FCC Auction: Who's Bidding on C Block?

At the end of round 39 of the Federal Communications Commission's auction of the national C block of 700 MHz spectrum, it appears at least two entities continue to bid.

The top bid now is a bit over $4.83 billion, up from the prior high of $4.7 billion at the end of round 38. Some of us think Google has halted its bidding, and most of us think Verizon Communications intends to win the C block. So if all that is true, at least one other company continues to bid against Verizon. Curious.

It's hard to picture at&t bidding for C block spectrum, as observers have predicted it would focus on filling in holes in its 700 MHz spectrum by bidding on local chunks of the B block.

AOL to Cleave Access from Ads

So it looks as though AOL will be split, separating out the Internet access business from the emerging advertising business. The thinking is that it will be easier to do something with each of the assets that isn't so easy right now. Presumably a buyer such as Google might want to pick up AOL's portal for the ad business.

But what can be done with the access assets? Even though AOL lost 3.8 million subscribers in 2007, it still has something on the order of 9.3 million U.S. subscribers.

EarthLink has something of a similar problem. It has a declining customer base but still has 4.2 million access customers.

The issue is what sort of buyer might exist for the Internet access customers AOL and EarthLink now are serving. Most of them are dial-up customers and are likely prospects for broadband upgrades. But the customer base is scattered all over the U.S. market.

So any potential acquirer would want a ubiquitous broadband access footprint (cable modem, wireless or Digital Subscriber Line). Only the leading wireless providers have any real shot at national coverage. Verizon, at&t or Comcast would have immediate coverage issues. Smaller ISPs might want to buy, but can't raise the money.

Does anybody have a rational business plan for rolling up the EarthLink and AOL access bases? Not one we've heard so far, even assuming all the other assets are cleanly separated.

at&t to Add 80 Cities to 3G Network

at&t Wireless will extend its third-generation (3G) wireless broadband network to more than 80 additional cities in the United States this year. About 270 communities already have 3G service available.

Most major metro areas already are covered, but you'd be surprised at the number of suburban communities even around the major markets that only have the slower EDGE data network. That's one reason, aside from battery life, that the Apple iPhone initially was available only in an EDGE network version.

By the end of the year, nearly 350 leading U.S. markets will be served by the 3G network, including all of the top 100 U.S. cities. The 3G initiative requires the building of more than 1,500 additional cell sites.

The at&t 3G network now delivers typical downlink speeds ranging between 600 and 1,400 kilobits per second, as well as uplink speeds ranging from 500 and 800 kilobits per second, though the network is not yet completely equipped for the higher upstream capacity at all sites.

People often underestimate how long it takes for a national network to be created, even if it is a wireless network. Back in the regulated days of telecom, for example, a sizable telecom company would expect to upgrade or replace only about 10 percent of total plant in any single year.

So access plant changed slowest, though switch replacements could occur more quickly. And it isn't just "physical" networks that have to be built. A large carrier might operate 50 to 100 "logical" networks, as each separate service often required its own hardware, software, provisioning and billing systems.

Likewise, consider that Verizon Wireless has invested $300 million in 2007 to enhance its networks in Maryland, Washington, D.C., and Virginia alone, largely related to broadband upgrades, spending $6.5 billion investment nationwide.

"Reliable wireless networks are not built overnight," says Tami Erwin, Verizon Wireless regional president.

From an at&t Wireless perspective, it will take a year to light 80 communities, using 1,500 towers, to create a 3G network in those areas. And there will be more work next year.

Verizon, at&t Take Different Approaches to Bandwidth Caps

For an industry that in decades past has tended to move in lockstep, it is refreshing to see an ever-increasing divergence in strategies and marketing positions. Consider the matter of bandwidth caps and content filtering.

at&t has decided to filter non-authorized content on its broadband access networks. The move is an attempt to reduce the peer-to-peer bandwidth load on its networks.

Verizon, on the other hand, doesn't want to do so and says it will not. Many policy advocates will cheer that stance.

