Sprint Rescues Clearwire

Sprint has agreed to pay up to $1.6 billion to struggling wholesale wireless provider Clearwire over the next four years, ending the near-term threat that Clearwire could run out of cash to operate its business and possibly enter bankruptcy.

In large part, that is why Clearwire has made interest payments totaling $237 million on its first-priority, second-priority and exchangeable notes which were due Dec. 1, 2011, and which had been in danger of default by Clearwire.

The deal includes possible pre-payments for LTE services and potential equity investments. Sprint has committed to providing additional equity funding to Clearwire in the event of a future Clearwire equity offering. If Clearwire raises new equity between $400 million and $700 million, Sprint will participate in the offering on a pro rata basis up to $347 million, consistent with Sprint’s current voting interest of 49.6 percent on the same terms and conditions as other participating companies. 

The agreements modify prior wholesale pricing agreements and provide Sprint with unlimited access to Clearwire’s WiMAX network. Under the terms of the agreements, Sprint will pay Clearwire a total of $926 million, approximately two thirds of which will be paid in 2012, for unlimited 4G WiMAX retail services during 2012 and 2013, subject to certain conditions.

The agreements also establish long-term usage-based pricing for WiMAX services in 2014 and beyond. Sprint will have access to Clearwire’s WiMAX network through at least 2015.

Sprint plans to continue selling WiMAX devices with two-year contracts through at least 2012 and support those devices through the life of the contract.

In addition, the agreement provides Sprint competitive pricing for re-wholesaling by Sprint of WiMAX services to third parties as well as increased pricing flexibility for Clearwire’s own wholesale business.  

Dan Hesse, Sprint CEO says the deal “provides Sprint improved pricing, allows us to continue to provide WiMAX 4G services to our customers today and to new customers in the future and provides additional LTE capacity to help complement our ‘Network Vision’ strategy and meet our customers’ growing data demands.”  Sprint funds Clearwire

In October, Clearwire reported that it was discussing the possibility of skipping an interest payment on debt it owes. While the WiMax network isn’t the future of Sprint’s Long Term Evolution strategy, it’s essential, at least for the moment, for supporting millions of Sprint 4G customers.

As part of the deal, Clearwire agreed to keep its WiMax network operational until 2015, which will give both companies time to build out their own LTE high-speed network.

The financing from Sprint gives Clearwire $926 million for unlimited network use for 2012 through 2013. The remaining financing is a prepaid fee for Sprint to use Clearwire’s LTE network, which should be available by June 2013.

Some had speculated that Sprint might be better served to let Clearwire go into bankruptcy, then buy the assets. But that approach would not automatically allow Sprint to secure the spectrum Clearwire now uses. The latest infusion of capital gives Sprint a better bridge to its own LTE future, at the very least.

AT&T Mulls Joint Venture With T-Mobile USA as Fallback Position

AT&T and Deutsche Telekom, the parent of T-Mobile USA, have discussed an alternative transaction, forming a joint venture that would pool network assets from the two U.S. wireless carriers, as a potential alternative plan if their current acquisition deal falls apart, the Wall Street Journal reports. 


But it isn't clear that the talks are active. "There are currently no talks about a (network sharing) joint venture," Reuters reports. "This would signal that they have given up. This is not the case, we're still betting on victory, not on the second-best solution," Reuters reports a source has said. 

At least in principle, such a move could create a sort of functional separation between AT&T and T-Mobile USA retail operations and the networks on which those services are provided. Such infrastructure sharing deals have grown more common, as mobile service providers agree to share tower sites and radio facilities as a way of reducing capital investment for new networks. AT&T Mulls Joint Venture With T-Mobile


The possible infrastructure joint venture would have a different business driver, namely allowing each firm to better use their shared spectrum and radio network. In such a deal AT&T would not have to worry about antitrust concerns, as the two firms would separately maintain their distinct retail customer bases and operations. 


On the other hand, such a deal could complicate any future efforts by T-Mobile USA to sell itself outright. 

Tablets cannibalizing TV viewing, says Orange

Tablets compete with television viewing, while smart phones complement it, a new study sponsored by service provider Orange suggests. In the United Kingdom, for example, 35 percent of tablet users watch on demand content, 40 percent watch streamed content and 39 percent watch live TV on their devices.


By contrast, the study also found that smartphones are complementing TV consumption. In France, 19 percent of users said they watch more TV as a result of their mobile media usage. Tablets cannibalizing TV viewing, says Orange study 

Word of Mouth Works

Columbia sociologists Lazarsfeld and Katz estimated that word of mouth was seven times more powerful that newspaper or magazine ads in motivating brand-switching as early as 1955.

