Wireless Carriers Need More Spectrum, But Can They Handle the Borrowing?

Though acquisition of more mobile spectrum is a key strategic imperative for leading U.S. mobile operators,  it is not clear how much capacity and flexibility Verizon Communications and AT&T have within their credit ratings to absorb future spectrum purchases, say analysts at Fitch Ratings.

That is a significant opinion. Despite the apparent belief in some quarters that the largest U.S. telecom providers are so well positioned they can handle any shock to their financial models, Fitch Ratings does not believe that is the case.

In fact, a number of factors, including the cost of acquiring new spectrum, ability to monetize broadband services more effectively and competition from application-based wireless services all pose "longer-term threats to telecom operators' balance sheets and cash flows," Fitch Ratings say.

Fitch believes Verizon Wireless and AT&T Wireless, because of their scale, market power, and financial strength, will be in a better position to cope with these challenges than many lower-margin contestants, should the market environment shift. But increased reliance on wireless communications is an issue for many other contestants as well.

A key issue for cable companies is whether their wholesale arrangement with Clearwire can bundle competitive offerings that can successfully offset the significant threat from next generation broadband wireless networks as the telecom industry transitions more and more traffic longer-term to wireless, Fitch analysts say.

The Federal Communication Commission's "National Broadband Plan" aims to release 70 megaHertz of spectrum available for auction in the 2011 time frame.

Depending on the timing of the auction, the final amount of spectrum available, and the aggressiveness of the bidding, it’s not clear how much capacity and flexibility Verizon Communications Inc. and AT&T Inc. have within their credit ratings to absorb future spectrum purchases.

The good news is that, by the end of 2010, leverage is expected to decline for Verizon and AT&T due to strong free cash generation and management commitment to debt reduction. Both companies’ leverage has been at the high end of Fitch’s expectations due to past acquisitions and spectrum purchases.

Other well-capitalized, smaller operators or new entrants with strong balance sheets and good
free cash flow prospects should be in a favorable position to acquire additional spectrum.

New entrants or smaller companies without good operational cash flow characteristics or
strong balance sheets would likely have a difficult time funding any commitments for
spectrum purchases or buildout requirements.

That suggests the coming spectrum auctions will reshape the competitive environment in significant ways, favoring the well-capitalized contestants and weakening the financially weaker firms.

The transition to 4G networks also would seem to provide an opportunity for operators to
implement a new pricing model for data services. But it is not clear the opportunity is all "upside."

Clearwire, for example, already offers unlimited mobile data usage for $40 per month. Clearwire does not currently cap subscribers’ data usage, where most cellular operators limit monthly data
usage at 5 gigabytes. Since AT&T and Verizon offer capped plans costing $60 a month, Clearwire is using its 4G spectrum to disrupt current levels of pricing.

The company’s management has indicated that Clearwire’s mobile WiMAX subscribers already average approximately 7 GBytes of data usage per month.

Given the current indication by operators that Internet video will be a key driver of traffic on 4G networks, operators will need to create larger “data bucket” plans with tiered pricing, as the current 5 GB 3G plans currently offered for aircards and netbooks would not be sufficiently large enough to handle subscriber demands from streaming video.

What Apple Has to Do to Dominate Mobile Advertising

What will Apple do to upend Google's dominance in search advertising, as advertising emerges as a major revenue stream in the mobility business? For starters, it will leverage its strength in devices and strong consumer market share. That will be the least of Apple's concerns.

Apple will leverage iTunes as the distribution portal and media manager, something it also will not have a problem with.

Apple will try to leverage the "closed" or "integrated" way it approaches device operation and design, which sacrifices "openness" for assured application operation. And it will block third party applications and ad networks from access to advertising analytics that are the heart of all efforts to personalize advertising for mobile apps.

But there are challenges. Apple has to hope that the Android ecosystem will not flourish. A functional definition might be that Apple gets as much as 50 percent market share for smartphones, while Android fails to approach those levels. It is too early to predict whether this could happen.

There is a bit of execution risk as Apple tries to stake out a "premium" position for its own ad network, compared to others.

Of course, all of this assumes mobile marketing gets critical mass, but most observers think that is only a matter of time.

It would take a brave prognosticator indeed to argue that Apple does not have an excellent shot at upending Google in the emerging mobile marketing business. But there currently is only a small group of large firms in the mobile advertising space, though there are lots of emerging firms trying to muscle their way into the emerging business.

"There's AdMob (Google), Apple and us," says Paran Johar, Jumptap CMO. "That's pretty much it." The Federal Trade Commission might be preparing a challenge to Google's purchase of AdMob. Some of us might be so sure that is necessary. Apple is the company to watch, it might appear.

