Telecommunication Strategy

>play: XOHM will Tear down this walled garden

2007-10-28T18:30:00.001-07:00

Today at the >play conference, Mr. Rick Robinson of Sprint spoke about Xohm, Sprint's WiMax effort. In answering to an audience question about walled gardens and the restricted access to mobile Internet, Mr. Robinson categorically said, "Xohm will teardown this wall. We will provide complete access to Internet from a WiMax enabled device".
Sprint Nextel is clearly not afraid of being reduced to a bit-pipe (a reason most often attributed for the restricted Internet access from your phone). They are confident that a new content delivery model that is Ad supported, will let them earn from the Ad delivery and distribution.

It will be interesting how Nokia and Google's Ad delivery to mobile will play into this. Google has the most effective Ad distribution system for Internet and will leverage it for mobile Internet. Nokia is taking all the steps necessary for Mobile Ad delivery and it is doing it mostly through acquisitions. Nokia's new initiative "mosh" (short for Mobilize Sharing) was at display at the CTIA. When I talked to Nokia representative driving mosh at the CTIA, he said they have figured out a business model that delivers free content to the phones and supported by Ads. This Ad delivery is done using Enpocket's framework. So what will Sprint's Ad framework be?

As a side note, the way Mr.Robinson said it reminded me of President Reagan's, "Mr.Gorbachev tear down this wall".

Mobile Alphabet Soup

2007-10-25T20:35:00.001-07:00

The mobile standards are not for the faint of heart. Here is a soup, thanks to Wikipedia. I can honestly say I can talk about three of them, CDMAone, CDMA2000, EVDO. If you insist I can talk the level of bits, channels and network. We all need a device that is mobile, allows us to stay in touch with the world through voice, email, video and web. So the question to you and I as mobile users is, "why do we care about this soup?"

Mobile communication standards

3GPP / GERAN / UTRAN / LTE Family

GPRS

EDGE (EGPRS)

EDGE Evolution (Evolved EDGE)

HSCSD

W-CDMA
- UMTS (3GSM)
- FOMA

UMTS-TDD
- TD-CDMA
- TD-SCDMA

HSPA
- HSDPA
- HSUPA

HSPA+

GAN (UMA)

Pre-4G

UMTS Revision 8
- LTE
- HSOPA (Super 3G)

3GPP2 / cdmaOne / CDMA2000 Family

cdmaOne

CDMA2000

EV-DO

Pre-4G

Other Technologies

IMTS

AMTS

Autotel / PALM

AMPS / TACS / ETACS

Hicap

CDPD

Mobitex

DataTAC

iDEN

D-AMPS

WiDEN

Pre-4G

iBurst

HIPERMAN

WiMAX

WiBro (Mobile WiMAX)

Frequency bands

Cellular

Mossberg calling for freer phones

2007-10-25T17:54:00.001-07:00

Mossberg of The Wall Street Journal who usually keeps his writing to the technology sections, wrote a rare opinion piece, Free My Phone - WSJ.com.
Some time back Tim Wu of Columbia Law School, a well known proponent of Net Neutrality wrote a paper on Wireless Carterphone. Mossberg's call is very similar to what Tim Wu talks about in his paper, asking for the freedom to buy any cell phone you wish and use with any service provider. Mossberg's asks, for the same freedom we enjoy with buying computers and the choice of ISPs we have. This is the old carter phone rule that allowed people to buy any landline phone with a RJ11 port and plug it into the jack in your house.

I am glad Mossberg is very strong in his message:

It's intolerable that the same country that produced all this has
trapped its citizens in a backward, stifling system when it comes to
the next great technology platform, the cellphone....

That's why I refer to the big cellphone carriers as the "Soviet
ministries." Like the old bureaucracies of communism, they sit athwart
the market, breaking the link between the producers of goods and
services and the people who use them.

The article goes on to talk about the absence of SIM card n CDMA phones, the locking of SIMS and the upcoming 700 MHz auction. However I do disagree with some of his claims regarding Apple's success in choosing its own hardware and software platform for the iPhone.

Both Mossberg's article and Tim Wu's paper are must reads if you want to understand why your phone is tied to your service provider or why Skype is not supported in iPhone platform.

mossberg, carter phone, wireless phone, iphone

Carbon Neutral TV Commercial

2007-10-17T21:39:00.001-07:00

AdAge magazine reports that the Ad agency, Brooklyn Bros. shot what is believed to be the first carbon neutral TV commercial. The Ad agency developed a software that kept track of all the carbon generated by the cars, trucks, generators, lights, etc used in creating the commercial. They said that they generated 9 tonnes of carbon and paid $20 per ton to offset it. (I picked the photo above from Flickr that I found interesting and appropriate).

We already saw SimCity mixing global warming into their system. SecondLife can't be far behind, selling carbon offsets for LindeX.
What is next in mixing carbon neutral living and digital media?

