Tom Evslin has a very interesting post looking back at the predictions he made keynoting Jeff Pulver’s VON conference ten years ago, and noticing that of his three stages of the VoIP adoption path, the third never happened. Evslin predicted that the first area of VoIP adoption would be the straight arbitrage play of offering cheaper calls on the backend, especially for international calls. That absolutely happened. The second stage of VoIP adoption would be to move the calls to the internet, rather than a separate IP network for VoIP calls. That also happened. The third stage, however, would be when VoIP offerings became more common because they allowed people to do things they simply could not do with the traditional POTS (plain old telephone system) offering. That’s always the definition of a true killer app. It’s not about moving one service from one system to another, or about just making something cheaper or better. It’s about enabling something that wasn’t even possible before. Yet, Evslin notes, this hasn’t really happened with VoIP. Instead, most VoIP plays are still quite similar to the telephone. Evslin thinks that, in retrospect, his mistake was in forgetting that the new VoIP offerings needed to remain backwards compatible with POTS, and that has limited the ability to really create new offerings.

Instead, he believes the real third stage of VoIP adoption will be to totally bypass POTS and make it obsolete. He notes that social networking communication systems are starting down that route, where there are many different ways of communicating — and voice will just slot right in as one of many modes of conversing (along with videos, text, pictures and other options). I’d argue that this isn’t that far off from his original vision — and he seems to downplay things like Skype, GizmoProject and Yahoo IM that really have started to allow people to do things that weren’t possible before, such as adding presence and mobility to VoIP, while still connecting back to the legacy POTS system. I’d also argue that a second issue holding back the adoption of cool new features and benefits from VoIP has been the ridiculous patent lawsuits from the incumbents, trying to halt any real innovation in the space to protect their cash cows. Perhaps Evslin’s right that the only way to get around these things is to leave POTS in the dust — but hopefully once the dust clears on these patent lawsuits, real innovation can start happening.

Just a few days after a class action lawsuit was filed in California against Apple for locking down the iPhone, the California Supreme Court ruled on a different case that may have an impact on the Apple case. It’s given the go ahead on a separate lawsuit against T-Mobile for locking its phones and requiring an early termination fee. T-Mobile had argued that the terms of service required that any dispute go to binding arbitration, so that it didn’t make sense to take it to the courts. Of course they want binding arbitration because companies almost always win in binding arbitration. The court found that it’s perfectly reasonable to take this issue to court. How the courts will actually rule on the issue could make a big difference in the Apple/iPhone case — as there is the possibility that the courts may find that (in California at least) locking a phone to a single network is not allowed. It may depend on the specific wording of state laws, as the specifics of such a case can get rather technical. To be honest, if a mobile phone operator wants to lock a phone to only their network, and people agree to it in the contract (or agree to an ETF), then that should be a contractual issue. It’s a dumb business practice — as many operators are starting to realize. However, that doesn’t necessarily mean it should be illegal.

Just as the FCC is pushing back the start of the highly anticipated 700 MHz spectrum auction, comes the news that AT&T couldn’t wait for that spectrum to come on the market and decided to buy up a different chunk of 700 MHz spectrum licenses from Aloha Partners for a mere $2.5 billion. There’s plenty of speculation about what the company is planning to do with the spectrum, with some thoughts that it’s going to ditch its Qualcomm partnership for mobile video and go it alone, but that seems like a market that’s DOA.

Instead, it seems likely that this is just the beginning of AT&T lining up to get its hands on the auctioned spectrum to combine with this batch. There’s been plenty of speculation about who might be the top bidder for the spectrum, with random startups, Google and Apple being tossed around as possible names along with the big telcos. Verizon’s been making plenty of noise (apparently both publicly and behind the scenes), but AT&T has always been up there as well. Now, that additional spectrum becomes even more valuable to AT&T, so it might be time to push up how much AT&T is likely to bid on the auctioned spectrum. And, in the worst case, if AT&T doesn’t win the auction, it can use this new spectrum it bought to try to barter a sharing arrangement — or, alternatively, as Glenn Fleishman posits, be able to keep a locked up network going, while whoever buys the auctioned spectrum will have to be more open. If true, that seems likely to backfire. It could give AT&T an initial leg up, but those walled gardens tend to have long-term problems when competing against open systems.

