As has been widely expected, Google has confirmed that it will participate in the upcoming 700 MHz spectrum license auction here in the US. There’s lots of speculation and analysis about what this means; for its part, Google says FCC rules will prevent it from speaking publicly about its strategy.
Google’s blog post about the decision is strangely worded, though perhaps it reflects careful PR messaging more than any true tactics, with lines like “We already know that regardless of which bidders ultimately win the auction, consumers will be the real winners either way.” Still, this makes it seem like Google’s actual interest in bidding on, winning, and owning spectrum licenses is quite low. It still sounds like Google’s real interest is simply in getting wholesale access to a mobile broadband network, not in building and running its own network.
Verizon’s recent announcement encourages this thinking. After all, if Google can get access from a number of operators (Verizon, Sprint’s WiMAX network, etc.), there’s going to be a competitive market in place, negating the need for Google to shell out its own capital for licenses and networks.
What seems most likely, at this point, is that Google will meet the $4.6 billion reserve price for the C block nationwide license. This bid would put into place the open-access requirements stipulated by the FCC. After ensuring those requirements are attached to the licenses, Google could be happy to step aside and let operators fight over the license — since $4.6 billion is, by many accounts, a pretty low price for such attractive spectrum. Operators won’t want to see this spectrum slip out of their grasp, particularly at such a low price. Furthermore, new strategies, like that of Verizon, make the open-access rules a much smaller issue.
It’s something of a high-dollar game of spectrum chicken, with Google banking on the fact that the operators will blink. But, even if they don’t, Google still has an out. If it picks up the C block license for $4.6 billion, it’s gotten a great deal, and in turn has very valuable currency it can use to lease out to an operator and get itself a good deal on wholesale network access. Verizon’s open announcement could be seen as an attempt to persuade Google not to bid, since it could get the access it wants from Verizon; in the same vein, Google’s strange public announcement that it’s applying to bid is a sign to operators and any other interested parties that it means business.
Google can be the ultimate spoiler here. If it wants to, it can get involved and bid the license prices up, since it’s got the money to do it (though, of course, its investors might not be too happy). But that doesn’t really do it any favors. If it’s going to get licenses, it will want to pay as little as possible for them; it also doesn’t have any interest in inflating prices for licenses it doesn’t win, since that will be built into the costs of the network access it will later be buying.
One big issue is that, at some point, Google will have to play ball with the operators — the same operators it will want to compete with. But it will find a way to make it work, either by dangling spectrum in front of them like a carrot, or by virtue of being a massive wholesale customer.
Like many other mobile bloggers, I’ve complained before about excessive international roaming fees. The issue isn’t that I’ve been hit with bill shock because I didn’t know what the prices were; it’s quite the opposite. I know what the charges are, and it’s appalling. While the operator I use, T-Mobile USA, still levies hefty roaming fees, especially for data, I’ve found one way around that seems tacitly approved by the company. I want to document it here for others, but also to give T-Mobile some kudos.
When I complained a year ago, Scott Rafer told me to call and get the $20 per month international roaming plan, a plan of which I wasn’t aware. It appears it’s only available to users on BlackBerry data plans (please leave a note if your experience says otherwise) — so I dropped my $20 domestic flat-rate data, in favor of the $20 BlackBerry add-on plan, which of course includes unlimited data, as well as the ability to use T-Mobile’s BlackBerry services with compatible devices. (To get this plan, you can either call customer service, or you can log into the My T-Mobile site and hit “Not Your Phone?” in the upper right, then choose one of the BlackBerry devices. When you click on “Plan & Services”, you should then be able to swap out your data plan for the BlackBerry one.)
That’s half the magic. The other half is this $20 per month international roaming tariff. One great thing is that T-Mobile will let you add it and remove it from your account whenever you like, and prorate the charges. That is, if you only need it for a week, you can call and add it, then remove it a week later, and you’ll only be charged a fraction of the $20. I’m headed out of the country next week, so I called to do add it, and was a bit surprised when the customer service rep asked me, unprompted, if I’d like to have it removed on a specific date when I return. So while I felt like I was making some slightly shady workaround to avoid paying T-Mobile a bunch of roaming fees, it certainly appears like they’re happy to help.