Your cellphone network becomes carbon neutral. In addition to charging you overage for minutes you will also get carbon overage.

Carbon Neutral channel on Cable. All programs must be certified carbon neutral, and the Ads too.

BestBuy starts selling carbon neutral TV. It never turns on.

RadioHead releases a carbon neutral album, same old name your price, this time hosted on a website powered by power generated by crank turning delirious RadioHead fans who paid $300 for the album.

Bloggers start paying for carbon offsets for using too much of electricity in producing all those posts.

Google search results show carbon score for each web page listed. In addition to relevancy you can customize the search results to show first those sites that are carbon neutral.

Social networking sites for all those who are carbon neutral. Add to that dating sites that match you with others of same carbon profile.

Technorati Tags: carbon neutral, carbon ofset media

Nash Equilibrium

2007-10-14T17:41:00.001-07:00

Google Acquires Finnish Jaiku

2007-10-11T17:15:00.001-07:00

This has been an year of acquisitions for Google. It's only October and Google has made 16 acquisitions. All in the ever popular Web2.0-Social networking area. This time is is Jaiku.
As it has been the norm, Jaiku is now closed to new users, "In order to focus on innovation instead of scaling, we've decided to close new user sign-ups for now,"

Jaiku is Twitter like, helping you leave digital breadcrumbs, through your mobile phone, about your whereabouts for people who do care so much about your mundane minutiae.

There isn't anything significant about the foray into Finland (no, it is not about taking the battle into Nokia territory). Or is there? Jaiku is now supported only on Nokia Handelds (specifically those based on Nokia software platform S60). So when Jaiku is integrated into gPhone software framework, Nokia may be forced to find its own alternative.

Now someone has to make a play on Twitter and Facebook real soon.

Will Verizon Wireless acquire Sprint?

2007-10-10T21:31:00.001-07:00

The Wall Street Journal Blog asks,
"Think of how much better long-suffering Sprint shareholders would have been expanding through another type of deal: say, a buyout offer from the likes of Vodafone Group."

Vodafone, is the part owner of Verizon Wireless, a JV. Technically I should have said Vodafone in the post title.

The answer however is, a resounding no. The law of conservation of good mobile customer states that there are no more new customers, growth can only be initiated at the expense of others or by acquisitions. Sprint would've looked attractive if it were the size of Alltel and acquiring it just to show subscriber growth would've been worth the deal.

At the current rate Sprint is losing subscribers and its current change of leadership, Verizon and at&t will step up efforts to acquire its subscribers not its liabilities. But will the Private Equities make a play to acquire Sprint? With $2.4 Billion in cash and $6.8 total current assets, it is a possibility. That sure will cause big hurdles for Wi-Max because the private equities are about cost cutting and generating cash flow, not about strategic growth in wireless industry.

What do you think?

[tags] sprint, verizon, vodafone, at&t, sprint acquisition[/tags]

Purpose of Mobile Music is to Discover and Share

2007-10-07T23:36:00.001-07:00

Your music is mobile as soon as you side-load it on your MP3 player. It goes where you go. But Mobile Music means something different. It is the ability to call-up music that you like on the go. You have a phone with MP3 player and high-speed anywhere data connection. You have mobile music when you can buy a song online through your phone. The mobile phone companies try to set the price leadership in mobile music by pricing the on the go downloads at least 2.5 times the 99 cent downloads from iTunes.

The market for this mobile music is not as big as the iTunes store, the market won't expand even if the songs were offered at 99 cents. The MNOs know this and are not tempted to get into a price war. An ABI research early this year said that an averag customer buys 8-9 songs a year. Mobile music purchase is not for the average. It is defined for those with a higher willingness to pay to get instant gratification. Does the market justify the operational costs? Verizon and Sprint don't break down the numbers but we know now that they had decided advertising mobile music is not a good strategy. There is no more Ads on calling up music on demand.

So what is the true purpose of Mobile Music? The Wall Street Journal says

"The purpose behind wireless music downloading is to finally go beyond
music playback -- where the iPod and most MP3 players are stuck today
-- and address music discovery," says Forrester's James McQuivey.
"Because sometimes you want to tell your device what you want to hear,
and sometimes you want your device to tell you what you should hear."

I think this is absolutely true. The power of Mobile music is in finding local music (buying songs of a band playing in your coffee shop from your iPhone) and sharing music from a central location.

Apple is moving towards another form of sharing. The deficiencies quoted in WSJ article are already addressed by iPhone's design and its ecosystem.

"I still think the PC is the place where consumers want to have their
digital library -- and it's certainly where they want to store and
manage that library," says Forrester Research analyst Charles Golvin,
who ticks off a list of advantages PCs have over mobile devices: Their
user interfaces are more convenient, they're harder to lose, and
they're easier to back up.

