Posts tagged Verizon
EFF: Twitter Scores, Verizon Fails At Protecting User Privacy
May 2nd
The Electronic Frontier Foundation has posted its annual report on which Internet vendors do the most to help protect their users’s private information. And this year’s two best protectors by the EFF’s definition? Twitter and Internet Service Provider Sonic.net.
Each of these two vendors scored well within the EFF’s six criteria used to judge online services in the organization’s Who Has Your Back? 2013 report posted today.
For the EFF, the most privacy-oriented companies should comply with these policies:
- Requiring a Warrant for Content
- Telling Users About Government Data Requests
- Publishing Transparency Reports
- Publishing Law Enforcement Guidelines
- Fighting for Users’ Privacy in Court
- Fighting for Users’ Privacy in Congress
Each rated company gets a star when it does well with one of these criteria. Twitter and Sonic.net nailed it with six stars. LinkedIn, Dropbox and storage service SpiderOak received five stars, having each missed the fighting for users’ privacy in court category.
The worst performers in the EFF’s round-up of privacy advocacy? Social media platform MySpace and cellular carrier Verizon, which were awarded no stars at all. Apple, AT&T and Yahoo, only received one start apiece, with the latter getting the award for pushing back in the courts and the other two companies achieving the fighting for users’ privacy in Congress star.
Overall, the EFF thinks that things are getting better among these vendors that deal with so much user data.
“We’re happy to report that several of the companies included in last year’s report have significantly improved their practices and policies concerning government access to user data,” the organization reported, “Comcast, Google, SpiderOak, and Twitter earned two new stars this year while Microsoft earned three new stars. Foursquare went from zero stars in 2012 to four in 2013.”
The report might seem a bit disjointed in its approach, lumping a lot of companies in together with the only common thread being the handling of user data. Users’ expectations on a social network like Facebook is much different than privacy concerns on Verizon or Amazon.
But this is a report about government overreach, not expectations of privacy. The government may be able to see your data on your Facebook page, but to use it in a trial or investigation, they should still use a warrant, the EFF is arguing. Users may be surprised to see so many large data handlers that don’t even have that basic requirement.
Things are getting better, but there is still a long way to go.
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Verizon: Damn The Cable Cutters, Full Pay TV Ahead
Apr 18th
What cable cutters? If Verizon Communications latest quarterly earning are any indication, over-the-wire services have little to worry about in the near future.
Verizon’s wireline FiOS revenue for pay TV and Internet leaped 15.1% higher in the prior quarter, up to $2.6 billion. That figure is especially telling, given that Verizon FiOS hasn’t expanded into any new markets lately. Verizon’s pay-TV service seems to be figuring out how to get more customers out of the markets it’s already in, probably to the detriment of other cable and satellite providers in the same markets.
“FiOS continues to make inroads in the internet and video markets taking away share from the cable companies,” Roger Entner, Lead Analyst and Founder of Recon Analytics commented.
All told, FiOS added 169,000 new customers to its TV plans, and 188,000 new Internet customers. The lack of decline in users broadly demonstrates that there still hasn’t been a mass “switch-off” from pay TV providers, as these businesses are still showing signs of growth.
Verizon did pretty well in the wireless side of its business, too, pulling in $19.5 billion in revenue, up 6.8% from the first quarter of 2012. The company also noted that per-account revenue went up 6.9% from this time last year, a sure indicator that more customers were signing up for those hefty data plans.
They’ll need those data plans, too – for the second straight quarter the iPhone made up more than 50% of smartphone sales, clocking in at 55.5%. Since smartphones made up for 61% of contract user sales that means 33.9% of all phones sold to Verizon Wireless contract users were iPhones.
The story of Verizon’s first quarter earnings is very much one of in-market attrition – they are building revenue by offering plans and services that customers like, and still increase Verizon’s bottom line.
“Verizon is firing on all cylinders. In an increasingly saturated market, the company is accelerating subscriber, revenue and profit growth. The ShareEverything plan is being received enthusiastically by consumers,” Entner added.
