Sonim XP1 Blog

Verizon frees phones!

In an announcement that stunned everyone in the wireless communications industry, Verizon WIreless has just announced that customers will be able to use any application and (almost) any device on the carriers network, starting early next year.

This is amazing news, as Verizon Wireless has always kept a very firm grip -- more so than any of the big four carriers -- on what services and devices  its customers could access.

This move means that America's wireless business is going to change, soon, and in big and very wonderful ways.

According to Verizon's press release this is what's going to happen:

In early 2008, the company will publish the technical standards the development community will need to design products to interface with the Verizon Wireless network. Any device that meets the minimum technical standard will be activated on the network. Devices will be tested and approved in a $20 million state-of-the-art testing lab which received an additional investment this year to gear up for the anticipated new demand. Any application the customer chooses will be allowed on these devices.

This new option goes beyond just a change in the design, delivery, purchase, and provisioning of wireless devices and applications.

One limitation is that customers will have to use phones based on CDMA technology, rather than GSM. 

“This is a transformation point in the 20-year history of mass market wireless devices – one which we believe will set the table for the next level of innovation and growth,” said Lowell McAdam, Verizon Wireless president and chief executive officer. “Verizon Wireless is not changing our successful retail model, but rather adding an additional retail option for customers looking for a different wireless experience.”

The press release goes on to explain that Verizon Wireless "will continue to provide a full-service offering, from retail stores where customers can shop, to 24/7 customer service and technical support, to an easy-to-use handset interface and optimized software applications."

Many kudos to Verizon for making the first step to unlock and unblock America's wireless phone system.

Only in America

The New York Times is doing a great job of covering the quickly evolving world of wireless communications, specifically the apparently inevitable changing of the US networks into a more open system such as the ones that the rest of the world enjoys.

In their latest piece, Cellphone Straightjacket Is Inspiring a Rebellion, reporter Laura Holsen quotes Tim Wu, a professor at Columbia Law School, who said the relationship between software developers, carriers and handset makers must change because the way that consumers relate to their phones is changing too.

 “On a personal level, the phone feels more like property,” said Mr. Wu. “Once you start to make it yours, you feel like you have more rights to it. It will have a huge effect if you don’t feel free to do what they want.”

 His view is that now that entrants like Apple and Google are in the game, companies like AT&T and Verizon are going to have to adjust. “Little companies are not going to change industry practices,” said Mr. Wu. That happens, he said, “when you have big, powerful players with a different ideology.”

The piece also noted that running a network is no easy job, and basically hinted that the few companies who are qualified to run such a network are already doing so and aren't in favor of openness as they don't see as much potential for profit if consumers are given choices rather than force-fed specific services offered by those who have partnered with the big wireless carriers.

Roger Entner, a senior vice president for communications at IAG Research, was quoted as saying “An open network is really awesome if you don’t have to operate it.”

 This sort of attitude amazes me. If open networks are so fraught with complications and crisis and lack potential for profit – then isn't it funny how the rest of the world is managing just fine with their open wireless networks?

 

Some People Just Want a Phone That Works

David Pogue has an interesting article in the NY Times on the development of the T-Mobile Shadow mobile phone, created by T-Mobile executive Robert Dotson and an unnamed ex-Apple employee.

I know from personal experience that the most frustrating thing about mobile technology development in the US is having to deal with the big four wireless carriers. You can have the best product in the world but if these folks don't see how they can make money off of it, they won't sell it.

America's Wireless Market Will Never Really Be Open

I've been saying for awhile now that Google's anticipated bid for the 700 wireless spectrum is unlikely to result in an truly open American wireless service of the sort that much of the rest of the world already enjoys.

And now it seems that Google is forming alliances with the major carriers, who vehemently oppose wireless freedom, in order to get Google's own "Gphone" to market.

Red Herring has a good story on what's happening.

"…the search king has spent the last few months at odds with Verizon Wireless in a battle over regulatory rules. The outcome would affect an upcoming spectrum auction in which Google is expected to bid for a slice to create an open network.

“This is not what Frontline envisioned as an open network,” said a source close to Frontline Wireless, a consortium that plans to bid for spectrum in the upcoming auction and build an open network, commenting on a report.

The deal, according to The Wall Street Journal, would have Google marketing its own phone and licensing its own operating system and applications on Verizon and Sprint wireless networks, similar to the arrangement Apple has with AT&T for the iPhone.

There is a bright spot, reports Red Herring.

"Google appears to be open in one area: third-party apps. The search king’s phone is expected to be open so developers can create third-party applications and gain easier access to the mobile consumer market."

