Verizon Wireless selects LTE as 4th Generation Wireless Technology

verizon_wireless_logo.jpgVerizon Wireless has confirmed plans to use Long Term Evolution (LTE) technology as its 4th Generation (4G) technology. Today, Verizon Wireless uses CDMA2000 technology and most of the rest of the world (including Verizon Wireless’ European half-parent Vodafone Group Plc.) uses W-CDMA (also called UMTS) for 3G services. These two technologies are similar but are not compatible.

With this move, Verizon Wireless will have a cellular technology compatibility with Vodafone, thus facilitating better operational synergies for the two companies as well as making it much easier and cheaper for subscribers that travel Internationally between the US, where Verizon Wireless operates, and Vodafones coverage areas in Europe and Asia.

Also, this move could be a blow to Qualcomm, the developer of the CDMA2000 technology, because Qualcomm has a very strong position in CDMA2000 as the primary (only?) chip vendor and holder of the majority of Intellectual Property but has a much less Intellectual Property and marketshare as a potential chip vendor in LTE.

Qualcomm has been working on a rival next generation technology known as Ultra Mobile Broadband, but 3GPP, one of the main standards bodies developing 3rd and 4th Generation technologies, recently selected LTE as its 4G migration path. According to the CDG, there are 400 million CDMA2000 and 21 million CDMAOne (IS-95) subscribers worldwide. Verizon Wireless currently has 64 million subs (mostly CDMA2000) or about 15% of the worldwide base. Losing 15% of the market in the future is significant but even more significant because it may compel other wireless operators to ditch the CDMA2000 4G migration path in favor of LTE. This move also could be a blow to WiMax, a rival 3G technology supported by Sprint Nextel that was recently designated as a 3G technology.

The Verizon Wireless and Vodafone will begin testing LTE technology in 2008 with equipment suppliers Alcatel-Lucent, Ericsson, Motorola Inc., Nokia- Siemens, and Nortel Networks.

It is estimated that LTE would be commercially available in 2010 or 2011 and Verizon Wireless and Vodafone may have a common platform by around 2015 (Note: Telecom doesn’t move that fast!)

Will Amazon Kindle a better MVNO model?

amazon_kindle.jpgThe Mobile Virtual Network Operator (MVNO) business in the U.S. is hardly making any headlines these days. That’s because some of the biggest MVNO’s have lately kicked the bucket. First, there was Amp’d Mobile where the management engineered a spectacular demise by burning cash and providing service to those who didn’t pay (a cellular sub-prime gamble of sorts). Then there is ESPN Mobile, which bit the dust after several agonizing months of trying to sell a high priced sports-oriented offer that not even loyal fans would bite. These are just two examples that sealed the fate (see related article on Why U.S. MVNO’s will find it hard to survive) of the traditional MVNO model. However, all hope is not lost. The MVNO business can still be successful – for the right innovator.

In steps Amazon into the picture. Amazon has shown time and again that they can come up with a feasible business model or two that users find compelling and easy to use. For example, Amazon revolutionized selling books online and then made is super easy with features such as 1-click checkout. Then there’s that elastic computing cloud, which I think has a lot of potential.

And now, Amazon has come up with its next innovation – an electronic book reader called Kindle that sells for $399 and makes it easy to read and easy to download e-books anywhere, anytime. Kindle can view, select, purchase, and download electronic books over a high-speed cellular network. Users can also purchase a newspaper or subscribe to daily newspapers, magazines, and blogs for a monthly fee. Newspapers are delivered overnight and blogs are updated several times a day.

