Satellite Broadband does not work

This morning WSJ reported that News Corp is pulling the plug on its satellite-based Internet service. Hughes Electronics had embarked on an ambitious plan to deliver broadband to consumers and businesses using satellites made by Boeing. Seems News Corp executives have doubts about the financial viability of the plan. The company will be launching one Spaceway satellite, but will be using it for HDTV broadcast. This indeed is good news for the cable guys, who should be smart enough to capitalize on this and use broadband service as another way to keep the customers on coax. Sure there are some others who are trying to play with satellite broadband but News Corp’s decision says one thing loudly and clearly: the economics for large scale satellite Internet service are not right. 

Japan in telecom merger mania.

Well looks like today it is going to be an overseas kind of a day. Softbank is buying Japan Telecom for $1.28 billion from Ripplewood Holdings, reports Bloomberg. This adds a potential 170,000 customers for its Yahoo Broadband service, even though the high-speed service is not making any profits right now. “What we know about Softbank is that they are an aggressive price cutter and that’s what we should expect as they move into the fixed-line business,” Kieran Calder, an analyst at CLSA Asia-Pacific Markets in Tokyo told Bloomberg. “The big driver of Yahoo’s and Softbank’s broadband business has been offering voice’ calls over the Internet.”

Elsewhere, Carlyle Group is looking to buy a stake in DDI, a wireless data services company in Japan, according to Bloomberg. The price is said to be $2 billion. Earlier Vodafone announced that it was going to increase its stake in its Vodafone KK subsidiary.

Japanese telecommunications shares surged as Carlyle joined Softbank Corp. and Vodafone Group Plc announcing plans this week to buy or increase stakes in the nation’s telephone networks. Tokyo-based KDDI needs funds to expand its newest high-speed network, which is winning share from bigger rival NTT DoCoMo Inc. in Japan’s $76 billion market for cellular phone services.

Bluetooth Headsets, a Fashion Accessory?

It has been long time coming but bluetooth is finally beginning to hit its stride, if only in the automotive and mobile phone sectors. Thankfully after the hideous product models introduced by Motorola and Sony Ericsson, the bluetooth headsets at the very least are resembling fashion accessories. Many companies do not realize that if a BT headest and/or a phone is the most visible piece of electronics on our person and has to look cool. Hasn’t anyone learnt from super sales of IPod? No one wants to look like Gubernator!

I just go a ping from a company called Cardo, which is about to ship their Allways BT headset + universal adapter. The allways headset can uniquely clip onto the user’s eye ware (glasses or sunglasses), in addition to fitting comfortably over a user’s ear. The lightweight device provides up to 6.5 hours of talk time, 200 hours of standby time, and also allows a user to be up to 30 feet away from their wireless phone device and still accept/make calls. Don’t know about the quality, but looks pretty nice.

product-earpiece-eyeware.jpg

Elsewhere, Parrot, a European leader in the development of Bluetooth products, today announced the U.S. launch of DriveBlue, a hands-free car kit requiring no installation. When plugged into a car?Äôs cigarette lighter, DriveBlue instantly and wirelessly provides advanced hands-free functionality without the installation constraints of other Bluetooth car systems. It costs $99 a pop!

T-Mobile & Cingular’s spectrum divorce

T-Mobile and Cingular are calling their joint venture off. The two had originally set-up this deal in 2001 when Cingular wanted to enter the New York market, and T-Mobile wanted to take California. After all now that Cingular has all the AT&T spectrum it needs, why would they need to do business with the Germans? T-Mobile will buy its network/spectrum in California & Nevada for $2.3 billion; probably a necessary transaction for T-Mobile, as it has no network presence in these two states.

Atlanta-based Cingular will also receive 10MHz of spectrum from T-Mobile in the New York BTA as part of the dissolution terms originally agreed in 2001. T-Mobile will obtain 10MHz of additional spectrum from Cingular in San Francisco, Sacramento and Las Vegas, as well an option to buy an additional 10 MHz in the Los Angeles and San Diego BTAs.

Investors seem to think this is a good deal for both parties. “They need access to these areas because the U.S. is what’s driving growth,” Friedrich Diel, who holds Deutsche Telekom shares among the $13 billion he helps manage at Frankfurt Trust Investment in Frankfurt, Germany, told Bloomberg News and added, “The investment makes sense.'”

According to Bloomberg, T-Mobile has 1.7 million customers in Nevada and California in the past two years and has about 14.3 million U.S. wireless users in total. While T-Mobile is looking to raise its subscribers to a total of 16 million by end of 2004, don’t count on it. I think we T-Mobile subscribers are going to go through dropped call hell over next few months. It would make many of us consider other options like AT&T or Cingular. Oh wait…. isn’t that what Cingular wants: stop T-Mobile’s growth in its tracks.

Sprint may try Flarion

First is said no way, today it says maybe. Sprint is going to test and experiment with Flarion’s 4g wireless technology, according to this report. Speaking at a Lehman Brothers’ conference, Sprint Chief Operating Officer Len Lauer said that his company will be looking at various options for its high speed wireless mobile data service and expects to reveal its technology choice within two months.

bq. Sprint said in the past it favored waiting for an even faster technology known as EV-DV, but this will not be ready for commercial use until about 2006, analysts believe. Lauer said Sprint is considering EV-DO and EV-DV as well as a technology from start-up Flarion Technologies that its smaller rival Nextel testing. Sprint has set a 2004 capital equipment budget of $4 billion for its wireless and wireline business. It has said next year’s budget would be at similar levels, including $500 million for a network upgrade.