The growth of smartphone sales over feature phones is something businesses should continue to note as well, since it effectively means the target audience for reaching mobile users is still getting bigger, just like everyone predicted.
It’s a perfect circle, in a way, as more smartphone customers participate in commerce and social interaction with their devices, Verizon and its competitors will continue to see smartphone growth… which will in turn spark the availability of more commercial services. Today’s earning report is part of the turning of this mobile commerce wheel, which shows no signs of slowing.
Coupled with the growth of its wireline FiOS service, Verizon is sitting pretty in the marketplace now.
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Why Verizon Killing Its 3G Network Probably Won’t Save You Money
Mar 5th
We will soon be witness to the death of 3G. At least, we will from Verizon.
Speaking at the Deutsche Bank Media, Internet and Telecom conference, Verizon chief financial officer Fran Shammo said that Verizon could start phasing out its 3G CDMA chips by the beginning of 2014. The goal, ultimately, will be to lower subsidies that carriers pay to smartphone manufacturers to carry new devices.
As it stands in the United States, the big carriers pay full price for smartphones like the iPhone or Samsung Galaxy S 3 then retail them at a reduced cost tied to two-year contracts. This subsidy costs the carriers a lot of money up front and is a drain on their quarter-to-quarter revenue. The carriers end up ahead if a user stays for the life of the contract (or pays an early termination fee), but anything a company like Verizon can do to lower its subsidy prices is good for its bottom line.
“Then if you look out into late 2014 then you start to think of things like, okay, so now I can start to take the CDMA chip out of the phone and just have a pure LTE handset. That also starts to reduce subsidies. So over the next two to three years I think we will start to see subsidies come down,” said Shammo, according to a transcript of the interview from Thomson Reuters (PDF).
What is stopping Verizon from phasing out its 3G CDMA network and moving to LTE permanently now? The answer lays with an overlooked aspect of smartphones that users tend to forget exists: voice.
The Coming Of Voice Over LTE
As it stands now, smartphones running LTE cannot make calls over the 4G network. LTE is a big, fat data pipe and it is indeed very fast. Yes, you can use some IP-based services to make calls (Skype, for instance), but the traditional phone call is not available on the newest wireless standard.
The challenge is that LTE is an IP-based system (akin to Wi-Fi) and does not handle traditional voice. When you make a call with your 4G LTE Verizon phone, you are actually still using the 3G network. Most people do not know or care how that works, but it forces companies like Verizon to keep expensive chipsets in their smartphones to handle voice calls.
Verizon’s CDMA network is also why devices like the iPhone 5 cannot simultaneously make calls and browse the Web. The standard just does not allow it.
This will change when Voice Over LTE (VoLTE) is available, likely near the end of 2013 or the beginning of 2014.
“So I am a believer that over the next two to three years subsidies will start to decrease just because of the ecosystem. Then, for us, I think – for Verizon Wireless one other important ingredient for us is obviously we are investing in all this LTE technology. We will ultimately get to Voice Over LTE, probably end of this year, beginning of next year,” said Shammo.
What Does It Mean For You?
More than any other industry, the mobile operators play a very fluid game of ARPU – average revenue per user. As we have seen in the past, the supposed “deals” we have seen from the carriers are really just rearranging how the language and structure of contracts are made. For instance, with Verizon’s “Share Everything” plan, you are going to pay basically the same as you were under the previous plan for data plus a couple extra dollars per device you add. It remains to be seen if Verizon will actually pass on savings from lower subsidies to consumers buying devices.
So, Verizon cutting out CDMA in the next year for the sake of lower subsidies is not likely to lower your own data bill. If there is anything that consumers can count on it will be that companies like Verizon will always be looking for ways to squeeze the ARPU out of them.
