Even after the stores opened and the customers have packed home with their lawn chairs, the disaster that has been the iPhone’s launch in Canada continues to ring (pardon the pun) in the ears of consumers. I took a spin around Vancouver on my motorcycle (sorry, going too fast for photos) this morning at 7:30 and counted 250-300 people at the Broadway & Arbutus Rogers store, some TV trucks, and some balloons but otherwise not much fanfare. The smaller stores had maybe a dozen or so people hanging around at best.

I was concerned that the media were going to get taken on a ride by Rogers with this launch. Fortunately, the CBC is reporting that desperately few of the customers who were encouraged by Rogers to go to Rogers flagship stores in 6 Canadian cities have walked home with the prize, while still others are getting denied the purchase because some Rogers outlets are showing preference to new customers (and thus, highly-spiffed new activations) over existing ones. The CBC has thus far been on the money on this issue I hope this REAL story is echoed in other media over the course of the day.

As Daniel Smith reported, Apple may have heard the more than 63,000 voices at RuinediPhone.com and diverted shipments destined for Canada to elsewhere. Plausible, but this clear internal “leak” might actually be a way for Rogers to blame the lack of supply on Apple in a very subtle way.

This is what happens when big, arrogant service providers who fail to remain customer-centric come into contact with a mass-market trend. The launch of the iPhone in Canada could (should) have had a huge impact on subscriber loyalty and shareholder value for Rogers, but today even those few folks lucky enough to actually have paid through the nose and signed their lives away on a 3-year contract to get an iPhone are embittered by the experience.

It seeps down from those obnoxious gouging prices and the three-year lock-in (in an industry where the life cycle of a phone is less than 2 years) all the way to the flagship Rogers store passing out Granola Bars from Costco instead of paying the overnight campers the respect of some eggs or pancakes (they promised ‘breakfast’).

Somewhere in between those two offences is the fact that, with diminished supply on hand, Rogers store managers failed to tell those in the lineups that there weren’t enough devices to go around. Moreover they failed to give those people any promise that they might get one sometime in the future, so as a result many fan boys have now sat on their asses outside a store all morning for nothing.

Rogers created a media event around the iPhone launch.. great for free marketing, bien sur. They made promises about special promotions and breakfasts and early openings for these stores, and encouraged crowds to concentrate at specific stores to make sure they’d be part of the media frenzy and make the event seem much larger in scale than it actually is. It’s an even trade, I guess, when the consumer ends up getting what they went there for. But with the biggest stores having fewer than 100 units on hand you can do the math: of those 200-400 people who waited at each of the flagship stores, as many as 75%-80% did it for nothing.

In essence, Rogers exploited them to generate buzz and get some free marketing, and gave them nothing in return. So let’s do the math: A Triple-Lock for the lucky few, a lost night’s sleep for many, and for everyone a granola bar.

Yeah, screw you too, Rogers.

The next thing I’ll line up for is to be the first subscriber on the nation’s next GSM wireless carrier.

Since I made my purchase, though, there have been three major developments:

1. Apple announced there will be an SDK. This seems (because of odd timing) that either the announcement or possibly the entire program is the result of bowing under pressure built up within the developer (and user) marketplace, or the fact that with jailbreaking they’ve lost control of the 3rd party developers already.
2. Various analysis is leading to a consensus that Apple profits as much as $565 per iPhone, assuming you keep it hooked up to AT&T. Roughly $432 of that comes from the payments from AT&T to Apple over the course of your two-year contract.
3. AT&T said it has activated 1.1M iPhones, but Apple says it has sold more than 1.4M iPhones. This means that there are 250K-300K iPhones which have obviously been unlocked. Unlocking your iPhones means that Apple is losing out on almost $130 million in gross profit over two years already. AT&T loses entirely. Ouch.

So, what’s a self-respecting geek to do? The reality is that the iPhone is enticing. Even though the call failure rate is actually pretty high (not sure if this is true of locked iPhones) it is an excellent phone with great acoustics and with a tremendous UI.

I’ve noticed some real flaws, of course: The fact that this is the first Apple device with a keyboard that can’t copy & paste in over 10 years should be embarrassing to Steve-O, as would the fact that you can’t Search anywhere on the platform. The fact that although it has Bluetooth you can’t talk to it from your bluetooth-enabled Mac rather contradicts Apple’s entire modus operandi with regard to connectivity, as does the astonishing iRealization that it inexplicably uses iTunes, and not iSync to.. uh… Sync.. Ouch.

As a new unlocked iPhone user, Apple still might be at war with you. But the reality is that these problems are largely software-fixable. Apple will solve them, or some plucky third-party developer will step in and hand-grenade Apple’s stranglehold on the users.

The best way to play the iPhone game is not to abstain from purchasing one (I know you want to) until RSJ opens the platform properly… The best way to launch your missile attack and enter the iPhone war is to buy one, unlock it immediately, and take it to your favourite GSM carrier (using it with or without the data plan — I’m finding free WiFi to be quite readily available most of the places I want to do email etc.).

