Sonim XP1 Blog

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.

Travel Tips for Business or Pleasure

As I wrote in a previous post 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.

Yes, I travel a lot.

Out of sheer self defense I've figured out ways to avoid the worst of the travel hassles. But I learned some good things (and remembered some services I'd used, liked, and promptly forgot about) from this post on LifeHacker, including:

A service called Farecast that predicts the rise and fall of ticket prices with the intention of letting you know whether or not now is the right time to buy. Note: For international flights use Airfarewatchdog.

MileMaven lists frequent flyer promotions that could secure you a few bonus miles.

You can find the best seats on the plane with SeatGuru.

With a little booking ingenuity and luck you may be able to keep the seat next to you empty. (this trick doesn't have a chance of working during busy travel times, of course.)

 

 

 

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.

 

 

Breaking Down The Walls

Information Week has a good story on last week's ouster of Sprint Nextel CEO Gary Forsee. The article points out that Sprint has to find not only a new CEO but also a strategy to compete with rivals Verizon Wireless and AT&T, as well as handling the Big Four wireless carriers biggest common problem: frustrated customers in the U.S.

Information Week reporter Richard Martin correctly points out that theturmoil at Sprint is "only the italicized version of what all of the Big Four wireless carriers--AT&T, Verizon, Sprint, and T-Mobile USA--are going through. The big cellular carriers are plagued with declining average revenue per subscriber (known in the business as "ARPU" and considered its most critical metric). They face competition from new deep-pocketed rivals such as Google. And they're grappling with innovative new services such as Wi-Fi, WiMax, and whatever comes next on the 700-MHz frequencies to be auctioned off by the FCC. As a result, they're struggling to shift their business models."

I was especially interested in Martin's breakdown of the ways that US wireless providers are dealing with customers who are tired of the whole walled garden wireless business model.

Verizon Wireless debuted the Voyager phone, the first consumer phone from Verizon Wireless to include a full Web browser. Customers will now be able to move beyond Verizon's branded content and services from partners, often carrying ads and for-fee add-ons.

 T-Mobile USA has begun a broader introduction of Wi-Fi in the form of its HotSpot @Home service, following a trial in the Pacific Northwest. Acknowledging that the service could eat into existing revenue from cellular customers making calls over Wi-Fi, T-Mobile executives have said that change is inevitable and they must take risks to adapt.

 AT&T's deal with Apple to be the exclusive U.S. provider of services for the iPhone, which has brought with it thousands of new subscribers, "could be seen as a deal with the devil," said Information Week. " iPhone users are buying the Apple device, not AT&T's service, and new owners are finding ways to unlock the device from AT&T's network. Steve Jobs is said to be demanding a cut of service revenue in negotiating future carrier deals for the popular device. And Apple has said that it plans to eventually open the iPhone to outside developers."

Information Week predicts that "The end of carrier dominance will likely lead to more options for enterprise voice and data plans, more device choices, and, eventually, lower prices" but they warn that No radical market reshaping comes without its share of chaos, though. Expect a couple of years of uncertainty in the enterprise mobility market, carriers fighting back, and new players making hard-to-verify promises before the dust settles and the real benefits show up."

 

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.

 

Open Auction for 700 MZ -- Give Me (and the US consumer) a Break!

Today the The Federal Communications Commission announced that it would allow one bidder to buy the entire 700MHz spectrum, in an auction planned for January 2008. So this spectrum, formerly used by local municipalities and old TV channels is going to be auctioned to the highest bidder. It's the largest allocation of airwaves in the last decade.

The FCC was swayed by Google, a shining example itself of a ruthless monopoly, and has opted to allow some of the spectrum to be sold with the condition that that network will have to allow for the use of any phone, a system that has been employed by the rest of the world for the last 10+ years.

However, allowing one company to buy the entire spectrum will ensure that this small, symbolic step toward open skies will be just that: symbolic.

What's Keeping US Phones In the Stone Age?

This post on Slashdot poses an interesting question: What's Keeping US Phones In the Stone Age?

The original poster writes: "After seeing the iPhone introduction, I was totally confused by how much excitement it generated in the US. It offered no features I could see beyond my Casio W41CA's capabilities. I had a lot of apprehension towards the idea of a virtual keypad and the bare screen looked like a scratch magnet."

"After returning to the US from Japan, I've come to realize the horrible truth behind iPhone's buzz. Over the year I was gone, US phones haven't really done anything. Providers push a minuscule lineup of uninspiring designs and then charge unbelievable prices for even basic things like text messages…."

And he concludes with, "It seems to me more like competition is non-existent and US providers are ramming yesteryear's designs down our throats while charging us an arm and a leg! Someone please give me some insight."