Wireless Operator Strategies

Wireless Operator Strategies provides both a deep and broad perspective of the operator market, combining granular operator-level and market-level data with ecosystem-wide understanding of wireless operator challenges and opportunities.

December 29, 2011 03:26 suerudd

On December19th. AT&T - discouraged by massive DoJ and FCC opposition - ended its bid to add capacity with the acquisition of T-Mobile USA. This leaves AT&T hunting for alternative ways to acquire sufficient spectrum, even though it was finally able to complete the purchase of Qualcomm’s 700MHz Spectrum on December 27th.

But where does this leave T-Mobile USA?

On December 20th. Deutsche Telekom (DT) CEO Rene Obermann speaking to his own corporate blogger suggested that T-Mobile USA would need to move to LTE technology eventually; and would also require additional spectrum. He made clear however, that the $3 Billion cash settlement from AT&T would be used initially to reduce DT corporate debt not to further enhance T-Mobile USA’s network that was just upgraded in 2011 to dual carrier HSPA+ and is currently providing sufficient capacity for current customers.

Rumors of T-Mobile USA’s difficulties are exaggerated…

As of end of third quarter of 2011 T-Mobile USA served 33.7 million customers only slightly down from 33.8 million at the end of third quarter 2010. 10.1 million of those customers are now using 3G/4G smartphones up 40% from a year earlier. OIBDA margin was 31% in the third quarter of 2011, up from 28% in the third quarter of 2010 due largely to lower losses from equipment subsidies that were reduced by the launch of T-Mobile’s unlimited Value plans. These Value plans allow customers to subscribe to new services without an upfront payment for a bundled handset. These plans have reduced ‘costs per gross add’ and lowered the cost of subscriber retention.

Overall, T-Mobile USA had a slim but maintainable third quarter net income of $332 million on service revenues of $4.67 billion.

This year therefore, T-Mobile survived disruptions to its retail channels including the discontinued retail partnership with Radio Shack; handled the uncertainty of the AT&T acquisition; and held Contract Customer churn down to 2.4%, although Prepaid churn jumped to 7.2% from 6.6% between the second and third quarters.

T-Mobile is maintaining its customer base and making money.

Challenge is Migration to LTE

The challenge for T-Mobile USA is to fund future growth to compete with the three other large players in the US market – AT&T, Verizon and Sprint - as well as ‘no contract’ low cost prepaid regional operators - Leap Wireless, MetroPCS and US Cellular - all of whom are migrating to LTE.

In November T-Mobile announced that its nationwide ‘4G’ (HSPA+ at 21Mbps) network now covered 208 markets across the US reaching more than 200 million POPs.

But how will T-Mobile migrate this network and its GSM PCS customers to LTE without AT&T?

Possible Migration Path to LTE

We have reported that migration to at least a Hybrid HSPA+/LTE network is key to long term profitability. TMoNews the unofficial blog of T-Mobile USA recently described a possible low cost path for T-Mobile’s LTE migration. See: ‘Editorial: Why T-Mobile Should And Will Deploy LTE (The Technical Edition)

At this point in time, T-Mobile is just now refarming PCS spectrum. In a majority of the markets where T-Mobile has both PCS and AWS spectrum with no AWS used, it is quite likely that they will deploy HSPA+ only on PCS because most of the remaining markets only have 10MHz of AWS and 30MHz or more of PCS. AWS will likely be reserved for LTE in these areas.”

“In areas where they’ve got plenty of AWS spectrum and they’re using it for HSPA+, they’ll dedicate about 10MHz of PCS to GSM and 10MHz to HSPA+. If they have 20MHz of PCS or less in a market with lots of AWS, there will be no deployment of HSPA+ on the band, but there will be scaling back of GSM to 10MHz to prepare for LTE. T-Mobile will deploy LTE.”

 “T-Mobile USA has been preparing for LTE on their core network and backend infrastructure for over two years now. … T-Mobile USA has deployed all the necessary components to run IMS on their core network and (has) made a new Wi-Fi Calling solution that uses it. As far as we know, they are the first in the world to commercially deploy IMS for voice, SMS, MMS, and other circuit-switched services. It would be trivial for T-Mobile to change the client software to make it run over LTE or HSPA+. By preparing all the core network and backend infrastructure for LTE this far ahead, their nationwide LTE deployment costs will much lower.” 

