tabUp - PJ Louis LLC

Why the Time May Not Be Right for a Cisco-Skype Deal

Comments on article found at: <a href="http://blog.connectedplanetonline.com/unfiltered/2010/08/31/why-the-time-is-right-for-a-ciscoskype-deal/">http://blog.connectedplanetonline.com/unfiltered/2010/08/31/why-the-time-is-right-for-a-ciscoskype-deal/</a>   The biggest problem with these “deal rumors” is that the majority of the time they are designed ot get people excited over the company in question. The real question that should be asked is: Does Cisco want to compete against its customers? Many analysts will find some way of conjuring up reasons why telecom players like Verizon and AT&T are giving up the voice business in order to spend money on entering another. Verizon is not giving up the voice business. AT&T is not giving up the voice business. The voice business is no longer the same old voice business of 1983 (pre-Divestiture AT&T). Today’s voice business is a converged business of visual, audio, and other content plays. Verizon and AT&T will never stop providing voice; voice will be provided along with their entire menu of services. What we have today is no opportunities for a “voice only business”. Skype is a free VoIP business. It has many, many users and we all get to use the service for FREE. How in the world does anyone actually expect Skype to have a valuation of $5 Billion? If I am correct, Skype’s filing to the SEC proposed a $100 Million raise on the street. If you do not generate revenue from the bulk of your users, then how to do you value the company at $5 Billion? Are you counting heads the way the Internet business used to count pairs of eyes? Is Cisco interested in buying a company that only provides “voice”. In a day an age when handsets, that 20 years ago my colleagues and I could only imagine as science fiction, now support everything from voice only calls to web surfing to mobile commerce to document editing to image projection to mobile banking; why in the world would anyone want Skype? Cisco already has a platform for unified communications, therefore Cisco understands telecommunications (voice and media). Why would Cisco buy Skype? Is Cisco interested in Skype because of the millions of free users? Is Cisco looking at acquiring the customer list of Skype? Telecom service providers are no longer freaked out by Skype because Skype is not a threat. In short, other than the stock brokers who stand to make a pile of coin on a Skype IPO, can someone please tell me why Cisco needs Skype? I am wide open to hearing other rational views.

9/1/2010 3:54:22 PM (PJLouis)

Google Purchases Angstro and the Mystery Continues

Comments on article found at: <a href="http://online.wsj.com/article/SB10001424052748703618504575459713643013500.html?mod=WSJ_Tech_LEFTTopNews">http://online.wsj.com/article/SB10001424052748703618504575459713643013500.html?mod=WSJ_Tech_LEFTTopNews</a>   I fear Google is trying to be all things to all people. In other words, Google is trying to reach the mass market and compete against the likes of Verizon and AT&T via multiple avenues. I applaud Google for trying to serve the mass market but it appears to me that Google’s efforts are ineffective. Google is competing against established brands like Facebook, Skype, Verizon, and AT&T. Google should have acquired Facebook. Such an acquisition would have gone a long way to putting Google squarely in the social media space. A Facebook acquisition would have at least given me the impression the company was serious about the social media space. A Facebook acquisition would have given any social media/telecom strategy more credibility than the Angstro deal. This acquisition screams one thing: “We are Google and we love doing things the hard way!” As for where Google is ultimately going with all of its initiatives and forays into telecom/social media, I am still not sure what Google’s master plan is.  The mystery continues and deepens.

9/1/2010 10:40:01 AM (PJLouis)

AT&T Sells off Sterling – Makes a Nice Tidy LOSS

Comments on article at: <a href="http://www.wirelessweek.com/News/FeedsAP/2010/08/ibm-closes-14b-acquisition-of-sterling-from-at-t/">http://www.wirelessweek.com/News/FeedsAP/2010/08/ibm-closes-14b-acquisition-of-sterling-from-at-t/</a> You know the economy is a wreck when Wall Street is applauding the sale of a company that had been originally purchased at more than twice the sales price. When AT&T’s predecessor company SBC Communications first acquired Sterling, it did so for a price tag of $3.9 Billion in stock. Now AT&T just sold it to IBM for $1.4 Billion; IBM bought it for a steal. Wall Street was ecstatic over the sale. IBM will integrate the unit into its WebSphere organization; hopefully, the integration will occur without a hitch. AT&T desperately needs the cash. IBM needs to reach deeper into the enterprise marketplace. The sale was needed by both.  The tragedy is that AT&T sold it at a loss.

8/28/2010 9:54:54 PM (PJLouis)

Paul Allen – Comes out Swinging

Comments on article found at: <a href="http://www.google.com/hostednews/ap/article/ALeqM5hGx-HVD3Tdy-aLjHXksocxN8ktmAD9HS3VM00">http://www.google.com/hostednews/ap/article/ALeqM5hGx-HVD3Tdy-aLjHXksocxN8ktmAD9HS3VM00</a>   Folks might be wondering what took so long for Paul Allen to makes how move. I actually don’t think it has taken so long. Patent infringement cases take time to build. The challenge for companies like Google is that Paul Allen has resources to back up his lawsuit. If I were Google, Apple, Facebook, AOL, Netflix, and Office Depot, I would worry about one another. I know nothing about the case theory behind the lawsuit so I am just guessing. The problem with a lawsuit like this is that the individual companies in the lawsuit need to stand together. All one defendant has to do is settle or lose their case and then “they all fall down”. Heck, I have no idea how this case will turn out but Paul Allen is not exactly small potatoes.

8/27/2010 10:06:42 PM (PJLouis)

AT&T Launches Dell’s New Smartphone – Competition for the iPhone?

Comments on article at: <a href="http://online.wsj.com/article/SB10001424052748703447004575449574198576034.html?mod=WSJ_Tech_LEFTTopNews">http://online.wsj.com/article/SB10001424052748703447004575449574198576034.html?mod=WSJ_Tech_LEFTTopNews</a>   Dell’s launching of another smartphone is no surprise, I am just wondering what took so long. Dell may not have released sales figures for its Mini 3i, but I am guessing the China introduction must have worked. China Mobile served as a good test bed for the global marketplace for Dell. The Mini 3i used TUi technology and a stylus as well. Early reviews of the Mini 3i claimed fingerprints were an issue on the screen, it did not come with Wi-Fi, had a 3megapixel camera, and the handset had lots of buttons. What does this all mean for Dell? The answer is “a lot”. Dell’s Aero was launched in China after the Mini 3i. In my opinion, the Aero was the beneficiary of the Mini 3i work (and mistakes). The Aero is an Android phone that weighs less than 4 ounces and has a 5 megapixel camera. The Aero supports Wi-Fi. The Aero is being sold through Dell’s website and cell service is provided through AT&T. One question that comes to mind is: “Is this AT&T’s way of preparing for a future where it does not have an exclusive contract with Apple?”

8/26/2010 8:10:05 PM (PJLouis)

Intel Acquires McAfee; Good or Bad?

Conceptually, the idea of building security into the chip is not new. However, the real question is: Does this particular deal make sense? I have to say this deal makes no sense to me unless Intel keeps its hands off managing McAfee. McAfee is not in Intel’s core business. Like many acquisitions that go wrong; the idea sounds nice but the reality and execution are something entirely different. Worse case for Intel is that McAfee generates cash flow for Intel. I do not want to comment on the product performance of network security and anti-viral companies like McAfee, Symantec, Peter Norton, AVG Technologies, or Kaspersky Labs. Users of these products are consumers of these products for their own reasons. The fact is people change security software programs frequently. Large corporations change security software platforms less frequently than small business and individual users. What we need to focus on is the reason for such an acquisition. McAfee has been losing market share over the years to companies like AVG Technologies and Kaspersky Labs – and for good reason. The question is who benefits from the Intel acquisition more; Intel or McAfee? As I stated, the idea of building security into the chipset is not new. Marrying software to a device is not new – think Windows Operating System and every PC on Earth. What does McAfee bring to the table? Does it bring revenue? Does it bring a customer list? The idea is not new and it is not a bad idea; of course if McAfee cannot keep up with the likes of Kaspersky or AVG then Intel just made one big mistake. Here is a question to consider: Did Intel overpay for McAfee? The acquisition is clearly a strategic acquisition and therefore the acquisition multiple has minimal connection with McAfee’s financials. Intel needs to reach into new markets; especially the mobile market. Intel does not dominate the wireless chip industry. Then again, McAfee is not a player in wireless devices either. McAfee was the cause of millions of computers crashing in mid-2010 when a McAfee definition file update removed a Windows system file causing all of those computers to lose network access. I would say that was a big OOPS. With growing competition, McAfee needed to be acquired. Intel needs a wireless strategy; frankly, I do not think McAfee is the answer to their wishes.