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Verizon Fell Behind AT&T In Q4 With 9.8 Million Smartphone Sales
Jan 9th
In a note to the Securities and Exchange Commission, Verizon Wireless noted yesterday that it sold 9.8 million smartphones in the fourth quarter of 2012. In the brief release, Verizon noted that the total smartphone sales included, “a higher mix of Apple smartphones.”
Unlike its top rival AT&T (which yesterday said it had sold in excess of 10 million smartphones last quarter including record numbers of iPhone and Android devices), Verizon has shown more historical balance between the two dominant smartphone operating systems. In the third quarter of 2012, Verizon sold 3.1 million iPhones out of 6.8 million total smartphones, good for 45.5%. Verizon did not give a total on how many iPhones it sold in its SEC note for this last quarter, but expect the number to be closer to a 50-50 split with Android.
iPhone’s Magic Powers
The question to be asked is why would Verizon mention iPhone channel sales in its SEC note at all? Well, right or wrong, the carriers (and hence, investors) tend to think of iPhone owners as more lucrative consumers. iPhone owners tend to be loyal, thus giving carriers guidance for how many net postpaid subscribers they will have years down the line. So, if I am a carrier, I want to show investors that I have a large amount of people using Apple products as a sign of the health of my business.
As the rest of the fourth quarter smartphone sales from the top carriers in the United States come in, we are once again likely to see that Apple dominates the top of the American smartphone market. In Q3 2012, Apple controlled about 58.1% of U.S. smartphone sales for the three largest carriers (AT&T, Sprint and Verizon). Of those three, AT&T provides the biggest cushion for Apple, taking between 70%-80% of its total smartphone sales. As noted yesterday, AT&T likely sold more than 7.6 million smartphones last quarter. If Apple has a stronger 4Q with Verizon, the iPhone may break the 60% mark for control of U.S. marketshare among the big three.
Research analytics firm comScore notes that Android still controls the overall U.S. smartphone market. According to comScore Mobile Lens, Android U.S. subscribers grew 1.1% between Aug. 2012 and Nov. 2012 to a total of 53.7%. Apple grew 0.7% in that same period to 35% of U.S. subscribers.
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Finally, HTC Delivers A Decent Android Device For Verizon
Nov 13th
Last week, a friend of mine called from the Verizon store. His girlfriend was looking for a new smartphone and wanted my opinion on what she should get. The choices were the iPhone 5, the Samsung Galaxy S III and, “something from HTC.”
I cringed. HTC has not had a desirable device on Verizon for a long time. The option presented was the Rezound, the successor to the flawed Thunderbolt and already a year old. When asked if she should consider the Rezound, my response was, “oh god, no.”
Verizon is the largest cellular carrier in the United States – and the one that sells the highest proportion of Android devices. The fact that HTC has had nothing worth worth buying on the carrier for basically all of 2012 has been a major problem for HTC.
The Droid Incredible 4G LTE was an also-ran device for HTC on Verizon, a reprise of a past hit updated for 4G LTE. Verizon passed on HTC’s flagship One series – it went to AT&T. Sprint remodeled the One X to be the EVO 4G LTE. Verizon stuck with its aging HTC models even as it released new devices from the likes of Motorola and Samsung.
About Time For A New HTC Phone
On Tuesday, HTC finally announced a new top-of-the-line smartphone, exclusive to Verizon. The Droid DNA is a 5-inch Android 4.1 Jelly Bean device that HTC dubs as “the ultimate smartphone.” It’s screen packs a pixel per inch rate of 440 (quite a bit higher than the iPhone’s 326 ppi), an 8 megapixel camera, Beats Audio with a 2.55 volt headset amplifier, 2020 mAh battery and a 1.5 GHz quad-core Snapdragon processor. The Droid DNA will run HTC’s Sense 4 Android skin on top of Jelly Bean. It will be available for $199 on a two-year contract from Verizon starting Nov. 21.
The 5-inch screen may be a touch excessive for some, but otherwise the DNA is everything an Android fan might want from a smartphone. Whether or not it lives up to HTC’s marketing blather, “the ultimate smartphone” is indeed quality competitor on Verizon.
