Out of the Blue

Hearts, Minds and the Mobile Address Book

Mobile operators face a new battle for control of the customer relationship. But this time it's not about ringtones, games and search; it's about what is quite possibly their most valuable asset -- the application you use to make a phone call.

The challengers are the online social networks, with their growing reach, power and innovation, and their legions of developers. When online social network meets mobile phone, the frontline is the humble address book.

Worldwide, nearly 600 million people visited an online social network in June 2008, according to comScore. The leading social networking sites -- Facebook, hi5, MySpace, Friendster, Orkut and Bebo -- added 88 million new visitors in the first half of the year. People keep coming back; 96% of online tweens and teens log onto a social network at least weekly.

Now online social networks are moving from the desktop and laptop to the cell phone, with versions of Facebook and MySpace for Blackberry, iPhone and the mobile web, as well as a new group of “social network aggregators” like Yahoo's oneConnect. In less than a year, more than five million of Facebook’s 100+ million users have mobilized.

 There is a larger, more ubiquitous, and far more meaningful social network than Facebook, hi5 or MySpace, or all of the online social networks combined; it’s the network of people that you, I and everybody else actually talk to (and get together with) each day. It’s our real social network, and includes people, businesses and organizations not part of any online community. And mobile operators are smack in the middle of this real network.

Your real social network is not listed on any web site. More likely, it’s in your mobile handset’s address book. Because in the real world, you “friend” someone by exchanging phone numbers. And while we text, IM, e-mail (or forward articles, jokes and other curiosities) to a larger group of friends and acquaintances – some of whom we haven’t talked to in years -- the more we actually talk, the closer the bond.

Territory is already being staked out. At CTIA last week, Yahoo called its oneConnect app “a revolutionary social address book” that brings together your people and your life with a full-featured phone book that integrates contacts from your Yahoo address book and social networks. In the same week, Visto announced its own “living address book” which combines e-mail, social networks and messaging into one user interface.

The strategic importance of the mobile address book as social network has not been lost on mobile operators. For example, T-Mobile’s myFaves® plan allows you to call your five favorite people on any network for free. Alltel launched its My Circle plan, where subscribers choose between 5, 10 or 20 numbers to call for free.

By making it easy (and affordable) to stay connected to the people who matter the most, these operators have successfully positioned themselves in the middle of their subscribers’ real social network. And if these limited, “mini social networks” are sticky, imagine how strong the customer bond would be if the mobile operator were in the middle of the subscriber’s entire social network?

Operators are waking up to the coming battle for the address book, and more importantly, who will power it. Vodafone has already made an acquisition: Zyb. Partnering for innovation is essential.

I work with a new company called Skydeck that has a different approach to the market. Skydeck combines a subscriber’s address book (from Gmail, Yahoo, Outlook or Plaxo) with their call records to map their real social network – the people that they actually call and text most often. Skydeck helps users keep track of their network and all their mobile calls and text messages with a Gmail-like web interface, and is a precursor of things to come.

How strong are the challengers and how big the stakes? The leading social network sites are as big or bigger than any domestic mobile operator, are growing faster, have repeatedly demonstrated innovation and virality, and have captured the hearts, minds and eyeballs of the most prized demographic – the affluent, educated, Internet-savvy 18-34 year olds that operators are relying on for growth.

Today, mobile operators are well-positioned n the middle of their subscribers’ real social networks.  The power, reach and innovation of the leading social networks and their community of developers could be the mobile network operators’ biggest challenge, or opportunity, in the battle over the “social utility” that is your mobile address book.

Originally published in TelephonyOnline on Sept. 19^th.

 

Tags: Skydeck, T-Mobile, myFaves, Alltel, My+Circle, Yahoo, oneConnect, Facebook, MySpace, hi5, Vodafone, Gmail, Plaxo, social+network, mobile, address+book

3G iPhone -- Everything but a phone!