Amazon isn’t the first to sell an electronic book reader, but its the first to have an electronic book with the following features:

  1. Easy-on-the-eyes E-Ink. The Kindle, like the Sony Reader, has an electrophoretic display from E-Ink that is designed to look like paper. An LCD screen, a popular choice for e-readers and smartphones, causes more eyestrain.
  2. Download e-books anytime, anywhere using a wireless broadband speeds (no need to look for a hotspot)
  3. No need for a wireless subscription (no contracts, no bills, no worries)

What’s interesting here is that there is no wireless/cellular subscription required. Imagine a wireless device that can connect to a high speed cellular network but doesn’t need a subscription? This is just what Amazon has done and perhaps may have opened up a whole new use for mobile data networks. This contrasts in many ways with the iPhone, which requires a cellular contract, a subscription to cellular Broadband service called EDGE, but doesn’t even allow wireless downloading of songs (except via WiFi hot-spots).

The Kindle operates on Sprint Nextel’s 3G cellular network. But user will not see a bill for wireless service – it’s included in the price of the content. The Kindle is “always-on”, that is always connected to Sprint’s 3G EV-DO network (slides down to the slower 1x network when EV-DO is not available). Interestingly, since Sprint EV-DO network was recently upgraded to Rev A, where users typically get download speeds of about 800 Kbytes, e-books should download quickly. My guess is that the device will not roaming on other networks. Users can also turn the radio off, which will come in handy in airplanes, and will extend the battery life from about two days to one week.

Users can also “sideload” purchased e-books onto the Kindle. In any case, every book purchased is backed up on Amazon along with any bookmarks or notes added by the user. I know that sometimes devices can go bad, so this is one of the most important features for me. I’ve always wanted the backup feature with iTunes, but I guess Apple sees things very differently, and they also have to grapple with a messed up Digital Rights Management (DRM) system.

E-books cost about $9.99, while newspaper subscriptions start at $5.99 per month. There is a small music player on the device for background music while reading, but Amazon isn’t selling music over EV-DO, so users will have to sideload their own songs. This is not a great choice (perhaps it will be added later), because Verizon Wireless claims that 95% of song downloads from its VCAST music service is over-the-air (and its priced higher than for sideloading)

I think Amazon has another great idea with Kindle. It has already sold out in the first 5.5 hours. This is going to be another great product and a good boost for Wireless Broadband services.

Voice over IP revenue around the World skyrocket

Last month, I wrote that US Voice over IP (VoIP) subscriptions are skyrocketing. That was about VoIP in the U.S., but the VoIP story around the Globe was no different. Worlwide revenue from retail Voice over IP (VoIP) services almost quadrupled (4x) from $1.834 Billion in 2005 to $6.908 Billion in 2006, according to research by Point Topic.

North America, with the third highest number of VoIP subscribers (8.6 million), generated $2,411.7 million in revenue. Western Europe, with the highest number of VoIP subscribers, generated $2639 million in revenue. The Asia-Pacific region, a close second in terms of VoIP subscribers with about 14.5 million generated $1750 million,

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Interestingly, North America had the highest Monthly average revenue per user (ARPU) at $20. Western Europe and South and East Asia had comparable ARPU at $15, while both Asia-Pacific and Latin America had an estimated ARPU of $10.

While some of the better known U.S. based VoIP providers, ala Vonage and Skyrocket, may bring up concerns about the viability of VoIP (and there are strategic issues with standalone VoIP service), VoIP is a phenomena that is here to stay – primarily because of the cost advantages and the flexibility and extensibility that comes with IP technologies. The cost advantage is because an IP network can be shared by multiple services or in other words, IP allows multiplexing of services. For example, with an IP network, a user can have both a VoIP session and a Web browsing session at the same time (whereas with traditional circuit switched voice service, both voice or fax cannot be used simultaneously on one connection). The flexibility and extensibility comes from the ability to transform voice into multimedia seamlessly as well as transform the service experience with enablers such as Presence.

Which Countries have the Highest Broadband Adoption?

If you ever wondered which countries are leading the broadband revolution, at least in terms of broadband adoption, you have it here. Broadband adoption itself is not as important as what broadband adopters do with it, but it provides an idea of which countries will be the leading users of using Internet services and perhaps the leading countries for starting Internet-based ventures.

