Pings & Packets - October 1, 2001

by Derek Kerton

A Little Sunshine From Nextel and Nokia
Vodafone “Launches” bid for Control of Japan Telecom
Pet Peeve - Announcing Service That Doesn’t Exist
Cell Phone Guns - They’re Real
Odds and Ends


A Little Sunshine From Nextel and Nokia
In the midst of all the bad numbers Telcos are spitting out, it’s nice to see that not everyone is bleeding red ink all over the industry. Craig McCaw controlled Nextel has recently reported that they will meet all of their growth expectations. For the third quarter, cash flow is up, and subscribers will increase by some 500k, compared to last quarter’s 485k. On Sept 7, Nextel announced they had reached the 8 million-subscriber mark. Despite the good news, the terrorist impact on the stock market has plagued the valuation in what should have been a strong month.

Also good news, Nokia reported early in the month that it expects to meet third quarter earnings targets despite lower sales. Earnings will be 5% lower year-over-year than 3Q 2000. A week later, Moody’s changed Nokia’s debt Outlook to ‘negative’ on speculation that handset sales will continue to fall, and the networking division of the Finnish company would perform poorly.. 


Vodafone “Launches” bid for Control of Japan Telecom
The third largest public wireless data carrier in Japan, and also third in the world is Japan Telecom, purveyor of the J-Phone and J-Sky services of wireless access. J-Phone has greater functionality and features than iMode, but is still playing catch-up to that leading service from NTT DoCoMo, and trailing #2 KDDI.

On September 17, a number of news sources (incl. Reuters, Bloomberg, AP) announced that Vodafone was making a play for control of Japan Telecom. On September 20, press reports detailed that Vodafone Group offered $2.7 billion to boost its holdings in Japan Telecom from 45 to nearly 67 percent.

Readers of the KWR may recall my Dec. 22, 2000 issue (#21) article titled “Like a New Year's Bowl Game - Vodafone vs. BT” in which I discussed Vodafone’s strategic plans for control of J-Phone. At the time, a pre-implosion British Telecom was also making what I predicted was a losing play for the Japanese telco.

In the June 7 ?? (#31), we discussed how BT was starved for cash, and abdicated its shares in J-phone to Vodafone. The gist was that Vodafone had all but won the bid for control of J-Phone, and would thus be in a good position to mount an offensive against DoCoMo on their home turf. Lessons learned in that marketplace would benefit Vodafone globally.

Hey, I don’t try to give the latest news, but I do try to offer insightful analysis.

More: <http://dailynews.yahoo.com/h/nm/20010917/tc/telecoms_vodafone_japan_dc_2.html>


Pet Peeve - Announcing Service That Doesn’t Exist

To follow on the Wi-Fi article above, I’m getting a little frustrated at WISPs whose websites boast x number of locations, and a directory of these hotspots, but service at that hotspot doesn’t yet exist. I’ve been to multiple Mobilestar locations which their site has listed as active, but I could not get access and the Starbucks staff tells me that the service won’t be installed until the next month.

Come on, people. What have we learned? Vaporware sucks. Even worse when you make someone drive to a specific location to learn that your service is vapor. By and large, I’ve been extremely happy with Wireless LAN service, but a sure way to irritate the average user is to under-deliver on your promises.

I’m sure the VCs, the street, and the press are all very impressed with the higher numbers of hotspots that can be achieved when one counts fictional locations, but a company has to prioritize whom it is seeking to please. I would suggest the customer fit somewhere near the top of that hierarchy.



Cell Phone Guns - They’re Real

Here’s a real scary prospect in these dire times. International security forces are confirming rumors that a number of cell-phone shaped guns are being found and confiscated in Europe and the Middle East.

There’s not much analysis for me to add here, other that the fact that we should all cooperate fully when we are asked to x-ray or otherwise demonstrate that our phones, laptops, etc. are genuine. For the record, x-ray machines at airports do not damage laptops, memory, cell phones, PDAs, or even cameras with film.

http://dailynews.yahoo.com/h/kitv/20010920/lo/911048_1.html
<http://www.truthorfiction.com/rumors/cellgun.htm>



Odds and Ends

Mobile games will generate revenues of $17.5 billion by 2006, Datamonitor predicts in a new study. This year, the research firm expects wireless gaming to earn $950 million from Europe, Asia and U.S. markets.

From Business Week and Gartner: Shipments of mobile phones fell sharply in the second quarter and manufacturers Motorola and Ericsson grabbed market share from leader Nokia (NOK1V.HE), research group Gartner Dataquest said on Wednesday.

Global shipments of mobile phones to end-users in the second quarter of 2001 fell for the first time in the history of the indusry That is economically significant since mobile phones are the largest global consumer products category. Second quarter shipments declined by 8.4 percent to 89.76 million units, from 97.98 million in the same period a year ago. ``This is the first year-on-year decline after years of phenomenal growth,'' said Gartner Senior Analyst Ben Wood. Sales also fell from the first quarter, when 96.69 million cellphones were shipped.