8/19/2010 11:22:41 PM (PJLouis)

Is Sprint Playing Games? WiMAX or LTE?

Comments on article at:<a href="http://www.computerworld.com/s/article/9180584/4G_czar_at_Sprint_backs_WiMax_singularly_?taxonomyId=15">http://www.computerworld.com/s/article/9180584/4G_czar_at_Sprint_backs_WiMax_singularly_?taxonomyId=15</a>   In past articles, I have noted sufficient technical similarities to allow for a WiMAX to LTE migration. In past articles, I have openly voiced support for WiMAX as a 4G technology. I still believe WiMAX is a 4G technology and a viable one to provide service to users today. I can believe that Sprint is looking at LTE and WiMAX simultaneously. Both WiMAX and LTE can run simultaneously on the Sprint Nextel network. WiMAX can be deployed and then later migrated to LTE; not easily but it can be done. This may alarm many stock analysts. However, no one should be alarmed. As I have said in a recent posting, it is all in the timing. The timing I am referring to is market timing and all within the context of a major recession. The recession is still on. Economists are backpedaling on their views regarding a recovery. With this level of uncertainty, do you think it is reasonable to expect Sprint Nextel to stop and re-think the deployment of WiMAX and LTE? I think it is reasonable for Sprint Nextel to rethink the deployment of WiMAX and LTE. A prolonged recession or even sever economic weakness is going to limit consumers’ ability to spend money on luxuries and necessities. If the marketplace’s media demands can be met with current 3G technology, the carriers need to consider LTE as a 4G technology because the market has given the carriers time to develop LTE. However, LTE is not here yet and WiMAX is here. There is a market for WiMAX but not so big that it warrants Sprint Nextel to abandon all thought of LTE because by the time the market recovers sufficient time may have passed to have a commercially ready LTE. Sprint Nextel needs to consider the reality that at this time the economy is in a recession and mobile media appears to be at a critical juncture both in technology development and in market development. The recession has forced consumers to reduce spending on luxuries and necessities, which has affected the demand for WiMAX based services. I believe that a dual path can be expensive but if both technologies are sufficiently different enough in the services they support it may be possible to write a business case to support a dual path. At the end of the day, the consumer will decide what will happen to 4G.

8/13/2010 4:57:49 PM (PJLouis)

Clearwire – Moving Ahead with LTE? Will Sprint Nextel Be Bailing out on WiMax

Comments on article found at: <a href="http://online.wsj.com/article/SB10001424052748704017904575409860401340320.html?mod=WSJ_Tech_LEFTTopNews">http://online.wsj.com/article/SB10001424052748704017904575409860401340320.html?mod=WSJ_Tech_LEFTTopNews</a> I am still a supporter of WiMax as a 4G technology. However, we may be seeing market forces at work here. Buying network equipment is partially about leverage and numbers. The fewer the network equipment buyers there are the less leverage that buying group has over the equipment suppliers. Carriers are always trying to leverage buying group strength to force vendors to lower prices. Carriers as a whole do not actually plan to buy as a group, however, vendors see carriers as a group. The more customers there are the lower the pricing (hopefully). Vendors have to be able to pay their bills. Economies of scale are achieved when there are massive numbers of buyers. This is what is driving Clearwire and Sprint Nextel (NYSE:S) towards carefully examining the potential for LTE. What is occurring needs to be put in its proper context; money is driving the decisions towards testing LTE not technical capability. LTE essentially does not exist except in two places; labs and the minds of the engineers. Is Clearwire doing the right thing? Despite what many talking heads on television are saying, we are still in a recession. People are still losing their jobs and people are spending less. This means one thing for the 4G market revolution, it is being slowed down by economics and not technology capability. Unless there is a large spike in demand for 4G services that cannot be dealt with by 3G, Clearwire and Sprint Nextel are forced to examine the viability of LTE. As time passes, LTE gets closer to becoming a reality. Unless the market is demanding 4G services it would be bad fiscal management to invest in something that is not needed now. This is good carrier management. There may be analysts out there who want to take a shot at Bill Morrow or even Dan Hesse over this issue; however, those analysts would be off-base. Looking at LTE given the current circumstances is simply good carrier management. Clearwire and Sprint Nextel are facing a tough decision in the next 2 or 3 quarters.

8/7/2010 11:22:33 PM (PJLouis)

Fairpoint- Having Trouble Again – Public Interest Standard vs. Bankruptcy Law

Comments on article at: <a target="_blank" href="http://www.billingworld.com/news/2010/06/fairpoint-reorganization-vermont-denies-post-bankruptcy-plans.aspx">www.billingworld.com/news/2010/06/fairpoint-reorganization-vermont-denies-post-bankruptcy-plans.aspx</a> The Vermont Public Service Board rejects Fairpoint’s plan of reorganization (PoR) on grounds that Fairpoint remains financially unsound. In a word; YIKES. The Plan of Reorganization (PoR) is a bankruptcy court approved document that details the treatment of the claims of a bankrupt company’s various classes of creditors. This document is binding on all classes of creditors; even parties who object to the PoR are bound by the document. If Fairpoint decides to travel down the path of engaging the Federal bankruptcy courts in a fight with the Vermont PSB, it would be the first I have ever seen. All public utility commissions operate under the guidance of the public interest standard. The courts operate under the rule of law. Now here is the problem, the public interest standard is a not a real standard. The public interest standard is as much of a political tool, as it is a financial tool and a social tool. In the case of telecommunications, the FCC (Federal Communications Commission) has used the public interest standard to govern policy. The Radio Act of 1927 gave the Federal Radio Commission (FRC) broad discretionary powers to regulate the airwaves. The FRC later became the Federal Communications Commission (FCC). The Radio Act of 1927 gave the FCC the power to regulate anything involving communications if it found it was in the “public interest, convenience, and necessity.” The same philosophy is embedded in the Communications Act of 1934 and then later in the Telecommunications Act of 1996. It sounds nice; protecting the consumer is great. The problem with the public interest standard that politicians, regulators, and special interests can run amuck regulating in the name of the consumer without any input from the consumer. There has been an ongoing debate around the public interest standard since 1927. This matter involving Fairpoint will become a part of the debate about the public interest standard. I believe that the debate will spill over into the whole matter of net neutrality, broadband for rural and underserved markets, as well as the whole national effort to upgrade the country’s telecommunications infrastructure. Fairpoint and its creditors have opened Pandora’s Box but they may be able to avoid the bulk of the fallout if Fairpoint’s management and the Vermont PSB can have a rational discussion about the PSB’s concerns. My suggestion to Fairpoint’s creditors: Talk to the Vermont PSB and come to an understanding. Should we be cheering the Vermont PSB for standing up to Fairpoint, Fairpoint creditors, and the US bankruptcy courts? Sure, why not. The biggest challenge with any PoR is executing it in a fashion that positions the emerging company for future growth. I think Vermont ‘s PSB ought to be heard; however, we are looking at Pandora’s Box. If Fairpoint decides to fight this in court, it will get messy. A fight with Vermont’s PSB can turn so nasty that Fairpoint may have trouble operating as a carrier anywhere. State public utility authorities tend to support one another; so this means trouble ahead for Fairpoint. As I had noted earlier, the Plan of Reorganization is designed to treat claims of creditors; making secured creditors as whole as possible and secondarily making unsecured creditors as whole as possible. This leads to short term decisions to make cash and not necessarily position the company for a 3 year growth strategy. Vermont’s PSB is worried about financial and operational stability. Therefore we may be looking at two parties with two completely different sets of goals that are at odds with one another.

7/7/2010 1:17:42 PM (PJLouis)

Sprint Nextel’s 3G Network Problems? – Who Cares?! They Should Be Focusing on 4G!!

