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