No Contract, No Locking, Nobody

Sprint CEO Gary Forsee says Sprint is thinking about expanding the test area for an unlimited calling plan that doesn’t require customers to sign a contract. That's something Leap Wireless and MetroPCS already offer. Nokia meanwhile appears poised to start selling unlocked N95 series really-smart phones imminently. So far, no carriers seem willing to do both.

Of course, there are good financial reasons why carriers like contracts and locked phones. The former provides a more predictable revenue stream and the latter ensures lower churn. Apple doesn't like unlocking either, as it now participates in the recurring revenue stream.

At least some users would benefit from unlocking and contractless service. Anybody buying a Nokia N95, for example, is spending enough on a device that the portable computer (it seems too limiting to call it a phone) clearly is more important than any network.

Of course, the carriers increasingly will find themselves in the position of angering power users who can figure out other ways to use unlocked devices, with or without contracts. To the extent that an N95 really is a mobile media and Web platform, outfitted both with Bluetooth and Wi-Fi, users can simply avoid any carrier "calling plan" if they are willing to put up with a little hassle and use Wi-Fi for connectivity.

That won't be very desirable for anybody who really needs mobile calling, but lots of people choose to carry two devices in any case. So maybe one of the new choices is one device for mobile email and voice, and the second for rich media and rich Web browsing.

It isn't so clear to me that a heavy email user is going to opt for an N95 in any case. The N95 excels as a rich media device (audio and video performance is spectacular) but won't satisfy a BlackBerry addict. The BlackBerry, though, isn't so great as a phone and really doesn't measure up as a media player.

Carriers might not like it, but devices are becoming the drivers of purchase and use behavior for a growing segment of the user base. Sure, the presence or non-presence of 3G capabilities is an issue. Operating system is getting to be more important. And then there's the blasted CDMA or GSM choice to be made. Pricing plans still are important, to be sure. But device coolness arguably is enough to outweigh the other considerations.

N95 might be among the first devices that test the theory that a powerful enough rich media device can get traction using Wi-Fi connectivity as an alternative to "mobile network" connectivity. Broad traction still will require 3G GSM. But N95 is the first device I've experienced that gets one to thinking about using it in a way similar to a laptop, rather than a phone. A Wi-Fi-equipped iPod is sort of in the same category.

Google Will Buy 30% of Servers in 2010

In 2010, say analysts at the Gartner Group, Google alone will consume 30 percent of all the world’s servers. That's three out of 10 of all servers manufacturing globally that year. That's some serious scale! And explains why Google buys so much optical bandwidth, and is investing in its own cable.

Google to Build Own Trans-Pacific Cable Network?

Up to this point, it has been local telcos, mobile providers, newspaper publishers and others in the media business who have had to ponder what Google might be up to. Trans-oceanic fiber providers might be next. Google apparently is planning to lay its own multi-terabit undersea communications cable across the Pacific Ocean, to be lit in 2009, according to Communications Day.

The Unity cable has been under development for several months. As envisioned, Google will join with other carriers to build the new multi-terabit cable. Google would get access to a fiber pair at build cost.

Partners haven't been announced, but rumors indicate Telekom Malaysia and Verizon, each involved in rival new cables, won't be part of the Google consortium.

There's not necessarily any broader agenda beyond securing low cost bandwidth on a major and growing oceanic crossing. Aside from that, the new capacity helps Google peer directly with Internet Service Providers in Asia.

Google's move still could be disruptive to the capacity industry, though. Obviously, Google's new capacity will take some revenue out of the retail market place.

TeleGeography Research says existing trans-Pacific cables provide on average 3.3 tbps of capacity and that carriers have increasingly been upgrading their existing cables or planning new ones. Trans-Pacific bandwidth demand has increased 41 percent between mid-2006 and mid-2007.

