TeleTips Network » 700MHz http://www.teletips.net/blog Help for Telecoms Professionals Thu, 22 Apr 2010 06:47:07 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 This Week it’s Verizon Battling Google http://www.teletips.net/blog/2007/10/03/21/ http://www.teletips.net/blog/2007/10/03/21/#comments Thu, 04 Oct 2007 07:52:03 +0000 Arch Stanton http://www.teletips.net/blog/2007/10/03/21/ OM Malik is one of my favorite bloggers. He generally writes about the technology industry with a focus on telecoms and the Internet. Today he covered news of Verizon Wireless and Google jockeying for position prior to the American 700 MHz spectrum auctions coming in January. It’s clear that both sides believe that much is on the line.

From Verizon Wireless’ perspective they must have at least 2 objectives in winning the auction. First, to acquire more spectrum to expand their existing business. They’d prefer additional nationwide spectrum. But I’d expect them to hedge that bet by selectively bidding for regional licenses.

Second, they can hope to eliminate a competitor, or at least reduce the scope across which a competitor might compete with Verizon Wireless. Both are clearly worth billions. Trailing 12 month revenue for Verizon Wireless is $91 billion. If a competitor or competitors could deny Verizon Wireless as little as 10 percent of that market it makes the cost of licenses pale by comparison.

A lost opportunity of $10 billion/ year has a net present value of around $25 billion. If that represented the cost of doing nothing, spending $10-12 billion to buy more spectrum seems like a way to save $15-13 billion. I count on Verizon Wireless to go all out before the auctions and to bid ferociously during them.

This show is only starting folks. don’t touch that dial.

]]> http://www.teletips.net/blog/2007/10/03/21/feed/ 1 Verizon and Vodafone stir the pot http://www.teletips.net/blog/2007/08/22/verizon-and-vodafone-stir-the-pot/ http://www.teletips.net/blog/2007/08/22/verizon-and-vodafone-stir-the-pot/#comments Wed, 22 Aug 2007 17:33:06 +0000 Arch Stanton http://www.teletips.net/blog/2007/08/22/verizon-and-vodafone-stir-the-pot/ Vodafone and Verizon are again in the news. I’ve posted a recent story to our message boards, and written about them previously in the context of the upcoming American 700 MHz auctions. (Full disclosure: I used to work for AirTouch, which was acquired by Vodafone, and for Arun Sarin, now CEO of Vodafone.) The recent news is about their difficulties getting along together and about the possibility that the dividend Verizon pays to Vodafone, as a major stockholder, might not be paid again until 2010 or later.
In my earlier writings I’ve predicted that Vodafone would be a key bidder in those 700 MHz spectrum auctions. The current news only strengthens my belief in that outcome. Vodafone recently declined to sell a small bit of its Verizon holding, thought to be worth about $10 billion, if that can be called “small.” The reason they passed on the chance was the worry that reducing their position in the partnership would leave them even less influence over decisions taken at Verizon than they have now. However, with the news that the dividend might not be paid for the near future Vodafone has less of an incentive to stay on board. And remember, Verizon Wireless has repeatedly expressed a desire to buy out the Vodafone stake. Therefore, Verizon can be expected to continue taking steps to motivate Vodafone towards that goal.
These are factors pushing Vodafone away from the Verizon partnership. On the pull side are also a couple enticing factors. First, there is the prospect of all the cash from their Verizon stake, possibly $55 billion or more. With funds like these they could pay down debt, reward shareholders, buy back stock and invest in all kinds of new technologies and network upgrades.
Second, there are those interesting spectrum auctions. I have imagined that Vodafone would want a part of that to build a new nationwide, state-of-the-art GSM network to which their existing global subscriber base could seamlessly roam.
Together these combine to give Vodafone powerful incentives to arrange their exit from the partnership. I suspect they will do that as surreptitiously as possible for the same reason they declined to sell the $10 billion stake: to avoid diluting their current influence. Vodafone could conceivably discuss selling their stake with a private equity group. This also would strengthen their hand in any negotiations with Verizon.
Whether or not this comes to pass misses the point. The upcoming spectrum auctions are a huge, once in a generation opportunity. Everyone who is anyone will be at the table. This is high theatre at its finest.