In 1975, the Roper Organization showed that word of mouth was mentioned as the best source of information about new products and services 67% better than advertising at 53% or editorial content at 47%.

A 2003 Cap Gemini study (cited by AdAge in TV Ads Don't Sell Cars) into the influences on car purchases showed that 71% of the 700 respondents pointed to word of mouth compared to only 15% for television ads. McKinsey estimated that word of mouth drives two thirds of the US economy. Conversation Agent: Permission is an Asset

That's basically why social media work: they are updated, more efficient word of mouth mechanisms.

MasterCard invests in mFoundry

MasterCard has made an investment in mFoundry, the developer of mobile banking, payment and commerce solutions that created the Starbucks mobile payment system. MasterCard also seems to be interested in mFoundry's relationships with hundreds of banking institutions that have created their own branded apps. 

Intel Capital, Fidelity Information Services and Motorola Mobility also are said to be part of the funding round for mFoundry. Previous investors include PayPal and NCR. The list of backers illustrates some of the dimensions of the developing mobile commerce ecosystem, which includes mobile handset, payment clearing network, retailer terminal, mobile wallet and mobile advertising and marketing functions as well.

For the past five years mFoundry has been developing mobile banking applications for banks that typically enable users to check their balances and conduct other financial services from their phone.



Going forward, MasterCard wants to work with mFoundry to enable those applications to make payments at the register using MasterCard’s near-field communication (NFC) technology called "PayPass." MasterCard invests in mFoundry

Tablets are Not PCs, Google Finds

One of Google’s studies of tablet use over a two-week period, which had users recording every occasion that they used their tablet, shows that tablets really are not PCs, any more than smart phones are used in the same way that PCs are used.

Most consumers use their tablets for fun, entertainment and relaxation while they use their desktop computer or laptop for work, Google User Experience Researchers Jenny Gove and John Webb say. About 91 percent of the time that people spend on their tablet devices is for personal rather than work related activities.

And, as it turns out, when a consumer gets a tablet,  they quickly migrate many of their entertainment activities from laptops and smart phones to this new device.

The most frequent tablet activities are checking email, playing games and social networking. The study also found that people are doing more activities in shorter bursts on weekdays (social networking, email) while engaging in longer usage sessions on weekends (watching videos/TV/movies).

Tablets are multi-tasking devices with at least 42 percent of activities occurring while doing another task or engaging with another entertainment medium.

Also, tablets are more accurately described as “untethered” devices than “mobile” devices, to the extent that tablets primarily are used at home. Unlike smart phones that go everywhere and laptops that travel between work and home, few consumers take their tablets with them when they leave the house.

However, consumers do take their tablets on vacation or work trips where they use them as a laptop replacement and a small number take them on their commute. The  research also found that tablets are for the most part a one-person device, although there are consumers who share their tablet with other family or household members.

Tablets are used on the couch, from the bed and in the kitchen.


The activities and locations shown in the above chart were self-reported by respondents.

For many people, websites and apps designed for smart phones just don’t cut it on tablets. Instead consumers are taking advantage of the bigger screen and prefer using fully featured apps and the full desktop sites on their tablet. Users also seem to do things on tablets that are exclusive to the tablets.

That could indicate that people shift app use to the tablet from their smart phones and PCs, or only undertake use of some apps on the tablet, when they might do so on a PC or smart phone.



Google on tablet use

Enterprises Going Mobile Faster than Expected

Global enterprises are shifting to mobile-only communications more rapidly than expected, a new study sponsored by BroadSoft suggests. Notably, 25 percent  of enterprise IT decision makers believe desk phones will be replaced by mobile phones within two years, while 82 percent of enterprises have employees currently using mobile applications for communications and collaboration. Enterprises embrace mobile

The survey, conducted by Cohen Research Group, gathered insight from 200 U.S. and 200 UK IT decision makers (CXOs, VPs, Directors) at enterprises of all sizes.

Some 44 percent of enterprises surveyed have at least a quarter of their workforce operating solely using a mobile phone. Some 30 percent of enterprises support tablets as well.  You might think the trend would be more pronounced at smaller enterprises, but the survey suggests the mobile substitution trend is most pronounced in the mid-market and enterprise segments of the market. This tends to be most true for organizations with six or more locations.
Fully 62 percent of respondents are expanding their enterprise’s unified communications capabilities, while instant messaging, web collaboration and videoconferencing were identified as the top UC services they are looking to support on mobile devices over the next three years.

Also, some 72 percent of U.S. respondents are looking to deploy videoconferencing across their organization in the next year, compared to 56 percent in the United Kingdom.

Many respondents believe their mobile network operator is better positioned to deliver single voicemail, instant messaging, video calling, unified messaging, voicemail and email integration, extension dialing and video conferencing than fixed line providers, Microsoft, Google or IBM.

