A number of industry players - Sprint Nextel, Clearwire, Comcast, Time Warner, Bright House Networks, Google, Intel and Trilogy Equity Partners - have formed a $12 billion technology consortium to build out a WiMAX network with the spectrum that Sprint and Clearwire own. It is not clear what each player will get, but it is clear that all the partners are hedging their bets against the wireless future:

- Sprint Nextel needs a path to 4G.
- Clearwire needs a mobile element that is nationwide.
- The cable players need mobile to compete with the telcos.
- Google needs an alternative to promote its open access agenda.
- Intel needs success in wireless technology because it has not done well with mobile wireless chips in the past.

These types of arrangements with various players have not worked in the past, because each of the players has different and sometimes conflicting needs. The final outcome of this consortium will most likely not look like the initial consortium. But with all the backing behind this agreement and the motivations of the various players, a WiMAX network is very likely to get built.

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Vodafone Group's terse 6 May announcement (click here for press release) that it has signed an agreement with Apple to sell the iPhone in 10 countries around the world has taken many by surprise. The countries are Australia, Czech Republic, Egypt, Greece, Italy, India, New Zealand, Portugal, South Africa and Turkey.

While Vodafone has promised more details later, the press release is interesting because it makes no mention of the exclusivity that has featured in previous Apple-operator deals in the U.S. and Europe. It also makes no mention of whether Vodafone will be selling the current EDGE-only iPhone, or some new (but so far unannounced) 3G iPhone. Vodafone does not support EDGE in many of these countries.

It is in Apple's interests to achieve the largest possible addressable market in each new country it enters - and given that Vodafone's market share is a distant third (Australia) or even fourth (India), it would indeed be a coup if Vodafone had achieved exclusivity in these markets. This lends credibility to the theory that, to reach its 1% of global handset market share goal, Apple needs to move away from the single-operator-per-market approach. Vodafone's announcement smells to me like a pre-emptive public relations strike, and I expect to see several "me too" statements from other nonexclusive operators in these markets during the next few days.

Of course, Vodafone does have one interesting advantage over the larger operators in these markets - and that is its ability to offer its subscribers more attractive mobile data roaming rates to countries where it has a presence. Mobile data roaming "bill-shock" is already an issue for international travelers - and one that will be exacerbated by the iPhone's well-proven ability to generate order-of-magnitude mobile data usage greater than any other current smartphone. Vodafone is one of only a handful of operators that can leverage their global footprint to the advantage of their subscribers.

Vodafone's pre-emptive announcement is only the first salvo of what is sure to be a torrent of 3G-iPhone hype during the next few weeks as Apple's 9 June Worldwide Developer Conference approaches - a traditional occasion for Apple to announce new products. As a result, enterprise IT departments in each of these new countries will no doubt soon get lots of "can-I-get-an-iPhone" requests from enthusiastic employees. We've been talking about "managed diversity" for several years now - how to handle the virtually unstoppable demand for more diversity in supported mobile devices (see "How to Support PDAs and Smartphones in Business, 2006"). And we recently changed our position on whether to allow iPhones into the enterprise (see "Gartner Changes Its Enterprise iPhone Recommendations"). In addition, more information can be found in "Key Issues for Mobile Devices, 2008".

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Vodafone UK announced on 1 May new monthly price plans where customers, both new and existing, can get a bundle of text, voice, mobile Internet and e-mail access. The price plans start at £25 and increase in £5 increments, reaching a maximum of £80 per month. Although the mobile Internet access is marketed as unlimited, there is a fair usage policy attached to the deal, where the customer can use up to 500MB/month, roughly equating to watching a little over one hundred 90-second YouTube clips in a month. However, after customers reach this ceiling, Vodafone has decided to go soft on them and not cut off the Internet access on the spot. Instead, Vodafone will simply call clients and talk them through other offers that are more suitable for their heavy usage, and in this case, it would be a mobile broadband product.

Traditionally, mobile Internet access in many European countries is added on to a current monthly contract, although there are some prepay alternatives too, rather than being included in an offer. T-Mobile, for example, has its Web'n'Walk, and Orange has its mobile Internet packs starting at £1 for a day's access to £8 for an "anytime monthly browsing bundle." For further insights into other mobile Internet pricing strategies, read "Dataquest Insight: Pricing Strategies for Consumer Mobile Internet Access."

Do U.K. customers check out mobile Internet sites? They do, and according to Vodafone UK, the usage is on the increase, and the top visited sites are Facebook, Google and the BBC, among others. Interestingly, Sony Ericsson was heralded as the sixth most visited site, which could point to the fact that a part of the mobile Internet users were in fact Sony Ericsson device users. In our latest Western European User Survey "Market Trends: Communications Consumers, Western Europe, 2007," we found that there was a propensity in the younger generations to buy Sony Ericsson phones; however, Vodafone UK's mobile Internet statistics suggest that mobile Internet customers are in fact spread across all ages. Hence, mobile Internet activity is not exclusively for the young. The new offers are an attempt to further increase usage among current mobile Internet users and to get nonusers to start taking advantage of the services. In fact, there will be 40 so-called "mobile data ambassadors" in-store to help ease customers into the mobile Internet experience.

