FCC Net Neutrality Proposal Stirs Up Controversy- Reclassify or Not?

An image of Tom Wheeler, Chairman of the FCC,.
FCC Chairman, Tom Wheeler (image courtesy of FCC.gov)

On May 15th the FCC Commissioners narrowly voted to approve a framework for rules that would create an Internet fast lane, while trying to patch up the loopholes that would make that fast lane possible.

The proposal from FCC Chairman Tom Wheeler would ban broadband providers from blocking or slowing down websites, but leaves the door open for them to strike deals with content companies for preferential treatment, or fast lanes to customers. The Democrat-majority FCC voted 3-2 along party lines to open the proposal to public comment for 120 days, with an eye toward voting on final rules later this year.  However, the timing of actual rules will depend on what the agency decides to do after the four-month comment period expires.

Frankly, we don’t understand why there are objections for content providers and consumers paying more for higher speed delivery of broadband Internet content.  Doesn’t every ISP charge more for higher speed Internet access?  Don’t pay TV providers charge more for premium content with tiered service offerings? And an extra charge for HBO, Showtime, STARZ, Cinemax, etc?

The FCC is proposing that it should use the authority that it has under Section 706 of the 1996 Telecommunications Act to regulate net neutrality, which leaves the rules open to the possibility of “paid prioritization” of Internet traffic. While FCC Chairman Tom Wheeler said that those rules don’t allow paid prioritization and is vehemently against allowing any bifurcation of the Internet, it’s also something that the agency can’t enforce if the ISPs offer a creative legal challenge to its no-blocking rules or the wording of the eventual net neutrality rules.

“The potential that there would be some kind of a fast lane has many concerned,” Wheeler said. “I don’t like the idea and I will work to see that does not happen. We specifically ask whether we can and how to prevent an internet fast lane.”

While broadband providers like  Comcast, Verizon and  AT&T are firmly against stronger regulatory oversight of the industry—a possibility that the commission opened up for comment—they have indicated that Mr. Wheeler’s proposal as it stands is something they could live with.

The content providers disagree vehemently.  Google, Facebook, Amazon.com, and many web content startups are vehemently opposed to any arrangements that allows broadband providers to charge content companies extra for preferential treatment.

Netflix, whose streaming service is responsible for a substantial share of overall Internet traffic, said it is “concerned that the proposed approach could legalize discrimination” in how broadband providers treat Web traffic, “harming innovation and punishing U.S. consumers.” The statement added, “Netflix is not interested in a fast lane” on the Internet.


Another key issue is whether the FCC should reclassify broadband as a public utility service that’s regulated.  Currently, Internet Service Providers (ISPs) are classified as information services, which means the FCC cannot regulate them as it would landline phones which are considered telecommunication utilities and under the FCC’s purview. Reclassifying ISPs as utilities (like common carrier telephone services) would potentially give the FCC far greater control over ISPs and, potentially, help the FCC ensure an open Internet.

The problem with defining broadband (not including mobile Internet access) differently than land-based common carriers, which are governed by Title II in the original 1934 U.S. Telecommunications Act, is that the FCC doesn’t have the right to regulate broadband or truly protect net neutrality.

When the FCC sought to censure Verizon’s efforts to manage its own Internet traffic, the D.C. Court of Appeals found it had overstepped its bounds and struck down the net neutrality rules the FCC essentially built as a bulwark against Internet access abuse. The rules it was applying to Verizon’s Internet services were not covered under Section 706 of the 1996 Telecommunications Act, which governed the FCC’s oversight of broadband.

Section 706 of the 1996 Telecommunications Act didn’t give the FCC that kind of power. Redefining broadband Internet services a utility would allow the FCC to bring to bear all the rules and power found in Title II of the 1934 Telecommunications act.

“The fact is that reclassification doesn’t mean any additional regulation at all,” said Free Press Research Director S. Derek Turner who added that industries like wireless and carrier Ethernet currently classified under Title II “are thriving.”  So what’s the problem?

Net neutrality proponents believe officially designating broadband as a utility to be regulated is the only way to ensure an open Internet. “It is exactly what the bulk of activists are supporting, as the recent court decision made it clear that it is the only way in which true net neutrality regulations can be applied,” said David Segal, executive director of Demand Progress.

Some would like the whole Internet designated a public utility. “The Internet is a public utility and the FCC must regulate Internet providers as common carriers. Anything short of undoing the George W. Bush-era deregulation of broadband industry is fake net neutrality, and we’re not falling for it this time,” said Becky Bond, Political Director at CREDO Mobile.

“Tom Wheeler spoke passionately about the open Internet, but his rousing rhetoric doesn’t match the reality of his proposal. The only way to accomplish the chairman’s goals is to reclassify Internet service providers as common carriers,” Craig Aaron, CEO of the open-media advocacy group Free Press said.

Broadband (wire-line) providers, though, say reclassification would be devastating for their industry.  Former FCC Chairman Michael Powell (now the CEO of National Cable and Telecommunications Association) said: “Treating broadband as a utility-like Title II service would reverse years of settled precedent, dry up investment in broadband deployment and network upgrades, and result in protracted litigation and marketplace uncertainty. We (the NCTA) will continue to reiterate our unwavering opposition to any proposals that attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II.”


The FCC’s proposal is open to months of debate before a final document is voted on at the end of this year. Whether the Title II reclassification concept survives that long is open to conjecture and debate.  Mr. Wheeler emphasized that his proposal is only a draft, and that he is open to changing it before a final vote later this year.

Mr. Wheeler has repeatedly vowed to use all tools at his disposal to prevent Internet providers from striking deals that would shut out startups and smaller companies that can’t afford to pay for preferential treatment.  He said consumers pay for a specific amount of bandwidth when they subscribe to broadband Internet access, and that the commission won’t allow broadband providers to throttle that connection or limit how consumers use it.

“The potential for there to be some kind of ‘fast lane’ available to only a few has many people concerned. Personally, I don’t like the idea that the Internet could become divided into have’s and have-nots,'” Mr. Wheeler said. “I will work to see that doesn’t happen.”

“There is one Internet. It must be fast, it must be robust, and it must be open,” Mr. Wheeler added. “The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable.”

That remains to be seen.  This is going to be one heck of a balancing act for the FCC.  For sure, they won’t be able to satisfy all the stakeholders in the broadband Internet (content providers, ISPs, consumers, public interest/ consumer advocate groups, etc).

We’ll update you with our perspective, comment and analysis as this controversial proposal and ultimate ruling progresses.  We think it will be a “battle royal.”


Here’s how to submit a comment to the FCC:

The FCC is taking comments on its proposal at OpenInternet@FCC.gov This email address is being protected from spambots. You need JavaScript enabled to view it. . The initial deadline for comments in July 15th and the deadline for reply comments is September 15th, but the agency is expected to keep the inbox open until it votes to finalize the proposal.


