EK Telecom Analysis Newsletter

Author of EKTAN Accepted into GLG Leader Program

Yes, it's self serving and I've been away and busy for the past couple months, but I wanted to share that last week I was invited into the GLG Leader Program, based on my work with Gerson Lehrman Group Clients. Only Council Members who achieve a CouncilRank™ in the top 5% of the GLG global network are eligible to join this elite program.  I'll try to have the GLG widget on the side of the blog updated soon. 

There's a lot happening in telecom these days, especially with Sprint Nextel.  I'll try to get some thoughts up there in the coming week.  It looks to me like it might be possible for some imminent news forthcoming regarding the iDEN network. 

THOUGHTS AND COMMENTS, 6/4/08

The last newsletter was published on May 13, 2008.  This issue contains three articles, two of which have been reprinted at seekingalpha.com.  My author biography and an index of articles is at:  http://seekingalpha.com/author/ed-ketchoyian.  These articles are practically identical to the articles here at the EKTAN, but at Seeking Alpha, as usual, there are interesting comments, and in one case, a correction to a mistake in one of my articles.  More on that below.  

There are a few things happening here at the EKTAN:  First, I've made mistakes in two recent articles.  Corrections have been issued, but the mistakes were embarrassing nevertheless.  Earning a positive reputation stems from accuracy as much as providing insight.  On that score, I've fallen short recently.  I do have a growing appreciation for those who do this for a living, i.e., real journalists and analysts, including the folks over at RCRNews, rather than hacks like myself.  Second, I've been notified that the RSS feed on the EKTAN blog is broken.  I'm researching the issue and have opened a trouble ticket with Typepad to resolve the problem.  Third, the EKTAN will be going on partial hiatus for about the next two months, due to a new venture I'm starting (unrelated to the wireless space) and a special assignment that I anticipate may soak up any other remaining time starting some time in July.  For those for whom I have consulted and / or who may wish to consult in the future, I will still make myself available and will respond in a timely manner, but my availability for the rest of June will outside of regular business hours.  The largest impact of the hiatus will be that my contributions to the EKTAN and the other sites where I feed my analysis will be reduced.

Please check sonicblues.typepad.com every now and then or subscribe to the RSS feed (hopefully to be repaired soon) to get freshest material. 

THOUGHTS AND COMMENTS, 5/13/08

The last newsletter was published on March 28, 2008.  This issue contains three articles, two of which have been reprinted at seekingalpha.com.  My author biography and an index of articles is at:  http://seekingalpha.com/author/ed-ketchoyian. These are practically identical to the articles here at the EKTAN, but at Seeking Alpha, as usual, there are interesting comments.  It's curiously satisfying to be called an idiot for stuff that you write. It's also interesting when people add color to what you've written or additional facets that validate your points. 

There is a third article also in this issue written by the first guest analyst to the EKTAN, Mr. Martyn Roetter, Ph.D.  I met Martyn through his writing on the Gerson Lehrman Group web site and have become a big fan of his writing and analysis on the wireless industry and technology issues in general.  Martyn approaches issues from a detailed and many times historical perspective, which I appreciate.  He has staked out what I would characterize as a reasoned, but skeptical position regarding WiMAX.  With Martyn's permission, I am republishing a recent article that he wrote on the private GLG web site.  A brief bio for Martyn is at the end of the article.

Sprint Nextel of course had its 1Q earnings call and annual shareholder meeting this week.  Some striking stats for me were the following: ARPU of $56; iDEN ARPU less than $56; CDMA ARPU greater than $56.  Back in the day, iDEN ARPU was the leader of the industry, but those days are obviously long gone.  CDMA ARPU popped up by $14 data ARPU.  If my math is correct, total iDEN subs, post-paid, pre-paid (Boost), and Power Source is about 17.3M.  That's a lot higher than I thought it would be.  Without Power Source, iDEN subs are at 15.7M.  I think predictions of iDEN subs going to below 10M are still a little ways out into the future.  Senior team largely in place.  For some reason, it was important to mention that Sprint has $4.8B in cash and marketable securities. 

Subjects still on the plate for future articles are, besides the popular Sprint Nextel Watch series: LTE deployment issues, 700 MHz post-auction analysis - part 2, Motorola, and a suggested topic called Near Field Communications.

Please check sonicblues.typepad.com every now and then or subscribe to the RSS feed to get freshest material. 

THOUGHTS AND COMMENTS, 4/28/08

The last newsletter was published on March 28, 2008.  This issue contains four articles, one of which has been reprinted at seekingalpha.com.  My author biography and an index of articles is at:  http://seekingalpha.com/author/ed-ketchoyian. These are practically identical to the articles here at the EKTAN, but at Seeking Alpha, there have been some very interesting comments.   In the last month, my article on Dan Hesse was included in Wikinvest. 

