Mobile Sands

February 2, 2010

Billing for Mobile Connected Devices

Filed under: 3G, LTE — Tags: , , , , — AJ @ 4:40 am

Imagine if every home appliance you own required its own electricity subscription, and the price of a light bulb included lifetime electricity usage!

Well, that is how mobile broadband connectivity is being priced today for “connected devices” ranging from tablet computers to electronic book readers. Apple iPad owners need to pay an additional $14.99/month to access AT&T’s 3G network even if they have unlimited data plan with AT&T. And Sprint 3G subscribers need to pay for the data charge bundled with their eBook purchases from Amazon, just like everybody else.

When Edison first started selling electricity to consumers in 1882, he priced it by the light bulb. At that time, the primary application of electricity was illumination. Edison promoted electric lamps as “the sun’s only rival” and often subsidized them. Tied to each light bulb was an unlimited usage plan.  Sounds familiar? It took another ten years before Chicago Edison Company (led by Samuel Insull) started charging for electricity consumed. Insull grew Chicago Edison into one of the largest utilities in America, and the pricing model he pioneered opened the doors led to a proliferation of electricity-consuming appliances, driving decades of rapid growth for the electricity business.

To get similar growth in the mobile broadband business, carriers need to offer plans that cover all devices owned by a single person (or family), and then, charge for bandwidth consumed. An AT&T subscriber who buys an iPad should be able to add it to her existing 3G plan and do the same when she buys a new PlasticLogic e-Reader or Isabella’s VIZIT photo frame. Not only will this make connected devices more affordable and palatable to consumers, it will increase make consumers more loyal to the wireless operators they chose.

Metered pricing is essential for such “converged” pricing to work. Today’s “unlimited” usage plans are often tied to particular devices and are  based on the premise that the device and how it is typically used will limit actual usage to a manageable amount. A typical user of an email device like Blackberry uses just 30-40 MB of data per month. iPhone users use thrice as much data but still, it is not a lot. All this changes when you have dozens of devices connected to the wireless network, soaking up bandwidth all the time.

Carriers are definitely thinking about metered billing, especially as they look at introducing connected devices.   Verizon’s CTO Dick Lynch talked about this topic in an interview with Washington Post last month, and said that metered billing is essential for both, reducing network congestion and to enable “open devices”. The move towards the pricing model that made utilities successful is on.


September 7, 2009

Innovative MiFi Drives Growth at Novatel

Filed under: 3G — Tags: , , , — AJ @ 2:12 am

Novatel’s MiFi “intelligent mobile hotspot” is a shining example of how innovation makes all the difference in a tough environment. Novatel’s core product – 3G data cards – has faced tremendous price competition, especially in the European market.  Novatel’s primary supplier, Qualcomm, is attacking Novatel’s embedded module business with its Gobi chipset. Companies comparable to Novatel have either seen sequential decline in revenue and margins (Belgium-based Option) or have resorted to mergers (Sierra & Wavecom) for growth.  Novatel probably had some insights on how users were struggling to make data cards work in “3G routers” and used these insights to create a fast-growing new product category.

According to Novatel’s Q2’09 earnings release, it has received over $100M of MiFi orders within two months of launch. As a result, it managed to grow revenue by 20% compared to Q1’09 and maintain at it approximately the same level as 12-months ago.  Further, despite losing a large embedded module customer to Qualcomm, Novatel is guiding higher for rest of the year.

Now that Novatel has created the “intelligent mobile hotspot” category, it has the difficult task of defending it. Huawei announced a MiFi-rival in February and demonstrated it at CommunicAsia in June. Clearwire offers a similar product for WiMAX. In another 6 months, there will be many other competitors on the market. Still Novatel has done several things right that may be important insights for people in similar markets:

1. It created a catchy name, “MiFi”, and convinced all its operator customers to use it.  As a result, Novatel now owns the name of the product category.
2. It launched the product in markets where it has stronger customer relationships and pricing (North American CDMA) but was prepared to quickly follow-up with products for the HSPA market.
3. It left headroom for new applications (internal or third-party) on its processor. The product ships with a few applications (like “Auto-VPN”) and there is potential for more in the future.

Novatel however needs to vigorously defend its product name. 3UK just launched Huawei’s mobile hotspot product and calls the service “MiFi”, insisting that 3UK owns the “MiFi” name in UK. I have no reason to doubt 3UK, but it looks like Novatel needs to  invest in trademarking MiFi in as many countries as possible.

Novatel’s has launched a developer program (prominiently displayed on its website) but this program will not bear fruit unless Novatel actively seeks out development partners that bring meaningful value to its target end-user base.  Apple, for instance, is rumored to had a “hundred-person” business development team targeted at the gaming industry before it launched iPhone. Novatel, of course, does not need a team like that that but it shouldn’t wait for the developers to show up on their own either.

