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Sprint to launch Business Ethernet service in New U.S. and Global Markets
And you thought Sprint-Nextel was just a wireless carrier? The company, thought of primarily as a 3G/mobile WiMAX provider, has just announced that it will add Ethernet service to 25 new U.S. markets by the end of 2011 and expand the service into additional global regions next year. The carrier offers Ethernet to businesses and wholesale partners in 40 American markets and 37 countries. Sprint said it recently expanded the service by adding additional speeds, ranging from 2 to 10 Gbps.
Enhanced Ethernet access coverage for Sprint Global MPLS and dedicated internet access provides businesses and wholesale partners to maintain multiple types of technologies. Sprint Ethernet access is offered in 40 markets nationwide and 37 countries globally. Sprint plans to launch domestic markets in existing markets by end of year, as well as expand availability globally next year. Sprint has enhanced its service by adding speeds to current aggregated speeds, with ranges of 2-10 Gbps, subject to market availability. Businesses can select from eighteen aggregated speeds and sixteen dedicated speeds, choosing the port speeds that fit their network needs. Aggregated Ethernet access can provide an alternative to traditional TDM access, while Dedicated Ethernet access expands to meet specific customer bandwidth needs, offering fixed-rate and fractional billing.
http://www.telecompaper.com/news/sprint-to-expand-ethernet-access-service-to-65-markets
Comment and Analysis
We expect that Sprint will compete in the U.S. with Comcast Business, Verizon Business, AT&T, Century Link, Megapath and XO Communications. We’re not sure about who they’ll compete with outside the U.S.
A key issue is whether Sprint will extend its fiber plant to commercial buildings and offer Optical Ethernet. It’s that techology that offers customers “liquid bandwidth,” i.e. they can upgrade their access speed without having the carrier deploy a new facility. For example, a customer could initially order a 10M bit/sec Ethernet Private Line or Virtual Private Line service and then upgrade to 50M or even 100M bit/sec by simply using more of the bandwidth available in the fiber access link. Of course an automated provisioning/ re-provisioning system is needed to be in place at the carrier’s Central Office (where the Ethernet link access is terminated) to realize such “liquid bandwidth.” Ethernet over copper (DS1/E1, nx DS1/E1, bonded DSL, etc) can not generally support this capability.
Perhaps, the expansion of Sprint’s metro Ethernet service will provide a lifeline for the company in view of its challenges and difficulties in the 4G market.
https://techblog.comsoc.org/2011/09/06/what-next-for-sprint-if-att-get-done-4g-strategy-will-be-key
What next for Sprint if AT&T- T-Mobile deal doesn’t get done? 4G Strategy will be key!
If the U.S. Justice Department succeeds in blocking the $39 billion merger of AT&T and T-Mobile, Sprint – the nation’s 3rd largest wireless carrier- will be very pleased. The company would then not face competition from an even larger #1 wireless carrier in its major markets. But Sprint still faces daunting challenges. Its market share of subscribers on contracts dropped to 13 percent in 2010, down from 17 percent in 2008, according to Barclays Capital. The company reported a net loss of $847 million in the second quarter of this year.
Christopher King, an analyst with Stifel Nicolaus said that Sprint has already lost to Verizon Wireless and AT&T. Sprint itself has acknowledged the difficulties it faces when competing against companies whose scale will allow them to secure better deals on hardware. The company has also argued that the amount of spectrum that a combined AT&T and T-Mobile would control would be anti-competitive.
But even without the AT&T-T-Mo merger, Sprint is being left in the dust by VZW and AT&T primarilly for picking the WRONG “4G” network (mobile WiMAX rather than LTE). . As LTE has become the defacto “4G” industry standard, there are and will be many more devices for it than for WiMAX. That gives the customer much more choice. That is a huge disadvantage for Sprint now that mobile data service is what wireless customers care most about now. Rolling out LTE over one year after Sprint offered mobile WiMAX (as a Clearwire MVNO), Verizon Wireless has now overtaken Sprint as the nation’s largest “4G” network provider.
Mobile data service is becoming increasingly important to a wireless industry that is experiencing declining revenue from voice traffic. Data charges will account for more than 41 percent of the revenue from contracted wireless subscribers in 2011, according to James Ratcliffe, an analyst at Barclays. That compares with less than 30 percent in 2009. And all the mobile data subscribers want a lightening fast “4G” service for their smart phones, tablets and notebook/ netbook PCs.
Sprint is planning to disclose its new strategy for its 4G network October 7th at its investor conference in New York. Everyone expects that strategy to be based on LTE- either on its own, with Clearwire or with LightSquared.
With respect to the latter option, LightSquared agreed to pay Sprint $9 billion to build a 4G network using its spectrum.
