U.S. households increasingly cut the cord and go pure mobile

April 21 2011 – 2:11 pm ET | Matt Kapko | RCR Wireless News

A new report from the Centers for Disease Control and Prevention highlights the growing rate at which U.S. households are cutting their landlines.

The three-and-a-half-year survey found that nearly 24% of adults and 27.5% of children were living in wireless-only households from January 2007 to June 2010.

“The prevalence and use of wireless telephones (also known as cellular telephones, cell phones, or mobile phones) has changed substantially over the past decade. Today, an ever-increasing number of adults have chosen to use wireless telephones rather than landline telephones to make and receive calls,” the report’s authors wrote. “As of the first half of 2010, more than one in four American households (26.6%) had only wireless telephones—an eightfold increase over just 6 years. The prevalence of such ‘wireless-only’ households now markedly exceeds the prevalence of households with only landline telephones (12.9%), and this difference is expected to grow.”

The number of adults living in wireless-only households is highest in Arkansas at 35.2% and lowest in Rhode Island at 12.8%. Other states with comparatively high wireless-only adults (more than 30%) included Mississippi, Texas, North Dakota, Idaho, and Kentucky. Other states with low prevalence of wireless-only adults (below 17%) include New Jersey, Connecticut, New Hampshire, Pennsylvania, Delaware, Massachusetts and South Dakota.

CDC also noted some of the challenges that come to the fore as more households cut their landlines. “The increasing prevalence of wireless-only households has implications for telephone surveys. Many health surveys, political polls, and other research studies are conducted using random-digit-dial (RDD) telephone surveys. Until recently, these surveys did not include wireless telephone numbers in their samples. Now, despite operational challenges, most major survey research organizations include wireless telephone numbers when conducting RDD telephone surveys,” the CDC wrote.

iPhone user satisfaction runs high on AT&T and Verizon

April 5 2011 – 1:41 pm ET | Matt Kapko | RCR Wireless News

Overall, iPhone owners are a satisfied bunch. A new survey from ChangeWave Research found that more than 80% of iPhone customers on Verizon Wireless and AT&T Mobility were “very satisfied,” though Verizon’s customers edged out with 82% versus AT&T’s 80% very satisfied rate.

The dropped call rates is where the carriers really distance themselves though. AT&T ranked last with customers reporting an average of 4.6% of calls dropped over the past 90 days. Verizon Wireless, however, maintained the best overall rating in the industry with customers reporting an average of 1.4% of calls dropped over the same 90-day period. T-Mobile USA Inc. and Sprint Nextel Corp. came in at 2.3% and 2.7%, respectively.

Verizon Wireless did a little worse in reported drop call rates from iPhone users at 1.4% while AT&T iPhone owners reported a 4.8% dropped call rate.

“In sum, while the survey finds overall customer satisfaction ratings are virtually indistinguishable between Verizon iPhone 4 owners and AT&T iPhone 4 owners, there are apparent differences in the relative percentage of reported dropped calls – where in the current survey Verizon is outperforming its industry rival,” the firm wrote in its report. “We note, however, that Verizon is still in the early stages of its iPhone 4 offering to consumers. It remains to be seen how well the Verizon network performs as the number of Verizon iPhone 4 owners ramps up and inevitably puts more pressure on their system.”

One final note regarding the ramp-up that Verizon could be facing with the iPhone — 46% of those who plan on buying an iPhone 4 say they’ll use Verizon’s service compared with 27% for AT&T.

FLO TV goes dark, what’s next for mobile TV?

March 29 2011 – 2:09 pm ET | Matt Kapko | RCR Wireless News

Qualcomm Inc.’s mobile TV service has gone dark and with it a new round of questions have cropped up about the future of mobile TV as a whole. Will there ever be a year that defines mobile TV? What will it take to finally deliver mass adoption?

Americans love their TV, without a doubt, but that has yet to translate to our mobile devices at least in the traditional sense. There are hundreds, if not thousands, of mobile applications that deliver video and TV programming at a good rate, but widespread mobile TV services still face an uphill battle. Still, groups like Mobile Content Venture, the Open Mobile Video Coalition and others are trying to revive broadcaster and TV network interests in the mobile channel.

As these groups proceed, it would be worth their while to reflect on what went wrong with Qualcomm’s big bet on mobile TV.