Financing the Path to LTE

The key question is whether T-Mobile USA can finance this migration without bringing in new investors. Even if the migration could be done for as little as $6 Billion, additional spectrum will eventually be needed. DT is unlikely to provide that and is being very cautious because of concerns about European market growth and the financial risk of its 40% share of Greek telecom group OTE. DT is also planning to expand in several areas of its European business rather than in the US. 

Nor is DISH Network, who has offered to Partner With T-Mobile likely to be able to finance a T-Mobile upgrade as it focuses on its own rollout.

Meanwhile T-Mobile USA is pursuing business as usual adding ‘no contract’ plans to keep prepaid customers; and offering aggressively priced deals for the Holidays.

And Oh Yes - directly targeting AT&T and iphone4 in its Ads with its attractive T-Mobile girl – Carly Foulkes


December 14, 2011 06:06 suerudd

It has been a busy few weeks for AT&T.

Date

Event

Nov 25th/28th

  • AT&T-deep in talks with Leap Wireless, a second-tier but growing wireless player, to sell it a big piece of T-Mobile’s customer accounts and some of its wireless spectrum…..  AT&T hopes such a deal would placate the Justice Department …… or at least to strengthen AT&T’s hand if it goes to trial.

Nov.29th

Dec. 9th

  • US Department of Justice (DoJ) argued before U.S. District Judge Huvelle that since AT&T has pulled its merger application from the FCC, the issue is no longer pressing and there is no need to rush to trial. DoJ asked the judge to delay the trial to an unspecified date in the future.

Dec 12th

  • AT&T has until Jan 12th. to file a report with the court explaining whether it still plans to try to buy T-Mobile.
  • AT&T said that it is considering "whether and how" to proceed with the proposed merger, which needs both FCC and DoJ approval to move forward. If it presents a plan to proceed on Jan. 12th. the pre-trial process will restart on January 18th.

Dec.13th

  • U.S. District Court Judge Huvelle puts hold on Sprint, C Spire Suits and any court proceedings until Jan. 18, while AT&T weighs the future of the deal.

While many are saying the AT&T T-Mobile “deal is dead”, and AT&T has clearly irritated the FCC staff, AT&T is now finally taking a much more conciliatory attitude.

Our recent report ‘It's all about Spectrum - AT&T T-Mobile Bandwidth matched by Verizon and Sprint’ describes how Verizon and Sprint are both buying control of significant extra spectrum. However, the Verizon AWS spectrum purchase from SpectrumCo. requires FCC approval; and once it approves that deal the FCC will find it difficult to argue that a merged AT&T T-Mobile would have an excessively ‘dominant spectrum position’.

Once the FCC allows Verizon’s spectrum acquisition - and after Sprint’s takes ‘virtual control’ of Clearwire’s spectrum - AT&T will have a very strong case that its ability to compete will be diminished if it is not allowed to acquire T-Mobile.

A complete reversal of the original case.

AT&T is working hard to complete the deal and is thought to have two teams pursuing two parallel options.

Option 1. AT&T is negotiating to divest sufficient spectrum and assets to satisfy the regulators. See:

AT&T and T-Mobile: Will there be a Spectrum Fire Sale to Escape Department of Justice and Close the Deal?

See Blog: Could AT&T Settlement Catapult Leap and MetroPCS to Top National Status?

Option 2. AT&T is still preparing to fight in court.

  • Verizon’s recent actions may have significantly helped AT&T’s case.
  • If AT&T makes a new proposal on January 12th DoJ may demand that AT&T refile that proposal with FCC before it goes to trial. [Note: AT&T correctly noted that it is normal to resolve DoJ issues before getting FCC approval. We also noted that in April in: ‘AT&T T-Mobile Acquisition: How long will it take to close?’]

AT&T really…really….really… wants the T-Mobile spectrum for capacity growth and is not likely to give up easily.

But, if AT&T loses at trial there are two other likely options:

Option A. “A network-sharing deal between AT&T and T-Mobile could be established, but this would probably not allow AT&T to reuse T-Mobile's AWS spectrum for LTE. A major blow for AT&T.

