Out of the Blue

The Original Social Network™

My teenagers spend too much time on Facebook! They’re not alone. The numbers are staggering. There are 60 million active Facebook users, who spend an average of 20 minutes each day on the site. My teenagers (one HS, one college) spend more time than that on the site. In fact, more than half of Facebook users return daily, which tells me my kids’ behavior is not unusual. There are 250,000 new registrations each day, with 65 billion page views per month. It’s also the No. 1 photo sharing site on the web. More than half of Facebook users are outside of college, with 25 years and older being the fastest growing demographic. At this rate, Facebook could take over the world, everyone would be in a social network, and there would be no war, or conversations.

The term “social network” is a misnomer. What is social about sitting in front of a computer for 20 minutes or more a day when you could be have a real conversation, live or over the telephone, to your real friends. Some kids think talking is lame when you can text or go on a computer and post something on someone’s wall. Sure, sharing pictures of your friends shows your other “friends” how much fun you’re having. But when you’re simply adding more devices between you and the other people with whom you’re interacting, what’s social about this?

I have my own hierarchy of social interaction:

1. Talking, The Original Social Network™, which includes face-to-face and telephone conversations (and involves taking time to listen, another important skill lost in the proliferation of social networks).
2. E-mailing, which involves a computer but is person-to-person interaction, although e-mail doesn’t allow people to really “connect” and in this way, is rarely personal or intimate.
3. IM’ing, Chat and SMS/Texting which, based on the Text messages and IM’s I’ve seen, are so cryptic as to not qualify as a conversation or meeting of the minds.
4. Social Network, including MySpace, Facebook, Reunion, etc.

I made a New Year’s Resolution to e-mail less and call friends more often, on the telephone. Whenever I have time, driving in a car or waiting for a plane, I now call and talk to my friends, Let’s talk soon!!!

Tags: Facebook, Social+network, myspace, e-mail, SMS, messaging

700 MHz Auction, Incumbents and Google

The 700 MHz spectrum to be auctioned next week has been called the “last beachfront property”, and judging by who’s in and who’s out, it will not be for the feint of heart or light of wallet. This auction will be unlike others before it in one significant way — the incumbents who usually dominate spectrum auctions will not have the deepest pockets — Google clearly has those!  During the last big mobile spectrum auction, for PCS in the mid-1990’s, I was on the auction committee of US AirWaves, a leading contender. A lot of money came to those auctions, and prices rose very quickly. In one week, prices rose to a point where three of the top bidders dropped out. We were one of them. It was a tough decision, but we concluded (and others apparently agreed) that the higher prices wouldn’t support the business contemplated. (As it turned out, some of the “winners” of the C-Block auction didn’t as much money as they bid, and when it was over, there were bankruptcies, court fights, and ultimately a re-auction.) That will not happen here. The big question in the upcoming 700 MHz auction, with Google, AT&T and Verizon all likely bidders, is how deep will Google reach in their pockets to buy the licenses it needs to be a player? Recall that Sprint and the GSM players (Voicestream and OmniPoint, which are now T-Mobile) put together their national networks in the last mobile spectrum auction. If Google puts its money where it’s mouth is, there are going to be some very tough decisions at all of these companies, and not everyone is going to be a winner, except the US Treasury!

http://money.cnn.com/news/newsfeeds/articles/djf500/200801181849DOWJONESDJONLINE000967_FORTUNE5.htm

Tags: Google, AT&T, Verizon, 700+MHz, FCC, auction

Google, Sprint, 700 MHz Auction and Open Access

There’s no fun like participating in an FCC spectrum auction. I was on an auction committee for the PCS auctions in the late-90’s and it was both exciting and all-consuming. (More on that later!)

My question is, why is Google going to waste time (and money) in the upcoming 700 MHz auction, then more time (and money) building out a brand new network that won’t be up until at least 2010 when they could just go buy Sprint and have a national network up, running and generating revenue now? With a market cap of $27B, Google could buy Sprint for $30B. They could then spin off Nextel (so it can return to being a great business solution) and Boost (which should be a standalone), and sell off their stake in Virgin — see my unsolicited advice to Dan Hesse below. In this way, they could lower the acquisition cost, Google would realize its Open Access vision immediately, or at least after the anti-trust review. Alternatively, Google could make a strategic investment in Sprint exchange for an Open Access deal, allowing Sprint to harness Google to turn around a company that can’t seem to turn itself around.

Tags: Google, Sprint, 700+MHz, auction, Virgin, Boost, Open+Access

WiMAX and the Transition to the Internet Service Model

Been helping a client on a WiMAX project over the last eight months, and several things occur to me. First, the debate about WiMAX vs. 3G is all wrong. Second, WiMAX is going to happen. Third, WiMAX is game changing, not necessarily as a technology but, along with the current 700 MHz spectrum to be auctioned, a key part of the major transition now in progress from the Telecom Services Model to the Internet Service Model. 