Although I didn't go to CTIA, I've spoken to a number of colleagues who did.  The impression I get from my limited and biased sample is that the show this year was high on professional networking opportunities, but that the wireless industry is lacking a focus on the next big thing.  Notwithstanding the buzz on the ongoing WiMAX vs. LTE religious war, if you are an old school wireless pro from years past, you'd be looking for major announcements that involved spectrum, major infrastructure equipment deals that resulted in commitments of billions of dollars for new or upgraded technology, a blockbuster partnership deal deal, or maybe even an iPhone-type device announcement (iPhone derivatives, such as an iPhone "killer" don't count).  None of which happened, leaving some of the colleagues questioning their own future in the industry. 

Sprint Nextel continues to look for partners to share the cost of the WiMAX rollout, which will undoubtedly cost several billion dollars, but still has no takers.  Given the credit markets being what they are and, for intents and purposes, a recession in place, major deals that might have been possible six months ago, seem like longer shots now.  The prospect of Sprint spinning off WiMAX completely to Clearwire or iDEN or being taken over outright, given the intrinsic value of Sprint's spectrum holdings alone, may not happen now in the short term, due to macroeconomic conditions.  This situation may end up being a blessing in disguise for CEO Dan Hesse and any Sprint Nextel partisans who wish for the company to remain independent; new management gets some breathing room to turn around the company.  Short of transplanting headquarters from Kansas to a location where leadership actually has to care about employee satisfaction because there is a market alternative for good talent (rather than knowing that the best alternative is working for H&R Block, Hallmark Cards, Applebees, McDonald's or back to the farm, which has fostered a culture based on fear for one's job security and having the right political connections over self-initiative), or a wholesale change of entrenched management, it's hard to envision a near term solution to the Sprint malaise with the current lineup.  I continue to be a fan of Dan Hesse and believe he is capable, but turning around Sprint is more than a one or two person job.  If Dan Hesse is successful in turning around Sprint Nextel, then he deserves to be enshrined with Lou Gerstner and Lee Iacocca in the annals of against-the-odds business turnarounds. 

As for the rest of the industry, the big impacts for the future should be, if I'm a vendor, equipment awards from winners of 700 MHz spectrum.  However, since the rollout requirements the 700 MHz spectrum are so liberal, i.e., stretched out over several years starting next year when the television broadcasters cease using the spectrum, any major equipment awards and deployments are still well over a year out and will be stretched for three to four years after that.  Compared to motivated initial deployments of other networks and technologies in wireless industry past that took between eighteen months to three years from the time of spectrum being awarded, I'd be concerned to be a wireless equipment vendor to U.S. carriers from a revenue perspective for the next few years.

So, where's the money?  Will there ever again be a need for the same level of wireless technical field installation nomads, living on the road for almost a year at a time, doing construction work to build greenfield wireless networks when establishing coverage in newly won spectrum was like staking settling land on a new frontier, or will these people be recorded in history in a documentary style that recalls the men who built landmarks like the Golden Gate Bridge, i.e., who existed in a bygone era in the day when making $5 a day was considered good pay?  Being in the field building wireless networks wasn't glamorous work and I wasn't one of them, but I know a lot of people who nevertheless reminisce fondly on those times. 

There's a lot of buzz out there on mobile social networking, location services, mobile video, next generation bandwidth, quadruple plays, ATC, mobile search, mobile advertising, open networks / Android, wireless internet, etc.  These options are so far, for the most part, unrealized promises or "futures".   Whatever the "it" ends up being, I believe it will be something unique to wireless, rather than an adaptation or migration of an existing service or capability from another medium.  "It" will also be something that has unique utility to consumers that will primarily be useful to them when in a mobile state and has limited value if it is substituted by a fixed version.  "It" will also be something that marketers will be anticipate, but that which consumers will decide where the value resides.  My vote for "it" according to this criteria is for navigation and location services.

My stated goal is to publish one article a week.  It turns out that I'm achieving that goal, but on an asymmetric basis, i.e., a burst of four or so articles every three or four weeks.  I'll work on my level loading going forward.  I also intend on republishing some guest articles from analysts I believe product unique, quality and non-widely available analysis.   I'm continuing to mull on the following topics for future articles, besides the popular Sprint Nextel Watch series: LTE deployment issues, 700 MHz post-auction analysis, Motorola, and a suggested topic called Near Field Communications. 

You may have to check the sonicblues.typepad.com every now and then or subscribe to the RSS feed to get fresher material. 