Comments on article at: <a target="_blank" href="http://www.bizjournals.com/kansascity/blog/2010/06/sprint_nextels_network_faces_steep_competition.html">www.bizjournals.com/kansascity/blog/2010/06/sprint_nextels_network_faces_steep_competition.html</a> I do not doubt that Sprint Nextel’s network needs upgrading. Sprint’s 3G network was a mess 3 years ago. With the restructuring that has been going on, is it any wonder the carrier still has issues in certain markets? The PC magazine’s study basically is documenting what many people already believe. I get it but does it really matter? As for competition in the network business; NO KIDDING. My advice to Dan Hesse: read the study, understand the context in which the study was made, know the questions asked, understand how the data was collected, and remember AT&T may have won the data speeds but it is getting the worse press imaginable thanks to the iPhone. I do not doubt the integrity of the data in the survey but after awhile you need to read these studies without panicking. The funny thing about studies is that even though they may say Carrier X has a fast network, when you ask the customer what they think of Carrier X they may have nothing but scorn for Carrier X. Let us not forget that about a year ago, AT&T stated it would pour money into its 3G network; it had to because the iPhone’s data demands were crushing the AT&T network. If you did not know that little tidbit, you might be thinking: “Hey this carrier has its act together” rather than “AT&T blew it and got caught”. You need to consider studies in context. If you are going to worry about network studies, Sprint and the other carriers need to prepare for third-party reviews of their 4G networks. Sprint’s 3G network is still important to Sprint and its customers. However, Sprint needs to focus the majority of its resources on getting its 4G network operational. Sprint needs to focus on building-out its 4G network. What’s done is done, move on; focus on 4G.

6/7/2010 10:37:53 PM (PJLouis)

FCC – Congress, Has The FCC Gone Too Far? A Network of Networks

Comments on article found at: <a target="_blank" href="http://blog.connectedplanetonline.com/unfiltered/2010/05/25/fcc-third-way-regulation-gets-bi-partisan-slam/">blog.connectedplanetonline.com/unfiltered/2010/05/25/fcc-third-way-regulation-gets-bi-partisan-slam/</a> The judicial and legislative processes are interesting. The federal courts tell the FCC that it is overstepping its authority in how the agency enforces certain broadband rules. The FCC responds by ignoring the courts and looking for a loophole to create rules that will allow them to do what the courts said it is not allowed to do. I have stated that I did not expect the FCC to take the court’s decision lying down. I just find the entire process interesting. It has not reached the level of sausage making but it certainly is getting there. Some may say the FCC’s actions are heavy handed; I will simply give them the benefit of the doubt and say the FCC is misinformed about its role and authority in this matter. The decision to reclassify broadband is not a simple matter for the FCC alone to decide. I had originally posted this view on my own site a few weeks ago. However, now Congress has weighed in on the matter. I am not sure if Congress is just playing this for media attention or not; it is an election year. Nevertheless, Congress needs to be involved. The basis for all telecommunications and information services activities is governed by the Communications Act of 1934 and the Telecommunications Act of 1996; both are laws passed by Congress, not the FCC. If Congress is serious about spanking the FCC then let us hear some serious discussion. If I recall correctly the FCC’s current position on broadband is the result of a two-decade long fight that began in the early-1980s with the Bell Operating System and something called “data”. The Bell Operating Companies fought to keep a new thing called “data” from being classified a telecommunications service, which meant back then, “voice”. The fight morphed over the years into “information services” and then everything over “the Internet and anything not voice”. In the late 1980s, the FCC decided to classify “data” and “anything not voice” as “information services”. Back then it made sense, no one really understood where “data”: was going; the desktop computer was still considered a business tool and only people with lots of money could even afford one. The cell phone was considered a high priced ticket item. In 2005, the Supreme Court reaffirmed the FCC’s decision. If I recall correctly, the Supreme Court even acknowledged the FCC’s technical strengths. Now the FCC may change its mind about that. I have said in the past that network neutrality is a great idea in theory. However, I am not sure network neutrality can be implemented without total chaos to the network and carrier financial structures. Can the carrier community think this through and come up with a solution? Probably but I would love to hear the discussion. Anyone remember the fight and discussions to update the Communications Act of 1934? I do. I liken any reclassification of broadband as a telecommunications service as big as the last update to the Communications Act of 1934, which is called the Telecommunications Act of 1996. It has been 14 years since the Telecom Act was passed and technology has changed in ways in which most of us could not have predicted. I agree the Telecom Act may need to be reviewed but the operative word is “may”. Despite what you may hear the traditional telecommunications network is a complex network of networks. Think interconnected streets and highways with tollbooths and traffic lights. Folks, it is not that simple. Needless to say, the network of networks is complex. Throw in the Internet on top of the traditional TDM-based network and you have more complexity. Now we suddenly have two very powerful factions arguing their viewpoints. Somewhere, there is a middle ground of sanity. I am all for sensible regulation. I am also supportive of developing regulation over time with industry input. Over time, regulations need to be revisited to determine if the rules are still applicable. The FCC has no authority to regulate whatever it feels it ought to. Now the FCC wants to turn the Telecom Act of 1996 on its ear. When politics (and special interests) gets into the mix, the likelihood of intelligent and well thought out regulation diminishes. FCC Chairman Genachowski is proposing applying rules designed to regulate traffic on copper-wire telephone networks. What exactly does that mean? There are folks out there who believe the FCC already has the right to regulate the carriers on the matter of broadband in the same manner and under the same rules as it does with traditional telecommunications services. Well, those folks are WRONG. Does the FCC plan on reclassifying broadband? The FCC plans on applying the following six sections of Title II of The Communications Act• Section 201—Requires Internet providers to interconnect and charge reasonable rates • Section 202—Prevents price or service discrimination • Section 208—Sets up FCC complaint process • Section 222—Protects customer privacy and proprietary commercial information • Section 254—Allows use of Universal Service Fund for broadband • Section 255—Ensures disability access I am a little confused. Title II applies to Common Carriers. Is this really a middle ground approach or the first step towards heavy-handed regulation? Frankly, I am a believer in limited regulation of any infrastructure business but this leaves me feeling uneasy. The courts were clear about what it felt. The FCC is calling it a proposal, so I guess that means there will be public discussion as opposed to a dictate. I just hope there is real discussion. The whole notion of applying basic rules designed for one telecom sector to another telecom sector sounds rational. However, I am concerned that no thought is being given to what rules are being applied and how they are being applied. The FCC appears to be laying the ground work for a slippery slope. It says it does not want to reclassify broadband but section 201 is quite a large step towards giving the FCC an enormous amount of power. What does this mean for technology investment? I believe that we will be looking at uncertainty in the investment community until all questions and concerns are resolved or at least until the FCC makes a decision. If companies like Google want to praise this decision, go right ahead but Google will regret the blind support. The FCC appears to be behaving in a heavy-handed manner. I am all for intelligent regulation. However, what is so intelligent about applying the rules that have just been mentioned. Each one of the sections gives the FCC greater discretionary power. Each section listed by Genachowski assumes a common understanding of traditional telecom. If you start from these sections without a common understanding of what broadband is, the FCC may easily decide to reclassify broadband as a telecom service rather than an information service. Does anyone really want the FCC to start designing the next generation of telecom/infocom services without a thorough debate? I certainly do not. I have never hidden my belief that from a customer’s perspective, telecom and infocom services are the same. However, that is my opinion and I see nothing wrong in a public debate on the matter. It would be the height of arrogance for the FCC to proceed as if it knows better. As I have said in the past. The best telecom regulations are the ones developed from real world and practical experiences. The best telecom regulations literally evolve from the experiences of the carriers and the consumers; not the politicians. Now Congress has jumped into the mix, so you can forget about politics and special interests not being involved. Factor in Congress and this just gets worse. Do not get me wrong, Congress needs to be involved but its track record for bipartisanship stinks. Now we need to ratchet down the rhetoric and think through the issues. The best regulations ever written were written with input from industry experts and rooted in experiences of a diverse group of interested parties (and not politicians). The FCC should be demanding a public debate because right now it sounds like politics as usual.

5/29/2010 9:41:34 AM (PJLouis)

FCC – Pushing The Limit? Has The FCC Gone Too Far?