References:

Everything You Ever Wanted to Know About the FCC’s Net Neutrality Proposal

Section 706 of the 1996 Telecommunications Act

(TELE) COMMUNICATIONS ACT OF 1934

 

Net Neutrality Ruling – The Beginning of the End or the End of the Beginning?

In his January 8th speech at the Computer History Musuem (CHM), F.C.C. Chairman Tom Wheeler said we were in the midst of a transition to a “4th Generation Network” which had an “Open Internet” as it’s foundation. The concept of net neutrality– where there are no privileges or added costs or special deals for high bandwidth media/content delivery companies- was clearly implied.

”Not unlike how the radio stations of the 1920s needed to be protected from technical interference, today’s entrepreneurs need to have a fair opportunity to reach their customers over the biggest technological channel of them all—the Internet,” Wheeler said during his prepared remarks at the CHM.

”No one in Silicon Valley needs to be convinced of the importance for innovation and overall societal welfare of our broadband networks. Keeping them open for any and all lawful uses is a major policy imperative.  It is essential in the public interest of our
country that the government, and by government I mean the FCC, have the power to oversee the broadband networks and to intervene to forestall their exploitation by unacceptable acts,” Wheeler added.

That Open Internet policy is now in jeopardy. On January 14th a federal appeals court tossed out the FCC’s Open Internet rules, permitting Internet Service Providers (ISPs) to make deals with streaming media and web content companies (Netflix, Amazon, Apple, or Google) for faster content delivery at a higher price.

The US Court of Appeals for the DC Circuit ruling stated that the FCC’ s Open Internet Order is invalid and that the regulator had overstepped its authority when (in 2010) it classified broadband as an ‘information service,’ not a ‘telecommunications service.’  Having done that, the FCC could not then impose its “anti-discrimination” and “anti-blocking” rules on ISPs, the court ruling stated.

The court stated: “Even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.”

The FCC had tried to prevent those deals, saying they would give large, rich content/media companies an unfair edge in reaching consumers. But since the Internet is not considered a utility under federal law, the court said, it is not subject to regulations banning such arrangements. That paves the way for ISPs like Verizon to cut a deal with Netflix, Amazon or other content providers for higher speed Internet delivery services.

For consumers, the ruling could usher in an era of tiered Internet service, in which they get some content at full speed while other websites appear slower because their owners chose not to pay up.

According to the NY Times broadband Internet providers (like Verizon) that have spent billions of dollars building their networks, said the ruling confirmed their right to manage their networks as they saw fit.

“Verizon has been and remains committed to the open Internet, which provides consumers with competitive choices and unblocked access to lawful websites and content when, where and how they want,” the company said in a statement. “This will not change in light of the court’s decision.”

Much of the argument over net neutrality has been theoretical. Verizon noted in its court papers that the F.C.C. documented only four examples over six years of purported blocking of Internet content by service providers. The issue came into focus in the agency’s review of the purchase of NBC Universal by Comcast. As a condition of approving the deal, the F.C.C. made Comcast promise that it would abide by the Open Internet rules for seven years, even if the rules were modified by the courts.

Consumer advocates warned that higher costs to content providers could be passed on to the public, and called the ruling a serious blow against the concept of a free and opens Internet. “It leaves consumers at the mercy of a handful of cable and phone providers that can give preferential treatment to the content they profit from,” said Delara Derakhshani, policy counsel for Consumers Union.

“I would not be surprised if business development folks in ISP’s around the country were now looking for ways to partner with content creators,” said Michael Weinberg, acting co-president of Public Knowledge, a consumer advocacy group. The companies’ goal is “to make sure their unpartnered service is bad enough that a paid partnership is attractive.”

“It takes the Internet into completely uncharted territory,” said Tim Wu, a Columbia University law professor who coined the term “net neutrality.”

Mr. Wheeler said the FCC might appeal the ruling. In a statement, he wrote that he was “committed to maintaining our networks as engines for economic growth, test beds for innovative services and products, and channels for all forms of speech protected by the First Amendment.” He added, “We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.”

A January 15th NY Times editorial called the ruling “a disappointing Internet decision.” 

“If this ruling stands, broadband providers would be free to strike deals with companies like Netflix and Apple to pay to have their movies, software and other data streamed to customers faster than or ahead of other content. Such deals would hurt smaller businesses or start-ups that cannot afford to pay for preferential treatment.”

“Ideally, Congress would pass a law prohibiting broadband companies from discriminating or blocking content, but that is unlikely to happen given industry opposition. That’s why it’s important for the commission to reclassify broadband as a telecommunications service.”

Craig Aaron of Free Press told PBS he was very much against the court ruling.

“I really think this court decision puts at risk so much of what we love about the Internet. With these rules being invalidated, it really leaves consumers at the mercy of phone and cable companies, who are now free to block websites if they want to, interfere with traffic, favor certain sites and services over other sites and services. And I think that’s bad news for the average Internet user, that the agency that is supposed to be protecting them has been told it has no oversight of the most important communications network of the 21st century.”

But not everyone dissented. Former F.C.C. Commissioner Robert M. McDowell (who voted against adopting the Open Internet rules in 2010) told the WSJ: “The Internet was working beautifully before these rules were implemented. It will thrive even more now that they have been struck down. In the meantime, ample laws already exist to protect consumers should market failures occur.”

CNET is attempting to gauge public perceptions of the new network neutrality rules by conducting a poll:  “How concerned are you about Net neutrality? The FCC’s Net Neutrality rules got wiped out in a court ruling, leaving some people unimpressed and others predicting Internet Armageddon.” You can read all about it and cast your vote here 

Stay tuned for a follow up article that will preview the F.C.C.’s January 30th open commission meeting, which will cover topics described in this meeting announcement.

Those issues will be contrasted with the policy agenda Mr. Wheeler described during his January 8th CHM speech.

Viodi View – 12/03/13

It is nice when someone is listening. That’s the feeling I had last Friday while reading Congresswoman Anna Eshoo’s (D-Ca) letter. Her letter was in response to my suggestion that Senator Rockefeller’s bill, S1680, provides an opportunity to reconsider the best way to serve the public interest with spectrum now used for broadcast television. She indicated she would consider my suggestion and reminded me of her discussion draft, the Video CHOICE Act, which was released on September 9th and is intended to update legislation to reflect today’s video market place realities.

With the turmoil, rancor and election year politics in Washington, the odds are extremely low that there will be any updates in 2014 to last century telecommunications’ laws. Still, could there be enough common ground for Congress to find a solution that advances the legal framework to match today’s video marketplace, which has shifted to broadband as the delivery vehicle of choice?