That shocked me a bit — but I have to say it’s been par for the course with my experience with T-Mobile. I’ve used other US operators and been generally unhappy with their customer service, but I’m yet to have any problems with T-Mobile. Additionally, I find their CSRs to be friendly, helpful, and most of all, knowledgeable. When unhelpful service and policies tend to be the rule rather than the exception for mobile operators, I just wanted to relate my positive experiences with T-Mobile. I still find their normal international roaming rates pretty annoying, but it is nice to know they’re willing to look out for me a little bit.
This has been a while in the making: MOTOCEO Ed ZNDR is out as Motorola CEO come January 1, and will be replaced by the company’s president. ZNDR’s legacy is undoubtedly the RAZR: a huge-selling handset, but one the company couldn’t follow up with another smash hit.
Motorola’s corporate history over the last several years has really been a roller-coaster ride, with the RAZR being a more recent reincarnation of the StarTAC. But Motorola’s still shown few signs that they’ve really started to turn things around by rolling out a portfolio of solid, attractive handsets, rather than yet another RAZR update. The Z8, which didn’t get many great reviews, showed that somewhere within the company, somebody’s trying to make better handsets that have the wow factor. Perhaps Moto’s new stake in UIQ signals that there’s some more (and better) where that came from.
Update: Apparently Moto’s CEO, Padmasree Warrior, is out as well.
My pal, Mike Rowehl, fellow AdMobber, blogger, MoMo’er and engineer extraordinaire has decided it’s time for him to leave AdMob. He explains some of his reasoning here.
It’s always a sad day when a valued employee leaves a company voluntarily and especially so when it’s the first time it happens. In Mike’s case, he was the first engineering hire at about the same time as I became the first employee on the commercial side of things in the Spring of 2006.
As Mike writes about how the three of us sat in Sequoia’s incubator offices being told how “the established ad networks are going to crush you before you can make a difference.”. Well, 11 Billion ads later, they haven’t yet and we have plenty more ideas about keeping ahead their half-hearted crushing efforts so far.
I’m really sad about Mike going, but I understand his reasoning. Mike is the ultimate engineering generalist, able to cope with whatever we needed. This included commercials deals that required us to double capacity overnight - he might not have proffered the hearty congratulations I was expecting 
but the platform coped magnificently.
Mike feels that this brand of engineering generalisation isn’t really needed anymore now that AdMob is more grown up, staffed and structured and he’s probably right - even though we’d have loved to have kept him. So he’s off seeking new challenges in startup land, where one man and computer can really make a difference.
So if you’re a startup with a world class idea and want world class engineering talent, Mike’s your man.
Verizon Wireless, the US mobile JV between Verizon and Vodafone, has confirmed that it will use LTE for its next-generation mobile network. This is significant because it, in essence, will bring Verizon into the GSM-based camp (though LTE isn’t technically a GSM technology, it’s viewed by most GSM operators as the logical upgrade path from UMTS). Many years ago, Vodafone tried to get Verizon to drop CDMA for its 3G network, in favor of UMTS, but it declined, though the two will eventually have compatible networks once they roll out LTE (probably sometime early in the next decade). Indeed, Vodafone and Verizon say they’ll conduct coordinated trials of LTE starting next year.
This announcement is particularly interesting in light of Verizon’s pledge to open its network earlier this week. Stepping into the LTE camp should result in a slew of more compatible devices that people can use on Verizon’s network, as well as allow it to leverage the economies of scale afforded to the “GSM” camp.
Also, with regards to the thought that Verizon’s new sense of openness has more to do with non-handset devices embedded with mobile radios than typical mobile phone service, check out some quotes from the PR (added emphasis mine).
Verizon Wireless CTO Dick Lynch: “With a host of new devices and applications, and a particular focus on embedded wireless in virtually every piece of electronics you buy in any store, we believe LTE is the best technology with global scale to deliver on the promise.”