This is a new business paradigm. For the last 25 years, mobile services have utilized a Telecom Service Model -- a measured voice service to which messaging/data is an add-on vs. WiMAX (fixed and mobile), which is an Internet Service Model (always on, non-usage sensitive, open access, standards which facilitate a wide-range of non-subsidized devices/appliances with embedded connectivity). This Internet Service Model is an IP data service to which voice is the add-on (and in developing countries, will be the killer app). It's all about perspective, so cellular providers are essentially voice people who are wrestling with data, applying or attempting to apply voice pricing models to data, and wondering why end users want, for example, more than the 100 YouTube videos that VZW has selected for their subscribers; these Telecom Service Model adherents are people who want each handset on a plan (and contract), and where each customer must be "controlled" and activities/options limited, i.e., spoon feed them in the walled gardens. 

 

Those approaching WiMAX with fresh thinking see the non-stop social networking and insatiable demand for user-generated content driving an "Age of Personal Broadband", where every computer in the home has connectivity, and fixed/mobile appliances, from cameras to refrigerators to vehicles, have connectivity through embedded chips. (Just walking around CES last week provided a glimpse of this!) Every household has a broadband account, and maybe their own home network with multiple devices but there are also portable and mobile devices that share access, as add-on which are registered on the network and maybe pay a small incremental per-device monthly fee, but more importantly, all of this supports the non-stop social network and huge demand for content not in the controlling way of the Telecom Service Model and incumbent operators, but in the Internet Service Model. In emerging markets, where few have PCs or mobile devices outnumber PCs (and always will), browsing and VoIP calling will be flat-fees for every imaginable connected (but unsubsidized) device.

 

Imagine a digital camera with embedded WiMAX chip. A limited number of cameras today have WiFi connectivity, but amp this up with WiMAX. As a serious amateur photographer, this had me thinking. Let's assume that in two years, all camera phones will be as good as Sony Ericsson's k800i or Nokia's 5MP, Zeiss N95. If you were at all serious about your photos, would you rather use a cellphone with add-on camera and transmit images over the network at carrier data rates and cellular network speeds, or take your digital camera with an embedded WiMAX chip transmitting images to your home PC as you take them? No more storage cards or worries about lost/stolen cameras with lost images. No more back-up. No worry about cellular plans, contracts, or the carrier telling me what kind of camera I can use and what I can't, based on its technology choice rather than my preferences. Just turn the WiMAX-connected digicam on, take an endless number of pictures, and know they will be on my home PC when I return.

As we move to the Internet Service Model, with WiMAX and other spectrum, like the 700 MHz spectrum soon to be auctioned, low-cost, high-speed, always on connectivity will be everywhere, at a fair price. Life will be good.

Tags: WiMAX, imbedded+chip, cellular, mobile, Verizon, Sprint, Xohm, digital, photo, Nokia, Sony, Telecom, Internet

Unsolicited Advice for Dan Hesse, Sprint's new CEO

Dan Hesse is Sprint’s new President/CEO. Given Sprint’s recent troubles, this job clearly calls for bold action, so when Dan calls, this is what I’ll tell him (for starters):

1. Keep it simple. Create four business units: Sprint Mobile for the retail (residential) market, Nextel Business for the business market, Sprint Wholesale for the resale/MVNO market, and Xohm for the WiMAX business. Each of these units will focus on their target market, with P&L responsibility reporting directly to you.

2.  Return to your earlier channel strategy, which served Sprint well, where wholesale is an important driver of growth and profitability; then make Sprint Wholesale an autonomous unit with an experienced senior executive leading the unit. In creating the Sprint Wholesale unit, your company would end the flip-flopping and mixed signals over the last six years. Unequivocal support for wholesale will provide focus; organizational autonomy will prevent meddling by the retail business. When wholesale was a key part of Sprint’s strategy, it produced significant line growth. In its heyday, wholesale comprised most if not all of Sprint’s quarterly line growth. Profitability for wholesale is believed to be nearly twice that of Sprint’s retail segment. And while you’re at it, when establishing the Sprint Wholesale unit, take a close look at Verizon’s wholesale group – the industry standard – to find out just how professional and supportive a carrier wholesale group can be. The wholesale market is much bigger than MVNOs. As more devices – PCs, game consoles, and devices of every description – have embedded connectivity, this is an increasingly important space for the wholesale market, which includes mobile and WiMAX services. Sprint Wholesale could also sell the Xohm network to wholesale customers. 

3. Stay the course on WiMAX. Continue the WiMAX roll-out, get the Clearwire-Sprint alliance back on track to build out the national WiMAX network. This will be a key competitive differentiator that should not be surrendered. With WiMAX being rolled out worldwide, Sprint and Clearwire will own the US WiMAX market, which will be another wireless connectivity solution.

4.  Let Boost follow Virgin Mobile. Spin off Boost as an independent entity, and let it do its thing without corporate interference.

Tags: mobile, wireless, Sprint, WiMAX, MVNO, wholesale, Clearwire, Boost