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July 2008

July 15, 2008

Wireless on the Water

Last weekend, I crewed on a delivery of a brand new, 49–foot Beneteau sailboat from Annapolis, MD to Newport, RI. It was a two-day trip, and we were going to be out of touch. Or were we? Wireless played a huge part in the delivery, and produced surprising results. We also happened upon at least two likely Darwin Award nominees, but more about that later.

Navigation was made easy through fancy electronics and wireless, starting with a GPS chartplotter which showed our boat’s position superimposed on a navigation chart. Add radio-based Automatic Identification System, which provides geoposition and identification of approaching commercial vessels on top of the chart view, so that we could, for example, see tugs pulling huge barges in the channel in the middle of the night with vital information like boat speed, displacement, destination, etc. And of course, there’s radar, especially useful for the night portions of the journey. Let me tell you, nowhere is it more clear how valuable these Location Based Services are than when you’re 75 miles offshore in the North Atlantic in the middle of the night, with state-of-the-art marine electronics and wireless radio!

We weren’t out of touch for mobile communications. Four sailors, four Blackberries, three feature phones and a high-speed data card – all four national carriers were onboard! (It got a little crowded with the “Do you hear me now?” guy and his support staff!) Twelve miles offshore from Atlantic City, we were checking e-mails, and getting a few messages out as well. Coverage was spotty that far out, not strong enough for a voice call, but the Blackberries were sending/receiving e-mails with no problem. In fact, for most of the journey except on the Atlantic City to Long Island leg, we had Blackberry coverage, including an incredible 14 miles offshore Long Island.

The most entertainment came from the VHF radio, on which Channel 16 is monitored. Vessels are required to carry marine radios. The Coast Guard and most coast stations maintain a listening watch on this channel, which is used for international calling, distress and safety. It is supposed to be limited to essential and emergency uses. Unfortunately, many inexperienced boaters use Channel 16 like a CB radio. Three transmissions/exchanges stood out, and maybe you don’t have to be a sailor to understand that at least two of these could be future Darwin Award nominees:

1. One boater asked, “Does anyone know if there are any weather advisories for the area?”  (It is inadvisable if not downright foolhardy to go out on the water without knowing what the weather is going to be. All VHF radios have seven weather channels operated by NOAA, each with continuous weather broadcasts for a local area. This information was readily available had the user known how to use her radio. Fate will eventually catch up with this boater, a possible future Darwin nominee.)

2. Another not-so-swift boater requested a “regulation check” (as if there was someone with a rule book in front of them ready to answer any question) on whether it is “illegal to use a charcoal grill on a boat.” We were tempted to say, “Yes, but not indoors,” but someone else asked a better question, “Why?”, to which the future Darwin nominee responded, “I don’t want to do anything illegal.”  He should have been more concerned about doing something stupid, but it all made for a few laughs.

3. The frequent (and annoying) “radio checks” on a channel allocated to safety and distress situations, clogging the channel. At one point, we heard an emergency broadcast involving a capsize of a Boston Whaler with three boaters overboard. Sounded like a serious situation, until the report continued that the boaters were standing on a sand bar. Fortunately, the boaters knew to stay near the vessel. But if this emergency situation had been blocked by a “radio check”, it could have been far worse.

Finally, once we arrived in Newport, I pulled out my high-speed data card, got on my laptop, and immediately was fully reconnected (with blazing speed, I might add).

So, wireless on the water included:

  1. GPS, Satellite, AIS and radar imagery, all integrated in a chartplotter that was the ultimate wireless LBS device;
  2. Cellular communications – voice and data (Blackberries and high-speed data cards); and
  3. VHF radio.

As they say, it’s the journey, not the destination. Wireless made a great journey even better. And safer, too, for those who know how to use it!

July 14, 2008

Another Piece in Telephony: Narrowing the innovation gap

Every few months, I write commentary for Telephony. The latest issue, out today, contains my latest “What’s Next” piece. Take a look, and let me know what you think!

 

3G iPhone Hurts T-Mobile and VZW Most

In my last posting, I said VZW made a huge strategic mistake by passing on the iPhone According to today’s UBS TelMeDaily, last Friday UBS’ equipment group interviewed 328 customers lined up to buy the iPhone, including 222 people in the UK and 106 in the US. Of the US iPhone buyers, 40% were new to AT&T. Of those, 41% came from T-Mobile, 37% from VZW and 20% from Sprint. While the sample size is very small, if these figures hold up, I have to wonder if VZW still believes they made the right decision passing on the iPhone. BTW, some believe that Apple may have gone to VZW only as a stalking horse when all along, they wanted a GSM-based device, which in the US meant AT&T, at the time the largest US operator. Given their worldwide iPhone rollout on other GSM operators, the stalking horse theory rings true.

July 05, 2008

They're Already Lining Up

It began yesterday, the Fourth of July. They’re already lining up outside Apple’s Fifth Avenue store in NYC for the 3G iPhone. Earlier in the week, a study by investment bank RBC Capital Markets found that half of consumers in the market for smartphones will buy a 3G iPhone after the July 11th launch. Smartphone users are the most desirable subscribers, with much higher ARPUs than the industry average of $51. For example, iPhone users average $90 ARPUs!

Consumers will be paying $199 for their new 3G iPhone — $200 less than the original iPhone — but an interesting analysis found that with AT&T’s unlimited data plan going up to $30 plus the $5 messaging bolt-on for 200 messages, the 3G iPhone will actually cost consumers $160 more over the two-year term. The analyst’s conclusion: “$160 is a small price to pay—for us at least—over the course of two years to drastically increase your email and browsing speeds.”

While consumers will be paying $200 less up-front, and $160 more over a two-year term, what has the iPhone cost its competitors, particularly VZW?

Last Fall, when asked if he had any regret passing on the iPhone, VZW CEO Lowell McAdam told FierceWireless, “None whatsoever.” Interestingly, when asked the follow-up question in an earlier interview, he explained, “partnering with Apple would have meant surrendering customer service to Apple. It would have prevented Verizon Wireless retail partners from selling the product. And he said the revenue share model was not favorable enough to justify the deal.”

It’s no secret that the iPhone was a big driver of subscriber growth for AT&T in the second half of 2007, and the 3G iPhone promises a similar boost. So much so that the only way VZW was going to pass AT&T in total subscribers is through acquisition. Many consider this the main reason VZ is spending $28 billion to buy ALLTEL — to add their 13 million subscribers to VZW’s 67 million — to get to 80 million (vs. AT&T’s 71 million at end of 1Q08) and leapfrog AT&T to be Number One.

With lines forming a week in advance, VZW is not going to catch AT&T organically, especially if its answer to the iPhone is a handset named after a minivan (did Chrysler license the Voyager name to VZW?) A $199 iPhone will also force handset prices down. VZW (and everyone else) is going to have a hard time selling any handset for more than $199. If half of consumers looking for a smartphone will buy an iPhone, even high-end smartphones will be hard to sell at more than $200. Except the Blackberry. Here again, AT&T will be first to market with the Bold, which will also push sales.

But $28 billion later, at least VZW didn’t have to surrender customer service to Apple, a brand customers consistently rank high, usually higher than Verizon. VZW made a huge strategic mistake by passing on the iPhone, and protestations to the contrary just don’t ring true, at least to this observer.