Arguably iPhone offers the best and the simplest user interface among mobile music devices. With iTunes integration they can easily provide music backup through their .Mac hosting service. While Apple does not believe in subscription model for music, it already has a subscription model for its .Mac file storing and web hosting service. An iPhone user with .Mac account can seamlessly buy songs on the go from iTunes store and have it sent to storage in her .Mac account. The iPhone will support streaming music from our playlist on .Mac or your friend's shared list.

I think Apple is
also best suited to deliver SlingBox on your iPhone/iPod Touch from
your Apple TV at home. At the simplest form, the current Apple TV can
support (with just software upgrade) web streaming of music and videos
on your home computer to your iPhone.
The next step is to have Apple TV support Cable input and let you watch TV on the go.

The real purpose of Mobile Music is sharing. It needs a perfect ecosystem. Apple has it.

Technorati Tags: mobile music, ipod touch, iphone, music sharing, mobile music streaming

Free the music?

2007-10-07T22:53:00.001-07:00

>play Music panel will discuss the current state of digital music and the emerging path as the business models change. Is free the new business model? Giving things away for free isn't new, people have been giving away software, books, ideas, knowledge, art all for free. There is a great study on the economics of open source by Professor Eric Von Hippel of MIT. The argument applies to any creative work that previously had a price but is now given away. In a recent article Michael Arrington of Techcrunch says, albums and singles will cease to be the source of revenue and will become marketing tools for other services (like concerts).

I will be very much interested in asking one of the panelists, RealNetworks , who have a subscription model, how the "free music movement" will transform their business model. Will Rhapsody/RealNetworks and others such services will become marketing channels rather than remain as digital music stores?

Join us at >play on October 27th to ask your questions.

Technorati Tags: >play, play conference, haas, berkeley, digital music, drm, rhapsody, realnetworks, music subscription

Sprint: Changes Ahead

2007-10-04T22:09:00.001-07:00

The Wall Street Journal reports on the board's search for a replacement for Sprint's current CEO. The problem is the lingering doubts on Sprint's strategy of investing big on on WiMax vs. stemming subscriber turnover. Are these two mutually exclusive options? It is easy to say "Exploit before Explore" but the truth lies in between.

Sprint needs to stabilize its current subscriber churn and start creating churn away from the other two providers. In the cutthroat competition for subscribers it is an established fact that all good subscribers are already taken and growth can only be engendered by churn from from others. Verizon is doing it with on the network side, with better coverage and at&t is doing it on the handset side with iPhone. Sprint can't ignore its current churn rate of 2.5% per month.

But Sprint also needs an answer for the future. It cannot give up the 4G battle to others. Besides it needs an answer to the big pipes Verizon, at&t and Comcast have into customer homes. If Sprint can make WiMax the unified strategy to deliver a true quadruple-play it stands to gain market share, especially given the problems Verizon and at&t are facing with their fiber solutions and the slow uptake.

The questions should be:

What are Sprint's short term goals and measures to achieve these?
Has Sprint accurately estimated the risks in WiMax, rollout?
Has Sprint correctly identified the market segments that will take up this new network?

If the board does change the CEO, it should be because it did not receive convincing answers to these questions and not because WiMax is an expensive undertaking.

Technorati Tags: sprint, verizon, at&t, WiMax, Forsee, churn, 4G, quadruple play

>play Mobile Panel

2007-09-30T09:41:00.001-07:00

I am one of the student organizers of the Berkeley Digital Media conference, >play. I am working on the >play marketing team, >play mobile panel and >play EXPO.

>play mobile panel is on the future of mobile and mobile applications. I am particularly interested in learning about:

Which group will control the ecosystem? Application providers? MNOs? Device manufacturers?
Is this a zero-sum game with only one group controlling the ecosystem?
Is there only one ecosystem or can multiple parallel ones coexist? For example, will there be clear segmentation on voice, music, video, applications, games etc.
How access layer agnostic will the services be? Does it matter whether the access is over WiMax or HSDPA (or its successor Long Term Evolution LTE)?
Will voice become just another application in the services layer and cease to be the major bandwidth consumer?

What are your questions on the future of mobile?

Come to >play to listen to Nokia, Google, Sprint and LoopT to hear about mobile future and to get your own questions answered.

Visit >play Squidoo Lens.

Technorati Tags: play, berkeley, digital media, conference, mba students

Pricing - Your $39.99 Cellphone bill

2007-09-29T20:28:00.000-07:00

In my MBA coursework, we have been discussing pricing for the past few classes. Admittedly this is a complex subject and even after all the complex pricing schemes based on market segmentation (two part tariffs, second degree price discrimination ...) a business still finds it can't price much differently than its competitors.

