It also means that the current raft of criticism lobbed toward Apple (and toward the irrational exuberance of Apple investors hoping that Apple will turn the mobile biz on its ear) is largely a criticism of AT&T Wireless, and the limitations of a combination of the AT&TW network and the structure of the deal they likely struck with Apple.

Apple’s not stupid. They’re betting big on GSM and GSM-based 3G wireless. The unlocked “TriPhones”, available in Europe (possibly also in Canada?) come this October, will be the items to have. If you buy an iPhone this weekend then you’re going to lose a lot of value very quickly.

If, in a few weeks, it turns out that Apple’s iPhone is going to become another delicate rosebud in the AT&T Wireless walled garden, there are a number of candidates waiting in the wings for those of us who’ve seen this as the bazaar‘s big chance to topple the cathedral. One of the more interesting ideas is the OpenMoko phone.

Yes, it’s a linux device, and no, there is no way to lock it. Furthermore, you will likely never be able to purchase it from your local wireless carrier for pennies, along with a two-year commitment. When people are looking for carriers and handset makers to break open that walled garden, what they’re really looking for is for mobile devices to be more like PCs (install whatever you want on it, use it the way you’d like to, support it yourself), and for the wireless data connection to be more like the internet (flat-rate, all-you-can-eat, don’t mess with my packets). These are market concepts which are rather foreign to the carriers whose networks we depend on.

OpenMoko, as this presentation attests, is pursuing just that model. Phone-as-PC, with linux and a solid widget/application framework under the hood. Under OpenMoko.org, developers are exchanging ideas and sharing code in a kind of SourceForge for the OpenMoko platform. Backed by Taiwan-based FIC, one of the world’s largest contract technology manufacturers, this platform looks as though it may have some legs, but it will likely hit the market in some other form and via a short list of different name brands. At the moment it’s just a reference design.

The hardware supplied to developers (and only developers at this stage) by FIC is named the Neo1973. It’s powered by a Samsung SoC S3C2410AL 266MHz ARM9. Standard memory includes 128MB SDRAM and an internal NAND flash, with apparent room for more (including via the MicroSD socket). The Quad-band GSM radio unit by Texas Instruments connected by an internal serial bus to the SoC is also pretty spiffy. But wait, there’s more:

• 480×640 Active-Matrix Touchscreen
  
• a WiFi chip is on the horizon, Bluetooth 2.0 built-in
  
• GPS receiver
  

Will this really shake up the market? FIC really seems to hope so, and is investing to make sure it goes somewhere. What’s clear is that with devices like this one, the Trolltech phone, Nokia’s first tentative step with the 770 Internet Tablet, Linux is going to have a startling disruptive effect on existing mobile platforms like Symbian and Windows Mobile. And very likely it’ll have the greatest likelihood of putting the wireless companies, especially 3G GSM carriers, in their place.

Time will tell.

-Ian.

Service Providers suck. They hire guys like me to figure out how to maximize the share-of-wallet while containing the growth and supporting their other, boneheaded, legacy products. Generally speaking, carriers are obstacles to the adoption of technology, rather than instigators of it.

What this article hints at is a mesh of ad-hoc mobile phone users each sharing their network capacity and organically frequency-hopping to avoid network trouble zones. Whereas it has proven impossible for mobile phone network dweebs to engineer reliable wireless services in North America, this could be the answer.

More and more spectrum will be made available to the general public around this world, or we will figure out better ways to use that which is already allocated. In the end, the Return On Investment that carriers expect for their 3G licenses, which already has an event horizon measured in decades, may never happen.

Regulatory bodies will be faced with bolstering floundering wireless carriers, which are clearly obstacles to growth, or enabling an ecosystem of radical technologies to flower into a jungle of new technologies, applications, and networks. The trend of technology and invention clearly favours the latter.

-Ian.