One might credit Verizon's decision to move to a fiber-to-home network for that laudable move. Simply, Verizon has a lot more headroom than at&t will to support today's heavy users, and ultimately, heavier use by nearly all users as more video moves to Internet delivery.

Beyond the policy stance differences, and the customer goodwill Verizon will garner, the notable difference stems from fundamental decisions each carrier has made. Verizon made a risky bet in the face of nearly-universal investor opposition. at&t took a less-risky path that was rewarded by investors.

But each of those decisions now has repercussions in other areas where technology now conditions the marketing decisions each company can make. I've said it before and will say it again: Verizon did the right thing sticking to its FiOS program, in the face of intense financial community pressure.

In the years to come, that technology and financial decision is going to give Verizon many options other contestants may not have.

AMPS Network Shutdown May Affect Security Systems

On Feb. 18 at&t and Verizon will be shutting down their analog AMPS mobile networks. Not many mobile voice users still are on any of those networks, but some home security systems could be. By some estimates, as many as one million homes use wireless AMPS networks as the communication link.

LaserShield Systems says its LaserShield Instant Security System will solve the problem, using either the GSM network, a high-speed Internet access connection or a standard analog phone line if that is available.

A cellular adapter plugs into the rear of the master LaserShield Unit if a GSM network is the communications link, while a separate adapter is plugged into a broadband router if that is the communications link.

The LaserShield $199.95 security system includes a master alarm unit, a wireless motion detector and two keychain remotes. The wireless adapter costs $229.99. The broadband adapter costs $129.99.

The monitoring service costs $19.95 a month for dial-up and $29.95 a month for cellphone or digital phone service with no long-term contracts.

One wonders how many home security providers would not already have notified their customers of the impending change, though, giving customers time to make other arrangements that preserve the business relationship.

Japanese Study: Mobile Phones Don't Cause Cancer

Using a mobile phone does not increase your risk of brain cancer, according to a new Japanese study that is the first to consider the effects of radiation on different parts of the brain, Reuters news service reports.

That is good news for many of us who rely on them quite a lot.

Scientists at Tokyo Women's Medical University compared phone use in 322 brain cancer patients with 683 healthy people and found that regularly using a mobile did not significantly affect the likelihood of getting brain cancer.

"We found no association between mobile phone use and cancer, providing more evidence to suggest they don't cause brain cancer," says Naohito Yamaguchi, research team leader. The findings are published in the British Journal of Cancer.

Telcos, CLECs, Cable Among Top Ethernet Providers

You might not be surprised that at&t, Verizon and Qwest are among leading incumbent carriers providing Ethernet services to U.S. organizations and businesses. But Time Warner Telecom and Cogent also are among the top six providers, and two cable companies are among the top seven providers, according to Vertical Systems Group.

More than forty other companies are also delivering retail Ethernet services to business customers in the U.S.

at&t is the market leader with a 22 percent share at year-end 2007, based on ports in service. Verizon is second with a 17 percent port share, followed by Time Warner Telecom with 13 percent of U.S. active ports.

Cox Communications is fourth overall with a 10 percent port share, followed by Cogent with seven percent of ports and Qwest with six percent of ports. Time Warner Cable has five percent share.

Other notable providers offering Business Ethernet Services in the U.S. include AboveNet, American Fiber Systems, Alpheus Communications, American Telesis, Arialink, Balticore, Bright House Networks, Charter Business, CIFNet, Cincinnati Bell, Comcast Business, Embarq, Expedient, Exponential-e, Fibernet Telecom Group, FiberTower, Global Crossing, Integra, IP Networks, Level 3, LS Networks, Masergy, Met-Net, Neopolitan Networks, NTELOS, Optimum Lightpath, Orange Business, Paetec, RCN, Savvis, Spirit Telecom, Sprint, SuddenLink, Surewest, US Signal, Veroxity, Virtela, Windstream, XO and Yipes (Reliance Communications).

More Competition in Small Business VoIP Market

Small business VoIP providers face a challenging year where competition in the small business space is heating up. Speakeasy, for example, has introduced a voice trunk replacement service called Integrated Voice, using a per-person pricing plan, available nationally and seemingly pitched to the sort of business that otherwise might buy a Cbeyond service.