As per the rumors circulating for just a few days, activist investors,
and disgruntled shareholders have ousted Sprint CEO Gary Forsee. There
are three main reasons for the ouster — and not all of them make sense.

1. Sprint has a relatively high churn rate among the majors, and is
   acquiring new customers much more slowly than chief wireless rivals AT&T
   and Verizon. For the next quarter, Sprint has issued guidance that they
   will suffer a net loss of over 300k subscribers, which is atrocious in a
   time when AT&T and VZW are net adding about 1.5M each. There seems to be
   no resonating marketing message, and the brand is suffering.

   My take: This is a problem that can be blamed on Sprint
   management and marketing execs, and possibly right up to Forsee. Sprint
   needs to find a message that resonates with customers, stick to it, and
   rebuild the brand. Realistically, their service is scarcely better or
   worse than the other oligopilists, but the perception is that it is
   worse.

2. The Nextel merger is not going as well as expected, with delays in
   integration, and frustration and churn among Nextel’s formerly loyal
   blue-collar Push-to-talk (PTT) base. Prior to acquisition, Nextel was the
   goose that laid golden eggs, with ~$70 ARPU, but that goose is plucked.

   My take: The roots of this problem stem from the “Nextel
   Spectrum Swap” that was in motion long before Sprint stepped in. Nextel
   is vacating spectrum that it promised not to use because it was
   interfering with Public Safety radios in the 800MHz band. As it vacates,
   existing Nextel users are getting crammed into a smaller band, and
   quality is suffering. The only cure is to speed up the rollout of EV-DO Rev.A, and get
   Nextel users migrated to PTT services over CDMA. Sprint is showing every
   sign of doing this, so is there any executive culpability? Perhaps the
   Nextel merger was simply ill-conceived, and overpriced.

3. Investors are not thrilled about Xohm, Sprint’s big venture into
   WiMAX service at 2.5GHz.

   My take: This is a serious fundamental disconnect between
   investors and management. The Xohm effort is something I earlier
   described as follows: “Sprint’s 2.5GHz strategy is tied in my
   mind for “gutsiest US telco project” with Verizon’s FIOS project. If
   Sprint succeeds, they will have a sustainable advantage that their
   competitors cannot easily copy (for lack of spectrum).”

   The disconnect is that investors in Sprint are risk-averse,
   Blue-chip, dividend seekers. They invested in Sprint when it was a
   utility company. But Sprint’s “gambit” into WiMAX has taken them way out
   of the “utility company” comfort zone — and the reaction of the
   investors is as expected. With Xohm, Sprint’s risk profile is looking
   more and more like a big tech firm, say Yahoo or Apple. Today’s Sprint
   needs risk-seeking investors, not fixed-income seekers. Of course, the
   result is that Sprint is churning investors faster than it churns
   subscribers. And it’s easier to lose old investors than to gather new
   ones.

   Perhaps existing investors would rather see Sprint sell off its
   2500MHz spectrum to some VC, private equity-backed group that could take
   the risk, and pay a dividend to shareholders. But that doesn’t make sense. It’s exciting to finally
   see a telco do something bold, take risks, and…yes…even get a bit
   desperate. Because it is in desperation that the telco will break ranks
   and do radical things, like give the customer what it wants. Xohm
   promises no long contracts, open-access to any compatible device, ample
   bandwidth, and reasonable and varied pricing plans. Damn, does that
   sound like a breath of fresh air! Techdirt is firmly in the camp that so
   doing, a telco would actually INCREASE the value of their products, and
   grow profits.

By no means is Xohm a slam dunk. WiMAX is, as
yet, largely unproven. Timing is essential, and any significant delays
will reduce the Sprint advantage. But an early success would radically
change the wireless landscape, and could not be readily copied by
competitors. In Sprint, we have the best of the capitalist system, where
the effort could succeed or fail, but in pushing the envelope by merely
entering the race, things are better for all consumers. Forsee or not, I
hope Xohm lives on.

