AT&T has articulated its vision of a concentrated wireless market with few carriers that control a lot of spectrum. They foresee a gradual, controlled shift from voice minutes to all-data during the next few years, and hope to charge enough for that data to maintain carrier revenue and profit.
But one of those carriers, Sprint, seems to be doing something radical -- competing.
Sprint is competing by partnering with mobile virtual network operators (MVNOs) that sell access to the Sprint network. Users have to buy their phones up front, without subsidy, but they get flexible, cheap voice and data plans in return. The MVNO gets less revenue per user than AT&T or Verizon charge, but I assmue they and Sprint are profiting or they would not do it.
The net result is that wireless is cheaper and customer bills more accurately reflect the fact that voice calls, text messages and data are all bits.
Since the user pays full price for a phone, the MVNOs do not require two year contracts, but they lock you in by insisting that you buy your phone from them -- you cannot bring your own. Phone portability should improve with market pressure and the widespread adoption of fourth generation cellular technology.
MVNO phone selection is limited, but that may be breaking down. Sprint recently picked up the iPhone and today they announced that Virgin Mobile, one of their MVNOs, would also get the iPhone. I suspect that eventually Sprint MVNOs will offer all Sprint phones.
Virgin is not Sprint's only MVNO. One, Ting, has effectively done away with the concept of tiered service -- you pay for what you use. Virgin and Ting are early, but there will be others. One that is in beta, Republic Wireless, hopes to charge even less by automatically substituting WiFi for cellular connectivity whenever possible.
AT&T has their ideal vision of the future, and I have mine -- the ability to own my own phone, use it on anyone's network and only pay for the bits I send and receive.
I listened to a 52 minute interview of AT&T CEO Randall Stephenson while at the gym yesterday. He predicted that they would be offering data only plans for multiple devices within 24 months and "reverse billing," in which data from a content provider who pays AT&T a fee will not count against the user's data cap within 12 months. He also talked about spectrum ownership. He forsees industry consolidation believes the "most efficient" use of spectrum occurs when it is owned by the operator.
Here are a few notes I jotted down while listening. (Some with snarky comments in parenthesis).
We cover cellular networks and generations in discussing mobile and portable connectivity.
Today might be considered the first day of the fourth generation -- TeleSonera began offering commercial LTE (Long Term Evolution) service in central Stockholm and Oslo. This is LTE 1.0. It is not built into phones; it is not offered outside of Oslo and Stockholm; there is no competition; it does not fall back to 3G or WiFi; there are no tethering applications for creating portable WiFi hot spots, but it is here.
The service delivers download speeds in the 20-80 Mbps range and will cost 599 Swedish Kronor ($85) per month. There will be no data cap while the service ramps up, but after July 1 2010, they will impose a 30 GB-per-month cap. It also requires a Samsung plug in modem. The current version of the modem is LTE only, but they will soon have one that can fall back to the 3G network where LTE is unavailable.
When TeleSonera began testing in Oslo last June, they said rollout would begin in 2010, but demand for high speed mobile connectivity convinced them to push the start date up.
The equipment is manufactured by Huawei, a Chinese company. You may think of China as a manufacturer of cheap toys and other consumer goods, but they are becoming world leaders in high tech areas like telecommunication. Huawei European equipment sales were $3 billion in 2008, compared to just $160 million in 2003. Forty of the world's fifty largest telephone companies are now Huawei customers and 75% of their 2008 sales were outside of China. Globally, Huawei is the second largest mobile connectivity manufacturer.
Check this short video tour of the Stockholm base station, which has both 3G and the new LTE 4G equipment.
Verizon's FIOS Internet connectivity is $70 per month for up to 25 mbps download and 15 mbps upload. Would you rather have that or TeleSonera portable service in Stockholm?
What new applications and devices might this service enable?
We discuss evolving cellular data generations. Today's third generation equipment provides for speeds of up to 2 mbps, but, as shown in this figure, download speed varies considerably from one city or neighborhood to another. The download speed to your iPhone 3G might be as low as 400 kbps or as high as 1,600 kbps.
The plot was generated by ARCchart, a wireless market research firm, and described by Brough Turner in a blog post. ARCchart monitored over two million performance tests using iPhone, Blackberry and Android phones, then filtered them to focus on major cities. This graph is based on 648,374 downloads from major cities in 103 nations between August 2008 and June 2009.
(Gizmodo performed a more limited test of Sprint, AT&T and Verizon 3G networks in eight US cities and also found considerable variance in download speed).
Of course, in some places there is no GSM coverage. Consider the coverage by AT&T, the GSM provider supporting the Apple iPhone in the US -- there is no coverage in the light-colored regions:
This map was taken from AT&T's coverage viewer in early September 2009, and coverage has continued expanding since then.
