Apple & AT&T interview with Wall St Journal

As people start to learn whether the Apple iPhone lives up to all the hype, I was interested to read yesterday's interview with Steve Jobs and Randall Stephenson (AT&T Chairman & CEO).

The whole article is interesting as it talks about some of the compromises that they've had to make (e.g. using EDGE rather than a true 3G network, power requirements, etc.) but what particularly intrigued me was when they started talking about 'any time, any place, any device' networks and services.

Far too many people see the various wired and wireless technologies as competitors locked in a 'winner takes all' battle to the end. The view that we have at NextPhase Wireless (which is being echoed here by both Apple & AT&T) is that the technologies are complimentary, and that hybrid solutions enable richer functions and capabilities. Not all of the pieces are in place yet (seamless, real-time switching between networks & techologies, the underlying micro-payment systems to make sure everyone gets paid), but the iPhone offers a glimpse of what is on the near-horizon.

WSJ: To clarify on your comments about Wi-Fi handsets: Were you saying, Randall, that this phone will eventually evolve into that kind of device that does seamless roaming on Wi-Fi and cellular, or are you just saying there will be many more Wi-Fi devices?

Mr. Stephenson: This phone is the first device that truly kind of breaches that gap. You have a device they gets you true six-megabit broadband speeds on Wi-Fi connectivity. You get the mobility aspects of traditional cellular-type technologies. It begins to let your mind wonder. Once you have those kinds of speeds of a wireless handset … it just opens up a whole new world to what can be done on these wireless devices.

Mr. Jobs: A few years ago, the perception was that the large operators viewed Wi-Fi as potentially an enemy. And I think quite the opposite is now the case. Wi-Fi is viewed as a friend.

Mr. Stephenson: Absolutely -- in fact Wi-Fi is just an enhancement to your existing wireless capability. I have this perspective that the more wireless we become, the more wireline we become. The deeper you push these wireless capabilities the more you're relying on the underlying wired transport which is a much faster, high-capacity transport. And Wi-Fi just takes that to the nth degree. You could not have thought of VoIP on a wireless handset until you start thinking about Wi-Fi capabilities on these handsets. That doesn't intimidate us at all. I think it's a very nice enhancement to an existing service.

Wi-Fi Threatens Cell Phone Business With WiMax To Come

Broadband wireless, whether you're talking at the Personal Area Network (PAN), Local Area Network (LAN) or Wide Area Network (WAN) levels is a disruptive technology. Coined by Clayton M. Christensen, a disruptive technology or disruptive innovation is a technological innovation, product, or service that eventually overturns the existing dominant technology or status quo product in the market.

In trying to predict what sort of impact technologies like Ultra Wide Band (UWB) and WiMax (802.16d, 802.16E, and the similar 802.20 standard) will have on the way we work, play and interact with each other, looking at the impact of other disruptive technologies (and just how quickly they have that impact) gives us some useful insights. This Wikipedia entry on disruptive technologies gives some good examples (digital photography replacing traditional film, iPods replacing CDs which had previously replaced vinyl albums), but what strikes me is that the pace of the disruption is getting ever faster.

Take a look at what the article has to say about business implications, and then think about how the telcos (with the notable exception of Sprint, and even they can be seen to be dithering about their commitment to WiMAX) are responding to the rapid advances in broadband wireless technologies.

Disruptive technologies are not always disruptive to customers, and often take a long time before they are significantly disruptive to established companies. They are often difficult to recognize. Indeed, as Christensen points out and studies have shown, it is often entirely rational for incumbent companies to ignore disruptive innovations, since they compare so badly with existing technologies or products, and the deceptively small market available for a disruptive innovation is often very small compared to the market for the established technology.

Even if a disruptive innovation is recognized, existing businesses are often reluctant to take advantage of it, since it would involve competing with their existing (and more profitable) technological approach. Christensen recommends that existing firms watch for these innovations, invest in small firms that might adopt these innovations, and continue to push technological demands in their core market so that performance stays above what disruptive technologies can achieve.

While broadband wireless enabled cellphones don't have the ubiquitous coverage of traditional cellphones today, they're starting to show us a glimpse into the 'any time, any place, any device' future that these rapidly maturing technologies are opening up for us.

Are the telcos set to be left behind as the 21st century equivalents of carriage manufacturers, when the automobile came along? Probably not, as they have deep enough pockets to go out and acquire the new players as the technologies push things to the tipping point.

One way or another, this is going to be a very interesting space to watch over the next couple of years.

Wi-Fi Threatens Cell Phone Business With WiMax To Come

More and more cell phones can access WiFi, allowing the phones to work in cellular dead zones, and potentially saving consumers money by avoiding using cell networks altogether. The Wall Street Journal writes: "Operators have resisted selling WiFi phones in the past, fearing that such devices would eat into revenue from voice and data plans by allowing customers to cut back on cellular-network usage."

