Tech Untangled - Information at the intersection of Technology and Business

T-Mobile USA has launched a wired phone service for $10 a month, plus taxes and fees, to its wireless subscribers in the Seattle and Dallas-Fort Worth areas. The service, called “Talk Forever Home Phone”, comes with unlimited local and domestic long distance calls. This is a VoIP service that runs over a broadband connection, and in that sense, it is similar to VoIP offerings from the likes of Vonage. Talk Forever Home Phone will likely be available nationally in a few months. It works via a special Wi-Fi wireless router that you must buy, with a two-year contract, for a $50 one-time fee . The router has two phone jacks to connect 2 standard corded or cordless phones. The router can either replace or supplement your existing wireless router and connects to the T-Mobile cellphone network. No other hardware is required from T-Mobile (e.g. you can use your own cordless or corded phones with it).Talk Forever customers must be on a T-Mobile individual plan costing at least $39.99/monthor a family plan costing at least $49.99/month.Talk Forever Home Phone has some significant downsides. It doesn’t support faxes, home-security systems and other devices that rely on dial-up modems. Also, unlike in POTS phones, your home address is not automatically transmitted to 911 emergency centers - the customer has to manually supply that address to T-Mobile during signup (and then change it whenever the address changes). This issue exists with any residential VoIP service. Cord-cutters can transfer their landline phone number to this new service, but it cannot be shared with the T-Mobile cellphone number. Also, the cell phones addressbook doesn’t transfer to the home phone (after all, addressbooks are generally local to the cellular handset).

This is similar to T-Mobile’s HotSpot AtHome program, which allows subscribers to place calls over their broadband connection using special Wi-Fi-equipped cell phones. The difference is that HotSpot AtHome uses the cell phone, while this Talk Forever Home Phone works with any standards corded or cordless phone. In both cases, T-Mobile is trying to get more people to give up their traditional landlines, but the new plan allows them to keep the familiar home phones as well as the home number.

Again the biggest losers out here will be pure-play VoIP providers such as Vonage! Not that there’s a complete overlap, but T-Mobile is positioning itself to carve out a chunk of Vonage’s customer base. This is waaaay cheaper than Vonage (doesn’t have all the features of Vonage, though) and will provide a better value proposition for those looking for cheap home service AND a mobile solution (users will have one bill for both at home and on-the-go voice service). Plus T-Mobile can market this cheaper than Vonage can because it already has a bigger customer base.

No doubt that this will be another nail in Vonage’s coffin - Vonage will now have to work even harder to survive

The 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.

Qualcomm got a breather now, and so did a number of its key customers. The Ban on the importation of new 3G handsets containing Qualcomm chips is stayed while an appeals court reviews the merits of the case. The United States International Trade Commission had imposed the ban in June as a remedy to its finding that Qualcomm infringed on a Broadcom patent for power management. While this may be buying time for Qualcomm, it is buying a very important time, because wireless service providers such as Sprint Nextel and Verizon Wireless typically sell a significant portion of handsets in the holiday season starting October.

Besides Qualcomm, handset manufacturers such as Samsung, Motorola, Sanyo, Kyocera, and LG will benefit by being able to sell 3G new handsets (the ban was limited to new models of 3G handsets). Cellular carriers such as Sprint Nextel and to a lesser extent AT&T will benefit. Verizon Wireless Struck a Deal with Broadcom by paying $6 to Broadcom per handset to avoid the ban, so it’s not bound by the ban on importation of 3G handsets (or the stay of the ban). Sprint Nextel was also relying on handsets that had a “workaround” from Qualcomm that avoided using Broadcom’s patent, although Broadcom was expected to challenge the workaround in court.

The Court of Appeals for the Federal Circuit believes that the ban would unjustly harm  Qualcomm customers. The stay of the ban is a major psychological boost after the company’s recent setbacks on the patent infringement case with Broadcom. This will give Qualcomm a much needed breather before seeking a complete reversal of the original infringement finding and the ban.

Diebold and NCR Corporation, leading players in the automated teller machines market, are developing technologies to enable cell phones or PDA’s/Smartphones to transact with an ATM. NCR has been developing technology for linking hand-held communications devices with ATMs since 2001. NCR already uses such technology in Denmark and Singapore.