When asked who could best deliver a complete, integrated set of unified communications services, “my mobile service provider”, Microsoft and Google were top choices among respondents.

Separately, PwC sees enterprise mobility growth as well, in part because the nature of work at enterprises is changing. As exemplified by the tablet boom in the consumer market, so enterprise work now includes content consumption, in addition to content creation. Smart phones and tablets are the key devices in that regard.

In many ways, the BroadSoft data should not be surprising, as it simply tends to mirror similar changes in consumer markets, where mobile data is driving service provider revenue growth.

Mobile data will be the largest contributor to U.S. telecom service provider growth over the next five years, says Pyramid Research.

Voice services are expected to dwindle, on both the fixed and mobile networks, but remain significant. There is a shift from circuit-switched voice to IP telephony, but revenues are not keeping pace. Since at least 2007, mobile voice revenues have been of greater magnitude than fixed-line voice, as well.

The U.S. telecom market generated $367 billion in service revenue in 2010, an increase of 3.1 percent over 2009.

"We expect the market to grow at a 3.1 percent compound annual growth rate over 2011 to 2016, reaching $443 billion in 2016. U.S. telecom revenue forecast

While it was the fourth-largest service segment in 2010 (after mobile voice, fixed voice and pay-TV), Pyramid Research projects mobile broadband will have a 12.7 percent CAGR over the 2011 to 2016 period.

That means that mobile broadband services will overtake mobile voice, fixed voice and entertainment video  to become the single largest revenue stream in the U.S. telecom industry by 2016.

As demand for fixed circuit-switched voice decreases, fixed VoIP will increase, growing at a 12.2 percent CAGR from 2011 to 2016. But VoIP still will be the smallest of all revenue streams over the forecast period. There might continue to be some small dial-up Internet access revenue, but it will be negligible.

Small Business Social Media Channels

U.S. small businesses think Facebook is a useful and effective marketing tool, according to Constant Contact. About 83 percent of respondents say Facebook is "very" effective or "moderately" effective as a marketing tool. 


About 47 percent think Twitter is similarly useful. 


Will Brands Be Successful on Google

Australia National Broadband Network Faces Cost Overruns, Demand Issues

Capital investment for the National Broadband Network will top $50 billion, while slower-than-expected development of digital video content could put at risk the financial returns for the ultra-fast network, a confidential report states. 


The Australian government has been told by its own corporate advisers, Greenhill Caliburn, that costs will be dramatically higher than the $35.9 billion in capital costs the government has been claiming. 

Take rates also have been lower than many had expected. So far, 11 percent to 16 percent buy rates have been seen. Keep in mind that those buy rates reflect sales by all retail providers in each market, not the share held by any single contestant.  Costs too high?

The Joint Committee on the National Broadband Network has warned that NBN Co may be showing early signs of cost-blowouts and delays, with timeframe slippage and higher than expected operating expenditure recorded during the last six months. Retail pricing an issue?


In the committee's latest report (PDF), chair and independent MP, Robert Oakeshott, said that compared to the NBN Co Corporate Plan, a lower than expected capital expenditure and higher than expected operating expenditure result had been observed.


"This could be an early warning that it is costing more to do less, when compared to the expected results in the NBN Co Corporate Plan, even though the committee has at this stage accepted the argument from NBN Co that other reasons are behind this," the report reads.

Google’s Six Minute History Of Search

Here's a six-minute video clip that describing Google's history as a search company, from its earliest days of Larry Page and Sergey Brin’s PageRank algorithm to its more recent feature launches, like Google Instant. 


The video features interviews from key members who have worked on Google Search, including Google Fellows Ben Gomes and Amit Singhal, and Google VP Marissa Mayer, who led Search for a decade before taking the helm of Google’s local products. Google’s Six Minute Recap Of The History Of Search

Rogers exploring potential of LTE

Rogers CEO Nadir Mohamed says Long Term Evolution will allow Rogers to create over-the-top entertainment video services that resemble Netflix more than traditional cable TV, and be available both on mobile devices such as smart phones and tablets, as well as TVs equipped with Internet access, or Internet-connected game consoles.

The remarks appear to refer to ways video entertainment can become a revenue stream for Rogers in areas where it does not provide fixed network cable TV services, for example.


Rogers, which provides cable television services in New Brunswick, Newfoundland and Ontario, says it won't provide cable TV services it offers to those customers, to connected tablets and televisions outside those areas.