Over a period of 45 months, FLO TV only managed to rack up 1 million customers, surely far short of what the company intended when it invested $683 million for spectrum that reaches a potential 300 million people between 2003 and 2008. The company poured perhaps an even greater amount of cash into building out the network, lining up content deals with TV networks and operations. In the end, Qualcomm still pulled away with a decent return on all that investment when it agreed to sell the spectrum to AT&T Mobility for $1.92 billion.

Since then, a group of smaller carriers, organizations and Dish Network Corp. have filed petitions with the Federal Communications Commission to block AT&T Mobility’s purchase of the 700 MHz spectrum from Qualcomm. A decision on the transaction is still pending.

John Fletcher, senior analyst at SNL Kagan, said FLO TV proved that consumers are not willing to pay monthly service fees in the double digits for appointment-based TV. “They were probably also just a little bit early,” he added.

“I always like to compare what’s going on in the United States with what’s going on in Korea because the Koreans just eat it up. One in two Koreans is watching mobile TV,” Fletcher said. And yet, the free-to-air terrestrial service there is still losing money.

“Our underlying philosophy is that people love motion picture content,” he said. But free-to-air handheld TV has been available for decades and it never took off like other services.

So just when, if ever, will consumers embrace mobile TV on a grand scale? “It’s more up to consumers and their timeline on things,” Fletcher said.

If consumers are ever to jump on board to the scale they have with television and video online and in the home, broadcasters and network studios will have to line up some strategic business deals with major carriers and device makers. Industry watchers will be looking for such deals to be announced in a couple weeks at the National Association of Broadcasters show in Las Vegas.

Survey: Social media spurs device love

March 17 2011 – 1:33 pm ET | Dan Meyer | RCR Wireless News

Wireless consumers that are really addicted to their devices are also really happy with those devices, according to the latest customer satisfaction studies conducted by J.D. Power and Associates.

The studies, one focused on smart phones and one on traditional mobile phones, found that smart phone owners that use their devices for social media services like Twitter, LinkedIn and Facebook averaged nearly 22 points higher in customer satisfaction scores than the study average. The study also found that more than half of smart phone owners reported having used their device to access such sites.

For non-smart phone owners, usage of social media sites was measured at only 9%, but device satisfaction by those users was 58 points higher than the segment average.

The study also noted that customers that access social media services from their mobile device also tend to place more calls, send more texts, use more data, are more likely to purchase additional wireless services in the future and are more likely to provide positive recommendations for their handset brand and service provider.

“It’s clear that the gap in satisfaction between customers who use social media applications on their device and those who don’t is driven by several factors, but the critical ingredient is whether the user has a positive experience with the wireless device itself,” said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. “Providing features that facilitate social networking activity and make it easy for users to communicate and share information between various social media sites may be an effective way for service providers to further engage customers and increase loyalty.”

Amongst device makers, Apple Inc. ranked highest in smart phone satisfaction with a score of 795. Users singled out the device’s ease of operation, operating system, features and physical design in their praise. Motorola Mobility Holdings Inc. was second with a score of 763, followed by HTC Corp. with a score of 762.

For traditional handsets, Sanyo Corp. scored the highest satisfaction score with a 715, followed by LG Electronics Co. Ltd. at 711 and Samsung Electronics Co. Ltd. at 703.

The survey also found that the average selling price for traditional handsets dropped from $81 at the beginning of 2009 to $73 in 2011, with a historic high of 46% of those surveyed saying they received their device for free in connection with subscribing to wireless service.

The mobile application craze continues unabated with two-thirds of smart phone owners saying they have downloaded games and social networking applications to their device; 54% have downloaded travel software or weather applications; and 53% have downloaded entertainment-oriented applications.

Google opens AdMob SDK for Windows Phone 7, updates for iOS and Android

March 16 2011 – 12:46 pm ET | Matt Kapko | RCR Wireless News

Google Inc. had big plans for AdMob when it acquired the mobile ad network for $750 million in stock in 2009 and now it’s opening up the platform for Windows Phone 7.

The company rolled out out a beta SDK (software development kit) for Microsoft Corp.’s Windows Phone 7 to give developers a path to start integrating its ad products into applications for the young operating system.

AdMob currently reaches more than 50,000 applications across Apple Inc.’s iOS, Google’s Android and Hewlett-Packard Co.’s webOS, Mark Schaaf, director of engineering on mobile ads at Google, wrote in a blog post announcing the news.

