Price War Breaking Out in Prepaid Wireless

MetroPCS Communications is making another potentially disruptive move in the prepaid wireless market, introducing a prepaid $40 a month unlimted plan including voice, texting and Internet access.

The $45 plan now include sunlimited email, navigation and social networking applications. MetroPCS’ $30 and $35 local unlimited plans will now include caller ID and call waiting.

The $50 plan continues to offer smartphone customers complete HTML Web browsing and enterprise wireless email.

For anybody who doubted potentially huge changes in the prepaid market, this is yet another example.

MetroPCS was the first North American wireless carrier to offer unlimited international long distance calling for an additional $5 per month, to over 100 countries and over 1,000 destinations. This unlimited international long distance feature is available on both the $45 and $50 service plans.

MetroPCS is also offering consumers a family plan. With MetroPCS’ family plan, families with two to five lines will be able to enjoy MetroPCS Unlimited Nationwide service for talk, text and Web access for $35 per line.

TracFone Wireless, the nation's largest prepaid wireless service, recently introduced a $45 flat-rate monthly plan for calling and text messaging. That undercut the previous $50 benchmark for unlimited monthly plans set by Sprint's Boost Mobile prepaid service earlier this year. The pressure is now on Boost, and Virgin Mobile, to match its rivals by dropping pricing below the $50 level.

The other big change will be a breakthrough in phone models available to prepaid customers, particularly the higher-end smart phones. Historically, low phone cost has been something of a requirement for budget-oriented customers, but that will change as the customer base begins to reflect the same demographics as the postpaid base.

http://investor.metropcs.com/phoenix.zhtml?c=177745&p=irol-newsArticle&ID=1314223&highlight=

Apple, AT&T Ban Google Voice, Put Restrictions On Google Latitude

In the never-ending debate about whether usrs benefit more from "open" amd "closed" application environments in the mobile space, Apple has tended to be the best example of innovation and consumer benefit provided by the "closed" model, even though many would likely argue the evidence tends to suggest "open" leads to more rapid innovation, as a rule.

"Closed" can lead to benefits if the provider can optimize performance of all applications and devices, while at the same time delivering better user experiences. Apple has excelled, on that score.

But Apple's recent decision to ban Google Voice from the iPhone App Store is a salient reminder that the ability to optimize user experience can come at a cost.

To be sure, nobody is quite sure who was the driving the ban. AT&T obviously has incentive to protect its existing voice business. If Apple drove the decision, the reasons are more difficult to discern.

Google Voice allows free domestic calling and texting and cheap international calls, and will in the near future provide number portability. That AT&T wouldn't be too happy is obvious. But why would Apple support such a move, beyond the clear interests of its partner?

Could perceived competition between Apple and Google, which traditionally has been quite well mannered, be moving to a new stage more analogous to the ways Microsoft and Google now compete?

In what might be a related move, Google Latitude for iPhone and iPod touch. available as a Web application running in Safari, might have been "forced" to operate in a more restrictive way than the same app runs on other mobiles.

Gooble says it worked closely with Apple to bring Latitude to the iPhone in a way Apple thought would be best for iPhone users. But afterwards, Apple requested that Google release Latitude as a Web application "in order to avoid confusion with Maps on the iPhone, which uses Google to serve maps tiles.".

"Unfortunately, since there is no mechanism for applications to run in the background on iPhone, which applies to browser-based web apps as well, we're not able to provide continuous background location updates in the same way that we can for Latitude users on Android, Blackberry, Symbian and Windows Mobile," Google says.

Again, there are reasonable user experience reasons for Apple to avoid user confusion. But one suspects there might be more than that going on here.

Skype in Patent Dispute

eBay says in a regulatory filing that it is set to go to trial on June 10, 2010 on what appears to be a key VoIP patent dispute with Joltid Limited, which licenses peer-to-peer technology to Skype..

Skype has begun to develop alternative software to that licensed through Joltid.

EBay wrote in the quarterly filing that it recognized that pending litigation over the technology behind Skype could ultimately have an "adverse result," so it had begun to develop alternative software to the technology it licenses from Joltid Ltd for Skype.

In its regulatory filing, which contains the typical disclaimers about the potential damage if eBay's position is not upheld, eBay made the statement in typical legalese that if the company is not successful, it might have to shut Skype down.

