Congress can debate telecom immunity but not jurors

As I write this, members of the U.S. Senate are debating whether to forward legislation that would grant some measure of immunity to telecom companies such as AT&T and Verizon for allowing the federal government to eavesdrop on American citizens without warrants.

Much of the rationale offered by telecom immunity supporters is that telecom carriers rightly saw the need, in the wake of the Sept. 11 attacks, to prioritize national security and rapid action over bureaucracy or even civil liberties. But recent reports suggest this activity started even before Sept. 11, 2001.

Some say the carriers shouldn’t be punished for this activity because they were assured by the administration that the program was legal. AT&T and Verizon “are not experts on Article II of the Constitution,” Senator Diane Feinstein said on the Senate floor today, arguing for telecom immunity.

I have a short answer on this issue. I will happily listen to supporters of telecom immunity enumerate all the various arguments justifying and mitigating carriers’ actions in this case. And when they’re done, I’ll simply say this: “If your arguments are so reasonable, why don’t you trust a jury to see them?”

Let’s try it on Helio

Helio LogoLet’s face it. If we want to get a sneak peak at what our mobile phones and services can do a year or two in the future, we just have to look at the Helio content deck today. Since Helio launched as an MVNO over the Sprint EV-DO network, some of the biggest names of the Internet and gaming have looked to the company as a testbed for their future mobile apps. This week YouTube added its name to the list.

MySpace signed on first with a native app for Helio’s handset line that allowed the obsessed social networking masses to access their profiles. That app appeared eight months later on Cingular/AT&T’s content deck (albeit with a $3 a month a charge). Last November, Helio was the first operator to begin embedding Google Maps and integrating it with GPS on its handsets. A few weeks later, Google released Maps along with mobile versions of Gmail as Java downloads, but Google Maps didn’t appear again in an out-of-the-box handset until the iPhone was released this summer. The iPhone was supposed to give Helio a run for its for money, but the operator showed this week it can still outfox Apple.

YouTube made the Helio Ocean the showcase for its new revamped video sharing portal. It’s not that Apple hasn’t gotten any love from YouTube–the YouTube portal went live on the iPhone just as it did on the Ocean and several other smartphones around the world. But unlike Apple’s implementation, the Ocean allowed customers to upload videos to the site. And this week, Helio pulled off another coup: the majority of YouTube’s 10 million-plus video libraryis now available for viewing on the Ocean’s YouTube portal, as well as customization, community and tagging functions that were previously enabled only on the online YouTube site. I’d venture to say that this isn’t just a marketing shenanigan. Gizmodo was impressed with the service’s new functionality, and they have a special place in their hearts for the iPhone.

If you’re not familiar with YouTube’s current offering for the mobile Web, let me assure you it sucks. Try pointing your phone browser at m.youtube.com. If it works at all in your browser or on your media player, you’ll get a list of pre-sorted videos for your consumption. Try search for the “Flight of the Conchords” and you’ll get squat (Now search the Conchords through YouTube on the PC browser–you won’t be sorry I promise). The problem is YouTube renders all of its videos in the Flash format. Since Flash video isn’t supported on any current phone, YouTube has to transfer its content to another format, which it clearly wasn’t about to do to every video of a drooling children on its site. For the Helio platform, however, YouTube just did that. I’m not sure how they did it. The Ocean may be supporting Flash, though I doubt it–Adobe just released this fall the version of Flash Lite supporting video. Perhaps they’re just converting every YouTube video into alternate formats. If you know, I’d like to hear from you (That’s what the comment section is for…)

Nielsen DVR survey numbers no shock

Well, there’s a shock.

 A new Nielsen Media survey shows younger viewers are more likely to use digital video recorders or the Internet to catch up on shows they missed than those over 55.

I hope no one paid too much for that insight. The numbers show those under 35 are slightly more likely (37%) to watch a show on a DVR than those ages 35 to 54 (30%) but significantly more likely to catch up on the Internet (16%) than their elders (5%).

