The September 3, 2007 Business Week Online has an interesting story about the evolution of Wi-Max, which, as you may recall from previous postings this month, is the wireless technology of choice for Sprint and Clearwire, and it would seem, Google – the latter on account of an announced partnership with Sprint.
As overall broadband adoption in the US shows some signs of slowing, following several years of torrid growth, deployment in some areas remains problematic, given the economics behind wired solutions, and the density (or lack thereof) in the potential subscriber base.
These realities are typical of those faced by carriers in upgrading networks, designed for one purpose, and built over time and thereby employing multiple legacy services, into unified IP networks that may handle broadband traffic (and then some), on an economic basis.
The head to head competition between cable and the telcos creates more than just a two-way arms race, the nature of which may be illustrated by the additional challenge of carriers having to adapt to changing consumer patterns. Recently released figures from the BBC show the impact of how people with broadband in the UK are spending their time.
Data rates which might be well and good for web browsing, sending e-mail and attachments simply fall flat when it comes to the heavy duty requirements of streaming video, which widespread activity requires additional network upgrades for carriers.
Then there is the slight matter of which devices work on particular networks. One persistent criticism of Apple’s iPhone is that only AT&T offers the device, and while this may be good for AT&T, customers on other networks, particularly those located in the US, locked in mid-contract, may not be so happy, given the phone's appeal.
A New Jersey teen, though, seems to have found his own solution to this situation, and hacked his iPhone to work on T-Mobile's network - which also is GSM.
The FCC's new 700 MHz spectrum auction rules would appear to address the device limitations, requiring that new wireless networks be open to support any devices, but the rules also may have an impact on existing carriers versus new entrants. Given the complexity of matters, these positions will take some time to resolve and sort out.
As the US wireless market records increased investment for delivering mobile broadband to increasingly services-dependent consumers, so too, I note, go investments around the world.
SK Telecom, South Korea’s largest handset vendor, announced a sizable ($1 billion) investment in China Unicom bonds that can convert to a 6.6% equity stake in the carrier, which has 35 million subscribers.
If this sounds like an impressive subscriber base, consider that China is the world’s largest wireless market, with some 421 million subscribers, and this is expected to increase to 600 million users in three years.
SK Telecom is also Korea’s largest mobile operator, with 20 million subscribers, giving it a 50% share in its home, South Korean market.
The announced deal would make SK Telecom the second largest shareholder in China Unicom, and, apparently, comprise another step for the Korean vendor in the Chinese market; SK and China Unicom had established a 49% - 51% joint venture several years ago called UNISK.
The cross border deal making follows similar investments driven earlier this year by private equity firms prior to Wall Street’s current credit concerns.
The deals likely point to telecom opportunities eyeballed in other countries that are going through rapid economic development, the privatization of national carriers, or solidification of competitive positions with buildout of next generation networks, both wireless and wireline, that are viewed to provide solid returns on capital.
In short, the current climate represents a period of flux due to various factors that likely will continue to change with acquisition of content for subscribers, and business models imported from other countries, as well as outside the telecom world, such as online search engines and social networking sites.
Elsewhere, China Netcom reported interim 2007 financial results, with strong growth in several areas, including broadband subscribers and a migration from wireline to wireless.
The King is dead. Long Live the King.
Sprint makes news today with additional more details about its proposed Wi-Max wireless Internet service, including an interesting new name.
I haven't had a chance to run the new name - XOHM or Xohm, I've seen it written both ways - past any of my marketing buddies yet, but something tells me they're going to have some interesting opinion on the matter.
As part of their buildout plan, Sprint said it will spend a bundle on this bundle, or $2.5 billion through next year and $5 billion through '10, in their play to change the broadband access game through widespread wireless connectivity, essentially a big-big Wi-Fi network with Intel chipsets embedded in absolutely everything, with the possible exception of the family dog.
One analysis, though, says that news about the current investment slug isn't as large as that pitched by the company about a month ago, when Sprint linked up with Clearwire to achieve its Wi-Max buildout, and Sprint may be cautiously keeping its options open.
The last line of the 5th paragraph in this news item, from the Wall Street Journal from July 20, 2007 (that it was unclear whether the Clearwire deal represented a decrease in spending), and the requirement for government approval on the roaming agreement probably means that some details are still in the works.
A casual observer might notice that the wireless industry has been getting a pretty good makeover, with some pretty heated competition amongst big carriers (AT&T's introduction of Apple's iPhone, gee whiz product placement in virtually any good action movie, new FCC rules, etc.), and so if the past few years saw the widespread consumer adoption of big flat panel TV sets, the near future looks to be defined by the proliferation of super-charged hand held computing devices that perform multiple functions, from e-mail to watching videos or even movies to gaming.
It's coming to the small screen, nearest you. One peer told me that he jammed half the storage space on his new phone with a couple of TV shows, some videos, as well as part of a movie, and he's had the thing less than a week.
Be they toys or tools, the new devices, and their operation on new network by new players under new rules (let the record reflect that I mean this to include market dynamics as well) will have an impact on the arms race already underway.
A common phrase, that "content is king" might therefore be amended to include mobility, connectivity, and bandwidth, in suit.
I'll just run through recent developments, many of which point to increasing activity and potentially big shifts in broadband deployment of the wireless kind.
The FCC recently announced 700 MHz wireless spectrum rules, which additional spectrum may allow for new entrants into the broadband deployment arena, athough opinion on the auction impact varies to some degree.
Now let's take a look at Sprint, which just reported earnings this week. Several weeks ago, Sprint linked up with Clearwire to combine elements of the two companies' planned Wi-Max buildouts, and then a week or so later, Sprint announced a deal with Google.
Then, last week, Sprint pulled out of an Advanced Wireless Spectrum auction consortium with several cable companies.
Sprint’s stake, at five percent (5%) of $2.4 billion, amounted to $100 million, which will be refunded to Sprint , which presumably leaves Sprint free to concentrate on its Google deal.
You may recall that Google has committed to spend $4.6 billion on the upcoming 700 MHz auctions if the FCC's rules looked right, and so far so good.
All these developments occur against the backdrop of Google introducing its own phone.
Google, by the way, has a comfortable relationship with Apple, which recently introduced a game changing phone.
Tapping the iPhone's "stocks" icon presents several pre-loaded symbols – the DJIA, AAPL (obviously), and GOOG.
A user may add more (I popped in Yahoo and AT&T, for kicks), but the "big three" are already there.
Plus, YouTube's icon is located immediately to the left (Google owns YouTube). Although talking about real estate these days is a kind of a bummer, you gotta admit that's some pretty good screen placement on a device that's pretty spare, comes with one button.
The iPhone's YouTube capabilities, and its screen quality, by the way, produced a wonderful assessment of the device from an observer: the ability to be able to watch videos on the go made the iPhone the "world's greatest time waster."
While I don't know if I'd go quite that far, I also liked how she summed up her own iPod, loaded with "great music" (in the opinion of one of her co-workers). She commented that the eclectic music she has loaded makes her iPod “really just a compilation of people I know.” Nice...Back to spectrum: Vodafone wants to be part of the wireless picture, no matter what that picture happens to be: in addition to Clearwire and Sprint, Vodafone has announced that the Wi-Max outlook appears pretty sunny to them.