That could, in a worst-case scenario, lead to Skype being shut down, but that typically is not what happens. The parties come to some sort of settlement. Remember the wave of patent infringement lawsuits back in 2007 that started with Vonage?

One way or the other, this will be settled. Joltid doesn't win if its customer goes away, and eBay is developing alternate methods in any case.

Watch for Fireworks in Prepaid Wireless Later This Year

Watch for shake-ups in the U.S. prepaid wireless market later this year. The obvious example is what Sprint Nextel might do with its 10 million customer strong Boost-plus-Virgin Mobile business.

Now that unlimited prepaid plans have been successfully launched by MetroPCS and Leap Wireless, for example, other contestants are likely to have to rethink packaging and pricing. Products, after all, are positioned in relationship to other products, not in the abstract. In fact, when a produce cannot be valued and priced in relationship to other known products, consumers are likely to resist buying.

In context, the prepaid market will look different to typical buyers when the range is "unlimited for this price" compared to "buckets at other prices." The value equation is changed, even if, as a practical matter, for most uers the difference between "truly unlimited" and "a big bucket" is indistinguishable.

Were Sprint Nextel to announce an unlimited prepaid, it wouldn't be unusual, given its similar "Simply Everything" postpaid offers, or the fact that major competitors already have proven market receptivity to prepaid "unlimited" offers.

That would not be Dan Hesse, Sprint Nextel CEO's style. He will want to do something more potentially disruptive. Since I have been predicting the emergence of smart phone prepaid plans, I might as well suggest that would be something Hesse would consider.

Traidtionally, major carriers have tried to protect their postpaid bases by restricting handset access available to prepaid users. But given heightened competition in the overall mobile market, the growth of demand for prepaid and the leading role of smart phones in creating a base for new data services and revenue, smart phones inevitably must move to prepaid, as well as being more heavily pushed on the postpaid side of the business as well.

So one possibility is a major push by Boost Mobile and Virgin Mobile USA to offer unlimited plans with access to devices such as the Palm Pre, reversing the age-old policy of allowing prepaid resellers access only to older handsets.

As for why Sprint Nextel might have wanted to buy Virgin Mobile USA, there are a couple of possibilites. Undoubtedly Sprint Nextel has concluded that prepaid is due for significant growth. In that case, one might as well start growing faster than other competitors.

Perhaps Sprint Nextel is preparing for a disruptive move in prepaid. In that case, heft makes sense. Perhaps Sprint Nextel simply wants the better economics that accrue to scale.

Also, Virgin Mobile might simply have reached the point where it typically makes sense for a larger player to buy out a smaller player. That point ideally comes when the target company customer base is highest, churn is lowest, costs have decreased, and demand has increased.

At the end of the first quarter, Virgin Mobile's base was at 5.2 million subscribers from 5.1 million in the year ago quarter and had gross adds of 630,259, falling from 795,575 subs. That suggests a peak has been reached.

Virgin Mobile’s churn at 4.8 percent was flat sequentially and down from 5.1 percent in the first quarter of last year. And its earnings of $19.1 million were up from $4.7 million in the prior quarter.

Basically, the acquisition profile was right.

And there are competitive considerations. It appears Verizon is looking at a possible expanded move into retail prepaid. T-Mobile already is a significant player in prepaid, and in recent quarters has seen most of its net growth in prepaid. AT&T says it is watching the market, though prepaid only represents about four percent of AT&T's market, and the company is wary of cannibalization of its postpaid base.

All of that is an explosive set of circumstances. I'd be watching for fireworks that will redefine "prepaid" later this year.

Verizon Offers Free Nationwide Wi-Fi to its Wired Broadband Customers

The public Wi-Fi hotspot model seems to be morphing again.

Verizon now is offering most of its broadband customers free access to more than 13,000 Wi-Fi connections across the United States, partnering with Boingo Wireless.

Other providers offer similar Wi-Fi services, including Cablevision Systems, which offers such free access for its cable modem customers, and AT&T, which does the same for its high-speed access customers at 20,000 locations, in partnership with Wayport.

To get the free Wi-Fi access, new Verizon FiOS Internet customers must order a 25 Mbps downstream / 15 Mbps upstream or faster connection and DSL customers must order 3 Mbps/768 Kbps or faster connection.

Barnes & Noble bookstores now offers free Wi-Fi access at tis retail locations, as do hotels and other public locations, at least in part, as a customer amenity, not a revenue driver.