Option B. Deutsche Telekom is still anxious to complete the sale as it has major European investment plans for the $39 Billion. It might decide to spin out T-Mobile to a Private Equity partnership pending a later sale to a new player like. Google. [Several options for T-Mobile’s future are summarized in AT&T and T-Mobile: Will there be a Spectrum Fire Sale to Escape Department of Justice and Close the Deal?

We should know by January 12th. 2012, if AT&T can come back with a modified proposal that may be acceptable to DoJ, and then the FCC.

Rethinking US Market Structure and Competition in an IP world.

In a recent policy paper Strategy Analytics suggested that the nature of US Mobile Broadband competition has changed and that ‘All-IP’ networks dramatically change both ‘economies of scope and scale’ and the ‘Relevant Geographic Areas’ that determine Competitive Concentration for Anti-Trust purposes.

See: Policy Insight: New Mobile Industry Structure and 'All-IP' Services change AT&T T-Mobile's 'Spectrum Dominance' and Create new 'Challengers'

There may not however, be sufficient time in the current AT&T case to make such a profound change to the traditional 1980s/90s market analysis. Nor to establish rules for the new digital ‘All-IP’ Mobile Broadband Industry.


May 3, 2011 20:14 suerudd

On April 27th.several competing operators - Cincinnati Bell Wireless, MetroPCS, NTELOS, the Rural Cellular Association (RCA), the Rural Telecommunications Group, and Sprint Nextel Corporation all requested the FCC to consolidate into a single proceeding the upcoming review of the T-Mobile acquisition (11-65) and the earlier Qualcomm MediaFLO Spectrum acquisition filing (11-18).

“In the proposed Qualcomm transaction, AT&T seeks to acquire Qualcomm's six Lower 700 MHz D Block (6 MHz) licenses, which collectively have a nationwide footprint, and five Lower 700 MHz E Block (6 MHz) licenses in five large markets. The T-Mobile transaction includes the acquisition of an additional 50 MHz on average in the same geographic areas covered by the proposed Qualcomm transaction. Obviously, with such an overlap, these two transactions should be examined together, rather than separately.”

In Appendix B. Competitor Chart of AT&T’s April 21st. Filing there are 567 pages of Competitor Charts for 700 MHz, Cellular, and SMR Licensees that show the Qualcomm D & E Block Spectrum alongside the AT&T Consolidated Spectrum. A Selected example for San Francisco, San Mateo and Washington DC is shown below.

As seen in the above example AT&T’s own Appendix B strongly supports the case for examining the joint impact of the two acquisitions.
AT&T may now regret not having waited to settle the Qualcomm acquisition before seeking to acquire T-Mobile. [Note: Appendix A shows the Spectrum to be consolidated between AT&T and T-Mobile.]

So now the FCC may need to review the competitive and market impact of AT&T's aggregation of spectrum in both proposed transactions on nationwide mobile telephony and broadband services.

AT&T may have trouble establishing that it really needs all the additional Spectrum.

RCA President and CEO Steven K. Berry has called AT&T’s acquisitions a ‘spectrum grab’ and said, “It is clear that AT&T is doing everything possible to gain market dominance by making not one but two major spectrum grabs in the proposed Qualcomm and T-Mobile transactions.”

AT&T is now getting increasingly unfavorable publicity – as Broadband DSL Reports notes “Press (Are) Not Buying AT&T Spectrum Claims”. The chart below is being used in multiple publications to exemplify AT&T’s overreach. It is easy visually to add together either the green 3G columns or the blue 4G columns to estimate the consolidated spectrum of AT&T and T-Mobile. It is apparent they both far outstrip Verizon.

Delay may cause problems for AT&T unless it divests properties rapidly.

The clock is running on the AT&T T-Mobile merger since the FCC established the Pleading Cycle for the AT&T T-Mobile Acquisition (WT Docket 11-65) as follows:

Filings                        Due

Petitions To Deny     May 31, 201

Oppositions                June 10, 2011

Replies                        June 20, 2011

 Despite this aggressive FCC timetable, it is increasingly likely that extensive negotiations will be required – both nationally and state by state. AT&T will probably have to divest sufficient properties to ensure competition in each market on a case by case basis to create even stronger competitors than shown on its website.