But, that's too bad. Handset manufacturers are making the phones, and consumers are buying them. The cell phone industry can either figure out a way to charge more for these handsets to offset network use, or they can take it on the chin.

The trend begs the question of what will happen if and when Sprint (S) launches its WiMax network. It is due to cover an area with 100 million people by the end of 2008. Other companies, especially Clearwire (CLWR) are building out WiMax systems in large cities. Sprint's WiMax is designed to work with its next generation phones, but, as an open standard, it may be technically possible to build handsets that can take advantage of WiMax while being sold directly to the consumer. It would be yet another way to bypass the cellular infrastructure.

The other business incentive for tapping into WiFi and WiMax is that companies like Motorola (MOT) and Nokia (NOK) are captives of the cell service providers who market their phones. The Apple (AAPL) iPhone is clearly a break from this model, but other handset companies do not have the cache to circumnavigate their largest customers, the network providers.

Unless they can build phones that don't need the network.

Elite Communications Group

Recently I have been asked why NextPhase hired Elite Communications Group to handle our Media and Investor Relations.

NextPhase has been growing at an astronomical rate. The cost to hire an in-house Investor Relation person is over twice the cost of hiring a firm such as Elite. Also, I have had a business relationship with the founders of Elite for the past 10 years. I have found them to be courteous and responsive to the needs of our shareholders.

Although the CEO Robert Ford and I are still available to take calls from our shareholders, we have found that the direct questions from potential investors and institutional investors are better handled by an Investor Relations firm and that the dissemination of material is more effective with the professionals.

With the new regulations and Sarbanes Oxley rules we feel we are more protected from outsiders gaining inside information by a slip or a inquisitive investor.

Thank you
Tom Hemingway
Chairman/COO

Keeping up to date with what we're up to

First of all, thanks for all the kind words of support and encouragement from customers, investors and partners that we've received since launching our blog earlier in the week. It seems that quite a few people are suffering from 'information overload' with the rapid transformation that is taking place in the connectivity space (new technologies, new products and services, new demands) and see value in us attempting to put at least some of those developments into context.

A number of people picked up on an early reference to reading this blog via RSS (for those of you who haven't dabbled with Really Simple Syndication yet, here is a link to a good primer on the topic), and as you'll see over on the right hand side of the blog (yes... look over to the right --->), we now have a couple of options for you to keep up to date with what we're up to.

If you prefer your news delivered to your email inbox, the first option lets you sign up for a daily email that is automatically sent whenever we've added new posts. Simply enter your email address in the box, respond to the validation email that it sends out to you, and that's it!

If you want to use RSS, then the 'Subcribe Now' option is for you. click on the link, and you're given a list of the popular web-based news readers to choose from (My Yahoo, My AOL, Google, etc.), or you can select from a list of the popular news reader clients.

So, please keep up the feedback on how we can further improve this blog. If you see a wireless or connectivity related news item that you'd like to get our perspective on, feel free to drop me a line at rford@npwireless.com, and we'll do our best to respond.

Licensed vs. Unlicensed spectrum

The following comment was posted against yesterday's entry:

you mentioned earlier about moving to licensed spectrum. could you elaborate...specifically, what advantages do you expect to gain? thanks.

First of all, thanks for your question. There are pros and cons to using both licensed & unlicensed spectrum. Here's a link to a pretty good overview on the subject (source: HOGAN & HARTSON L.L.P.), but let me give you a couple of definitions, and then try to cover some of the key similarities and differences:

Licensed use of spectrum = Operation of a wireless transmitter over particular frequencies pursuant to an FCC authorization.

Unlicensed use of spectrum = Operation of a wireless transmitter at particular frequencies without an FCC spectrum authorization on a non-harmful interference and unprotected basis.

The key trade-offs in determining whether to use unlicensed spectrum is swift market access and lower equipment costs on the one hand, and low power and lack of interference protection on the other. So, if you're in a market with little competition (e.g. a rural deployment), it is possible to rapidly deploy a cost-effective network using unlicensed spectrum. If you try to do the same in a more competitive market, you're likely to find yourself up against competitors trying to use the same unlicensed spectrum, and the resulting interference can make it difficult to deliver an appropriate service level.

NextPhase started out using unlicensed spectrum, as most WISPs do, but over the last 6-9 months, we've been systematically upgrading our wireless network backbone to licensed spectrum. A useful analogy to understand what we're doing is to think about road networks. As more and more traffic try to use the same roads, everyone suffers delays and end up taking detours. If you're in an area where there road system isn't overloaded, you do just fine, but if you're trying to get from Orange County to LAX early in the morning, you start wishing for your own private toll lane. Licensed spectrum is pretty much that private toll lane for a WISP, allowing network traffic to be transmitted from one geographic point to another, with protection from interference.

