Mobile Sands

January 31, 2009

White space spectrum unlikely to enable new ISPs

Filed under: 3G, white space — AJ @ 9:29 pm

FCC’s 11/14/08 announcement to open up TV-band white spaces has been hailed as a great step forward for wireless inovation, and countries around the world seem eager to follow in FCC’s footsteps . There is lot of excitement about this spectrum because it has excellent propogation characterstics.  In my opinion, even though this spectrum may enable some new consumer electronics applications,  this spectrum is unlikely to create any new service providers.

Some background… White spaces exist because TV broadcasters have to do frequency planning. A channel that is used in Los Angeles cannot be used in Orange County or San Bernandino and vice versa. After the DTV transition is over, LA will be using 11 channels (7, 9, 1, 13, 28, 31, 34, 36, 41, 42, 43) in the VHF and UHF band, leaving 40 channels unutilized.

After years of investigation, FCC decided to allow unlicensed devices to operate in this spectrum subject to certain conditions.  Here is a quick summary of FCC’s Notice of Proposed Rule Making (NPRM) on this topic. 

  • Unlicensed TVBDs are expected to protect all services that operate in TV bands today. This includes broadcast TV, wireless microphones, medical telemetry, radio astronomy and land-mobile radio systems
  • Unlicensed TVBDs are not allowed to operate in any channel being used for Broadcast TV (i.e. generate no co-channel interference)
  • Based on rules for adjacent channel operation, maximum transmit power and spectrum sensing, unlicensed TVBDs can be of two kinds: Fixed and Personal/Portable.
  • Fixed devices
    • Use channels 2-51, with the exception of channels 3, 4 and 37
    • Maximum transmit power (EIRP) of 4 W with directional antennas
    • No adjacent channel operation with TV
    • Support spectrum sensing, and detect signals as low as -114 dBm
    • Determines its location; accesses a database of existing services
  • Personal/Portable devices
    • Use channels 21-51, with the exception of channel 27
    • Maximum transmit power of 100 mW. No directional antennas allowed
    • Maximum transmit power limited to 40 mW in channels adjacent to TV
    • Spectrum sensing, location determination, and access to database of existing services required, unless device is operating under control of a fixed device

Notice that the FCC does not allow fixed devices to operate in adjacent channels and requires portable devices to reduce their peak power. This restriction reduces the amount of “white space” spectrum available to a new ISP considerably. Going back to the LA example, once we removes channels 2, 3, 4, 37 and all adjacent channels from the list of available channels, a “white space” ISP has only16 channels, not 40. Though sixtenn channels provide 96 MHz, an ISP must be prepared to share it with other users like wireless microphones and personal/portable TVBDs.

More white space spectrum is available outside major metro areas but these areas also have abundant and inexpensive PCS, Cellular and AWS spectrum. Despite its better propogation characterstics, Unlicensed TV band spectrum does not cover much more than licensed PCS or AWS spectrum because the transmit power of unlicensed TVBDs is limited. As a result, an operator/ISP that deploys a proven 3G/4G technology in licensed bands is guaranteed to do better than on ISP that uses yet-to-be developed “white space” technology.

Any ISP using it in a large metropolitan area will also have to contend with three to four established competitors (cable, DSL, WiMAX and LTE). Technology required to build a commercial white space system is barely on the drawing board. The IEEE standard (802.22) that is being developed for white spaces is far from completion and in its current state does not meet FCC rules.  Even if lots of vendors get behind this standard, it will be at least four years before commercial base stations and devices can be available at reasonable price points. By that time, it is debatable how much unmet demand will exist, in the US or outside.

I think things can be more interesting for personal/portable devices, but that is the topic of another blog entry.

 

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January 29, 2009

Q4’08 results show AT&T outpacing Verizon Wireless

Filed under: 3G, Smartphones — AJ @ 4:03 am

Though acquiring Alltel makes Verizon the largest wireless carrier in the US,  Q4’08 results presented by AT&T and Verizon this week show that AT&T is beating Verizon on practically every operating metric.

