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I guess folks who thought they were going to make a killing on eBay are a little disappointed at the moment, not many iPhones on the site, but not much action for them either.

Bits and Pieces

Sunday, July 15, 2007

In New Zealand they have a saying, “bits and pieces,” meaning a little of this and a little of that. Since this blog entry is about several different things, I thought I’d borrow the expression I heard so often when I was in New Zealand.


Want an iPhone?


During the past couple of days, I have stopped by and called four AT&T company stores and asked, “Do you have a waiting list for an iPhone? How long will it take for me to get one?”


All of the stores have the 4-GB version in stock, one has several 8-GB units, and the ones that did not, offered to order one for me with express delivery, shipped to my home within 2 days. Checking the iPhone Website, I found I could also order one online there with a 2-4 week delivery commitment but no shipping charges.


Meanwhile, going to eBay, when I searched on iPhone I found 187 entries. All but a few were for accessories, and the ones that were for actual iPhones were interesting to read: 1 8-GB unit, new with receipt, high bid $671.00 reserve not met, new, in box, shipping free, $799.99 for 8-GB unit (0 bids), 1 with bids of $565 (8 GB) reserve not met, 1 for $587, reserve not met, and one for $695.00 bid still open.


I guess folks who thought they were going to make a killing on eBay are a little disappointed at the moment, not many iPhones on the site, but not much action for them either.


Talking to several AT&T retail sales reps, I found they are not real happy with what is happening. Folks come into the store, buy an iPhone and take it home to set up service. The retail sales reps in the store don’t get a chance to up-sell; they don’t get to do much except write up the purchase, collect the money and watch the customer walk out of the store. When I mentioned to one store that I did not want to get my iPhone activated but wanted it for my museum, he told me it didn’t matter to him what I did with it, once he had my money for the phone he was done with it.


A friend of mine stood in line and bought one, he really likes it, and since he is a developer he intends to write a Web 2.0 application for it. When I asked him how he liked the Web-surfing part of the phone, his response was it was great—but he only uses it when he is in Wi-Fi coverage.


The lines waiting for iPhones have gone away and the AT&T stores I talked to don’t even have a waiting list. They told me they get deliveries of iPhones every few days―no one tells them when the phones will arrive, they just show up―but so far, the demand after the first surge is being fulfilled within days. Obviously, from what I have learned, the 8-GB unit is the most popular, and that makes sense—adding 4 GB of memory for $100 makes sense.


One of the most interesting things to me is that when I asked the salesperson at the Santa Barbara store if they were selling mostly to college students (we have several universities and colleges here) his answer was no, they were selling iPhones mostly to the 20-30 crowd who were out of college and working. I guess that has to do with the pricing.


In any event, those who stood in line got their iPhones and now it appears as though anyone who wants one can get their hands on one within a couple of days—interesting that AT&T will get one via overnight delivery to your home while Apple says 2-4 weeks for delivery, but the net is that the iPhone is available, no back orders, no waiting!


WiMAX Has a Challenger—At Least in Japan


This week brings news that NextWave, which is redefining itself once again and recently bought IPWireless, which owns spectrum in the U.S. and builds UMTS TDD technology, has taken another big step forward. NextWave just purchased an almost-70% share of IPMobile, which holds licenses to cover all of Japan with a broadband network and has been planning to build a system of up to 8,000 cell sites to provide the service, but lacked the funding to do so.


With NextWave in the picture, it appears the system will go forward as planned, and NextWave believes this deployment will convince other companies to join in the UMTS TDD ecosystem and, therefore, spur UMTS TDD on a worldwide basis. TDD stands for Time Division Duplex, which means the system will have both the base stations and mobile/portable devices transmitting on the same portion of the spectrum.


IPMobile and NextWave say, “IPMobile will support broadband data connectivity to mobile devices of many kinds, ranging from cameras to game devices and web tablets.” Sounds a lot like WiMAX, and speaking of WiMAX, have you noticed how quiet it has gotten since the Wall Street Journal article quoting Sprint’s CEO saying they might spin off their WiMAX efforts, look for a joint venture with Clearwire (which just went out for yet another $1billion to restructure its debt) or work with cable operators for a joint venture system. I am still reading about WiMAX and systems that are planned or have been partially deployed, but Intel has grown very quiet about WiMAX and its belief that it will become ubiquitous and move the Internet into the wireless space.


If NextWave is successful, there is a lot of UMTS TDD spectrum around in Europe, Asia and elsewhere. It is licensed, but not much has been done with it so far. Since some of the spectrum is reserved for UMTS TDD only, NextWave will have an advantage if it does build out systems. Should be interesting to watch, especially if WiMAX and UMTS TDD go head to head in a number of different countries. And I cannot leave this topic without repeating the statement I made in 1998 that there is not a single terrestrial data-only network that has ever made money. I keep being told I am wrong, but no one will show me any numbers to prove I am wrong, so I will stand by my statement until someone comes forward with proof. By the way, I don’t mean a network that is part of a larger company where the numbers can be moved around, or the loss from the data-only network is considered as the cost of doing business, I mean a company whose sole income is derived from deploying wireless data services over a wireless network and that there is no other form of income except from providing data-only services.