In this way, you vote with your feet. And your wallet. And any vote against AT&T is a good one, in my view.

And if half or more of iPhone buyers point their radios at “anyone but AT&T” it’ll start to hit Apple where it lives, and they’re realize that the Blackberry-style lock-in is not the appropriate business model for invoking change in the wireless industry.

Despite vehement denials and warnings from Rogers spokespeople, I have it on slightly better authority from an unnameable closer-to-the-source Rogers employee that the date for launching the Rogers iPhone in Canada will land in December — making those overnight lineups outside the Apple Store so much more pleasant!

It is, however, unclear to me whether this will be the impotent 2.5G iPhone a la AT&T, or the kick-ass 3G iPhone rumoured to be teeing up to launch in Europe in October. Launching a 3G iPhone in Canada that is rather unlocked would be great for T-Mobile and other U.S. GSM carriers, such as they are, because it’d allow people to hook up an iPhone to existing GSM accounts with other service providers, despite AT&T‘s rumoured two-year exclusivity lockout.

What most of the hysterical journalists I have read in the past few weeks have overlooked is that the iPhone is a service, and not just a device: there are provisioning systems, security standards, and feature interactions (specifically, the visual voicemail tool is not exactly out-of-the-box wireless voicemail technology) which are client-server and which require service providers to deploy network equipment to coincide with the iPhone launch. Some carriers’ architectures will lend themselves better to this than others. So it’s not simply a case of getting the handsets, and some carriers are more stuffy than others about third-party hardware and protocols riding in their network.

In this sense, iPhone is interesting not just because it’s a cool, game-changing device .. but moreso because it’s the first fundamentally new network approach to break down the bunker doors to the wireless carriers metro switching networks since RIM. And as Richard McManus points out, it’s a platform that’s carrying a lot more applications than just email.

In the meantime, insofar as wireless device crazes go, the iPhone has big shoes to fill in outselling the RAZR.

It also means that the current raft of criticism lobbed toward Apple (and toward the irrational exuberance of Apple investors hoping that Apple will turn the mobile biz on its ear) is largely a criticism of AT&T Wireless, and the limitations of a combination of the AT&TW network and the structure of the deal they likely struck with Apple.

Apple’s not stupid. They’re betting big on GSM and GSM-based 3G wireless. The unlocked “TriPhones”, available in Europe (possibly also in Canada?) come this October, will be the items to have. If you buy an iPhone this weekend then you’re going to lose a lot of value very quickly.

If, in a few weeks, it turns out that Apple’s iPhone is going to become another delicate rosebud in the AT&T Wireless walled garden, there are a number of candidates waiting in the wings for those of us who’ve seen this as the bazaar‘s big chance to topple the cathedral. One of the more interesting ideas is the OpenMoko phone.

Yes, it’s a linux device, and no, there is no way to lock it. Furthermore, you will likely never be able to purchase it from your local wireless carrier for pennies, along with a two-year commitment. When people are looking for carriers and handset makers to break open that walled garden, what they’re really looking for is for mobile devices to be more like PCs (install whatever you want on it, use it the way you’d like to, support it yourself), and for the wireless data connection to be more like the internet (flat-rate, all-you-can-eat, don’t mess with my packets). These are market concepts which are rather foreign to the carriers whose networks we depend on.

OpenMoko, as this presentation attests, is pursuing just that model. Phone-as-PC, with linux and a solid widget/application framework under the hood. Under OpenMoko.org, developers are exchanging ideas and sharing code in a kind of SourceForge for the OpenMoko platform. Backed by Taiwan-based FIC, one of the world’s largest contract technology manufacturers, this platform looks as though it may have some legs, but it will likely hit the market in some other form and via a short list of different name brands. At the moment it’s just a reference design.

The hardware supplied to developers (and only developers at this stage) by FIC is named the Neo1973. It’s powered by a Samsung SoC S3C2410AL 266MHz ARM9. Standard memory includes 128MB SDRAM and an internal NAND flash, with apparent room for more (including via the MicroSD socket). The Quad-band GSM radio unit by Texas Instruments connected by an internal serial bus to the SoC is also pretty spiffy. But wait, there’s more:

• 480×640 Active-Matrix Touchscreen
  
• a WiFi chip is on the horizon, Bluetooth 2.0 built-in
  
• GPS receiver
  

Will this really shake up the market? FIC really seems to hope so, and is investing to make sure it goes somewhere. What’s clear is that with devices like this one, the Trolltech phone, Nokia’s first tentative step with the 770 Internet Tablet, Linux is going to have a startling disruptive effect on existing mobile platforms like Symbian and Windows Mobile. And very likely it’ll have the greatest likelihood of putting the wireless companies, especially 3G GSM carriers, in their place.

Time will tell.

