Tag Archives: Verizon

Net Neutrality

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Net Neutrality has been in the news lately thanks to FCC Chairman Julius Genachowski recently adding to 2 principles to the existing 4. Net Neutrality, in general, is the idea that all data traveling over the internet should be treated equal. Opponents, including major internet providers AT&T and Verizon, say allowing some bandwidth hogging application, such as YouTube, degrade the experience for everyone else. Proponents say Net Neutrality is necessary for innovation.

The big question is Why Should We Care? The reason is innovation. If the Net were restricted services such as YouTube, Facebook, Twitter and many more useful items may never have gotten off the ground. I think the best compromise is to allow the carriers to do as they please with their networks as long as they:

  • Provide 100% full disclosure of what they are doing
  • Extremely stiff penalties are in place for anything less than full disclosure
  • The disclosures need to be posted on their website with a link as large as the main services they offer
  • The disclosure needs be written in plain English

Analog & High Definition & Minutes

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This week there were 3 significant technological developments. The first was the disconnection of most analog cellular signals. Basically the original cell phone has died. AT&T and Verizon, the big, and essentially only, two in the mobile game turned theirs off. Number 3, Sprint, never had an analog network.

The second comes from Japan. Toshiba has announced the end of the HD DVD and declared Sony’s Blu-Ray the winner. Hopefully this will allow Sony to stop focusing on the competition with Toshiba and start advancing the format.

The third is back in the mobile arena. AT&T, Verizon, and T-mobile, have announced unlimited minute plans for roughly $100. Sprint is expected to join the party, but some beleive their plan will be between $60-75 dollars. Hopefully this turns into a larger developement than I’m giving it credit for.

Google Wireless

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There have been recent articles on eWeek and other sites about the possibility of Google buying Sprint. Although I have said for the past few months that this is something Google should at least look in to, if not do, I’m no longer sure I think its a good idea. Sprint has 2 assets Google should want, Wireless Spectrum and a Tier 1 Network. Most articles and rumor sites I have read have focused on the Wireless portion of the deal because Google has already announced plans to enter the upcoming 700 Mhz auction, which is considered prime for wireless internet , and Wireless Spectrum would allow Google to ensure people can get online everywhere, therefore search from anywhere. Buying Sprint and renewing the plan to build a WiMax network is probably the quickest way to make Google’s dream of everyone having internet access from anywhere come true.

I think the Network is a key, often overlooked, part of a potential deal because of Net Neutrality. If Google owned one of the 9 Tier 1s and promised to be Net Neutral, it may force the other Tier 1s to remain/become Net Neutral in order to stay competitive. Google has openly campaigned for Net Neutrality, including publishing an Open Letter from CEO Eric Schmidt. Buying Sprint would allow Google to put its money where its mouth is, so to speak. Google has bought an undisclosed amount of Dark Fiber, but probably not enough to impact Net Neutrality. Buying Sprint would probably get them there.

There are a few problems with the potential deal. First Sprint’s market cap is roughly $45 Billion. That is a hefty price tag for a struggling company. Second, Sprint uses CDMA and IDEN on their Sprint and Nextel networks, respectively, instead of GSM, which I believe Google would prefer. In addition, Sprint has baggage, such as long distance and a terrible customer service reputation, Google probably doesn’t want to deal with. Google could go for Clearwire, with market cap of roughly $2.5 Billion, instead. Google would save enough money by purchasing Clearwire instead of Sprint, to build the wireless network.

What about the Tier 1 Network I thought was so important to ensuring Net Neutrality? Well, there are other options. AT&T (market cap of $240 Billion), Verizon ($127 Billion), and AOL ($63 Billion) are likely out of the acquisition question because of their price and the number of assets they have that Google wouldn’t want and NTT ($32 Billion) and TeliaSonera ($44 Billion) are likely out of the question because of their ties to foreign governments. Qwest ($12 Billion) is a possibility, but unlikely because there are 3 better options; Level 3 ($5 Billion), Savvis ($2 Billion), and Global Crossing ($1 Billion). Google could buy Clearwire, Level 3, Savvis, and Global Crossing for less than $15 Billion, leaving twice that amount to complete the wireless network before reaching Sprint’s price tag. This plan would allow Google to acquire wireless expertise, in the form of Clearwire, without the baggage of Sprint. It would also allow Google to impact the Net Neutrality debate by becoming one of the largest data carriers in the World.

