PJ Louis

Is the iPhone Slowing AT&T's Network?

This is not a new discussion. In fact it is about 2 years old. Since AT&T Mobility launched the iPhone in 2007, there have been technologists like myself that have raised issues like the imoact on the network. Just as important issues regarding fraud (the unlocked phone issue - especially the 400,000 handsets that were illegally unlocked by 1Q2008) and lopsided revenue sharing have been discussed by the telecom industry since the iPhone's launch. Despite then popular investor belief, the iPhone was originally launched as a 2G handset and not as a 3G handset. The iPhone eventually launched a 3G version of itself, which took greater advantage of AT&T's 3G network. The problem AT&T has now has less to do with beefing up the network and more to do with evolving it to full 3G capability. Even the need for Apple to move away from exclusivity has been discussed since 2007. When AT&T originally signed the deal with Apple I objected to the contract's long term impact on AT&T.

I hate to say this: Nothing new here.

I suggest investors go back and do research dating all the way back to 2007. There were plenty of telecom industry experts objecting to the AT&T-Apple deal and for all the reasons analysts are now finally discussing.

Why Ericsson's Nortel Deal Won't Happen

In the past I would have agreed with you that the national government would not let its premier think tank and vendor fall into foreign hands. However, there is precedence for such a move.

When Lucent was acquired by Alcatel, the U.S. government and industry professionals (including myself) cried out about Bell Laboratories ending up in the hands of foreign ownership. Bell Labs was the United States’ top telecom think tank and we were going to let it fall into French control. For many professionals there were issues of intellectual property control and national security that had to be dealt with. Concerns regarding Bell Labs’ U.S. government work were eventually dealt with by Alcatel when it promised to build a firewall between Bell Labs and the rest of Alcatel Lucent. The result was Alcatel forming a separate company, which is now called LGS (Lucent and Alcatel Government Solutions). LGS now has operating control of Bell Labs. Effectively, LGS acts as a kind of firewall for sensitive U.S. government telecom work. However, Bell Labs no longer does basic research and sets defacto national standards; it now just performs marketable technology work. How valuable can their work be now? So who knows what the Canadian government will do.

Nortel’s Bell Northern Research (the U.S equivalent of Bell Labs) no longer exists as a separate entity and it has not since the late 1990s. Bell Northern Research (BNR) was a top notch telecom R&D group. In my opinion. after John Roth merged BNR into Nortel R&D, BNR ceased being a force in the industry.

Will the Canadian government allow their premier telecom vendor to disappear from Canadian hands? I don’t have an answer to that question. But there are so many creditors and bond holders involved in Nortel that many influential people in the financial market may have significant influence over the final outcome. I do agree there will be a national discussion about this sale. The question is whether the discussion will have any impact on the final outcome. I have commented on this issue on Canadian news blogs, the replies run the gamut of views.

AT&T: The iPhone's Achilles' Heel

The problems noted by TechCrunch were true. The fact the entire country and the entire customer base did not suffer from the early technical problems is a testimony to both AT&T and Apple. As for the recent debacle concerning AT&T and Apple as it relates to 3G media services, the problem was; network congestion. The problem was addressed in the short term by AT&T’s deliberate and smart action of temporarily removing SlingPlayer access kept most of the customer base from ever knowing what was happening. AT&T is fixing that by upgrading the network to HSPA. So was there a problem? Yes. Can you blame AT&T? Yes. Is it being fixed? Yes. Could there be some other operational issues? Yes and most people would be surprised how many things go wrong in running a network and you never notice. End of story; move on.

The real story is that it is no longer in Apple’s best interest to stay in an exclusive arrangement with AT&T Mobility. Apple needs to expand its customer base for its own content business. AT&T Mobility needs to transition its business to a content driven model and it currently needs a push from the likes of Apple.

There is another story and that involves Nokia. What Apple needs to worry about is Nokia.

Why Level 3 Is a Must Own

A joint venture is not unusual. An acquisition is not unusual. What is unusual is “network sharing”. When most analysts are thinking "joint venture" they are likely thinking network sharing. There have been discussions of possible network sharing. Now that is an idea I like because it does not expose Sprint to the onerous implications of owning an expensive network. Remember that networks cost money to operate.

Debt issues aside. Even if debt was not an issue there are a ton of downsides to network sharing.

One of the many bad things about network sharing is simple alignment on operational priorities: Imagine, Sprint with one set of goals for the overall fiber network and Level 3 with another set of goals for the overall fiber network. Now imagine trying to share a network.

Seeking Omega – An Unauthorized Strategy for Yahoo

I like the whole notion of predictive decision markets. If you take that one step further, you can actually leverage experts within a company and outside of the company to improve management’s tactical and strategic plans.

There are consulting firms that have been using this approach for since mid-2008. For one I have been using the tools mysel. I believe the use of predictive decision tools is effective for restructuring a company.

The keys to successfully using predictive decision tools are: management needs to be willing to look deep within the company and management needs to hire external consultants to serve as referees.

In regard to Yahoo, I hope they listen to your advice because they certainly need it. Mark - your other suggestions are sound as well - good article.

Back to Basics for Private Equity

I am in total agreement with Old Trader. There is not much to add. Strategic acquisition exit strategies require a long view of the industry sector and there is nothing wrong with that.

4 Key Telecom Trends

Interesting article. However, the jury is still out on what 4G is. Yes many of the major carriers are heading down the path of LTE but that does not mean WiMAX is dead and buried. In my opinion, 4G wireless will be both WiMAX and LTE. As for Clearwire's so-called dismal results, I had heard something completely different.