——— http://story.news.yahoo.com/news?tmpl=story&ncidR8&e=4&cidR8&u=/ap/ 20021125/ap_on_hi_te/the_new_spectrum

New Gadgets May Spark Deregulation Mon Nov 25, 7:38 AM ET Add Technology – AP to My Yahoo!

By BRIAN BERGSTEIN, AP Business Writer

NEW YORK (AP) – It almost sounds too “Star Trek” to be possible: A multipurpose cell phone that also serves as an FM radio, walkie-talkie, garage door opener and TV remote control.

And what if every time you made a call with that handset it increased the performance of other phones already in use — instead of competing for airwaves with them?

While such wireless wizardry remains a few years off, those days could be coming faster now, thanks to a rare confluence of technology breakthroughs and a rethinking of airwave regulation by the federal government.

“It is kind of an interesting point in time when it comes to wireless networks,” said Dallas Nash, co-founder of Mississippi-based SIGFX LLC, a player in the impending wireless revolution.

SIGFX figured out how to transmit cell phone calls in a thin part of the airwave spectrum already used by TV stations. By dramatically reducing the cost and increasing the range of wireless phone networks, the invention could bring reliable service to rural areas and developing countries.

Vanu Bose has big dreams, too: to create that new generation of radios — that’s really all that cell phones and garage-door openers are — that can move between various functions with an icon click. The trick is to replace much of the circuitry found in radios with flexible software.

Bose began working at it in a military-sponsored communications project at the Massachusetts Institute of Technology (news – web sites). After graduating in 1998, he started his own company, Vanu Inc., to further develop the technology.

Now Cambridge, Mass.-based Vanu Inc. has created an all-software base station — which relays calls from wireless phones on cellular networks. Vanu also has built a prototype handheld computer that can make calls on different kinds of wireless networks and work as a walkie-talkie, baby monitor, FM radio — “whatever you want,” Bose said.

The big challenge is that the device is limited to 10 to 20 hours of battery life. Bose — son of the stereo engineer who founded Bose Corp. — believes that with more development and improvements in low-power microprocessors, the device could be the size of a cell phone and have a much longer battery life.

At the same time, other researchers are making progress in developing “smart” radio receivers that can, on their own, determine instantaneously when and where a bit of spectrum is going unused and switch their communications accordingly to avoid interference. (A method of doing that is already employed in cellular networks and cordless phones).

In fact, advocates of an “open spectrum” or a “commons” policy believe new generations of radio receivers will routinely handle their own conversations and help relay others at the same time.

“If every radio is both a transmitter and a receiver, as you add more, you add capacity to the network,” said David P. Reed, a former chief scientist at Lotus Development Corp. and a leader of the “open spectrum” movement.

“My gut feeling,” Reed said, “is that in 10 or 20 years this will be as big as the Internet.”

That may seem a wide-eyed prediction, but ideas like this are not just grass-roots dreams.

Intel Corp. backs software-defined radio in hopes it will ignite an explosion of demand for wireless chips. The military’s Defense Advanced Research Projects Agency (DARPA) is working on several ways to “increase spectrum usage by dynamically sensing and adapting in frequency, time and space.”

Researchers at Bell Laboratories, part of Lucent Technologies Inc., recently announced a breakthrough in their BLAST technology, which takes advantage of interference on a network to increase the rates at which data can be sent.

Many technology experts say such breakthroughs should force a revolution in how we treat the airwaves. Since the 1920s, electromagnetic spectrum has been handled like real estate. The government licenses use of slices of spectrum and tightly regulates what can be done in those bands.

Much of the spectrum is tied up — largely by the military — and there’s only so much room for experimental and innovative new technologies in unlicensed bands, such as those occupied by cordless phones and the wireless networking system known as WiFi.

But in what looks like the beginning of a historic policy shift, the Federal Communications Commission (news – web sites) has been listening closely to the technology crowd — and to cellular carriers that spent tens of billions of dollars for spectrum licenses and want more freedom to use or trade them as they see fit.