The agreement with Deutsche Telekom (DT) however, states that AT&T does not have to agree to divestitures and other regulatory conditions that would have an adverse effect greater than USD 7.8 Billion; only half of subscriber or spectrum sales value is counted towards that sum. AT&T has stated that it is prepared to divest up to 40 percent of the number of T-Mobile subscribers or approximately 13.149 million subscribers - based on the stated value of USD 578 per subscriber. But the likely buyers are AT&Ts competitors who have no incentive to move quickly or to pay full price .

But AT&T’s acquisition agreement with DT for T-Mobile USA has a ‘drop dead’ date of March 20, 2012 after which either AT&T or DT can chose to terminate the deal.

If the deal terminates because of a failure to obtain regulatory clearance there is a provision that A&T must pay DT up to USD3 Billion in cash; enter into a roaming agreement; and “transfer to Deutsche Telekom certain wireless AWS spectrum that [AT&T] does not need for its initial LTE roll-out.”

The growing opposition to AT&T may well push the deal to the fall of 2012 as we predicted in an earlier Insight AT&T T-Mobile Acquisition: How long will it take to close?


December 30, 2010 22:12 suerudd

Skype today launched Video for iPhone, iPod Touch and iPads. This new version of the Skype service application software lets users make and receive video calls from iPhones, iPod touch and iPads, with instant messaging for other Skype users, over both Wi-Fi and AT&T's 3G network.

Was it a test for this iPhone video application that brought down Skype's Video Network Last week? The story going around last week was that a new release for Apple software - possibly the Skype iPhone Video application announced today - had a problem and triggered the Skype server failure when installed first on one and then several Skype 'supernodes'.

But don't blame the Apple software application.

Skype's supernodes act as both offline message (IM/SMS) relays and as Skype's Chief Information Officer noted yesterday "a directory, supporting other Skype clients, helping to establish connections between them and creating local clusters typically of several hundred peer nodes per each supernode."

The initial crashes brought down 25% to 30% of the Skype supernode servers - just before the normal daily peak. This in turn led to traffic overload that created extensive delays in the support servers responsible for offline instant messaging. This resulted in long response delays to some to Skype Windows clients and 20% of these had an old software bug that then caused them to crash.

The official Skype story was released yesterday by Lars Rabbe, Skype's Chief Information Officer, who describes the "snowball" effect that blocked most Skype users for 24 hours on 22nd.- 23rd. December 2010.

"50% of all Skype users globally were running (an older) 5.0.0.152 version of Skype for Windows, and the supernode crashes caused approximately 40% of those clients to fail. These ... included 25–30% of the publicly available 'supernodes', (that) also failed as a result of this problem."

"The failure of 25–30% of supernodes in the P2P network resulted in .. massively increased... load as (supernodes) reconnected to the peer-to-peer cloud... just before our usual daily peak-hour (1000 PST/1800 GMT)". As users tried to reconnect to the system, they generated "traffic to the supernodes that was about 100 times what would normally be expected at that time of day" and overwhelmed the remaining supernodes bringing the whole system to a standstill.

It is interesting that some sources focus blame on Microsoft, not just Skype's network, servers and software, but maybe the problem is more profound.

P2P Server Architecture.

Serious questions need to be asked about a network service architecture that allows:

  • Application software to crash what should be 'carrier class' servers performing network functions
  • P2P software that causes both network and user device based clients to crash as a result of network overload problems
  • Network server problems that spread automatically across a large number of supernodes

Network servers need to be especially resilient and intelligent in how they 'fail-over' in a distributed networking environment; but a robust Service Architecture is always a pre-requisite.

Let other P2P and 'Cloud' service providers beware.

On a positive note Skype brought in massive extra capacity to stabilize the network and was also able to restore Group Video Calling functionality in time for Christmas.

Software Release Deployment

Lars Rabbe also committed to review Skype's "testing processes to determine better ways of detecting and avoiding bugs which could affect the system.". Hopefully this promise includes:

  • 'Old fashioned' regression testing of all old versions of client software
  • Large scale network testing that does not impact live users - especially at peak traffic times!