Overall,  an interesting case study in creating innovative hardware products in the wireless business and defending them from fast followers.

June 6, 2009

Smartphones may Herald the Golden Age of Internet Radio

Though Internet Radio has been around since the mid-nineties, it has not seriously challenged good-old FM radio (“Network radio”) in the same way that Internet video (YouTube, hulu and others) have challenged Network/Cable TV.  The reason – over 60% of radio listening is done “on-the-go”. And of the 40% of radio listening that is done at home, most is done while doing other things around the house – not when the listener is on her PC.  Well,  3G-capable smartphones change all this.  

Pandora, NPR, Y!Music and more

Pandora, the web-based service that let users create their own radio station, is the #1 free music application on Apple’s App Store, and is ranked #20 among all free apps.  Other personalized streaming audio apps on the iPhone include Slacker and CBS-owned Last.Fm.

Interestingly, network radio has been quick to enter the smartphone radio market.  NPR makes 300 of its stations available through the Public Radio Tuner app, ranked #5 among all free music apps.  Clear Channel, the largest owner of FM radio stations in the US makes some of its channels available through iHeartRadio.  Many CBS stations can be heard via AOLRadio.  Yahoo! Music launched an iPhone version of their service few months ago, and one can listen to thousands of radio stations from around the world using apps like Radio, ooTunesRadio, allRadio and WunderRadio.  

Many Internet Radio apps are quickly making their way to other smartphone platforms as well.  Slacker offers a Blackberry App. Pandora has been available on Blackberry, Windows and over 50 feature phones for a while but it recently made a  conscious choice to focus on Palm Pre as its second major smartphone platform. As a result, Pandora comes pre-installed on the Pre.  Mumbai-based Geodesic is focusing on Blackberry and Symbian phones instead with its Mundu Radio application.

Unlike mobile video, carriers are not blocking Internet radio

Wireless carriers are not blocking Internet radio applications because its bandwidth requirements are in line with 3G.  Internet radio stations use streaming rates between from 28.8 kbps to 128 kbps, speeds that can be easily supported even over moderately loaded 3G networks.   Someone who commutes for 2 hours/day for 22 days a month and listens to Pandora at 128 kbps would download around 250 MB of data – not a very large amount, and definitely within the data caps imposed by most 3G providers.  

Time for 3G carriers to challenge Satellite Radio

The main value proposition of satellite radio has been that one can listen to hundreds of radio stations, without the hassle of searching for the right one when crossing over from one metro area to another. Well, now a listener can do exactly that and much more with Internet radio on her mobile phone. She can listen to thousands of radio stations from around the globe or even better, listen to a station completely personalized to her tastes.  And do all this without paying anything over and above the price of the a 3G data plan.  

Though 3G carriers are not actively promoting Internet radioon phones  and challenging satellite radio, they should, and make a play for the dollars that are going to Sirius/XM today.  Sirius/XM charges $9.99 – 19.99 for its multiple radio station services and had 18.6M subscribers at the end of Q1’2009.  If these 18.6M subscribers were convinced that they could get the same selection of radio stations (or even better – personalized radio stations!) on their 3G phones – in addition to email, web and more – it would be easy for them to sign up for a $30/month plan.

April 21, 2009

AT&T’s Investment in GSM/UMTS Delivers Subs & Easier 4G Uprade

Filed under: 3G, LTE, Uncategorized — Tags: , , — AJ @ 4:11 am

AT&T’s investment in GSM & UMTS is paying off.  Not only does it have an exclusive on the most desirable handset in the US market, it may also be able to upgrade to 4G at lower cost than its major rivals.

Almost 10 years ago, the different components of today’s AT&T (AT&T Wireless, BellSouth, SBC, others…) started migrating their 2G TDMA networks to 2G GSM.  They launched their first GSM/GPRS networks in 2001 and completed the migration by 2004. See this AT&T and Cingular milestones chart for more information.  Also, see this 2002 press release on the first TDMA-GSM handset

This was a period in which CDMA carriers had the lead. While Cingular and AT&T were migrating their TDMA network to GSM, Verizon Wireless was improving the coverage of its CDMA network and getting ready to launch 3G.  By the time Cingular completed nationwide 2G GSM coverage (07/2004), Verizon Wireless was ready to launch 3G EV-DO networks in over 30 major cities.  

Further, Verizon and Sprint – the two nationwide CDMA carriers – were able to rollout 3G relatively inexpensively. Both carriers just had to add channel cards to their existing CDMA base stations.  As per Verizon’s January 2004 announcement, it planned spend $1 billion to build out nationwide EV-DO coverage (compare this to the $7.2B for broadband in the stimulus package!).