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Need content for your local channel or for your blog – Contact documonials@viodi.com

Too Much Delegation

Ken Pyle interviews Congressman John Barrow (D-Ga) at the 2013 ACA Summit.
Click to view

“We have got to do everything possible to get the regulatory dog back on the Congressional leash,” said Congressman John Barrow (D-Ga). In this video, he suggests that too much power has been delegated to regulatory agencies. While Congress is infighting, they are not providing the oversight necessary to keep regulatory agencies in check. He points out that unless both sides of the aisle have a shared view of how a law is supposed to be implemented, it is going to be difficult to provide this oversight. Barrow’s comments were made prior to the arrival of new FCC Chairman, Tom Wheeler.

Click here to view the interview with Congressman Barrow.


Regulating the Internet a Non-Starter

An image showing a race between a horse drawn and steam powered trains in 1830.
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The location of FCC Chairman’s first public comments may be as important as the content of the comments, as he made them outside Washington D.C., in Columbus, Ohio. Speaking to Ohio State University students, he points out that the purpose of the FCC is to serve the people. Suggesting that we are in the transition to a fourth network revolution (Guttenberg press, railroads and telegraph being the first three, as he suggests), he indicates that, “’Regulating the Internet’ is a non-starter.”

He does suggest some level of FCC oversight is necessary to ensure competition and he likens the need for oversight to a see-saw, whereby more competition means less regulatory oversight. He also suggests a “Network Compact”, which provides for basic rights of consumers and basic responsibilities of network operators. There are three key elements of the Network Compact – accessibility, interconnection, and public safety and security.

Click here to read his entire speech and click here to read his just published e-book, NET EFFECTS: The Past, Present, and Future Impact of Our Networks, which lays out his philosophy for the role of the FCC, as well as provides a good historical perspective of how we got to the point, where as Wheeler puts it, “Information networks aren’t ancillary; they are integral.”


Getting People to Work Together

Hilda Legg speaks at the 2013 Broadband Communities Summit
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“The thing that really pleased me is that those two mayors were willing to put aside their geographic boundaries  their voting constituent boundaries and to say, ‘if we collaborate, then this entire area will benefit,’” said Hilda Legg Vice Chair of the 2013 Broadband Communities Summit and former Administrator of the Rural Utilities Service. Legg was referencing the work of the mayors of Kansas City, Kansas and Missouri in working together to facilitate the rollout of Google Fiber in the Kansas City region.

Click here to read more and view the interview.


Datacenter in the Himalayas of South Florida

The welcome sign to Indiantown, FL is depicted in this photograph.
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Hurricanes, tornadoes and flooding are some of the concerns for businesses in a low-lying tropical climate. A disaster recovery plan for mitigating the loss caused by one of these inevitable natural disasters is mandatory. ITS Fiber, with its roots as the local telephone provider in rural Indiantown, Florida, saw its location as a key asset in helping businesses integrate disaster recovery into their standard operating processes, such that disaster recovery becomes a strategic advantage.

Click here to read more and view about this unique local datacenter that Viodi documented earlier this year.


Going Beyond Phone Therapy

Ken Pyle interviews James Morehead of Support.com.
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“It has to go beyond, what we call, phone therapy,” said James Morehead. Morehead, VP of Product Management for Support.com explains the importance of being able to provide fast and efficient support to meet the demands of consumers. He explains that being able to embed software hooks to enable remote the monitoring of devices within the home is a critical element for providing efficient and invisible support.

Click here to view the interview.


Some Tweets and Short Thoughts

  • Great #callcompletion analogy “..a car driving across America taking only back country roads to avoid paying tolls..…
  • #SmallCable Must Be Compensated For Post-Auction TV Channel Relocation Costs, suggests the American Cable Association.
  • Similarly, in comments to the FCC, “Sennheiser argues that the winners of the spectrum auction should compensate owners of wireless microphone equipment that will be rendered obsolete as a direct result of the planned spectrum repacking.” Ouch, my favorite microphone uses frequencies in the 600 Mhz band.
  • November 21st was the 50th anniversary of the touchtone phone

The Korner – At the Pinnacle of Trade Show Exhibition

Ken Pyle interviews Lori at the MTA.
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An exhibit booth has to have something unique to catch the eye of this grizzled veteran of the trade show floor. To stand out among hundreds of competitors is always the challenge for the person responsible for a trade show booth. What really makes for a successful display is the integration of the conference theme into the booth, while providing visitors with something memorable and doing so without spending a fortune. Of course, all the aforementioned must be accomplished while imparting a desired message to the attendees.

Pinnacle’s exhibit at the Minnesota Telecom Association’s Annual Convention stood out above and beyond any of the  thousands of booths I saw this year. As seen in the following video, they incorporated the theme of the conference into an interactive booth that told the message of how their business has transformed from analog to digital. As such, they were awarded with the MTA 2013 Best Booth Design!

Click here to view.

Viodi View – 08/09/13

Ken Pyle interviewing Jaime Montes of SureWest at the Viamedia booth at the 2013 Indy Show.
ViodiTV @ The Independent Show – photo courtesy of Becky Jones

The moments of life blur together as the years speed by faster and faster. Travel tends to accelerate the blur, as the towns and conferences seem to melt into a collage of images and seem to be part of another life. The moments that standout are when those different paths intersect, like they did last week at The Independent Show in San Diego, when my kids literally got a close-up of my friends and colleagues from around the country. It was better than that, as my kids were active participants in bringing ViodiTV to the hotel channel of the conference.

Thanks boys for the great work and thanks ACA and NCTC for your support in making it happen and to AXS TV and Viamedia for the advertising on this extremely local channel.


Opportunities Amidst Uncertainty

An image of one of the banners at The Independent Show - 2013.
ViodiTV at The Independent Show

Slices of last week’s Indy Show with soundbites from several of the speakers are found in this video. Outdated rules, regulatory uncertainty and the burdens of regulations were on the minds of many of the speakers and attendees, as reflected by comments from Ross Lieberman of ACA, Shirley Bloomfield of NTCA and Matt Polka of ACA. At the same time, there was a sense of optimism around broadband.

Stay tuned, as Viodi will be releasing the complete video interviews of the aforementioned industry experts, as well as others who participated in the 2013 Independent Show.

Click here to view and to read more.


Be Careful What You Ask For

Ken Pyle interviews Mike Grebb of CableFAX at The Independent Show
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Retransmission consent reform was a hot topic at this week’s Indy Show. In this interview, Mike Grebb, Executive Editor of CableFAX provides an overview of some of the discussions heard on this topic, including thoughts on the retransmission consent flare-up between CBS and Time-Warner, comments from Insight founder Michael Wilner on being careful what you wish for regarding legislative or regulatory relief and the potential for Aereo to disrupt retransmission rules.