The SDK gives developers a mechanism to bring AdMob’s inventory into their apps and determine what types of ads will be displayed. Formats include text, banner and a variety of post-click actions that, for example, could lead users to an app store.

“We have also taken steps to customize the ad experience for the look and feel of the Windows Phone 7 platform and make it easy for users to return to their application after engaging with the ad,” Schaaf wrote.

With the new SDK for Windows Phone 7, Google is also updating its SDKs for iOS and Android to offer greater support for HTML5-based ad units and full-screen interstitial formats for tablets.

Motorola, Nokia suffer at the hands of impending Verizon Wireless iPhone launch

January 27 2011 – 12:57 pm ET | Sylvie Barak | RCR Wireless News

Two firms that aren’t cheering the Verizon Wireless iPhone are Nokia Corp. (NOK) and Motorola Mobility Holdings Inc. (MMI), who both saw shipments and average selling prices of their own smart phone devices drop in the fourth quarter.

Nokia said it had managed to shift just over 5 million N8s and other Symbian^3 smart phones in during the fourth quarter of 2010 and 28.3 million smart phones in total, though ASPs took a 16% hit and yearly device sales for the Finnish phonemaker were just 123.7 million units, down from its 2009 numbers.

Motorola, meanwhile, fell short of analyst expectations and only managed to ship 4.9 million Android-powered smart phones in Q4 and a total of 13.7 million smart phones for the year, with 37.3 million handsets sold in total.

“We have seen some slowdown as a result of the [iPhone] announcement at Verizon,” Motorola Mobility CEO Sanjay Jha said on the earnings call.

Nokia, meanwhile, lamented its continuing decline and seems to be accepting that it needs some real innovation to survive in a smart world. “Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it’s time for Nokia to change faster,” admitted CEO Stephen Elop.

Of course, neither firm is struggling financially, and indeed both managed to do reasonably well in the fourth quarter earnings, but shareholders and analysts seem concerned about the longer term vision – or lack thereof.

Neither firm seems terribly optimistic, either. Nokia was predicting 2011 device sales of between $9.35 billion and $10.04 billion in the first quarter, down from the $11.69 billion in the fourth quarter, while Motorola said it believed it would see a whopping loss of between $26 million and $62 million in the fourth quarter, with only 20-25 million Android smart phones expected to sell throughout the entire year.

Unsurprisingly, this crippling lack of confidence led to stock drops for both companies after earnings were announced.

While Nokia seems rather justified in its descent into self-pity, Motorola shouldn’t be having the same cause for concern. The recent Consumer Electronics Show saw Motorola unveiling some rather innovative products on Nvidia Corp.’s Tegra 2 chips, including its first tablet, the Xoom, a new member of the popular Droid family, the Bionic, and the much praised cell-to -aptop transformer, the Atrix 4G.

Still, going up against a behemoth sales machine like Apple, which managed to sell over 16 million iPhones last quarter alone, it’s not difficult to see why Motorola may feel daunted now that Apple has turned up on its Verizon Wireless doorstep. Motorola is a notorious comeback-kid, however, which means critics may want to hold their fire for the meanwhile.

Nokia faces a much more daunting task in North America, where its clunky, rather old-school phones have not been popular and have little chance of winning over iPhone and Android fans. This has come as a serious shock to Nokia, which was king of the smart phone market back in 2007 when it held 78% of the world’s smart phones market, running on its S60 operating system. That figure has now dropped to 31%, with Symbian^3 not looking like a knight in white armor.

Both Nokia and Motorola have some serious thinking and strategizing to do, but if the mobile market has proved anything, it’s that innovation never sleeps and trends are dynamic. It may take blood, sweat and tears to wring out new and exciting innovation, but the payoff may well be worth it.

Verizon Wireless’ iPhone announcement: Short on surprises, big on delivery

January 11 2011 – 1:15 pm ET | Matt Kapko | RCR Wireless News

--Matt Kapko Photo credit:Matt Kapko

NEW YORK – It finally happened. Verizon Wireless (VZ) is bringing the iPhone 4 to its network, putting to rest a question that’s plagued the wireless industry for years.

After trumpeting the strengths of the carrier’s recently launched LTE network, Verizon Wireless announced that its first version of Apple Inc.’s (AAPL) hit device would only enjoy 3G speeds on its CDMA network.