These are rules that traditional service providers have followed for decades. Perhaps a little more respect for the "old fashioned" network operators and their software release processes is warranted.


October 12, 2010 04:10 David Kerr

sa photo dk

At CTIA in San Francisco last week, away from the fanfare around LTE rollouts and the next dozen tablet devices (ok, I exaggerate a little), Sprint had an announcement which will have significantly higher impact on mobile broadband adoption and revenues: Sprint ID. 

Sprint ID promises to up the ante on personalization and ease current feature phone users into the smart phone ranks.

Sprint ID offers instant personalization along key themes/packs where the operator has done the heavy lifting of identifying and group related applications of interest to different persona from wallpaper to ringtones to apps. While the one click marketing line is not quite matched by reality given pesky little things like accepting terms and conditions etc, Sprint ID is a significant breakthrough in my opinion as:

  • it broadens the market appeal of Smart phones to current feature phones users with a simple to understand offer in a range of device price points including the critical $49 and $99 levels.
  • it tackles one of the biggest weakness of all app stores: discoverability of content and simple personalization.

Three handsets were featured at launch of Sprint ID: Sanyo Zio™, Samsung Transform™, LG Optimus S™. These three devices cover key price points in the Sprint portfolio and provide customers with a range of form factors, industrial design and brand to meet their tastes. Interesting to note that both LG and Sanyo retain the right to put their own packs on their handsets as well. This is a big win for LG as its Optimus S™ will be available for under $50 with contract giving the vendor a much needed boost in the smartphone space. Samsung meanwhile continues to shine at Sprint occupying the lucrative $149 spot with its Transform™. All three devices of course require a Sprint Everything Data plan.

However, for me the more significant impact is that operators and oems are finally realizing that customers don’t buy phones or services or apps… what they really want are positive experiences

… be that socially connected, sports, education, health and fitness, fashion etc. This is something that our User Experience team has been evangelizing for the last 7+ years. Whether its 80k apps on Android or 250k on Apple store or 10K on RIM, one common experience has been exasperation at the huge waste of time, energy and emotions in finding ANYTHING!!! Which happens first, eyes glazing over or fingers cramping with so much scrolling? Either way the net result is often a disappointing experience which the early smart phone coolaid drinkers have learned to live with.

Newbies to the smart phone arena, will certainly have less tolerance and spend less time to personalize their device and enable applications. Sprint ID is well tailored to the next wave who are taking tentative steps into the smart phone space

 

David Kerr

dkerr@strategyanalytics.com


July 6, 2010 17:07 Phil Kendall

Yesterday in Paris, Orange unveiled its new five-year strategic plan, Conquests 2015. The plan covers four strategic priorities:

    The conquest of employee pride – to re-build its reputation as an employer;
    The conquest of networks – covering fibre-optic build in France, LTE deployments, the monetization of mobile data traffic (read: no unlimited data plans) and green networks;
    The conquest of customers – delivering a superior customer experience and helping customers navigate through their connected/digital lives;
    The conquest of international development – targeting 2x growth in revenues from emerging markets, with total customers growing from today’s 200m to 300m by 2015.

We published a report profiling the world’s 20 largest mobile operators last week, providing a SWOT and overview of strategic directions. We knew a new Orange vision was on the way, but there are only so many events that can postpone a report’s publication. It is with relief that I can say that, in terms of the key elements of this new strategic plan, enough had been discussed in the past to allow us to predict this quite accurately.

In this report, we looked at two key differentiators for operator performance: footprint (scale) and unification (both in the sense of integrated/converged networks and the provision of integrated services). The more profitable global mobile operators have strengths in these areas and it is good to see they form the basis of Orange’s new strategy.

Orange is very much committed to improving the value of its footprint, both in terms of growing its business in Africa and the Middle East (it is suggesting roughly three-quarters of its emerging market revenue growth could come from M&A here), but also in terms of its mature market footprint, where further consolidation (after the Orange / T-Mobile UK deal) can be expected.