Click here to view and to read more.


Advertising Partnership Drives New Revenue for Existing Networks

Ken Pyle interviews Becky Jones of Viamedia at The Independent Show.
Click to view video

Many years ago, a wise marketer suggested that the value from cross-promoting different parts of his triple play would, by itself, justify ad insertion in his channel line-up. His challenge was that there were higher priorities for his company’s staff and ad insertion was way down the list of priorities for his IPTV network. Fast-forward almost a decade later and his words echoed in my head as I spoke to Becky Jones, VP Marketing and Research for Viamedia, at The Independent Show.

Thanks Viamedia for advertising with ViodiTV on the hotel channel at The Independent Show.

Click here to view and to read more.


Arash Afrakhteh on How to Create a Successful Network Software Company by Alan Weissberger

Arash Afrakhteh
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In 1993, Arash Afrakhteh immigrated to the U.S. from Iran to work at Microsoft. He initially felt like “a kid in a candy store,” as a result of the stimulating intellectual environment, bright people, and excellent software tools at the software giant. In 2001, Arash became an entrepreneur when he co-founded Cariden Technologies, Inc. without taking any money from VC’s or angel investors!

Click here to read his story.


AT&T Offers Faster U-Verse Internet in CA and NV by Alan Weissberger

A picture of conduit for fiber optic cable being laid in a city street.
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AT&T has launched a very tangible piece of its Project Velocity IP (VIP) in Nevada and California, introducing a faster U-verse broadband tier that delivers theoretical download speeds of up to 45 M bits/sec and upstream speeds of 6 M bits/sec. The new broadband tier, called U-verse High Speed Internet Power, will cost $50 a month as a promotional price to consumers who bundle it with TV and voice services on a two-year deal, after which the tier will cost $76 a month, AT&T said.

Click here to read more.


The Korner – Back In, Safety First

An example of a backed in car. Nationally renowned safety experts recommend that this is the safest way to park one's car.
An example of a backed in car. Nationally renowned safety experts recommend that this is the safest way to park one’s car. Click to view the associated video.

“Attaboy,” is a quote from Chris Trembley that I will remember for a long time. Trembley and Dan Berg are safety experts from the Minnesota Telecom Association who train operator employees within Minnesota as well as other states, such as Iowa. In this video interview, they emphasize the importance of creating a culture of safety within an organization. They suggest that safety starts with and has to be a priority of the company leaders. Other good things will result, when safety is put first.

Dan Berg points out that safety doesn’t end at the workplace and that, “Slips, Trips and Falls are horrible on the job and off the job.” Of course, safety and driving go hand in hand. An important part of driving is parking and Trembley confirmed that backing in a parking spot is the safe way to park (better visibility when one leaves). Hopefully, Trembley’s comments will finally put to bed the decades long debate in the Pyle household as to the best way to park a car. Thanks Chris and Dan for your insight!

Click here to view the video.

Telecom Death Spiral Continues with ZTE's Steep Profit Drop

Sluggish telecom operator infrastructure spending, mobile device price wars and roadblocks in several western markets have all combined to cause China’s ZTE to report an 85% drop in profits (year over year) in the latest quarter that ended in June. Net earnings for the first half dropped 68 per cent  to Rmb245m, in line with a warning issued last month. That’s the steepest drop in net profits since the Hong Kong listed company went public six years ago!

The drop follows a series of weak results announcements by other leading  telecom equipment vendors. Huawei, ZTE’s larger Chinese rival, reported a 22  per cent slide in first-half operating profits.  Alcatel-Lucent and NSN have been losing money and laying off employees for years, while LM Ericsson recently reported net income down 63 per cent to SKr1.2bn ($172m), compared with a year ago.

ZTE blamed delayed orders from telecom operators and foreign exchange losses  because of the euro crisis for the weak performance, but some analysts say the  company faces much broader problems. China’s three telecoms carriers spent only a third of their projected  full-year capital expenditure during the first half, according to BOCI Research. Analysts do not expect a significant increase before the end of the year that could translate into new orders for ZTE, especially since Chinese operators are  not expected to receive licences for fourth-generation mobile services until  2014.

These are not ZTE’s only woes. The company, alongside Huawei, is being  investigated in the EU for allegedly receiving unfair subsidies from the Chinese  government. In the US, it is under investigation by the Department of Commerce and the FBI for allegedly selling equipment to Iran in violation of trade  sanctions. But unlike privately owned Huawei, ZTE is  predominantly owned by Chinese state entities despite its Hong Kong stock  exchange listing.

“The authorities in both the US and the EU appear to protect their own  players in the industry,” said Mr Ku. “That will make it very challenging for  ZTE to make inroads in the US market, much like it has been for Huawei.”

According to excerpts of an affidavit posted online by The Smoking Gun website last month, Ashley Yablon, a Texas-based lawyer working for ZTE, told the FBI that company executives discussed lying to the US government and  destroying evidence. ZTE on Wednesday declined to comment on the investigations.  As a result of the probe, Jon Christensen, a former Republican Congressman, terminated his lobbying for ZTE last month. A group of US lawmakers has also  called for a Treasury investigation against the Chinese company.

And mobile phone sales aren’t contributing to the bottom line! ZTE is the world’s fourth-largest handset vendor by shipments, but the ultra-competitive and price sensitive handset/mobile device business is depressing its profit margins.

“We still expect only low single-digit growth in global telecom capex next  year, and everyone is competing by price, so things will continue to be tough  for the industry,” said Jones Ku, an analyst with Barclays Capital.

More info at:  http://www.ft.com/intl/cms/s/0/c09c2db4-ec46-11e1-81f4-00144feab49a.html#axzz24NrVpW9v


From ZTE’s latest financial report:

Overview of the global telecommunications industry in the first half of 2012

Investment in equipment in the global telecommunications industry slackened during the first half of 2012. Regional differences remained as emerging markets such as Latin America, Middle East and Asia Pacific continued to enjoy faster investment growth. With the gradual phase-out of 2G networks and the further optimisation and upgrades of 3G networks, commercial deployment of 4G networks has commenced in many countries around the world. In the meantime, global broadband construction continued to be boosted by policy support for and financial commitments to the national broadband strategy in various countries. Smart terminals continued to account for an increasing share of the market, in line with growing popular demand for the product driven by the rapid development of Mobile Internet and the growing variety of mobile applications.