Verizon may still have the best voice and data coverage in America,  but advantage has now shifted to AT&T.  With HSPA, AT&T can now boast of having the fastest 3G network and AT&T’s GSM network allowed it to get Apple’s iPhone device in 2007. As Verizon CEO Ivan Seidenberg admitted in a recent interview with the WSJ,  Apple never seriously considered building a CDMA device.  And it is the  iPhone that helped AT&T outpace Verizon in 2008.

Things get more challenging for Verizon (and other CDMA carriers) with 4G.  While Verizon and Sprint (Clearwire) invest billions on building their respective 4G networks, AT&T claims that it will be able to increase the peak sector throughput of its UMTS base stations from 3.6 Mbps to 7.2 Mbps via a software upgrade,  and then to 21 Mbps by upgrading to HSPA+ (the HSPA+ upgrade will involve upgrading antennas to MIMO).  These incremental base station upgrades, combined with backhaul upgrades, give AT&T the time to wait till LTE equipment is stable and cheaper.  Of course, Verizon and Sprint (Clearwire) understands the risks, and are taking aggressive steps to drive their network equipment and handset vendors to make their 4G migration as successful as possible. Still, the next two years will be very interesting.

April 5, 2009

LTE in spotlight at subdued CTIA

Filed under: 3G, LTE, Uncategorized — Tags: , , , , , , — AJ @ 3:52 am

CTIA 2009 was subdued but well attended.  Still, people and companies that had to be at the show to network were there.  LTE continued its march towards becoming the undisputed 4G technology, with most major infrastructure vendors either demonstrating their LTE products or presenting their story, with many claiming (optimistically, I think) that they will have a “commercial solution” by the end of 2009.

Several large vendors demonstrate LTE

  • Motorola was not only demonstrating LTE speed but also mobility. It had set up two LTE base stations (700 MHz, FDD) close to the convention center. A van equipped with an LTE modem and capturing HD video and piping it to the booth, while passengers in the van could see the van. Motorola also had an LTE TDD base station in the booth and were using it for additional video demos.
  • ZTE was demonstrating LTE data speeds and were showing a prototype LTE base station (digital functions running on microTCA chassis, connected to a remote radio head).
  • LG was demonstrating its handset baseband implementation using infrastructure from Nortel and Alcatel-Lucent.  LG was showing 40 Mbps download rates with Nortel’s LTE gear, and using the ALU gear for a VoIP calls.
  • Qualcomm was demonstrating LTE handset baseband with third-party infrastructure (I believe, Nokia Siemens Networks) and talking about three multi-mode LTE chips (MDM9200, MSM 8960, MDM 9800 ) that will sample in mid-2009. 
  • I did not see LTE demos in Huawei, ALU, Ericsson and NSN booths, but that does not mean they did not have demos for select customers and analysts.  All of them did have presentations in which they talked about their “end-to-end LTE solutions” covering eNBs, EPC, and OA&M.  And I am sure, many of you have already read about how Nokia compared WiMAX to Betamax.

Smaller vendors thinking about building LTE base stations as well

I had written off LTE RAN equipment as a play for big infrastructure vendors.  However, during conversations at the show, I was surprised to hear that several smaller companies are thinking about building LTE base stations as well. Airwalk is one. And I heard about few WiMAX companies who want to build LTE base stations as well.  Practically all of them are thinking about pico/micro base stations that implement standards-based interfaces to the core. 

From CDMA2000 to LTE

CDG had organized a workshop to convince CDMA2000 operators that they can deploy LTE directly, without having to switching to UMTS now.  I made it to the workshop for the last 30 minutes and heard part of ALU’s presentation in which the ALU speaker argued that it would be best to leave voice on CDMA 1xRTT for several years and use LTE just for data…

Blackberry App Store, Next-gen Backhaul and more

Of course, there was lot happening at CTIA besides LTE.  RIM’s CEO Mike Lazaridis formally launched Blackberry’s App Store at CTIA.  Initial reviews were mixed.  See CNET and Sensobi.  Backhaul was on the minds of the few operators I spoke to, and there were several Ethernet and wireless/microwave  backhaul solutions on display, as a well as a half-day workshop on next-generation backhaul open to all attendees.  Verizon reiterated its aggressive LTE plans, talked about the need to reduce the number of handset platforms, and announced that it had teamed up with Vodafone, Softbank and China Mobile to create a “single platform” for developing applications.  If you are interested, CTIA has posted all the keynotes on its website.

Please feel free to comment, or add any other information about the show!