But Sprint hit yet another barrier. Federal regulators are hesitant to allow the companies to use this spectrum because it interferes with GPS frequencies.
Between Clearwire and LightSquared, Sprint should have the spectrum it needs to build its network, analysts say, but it is unclear how it will be able to make the investment to take advantage of this. There is speculation that Sprint will have to buy Clearwire outright, or assemble a consortium of other companies to help it do so. Another option would be a collaboration with cable companies that control spectrum and could be willing to work with Sprint.
The only advantage Sprint seems to have today, is that it offers unlimited data plans, while both VZW and AT&T have instituted “tiered pricing” with data caps.
For more information, please see:
Steve Elfman, Sprint’s president and head of network operations recently met with a reporter from the Seattle Times. Among the looming changes that Elfman sees from his perch are phones with newer multimode radios that do a better job seamlessly shifting across different networks, including 3G and different flavors of 4G.
One of the challenges to getting there is figuring out how to put enough antennas onto a phone to work with all the different bands of spectrum that are available, he said.
Also in the works is new software that does a better job of orchestrating the handoff when you move across networks.
Elfman explained that this software isn’t just embedded in the handset or part of the operating system. It extends from there through the network and into the carrier’s billing systems.
For more information, please see:
http://seattletimes.nwsource.com/html/businesstechnology/2016103487_brier05.html
Note that there’s a lot of speculation that Sprint will announce availablity of Apple’s iPhone 5 on its network, but that would probably be for LTE and not WiMAX. Deutsche Telekom (but not T-Mobile) has already started to take orders for the iPhone 5. DT has no plans for WiMAX and supports a GSM based technology called HSPA for 3G, while Sprint supports WiMAX (as a Clearwire MVNO) and CDMA based EVDO as its 3G mobile data network.
Additional References:
http://viodi.com/2011/03/21/att-acquisition-of-t-mobile-has-huge-impact-on-u-s-telecom-industry/
http://viodi.com/2010/08/12/hold-the-obit-sprint-pays-105m-for-spectrum-will-focus-on-wimax/
http://viodi.com/2010/03/31/1835/
http://viodi.com/2010/12/07/sprinting-to-lte/
http://www.sprintusers.com/forum/showthread.php?t=216333
http://viodi.com/2010/12/01/consumer/
http://viodi.com/2010/11/12/lte-market-forecasts-up-as-operators-announce-deployment-plans/
http://viodi.com/2011/03/21/att-acquisition-of-t-mobile-has-huge-impact-on-u-s-telecom-industry/
M2M Standardization Task Force (GSC MSTF) meets Sept 20-21 @ Georgia Tech Research Institute
Building a Platform for the Emerging M2M Dialogue
Upcoming International Conference in Atlanta Will Highlight M2M Advances
By Cheryl Blum, Vice President, Technology and Business Development, TIA
The last two years have seen a remarkable renewed interest from wireless carriers, telecommunications equipment suppliers and standards development organizations (SDOs) in machine-to-machine (M2M) communications. M2M protocols and technologies allow two pieces of equipment to exchange data and commands with little or no human involvement. That functionality is now permeating the United States and global economies as companies demand real-time data from networked systems that span many vertical markets such as healthcare, manufacturing, information and communications technology, shipping, finance, and utilities.
For example, real-time vehicular telematics technologies helped shipping giant United Parcel Service (UPS) reduce the amount of fuel consumed per package in the United States by 3.3 percent and engine idling time by 15.4 percent in 2010, Data sensors track vehicle performance mechanically and driver route and behavior behind the wheel. Scott Wicker, UPS’s Chief Sustainability Officer, says: “the data we gather from telematics enables us to make small adjustments with big payoffs.”
M2M technology for monitoring is also used to save lives. Cinterion and TZ Medical are launching a new heart monitoring device that can detect abnormalities in heartbeats and communicate the diagnostic data to physicians via mobile networks and the Internet. Authorized caregivers can securely view patient data at any time, from anywhere in the world to determine treatment approaches.
However, harmonizing M2M technologies across such a wide range of industries is a significant challenge, which is why the Telecommunications Industry Association (TIA) is hosting the next GSC Machine-to-Machine Standardization Task Force’s (GSC MSTF) meeting at the Georgia Tech Research Institute (GTRI) Sept. 20-21. The theme of the Atlanta event is “M2M Standards as Growth Enablers.”
The GSC MSTF was created in September 2010 at an international meeting of major SDOs in Beijing to facilitate global coordination and harmonization in M2M standardization. The MSTF roundtable will help in finalizing an activity map and make recommendations on current and future M2M standardization undertakings to the Global Standards Collaboration (GSC) in Halifax, Nova Scotia, from Oct. 31 to Nov. 3.