Cable operators also are aggressively pitching their own small business VoIP services. Oddly enough, it is Comcast and Time Warner that arguably can claim better national name recognition that any of the other business VoIP specialists. And name recognition has been a problem up to this point, in the small business VoIP market.

The Best Buy-owned company is targeting smaller businesses with two to 12 phone lines that also want to keep their existing on-premises handsets and phone switch, and which also have a need for broadband Internet access.

Pricing begins at just $19.95 per line or user, with long distance charges of 2.9 cents a minute.

The phone line trunk replacement service combines voice and data services over a T-1 or high-speed DSL Internet connection, where bandwidth is dynamically allocated between voice and data. Speakeasy says the service will run over any existing broadband connection, but also sells the Speakeasy T1 and 15 Mbps Digital Subscriber Line service as well, the advantage being that Speakeasy can provide quality of service mechanisms if its own access is used.

fring Launches Mobile Web and IM Initiative

fring has launched of a new version of its mobile phone application that allows anyone with a compatible handset to talk, chat, and interact with other fring users on their mobile phones. Originally launched as a way to talk using VoIP, fring now is making an effort to use VoIP as a way of creating and enhancing IM-based mobile social networking.

As such, it hopes to become a mobile Internet service and community, enabling users to talk, chat and interact with other fring users in the context of their online IM communities, from their mobile phones.

fring’s new file transfer feature allows fring users to swap music tracks, pictures, video clips and other files between each other, from mobile to mobile and mobile to PC quickly and reliably without the need for multimedia message service, cable, Bluetooth, or infrared connections. And because its fring, the connection is made via the phones’ mobile Internet capability, using the already paid for data plan, so there’s no extra cost.

fring users now conduct voice sessions over the mobile phone’s data service channel, using instant messaging in place of text messaging, for example, using fring, Skype, MSN Messenger, Google Talk, ICQ, Twitter, Yahoo! and AIM.

The new fring version has enhanced chat features including new real-time displays alerting the user of new incoming chat, real time typing indication and easier navigation between different chat windows, making for rich PC-style interaction.

fring users also can activate the fringME! Web services feature, making themselves contactable from any PC-based Web page, blog, home page, email, MySpace or Facebook pages (the Facebook capability will be available soon).

fringME! also allows fring users with GPS-enabled handsets to choose whether to have their real-time location displayed via a pop-up GoogleMap.

Mobile service providers probably are ambivalent about the new features. On one hand, fring will stimulate demand for data plan purchases. On the other hand, fring also will supplant and replace some amount of text messaging, at some point.

Wireless Prices Lower, Usage Higher

Since 2006, U.S. mobile users have been paying dramatically lower prices, and therefore talking more, than users in Western Europe and Japan, the latest Federal Communications Commission data indicates.

And though there may be other areas where work must be done, access, usage and price no longer are problems. Nearly 90 percent of potential users have access to four or more different providers. Some 95.5 percent have access to at least three providers. Fully 99 percent of people have access to at least two different providers. And 99.8 percent of potential users have access to at least one provider. That includes people living in rural areas where service is more limited.

Approximately 99.3 percent of the U.S. population living in rural counties have one or more different operators offering mobile telephone service in the census. Nearly 57 percent of the population lives in areas with at least five competing operators.

On average U.S. mobile subscribers paid about seven cents per minute for mobile voice calls in December 2006 based on an estimate of average revenue per minute. Prices declined 85 percent from 47 cents in December 1994 to seven cents in December 2005.

In Western Europe revenue per minute averaged 20 cents in the last quarter of 2006, while in Japan users paid an average of 26 cents a minute.

U.S. mobile subscribers lead the world in average voice usage by a wide margin, with Western European subscribers averaging 150 minutes and Japanese subscribers averaging 145 minutes, compared to an average of over 700 minutes in the U.S. market.

Lower prices also have other effects of concern to wired service providers. If wireless use does not cost too much more than tethered calling, lots of users will simply abandon use of wirelines in their lives as consumers.