Three years ago, we discussed the possibility that Wal-Mart could eventually enter the broadband business. At the time, the discussion was around Wal-Mart using its massive network of stores to act as WiMax access points, coating much of the nation with wireless internet access. The idea didn’t seem likely for a variety of reasons, and with the news that Wal-Mart actually is entering the broadband space, we can easily see why the WiMax plan never made sense for Wal-Mart. Rather than taking the route suggested three years ago, Wal-Mart is simply partnering with Hughes to resell satellite broadband access. As many people know, satellite broadband access is the last refuge for the broadband addict who simply has no other choice. The speeds aren’t great, the latency is a huge pain, and the reliability is often a problem. So, there are already some hurdles to overcome. Second, unlike the original suggestion, Wal-Mart appears to have nothing to do with the offering, other than slapping its brand on it (and even then it’s not entirely clear from the article how the service will be branded). That means that Wal-Mart won’t be able to have much say in how the service is run. Even if the stories of Wal-Mart losing its technology edge are overrated, this deal is going to involve existing infrastructure and existing service models — meaning that it won’t shake up the industry very much at all. Basically, what was envisioned three years back was Wal-Mart routing around other providers and offering up something entirely new, which it could control. Three years later, the best the company can do is piggyback its brand on a weak legacy offering. That’s hardly going to shake up the industry.

GM continues to expand the features of its popular OnStar system with a new service that’s been talked about for years, that would allow the company to automatically stop a stolen car remotely. The last time we spoke about such a concept, it was four years ago — and there were a lot of people worried about the idea. However, that may have been because it was the police asking for the right to stop cars remotely, rather than an individual using a private service (and they were also interested in using it to control speeders). In this case, the service would first alert the car thief that it’s known they’re driving a stolen car (and potentially that the police are on their way), and that OnStar is about to stop the automobile. It would then slowly halt the car — though the driver could stop the car themselves at any time. The police apparently are excited about the possibility of this ending some high speed chases (and certainly making it easier to retrieve the car), but you have to wonder what happens if the service is hacked or malfunctioned.

While the last class action lawsuit over the iPhone was pretty ridiculous — claiming that the rapid price drop was illegal — this latest one may have a bit more substance behind it. One of the victims of the infamous iPhone iBricking update has now filed a class action lawsuit against Apple, claiming that the iBricking action was a violation of California law. The specific arguments are a bit complex, but basically, the guy is claiming that in locking the handset to one carrier, Apple violated sections of the Cartwright Act, which is designed to prevent companies from creating artificial market barriers on products they sell in order to boost the price. On top of that, the lawsuit notes that unlocking a phone for use on other networks is perfectly legal under last year’s DMCA exemptions. Therefore, to then brick the iPhones that were unlocked violates the California law, saying that it’s illegal to take actions that “substantially lessen competition or tend to create a monopoly.” It may be a bit of a stretch to say that applies in this case, and Apple can simply plead (reasonably) that the iBricking was not on purpose, and that the company has no requirement to support unlocked handsets — but if this case actually does get some traction, Apple may need to be a bit more careful in future firmware updates.

Just a couple weeks after losing yet another patent lawsuit, Vonage has decided to settle its patent lawsuit with Sprint, agreeing to pay $80 million, covering both past and future licensing costs. The company is still fighting over Verizon’s questionable patents. Again, it seems pretty silly that the company that actually figured out how to bring phone-based VoIP to the market in a way that people wanted now has to pay the incumbents who were unable (or unwilling) to do so. Of course, there’s also been lots of talk that these patent lawsuits were really an attempt by the telcos to crush Vonage to the point where it was an easy buyout target. Thus, settling with Sprint, could open up the possibility of a Sprint purchase… but it probably would have just made more sense to do the buyout first before “settling,” as the news of the settlement has sent Vonage’s stock soaring. Based on that, don’t be too surprised if Vonage reaches a bit deeper into its dwindling cash reserves to to pay off Verizon as well — the resulting stock bump could effectively pay for the licensing fees. All in all, though, it does highlight how silly the patent system has become. The uncertainty over the suits hurts a company’s stock and pushes companies to settle, even if they shouldn’t. That’s exactly what happened with RIM and NTP, and it looks like what happened here.