“We have perhaps the most interesting debate in spectrum governance taking place in America since the 1930s,” said Adam Thierer, director of telecommunications studies at the Cato Institute, a libertarian think tank.

This month, a task force appointed by FCC (news – web sites) Chairman Michael Powell — and headed by the former leader of DARPA’s communications research — offered a framework for a spectrum policy overhaul expected to begin next year.

The group said the government should grant wireless carriers more flexibility with their expensive spectrum licenses so they may lease portions of the airwaves that go unused at certain times, for example.

It also endorsed the “commons” concept in some circumstances, saying new technologies should have more freedom to operate in regulated bands — as long as they don’t interfere with cellular conversations or radio broadcasts — and in unlicensed parts of the spectrum as well.

In essence, the FCC finally would be treating spectrum like real estate in the physical world, where the public has easements and parks alongside private property, and airplanes can fly overhead.

Such monumental changes probably will provoke some fights in Washington.

“Certain ossified licensees will inherently be resistant to change,” said Bryan Tramont, Powell’s senior legal adviser.

Even parties who are clamoring for change are circumspect. Wireless phone carriers, for example, praise the FCC’s efforts to modernize spectrum policy. But some say technologies such as software-defined radio might be too unproven to form the basis of policy changes.

They also worry that low-power transmissions by rival technologies on or near already-licensed frequencies could interfere with wireless phone conversations.

“It’s hard to oppose looking at spectrum policy anew,” said Doug Brandon, AT&T Wireless’ vice president of federal affairs. But, he added, eventually, “someone will say, `My ox just got gored.'”

———–

NEW YORK (AP) –Here’s another reason to check your telephone bill closely.

A subtle realignment this fall in the nation’s inscrutable tangle of phone systems could cause a surprising increase in what some consumers pay to call cell phones from traditional landlines.

The change, rooted in the different ways landline and wireless phone networks are laid out, means some calls to cell phones that were once considered local now incur higher toll charges.

For most people, the increases will be negligible. Verizon Inc., the largest regional phone company, estimates that in the 33 million households it serves, the average bill will rise pennies per month.

Even so, Verizon warned customers about the new policy in an insert with September phone bills and acknowledged that some people’s monthly charges could jump $10 or $20 unless they change their calling habits.

“This change may come as a shock to many wireline customers the first time they see it on their bills, and could cause callers to hesitate next time they reach for the phone and want to dial a wireless number,” said Travis Larson, spokesman for the Cellular Telecommunications and Internet Association, a trade organization for wireless carriers.

No serious trouble reported

The billing change doesn’t appear to have caused serious trouble where it already has been in effect, mainly in the West and Midwest.

“I’m not aware that this is an issue that we get a lot of consumer complaints on,” said Federal Communications Commission spokeswoman Meribeth McCarrick.

Why is this happening?

Area codes are divided into “rate centers” with their own number prefixes. Calls to nearby rate centers are considered local, while those to further rate centers generate intra-state or regional toll prices. Calls between more spread-out points count as long-distance.

Because of differences in how wireless networks are set up, wireless carriers don’t need to get phone numbers in every local rate center. So your cell phone could have a number from a rate center distant from your home.

For such customers, a call from home to their cell phone could incur per-minute toll charges.

To stimulate use of mobile phones, wireless carriers years ago got landline companies to treat such calls as local. Wireless carriers reimbursed landline companies for the lost toll revenue — a process known as reverse billing or wide-area calling.

Reverse billing diminishes

Reverse billing has diminished over time, largely because wireless companies acquired numbers in more rate centers as their customer base exploded.

For example, in New York state, fewer than 6 percent of wireless phone exchanges still employ reverse billing, said Michael O’Connor, a director of federal regulatory issues at Verizon.