The real dropoff in technology usage comes at age 55. Those over that age are much more likely to wait for a rerun (35%) or just watch the next show (20%) than to use a DVR (18%).

None of this is surprising, but it does speak to the need for video service providers to make their technologies easier to use. I suspect older viewers would be happy to watch their shows on their own time, if they could only figure out how. There is a lot of disposable income sitting in the pockets of these older viewers, and for all the focus on the youth market, someone should be smart enough to tap that money pit.

Muni Wi-Fi nightmare

The city of Philadelphia can be generally credited with launching the muni Wi-Fi craze, and is now seeing the down side of that trend. Earlier this week, the City Council held a hearing at which the status of its ambitious municipal network was examined, given the fact that the service provider, EarthLink, has stated it will no longer invest in municipal wireless networks.

EarthLink’s grand plans have run afoul of business realities, and nowhere is that more evident than in Philadelphia. The company said it has spent $20 million to build out Philadelphia’s network, which is still substantial but not complete, more than the $12 million to $15 million expected. The original contract between EarthLink and the city and its Wireless Philadelphia not-for-profit organization was hopelessly one-sided. As noted by the MuniWireless Web site, EarthLink is expected to pay $2 million to the city, $450,000 in inspection fees and rental fees of $2 per month for each streetlight used in mounting antennas, along with 3700 free accounts for city workers to access the network. The contract also calls for 23 free zones and 25,000 reduced price accounts for low-income families that qualify in WP’s digital inclusion program.

All of that, on top of the higher-than-expected cost of actually installing Wi-Fi citywide leaves EarthLink in no position to do anything but bleed red ink. Subscribership is not likely to cover those costs any time soon, if ever. The company did not attend the hearing, sending an unsigned statement claiming confidentiality, but it’s obvious that EarthLink is between a rock and a hard place here.

In a report also issued this week, the New America Foundation blames Wireless Philadelphia for handing its network over to a private concern. I didn’t read the whole report, but here’s a blogger who did and takes issue with it, for reasons I understand.

Rather than parsing out blame, however, it seems to be that some reasonable re-negotiation needs to take place that doesn’t leave Philadelphia’s ambitious plans for bridging the digital divide in limbo but also doesn’t bankrupt the company attempting to make those dreams a reality. The municipal Wi-Fi market has come a long way and much has been learned – the hard way – in the process. Philadelphia pioneered once, and it could do so again.

Customer service – the true killer app

I practically have RCN’s phone number memorized. When my bill was mysteriously doubled, I had to redial the cable company so many times after being hung up on that it is etched in my brain, right next to the hold music I heard for an hour each time. I even considered canceling my service, which is why I’m convinced that if a company – be it a cableco, telco, wireless carrier or Internet provider – had a solid customer service experience (not to mention allowed consumers to bypass those pesky automated menus), they would dominate the market. Customer service is paramount, arguably more so than the speed of a network, the features of a cell phone or the number of high-definition channels offered via IPTV.

At least 5,000 consumers agree with me. Forrester Research recently announced its Customer Experience Index (CxPi) for 112 firms spanning nine industries. Making up the lower echelon of the list were wireless carriers, television and Internet providers – sad news for the telecom space. In terms of usefulness, usability, and enjoyability, 5,000 consumers surveyed dubbed them failing to perform.

Perhaps even more surprising was that wireless carriers, coming in fifth, beat out TV and Internet providers. Internet providers came in third to last on the list of nine and TV service providers followed, beating out only medical insurance providers (at least they can claim that). Still, it is a dismal state of affairs when your TV brings you less joy than your phone, which in turn is also failing to live up to your expectations. I don’t think we can blame the Writer’s Guild for this one.

So, the question remains: Are consumers demanding more or is the industry delivering less? The answer may well be both. Forrester analyst Bruce Temkin, who conducted the survey, said that to some degree, the carrier and service providers tend to focus a lot on their products and the protection of their territories rather than on the needs of their customers. It can be a double-edged sword as service providers get caught up offering the latest advancements to attract customers, yet overlook the customers they already have. On the flip side, as customers hear more and more about the capabilities of IPTV, mobile handsets and the Internet, they come to expect the technologies to work more quickly, efficiently and right now.

