Sale Ahead for EarthLink?

EarthLink Executive Vice President Mike Lunsford, who acted as interim CEO after the death of former CEO Garry Betty, is leaving the company at the end of the year. Earthlink CTO Jon Kerner also is said to be leaving, as is Vice President of Production Operations Eric Alfaro. Kip Morgan, former EarthLink Vice President for Direct Marketing, Access and Audience, also has gone elsewhere.

When such things happen, one normally expects a sale of assets, which is what many observers expected when Rolla Huff took over at EarthLink.

T-Mobile, 3 Join 3G Networks

T-Mobile and 3 are pooling their U.K. 3G transmission networks, a move expected to reduce mobile tower sites by about 5,000 and save £2 billion in capital spending.

Kevin Russell, 3's UK chief executive, said the joint venture deal includes contingencies should either company be taken over, but both expect it to be a long relationship.

The move is not unprecedented, but still is unusual. Though not dictated by regulatory requirements, the move essentially creates a wholesale entity both retail networks will use to operate their businesses. It is not a structural separation, but certainly a functional separation.

By the end of 2009 the two companies plan to have 13,000 sites, covering 98 percent of the population with a mobile broadband network capable of speeds up to 7.2 Mbps.

Wireline Substitution, Mobile Plans, Broadband

KPN seems to have found a way to take market share in the German wireless market: give customers unlimited calling for a flat fee, avoid phone subsidies or selling phones, and keep things simple. The growing number of wireless-only customers apparently is helping, as one obviously needs more minutes in the plan to cover the additional volume when all calls in and out are taken on the mobile.

For $108 a month, Base subscribers can make unlimited free calls anywhere in Germany. A comparable offer by Vodafone costs $144. The sister E-Plus brand KPN supports also has shifted to this "no frills" approach.

In the third quarter 2007 subscriptions wereup 16 percent year-over-year, to some 14.1 million. E-Plus operating profit also rose 79 percent over that period, with profit margins of 38 percent.

Of course, KPN will have to figure out how to translate that success into similar good fortune in the mobile broadband segment, where it might not be quite so easy to maintain robust margins of this sort. Still, KPN's approach to the market is an example of what a carrier can do in an environment where phones are unlocked.

As Verizon moves to "unlock" its CDMA network, and as the C block 700-MHz spectrum goes into operation, also with an "unlocked" approach to device use, one wonders how soon somebody will try this in the U.S. market as well. Cricket Communications, one might argue, already has been chasing the wireline replacement market, but without the unlocked phone component.

FCC Reimposes Market Share Cap

The U.S. Federal Communications Commission has voted to impose a limit on the size cable operators can reach on a nationwide basis, limiting any single company from controlling more than 30 percent of total subscribers. The FCC in the past has maintained such a rule, but the limit was invalidated by a court decision in 2001.

Consumer groups say a strict limit on cable television system ownership is needed to prevent them from dominating television programming and Internet services and from blocking video competitors.

As a practical matter, the FCC action could affect merger deals Comcast Corp. would like to pull off, as Comcast already has about 27 percent. The rule might also affect smaller operators like Charter Communications and Cablevision , as it might rule out their acquisition by Comcast.

New Role for ENUM?

Analysts at the Yankee Group think there might be a new market developing for network elements or functions that provide the electronic numbering function that today is provided by peering federations. Such IP Routing Directories functionally provide the basic information required for interconnecting discrete VoIP networks.

Proponents of ENUM have argued that the business benefits derive from operational cost savings and service quality made possible by avoiding traditional PSTN routing infrastructure (SS7) to complete VoIP calls destined for a non-local VoIP
endpoint.

To date, business issues and volume issues have proven to be stumbling blocks. Large carriers make enough money from interconnection that any move to models that dispense with such payments are undesirable. That's the business issue.

And though native VoIP networks obviously require some sort of interconnection fabric, the fact remains that VoIP still is a small amount of total volume.

For the moment, legacy interconnection requirements remain essential. The percent of originating VoIP calls that are actually destined for an IP endpoint are sufficiently small that it might not make terrifically great sense to shift to an IPRD function of some sort.

Ideally, IP-to-IP connections are preferable. But the cost and quality issues might be a growing irritant rather than a compelling necessity for a large carrier, at the moment.

The pain of media conversion and database dips might not be creating enough pain to require an immediate shift to ENUM, in other words. Not to ignore the revenue implications for large carriers, either.

Whither WiMAX?

It might seem odd to question just how big the WiMAX infrastructure market might be, given strong support from the likes of Intel and others who see a data device optimized broadband network as a huge opportunity. And maybe WiMAX ultimately will create a large enough global base of infrastructure that handset and device manufacturers will have a large opportunity.

But potential end user volumes matter, and matter a lot, in today's world. The issue isn't whether WiMAX will work. CDMA works. But global volumes for GSM networks are so large that device innovation is higher on the GSM than the CDMA sides of the ledger. Volume also is a factor for software developers, who prefer larger markets to smaller markets.