LTE does not exist yet except for what is on paper and in the labs. Yes, LTE is an evolutionary stage of UMTS but that does not mean it is ready for prime time.

Palm Pre vs. iPhone: The Gmail Advantage

Let me clarify myself, the iPhone supports multi-touch. It has improved over time.


On Jun 06 09:19 PM PJ Louis wrote:

> When Push technology was developed years ago it was a major breakthrough.
> However, it was and still is a feature that frankly is lost on a
> consumer. In other words, with current handsets, the Pull reconciliation
> that is done is not a big deal to the consumer. Think about it, so
> you wait a few minutes or even an hour before your main mailbox reconciles
> with your handset. Isn’t that fast enough? If that is not fast enough
> than maybe plain old SMS-based text messaging will do?
>
> The fact is Push technology was a major network management breakthrough.
> Rather than handsets wasting bandwidth requesting reconciliation
> or making queries, carriers and ISPs can simply push messages out
> to the handset. Back in the early to mid-1990s Push technology increased
> network efficiency and it was a way for companies to push information
> to you that you would not necessarily ask for. Push technology served
> and still does serve a variety of marketing and operational needs.
> However, is it a feature that consumers will consider a market draw?
> I don’t think so.
>
> Unlike the iPhone, the Pre supports multi-tasking and multi-touch.
> These are features that will likely draw consumers.
>
> In the end time will tell.

Palm Pre vs. iPhone: The Gmail Advantage

When Push technology was developed years ago it was a major breakthrough. However, it was and still is a feature that frankly is lost on a consumer. In other words, with current handsets, the Pull reconciliation that is done is not a big deal to the consumer. Think about it, so you wait a few minutes or even an hour before your main mailbox reconciles with your handset. Isn’t that fast enough? If that is not fast enough than maybe plain old SMS-based text messaging will do?

The fact is Push technology was a major network management breakthrough. Rather than handsets wasting bandwidth requesting reconciliation or making queries, carriers and ISPs can simply push messages out to the handset. Back in the early to mid-1990s Push technology increased network efficiency and it was a way for companies to push information to you that you would not necessarily ask for. Push technology served and still does serve a variety of marketing and operational needs. However, is it a feature that consumers will consider a market draw? I don’t think so.

Unlike the iPhone, the Pre supports multi-tasking and multi-touch. These are features that will likely draw consumers.

In the end time will tell.

Femtocells vs. Repeaters?

The author is correct femtocells are more than just repeaters - but I do like the analogy. Femtocells were conceived close to 20 years ago but we called them smart base stations and in some implementations we were calling them pico cells. The idea was largely abandoned by the industry because we found other ways to deal with improving coverage. However, given the vast amounts of data that is currently being pushed (and interacted with) through the network fabric and projected to be pushed through the network, the industry needs a way of increasing capacity and improving coverage within the current frequencies available to the wireless carriers and even the fixed wireless carriers. You add self-reconfigurable cellular network technology and you have a rapidly self adjusting smart wireless network that has great indoor coverage.

I have jokingly likened femtocells as stuffing 5 pounds of stuff into a 10 pound bag. It is a solution but not the only solution for a very big problem. No single technology is the answer. Bear in mind the goals of the engineering department of a carrier are ito mprove coverage and to increase capacity – all without sacrificing call quality. This is a challenge that requires a carrier to implement multiple technologies in a variety of ways.

More importantly, femtocells can play an important role in extending network intelligence further out into the fringes of the network. This is all very helpful to the emerging media sector in telecom.

There is a bigger problem than radio interference. The problem lies in the current underlying network configuration used by the carriers. Read my blog pjlouis.com.

Yahoo's Bartz Minimizes Microsoft's Bing

Bing is faster and cleaner than Yahoo. Bartz is dissing Microsoft at a time when Yahoo needs help itself. True, Yahoo is focusing on the mobile sector but so is Microsoft. Don’t forget Microsoft’s deal with Verizon Wireless. Over the last 12 months, Microsoft has demonstrated less of a need for a Yahoo deal. After so many years of work, Microsoft may have gotten this right. Yahoo needs to find a way to differentiate itself in a day and age where Google is already preparing to get into the e-book business, Google is working to make its mark on wireless via Android and Microsoft has its Verizon Wireless deal.

As for Yahoo and social networking, it ought to be thinking social collaboration instead.

Does Sprint Have Any Steam Left?

As I have said frequently in my own blog pjlouis.com. The great thing about the wireless marketplace now is that it is dynamic. The dynamics of technology always forces change; it may take time but things will change.

True Verizon Wireless and AT&T Mobility dominate the landscape but they do not have total control over the marketplace. Sprint is undergoing a major restructuring as evidenced over the last 12 months in the way Dan Hesse has made changes and dealt with the recession. The numbers are important and indicate the positives and negatives of any company but you need to understand why the numbers reflect potential.

Dan Hesse has been responsible for: changing out his executive management team (which was necessary), mitigating his WiMAX risk via the new Clearwire venture, establishing new relationships via the new Clearwire, and re-launching (sort of since it never disappeared) Boost Mobile (thereby re-emphasizing prepaid).

The Palm Pre will facilitate Dan Hesse’s turnaround of Sprint. Keep in mind Sprint is alreayd putting in place its 4G network; nearly a year ahead of Verizon Wireless, AT&T Mobility, and T-Mobile

Sprint’s best friend to date has been the recession. The recession forced all of the major wireless and landline carriers to shift strategies. The recession gave Sprint time to act. The recession forced all of the major and minor carriers to scale back capital budgets that had been in place since 2006 or 2007.

The recession reset the playing field.