The Wi-Fi business model has been through several iterations over the past several years, with most local providers discovering it isn't much of a business as a stand alone. That's one reason Verizon, AT&T and Cablevision essentially use Wi-Fi access as a customer acquisition and retention tool, not a stand-alone business.

Nor have municipal Wi-Fi projects fared well. Most have found the retail revenue insufficient to support service.

Hotels and airports often use it as an amenity. For Starbucks, the business model is coffee. For Barnes & Noble, the business model will likely include sales of e-book content.

The Barnes & Noble eBookstore launched with 700,000 titles, and since the Barnes & Noble e-reader will not be available until later this year, the only way the retailer can sell is to wireless-connected PCs or other Wi-Fi-enabled devices such as the iPhone, iPod touch or Wi-Fi-enabled Blackberries.

So far, retail models have relied on a mixture of wholesale service sold by one provider of infrastructure to another provider with a retail business model, for-fee use by retail users and product sales such as e-book content. Over time, it seems likely the wholesale model will expand, as retail opportunities are limited, given the growing use of 3G and 4G mobile connections.

Brands are Media, These Days

Because of the Internet, blogs and social networking, marketing really is changing. It has been clear for some time that where brands once relied on media companies to get their messages across, using public relations and advertising, new forms have arisen.

Many firms, perhaps most, now divert spending from advertising to bolstering their own Web sites. Many, because of real simple syndication, recommendation engines and other sharing tools, can become "media" in their own right. That is not to say the new tools completely replace the older channels. It would be more accurate to say the new tools more often supplement the older channels.

Most firms likely still would see more value in a story in the Wall Street Journal than on their own blogs and content sites. But most firms can use "earned media" (non-paid attention as compared to for-fee advertising, for example) to a growing extent.

Whether the goal is "branding" or "direct response," earned media seems to be assuming a greater role. But the business models are different. Where "professional" media have relied on a revenue model where attention is converted to advertising or subscription revenue, "earned media" relies on converting attention to sales of hardware, software or services.

That means many of the proxy measures used by professional media to measure success have less relevance. Where volume metrics such as visits, clicks or views are a way of demonstrating "attention," those same metrics may or may not have as much direct relationship to brand sales activity, especially in businesses with long sales cycles.

Attention still is important. But the attention a brand wants is the sort that contributes to sales of the firm's products, not advertising or other revenues. So far, this is a metric nobody seems to have figured out. Perhaps it is not directly measurable.

What does seem clear is that attention created by brand-sponsored content can lead to peer recommendations. And studies of influence do suggest that peer recommendations are more powerful, by far, than traditional or even most "new" media messages.

So far, this more art than science. But brands believe it works. Some studies show firms are switching spending away from advertising and towards their own Web sites and content. This will have big implications both for marketing and for the media.

http://blog.hubspot.com/blog/tabid/6307/bid/4897/Be-a-Publisher-But-Don-t-Use-the-Publishing-Industry-s-Metrics.aspx

Verizon Wireless Unveils Cross-Network, Cross-Device, Cross-OS App Store

Up to this point, "application stores" have been device specific. But Verizon Wireless is launching the first cross-device, cross-network application development effort and store. Specifically, developers can create apps running across four different mobile providers and operating systems ranging from Research in Motion, Android, Windows Mobile, Palm and Symbian operating systems.

The “Joint Innovation Lab” is a consortium consisting including Verizon, China Mobile, Vodafone and Softbank. That platform, which will push common standards for developers, will allow those developers to reach a billion customers on all four networks.

The consortium will offer its own software developer kit and open up handset and service application programming interfaces to developers.

This is important: until now, developers have had to design apps to work with the dozens of handsets supported by each carrier. Now, however, Verizon says it will offer tools so developers can write one app that will work on all handsets developed under the JIL standard.

The JIL will feature common application access management standards, including for things such as billing and common application management standards.

The app store will be run by Qualcomm. The storefront will be available on the Internet, mobile web and through a portal on the handset, and is expected to be operational by the end of 2009.

Many obstacles must be surmounted, of course, but the effort is qualitatively different from all prior app store efforts, in offering cross-network, cross device and operating system capabilities.

http://deals.venturebeat.com/2009/07/28/verizon-promises-developers-access-to-a-billion-customers-so-there-apple/