Over the past 18 months, Diebold has won five U.S. patents for applications that enable mobile devices to interact directly with bank ATMs. The patents involve allowing banking consumers to use their mobile devices to locate and get directions to the nearest ATM, order cash withdrawals remotely, generate electronic checks, transmit wireless payments, and generate various other transactions by linking to an ATM. Diebold claims the technology underlying these patents exceed current mobile banking practices, namely online transactions.

One patent allows mobile phones to interact directly with ATMs and bank systems for cash withdrawals, with protection against card-skimming or personal identification number surfing at ATMs. Another patent allows mobiles to work at checkouts or banks to pay payments via secure electronic checks. A third patent allows bank networks to receive wireless communications from mobile phones for account information. The fourth allows bank ATMs to communicate with mobile devices through a cellular network or other wireless methods. The fifth patent allows users to interact with ATMs through the wireless device’s display and keypad instead of the display and keypad on the ATM.

For one, those not comfortable with entering a PIN code in a public place (ATM) can use a mobile device to enter the PIN. Here’s how it works: First, the mobile device user would receive a one-time code, which would then be entered when arriving at a specified ATM. The user could insert an ATM card and the one-time code, and the ATM would then know to complete the transaction.

A study last year found that people in the United States conduct about 8 billion ATM transactions annually. The Dove 2006 ATM Deployer Study shows that ATMs dispense about $600 billion in cash each year. With close to 200 million handsets in use in the United States, it’s easy to see that there may be a significant overlap between ATM users and mobile phone users.

Diebold has estimated such applications will be widely available within three to five years. I doubt anything mainstream in terms of accessing ATMs from mobile phones will happen soon. But, look out for banks to start testing some of these services, mainly out of security concerns.

When we first talked about Apple going with T-Mobile as the wireless service provider for the iPhone in Germany, it was just a rumor. Now, T-Mobile, the wireless arm of Deutsche Telekom has confirmed that they have had talks with Apple about selling the iPhone in Germany.

Discussion of the iPhone’s arrival in Europe intensified following reports last week about a deal between Apple and mobile phone operators in three key European markets: Germany’s T-Mobile, France’s Orange SA and Britain’s O2 (UK).

Not that a deal has been confirmed, but Apple is expected to announce its German wireless partner soon. The holiday season, where a significant amount of wireless phones are purchased, is just around the corner, so we can expect a deal to be announced within the next 1.5 months.

Qualcomm has lots of friends, but Nokia is not one of them. In fact, Nokia is almost an arch enemy; this club includes Texas Instruments (TI), who with Nokia, was trying to develop CDMA chips for Nokia phones (mostly), but this didn’t work out because Qualcomm apparently was charging too much to license its patents for TI. That was several years ago, and TI’s quietly gave up on developing CDMA chips.

Fast forward and there’s a new squabble between Nokia and Qualcomm. The licensing agreement that allows Nokia to use Qualcomm’s CDMA (Code Division Multiple Access) patents expired in April 2007, and the two are struggling to extend this agreement. Without licensing Qualcomm’s patents, Nokia cannot sell 3rd Generation (3G) phones or other handsets that use Qualcomm’s CDMA technology. Likewise, Qualcomm will also have to stop selling chips that rely on Nokia patents. So its in both parties interest to eventually work out an agreement. Apparently, Qualcomm CEO Paul Jacobs thinks a final deal with Nokia will take several years.

The biggest likely reason for the holdout is that Nokia wants to reduce the licensing fee it pays Qualcomm, especially since Nokia has inserted some of its intellectual property into 3G standards. While Nokia has a stronger hand than before, Qualcomm has the ultimate upper hand.

Now, Nokia is trying other means to tame the tiger called Qualcomm.

For one, Nokia and others have filed complaints with the European Commission late last year, charging Qualcomm with anti-competitive behavior, accusing Qualcomm of charging the same rate to license its patents for WCDMA as it does for CDMA2000 even though its contribution to WCDMA is much smaller.

Next, Nokia filed a complaint with the U.S. International Trade Commission alleging that Qualcomm’s products infringe on 5 Nokia patents that improve the performance and efficiency of cell phones, as well as enable lower manufacturing costs, smaller product size and increased battery life. Nokia is asking for a ban on Qualcomm chips in the United States. Interestingly, Qualcomm has filed its own patent-infringement charge against Nokia with the ITC, and the issue is scheduled to go to trial next month.

