Posts Tagged ‘Sprint’

Wireless: The Outlook Gets Murkier for Clearwire

February 9, 2009

BusinessWeek just published my story on what many folks consider broadband’s best hope for injecting more competition in the market for high-speed Internet access.

It’s about Clearwire, the WiMax startup founded by wireless pioneer Craig McCaw. The company has a very bold (and expensive) vision for rolling out fast Internet access through the ether but it’s getting caught up in the credit crunch right now.

Here’s the top of the story:

Last May some of the biggest names in the technology and media business, including Intel (INTC), Google (GOOG), Sprint (S), and Comcast (CMCSA), teamed up to invest $3.2 billion in the startup Clearwire (CLWR). The Kirkland (Wash.) company founded by entrepreneur Craig McCaw had high hopes of shaking up the wireless industry. The idea was that Clearwire would offer an alternative to the two big incumbent U.S. operators, AT&T (T) and Verizon Wireless, by rolling out a technology called WiMAX that could provide superfast Internet service for cell phones, laptops, and other devices.

Today, Clearwire is just trying to keep its head above water. Although sales are on track to rise 50% this year, to $230 million, analysts expect the company will lose $715 million. Billions more in losses are projected for the coming years as Clearwire invests heavily to roll out its network. Clearwire needs to raise billions in additional capital in the midst of the worst economic downturn in decades or it will be forced to slow the pace of its rollout and give AT&T and Verizon a chance to gain ground in the race to build next-generation wireless networks.

Clearwire’s stock has plummeted 90% since its peak in mid-2007. The sharp fall has prompted backers to announce write-offs on their investments, including a $950 million charge by Intel, a $355 million charge by Google, and a $350 million charge by Time Warner Cable (TWC). Comcast is expected to follow suit.

Click here to read the rest of the story.

Why Randall Stross and the New York Times Don’t Get Wireless

December 31, 2008

Here’s the beginning of a post I just published on BusinessWeek’s Tech Beat blog:

This Sunday, New York Times business columnist Randall Stross devoted his column to dissing the U.S wireless industry for doubling the cost of text messages to consumers to 20 cents from 10 cents. But what really got Stross lathered was his claim that the cost of transmitting text messages is far less than the public supposedly assumes.

Stross backed up his argument by quoting Srinivasan Keshav, a computer science professor at the University of Waterloo, who said that “it doesn’t cost the carrier much more to transmit a hundred million messages than a million.” Stross also noted that 20 class action lawsuits have been filed around the the country against AT&T and other carriers, alleging price-fixing for text messaging services.

Stross is not only flat out wrong, but his argument is overly simplistic and suggests that he doesn’t really understand the economics or business model of the wireless industry.

Let me explain.

First off, it costs more to send more text messages–contrary to what Stross and Keshav claim. Verizon Wireless, AT&T and Sprint declined to speak with Stross. But James Gerace, a spokesman for Verizon Wireless, told me in an email that the company “had to invest an additional $200 million in the network just to accommodate the ’08 volume in text messaging.” That is not chump change.

“This op-ed is bunk,” wrote Gerace, adding that he sees the Times story as an example of “trial lawyers placing it looking for a new revenue stream.”

Second, Stross totally discounts the price of wireless spectrum, which is really, really expensive. In the most recent spectrum auction, wireless carriers and other technology companies paid an astounding $19.6 billion to acquire the nation’s most desirable remaining airwaves. Yes, Stross mentions that the “carriers pay dearly for the rights to use” spectrum. But in the next breadth he writes off the cost by noting that text messages are “free riders” that piggyback on the control channel of the wireless network.

This gets me to my last point. Stross doesn’t seem to grasp the current economics of the wireless biz. Here’s the deal. The voice side of the business is becoming increasingly commoditized. So the future success of the industry hinges on the ability of carriers to grow the revenue they get from data services such as text messaging, wireless web surfing and wireless applications.