A ray of hope from the Forrester study for telcos is that they were not included in the television space. With consumers so displeased with the eight satellite and cable companies included in the survey, a significant opportunity exists for telecom providers to differentiate themselves based on their quality of experience in this space.

And it’s not just a North American phenomenon. Increasing customer dissatisfaction is leading to higher churn in the UK as well. The solution may come from a better product or more likely from simply communicating the utility of a product, how to use it and enjoy it through stronger customer service. In terms of the overall worldwide customer experience, it might just be the one thing that service providers can’t substitute for faster speeds, cheaper prices or technological innovation.

Test driving the handset

For every customer who wants to fiddle with a phone before buying, Mobile Complete may have the answer. It launched an online handset simulator today that allows you to run your intended purchase through the motions before you shell out your cash and sign your contract–or even visit the store for that matter.

Mobile Complete is launching its beta site tryphone.com with four devices, including the iPhone, with the idea of getting its simulator embedded into retail sites, review publications and even carrier online portals all over the Web. To the right is the new Sprint LG Muziq. Try hitting a few buttons (it moves!). Admittedly it isn’t the same as tinkering with the real thing. You can’t prank call your ex-girlfriend, and not all of the functions are active, but it’s a tolerable substitute. And it certainly beats hiking down to the Sprint store and staring at powered-down phone with a cardboard mock-up of the idle screen.

For those of you unfamiliar with Mobile Complete, it runs a remote device-testing lab that allows application developers to test their products on a handset virtually, not through an online simulation, but through a sort of tele-testing engine that lets a developer interact with a live phone thousands of miles away. Controls linked to a Web portal interact directly with the phone interfaces, and the phone’s voice and data connections come from the same wireless connections as a device on the street. All the action is beamed back to the developer by wireless video feed.

The consumer test site isn’t the same service Mobile Complete is offering to developers–renting time on a specific phone in the lab ain’t cheap. But it’s an interesting approximation. Mobile Complete isn’t trying to present the phone in its marketing glory. Instead it shows the devices, warts and all. It has created a phone-version of a crawler that goes through and maps the functions of each device. It then records each interaction on digital video and renders them on the Web whenever a user hits a button. So you know just how many steps it takes it access your contacts or download a Web site. Try going to its mock-up of the iPhone and downloading one of the Web sites available in the Safari browser: There’s some waiting involved–just like the real iPhone on AT&T’s edge networks.

So is this the end of the carrier store? Will customers now eschew the pushiness of sales people and the hassle of crowds if they can both test and buy their handsets online? Well, probably not just yet. There’s no approximating the real device in your hands, and Mobile Complete has a few kinks to work out. Not all of the phone functions on the four devices on TryPhone.com appear to be mapped out just yet. But it is a beta, after all.

Mobile Complete CEO Faraz Syed said his company plans to quickly populate the site with all makes and models of phones and pair them off with the connections of their appropriate carriers. Syed’s goal, however, isn’t to create an independent review site or Mobile Complete’s own retail portal (though TryPhone.com will start collecting referral fees when it launches commercially). Rather he wants to license this technology to online retailers like Amazon and ultimately to the operators themselves, who could definitely use something more than a low-rez photo and list of specs to market their devices online. Syed even envisions the platform as a post-purchase tutorial application carriers and vendors can use to educate their customers on the increasingly complexity of their phones.

The Green Phone

Nokia 3110 EvolveNokia is following its offspring down the path of feel-so-good environmental conciousness. Last month Nokia Siemens Networks revealed its green base station efforts, and now Nokia is complementing it with a green phone platform. (Also check out our Podcast with NSN’s Sue Schramm.) At its annual customer and analyst hootenanny, Nokia World, the vendor took the wraps off the 3110 Evolve, a device housed in 50% recycled material with a power supply that actually drains no electricity–or at least 94% less–from the wall socket when the phone is not connected (If you didn’t know, that charger you keep so callously plugged in 24-7 is actually spewing wasted power into the ether–for shame!)