Operating results of the ZTE Group for the first half of 2012

During the first half of 2012, the Group achieved relatively fast growth in overall revenue courtesy to efforts to explore market niches and enhance its market position through initiatives in the perfection and innovation of product technologies, as competition in global telecommunications industry became more rational. Terminals remained on track for fast growth, while telecommunications software systems, services and other products sustained existing growth rates. Nevertheless, the Group’s net profit declined in comparison the same period last year, reflecting reduced investment income, exchange losses, postponement of network contract tenders of certain domestic carriers and lower gross profit margin. For the first six months of 2012, the Group reported operating revenue of RMB42.642 billion, representing a year-on-year growth of 15.21%. Net profit attributable to the shareholders of the parent company amounted to RMB245 million, decreasing by 68.17% as compared to the same period last year. Earnings per share amounted to RMB0.07 per share.

The international market

During the reporting period, the Group reported operating revenue of RMB21.757 billion from the international market, accounting for 51.02% of the Group’s overall operating revenue and representing a year-on-year growth of 6.20%. With a strong focus on populous nations and mainstream global carriers, the Group consolidated its market shares in emerging markets, while winning recognition in its work to enhance cooperation with mainstream global carriers on different products. As well as reinforcing its operation in current mainstream products, the Group was vigorously planning for new strategic niches.

http://wwwen.zte.com.cn/en/about/investor_relations/announcement/201208/P020120822628655583372.pdf

Closing Comment:

It’s been over three years since the “great recession” officially ended (at least in the U.S.). And 12 long years since the dotcom/fiber optic networking bubbles burst. Yet the recovery in sales and earnings for telecom equipment companies are still extremely depressed with little if any growth (especially in bottom line/net earnings). Layoffs continue unabated at most of the large networking gear makers (Alcatel Lucent to layoff 5,000 more employees starting in September 2012).  

There are also few if any network equipment start-ups being funded and many of those that got seed money in the last few years are folding as they can’t obtain additional capital/investments.  Network infrastructure has become a dirty word for VCs and Angel investors who were badly burned by previous investments in that space 10 or 12 years ago (e.g. ultra long haul, photonic (all optical) switching, multi purpose provisioning platforms (AKA “God boxes”), metro optical & resilient packet rings, terabit routers, free space optics, WiMAX, and many, many more technologies that never were commercially successful.

It has certainly been a very long nuclear winter.  More like a decade of frozen tundra for telecom gear makers, component and most semiconductor companies exclusively focused on this still depressed market segment.

When will the recovery come?  I was asked that question during an IEEE Globecom 2002 Business Applications Session on Optical Networks. Almost 10 years later, there is no recovery in site. Does anyone have a guess when the telecom infrastructure industry will see sunny days again?

References:

http://community.comsoc.org/blogs/alanweissberger/weak-global-econcomy-slow-business-china-has-negative-impact-alcatel-lucent-an

http://www.reuters.com/article/2012/07/16/us-zte-shares-idUSBRE86F00E20120716

http://community.comsoc.org/blogs/alanweissberger/huawei-gaining-ericsson-leadership-network-infrastructure-equipment-sales

 

Implications of Egypt's Internet Shutdown

Wasn’t Egypt supposed to be one of the most stable countries in the Arab world and middle East? Apparently not! The Egyptian government’s decision to pull the plug on the country’s ISPs has left most of Egypt’s 80 million residents and businesses without Internet access for the last five days. Experts say the situation shows how vulnerable on-line communications still are today.

Several tech companies have been adversely effected. This morning, KCBS radio reported that Cisco Systems, HP, and Google have closed down their offices in Egypt and told employees to stay home and telecommute (to whom and to where?). Google was reportedly not able to locate its Middle East/Africa Head of Marketing, who was rumored to be sleeping on the streets of Cairo.

According to Andrew S. Ross of SF Gate,

“A little over two months ago, Cisco happily announced the installation of one of its Telepresence videoconferencing systems at Smart Village, a high-tech industrial park situated just outside Cairo. In addition to its ‘very promising’ IT and communications market, one of the competitive advantages the Middle East nation offered, according to Cisco, was ‘political stability.’ That was apparently an illusion.  ‘Cisco has temporarily closed its Cairo offices due to the recent civil unrest,’ the company said in a statement sent to me on Monday. ‘The company is closely monitoring the situation, we continue to stay close to our Egyptian employees and we remain prepared to respond if needed to any impact to our employees, customers or business in Egypt'””

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/01/31/BU1M1HFT11.DTL#ixzz1CjUGUzw0

There are several important implications of Egypt’s Internet going dark. Here are a few:

  1. Outsourcing work to developing countries: which one’s are safe and how much work should be outsourced?
  2. Vulnerability of relying exclusively on IP VPNs accessed via the public Internet.
  3. Ensuring back up Internet access is in place- either via private lines or digital switched connections.
  4. Viability of cloud computing, especially Software as a Service (SaaS) for mission critical tasks.
  5. Enterprises and government agencies reverting back to private networks or Intranets that they directly control.

The key point to ponder is that the unpredictability of problems like this one in Egypt can seriously impact the security and availability of key support services as well as local business operations. Some areas that could be adversely effected include: IT storage/retrieval, finance and accounting, payroll, customer services (CRM), ERP, etc. If political protests and uprisings like the one’s in Egypt, Tunisia, and other oppressive Arab states proliferate to other countries with global outsourcing support services (e.g the Phillipines), the first reaction of governments may be to shut off the Internet or at least block Facebook and Twitter (which happened in 2009 after disputed election protests in Iran).

Meanwhile, Egypt’s Police Department data communications were unaffected by the Internet shutdown. That’s because they use a Fixed WiMAX based private network for communications between police stations and the Ministry of Interior. Please see this article which briefly describes that network as of Feb 19, 2009:

Egypt’s MoI fixed WiMAX Deployment – A Secure and Reliable Private Network

FCC's Multiple Front Offensive to Solve Wireless Backhaul Demands

Image courtesy of Cisco[Editor's Note:  Bob Primosch is a Partner with the Washington, D.C.-based, communications law firm Wilkinson Barker Knauer, LLP

According to a recent report published by Cisco, online video now accounts for more than 25% of all broadband traffic. In all likelihood that number will only go up, straining the capacity of existing backhaul alternatives. The FCC thus is taking steps to position fixed wireless as a meaningful option for high-capacity backhaul in areas where fiber might not be cost-effective.

In June, for example, the FCC decided to permit users of the upper 6 GHz band to utilize channel bandwidths as wide as 30 MHz. The FCC’s rules require that 6 GHz links have a minimum path length of 17 kilometers, and a 30 MHz channel must have a minimum payload capacity of 134 Mbits/s. Under ordinary circumstances and assuming proper frequency coordination, 6 GHz licenses can be relatively easy to obtain.