In his recent post, Seth Godin, says this about pricing, "The way you charge for something changes the way people perceive it." We all pay almost uniformly $39.99 a month for our cellphone service that provides abut 500 minutes a month. Verizon and at&t can't offer a pricing much different from each other, at least not for long. There is little perceived variation in the service for a mobile subscriber and the competition comes down to pricing and customer service. So why can't the phone companies have drastically different plans?

It all comes down to how much the consumers value the service and their willingness to pay. If you get a bigger "smile" after paying $49.99, for the same minutes, you will. If the services are indistinguishable (which they are to most users, given the technologies and the cell coverage) they will be indifferent to one or the other.

For the curious, this $39.99 for 500 minutes is called the two part tariff, the different calling plans are versioning (self selection) and combined triple and quadruple plays are bundling. They charge a fixed charge that lets us consume some service and charge extra after that limit. Number of mobile minutes a subscriber is willing to purchase has wide variation, but my guess is that the middle 80% won't even come close to exhausting their monthly limit. Mobile phone providers could technically charge every subscriber a different price based on their minutes usage. But this is incredibly complex to administer and impossible to market. So they do the two part tariff.

If you assume an all voice network, the marginal cost to provide a minute of service is practically zero. It does not cost more to offer you 600, 1000 or unlimited minutes. They do offer more minutes or unlimited minutes plan for a higher price (Boost offers unlimited minutes for $50). It is exactly the same reason why at&t can offer you rollover minutes that lets you move unused minutes from month to month. There is no marginal cost but there is great perceived value (through marketing).

So why don't all mobile providers offer this unlimited plan to all at the same $39.99 price? Because there are still a few people who have a higher willingness to pay for more minutes and they should be nudged to pick the higher plan and give up up some of their consumer surplus. Not all are attracted by unlimited minutes, the middle 80% will then ask for a plan that offers fewer minutes. Their willingness to pay will drop. Hence there needs to be some versioning to nudge subscribers to self select.

So why is there a high surcharge or the times we do go over the limits? Once again, it is to nudge us to move on the higher price plan and not to discourage us from going over the limits. Like Seth Godin says, by charging the overage at a much higher rate, the mobile companies make us perceive that there is higher value in switching to the next calling plan.

Next time you see an Ad for triple-play or open your cellphone bill, think about it. Pricing isn't as simple as it looks. The pricing is all designed to change the way we perceive the service. There is a dollar figure assigned to each one of this perception. If the businesses get this dollar figure right, they make profit, else they have bad pricing.

Google Acquires Zingku

2007-09-28T09:41:00.000-07:00

Zingku a Boston based Mobile application startup, entered into an agreement with Google. Zingku describes its services as " Supercharged mobile txt and picture messaging for you & your friends." With the simplicity of TXTing Zingku puts helps you put together a quick Social Network.

Why would Google acquire a TXT application (and a small player in that)?

GigaOM says, " ... we suspect it would be to bolster their Orkut social network. Zingku is an SMS-turbocharger of sort.

GrokOnGoogle says, "Google could offer the ability
to send targeted text links, display ads, and promotional flyers to
cell phones across much of the world."

IterativePath (that's me) says, "Duh! There is nothing more personal and personalized than a mobile phone. Whether the mobile business models based on TXT ads or flyers are possible or not are inconsequential to Google at this stage. Following their 9 year old business strategy of, develop something remarkable first and then figure out ways to monetize it, Google is positioning itself to be the place to go to for all things Mobile. Just like becoming the verb for web search, they would want the same with mobile applications."

On an unrelated(?) note, Google denies reports that it wants to be a telecom.

Google's Wireless Initiatives

2007-09-27T23:35:00.000-07:00

Google is 9 years old today. It still makes most of its revenue from Ad sales. But its strategic thinking in moving from traditional Internet to everything mobile is clear from its many mobile initiatives. The moves range from the Muni-Wifi to partnership with Sprint on their WiMax network and even the possibility of being a MNO (Mobile Network Operator). Google is shaping the upcoming 700Mhz auction and has pledged a minimum bid to coax FCC to auction of a slice for open access.

In the connected Internet world, no one really owned the Internet and Google thrived on it, especially since all its applications are web bases (software as a service). In the mobile internet arena, the are owners to the mobile network. The MNOs had bid big amounts to own the spectrum and invested considerable resources to rollout and maintain a wireless network. So Google is making a strategic move to partner with a MNO and also position itself to be a MNO.

It is not easy to become a MNO overnight, especially given that Google (in simplistic terms) a software centric business. Being a MNO requires acquiring mobile infrastructure, acquiring spectrum, building cell sites and maintainng this network (Can you hear me now! type work), subscriber acquisition, billing etc.

However all these are routine, (essential but not met by core competenis) work that doesn't require Google's innovation. With infrastructure providers like Ericsson and Nokia taking on these operational tasks from MNOs. For example India's Bharti-Airtel outsourced their network operation to Ericsson, so did 3 and Orange. Google could do the same and focus on intelligent services delivery, which it does best.