Because this move will certainly decrease customers' worries about running up a large bill for Internet access, it could potentially increase usage too. However, there is no guarantee that usage will skyrocket or even increase, because there is still a perception that the mobile Internet is slow and cumbersome. But do watch this space for competing operators who are likely to jump on the bandwagon of bundling mobile Internet access with the usual text and voice contract - and not only in the U.K. but also in countries that have launched mobile Internet and where usage could do with a "pick me up."

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This recent press release from Dell (about premium support and integration services building on existing tools and improvements for consumers) got me thinking. It has some characteristics from the research (soon to be published) that I am developing around next-generation contact centers offering much more choice to customers and being much more flexible. In addition, I based a recent presentation at Wharton Business School on this topic. But it also makes me think of some protectionist, jingoistic rhetoric that we are hearing.

The gist of this release is that Dell will charge more for "premium" North American customer service support. This is not a practice I have seen before, and it is a break from standard contact center practice. Standard practice is to globalize the agent "pool" and to make agent location and nationality transparent. The rationale for the standard practice is that you get to maximize the use of resources.

It seems to me that there are both good and bad rationalizations for this offering by Dell.

The good:
- Does this allow Dell to afford to keep good U.S. professionals, who are also close to U.S. headquarters?
- Is this a way of offering customers more choice and giving them more control?
- Is this a start toward offering personalized team service, creating virtual personal support teams?
The bad:
- Does this mean that regular Dell service is not good?
- Is this a way to upsell on service?
- Is this a way to avoid potential political "offshoring" critics?
The ugly:
- Is this a start toward indulging nationalist sentiments?
- Is this a way to start charging more for local national support in each country?
- Would there be separate charges for each country, like a popularity contest?

I am willing to start out believing the "good" reasons above. Time will tell if the others are actually relevant.

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A report published by ThinkPanmure states that AT&T has plans to sell about 7 million femtocells. The femtocells would come from ip.access, a U.K.-based player with a history in the femtocell and picocell space. The report says that AT&T may have signed a $500 million contract with ip.access, which would provide AT&T with femtocells during the next five years.

First of all, let's clarify that this is not official yet (I called a contact at ip.access on Monday, and they said they "could not comment" either way). In the meantime, let's look at some of the immediate issues at play and the stakeholders.

Implications for ip.access: This would be interesting because of the large volumes involved - it is a truism in the femto community that you need large volumes to drive low cost and, hence, mass-market adoption. However, before a large contract, this was a bit of a chicken-and-egg discussion. "Low cost" is assumed to mean under $100. However, we are not there yet. This may take a couple of years - femtocells' bill of materials (BOM) cost today is still higher than this - generally around $200.

Implications for Cisco: In January 2008, Cisco had invested in ip.access for an undisclosed amount and share. My Cisco sources indicated at the time that the agreement may allow for a larger stake in the future. I think it is a logical extension of what they do in terms of gateways, and again - like IP RAN - it is an additional wireless play.

Implications for other vendors: If this deal materializes and AT&T has selected ip.access, it is interesting to note the vendors not selected, because quite a few other players have a femtocell play.

Implications for AT&T: The business case for femtocells is still in dispute, as we have written about for some time now. Although there is a place for a femtocell offering in areas of poor coverage (not unlike in building picocells for enterprise), in order to help keep customers and prevent them from churning away, it is unclear whether this would apply to millions of subscribers.

Implications for the femtocell industry: As indicated above, this announcement is likely to boost confidence in the femtocell approach. A note of caution is that all the above caveats on the business model apply equally to other regions outside North America; however, in most other regions, poor indoor coverage may not be as pressing an issue.

References:
"Dataquest Insight: A Look at How Femtocells Can Offer an Attractive Return on Investment"
"Dataquest Insight: Femtocell Vendors and Operators Must Avoid VoDSL Pitfalls"
"Dataquest Insight: Femtocell Contracts, Partnerships and Acquisitions, Worldwide, 2006-2007"
"Report Highlight for Dataquest Insight: Business Case for Use of Femtocells Is Yet To Be Proven"

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Once upon a time, Telebras (a Brazilian incumbent - Sistema Brasileiro de Telecomunicacoes) was one of the world's top 20 carriers by revenue. Then, government regulators cast a powerful spell and broke it up into four pieces, also creating a magic-mirror company for each of them. Together, the eight new carriers had many interesting adventures. But now, like magic, one of the original pieces, Telemar, with a shareholder restructuring to incorporate the mobile company Oi, was large enough to rank in the top 30 once more. Not enough, the new carrier decided to merge with another former piece, named Brasil Telecom, which would once again form a global player - offering fixed and mobile services, with significant strength in Brazil and throughout the region. The regulator's enchantment still lingers in the form of a law that forbids such a merger between former incumbents. But the nation is buzzing with the rumor that the leader of the land will lift the spell through a decree and that it could happen within a year - a short period for a story that started back in 1998 and that apparently closes with the satisfaction of all players.

Is this a happily-ever-after ending? That depends on the reader. Proponents of the deal argue that Brazil needs a national champion to provide a competitive response to Telefonica and America Movil-Telmex, not only in the country but one that already foresees other markets in Latin America. Yet the recreation of a single entity to own nearly two-thirds of Brazil's fixed lines should be a concern. If one argues that all the action today is on the mobile side, then this move is not as alarming, because the combined entity would not rank in the top three nationwide (see "Market Share: Mobile Connections, Latin America, 4Q07"). But the new company (referred to as "Oi" on the enterprise side of the market) will have a strong revenue base and brand platform from which to enter other regional markets and to participate in the future of the truly global market in converged communications services. For a ranking of the top players through 2007, keep an eye out for the upcoming piece "Top 30 Telecom Carrier Rankings for 2007."

