Mobile

Sprint & WiMAX partners to invest more in technology development

Sprint and others in the WiMAX partnership have agreed to contribute more money to the 4G wireless technology despite the view by some that WiMAX is the poor stepchild of 4G and that LTE is the anointed. The problem is that they have fallen into a nomenclature trap. 4G technologies are alike in that they’re the generation after 3G, but WiMAX and LTE are in different families, and in truth are not likely to be very competitive.

WiMAX is aimed at migratory users who operate from a small number of fixed locations in some random sequence—hence our name for the group and the behavior. LTE is a successor to 3G mobile service, largely aimed at a mobile or at least a regularly moving population. The preferred LTE instrument is the smartphone; for WiMAX, it’s the tablet or the netbook.

We think Sprint and its allies are on to something here. Wireless behavior is constrained by its device support, and little devices are not great vehicles with which to view content or even web pages. Yes, there will be many iPhone and Android lovers who will use their mobile devices from fixed locations, but we think a large number of users will adopt a larger device designed for sedentary applications in cafes and other locations.

There’s still plenty of time (and ways) to mess this up, but we think Sprint could redeem its position with WiMAX. In fact, it’s the only way it can do that. Sprint is cutting its workforce, which hardly speaks favorably about its prospects with normal cellular services.

New broadband stimulus proposal emerges from FCC inquiry

A proposal to pay ISPs to connect broadband customers is one of those that’s emerging out of the FCC broadband policy debate, and the concept has some merit. A direct payment for a connected subscriber might address the fact that there is a very large base of consumers who can get broadband but don’t, and not being willing/able to pay for it appears to be the largest reason.

A subsidy would be a strong incentive to boost broadband usage, but there are major risks. The incentive might spawn another overlay CLEC model that doesn’t really address cost management and thus doesn’t create a viable market. Users might be pirated to gain their subsidies and given substandard services. Some significant tuning on the idea is essential if it’s to form an element of a future broadband policy. We think, for example, that the funds should go only to ISPs who provide facility-based services.

Verizon’s smartphone direction still chasing AT&T?

Verizon is apparently planning a total smartphone blitzfor the holidays, including the already-discussed Droid from Motorola, but also according to rumor, a new HTC Android smartphone and perhaps a third model as well.

The Verizon moves are, we think, are calculated to make things complicated for AT&T and Apple with the iPhone for the holidays. A multiplicity of models at various sizes and price points makes sense at this stage in the market, but there is no question Apple still has the cachet that other smartphones have so far been unable to match.

We think all of these smartphone wars are a signal that whatever the FCC might do with wireless net neutrality, operators are committed to the mobile web.

Mobile web has “senior” appeal

Mobile web use is actually growing fastest among seniors, according to a recent report. While much of this is due to the very low adoption rate there (3% of mobile web users are over 65), part is also likely due to the fact that applet-based or widget-based web tools are easier for seniors to navigate and more directly linked to their needs.

Research has tended to show that older users use the Internet more narrowly, “by rote,” and thus may be less interested in the range of things that you can do on broadband than with the specific need to find a restaurant or store, for example. This means that a wireline broadband appliance tuned to provide at-home information like TV schedules, health information, etc. might induce more seniors to adopt broadband at home.

Policy clues surface as FCC hits its stride

The FCC is hitting its stride in regulatory policy terms, primarily relating to the issues of next-gen voice. In one matter, the FCC has already asked Google for specific details on Google Voice, in response to AT&T filing a complaint that the service was really a regulated voice service and was discriminating against open call routing to exchanges with high reciprocal compensation rules.

Now the FCC’s chairman is making it clear that his FCC thinks mobile services are the really hot regulatory issue. Genachowski applauded the AT&T decision to open its mobile network to VoIP services and the Verizon Wireless partnership with Google. He still feels that mobile services aren’t necessarily as competitive as the FCC would like. The knotty issues for mobile are the application of net neutrality and the question of open handsets and handset subsidies.

Google Voice, Apple, AT&T and the FCC: The flap continues

Google has released some information that suggests that Apple’s statements to the FCC in July about blocking Google Voice were not correct, and the rumor is that even more damning information is available at Google for release should Apple not reconsider its position.

Apple claimed that its “rejection” of the Google Voice application was for look-and-feel reasons, but the Google release suggests it was explicitly because Google Voice competed with basic Apple/AT&T functionality, something the FCC would likely rule on.

This issue could bite both Apple and AT&T because an actual false statement to the FCC would be bad politics, at the minimum. We say this because it’s not clear whether the FCC really has authority over Apple and handsets. The FCC would have to contend that Apple was simply a stalking horse for AT&T interests in this case, and AT&T is within the FCC’s jurisdictional web.

Motorola’s Android phone: good but compelling enough?

Motorola has launched the Cliq smartphone, its first Android operating system model and one that offers users a kind of “mashup” launch page called Blur (not much marketing zip) that consolidates social network, email, and IM into a single page.

Motorola has been a major laggard in the smartphone space, and it’s now teaming with T-Mobile for the Cliq launch, since T-Mobile has the longest history with Android phones. There are also some international prospects for Cliq, but the problem is that the gadget doesn’t have any really compelling benefit and thus may not be enough to pull through a lot of additional sales for Motorola.

We think the Android choice is smart. Nobody but Apple, Blackberry and Palm can hope to sustain a developer program on their own these days. The problem is that Motorola has waited so long that it’s going to be incredibly hard to differentiate its announcements from the pack.

Smartphones drive wireless, Android updates in pipeline

Whether smartphones clog cellular networks or not, they’re in demand as flagship elements of engagement with the consumer. They also help reduce a provider’s churn and let the provider churn opponents instead.

No wonder, therefore, that Sprint will be launching the HTC Hero smartphone in October. Sprint already has an exclusive on the Palm Pre, but the HTC Hero is the first Android device Sprint has deployed and only the third deployed in the U.S. (the other two are offered by T-Mobile).

Google is also rushing upgrades to Android. There are three in the pipe, and we hear the first is imminent. We’re told by two providers that discussions are underway to do away with voice-only pricing and standard handsets for new customers and instead move to an integrated plan.

Both Verizon and AT&T already require data plans for smartphones, and smartphone pricing is likely to sink to the point where making them the only customer option becomes practical. When? It won’t happen till 2011 in our view.

FCC on wireless: Defining competition is task one

The FCC voted unanimously to move both of its wireless investigations to the formal Notice of Inquiry phase, but it is clear that (as usual) the body is divided along party lines regarding just what might be done.

Democrats think the industry has competitive issues and Republicans do not. Their differences seem to us to come out of the definition of “competition.” Republicans want to define it as having multiple wireless provider choices available, while Democrats define it as having relative freedom and flexibility to exercise handset and service options without being locked into a single provider.

In short, the “mobility” of customers is a concern of Democrats, and that may be a harder point to cover in a regulatory sense.

Service provider capex takes off in second half 09

Service providers are planning to increase their capital spending in the second half of the year, according to a number of financial industry and media sources. The exact percentage of increase and the way it will be distributed among vendors hasn’t been reported.

But our current data suggests providers will spend between 18% and 40% more in the second half of the year than the first, that spending will be balanced so wireless gets about 35% more than wireline, and that edge and metro networks will get a bigger boost than deeper core (in large part because the former groups were cut more in 1H09). As we’ve noted before, we expect most of the money to be spent between mid-September and the end of the year.