Similarly, Sprint PCS estimates that wireless billing covers fewer than 5 percent of its customers, said Jack Weyforth, manager of carrier interconnection. AT&T Wireless spokeswoman Rochelle Cohen said “a very small percentage of our customers have these sorts of phone numbers.”

On Nov. 24, reverse billing will begin to die altogether. The FCC is changing how phone numbers are allocated to different providers and in many cases reverse-billing systems aren’t sophisticated enough to deal with that switch.

The final blow to reverse-billing should come next year as consumers get “number portability,” the right to keep their mobile numbers if they switch carriers.

Michael Altschul, general counsel for the cell-phone industry group, said local phone companies asked regulators in several states to let them kill reverse billing.

That forced wireless companies to establish their own connections in local rate centers by leasing costly equipment and space from landline companies, he said.

“We’re disappointed with the (local phone companies) that they’re discontinuing this service, because it was meeting the needs of customers,” added Diane Rainey, a spokeswoman for wireless carrier Nextel Corp. Unclear how many affected

Sam Simon, chairman of the Telecommunications Research & Action Center, a consumer rights group, said complexities of the phone system make it unclear how widespread the new charges will be.

No phone company would give details on where people could be affected.

All nine states where BellSouth Corp. is the local phone provider got rid of the old billing system by Oct. 1, spokesman Jeff Battcher said.

In the 14 states served by Qwest Communications International Inc., the change is scheduled to take effect in November, though Qwest is working on ways to extend the old system wherever possible, spokeswoman Carey Brandt said.

Many SBC Communications Inc. customers experienced the change several years ago. People in Texas, Oklahoma, Arkansas, Missouri and Kansas will begin to see it this fall, SBC spokesman Kevin Belgrade said.

Copyright 2002 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

———–

Published Oct 7, 2002 NET07

Envisioned by cellular pioneer Craig McCaw, backed by Bill Gates — and financed in part by their bottomless wealth — the idea of delivering high-speed Internet via a constellation of satellites seemed almost a sure thing.

But after 12 years of management changes, network design revisions and, most recently, telecommunications industry turmoil, the vision of an Internet-in-the-sky has come crashing down to Earth.

Teledesic’s board has halted work by a contractor building two satellites, effectively putting the ambitious idea into deep hibernation.

“Obviously by suspending work on the contract, the board of Teledesic is saying, as we see it today, it’s not feasible to do this,” spokesman Todd Wolfenbarger said.

The recently announced decision means layoffs for 25 people. Another 10 or 12 employees will stay on, evaluating “possible alternative approaches,” a company press release said.

Teledesic, started in 1990, was envisioned as a network of space-based satellites that could deliver high-speed Internet to businesses and consumers anywhere in the world. The network would relay voice and data over a portion of the radio spectrum, with Teledesic hoping to offer full service by 2005.

It was the latest brainchild of one of Seattle’s favorite sons. McCaw almost single-handedly had spun together the new industry of cellular telecommunications. His company, McCaw Cellular, impressed telecom executives, Wall Street investors and customers alike and was bought by AT&T Wireless in 1994.

And Teledesic, although it never had more than 200 employees, certainly had its star power.

The company, based in Bellevue, Wash., had McCaw for a founder, Microsoft Chairman Gates as a backer, a $100 million commitment from Boeing Co. and $200 million from Saudi Prince Alwaleed Bin Talal. With some of the richest men in the world behind it, the company wasn’t hurting for money.

But despite the promise, the vision and the war chest, Teledesic had its issues.

Management changes

The company went through several management changes, including rotations through chief executives and co-chief executives.

“It’s hard to have consistency and hard to develop your road maps and service with different types of visions that are being replaced every so often,” said Sean Badding, vice president of the Carmel Group telecommunications research firm.

The designs and scope of the project changed as well through the years.

Ultimately, even men with very deep pockets have their limits.

“Really, for the people who have already invested money in this thing, it really doesn’t make sense,” Wolfenbarger said. “The risk is not outweighing what they think the reward is.”