What we're doing by upgrading our backbone to licensed spectrum is ensuring that we have the ability to deliver carrier-class service to our customers. Once we've lit our POPs with licensed spectrum, we then have the choice of using either licensed or unlicensed spectrum for the 'last mile' to our customers, allowing us to deliver up to 200Mbps (the equivalent of 130 T1 connections). From that same licensed backbone, we can also light up hotspots, such as the NextZone(tm) that we operate at John Wayne Airport in Santa Ana (one of the 50 busiest airports in the US).

NextPhase Wireless Adds 'Peace of Mind' Networking Software to Portfolio

Connectivity is increasingly a commodity, and while customers are consuming more and more of it, they're also open to getting it from whichever provider has the lowest price. While this can be a false economy (those bargain prices don't seem so hot when you have an outage and then you find out all the things that the no-frills package doesn't include), it sends a signal to the rest of us that we need to articulate the value that we bring to our customers.

At NextPhase, we've spent a lot of time thinking about this and where we've come out is that above and beyond connectivity, what people are looking for is 'peace of mind'. Think about it. Whether it's our connection at home, in the office, or when we're traveling, we want connectivity to be available when we need it. We don't want to have to wait months to get it (think leased lines .. think fiber); we want to have a range of connectivity options (not one size, and one price, fits all); we want plug and play ease of use; we want flexibility and scalability (so that the service can adjust to our changing needs, and not the other way around).

Over the last couple of months, we've made a couple of announcements regarding new products and services that enhance our core portfolio of connectivity services. Today, we announced that we've added additional 'Peace of Mind' networking software to our portfolio. In surveying a cross-section of our customers, we've learned that security, disaster recovery and network management are increasingly giving them headaches and keeping them awake at night. As traditional boundaries (between work and play; between public and private; between company, supplier, partner, competitor, and customer) continue to get blurred, people are realizing that while this 'always on' world provides a wealth of opportunities (to be able to create, share and collaborate with others, to have 'any place, any time, any device' access, etc.), it also comes with increased risks and challenges.

All too often, technology's answer to these risks and challenges is to throw in more difficult to access features (hands up all those people who have cursed, and not just under their breath, as they've tried to securely share files across multiple PCs on their wireless network at home, or to configure a virtual private network (VPN) at the office?) Here, at NextPhase, we've decided enough is enough, and we're introducing a range of products and services intended to relieve those headaches and bring an end to those sleepless nights.

Whether it is tools to assist SOHO (Small Office / Home Office) business and residential customers with setting up, managing and securing their networks, or security, disaster recovery, network performance and consolidated communication capabilities aimed at small and midsize businesses, we're definitely in the 'peace of mind' business.

Clearwire Partners with DIRECTV and EchoStar

Here's an interesting development, as we see broadband connectivity and content become inextricably linked in the race for the triple-play (TV, phone and Internet). It's a very smart move, as it gives DIRECTV a new high-end Internet offering (Internet via satellite is a niche play - it's good when you've got no other options, but it can never be competitive against other technologies in regular markets) and significantly broadens Clearwire's portfolio, allowing them to compete with incumbent content providers in their footprint.

KIRKLAND, Wash.--(BUSINESS WIRE)----Clearwire Corporation (NASDAQ:CLWR) announced today distribution agreements with DIRECTV (NYSE:DTV) and EchoStar Communications Corporation (NASDAQ:DISH). The distribution agreements enable both satellite companies to offer Clearwire's high-speed Internet service to their customers and contemplate that Clearwire in turn will be able to offer the video services of one or both satellite companies to its customers. This is expected to enable each of the three companies to offer high-speed Internet, video and voice in all current and future Clearwire markets. The launch is planned for later this year. Under the terms of the distribution agreements, DIRECTV and EchoStar will have access to Clearwire's wireless high-speed network,and will be able to market a bundle that includes Clearwire's high-speed Internet services to their residential customers. DIRECTV and EchoStar will also have the ability to sell Clearwire's branded services on a stand-alone basis. Similarly, the agreements call for Clearwire to be able to sell DIRECTV and EchoStar satellite video services. "We're pleased to partner with these two satellite companies as they both share our commitment to offering a superior customer experience by enabling customers to enjoy the benefits of unwired services," said Perry Satterlee, Clearwire president and chief operating officer. "By expanding the reach of our services through DIRECTV and EchoStar, and by incorporating direct-to-home satellite video services in our own distribution channels, we believe we have an opportunity to significantly expand our business opportunity." "Being able to offer services on the Clearwire network will give our customers another high-quality option to subscribe to broadband services with DIRECTV's video offerings," said Bruce Churchill,president of New Enterprises, DIRECTV. "By choosing this bundle option, DIRECTV customers will now be able to enjoy Clearwire's fast,reliable and secure wireless broadband network that works great at home and on the go." "EchoStar is committed to providing the best quality and latest incutting-edge digital programming, and with Clearwire we continue that commitment by offering a next-generation wireless broadband technology," said Nolan Daines, senior vice president, Strategic Initiatives, EchoStar. "Our ability to offer Clearwire's broadband service is a strong competitive alternative that we believe will help increase our subscriber base."