If Qualcomm gives into Nokia, Qualcomm’s other patent licensees such as Samsung Electronics and LG Electronics will likely push for cheaper licensing deals with Qualcomm !

In the least, this whole patent thing seems to be taking new twists and turns every month!

Earlier this week, Qualcomm’s General Counsel Lou Lupin resigned in the face of mounting legal battles related to Intellectual Property in 3rd Generation Wireless systems. Rightfully so, because Qualcomm has had several setbacks in its patent disputes with Broadcom and Lou was responsible for directing these battles. Moreover, for a company like Qualcomm that has been so successful so far and collected so much royalty from patents, Broadcom has to be a big thorn on its ego (I contend that any company as successful as Qualcomm has sufficient corporate big-ego and arrogance)

First, Qualcomm lost its patent dispute to Broadcom (Qualcomm is appealing). On top of it, Broadcom had the nerve to ask for $6 for each handset sold with a Qualcomm chip (See Broadcom gives Qualcomm a taste of its own medicine for some background).

Second, the U.S. International Trade Commission on June 7th banned the import of future models of 3G handsets with Qualcomm chips that infringes a Broadcom patent. Qualcomm’s pursuit of a stay of the import ban hasn’t materialized so far.

Third, the Presidential veto that Qualcomm was seeking was rejected (see Sticking it to Qualcomm).

Fourth, Verizon Wireless, Qualcomm’s biggest partner in the U.S., does U-turn and pays Broadcom to import EV-DO mobile devices. As part of the deal, Verizon also will drop its part in the effort to overturn the ruling.

Fifth, a federal judge in San Diego last week excoriated Qualcomm for “gross litigation misconduct” in another dispute with Broadcom, saying Qualcomm waived rights to enforce two patents on compressing video signals because it deliberately concealed them from an industry standard-setting group.

Sixth, a judge last Friday tentatively doubled Broadcom’s $19.64 million damages awarded against Qualcomm in May for the patent infringement.

And now, seventh, the head-honcho of Qualcomm’s patent battles has resigned (No need to feel too bad, he made $2.5 million in stock options on Fed-20-20007 and another $1 million in march-06)

In addition, Qualcomm is also involved in another legal dispute with Nokia, the world’s biggest mobile phone maker.

All this bad news, and there’s probably more to come, makes it more likely that Qualcomm will come down from its high throne and settle with Broadcom. Of course, it’ll be billed as a mutual agreement in the best interest of society!

Ooma just announced that it is taking pre-sales orders for the ooma Hub™ and ooma Scout™ in advance of the company’s consumer release slated for September 2007. Pre-sales orders will have for first priority fulfillment next month when the company opens up the online store.

Pre-sale Ooma systems come at the introductory pricing of $399 for a ooma Hub™ and $39 per Ooma Scout™ device. However, buried within this announcement (thanks Mike P!) is the news that Ooma is planning to increase prices!!!!!! Here it is:

In 2008, when the introductory pricing period expires, the ooma Hub™ device will carry a suggested retail price of $599.

I’ve had some concerns about Ooma, as outlined in Wanna get Ooma, Be Careful!. I’ve also outlined a preliminary comparison of Ooma and Skype, concluding that Skype is a better alternative for most people.

$600 for a device for free domestic long distance!!!! One has to have a really long investment span to see how this becomes a better value proposition than something like Skype. Frankly, I don’t see many users flocking to this anymore!

Ooma is just getting ready for lift-off and somehow I feel that it’s quickly forgetting about the consumer and thinking only about its profits (or perhaps the VCs are trying to cash out quickly). Or better yet, maybe Ashton is trying to Punk’d the general public this time!

It was a sad fate for Amp’d.

On the other hand, the future for Prexar Mobile looks brighter than ever. Here’s why; Prexar Mobile, a small mobile virtual network operator managed by a nationwide CLEC, says it has signed a deal to acquire Amp’d Mobile’s customers. Prexar is hoping this move will help its nationwide expansion.