More recently, the FCC launched a wide-ranging proceeding to explore other ways of enhancing wireless backhaul. As a “big picture” item, the FCC is investigating the possibility of permitting use of smaller antennas for backhaul links, and lowering its minimum capacity requirements for links in rural areas where broadband traffic may be lighter. In a separate docket, the FCC is slated to consider whether spectrum in the TV white space can and should be available for licensed wireless backhaul.

Also on tap are several possible near-term rule changes to increase the amount and cost-effectiveness of spectrum available for backhaul below the 13 GHz band. First, the Commission has proposed to permit fixed wireless licensees to share 750 MHz of spectrum in the 6875-7125 MHz and 12700-13200 MHz bands with broadcast stations and cable systems that already utilize microwave links on those frequencies. With certain exceptions, backhaul providers would be required to comply with existing FCC frequency coordination and technical rules (power limits, capacity and loading requirements, etc.) that apply to these frequency bands.

As something of a quid pro quo for the broadcasters, the FCC proposes to eliminate its “final link” rule, which prohibits broadcasters from using certain spectrum as the final radio frequency (RF) link in the chain of distribution of program material to broadcast stations.

In addition, the FCC proposes to give fixed wireless licensees more flexibility to temporarily operate below the FCC’s capacity requirements. Presently, the FCC requires licensees in certain Part 101 bands to operate with a minimum payload capacity at all times (the required capacity is expressed in terms of megabits per second, and varies according to channel bandwidth).

Various vendors and service providers have argued that the rule is too draconian. Fixed microwave links (especially those over longer distances) may suffer from atmospheric fading and increased bit errors. One way to combat fading is to reduce the link’s data rate for a short period of time. This, in turn, requires a temporary change in the type of modulation, a process known as “adaptive modulation” or “ACM.” The FCC is considering whether to permit use of ACM where the link operator otherwise maintains the required minimum data rate both during normal operation and on average.

Finally, the FCC is weighing the merits of a proposal that, in theory, would permit greater spatial reuse of backhaul spectrum via use of side lobe transmissions (also called “auxiliary links”). Under Part 101 of its rules, and except in the case of geographically licensed services, the FCC requires each microwave link to be separately licensed and frequency-coordinated. In 2007, the FCC was asked to declare that a Part 101 fixed wireless licensee may simultaneously license and coordinate its main lobe transmission (or “primary link”) and side lobe transmissions so long as all transmissions collectively comply with the FCC’s technical requirements.

The idea here was to permit the licensee to deploy multiple links over the same spectrum in areas more proximate to its transmitter (as opposed to just a single directional link pointed at one distant receive location), without having to license or coordinate each link separately.  After receiving substantial opposition, the FCC tweaked the proposal a bit. Under the FCC’s modified approach, each “auxiliary” link would be coordinated separately, and the licensee of the primary link would file applications to add the auxiliary links to its license. Auxiliary links would have no interference protection except against subsequent auxiliary links deployed by other licensees. Also, auxiliary links would not be subject to antenna standards or the loading or path length requirements that apply to primary links.

It is expected that the FCC will make progress on some or all of these items, perhaps as soon as the first half of 2011. In the interim, those interested in wireless backhaul opportunities should review the FCC’s Part 101 rules to evaluate which spectrum bands might provide the most cost-effective solution.

Pump Is Primed for the Broadband Mobile Internet

Nomadic user experiences with WiFi sets the stage for mobile broadband access, but significant CAPEX will be required


The Nomadic Virtual Lifestyle

We have read quite a lot lately about nomadic workers and virtual offices.  Armed with notebook PCs and seeking WiFi hot spots, many employees are leaving their cubicles and using coffee shops, pool decks, and friends’ homes as their new “anywhere” offices. 

An article in today’s Washington Post truly captures this trend – Digital nomads ditch cubicles for diners and pool decks.   Marilyn Moysey, an employee of Ezenia who sells virtual collaboration software, often works at Panera Bread near her home in Alexandria, Va., even though she has an office in the "boondocks." Asked where her co-workers were, Ms. Moysey said, "I don’t know, because it doesn’t matter anymore."  Clearly, nomadic Internet access is becoming a way of life for many people – not only for business use, but for entertainment and education as well. 

The key takeaway from this phenomenon is that more and more people are using WiFi and (when affordable and available) 3G data cards to access the Internet.  AT&T and Verizon have accepted this fact – both are now offering free WiFi hotspots to premium wireline Internet customers along with 3G data cards for laptops (HSPDA and EVDO respectively).   

As a result, mobile broadband is expected to grow much faster than wireline broadband (even with FTTP/ FTTH solutions such as Verizon’s FiOS).

projeected mobile broadband growth

Projected Broadband Growth – courtesy of an AT&T presentation

A recent Cisco study is even more optimistic about mobile Internet traffic growth:

Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update

Here are a few of Cisco’s predictions:

  • Globally, mobile data traffic will double every year through 2013, increasing 66 times between 2008 and 2013. Mobile data traffic will grow at a CAGR of 131 percent between 2008 and 2013, reaching over 2 exabytes per month by 2013.
  • Mobile data traffic will grow from 1 petabyte per month to 1 exabyte per month in half the time it took fixed data traffic to do so. In the 7 years from 2005 to 2012, mobile data traffic will have increased a thousand-fold. The Internet grew from 1 petabyte per month to 1 exabyte per month in 14 years.
  • Almost 64 percent of the world’s mobile traffic will be video by 2013. Mobile video will grow at a CAGR of 150 percent between 2008 and 2013. Mobile video has the highest growth rate of any application category measured within the Cisco VNI Forecast at this time.

However, there are several reasons why the current mobile Internet solutions (WiFi and 3G) won’t scale to higher speeds and larger number of subscribers: 

  • WiFi hot spots are not available everywhere and often are not free, e.g. airports
  • A WiFi network collapses when many users send or receive heavy traffic loads, e.g. ppt presentations, videos, photos, etc.
  • 3G pricing is too high for the small amounts of bandwidth given to each user.
  • Low cost per bit is hard to achieve on a cellular network because its design was based on carrying TDM voice.  3G data is an overlay and a stop-gap solution for mobile carriers.
  • Cellular operators have imposed data caps on 3G data traffic. (Typical 3G data pricing is $60 per month with a data cap of 2G to 5G bytes transferred per month.  Additional data transferred is usually priced in 1G byte increments.)
  • 3G networks are already getting saturated from iPhone traffic, according to the CEO of AT&T.  Cellular network infrastructure (possibly augmented by femtocells) will need to be significantly upgraded to support the coming mobile data bandwidth explosion. 
  • Data rate needs will increase with time.  Many more people are expected to use smart phones and data cards for mobile broadband Internet access. Video will be the primary bandwidth driver, as it has been for the last several years since You Tube became popular.  Neither 3G or WiFi will be able to keep up with this increase in data (non-voice) traffic.