The Wi-Fi Chipset Market: Portable Connectivity Applications Drive Volumes

While I might not be ready to shell out $3,495 for In-Stat's latest report on the Wi-Fi Chipset Market, a closer look at the summary makes for interesting reading.

In 2006, approximately 213 million Wi-Fi chipsets shipped, representing a 32% growth rate over 2005 Wi-Fi chipset shipments. Market segments that drove growth in 2006 included the following:

- Mobile PCs (37% of total Wi-Fi chipset shipments)
- Home/SOHO Wireless Routers, Gateways, APs (18%)
- Portable CE (17%)
- External Clients (12%)
- Stationary CE (10%)
- Dual-mode cellular/Wi-Fi handsets (3%)

Just think about some of those numbers for a minute. That is 79 million new notebook PCs who are potential customers of Wi-Fi hotspots. 38 Million homes and small businesses now have new wireless routers and gateways, which means that they will probably be looking for more bandwidth in the near future.

While dual-mode cellular/Wi-Fi handsets only represented 3% of the market in 2006 (though 6.4 million is still a lot of chipsets), they predict that this will be the breakout category this year and will grow to be 20% by 2009. Even if the market only continues to grow at its current rate (32%), that could be almost 15 million devices.

As I outlined in the previous post, wireless technologies are incredibly well positioned to take advantage of all this growth. We believe that NextPhase Wireless is well positioned, too.

So where do we begin?

These are very interesting times to be an ISP. Advances in technology continue to provide new and improved ways to deliver Internet connectivity to businesses and individuals. Copper (dial-up, cable, DSL, T1s), fiber, wireless (pre-WiMAX, WiMAX, WiFi), BPL (broadband over power lines), satellite, cellular (GPRS, EV-DO, HSDPA) are all doing their bit to make this an 'Any Time, Any Place, Any Device' world, where ubiquitous connectivity gives everyone the power to create, collaborate, distribute and deliver ever-increasing amounts of digital content.

Okay, before we get too excited, let's remember that there still is a 'digital divide' in this country, with many businesses and individuals still not having access to broadband services. Currently, the US is 25th in Broadband Penetration worldwide, and continues to slide down the league table.

At this point, I do have to reveal my hand, and admit to being somewhat biased about certain of those technologies (there is a good reason that we're not called NextPhase Dial-up) . Actually, our company's official position is that we're technology-agnostic, and as of today, we currently include dial-up, ISDN, DSL, T1s, Fiber, pre-WiMAX and WiFi offerings in our portfolio. We believe that connectivity is not a 'one size fits all' issue, and that all of the technologies have their relative strengths and weaknesses. Where we do believe that wireless technologies have an edge, is keeping up with the explosive growth in demand for 'Any Time, Any Place, Any Device' connectivity and consumption.

Whether at work, at play or at home, we increasingly find ourselves in an 'always on' world, where traditional lines are blurred. Early adopters are 'kicking the tires' on multiple ways to have digital movies delivered straight to their TVs (e.g. Apple TV, Amazon's Unbox, NetFlix's new digital streming service, etc.), notebook sales have overtaken desktop sales, and they're all equipped with WiFi chipsets (within a couple of years, it will be WiMAX chipsets), we're carrying around smart phones that come with 'all you can eat' wireless data plans.

While much of the country does have robust telecommunications infrastructure, we still believe that the explosive growth is going to highlight bottlenecks in delivery (imagine everyone choosing to download different HD movies at the same time - think what that will do to your average cable download speed). Where we see wireless playing a major role is two-fold; the wireless 'last mile' and as a 'bypass' technology. Wireless can be deployed quickly and very cost-effectively (it has an 8X advantage over copper and fiber, as trenching cable is both slow and expensive).

Okay, so why are we creating yet another blog to talk about these things? Well, for one, I believe that things are moving so fast, that everyone is suffering from 'information overload' and 'analysis paralysis'. Because we are technology-agnostic and always look for the optimum solution which often is a hybrid of multiple technologies, we believe that we're in an ideal position to help filter out 'noise', and really put what matters into perspective.

So, I hope you're going to come back regularly to hear what we've got to say, or better yet, sign up for our RSS feed. If you do have any questions, or want our opinions on specific areas, please leave comments or drop me an email (rford@npwireless.com), and we'll do our best to answer them.