-Ian.

-Ian.

Begin forwarded message:

> From: Tom
> Date: Fri Aug 1, 2003 9:32:24 AM US/Pacific
> To: fork [at] xent [dot] com
> Subject: Can You Here Me Now
>
>> From http://www.arstechnica.com/
>
> Middle East mobile firm shut out in Iraq
>
> Posted 8/1/2003 – 2:09AM, by Fred “zAmboni” Locklear
> Getting a foot in the door can lead to opportunities, but it can also
> lead
> to some squashed toes. Using the confusion in a Iraq as a cover screen
> the
> Bahriani mobile firm Batelco spent $5 million setting up and beginning
> GSM
> service in Baghdad on July 22. One problem. Batelco had not obtained a
> license to start services and promptly told to cease service. The U.S.
> started seeking bids for three mobile phone licenses on Sunday, so
> Betelco
> could just apply, right? Watch out toes, here comes the crunch.
>
> Batelco was probably trying to get the jump on others since licensing
> rules had not been set up and there have been rumblings the U.S. would
> craft rules to favor other U.S. companies. It was a $5 million gamble
> that
> could have been parlayed into a lucrative mobile license and contract.
> On
> Thursday, rules were set up for Iraqi mobile phone licenses and
> Batelco,
> along with some of Europe’s largest mobile companies will be left out
> of
> the bidding.
>
> ” The rules – issued by the coalition authorities ahead of a
> bidders’
> conference in Jordan on Thursday – ban governments from “directly
> or
> indirectly own(ing) more than 5% of any single bidding company or
> single company in consortia”.
>
> That rules out – among others – Orange and T-Mobile, two of
> Europe’s
> biggest operators, because the French and German governments still
> own
> significant stakes in their parent companies.”
>
> The BBC also suggests the rules have stipulations which will favor U.S.
> companies. The restrictions could be seen as preventing a government
> from
> having influence over services provided to Iraq. On the other hand, one
> could argue companies from coalition nations should be barred,
> especially
> since they are the ones setting up the rules.
>
> [1]http://www.bayarea.com/mld/mercurynews/news/special_packages/iraq/
> 6402112.htm
> [2]http://news.bbc.co.uk/2/hi/business/3114591.stm
>

Permanet, Nearlynet, and Wireless Data First published March 28, 2003 on the “Networks, Economics, and Culture” mailing list. Subscribe to the mailing list.

“The future always comes too fast and in the wrong order.” — Alvin Toffler

For most of the past year, on many US airlines, those phones inserted into the middle seat have borne a label reading “Service Disconnected.” Those labels tell a simple story — people don’t like to make $40 phone calls. They tell a more complicated one as well, about the economics of connectivity and about two competing visions for access to our various networks. One of these visions is the one everyone wants — ubiquitous and convenient — and the other vision is the one we get — spotty and cobbled together.

Call the first network “perma-net,” a world where connectivity is like air, where anyone can send or receive data anytime anywhere. Call the second network “nearly-net”, an archipelago of connectivity in an ocean of disconnection. Everyone wants permanet — the providers want to provide it, the customers want to use it, and every few years, someone announces that they are going to build some version of it. The lesson of in-flight phones is that nearlynet is better aligned with the technological, economic, and social forces that help networks actually get built. The most illustrative failure of permanet is the airphone. The most spectacular was Iridium. The most expensive will be 3G.

“I’m (Not) Calling From 35,000 Feet”

The airphone business model was obvious — the business traveler needs to stay in contact with the home office, with the next meeting, with the potential customer. When 5 hours of the day disappears on a flight, value is lost, and business customers, the airlines reasoned, would pay a premium to recapture that value.

The airlines knew, of course, that the required investment would make in-flight calls expensive at first, but they had two forces on their side. The first was a captive audience — when a plane was in the air, they had a monopoly on communication with the outside world. The second was that, as use increased, they would pay off the initial investment, and could start lowering the cost of making a call, further increasing use.

What they hadn’t factored in was the zone of connectivity between the runway and the gate, where potential airphone users were physically captive, but where their cell phones still worked. The time spent between the gate and the runway can account for a fifth of even long domestic flights, and since that is when flight delays tend to appear, it is a disproportionately valuable time in which to make calls.

This was their first miscalculation. The other was that they didn’t know that competitive pressures in the cell phone market would drive the price of cellular service down so fast that the airphone would become more expensive, in relative terms, after it launched.

The negative feedback loop created by this pair of miscalculations marginalized the airphone business. Since price displaces usage, every increase in the availability on cell phones or reduction in the cost of a cellular call meant that some potential users of the airphone would opt out. As users opted out, the projected revenues shrank. This in turn postponed the date at which the original investment in the airphone system could be paid back. The delay in paying back the investment delayed the date at which the cost of a call could be reduced, making the airphone an even less attractive offer as the number of cell phones increased and prices shrank still further.

