Telecom Monthly - July: A T & Tease
July 7, 2009
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- Telecom Monthly July Newsletter
Welcome to what is shaping up to be a wacky Summer. iPhone and Pre are positioning themselves as the ultimate smart phone and Android would just like to be mentioned at all. But who has the most at stake: Apple? Sprint? Palm? AT&T? It leaked out that Steve Jobs had a liver transplant while on medical leave from Apple and everyone is holding their breath to see what will happen next. But holding one’s breath won’t save the likes of Nortel which is about to be sold off into pieces. Red ink is on everyones mind this month and hopes are riding high for a Fall economic recovery in the Telecom sector. Give us a few minutes and we’ll fill you in on the news you missed while trying to save your job and still get your kids to soccer practice on time.
Let’s get the sensational news out of the way first. Michael Jackson dies and takes the Internet with him . . . at least for a few moments. Social networking and news sites like Twitter, Facebook, CNN, Google News, and Wikipedia all went down for varying lengths of time as people around the world searched for bits of news and rumor on the web regarding the early whispers of Michael’s death. AT&T reports record text messaging volume during Michael mania, and his songs shoot back to the top of the charts on iTunes and Amazon. Perhaps it took the death of a legend to prove that the days of traditional media are over. By the time the newspapers or even the evening broadcast news could report the tragic details, most Americans had already found the answers they were looking for in texts, tweets, and the words of their friends on Facebook. At least one company was able to turn the tragedy into a show of power. Sirius XM satellite radio announced a new Michael Jackson tribute station just 16 minutes after the singer’s death, proving that the newly merged company is both technically flexible and willing to make major decisions on the fly. Amazon and iTunes were similarly able to tailor their music stores to the throngs of customers looking for all things Jackson. There is no time to be sentimental when there are customers knocking down your doors.
MJ wasn’t the only sensational news of June. Some have been hawking paranoia and panic that millions would be left without a live television feed once the digital deadline passed on June 12th. But, to our knowledge, the world did not come to an end. We’ve got to wonder if traditional television is even relevant in the new agent of communications and entertainment. Most Americans now get their television content via Cable or Satellite, with many younger users rarely using a television as much more than a monitor for their video game machines. Nielson reports that all but 2.2% of television users had successfully completed the conversion. At least 2.2% of the population is faced with the decision (or already has) of whether or not television plays an important role in their lives or if they can find their entertainment elsewhere or online. Personally, we find ourselves streaming more content from Netflix and Hulu these days and reading news online as it happens rather than waiting for the broadcast news. Have your habits changed?
Sensational news tends to come in threes. And our final tabloid-esque item involves the ailing Steve Jobs of Apple. It seems that while Mr. Jobs was out on his six month medical leave, he took a little side trip down to Tennessee to swap out his liver for a newer model. Of course this has many on the Internet speculating on a possible return of his cancer. The investment community has renewed concern about Apple’s ability to survive without Steve Jobs at the helm. And Telecom Monthly wants to know if it is time for Apple to get a CEO transplant. At the very least, investors and Apple fans want to know if the company has a succession plan in place, but Apple is loath to give details on issues such as this, once again leading inquiring minds back to the Internet to speculate on the worst. The Internet can always be counted on to make a bad situation worse.
Speaking of bad Internet policy, AT&T has proven to be terrible at spinning a web of happiness. They seem to be poking their customers in the eye at every opportunity. This past month, they managed to upset loyal iPhone customers by making it more expensive for existing customers to upgrade to the new iPhone 3Gs, then it became clear that they also wouldn’t be ready to support MMS and tethering on the new device. Fans and bloggers pounced, spreading the news about the increasingly evil AT&T on Twitter and social networking sites. Suddenly, AT&T reversed position making it possible for most early iPhone adopters to get the new model. But the door remains open on when AT&T will finally make the long awaited MMS and laptop tethering available to iPhone users. AT&T’s credibility hangs in the balance and many customers are already posting online that they intend to switch carriers the moment the iPhone is no longer locked to AT&Tease.
Not all AT&T news was bad last month. AT&T and Apple blew 3Gs sales projections out of the water with an opening weekend sale of over one million iPhones. By comparison, Palm’s Pre apparently sold just 50,000 units in its opening weekend. More positive iPhone news came with the announcement that phones which have been upgraded to OS 3.0 will be able to automatically authenticate to any AT&T hotspot location, making it a breeze to surf the Internet wirelessly at thousands of Starbucks and other locations nationwide. And for those who live in poorly covered AT&T areas comes the exciting news that femtocells will be available by the end of the year. Femtos are little router-like devices which act as tiny cell towers, making it possible for you to place AT&T wireless calls in otherwise unavailable locations (such as indoors or in basements or garages). We are big fans of Femtos as they make wireless access universal and remove the barrier to using wireless devices as a primary form of communication in previously poorly covered areas. Of course, we’d be even happier if AT&T would simply expand their cellular network and patch the many holes!