In terms of unification, the next-gen network upgrades are a key building block there, as well as layering in services in areas such as health, education and payments. One of the more interesting statements in this strategy launch was that “Orange must become a multimedia coach for its customers by working alongside them to make their digital life easier”, with Orange’s CEO Stéphane Richard adding that Orange “are trying to be activists for an open world”. That trusted partner role has taken over from the own-branded services/content role as a priority for telcos and it is encouraging that Orange is focusing on its key strengths there.


June 4, 2010 20:06 David Kerr
sa photo dk

 

 

 

The inevitable movement to tiered pricing which started with Verizon Wireless acknowledging its plans to do so for LTE and has been accelerated with the much anticipated data plan announcement by AT&T this week.  So, what next?

    • Will we see significant priced based competition for mobile data among the top US operators?
    • Will we see significant movement in share of adds for AT&T as iPhone wannabees are tempted by a plan of only $15?
    • What impact will lower data plans for smartphones have on AT&T’s Quick Messaging Devices and Verizon Wireless equivalent?
    • How long before we see family data plans and shared usage across multiple devices?

The move by AT&T is a smart play to extend the smartphone momentum as the low hanging fruit of Apple aficionados, multimedia techies and style seekers willing to pay top dollar has been significantly penetrated.

There is no doubt that the iPhone remains the coolest device on the marketplace and the end to end user experience remains easily the best in class. So, reducing the TCO to attract the next 20% of customers to a paid data plans while educating customers about data usage levels and managing the traffic risk is very smart business in my opinion.

The lower price points will help AT&T maintain its current leading share of smartphone users and may be attractive to casual social networkers

  • Although the 50 photos allowance is not exactly generous! For casual messenger, and social network status checking and moderate email the new DataPlus plan is quite attractive overall and will likely attract a portion of customers who would otherwise opt for a Quick Messaging Device from AT&T or a competitive offering from Verizon Wireless.

I do expect to see some modest price competition among the big operators

  • with T-Mobile most likely to drive prices lower given their need for scale and to protect their predominantly youth centric customer base. but also expect an increasingly strong Verizon Wireless handset line up to compete strongly.

The impact on Quick Messaging Devices is in my opinion likely to be modest

  • as a traditional qwerty remains overwhelmingly the input of choice for heavy messengers in the US although there is definitely room for lowering the $10 mandatory data plan on featurephones

Family data plans and data plans which allow access across multiple devices are in the pipeline

  • but will probably not make an appearance until 2012+ as part of LTE offerings.

From a device vendor perspective, the move to lower priced iPhone plans is likely to put further pressure on vendors like LG who have yet to make a credible offer in this space as well as RIM who will find more competition in the consumer space.

The lower pricing on data plans will be music to the ears of ambitious new entrants like Huawei, ZTE who plan to bring mass market priced devices to the US & Europe. The lower TCO of smartphones as a result of downward pressure on service prices boost their addressable market.


May 20, 2010 21:05 David Kerr

sa photo dk

 

May you live in interesting times as the old Chinese proverb goes. Well in the information, communication and entertainment industry we certainly do. Some very interesting questions face our industry whether we look at:

  • the outcome of much delayed Indian 3G auction or
  • the battlegrounds around HSPA+ and LTE or
  • the surging Android ecosystem vs. weakening Symbian or
  • the upside potential for WebOS under it new owners
  • the potential disruption caused by mobile cloud phones and device

Every major technology advancement has lead to a massive disruption in the handset and infrastructure vendor community.

  • In 3G, Motorola’s slim myopia led to its near ruin and has provided huge growth for Samsung and a foothold in international markets for LG and SEMC.
  • On the infrastructure side 3G was expertly grasped by Huawei and ZTE leading to a new wave of M & A and a new world order which counts Nortel as a victim and seriously challenges ALU.

So how will the migration to 4G change the playing field?

  • Who will benefit most on the operator/service provider side?
  • Will Cloud Phones be disruptive in LTE?
  • Will operators find a path to realign the traffic/revenue mix with mobile broadband devices?

I would welcome your thoughts on these key questions. Also don’t forget to join our client webinar on Thursday May 27.

