Rocks, Hard Places for U.S. Mobile Service Providers

The next year will continue to be a story of being caught between rocks and very-hard places for a few of the leading U.S. mobile service providers. AT&T seems to be facing higher obstacles as it continues to try and convince regulators that its proposed purchase of T-Mobile USA would not harm competition.

The possible rejection of the deal might cost AT&T $3 billion in cash and an equivalent amount of spectrum. For T-Mobile USA, a failed deal means not only that it has failed to exit the U.S. market, failed to free up valuable capital that it needs to deploy elsewhere, but also has lost well more than a year of marketing blocking and tackling. The cash and spectrum might prove small consolation.

Sprint seems to have gambled its future on what the Apple iPhone can do for it, and continues to have a complicated relationship with Clearwire, which it owns, with 53 percent of the equity, but cannot control. Clearwire is running out of money, hasn't finished building its national WiMAX network and now says it has to build a Long Term Evolution network as well.

Clearwire also says it might not make a coming debt service payment, which would raise questions about whether bankruptcy is coming. Clearwire seems to want help from Sprint, which has pressing capital needs of its own, as it is pushing hard on a key network upgrade that will allow Sprint to build its own LTE network.

Sprint might be happy to see Clearwire restructure, under bankruptcy protection or not. What Sprint can’t afford is for Clearwire’s network to shut down. As many as eight million Sprint customers would lose service should that happen. But a chapter 11 bankruptcy would allow those services to continue.

Some argue Sprint would do better to have Clearwire go into chapter 11 bankruptcy, then buy the company. If Clearwire files for bankruptcy protection, the company’s spectrum licenses go to the bondholders, though, not to Sprint. That doesn't mean Sprint could not then try and buy the spectrum from bond holders. But there is risk. Sprint, Clearwire

LightSquared still hasn't managed to satisfy the U.S. GPS industry that its own launch of LTE services will avoid signal interference with the GPS system. So much hangs in the balance for LightSquared and its wholesale customers as well.

"Telcos will Compete with Banks"?

Smartphones using encryption and biometrics will enable telecom companies to compete with banks and credit card companies for retail payment transactions, argues Futurist Patrick Dixon. That might not seem to be the way providers of mobile wallet services such as Google, Isis and PayPal are heading. In most cases, all of those providers require the existing payment providers to provide a complete solution. 


But there might be a difference between the ways new contestants side step into a market, and the efforts such firms might make in the future. As many strategists could argue, a common way new firms get into a market is by starting at the "low end," and then, over time, adding more and more capabilities until, at some point, full head to head competition is feasible. 


Rogers, in Canada, provides an example. Rogers is becoming a "bank," though it likely will confine its early efforts only to some highly-focused applications related to its current customer base. But it would require little imagination to suggest that, once successful, additional functions would become attractive. 


With the caveat that predicting the future is an often-perilous undertaking, and that predictions about the future are more often wrong than right, Dixon thinks big things can happen in mobile commerce, mobile payments and shopping. 


Mobile payments could generate commissions of up to EU2 billion a year in countries like France, Germany, Italy and the UK, he says.  Mobile Payments Future

What is a Facebook Fan Worth?

The old quip about advertising spend--namely that half is wasted, but nobody can tell you which half--remains true, it seems.

According to social media agency SocialCode, a Facebook fan is worth about $10. Looking at more than five million Facebook ads placed by over 50 clients (spanning verticals, but mostly in consumer packaged goods, auto and finance) from between May 2011 and September 2011, the study looked at the cost of acquiring new fans, and what it took to get them to perform a desired action. Value of a "fan"

The study  found that fans perform desirable actions such as installing an app, voting in a contest and making a purchase at a much higher rate, and it's significantly cheaper to prompt them to do so, using advertising, than it is to prompt non-fans.


Facebook fans also are more likely to engage in actions that suggest more involvement. .

The study looked at seven actions a user might perform on a Facebook fan page: app install, contest submission, contest voting, fan acquisition (which encompasses "liking" a sub-brand for existing fans), program sign-up, purchase and sweepstakes.

The cost per acquisition, calculated by dividing the total cost of clicks by the total number of actions, for fans and non-fans is $9.56.


The total conversion rate for fans, obtained by dividing the total users who performed an action by the total who clicked on an ad, is 19 percent, compared to seven percent  for non-fans.

But other studies come up with different figures. Values range from two cents to $136, depending on how one wishes to tally the presumptive value. It all hinges on the assumptions.