  • Churn: While AT&T’s churn has been stable at 1.2% for the last 12 months, Verizon’s churn increased to from 1.2% to 1.35% over the same period
  • ARPU: While AT&T’s ARPU increased by 3.9% to $59.59 compared to 4Q’07, Verizon ARPU increased by just 1.4% to $51.72 over the same period.  Further, Verizon’s ARPU actually declined in the 4Q’08 compared to 3Q’08
  • Net Adds: While AT&T added 2.1 million subscribers in the last quarter of 2008, Verizon added just 1.25 million

What should worry Verizon (and Vz investors) most is the decline in its ARPU from $52.18 in 3Q’08 to $51.72 in 4Q’08.  When you look at this decline along with AT&T’s claim that ARPU for iPhone customers was $95.3, 1.6 times higher than the ARPU of its overall customer base and that 40% of iPhone 3G customers (i.e.  1.7 million) were new customers; it indicates that high value subscribers are leaving Verizon in droves.

I would estimate that Verizon lost approximately 650K subscribers that had an ARPU of $95 in 4Q’08 and gained around 1.9M subscribers with an ARPU of $50. This would account for 1.25M net adds and a fall decline in ARPU from $52.18 to $51.72.  Sounds plausible?

For years, Verizon really had a superior network.  It not only had the best coverage but it was also first with 3G (EVDO).  Verizon’s network advantage is quickly disappearing vis-à-vis AT&T.  AT&T, with its “more bars in more places” campaign has convinced customers that its coverage is as good as Verizon’s. AT&T’s HSDPA network delivers faster downlink speeds that Verizon’s EV-DO network, and AT&T benefits from global economies of scale in network equipment and handsets.  Verizon needs to do more now – on handsets and network – than pinning its hope on being first to build out LTE. 

January 28, 2009

The future of games looks bright

Filed under: App Store, games, iPhone, Netbooks, New business models, Smartphones — AJ @ 5:56 am

Yesterday evening, I attended a talk by Professor Chris Swain about the future of games.  

The main focus of Chris’ talk was creativity in the game development business.  One of the things that he talked about was how Apple’s App Store (and similar marketplaces from Microsoft for Xbox or future ones for Android and Symbian) can unlock creativity in the gaming business.  In contrast to the normal complaints about how Apple’s 30% cut is too much, Chris said that “70:30 is the best publishing deal ever” for game developers.  He did complain about how the Apple’s shopping interface (top 10, top 50, others) favors cheap $0.99 games over more expensive development efforts.

He said that, in contrast, publishers of console games make only 17% on AAA titles.  Since developing games for major gaming platforms can cost close to $20M, it means that a game publisher must have line of sight to selling over 1 million games. This pushes publishers to develop proven, formulaic titles, hampering creativity.  Digital distribution where publishers can get a higher cut can change that, enabling smaller team to innovate. And even for formulaic games, if the digital medium of distributing games is successful, lot of publishers would prefer to sell online rather than through Wal-mart (the biggest channel for game titles today). 

Games on popular consoles cost so much (and publishers get so little)  because companies that build the hardware (Sony, Microsoft, Ninetendo) need to collect a tax to recover the money they lose on the console.   If interesting enough games could be created on powerful low-cost platforms that come with multi-touch interfaces (smartphones, mobile internet devices, netbooks etc.) and can be digitally distributed, the whole business model could change. I am sure this keeps lot of people awake at night – some worried about losing their existing business, others abuzz with the opportunity.

Here are two more interesting (and perhaps relevant) recent news items:

1.  More powerful, multi-touch, touch screens on their way. See story about Cypress and Palm.

2. ABI predicts 139 million netbooks by 2013.  Maybe a little optimistic, but definitely the expected direction.

January 26, 2009

Nokia to launch MVNO in Japan with Vertu

Filed under: Uncategorized — AJ @ 10:58 pm

Nokia, so far, has not succeeded in penetrating the Japanese phone market, so it is understandable that they might want to enter the market using the MVNO model.  What surprises me is that they are creating an MVNO around Vertu – their luxury phone line better known for the diamonds used on its keyboard than for what it does, rather than creating one around Ovi – their applications platform.

Voce, the one luxury MNVO that was launched in the US, did not do great. It was launched in 2005 with a $1500 origination fee and $500/month voice plan. By the time it closed in 2008, the sign-up fee was $500 and the unlimited voice plan was $200/month.  Still they did not have enough subscribers.  Not only was the service too expensive, Voce did not support data. Yes, that means no Blackberrys.