66 Tears

This is the general pattern of the defeat of permanet by nearlynet. In the context of any given system, permanet is the pattern that makes communication ubiquitous. For a plane ride, the airphone is permanet, always available but always expensive, while the cell phone is nearlynet, only intermittently connected but cheap and under the user’s control.

The characteristics of the permanet scenario — big upfront investment by few enough companies that they get something like monopoly pricing power — is usually justified by the assumption that users will accept nothing less than total connectivity, and will pay a significant premium to get it. This may be true in scenarios where there is no alternative, but in scenarios where users can displace even some use from high- to low-priced communications tools, they will.

This marginal displacement matters because a permanet network doesn’t have to be unused to fail. It simply has to be underused enough to be unprofitable. Builders of large networks typically overestimate the degree to which high cost deflects use, and underestimate the number of alternatives users have in the ways they communicate. And in the really long haul, the inability to pay off the initial investment in a timely fashion stifles later investment in upgrading the network.

This was the pattern of Iridium, Motorola’s famously disastrous network of 66 satellites that would allow the owner of an Iridium phone to make a phone call from literally anywhere in the world. This was permanet on a global scale. Building and launching the satellites cost billions of dollars, the handsets cost hundreds, the service cost dollars a minute, all so the busy executive could make a call from the veldt.

Unfortunately, busy executives don’t work in the veldt. They work in Pasedena, or Manchester, or Caracas. This is the SUV pattern — most SUV ads feature empty mountain roads but most actual SUVs are stuck in traffic. Iridium was a bet on a single phone that could be used anywhere, but its high cost eroded any reason use an Iridium phone in most of the perfectly prosaic places phone calls actually get made.

3G: Going, Going, Gone

The biggest and most expensive permanet effort right now is wireless data services, principally 3G, the so-called 3rd generation wireless service, and GPRS, the General Packet Radio Service (though the two services are frequently lumped together under the 3G label.) 3G data services provide always on connections and much higher data rates to mobile devices than the widely deployed GSM networks do, and the wireless carriers have spent tens of billions worldwide to own and operate such services. Because 3G requires licensed spectrum, the artificial scarcity created by treating the airwaves like physical property guarantees limited competition among 3G providers.

The idea here is that users want to be able to access data any time anywhere. This is of course true in the abstract, but there are two caveats: the first is that they do not want it at any cost, and the second and more worrying one is that if they won’t use 3G in environments where they have other ways of connecting more cheaply.

The nearlynet to 3G’s permanet is Wifi (and, to a lesser extent, flat-rate priced services like email on the Blackberry.) 3G partisans will tell you that there is no competition between 3G and Wifi, because the services do different things, but of course that is exactly the problem. If they did the same thing, the costs and use patterns would also be similar. It’s precisely the ways in which Wifi differs from 3G that makes it so damaging.

The 3G model is based on two permanetish assumptions — one, that users have an unlimited demand for data while traveling, and two, that once they get used to using data on their phone, they will use it everywhere. Both assumptions are wrong.

First, users don’t have an unlimited demand for data while traveling, just as they didn’t have an unlimited demand for talking on the phone while flying. While the mobile industry has been telling us for years that internet-accessible cellphones will soon outnumber PCs, they fail to note that for internet use, measured in either hours or megabytes, the PC dwarfs the phone as a tool. Furthermore, in the cases where users do demonstrate high demand for mobile data services by getting 3G cards for their laptops, the network operators have been forced to raise their prices, the opposite of the strategy that would drive use. Charging more for laptop use makes 3G worse relative to Wifi, whose prices are constantly falling (access points and Wifi cards are now both around $60.)

The second problem is that 3G services don’t just have the wrong prices, they have the wrong kind of prices — metered — while Wifi is flat-rate. Metered data gives the user an incentive to wait out the cab ride or commute and save their data intensive applications for home or office, where sending or receiving large files creates no additional cost. The more data intensive a users needs are, the greater the price advantage of Wifi, and the greater their incentive to buy Wifi equipment. At current prices, a user can buy a Wifi access point for the cost of receiving a few PDF files over a 3G network, and the access point, once paid for, will allow for unlimited use at much higher speeds.

The Vicious Circle

In airline terms, 3G is like the airphone, an expensive bet that users in transit, captive to their 3G provider, will be happy to pay a premium for data communications. Wifi is like the cell phone, only useful at either end of travel, but providing better connectivity at a fraction of the price. This matches the negative feedback loop of the airphone — the cheaper Wifi gets, both in real dollars and in comparison to 3G, the greater the displacement away from 3G, the longer it will take to pay back the hardware investment (and, in countries that auctioned 3G licenses, the stupefying purchase price), and the later the day the operators can lower their prices.

More worryingly for the operators, the hardware manufacturers are only now starting to toy with Wifi in mobile devices. While the picture phone is a huge success as a data capture device, the most common use is “Take picture. Show friends. Delete.” Only a fraction of the photos that are taken are sent over 3G now, and if the device manufacturers start making either digital cameras or picture phones with Wifi, the willingness to save a picture for free upload later will increase.

