The Year That WasMonday, December 15, 2008
Before writing the traditional “what’s ahead for wireless in 2009” Commentary, I first must write the traditional what happened in 2008 Commentary. If I fail to write these two pieces, I will be ousted from the world of wireless writers and editors who are all bound by an unwritten code to write about the same two topics. Each of us will look back and ahead from a different perspective.
2008 was the year of the 700-MHz auction, except for the D Block, which is the shared public/private sector spectrum that was (is?) to be developed by a commercial wireless company and shared on a priority basis with the first responder community. The rest of the auction went as predicted by many. Verizon ended up with a nationwide license, including the requirement for open device and information access courtesy of Google’s influence in Washington. AT&T, which had previously bought the Aloha 700-MHz spectrum, filled in its own 700-MHz footprint with at least 12 MHz (6X6) of spectrum in most markets and with 24 MHz (12X12) in others. Qualcomm won the E Block (6 MHz unpaired licenses in major metro areas), which is adjacent to its existing nationwide 6 MHz it uses for its MediaFLO TV system. The remainder of the E Block went to EchoStar/Dish Network.
Other winners were MetroPCS with a single license in Boston, Cox Communications (the cable company) with fourteen A and eight B Block licenses (mostly within its cable coverage area), US Cellular, Cellular South CenturyTel, and Vulcan Spectrum, which is part of the Paul Allen empire. Paul was the co-founder of Microsoft with Bill Gates and is into everything Portland and Seattle. So there were no big surprises and, as expected, Google only stayed in the bidding long enough to ensure that the C Block (which was won by Verizon) would be classified as “open” from the perspective of any device to any information.
The D Block, which was supposed to be paired up with 10 MHz that is licensed to the Public Safety Spectrum Trust, did not receive a bid meeting the reserve price so it is back in the hands of the FCC. It appeared as though the FCC commissioners were going to bring up the revised set of rules for a new auction at its December 18, 2008 meeting, but according to the FCC, the meeting has been cancelled. That leaves only one more meeting for this FCC, which is in January, only days before the new president is sworn in, and in that meeting there will only be four commissioners because one will be leaving at the end of December when her term is up. Look for my thoughts on the D Block in my looking forward Commentary.
Chalk up another wireless victory for Google, Microsoft, etc. The FCC voted to permit unlicensed wireless broadband devices using the spectrum between TV stations around the United States. This spectrum is called “white space” because its original function was to prevent TV sets from being overwhelmed by the TV signal of one channel bleeding into the signal from a channel next to it. This white space is 6 MHz wide if there are channels on either side of it, more where channels are spaced out. The theory is that an entire new community of wireless ISPs will begin selling wireless services in this band to compete with cable, DSL, Clearwire, and perhaps even the likes of Verizon and AT&T Wireless.
It will be interesting to see what develops. This white space is already being used by first responders, land mobile radio customers, and wireless microphones in many areas of the country. In many areas, it will require some serious oversight to keep this band from destroying TV reception. One of the cited uses for this spectrum is to provide wireless broadband access to rural America, but the FCC will probably also approve the AWS-3 spectrum at 2.5 GHZ next year and the idea is that it, too, will provide coverage to 95% of the U.S. population with a portion of the wireless broadband service provided free to anyone who wants to use it. So far, 2008 has been all talk and no action when it comes to rural America and broadband services. In fact, this is just the latest of many years when the words have been spoken but there has been little or no change in providing services.
I won’t dwell on too much here, we saw the introduction of the 3G iPhone, Samsung Instinct, LG Dare, the first Android phone (on T-Mobile), Blackberry Bold and, of course, the latest entry in the touch screen markets, the Blackberry Storm. Smartphones are selling very well in most parts of the world, and even during the hard economic times this year most of the handset vendors did well.
There are two interesting points about handsets. In Japan, the government ruled that handset subsidies could no longer be used to buy down the price of phones and that customers would have to pay full price. The result, according to several sources within Japan, is that the number of new phones sold in Japan in 2008 was down almost 50% from a year ago, and this is creating a problem not only for the Japanese handset makers, but also for companies such as Nokia that have now pulled out of that market completely.
During a recent conference in Beijing, I was told that at least one operator in Asia has developed two different pricing models. One is for customers to purchase the phone with no discount but receive a discount on the minutes and data used, and the other is to pay less for the phone but pay the going rate for voice and data services. This program appears to allow customers to determine how much they will be using their device and choose the purchase plan that best fits them.
There are still a few cities hanging onto muni-Wi-Fi even though EarthLink and others pulled the plug on their projects. Today, according the Wall Street Journal, Minneapolis, Oklahoma City, and Philadelphia are still up and running, and a totally different type of Wi-Fi system in San Francisco seems to be functional. I still do not see an economic model for muni-Wi-Fi. Clearwire’s Baltimore WiMAX system will be using Wi-Fi to extend the reach of WiMAX in-building, just as T-Mobile is doing today with its HotSpot @Home program.