Teledesic still owns rights to a portion of high-frequency spectrum.

But under agreements with the Federal Communications Commission, the company would have had to meet a series of deadlines with the ultimate goal of offering service by 2004, which it could not do under the current financial climate, Wolfenbarger said.

With no big customer lined up ready to commit, the board opted to put the project on ice.

“[McCaw] was supposedly a genius who could see the future and see around corners,” said O. Casey Corr, who wrote a biography of McCaw. “This proves that he’s mortal.”

Other companies, including McLean, Va.-based StarBand and Hughes, already offer Internet connections through a satellite network, though their service is far less ambitious than what Teledesic had planned.

StarBand recently filed for bankruptcy, joining other troubled satellite ventures, including Iridium. Backed by Motorola Corp., it built a satellite network offering voice and data service but, crippled by debt, ended up cutting off service two years ago. A new venture, Iridium Satellite, took over the bankrupt company’s assets.

Too much, too soon?

Teledesic, with its grander vision of high-speed connectivity, might have been ahead of its time, Badding said. “At this time, there are more questions than answers about the viability and the economics for these types of services.”

McCaw isn’t out of the satellite business altogether, either.

He still is a major investor in London-based ICO, which similarly hopes to offer satellite-based wireless communications in the future. At one point, McCaw sought to merge the company with Teledesic and issue new stock in the combined company. But he abandoned that effort early last year due to the sagging market.

Badding said he remains hopeful that McCaw one day will revive Teledesic.

“Teledesic still has tremendous amounts of potential in the future,” he said. “In the next seven to eight years, it clearly is going to be a different story.”

———–

-Ian.

———– http://www.wirelessweek.com/ index.asp?layout=story&articleIdÊ243964&stt1 E911 Moving Along, But Not Very Quickly By Mark Rockwell September 16, 2002 Wireless Week © 2002, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

WASHINGTON—Carriers’ progress on enhanced 911 Phase II deployment is moving along, but probably not as quickly as the FCC would like.

That’s the consensus among industry analysts and E911 vendors as they await a widely anticipated report on the progress of E911 installation from the FCC. The agency’s office of engineering and technology is expected to release the report within a couple of weeks.

Actual availability of E911 Phase II equipment was a problem in the past, hampering and slowing some installations. Now equipment needed to implement Phase II is beginning to reach carriers, but it still isn’t fast enough to satisfy FCC objectives, says Rudy Baca, vice president and global strategist at the Precursor Group, a Washington D.C.-based telecommunications investment research company.

“The implementation of E911 Phase II is going slower than the FCC would like, but it’s better than was feared,” he says.

For their part, vendors say they’re encouraged. “It’s starting to take off,” says Mike Amarosa, vice president of public affairs at TruePosition, a provider of location-based technology, an integral part of Phase II.

That sentiment is shared at rival Grayson Wireless, a division of Allen Telecom that is involved in a patent dispute with TruePosition. “We’ve been installing systems for some time,” says George Marble, vice president of marketing at Grayson.

In fact, some of the systems are advancing well. Cingular Wireless is using TruePosition’s location-based systems in Harris County, Texas. The vendor says its position determining system has been installed on 70 cell sites across 22 square miles of the county near Houston. It contends the installation meets, or exceeds, the FCC’s standards.

Grayson has deployed location-based systems for Triton PCS, Hickory Tech and other smaller, regional wireless providers, as well as larger carriers such as AT&T Wireless and Verizon Wireless. “We’ve now installed about 1,000 systems on about 1,500 base stations,” Marble says.

“We’re not running into any big issues after installing systems,” he adds. “We know what to expect” in most situations.

FCC spokeswoman Meribeth McCarrick says she couldn’t pinpoint the exact date of the E911 progress report’s release, saying it would happen sometime this fall. The report will include recommendations on how to improve installation and implementation of such systems.