Not all permanets end in total failure, of course. Unlike Iridium, 3G is seeing some use, and that use will grow. The displacement of use to cheaper means of connecting, however, means that 3G will not grow as fast as predicted, raising the risk of being too little used to be profitable.

Partial Results from Partial Implementation

In any given situation, the builders of permanet and nearlynet both intend to give the customers what they want, but since what customers want is good cheap service, it is usually impossible to get there right away. Permanet and nearlynet are alternate strategies for evolving over time.

The permanet strategy is to start with a service that is good but expensive, and to make it cheaper. The nearlynet strategy is to start with a service that is lousy but cheap, and to make it better. The permanet strategy assumes that quality is the key driver of a new service, and permanet has the advantage of being good at every iteration. Nearlynet assumes that cheapness is the essential characteristic, and that users will forgo quality for a sufficient break in price.

What the permanet people have going for them is that good vs. lousy is not a hard choice to make, and if things stayed that way, permanet would win every time. What they have going against them, however, is incentive. The operator of a cheap but lousy service has more incentive to improve quality than the operator of a good but expensive service does to cut prices. And incremental improvements to quality can produce disproportionate returns on investment when a cheap but lousy service becomes cheap but adequate. The good enough is the enemy of the good, giving an edge over time to systems that produce partial results when partially implemented.

Permanet is as Permanet Does

The reason the nearlynet strategy is so effective is that coverage over cost is often an exponential curve — as the coverage you want rises, the cost rises far faster. It’s easier to connect homes and offices than roads and streets, easier to connect cities than suburbs, suburbs than rural areas, and so forth. Thus permanet as a technological condition is tough to get to, since it involves biting off a whole problem at once. Permanet as a personal condition, however, is a different story. From the user’s point of view, a kind of permanet exists when they can get to the internet whenever they like.

For many people in the laptop tribe, permanet is almost a reality now, with home and office wired, and any hotel or conference they attend Wifi- or ethernet-enabled, at speeds that far outstrip 3G. And since these are the people who reliably adopt new technology first, their ability to send a spreadsheet or receive a web page faster and at no incremental cost erodes the early use the 3G operators imagined building their data services on.

In fact, for many business people who are the logical customers for 3G data services, there is only one environment where there is significant long-term disconnection from the network: on an airplane. As with the airphone itself, the sky may be a connection-poor environment for some time to come, not because it isn’t possible to connect it, but because the environment on the plane isn’t nearly nearlynet enough, which is to say it is not amenable to inexpensive and partial solutions. The lesson of nearlynet is that connectivity is rarely an all or nothing proposition, much as would-be monopolists might like it to be. Instead, small improvements in connectivity can generally be accomplished at much less cost than large improvements, and so we continue growing towards permanet one nearlynet at a time. First published March 28, 2003 on the “Networks, Economics, and Culture” mailing list. Subscribe to the mailing list.

-Ian.

—— http://www.nytimes.com/2002/11/18/technology/18CELL.html

November 18, 2002 Success of Cellphone Industry Hurts Service By SIMON ROMERO

Americans’ use of cellphones has increased so quickly that wireless networks are becoming overloaded, causing a growing number of customers to complain about calls that are inaudible or are cut off or are never connected in the first place.

And things could get worse before they get better, industry experts say, because even as cellphone companies are rolling out fancy features like digital photography and Internet-based games, they are hard-pressed to spend the money needed to improve basic service.

“This is a situation in which the wireless industry is a victim of its own success,” said James D. Schlichting, a deputy chief of the wireless communications bureau at the Federal Communications Commission.

Many of the industry’s service problems are a result of a huge growth of new customers. In 56 percent of the nation’s households, someone now subscribes to wireless phone service, more than double the percentage in 1995.

The surge in users is overwhelming the capacity to handle calls on wireless systems — whether because local transmitters are too few or too small, or because the local airwaves have become too crowded and carriers are unable to obtain larger swaths of radio frequencies.

The problems are compounded by basic economics. Customers have been attracted by the plunge in prices for wireless service. The average per-minute cost has dropped to 11 cents this year from 56 cents in 1995. For the phone companies that has meant a decline in average revenue per customer to $61 a month, from $74 in 1995.

And so, just when the wireless companies need to invest more money to accommodate all those new users, the companies are under increased financial strain.

As a result, the complaints are piling up.

The F.C.C. tracks only the few hundred complaints it receives each quarter — it recently reported fewer than in past years — but acknowledges that an increase in subscribers had worsened service problems. And surveys conducted for the industry itself show that complaints are rising.

“If I make 10 calls, at least three have to be redialed because they don’t go through,” said Orville Mills, who lives near Van Cortlandt Park in the Bronx and recently switched carriers to Sprint from T-Mobile. “The new services are just a distraction from not having the basics down.”