That’s critical for a comany whose numbers have been abysmal over the last two quarters. HTC’s revenue in the third quarter was 23% down from the second quarter and 48% down from Q3 2011. The manufacturer has not gained traction with the One X or the Evo 4G LTE, and the lack of a decent option on Verizon has been even more damning. The most lucrative market of Android users in the U.S. has been essentially lost to HTC for the better part of 12 months.
Will the Droid DNA be enough to reverse HTC’s downward trend? Not entirely.
This holiday shopping season has more great mobile devices to choose from than ever before. But expanding its distribution channels with high quality devices has to be one of HTC’s first priorities as it begins climbing back towards the top of the smartphone ladder. The Droid DNA is a good step in that direction.
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Why iPhone 5 Users On Sprint & Verizon Still Lack Simultaneous Voice & Data
Sep 14th
The more things change, the more they stay the same. Apple’s newest iPhone finally brings 4G LTE to the device, a long awaited transition, but customers of Sprint and Verizon find themselves in a familiar situation. The iPhone 5 on both carriers will not allow simultaneous voice calls and data transmission, a feature AT&T long has lorded over its rivals. A combination of technology restraints and design decisions by Apple once again leave Sprint and Verizon customers without a feature that, theoretically, should be very simple.
Consumers want technology to work. They do not much care how. But a quick explanation of LTE, as simplified as possible, informs why the iPhone 5 on Sprint and Verizon does allow simultaneous voice and data usage.
On its most basic level, LTE is a wireless standard designed to send data from one point to another. It functions on an Internet Protocol-based standard that is more akin to Wi-Fi than traditional cellular service. LTE, for the most part, does not yet have a dedicated speech channel for voice calls, as “2G” and “3G” do. Companies are working on the function, known as Voice Over LTE, (VoLTE), but it is very limited and not ready for public consumption.
So how can many LTE phones, including Samsung LTE smartphones on Sprint and Verizon, support simultaneous voice and data? There are two reasons for this.
AT&T and T-Mobile operate on a standard called Global System for Mobile Communications (GSM). Sprint and Verizon’s networks are built on a different standard known as Code Division Multiple Access (CDMA). LTE is a natural extension of GSM. When smartphone manufacturers develop phones for various carriers, they decide what types of antennas to use based on the wavelength a carrier uses to transmit its signal, commonly referred to as a spectrum band. LTE runs on multiple bands, requiring multiple antennas. For AT&T, this is not a problem. The same architecture that supports its GSM-based voice function can also access data on LTE bands. For CDMA, a third antenna is necessary to handle this function.
Consequently, when you make a call on your 4G LTE smartphone, your voice is not actually transmitted via LTE but rather a 3G network. The phone switches from the LTE band to the 3G band. On AT&T this requires two antennas. For Sprint and Verizon, it would require three to support the “switchback” to the CDMA-based 3G network.
“This quite literally means you drop from 4G LTE to 3G WCDMA (where voice and data are already multiplexed) for the call, then hand back up to LTE when you’re finished,” wrote Brian Klug, senior editor of smartphones at AnandTech. “This is the way that voice works at the moment for all GSM/WCDMA carriers, and on all those handsets with LTE to date,”
Samsung can support simultaneous voice and data on LTE smartphones because they decided to implement that third antenna. Apple did not. According to reports, the motivation for this was to not only create a very thin smartphone, but to simplify manufacturing so Apple can make as few unique versions of the iPhone as possible while still hitting as many LTE-capable markets as possible. As reported by Klug, according to FCC documents, two unique versions of the iPhone 5 exist that are nearly identical except for the types of antennas they include. To support simultaneous voice and data on Sprint and Verizon, Apple would have had to make a third unique version. Doing so would complicate the manufacturing process and cut into Apple’s profit margin, something the iPhone maker is very protective of.