I’ve had my 3G iPhone for more than two weeks now, and I love it. It goes everywhere I go, and it does everything. Well, almost everything. Actually, everything but a phone! The sound quality for voice calls is appalling; the Bluetooth connection almost unusable because of the echo, and the dropped calls beyond maddening. After suffering through two weeks of poor call quality and more dropped calls than I’ve experienced in a decade, I wanted to know whether it was the network or the handset, so I ran the ultimate comparison between my Nokia N95 and the 3G iPhone, both on AT&T’s network. Not exactly scientific, but the best handset comparison I could conduct. 

The envelope, please? The results are in – it’s not the network but the handset. The Nokia N95 won hands down! No contest. To me (and when I checked, the person at the other end of the connection), the Nokia N95 has far superior sound quality, excellent Bluetooth sound with no echo, far better radio (with no dropped calls!), a fabulous speakerphone rivaling office Polycom systems, and beyond these critically important voice quality characteristics, an outstanding camera (Carl Zeiss lens, 5 MP) that could replace most Point & Shoot cameras. (Sadly, it just doesn’t have the Apple GUI.)

Testing the 3G iPhone — After pairing my iPhone with my Nissan Altima Hybrid’s hands-free phone system, I pulled out of my driveway and placed a call. By the time I got to the bottom of the hill (1.2 miles), the call had dropped three times. The sound quality was poor as well, with an annoying echo not experienced with my any other paired device.  (I live on a hilltop in Marin County, about a half-mile from Highway 101, the main North-South highway running the length of California. Not exactly the boonies!) After a few dropped call episodes, I stopped using the phone until I reached the flats. I still had dropped calls.

Testing the Nokia N95 — Same network, same car/hands-free system, different handset. And a different experience entirely. I initiated a call from my driveway, retracing my route down the hill, and in each of the three spots where my call dropped on the iPhone, the conversation continued uninterrupted. We talked for 20+ minutes, without a drop. I placed another call, to the recipient of the original 3–dropped calls conversation(s), who commented that the call quality was better this time on his end. And no drops so far.

Verdict — No one’s made the perfect handset yet. I’ve said what the iPhone isn’t — a decent device for voice calling — but it has the best mobile browser by a lot, an elegant interface, fun apps — my current fave, Guitar Toolkit, for tuning guitar, illustrating chords and keeping the beat — and then there’s the coolness factor. Forget about e-mail, for which the BlackBerry rules. I use the 8820 (at least until the Bold is available). With a keyboard and the BlackBerry software, it’s simply the best for e-mail and business. And my current voice handset — the Nokia N95. So for now, I’m carrying three mobile devices, one for e-mail, one for browsing and one for good ol’ fashioned voice calls. That doesn’t include my Sprint USB Novatel U727 modem. The iPhone has further complicated my life, and added a third device to carry. Maybe I’ll give it all up and get a Jitterbug phone, the simplest and most elegant handset (and GUI) out there.

NOTE: California has a new hands-free law which prohibits all drivers from using a handheld wireless telephone while operating a motor vehicle (except to make emergency calls to a law enforcement agency, a medical provider, the fire department, or other emergency services agency.) So how well the iPhone, N95 or other handset operates in hands-free mode is very important, if you want to make a call in a car.

Tags: iPhone, 3G, Apple, Nokia, N95, quality, handset, dropped, echo, speakerphone, camera, Bluetooth, hands-free, sound, Guitar+Toolkit, Novatel

Why MVNOs Aren't Working in America -- Another Opinion

I just read a thoughtful piece on why MVNOs aren’t working in America. I think it comes down to four issues:

1. Every US-based MVNO is struggling with the virtually impossible challenge of making money buying wholesale minutes while network operators are pushing unlimited plans in the market. There is always a time lag between what network operators offer their retail customers and when they make these features, services or pricing available to their wholesale customers. Trust me, this is the nature of the beast. However, what is happening in the US today is far more profound. We are in the middle of a sea change in mobile service pricing as we transition from usage sensitive pricing to flat rate, all-you-can-eat unlimited plans. While most postpaid subscribers still use retail “bucket plans”, e.g., $39.95 for a given number of minutes per month, and prepaid subscribers buy a given number of minutes for, say 15 or 20 cents per minute, a typical unlimited voice plan, introduced earlier this year by all the national operators, offers $99 unlimited voice, or in the case of Sprint’s Everything Plan, everything but the kitchen sink – voice, data, messaging, navigation – for that amount. Unlimited pricing is not just a postpaid phenomena. Sprint’s Boost unit offers its unlimited package, and both metroPCS and Cricket (Leap) offer similar hybrid unlimited plans where credit-challenged customers prepay a the beginning of the billing period rather than the end. Unfortunately, wholesale customers cannot purchase these unlimited plans at a discount (discounted buckets). Wholesale customers must still buy bulk minutes (and pay on a per minute basis). This forces them to either take an unacceptable risk by offering an unlimited plan while hoping they have more lower usage subs than high-usage customers, or not offer competitive plans with obvious consequences. Resellers are thus caught in the middle of what looks like a classic price squeeze but is actually something far bigger – the transition from the telecom service model to the Internet service model. Time may sort this out as some variant of unlimited pricing reaches the wholesale market, but there will be few if any survivors. To reiterate, every US-based MVNO is struggling with this challenge today.

2. Distribution has evolved, but not for the benefit of MVNOs/resellers. Network operators are increasingly reliant on their own stores, shelf space which is not available to MVNOs (except Virgin and Boost sold in Sprint stores, but these are affiliates and wholly-owned units, respectively.) At the same time, non-carrier retailers are not faring well, e.g., RadioShack, Circuit City, CompUSA and other wireless destinations, are struggling and don’t account for as many new subscribers as they used to. For these reasons, MVNOs can’t find the broad distribution needed to acquire new customers, or must pay much higher commissions to buy their way onto non-carrier shelves. Either way, this drives up acquisition costs. The original notion of MVNOs was they could leverage existing assets – a strong brand, distribution, existing customer relationships – to reduce acquisition cost. In most cases, MVNO acquisition costs are higher than operator costs. (Oh yes, as noted in the paragraph above, so are their airtime costs.)  

3. Content is simply not a compelling proposition for MVNOs, as many thought it would be. Disney, ESPN, Amp’d all failed to sign up significant (paying) customers based on content alone. And believe me, they spent a lot of money trying. Disney is thought to have spent more than $400 million, and shuttered their doors quickly. Amp’d spent hundreds of millions. And Helio’s investors, SK and Earthlink, have invested more than $400 million so far.

4. Cool handsets are now what network operators tout, and MVNOs have almost never been able to offer as cool of handsets as the operators. They don’t buy the volumes of handsets that get OEMs excited. They often must purchase handsets from the operators, who “push the fish.” (You’ll have to ask me to explain that one.)  The one possible exception to this has been Helio, at least until the iPhone was introduced.

Early successes by TracFone, Virgin and Boost were in the then-untapped prepaid market. Now the prepaid market has many providers, operators have come in with their own prepaid offerings, metroPCS and Cricket offer a compelling alternative to prepaid (and landline phone service), and unlimited plans are squeezing everyone. With penetration to a point where just about everyone who wants a cellphone has one, there just isn’t the white space (unserved markets/segments) there was before. Notwithstanding Movida (which was snapped up quickly), the one exception to this is the ethnic markets, where big operators have historically been ineffective. Nevertheless, there are still the issues of pricing and distribution described above, both of which are extremely challenging.

Historically, the most successful resellers I’ve seen, and a decade ago while at (pre-WCOM) MCI, we bought the then-largest reseller in the US, Nationwide Cellular, focused on the details. It wasn’t a glamorous business, with no fancy content or handsets. But the key then was watching pennies, aggressively managing carrier relationships, and focusing on details, not cool but not compelling content. It comes down to basics, and this is a far tougher business in the US today, for everybody.

It’s really time for a new model. I have a few ideas on this score. But that’s what my clients pay me for.

Tags: MVNO, Virgin, Helio, Amp'd, Sprint, TracFone

Virgin, Helio and SK -- Some Say "Why Not?", I Say "Why?"

What had been rumored for some time has been acknowledged. Today, Virgin Mobile USA said it is in preliminary talks with South Korea's SK Telecom, majority holder of Helio, about possible strategic options.