The percentage of all wireless subscribers who have called customer-service centers at least once in the last year to complain about service or because they had other problems has climbed to 61 percent, from 53 percent in 2000, according to J. D. Power & Associates, a company that measures customer satisfaction in many industries and sells it to the companies being scrutinized.

The level of such calls is higher than for many other consumer-service providers, including land-line telephone companies, cable-television operators and stockbrokers, according to Power. About 30 percent of the calls to customer-service centers were complaints related to dropped calls, bad reception or calls not going through, up from 19 percent in 2000. Other reasons included complaints and questions about billing, equipment and services.

The author of the study, Kirk Parsons, said the wireless companies are aware of the problem. He said he expected complaints to grow as the companies add new services, contributing to stress on the networks and subscribers’ confusion.

“It’s important to remember that cellphones are glorified radios,” said Travis Larson, a spokesman for the Cellular Telecommunications and Internet Association, the wireless industry’s main trade group. “They’re subject to interference from a lot of things, from building walls to sunspots to the weather. There will always be a trade-off between mobility and call quality.”

Meanwhile, the stock prices of AT&T Wireless Services and Sprint PCS, the two largest stand-alone publicly traded carriers, are down more than 45 percent this year on investor concern about revenues. And the two largest carriers, Verizon Wireless and Cingular Wireless, which are controlled by regional Bell companies, are struggling to find and pay for additional swaths of airwaves to carry calls.

The industry received something of a financial reprieve last Thursday from the Federal Communications Commission, which ruled that wireless companies would not have to pay the $16 billion they had offered for additional airwave licenses during a bidding process that is now being contested. The licenses had been seized by the F.C.C. from NextWave Communications and auctioned after NextWave filed for bankruptcy protection. But the licenses, and the airwave capacity they represent, are tied up by NextWave’s appeal of that seizure, which is now pending before the Supreme Court.

Another industry problem is the sheer technical complexity of sending and receiving wireless calls. Unlike conventional telephone systems, in which every customer is hardwired to the network, wireless systems rely on a delicate mesh of thousands of antenna towers — which often face resistance from local governments — and cellular relay stations.

The stations can easily be flooded by an increase in calling volumes. That vulnerability became clear in the hours after the Sept. 11 terrorist attacks in New York and Washington, when the local wireless networks were effectively shut down by the surge of attempted calls.

Various new companies are trying to develop towers and other forms of transmission technologies that could handle such surges. But so far carriers remain reliant on systems that, in some ways, still resemble radio communications networks that were first developed in World War II.

Because of brisk demand, financial problems at wireless carriers are not as severe as those in other areas of telecommunications, where large companies like WorldCom and Global Crossing have sought bankruptcy protection. Even so, some investors think the only way to ensure industry stability will be to winnow the competing wireless players. Instead of six nationwide carriers, they say, a more economically feasible number might be three or four.

“Consolidation among wireless companies can’t fix these problems, but it can make them less severe,” said Frank J. Governali, an analyst at Goldman, Sachs.

For months, investors have been waiting for mergers that would shrink the number of large competitors. No deals have yet materialized, though, partly because of technical obstacles. Unlike nations in Europe and Asia with higher wireless usage rates, the United States does not have a single wireless technical standard that would make it easy for carriers with different systems to combine operations.

Verizon and Sprint, for instance, employ an American-designed standard called code division multiple access, or C.D.M.A. Meanwhile, AT&T Wireless, Cingular Wireless and T-Mobile, formerly known as VoiceStream, use the global system for mobile communications, or G.S.M. format, common in Europe and Asia. Another large American carrier, Nextel, uses its own technology, called Iden.

Carriers have also resisted measures that would make the industry more consumer-friendly. In response to industry lobbying, for example, the F.C.C. has postponed until next fall a deadline for companies to start allowing “number portability” — letting customers keep their cellphone numbers even when they switch providers. The companies are reluctant to implement the measure, fearing it will create new costs while also encouraging customer defections.

“I’ve had the same number for three years,” said Sarah Vanderslice, a student at the Benjamin N. Cardozo School of Law in New York who subscribes to Sprint’s service. “The fear of losing it is the only thing that keeps me from dropping my cellular company.”

The F.C.C. has also repeatedly extended the industry’s deadlines for improving emergency-call abilities for wireless phones. Calls from cellphones are still much more difficult for emergency officials to pinpoint than calls from land-line phones. And the issue has become more pressing as the number of emergency calls from cellphones has grown to the current rate of more than 30 percent of 911 calls.

“The wireless industry is in need of a stricter taskmaster,” said David Heim, the managing editor of Consumer Reports magazine, which publishes an annual feature each year on cellular service problems. Although the F.C.C. has jurisdiction on certain operational matters, the wireless industry remains largely unregulated.