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With more than 63 million subscribers on board, the U.S. has the most broadband subscribers of any country, but China tops the DSL subscriber list, with over 44 million of its 59 million broadband users connected via DSL. China is also quickly catching up in total Broadband subscribers and will likely overtake the U.S in the next 1-2 years. This should be no surprise, given that China has more than 3 times the population of the U.S. Overall, Broadband adoption across the world grew at about 5% from Q1 2007 to Q2 2007 (quarterly growth) and about 30% for the year ending Q2 2007.

The results, prepared by industry analyst firm Point Topic, also indicate that DSL continues to dominate broadband access, with almost 66% of subscribers – more than 200 million out of the world’s 313 million – using DSL. North America maintained its reign over the global broadband market with 16% of the world’s subscribers. In Western Europe, 72 million of the 86 million broadband subscribers use DSL. The Eastern European DSL market remains small, but grew at 63% in the first half of 2007.

FCC bans Exclusive Contracts for Cable TV

The Federal Communications Commission (FCC) recently voted to ban exclusive contracts between cable TV providers and the owners of apartment buildings, condominiums and planned subdivisions. This is a good move by the FCC (see Ushering a New Era of Consumer Choice in Set-Top Boxes for another cabled related good move by the FCC), which is expected to promote competition and reduce cable rates for an estimated 100 million consumers.

The problem with long-term cable contracts is that if an apartment, condominium, or subdivision enters into an exclusive agreement with a cable company, then other TV providers are hampered from offering service, even if subscribers want another service provider. This issue is made worse by exclusive cable contracts that last indefinitely (a small number of idiots have apparently done this!). Frankly, I don’t see much benefit in exclusive cable contracts when satellite is available.

I am in this exact situation – the town I live in has an exclusive contract with a small cable TV provider. Incidentally, the contract was given to a close relative of the mayor – something smells fishy here! Residents here can get satellite service, but they still have to pay the mandatory charge for the cable TV service whether they use it not.

The biggest benefit of this ruling may be for telephone service providers who offer TV services over Fiber (FTTP or FTTH) or copper (e.g. AT&T U-Verse). Of course, some cable TV competitors will benefit as well, as they will be able to serve apartments, condominiums, and subdivisions that were not approachable due to long term contracts.

However, there are benefits to long-term exclusive agreements; Property owners can negotiate rates in return for guaranteeing a large number of customers for cable providers, who otherwise might be reluctant to invest in setting up the last mile connection into buildings. Overall, everyone benefits – the cable provider gets subscribers, customers (tenants) get cable service, and property owners are able to market their properties better because the property has cable service. The customer lock-in is the only hitch!

The question is whether competitive cable providers have access through the same wires or does every cable service provider have to develop its own last mile network. I suspect it is the latter, which also means that property owners may have to pay more to rewire buildings for competitors – this is going to make this ruling mostly ineffective.

The FCC ruling is a good first step, but I’m not sure if this will resolve many of the problems associated with exclusive contracts. As for me, I am hoping that I have the choice to cancel my cable service and not have to pay for it (I can get satellite for less)

Your thoughts?

AT&T cuts U-verse IPTV rollout numbers

AT&T just cut its forecast for the number of homes that will have access to U-verse, the service that sends TV through home phone lines.

Now, AT&T expects U-verse to be available to 17 million homes at the end of 2008, down from a previous estimate of 18 million. According to AT&T this delay is due to preparing for U-Verse rollout in the former BellSouth territory, which AT&T acquired last year. As this is preparatory work, it will not result in U-verse being available to additional homes by 2008.

AT&T has delayed U-verse rollout several times, so no surprise here. IPTV so far hasn’t been a big hit in the U.S., with Europe and Asia leading the U.S. in terms of IPTV subscribers. Nonetheless, service providers see IPTV as a key component in providing bundled services and “three-screen” services (i.e. mobile screen, desktop screen, and TV screen).

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