Comments on article found at:<a target="_blank" href="http://online.wsj.com/article/SB10001424052748704370704575228503914251096.html?mod=WSJ_Tech_LEADTop">online.wsj.com/article/SB10001424052748704370704575228503914251096.html</a> The judicial and legislative processes are interesting. The federal courts tell the FCC that it is overstepping its authority in how the agency enforces certain broadband rules. The FCC responds by ignoring the courts and looking for a loophole to create rules that will allow them to do what the courts said it is not allowed to do. I have stated that I did not expect the FCC to take the court’s decision lying down. I just find the entire process interesting. It has not reached the level of sausage making but it certainly is getting there. I am all for sensible regulation. I am also supportive of developing regulation over time with industry input. When politics (and special interests) gets into the mix, the likelihood of intelligent and well thought out regulation diminishes. FCC Chairman Genachowski is proposing applying rules designed to regulate traffic on copper-wire telephone networks. What exactly does that mean? Does the FCC plan on reclassifying broadband? The FCC plans on applying the following six sections of Title II of The Communications Act• Section 201—Requires Internet providers to interconnect and charge reasonable rates • Section 202—Prevents price or service discrimination • Section 208—Sets up FCC complaint process • Section 222—Protects customer privacy and proprietary commercial information • Section 254—Allows use of Universal Service Fund for broadband • Section 255—Ensures disability access I am a little confused. Title II applies to Common Carriers. Briefly, Section 201 (a) states: “It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor; and, in accordance with the orders of the Commission, in cases where the Commission, after opportunity for hearing, finds such action necessary or desirable in the public interest, to establish physical connections with other carriers, to establish through routes and charges applicable thereto and the divisions of such charges, and to establish and provide facilities and regulations for operating such through routes”. That is not a minor rule/regulation. Section 201 says a lot about the Commission’s thoughts about its authority over how common carriers establish connections with other carriers and establishes charges with other carriers. Instead of the usual Washington DC ranting and raving over political divisions, I would be interested in seeing an explanation behind why Genachowski selected those six sections. Section 202 concerns itself with pricing and service discrimination. I hate seeing service providers gouge users, however, the marketplace usually ends up policing itself fairly well. Section 202 makes sense in a world where there are a small handful of key providers. Is this the FCC’s way of dealing with dwindling competition in the Internet space? Assuming you are afraid of Google and Apple charging whatever they want, applying this section makes sense. If I were Google, I would think long and hard about this section. Section 208 addresses a complaint process. If the FCC sets up a complaint process for Internet services, then I am assuming the FCC will establish operating rules and penalties. How do you address the validity of complaints when you don’t have a clear set of rules that say “this is right and this is wrong”? What is the point of setting up a complaint process unless there are penalties associated with unresolved user complaints? Section 222 addresses customer privacy and carrier proprietary information. Applying this section makes sense. However, I am beginning to think the FCC wants to reclassify broadband as a telecom service. Section 254 addresses the use of the Universal Service Fund for broadband. Are we saying that the Universal Service Fund will be used for information services? Is that not what BTOP is for? I feel like I am seeing a carrier double dipping by charging useless fees. Section 255 is the only section I have no trouble understanding why the FCC wants enforced. A Is this really a middle ground approach or the first step towards heavy-handed regulation? Frankly, I am a believer in limited regulation of any infrastructure business but this leaves me feeling uneasy. The courts were clear about what it felt. The FCC is calling it a proposal, so I guess that means there will be public discussion as opposed to a dictate. I just hope there is real discussion. The whole notion of applying basic rules designed for one telecom sector to another telecom sector sounds rational. However, I am concerned that no thought is really being given to what is being applied. The FCC appears to be laying the ground work for a slippery slope. It says it does not want to reclassify broadband but section 201 is quite a large step towards giving the FCC an enormous amount of power. What does this mean for technology investment? I believe that we will be looking at uncertainty in the investment community until all questions and concerns are resolved or at least until the FCC makes a decision. If companies like Google want to praise this decision, go right ahead but Google will regret the blind support. The FCC appears to be behaving in a heavy-handed manner. I am all for intelligent regulation. However, what is so intelligent about applying the rules that have just been mentioned. Each one of the sections gives the FCC greater discretionary power. Each section listed by Genachowski assumes a common understanding of traditional telecom. If you start from these sections without a common understanding of what broadband is, the FCC may easily decide to reclassify broadband as a telecom service rather than an information service. Does anyone really want the FCC to start designing the next generation of telecom/infocom companies and competitive environment without a thorough debate? I certainly do not. I have never hidden my belief that from a customer’s perspective, telecom and infocom services are the same. However, that is my opinion and I see nothing wrong in a public debate on the matter. It would be the height of arrogance for the FCC to proceed as if it knows better. As I have said in the past. The best telecom regulations are the ones developed from real world and practical experiences. The best telecom regulations literally evolve from the experiences of the carriers and the consumers; not the politicians. Check out my site www.pjlouis.com and my posting – “The National Broadband Plan???? Network Sharing??? Net Neutrality???” Check my GLG posting – “Net Neutrality – Is There an Impact on Telecom/Infocom Investment”. The best regulations ever written were written with input from industry experts and rooted in experiences of a diverse group of interested parties (and not politicians). The FCC should be demanding a public debate.

5/12/2010 9:11:21 AM (PJLouis)

New Survey Looks At Ongoing Battle Among Industry Leaders

ChangeWave: http://www.changewave.com/alliance/viewreport.html?source=/alliance/reports/2010/cell_service_20100427.html During March ChangeWave surveyed 4,040 consumers on their attitudes towards the wireless service provider industry – including trends in customer satisfaction and loyalty, future market share demand, and the issue of dropped calls. Note: I'm a bit surprised to see Sprint in the number two spot.

5/5/2010 4:29:05 PM (gdt)