Not to toot my own horn too much, but I've been predicting that a (somewhat) open market for applications on mobile phones is about the best we can hope for in the American market. And that's one of the reasons Sonim Technologies is no longer doing business in the US. It's not a choice we made happily, but one we were forced into by the "Big Four" wireless carriers. There's simply no real opportunity for a small business to develop and market innovative mobile communications technologies in America's wireless market.

AT&T Says Open Access Rules Are ... Interesting

At the Web 2.0 summit last Friday, AT&T CEO Randall Stephenson said the company hasn't decided whether it will bid for the 700MHz band because it doesn't know if it can build a profitable business given the open-access rules set for the wireless spectrum by the U.S. Federal Communications Commission.

Stephenson called the rules, which include open-access capabilities on a third of the spectrum, "interesting."

But, PC World reports, Stephenson then went on to describe the 700 MHz band as "a huge opportunity. It's beachfront property. When it comes to buying spectrum, it's the best you're going to find for a long time," Stephenson said.

AT&T recently agreed to buy 12MHz of high-speed wireless spectrum in the 700MHz band from Aloha Partners LP for US$2.5 billion.

"It's the first time, I think, that we've ever paid $2.5 billion for a company that had no revenue," PC World quoted Stephenson as saying.

Revenue or not, I (and every other sentient being in the world) expect that AT&T will see nice returns on that investment, the Aloha spectrum covers 196 million U.S. residents, including 72 of the 100 largest markets in the U.S.

Check Mate

There's been another interesting twist in the wireless service providers' world.

AT&T's recent $2.5 billion purchase from Aloha partners of a good chunk of important spectrum in the 700-MHz band will obviously give the company an excellent lead in the competition to create high-speed wireless networks. It also changes the anticipated game plan for the upcoming FCC spectrum auction.

AT&T was expected to bid big in the upcoming FCC auction of 700-MHz spectrum, currently scheduled for Jan. 28. It's still a potentially major player in the auction, but is unlikely to need to bid strongly for the "C block,"  the segment of the spectrum that is subject to open access requirements.

Whoever wins this block has to open a portion of the network to applications and devices from third-party providers. It's likely that AT&T, now flush with its Aloha 700 MHz purchase, doesn't need that C block nearly as badly as it did last week. The company can instead bid on the A and B blocks, which are not subject to the open-access rules, and build a good old-fashioned "closed" network on that spectrum and the frequencies it will take over from Aloha.

That leaves Verizon as the most likely wireless carrier to bid for the block. Verizon has already sued the FCC over the open access rules. And if the reserve prices for the 700 MHz block are not met, the FCC will re-auction the C block with no reserve prices and without the open-access conditions. Will Google buy the C block and enter the wireless business? Will Verizon step up to the plate? Is there a dark horse running in this race that will dash forward at the last minute? Stay tuned.

The 700MHz Plot Thickens

 You might think that small wireless companies would be thrilled by the upcoming Federal Communications Commission wireless spectrum auction. After all, the auction has been widely touted as the last chance for smaller companies to get into the wireless business in a big way.

But the smaller companies know better. They realize they don't have the money to win an auction this important, and are afraid that the open-access rules may kill their existing business opportunities.

Why? Because the large carriers will likely be discouraged from bidding on new Nationwide spectrum, which carries a condition that about 1/3^rd of said spectrum will have to be open access. Instead, the smaller companies fear, the big carriers will turn their attention to auctions for spectrum that cover smaller geographic areas, the ones that the small carriers can actually successfully bid for and win, according to Christopher Guttman-McCabe, vice president of the CTIA, a trade group representing wireless carriers. Guttman-McCabe made these statements when he testified last week before the House of Representatives Small Business Committee.

At that meeting Guttman-McCabe also produced a letter signed by 139 small and regional wireless carriers urging Congress and the FCC to abandon the open-access rules, saying that large carriers will likely bid on the smaller licenses "rather than accept large, encumbered licenses," the letter said.

Smaller carriers are also concerned about the requirement that prohibits winning small business bidders from selling the spectrum for 10 years and also prohibits them from leasing more than 25% of the spectrum to other carriers, in return for a small business bidding discount.

These requirements not only straightjacket small businesses, who believe they shouldn't have to operate under rules that don't affect larger cariers, they also put small business bidders in danger of having to pay back those bidding discounts if they grow beyond the FCC's definition of a small business in the ten years that they'll be owners of the spectrum.