Mobile Phone 101

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I’m writing this because as I drafted another post I realized not many people are knowledgeable about mobile phone technology and a quick Mobile Phone 101 class may be helpful to many. In the United States there are 4 major mobile phone operators (listed in order of number of subscribers); AT&T, Verizon Wireless, Sprint, and T-Mobile. AT&T, which I have recently seen called AT&T Mobility and/or AT&T Wireless, is the former Cingular, and is fully owned by American phone giant AT&T. Verizon Wireless is a joint venture between 55% owner Verizon Communications and 45% partner Vodafone; Vodafone being the English company which is the largest mobile operator in the World. Sprint and Nextel are owned by Sprint and T-Mobile is owned by German giant Deutsche Telecom. The large companies also typically have smaller companies, subsidiaries, and joint ventures operating using their name in different regions. There are also some virtual carriers such as Virgin Mobile, Qwest, Boost Mobile, and Amp’d that sell service, but don’t operate their own network in favor of renting space from one of the big 4, and there many other small carriers such as Dobson (which operates as Cellular One) and Alltel.

In America there are also 2 major mobile phone technologies; CDMA and GSM. CDMA stands for Code Division Multiple Access and is used by major players Verizon Wireless and Sprint, but not Nextel, as well as some smaller carries such as Alltel, US Cellular, and Cellular South. Many believe CDMA is the best mobile phone technology currently available, hence the Verizon commercials about their network. GSM stands for Global System for Mobile Communications and is used by big boys AT&T and T-Mobile in America, and smaller carries such as Dobson Communication, which was recently purchased by AT&T. GSM is the dominate worldwide technology controlling about 80% of the market, and is used by Vodafone in each of their markets outside of the United States. The differences in technology are a large part of the reason you cannot keep your AT&T phone when switching to Verizon. The remainder is due to company greed even though the companies will blame it on network compatibility.

In my opinion the only 2 national carriers worth considering are AT&T and Verizon for people who travel out of their home area frequently. Verizon is widely considered to have the best network in America, but limited coverage outside of the States. AT&T is best if you travel outside of America often because their network is based on the same technology used in most of the modern World. Hopefully Sprint will fix the issue they are having and complete the integration with Nextel and become a recommendable third option soon. T-Mobile has stated they are expanding their American network so maybe they will make it a 4 horse race. To me the other carriers are either going to remain regional carriers targeting limited travelers, be purchased by the big 4 as Dobson recently has, or combine with each other to become a fifth national power.

Corporate Predictions

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People seem to love predictions so I’m going to make a few business predictions I can see happening in the next year or so. First is the one that gave me the idea of writing this post; Google buying Adobe. Imagine 2 of our favorite Silicon Valley brands combining and giving us on- and off-line version of Dreamweaver & Photoshop powered Adobe AIR and supported by Google’s ever exanding super computer network. Granted this is possible without the 2 companies combining, but where’s the fun in that. A third, significantly less likely player in this combiniation would be Apple. Adobe & Google both seem to have extraodinary tight relationships with Apple. Google CEO Eric Schmidt is on Apple’s Board of Directors and Adobe is consistently the first to take advantage of the full power of Apple hardware. A hardware/software combination involving all 3 companies would instantly be THE force in the tech industry.

Next we move to banking. Once Bank of America completes its deal purchasing LaSalle Bank from ABN Amro, making it a major player in the Chicagoland area, it will no longer be able to make significant deposit purchases in America because it will be bumping up against the 10% limit. Bank of America will turn its vision overseas, starting with the previously rumored to soon be a Bank of America target, and new ABN Amro parent company, Barclays. Buying Barclays after Barclays purchases ABN Amro, the deal which made LaSalle available for purchase, will help Bank of America’s presence in Europe and South America. In addition Bank of America will push organic growth within the States in an attempt to truly become the first and only nationwide, coast to coast, in every major and mid sized city, bank, or in other words the Bank of America.

AT&T & Vodafone – How does AT&T continue to grow following combining the companies once know as PacWest, Ameritech, SBC, BellSouth, Cingular, AT&T Wireless, AT&T, and soon to be Dobson/Cellular One, among others? It buys the largest GSM carrier in the World, Vodafone. Vodafone has a market capitalization of about $160 billion, meaning it could be purchased for under $200 Billion. The great part of the deal is it would give AT&T control over the 45% of Verizon Wireless currently owned by Vodafone. The Feds would never let AT&T keep that portion, but in a pre-arranged deal with a private equity firm AT&T could sell the Verizon Wireless stake, currently valued at around $65 Billion, for $80 Billion or so, cutting the actual Vodafone purchase price to somewhere in the neighborhood of $120 Billion. Who would be interested in 45% of VZW? How about KKR and/or Blackstone who seem to be buing everything. Or the Goldman Sachs/Texas Pacific consortium which recently puchased fellow CDMA carrier Alltel for $27 Billion? This would give GS/TP more leverage in it attempt to get VZW to buy the CDMA assets, probably raising the price to over $115 Billion.