This is not surprising. Both companies have been struggling, although I’d rather be struggling with Virgin’s nearly 5 million subscribers than Helio’s quarter million or so. When Virgin first launched its MVNO in 2002, there was considerable pent-up demand for prepaid service. Yes, TracFone was a large and successful prepaid provider even then, but Virgin targeted the youth market with a then-fresh approach, fun features and a wide open market.

Others came along, most notably Boost Mobile, which partnered with Nextel (and was later acquired by Nextel, now part of Sprint). Like Virgin, Boost targeted the youth market. Amp’d (RIP) and Helio came later, with postpaid offerings also geared to the youth market. By now, it was getting crowded.

The US prepaid market faces real challenges today. Besides being crowded, prepaid subscribers have alternatives.  Prepaid subs spending more than $30/month who are credit-challenged start looking at metroPCS and Cricket offerings, which include all-you-can-eat calling for as low as $35/month. Boost has recently focused on its Boost Unlimited offering, which has put additional pressure on Virgin. If not credit challenged, prepaid subs simply outgrow Virgin and sign-up for the carriers’ popular $39.95 monthly bucket plans (or glom onto family plans).

So Virgin needs to have a migration path – a postpaid option – to hold on to subscribers who see usage growing and are tempted by Boost Unlimited, metroPCS and Cricket, and carrier entry-level $39.95 monthly plans.

Enter Helio, the postpaid offering geared to the same market as Virgin, with a focus on the youth technophile. Helio has some of the coolest handsets around, and a fresh product set. But Helio has a more fundamental problem that presents big challenges in any combination with Virgin.

Have you ever been at a company that, in hindsight, made a costly, even fatal, decision, the implications of which were not apparent at the time? Helio made such a mistake, early on, in deciding to use SK’s proprietary back-office solution rather than outsourcing or using off-the-shelf technology. The development of this proprietary back-office cost the SK-Earthlink partnership tens if not hundreds of millions of dollars, delayed market entry, and diverted funds to back-office development rather than getting the service into the marketplace. With this proprietary back-office, custom interfaces are needed for any new product or service. Meanwhile, Earthlink, which needed a mobile play to drive growth, got to invest in SK’s back-office instead. By the time the service launched, Earthlink was rethinking its investment, and began diluting down rather than sinking more money in.

While strategically it makes sense for Virgin to try to broaden its prepaid product set with a postpaid solution, integrating Helio’s proprietary back-office with Virgin’s platform will be costly at a time when Virgin can ill-afford IT costs. Further, I see Virgin’s and Helio’s subscribers at opposite ends of the scale. There’s a lot more in the middle that should be Virgin’s bread and butter.

Bottom line: Thumbs down on this deal. It won’t solve either’s problems.

Tags: MVNO, Virgin, Boost, Helio, SK, Korea, Sprint, Nextel, Boost, TracFone, prepaid, postpaid, mobile, Earthlink

The Mobile Juggernaut

Juggernaut – an overwhelming, advancing force that crushes or seems to crush everything in its path.

Business Week has a story on how navigation companies with handheld devices, including Garmin and TomTom, are struggling because of wireless competition. Over the years, as handsets and networks add features, there have been many victims of the Mobile Juggernaut. You be the judge. Here’s a short list of telecoms features and services which have fallen victim to the advancing force that is mobile, or at least lost significant market share to mobile:

• Payphones — Who needs a payphone anymore? Which explains why you can’t find one when your cellphone battery dies! (You may find a cellphone charging station at the airport before a payphone!)
• Phone Calling Cards (except international cards) — Once one of the most profitable products long distance companies and others offered are now unnecessary, except for low-cost international calling (if you can find a payphone, and don’t use Skype!)
• Long Distance Service (domestic) — AT&T Digital One, introduced a decade ago, was the beginning of the end of the domestic LD business. Why pay more for a long distance call when you can make a “free” LD call on your mobile? (On the international side, Skype, Mig33, Jaxtr, Jajah and others are dramatically lowering cost of international calls via mobile.)
• Long Distance Company – Okay, remember when you bought long distance service from AT&T, MCI or Sprint? None exist today as standalone long distance companies, as they did a decade ago. AT&T and Sprint are increasingly focused on mobile. (Sprint and ALLTEL divested their landline businesses, Verizon bought MCI, AT&T keeps getting bigger but is not “a Long Distance Company.”)
• Landline Phone Service – For a growing number of people, there’s no need for home (landline) telephone service when they have a mobile. Teens and Gen Y’ers don’t subscribe to landline service as they set up their own households, instead relying on their mobile as their only telephone service. Many business users and entrepreneurs use their mobile as their office phone. Why have two numbers, when you want customers, clients, colleagues or vendors to be able to reach you anytime?
• Point and Shoot Cameras — At CTIA earlier this month, Sony Ericsson demonstrated its new C902 cameraphone with face detection, a feature heretofore reserved for better “pro-sumer” digital cameras!  I have taken surprisingly good pictures with my Nokia N95, with its 5MP Carl Zeiss lens, all the megapixels anyone needs for great shots. 
• Handheld Navigation Devices — Read the Business Week story above or MocoNews! Then check out your mobile carrier’s navigation offerings, or better yet, try Google Maps on your mobile, for free!
• MP3 Players – Who needs a standalone MP3 player when you can take your music with you on your mobile. Did someone say iPhone? Or what seemed like scores of new music phones featured at CTIA last week?
• Handheld Games – Why carry a PSP, Gameboy or other handheld when you can play great games on your mobile? Want to go online to play games? No need to set up a connection; your mobile has high-speed data.
• Wristwatch – How many teens and Gen Y’ers wear wristwatches when they get their time on their mobile?
• PDA – I remember fondly synching my Palm Pilot to my desktop to keep contacts and calendar up-to-date. Now you don’t even need a Smartphone, as most Feature Phones store contacts and calendars, as well as play music, take pictures, run navigation programs and have games. Guess I don’t need that Newton anymore!
• TV – With 2.7 billion mobile phones in the world and 1.5 billion televisions, the former growing faster than the latter, and mobile TV services being introduced in a growing number of markets, an increasing number of users are watching television on their mobiles. Screen too small? Ever hear of a Video iPod?
• Web Browsing – In many countries where there are far more mobiles than PCs – just about everywhere – mobile browsing may already be exceeding web browsing at home or office.
• Dial Tone – Okay, now I’m having fun, but when you rely on your mobile phone, you don’t hear that steady dial tone when you pick up.

Did I miss anything?

Tags: AT&T, Sprint, Verizon, MCI, mobile, payphone, camera, MP3, Garmin, TomTom, Nokia, Sony+Ericsson

Movida and MVNO Failures

Many were surprised when Movida, the Hispanic-focused MVNO, filed for bankruptcy protection last week. With 267,000 prepaid subs and a Wal-Mart deal, Movida appeared to be building a solid subscriber base. Unlike other failed MVNOs, they seemed to have solid distribution. And while MVNOs built around content (e.g., ESPN, Disney and Amp’d) failed, those focused on ethnic segments have fared better, at least until now.

Cellular resale is a tough business, especially tough in these times. (I know, having been at MCI in 1995 when it bought the then-largest wireless reseller, Nationwide Cellular. Like Movida, Nationwide served a similar number of customers, though high-quality postpaid business and residential subs. The acquisition formed the platform for MCI’s branded cellular service –  MCI Wireless –  part of the company’s successful MCIone bundled offering. Earlier, I was also involved in MCI’s cellular resale operation in Los Angeles with Metromedia, so I’ve watched cellular resale almost from the start.)

Why is resale tough? Margins are razor thin, obtaining decent, low-cost handsets (an issue also cited by Movida) is difficult, and distribution is increasingly a challenge as many electronics retailers who have been wireless destinations (e.g., RadioShack, Circuit City, CompUSA) struggle. Execution is critical, and there can be no lapses. Managing a successful resale business is akin to treating a sick patient in the ICU; leave the patient alone for a long coffee break and an irreversible problem could strike. It requires that much focus. Few resellers or MVNOs have achieved long-term success. In fact, TracFone and Virgin Mobile are the only two that immediately come to mind.