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The major cable companies Comcast, Time Warner and Cox Communications, recently dropped out of their previously highly-touted Pivot joint venture (JV) with Sprint. This is due to the fact that they could not offer a differentiated service, could not effectively bundle wireless with the rest of their product line, and were essentially competing with the Pivot branded JV.

The three cable companies mentioned above are part of a consortium that also owns AWS spectrum, but lacks a full nationwide footprint. In addition, Cox Communications owns additional spectrum at 700MHz in the southeastern United States. These companies are in discussion with Clearwire, Sprint, Intel and some equipment manufacturers concerning a JV using WiMAX. Comcast has even recently hired a wireless industry veteran. Dave Williams from O2 in Europe, to be its senior vice president of wireless technology.

A couple nice pieces of material and a little flash do not make a $1,000 suit. While these cable initiatives, spectrum investments and hirings seem to point the way to continued interest in and planning for some sort of wireless play, Gartner believes much more is needed.

To be a viable player in this market, U.S. cablecos are going to have to bite the bullet and separately own a wireless company that must be on the same page as them in terms of strategy and direction in the market. They are also going to jump into the industry quickly, because it is already very mature. That means purchasing an existing wireless provider (T-Mobile, Sprint, or the combination Alltel/U.S. Cellular/Leap/MetroPCS) because what they have now will not give them the needed resources to compete effectively. Cable has procrastinated about making a big move into wireless, but time's a wasting, and if they want to get in this market in any meaningful way, they are going to have to write a big check.

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U.S. mobile virtual network operator (MVNO) Movida Communications, which provided prepaid voice service and news targeted to the Hispanic community, will be purchased by Cozac, a subsidiary of APC Wireless. Because Movida had already been in bankruptcy since March, the takeover comes as no surprise - and furthermore, it's not necessarily an indictment of the virtual operator model. The U.S. mobile market is very competitive (see "Dataquest Insight: Competitive U.S. Mobile Market Challenges Its MVNOs") and relatively mature (though not fully saturated). Other VNOs have collapsed from underestimating the challenges, but several have carved out interesting niches, and at least two are quite substantial (see "Dataquest Insight: VNO Business Model Is Key Option for Network-Owning Telecom Providers") - namely Virgin Mobile USA and TracFone. When Movida's records become open to public scrutiny (as a result of the bankruptcy proceedings), the question of how it handled its base will become clearer.

In other regions, foreign language/culture-targeted MVNOs have done well - for example, KPN's Ay Yildiz service for the Turkish community. If APC can bear out its claims to improve customer experience via its strength in handset fulfillment, the demand will surely be there for an entrant to serve better than the mass-market plans of the incumbents.

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Eventually, every house will have a fiber connection - and who doesn't need more fiber? Increasingly, that's the long-term view of many in the telecom industry. The question for cable operators, who use a mix of fiber and coaxial cable to distribute their voice, video and data services, is how to get there while also supporting the existing base of legacy technologies, including, most prominently, DOCSIS, which is the standard that defines the operation of broadband IP data services.

The cable industry took a step in defining what fiber optics will look like in the network this week with the announcement that its main standards body - the Society of Cable Telecommunications Engineers (SCTE) - is pursuing a standard that will effectively be the equivalent of fiber to the premises (FTTP) for cable networks.

The SCTE Engineering Committee - which is accredited by the American National Standards Institute (ANSI) - will focus on defining a technology it calls "RF over Glass" (RFoG). It has also been referred to as "Cable PON." The committee approved the RFoG program in late 2007, and relevant subcommittees have begun meeting to start crafting a standard that is expected to significantly improve overall cable network capacity.

The move comes at a time when cable operators are under pressure to increase the capacity in their networks to support not only ultrahigh-speed broadband to compete against fiber to the home (FTTH) services being deployed by telco and other carrier competitors, but also a future where everything on demand and massive amounts of high-definition programming, over-the-top and peer-to-peer video, and other bandwidth-laden applications and services are the norm.

SCTE is undertaking development of a suite of technical standards to support wider use of optical fiber in the cable plant, while also supporting the coexistence of current legacy technologies over cable's hybrid fiber-coaxial (HFC) system architecture, where voice, video and data share the same spectrum. Any new standard must deal with DOCSIS, which is the standard for IP data services.

An SCTE "interface" subcommittee will examine key issues of RFoG, including performance issues of existing outside plant equipment such as splitters and couplers; specifications for fiber-optic passive filters and gateway RF levels; environmental requirements for gateways; and issues and practices dealing with "midsplit" cable equipment and system operations. This last one is interesting, as it deals with rearranging the spectral capacity of the cable's limited upstream path.

What vendors will benefit in the carrier network infrastructure space from this potential migration to fiber? The usual suspects include Cisco, Motorola and Arris, of course. However, some other smaller players that already offer products in this segment, such as Wave7 Optics, Aurora Networks, Calix and Alloptic, have been in this space as well. The RFoG standards initiative could also open a door to a more significant presence for Alcatel-Lucent in the cable market as well, which it has targeted as a new opportunity area.