Analysts from investment bank Piper Jaffray are making some news today after releasing a report claiming that 10% of iPhones are actually being sold to groups that are unlocking them and reselling them. They seem to be basing this on the fact that there are a bunch of folks going in and buying the maximum single allotment of 5 iPhones at a time. If this is true, the actual number of unlocked iPhones could actually be significantly higher, as many unlockers are buying the phone and unlocking it themselves. On the flip side, there could be other explanations for people buying 5 iPhones rather than to resell them unlocked. Either way, it should be clear that there’s a fair amount of demand for unlocked iPhones, which again raises the question of why Steve Jobs ever agreed to an exclusive with AT&T.

Over the weekend, a story out of the UK began to get some buzz, when an American FAA representative supposedly told a British newspaper that the FAA will not approve in-flight mobile phone calls after the agency received a ton of complaints when it publicly began considering the shift in policy. Of course, this is somewhat meaningless, because the FCC had already said no to the change in policy, and both agencies would likely need to agree before any change went into effect. So, for those of you (and we know there are lots of you) who were terrified by the idea that you might get stuck sitting next to someone jabbering away into a mobile phone for a cross-continent flight… rest easy. Well, rest easy until you realize that voice is just a form of data, and it’s only a matter of time until internet access in the sky means the person sitting next you will be jabbering away via Skype for a cross-continent flight no matter what gov’t agencies have to say about mobile phones in the sky.

While we agree with some others that Apple’s decision to focus on a walled garden approach to iPhone apps seems short-sighted, it certainly does open up an opportunity for competitors — and those competitors seem to be realizing it. A bunch of companies are starting ad campaigns around their mobile phone offerings highlighting how open they are compared to the iPhone. That would be competition at work, and a response to anyone who may be suggesting that Apple should somehow be required to open up. Of course, touting openness is just one part of the story. It helps to also have some really good technology to stack up behind it, and on that front, most of the competitors still have a long way to go. That probably means that Apple’s closed strategy won’t hurt it very much in the short-term, but it does open up a huge opening for someone who can actually get closer to matching the iPhone on the technology side.

Apple could respond by opening up a bit more (and there’s some indication that they’re doing exactly that), but building up a strong developer community from the beginning would help keep the iPhone miles ahead of the competition. In fact, the iPhone craze is somewhat reminiscent of the hype surrounding Danger’s Hiptop five years ago. It was launched on T-Mobile (under the “Sidekick” brand), but again as a closed platform. It took months for Danger to get a real developer program going, and even then it was pretty weak. Without a strong developer community, many other devices passed by the Hiptop, where it had had an early advantage. While Danger has been able to do okay with continual Sidekick updates, it never really reached its potential as one of the very first truly usable mobile data devices for the masses.

It’s well known that folks at the FCC have a rather chummy relationship with the telco industry. After all, many of them either worked in the industry at one point or (more importantly) expect to get lucrative jobs in the industry after they leave the FCC. So it probably should come as no surprise to find out that the FCC tends to favor industry lobbyists and industry data to that of the consumers whose interests the FCC is supposed to be safeguarding. This is according to the GAO who has been doing a fantastic job highlight questionable government activity — specifically with the FCC. In this latest report, there are two key things, both of which are quite troubling. First, the FCC often reveals important information to industry lobbyists, including information on new rulemaking efforts, votes and even how Commissioners intend to vote. This information is often not equally shared with consumer advocates, leaving them at a tremendous disadvantage. Second, in doing research for rulemaking, the FCC often relies on the data submitted to them, by industry representatives. And we all know how trustworthy that is likely to be. It’s also probably worth pointing out that the GAO provided a draft of the report to the FCC and asked for comment, to which the FCC replied “no comment.” Indeed. It appears no comment is really needed.