Sprint got people excited with plans to build a $5-billion, nation-wide network in the U.S. but that strategy is now in question. Sure, there's the rest of the world, but if you have followed mobile technology trends for any time, you are more careful about the installed base, and the potential installed base.

In the third-quarter, Infonetics Research says, worldwide WiMax equipment sales climbed a mere six percent to $206-million. Meanwhile, worldwide unit shipments of fixed and mobile WiMAX equipment rose 16 percent in the third quarter of 2007.

Still, Infonetics is looking for Wi-Max to see annual growth of 87 percent between 2006 and 2010 as more carriers embrace the fourth-generation technology.

The number of worldwide WiMAX subscribers (fixed and mobile) is expected to skyrocket to close to 60 million in 2010, led by the Asian region, Infonetics says.

Still, there is the historic example of iDEN and CDMA to consider. Devices are more important than networks these days. And one has to contend with the issue of sheer mass, in that regard. There's no question that WiMAX will work. But that's not the crucial question. The issue is how large the market for WiMAX devices might be, compared to GSM and its derivatives.

What Next for Sprint Nextel?

Sprint Nextel has turned to a wireless industry veteran in naming current Embarq Corp. CEO and Chairman Dan Hesse new CEO and President. So what might we expect from him? Perhaps a focus on the many details of execution that seemed lacking in Sprint, of late. Hesse gets high marks for execution at Embarq.

Hesse also was considered a top candidate for the Qwest CEO post as well. And in some ways, Qwest and Sprint are in similar situations. Qwest does not have the financial ability to do some things one might expect from a former Baby Bell. Sprint likewise is in desperate need of serious attention to its core business, even as it contemplates a fourth-generation WiMAX rollout.

Neither company seems suited to a major acquisition that would fix the basic problems each faces. Qwest lacks scale to make some strategies work (it does not own a wireless network and arguably can't afford a major fiber-to-home video initiative).

Sprint remains the third-largest U.S. wireless carrier, but is feeling a rejuvenated T-Mobile nipping at its heels and has to do something really serious about its churn problems. Beyond that, Sprint is looking at some very basic decisions about future technology direction.

Volume in the global markets clearly is in GSM, and Verizon, the other major CDMA-based carrier, has made clear its decision to migrate to LTE, a GSM platform, for 4G. That leaves Sprint even more out on the fringe, as it now supports iDEN, which no other carrier uses, and CDMA which is losing traction in the U.S. market, if not yet internationally.

Before those issues can be tackled, Sprint has to stabilize itself. And Hesse is an adroit manager, most observers probably would say.

Before taking the helm at Sprint spinoff Embarq, he spent 23 years at AT&T, serving as President and CEO of AT&T Wireless Services from 1997-2000, then the nation’s largest wireless provider.

It is probably fair to say Hesse will have to right the ship before considering launching a new vessel.

Personal Navigation: Quiet but a Big Deal

Garmin and TomTom will both ship over 10 million personal navigation devices this year, recent forecasts suggest. Total production in 2007 for just those two manufacturers is something on the order of 22 million units.

To put that in perspective, that's about half of the 55 million iPod music players Apple probably will sell in calendar 2007.

Location-based services seem to catching on very rapidly in the consumer space, after a long gestation in the commercial markets. Is it any wonder Google is so hot on location-based services, or the advertising and marketing opportunities that seem destined to come along with location awareness?

iRobot Cleans Up

This item just for fun, as my daughter worked on the company initial public offering. iRobot, which sells the Roomba vaccuum cleaner robots, got a five-year, $286 million contract from the U.S. Army for up to 3,000 military robots, spare parts, training and repair services.

Up to this point robots have used sparingly and mostly to deal with explosive devices. Apparently there are other things they can do. Aside from cleaning floors and sneaking up on dangerous explosives, that is.

FCC Relaxes Cross Ownership Rules

By a vote of three to two, the U.S. Federal Communications Commission has approved a plan to relax media cross-ownership rules. The rule change, which comes amid opposition from some politicians, allows companies to own both newspapers and broadcast stations within a top-20 market. The rules originally were put into place to safeguard the "diversity of voices" within media markets.

Of course, the context was different then. There were three national networks and maybe one or two major newspapers in a market, with a fragmented radio audience. Since then, cable programming has exploded, with three 24-hour-a-day news channels and two 24-hour-a-day business national news channels available in most markets, and multiple local news channels in many major metro markets as well.

The daily newspaper business, meanwhile, has continued its inexorable, decades-long decline. Indeed, one can argue reasonably that the daily metro newspaper might not exist in the future, at all.

And on top of that we have the rise of blogs, Web news portals, podcasts, Webcasts and other media and news outlets.

Though there was not unanimity on the issue, one can argue that local media markets bear little resemblance to markets of the past, and are in transition to an even-more-different structure in the future.