Verizon has known for some time that “the company that basically invented the smart phone market would have to have a place on our network,” said Lowell McAdam, president and COO at Verizon Communications Inc., Verizon Wireless’ parent company. “Today we are extremely gratified, and I can’t think of a better word, to announce that the iPhone 4″ will be on Verizon’s network.

For Apple’s part, COO Tim Cook took the stage to talk about the road both companies traveled to get to this point.

“We’ve been looking forward to today for a long time,” he said. “We have been talking to Verizon for a while and I can tell you we have enormous respect for the company this team has built and the hard-won loyalty that they’ve earned from their customers.”

Despite the tremendous success the iPhone has seen on AT&T Mobility’s (T) network, the No. 1 question directed at Cook has long been: “When will the iPhone work on Verizon’s network?”

Expanding on that theme later in an interview and highlighting a sense of bewilderment, Verizon Wireless VP and COO John Stratton equated his new iPhone 4 to “plutonium in the pocket.”

With Apple’s device soon to be on board he’s confident that Verizon Wireless’ device portfolio in 2011 is “better than anyone’s in the world.”

Many of the predictions leading up to today’s announcement turned out to be spot on. Verizon Wireless’ iPhone 4 will not run on LTE, it won’t handle simultaneous data and voice calls and it doesn’t look any different physically than the existing iPhone 4.

The pricing will also be identical to AT&T Mobility’s offering: $200 for the 16GB version and $300 for a 32GB device on two-year contracts. Existing Verizon Wireless customers will have exclusive rights to pre-order the new device on Feb. 3 and a full launch is slated for Feb. 10.

“We are going to have a very strong offer to attract customers to our network,” Mead added, perhaps hinting at the carrier’s reported plan to offer unlimited data packages for the iPhone 4.

Although Apple and AT&T have rolled out massive ad campaigns to highlight the iPhone 4’s ability to handle voice and data simultaneously on AT&T Mobility’s network, Cook said he thinks customers will be willing to give that up to be on Verizon Wireless’ network.

Apple’s reason for bypassing LTE with its first iPhone on Verizon Wireless’ network is because the early chipsets for LTE would have required Apple to make design changes that it was not willing to make, he said.

So far, the only unique feature of Verizon Wireless’ iPhone 4 is a personal hotspot that allows connectivity for up to five devices. Of course, Verizon Wireless could still have some surprises in store when it announces pricing and allowances for data.

Apple’s agreement with Verizon Wireless is a multi-year, non-exclusive deal, which could leave open the possibility for a CDMA iPhone 4 on other carriers like Sprint Nextel Corp.

Regardless of the technology that the new iPhone runs on, Verizon Wireless is ready, said CEO Dan Mead.

“We’ve been scaling all of our backend systems” to handle demand,” he said. “We have advanced the capacity. … We’re ready for this launch.”

Report: Wireless industry to generate $235.5B in equipment revenues

December 23 2010 – 12:37 pm ET | Dan Meyer | RCR Wireless News

Industry market research firm iSuppli Inc. reports that due to the continued growth in the cell phone market, worldwide factory equipment revenues associated with the wireless industry will hit $271.3 billion in 2011. That growth will be on top of the $235.5 billion generated in 2010, which was a 7.9% increased compared with the $218.2 billion posted in 2009.

“Continued revenue growth seems assured in the years ahead for mobile communications, a wide-ranging market encompassing cell phones, cordless phones, battery chargers, mobile infrastructure, mobile and fixed broadband access devices and wireless LAN equipment such as routers,” the report noted.

ISuppli added that total mobile communications factory equipment revenues will surge to nearly $360 billion by 2014.

As for a break out of segments, iSuppli predicts 3G handsets will generate $86.4 billion in revenues this year, which would be a 34.6% increase compared with 2009. The firm also forecasts that 1G and 2G device sales will combine for $55.6 billion in revenues this year compared to $68.3 billion in 2009.

While still trying to find its footing, iSuppli predicts the “4G” device segment will see revenues surge from $11 million in 2009 to $1.3 billion this year.

“Among mobile handsets, 3G continues to be the dominant technology in 2010 and likely will maintain that distinction beyond 2014,” said Francis Sideco, principal analyst for wireless research at iSuppli. “For their part, wireless carriers – while wrestling with the issue of heavy data traffic on their networks – are attempting to maximize investments in existing 3.5G and 3.75G technologies through incremental network upgrades. At the same time, carriers are deploying next-generation 4G technologies such as long term evolution, to begin in earnest by 2011.”