I vaguely recall a very similar study making waves a few years ago, but can’t find any trace of it right now. However, a recent study of executives working in the mobile content space found that more than half of those surveyed don’t actually use the mobile content they’re pitching. Now, there can be plenty of questions about the methodology here, and it’s not entirely clear from the wording if they asked specifically about the mobile content from that particular exec’s company, or mobile content in general. However, when your own executives can’t be convinced to use the product they’re supposed to convince others to use, there’s a problem. If anything, it suggests that there’s been too much hype in “mobile content” and a bunch of execs have jumped on the bandwagon, not because of an interesting product, but because of the hype. That’s unfortunate. Mobile content should be a big deal, but it’s not as simple as some may think — and if you have bandwagon-riding execs, a lot of time, effort and money is going to get wasted.

The debate over white space spectrum has gone on for quite some time. Basically, the FCC handed out a ton of spectrum (for free, mind you) to TV broadcasters years ago. In order to prevent against interference, there’s always been a requirement for some “buffer” space. However, as technology has improved, the need for this buffer space has decreased, and plenty of tech companies would be interested in making use of some of that basically unused spectrum by having it set aside as open spectrum. Earlier this year, some of those companies, led by Microsoft and Google, delivered a device to the FCC to test. Unfortunately, the device had some problems. However, the concept is sound — and with some tweaking, it’s quite reasonable that such a device could work without interfering with TV signals. But you wouldn’t know that from broadcasters, who love to hoard their spectrum. Matthew Lasar writes in to note that in responding to the device, the broadcasters have gone way over the top in describing the horrible things that will happen if the white space is made available:

“Why would the FCC consider allowing millions and millions of these interference causing devices, like ‘germs,’ to spread throughout America with the ability to attack the TV receivers in people’s homes, apartments, hotel rooms, hospital rooms, dormitories, etc., with no way for the owner of the TV set (the ‘victim’) to determine who was causing the ‘illness’ to his or her TV set?”

They also suggest that allowing this white space to be used would “risk the outrage of America’s citizenry.” Of course, it’s important to remember that only a small percentage of TV watchers actually run this risk. The vast majority of TV owners in the US have cable or satellite TV — meaning that they don’t use the over-the-air broadcasts that use the spectrum in question. So, the “outrage” would be limited to the small group of people who still use over-the-air systems to watch broadcast TV and are close enough to a device that uses this white space in the unlikely situation when that device might temporarily interfere with their TV signals. But, apparently, with that tiny probability out there, opening up that white space is like a “germ” that will “attack” people’s TVs, raising the “outrage of America’s citizenry.”

The promises of contactless payments consistently seem to fall a bit short. The hardware costs for merchants sound hard to justify, and the benefits to the consumer are usually minimal — since credit cards aren’t exactly a painful process to begin with. However, wireless technologies are cool, so NTT DoCoMo has demonstrated a prototype phone that uses human conductivity to transmit data for services such as payment-by-touch — so that you can keep the phone in your pocket and simply touch other devices to transmit your personal information. But if the irrational fears of cell phone radiation weren’t enough for you, then imagine the possibilities of using skin conductivity. How will users fill up at the gas station? And consider how many more stories about high-tech pickpockets there will be… when thieves just have to touch you briefly in order to get your payment information. NTT DoCoMo admits that it’ll be several years before this payment-by-touch system will be “ready, reliable and safe” for Japan — but phone makers may also want to anticipate the FUD and weigh it against the existing payment methods before releasing a new plot device for Michael Crichton.

While you need to take this study with a large grain of salt, since it was paid for by T-Mobile (who has a vested interest in the results saying what they say), it does have a ring of truth to it that parents and kids often find it easier to communicate these days using various electronic means of communications. Rather than spending quality time around the dinner table, the study suggests that more tech savvy parents (and grandparents) are able to not just stay in touch with, but relate to, their kids much better by using the same electronic communication tools those kids are used to using with their friends. There will be some, of course, who find this troublesome, but if it actually does allow for better lines of communication within a family, that certainly seems like a good thing.