If anything, cellular resale is tougher today than ever before, for several reasons:

1. Unlimited pricing plans, with all-you-can-eat minutes, have wreaked havoc on wholesale pricing, typically based on bulk minutes. Carrier plans which include free nights and weekends are bad enough for resellers, who at best buy lower cost off-peak minutes. Unlimited voice plans are the worst for resellers, who simply can’t match them without risking everything;
2. The arrival of mobile data, web browsing, and the cool handsets that make data accessible have created a widening gap between the terms wholesale customers can obtain on data and handsets versus what the operator can offer, e.g., iPhone with unlimited data;
3. Operators can innovate, and introduce new services, while resellers/MVNOs must wait for the necessary components to trickle down and become available to wholesale customers, who often not offered the carrier’s latest services at wholesale. The operators are clearly higher up the food chain in this regard;
4. Industry consolidation – with AT&T and VZW now controlling 64% of subscribers of the Big Four – has created market power not seen in the industry since the very early days of cellular, when there were only two licensees in every market; and
5. The wholesale highway is increasingly littered with fresh roadkill, which has understandably spooked the operators, who are tightening availability and terms of wholesale deals, as well as potential investors.

MVNOs have failed for three reasons:

1. Distribution – Disney, ESPN, Amp’d (and Voce) failed to build a robust distribution network. There were certainly other problems at all four (see below). By contrast, Virgin Mobile has distribution deals with Best Buy, RadioShack, Circuit City, 7–Eleven, K-Mart, Walgreen’s, CVS, Rite Aid, and of course, the Sprint and Virgin stores. TracFone, the oldest and most successful reseller, has phones and top-up available at 70,000 retailers.
2. Proposition – Content alone or as the key proposition cannot sustain an MVNO. While compelling content can make an offering interesting, operators offer something close enough, as in sports and family-oriented content. If the business proposition addresses an unmet need, as the original prepaid providers (TracFone, Virgin and Boost) addressed, or an ethnic segment – ask anyone at the aforementioned prepaid providers what percentage of their base is Hispanic and other ethnic category – that the operators are not addressing, it has a fighting chance, provided it can navigate the five problems above, and execute.
3. Execution – Again, execution with a cellular resale operation requires constant attention to details, analogous to managing a sick patient. So far, the high-profile MVNO failures have not been a result of lack of funding. Amp’d raised a staggering $350M. The Disney MVNOs (ESPN and Disney Mobile) are believed to have invested at least that much. Amp’d clearly had huge back office problems. What else could explain 80,000 non-paying subscribers (if they were subscribers at all; many may have been phantom users enrolled by agents gaming the system for commissions.) As to ESPN and Disney, I defer to Disney CEO Bob Iger, who commented on his company’s MVNO initiatives in a recent article in ADWEEK:

Iger believes there are many opportunities to offer content via mobile platforms, and said the failure of the ESPN and Disney mobile phone rollouts was due to bad marketing, bad pricing and bad research by the company. "Our approach was wrong. We made mistakes," he said, but vowed to continue to try to reach audiences via mobile outlets. "Lots of kids have cell phones and they are our audience," he said.

The vast majority of businesses ultimately fail. MVNOs are no different, especially in tough economic times. The fact that some are surviving with customer bases of more than five million subs suggests that it can be done.

Tags: MVNO, Movida, Disney, mobile, cellular, resale, iPhone, Wal-Mart, distribution, Amp'd, mobile, cellular, TracFone, Virgin, RadioShack, ESPN, Voce

Sprint Rebound?

My first blog entry, on the first day of this new year, contained unsolicited advice for Dan Hesse, Sprint’s then new CEO. My first recommendation was that he create a separate Sprint Wholesale unit, and that Sprint should return to its earlier channel strategy which recognizes that wholesale is an important driver of growth and profitability. (It certainly was for Sprint before they shut it down!) I said they should make Sprint Wholesale an autonomous unit with an experienced senior executive leading the unit.