The meeting, open to the public and free of charge, features a conference followed by a roundtable. Attendees will have valuable collaborative opportunities, and gain technical insights into the area of M2M technology from the perspective of industry experts involved in critical vertical markets.
The conference will include panels on healthcare; transportation, logistics and supply chain; residential and commercial security and home automation; payments (ATM/vending/mobile payments); manufacturing and industrial processes; and energy and Smart Grid.
A number of prominent industry experts will be participating, including Dr. Daniel Russler, VP of Clinical Informatics at Oracle; Chuck Holland, VP of Industrial Engineering at UPS; Ron Zimmer, President and CEO of the Continental Automated Buildings Association; Cynthia Merritt, Assistant Director of the Retail Payments Risk Forum at the Federal Reserve Bank of Atlanta; Alexander McMillan, Director of Global Standards and Trade at Rockwell Automation, and member of the American National Standards Institute Board and IEC Standards Management Board; and Eric Gunther, Chairman and CTO of EnerNex Corporation, and Chairman of the U.S. Department of Energy (DOE), GridWise Architecture Council.
The GSC MSTF roundtable will feature organizations and companies that are contributing to M2M standards development. It will appeal to attendees directly involved in M2M standards or interested in monitoring the progress of M2M standardization. The roundtable will be moderated by Dr. Ron Bohlander, associate director for Business Operations & Commercialization at GTRI’s Information and Communications Laboratory (ICL) and will include representatives from the International Telecommunication Union (ITU), the European Standards Telecommunications Institute (ETSI), the Open Mobile Alliance (OMA), the 3rd Generation Partnership Project 2 (3GPP2), the Zigbee Alliance, the Continual Health Alliance and TIA.
The GSC MSTF will be convened by TIA’s TR-50 Smart Device Communications Engineering Committee Chair, Dr. Jeffrey O. Smith, CTO of Numerex. (Please see info on current and past GSC MSTF meetings at www.tiaonline.org/standards/mstf/index.cfm.)
TIA’s M2M standardization work is multifold. TR-50 is developing a multipart standard for M2M architectures and security to define requirements for access agnostic monitoring and bi-directional communication of events and information between smart devices, applications, and/or networks. TR-50’s central M2M standard feature is interoperability for interfacing with a broad range of machine-to-machine specifications and technologies. Technical interoperability with M2M technologies is also being addressed by TIA’s TR-48 Vehicular Telematics, TR-49 Healthcare ICT, and TR-51 Smart Utility Networks Engineering Committees.
Attendees at the Atlanta GSC MSTF meeting will have a unique opportunity to participate in the emerging global M2M dialog.
For additional information about the event, including registration details and a full agenda, please visit www.tiaonline.org/standards/mstf.
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Numerex has organized this M2M meeting.
“Numerex is honored to have been chosen to organize this important event in the global M2M arena, which will feature international Standards Development Organizations, various standards alliances focusing on specific vertical markets, and companies that are leaders in their field,” said Stratton J. Nicolaides, chairman and CEO of Numerex, in a statement.
“The effective collaboration with TIA (News – Alert) and Georgia Tech, in particular GTRI’s Information and Communications Laboratory has contributed to make this premier international M2M gathering a required stop for any M2M player interested in keeping current with the latest M2M developments,” Nicolaides added.
Jeff Smith, Numerex CTO, presented at IEEE ComSocSCVs M2M/Smart Grid workshop in Sept 2010. His presentation is at: http://www.ewh.ieee.org/r6/scv/comsoc/Workshop_092510_M2MStandards.pdf
Alan J Weissberger
IEEE ComSocSCV Chair
More Solutions for Mobile Data Offload as 3G/4G Traffic Continues to Grow Exponentially!
Note: This is a followup article to the excellent Mobile Data Offload panel session report posted by IEEE ComSocSCV Wireless Expert (and webmaster) Daniel Wong, who now resides in Singapore. Please refer to Daniel’s post:
Summary of Connectivity Week panel session on Mobile Data Offload
Introduction
Several techniques to decrease cellular data traffic, including offloading mobile data traffic to WiFi hotspots, optimized mobile video compression, and elimination of extraneous 3G/4G status checking requests from mobile apps are described in this article.
Solutions for Mobile Data Offload
It is abundantly clear that Wi-Fi hotspots will continue to grow in terms of locations, the total number of connections and their importance to cellular network operators who must keep pace with explosive growth in mobile data traffic.
Market research firm Instat writes:
“The (WiFi) hotspot market continues to surge forward with phenomenal growth in footprint and usage, a trend that In-Stat anticipates will continue. As with the past several years, growth in the hotspot market is largely being driven by wireless and broadband providers embracing Wi-Fi as both a competitive differentiator and enhancement to core services.