Many experts predict a minimum of 100% per year growth in mobile data, but that won’t be achievable without huge increases in CAPEX – both in the RAN and backhaul networks, including new network management and maintenance software.  What’s the solution for true mobile broadband Internet access-  Mobile WiMAX or LTE? 

We are not going to comment about the seemingly never-ending WiMAX vs LTE comparisons.  This is because WiMAX is available now and LTE is not and might not be for a long time (much longer than most think).

Conclusions

Our main theme here is that mobile traffic continues to grow exponentially and that growth is unsustainable.  There are a lot of variables and feedback loops that will impact the trajectory of mobile broadband traffic and subscriber growth.  Here’s one view:

Projected Traffic Growth

Projected Broadband Growth – courtesy of an AT&T presentation

Unless carriers significantly upgrade their network infrastructure they will have to resort to more data caps and blocking of high throughput traffic (e.g. AT&T currently blocks Sling box video on its 3G network).  That would lead to many dissatisfied users and the promise and potential of mobile broadband will not be realized.   

Pico-cells, more cell towers, self –organizing- networks (SONs), and other network topology tricks have been proposed to alleviate the mobile bandwidth crunch.  We don’t believe any of those will be cost effective (although we do like femto-cells as a way of getting traffic off cellular networks and onto the wireline broadband network at home or a small office).   

The bottom line:  mobile data growth will slow down much more than forecasts indicate, unless 4G- like technologies (Mobile WiMAX and LTE) are deployed in a very significant way.  If and when that happens is anyone’s guess.  So take the forecasts with a grain of salt and don’t bet the ranch on them. 

 

wireless growth image courtesy of AT&T

Viodi View – 07/01/2009

Summer is here and the living is easy; at least I think that is how the song goes. Actually, summer is here and somehow I missed spring cleaning. Loose ends seem to be everywhere; web sites that are almost updated and articles not quite finished. With all of the clutter, my mind becomes blurred with visions of the way I picture things were supposed to be and the reality of what they became.


3G-HSPA, Mobile Linux and Open Source are the Big Winners in Intel-Nokia Technology Partnership by Alan Weissberger

The Intel-Nokia announcement of their joint push to work together to create a new breed of Mobile Internet Devices based on various versions of Open Source Linux, reminds me that what you see in press releases is not always what ends up being reality. Of course, we see this all of the time in the technology industry, but Alan Weissberger and several of his informed readers point out previous Intel announcements in the mobile space that haven’t quite led up to the vision of what was suggested. Another major thing missing in this announcement is Microsoft.  Click here to read Weissberger’s sharp analysis as well as astute commentary from his readers.


Connections at ConnectionsKurt Scherf of Parks Associates summarizes the 2009 Connections Conference

The Parks Associates conferences are good events for providing a glimpse of what might be in the consumer electronics’ world. In our ongoing video coverage from last month’s Connections conference event, Kurt Scherf, Vice President of Research for Parks Associates discusses how devices in the home are becoming more web-like and the on-going challenges of connecting these broadband devices.  Click here to view the video.


Via Licensing video interviewLicensing Pools with Via Licensing

I.P. (Intellectual Property, that is) rights owned by multiple parties are often one of the reasons standards take so long to move from concept to commercial reality.  In this video interview, Jason Johnson, of Via Licensing, a subsidiary of Dolby Laboratories, explains their newly formed partnership with the IEEE.  This partnership promises the expeditious creation of licensing pools, allowing standards to be commercialized much sooner than traditional approaches.  The upshot of this effort should be even faster innovation by consumer electronic companies to bring us new gizmos and widgets.  Click here to view the video.


What’s New with Vegas 9 Provegas 9 video reviewed by Roger Bindl

Matthew Brohn, Product Manager of Sony Creative Software, discusses some of the strengths of Vegas Pro video editing, and what’s new with Vegas 9… things like small footprint, direct editing of AVCHD and XDCAM, plus new effects. The video includes screen captures of real-time editing in Vegas.  Click here to view Roger’s review of Vegas 9 Pro.


People on the Move:

Congratulations to Nsight/Cellcom and for the award they received from the Femtoforum for, “Significant progress or commercial launch by a small carrier .” They won this award for their, “deployment of the world’s first IMS-based, CDMA femtocell network for consumers and enterprises.”   Rob Riordan of Cellcom was in London last week to accept the award.

As follow up to an article I wrote last year when I announced that I was involved with a stealth start-up, this is the official announcement that the referenced company is ZillionTV.


The Korner –  Loose Ends EverywhereViodiTV Revealed - the Video

Roger and I are always so busy producing content that often times the packaging around the content is somewhat unfinished. It is sort of like the last bit of molding on the remodel that just never gets installed; most guests won’t notice it, but, to the owner, will view it as an eyesore. We have a great deal of unfinished business on the Viodi View and ViodiTV web site, which may or may not be obvious to the visitor.

Despite the packaging, it is the content that matters. Roger recently put together a video to tell the story of ViodiTV. Roger is normally ruthless at cutting out extra content, but he found it difficult in this case, as we have had the good fortune to interview some really cool people and report on some really interesting stories over the past several years. This video is really a commercial for Roger’s talents, but it also provides the story of ViodiTV and our attempts to tell the stories of the Independent Telcos and their communities.  Click here to view the video.

3G-HSPA, Mobile Linux and Open Source are the Big Winners in Intel-Nokia Technology Partnership

Intel referred to it as "this year’s most significant collaboration in our respective industries." The Intel-Nokia strategic partnership will "align and shape the next generation of mobile computing." But it was very difficult to extract any tangible take always from the press conference announcing the partnership. That’s because no specific products were identified and no time frames were given to see the results of this highly acclaimed collaboration.
 
To a large extent, the press conference was a lot of hand waving and gesturing, without providing anything of substance that we might expect from such an important strategic relationship. This is the third time in the last decade that Intel and Nokia have announced a partnership, with the previous two attempts not producing much if anything at all. So the industry might have a right to be skeptical this time. Nonetheless, it certainly sounded exciting. 
 
Anand Chandrasekher, Sr VP and GM of Intel’s Ultra Mobility Group stated, "The leaders in both computing and communications are coming together to accelerate innovation while driving exciting new revenue opportunities. Intel and Nokia are joining forces to announce a long term strategic relationship that will align and shape the next generation of mobile computing."
 
We are all aware that smart phones and intelligent hand held devices contain powerful processors and need mobile broadband capability to unleash "the tremendous power and potential to reshape our lives." With many different wireless communications options, most of us expect that "the future will bring even more ways to be connected- a future full of different possibilities." Yet that kind of talk dominated the prepared remarks of Intel and Nokia during the conference. 
 
