. In this multi-year agreement, Jasper brings its service platform to the table with the applications that help customers build, deploy and manage connected devices. AT&T is Jasper’s exclusive U.S. carrier for its wireless platform.

In a recent New York Times interview, Glenn Lurie, president, Emerging Devices and Resale, AT&T Mobility and Consumer Markets, acknowledged that while there’s a flurry of market activity around wireless access for gadgets, the market is in its infancy. I was relieved that Lurie sounded very clear that no one is clear what the business model looks like yet. Specifically he said: “You’re going to see a lot of people throw a lot of things out there and see what sticks.”

Maybe it will be a little bit like Apple’s iPhone apps. It seems every time I turn on the TV, I’m told that no matter what I might need, Apple’s iPhone has an app for that. Maybe wireless operators will want me to have all sorts of convenient wireless services.

Think Amazon Kindle. The AT&T partnership was announced the day after Amazon said it would release yet another Kindle in June. The Kindle DX is a large-screen (9.7 inch) version optimized for newspapers and magazines for $498. Now I am a recent Kindle 2 owner, and every time I download a book to my device in a matter of seconds, I think about the Amazon model of offering customers “free” wireless access. Since the Kindle’s launch in 2007, Amazon’s whisper-quiet partner has been Sprint, which runs the Whispernet (EVDO) network. Wispernet delivers e-books to me quickly and quietly. Someone pays for it of course, but for once, it’s not me.

The Amazon Kindle/Sprint Whispernet deal no doubt gets other operators’ attention. Sprint may provide the access, and other operators may want to go farther and get a more direct cut of the content. AT&T’s Lurie believes Jasper Wireless can help AT&T get into the wireless device market faster.

According to AT&T:

For some AT&T powered devices, Jasper Wireless’s applications will provide automated operational management capabilities, including custom device provisioning, instant activation, real-time diagnostic tools and detailed billing and usage reports – managed through a Jasper Wireless core software-as-a-service platform designed exclusively for M2M and consumer electronics communications.

By all means, companies should experiment, and wireless operators need to find a comfortable revenue stream, maybe even one that doesn’t make them mere transport providers. Lurie says AT&T wants to experiment with different models that could include charging customers for short-term or prepaid wireless access – both of which sound interesting.

Being a service-provider supporter, somewhere in all of the experimentation, I hope something lucrative sticks.

Wi-Fi: You can take it with you

Being neither 3G nor 4G, Wi-Fi, with its “no G” status, is much in the news these days, which goes to show that beyond the next-gen hype, there’s life (and competition) in Wi-Fi yet.

First let’s look at Qwest, which is offering its high-speed Internet customers a good deal — free Qwest Wi-Fi access at 17,000 hot spots nationwide. Qwest Wi-Fi is actually rebranded AT&T Wi-Fi, so there’s no doubt a wholesale deal in place. Some years ago, this deal would have been unthinkably anti-competitive, but both of the former Baby Bells operate in completely separate wireline territories, and Qwest doesn’t own any wireless assets. So why not?

Continued »

Are you worried about telecom’s “Mad Max” moment?

It’s not hard to find arguments that concerns about IPv4 address exhaustion are overblown and can be forestalled by re-distributing already allocated, but unused space.

Not one advocate of that approach, however, presented at this year’s FutureNet “Beer and Pizza Shootout,” which tackled just that topic head on.

Panelists ranged from academics to service provider representatives to “Big Iron” providers like Cisco. They all agreed that doing the IPv4 Do-si-Do was a losing proposition. As the acting CEO and President of American Registry for Internet Numbers (ARIN) John Curran explained, shuffling numbers around would mostly just complicate routing and addressing administration for service providers while doing little to actually forestall an eventual turnover.

Sure, he admitted, some corporations would be convinced to hand over swaths of unused IP addressing, at a price, but the headache of constantly bidding and transferring addresses, combined with the extra routing horsepower needed to sort the once logically arrayed addresses, simply did not make sense, even as Continued »

Is IPv6 a sure thing? Not if the Pouzin Society has anything to say about it

The Internet architecture is fundamentally broken, and IPv6 solves almost nothing. It only delays the inevitable.

This is the somewhat ominous warning sounded by John Day, author of in Patterns in Network Architecture: A Return to Fundamentals and co-designer of both ARPANET and the Internet. To address the problem, he’s founded the Pouzin Society. The name sounds like something out of a Dan Brown novel, and the society’s goal - to fundamentally re-architect the Internet - is probably a bit harder than blowing up the Vatican, but the group is serious about confronting head on what they see as a looming threat Continued »

If RIM can’t do it, can anyone?

RIM’s business philosophy has long placed a high premium on carrier relationships, and the launch of the BlackBerry mobile store wasn’t supposed to be a departure from that, as RIM took careful pains to let each carrier have their own, customized front, if they so choose. But I wonder if the launch will ultimately be a boon or bust for the carriers involved.

Today, getting access to BlackBerry services requires an extra subscription fee, part of which is kicked over to carriers, and it would appear that some popular features — such as WiFi or unfettered GPS access — have previously been quietly left out at carriers’ requests. But while RIM was careful to launch the store with a bevy of paid business tools, “free” may still be the only price most customers are really interested in, which means double trouble if those apps drive up bandwidth consumption without adding revenue, even if carriers do manage to get a cut of at least a portion of paid apps.

I’ve been informally tracking the most popular downloads at the BlackBerry App World, and have yet to see (I may have missed one or two) a paid app crack the top 25.

Even more worrying? A good number of the top downloads are major wireless bandwidth hogs: Streaming music like Slacker Radio or Pandora (a personal favorite), or even worse, a YouTube video player. While these applications boost customer satisfaction, they don’t add a dime of revenue even as they increase the bandwidth an individual user might take up. Remember, while the iPhone has been the darling of AT&T’s customer growth, it came at the price of the mixed blessing of much, much higher data usage.

Related Reading:

• Mobile app stores deliver little direct revenue but are critical for ARPU