Well, I’d like to think that Dan read my post, because the other day, Sprint appointed Steven Elfman as President of Network Operations and Wholesale. Reporting to him is Jim Patterson, President of Wholesale. Yes, that’s a President position, and if one can make inferences by title alone, this is an important indicator that Sprint is not just returning to the wholesale market, but re-committing to it. Maybe they will be more cautious with MVNOs, in light of ESPN, Disney and Helio’s troubles, but there’s still growth and opportunity in the wholesale space and Sprint can return to leadership here. There are many significant companies seeking a friendly (and hungry) host carrier.  From FierceWireless:

Sprint appoints Elfman networks president

Sprint Nextel created a new position for Steven Elfman, who left Motricity to become Sprint's first president of network operations and wholesale. Elfman will report directly to Sprint CEO Dan Hesse after taking the new post on May 4. Elfman previously worked with Hesse at Terabeam and AT&T Wireless. Elfman will oversee the combined network and IT organizations at Sprint that are led by Chief Network Officer Kathy Walker as well as the wholesale business, which Jim Patterson leads. Additionally, Elfman will oversee Sprint's technology development and product development initiatives.

For more on Elfman's new position:
- read this press release

In fact, part of an aggressive (and winning) wholesale strategy would position Sprint as the Open Access alternative and host network of choice. In this way, Sprint could be a leader. Such a strategy on their existing network would complement a WiMAX play, however it shakes out. Because wherever WiMAX ends up — the resurrection of the Sprint-Clearwire partnership, or the transfer of some or all of Sprint’s WiMAX holdings to Clearwire (with an investment by Intel, Google, Comcast, Time Warner and/or others) — Sprint will almost certainly have a stake or preferred access to the WiMAX network regardless of ownership position. WiMAX is important strategically for Sprint, and finding a way to have some stake in Clearwire is important for Sprint.

In fact, it might be early — change takes time — and it will by no means be easy, but the makings of a rebound are starting to emerge. Sprint has to make it easier to do business with it, for subscribers, partners and other mobile players. Maybe an extreme makeover. But Dan Hesse seems to be assembling a strong team to do this.

Is Sprint on the rebound? They still have the most elegant mobile network in the industry, the lowest price kitchen-sink (okay, “Everything”) plan, and only one direction to go. Whatever steps they take tomorrow or the next day won’t show immediately (or in several quarters) in key metrics (gross/net adds, churn, ARPU, subscribers). The more important measure for Sprint right now — perception — must change sooner!  Changing any big company, and especially a carrier, starts with strong management, and in this regard, Hesse seems to be making bold changes, and bringing strong people in. How long it takes to rebound will depend on the sense of urgency and purpose they instill, how quickly they can make things happen, and how fast they can change the perception.

The industry needs at least three national players to even resemble a competitive environment. A stronger Sprint can reverse the growing concentration that now finds AT&T and Verizon controlling nearly three out of every five mobile subscribers (and 64% of those served by the four national operators). A reversal of this concentration will help everyone, from shareholders to consumers to innovators. Increased competition in telecommunications. What a concept!

Tags: Sprint, wholesale, WiMAX, ESPN, Disney, Helio, MVNO, Clearwire, Intel, Google

Unlimited Data Plans

Have received so many notes since my Telephony piece came out yesterday. While unlimited voice plans have not come close to the price point they need to to reach the masses, unlimited data plans are. As I mention in my piece, if the price is right, flat rate plans can make a huge difference, as they are beginning to do in mobile data. For example, the iPhone data plan includes e-mail, web and texting, for as little as $20. When you start with a well-priced unlimited data plan, and add a great device for web browsing, like the iPhone, usage skyrockets. This has been born out both in the US and in Europe. According to AT&T, 95% of iPhone owners surf the mobile web, more than six times the roughly 15% of all mobile users who browse. Google says iPhone users make a staggering 50 times more searches than users of other mobile devices. T-Mobile in Germany said that iPhone is driving up mobile data usage to levels as much as 30 times higher than other handsets. And in the UK, O2 observed an “unheard-of level of mobile Internet usage” on the iPhone bundled with an unlimited data plan.