But few people expect the Bush administration’s F.C.C. to try to exert significant new authority. And even a former F.C.C. chairman from the Clinton years says that, in the main, it would be prudent to avoid more regulation.

“We have a robustly competitive wireless industry,” said Reed E. Hundt, the former F.C.C. chairman, who is now a senior adviser on information technologies for the management consultant firm McKinsey & Company. “Younger people recognize this in opting for wireless over wire line and putting up with some flaws in exchange for freedom of movement.”

Like their counterparts in Europe, carriers in the United States are hoping new services like text messaging and transmission of digital photos will eventually generate the additional revenue they need to put their finances on stronger footing. But aside from a small but loyal following of mainly younger subscribers that exchange text messages, none of the new services have attracted a large number of users.

And anyone who expects competitive market forces to quickly improve cellphones may be overly optimistic, some experts say. They note that the conventional wired telephone system has been evolving for more than a century and became widely dependable only in recent decades.

“Don’t hold your breath,” said Jeffrey Kagan, an independent telecommunications analyst in Atlanta. “Service and the economic evolution of wireless are works in progress — it might be years before customers are truly satisfied.”

“This is stupid. Nobody’s going to want to just access their email on mobile devices — people want to surf the web from anywhere!”

Long-time FOIBers know how wrong I think I was.

MOBITEX is the un-sexy, Ericsson-proprietary data network. Rogers operates it in Canada, BellSouth in the US. It’s interesting ’cause it’s a very old network that was built from the ground-up as a data-only system, whereas GPRS, CDPD, and others are simply data abstraction layers overlaid on switched voice networks.

I think it’s probable that MOBITEX could experience a renaissance of sorts in the coming couple of years, now that people other than subscribers to this list are starting to realize that 3G is a faint, whimpering hope. It all depends upon what Ericsson does with it.

This author contends that if Ericsson were smart, they’d Open-Source MOBITEX right away. Allow anybody to build equipment, and leverage the overall market’s growth to become the preeminent supplier of MOBITEX gear.

MOBITEX is now more than 10 years old… could it finally be all growed up?

-Ian.

—— http://www.stmobiledata.com/more_on_mobitex.htm

Mobitex is poised to lead the wireless network revolution. Read on to find out more in Alison Campbell’s “Mobitex versus GPRS – the latest mobile data war?”

By Alison Campbell

It’s been operating in the UK for almost ten years, but not many mobile users may be aware of Mobitex.

A different story can be heard in the USA where the wireless data communications network has a high profile, primarily because of its involvement with the much-acclaimed success of RIM Blackberry.

As the dawning of mass-market mobile data is upon us, Mobitex is poised for market expansion and may even be viewed as a competitor to GPRS. So what does the technology have to offer and how does it compare to the giant of next-generation wireless comms?

The company behind Mobitex in the UK has been RAM Mobile Data, which was acquired at the end of 2000 (along with Tardis Mobile and Playsafe Monitoring) by Transcomm plc. The three companies have been consolidated into Transcomm UK, which is now the UK network operator for Mobitex.

The technology itself was developed by Ericsson back in the mid 1980s to address the need for mobile access to the Internet or enterprise networks. It was initially developed for use by Telia Telecom as a way of controlling mobile communications costs for the company’s fleet of field service engineers. Designed for two-way, packet-switched, data only communication – using devices such as pagers, palm-tops and PDAs – Mobitex has achieved great success in various vertical markets and now has around 30,000 users on its UK network.

In the UK, Mobitex has been targeted at the public sector, transport & distribution and the field service industry, where it competes head-on with Cognito. A recent agreement with Communication Network Interfaces (CNI) of Korea will see a new range of two-way messaging devices being developed specifically for Mobitex users. This opens up the market for Transcomm to target white-collar sectors (such as the City) and other mobile users that need secure and reliable access to mission critical applications.

Like GPRS, Mobitex offers an ‘always on, always connected’ service, but unlike GPRS it has been specifically designed to carry two-way data, quickly and securely, and not voice. The technology is not being marketed as a direct competitor for GPRS, ‘But,’ says Ben Wood, a senior analyst with Gartner Group, ‘GPRS has done Mobitex a big favour by creating awareness of the benefits of mobile data. If Transcomm can ride on the back of that they could do very well.’

Rich Pullin, Managing Director of Transcomm UK, explains his view: ‘we’re offering an alternative to GPRS but it depends on what the user wants. Mobitex has many advantages. Network performance, for example, is not hindered by voice communications but it really depends on what’s important to the user.’

The main advantage Mobitex has over GPRS is that it’s here, deployed successfully, and has been so for ten years. Most experts say that GPRS will not really be fully available until the middle of next year.

As for the technology, Mobitex is data only, which limits it from competing with anything other than the GSM aspects of GPRS. However, there’s something to be said for treating voice and data as separate solutions. Recent research indicates that 83 percent of requirements for mobile data are for short messaging services (SMS).