However, AT&T states that the maps are only an approximation, not a guarantee, of their coverage, which may be effected by terrain, weather, foliage, buildings and other construction, signal strength, customer equipment and other factors. There are many anecdotal reports of inability to use an iPhone in parts of San Francisco and the bay area.
We discuss wireless communication, and an earlier class used WiFi wireless technology to connect our campus dorms to the Internet. They used 802.11A for the links between the dorm buildings and 802.11G to connect to student's computers in their dorm rooms inside the building.
Intel has taken a similar approach with their Rural Connectivity Program (RCP). (Watch the short video). They have combined the components we used in the dorm into a single, commercial package. An Intel RCP node puts two radios (one using 802.11A for a long distance link and a second using 802.11G for user connectivity) in a weatherproof box along with antennae for local access and a high-gain, focused antenna for the longstance link. They also modify the modulation method to improve communication speed and reliability.
Our dorm buildings are only 100 or so meters apart, whereas Intel intends RCP links to be as much as 60 miles apart. Their goal is to provide a link from a rural village or farm back to an ISP for Internet connectivity. Their target market is developing nations, but many rural areas in the US also lack connectivity.
Can you think of a place where Internet access is not available in the US? Would Intel RCP offer a solution?
As we have seen, WiFi and 3rd generation cellular networks are the primary options for mobile and portable connectivity today. But, WiFi covers only limited areas (though there are millions of them), and cell networks are closed to innovation and focused on a business model of selling voice and other expensive services rather than pure Internet connectivity.
One day, Google and others may force the cellular networks to open up, but it will be a struggle. Another possibility is that a new standard, WiMax, will provide viable wireless Internet access.
We have spoken of WiMax earlier, and the WiMax leader at this time seems to be Clearwire Communication led by industry veteran Craig McCaw. You can read of McCaw, Clearwire, and their possibly foundering negotiations to combine WiMax networks with Sprint in this Wall Street Journal article.
If WiMax sounds promising, you can follow standards and industry progress in blogs written by Glenn Fleishman and Steve Stroh both of whom know a lot about wireless technology and business. Fleishman has just written a positive review of Clearwire's test deployment of pre-standard mobile WiMax in its home city of Seattle.
Do you plan to subscribe to either Stroh's or Fleishman's blog? What industry blogs do you subscribe to?
We have contrasted a "dumb," end-to-end network like the Internet, where services are provided by network users, with a "smart" network, where services are provided by the network operator. In two earlier posts, we saw that Tim Wu and business customers have argued that the cellular networks should move to the open, Internet model.
Google has now joined the fray, saying they would bid on the spectrum that will be made available for auction by the FCC when the US converts to all digital television transmission in 2009 if the following were mandated by the FCC:
We have seen that access networks in the United States have fallen behind those of many European and Asian nations. There is no federal government effort or planning, and the ISP industry is dominated by telephone and cable companies which were able to defeat Congress' attempt to generate competition in the 1996 Telecommunication Act.
William Kennard, who, as chairman of the United States Federal Communication from 1997-2001 was charged with implementing the Telecommunications Act, stated near the end of his term that “all too often companies work to change the regulations, instead of working to change the market,” and spoke of “regulatory capitalism” in which “companies invest in lawyers, lobbyists and politicians, instead of plant, people and customer service." He went on to remark that regulation is “too often used as a shield, to protect the status quo from new competition - often in the form of smaller, hungrier competitors -- and too infrequently as a sword -- to cut a pathway for new competitors to compete by creating new networks and services.”
In many cases, municpal governments have tried to close the access gap by developing and contracting for Internet access networks. They have a mix of motivations -- use by city employees, narrowing the digital divide, economic stimulation, providing a service to citizens, etc. and a mix of public-private funding and business models.
W2i organizes conferences on municipal networks, and they have compiled a database with 91 case studies. The case studies include an overview, contact information, and presentations on the projects as delivered at W2i conferences.
Muni-Wireless is another excellent source of information on these networks. They also organize conferences, have an excellent blog, and a Web site with sections on technology, applications, initiatives, and other topics.
A recent Information Week article criticizes the US cell phone industry for disabling phone features, restricting phones to one network, restricting Internet access, using incompatible communication technologies, and poor quality of service and coverage. For example, the article says that "by some estimates, nine out of ten cell phones in the US are sold by carriers, nearly reverse the ratio in other countries." Compared to the cell companies, wired Internet service providers are good guys and network neutrality advocates.
That is all bad news, but the article maintains that since mobile access is becoming very important in business, the cell companies might be pressured into reform. Consumers take whatever the operators offer, but business will not.
We spoke of this topic in an earlier post on Tim Wu and efforts to obtain wireless net neutrality.
In some nations, cell phones and cell service must be sold separately -- can you find which ones?