Google Aims for Cloud Printing

The Google Chrome operating system apparently will be designed to support output to printers without the use of onboard printer drivers, says Mike Jazayeri, Google Chromium group product manager.

"Since in Google Chrome OS all applications are Web apps, we wanted to design a printing experience that would enable web apps to give users the full printing capabilities that native apps have today," says Jazayen.

Google Cloud Print is a service that enables any application (Web, desktop, or mobile) on any device to print to any printer, he says.

Rather than rely on the local operating system or drivers to print, apps can use Google Cloud Print to submit and manage print jobs. Google Cloud Print will then be responsible for sending the print job to the appropriate printer with the particular options the user selected, and returning the job status to the app.

Google Cloud Print is still under development.

Verizon's LTE Network Will Improve Gaming, Interactive Video Performance, Battery Life

The Verizon Wireless fourth-generation Long Term Evolution network will boost typical downlink speeds to 5 Mbps to 12 Mbps, and uplink speeds to the 2 Mbps to 5 Mbps range, but latency performance also will improve by a factor of about four, making the LTE network a much-better platform for multiplayer games and interactive multimedia applications.

Video applications such as video sharing, surveillance, conferencing and streaming in higher definition will benefit from the new network's capabilities.

The LTE air interface also reduces signal interference that historically has degraded end user experience and reduces power requirements, leading to longer handset battery life. Because of the 700-MHz frequencies used to support LTE, in-building signal strength will be higher than currently is possible with 3G network signals.

Verizon Wireless will be the first mobile service provider and among the first in the world to launch a fourth-generation Long Term Evolution network, starting with 25 to 30 markets in 2010, covering approximately 100 million people; and extending to cover Verizon's current 3G footprint in 2013.

User Choice or Imposed Limits: What is Best Way to Manage Bandwidth?

Should the internet treat all data equally, regardless of whether it is part of a multi-gigabyte video file or a short email? Gareth Morgan asks the question in an article at New Scientist.com, after interviewing Johan Pouwelse, a peer-to-peer researcher at the Delft University of Technology in the Netherlands.

Though many will reflexively object, Morgan says one way to deal with demands placed on the network by very-active users is to bill for consumption of bandwidth, not for access at certain speeds. That charging principle would allow people to alter their own behavior, rather than imposing fixed limits to use.

Nearly two years ago, the US Federal Communications Commission (FCC) censured network operator Comcast for trying to impose restrictions on "bandwidth hogs" who use BitTorrent and other file-sharing software. These systems eat up huge amounts of data capacity, and so can degrade the service to other customers, he says.

But the key problem remains unresolved: when large numbers of customers want to access the internet simultaneously, how can traffic be managed in a way that prevents those who are transferring huge multimedia files clogging up the network?

Pouwelse suggests that a different kind of charging tariff could help. Instead of charging customers on the basis of download speeds, network operators should charge users and content providers according to how much data they download or upload. "They could do that without interfering with traffic, in an entirely net neutral way," he says.

This proposal would be opposed by internet giants such as Google and Facebook, who generate large volumes of web traffic and so could face higher charges. But with high-speed broadband stimulating an ever-growing appetite for bandwidth, some way must be found to fairly share out the internet's limited resources.

Bandwidth hogs eat away at principle of net neutrality - tech - 16 April 2010 - New Scientist

GPS Using Augmented Reality

Augmented reality adds a layer of information to images viewed by a smartphone camera. So it was only a matter of time before some people figured out that if an iPhone can be mounted properly on the dashboard of a car, the right AR software can be used to enhance the normal GPS navigation functions the native GPS feature of the phone would provide.

As an aside, I notice that Microsoft-powered smartphones now offer a navigation service, but it requires a monthly recurring fee. Since that feature can be used for no incremental cost on an Android phone, I don't see that remaining a viable long-term competitive alternative.

People in competing firms often gnash their teeth when Google disrupts an existing business by giving away something valuable "for free." And that is what Google is doing by giving away turn-by-turn navigation services without requiring users to buy a monthly recurring subscription. Garmin obviously cannot be happy about that.

On the other hand, Google apparently had to spend quite some time and money creating richer data for its service, primarily because creation of a turn-by-turn navigation feature apparently cannot be created simply by importing satellite data, but also requires actual recording of the positions of vehicles as they drive around.

It's not as though Google is simply licensing software or database services from a third party; it had to create new data to enable the feature.