During the second half of 2006, 11.8 percent of U.S. adults lived in households with only wireless phones, up from 7.8 percent in the second half of 2005, and triple the percentage (3.5 percent) in the second half of 2003.

About one in four adults aged 18 to 24 years lived in households with only
wireless telephones, and nearly 30 percent of adults aged 25-29 years lived in wireless-only households.

Sky Dayton Leaves Helio

Given that Sky Dayton now has resigned as chief executive of Helio, the wireless joint venture between SK Telecom and Earthlink, one has to conclude that Dayton, at least, thinks the end is near. Shutting Helio down is a possibility, though not the only possibility. Earthlink itself is for sale and it is possible Dayton sees the larger transaction coming.

Earthlink clearly wants out of the Helio venture, but SK Telecom clearly believes in the business, hoping only to replicate the success it has had in its home market. The issue rests with SK Telecom, as the Korean firm recently invested $70 million in Helio and now has voting control of the venture.

Maybe Earthlink executives have found a way to reorganize the firm in a self-sustaining way. If so, it almost certainly would have concluded that it must stop investing in the muni Wi-Fi and Helio ventures.

Another Cable Cut in Persian Gulf

What are the odds four undersea cables are cut in a single week? Whatever those odds, it has happened. First two cables snap off Egypt. Then a separate cable in the Persian Gulf, and now yet another Middle East cable.

In the latest incident, an undersea telecoms cable linking Qatar to the United Arab Emirates was damaged, disrupting services, telecommunications provider Qtel has reported.
The cable was damaged between the Qatari island of Haloul and the UAE island of Das. The cause of the damage is not yet known.

Qtel's loss of capacity seems to be disrupting voice capacity more than Internet services. Qtel says it was operating at 40 percent over the weekend because alternative cables exist. Nevertheless, disruption to Internet and telephone services in the Gulf state is likely to continue for 10 another days or so.

Not since the December 2006 earthquake off Taiwan have so many cables been taken out of service almost at once.

Google: Microsoft "Troubling Questions"

Google is doing what it can to annoy Microsoft. Reportedly it has contacted Yahoo about potential help fending off a Microsoft takeover bid. And it certainly is going to raise antitrust and other competitive issues it hopes will be addressed by regulatory bodies.

"Microsoft's hostile bid for Yahoo! raises troubling questions," says David Drummond, SVP and Chief Legal Officer. "Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?"

"Could the acquisition of Yahoo! allow Microsoft, despite its legacy of serious legal and regulatory offenses, to extend unfair practices from browsers and operating systems to the Internet?" he asks.

"Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services?"

Mobile IS Voice

Enterprises and consumers still spend lots of money on voice services delivered over some sort of wired connection, including "plain old telephone service" as well as newer replacement services such as cable-provided "digital voice" (voice over IP) or hosted business phone services.

But wireless is where the action is moving. And while lots of different approaches to integrating wireless and wireline access are being tested and deployed, it's hard to escape the conclusion that wireless increasingly is the dominant way people "do voice," even when some amount of talking shifts to PC-to-PC format.

There will be lots more integration of features and call delivery between wireless and wired modes, to be sure. But there will be an equally large amount of wireless substitution as well, even in the enterprise customer segments.

France is Leading W. Europe VoIP

The three largest VoIP providers in Western Europe are French: Orange, Neuf Cegetel and Free. According to InfoCom's most recent report on IP-based voice, Orange also is active in the Netherlands, Spain and the United Kingdom.

All in all Orange had 3.57 million VoIP customers in these four countries at the end of June 2007 and was the largest provider of IP voice services that are a replacement for analog telephone service, with a 14 percent market share. Neuf Cegetel and Free (Iliad group) follow. BT ranks fourth while and United Internet ranks fifth.

Skype leads for PC-to-PC VoIP share, though MSN or Yahoo! each get significant usage as well. Generally speaking, consumers do not use Skype, Google or MSN VoIP services as their main phone line in place of their traditional telephone line, InfoCom analysts say.