How WiFi hotspots are being used, the frequency, and the occasion for usage all continue to transition due to a variety of factors, including:
-Wide-scale adoption of Wi-Fi-enabled handsets and a blending of mobile and Wi-Fi experiences
-Further integration of Wi-Fi into mobile operator strategies
-A promise of automatic login and seamless access as next-generation hotspot technologies are implemented in coming years
-Revised payment models shifting to free and bundled access
-New application potential, including mobile video and location-based services.”
Instat forecasts that wireless hotspots will account for nearly 120 billion connect sessions by 2015!
http://www.in-stat.com/catalog/wcatalogue.asp?id=167#IN1105002WS
Notebook PCs are still the No. 1 device for Wi-Fi hotspot use, which is understandable as Wi-Fi radios and cards are integrated into almost all notebook PCs. Most smartphones and tablets now have integrated WiFi as well as 3G or 4G radios. According to the Devicescape WiFi Report 2010, 81 percent of US Smartphone users prefer using Wi-Fi over 3G provided by their existing mobile carrier for browsing Web sites, downloading data, performing Google searches and sending e-mail. Today, about half the smartphones sold have Wi-Fi functionality. By 2014, the report forecasts about 90 percent of smartphones will offer seamless access to Wi-Fi.
Mobile device owners are apt to take advantage of free or low-cost hotspots to mitigate the risk of mobile broadband data overage charges, as almost all carriers (except Sprint) have done away with unlimited data plans. Another benefit is that the Wi-Fi connections are often faster than 3G. However, that’s dependent on the number of concurrent WiFi hot spot users and the throughput of the hotspot’s broadband access facility (which is almost always wireline based- fiber is better!).
Cellular network operators see the benefits of Wi-Fi for mobile data offload and are likely to expand hotspot locations by partnering with businesses directly or through existing hotspot networks, such as Boingo Wireless. In July, for example, Japanese network operator KDDI said it would build out 100,000 Wi-Fi hotspots by March 2012 that will seamlessly work with the carrier’s WiMAX network in Japan.
The WSJ reports, that cellular network providers are turning to outside technology companies to find ways to cope with the broadband burden caused by soaring use of smartphones and tablets. The methods used include sensing when a WiFi network is near enough to use, compressing mobile video traffic, and eliminating extraneous update requests.
TDC A/S, a Denmark mobile operator, turned to Birdstep Technology ASA, a Norwegian company, to help ease the data overload. Essentially, the technology reaches out to users and urges them to temporarily switch away from the wireless 3G/4G network to Wi-Fi hot spots whenever possible, promising faster speeds as an incentive. Because it costs significantly more to provide mobile broadband coverage than fixed-line Internet, Birdstep’s off-loading technology, in use for two years, helps lower TDC’s overall costs. It also helps keep quality levels high by connecting those in the range of a hot spot to faster, more stable Internet, while also freeing up the mobile Internet for those using the company’s cell sites, says Mr. Langkilde.
Other companies offer systems to compress video, reducing the amount of bandwidth it needs. Another product on the market cuts down in the amount of unnecessary requests for data made to networks for updates.
In March, Montreal-based Vantrix Inc. partnered with Sweden’s Telefon AB L.M. Ericsson, which makes telecom equipment, to sell a “video optimization” system that helps reduce the bandwidth mobile video uses. Allan Benchetrit, president and CEO of Vantrix, says that the system, which is being pitched to wireless service providers, can compress mobile video bandwidth between 30% and 50% and save operators up to 70% in costs related to operating and upgrading the network. Earlier this month, Ericsson said that Mobifone, a Vietnamese carrier, has signed on as a new customer of the system.
The system delivers videos online closer to the time frame spent watching them instead of delivering the entire video, helping to save bandwidth when someone clicks off before the video is finished. It can also adapt the video to the quality of the Internet connection, and adapt it for different screens and devices. Vantrix said it is working with a number of companies in addition to Mobifone, but declined to name them.
Sprint is trying to be proactive in addressing the burden from increased data use. The 3rd largest wireless carrier in the U.S., Sprint is testing software from Seven Networks of Redwood City, CA. That technology monitors requests for data coming from smartphone or tablet apps and then connects to the cellular broadband network only when new updates are available. The result can mean a 40% reduction in the time a smartphone or tablet is on the network and an improvement of up to 25% in battery life, says Seven Networks. Sprint’s Mr. Yarkosky says that so far the results of the testing have been positive, though he adds that the company is still validating the results.