Lots of AR applications add metadata of questionable value. But features related to travel and transportation seem to be exceptions. It often is quite useful to be able to ascertain where the nearest subway station is, or whether the road sign you just read actually goes to the place you want to go, even though that information was not on the road sign.

FCC Has National Broadband Authority, Say 2 Former FCC Commissioners

Former FCC chairmen Reed Hundt (D) and Michael Powell (R) say that, contrary to much speculation, the Federal Communications Commission continues to have the authority it requires to set in motion the "National Broadband Plan."

Both Powell and Hundt agreed that the FCC still has jurisdiction on the Broadband Plan and net neutrality and that there isn’t “Armageddon” because of the DC Circuit ruling on the Comcast complaint.

Powell pointed out that Title II reclassification would have a “destabilizing nature” to the industry because it would change decades-long policy and that it would frustrate investments made under the current regulatory environment (for example the $23 billion investment Verizon made on their “FiOS” service).

The argument that the FCC now "lacks jurisdiction," though incorrect, is being used to advance the notion of wider and more-disruptive changes in the basic regulatory framework governing broadband access services.

Post Tech - The Full Video: Ex-FCC heads Hundt and Powell discuss broadband policy

FCC National Broadband Plan Does Not Require Title II, AT&T Says

Robert Quinn, Senior VP, federal regulatory, for AT&T, argues that the FCC does not need to redefine broadband as a Title II telecommunications service in order to implement its proposed national broadband plan, particularly its changes to the Universal Service Fund.

The "Open Internet Coalition" including  Google, Sony, Public Knowledge and the Free Press have been arguing for that classification as necessary for the plan's recommendations.

AT&T filed an analysis with the FCC Monday saying it thought the commission still has "all the authority it needs" to migrate the Universal Service Fund from phone to broadband service or to implement the online privacy recommendations. "The FCC has all the authority it needs to go out and do the things it has identified in the national broadband plan," Quinn argues.

He said suggestions that the court decision could significantly impede the broadband plan were overblown, and that classifying it as a more regulated Title II (common carrier) service would chill investment, which could adversely impact broadband deployment.

"I think at a time when we need more than anything else is infrastructure investment, I think it would provide a huge disincentive for entities to invest in this space," Quinn says.

Quinn said, ultimately, Congress may need to step in and clarify the scope of the FCC's broadband oversight, but that in the meantime the FCC has authority over changes to universal service, protecting proprietary customer information online and making broadband accessible to disabilities, for example.

Goats at Google

As it did last year, Google has a herd of goats mowing the grass at its headquarters. I like goats. 

more photos

Cablevision, Time Warner Cable, Comcast Federate New York Hotspots

Federation nearly always is good for widespread adoption of any application. Email and text messaging provide recent examples, as usage exploded once messages were made interoperable. But one can point to any number of other examples, including railroad, telegraph and telephone services, each of which benefitted from interoperability.

A positive usage effect likely will happen for cable public hotspot users as Cablevision Systems Corp., Time Warner Cable Inc. and Comcast Corp. have agreed to allow their broadband Internet subscribers to roam freely across the Wi-Fi deployments of all three major cable operators in the New York metro area.

The agreement will allow customers of those companies to use Wi-Fi for no additional charge in places like Madison Square Park in Manhattan, areas of the Jersey Shore and the Hamptons on Long Island.

In key ways, the agreement attempts to keep pace with public hotspot access offered by Verizon Communications and AT&T. The issue isn't so much the public hotspot access as such, but the fact that cable modem, DSL and wireless dongle services now typically come with "no additional charge" Wi-Fi hotspot access. So any provider that can offer free Wi-Fi at more locations has an advantage retaining and acquiring fixed broadband access customers.

Verizon to Debut Droid Incredible April 29

To the extent that Verizon Wireless is looking for a device that takes the "Droid" one step further,  it probably has one in the coming HTC "Droid Incredible," with many of the features of Google's "Nexus One" phone.

Verizon and HTC say the new device will cost $199.99 after a a $100 mail-in rebate on April 29 with a new two-year contract.

DROID Incredible by HTC is the first Verizon Wireless phone that takes advantage of Qualcomm’s 1GHz superfast Snapdragon processor, and it’s the first available phone from Verizon Wireless to include an 8 megapixel camera.

Shortly after the phone becomes available, customers will be able to enjoy two of the latest exclusive apps from Verizon Wireless, NFL Mobile and Skype mobile.

The new Droid features Android 2.1, a 1GHz Qualcomm Snapdragon processor; unified
Flickr, Facebook and Twitter updates; an 8-megapixel camera with dual LED flash, a 3.7-inch WVGA (480x800) AMOLED capacitive touch display and an optical joystick for smooth navigation.

