Wireless Net Neutrality: Dead?
The effort to let any Web service run over wireless networks may be dead.
On April 6, the U.S. Court of Appeals for the District of Columbia said the Federal Communications Commission couldn’t tell the U.S.’s largest cable company, Comcast, not to interfere with certain types of traffic. This in effect reverses the FCC’s 2008 ruling, which allowed Web services like Web-calling provider Skype to run over most wired networks, and to grow and prosper faster.
Ever since, Skype and other services have lobbied the FCC to impose similar, so-called net neutrality rules on wireless networks of carriers such as Verizon Wireless and AT&T Mobility. The agency’s chairman, Julius Genachowski, has said he’d like to extend net neutrality rules onto wireless networks.
Now, however, Genachowski's ability to go ahead with the reforms may be severely crippled. While the FCC could appeal the court’s decision, that could be a drawn-out process. And it’s likely to halt any new net neutrality rulemaking and proceedings. That’s bad news for Skype, as well as a myriad of other Web services that depend on being able to run over various carriers’ networks to grow. These companies will have to work with the carriers to gain access to their networks via business negotiations – as Skype has already done with Verizon Wireless.
Wireless Net Neutrality: Dead?
The effort to let any Web service run over wireless networks may be dead.
On April 6, the U.S. Court of Appeals for the District of Columbia said the Federal Communications Commission couldn’t tell the U.S.’s largest cable company, Comcast, not to interfere with certain types of traffic. This in effect reverses the FCC’s 2008 ruling, which allowed Web services like Web-calling provider Skype to run over most wired networks, and to grow and prosper faster.
Ever since, Skype and other services have lobbied the FCC to impose similar, so-called net neutrality rules on wireless networks of carriers such as Verizon Wireless and AT&T Mobility. The agency’s chairman, Julius Genachowski, has said he’d like to extend net neutrality rules onto wireless networks.
Now, however, Genachowski's ability to go ahead with the reforms may be severely crippled. While the FCC could appeal the court’s decision, that could be a drawn-out process. And it’s likely to halt any new net neutrality rulemaking and proceedings. That’s bad news for Skype, as well as a myriad of other Web services that depend on being able to run over various carriers’ networks to grow. These companies will have to work with the carriers to gain access to their networks via business negotiations – as Skype has already done with Verizon Wireless.
Telecom giant says it has completed its plans for expansion, and while not ruling out further deployments, the firm doesn’t have any more expansion plans at the moment.
Listen up, wireless industry. If you promise users high-speed mobile Web access — and your network actually delivers — subscribers will flock to your product.
Ask Clearwire. An average Clear service user consumes more than 7 Gigabytes of data per month, says Clearwire, which delivers access at speeds, it claims, that are up to four times faster than those available for laptops from cellular service companies. Clear allows people to plug a tiny card into a laptop's USB port to surf the Web.
That's equivalent to an average user streaming a couple of movies onto his or her laptop a month. While that might not sound like much, it's a lot more usage than what most people are getting out of their mobile laptops and smartphones today. An average iPhone owner only uses up about 500 Megabytes of data a month, estimates independent wireless consultant Chetan Sharma. An average laptop owner likely consumes about double that amount.
Clearwire customers likely use the service more because it's faster. It can deliver a faster speed because Clearwire's network runs on a different technology, called WiMax.
Still, it's an important lesson for other providers, such as Verizon Wireless and AT&T Mobility. They are investing billions to beef up their networks, and they will eventually see as much per-user broadband use. They'd better plan for it – or, else, cap the amount of bandwidth their customers can use up in order to prevent their networks from being overwhelmed with traffic.
Listen up, wireless industry. If you promise users high-speed mobile Web access — and your network actually delivers — subscribers will flock to your product.
Ask Clearwire. An average Clear service user consumes more than 7 Gigabytes of data per month, says Clearwire, which delivers access at speeds, it claims, that are up to four times faster than those available for laptops from cellular service companies. Clear allows people to plug a tiny card into a laptop's USB port to surf the Web.
That's equivalent to an average user streaming a couple of movies onto his or her laptop a month. While that might not sound like much, it's a lot more usage than what most people are getting out of their mobile laptops and smartphones today. An average iPhone owner only uses up about 500 Megabytes of data a month, estimates independent wireless consultant Chetan Sharma. An average laptop owner likely consumes about double that amount.
Clearwire customers likely use the service more because it's faster. It can deliver a faster speed because Clearwire's network runs on a different technology, called WiMax.
Still, it's an important lesson for other providers, such as Verizon Wireless and AT&T Mobility. They are investing billions to beef up their networks, and they will eventually see as much per-user broadband use. They'd better plan for it – or, else, cap the amount of bandwidth their customers can use up in order to prevent their networks from being overwhelmed with traffic.
- Verizon Wireless officials are saying their plans to roll out 4G Long-Term Evolution networks are coming along swimmingly. LTE trials in Boston and Seattle reportedly saw peak download speeds of 40M to 50M bps and peak upload speeds of 20M to 25M bps quot;significantly faster quot; than cu...