Read more: http://online.wsj.com/article/SB10001424053111904070604576518304117541590.html?mod=ITP_marketplace_2
Explosion of Mobile Data Traffic (especially video) to Continue Unabated
Global mobile data traffic this year is expected to more than double from 2010, reaching 0.6 exabytes per month, up from 0.24 exabytes monthly, according to research from Cisco Systems Inc. Mobile video traffic is expected to make up 52.8% of that traffic this year, up from 49.8% in 2010.
Global data revenue for wireless carriers is expected to more than double to $491 billion in 2014 from $214 billion in 2009. Those wins will be offset by a 2% decline in revenue from voice services to $620 billion in 2014 from $633 billion in 2009, according to market researcher Gartner Inc.
Read more: http://online.wsj.com/article/SB10001424053111904070604576518304117541590.html#ixzz1WSnd9Pei
Another Reference:
Sprint will NOT Abandon WiMAX customers or Clearwire after deploying LTE, but no plans for 4G APIs!
Received today from Kristin Wallace, Sprint Corp Communications Mgr:
Enterprise VoIP and related services drives 7% Gain in Wireline Voice Core Revenues
Disclaimer: We still don’t know what “core” means in this context of “WIreline Voice Core Revenues.” Does anyone know what is non core voice revenues?
Introduction
Wireline voice core revenues were up 7% in the second quarter of 2011 over the prior quarter, according to research from Exact Ventures, which attributed the growth to continued demand for enterprise Voice over Internet Protocol services. The data also showed the market for IMS core equipment was up more than 50% year-over-year for the quarter because of large-scale deployments in Asia that boosted market share for companies such as Alcatel-Lucent, Huawei Technologies and ZTE.
Where did the Growth Come From?
Exact Ventures (who they?) said that the growth was driven in part by the continued strength of enterprise VoIP services, such as SIP trunking and hosted unified communications. The enterprise session border controller and voice application server markets each grew over 40% compared to the second quarter of last year.
“Enterprise VoIP is clearly a key factor in the resurgence of the wireline NGN market. The older, more traditional wireline NGN segments of softswitches and media gateways, however, are beginning to show stability as growth in wireline VoIP services will also need to interface with legacy TDM services,” said the firm’s founder and principal analyst Greg Collins.
“While wireline deployments currently dominate IMS Core sales, as voice-over-LTE services are introduced in the coming months and gain subscribers, the market will shift to become dominated by wireless deployments, which will drive the IMS market for well over a decade as the billions of wireless subscribers are gradually migrated to VoIP,” Collins added.
http://unified.cbronline.com/news/wireline-voice-revenue-grew-7-in-2q-2011-report-230811
AJW Opinion:
Note that if wireless subs move to Voice over LTE or voice over 3G+ technologies, that would certainly canabolize the cellco’s cash cow- voice minutes. We don’t think this will happen anytime soon.
Instead, we see continued growth in enterprise VoIP and related services, such as SIP trunking and hosted unified communications. Enterprise VoIP integration with legacy TDM Voice/PSTN will continue to be a “hot ticket,” best exemplified by SIP Trunking (Connects a premises or network hosted VoIP switch with the PSTN/ legacy TDM voice network).
Cisco Systems to Buy Axioss Management Software to Aid in Convergence of Services and Networks
Cisco Systems has announced its first acquisition since revealing its strategy-overhaul plans this Spring. The company is buying AXIOSS from the UK subsidiary of Comptel. The purpose of this purchase is to help Cisco’s customer base bring technology services, including video, data and cloud services, to market faster.
The AXIOSS software will provide management capabilities for network services across Cisco’s five company priorities, and it will enhance Cisco Prime, which enables service providers to better manage their networks and network services.
“As more users, connected mobile Internet devices and bandwidth intensive applications drive the explosive growth in IP-based networks, service providers continue to invest in their infrastructure to support customers’ needs,” said Jesper Andersen, senior vice president and general manager, Network Management Technology Group (NMTG), Cisco. “With the acquisition of AXIOSS software and talent, we will help enable service providers to generate greater profits using a single management architecture to drive quick monetization and optimization of their Cisco network investments.”
Upon the close of the acquisition, the Axioss team will be integrated into the Cisco’s NMTG (Network Management Technology Group) and its Advanced Services Group. Gareth Senior- Comptel CTO and member of the Executive Board, will join Cisco. The services group “will offer implementation, customization and integration services”, and the new personnel will “bring strong software development and professional services skills,” a Cisco spokesperson said.