A content purveyor friend sees the Sprint Kitchen Sink plan as a good thing, especially as it makes browsing more accessible. I couldn’t agree more! Once all the operators’ data plans are $20–25/month “bolt-on’s” and we have more devices with great browsers, mobile surfing will really take off. And that’s a good thing!

 

 

Tags: data, unlimited, iPhone, AT&T, Sprint, T-Mobile, O2

Unlimited Plans and Shift from Telecom Service Model to Internet Service Model

Before we get into it, ponder this: Wireless phone users worldwide will outnumber landline customers 3-to-1  by 2009, according to IBD story on 2/29/08.

Now that I have your attention, I’ve been writing about unlimited plans for some time. Last month, VZW, AT&T and T-Mo rolled out unlimited voice plans for $99. Last week, Sprint responded (sort of) with an $89 unlimited voice plan, and a $99 “Kitchen Sink” plan, which threw in everything but the Kitchen Sink for another $10 — data, messaging, e-mail, web access, TV, music, navigation, push-to-talk, everything. (Talk about devaluing these services!)

In my return as a Regular Contributor to Telephony, my latest commentary addresses this issue. Check it out at: http://telephonyonline.com/commentary/contributed/unlimited-voice-plans-030308/

Later today, UBS’ telecoms analyst John Hodulik who does the quarterly, must-read Wireless 411 Reports, described the AT&T’s “bullish” management meeting last week. John summarizes AT&T’s unlimited plan:

AT&T's new, flat-rate plan has only been available for less than 2 weeks and management does not expect it be able to gauge its impact on the segment for another month or so. That being said, in the two weeks the new pricing has been in the market its "been kind of a yawn," with little impact. While the sample is very small, more customers have bought up than have bought down.

And that’s the point of my Telephony piece: 99% of mobile customers don’t need $99 unlimited voice or kitchen-sink plans. These $99 plans are just the latest gimmick to sell users more than they need, while averaging up carrier ARPUs in the process. At $99, this is indeed a yawn, and less a revolution than a ploy to bring people into the stores, which apparently is working.

The underlying trend is far more important, as there’s a fundamental shift now underway from the Telecom Service Model to the Internet Service Model. Under the old Telecom Service Model, a carrier, handset, plan and features are selected and a long-term contract signed. The Internet Service Model replacing it includes always-on high speed data, flat-rate (non-usage sensitive) pricing, voice, data and a world of applications all running on an open platform, and a range of devices available. If this sounds like Open Access, you are right; the Internet Service Model is the platform, and flat rate pricing a big first step.

Please check out the TelephonyOnline piece, and look for more commentary to follow.

Tags: AT&T, Sprint, Verizon

Connectivity Trend -- Unlimited Voice Joins Unlimited Data

Verizon Wireless pulled a pre-emptive strike today, announcing an unlimited voice plan for $99.99/month available immediately. AT&T followed with its own $99.99/month unlimited voice offering, to become available on Feb. 22. And T-Mobile quickly jumped in with its matching offer, available on Feb. 21. Last year, Sprint rolled out a combined unlimited voice, data and messaging plan in select markets at $120/month, and earlier this month, rolled it out nationwide; they had been rumored to be readying an unlimited voice plan akin to the VZW, AT&T and T-Mo plans to help stem losses and win new subs. And aggressive pricing is the only way to catch up, so if Sprint wants to attract new subs, look to them to introduce a sub-$100/month unlimited voice plan.  

With unlimited data plans commonplace, unlimited voice plans both in prepaid (e.g., Boost Unlimited) and now postpaid are moving the operators closer to unrestricted connectivity. I’ve written about the transition from the Telecom Services Model to the Internet Service Model in earlier posts. Today’s introduction of unlimited postpaid voice joining unlimited prepaid voice and unlimited data plans hasten this transition. Increasingly, end users will look to a range of providers for mobile connectivity solutions, and today, we moved one step closer.

Tags: Sprint, Verizon, unlimited, Boost, AT&T