 

David


April 28, 2010 09:04 Phil Kendall
The bids in Germany’s current spectrum auctions are starting to add up. With a range of spectrum on the table (800MHz, 1800MHz, 2GHz and 2.6GHz), it is the digital dividend 800MHz spectrum that is dominating proceedings – at the end of round 94 the bids totalled €1.9 billion, with nearly 90% of this bid on the 800MHz spectrum. image Although there is still some way to go, the auction is already pricing the 800MHz spectrum at more than 30x higher than the 2.6GHz spectrum. The need for denser LTE networks in higher frequency bands will come, but for now 800MHz is much more valuable as it is the most cost effective for delivery of next generation coverage. However, in this instance the government isn’t leaving that to chance as it strives to close the broadband coverage gap in rural areas. Winning bidders have to cover smaller towns before they can move on to larger cities. That is a nice touch by the government. The next few years of spectrum auctions in Europe are unlikely to raise the kind of sums seen in the 2.1GHz 3G auctions of 1999-2001. So getting some public good (other than money for the public purse) out of the auctions makes sense. Building in licence rules to make sure 800MHz spectrum really is used to close the digital divide is logical as 3G/4G mobile broadband adoption soars. So if you live in a rural community that has yet to be touched by DSL/cable and are fed up waiting for a decent 3G mobile broadband signal, the sale of 800MHz spectrum for mobile services and they way coverage is being prioritized in the legislation is good news (provided you can wait a little longer for the spectrum to be cleared of analogue TV). But for the rest of the population in Germany at least, this is probably all very dull. There are only four bidders in this auction (the four existing mobile operators), so it will do nothing for competition and probably nothing for pricing either. Many operators we speak to have a similar view to TeliaSonera and will position LTE as a premium mobile broadband product as they try to pull back from what has often been quite intensive price competition in this fledgling sector.

March 30, 2010 00:03 David Kerr

sa photo dk Returning from CTIA in Las Vegas last week and with only 2 days before going off on vacation to Florida, I found myself reflecting that two of the most interesting meetings I had at the show were with mobile operators.

During CTIA I spent some time with AT&T emerging devices and T-Mobile M2M teams and was impressed with how both these units had managed to cut (or at least untie) the cord to the mother ship and avoid having innovation stifled by the Borg up at Corporate.

    • AT&T’s efforts to encourage a broad range of new applications and devices has definitely paid dividends with Mr. Lurie and his team adding an impressive 1M users in Q409 as a result of new device categories (mostly PND and EBR).
    • T-Mobile revealed a somewhat unheralded pedigree in M2M.

Partnership is the order of the day.

AT&T highlighted partner applications ranging from location enabled pet collars (Apisphere) to glow cap bottles to aid compliance with medication schedules (Vitality) to a very cool new tablet from Openpeak which is very different to the announced but apparently supply side challenged iPad.  Verizon Wireless and Sprint are of course also praying at the alter of open development but perhaps with less public presence.

When I think of enterprise mobility, AT&T and Verizon Wireless are top of mind but T-Mobile has in fact quietly been developing strong competency in the M2M space over the last 7-8 years.

T-Mobile offers four different SIM form factors to suit specific applications and have enjoyed triple digit growth for the last four years. T-Mobile US has quietly activated “hundreds” of different device types on its network with only a handful of devices being rejected or pulled due to network unfriendly characteristics. These devices span Telematics, Connected Energy, Telemedicine and several other applications.

So what is the common DNA of two very different operators that has allowed them to innovate and focus on new opportunities? Separation and operational autonomy to facilitate and open funnel approach to partners and speed of execution not normally associated with US carriers.

In the case of AT&T, the Emerging Devices group was chartered with developing a new space and freed from the legacy of voice & data consumer tariffs and prepaid/postpaid categories which just don’t cut it in the new connected reality where users will have multiple devices connected but used in very different ways. Mr. Lurie and his team have been able to streamline device certification and experiment across the spectrum of business models for new connected applications.

For T-Mobile, speed of certification (days not months) and the independence of being a self-contained unit (own engineers, own sales although linked to broader enterprise group) reporting to Finance & Strategy have allowed them to pursue their “easiest to do business with” approach to the M2M markets.

So, the takeaway? Innovation is alive and well at US operators but separation from the collective corporate mind is essential.

David Kerr