———–

Reuters Business Report VoiceStream Proposes Cingular Merger -WSJ

NEW YORK (Reuters) – Wireless phone provider VoiceStream has proposed a merger with rival Cingular Wireless, in a bid to compete with market leader Verizon Wireless, the Wall Street Journal reported on Tuesday. ADVERTISEMENT

While the two companies have yet to agree on terms, the Journal cited people close to the situation as saying VoiceStream has approached Cingular about merging the two companies in a deal that would leave Cingular as the controlling shareholder.

The proposal, just weeks after VoiceStream sought a similar partnership with AT&T Wireless Services Inc. (NYSE:AWE – News), comes amid signs of government support for consolidation in the $67 billion cellular-phone industry, the paper said.

The Journal said the talks are at an early stage and could break down before any deal.

And any transaction between Cingular and VoiceStream could face regulatory hurdles as well as opposition from either of Cingular’s owners, SBC Communications Inc.(NYSE:SBC – News) and BellSouth Corp (NYSE:BLS – News).

VoiceStream, which is owned by Deutsche Telekom AG (XETRA:DTEGn.DE – News), also continues to hold on-again, off-again discussions with AT&T Wireless, although the two companies failed to agree on terms earlier this summer.

VoiceStream and Cingular declined to comment to the Journal. The companies could not be reached by Reuters.

———–

Then BT went out and splurged on 3G licenses and all hell broke loose. BT began to hemorrhage money and began to throw everything overboard that looked like it was too heavy. Last year both AT&T and BT were convinced enough that Concert was a failure to announce the dissolution of that enterprise, which left BT in a quandary. It no longer had any strategic reason to own a Wireless Service Provider and a CLEC in Canada (as if it did in the first place…).

Problem is, to whom do they sell these interests? AT&T Canada is pressuring the CRTC to relax Canada’s foreign ownership rules to sweeten the deal for any south-of-the-border suitors (in this market, no one wants to buy only 10%). AT&T (US) has no money to buy out BT in any of the ownership stakes, and in fact is re-evaluating its own goals with AT&T Canada.

So there’s no more money in the well for AT&T Canada which must make it a scary place to work these days. Hot on the heels of the cash calls and rating downgrades against Group Telecom in Q1/02, AT&T follows suit — proving that in Canada, just like in the US, the ILECs own the market. Rogers Communications, the parent company that owns most of Rogers Cable, Rogers/Cantel, and AT&T Canada, is fighting its own battles and has no money to buy out its US and UK cousins, making the situation that much more dire.

There is an empty dance card for AT&T Canada in trying to sell themselves both because of Canadian foreign ownership rules and thanks to their failure to execute on even the most meager of business case objectives. Unlike their parents, they have no revenue basis upon which to rely, and of course since their parents are all struggling no tree from which to pluck more operating capital.

In short, these are nail-biting times for telecom in Canada. Partially to blame is the over-regulation of ownership by the CRTC — more significantly to blame is the lack of oversight by the CRTC into how the incumbent carriers deal with resellers like AT&T Canada. They have essentially defended their monopoly in the Canadian marketplace by simply dragging their feet, just as was attempted in the US. To a greater degree, however, the Canadian ILECs have had full support of the government in doing so.

-Ian.

—— Forwarded Message From: Shiuman Ho Date: Thu, 02 May 2002 13:02:09 -0700 To: marketing [at] navigata [dot] ca Subject: AT&T Canada cuts 1,000 jobs…

AT&T Canada lost $1.75 million a day (counting weekends) at the net income level during the first quarter. First GT, then AT&T. Who’s next? 🙁

— Shiuman Ho Director Product Marketing Navigata Communications http://www.navigata.ca T: 604-990-5939 F: 604-990-2096

http://www.globeandmail.com/servlet/RTGAMArticleHTMLTemplate/D,C/20020502/wb attcanada?hub=businessBN&tf=tgam%252Frealtime%252Ffullstory_Bus.html&cf=tgam /realtime/config-neutral&vg=BigAdVariableGenerator&slug=wbattcanada&date 0 20502&archive=RTGAM&site=Business&ad_page_name=breakingnews-business

>From globeandmail.com, Wednesday, April 17, 2002

BCE should just walk away from Teleglobe

ERIC REGULY

Could the safety of BCE’s dividend be determined by a few telecommunications executives in Bonn?