Comcast has teamed up with Clearwire and Sprint to provide 4 mbps WiMAX in Clearwire areas and Sprint 3G access where WiMAX is unavailable. That’s next generation wireless speed and marks the beginnings of the wireless speed revolution. By this time next year most carriers will have deployed or will be about to build out their 4G/WiMAX/LTE networks which promise blazing fast Internet for all sorts of mobile devices from phones and handhelds, to computers and appliances. Mark our words, connectivity is about to change in dramatic ways and the wired Internet may soon be in its decline.
New FCC Chairman Julius Genachowski has finally been confirmed, just in time to weigh in on exclusive carrier contracts such as AT&T has with the iPhone and Sprint with the Palm Pre. While it is unknown which side of that issue Genachowski may come down on, it is known that he favors net neutrality and consumer choice.
FCC just cleared the way for Embarq and CenturyTel to merge, creating a new local service powerhouse. And talk has been heating up that Sprint and Level 3 Communications may be discussing a joint venture which would allow them to spin off their Long Distance networks. But we find it unlikely that the FCC will continue to allow the contraction of the entire Telecom industry. The days of the reemerging Telecom monopoly may soon be over in a Genachowski FCC.
Insiders predict greater regulation and consumer protections from the FCC. But that may not be an easy task. The poor economy has made the inevitable draw of large objects to attract even harder to stop. Take Nortel for example, it would once have been impossible to think of this mega technology firm as bankrupt jalopy in the pick-a-part bin at the local junk yard. And yet, it is about to be sold off in pieces to the likes of Nokia Siemens. And while purchasing entities may seem like saviors now, the lumbering behemoths staggering out of the recession era will also become the big game in the sights of consumer groups and the FCC.
The Minnesota courts have declared the Internet to be a “Utility,” and in the process opened the eyes of many to the obvious truth that communications needs have changed. Landlines are in a clear state of decline and more consumers now place their critical communications via the Internet or on mobile devices. The FCC and state PUCs will increasingly need to address the fact that the communications habits and needs of Americans have been dramatically altered in recent years. Can it be long before the FCC recognizes both wireless and Internet as critical utilities in much the same way that electricity and phone service were regarded in the last century?
While competition may be shrinking on the carrier side, technology is still a hot market. Open source telecommunications options from Asterisks and FreeSwitch have boomed during the recession, even as Nortel, Avaya, and many other stalwarts of the bygone Telecom golden era have faltered.
All powerful institutions seem to be vulnerable these days. Microsoft knows all to well how established franchises such as Internet Explorer are suddenly at risk from crafty newcomers such as FireFox, Google Chrome, and Apple’s Safari who have all made gains in the past year which have eroded Microsoft’s lead. Where competition is allowed to flourish, it seems to be doing so these days, in spite of, or as a result of, tough economic times. The big trend we spot in all this change is “Free” or “low cost” as an alternative to expensive entrenched solutions. Funny how an empty wallet can effect such broad change!
Those low cost threats may come from previously unexpected places for the Telecom Industry. Google Voice is sending out beta invitations for a service which will likely challenge carrier phone service with free SMS, voicemail transcription, free domestic calls and low cost international calls. But the industry may be its own worst enemy, raising rates on SMS and data just as Google and others seek to drop the floor out of pricing. Consumers are feeling pinched and options, such as Google Voice, are much more likely to take hold in the current economy than they might have in the past.
While you’re out enjoying the Summer sun, we’ll keep our eye on the growing shift which is occurring at a rapid pace in the Telecom world these days. Plop yourself in a lounge chair. Pour a cool drink (or twelve). And check in with us when you get a chance at TelecomMonthly.com.
Cheers,
iTodd
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This blog is one of the best blog that gives updated news and information.
What’s your spin on carriers like Integra Telecom, Level(3), Global Crossing and others ending up on Moody’s “Bottom Wrung” list?
See this link: http://www.tmcnet.com/voip/0609/expect-the-unexpected.htm
You are definitely right . This is one of the best blogs there is for telecom information. VOIP is my specialty let me know when you need anything.
Jeff Jones
Thinkbright.net - Enterprise level voip pbx systems for small business
Great article!!!!