Mobitex offers a data transfer speed of 8kbps. GPRS, on the other hand (because it operates on fours channels), can offer transfer speeds of up to 38kbps. But voice communication requires significantly more bandwidth. So therefore, performance could be constrained by how many users are on the network at any one time. Realistically achievable data transfer speeds could be much less. The problem GPRS has it that it is being overlaid on top of GSM, which means that in busy cities and urban areas it could be difficult to achieve anything like a decent data speed.

Mobitex is also said to be an extremely secure network, a primary requirement for trading exchanges. It is one of the only networks in the UK utilised by the Police and emergency services without encryption (although encryption can be built in).

Mobitex is designed to facilitate file transfer because it is what’s termed ‘symmetric”, while GPRS is asymmetric. What this means is that Mobitex devices support an even number of time slots in the uplink as they do in the downlink. Put simply, this means it’s easy to transfer files because the available bandwidth is the same all the way along the link.

GPRS on the other hand is ideal for viewing web applications or for gaming because devices support more time slots in the downlink than the uplink.

With GPRS, users get more bandwidth, which is necessary for voice and graphically hungry applications, but this means it is also more expensive. WAP sites are typically 1 gigabyte in size, which could cost as much as £2 per viewing as pricing stand today. So for users that require a fixed cost solution, GPRS may not be ideal. The likelihood is, however, that GPRS operators will offer a choice of packages geared towards different types of user, as will Transcomm with Mobitex. Says Wood: ‘As the market evolves, network operators in both camps will have to become much more competitive by offering a choice of services and tariff options.’

Whereas GPRS is an open technology, Mobitex is a proprietary standard. There will be less service providers and systems integrators designing and building applications to run on the network. For an enterprise-wide solution, Mobitex requires some bespoke programming and bespoke application design. But mobile data comes into best effect when integrated into the business, so for corporates this shouldn’t be a problem. For the single or consumer user it might be more difficult find devices, applications and games. There seems little difference between Mobitex and GPRS on t he pricing side, but Transcomm seems determined to compete starting with a basic service at around £10 per month (same as GPRS). Handsets for both can be purchased at sub £300. But as an established standard without the benefit of pre-Christmas hype, could Mobitex ever be a threat to GPRS?

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Some Early Mobiles Reportedly Pose Brain Tumor Risk Thu Aug 22, 1:09 PM ET

By Anna Peltola

STOCKHOLM (Reuters) – Long-term users of some first generation cell phones face up to 80 percent greater risk of developing brain tumors than those who did not use the phones, a new Swedish study shows.

The study, published in the European Journal of Cancer Prevention, looked at 1,617 Swedish patients diagnosed with brain tumors between 1997 and 2000, comparing them with a similar control group without brain tumors.

Researchers found that those who had used Nordic Mobile Telephone handsets had a 30 percent higher risk of developing brain tumors than people who had not used that type of phone, particularly on the side of the brain used during calls. For people using the phones for more than 10 years, the risk was 80 percent greater.

“Our present study showed an increased risk for brain tumors among users of analog cellular telephones. For digital cellular phones and cordless phones the results showed no increased risk overall within a five-year latency period,” the study said.

Two major mobile phone manufacturers disputed the findings of an increased risk of cancer.

The world’s biggest mobile producer, Finland’s Nokia ( news – web sites) Oyj, which still produces two models of phones working in the Nordic Mobile Telephone standard, said scores of other studies conducted on the health effects of cell phones showed no evidence of health hazards for users.

“There have been close to 200 studies done on different areas of mobile phones and in the light of those and the way the scientific evidence is, there is no health risk in using mobile phones,” Marianne Holmlund, communications manager at Nokia Phones, told Reuters Thursday.

Mikael Westmark, a spokesman for Sweden’s Telefon AB LM Ericsson ( news – web sites), which used to make Nordic Mobile Telephone handsets, said: “The study and the conclusions it reaches differs from at least three other studies in the past in several highly regarded scientific journals. None of these studies found a connection between mobile phones and cancer.”

DEVELOPED TO SERVE NORDIC COUNTRIES

The Nordic Mobile Telephone network was initially developed to serve the Nordic countries, starting operations in the early 1980s, but then became popular in Russia and the Baltic countries.

It is still used in more than 40 countries, but has been overtaken in several countries by the Global System for Mobile Communications, which is due to be gradually replaced by rapid third-generation mobile networks.

Analog Nordic Mobile Telephone phones have been in operation for 20 years, making it possible to study the longer-term impact of microwave exposure to their users, but researcher Kjell Hansson Mild said it was too early to draw conclusions on the currently widely used digital Global System for Mobile Communications phones.

“Nothing can be said about GSM at this stage,” said Hansson Mild, professor at the National Institute for Working Life and co-leader of the study.

“These are tumors that develop very slowly, and GSM does not have users who have been using it for 10 years,” he told Reuters. (Additional reporting by Jan Strupczewski)

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