With its immense resources Google is going to play a decisive role in shaping the Mobile communications of the future.

Here is a nice summary of Google's mobile initiatives from the Telephony magazine:

GOOGLE'S WIRELESS INITIATIVES

Xohm: Google has partnered with Sprint to be the portal services provider for its upcoming WiMAX service. Google will supply a suite of communications and organization applications, as well as collaborate with Sprint on location-based and presence services.
700 MHz: Google has expressed a surprising amount of interest in the upcoming auction, which will allocate new broadband wireless licenses in the U.S. Not only has it lobbied the FCC to include open-access rules for certain licenses (against Verizon Wireless' opposition), it has indicated it may bid in the auction itself.
Muni Wi-Fi: Google has launched its own free citywide Wi-Fi service in its hometown of Mountain View, Calif. It also has ambitions to be the service provider behind other cities' municipal wireless launches, although many of those projects have been canceled.
Google Mobile: Google has recreated many of its most popular Web applications and services for mobile devices, launching Java versions of its Gmail and Google Maps programs and expanding its search capabilities to the mobile Web and short message service. In some cases, it has succeed in placing specific applications as core services on handsets and mobile devices, such as Google Maps on the iPhone and Google Talk on Nokia's Internet tablets
Google Phone: Almost a foregone conclusion, the Google phone is the most anticipated device since Apple's iPhone, even though Google has not officially confirmed its development. The big question is whether it will be a Wi-Fi-only device using Google Talk or one with a cellular chip.
AdWords: Google is optimizing its core text-ad-delivery technology for mobile, serving up ads for mobile-optimized sites on specific phones when conducting a mobile Web search.

Mobile Adverising Battleground

2007-09-23T08:58:00.000-07:00

Mobile advertising battleground promises to be an interesting one, with competition between leaders in web ad delivery (Google, Yahoo, Microsoft) and strong mobile player Nokia. It is interesting that Nokia, primarily a mobile vendor (Nokia spun off its infrastructure as a JV with Siemens) is playing a strong role in shaping Mobile advertising and not the infrastructure vendors like Ericsson, Motorola or the network service providers like at&t and Verizon.

Traditionally, the networks have a big control over the content delivery to their mobile subscribers, both in who and what of mobile content. Sprint has its own music service, Verizon too and its own GetITNow for mobile Internet. Apple's iPhone for at&t opened the mobile internet to the same level as the wired version on our PCs, with no restrictions. Nokia has been steadily making strategic moves, with their acquisition of LoudEye for mobile music, their own online music, games, multimedia store Ovi.

Google with its strength in search Ad delivery on the Internet, recognizing the slowing growth in online Ads and the potential for mobile Ads, is stepping up its efforts to increase the volume of its mobile Ads.

Nokia, Advertising Age reports, is closer to Mobile Ad delivery with its acquisition of Enpocket.

It's a move that pits the handset maker directly against rival carriers as well as more traditional ad sellers such as Google, Yahoo and other PC portals. Content providers and media companies, such as Weather Channel and MTV, also hope to rake in additional revenue from mobile ads.

Clearly, the competition is going to be between two of the leaders in their own area and who have shown strategic thinking in focusing on building the complete ecosystem and not just the standalone parts. With the tremendous market share they have in their respective areas and the cash in their balance book, they are reinventing their businesses and setting up for future growth.

If Yahoo and Microsoft don't have make key acquisitions now they will be forced to play catchup as they do with Google's search Ads. Network providers mus be getting wary about the emergence of a Mobile phone vendor and a search firm as leaders and must be feeling that control is slowly slipping from their hands. My vote is with both Nokia and Google.

Dual Line Mobile Phone

2007-09-21T21:10:00.000-07:00

I listened to a podcast at Telephony Online on the advent of Dual-line phones. Just like your home phone that comes with Line1 and Line2, certain mobile phones are going to support Dual (actually multiple) lines per handset.

This reminds me of my conversations with mobile phone users in India when I visited the country past June. With 6 million new additions per month, most people who work in the cities have phones. Most importantly, most use GSM phones (as opposed to Qualcomm's CDMA) phones that support a SIM card. Your identity, (trivially, your number) is tied to your SIM card. So by changing your SIM card you will have a completely new number.

People who use their business provided phone or those who use their personal phones for business purposes, usually carry more than one SIM cards. They swap the SIM cards by the end of the day, so that "work" won't call them and yet they can use the phone.

In Israel they have a semi-automated version that is created by hacking existing phone phones by adding second SIM and a switch.

Dual-line tries to serve that purpose but without swapping SIM cards or an explicit hack. Would it catch on in USA?

Here is the link to the podcast (MP3).