In addition to external network equipment, the RFoG standards work will also help ensure interoperability with existing digital set-tops and DOCSIS modems/VoIP eMTAs, as well as integrated gateways' seamless operation on any FTTP-type architecture that emerges. A number of cable operators are already implementing deep fiber architectures in "greenfield" build-outs, and a number are also moving to FTTP already in their primary networks. In some higher-end markets, home builders are asking for FTTH connections as a way to increase the value of their properties to upscale buyers. As a general rule, home builders enter into nonexclusive agreements with TV and broadband service providers, but often provide incentives, such as subsidization, for running fiber connections to their developments.

From the time a new cable standard is initiated to the time of market implementation can be as long as five years, so if cable is to think about what its networks are going to look like by 2013 and beyond, the work must start now.

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BT Conferencing, the audio, video and Web-conferencing unit of BT Global Services, has announced the acquisition of Wire One, one of the leading independent videoconferencing integrators and service providers in the North American and transatlantic market. Terms were not disclosed. Wire One adds staffing and expertise to BT, particularly professional services and support staff in North America, where it needs to bulk up to compete more effectively. It also brings a strong customer list, which will see BT doing something it is getting more used to these days - managing services over other people's networks (for the time being, at least - this does offer upsell opportunities for BT's core WAN services too). This improves BT's general credibility in video, which will be vital not only in the managed videoconferencing market, but also for the expanding unified communications market in which BT Global Services wants to compete.

We have expected for some time to see more vertical integration in managed videoconferencing, as carriers look to bring on board service and support in key markets. Such moves don't mean the death of the small independents, but they will become more marginalized, as providers with global service reach are better positioned to serve global customer needs in-house. Particularly at the high end of the market with video telepresence, having a strong and homogeneous global service capability to deploy and support endpoint suites is becoming a critical differentiator.

Recommended Reading:
"Video Opportunities for Network Service Providers"
"Managed Videoconferencing Services"

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Recently in the news, Motorola announced its intentions to spin off its devices division.

Different perspectives exist on this debate. On the one hand, this could be a move by Motorola to concentrate on its core radio and cable infrastructure equipment, but on the other hand many carriers are looking for end-to-end solutions vendors which include devices. For the acquiring entity, what's in it for them? On the one hand, the acquiring firm may gain a great brand and sales distribution network, but may do so at great expense like Benq's acquisition of the Siemens' mobile devices division.

For example, Sprint's Xohm division awarded WiMAX equipment deals to vendors that had a combination of infrastructure and device(s) solutions, to Motorola/Samsung/Nokia/ZTE, for example, thus shunning infrastructure-only vendors. Equipment vendors with an end-to-end story as well, including devices, can also provide a compelling story that resonates with carriers - who anticipate less interoperability issues.

Is there enough in Motorola's offering excluding devices and excluding Symbol Technologies, with core radio infrastructure plus cable and telco infrastructure as well as advanced digital video processing and storage capabilities?

While Motorola is strong in cable CPE, the cable/telco video infrastructure solutions, both within and beyond the access network, are getting more complex. Motorola lacks a complete IMS (IP Multimedia Subsystems) offering session-aware IGMPv3 routers, Deep Packet Inspection routers, and FMC (Fixed Mobile Convergence) Softswitches with MSC: mobile switching center and Wireline/Packetcable Class 5 Softswitch offerings. The question is, by separating out the devices division, will this then allow them to fill in the gaps?

For 4G, Motorola has pegged its future with LTE: long term evolution and WiMAX with base stations, however, these networks will likely need core infrastructure aspects of carrier ethernet switches for backhaul, and in many cases the competition has applications components (VoIP, IPTV middleware) while lacking devices, or have devices as well.

Perhaps Motorola needs a devices portfolio to counter the stronger core infrastructure players.

Remember this is the company that sold its Quasar TV unit in the 70s for a paltry sum of $100M, to Matsushita Electric Industrial Co., Ltd., who leveraged the Quasar sales distribution channels for its Panasonic line.

Will the buyer of Motorola's devices division be successful by leveraging the Motorola brand and the distribution channels only? Or is this a Benq-Siemens being repeated?

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The largest U.S. cable operator, Comcast (Philadelphia, Pennsylvania), said recently it will start offering ultrahigh-speed Internet service using new DOCSIS 3.0, or wideband technology. It will introduce the service first in the Minneapolis/St. Paul, Minnesota, market, where it competes against Qwest. The service, which will cost $150/month for residential and $200 for business users, has the capability to deliver speeds up to 50 Mbps for downloads and 5 Mbps for uploads. To put this price in perspective, the latest published price I have for Verizon's FiOS - for 30 Mbps downloads and 15 Mbps uploads in New York - was listed as $159.95 unbundled or stand-alone, and $89.95 bundled with other services, as of February 2008.

Looking behind the curtain, however, we see this implementation isn't full-blown DOCSIS 3.0, as was presented by Comcast's CEO Brian Roberts at the Consumer Electronics Show earlier this year. Prestandard versions of DOCSIS 3.0-based modems are only available to the market now, because no standards-certified gear has made the cut at CableLabs (as of March 2008). Comcast told Gartner that it will use Cisco wideband modems that bond two channels as well as the Cisco uBR10012 cable broadband access platforms (cable modem termination systems [CMTSs]), which have been qualified at the Bronze level - meaning they supports certain key features, but not all, of the DOCSIS 3.0 specifications. Due to the complexity of DOCSIS 3.0 in both the upstream and downstream, CableLabs has allowed CMTS vendors to qualify their cable data headend gear using a gradual approach (Bronze, Silver, Gold) that phases in key features over time. This is so operators can go to market with higher-speed services to counter telco offerings and not be left hanging with nothing until full certification and qualification of headend and CPE gear.