If you’re hoping to get the new phone to match your Toyota Prius and compost heap, don’t hold your breath. A tri-band phone with no cellular radio, U.S. carriers aren’t likely to pick up the 3110 anytime soon. But according to Nokia, this isn’t a theme phone designed for tree-huggers; it’s just the first release in what will be enhancements to its entire product line. The charger, for instance, eventually will be shipped with all of its phones. And as for its covers, Nokia is already working on the next step. Nokia research head Bob Iannucci said the labs are developing injection-molded plastic made from polylactic acids. Not only would they come from 100% renewable resources such as cornstarch, but they’d be 100% biodegradable. You can toss your phone right on the compost heap–well, the covers at least.

Don’t give Nokia the Nobel Peace Prize just yet. Greenpeace let the company have it last week, accusing it of only paying lip service to environmental issues. It found that Nokia hadn’t implemented the phone recycling program it had touted around the world. Though not that many people will buy their phones on Greenpeace’s recommendation, it doesn’t exactly boost the Finnish manufacturer’s green reputation. Greenpeace, however, did give the vendor credit for eliminating a lot of the harmful chemicals in its phones.

Content piracy: What’s the MPAA doing about it?

It’s clear there’s a battle brewing over whether service providers can legally filter content, whether it is to prevent piracy, protect applications such as voice and video or keep peer-to-peer traffic from swamping the network. There are multiple approaches to doing this today and more on the way.

Dan Glickman, chairman and CEO of the Motion Pictures Association of America told UBS’s 35th annual Global Media and Communications Conference that his organization is working directly with ISPs and with its own technical arm, Movie Labs, to develop and deploy technology that can detect illegal usage of copyright-protected material. Glickman singled out AT&T as one company with whom the MPAA is working, but also said other ISPs are on the list.

“My prediction is the ISP community is going to be at the forefront of this – they have everything to lose and nothing to gain by not seeing that content is being properly protected,” Glickman said.

Understandably, this has some folks’ shorts in a twist. You can read what Broadband Reports and Ars Technia said.

What most of the reports of Glickman’s speech failed to pick up on, however, were the other ways in which the MPAA is working to stop piracy of copyrighted content. One of those is education, he said – working with schools to explain to a tech-savvy generation why stealing content is a bad idea.

And another is working with its members to “find new ways to deliver content at reasonable prices,” Glickman said. That is especially important for younger viewers, he added, who are looking to get content in new forms other than at the movie theater or on traditional TV.

To the extent the MPAA and content distributors develop a good business model for achieving that latter goal, they could go a long way to address casual piracy by otherwise law-abiding citizens. And that’s something to which no one can object.

You wanted an unlocked iPhone, you got it…for $1,500

Apple’s iPhone was undoubtedly a hot commodity from the first day of its launch. The phone sold one million units in less than three months. While most consumers had to get their hands on one, it didn’t stop them from grumbling about the exclusive agreement (amongst other things). In the United States, the response from Apple was largely, “Get over it,” but this attitude hasn’t flown overseas in Germany and France where locking phones to a specific carrier is against the law.

After agreeing to comply with a preliminary injunction from competitor, Vodafone, T-Mobile announced it will charge the equivalent of $1,478 for an unlocked iPhone in Germany. (The company is, however, appealing the injunction and will withdraw the unlocked version if successful.) In France, Orange is letting unlocked versions of the handsets go for $965.32, a bargain over Germany’s price tag. The cost of having a handset independently unlocked is only about $150 and if you can wait six months, it should be free in Europe.