Femto Cells

2007-09-21T21:08:00.001-07:00

If you type Femtocell your spell checker will be very upset. Femto, despite what your spell checker says, is 10 raised to the power of negative 15, a very small number indeed. Femtocell means a teeny weeny Radio Base Station you can mount in your home, just for you. Why would you need that?
Wireless phones are meant to set people free, allowing them to work from anywhere they want and have the same reachability of a tethered phone. Now as wireless phones are being substituted for fixed-line phones, more and more businesses are relying fully on using wireless for all communications. Cellular systems that are designed very well for outdoors coverage now face the problem of indoor coverage. Coverage indoors simply isn't good.

In its Telecommunications Predictions for 2007, Deloitte talks about the "mobile's move indoors". They predict the rising move to wireless phones and the need for mobile operators to be fully aligned to this move. Recently The Wall Street Journal reported that the wireless providers are moving in to take advantage of the market and the equipment like Femto cell available from vendors like Nokia.

Who are the players in femtocells?
In June of 2007 Nokia Siemens Networks (the infrastructure JV between Nokia and Siemens) announced their 3G Femto Cells . The newbie infrastructure vendor trailing behind Ericsson ad others made a good strategic move to go after Residential solutions.

Others include the Ericsson, Motorola but most importantly Google and Intel who are funding startups in this arena.

I can't wait for the day when every house has a femtocell and for the new wave of complaints about how RF waves cause cancer and autism. (They don't.)

I cross-posted this in Berkeley Digital Media Blog

Femto Cells

2007-09-21T21:08:00.000-07:00

Others include the Ericsson, Motorola but most importantly Google and Intel who are funding startups in this arena.

I can't wait for the day when every house has a femtocell and for the new wave of complaints about how RF waves cause cancer and autism. (They don't.)

I cross-posted this in Berkeley Digital Media Blog

On Demand

2007-08-01T09:09:00.000-07:00

We signed up for Comcast triple play because the price was attractive. One thing we discovered with digital cable is "On Demand". We are so thrilled to have several episodes of Sesame Street and Barney available for our kid and we get to see CSI (all flavors) and the clips from Daily Show hen we have downtime. But what is being done with On Demand is still extremely rudimentary, especially the business models.

The Ad supported On Demand delivery is still based on old static model with fixed Ads running all the time. For instance we see the same arthritis prescription medication Ad in all CSI episodes. Probably they determined the target viewers for CSI to be older people with Arthritis issues. By doing Ad delivery based on isolated data and broader groups and not on the individual subscribers and their overall viewing pattern.

For example, unlike normal cable, the Digital cable and On Demand provides the Cable company the power to collect all the data about the viewing habits of individual subscribers. If we consistently view episodes of Sesame Street somewhere between 8AM and 7PM then it is pretty obvious there is a kids in the household. Comcast can glean this pattern and choose to run Ads related to kids products during the CSI viewing.

This is just the beginning. The strategy should to be start now with at lest a rudimentary form of dynamic Ad delivery and continuously improve on the system. While the business models are still evolving, any form of individualized dynamic Ad delivery will set the provider apart form its competitors.

Nokia Siemens picking its markets strategically

2007-07-09T06:26:00.000-07:00

Nokia Siemens Networks, the infrastructure JV between Nokia and Siemens has a clear focus on the markets it can go after. It is a non entity in the US market that is dominated by Ericsson and Alacatel Lucent. But as study after study suggests, the bulk of the mobile subscriber growth is expected from the merging markets, especially India and China. There are two announcements made by Nokia this week that exemplify Nokia Siemens strategy, identify the markets where none of the players have clear leadership and develop products that will create a leadership position for itself.

Nokia Siemens announced $900 infrastructure contract with India's Bharti Airtel. This builds on top of its innovative product, Village Connection, especially geared towards India. WSJ reports this as a major victory for Nokia Siemens, given that Ericsson is competing for business from Bharti Airtel.
Nokia Siemens also announced 3G Femto Home Access Solution, aimed at addressing the poor coverage indoors. As I previously blogged about, the cellphone is increasingly used indoors as a wireline replacement. Even for Internet connections the data cards are replacing indoor WiFi or Ethernet. But the coverage indoors is extremely poor due to obstacles and building structures. Simply put, the cellphone networks are designed for better coverage outdoors but not indoors. AN ABI analyst, interviewed for WSJ, predicted the Indoor products market to be $3.6 billion. This clearly is a big greenfield opportunity for Nokia Siemens and certainly gives it the first mover advantage.

Nokia Siemens' moves clearly show that there is no one market strategy you can pick. The growth of Nokia Siemens business in the coming quarters will prove the efficacy of this strategy.