Under the terms of the agreement, Cisco will pay approximately $31 million in cash to Comptel Corp. for the acquisition. The acquisition is subject to various standard closing conditions and is expected to be completed in the third quarter of calendar year 2011. Comptel Corp claims to be “the global market leader in convergent mediation and provisioning software solutions.”
http://newsroom.cisco.com/uk/press-release-content?articleId=462765&type=webcontent
AJW Comment:
Cisco was noted for the huge number of acquisitions it made in the mid to late 1990s. Three of those acquisitions (Kalpana, Crescendo and Grand Junction) enabled the world’s leading router company to enter the Ethernet switch business, which it quickly took over. Other acquisitions permitted Cisco to enter other networking market segments. The 1995 acquisition of Stratacom enabled Cisco to get into frame relay and ATM in the WAN. But most other acquisitions failed badly (e.g. DSL, optical switching and transport, etc).
Cisco’s largest acquisition this decade was in 2006, when it took over Scientific Atlanta. That enabled Cisco to enter the Cable TV set top box business, which has not produced the expected revenues, profits or synergies with the rest of Cisco’s product line (especially home networking equipment it acquired through the Linksys acquisition).
While this is a much smaller acquisition than those in its glory heydays, this one is nonetheless important for Cisco to execute on its goal of integrating service management and fulfillment capabilities into Cisco Prime.
Addendum: One day later, another article on this topic:
Google’s Acquisition of Moto Mobility ups the stakes in Cell Phone Patent Mania
Here are what some respected news sources wrote today about the patent based motivation for this huge deal:
Google Primes Patent Pump-
Google Inc.’s $12.5 billion deal for Motorola Mobility Holdings Inc. provides the latest evidence that patents have become the hottest currency in high technology. Tech companies, particularly in the market for mobile devices, have been furiously snapping up patents to use as weapons in lawsuits and bargaining chips in settlement negotiations. That was a key reason Google cited for buying Motorola Mobility, though some experts disagree about the value of that company’s intellectual property.
In some such cases, companies buy patents to go on the offensive against rivals, seeking hefty royalties for patent licenses or injunctions that could bar sales of competing products. Google, by contrast, expressed defensive motivations; the company, which has relatively few patents on mobile technologies, could theoretically use Motorola Mobility’s patents to countersue companies that sue Google or companies that use its Android software.
http://online.wsj.com/article/SB1000142405311190348090457651061220870619…
In the World of Wireless, It’s All About Patents
That intellectual property portfolio is a treasure trove for Google because the battle in wireless is one that is increasingly being fought in court.
Corporate warfare over patents is not new. Companies historically preferred to reach truces, choosing to cross-license their intellectual property rather than risking bigger losses in court.
But patent battles are no longer waged between just two competitors, like Intel and Advanced Micro Devices. Platforms like Android and Windows Phone 7 are built upon a handful of device makers, adding more players with different stakes at risk.
That has changed the calculus of settling, as product makers have become increasingly willing to sue rather than reach peaceful settlements.
“Now you’re seeing more suits being brought by product companies willing to step up and say we will defend our patents,” said Colleen Chien, an assistant professor at the Santa Clara University School of Law.
Apple has sued important Android phone makers like HTC and Samsung, while Oracle has taken Google to court. The fighting has been likened to a “patent arms race.”
“The best way to fight a big portfolio of patents is to have your own big portfolio of patents,” said Herbert Hovenkamp, a law professor at the University of Iowa. “That appears to be what Google is doing here, arming itself with patents to be able to defend itself in this fast-growing market.”
Large sums hang in the balance, especially if phone makers are forced to pay out royalties for each handset they make. Microsoft has already persuaded HTC to pay a fee for every Android phone manufactured, and is seeking to extract similar royalties from Samsung.
If left unchecked, such payments could make creating new devices for Android prohibitively expensive for manufacturers, forcing them to turn to alternative platforms like Windows Phone 7.
“With a slim patent portfolio, Google is especially vulnerable to lawsuits against its Android licensees, if not itself,” Charlie Wolf, an analyst with Needham, wrote.
By acquiring Motorola Mobility, Google is seeking to ensure that growth in the Android market will not be choked by the burden of royalties.
The importance of bulging patent portfolios became clear this summer after a consortium led by Apple, Microsoft and Research in Motion, the maker of the BlackBerry, paid $4.5 billion for some 6,000 patents held by Nortel Networks, the Canadian telecommunications maker that filed for bankruptcy.
Google, which initially offered $900 million for the collection, fell short after several bids. Shortly afterward, Google executives complained that the company’s rivals had banded together to smother its Android system with patents.
“We’re determined to preserve Android as a competitive choice for consumers, by stopping those who are trying to strangle it,” David Drummond, Google’s chief legal officer, wrote in a blog post earlier this month.
Mobility’s Benefits for Google Not Patently Obvious
Google is hoping to secure the long term future of its business—by turning that business on its head. With its proposed $12.5 billion acquisition of Motorola Mobility, Google is jumping into a lower-margin, cut-throat hardware business. Even for a company with as varied ambitions as Google, this is a risky deal.