Partial DOCSIS 3.0 features include bonding two or three channels in the downstream instead of four or more, supporting IPv6, and having advanced encryption/security features. Upstream channel bonding is not part of the first wave of qualification for CMTS gear, which would enable triple-digit upstream capabilities. However certification of DOCSIS 3.0 modems, when it does occur, will be for all of DOCSIS 3.0's upstream and downstream capabilities.

Comcast has made the commitment to launch advanced broadband services throughout its 42+ million homes during the next two years. It is targeting up to 20% of its footprint with DOCSIS 3.0 this year, with continued rollout during 2009 and a complete coverage of the entire footprint by 2010.

When the final standards-based versions of the DOCSIS 3.0 modems are available, which bond four or more channels together, cable operators should be able to deliver speeds of 100 Mbps to 150+ Mbps in the future. But let's be clear: Widespread availability of fully DOCSIS-compliant CPE isn't expected until at least mid-2008, and more relevantly, Comcast and its cable peers still have some work to do to engineer their networks to support DOCSIS 3.0-based services, which require at least three to four full 6MHz channels.

With the high bandwidth demands of high-definition TV (HDTV) and video on demand (VOD), operators are implementing a host of tools and techniques in order to reclaim and reallocate bandwidth to support all these services. Node size reduction and segmentation, analog channel reclamation, switched digital video, expansion to 1GHz capacity, and eventually, the introduction of advanced video compression technologies such as MPEG-4, Part 10, are all part of the toolkit for cable operators.

Meanwhile, back in Minneapolis/St. Paul, it'll be interesting to see what the uptake of 50 Mbps service at the $150 price point will be - steep by anyone's standard, for sure. For perspective on the competition, Comcast's new speed tier is faster than anything Qwest presently offers in this market, or is likely to in the near term. Existing customers aren't being left out of all the fun. In addition to the introduction of this ultrahigh-speed tier, Comcast will also boost the upload speeds on all customers' existing services at no additional charge. Comcast offers a number of service tiers, with from 6 Mbps to 16 Mbps downstream speeds. New upstream speeds will range from 1 Mbps for the 6 Mbps tier and up to 2 Mbps for the 8 Mbps to 16 Mbps tiers.

Qwest's DSL service offerings include three tiers: 1) the lowest-speed tier at 256 Kbps; 2) its standard service at 1.5 Mbps; and 3) another at up to 7 Mbps DSL service. Supporting higher speeds is just one way Comcast is trying to boost its cache' with consumers, as Verizon's FiOS fiber-optic-based service is starting to steal both consumer mind and wallet shares. DOCSIS 3.0, even in this more proscribed version, is first in the race toward uber-broadband in the U.S.

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In a move that could lead to new price wars among the Indian mobile carriers, the Department of Telecommunications (DoT) recently announced new guidelines for active infrastructure sharing. This comes a year after the Telecom Regulatory Authority of India (TRAI) recommended sharing of infrastructure (both passive and active) to improve network coverage in rural areas and make services more affordable for consumers.

The passive infrastructure comprises components like physical sites, buildings, shelters, towers, masts, power supplies and battery backups, while active infrastructure sharing is about accessing a common antenna, feeder cable, radio access network, node and transmission system. The DoT has, however, steered clear of allowing spectrum sharing among carriers. The spectrum sharing, if implemented, could open the gates for new players in a mobile virtual network operator (MVNO) format - something that is currently not permitted in India.

DoT will expect existing carriers that benefit from lower capital and operating expenses (for network expansion, due to active sharing) to pass the benefits to their consumers - something that could further burden the carriers, given that tariffs in India are already among the lowest in the world. This move will also erode the competitive advantages enjoyed by some of the larger carriers that have already invested in expansion - as the game now shifts from network coverage to service innovation and customer experience. The new carriers on their part will now be forced to focus on new services that offer enhanced value or better price points to lure consumers away from existing operators.

This move could also be a boon to operators awaiting licenses to roll out services in the country. The incentive of riding on existing network infrastructure will encourage carriers that find capex associated with network rollout prohibitive when expanding into areas with lower teledensity. Existing carriers providing service in urban areas also stand to benefit given the rising demand for denser coverage due to spectrum constraints. The sharing of infrastructure could mean new avenues for revenue generation for these carriers as they lease out existing assets.

The move nevertheless is positive for the operators and consumers if implemented in the right spirit by the existing players. India is expected to soon become the second largest market for wireless services by subscribers growing at 22% CAGR over the next four years.

All this while the Indian regulator continues to mull over the criteria for allocating 3G spectrum …

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Embratel, Brazil's incumbent long-distance and corporate communications operator, announced the expected completion of the first phase of WiMAX deployment in Brazil.

The company is owned by Telmex international. The first phase covers 12 state capitals: Belém, Belo Horizonte, Brasília, Curitiba, Fortaleza, Goiânia, Porto Alegre, Recife, Rio de Janeiro, Salvador, São Luís and São Paulo. These capitals include Brazil's largest cities: São Paulo, Rio de Janeiro, Brasilia, Porto Alegre, and Belo Horizonte.
Total cost of the first-phase rollout was estimated at $104 million.