What are the odds, that Lucent buys out Flarion within 12 months?

Nextel’s spectrum quandary

Nextel has had a dream run so far – sales are up, subscribers have been lining up and even its broadband plans are coming together nicely. And for a while it seemed that Nextel would get the much needed spectrum swap and boost the QoS of its network and cut down on the pesky interference problems. Well, if it is too good to be true, then it normally is!

FCC Chairman Michael Powell late last week withdrew his support for Nextel Communications’ plan to relocate spectrum in the 1.9GHz band. Powell retracted the vote he made in March supporting Nextel’s public safety spectrum swap proposal, called the Consensus Plan. Nextel has proposed giving up some of its spectrum in exchange for a swath of airwaves currently used by municipal services — such as fire departments, police, and emergency medical services — in the 800 MHz band. The carrier’s proposal would shuffle spectrum to eliminate the interference problem. (Source: Fierce Wireless newsletter.)

Verizon Wireless, had vehemently argued against the plan, claiming that Nextel would be given access to valuable spectrum without having to pay a fair rate for it, according to Fierce Wireless newsletter.

Soon it will be a wireless nation

It has been long time coming, but the era of connected cellular phones is finally here. Today Verizon announced that it was launching its high-speed cellular service in Washington and San Diego. Other cities to follow. This is a massive upgrade from the current 144 kbps service Verizon is pushing for about $80 a month.

> Verizon said its service will deliver average speeds of between 300 and 500 kilobits of data per second, on par with the wired broadband connections provided by DSL and cable TV.

Sprint has already rolled out its high-speed services but the her sub-144 kbps speeds. Cingular has a test project currently underway in Indianapolis, while AT&T Wireless plans for a nationwide roll-out later this year. That leaves Nextel and T-Mobile.

> In addition to improving laptop connections, cellular companies hope snappier data services will eventually boost sales of a new generation of multimedia-capable phones so Web surfing on a handset is finally practical. [ AP via The Washington Post ]

One to watch: Dangerous devices

Former disciples of Apple Computer (Nasdaq: AAPL) CEO Steve Jobs keep trying to invent cool new devices that they hope will become as popular as the Macintosh. Apple alumni have gone on to start companies like WebTV Networks, TiVo (Nasdaq: TIVO), and now Danger Research, which has raised $10 million in initial funding from Softbank.

In a Silicon Valley clouded by dismay and despondency, Palo Alto-based Danger could prove to be a ray of sunshine. Founded last year by president and CEO Andy Rubin, chief technology officer Joe Britt, and senior vice president of hardware and operations Matt Hershenson, the company is building a wireless email device that the trio hopes will displace Research In Motion‘s (Nasdaq: RIMM) popular Blackberry device. Not shy about admitting that Blackberry was his inspiration, Mr. Rubin says, “RIM did it right, and we are emulating it.”

But Danger isn’t the only company trying to build a Blackberry-type email device. Others like Good Technology of Redwood City, California, and Motorola (NYSE: MOT) are also building gizmos that let users send and receive wireless email.

The RIM-envy is justified, because investment bank Morgan Stanley Dean Witter has forecasted that in five years the U.S. interactive mobile wireless industry will yield $15 billion in annual revenue and in ten years that figure will jump to $60 billion. International Data Corporation, a market research firm, expects that shipments of smart handheld devices (including Blackberry-type devices and personal digital assistants) will grow from 12.9 million units in 2000 to more than 63.4 million units by 2004.

DANGER’S LIAISONS RIM’s Blackberry has a strong presence in the corporate market. Danger is targeting the consumer market — a wise move, despite lower margins, as demand there is much higher. For instance, Motorola has sold more than a million of its Talkabout radio devices, which are favored by glitterati like Los Angeles Laker Shaquille O’Neal, rapper Jay-Z, and MTV heartthrob Carson Daly. “I don’t think that the Blackberry will appeal to consumers, as consumers want more than email,” says Tim Scannell, an analyst with the research firm Mobile Insights. “Consumers want wireless Web, instant messaging, and email, and they don’t want to spend $500 for a device.”

Danger hopes to price its device somewhere between $150 and $200, making it much cheaper than the $400-plus Blackberry. Mr. Britt believes that the company’s products, expected to ship this fall, will be ideal for wireless carriers building next-generation networks that can support data rates higher than the current 19.2 Kbps.

A prototype made available to Red Herring included a calendar, an address book, a memo pad, and Web browsing software. The cigarette pack-size device, which supports electronic games and applications like stock tracking, also has a small keyboard.

“With our device, you can actually see any HTML-based Web page,” boasts Mr. Britt, who previously developed operating systems at 3DO, Apple, Catapult, and WebTV. The process involves rendering the pages on Danger’s server, Mr. Britt says. The company’s server software does the heavy lifting; the device locally caches only small portions of data — for example, an address book.

“And the fun part is, if you lose your device, you can buy a new device and restore everything,” says Mr. Rubin. For that alone, Danger will be worth buying.

Write to [email protected]. The article appeared in the June 15, 2001 issue of Red Herring.