ISuppli added that total cell phone shipments will increase 11.7% this year reaching 1.29 billion units with smart phones singled out as the fastest growing with a projected increase of 40.6% this year. The firm added that its total cell phone shipments forecast does not include “gray-market” devices that are especially popular in China and could contribute $8.9 billion in revenues to the industry this year.

NTIA aims to free up 115 MHz of spectrum in next five years

November 15 2010 – 4:36 pm ET | Tracy Ford | RCR Wireless News

The Commerce Department has identified 115 megahertz of spectrum that could be freed up within the next five years for mobile and fixed wireless broadband services. The government also released a timetable to free more spectrum as part of President Obama’s initiative to find 500 megahertz of spectrum over the next 10 years for mobile and fixed broadband services.

The National Telecommunications and Information Administration, which advises the administration on spectrum policy, identified frequency bands at 1675-1710 MHz; 1755-1780 MHz; 3500-3650 MHz; and 4200-4220 MHz and 4380-4400 MHz. The report recommends that some portions of these bands totaling 115 megahertz be made available for wireless broadband use within five years, contingent upon the allocation of resources for necessary reallocation activities. Fifteen megahertz of spectrum, from 1695-1710 MHz, can be reallocated quickly, NTIA said. The government also recommended freeing 10 megahertz from 3550-3650 MHz.

“The 15 megahertz of spectrum that NTIA has identified below 3 GHz is just a start,” said CTIA President Steve Largent in a prepared statement. “We will continue to work to ensure that federal policymakers understand, and focus on, the importance of certain bands of spectrum, such as the 1755-1780 band, for delivering on the promise of robust mobile broadband. A thorough analysis of government spectrum use is key to ensuring that we succeed with the president’s and the FCC’s goal of bringing 500 MHz of spectrum, sufficient for mobile broadband, to market.

“We believe that NTIA’s efforts to free government spectrum for licensed commercial use are essential to helping the U.S. wireless industry maintain our world leadership in mobile innovation, and we will carefully review NTIA’s report. By making spectrum available for auction, the federal government will enable the wireless industry to continue to invest billions of dollars to purchase the licensed spectrum, and billions more to build and upgrade the networks that fuel our ‘virtuous cycle’ of innovation. We look forward to continuing to work with NTIA, the Administration, FCC, Congress and other interested parties to bring this spectrum to market and to continue to assist our nation in its economic recovery.”

U.S. on track to pass an exabyte of mobile data traffic in 2010

November 8 2010 – 12:07 pm ET | Sylvie Barak | RCR Wireless News

--Chetan Sharma 

Photo credit:Chetan Sharma

Despite the tiered pricing, the throttling and the choking, U.S. mobile data is still unstoppably on the rise, with analysts now predicting total U.S. mobile data traffic will exceed 1 exabyte for the first time by the end of 2010.

Wireless-data analyst Chetan Sharma reckons the mobile data market already hockey-sticked by around 25% in the third quarter of this year compared with the same quarter of last year and was up 7% from the second quarter.

That brings the mobile data industry up to a whopping $54 billion for the year ($14 billion in Q3 alone), a fact that can be attributed to the rapid and increasing demand for new and shiny smart phones.

“By the end of 2010, we expect the average U.S. consumption to be approximately 325 MB/mo, up 112% from 2009,” wrote Sharma, who also elaborated on the exact definition of an xxabyte – a unit of information equal to 1,000 petabytes or 1 billion gigabytes.

While that might sound ginormous, bear in mind that current global Internet traffic is thought to exceed 21 exabytes.

When the first iPhone came to market in 2007, wireless data was worth about $25 billion to carriers, which means revenues have more than doubled in just three years. Data average revenue per user has also doubled, now standing at around $16.70 a month, up from about $8 three years back. Indeed, mobile data now accounts for around 33% of total ARPU for carriers in the United States and Sharma says it’s realistic to expect data and voice revenues to be roughly equal by 2013.

Connected devices like tablets are also having a significant impact on data traffic, with Sharma reporting “the connected devices category will generate more revenue for the operators than the entire prepaid segment in the U.S.” That’s no small potatoes.

Reportedly, Verizon Wireless and AT&T Mobility managed to account for no less than 85% of all U.S. data revenue increases in the third quarter. AT&T and Verizon now also account for 70% of the market data services revenues and 62% of the subscription base, according to Sharma.

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