Sprint – Prepaid is the Future

Comments on article found at: <a target="_blank" href="http://connectedplanetonline.com/3g4g/news/sprint-prepaid-world-0428/">connectedplanetonline.com/3g4g/news/sprint-prepaid-world-0428/</a> I am an advocate for prepaid services. The prepaid marketplace is not the refuge of the lower economic strata; the prepaid market is where customers go when they wish to have greater control over the fees they pay and services they use. The market is changing. Prepaid will continue to grow. Unless the postpaid marketplace radically changes, prepaid will grow. Prepaid will likely be as large as postpaid. Prepaid will be a dominant force in the telecommunication marketplace. Prepaid is popular because there are no credit checks. Prepaid is popular because there are no monthly bills. Prepaid is popular because there are no contracts or ETFs. Prepaid business models can provide the same kinds of customer features as postpaid business models. If you consider most postpaid business models, carriers are pretty much giving away the farm in high MOU, low flat rate billing plans, which include everything from texting, web surfing, and voice. These postpaid plans are close to being all you can eat plans. The significant differences between prepaid and postpaid plans are:<ul><li>Credit Checks</li><li>Monthly Bills</li><li>Contracts and ETFs</li><li>Ideal for teens</li></ul> The postpaid model allows carriers to collect a minimum fee every month whether or not you use the cell phone. This means the carrier has cash coming in all of the time, even if the majority of its customers are not using 100% of the features they are paying for. This is what you call an annuity business. The prepaid model has no such guaranteed cash flow. A prepaid wireless carrier has no artificial mechanisms to handcuff a customer to it. Prepaid carriers do not sign up customers on contract. Prepaid carriers cannot collect an early termination fee (ETF), therefore no disincentive to leave the prepaid carrier. Prepaid service is ideal for those parents whom are paying for their kids’ cellular service. It is a great way to keep usage under control. Postpaid carriers have been claiming about the demise of the prepaid carrier since the mid-1990s. Why is the prepaid carrier still around? The answer is simple; the customers recognize the advantages of prepaid service. Prepaid service gets a bum rap with claims of poor service and poor customer service. The claims have validity but that has nothing to do with it being a prepaid service. Postpaid carriers like Verizon Wireless and AT&T Mobility offer prepaid service under their own brand and under other brands. When a postpaid carrier offers prepaid service under other brand names, they are wholesaling their network to others. Carriers do not prioritize reseller services over their own services. Carriers love the postpaid telecom model because it enables them to establish a monthly revenue stream, which can be used to establish a valuation. Carriers do not have to develop a prepaid track record like MetroPCS or Leap Wireless. Postpaid carriers simply have to put to the number of subscribers they have and the types of annuity contracts they have signed and BAM!!!, you have an easy valuation for the carriers. A prepaid carrier valuation is much tougher. Prepaid carriers have customers that have paid the carrier a fixed amount. This fixed amount cannot be fully recognized as revenue immediately. The only portion of the money that can be recognized as revenue is the portion the customer has used. Financial analysts frown upon prepaid business models. Consumers want to customize, in real time, their service usage/plans. I believe the prepaid business model can be more responsive to real time customer customization of service plans than the postpaid model. Prepaid does not eliminate flat rate plans, therefore carriers can still offer them. Prepaid may not play well with carriers if you couple it with all you can eat plans. This assumes you have a large number of customers that simply eat up minutes. Frankly, there are not as many as one would think, besides once you are over your plan limit you pay a small fortune, which naturally inhibits usage. Further, a prepaid plan has a better chance of recouping costs if churn is controlled. High churn is bad whether the carrier is prepaid or postpaid. To combat prepaid, carriers can simply offer everything for a low flat rate. At some point, the postpaid carriers will provide customers with unlimited talking minutes with unlimited data with free handset upgrades every 6 months with zero fees with zero contracts. At the rate things are going, the carriers may as well go prepaid. Unless a carrier does something radical to postpaid, prepaid is here to stay. What is a radical change in postpaid? What about eliminating ETFs? What about eliminating contracts? The postpaid response to date has been more minutes for less money. Eliminate contracts and ETFs and you have prepaid. The carriers are a few steps away from going completely prepaid. Customers like to feel they are not hostages. Prepaid (pay as you go) is ideal for an emerging and changing market that is looking for flexibility. Prepaid is ideal for an emerging and changing market that is living their lives on their wireless handset, The consumer market is cost conscious and will be for years to come. There is a youth market, which will soon become the adult market that will demand flexibility from the carriers. Prepaid is a major driver for the future. The future Dan Hesse is envisioning involves the youth market today, which will soon replace the current adult market. My suggestion to Dan Hesse is he should also focus on the baby boomers who are preparing to retire. The current recession will have a profound effect on how consumers spend money on telecom services for some time to come. Given continued economic weakness, the prudent thing for all consumers is to shift to prepaid. A jobless recovery still means no jobs. No jobs means little to no money. Prepaid makes sense. Prepaid is about “customer choice”. Prepaid can give customers greater control over their costs. In regard to the carriers, all one major carrier has to do to shift the paradigm is to go full throttle on prepaid using its own network and then we will see a major shift in how carriers do business. It is not in the interests of postpaid carriers to offer prepaid; however, it is in the interests of customers to use prepaid services. My advice to Dan Hesse is push prepaid further, continue postpaid efforts, and continue improving performance. Two years ago, analysts were already shoveling dirt on top of Sprint, claiming the carrier would never be able to stem postpaid losses and would never see growth in prepaid. Proper operational restructuring takes time.

5/2/2010 4:07:15 PM (PJLouis)

Twitter Rolls Out Ads – The Impact on the Wireless/Landline Carriers and OSS’s

Comments on article found at: <a target="_blank" href="http://online.wsj.com/article/SB10001424052702303695604575182233558434518.html?mod=WSJ_Tech_LEFTTopNews">online.wsj.com/article/SB10001424052702303695604575182233558434518.html</a> In the past have opined on Twitter’s valuation; wondering how and why the company’s original valuation was set at $1 Billion. You can read my past postings for those opinions. One of the things I had been wondering is how the site would generate real revenue. In general, I have had the same opinions about social networking and collaboration sites. However, there is a bigger issue for the carriers. Twitter is now rolling out ads on its site to advertise. I am all for it. I have stated that advertising is a legitimate way of generating revenue. Another legitimate way of generating revenue is charging subscription fees for premium services. Neither method is perfect. Both methods fly in the face of Internet purists who believe that everything on the net should be free. Hey, something has to pay for the infrastructure. There is no such thing as a free lunch. What has been completely overshadowed by monetizing social networking/social collaboration sites is: the impact on the carriers’ networks. Twitter generates a great deal of traffic on the wireless carriers’ networks. The traffic can be best described as large, frequent, and bursty. Carriers have lots of trouble engineering their networks for this type of traffic and still stay profitable. It is easy to say the carriers just need to add more capacity but capacity costs money and someone has to pay for it. In the early days of the Internet, there were many Internet startups that took the position the carriers could easily absorb the costs; however, that is just nonsense talk. There are no free rides. In a short time, Twitter has become the talk of the financial community. Now that rationality has begun to take root in the company, Twitter needs to generate revenue. The company has decided to sell ad space. What does this mean for the carriers? What it means for the carrier is an increase in traffic. It also means an increase in backoffice support. Carriers like AT&T Mobility are already having trouble handling the data traffic caused by the iPhone and other smart phones. Is Wall Street expecting AT&T Mobility, Verizon Wireless, and other wireless carriers to absorb the costs? More importantly, what makes anyone think these carriers can handle a sudden increase traffic load due to advertising. The increase in traffic will be not be one way but will be two way. Users will be interacting with the ads. What is the point of pushing an ad at someone without giving the user (viewer) the ability to order a product or service? As for backoffice support, companies that provide such products and services will be called upon to support the following:• Metering traffic flow for the carriers • Metering traffic flow for Twitter and other social networking/social collaboration companies • Transaction Detail recording and billing • CPM analysis • Network traffic analysis • Network management I know I am missing a few other backoffice issues but what I have considered to date is enough to scare me. The impact will not be on just the wireless carriers. Landline carriers provide the basic intercarrier network interconnection. The landline carriers also use landline carrier facilities to connect cellsites to switches. Initially, Twitter’s revenue model may adversely impact a carrier’s network. In the past I would have stated the best way for carriers to deal with Twitter’s new revenue model is by shifting network resources to those areas of the country where the increase in traffic flow will be seen. However, Twitter is a huge beast and a nationwide one as well. People and companies that tweet have followers that span the country and the world. I will need to think on this more.

4/14/2010 7:48:22 AM (PJLouis)

Palm - A Correction

Comments on article at:<a target="_blank" href="http://www.billingworld.com/news/briefs/palm-shares-like-talk-of-htc-or-lenovo-buyout.html">www.billingworld.com/news/briefs/palm-shares-like-talk-of-htc-or-lenovo-buyout.html</a> It has been recently pointed out to me that Palm had in fact issued its development kit much sooner than I had noted. This makes the Pre look even worse - rather than suffering from a lack of software kits, the Pre appears to have been a victim of a LACK of INTEREST.I have to thank this independent consultant who brought this to my attention.  My reason for the Pre's failure gave Palm some credit for creativity and consumer interest now I can only think the worse.

4/11/2010 1:33:33 PM (PJLouis)

Palm Pre Plus (MINUS) – What Went Wrong? The Party is Over

Comments on article found at:  <a target="_blank" href="http://blogs.wsj.com/digits/2010/04/01/verizon-offers-deals-to-move-palm-phones/?mod=rss_WSJBlog&mod=">blogs.wsj.com/digits/2010/04/01/verizon-offers-deals-to-move-palm-phones/</a> I guess I should have realized something was amiss with the Palm Pre when the company failed to release a software development kit for months. Despite my criticism of the iPhone in the past, the one thing I never criticized Apple for was its lack of applications or development kit. As soon as Apple released the first iPhone, it was not long before it released its software application development kit. These kits are what enabled thousands of application developers to thousands develop applications for the iPhone. Effectively, Apple opened up the iPhone for developers to participate in creating applications (that not even Apple could have thought of), which would vastly enhance the value of the iPhone. This should have been the first signal to the entire investment community about what was to come with the Palm Pre. Months went by before Palm issued a kit. I recall when Palm said the kits would be forthcoming, however, I lost track of time and only realized months later that it took Palm months to issue the kit. Palm obviously still does not get it. Palm is in the device selling business. Apple is in the content business. Think razors and razor blades. For years people thought Gillette was in the razor business, until one day the company noted that it was in the razor blade business. All of the cash being generated for Gillette was in the razor blades and not the razors. You buy one razor and hang onto it for years. However, you are frequently purchasing razor blades. Palm is selling razors and Apple is in the razor blade business. Guess who is going to make lots of money. The iPhone is a device. The iPod is a device. Both generate tons of cash flow through the applications/content both devices deliver to customers who pay for them. I had hoped Palm understood what business it was in. Looks like Palm is in the device business. I was so hopeful I even gave them credit for being bold. However, Palm reminded me what can happen in every product launch; one mistake and it can all be over. I believe that it is too late for Palm to turn the Pre line around. Television commercials give the viewer the impression the Palm is being targeted for women only. Why? Is this a form of market segmentation. Are the Palm Pre and Palm Pre Plus designed with women in mind? I do not even know what I just stated even means. Since when was a smarthandset gender specific. The marketing campaign was flawed. I was not happy with the marketing campaign from the beginning and months later, I still dislike it. Here is what I think: The Party is Over