• 2 cents: (offer for 500 new fans for $10.51; eBay).
• 57 cents: (offer for 1000 new fans for $57 by this fan-creating agency).
• $1.07: (the cost of advertising on Facebook that encourages a user to become a “fan”; Webtrends).
• $3.60: (as a media buy to reach 1 million fans; Vitrue).
• $9.56: (extra cost per acquisition for "conversion" of fan/non-fan into a purchase or other action; calculated by SocialCode).
• $71.84: (extra amount fans spend vs. non-fans; Syncapse)
• $136.38: (average annualized value of total fan purchases; Syncapse).
• 20 extra visits to your web site: (vs. one visit from a non-fan; Hitwise).

None of the studies address the obvious fact that a person willing to become a Facebook fan of an advertiser is probably already buying that company's brand. In other words, the extra value Facebook fandom adds for advertisers is $0 if the fan was already locked in. Value of a fan varies

The Facebook Phone is Coming

After years of considering how to best get into the phone business, Facebook has tapped Taiwanese cellphone maker HTC to build a smartphone that has the social network integrated at the core of its being.

Code-named “Buffy,” after the television vampire slayer, the phone is planned to run on a modified version of Android that Facebook has tweaked heavily to deeply integrate its services, as well as to support HTML5 as a platform for applications, according to sources familiar with the project. The Facebook Phone

Precisely how all this will play out is hard to envision. People now can use Facebook on virtually all smart phone operating systems and devices. So what Facebook seeks is a much-deeper integration of the Facebook experience with the devices. It might be way too simplistic to say Facebook probably is looking to control a fuller range of the end user experience on a Facebook-optimized mobile, but that is as close to an explanation as seems possible, right now.


The whole point of Android, the Google ecosystem; and Apple and the iOS ecosystem, is to leverage user experience on mobiles into mobile commerce, mobile advertising and other developing revenue streams. Facebook probably assumes its own experience likewise needs to become a business platform, as Google and Apple seem to be attempting. 

One in Three Online Consumers to Use a Tablet by 2014 - eMarketer

One in three people who are online will use a tablet device in 2014, eMarketer predicts. That would represent 90 million people.


That could have many consequences. Beyond the obvious benefits for firms that make and sell tablets, some percentage of those devices will be connected to mobile broadband networks. That means incremental revenue for access providers. 


Application providers will have to create user interfaces that do not require use of a mouse or keyboard. Content providers will have 90 million new screens that are primarily content consumption devices. App stores will have a chance to sell more content of all types to those new devices. 


Mobile marketers will be "freed" from the "tyranny" of small screens and will have a new potential audience of 90 million people whose attention partly will be shifted from other devices and might also represent some incremental new attention as well. 


Tablets also will blur the lines between "mobile" and "fixed" usage. Tablets are likely to be used while people are on couches, and not so much when people actually are in transit or out and about. 


More than the screen size, that usage pattern will create distinct marketing opportunities different than the location-driven smart phone screen or the "work-oriented" PC screen. Where devices tend to be used, screen size, storage and output and input methods will tend to shape smart phone, tablet and PC environments as distinct venues.


Right now, eMarketer estimates that 33.7 million Americans use a tablet device at least monthly. 


Growth will slow to double digits beginning in 2012, but the number of users will rise to nearly 90 million, or 35.6 percent of all Internet users, by 2014. One in Three Online Consumers to Use a Tablet by 2014

Chorus, New Zealand Wholesaler, Goes Public

On Nov. 23, 2011, Chorus, the wholesale business including assets that once were part of Telecom New Zealand, will start trading on the New York Stock Exchange.

The listing means Telecom New Zealand now is now longer a facilities-based service provider, but will lease capacity from Chorus, as will other New Zealand service providers competing in the fixed-network business.

There was an earlier BT precedent for thinking about structural separation, SingTel also operates under similar principles, and though most people don't realize it, Rochester Telephone in New York also agree to structural separation, in exchange for freedom to pursue unregulated business opportunities.

Despite the changes, Telecom New Zealand will retain its ownership of mobile services, making Telecom a more-focused mobile play, in a sense.

Timothy Geithner: US Must Make Choices

"We're facing a very consequential debate about some fundamental choices as a country," says Treasury Secretary Timothy Geither. "Those choices are fundamentally about what role can government play and what role can government not play and should not play in trying to create conditions for stronger growth and better opportunity, and how are we going back to a point where we're living within our means as a country." decisions the country must make

Though it is reasonable to criticize the White House and the Congress for failing to act resolutely ("why can't they reach a compromise?"), it also is reasonable to note that there is a huge, virtually unbridgeable gap between competing visions for the future, including the size and role of government. Some believe the size of government itself is a key problem. Others want government to do more. You can agree or disagree with either position. But if you really believe in one of the positions, compromise is not an option, is it?

Under such conditions, compromise is likely to be viewed as surrender. Hence, no compromise. But some big issues are not amenable, fundamentally, to compromise, even when agreement on smaller issues often is possible.