]]> http://www.teletips.net/blog/2007/08/22/verizon-and-vodafone-stir-the-pot/feed/ 0 Google scores a victory for consumers http://www.teletips.net/blog/2007/07/31/google-scores-a-victory-for-consumers/ http://www.teletips.net/blog/2007/07/31/google-scores-a-victory-for-consumers/#comments Wed, 01 Aug 2007 05:22:57 +0000 Arch Stanton http://www.teletips.net/2007/07/31/google-scores-a-victory-for-consumers/ So today the American Federal Communications Commission decided to make the winner of the upcoming 700MHz spectrum auctions accept terminals and applications from 3rd-parties. This was at the suggestion of Google and others, and is excellent news for American consumers. It likely will lead to more handsets from which to choose and more innovative applications being available more quickly. Probably it also will mark the beginning of the end of the glory days for America’s incumbent mobile operators.

This ruling heralds much more difficult times for America’s coddled mobile operators. Handset choice and the ready access to innovative applications are not what they are known for. These will force them to change their current business models, which is likely to reduce their margins as well as their subscriber numbers. Their good times now have a hard stop.
For the incumbent mobile operators the changes will come even before the new operators open their doors. Subscribers interested in changing operators will flee as soon as their current contracts expire. The wider choice of handsets available to subscribers of these new mobile operators will be one motivation.

People outside the US might have trouble believing this. But Americans are allowed to choose a handset only from the limited offering of their service providers, typically no more than 30 or so handsets are offered at any one time. There are no “mobile telephone stores” in the US that are not affiliated with one or more mobile operators. To buy a handset in the US is to select a service provider. La même chose.

To people outside the US accustomed to shopping at independent stores offering literally hundreds of different handsets for sale this may seem incredible. But Americans have for years put up with this situation. Most of them have no idea what they are missing. Finally, they will be given the same array of choice the rest of the world takes completely for granted.

The implications are enormous.

  1. The winners of the spectrum auctions are likely to deploy a GSM air interface.

    2. GSM has a long history of handsets that that function properly “out-of-the-box” without extensive testing with a specific service provider. Network interoperability is assured by the GSM logo. For CDMA operators the labor overhead of assuring that every handset available works properly with a CDMA network is simply too great. Sure, the CDG is supposed to enforce CDMA interoperability standards. But trust me, CDG is asleep at the switch. BTW, this means Vodafone is likely to be an unbeatable bidder in these auctions.

  2. Vodafone will be shopping their Verizon shares post haste.

    3. If the network is going to be GSM, Vodafone will be a key player. This auction is the foray into the American market that their stake in CDMA operator Verizon has long denied them. Remember, buy on the rumor, sell on the news, you heard it here first. Google may well find themselves bidding against Vodafone,

  3. Expect extreme conflict at America’s incumbent CDMA mobile operators.

    4. It is received wisdom on the Internet to cannibalize your own subscribers before your competition does. The CDMA incumbents will be sorely conflicted about how to handle this threat. Subscribers will be expected to leave in droves driven by increased handset choice and the availability of cooler applications. The operators will be on their own as the infrastructure providers have no dog in this fight: they’ll sell kit regardless of whether the air interface of the new network is GSM or CDMA.

  4. The “no contract” operators will make a short-term killing.

    5. As subscriber contracts with the incumbent operators expire many subscribers will want to “park” their existing mobile service with these no-contract operators while they wait for the new network to turn up.

As the new operator gains traction the incumbents will have to change their business models, and by then there may well be regulatory action to spur it.
I’m certain there will be a zillion gallons of ink spilled on this discussion even before such an operators moots their new service. Let the games begin!

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