4/3/2010 2:08:27 PM (PJLouis)

Palm – Talk of Buyout by HTC or Lenovo

Comments on article found at: <a target="_blank" href="http://www.billingworld.com/news/briefs/palm-shares-like-talk-of-htc-or-lenovo-buyout.html">www.billingworld.com/news/briefs/palm-shares-like-talk-of-htc-or-lenovo-buyout.html</a> My advice to HTC – consider not buying Palm. My advice to Lenovo – consider buying Palm As usual, stock analysts have started rumors of Palm being an acquisition target for HTC or Lenovo. Frankly there is no reason for HTC to acquire Palm. Palm has no measurable market share. HTC is a rapidly growing and maker of popular handsets; think EVO. On the other hand, Lenovo has no presence in the mobile space and may find Palm a desirable acquisition. My suggestion to investors, do research before you jump onto the HTC acquisition gossip bandwagon.

4/10/2010 11:31:01 PM (PJLouis)

Palm – Too Late to Save the Pre? Getting Thrown Under the Bus

Comments on article found at: <a target="_blank" href="http://blogs.wsj.com/digits/2010/04/01/verizon-offers-deals-to-move-palm-phones/?mod=rss_WSJBlog&mod=">blogs.wsj.com/digits/2010/04/01/verizon-offers-deals-to-move-palm-phones/</a> Palm lost a lot of ground when it launched the Palm Pre last year and failed to followup on improving the device and customer perceptions. To say Palm dropped the ball on the launching of the Palm Pre last year is an understatement. If you recall, the marketing program that launched the Palm Pre was lackluster; it lacked any sizzle. Worse still, Palm did not even have a sufficient supply of the handsets on available during the initial launch. The Palm Pre was not exactly on par with the iPhone but close enough for Palm’s and Sprint Nextel’s purposes. The Palm Pre hurt Sprint Nextel more than it helped Sprint Nextel. Investors may wish to blame Sprint Nextel but frankly, I blame Palm. The vendor did not do enough to promote the Pre. The final result was lackluster sales and customer complaints about handset performance. For those loyal Sprint customers who decided to give the carrier’s new smart handset a shot, the payback was Palm’s new Pre Plus is not even available on the Sprint network. Palm launches the new handset on the Verizon Wireless network; a disastrous way to build customer loyalty on the Sprint Nextel network. Fortunately, for Sprint Nextel, the Palm Pre was just a small chapter in their recovery process. The lucky carrier to benefit from Sprint’s mistake is: Verizon Wireless. Verizon Wireless gets the honor to launch the Pre Plus. However, maybe Verizon Wireless did not benefit. Verizon Wireless just threw Palm under the bus by dumping the Pre Plus on the market for about a third of its original price. What will Verizon do now? Will Verizon Wireless pin its hopes for a new smartphone on the iPhone? I am sure Sprint Nextel is not upset it missed out on launching the Palm Pre Plus. Sprint’s customers are a bit upset but in the end, the customers will thank Sprint Nextel.

4/3/2010 9:20:50 AM (PJLouis)

Sprint – Hesse Says Usage Based Billing in The Works

Comments on article found at: <a target="_blank" href="http://blogs.wsj.com/digits/2010/03/24/sprint-ceo-rate-plans-will-move-from-minutes-to-gigabytes/?mod=dist_smartbrief">blogs.wsj.com/digits/2010/03/24/sprint-ceo-rate-plans-will-move-from-minutes-to-gigabytes/</a> I have to say that I have no idea how this will work; in terms of actual pricing. This is not a new idea. In the early and mid-1990s, the landline carrier community was experimenting with usage based billing. Back then it was a dialup business and usage based billing was the only way to deal with the costs of maintaining a link to the Internet. Furthermore, usage based pricing kept the number of users low, which meant a great deal for capacity strained networks. FYI, internet dialup had a profound on TDM network capacity; however, enough of the history lesson. In the 1990s the wireless industry also considered using usage based billing as a way of dealing with what we were calling data services. In the early and mid-1990s, wireless data services amounted to SMS. We were looking at recouping our network costs of providing SMS by charging for bits and bytes. Needless to say, after professionals in the industry looked at what it would cost a customer to even use the service, those usage-based billing plans looked like they might make customers run from SMS. Frankly, no one really worried about it back then because wireless voice was still in its growth phase and hence just having cell services was a big deal. True, SMS is not wireless Internet but back then it was the closest thing to it. In short the wireless industry tried usage based billing in a small way so there is some experience. Getting back to the present; Sprint and the other carriers need to look at some form of usage based pricing. A usage based pricing plan lends itself to content; enabling content owners to generate significant revenue for their content. Usage based pricing will be higher than minute-of-use based pricing. I believe that current prepaid plans will also benefit from usage based pricing plans. Music, Video, and Internet access are things that lend themselves to usage-based pricing on the wireless net. The wireless industry needs to be not only need to be concerned about the carriers’ network capacity issues but also the content creators’/owners’ being fairly compensated. The industry needs to be concerned with content creators and owners getting paid for their work. Today’s flat rate plans do not generate sufficient revenue for the content creator and owners. A couple of years ago I had supported prepaid plans for wireless media; I had viewed prepaid media plans as being flat rate for voice and value priced for media. I had not been thinking usage based pricing for media but rather media priced based on the content’s value. My thoughts were and still are that traditional minutes-of-use based pricing could not properly represent the value of online (wireless and landline) media. I still believe advertising is a component of wireless media that will be forthcoming. If people want to see quality content then you need to pay the people who create it. I agree with Dan Hesse and Sprint Nextel. I will go one step further.  Usage based pricing needs to be tiered. Think of wireless media like cable TV; you have got basic and premium channels and you have bronze pricing plans and gold pricing plans. You might be able to somewhat throttle usage on the network and hence manage capacity better. However, the reason for a tiered pricing plan is that it attracts more customers overall. The challenge for Sprint Nextel and other carriers that follow is educating their customers to the reality of counting bits instead of minutes. I recall my reaction years ago during a friendly market trial when I realized how much we were charging the trial customer for all of the bits they were using – SHOCK. Of course, the services being trialed amounted to no more than SMS. Eventually we got the brilliant idea that we should simply charge a price for the message (with a specific character length – rocket science back then).Translate past experience into the present and it points to two things – customer education is needed to make usage based pricing work and a price is needed the customer will pay.

3/29/2010 12:14:34 AM (PJLouis)

Huawei – A Few Short Years Ago – Ignored by Wall Street

Comments on article found at: <a target="_blank" href="http://www.zdnet.com.au/telstra-eyes-huawei-for-4g-overhaul-339301886.htm">www.zdnet.com.au/telstra-eyes-huawei-for-4g-overhaul-339301886.htm</a> One of the many things I tell investors is: “Do your own research”. As recently as 3 years ago, Huawei was ridiculed by now-unemployed stockbrokers for not being a major player in the telecom space. It is good to see Huawei stepping up its efforts to make a global impact. Its entry into the global marketplace is shaking things up in the industry. Huawei is China’s largest networking and telecom equipment supplier in the People’s Republic of China. The company has the backing of the Chinese government. With government backing behind it, this company is a force to reckon with. Huawei may not get the bulk of Telstra’s business or any business at all. However, Huawei will have gained experience. I know this sounds bit silly but the Chinese do not really make huge overt moves unless it has an overwhelming advantage. Rather, the Chinese work slowly and build upon small moves. The country and its companies take one step at a time. Patience is a virtue and a matter of life. The other players in the Telstra technology trials need to watch what Huawei does. If I were these other players I would not get too confident about what they bring to the table. Huawei has been in Australia for awhile now; not as long as the other vendors but Telstar will not hold that against Huawei. I think it joined Optus. When the company first emerged the technology was highly limited and nothing to envy. However, through a series of acquisitions and organic growth, the company has made inroads in the telecommunications industry. The dynamic nature of the business has given Huawei numerous opportunities to learn from its mistakes and grow.