Verizon CFO Doreen Toben: “Fourth generation’s higher data speeds will usher in a new era of wireless applications and appliances, all of which can benefit from connecting to the nation’s premier wireless network.”
And Lynch again, quoted in the WSJ: “The next generation isn’t about supporting voice and messaging, it’s about supporting all sorts of applications and devices emanating from the consumer-electronic manufacturers. Those guys aren’t going to be able to go with multiple technology.”
Quite a milestone, as Informa says that global mobile phone penetration will hit 50 percent today, some 26 years after the first mobile network was switched on. While ownership of multiple subscriptions and SIMs means that fewer than half the world’s 6.6 billion people have phones, this stat makes very clear just how pervasive mobile telephony has become — moreso than so many other recent technologies.
Informa’s got some other interesting stats: at the end of September, 59 countries had penetration of more than 100 percent; just 27 countries had penetration under 10 percent.
The highest ARPU in the world is enjoyed by MTC in Kuwait, at $71 per month. It’s followed by 3UK, who despite rampant criticism over the years, brings in $70.55. The low end of the scale comes from Hutchison in Sri Lanka, with an ARPU of $2.83 per month, followed by operators in Bangladesh, the Ukraine and Pakistan.
These stats and figures reflect the wide array of challenges faced by the mobile industry worldwide. In developed nations, the goal is to boost ARPU, primarily with data and other services; in developing nations, it’s boosting penetration and turning a profit on extremely low ARPU. Some 3 billion or so people in the world are covered by mobile networks, but don’t have mobile phones, underscoring the importance of emerging markets to handset vendors.
EU telecom meddler-in-chief Viviane Reding’s effort to get DVB-H made an official EU standard for mobile TV has been successful, giving the technology a boost on the continent. Reding said earlier that the ruling will help make “DVB-H a similar success story as the GSM standard for mobile phones 20 years ago.” It’s not entirely clear why the EU needs to get involved here (apart from rival technologies being developed by North American and Asian companies), while Reding’s apparent belief that this decision will make DVB-H a success on the scale of GSM is more than a bit misguided. There’s this whole issue of consumer demand and simple matters like that.
In any case, the bigger — though less sexy — move out of the EU concerning mobile today is that ministers have backed a proposal to open up existing mobile spectrum to 3G services. This means operators will potentially be able to deploy 3G in the 900 MHz band, instead of only in the 2100 MHz band. The lower frequency penetrates buildings better and propagates farther.
Finnish operator Elisa launched its 900 MHz 3G network earlier this month, and vendors have been working on the technology for some time. However, the move isn’t finalized, and could come under legal challenges in some countries where new entrants launched 3G services alongside incumbent operators. For instance, in the UK, 3 might argue that giving incumbent operators the right to offer 3G services in their existing spectrum represents an unfair advantage and devalues its spectrum licenses.
Still, overall, this is a good thing (assuming it goes through and survives any legal challenges), and could help operators on many fronts as they seek to beef up their mobile data efforts.
(A bit of trans-atlantic explanation: US spectrum licenses don’t generally carry the same sort of stipulations as European ones. For instance, mobile spectrum licenses in the US didn’t mandate a particular technology, resulting in operators running incompatible networks with different standards. In Europe, the use of GSM and UMTS was mandated by governments.)
Jonathan MacDonald, Blyk’s sales director, got in touch after my post a few weeks back questioning some numbers he’d presented at an event. Jonathan got in touch offering some clarification and further details about Blyk’s performance.
Blyk sends its members up to 6 communications a day. These can take the form of SMS or MMS, and can consist of a cast (a one-time message), or a dialogue (a set of messages back and forth with the member, at the advertiser’s expense). Blyk charges advertisers 5p per SMS, and 20p per MMS — so obviously the CPM is much, much higher than most online ads. But Blyk says its gets a much higher response rate than online ads (or most other types of advertising, for that matter). It cites a report saying that the average response rate for online ads are 0.02%; Blyk says its response/clickthrough rates from the first six weeks of its operation ranged from 12-43%. The tradeoff seems clear: fewer impressions, but a much better response, resulting in a lower cost per response. In addition, Blyk can offer advertisers a good bit of tracking and accountability to their advertising, as well as a deal of recipient targeting and profiling.