Hearing about Orange and T-Mobile’s exorbitant prices, I can picture Apple CEO Steve Jobs’ smirk. The message behind the price tag seems to be “you can have your precious unlocked iPhone, but it’ll cost you.” German and French law might require T-Mobile and Orange to offer unlocked iPhones, but they never said how much it had to sell for. Jobs’ “so there” move reconfirms Apple’s power and shows that when you take away the carrier subsidies, the picture isn’t so rosy anymore.

One might argue that the announced unlocked prices goes to show that despite Apple making it really hard to acquire the phone, customers still really want the unlocked phone. My question is, are they really willing to pay Apple’s inflated prices? Or, will this move have the side effect of encouraging the already active hacking community to crack the phone on their own? I think the answer will be both.

Customers who do shell out the cash for the unlocked phone run the risk of not being able to use all of the phone’s features through another company’s SIM card. According to T-Mobile, the coveted visual voicemail will be one such missing feature. The company also noted that the their EDGE network is more extensive than most of its rivals. Through T-Mobile, the locked phone ends up costing consumers $2,330 after the two-year contract expires – $590 for the phone and $1,740 in monthly fees. While this is pricey, an unlocked iPhone would still require some kind of contract through another carrier, so the price gap is going to be even more significant.

T-Mobile competitor Debitel, for one, announced that it will give customers the equivalent to an $800 rebate of sorts if they sign up their leased phone with them instead. The bonus brings the phone down to around the same price that T-Mobile is charging with a contract, however, that doesn’t factor in Debitel’s own inevitable contract requirement. It’s a trade off, but one that is not necessarily financially advisable.

I think it’s worth remembering that the European mobile handset market is very different from the U.S. market. Customers are accustomed to paying a premium for a multimedia phone in Europe and, to many, it may be more of a matter of principal – it’s their phone and they reserve the right to choose a provider. In the US, while complaints about AT&T’s EDGE network and requirement of a data plan abounded, gripes about having a two-year contract weren’t as prevalent. Consumers are used to contract constraints in the U.S.

On a Webinar hosted yesterday by iSuppli vice president of multimedia content and services David Carnevale, he noted that despite the record-breaking level of hype that the launch of the iPhone generated this year, its market share remains almost insignificant. ISuppli estimated that the iPhone would ship 4.5 million devices in 2007, just a drop in the bucket when you consider that overall handset sales will surpass 1 billon. Carnevale’s point was that despite its minuscule market share, the iPhone’s impact has and will be revolutionary for the mobile and entertainment industry. Offering an unlocked iPhone seems to be a step in the right direction, however, before I become a full-fledged believer, something’s got to be done about the price tag…and that damn EDGE network, but that’s another story.

Playing the carrier game

It looks like equipment and applications vendors aren’t the only ones interested in mobile advertising. Today Vodafone and Telefonica teamed up to buy Amobee Media Systems, a mobile ad platform provider based in San Francisco. Admittedly ad companies are a hot commodity: Nokia scooped up Enpocket in September, and AOL landed Third Screen Media in May. The remaining ad platforms out there are considered fair game, but what are two carriers doing in the hunt?

It’s both surprising and not surprising to see Vodafone and Telefonica stake off their claim to this potentially huge market: Surprising because carriers don’t usually buy infrastructure and platform companies. Not surprising because carriers just can’t be carriers anymore.

Nokia didn’t just buy Enpocket to offer an ad solution to its operator customers. It also bought Enpocket to serve up ads to its blossoming Ovi portal and its future mobile Web service platforms, just as it bought Navteq to gain access to map data for Nokia Maps and Loudeye to power its mobile music store. Infrastructure providers are suddenly service providers, and that’s not the end of it. Look at the world’s biggest ad platform, Google—an obvious partner for the carriers, right? Well, Google is becoming a carrier, bidding on spectrum even. What’s more, Google has created its own handset OS, and might even become a hardware vendor (remember the Gphone? It still hasn’t ruled that out).

When your vendors become your competitors and partners become your competitors and suddenly everyone has it in their heads that they can do the services game just as well as you, then, yeah, we’re going to see a lot more carriers buying up applications vendors and even content companies. Don’t expect this purchase to be the last.

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