At least in part, that would be necessary since content owners do not seem likely to allow such uses of their licensed video content. Rogers exploring potential of LTE

The Diffusion Group (TDG) predicts that by 2020 the consumption of Internet video — content stored and distributed over an IP architecture — will eclipse the consumption of broadcast TV programming.Internet video forecast

With the caveat that consumption does not equal "revenue," the growing amount of online and mobile video consumption is creating the environment where providers will have growing opportunities to test new types of services and revenue models. But content owners will have to agree.

Cord Avoiders the Big Issue Now

About 200,000 fewer subscribers will buy entertainment video services in 2012, analysts at Credit Suisse predict. In large part, the modest contraction can be blamed on weak formation of new households and a growing number of new households that are avoiding subscription TV subscriptions altogether. More than "cord cutting," the abandonment of video services by customers that used to buy such services, the new weakness is among people who would otherwise have been starting their own households or becoming potential consumers for the first time.

The Credit Suisse analysts emphasized that they remain optimistic on cable and satellite sector businesses, but see the developing new problem as "cord-avoiders," households that are relying on video alternatives in an arguably new way. 

Many new households are not signing up for cable or satellite, the analysts said. While there were 1.8 million households formed, according to U.S. Census estimates cited by the report, only 16.9 percent of them signed up for video entertainment services.

 Analyst Stefan Anninger says he now expects the multi-channel video universe to contract by around 200,000 subscribers in 2012 instead of the gain of 250,000 that he had previously forecast. "We do not expect the pay TV universe subscribers 'to fall off a cliff' over the next year or two," he said. Base business okay But there is trouble brewing.

For the 12 months ending Sept. 30, 2011, total pay TV industry subs have remained unchanged at 100.8 million, according to Anninger. "Over the same period, however, occupied households have grown by 1.25 million," he said. "In turn, pay TV penetration has fallen from 84.1 percent in the third quarter of 2010 to 83.2 percent."


Cable and Satellite TV Subscriber Rolls to Shrink in 2012

Could Deutsche Telekom Buy Sprint-Nextel?

Though virtually all the acquisition and merger talk involving T-Mobile USA has involved some other entity buying the Deutsche Telekom unit, at least one observer speculates about whether T-Mobile USA could be a big acquirer.

The notion is that Deutsche Telekom could buy Sprint Nextel, for roughly one times that firm's annual revenue. Sprint’s market cap is $7.2 billion. Its long-term debt is $16.3 billion against a cash position of only $3.7 billion. The total cost of an acquisition would be $30 billion if shareholders got some premium. That is nearly as much as Sprint’s annual revenue of $32 billion. Will Deutsche Telekom Buy Sprint-Nextel (S)? - 24/7 Wall St. Could DT Buy Sprint?

The $4 billion break-up fee if AT&T cannot get regulatory approval to buy T-Mobile USA would help. Some will question how much help that amount could provide. DT faces significant investment challenges related to the coming Long Term Evolution network that must be funded.


Some will challenge the notion that DT can afford to spend scarce capital in the U.S. market when it faces key challenges in its arguably more important European markets. Others will simply say merging a number three and number four in the market will help, but not enough to justify the investment. Will Deutsche Telekom Buy Sprint-Nextel

But there also is an expectation that further consolidation of mobile and other telecom assets around the world is on the agenda, one way or the other. Mergers inevitable?

Top 10 Cloud Predictions for 2012

The cloud computing market will face some bumps as it continues to grow, says Forrester Research analyst James Staten. In part, that is because greater reliance on cloud services will raise the risk of exposure to outages, for example.


But one of the subsidiary challenges for some parts of the enterprise and business computing ecosystem. In particular, cloud services might pose a direct challenge to channel partners who typically serve the smaller and mid-sized business segments. 

"The channel will face the music," says Staten. "Reselling isn’t good enough anymore."


"For years I and my analyst brethren have been telling the value-added reseller market that they need to move away from revenue dependence on the resell of goods and services," Staten says. "Many have listened and now garner more revenue from consulting and unique intellectual property.
Here's the fundamental problem, he argues: "the cloud doesn’t need you."


Cloud services are a direct-sell business and standardized, Internet-resident services don’t need local relationships to reach their customers. 


There’s nothing to install, customization is minimal and margins are thin and volume-based. 


For the channel to survive it must add value around cloud services. While cloud services are standardized, how each company uses them is not and that’s where all the opportunity lies. Top 10 Cloud Predictions for 2012

67% of Indian E-Commerce is Mobile

About 67 percent of e-commerce in India happens in mobile and consumer appliances, says Rajan Anandan, managing director of Google India. 


Smartphone adoption is growing in the country at a rate of 56 percent year-over-year, with 21 million smartphones sold in India in 2011 so far. He said that the sector was expected to reach sales of 100 million units per year by 2015, a 476 percent growth in a span of four years. Mobile search queries highest from India at Google