FCC Chairman Kevin Martin said the FCC changed the auction rules for small businesses to prevent fraudulent bidding from businesses who had no intention of offering wireless service, but instead wanted to win and then sell or lease access at a profit.

 

 

The Battle Of the Behemoths

US Federal Communications Commission Chairman Kevin Martin has said that the agency the agency will not be implementing the proposals made by Verizon Wireless to modify the open-platform rules that the agency plans to impose in a January auction of key wireless spectrum.

The requirement in question is the one that states that license winner for about one-third of the 700-megahertz spectrum must allow consumers to connect using any device or software.

Verizon Wireless had filed suit in the U.S. Court of Appeals for the District of Columbia September 10 seeking to overturn open-access rules imposed by the FCC, calling those rules "arbitrary, capricious, unsupported by substantial evidence and otherwise contrary to law." Verizon had sought an expedited hearing, but the court denied the request.

Reuter's news service quoted Martin as saying that he doesn't "have any plans to try to revise our open-platform rule the way Verizon wants us to."

Martin said, in a statement, that "It is our goal that this open platform requirement will allow smaller businesses - namely, nascent wireless device manufacturers and smaller application software developers - to put their products directly into the hands of consumers without having to seek prior permission from the wireless providers, as they do today."

U.S. wireless carriers all have restrictions on which cell phones can be used on their networks, offering low-cost or no-cost phones that come with calling plans. They also restrict the software -- ring tones, music, etc -- that can be downloaded onto phones. Elsewhere in the world people pay more for their phones but can use them however they choose. Open-access rules would, at least in theory, change the way wireless business is run in the US.

Google spokespeople have said that Google supports the open access rules, and Google is likely to be one of the few companies that isn't already in the wireless business that can also afford to bid enough to win the FCC auction of the 700MHZ band. Perhaps only a monopolistic behemoth can end the rule of other monopolistic behemoths?

Making Micro-Multinational Work

I recently realized that Sonim Technology could best be described as a micro-multinational business.

I'm one of two Americans in a company comprised of people of nine other nationalities. Our headquarters are in San Mateo but our employees are located in every continent. We have customers in 15 countries around the world.

None of this is unusual for a big corporation, but Sonim Technologies isn't a huge enterprise. And I suspect that micro-multinational is fast becoming the new norm in the business world.

Here's what I've learned about making a micro-multinational company work:

•  Telecommuting is fine, but you do need to invest in face time. Getting together in person to throw ideas around, check in, and just reestablish your bond makes a difference with both co-workers and clients. So for a good part of every month I'm traveling, but its worth it.

•  You have to learn to time shift. It's painful but necessary. Since we span all time zones I start work at 6 AM PT, go until 5PM and then get back to work again from 9 to 11 PM PT. Working at something you really enjoy is a huge help – I can't imagine staying sane with these hours if I didn't love my work.

• It's critical to hire independent autonomous people. Look for people who have freelanced or run their own businesses, people who don't seek constant guidance and imposed structures. That doesn't mean every worker is an island unto themselves (see face time, above) but the sort of person who flourishes in a standard office setup is probably not the sort of person who'd do well in a micro-multinational company.

• We're sensitive to cultural differences, but we're also building a corporate culture that includes best ethical and business practices from each nation. So, even if your culture isn't accepting of – for example -- intellectual honesty or doesn't teach that you have an obligation to dissent when things or ideas just seem wrong, within our company you are expected to speak out and let everyone know your thoughts on our business plans, projects and products.

 

 

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Open Skies, Wireless Freedom

The battle for open skies is really starting to heat up, as we creep every closer to the start of the Federal Communications Commission anticipated auction of the 700MHz band spectrum which is slated to happen in January.

Frontline Wireless has petitioned the FCC to lower the minimum prices set for the spectrum licenses, in order to allow smaller wireless companies to effectively compete in the auction.

Here's why this is more than a money issue: The FCC has set minimum prices for each of the five spectrum blocks up for bid. If those prices aren't met during the bidding the block will be re-auctioned -- but without the service conditions attached to it in the original auction. The key issue here is that the highly coveted C Block has a reserve price of $4.6 billion with open skies service conditions that require the spectrum winner to allow customers to use devices and software of their choice.

"The incumbent bidders who have both the most money with which to bid and the most to lose from open access platforms, namely Verizon and AT&T, will rationally act to defeat the conditions by refusing to bid or low-balling their bids," Frontline stated in its petition. "Because the incumbents have deep pockets and can afford to bid high for the spectrum in re-auction, they will have effectively been given the opportunity to buy their way out of the open access conditions."

Sounds pretty plausible to me.