Wireless handsets

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.

Mobile DTV goes to Washington: And the effect on streaming?

The Open Mobile TV Coalition will be testing mobile DTV in the Washington DC area by the end of 2009.

Mobile DTV is a significant development for broadcasters because it is based on equipping mobile devices with DTV tuners to receive the broadcast signal rather than delivering content as IP streams. This empowers local stations and also empowers handset providers, but it obviously puts streaming mobile content more at risk.

The exact impact of mobile DTV on streaming mobile content is difficult to judge at this point because the former isn’t available and the latter is lightly consumed, but our modeling suggests that the mobile DTV approach could satisfy more than 70% of mobile content demand, if demand is measured by the spontaneous interest metric and not the “could-be-interested” approach that’s usually taken by researchers. There will be considerable network push behind mobile DTV too, since the networks don’t want to subsidize local channels but don’t want them to fail either.

Nokia indicates shift to service market

Nokia’s launch of its touch-screen high-end smartphone was also a bully pulpit for the company to make it clear that their activities with Symbian and smartphones are not the main event, but a shift into the services market.

Nokia noted that Blackberries were not successful because of the handset or the handset OS but because of the service behind them. This is the first time a major mobile equipment player has articulated what we believe is the central truth of 2009 and beyond. The industry is moving to services as operators move to monetization, and those who can create service ecosystems will be successful.

Nokia strategy reflects capex shift

Nokia is launching “Tube,” its newest smartphone today, and is expected to articulate its mobile strategy in greater detail. The company, like others, is addressing what appears to be a capex shift to wireless for 2009, a shift that would increase sales of RF and handsets and reduce that of traditional data equipment, including routers, switches, and optics.

Mobile broadband has less capacity demand than fixed, and while mobile backhaul will be an important application, our research shows it to be shifting more decisively to Carrier Ethernet and also that the total capacity requirements for mobile backhaul are lower than those of enterprise Ethernet services or consumer wireline broadband and video.

Death of analog TV could benefit telecoms

The upcoming death of analog TV broadcasting may save the U.S. cellular providers from one of the risks of an open handset — the deployment of cellphones able to tune into analog TV. This type of phone is sold by ZTE in China, where analog service will continue for another six years.

There may be a link between the open handset programs and the death of analog, in fact, because the use of cellphones to tune free TV would likely hurt telecoms’ mobile TV plans. We’re hearing that a number of firms are now looking at two dodges to the “no-analog” problem; one is working on a tuner for digital TV small enough to carry in a handset, and the other is looking at using Wi-Fi or WiMAX to deliver DVB-H TV in broadcast mode only, selling advertising to pay the bills.

IBM focuses on enterprise mobile applications

The boom in enterprise use of smartphones and the fact that carriers are anxious to promote business customers’ use of data services combines to make the space an attractive target for IBM, not as a provider of equipment but as a facilitator of mobile enterprise applications.

The latest offerings from IBM include tools to let mobile users get easy access to applications from the road, a Citrix-like capability. We believe that mobile enterprise application opportunity will be a major driver behind U.S. operators’ FMC plans as well.

Open handsets: It’s about the apps

While the number of iPhones sold is a popular metric of mobile change, the more significant metric may be the number of applications sold for iPhones. The iPhone phenomena, more than Google’s Android, is responsible for the open handset movement that is reducing the barriers to application innovation in the wireless service space.

Operators looking for IP transformation strategies have latched onto partnership relationships both with handset developers and with developers who use network APIs. The handset opportunity for operators comes because applications promote smartphones that are more expensive but also promote data service usage, a major goal.

Some research has shown that specialty applications have been responsible for the growth in data usage outside the traditional “corporate male” segment of the market. The question now is what platform will win, or how developers will split their resources across the multiple phone operating systems that are available.

Apple MobileMe as major competitor?

Apple’s MobileMe may be more than an “Exchange Killer” (or at least a competitor); it may be the beginning of Apple’s challenge to Microsoft’s Connected Services Framework (CSF) and also a challenge to network operators. Finally, it may be a boon to Cisco. The reason is that MobileMe is an example of an over-the-top application of advanced service features, and thus a step in further disintermediating operators that might want to offer similar services themselves.

That’s what Microsoft has been doing, but more in partnership with operators than as a competitor.  But it’s pretty much what Cisco had hoped to do (and presumably still hopes to do) with WebEx Connect. In all, we think MobileMe may be the most important thing about the latest iPhone announcement because it may be setting off a new industry trend. We also think that MobileMe is the revenue kicker that Steve Jobs sees in his new iPhone deals with providers, which eliminate the Apple cut of future service revenues in favor of a one-time subsidy.

Verizon open handset policy could promote loyalty

Verizon Wireless is launching its “open handset” strategy, a move that may have more impact on cellular voice pricing than its cap plan did a short time ago. Under the new program, handset makers can certify against what Verizon says will be minimal requirements and then sell directly to consumers, who will have to sign up for Verizon service but would not be required to sign service contracts. We hear that the non-contract services will be pricier than contracts offered, but that contract prices sans phone will likely be better. This will create additional slide in wireless cost and, we believe, further reduce infrastructure investment by wireless operators until an alternative revenue model is validated. We also believe it will promote FMC as a means of securing loyalty that was previously cemented through handset deals.

T-Mobile takes VoIP/wireless integration step

T-Mobile has announced it will be offering a limited trial of an unlimited VoIP calling service to broadband customers of any sort for $10 per month plus the cost of the equipment ($50). The new service may be a step toward integration of home voice services and wireless voice using dual-mode handsets, something T-Mobile has also pioneered. This is likely to create a price war in VoIP and may also hasten the FMC evolution of US providers, which will bring the femtocell/WiFi debate to a head.