Metro Bandwidth Still Worth Investing In: Zayo

Demand for metro bandwidth still is a good reason to create a company focused on layer one and layer two metro access, say the founders of Zayo Bandwidth, a regional provider of fiber-based access and metro transport. Zayo has acquired PPL Telcom, a 4,600 fiber-route-mile network based in Allentown, Penn. serving areas throughout the Northeast, and Memphis Networx, a 200 fiber-route-mile network serving the greater Memphis, Tenn. area.

In addition, Zayo Bandwidth has signed definitive agreements to acquire Indianapolis, Ind.-based Indiana Fiber Works (IFW) and Minneapolis, Minn.-based Onvoy, Inc. which are expected to be finalized in the third and fourth quarters of 2007, respectively. Combined, the four companies represent $125 million of annual revenue and 8,400 route miles of fiber.

Led by industry veterans Dan Caruso and John Scarano, both formerly with ICG Communications and Level 3 Communications, Zayo Bandwidth has secured access to $225 million from leading venture capital firms, including Columbia Capital, M/C Venture Partners, Oak Investment Partners, Battery Ventures and Centennial Ventures.

According to the Telecommunications Industry Association, demand for broadband has driven the highest telecom industry growth since 2000. Overall U.S. telecom industry revenues grew 9.3 percent in 2006, while the worldwide market grew a robust 11.2 percent.

Zayo focuses on private line from DS1 up to OC-192; Ethernet running from 10 Mbps up to 1 Gbps; dedicated Internet access at T1 and above; wavelength services ranging from 2.5 Gbps to 10 Gbps and collocation space.

Global revenue growth for metro access services has grown at about 124 percent annually since 2001, says Cisco Systems.

"Steve Jobs Was Right"

"Steve Jobs was right," says at&t VP Ralph de la Vega. Right about slashing the price of the iPhone sooner than att&t would typically have done. AT&T Inc., owner of the biggest U.S. mobile phone service, said the increase in sales of the iPhone has been "significant" since maker Apple Inc. cut the price by a third. How much?

at&t appears also to have been at least partly right about the iPhone's impact. Sprint and Verizon executives both acknowdledge at least a temporary increase in churn immediately after iPhone hit the market, and again after the recent price reduction.

Perhaps of more lasting significance is the ability of iPhone users to use Wi-Fi for connectivity in place of the EDGE network. Though it is doubtful many users will settle for a single "do everything device" that primarily connects only when within range of Wi-Fi networks, it will be interesting to watch whether there is a developing market for devices used primarily as media players.

The reason is simply that if the primary use mode is media, not voice, users might be able to live with sideloading and "spot" access of connectivity at home, at work and at public hotspots. And if there is a market for that, there could be a market for other Web-based devices that have value even when they are not "always connected."

That in turn is significant because it could offer some new options for providers of services and devices optimized for Web applications rather than voice. The analogy is notebook computers, that are highly useful even though they are not always connected. It might be possible to create significant new business models for devices that are "mobile" but not "always connected."

That, in turn, is highly significant for application or service providers that do not want to depend on the legacy mobile connectivity providers for access and transport.

Orange Gets iPhone in France

France Telecom's Orange has sealed the iPhone deal, it appears. France Telecom CEO Didier Lombard says the iPhone would be distributed in France "before Christmas, probably in November." Orange does not appear likely to subsidize the handset.

Address Books for Landlines?

Embarq is adding an address book feature to its home phones, allowing people to look up an entry and dial it by speaking a name into the handset.

Embarq also is testing a text-messaging function for home phones in some markets. When a text message is sent to a land-line number, the home phone rings, converts the message into audio, and plays it back. The land-line phone user can reply with an audio message or press a button to send a standard text response.

You have to admire Embarq's efforts to add features to landlines that are standard for mobiles. You also have to wonder how well address books, which are personal, and text messages, also personal, are going to translate into a "public" setting, which most landline phones represent.

One-person households won't have that problem, of course. "Public" and "personal" are the same, in such cases. But it will be an interesting test.