THOUGHTS AND COMMENTS, 3/28/08

The last newsletter was published on March 15, 2008.  This issue contains two fresh articles and feedback information.  In the past two weeks, I've submitted for articles from the EKTAN to Seeking Alpha at seekingalpha.com.  My author biography and an index of articles is at:  http://seekingalpha.com/author/ed-ketchoyian. These are practically identical to the articles here at the EKTAN, but at Seeking Alpha, there have been some very interesting comments.  One article garnered 27 including one response from myself.

Unlike Jerry Springer's system of providing profound Final Thoughts at the end of the show after there's been torn hair from who knows where and whatever else dispersed through the studio, I'm providing these thoughts at the beginning. 

I have been asked if I'm going to CTIA this year.  Unfortunately, no. I'll be monitoring from afar.  I have been to many CTIA and PCIA shows over the years, including the PCIA show in 1998 in Orlando that was cut short by an impending hurricane.  In my opinion, that was the beginning of the end of the PCIA show.  There was already fatigue setting in with having two major trade shows a year.  CTIA and PCIA were in heavy competition.  The vendors were whining that it was very expensive to support two shows per year.  The hurricane provided a excuse to many at the time to put their resources in the safer and larger CTIA show in the Spring. 

I believe the show this year will be the beginning of some major industry announcements that will happen through the rest of 2008.  With the quiet period ending next week from the 700 MHz auction, coincidentally coinciding with the CTIA show, we could have some interesting announcements.  By the way, am I imagining things or did Verizon really win the A, B and C blocks for Chicago?  There's a lot of good analysis out there on the auction results, especially from Wireless Strategy (no, they don't pay me to plug them, but I know them personally and I know the quality of work they produce).  I'll be working on providing unique observations next week. 

Some of the ideas and topics I'm mulling on for future articles, not including the popular Sprint Nextel Watch series, include the following:  LTE deployment issues, 700 MHz post-auction analysis, Motorola, and a suggested topic called Near Field Communications. 

A lot of the feedback that you have given me has been positive and encouraging and I very much appreciate it.  As I have commented to a few people in emails, I really love writing and analyzing.  I mentioned in the previous email version of the EKTAN that I was going to publish one article a week.  It seems like I'm working on that timetable, but the email version will be going out every two weeks.  You may have to check the sonicblues.typepad.com every now and then or subscribe to the RSS feed to get fresher material. 

If you would like to subscribe to the email version of the EKTAN, which contains the same content as on this web site, please email me.

THOUGHTS AND COMMENTS, 2/22/08

This has been a busy week for Sprint Nextel and for the industry in general with the (now old news) announcements of the renewed hookup between Sprint Nextel, Clearwire and now Intel.  I wanted to comment on this development, but since it's been over a week since the announcement, all I can say is that I think a potential alliance between these players does nothing to abate the end-game scenario of a Xohm spin-off.  I'm still mulling on the "who would buy iDEN question," and have some thoughts below on what Sprint Nextel should do in response to the price war, or at least, unlimited pricing plan war, initiated by Verizon. 

Some of you also might be interested, if you didn't know already, how the Google Maps function works on the iPhone in providing location information.  The genesis of my curiosity happened a few weeks ago, when I was in New York City to network on behalf of HailCab.  The local inhouse "techie" at the law firm that was hosting us whipped out his iPhone Google map and asked us if we had a demo that would work on his iPhone since he already could track himself moving and was really jazzed up by the functionality.  We didn't have a demo (working on it), but it had perplexed us since that day as to how iPhone was able to get what looked like an offdeck location app to work. 

I happened to be in an Apple store in Bethesda this week and took the opportunity to ask the rep and his answer was that the iPhone "sniffs" RF signals from Wi-Fi hotspots. The iPhone doesn't actually register on these hotspots. Rather, it detects the various signal strengths of all the WiFi networks that it detects and essentially self-locates itself on the Google map. This is how it works without having access to GPS information. Of course, there is a company that has patented this method / technology. The rep didn't remember who it was, but said they had been mentioned at MacWorld.  I ended up taking the lazy approach to verifying this claim and posted the question on Linked-In and got a lot of good private and public answers.  Since I didn't announce to anyone that I might be posting their responses on the EKTAN or the EKTAN blog, nor did I seek permission to do so, I don't feel comfortable even posting anonymous quotes.  I will, however, paraphrase some of the good answers. Essentially, the Apple rep's explanation was correct, using technology from Skyhookwireless. After triangulation is done (or X-angulation, depending on the number of hotspots sniffed), the app maps your location against an existing database of known locations of access points.   Here is a blog entry that explains it more.