We’ve tried to point out how government granted monopolies can distort a market, whether it’s in the intellectual property space or within wireless spectrum. For example, take a look at what’s happening in the 2.5 gigahertz spectrum space. A bunch of 2.5 gigahertz spectrum was handed over to schools and non-profits, supposedly for use in education. The rules on those licenses were that it couldn’t be owned by for-profit businesses… but could be licensed to them. Of course, for many schools, the idea that they owned any spectrum rights at all was a complete mystery. Many valued the spectrum at absolutely nothing (which was its real value to them) and let the licenses expire. However, with Sprint’s latest focus on WiMax, it could make use of more 2.5 GHz spectrum. It already owns a bunch, but not enough. So, of course, now that this spectrum is suddenly valuable to Sprint, schools are scrambling to renew expired licenses to the spectrum they valued at absolutely nothing, in order to turn around and license it to Sprint for quite a bit of money. In other words, you have a natural resource given to schools absolutely free. They didn’t value it and didn’t have any use for it at all. Then, a company comes along that actually can do something useful with that spectrum, and the schools are suddenly setting roadblocks in their way. That doesn’t seem like a particularly useful thing — but thanks to another set of gov’t granted monopolies, combined with a complete lack of a comprehensive spectrum allocation policy from the FCC, it’s what we’re left with.

For something as boring as a spectrum auction, the upcoming 700MHz auction sure has its fair share of excitement. There are the rumors of Google and even Apple potentially bidding on the spectrum. Google requested that the FCC attach some specific conditions to the auction, which the FCC gave some lip service to, but hardly a full endorsement. Meanwhile, Verizon Wireless initially liked the conditions set by the FCC (meaning it thought it had a good chance of getting the spectrum) until it began to think through the scenarios (or heard more credible stories about competitive bids) and then suddenly decided to sue the FCC, claiming that the rules being set are illegal. Of course, others can play the lawsuit game too. Frontline Wireless, a new company basically built to bid on this spectrum, is now accusing Verizon Wireless of breaking the law in not disclosing the details of a recent meeting between Verizon Wireless officials and the FCC about the auction — as required by the law. Thus, Frontline is asking the FCC to sanction Verizon Wireless, including the extremely unlikely possibility of barring it from the 700MHz auction. Of course, just imagine the resulting lawsuits should the FCC actually agree and bar Verizon Wireless. Somehow, given Kevin Martin’s chummy relationship with the telcos, it seems unlikely that Verizon Wireless will be stopped from bidding.

Nokia made a bit of a splash this morning by announcing plans to buy digital mapping/navigation firm Navteq for $8.1 billion. Navteq is definitely the leading player in the space, followed by TeleAtlas — and the two companies basically dominate the market. Earlier this year, you may recall, navigation device maker TomTom announced plans to buy TeleAtlas, though that deal is not yet completed.

Many people are speculating on what this could mean for Garmin, TomTom’s main rival in the navigation device space. Garmin uses Navteq for its maps, but it seems hard to believe that Nokia would simply cut off Garmin. That would take a huge chunk of revenue out of the deal, making it a lot less worthwhile. What’s much more interesting is how this shows the strength of Nokia’s commitment to really leveraging mobile devices for location-based services and navigation information. People have talked about such things for years, and Nokia’s purchase certainly suggests that they’re about to make a big push into moving navigation info and location-based services out of a separate device and into mobile phones.

You may recall the bizarre tale of Xero Mobile, a company that was formed out of the ashes of Gizmondo, the UK gaming handheld provider whose spectacular failure revealed all sorts of sketchy details involving executives taking ridiculous salaries and buying themselves luxury cars (which one former Gizmondo exec famously crashed last year). There were all sorts of questions about whether or not Xero was simply an attempt to repeat Gizmondo, which lost investors an awful lot of money with stories of potential riches from a handheld gaming device that would make money through ads. Xero’s plan was almost identical, though it would support mobile phone service via ads, rather than a gaming device. Xero followed Gizmondo’s strategy, raising a lot of money, and even doing a reverse merger to get its shares publicly traded. Of course, the company never seemed to get very far, other than the occasional highly promotional press release. The latest news, however, is that the company may get bought by UK mobile content provider Rok. This comes after another rumored acquisition a year ago. Of course, it’s still not clear why anyone would want to buy the company. It doesn’t appear that it ever launched a service — so there’s no clear benefit at all to buying it. As with Gizmondo, you have to wonder if there’s really more to this story than what’s coming out in the press.