In the end, the iPhone 5′s functionality is motivated by profit. Sprint and Verizon customers are still going to buy the iPhone 5, with or without simultaneous voice and data. The are used to doing without it, so it does not behoove Apple to change its design to achieve a marginal result. Essentially, for Apple it is more headache than it is worth.
The only way it will change, outside of a drastic change of course in Apple’s design and manufacturing approach, is when VoLTE becomes ready for public use, eliminating the need to fallback to 3G networks for voice capabilities. As it stands, VoLTE is not expected to be ready for widespread use until 2015-16.
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The Real Reason AT&T And Verizon Are Pushing New “Shared” Data Plans
Sep 4th
A new iPhone this year may mean a new “shared data” wireless plan for you, too. They may or may not save you money – that’s not the point. They’re really designed to put the wireless carriers in a better financial position for the future.
Get Ready To Share
With Apple’s new iPhone expected to launch in mid-September, expect to hear a lot of noise about newish, “shared” service plans from Verizon Wireless and AT&T, the biggest U.S. wireless carriers. The big idea: Instead of having separate pools of data allowances between different devices – an iPhone and iPad, for example – all of your family’s devices draw from the same pool.
Verizon already requires these plans for new subscribers, and AT&T says it will require them for subscribers who want to use Apple’s FaceTime video chat service over the mobile internet. (Translation: Eventually, you’ll end up using one whether you want to or not.)
Here’s how it works: For each device, you pay a monthly “access” fee. At Verizon Wireless, for example, this ranges from $40 per month for smartphones to $10 per month for tablets. This provides unlimited talking and texting on phones – no more minutes to keep track of. Then, you choose a monthly bucket of data that all your devices use, ranging from $50 per month for 1 GB to $100 per month for 10 GB.
The pitch to the consumer is that these plans are smarter for today’s families, which often have multiple smartphones and tablets. If you’re not using all the iPhone data you’re paying for, why not be allowed to use it on your iPad?
The Business Motive
Perhaps this pricing realignment makes some sense for subscribers. But it really makes sense for the carriers.
Consider how much more time you spend using a smartphone’s data signal versus making voice calls. Since I started using an iPhone in 2008, my data usage far has far outpaced my voice usage. Last month, I used 70 voice minutes, but probably spent over 50 hours using data. (Meanwhile, I’ve accumulated 3,900 “rollover” minutes on AT&T – a near-worthless benefit that made much more sense a decade ago.)
But while our smartphone data usage could now be 10 to 20 times our voice usage (if not more!), the amount of money we spend on voice is still usually half or more of our monthly bills. Below, I’ve charted the last 10 years’ worth of Verizon’s voice and data service revenues. Overall service revenue has more than tripled, but data is still only about 44% of Verizon Wireless’s service revenue.
With faster wireless networks – the new iPhone is expected to work on Verizon’s 4G LTE network – and services like Skype and Apple’s FaceTime and iMessage, which “disrupt” the carrier voice and messaging services, it becomes even more important for carriers to shift billing toward data plans.
With more connected devices launching all the time, these new “shared” plans offer greater convenience to subscribers – at a potentially higher cost. But what they really do is insulate carriers from potential disruption to outdated service models, and provide a more stable, logical revenue model for current and future wireless usage.
Phone and tablet photo via Shutterstock.
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AT&T and Verizon Earnings Show Who Really Drives the Mobile Economy
Jul 24th
Between AT&T and Verizon, cellular data service was a $13.3 billion business in the second quarter of 2012. Combined, the two have almost 88 million U.S. smartphone (i.e. lucrative) subscribers. These relatively quiet — though not gentle — giants have a firm handle on what happens in the mobile economy.
Verizon and AT&T are making more money than ever, and smartphones are the engines of the growth. Not only is that growth not slowing as the market becomes saturated, it is making the telecom pair the 800-pound gorillas in the nation’s mobile economy.