3/27/2010 3:21:47 PM (PJLouis)

Sprint Nextel – Introduces 3g/4G Smartphone – A Turning Point?

During CTIA’s 2010 Annual Convention, Sprint Nextel introduced its 3G/4G smartphone. This action is a positive development for Sprint Nextel. Congratulations to Dan Hesse. Sprint Nextel just launched the first U.S. cell phone that will serve both 3G and 4G networks. The cell phone is manufactured by HTC and is called the EVO. In a word, “fantastic”. We are going to see increased competition from the LTE camp, which is fantastic for the consumer. In the weeks to come, I will take a closer look at the handset but everything I have heard is the EVO is a well designed piece of equipment and will give any smartphone a run for its money. The EVO may have just set the bar for all 3G and 4G handsets. The EVO is a high-end Android handset capable of riding on the 3G and 4G network of Sprint Nextel. The EVO has a lot of processing power and has a ton of features. All very good. This handset runs a combination of EV-DO Revision A and WiMAX, with calls being made over CDMA and the EV-DO / WiMAX options for data. The handset is based on the HTC HD2 but better. It has a bigger battery. It of course has Android built into it. The handset’s display screen is a 480 x 800 4.3 inch TFT LCD. It has a Snapdragon QSD8650 1GHz processor. The EVO also has a lot of memory – 1 GB of memory and 512 MB of RAM. The handset has a lot of processing power. The EVO has an 8 megapixel camera (with a flash of course). It can shoot 720p video. The EVO also has a 1.3 megapixel front facing camera. The handset supports 802.11b/g Wi-Fi. The handset also comes with an 8GB micro SD card. The EVO of course has a touch-user-interface keyboard. Sprint now needs to leverage this handset in a way that facilitates and synergizes the carrier’s content and pricing strategies. Sprint must compel more users to sign up and stem the customer losses. The EVO may serve as a turning point for Sprint Nextel. Sprint needs to give thought to how this handset is to be used in conjunction with its cable company relationships in the Clearwire venture. My hat off to Sprint’s marketing team for picking the CTIA convention to launch the handset and to show off the carrier’s iPhone overdrive capability. Sprint just gave the iPhone its 4G look. Brilliant move. This really must have upset AT&T Mobility; you just cannot make this stuff up.

3/27/2010 11:26:36 AM (PJLouis)

Google – Takes a Moral Stand

Comments on article found at: <a target="_blank" href="http://online.wsj.com/article/SB10001424052748704266504575141064259998090.html?mod=WSJ_Tech_LEADTop">online.wsj.com/article/SB10001424052748704266504575141064259998090.html</a> My hat off to Google Inc. co-founder Sergey Brin, for taking a moral stand. I am not sure most investment bankers would agree with me. However, folks need to keep in mind that every company is built on a set of values but usually those values are about creating shareholder value and not about personal freedom. If a country had a personality, I would say that China’s is patient, thoughtful and focused. China is not one to leap out of the gate; it starts of slow and before you know it, the country hits full stride. Once this 8,000 pound gorilla is moving you cannot stop it. Companies that have done business in China understand two things – do business in China the way the Chinese want it or leave. Most large companies I have heard of actually find a way of getting back into China. They have all found a middle ground. Finding a middle ground usually means compromising your principles to some extent. Will Google compromise its principles? Whose principles are we talking about, Sergey Brin’s or Google’s shareholders? I applaud Brin. Brin is going to be bombarded with lots of questions. However, here are a few things shareholders need to think about: cyberattacks on Google, stolen code from Google, reading emails, national security, etc.. Brin has a point. The Internet business needs to monitor this situation.

3/25/2010 8:55:41 AM (PJLouis)

2010 – A Critical Year for Sprint Nextel

The year 2010 is a critical year for Sprint Nextel. This year is the year when Sprint Nextel needs to clearly set itself on a path of success and hit the road running. To date, Dan Hesse has done all of those things needed to stabilize the company in the midst of crisis and a massive recession. I think he did a great job. He may not win another Wireless Week carrier leader of the (2010) year award but frankly he deserves it. To anyone who understands turnaround work, he has done an extraordinary job. Now that all being said; that was in the past. The year 2010 is critical to Sprint Nextel’s future. Dan Hesse needs to make 4G work for Sprint Nextel in 2010. Making 4G work does not mean that Sprint needs to go positive cash flow on any 4G services. However, making 4G work means it has to at least show a leveling off of subscriber losses. When you are turning around a company you do not set unrealistic goals for the company. When you are turning around a company you set a realistic goal(s) for the company. In the case of Sprint Nextel, you stem subscriber losses and sign up new customers (or get old ones back or both). Dan Hesse clearly understands that the company needs to add more capacity and value to his network. However, what does that mean? In my opinion it means a “Merger with Comcast”.

1/7/2010 10:18:05 PM (PJLouis)

AT&T’s 4G Strategy – Taking It One Step at a Time

Comments on article found at: <a target="_blank" href="http://www.macrumors.com/2010/03/02/atandt-ceo-randall-stephenson-speaks-about-iphone-and-ipad/">www.macrumors.com/2010/03/02/atandt-ceo-randall-stephenson-speaks-about-iphone-and-ipad/</a> Bully for AT&T CEO Randall Stephenson. I agree with AT&T’s decision not to rush 4G. The real story is 4G and not the iPhone and iPad. The iPhone and iPad were used because the words tend to catch readers’ attention. I agree with AT&T’s decision to slow roll 4G deployment. The reality is that AT&T’s network was in disastrous shape. The focus had to be on fixing the 3G network first, before any 4G work. Stabilizing the existing revenue-generating network is far more important than spending enormous amount of capital on new technology. That all being said AT&T still needs to plan for 4G deployment. Planning is a fluid process and network implementation is a process that requires a lot of lead-time. You can be certain that AT&T has a plan. No carrier in its right mind actually flash-cuts a brand new technology; they may say that for the press. However, the reality is that all correctly performed implementations are over time and never as rushed as you may think. Not rushing 4G is a financial and operations decision more than a technology decision. If either Verizon or AT&T wanted to throw a lot of money into LTE they would if they could. They cannot throw that much cash into rapid LTE deployment because of the recession. The carriers are publicly traded companies and would have a lot of explaining to do to their shareholders. Network investments have to generate sufficient revenue before a carriers can just suddenly turn on a dime and accelerate a next gen network buildout. As a matter of best practice, carriers will not rush a network deployment because real-world and theory are different. Goodness knows what kinds of operating errors you will encounter over time. You can imagine the vendors are working feverishly to develop LTE while creditors and shareholders breathing down their necks. This is not an easy environment for any of the vendors to operate in. Bear in mind, carriers may cover the costs of specific trial deployments in their networks but the carriers do not cover the costs of research and development for these trials. As important as it is to compete against WiMAX, it is far more important to deploy the network intelligently. I have seen network rush jobs and they are a disaster for the carrier. In the case of AT&T, its 3G problems had been long anticipated by industry experts who had feared that a surge of data demand would overload its network. I should not pick on AT&T in this regard, all carriers were being observed for potential overloads. How much grief did AT&T get for not spending enough money on its 3G network? How much grief did AT&T get for deploying what amounted to a network that could not handle the data load caused by the iPhone? AT&T is making the right decision in slowly rolling the deployment of 4G. My suggestion to AT&T is to select a market that contains many of the attributes of the markets they wish to go commercial first. The selected market becomes a commercial trial for AT&T Mobility. The commercial trial market enables AT&T to trial the technology, marketing plan, the pricing plan, and the network operations processes.

3/20/2010 7:36:40 PM (PJLouis)

Sprint Loses Time Warner Contract – A Big Deal?