The device features a proximity sensor, light sensor and digital compass; integrated GPS and Wi-Fi
(802.11 b/g) as well as a 3.5 mm headset jack.

The Incredible will be available for pre-order online at www.verizonwireless.com beginning on April 19 and it will be in Verizon Wireless Communications Stores on April 29.

Incredible customers will need to subscribe to a Verizon Wireless "Nationwide Talk" and an "Email and Web for Smartphone" plan. Nationwide Talk plans begin at $39.99 monthly access. Email and Web for Smartphone plans start at $29.99 for unlimited monthly access.

HTC is the same company that makes Google's Nexus One.

Google Beats First Quarter Estimates

Google's first-quarter profit rose 37 percent, exceeding analyst estimates on both the earnings and revenue lines, suggesting that at least at Google, online advertising has picked up in the first quarter of 2010.

“Google performed very well in the first quarter, with 23 percent year-over-year revenue growth driven by strength across all major verticals and geographies,” said Patrick Pichette, Google CFO.

Google reported revenues of $6.77 billion for the quarter ended March 31, 2010, an increase of 23 percent compared to the first quarter of 2009.

Google-owned sites generated revenues of $4.44 billion, or 66 percent of total revenues in the first quarter of 2010. This represents a 20 percent increase over first quarter 2009 revenues of $3.69 billion.

Google’s partner sites generated revenues, through AdSense programs, of $2.04 billion, or 30 percent of total revenues, in the first quarter of 2010. This represents a 24 percent increase from first quarter 2009 network revenues of $1.64 billion.

Revenues from outside of the United States totaled $3.58 billion, representing 53 percent of total revenues in the first quarter of 2010, compared to 53 percent in the fourth quarter of 2009 and 52 percent in the first quarter of 2009.

Revenues from the United Kingdom totaled $842 million, representing 13 percent of revenues in the first quarter of 2010, compared to 13 percent in the first quarter of 2009.

Ning Lays off 40% of Staff, to Refocus on Paid Users

In a significant shift, Ning has laid off more than 40 percent of its staff (shrinking from 167 people to 98 people) and announced it no longer provide access to free social networks, concentrating instead on "for fee" customers. After 30 days as Ning's new CEO, Jason Rosenthal says "my main conclusion is that we need to double down on our premium services business."

"Our Premium Ning Networks drive 75 percent of our monthly U.S. traffic," and those customers will pay for many more services and features," says Rosenthal.

"Existing free networks will have the opportunity to either convert to paying for premium services, or transition off of Ning," he says.

The announcements by the Palo Alto social networking company came about a month after co-founder Gina Bianchini was replaced as CEO role after five years in that job.

Ning was founded in 2004 by CEO Bianchini and Netscape Communications Corp. founder Marc Andreessen. It has raised more than $100 million from Lightspeed Ventures, LinkedIn Corp. founder Reid Hoffman, Legg Mason and Allen & Co.

The company offers a platform aimed at offering customizable tools that lets users create their own social networks.

The company makes money by selling Google-brokered ads on social sites and by selling premium services, including the ability to eliminate Google ads, which can be replaced with ads sold by users.

The move could provide a boost to other providers, including firms such as Zerista, which specialize in social networks that feature 250 members or fewer, especially networks that benefit from mobile access and sharing. Zerista also offers paid support for larger social networks that could include 100,000 members, though.

GMail Gets Drag and Drop

Those of you who use Microsoft Outlook or Exchange won't be excited, but those of us who do use GMail with Chrome or Firefox browsers now can "drag and drop" file attachments into email messages.

It's just a small enhancement, but an enhancement that will shave a few seconds, and  few mouse clicks, off the attachment process.

It's also an example of how application "disruption" typically happens these days. Attackers generally start out "low" on the functionality scale, offering an alternative that generally does not have all the functionality of the market-leading application.

The attacking applications tends to be derided as "okay for consumer use" or "just a toy" in other cases, but that isn't the point. Over time, features get richer and the differences between the attacking application and the market leading application begin to narrow. At some point the attacking app starts to compete head to head with the leading app in one or more customer verticals.

And that is what this smallish new feature is, another small step towards feature parity.

75% of Twitter Users Use 3rd Party Services

Twitter says it has 105.8 million registered users, is adding 300,000 new users every day and sees activity by 180 million users every month.

About 75 percent of its visitors don’t go to Twitter.com, but to services built by third-party developers. That is significant because traffic counts based solely on the Twitter.com site vastly undercount actual Twitter activity.

That shows the power of third-party developers!