Embratel's is the largest WiMAX rollout to date in Latin America and continues to show a strong commitment from Telmex for using WiMAX as a fixed/nomadic solution to expand its footprint in markets where it does not control the copper infrastructure (Argentina, Brazil, Chile). While Embratel's sister company, Claro Brazil, has recently rolled out 3G services through the deployment of HSUPA in Brazil, Embratel is using WiMAX as a fixed broadband solution.

While the debate in regions like North America centers on the viability of WiMAX as a future mobile solution, Latin American operators are seeing WiMAX as the most significant alternative to copper for entering the competition for the fixed service in the residential and SMB markets.

The level of success of Embratel's WiMAX rollout should provide some very interesting references to how well WiMAX is able to compete as a fixed solution, because it will be deployed by a player with deep pockets in several large cities with competitive players. Telmex has also rolled out WiMAX services in Chile and Argentina, but on a much lower scale. The Embratel reference will be a much more significant barometer of how far WiMAX may be able to go in Latin America in the short to medium term.

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A company out of Indiana called ChaCha offers a new search service on a mobile phone via SMS. Cell phone users can type in the short code 242242, to obtain answers to any question they may have, from the whimsical ("How many eyelashes does a camel have?") to the serious ("In what terminal do I catch my last flight?"). The typical answer comes back in a minute and half. Users are also able to reply back if they need more information. The service is free because it is ad-sponsored; the customer is charged for an SMS message by the carrier. The service does not require registration.

The intelligence in this search engine is based on a network of knowledgeable people who are part of a community that the company has set up and whom they pay for correct answers. The company only pays them $0.20 on average for a correct message, so pay is not one of the main reasons for being part of this community. In fact, it ranks fifth. Some of the top motivating factors include recognition for being a knowledge person and using one's mind in an otherwise monotonous life. The company monitors this community for accuracy in responses and records the answers so that it can automate them in case these answers become frequently asked. About 60% of the answers come from human "guides," and 40% are generated by the computer system via stored answers.

What the company has done is zeroed in on what a cell phone user wants in search — very accurate and meaningful answers, the capability to communicate back for further information and having this information delivered in a timely fashion.

Some of the other implications are that access to search items will be different on a mobile phone versus a PC and that the communities allow human interfaces to play a role in search. This service is a combination of a number of different services that have already been introduced, such as Wikipedia, OnStar and Google SMS. What is different about this is that the company uses both computers and humans, and it uses human communities in a way that enables it to regulate, monetize and control cost. This certainly points to a potential future trend in wireless service because of its characteristics: direct answers, the fact that it's inexpensive, the ability to reply and request more info, and fairly quick response times.

See "Dataquest Insight: Mobile Search Revenue is Tempting and Carrier Efforts Are Non-Trivial."

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In the mid-1990s, Sprint and several cable companies had a joint venture in which they acquired a PCS license for Sprint PCS. The cable companies were eventually bought out, and Sprint PCS became completely owned by Sprint. In 2005, Sprint and several cable companies, including Comcast, formed a joint venture (JV) called Pivot to cross-sell each other's services and bring innovation into the market by means of cross-platform integration for video, voice and data services. Sprint halted the rollout of Pivot to 33 markets, and the results have been lackluster at best, because the Pivot JV has been confronted with issues related to investment, staffing, complexity of provisioning customers, ownership of the customer and limited footprint - all of which have hampered any potential service success.

So what is different this time around about the new proposed WiMAX, which Comcast, Time Warner, Bright House Networks, Sprint, Clearwire, Intel and Google are negotiating?

For one, the presence of some heavyweight Internet and technology players: a leading chipset manufacturer and very large Internet search company are contributing to this venture. But, in the end, it essentially boils down to cable companies once again dipping their feet into the wireless waters, with Sprint running the network, and two companies (Intel and Google) that can benefit from a more open wireless network in the U.S. It seems to be an unlikely recipe for success considering that Gartner believes WiMAX will not be the predominant 4G technology worldwide. There will continue to be the conflicting interest of who owns the customer, just as there was with the most recent Pivot JV. It is also unlikely that WiMAX will provide the capacity to be a complete broadband replacement as well as the network, which would allow for unlimited video streaming.

There are no easy answers for the cable companies in wireless, but whatever answer they choose, it will have to be one that they control and differentiate in their particular regions. Cable lacks a much desired bundle that is proving to be popular with telco-based customers: digital video, broadband and wireless voice/data. Cable operators clearly need wireless capabilities to match the bundled offering of their main telco rivals long term. And with many younger customers not taking a wired voice service (and research indicating that "millennials" prefer anything wireless), the main benefit of cable's VoIP offering may be in jeopardy long term as well.

It will be critical for cable operators and their partners not to repeat mistakes of the past; Success demands having a complete workable wireless plan with which to go to market. Otherwise, the effort is going to be a total waste of time and money.

The wild card is Cox Communications, which was a successful bidder in the 700MHz auctions and the AWS auctions (in partnership with Sprint and other cable providers). They have not played their hand, but they seem more likely to offer wireless service where they have greater control of the operation.

For further information, see:
"Invest Insight: What's Next for Sprint?"
"Teleconference Summary: The Escalating Battle Between Cable Operators and Telecom Providers"

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On March 25, the Ethernet Alliance announced that the IEEE P802.3at (also known as PoE plus or PoE+) task force has created IEEE P802.3at/Draft 3.0 and has submitted it to the IEEE 802.3™ working group ballot for technical review of the draft standard. This task force expects to complete the ratification of PoE plus by 2009.