Leap Wireless: No Easy Sell
Leap Wireless has hired Goldman Sachs and asked its board members to consider selling the company, according to The Wall Street Journal. Leap's shares jumped 13.1% today, to $14.92, amidst investor hopes of a quick deal.
Chances are, selling Leap won't be easy, however. As Michael Nelson, an analyst at Nelson Alpha Research, points out in his Feb. 1 note, "We believe an acquisition by AT&T or Verizon is unlikely, owing to significant regulatory hurdles associated with the companies' high market share at 30% and 32% respectively." A deal would mean major divestitures.
The most likely buyer, MetroPCS, has long resisted merging with Leap. The two companies' cultures differ, and its management had been known to exchange potshots during a prior merger attempt.
Moreover, the combination would basically bring together two companies that are struggling to grow and prosper. In the first nine months of 2009, Leap's losses mounted. Metro is in the black, and growing, but that may change. Amidst rising competition, both companies have been aggressive on pricing, and Metro's financials could suffer as a result. "We expect no free cash flow generation in 2010 and note that next year's free cash flow generation will be highly dependant on how far the company can cut capital spending," Pali Capital analyst Walter Piecyk wrote in a Jan. 14 note.
Leap has other options: A private-equity investor could take an interest in Leap, or facilitate a Leap-Metro merger. A foreign telco could buy Leap to gain a toehold in the U.S. market.
Sprint Nextel’s Ad Spending Skyrockets
Ad spending by wireless companies is going through the roof. Sprint Nextel's ad spending might have hiked 40% in 2009 over 2008, according to Jan. 22 report from Sanford C. Bernstein analyst Craig Moffett and TNS Media Intelligence. It now adds up to 4.4% of Sprint's revenues -- double the level of its peers.
Yet, whether Sprint's aggressive marketing has paid off is debatable. "The astronomical growth in ad spending by Sprint is not translating into increased gross additions," Moffett writes. "Sprint accounted for 26% of Big Four ad spending, but just 14% of Big Four post-paid gross additions." While Sprint is struggling to retain its subscribers, Verizon Wireless, which actually slashed its ad spending 7% last year, has managed to grow its customer base. While ad spending by U.S.'s six largest wireless carriers declined steadily throughout 2008, it jumped 4.3% last year, Moffett estimates.
What's clear is that carriers' ad spending no longer translates into subscriber gains. As Sprint has kept losing subscribers over the past several years, many analysts blamed that on lower advertising spending by the company. Well, now that Sprint has ramped that spending up, it's not helping as much as hoped.
Qualcomm’s MediaFlo to Come to the iPhone
On Jan. 6, Qualcomm announced that accessories maker mophie has built an antenna to catch Qualcomm MediaFlo TV's programming into its cases for the iPhone and iPod touch. The move will allow Qualcomm to sell its TV service while bypassing wireless service providers, which haven't been as successful as hoped in pushing the service thus far.
Carriers like AT&T and Verizon Wireless have long offered the MediaFlo service for select phones carrying Qualcomm's antennas, but it's not taken off as fast as many analysts hoped. Many people balk at paying a monthly fee for the service when they can get plenty of free programming online. And the market growth has been inhibited by the limited availability of MediaFlo-ready phones. The iPhone -- one of the most popular smartphones in the world -- had lacked the feature.
Now that an antenna is being built into a smart smartphone case, at least one of the barriers to MediaFlo's adoption will come down. iPhone fans will no longer have to wait for Apple to built the antenna into the smartphone in order to receive MediaFlo broadcasts. They will still have to pay Qualcomm fees for using the service. But at least Qualcomm won't have to share the revenues with the carriers.
Later on, mophie could make similar cases available for other devices, such as BlackBerry and Android-based phones, I suspect. Qualcomm is sure to benefit from no longer having to depend on carriers for so much of its MediaFlo traction and revenues.
Skype Talks Cooperation With Avaya
Now that gearmaker Avaya and Web-calling service Skype share a private-equity owner, the two companies are discussing ways they can better work together. "We are having conversations with [Skype]," Avaya CEO Kevin Kennedy said in an interview today. Kennedy didn’t go into detail, but these talks most likely focus on how the companies can work together, as opposed to some sort of combination of operations.
It's not difficult to imagine Avaya helping Skype enter new markets, such as the premises of its large business clients. While Skype's Web-calling service is already widely used by small businesses, it's yet to prove that it's reliable enough to serve the needs of large enterprise customers. Perhaps Avaya, whose business is focused on the enterprise, could help Skype make its Web-calling service more attractive to such large companies.
What's more, Skype could be integrated into Avaya's products, which include certain Nortel gear (Avaya closed its Nortel acquisition today). Nortel has long helped carriers like Verizon service their corporate customers. By integrating its offerings with Skype's, Avaya could help reduce these customers' telecommunications bills.