Comments on article found at: <a target="_blank" href="http://www.billingworld.com/articles/business-finance/sprint-loses-key-outsourcing-contract-twc.html">www.billingworld.com/articles/business-finance/sprint-loses-key-outsourcing-contract-twc.html</a> Turning around a company requires a focus on stabilization first and not rapid growth. Lets take a look at what Dan Hesse has had to deal with since 2007: • Nextel – refocusing the Nextel network’s business objectives; supporting the current base and prepaid customers • Prepaid – implementing a prepaid service • Customer service – a disaster that had to be fixed but it took more than just simply telling the employees to be nicer. Processes and procedures had to be created and then implemented. It does not happen overnight. • 4G- develop a 4G strategy. Easier said than done. • Stabilizing the finances • Stabilizing the customer losses. • Deep recession This is a big job that takes a lot of time. Investors need to give time for Hesse. I am sure Hesse has an exit strategy for investors. I have often said that the exit strategy should involve a merger between Comcast and Sprint. Read my past postings on my website.

3/12/2010 9:31:58 AM (PJLouis)

Good News for Clearwire – Smart Move for Charter – Good News for Sprint Nextel

Comments on article found at: <a target="_blank" href="http://blog.connectedplanetonline.com/unfiltered/2010/03/05/charter-exploring-wireless-options/">blog.connectedplanetonline.com/unfiltered/2010/03/05/charter-exploring-wireless-options/</a> Without a doubt, this is good news for Clearwire. As for Charter, a smart move. As I said, a smart move for Charter Communications. I am not quite sure what the condition of the network is. I am not quite sure what access to capital they have. I am not quite sure if they still have the in-house talent to execute a WiMAX (or any wireless strategy) strategy. I suggest investors ask Charter lots of questions. In my past GLG postings and postings in my own blog, I have supported the use of WiMAX in a cable strategy. I had been referring to Comcast and Sprint Nextel in those blogs. Now that Charter is considering joining the party, Clearwire has upped the ante in the war against carriers like Verizon Communications and AT&T Corporation. Note I am referring to the cable versus telco wars. Now that the cable companies are aggressively taking steps to execute their own wireless strategies in the telecom/content wars the big RBOCs will be living in interesting times. In this big picture, we may see Sprint Nextel emerging a winner. Do not forget they own the majority controlling interest in Clearwire. All Sprint Nextel has to do is not make a mistake.

3/12/2010 12:13:19 AM (PJLouis)

Sprint’s Never Ending Marathon – Next Steps

There are times my head spins when I read articles stating things that have been obvious since the 1984 Divestiture of AT&T. Analysts galore are pointing fingers at Hesse and screaming: “Sprint Nextel is still doing badly.  Sprint Nextel is facingnever ending competiton.”   What did people expect Dan Hesse to do turn the company around into a zero debt and positive cash flow position in one year?  Do people actually think the telecom business is static? The fact he is losing fewer customers in this environment is a miracle. Now is 2010 a critical year for him and Sprint Nextel? Yes, because he needs to create new revenues and stabilize the company by drastically slowing down customer loss. Analysts seem to forget one thing. All of the big cellular carriers’ cost structures are designed for the postpaid world. More importantly, the way in which analysts value a carrier is based on a postpaid model. I have said this many times in the past. The prepaid industry has Sprint Nextel to thank for forcing the hands of Verizon Wireless and AT&T mobility in joining the prepaid fray. Don’t thank MetroPCS or Leap. When Sprint jumped into prepaid that is when things got interesting. Sprint has the opportunity to force the next change in the wireless industry – 4G based prepaid data and media, flatrate voice, and targeted enterprise services.

3/6/2010 10:28:55 PM (PJLouis)

US Wireless Industry Growth Drops – No Big Surprise – The Real Issue?

Comments on article found at: <a target="_blank" href="http://blogs.barrons.com/techtraderdaily/2010/02/26/wireless-industry-growth-drops-below-3-and-still-sinking/?mod=rss_BOLBlog&mod=tech">blogs.barrons.com/techtraderdaily/2010/02/26/wireless-industry-growth-drops-below-3-and-still-sinking/</a> There are few things going on here at the moment that impact wireless industry revenue growth. First there is a deep recession that has left millions unemployed. Second the wireless industry is now 26 years old. In other words, wireless is a mature industry. I am not saying there is no room for growth. The growth will have to come from creating high margin services and intelligently managing existing low margin services. Revenue growth can no longer come from simply adding subscribers. There only 300 Million people living in the United States. If you add up all of the subscribers the major wireless carriers provide service to, you are looking at nearly 280 Million subscribers being served. How much more growth can you expect. Investors need to put this in perspective. Aside from this disastrous and long recession, the wireless carriers are now facing a market where nearly everyone between the ages of 10 through 100 owns a cell phone. Back in 1990, market growth was about subscriber growth only. The bulk of the country still did not own a cell phone and the bulk of the marketing was focused on selling cell phones to automobile owners for purely emergency use only. The only other real customer segment was business professionals and back then only executives. Selling back then was all about convincing customers they needed to be able to call someone from something other than a coin operated telephone or a landline telephone. Furthermore, back in the early and mid-1990s the B-side cellular carriers could not operate outside of their designated territory. Throughout most of the 1990s, carriers could charge a fortune for roaming. Once those barriers were lifted it was a new ballgame. Suddenly, the cellular carriers could pursue business throughout the country, without restriction. By the turn of the century, roaming charges could no longer be relied on as one of the key ways to make money. The only way to make money was by signing up first time cellular users. It is now 2010. Is it a wonder that the industry has reached maturity? So how do cellular carriers make money now? The carriers need to generate revenue by creating substantial value for their subscribers by packaging existing services in a way that attracts customer; this usually means large volumes of low cost minutes. The other way for carriers to generate revenue is by creating new services for their subscribers. This has come to mean new audio and video services. Today cellular carriers have to become content companies in order to mine the margins out of the various multimedia services. On top of all new multimedia services we will continue to see growth in prepaid wireless. Prepaid service once carried the stigma of being provided to low income subscribers. Today prepaid service is all about smart cash flow management.

2/27/2010 12:03:47 PM (PJLouis)

Google – Electricity Market Maker – What’s Next BPL or Smart Grid?

Comments on article found at: <a target="_blank" href="http://online.wsj.com/article/SB10001424052748703315004575073650351018606.html?mod=WSJ_Tech_LEFTTopNews">online.wsj.com/article/SB10001424052748703315004575073650351018606.html</a> On the surface, Google’s reason for becoming a marketer of electricity makes perfect sense. However, companies like Google are as dumb as a fox. I cannot believe Google is not thinking beyond its own needs. I think it makes perfect sense for a company like Google to consider marketing power management services. The company offers an on-line tool to help consumers manage their energy use. Google has partnered with utilities to help market this tool. Now imagine Google selling smart grid services or even Broadband over Power Line (BPL) services. For the last few years there have been documented cases of radio interference from BPL systems. I have seen BPL systems deployed in Maryland and know they work. However, the question has remained is can they be deployed in large-scale systems throughout an entire community without causing radio interference. The loudest complaints of radio interference came from ham radio operators; which is not to say the complaints should be ignored. However, the most significant report to slam BPL was a NATO report issued in 2007, which concluded that widespread deployment of BPL could have detrimental effect on military communications. Now that report did not help. However, the report did state NATO’s Research Task Group (RTG), which had authored the report did not have the expertise to make such a determination. To date one of the big concerns of BPL providers is return on investment. Subscriber density has to be sufficiently high to generate the ROI most companies and investors are seeking. I am still a believer in such systems but not in dense urban environments or even dense suburban markets (think Nassau County, Long Island, NY). I still believe that BPL can play a role in rural markets. Interference avoidance systems are being developed but will they work? I have not seen frequency avoidance schemes operate at the low signal levels BPL systems operate, however, never say never. Smart grid is a no-brainer and it will not take a lot for Google to get into the business. Google already has relationships in the sector. Besides to get into the sensing, analytics, monitoring, and control side of the business may not be that big a leap for Google. In 2005, the company invested in a company called Current Communications Group. I do not know what Google’s status is in Current Communications Group but it is obvious Google is familiar with the smart grid business. One plus one equals three.

2/23/2010 10:58:56 PM (PJLouis)

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