Google’s willingness to buy Mobility highlights how much it needs to protect its Android mobile operating system, now caught up in a raging patent fight. Along with other Android-powered handset makers such as Samsung and HTC, Mobility has been sued for patent infringement by Apple and Microsoft.
Google’s purchase of Motorola Mobility was cheered by the street, as Google looks to control more of its handset maker of its Android phones. The deal also gives Google access to a library of patents, which can be used to protect the Android operating system
Even settling the patent lawsuits could be harder, argues patent expert Florian Mueller. Google may want to use Mobility’s patents to negotiate a settlement that covers all Android handset makers. For Apple and Microsoft, agreeing to an Android-wide settlement may be unpalatable.
In a sign of how badly it appeared to want Motorola Mobility’s patents, Google offered $40 a share, a rich 63 percent premium to Motorola’s closing price on Friday. Analysts at Jefferies calculated that, of the $12.5 billion offer price, Google was essentially paying $9.5 billion for the patents.
http://dealbook.nytimes.com/2011/08/15/in-the-world-of-wireless-its-all-about-patents/
Google, until now largely on the sidelines of that fight, has good reason to get directly involved. As an increasing portion of people’s Web surfing shifts to mobile devices, Android gives Google a vital position in mobile advertising. Having snared 47.7% of global smartphone shipments by operating system in the second quarter, according to Strategy Analytics, it is clear why Android threatens rivals like Apple and Microsoft.
Google’s Motorola deal seen as Cold War arms race
Open warfare between technology giants is nothing new, but when Google this week announced it was acquiring Motorola’s mobile division, the conflict over mobile phones went nuclear.
Behind the headlines of the $12.5 billion deal, say analysts, is a Cold War-style arms race, with leading firms racing to stockpile the patents that will serve as weapons of mutually-assured destruction.
But as Google squares off against Apple, Microsoft and the creators of BlackBerry, the question is: will anyone benefit from this escalation in potential hostilities or, like the standoff between America and the Soviet Union, will it ultimately prove futile?
Industry observers say Google’s latest deal, which saw it pay a 63% premium on shares, is primarily aimed at laying its hands on Motorola’s arsenal of patents — legally protected innovations built up over years at the frontline of cell phone development.
Most of these estimated 24,000 patents have little intrinsic value, says Lee Simpson, a London-based analyst at Jeffries International, but a core 500 or so represent the mother lode, giving Google ownership of key cellular communication technology.
And it is these patents that Google will turn to should it be accused of stealing Apple’s own legally-protected iPhone innovations to enhance Google’s Android operating system — a software now used on many popular handsets.
http://edition.cnn.com/2011/TECH/mobile/08/16/google.motorola.patents/
Verizon Says Google Deal May Stabilize Patent Fights
Verizon Communications Inc. said Google Inc.’s $12.5 billion bid for Motorola Mobility Holdings Inc. was a welcome development because it may bring “stability” to a recent slate of smartphone patent disputes, though it stopped short of totally endorsing the proposed acquisition.
http://online.wsj.com/article/SB10001424053111903392904576512360865045134.html#ixzz1VEndvWVj
Patent Wars and Blackmail in Silicon Valley
The U.S. Justice Department’s Antitrust Division is investigating another possible conspiracy among Silicon Valley companies. This one arises out of the collective bid in the late spring of nearly every wireless phone operating system manufacturer, except Google, for a portfolio of 6,000 cell phone patents formerly held by bankrupt Canadian company Nortel. Simply put, Google started the bidding at about $1 billion, but the others joined forces to lift the price to an astounding $4.5 billion and win the prize.
That’s the legal background to Google’s just-announced Motorola Mobility acquisition, and it’s one that could have serious anticompetitive consequences. If the curiously named “Rockstar Bidco” consortium — which includes Microsoft, Apple, RIM, EMC, Ericsson and Sony — refuses to license the erstwhile Nortel patents to Google for its Android wireless operating system, they will be agreeing as “horizontal” competitors not to deal with a rival. Classically such group boycotts are treated as a serious antitrust no-no, and a criminal offense. If the group licenses the patents, on the other hand, they could be guilty of price fixing (also a possible criminal offense), since a common royalty price was not essential to the joint bid and would eliminate competition among the members for licensing fees.
http://www.huffingtonpost.com/glenn-b-manishin/microsoft-motorola-patent-wars_b_928728.html
2Q-2011 VC Investment Survey: Internet 2.0 Bubble while Telecom & Networking Start-ups Struggle for Funding!