AT&T has aggressively pushed its customers to smartphones. Almost 62%, or 43.1 million, of its postpaid subscribers (as opposed to pre-paid customers) are using the devices. Verizon has 44.4 million smartphone subscribers, half of its 88.8 million wireless postpaid subscription base.
The iPhone has been instrumental in both companies’ 2012 growth. The iPhone made up 72.5% of AT&T’s smartphones sold in Q2 — 3.7 million of the 5.1 million smartphones sold. Of those 3.7 million iPhones, 22% were new subscribers to the carrier, according to AT&T. Verizon sold 2.7 million iPhones in Q2.
Verizon, by wireless subscriber volume and revenue, continues to be the largest carrier in the U.S. Its total wireless revenue was $18.6 billion in Q2, over AT&T’s $16.4 billion. The two are close enough in postpaid subscriptions and revenue on a quarter-by-quarter basis that it is splitting hairs to note how much bigger one is than the other. AT&T (18.8%) and Verizon (18.5%) posted nearly identical year-over-year growth rates in wireless data revenue.
AT&T and Verizon boast how much more smartphone subscribers are worth to their bottom lines than non-smartphone customers, and in terms of average revenue per user (ARPU), both carriers are faring well.
AT&T postpaid subscriber ARPU increased 1.7% over the same quarter last year, to $64.93, a number it claims is the highest in the industry. Verizon’s Q2 ARPU for postpaid subscribers was $56.13, a record for the company.
From a macro perspective, AT&T and Verizon are the real giants of the mobile economy and some of the largest companies in the U.S. While most point to Google, Facebook, Microsoft, Apple and Amazon has the “Big 5” of the U.S. tech industry, Verizon and AT&T are actually larger on a quarter-by-quarter basis than four of the five, with Apple’s runaway success being the exception.
For instance, Google’s Q2 revenue was $10.96 billion, which is only about 35% of the $31.6 billion that AT&T posted in Q2. The carriers do have larger operating expenses than companies like Google because they carry the burden of building the telecom infrastructure of the U.S., but by any measure, the mobile operators are powerhouses that will dictate how the mobile economy evolves over the next 10 to 20 years.
Mammoth subscriber bases and revenue mean that it will be difficult to disrupt the mobile ecology.
Google, which has sought ways to work around carriers, does not have the capital to build its own wireless infrastructure. Microsoft is more concerned with rebuilding its online properties (which took a $6 billion write-down because of its Web services last quarter). Amazon has neither the incentive nor capital to build its own network. Facebook has enough problems just making money off its robust mobile base.
If one company could shake things up, it would be Apple. As we noted after Q1 2012, the iPhone and iPad maker could have bought the fourth-largest carrier in the U.S. — T-Mobile — with its quarterly revenue alone. Yet, the company is notoriously tight-fisted with its excess cash, preferring to make deals with its supply chain for better component prices than move aggressively into other industry segments.
For now, the terms of the mobile economy in the U.S. will be dictated by the carriers. Smartphones and operating systems that run them may have been created by companies like Google, Apple, Samsung and Microsoft, but AT&T and Verizon remain the confident gatekeepers.
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How AT&T & Verizon Learned to Stop Worrying and Love Data Hogs
Jul 19th
If you can’t beat ‘em, charge ‘em: Not long ago, AT&T execs criticized smartphone users as data hogs. Not anymore. With a series of new pricing plans, both AT&T and its archrival Verizon have decided that digital gluttony is good for business. Now the carriers are looking like the hogs themselves, only they’re gorging not on bandwidth but on the contents of their customers’ wallets.
A month after Verizon introduced a wireless plan that allowed users to share data across multiple devices, AT&T has followed suit. Like Verizon, AT&T designed its new prices to generate more revenue the more people use high-bandwidth apps on their smartphones and tablets. Like Verizon, AT&T charges fees for voice and text even if they go unused. And both companies’ shared data plans charge 50% more per gigabyte in overage fees.