Power-over-Ethernet (PoE) is a technology that distributes power to devices (such as IP telephones and WLAN access points) over the Ethernet infrastructure. The standard, called IEEE 802.3af, was ratified in June 2003, and saw rapid market adoption. The standard called for up to 15.4 watts of power per port, which was enough for powering IP phones and 802.11a/b/g access points at the time. However, powering laptops would require about 30W, and it is with that in mind that the IEEE 802.3 working group created the PoE Plus study group back in November 2004 to evaluate the technical and economic feasibility of providing increased power to devices over Ethernet, and approved the creation of the IEEE P802.3at task force in July 2005. The task force has since been working to deliver a solution for providing up to 30W of power using Category 5 (or higher) cables.

Then, the introduction of pre-standard 802.11n access points late last year, which require power in excess of the specified 15.4W, has reinforced the need for delivery of more power. But transmitting more than 15.4W of power per port poses some significant challenges. The first challenge lies in the physical characteristics of copper cabling, which can overheat or get damaged when transmitting power above certain thresholds. The IEEE is exploring different means of transmitting higher levels of power subject to these limitations. The second challenge is backward compatibility with the IEEE 802.3af standard, meaning that the IEEE is working to make sure that 802.3at-compliant power sourcing equipments (PSEs) are able to interoperate with 802.3af-powered devices and vice versa. However, as a result of these and other implementation challenges, the IEEE 802.3at standard is not expected to be finalized until 2009.

Because there has been significant demand from customers to power 802.11n access points and other such power-hungry devices, some vendors have released their own proprietary solutions while the PoE+ standard is being finalized. In January 2008, Cisco announced enhanced Power-over-Ethernet (ePoE) capabilities across its Catalyst portfolio, beginning with the Catalyst 3750-E and 3560-E Series, with the Catalyst 6500 and Catalyst 4500-E Series scheduled to follow in the second quarter of this calendar year. This internal innovation of ePoE, available via software upgrade, provides between 15.4 and 20W per port.

Microsemi also announced the availability of a high-power PoE midspan that will be available in March 2008, based on pre-standard IEEE 802.3at specifications. The PD-7000G allows double the power currently available within the existing IEEE 802.3af PoE standards, thus enabling broad WiMAX, pan-tilt-zoom cameras, and 802.11n access point and thin client network applications.

Since its introduction, PoE has been one of the main drivers toward Ethernet switch upgrades in the enterprise market. Most vendors have released PoE products in order not to lose market share, and to be able to charge a premium over non-PoE ports. In 2007, PoE ports accounted for 14% of all switch ports sold worldwide, and for some vendors, that number rose to 30 percent (Cisco), and even 40 percent (Nortel). Therefore, given both market and vendor interest, expect other vendors to follow suit and release other proprietary solutions before the standard is ratified. However, Gartner recommends enterprises purchase standards-based devices.

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Microsoft's entrance into the voice over IP (VoIP) and unified communications (UC) landscape was a lead theme at last week's VoiceCon conference in Orlando, Florida. The company is moving into the VoIP/UC industry via its Office Communications Server (OCS) 2007 product (released in 4Q07), a derivative of its mildly successful Live Communications Server (LCS) predecessor.

What is most notable about Microsoft OCS 2007 is not so much the product, but rather the base of system integrators and service providers committed to being channel partners. Virtually every service organization is investing in a certified staff, developing expertise through lab testing and working on productizing professional services. This is all occurring with a still-to-be-market-proven release 1.0 product that is expected to have the typical r.1.0 challenges. A steep learning curve is sure to arise given all the applications that OCS 2007 supports: VoIP, IM, video, collaboration and presence.

Microsoft has been equally adept in attracting technology partners. Dozens of vendors, such as Polycom, Nortel, Aspect, Psytechnics and Ericsson, are integrating their products to complement Microsoft's UC platform. The company has therefore leveraged its corporate marketing clout to put a still-maturing product in a leadership position.

What Microsoft is demonstrating is that, while product performance is important, it is second to the ecosystem of channel, support and delivery partners. We also expect Microsoft's VoIP and UC entrance to accelerate industry consolidation across the VoIP/UC landscape. The collective base of vendors such as Avaya, Cisco, Nortel, NEC Siemens, ShoreTel, Mitel, and Alcatel cannot all continue to operate as separate entities.

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Verizon and AT&T won big in the 700MHz auction, which concluded last week, setting the stage for higher-speed network rollout of these two larger players in the coming years. The two companies spent $16.3 billion of the $19.6 billion in total auction proceeds. Verizon, which needs to catch up with AT&T in spectrum portfolio, spent $9.63 billion on seven of the 10 regional C-Block Licenses (a 22MHz block), 77 B-Block licenses, and 25 A-Block licenses. The C-Block purchase by Verizon covered the entire continental U.S., and the C-Block licenses not purchased by Verizon were for Alaska, Puerto Rico/U.S. Virgin Islands, and the Gulf of Mexico. AT&T spent $6.64 billion on 227 B-Block licenses. Both companies are likely to use this spectrum for a network upgrade to the LTE (Long Term Evolution) technology, which will allow for higher speed and capacity for data services and more capacity for voice over IP (VoIP) service.