Amp’d Mobile customers have been notified of the option to switch via a series of 5 text messages. Prexar says that its customer service centers have already been “pounded” with customers calling and signing up. No surprise there because Prexar has only about 15,000 wireless customers, and it probably has very minimal customer service agents. Amp’d had about 200,000 customers, and with all of them without service and probably desperately looking for an alternate provider, it’s no wonder Prexar’s customer service is getting pounded. Amp’d Mobile customers better move fast.

Good thing is that customers will be able to keep their handsets, except those who have the “Hollywood” or E816 or from Motorola. Those customers have to buy a new phone. Since Amp’d was on Verizon Wireless, it would seem logical that Prexar is on a carriers that uses the same technology (CDMA2000), otherwise subscribers wouldn’t be able to use the same wireless device. According to Prexar’s Web site, the company “provides service on the same network as Amp’d” Since they don’t explicitly call out Verizon Wireless, it’s probably not (but they wouldn’t want to spook customers by saying its not). Prexar most likely is on Sprint, a MVNO friendly carrier, or perhaps on Alltel or U.S. Cellular.

Prexar goal is to help Amp’d Mobile customers retain voice and text only at first. Prexar doesn’t have the fancy schmanzy services that Amp’d had, but it says that is working on a longer-term plan to add a content delivery system. Amp’d Mobile’s vast content library is on the auction block, and I doubt Prexar will purchase those rights for a small number of subscribers.

Interestingly, Prexar’s calling plans are much higher than what Amp’d offered and are similar to what the majors offer. The main difference is a two-step billing process where it bills in advance for the base plan and for usage in arrears. Here’s Amp’d Price Plans:

And here’s Prexar’s calling plans

First these customers got Amp’d (and you thought that was a good thing), but now they are getting screw’d by Prexar’s price plans. At these price plans, why not join a major wireless operator such as Verizon Wireless or Sprint?

Ooma has a lot of buzz and hype around it, despite still being in private beta. But let’s look beyond the hype and compare Ooma with other telephony services. I’m specifically choosing Skype although there are other players to consider. This will give a good idea how Ooma stacks up against Skype and for who Ooma may make sense.

First, looking at features, both Skype and Ooma offer unlimited calls to telephone numbers in the U.S. and voicemail. In addition, Skype has a nice colorful user-interface where you can set your presence status and see your contacts’ (buddies) presence status. There’s also Instant Messaging (IM) capability, and the ability to call both telephone numbers and buddies, no matter where they are in the world. While Ooma charges for all international calls, Skype only charges for International calls to telephone numbers (calls to buddies anywhere are free). Skype also higher voice quality because it uses high-quality codecs (e.g. iLBC) that provides better than toll-quality (what you get with landline phones) that is even good for music. The good thing about Ooma is that you can just use a single telephone number to reach all the contacts (kinda sorta like GrandCentral). Whereas for Skype, there’s a buddy name and a telephone number.

Also, neither offers 911 service, so you still need a local service for 911. In addition, Ooma users your local telephone service. Of course, a broadband service (e.g. DSL, cable) is also required.

Next, Ooma has several concerns about it service, especially relating to privacy. It’s all on this page, and there’s no need to replicate it.

Last but not the least, lets look at price. Ooma costs a flat one-time fee $399. There’s talk about a monthly charge for premium services, but that’s in the future so let’s ignore that for now. On the other hand, a Skype-enabled cordless phone or a WiFi phone costs about $150 (the Netgear WiFi Phone is $120 after a mail-in-rebate). The SkypeOut service to call anyone in the U.S. and Canada is $29.95 per year. SkypeIn (so your buddies can dial a phone number to reach you) with Voicemail costs $60 per year. That’s $90 per year or a whopping $7.50 per month. The cost of a Skype system is even cheaper, considering that Ooma costs up front and Skype costs on an annual basis. Skype devices also come with some nice extras - the SMC WiFi Phone ($160) comes with a free FON WiFi Router and + 12 months of Skype Voicemail. You can use the WiFi router for other purposes as well and comes with a revenue-sharing opportunity.

The break-even price is about 3 years. In other words, Ooma is cheaper if you keep it for more than 3 years. Till then, Skype is the cheaper option. Overall, Skype is a better option for most people because their time-span for electronics is less than 3 years. Three years is a long time - people tend to break things, want to get new stuff, or wont have the receipts when equipment breaks down