March 20, 2011 § Leave a comment
News just hit the wires that AT-T, the once largest, sometimes and recently second largest telecommunications carrier in the US agreed to acquire T-Mobile, the 4th largest carrier with 33 million subscribers in a $39 billion dollar deal. This makes AT-T the definitive largest carrier by a big margin. It is early hours to speculate and confirm if the deal will pass the scrutiny of the antitrust folks but chances are the big telecom lobby will make sure it does. And when it does happen, it will mean 3 major carriers left standing (and one of them wobbly at that) and a bunch of fringe players whose valuation just jumped up at the prospect of Verizon scooping them. Metro PCS at less than $6 billion now seems a juicy target for Verizon. While the 8 million subscribers that Metro PCS offers is much less than the 33 million from T-Mobile that AT-T just picked up, it is still a first step for Verizon. The added bonus of having a LTE network rollout in progress will help the Metro PCS-Verizon Wireless marriage, if it were to happen. The speculation will start tomorrow and Metro PCS shareholders will definitely see the stock go up.
The implication of this event is significant. As recently as last week, rumors suggested that Sprint-Nextel, the third largest carrier with about 50 million subscribers was looking to merge or get acquired by T-Mobile to give the third and fourth place carriers some heft against AT-T and Verizon. This is particularly important in the era of exclusive handset agreements that can make or break multiple quarters for a carrier. The iPhone exclusivity is a case to point that effectively killed a lot of business for Sprint-Nextel and T-Mobile. The Verizon-Google-Motorola relationship was another. It made sense from a business standpoint for T-Mobile and Sprint-Nextel to merge although there were significant technological hurdles stemming from the completely different radio technologies used by the two (CDMA by Sprint and GSM by T-Mobile).
The synergies for AT-T and T-Mobile are much more than T-Mobile and Sprint-Nextel. Given that they have significant field test and operation presence out of Seattle and that they utilize similar wireless radio technologies, it makes for a relatively smoother transition. It also gives AT-T, extra spectrum for its LTE roll-out in the future. But where does that leave the consumer?. T-Mobile has been consistently rated as the best in customer service while AT-T often finds itself at the bottom of the pile. T-Mobile has a loyal set of customers who have benefited by excellent data and messaging plans often times cheaper than AT-T and Verizon. What T-Mobile has lacked is the killer smartphones that have fueled the rise of AT-T in recent years and also a larger coverage map thanks to AT-T’s legacy. This will change now with AT-T and Verizon primarily duking it out for the best smartphones while Sprint-Nextel watches from the sidelines with the occasional exclusive HTC phone. But consumers also have only one national GSM operator to pick making AT-T a bigger behemoth than what it was with a lot more muscle. This will affect the all critical data plans moving forward. On the bright side, with the expanded network, voice calls on AT-T will be better.
Day After Update:
Metro PCS stock is up 5% (PCS). Leap Wireless, a similar CDMA operator is up 12% (LEAP). As expected, this hurts Sprint the most, not just the stock price which is down 15% (S) but also their future prospects (here).
And yes, its all about LTE spectrum.
March 12, 2011 § Leave a comment
My first PC was an Intel 286 architecture based system that came preloaded with Windows 3.1. Since then, I have had a love-hate relationship with Microsoft. Their software is in a way, responsible for my career and who I am today. But I didn’t personally approve of the way Microsoft muscled their way into many segments of the business killing meaningful competition and innovation by the sheer strength of their OS domination . I continued to use Microsoft software in those years but with growing disdain. Bill Gates was the villain of the day back then.
Everything changed when Gates stepped down from his role of CEO and subsequently as Chairman of Microsoft Corp. He is now the head of the Bill and Melinda Gates Foundation, one of the biggest and most influential charities in the world. With his foundation, Gates has redefined his role dramatically from what it used to be. From head nerd, he is now a head philanthropist. Not just giving significant chunks of his wealth, but taking a very active interest in trying to address key world problems in the areas of health and education with the same kind of innovative spirit that defined the creation of Microsoft. In this second life, Gates has truly made a difference that matters in a significantly profound way that is truly admirable. If I sound like a shill of Gates, I really am. Especially of his tremendous impact in Africa and Asia in trying to solve basic healthcare problems.
I have always argued about the real good of capitalism in enriching humanity. I have appreciated some of the things being done by billionaire philanthropists in truly sharing their wealth , however earned. But Gates changed the game in a way unimagined. Not only did he seize the bull by the horns, he coaxed his fellow billionaires to also commit, via the giving pledge. Much was made of Buffett signing on, but equally remarkable is how Gates convinced many more such billionaires to commit vast sums of their fortunes to make the world a better place.
We all know it is one thing to talk about donating but another to truly commit financially to make a difference in the lives of others less privileged. The cynic would argue that Gates has far more wealth than the amount he has committed. But thats besides the point. There is real good being done by Gates. One that makes him a role model for all of us to admire and emulate. Not just the geek who dropped out to co-found one of the largest corporations in the world, but the one who figured it out post retirement.
In his second life, Bill Gates has actually managed the unthinkable. Craft a profile and career that might potentially rewrite his identity in the history books. Now that is truly spectacular.
August 9, 2010 § Leave a comment
Verizon and Google today unveiled an ambitious proposal for the future governance of the internet and more specifically handling the burgeoning traffic [Google][Verizon]. The coverage on the matter has been pretty good and some recommended links are here  . There is also a lot of chatter about Google “becoming evil” and abandoning its champion of the internet moniker. I wanted to pen down a few quick thoughts on the matter and see if it all makes sense.
Google and Verizon are basically saying the following key things:
1. Treat wired and wireless differently from a governance standpoint. This is critical for both companies since the Android operating system is growing by leaps and bounds primarily due to the Big Red push and any self inflicted wounds will potentially be fatal for both parties.
2. Do not allow any private deals on public networks and levy fines on guilty parties. The language on this is open so as to allow interpretation. In addition Google said that it had no monetary interests in such a proposal. What is left out is private networks like the FiOS private infrastructure of Verizon and the potential growth areas like healthcare and gaming.
3. Transparency and consumer protection are also highlighted as key areas. Transparency from ISP with regards to their traffic policies and consumer protection against blocking any of their content as long as it is legal and from a legal device.
The rest of the document basically can be described thus, ” Guidelines to live by but with enough options to work around”. The only part in all this that left me confused is what does Google get out of it?. I can see why Verizon needs it. It is a behemoth that wants to desperately manage its investments so as to get the best return and a deal with Google would be the best step to insuring its billions. But for Google, there is no “obvious” gain. The provisions pretty much keep things the same from a wired standpoint. It could be argued that the public face of Google probably took its worst hit today. Unless the deal gives Google some kind of access to data as this author suggests or a wireless deal for its Android OS, its hard to imagine Google being a winner in this deal. Am I missing something here?
Time will tell how this all translates into practice. For now it is just a proposal but one backed by industry giants. Will the FCC bless it or stick to its neutrality stance- we shall see. But it sure is an interesting development in an issue that warrants close attention.
For those interested in reading the full text of the joint proposal, it is here.