February 26, 2009

Verizon’s LTE Rollout – Lessons from CDMA

Filed under: 3G, LTE — Tags: , , , , , , , — AJ @ 5:58 am

There is lot of speculation in the press, among analysts and in the blogosphere about the timing of Verizon’s LTE deployment. This is unfortunate considering that Dick Lynch has actually provided very clear guidance.  In his interview with Sue Marek of FierceWireless he said, “…when we launch we will do what we did with 1xEV-DO and 1XRTT…” 

Verizon, under Dick Lynch, has been remarkably consistent in its process for deploying new air interface technologies. If one digs through years of Verizon press archives, one will find that Verizon’s EV-DO rollout followed the same process as its 1xRTT rollout.  At both those occasions and now, Dick Lynch was at the helm and we should not expect anything different for LTE.

As in EV-DO, Verizon has initially selected two vendors for LTE.  For EVDO, these two vendors were Lucent and Nortel. For LTE, it is Alcatel-Lucent and Ericsson. This does not mean that Verizon will not have a third vendor.  In EV-DO, the third vendor was Motorola, and as Dick said in his FierceWireless interview, “The rest of the vendors will have another opportunity in the future. We will go out again in mid-2010 and look for vendors for the next wave of the coverage”.

As in EV-DO, each LTE vendor has been assigned one city that each is expected to get on the air in 2009. For EV-DO, Nortel had San Diego while Lucent had Washington DC.   Once the two cities are on the air, each vendor will be expected to work out all the kinks in its products, a process well known in the industry as “First Office Application (FOA)”. A FOA can take anywhere from 3-9 months, depending upon the complexity of the system and the quality of the vendor’s product.

Once FOA is complete for LTE systems, either by the end of 2009 or in early 2010, Verizon is saying that it will start building out a sizeable national footprint.  In the EV-DO case, Verizon announced its decision to start building a national footprint in January 2004. Within 9 months, Verizon had launched EV-DO service in 14 metropolitan areas and by Aug 2005,  it covered 52 metropolitan areas.  All these services were launched using EV-DO data cards.  If Verizon’s LTE vendors can wrap up their FOA by Q1’2010, expect Verizon to at launch LTE data cards in dozen or so markets by Q3 or Q4 of 2010.

The other key player whose actions determine the pace at which Verizon can roll out LTE services is QUALCOMM. Verizon cannot launch an LTE handset (smartphone) unless this handset supports both 1xRTT and EV-DO. It needs 1xRTT to support all the legacy voice features (tough to replicate on IMS) and needs EV-DO for data service wherever there are LTE coverage holes. QUALCOMM is the only company that can build a dual-technology LTE/CDMA chip, and it is doing just so. On Feb 16th, Qualcomm introduced its MSM 8960 3G/LTE chipset, and said that this chip will sample in mid-2010. Since handset vendors need at least 12 months from the date Qualcomm samples its chipsets, to build a commercial device, one should expect the first dual-mode CDMA/LTE handset to reach the market in Q3’2011.

To summarize:

  • Verizon is likely to light up two cities with LTE in 2009 and have meaningful national footprint in 2010. They have a playbook for large scale wireless rollouts and they seem to be following it.
  • There will be no LTE handsets/smartphones in 2010,  just data cards. Therefore, Verizon will continue to add capacity to their CDMA network at least till the end of 2010.
  • Expect CDMA/LTE handsets to reach the market in Q3’2011. 

February 19, 2009

Verizon’s LTE Announcement at MWC Barcelona

Filed under: 3G — Tags: — AJ @ 4:09 am

Verizon’s CTO, Dick Lynch, laid out his company’s LTE plans at Verizon’s first ever Mobile World Congress (aka 3GSM) keynote.  Verizon has now posted his slides on its website.

Key points from the presentation (and subsequent interview with Fierce Wireless)

  • 2009 is the year of pre-commercial LTE trials in the US. No commercial LTE service will be offered in 2009
  • Sizeable footprint in 2010.  PC cards and embedded modules (M2M) expected to be main devices
  • Complete nationwide LTE network by 2015
  • Dick is extremely bullish on wireless data
  • Pace of LTE deployments will be very similar to 1xRTT and 1xEV-DO
  • 3G (i.e. 1x and EV-DO) to stay in network for another 10 years
  • Ericsson and Alcatel-Lucent win RAN business (often >70% of cap-ex)
  • Packet core divided between ALU, Ericsson and Starent
  • IMS divided between ALU and Nokia Siemens Networks (NSN)

I will write a longer post  (using publicly available material) on why Verizon is taking the lead in LTE and how Verizon’s 1xRTT and EV-DO rollout were done. 

There is fair amount of discussion in the press on winners (ALU, ERICY) and losers (NSN, Huawei, Nortel, Motorola). In my subsequent post, I will add my few pennies to the debate as well.

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.


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 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.

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