The last time I looked, the major broadcast networks had become "entertainment focused" in the extreme. I can't even tell you how the "voice" of any of the five local national broadcast networks differs from any of the others. To the extent that the concern about "voices" explicitly is about "political" voices, there seems even less justification than there used to be for cross-ownership restrictions.

National broadcast TV networks don't seem to have any substantial differences of voice. Newspapers are on the way to extinction. Radio is highly fragmented. And then there are the cable news outlets, national and local, plus Web-based news and opinion portals and blogs too numerous to count.

As elsewhere, legacy rules are straining to keep pace with rapid changes in media, communications and information infrastructure.

Wireless Spending Now Equals Wireline

U.S. consumer household spending on wireless now equals spending on wired voice services, the Bureau of Labor Statistics Consumer Expenditure Survey shows. Homes with multiple teenagers and two working parents probably will argue that wireless spending now vastly outpaces wireline, as landlines are phones connecting "places," while mobile connect people. There being more "people" than "places" in such a household, it is easy to see that wireless is the dominant spending category.

Cellular phone expenditures increased rapidly from 2001 through 2006. Coupled with a decrease in spending on residential landline phone services (residential phone services) over the same period, spending on the two types of services were practically equal in 2006.

Expenditures for cellular phone services per consumer unit rose from $210 in 2001 to $524 in 2006, an increase of 149 percent. Expenditures for residential phone services per consumer unit fell from $686 in 2001 to $542 in 2006, a decline of 21 percent.

In 2001, the ratio of spending on residential phone services to spending on cellular phone services was greater than 3 to 1. In 2006, the shares of these two components were almost equal, with residential phone expenditures accounting for 49.9 percent of total telephone expenditures and cellular phone expenditures constituting 48.2 percent.

Are Users Dumber, Or Software Too Complex?

Tech Support: "What does the screen say now?"
User: "It says, 'Hit ENTER when ready'."
Tech Support: "Well?" Person: "How do I know when it's ready?"

Make no mistake: our civilization runs on software. So be exceedingly glad when developers hide complexity so well something seems intuitive and natural.

Useful Condescending Phrases

This is just humor: don't do this at work! And don't get me wrong: I love cats. It's just that they once were worshipped as gods, and they haven't forgotten....

1. Thank you. We're all refreshed and challenged by your unique point of view.
2. The fact that no one understands you doesn't mean you're an artist.
3. I don't know what your problem is, but I'll bet it's hard to pronounce.
4. Any connection between your reality and mine is purely coincidental.
5. I have plenty of talent and vision. I just don't care.
6. I like you. You remind me of when I was young and stupid.
7. What am I? Flypaper for freaks!?
8. I'm not being rude. You're just insignificant.
9. I'm already visualizing the duct tape over your mouth.
10. I will always cherish the initial misconceptions I had about you.
11. It's a thankless job, but I've got a lot of Karma to burn off.
12. Yes, I am an agent of Satan, but my duties are largely ceremonial.
13. No, my powers can only be used for good.
14. How about never? Is never good for you?
15. I'm really easy to get along with once you people learn to worship me.
16. You sound reasonable...Time to up my medication.
17. I'll try being nicer if you'll try being smarter.
18. I'm out of my mind, but feel free to leave a message...
19. I don't work here. I'm a consultant.
20. Who me? I just wander from room to room.
21. My toys! My toys! I can't do this job without my toys!
22. It might look like I'm doing nothing, but at the cellular level I'm really quite busy.
23. At least I have a positive attitude about my destructive habits.
24. You are validating my inherent mistrust of strangers.
25. I see you've set aside this special time to humiliate yourself in public.
26. Someday, we'll look back on this, laugh nervously and change the subject.

Traffic Shaping, Not Blocking

Users of RCN broadband access services are complaining about blocking of BitTorrent connections. That seems unlikely, though traffic shaping seems certain. RCN has in the past noted that more than 90 percent of upstream traffic was composed of P2P streams. And since upstream bandwidth is the key resource constraint, RCN traffic shaping was not unexpected. When users are sharing a scarce resource, some "rationing" is simply fairness.

DoCoMo or Softbank for iPhone?

Apple Chief Executive Steve Jobs reportedly has been talking with NTT DoCoMo and Softbank Corp. about becoming the exclusive supplier of iPhones in the Japanese market, says the Wall Street Journal. That market will be quite helpful if Apple is to meet its promised goal of 10 million iPhones sold by the end of 2008.

Japan's nearly 100 million mobile-phone users buy new phones every two years on average, and aren't adverse to paying for advanced electronics, so it seems a natural iPhone market. And smartphone adoption is headed up smartly, as this forecast by Research and Markets shows.

Apple sold a total of 1.4 million iPhones through late September, which shows the importance of adding the Japanese market to the relative handful of countries where the device can be bought. Travelers from countries where iPhone is not yet available, but which use GSM, have been known to stuff several into their bags before heading home from the United States.

Apple appears to be asking for the same percentage of revenue that it receives from other carriers, estimated at about 10 percent of revenue.