And that’s where the carriers’ hog-like behavior comes into play. No longer are so-called data hogs the 3% of wireless customers who use 40% of the data. Thanks to Netflix, YouTube, online games and apps like Skype, on LTE networks the mainstream customer graduates into a high-bandwidth user. Anyone who upgraded to the new iPad on an LTE network became, overnight, a video hog. Many people will be surprised to discover they’re paying expensive overage fees, and so they’ll logically move into higher-priced usage tiers. Either way, AT&T and Verizon will benefit.
And so, five years after the iPhone kicked off a surge in demand for wireless data, the wireless duopoly of AT&T and Verizon is learning to love data hogs. AT&T CEO Randall Stephenson said as much at Fortune’s Brainstorm Tech conference this week. “We’ve gotten the pricing model right,” he said, “so I don’t think of them as hogs.”
Here’s how Stephenson explained it in detail:
“I’ve kind of conditioned people to think of it this way: We have gotten ahead of the capacity glut here. Now we have a spectrum crunch coming, but I believe the industry has gradually and finally gotten the pricing model right. Once you get the pricing model right, I don’t think of them as bandwidth pigs or hogs. I think of them as services and revenue. It’s not all bad; in fact, data becomes a good thing.”
There are a few things in Stephenson’s comments that should make AT&T customers uneasy. The company that once considered its biggest customers hogs now describes them openly in even more impersonal terms: revenues. And Stephenson is “conditioning” his workforce to see customers the same way. Wireless subscribers aren’t people who love your service – they are pockets of dollars to be fracked by any means necessary.
Stephenson also says with the new shared wireless plans, the industry has gotten pricing right. But what’s right for AT&T isn’t right for its revenues – I mean, customers. The new plans represent an attempt to condition consumers into accepting higher bills. And unless customers are willing to move to a second-tier carrier like Sprint or T-Mobile, they have no choice but to accept plans designed to squeeze money out of them.
Of course, as Stephenson pointed out at the Fortune conference, carriers are spending billions on new LTE networks. AT&T is investing $20 billion this year in networks and other capital expenditures. So, he says, a company with growing capex spending and flat revenue isn’t a sustainable business model.
This would make sense, except that it’s disingenuous at best and untrue at worst. The cost of those new networks will be amortized over years, and AT&T has been seeing $19 billion in amortization costs for the past three years. What’s more, AT&T is spending even more heavily in other areas: nearly $40 billion on marketing and administrative costs, and $10 billion a year in dividends for investors. Why not spend less on marketing and investors to cut customers a break?
Yet AT&T is moving in the other direction. A customer-friendly approach would be to let them choose an à la carte plan based on how they use their smartphones. Those who don’t make many voice calls or who send texts through programs like iMessage should be able to cancel voice and data plans we don’t use. And why not abandon tiers and let people simply buy data per unit used, like gasoline vendors do with fuel for cars?
For years, Verizon and AT&T have used their carrier muscle to force changes that are better for their own profits than their customers’ needs. In a thoughtful piece, the Verge called them the biggest threat to innovation, citing the imperious demands they place on phone manufacturers. This week, 9To5Mac found evidence that AT&T may charge for using FaceTime on its wireless networks. (Stephenson didn’t deny this when he was asked about it, but his bizarre response – “I’ve heard the same rumor” – made him sound sadly out of touch.)
With the new pricing plans, carriers are trying to control consumers as they have controlled phone makers for years. The result will be more profits for carriers and richer dividends for investors. But it will also make for a worse wireless world for everyone else. High-bandwidth apps with innovative potential will languish with smaller audiences, and the mobile web will stratify into upper and lower classes, where the rich enjoy the best features.
There are two kinds of innovations in tech. One that is often celebrated – the creation of great new things people will gladly pay for – and another that few companies will brag about – finding new ways to get people to pay for something they already have. The top two carriers are innovative in the second way. Only now, AT&T’s Stephenson likes to brag about it.
Image licensed via Creative Commons, courtesy of rajthesnapper.