In early September, Metricom, whom we’ve discussed at length in the KWR, refused a $20 million offer for all its assets (less spectrum, valued at $50 M) from Aerie Networks of Denver. They are still in bankruptcy protection.

A quarter of all business-to-consumer transactions and 20 percent of business-to-business transactions will be conducted wirelessly by 2003, according to a study by META Group Inc. I think these numbers overly optimistic. Perhaps they don’t read the Wall Street Journal (read the next bit).

The Wall Street Journal notes that wireless trading accounts for < 0.5% of online trades. This is great news - it indicates we have room to grow ;-)

British Telecom spins off its wireless assets, and renames them mmO2 PLC. Catchy, eh? The consumer brand will be O2, and all of BT’s wireless assets will be rebranded under this umbrella including: BT Cellnet serving the U.K.; VIAG Interkom in Germany; Telfort in the Netherlands; Digifone in Ireland; Manx Telecom in the Isle of Mann; and Genie, BT’s wireless Internet service. BT Wireless’ 16.9 million customers can expect to receive their products and services under the new brand by spring 2002, and I’ll bet they scarcely care. I suppose this move, following on the branding success of companies like Orange, makes some sense, but it seems frivolous at a time when BT is falling apart at the financial seams.

Strategy.com, a division of Microstrategy, has closed its doors for good. This author has examined the firm, first as an evaluation as a potential partner for Disney, and then at a time last year when the SEC identified some accounting discrepancies at the firm. Readers will recall our cold evaluations. If this economic slowdown were to only close down firms with weak products and technologies, and dubious accounting, it wouldn’t be such a bad thing.

Japan’s KDDI, third in the world for wireless Internet subscribership, has followed the leadership of #1 DoCoMo in delaying their 3G services. KDDI says that its services won’t be ready until April next year.

DoCoMo still claims that it will be ready to launch 3G services today (10/1/01) (after delaying earlier this year). They have recently announced they will be selling 3G handsets publicly on October 1st. I wish them all the best, but I think they’ll have problems with the quality of service in the short term. I just don’t think the handsets are cheap, available, reliable, and power-miserly enough at this point.

AT&T Wireless has received top overall customer satisfaction ratings in 13 top U.S. wireless markets in J.D. Power and Associates' 2001 U.S. Wireless Industry Services Study. Well done to ATTWS. This speaks well to both their customer service, but mainly to good QoS. Keeping the network up, running smooth tower-to-tower handoffs, and having available capacity are key factors in giving customers reliable service, and fewer dropped calls.

And so long as I’m handing out Kudos to ATT, let’s mention that this week it began sending coupons for free hands-free units to 16 Million customers who did not get a headset when they bought their wireless phone. There is still some argument over whether hands-free devices actually increase safety while operating motor vehicles, but you gotta give ATT credit for acting instead of talking.

An analysis firm called “The Carmel Group” has just issued their predictions that wireless handsets will outnumber traditional wire line phones worldwide by 2006. Interesting prediction, sure, but I’m most taken by the firm’s name “Carmel Group”. That sounds like a solid lifestyle choice. Perhaps The Kerton Group should ponder a change to “The Tahoe Group”. Hmmm…
<http://www.newsbytes.com/news/01/170483.html>

Liquor, Drugs, Music, and more… British Telecom, or should I say O2, is gambling on people’s vices to drive wireless use. A new application on BT’s Genie Mobile Net service will alert users when they are within a quarter mile of locations of music chain HMV, beauty chain Lush, liquor retailer Oddbins and pharmacy chain Superdrug. This would have been funnier if the liquor store was named Lush, but I’ll only distort the facts so much. Seriously, this sounds like a lousy idea. I hope there will be ample opportunity to opt out, and serious coupon incentives for those who opt in. The notion of someone ringing my phone when I pass a store frightens me. There are few things as intrusive as a ringing phone.

Following on the bit above, research firm Ovum estimates that mobile location revenues will grow to $20 billion by 2005, with 80 percent of wireless data users accessing location information. Meanwhile, the Shosteck Group projects the applications won't take off until at least 2005. I always advise caution in the use of location information. This is the thin ice part of the pond when it comes to personal privacy, which means that even those who walk carefully risk falling in. Respectable companies should err safely on the side of caution.

On the lighter side, Ananova and the BBC recently reported that the Queen of England has received her first cell phone as a gift, and uses it to keep in touch with her four kids and other friends. Why am I not surprised that royalty somehow is not in the “early adopter” segment?

In a 6-5 vote, the Miami-Dade County (Florida) Commission approved an ordinance that makes it illegal for drivers to use hand-held cell phones as of October 2002. Or was it a 5-6 vote? ;-)