Google, which had lobbied for open access for C-Block spectrum, was a bidder but did not win. The price appeared too high for the company as Verizon doubled the acceptable low winning bid for the entire C-Block of $4.6 billion. Google's main goal was to open up the mobile Internet so that its highly profitable Internet advertising business could function more efficiently on the mobile Internet.

Some surprises were that Leap walked away with no licenses and MetroPCS walked away with only one for $313 million in Boston after both companies had done so well in picking up licenses in the AWS auctions. Also, Echostar was a big winner on the E-Block unpaired spectrum, which is used for mobile TV. The company possibly is leaving its options open to offer TV on a mobile phone.

Qualcomm gained an additional five E-Block licenses to beef up its coverage for MediaFlo most likely, and four B-Block licenses for a total of approximately $500 million. The company was also a bidder for the D-Block but did not meet the $1.3 billion trigger price. The D-Block will most likely be reauctioned.

The auction in sum allows the two largest players to get stronger and get a leg up in introducing the newest technologies. Google was not willing to put up the money to support its position but got what it wanted anyway. There is still a lot of uncertainty around mobile TV and what the long-term viable service will look like. The U.S. government walked away with a lot more money than the FCC expected, despite the D-Block auction removal.

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In a panel discussion at WiMAX World Asia Conference & Exposition, Australian WiMAX pioneer Garth Freeman, Buzz Broadband's CEO, described WiMAX as a "miserable failure," which has since been quoted in the press worldwide.

WiMAX technology was found to be unacceptable for use with voice over IP (VoIP) due to high jitter and latency and "nonexistent" line-of-sight performance beyond 1.8 miles, with poor indoor performance.

With WiMAX touting speeds in the multi-megabits-per-second bandwidth, how can toll-quality voice at 64 Kbps be an issue (especially with VoIP compression using much less bandwidth)?

The issue is that the bandwidth must be guaranteed end to end, including the backhaul network from the base stations, to the core network, to the end user, with minimal latencies and jitter. In VoIP, jitter is the variation in the time between packets arriving, caused by network congestion, timing drift or route changes. A jitter buffer can be used to handle jitter, within media gateways and other network elements. VoIP latency is the time between the moment a voice packet is transmitted and the moment it reaches its destination. It leads to delay and finally to echo. Echo is always occurring, but if it arrives at almost the same instant you speak (less than 1/10th of a second), it is not noticeable, but beyond 200 ms latencies, echo is noticeable and echo cancellation equipment can help mitigate this.

Ideally, the VoIP-over-WiMAX network should be engineered with critical aspects of latency, jitter and bandwidth control all addressed. Simple best-effort approaches and quality of service (QOS) parameters of DiffServ/ToS bits are not sufficient, while deep packet inspection (DPI) approaches provide localized solutions. What is needed is a policy-controlled approach to guarantee bandwidth with minimal latencies end to end. One approach can be tying application-aware routers using DPI or Session Initiation Protocol (SIP)-aware voice services to policy controllers that control the network elements (WiMAX base stations, routers, carrier Ethernet equipment, cable CMTS equipment, and other access gear if it's used in the backhaul network, and so on). Another approach is leveraging IP Multimedia Subsystems (IMSs) within the WiMAX networking domain, whereby the IMS policy decision function (PDF) can be leveraged for bandwidth management. In other words, the WiMAX ASN gateway needs to do much more and interface with a PDF and policy controller that in turn controls the routers and WiMAX gear, as well as other access network elements (that is, 3G GGSN switches for internetwork VoIP calls, within the same carrier if it's allowed, or across carriers with peering arrangements).

In the U.S., with the 700MHz auction being awarded to Verizon and AT&T, last week, this spectrum with ideal indoor performance will likely be used for Long Term Evolution (LTE), which is based on the GSM family of technologies. Here, companies have highlighted LTE's strengths utilizing soft handoffs ("make before break"), as opposed to Mobile WiMAX's hard-handoff approach of "break then make." This hard-handoff aspect may be noticeable if the delay is beyond 100 ms, especially if the sessions are dropped entirely. Some additional work is likely needed using fast IP reroute functions, IGMP multicasting, and mobile IP functions to keep sessions alive, on multiple base stations, applying fast rerouting if network quality degrades through real-time assessments (VoIP mean opinion scores [MOSs], signal strength and so on), and then switching seamlessly to the new base station.

So, in actuality, this leaves WiMAX deployment in the U.S. now mainly dependent on struggling Sprint's Xohm division, Clearwire, as well as unlicensed WiMAX deployments, with the rest of the world market announcing some highly publicized deployments occurring mainly in Asia.

Unfortunately, what started out quite promising has so far had lackluster success in the marketplace, with:

- A plethora of WiMAX standards
- Sporadic equipment being truly certified
- Isolated trials being announced worldwide

Hopefully, with newer WiMAX ASN gateways that are application-aware, policy-aware and subscriber-aware and that can control aspects end to end across network access methods or peer with policy controllers, WiMAX will be used for consumer VoIP and real-time mobile broadband access, and not kept closed for carrier-managed fixed wireless broadband access or backhaul use.

Recommended Reading:
"Cool Vendors in Carrier Network Infrastructure, 2007"
"Dataquest Insight: North America Shows Potential for WiMAX Backhaul From Wi-Fi and Cellular Networks"

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