AT&T's Free Wifi offer a Case Study of - convergence

2007-07-03T07:57:00.000-07:00

AT&T announced free access to its Wifi Hotspots to its DSL customers. The offer while free to its most DSL customers who have some form of premium access, its low paying DSL customers can get unlimited Wifi access for just $1.99 a month, again practically free. This move needs to be looked at in the broader context of things AT&T is doing to stay competitive in an extremely competitive market. The major initiatives of AT&T are:
1. iPhone with exclusive rights
2. Bundling DSL and fixed wireline
3. U-verse TV
4. Wifi hotsport and free offer to its DSL customers

No single move by AT&T is independent of other.

The iPhone move is essential to generate subscriber growth in an extremely tight market. As was noted before, "all good subscribers are taken and the only way to generate growth is through churn". The exclusive right with Apple for this remarkable device is aimed squarely at creating defections from other wireless providers, especially Sprint and T-Mobile.

The name of the triple (or quadruple) game is to gain access to the customer household to generate multiple revenue streams and make it difficult for the customer to switch. In that aspect AT&T offers fixed wireline, DSL, wireless service and working on its U-verse TV service. The Wifi hotspots it operates are never meant to be a major revenue source and AT&T realized this by using it to drive more customers to its DSL (and hence fixed wireline) side of the business. This free offer does not impose significant marginal cost to AT&T but helps sweeten the switch from Comcast or Verizon. This definitely gives AT&T a leg up over Comcast which does not have Wifi hotspots but sure has an advantage in Cable and content.

The free Wifi move is also significant in the iPhone context which supports Wifi. AT&T, realizing that customers will progressively use more of the Wifi part of iPhone, given the slow speed of EDGE networks, wants to keep these customers in its Wifi network and in that process drive more of the new iPhone customers to its fixed wireline service. The existing DSL customers who are not AT&T wireless customers may be tempted by the free Wifi access to buy iPhone and do the switch.

It is impressive to see such a focused strategy that brings all parts of its business together, one driving the other in a virtuous cycle.

Testing the address verification restriction of Indian Telecom

2007-06-11T00:58:00.000-07:00

I decided to test the probity of the mobile phone retailers in India in enforcing the Indian DoT's requirement for address verification. I tried three retailers i Chennai. The are located within in a 5 Km radius. All of these are small 100 sq ft operations nestled between other non electronic retailers. They all proudly touted Nokia N95 outside their shops.

The skinny, I cannot convince any of they to sell me a SIM card. The conversations were almost identical in all three stores. They are eager to help and sell, they wanted me to fill out two application forms, asked me for a passport size photo and a local address. They were upfront in telling me that when the service provider verification fails my service will be deactivated. They all said that they used to fill in the shop address for local address for most customers but that has led to many problems for the retailers.

There is no waiting time to activate the phone. So given the manual nature of the verification process and the delays involved anyone could get a phone with a fake id and fake local address and use it for 1-2 months. What is the point of making the life difficult for law abiding citizens?

Despite my objections to the restriction, I think there is one thing the retailers could do as a favor to the customers. They could take a passport picture of the customers for free and in the store. This may in fact ironically speed up the address verification process by getting a digital image of the subscriber.

More on Subscriber Verification in India

2007-06-08T15:54:00.000-07:00

The service providers in India are adding 6 million mobile subscribers per month. But they feel the heat from the Indian Government's strange requirement for address verification of the subscribers. In a country where the majority of the subscribers are prepaid, there is now more paperwork added for every subscriber. One cannot simply walk into any of the thousands of mobile retailers to buy and activate a phone. An year back it wasn't a big deal but the DoT has stepped up the heat on the mobile operators with a threat of Rs 1000 fine per omission. That's the revenue from a subscriber over 5 years. So the mobile operators require the retailers to ask for a passport photo, a government issued id and a local address from the customers who walk in. The operators then follow-up with visits to the addresses listed and match the person with the photo submitted at the time of application. If a match fails the phones are deactivated right away. Since the service providers need not struggle hard to acquire new customers they don't mind imposing the onus on the subscribers.

The press in India does not mind this restriction and side with the Government. India's Business and Economy (sorry no link available) says,

"with the increase in the misuse of cell phones by anti-social elements, th DoT issued stricter norms fo address verification .... Why in heavens were cell phone connections accepted without appropriate verification"

No one wants to ask how can this step really prevent an "anti-social" from obtaining a phone. If the terrorists can bring in the explosives and guns into the country they can obtain fake ids and fake local addresses. Given the large number of subscriber additions per month how can anyone possibly verify every new subscriber?

Let us just hope that the service providers push back more, in the interest of keeping their margins since the cost of subscriber acquisition and support goes up, if not in the interest of the subscribers.