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Verizon Wants Your Car on a Data Plan
Jun 21st
You might see your car as a means of transportation or a reflection of your lifestyle. But Verizon views the automobile as a giant mobile data device on wheels. That’s why it recently announced a $612 million cash deal that will make it the first carrier to own one of the major companies that connect cars to wireless networks.
Atlanta-based Hughes Telematics is what’s known as a Telematics Service Provider or TSP. Much the way an ISP gets your home or business connected to the Internet, a TSP provides connectivity to a car. TSPs like Hughes, Agero and OnStar not only have the technology, platform and intellectual property to sync up an automobile to the same wireless network that your cell phone uses, they also provide services such as call centers with live human beings.
OnStar Corporation – a subsidiary of General Motors – uses Verizon simply as the network carrier for services such as crash response, roadside help, turn-by-turn navigation assistance, hands-free calling and remote vehicle diagnostics. Your car becomes a big phone with a single “call” button on the rearview mirror to put you directly in touch with the call center.
“Carriers like Verizon are trying to evolve from the dump pipe to the valuable pipe,” said Thilo Koslowski, vice president and automotive practice leader at Gartner. “Verizon could continue providing wireless networks to car companies like they do with OnStar, or they could take a larger share by creating an end-to-end solution.”
Safety First
Verizon’s purchase of Hughes inspires Jetson-like visions of connected cars offering mobile video conferencing, streaming movies, remote health monitoring and vehicle-to-vehicle communications – but those flights of fancy should be kept in check. “Just because you have a telecom that buys a company that’s automotive-oriented doesn’t open the door to take mobile services you get on your smartphone and dump them into a car,” said Frank Weith, general manager for connected services of Volkswagen Group.
“Carriers like Verizon are trying to evolve from the dump pipe to the valuable pipe.”
-Thilo Koslowski, Gartner
Volkswagen announced Hughes as its TSP in November 2011. Hughes has counted Mercedes-Benz as one of its customers since 2007.
“Our focus is safety, first and foremost,” said Weith. He believes that car infotainment, such as offering traffic and weather or enhancing navigation, should be put in the service of safety. “It has to be real information, because you get into a car for a purpose, to get somewhere.” So, using your dashboard to make a Facebook post doesn’t make much sense.
Nonetheless, Weith realizes that drivers and passengers are usually carrying smartphones in their car. “Our challenge as automakers is to find the balance between people reaching for their smartphones to get information, and the car being able to provide you the right information in the right dosage so you don’t get distracted,” said Weith.
Tethered vs. Embedded Phones
In fact, the auto industry is divided between two primary approaches. There are companies (like Ford and Toyota) using a tethered approach in which the smartphone – already a network-connected device – is paired up via Bluetooth to the car’s computer system. Then, there are automakers (like GM, Volkswagen and Mercedes) that embed the phone into the car, and support it with TSP services.
Weith believes the embedded TSP model provides the required extra layer of security, especially in an emergency situation. It creates a central point of contact that can triage between a driver and public safety agencies. “You know you’re going to get help,” said Weith. “They’ll send an ambulance to you if you need it.” With the tethered approach, it’s more like using your cell phone to call 911. The risk is that on some days, you might forget your phone or it might not be charged.
Gartner’s Koslowski believes that all automakers will eventually need to accommodate both tethered and embedded approaches. He said that Verizon is agnostic, as long as you connect using its network services.
Upcharges
Automakers might have the burden of ensuring safety, but the Hughes purchase is about providing what mobile consumers want, according to Koslowski. There are services like alternative routing to avoid traffic jams, Web-based info about when a movie starts (or a film review), or downloading contacts or a music file to your car. Many of these can be supported by a call center. “Verizon wants to offer these services with Hughes Telematics going forward,” said Koslowski.
Verizon is positioning itself to offer data plans that including connectivity to multiple devices, including your smartphone, your tablet computer and what it sees as the ultimate mobile device: your car. And of course, a healthy upcharge will come along with it.
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