That’s the fundamental reason why carriers have doubled the price of text messages from 10 cents to 20 cents over the last few years. I have no idea if the carriers engaged in price fixing. If they did, they should be punished. But there is a legitimate economic reason why they have raised prices for individual text messages.

Click here to read the rest of the post.

Telecom Monday: Telcos Face the Credit Crunch and Moto’s New Android Phone

October 20, 2008

Today, BusinessWeek Online published two must-read stories. One, by my colleague Olga Kharif, breaking the news that troubled handset maker Motorola is hard at work developing its own Android-based device.

Writes Olga:
“Motorola has been showing spec sheets and images of the phone to carriers around the world in the past two months and is likely to introduce the handset in the U.S. sometime in the second quarter of 2009, according to people familiar with Motorola’s plans.”

The second story, written by me, explains why the telecom industry won’t be able to escape the wrath of the financial crisis.

Writes me:
“Although most analysts believe the damage won’t be nearly as bad as the last telecom bust—when hundreds of firms went bankrupt, including giant Worldcom—there is growing evidence that the financial crisis is going to depress the debt-heavy telecom industry. To start with, rising capital costs are likely to take a bite out of earnings. In addition, the softening economy will probably crimp demand for such telecom services as land lines, cell phones, and Internet connections.”

Update: How Google AdWords Has Helped Market Creative Capital

March 3, 2008

A little more than a week ago, I created an AdWords campaign for my book on Google. Before this, I was a keyword virgin.

I’m happy to report that the four ads I created have generated 21 clicks at a cost-per-click of $1.24. Not bad, since I capped my budget at $100 per month. The AdWords software is very easy to use and Google’s reporting tools give you all sort of detailed information about your campaign. Here’s performance data for the last seven days from my “Account Snapshot.”

Last 7 days
Clicks 17
Impressions 54,094
CTR 0.03%
Avg. CPM $0.42
Avg. CPC $1.34
Total Cost $22.70

For most part, I feel like I am getting a good value for $24 I spent so far. Beyond the clicks that directed users straight to my Amazon.com page, Google is also generating massive impressions for my book–and all of those eyeballs come for free. So far, my campaign has generated more than 71,701 impressions. Only 2,000+ of the impressions have come from Google’s search engine; the rest have come from Google’s content network of partner sites. The tools also let me know which ads are performing better than others. This one has the highest click-through rate of .03%:

Save 34% on Hot New Book
Buy the New Book Creative Capital
By BusinessWeek’s Spencer Ante
creativecapital.wordpress.com

Here’s the one thing I don’t like about it: I HAVE NO IDEA IF THE CLICKS ARE GENERATING SALES OF MY BOOK. The reason? Google offers so-called conversion tracking that lets gauge this data, but in order for the feature to work you have to install some code on the landing page where your product is offered for sale. Problem is, Amazon.com does not, as far as I know, allow users to install code on their Web pages. I emailed Amazon about this over the weekend; maybe there is a fix. I hope so.

In any event, this points to the bigger problem facing Google. The clickthrough–Google’s nirvana that generates almost all of its revenue–is falling out of a favor a bit. What advertisers and marketers really want is conversion. And Google and other search/online marketers will probably have to adjust their business models to shift more towards getting paid for conversion, rather than mere clicks. Read this BusinessWeek story by Catherine Holahan and I to learn more about the trouble with clicks.

Ding Ding Ding: Tech Fight Night

March 2, 2008

BusinessWeek puts the gloves on for tech fight night. In this week’s Digital Dish, BW reporters Spencer Ante, Heather Green, Arik Hesseldahl, and Catherine Holahan debate whether Microsoft, Google and Sprint deserve the whuppings they got this week. Plus, from the department of weird leading indicators, the Dish talks about the ginormous tab for Steve Jobs’ private corporate jet.

HOW TO BUY CREATIVE CAPITAL: To pre-order Creative Capital and get a 34% discount, click here and go to Amazon.com.


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