Nokia told us more of what we already know: "The Internet continues to evolve and touch every aspect of our daily lives. Today, there are more Internet users (at 1.6B) than there are fixed phone lines (at 1.3B). There are over 64B web sites exist and more are added every day. And the Internet continues to grow in every aspect. New applications will drive the need for more powerful compute engines and faster (mobile) broadband wireless access, Consumers looking for mobile devices to do more, e.g. sensors, new apps, new materials, new device design and form factors (e.g. netbooks MIDs). We need to extend computing platforms, build on common open platforms and explore new architectures."
 
Anand told us that Intel would continue to "relentlessly focus on driving down the cost and power requirements (of new devices), while delivering continuing performance improvements." Should we have expected something different? We were also told more of the obvious, "Mobile devices require high bandwidth- mobile broadband communications and ubiquitous Internet connectivity at a reasonable cost. Users should expect a rich experience, any time, anywhere. New and exciting services across a range of devices, including new ones the companies will be defining together."
 
So what’s really new? There are three aspects of the partnership, which is not limited to just hardware and Research and Development:
 
  1. Intel and Nokia will collaborate on several open source initiatives, most importantly Mobile Linux. Nokia pointed out that "Hardware and software are decoupled these days. Mobile Linux is an important part of the new converged mobile computing world." We would expect Intel and Nokia joint software development to be centered on two open source projects:
  • Moblin, originally an Intel project but now run by the Linux Foundation.
  • Maemo, a Nokia implementation created for an Internet tablet.
  1. Intel is licensing 3G HSPA modem technology from Nokia, complementing its own WiFi and WiMAX silicon. (Note that two years ago, Intel licensed an HSPA module from Nokia for use in notebooks. This technology transfer is intended for Intel to offer HSPA silicon for mobile hand held devices).
  1. Intel and Nokia have entered into "a long term strategic partnership to develop a new class of mobile computing devices." Those future mobile computing devices will be based on Intel architecture defined chip sets and will "leverage each company’s expertise." 
And what about Mobile WiMAX? Don’t expect anything from the partnership. In response to a question on further WiMAX co-development, Anand replied, " This announcement has no effect on WiMAX one way or another. We are still committed to it. In this announcement, we are expanding our wireless portfolio to be able to implement Nokia’s 3G HSPA technology."
 
–>This implies that Intel will no longer debunk HSPA technology in favor of Mobile WiMAX and suggest that network operators leapfrog 3G and move to Mobile WiMAX instead.
 
When a questioner pointed out that Nokia now had licensed 3G-HSPA to five different companies, Intel and Nokia responded as follows.
 
Intel: "3G HSPA technology has been licensed to build into future mobile offerings. No comments on products or timing. Nokia and Intel’s vision is very similar- bringing communications and computing together. This is not an exclusive agreement."
 
Nokia: "3G HSPA is what’s on the market today (implying Mobile Wimax is NOT really on the market). Nokia is licensing its 3G-HSPA-modem technology as widely as possible within the industry.”
 
When asked if Intel had made any other inroads in the mobile phone business (which the company has tried to crack for years, but has not succeeded), Anand replied, "Intel is not public on any wins in the mobile phone arena except for LG." Then when asked what type of LG device would be forthcoming, Anand would not comment on the specific LG device that will have "Intel inside." 
 
Author’s Note:  This was surprising, considering that Intel had previously touted the LG MID (with Ericsson HSPA module) as the highlight of this year’s Barcelona MWC.

 

The stonewalling continued in response to other very reasonable questions about partnership deliverables:
 
Question from Bloomberg News: “There have been a lot of announcements about visions of the future. Intel has tried to get into the mobile communication business for a number of years, yet they have not succeeded. There’s still a degree of skepticism until we know when the first Intel powered mobile device will be out there. Can you tell us?”
 
Intel: "We will work together on strategic technology collaboration which spans three areas: Intel Architecture defined chip sets for future mobile computing devices, mobile and MIMO collaboration to deliver a very rich software environment for applications and user experience, Intel licensing of Nokia’s 3G HSPA technology   No products announcements at this time- not for today’s discussion."
 
Question: "Do you expect the Atom family (Intel’s lower power micro-processors) or x86 family to be embedded in future mobile computing devices?"
 
Intel: "No comment on brands or usage."
 
Nokia: "Premature to say how we will apply the technology at this stage."
 
How will the Mobile Computing Industry be affected as a result of this partnership?
  1. Could these mobile devices, with open source operating systems like mobile Linux, cause MSFT to lose its software domination of the computing world? Could this mean the end of Wintel dominance of the computing industry?   Mobile Linux- one of the three focus areas for Intel-Nokia partnership – is a direct competitor of MSFT’s Windows Mobile. As people increasingly use mobile computing devices to do things that would have required a PC a few years ago, MSFT is likely to lose ground.   Mobile computing devices, e.g. smart phones, MIDs, all-in-one gadgets, etc are already replacing a lot of things we do today on PCs. This trend will likely accelerate as mobile computing replaces desktop computing.  
  2. Does this announcement negatively impact Mobile WiMAX, which already has been severely criticized for the lack of mobile devices with native mode air interfaces? After all the Intel talk about WiMAX MIDs, we are still waiting for those devices to hit the market in a big way. Will "the Internet in your pocket," be based on 3G-HSPA, rather than Mobile WiMAX?
An anonymous Intel employee provided his read on the partnership:
"This announcement does not change any of Intel’s plans on WiMAX which are solid going forward. Intel has not been a major player in Smart Phones/MIDs and we want to get into that space with the Intel Atom® Processor so this one part of this strategy. Also most smart phones shipping today at least have 2G/2.5G and many also 3G. So this licensing deal help fill a gap in our wireless technology portfolio. 
It also allows us to provide WiMAX solutions to Nokia once more networks get deployed and they want their mobile devices to have WiMAX support as well. So by no means does this negatively affect our WiMAX strategy. It only opens new doors for us with a large customer like Nokia."
  1. When will the new mobile computing devices hit the market? They will need to come quickly, if they are to compete with all the new smart phones from Apple, RIM, and Palm. We hear there will also be MIDs coming soon from Samsung and various Taiwanese companies. Previous Intel – Nokia partnerships, e.g. HSPA modules for notebooks, have not been successful so the industry is skeptical that this one will succeed. We would expect to see Intel-Nokia mobile computing devices on the market in less than one year and perhaps as early as this Christmas.
References:
Intel and Nokia Announce Strategic Relationship to Shape Next Era of Mobile Computing Innovation
 
Intel makes stab in the dark with Nokia deal  

http://www.tgdaily.com/content/view/42977/118/ 

Intel- Nokia Partnership Facing Market Challenges

http://www.informationweek.com/news/hardware/handheld/showArticle.jhtml?articleID=218100945