Lifetime Prepaid Plans in India

2007-06-07T15:39:00.000-07:00

When you drive around in any major Indian city it is difficult to avoid the big hoardings from almost all the wireless providers talking about their "Lifetime Prepaid". In a country where every service provider offers free incoming calls went one step further to sign up more subscribers at a marginal cost. Lifetime prepaid plan requires you to pay a onetime fee of Indian Rupees 1000 ($50) and buy your own phone. Then you can receive free incoming calls forever. For outgoing calls, a subscriber gets a token credit of Rupees 20 (50 cents) and can recharge at their will.

The catch? There is the upfront fee, although there are festival time deals for half this price. The outgoing calls are charged at a much higher rate, anywhere from 2 to 5 times as much as the normal prepaid. The subscriber must recharge for at least Rs 10 (25 cents) every six months. Once a subscriber signs up they can't add any of the special priced schemes for outgoing calls.

What is in it for the service provider?
In a country where even the people at the bottom of the economic ladder can own and operate a cellphone the call model is very different from the rest of the world. The car drivers, vegetable vendors and the like who provide services to the Indian middle class use their phone to mainly receive calls and to signal their customers, a practice commonly referred to as "giving a missed call".For the middle class who can afford to make outgoing calls and need the services of those they hired, there is an unspoken rule that they don't pick up the phone at the first ring and call back. So for the service providers there is less of revenue per subscriber since there is no big upfront activation fee (Rupees 200 or so) and the recharge rates are as low as Rupees 10 per month.

For a normal prepaid customer the revenue realized over a five year period from a prepaid subscriber is :
Upfront fee: 200
Recharge (min 10 per month) : 600
Total: Rs 800

Compare this to the Rs 1000 realized on day one. This is a very attractive business model for the service providers.

What's in it for the subscribers?
There isn't much other than less frequent recharge. But they are attracted to this scheme by seeing something more than there really is.

India's need to keep a leash on its Wireless subscribers

2007-06-06T17:23:00.000-07:00

Indian Democracy is soon going to be 60 years old. Since it gained independence from British hegemony in August 15th, 1947 it suffered the growing pains of the Democracy. The Government, famous for its license Raj always found the need to keep a tight leash on its citizens. With very loose rules, a corrupt system and a state owned wirleline monopoly it used to be easy to know about all the citizens who owned the phones and if necessary tap their conversations with ease. The Department of Telecommunication (DoT) knew exactly which house a phone was subscribed to.

The explosion of wireless phones, primarily the prepaid service threatens to take away that control the Government enjoyed. The ease of prepaid made it affordable for millions of Indians to obtain a cellphone and operate it without big financial burden. The Government feels nervous that it had lost track on the 80 million mobile subscribers and feels powerless that it cannot track down the conversations. In this pseudo Democracy it is easier to make a common law, however restrictive it is, than to make exceptions.

The DoT requires the wireless operators to verify the address of all its subscribers and made it the onus of service providers to comply in a system that lacks any of the information infrastructure the western world is known for. The law requires the service providers to verify the address of the sbscribers it is signing up within 72 hours. The Indian Government requires a visit by a cop to a passport applicant's residence to verify his address. Now the DoT is forcing almost similar restriction on the wireless service providers.

All it takes is an event similar to the Mumbai blasts in which the terrorists use mobile phones to coordinate their actions and the Government may require police verification before a citizen can get a wireless phone. It is shocking to see that the press seem to not care about this encroachment by the Government. A recent news article in India's national newspaper, The Hindu, talks about the need for the address verification:

In an intensely competitive market, mobile operators have been issuing active connections on the basis of documentary proof furnished by an applicant. They then complete the physical verification of addressees in the next few days. This practice contravenes in spirit, if not in letter, the license terms stipulating that each operator must carry out adequate documentation and subscriber verification before offering a connection.
Inherent abuse

A recent incident in the city illustrates the potential for abuse inherent in this practice. An office assistant was held by police after he sent obscene messages to a woman using a connection he obtained by furnishing passport size photograph and address proof particulars and a forged signature of his employer. The police also arrested the mobile phone retailer for issuing a SIM card without proper verification.

The Government decided to make an example for the other mobile retailers by arresting one. Isolated incidents like these are enough to make knee jerk reactions. The law abiding citizens who are used to years of such measurs by the Government do not complain about giving their personal information to secure a phone. The operators do not face any resistance from their customers when they implement the restrictions posed by the Indian Government:

According to an Airtel official, customers at the point of sale are requested to fill in an application form with photograph and attach a copy of his/her proof of identity and proof of address, which are then matched with originals held by the customer. The form is then sent from point of sale to the distributor who verifies the `completeness' of the documents and once this is ascertained the customer is activated.
A subsequent deactivation happens only if a discrepancy is detected during the rechecking of documents, the spokesman said.

The Indian wireless operators may not raise objection, but I do hope that the multinationals like Vodafone which enter the Indian market stand up for the basic rights of the subscribers and not kowtow to a incompetent and insecure Government.