For the MVNO model to succeed, the MVNO needs to target a market segment:

1. Where the MVNO will have a lower customer acquisition cost than its network operator partner

2.  That the network operator really does not want to go after because of any number of financial or structural reasons

3. Is willing to pay more per-minute (or per-MB) for the service than what the network operator charges.

Virgin Mobile, Tracfone and Jitterbug are three US MVNOs that have been reasonably successful in the US market and all of them meet the criteria above.  Others like Voce, ESPN and Disney did not.

Most likely, Nokia’s market research shows that there is a large number of very rich Japanese customers who just want a bonafide luxury phone to make simple phone calls.  They would love to buy this phone in a luxury store in Ginza, and will willing to pay more per minute to do so. But I would be surprised if  NTT DoCoMo (Nokia’s network operator partner) would not want to go after this segment themselves with a diamond-studded Panasonic phone.  For now, I will give the smart guys at Nokia the benefit of doubt and wish them good luck.

January 24, 2009

3G and Wi-Fi hotspots – old rivals become best friends

Filed under: 3G, Metro Wi-Fi, Wi-Fi — AJ @ 6:45 am

Back in 2001-2003,  Wi-Fi hotspots were going to kill 3G, or so proponents of Wi-Fi hotspots said.  This is how their argument went – data is used by laptops. Most laptops have Wi-Fi and  people use laptops when they are stationary.  So as long as we can provide Wi-Fi in all public places, who needs 3G? And while we are at, we can cover whole cities and compete with DSL and Cable as well, right?  Wi-Fi was riding high on the hype curve.

So hundreds of millions were spent building hotspots around the world.  Verizon even dreamed up bring Wi-Fi to every telephone booth in New York.  And cities from Philadelphia to San Francisco chased the dream of free mobile wireless coverage for all.  Today, though hundreds of thousands of hotspots exist around the world and many are regularly used, the original vision of Wi-Fi as the magic bullet lies shattered.  Verizon turned off Wi-Fi in NYC telephone booths and Earthlink shut down Philly’s network. While public Wi-Fi floundered, 3G prospered and generated billions of dollars for its backers.

Now, ironically, 3G is helping public Wi-Fi make a comeback.  Once 3G networks were built, operators needed handsets that could generate $20-$30/month of additional ARPU.  After years of trial and error, data phones that people actually want are on the market.  That is fantastic news for carriers.  The bad news is – consumers don’t want these phones to access the carrier’s carefully managed walled garden. They want  phones – smartphones – to access the Internet;  to listen to live radio from Pandora and watch videos on Youtube.  And to do this consumers wants lots and lots of capacity – more data capacity than 3G networks can deliver today.

Re-enter Wi-Fi hotspots.  See, once a carrier has signed up a customer for a $30+/month flat-rate data plan, the most rationale thing is to offload as much data traffic as possible to a cheaper and faster network. Doing so has the double benefit of reducing network cost and increasing customer satisfaction. AT&T already gets that and with over 20,000 Wi-Fi hotspts,  is now the biggest Wi-Fi operator in the United States.  And as other operators succeed with iPhone-like devices, I expect them to follow a similar strategy.

I also expect Metro WiFi to make a comeback, but in a new avataar.  Not a technology that “bridges the digital divide with free Internet access” but as a technology that provides loads of  bandwidth to smartphones and mobile-internet devices in high-density outdoor areas.  Deploying Metro WiFi networks does need access to utility poles, but as Metricom, US Internet and Cablevision have shown, this is a time-consuming but not unsurmountable problem.

Rivals no more, Wi-Fi and 3G, are on their way to become best friends.

January 22, 2009

Have you downloaded more than 30 apps on your iPhone?

Filed under: App Store, eBooks, games, iPhone, Smartphones, Uncategorized — AJ @ 5:36 am

Apple just announced results for its quarter that ended on Dec 27, 2008.  According to these results, Apple had sold 11.3M iPhone 3G phones between July and December of 2008.  If we estimate that 1.2 million phones were purchased in the first three weeks of Jan 09, it would mean that the total installed base of iPhone 3G phones is ~12.5 million. 