Those are pretty impressive clickthrough stats, and they were missing from from the original story. Also, if you work out the potential ARPU with six ad comms a day, it can rise pretty quickly if MMS can get worked into the mix. Of course, they’re only sending 1 or 2 per day at this point, though Jonathan says they’ll scale that up, along with their number of users.
The key for Blyk is maintaining that high response rate. It’s easy to chalk it up to users’ initial curiosity about this new ad format, but based the much higher CTR I get here on MobHappy from AdMob ads on the mobile version of the site than from the Google ads on the web version, I don’t think that’s solely the case. I think Blyk understands this, and realizes that they can’t be seen as spamming their users with poorly targeted and poorly constructed ads with little to offer users. They’re not selling ads solely on impressions, so the goal isn’t solely to gain as many subs as quickly as possible to create space for impressions.
Blyk does face a real challenge, particularly if operators leap in with more ad-supported services of their own and begin chasing the same market. But their numbers do look more promising than they seemed a few weeks back.
I’ve been thinking some more about yesterday’s announcement from Verizon that it will open up its network to any compatible device, and let users access any service they want. There’s been a lot of analysis saying that this is Verizon’s response to Google’s recent launch of the Open Handset Alliance.
But Verizon’s move really has more to do with responding to the Amazon Kindle, in a sense, than to Google. As I said last week, the coolest thing about the Kindle, by far, is that it’s got a built-in EV-DO radio that’s used to download content, and it doesn’t require users to take out a subscription. This is the sort of model that Sprint’s been talking about for a long time for its forthcoming WiMAX network, while a future of all sorts of connected devices — devices that aren’t necessarily phones, PDAs or some other communications-specfic device — is one that’s been predicted for a long time. It’s this sort of future that Verizon wants to be able to cash in on; they’re probably less concerned — in the short term, at least — with offering a completely open service for users who just want to bring their own device and buy a data connection. But they’ll certainly not discourage that sort of use if they can monetize it.
The part of the market clamoring for consumer open access is very vocal, and this belies its actual size. And as I said yesterday, the early adopters and other people who really want it already have it from another operator. But Verizon sees the huge potential market for connected devices, and doesn’t want to miss out on that. Its talk of “minimum technical standards” and other info it will release for developers, along with its testing lab, seems geared towards this sort of device. After all, if a handset or similar device adheres to the CDMA standard, supports the proper frequencies, can accept Verizon’s OTA config and has already been through FCC testing, compatibility with Verizon’s network shouldn’t really be an issue.
The more I think about it, the more I think that it’s this connected device market Verizon is shooting for; its previous strategy would largely see it left out of this space to the likes of Sprint’s WiMAX network or GSM operators. Verizon’s announced the change in strategy; it now needs to explain the business models it will use and how it will charge for service for connected devices, as well as come up with some sort of activation and service management mechanisms.
Any openness in terms of consumers bringing their own handsets or other similar devices to Verizon’s network, getting them activated and getting service to them at a fair price will be a most welcome side benefit. If service providers can deliver VoIP devices or other hardware that replaces standard mobile phones and offer consumers more choices and better access to the services they want, we could be on the cusp of a new ear of innovation and competition, which would be fantastic.
The other side benefit for Verizon? Their announcement may keep Google out of the upcoming spectrum auction, and therefore hold down the cost of licenses. It’s becoming pretty clear that Google doesn’t want to be a network operator, it just wants wholesale, open access to a mobile network. One way to do that would be to buy a nationwide license, then lease it or loan it to a network operator in exchange for access. In this sense, Google would create its own competitive market in which it could secure access. But if Verizon joins other operators to create a competitive wholesale open-access market on their own, Google doesn’t need to spend its own billions on the licenses — meaning there’s one less deep-pocketed bidder Verizon needs to compete with.
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