Introduction
The just released PricewaterhouseCoopers National Venture Capital Association MoneyTreeTM Report for 2Q-2011 contains some very revealing information about the amounts and types of companies venture capitalists (VCs) are investing in.
https://www.pwcmoneytree.com/MTPublic/ns/moneytree/filesource/exhibits/M…
VCs opened their wallets and invested $7.5 billion in 966 deals in 2Q-2011. That was an increase of 19% in terms of both dollars and the number of deals compared to the first quarter of 2011 when $6.3 billion was invested in 814 deals. The quarterly investment level represents the highest total in a single quarter since the second quarter of 2008.
Internet Companies are Hot (or in Bubble 2.0)
Here’s an Eye Opener: Investment in Internet-specific companies surged in the second quarter with $2.3 billion going into 275 companies. That’s about one third of all VC money invested this quarter! It represents a 72% increase in dollars and a 46% increase in deals from the first quarter when $1.4 billion went into 189 deals. The second quarter marks the most dollars going into Internet-specific companies in a decade, since the second quarter of 2001!
Five of the top 10 deals this quarter, including the top two deals, were classified as Internet-specific investments, which is a discrete classification assigned to a company with a business model that is fundamentally Internet based, e.g. e-commerce, on line games or daily coupons, social networking, etc. These are generally software companies which have nothing at all to do with the underlying Internet infrastructure that they use to generate revenues (and hopefully profits).
Telecom and Networking Start-ups Continue to Suffer
In sharp contrast, there were only 29 deals totalling $169M invested in Telecom start-ups of all types (wireless, wireline, metro, WAN, etc). That was down from 35 deals worth $188M in the 1Q-2011 and basically flat from one year ago.
Networking and equipment companies fared even worse. They received only $115M in 21 deals in 2Q, which was flat from 1Q but DOWN from $303M in 24 deals one year ago!
Telecom combined with networking & equipment only accounted for 3.7% of all 2Q-2011 investments- an insignificant percentage, especially when compared to Internet related companies. As we have pointed out in several other articles, this does not augur well for future Internet infrastructure or for technology innovation in general.
San Jose Mercury had 2 recent articles about the Money Tree VC Survey, but didn’t accurately report the sorry state of telecom and networking start ups. In particular, this Sunday’s SJ Mercury VC report didn’t explicitly mention telecom start-ups http://www.mercurynews.com/business/ci_18664212?nclick_check=1
Saturday’s SJ Mercury article was more interesting: Silicon Valley in another tech-stock bubble? (Really means private equity bubble, since the companies receiving huge investments and high valuations are NOT publicly traded)
“New figures from the National Venture Capital Association show more venture money poured into Internet startups last quarter — $2.3 billion — than in any period since the dot-com bubble, driven largely by investments in social media companies.”
While VCs are throwing lots of money at Internet start-ups, telecom and network equipment companies are struggling to get funding from VCs (or even angel investors)!
This article is continued at:
More info on early stage company funding and the role of TiE Angels
AT&T to Throttle Heavy Mobile Data Users with "Unlimited" Data Plans
On July 29, 2011, AT&T surreptitiously announced it would reduce throughput for the top 5 percent of their heaviest mobile data users in a billing period. These customers falling into this highest mobile data use group on average use 12 times more data than the average of other smartphone data customers. The move does not apply to the 15 million AT&T smartphone customers on a tiered data plan nor to most smartphone customers who still have unlimited data plans.
AT&T wrote: “The amount of data usage of our top 5 percent of heaviest users varies from month to month, based on the usage of others and the ever-increasing demand for mobile broadband services. To rank among the top 5 percent, you have to use an extraordinary amount of data in a single billing period.”
In announcing this new policy, AT&T said that “nothing short” of wrapping up its T-Mobile merger “will provide additional spectrum capacity to address these near term challenges.”
http://www.att.com/gen/press-room?pid=20535&cdvn=news&newsarticleid=32318&mapcode=corporate
Streaming video apps, remote Web camera apps, uploading large data files like video and some online gaming as well as streaming music daily over a wireless network can ratchet up data use and may push a customer into the top 5 percent category. The company pointed out that users of its Wi-Fi network do not contribute to the wireless network congestion. That’s because the WiFi backhaul normally uses a broadband wireless Internet connection.
The new data throttling will begin Oct. 1st for AT&T customers with unlimited data plans. Customers will experience reduced data transfer speeds once they reach a level that pushes them into the top 5 percent of heaviest data users. Unlimited transfers will continue to be available, although at a reduced speed, and speeds will be restored with the beginning of the next billing cycle.
Points to Ponder: We wonder whether heavy mobile data users will balk when they notice a significant slowdown or buffer underrun in streaming video or other real time applications. Will they then switch to tiered data plans and pay substantially more in overcharges?