On Jan 20th, Apple’s website proudly proclaimed that its app store has over 15,000 apps and over 500 million apps have been downloaded.  Even if we assume that 25% of these apps were downloaded on iPod Touch, it means that 12.5 million iPhone 3G owners downloaded an average of 30 apps each. This means that there are lots, yes lots, of people who have downloaded more than 30 apps!

The large number of applications downloaded by iPhone users underlines (1) that consumers are hungry to do more with their phones (2) a large base of excited developers is essential for creating successful apps.  Everyday I am amazed by the kind of applications that developers are creating.  For instance, yesterday I found an app to do pushups better and compete with people around the world who are doing pushups.  

Rival phone makers need to do react, and react fast.  There isn’t much stickiness in the traditional feature phone market. Motorola, for instance, has seen its market share decline from 30% (the golden days of RAZR) to 6% by the end of 2008.  And while, Apple announced record results, Nokia is expected to report a 14% drop in revenue today, even though it remains #1,  selling an estimated 470 million units in 2008.

January 21, 2009

Obama’s Inaugration

Filed under: Uncategorized — AJ @ 4:37 am

President Obama was sworn in today and expectations are high everywhere – including the telecom market. Many in the industry expect the new adminstration to have a more proactive technology policy, open up more unlicensed spectrum and maintain net neutrality. 

I consider it unlikely that that adminstration will use the “net neutrality” argument to force mobile wireless operators to open up their networks. As the CTIA argued in its briefing to the Obama transition team, the United States has one of the most competitive wireless markets in the world.  Wireless operators are not monopolies and most have them have paid huge amount of money (since auctions were started in 1990’s) to get exclusive access to their spectrum.  CTIA can also point out that majority of the fundamental innovation in wireless technology- from the first analog mobile phones to TDMA, CDMA and OFDM happened in US.  And, they can add iPhone and Blackberry to that list as well (Yes, I know RIM is Canadian, but wasn’t US their first market?).

I am, however, not arguing that the mobile Internet should be closed. Just that, as long as the adminstration keeps the wired Internet “neutral”, consumers (“market forces”) will keep pushing wireless operators to open their networks.  Wireless operators will find that opening their devices and networks to innovation is a more profitable thing to do than operating walled gardens that no one wants to visit.

January 20, 2009

The App Store

Filed under: App Store, iPhone, Smartphones — Tags: , , — AJ @ 3:42 am

48 of the top 50 paid apps in Apple’s App Store fall in the games or entertainment category, so are 38 out of top 50 free apps.  And this is not surprising.  Single-user games are easy to develop because there is no server-side development.  Games also lend well to word-of-mouth marketing because games are fun. iPhone is the coolest gadget in town and who wouldn’t want to show it off with something cool, especially that something cool costed no more than a box of mint?

Games are also what gave Qualcomm’s BREW store a start.  Jamdat shipped its first BREW game in March 2002 and by September 2005,  20 million games had been downloaded.  Games on iPhone, of course, can do better, and may soon be challenging PSP and Ninentendo.

Unfortunately, Games and Entertainment applications are crowding out everything else in the Top 50 and Top 100 lists in the AppStore, and perhaps the time has come for Apple to either put games into their own Top 50 or better still, publish a rank of all applications sold through the store. If not, Apple is opening the doors to third-party review and ranking sites like AppVee.

One App in the Top 100 that surprised me was a GTD tool called Thing. It is priced at $9.99 but still made it at #100. Wow! And this is despite the fact that there are many free or less expensive GTD and time management apps available. Looks like the folks at Culture Code believe in staying in business.

Personally, the category of apps that I am trying out these days is eBook readers. More on that in a later post.

January 18, 2009

Mobile Services, Applications, Networks and Devices (MobileSAND)

Filed under: Uncategorized — AJ @ 3:45 pm

I have worked in wireless radio access network (RAN) infrastructure for most of my career – from radio network planning software to radio network management, large basestations to femtocells.  Last October,  I decided to take a break from infrastructure and learn about what else is there in the mobile market; to try and build something new.

Mobile may not be the hottest technology area today (that distinction goes to green-tech) but it is still holds tremendous opportunity. And almost all the opportunity in mobile starts with the widespread deployment of mobile data networks and the adoption of open mobile internet devices. Together, these two open the way to new Services and Applications, demand for Network capacity enhancements and must-have mobile Internet Devices.  And these are what I plan to write about.

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