Speaking of WiMAX, the new Clearwire, with $3.2 billion in new cash and some additional stockholders, is up and running in the city of Baltimore as the first true WiMAX mobile deployment for the company. Still, all of the existing Clearwire markets are smaller and are not Mobile WiMAX, so they will have to be upgraded. But Clearwire is predicting great things for Clear, the new wireless brand name, while at the same time telling Wall Street that it might be interested in LTE as well as WiMAX going forward. It should be fascinating to watch how this develops in 2009 and beyond, especially since Verizon Wireless is only about a year away from the projected launch date for its LTE services, stating that it will have service up in some markets by the end of 2009, giving Clearwire even less time to prove itself.
Also this year, three woman pioneers of wireless (Arlene Harris, Judy Purcell, Liz Maxfield) got together and created the Wireless History Foundation, a not-for-profit organization. The first thing they did was to organize a 25th Anniversary Dinner in Chicago on October 13, 2008, exactly 25 years after the first commercial cellular phone call was made from Soldiers Field in that city. The event was attended by 500 people, many of whom have been around for all 25 years of cellular in the United States and many of whom were involved in wireless (two-way radio, paging, etc.) years prior to the introduction of cellular service. This foundation is designed to memorialize many of the milestones of the past and to be a focal point for keeping the history of wireless from being lost. There are so many great stories and great accomplishments, and an equal number of failures, that it will be important to make sure those who come after us understand how we came to be where we are today and, perhaps, some of what lies ahead tomorrow.
SMS and Text
This was also the year that the United States discovered that SMS or text messaging is not the way to notify hundreds of thousands of people about an event or an emergency. President elect-Obama texted out his choice of running mate late on a Friday afternoon and many who had signed up to receive the message either did not get it at all or got it many hours late, including many reporters whose stories were ready to go to press as soon a they received confirmation of the choice.
Since then, the truth about SMS and emergency messaging has been spreading, and it is not a pretty picture. Those counting on text messages for mass alerts need to make sure that text is only ONE of the ways in which they notify those who need to know. Used in conjunction with reverse 911, sirens, TV and radio announcements, and virtually every other form of notification will help, but relying on texting alone is asking for trouble.
2008 saw the start of a trend I have been writing about for several years—devices other than voice and data phones and notebook computers will come equipped with wireless capabilities for added value. Many within the industry have been concerned as wireless customers cross the 80% penetration mark within the U.S. population, but they don’t need to worry. Each of us will have multiple devices and the penetration rate will go to 300% or more.
One of the first devices to prove this to be true is the Amazon Kindle that delivers books electronically over the Sprint EV-DO network. You do not need a Sprint contract and the price of delivery is included in the cost of the book. The next is the Chumby, a Wi-Fi enabled alarm clock that can provide all kinds of data from the Chumby Internet site and wake you up to almost anything.
This year saw a complete reversal in pricing models. Over the history of cellular, voice pricing has gone from peak and off-peak, roaming and long-distance costs, to buckets of minutes, including long distance, that can be shared by a family, to Verizon’s initiation of a flat rate for unlimited usage of voice, including long distance and roaming. At the same time Verizon introduced this new plan, it also reversed itself on unlimited broadband data services, going from $60 per month for unlimited services to tiered pricing based on the amount of data used each month. The first two tiers are 50 MBs per month and 5 GB per month. AT&T soon followed this model and then Sprint, which is badly in need of retaining customers and adding new ones, decided to offer a $100 flat rate for ALL of its services including voice, broadband data, text, push-to-talk, TV, and anything else it offers today. Pricing models, to say the least, are in flux.
In February of 2008, we said goodbye to analog cellular as AT&T, Verizon, and a few others shut down their 800-MHz analog services that had been in use for 25 years and hello to added digital capacity. In spite of how much publicity this transition received, and how many mailings and phone calls AT&T and Verizon made, some people were still caught unaware. Many of the early OnStar customers discovered that their old in-car analog phones did not work anymore. Of course, dealers were more than willing to help them out with a $500 replacement phone. Turning off analog enabled both AT&T and Verizon to add more digital capacity, though it had no effect on T-Mobile or Sprint, which had never operated analog systems.
The problem with a Commentary such as this is that I could keep going for pages and pages simply by reviewing my commentaries and blog postings from this year. To me, this indicates that I have not done justice to all of the important things that have happened in 2008, but I will stop here. If you like, you can add your own “best of 2008” to this Commentary on our website—I am sure many things I did not mention will jump out at you. Gone are the days when we could count the wireless press releases during a given week on one hand.
The number of news items that come flying across our screens at work, at home, and on our mobile devices is staggering. Wireless has arrived and you can tell it has because so many of us carry phones and so many of us are discovering data. The best evidence of how important wireless has become is that the Internet companies now want a piece of the pie—a large piece. This means we have arrived, but it also means that, coupled with the poor economy, we are in for some rocky times ahead. But I promise you my look ahead into 2009 will be mostly positive and upbeat because we are in an vibrant industry that will continue to grow for a very long time.
Andrew M. Seybold