Google’s free Wi-Fi network, or even a pay-for-service network, does not qualify since they are after eye-balls that have value to them and help keep their advertising rates up. But Clearwire is a good example of what I mean―at the moment, WiMAX data is its only business, and it keeps reaching into the money pot for more!


Some Final Thoughts


Back to Open Access, I could not believe it when I read that a “coalition” has been formed to pressure the FCC to make the Apple/AT&T 5-year exclusive contract null and void! The goal is to get the iPhone to run on any and all networks so they can be used on a network of one’s own choosing. But I have a problem with this. The battle for wireless customers is tough. The numbers keep growing, but adding new customers is becoming harder and costs more. Every network operator tries to get an advantage over its competitors. The first Motorola Razr was released on the AT&T network, which had a six-month exclusive, and other devices were launched on other networks with exclusive agreements. T-Mobile has a number of slick devices on their network that are available nowhere else in the United States, as do Sprint and Verizon Wireless.


Competition means competition. It does not necessarily mean a level playing field, it means each network operator tries its best to gain an edge over its competitors. AT&T’s deal with Apple is an edge they managed to get in their agreement with Apple, so from where I sit, AT&T is entitled to it, and both sides are happy with the contract agreement. And by the way, 5 years from now, the wireless landscape will be so different that having that agreement in place won’t give AT&T an edge any longer as there will be many devices that can do all the iPhone can or more. That is what life in the world of wireless is all about.

COMMENTS: This is an archived post. Commenting is no longer available.

Chris Coles - 07/16/2007 03:04:13


I sense you would have fished for some idea of how the iPhone was selling in terms of numbers when you visited the stores. What was the feedback? Are they on course to sell their ten million units?


Andrew Seybold - 07/16/2007 09:48:45

Chirs--no one knows the numbers and asking 4 stores is not going to help I have heard numbers of 500-700,000 the first week-end, but I have also heard that they will be making an annoucement on July 25th,

Joe Nordgaard - 07/16/2007 11:07:42


Some interesting points, some of which I will happily steer clear of...but this one caught my eye.

QUOTE: "And I cannot leave this topic without repeating the statement I made in 1998 that there is not a single terrestrial data-only network that has ever made money. I keep being told I am wrong, but no one will show me any numbers to prove I am wrong, so I will stand by my statement until someone comes forward with proof."

I believe if you contact a certain Czech operator with a lower frequency deployment, you will find they have a nice lucrative business selling "wireless DSL" for ~$34 per month to around ~100K subs with very low churn. Given that they were able to piggy-back on their already deployed GSM net - their cost of buildout was substantially lower (as it would be for most existing operators). Last I heard this operator was exploring adding IP-based voice services, such as, Push-to-talk and VoIP all on the same basic data infrastructure (albeit with some upgrades and some service specific elements to the core).

As you know, the main advantage this operator has which helps improve the financial viability of this network is the fact that it operates at lower frequencies than most traditional cellular services operate at, thus requiring significantly less infrastructure than alternatives at higher frequencies. Having been one of the leading pioneers of this lower frequency application (as was one of the founders of IPWireless) - you can argue some bias on my part but I think the numbers speak for themselves - if you can get the operator to disclose them.

On a related note, I believe that if mobile allocations at lower frequencies were more widely available (dare I say  by re-farming older less efficient technologies) that more hybrid nets could flourish. By hybrid, I mean a network that can support a wide set of what were considered traditionally different services (including some that never existed before) like LMR, PMR/PAMR, Public Safety/HLS, Cellular, Wireless DSL, Wireless Messaging, and Wireless Local Loop.

Such networks are increasingly being considered in developing countries where having flexible, multiple-use networks to address a variety of commercial and social applications, such as, everything from Push-to-Talk for government services like land management, highway maintenance and Homeland Security to IP access for schools, hospitals and public safety. (Obviously, issues of priority and preemption are being addressed for HLS/Public Safety.)

Multi-use networks in developing countries help solve/address numerous issues all with basically the same infrastructure, thus lowing the capex and opex of such networks. As you know, this has all been greatly facilitated by advances in processing that has allowed of for a wide variety of what were traditionally different applications to be supported by the same infrastructure. The utilization of lower frequencies helps make these networks more affordable over much wider areas; areas that have traditionally underserved or unserved.

So circling back to your point, I believe economically viable/lucrative data networks do exist, advancements in chip processing power is greatly facilitating that viability through greater flexibility and diversity of the services offered off the data core and as more lower frequency allocations are made available for these purposes, more people can be serviced, more affordably over much wider areas. And BTW  I dont think any of this is lost on Nextwave/IPWireless.

Joe Nordgaard
Managing Director
Spectral Advantage LLC
Wireless Consulting