Bonn is the home of Deutsche Telekom, Europe’s biggest phone company. Deutsche Telekom, like France Telecom and other European rivals, blew its brains out making overpriced acquisitions and buying overpriced wireless licences in the past couple of years. For its sins, it is expected to sell assets at a discount, one of which may be VoiceStream Wireless of the United States, which it bought near the height of the market a year ago for a lofty $30-billion (U.S.).

VoiceStream is the subject of much speculation at the moment. Just about everyone in the telecommunications industry — executives, analysts, fund managers — expects the profitless wireless sector to consolidate; the six big players probably will shrink to four or three. One of the companies that is expected to do the consolidating is SBC Communications of Texas, which controls Cingular Wireless, the second-biggest name in the business. Recently, Edward Whiteacre, SBC’s CEO, said the “wireless industry is ripe for consolidation,” adding that mergers will “probably begin some time this year.”

VoiceStream, whose parent company is anxious to reduce debt, would seem a natural candidate for the auction block. It also uses the same technology — GSM — as Cingular, making the two natural partners.

This is where BCE might enter the international portfolio shuffle. SBC owns 20 per cent of BCE’s Bell Canada unit and has the option to “put” it back to BCE at fair market value plus 25 per cent. The option opens in July and closes at the end of December. It reopens during the same period in 2004.

SBC has not revealed whether it intends to exercise its Bell Canada put, but the body language suggests it will. It is on record saying consolidation is coming and, as one of the stronger names in the industry, the expectation is that it will prey on the weak — VoiceStream or possibly AT&T Wireless (which also uses GSM technology). To do so, it would have to raise a lot of money in a hurry. As luck would have it, it has a piggy bank north of the border.

Stagnant ownership rules are another reason why SBC might exercise its put option this year. Last autumn, there was talk that the foreign ownership cap, currently at about 47 per cent, would be relaxed or eliminated. Since then, momentum to overhaul the ownership legislation has stalled. Part of the problem, it appears, is differing agendas. The cable companies would like to see the restrictions watered down. Bell Canada, though, is sending out mixed signals. In theory, it would like easier access to foreign capital. In practice, it would fear losing its independence. If SBC comes to the conclusion that it will have no opportunity anytime soon to leverage its minority interest in Bell Canada into a control position, it might just head for the exit.

Putting aside one nagging question — what was BCE thinking in 1999 when it agreed to give Ameritech, now part of SBC, the right to cash out at a fat premium? — the issue is how much financial damage SBC’s put option could inflict on BCE. Assume “fair market value” translates into a sale price of six times Bell Canada’s EBITDA (earnings before interest, taxes, depreciation and amortization). That would value SBC’s 20-per-cent stake in Bell Canada at $5.2-billion (Canadian). Add the 25-per-cent premium, and you’re up to $6.5-billion. If you assume Bell Canada is worth seven times EBITDA, the total price rises to $8.1-billion. That’s a lot of money, even for a company the size of BCE.

BCE wouldn’t necessarily have to give SBC cash immediately. It could issue a promissory note, but that would only delay the inevitable. A promissory note is a form of debt. Add this to the impact of consolidating 100 per cent of Bell Canada’s debt and all of a sudden BCE is up to its call centres in leverage, which in turn would put its debt ratings under pressure. In the end, paying cash or issuing promissory notes are equally unappetizing.

The bigger question, though, is whether BCE wants to risk dealing with another crisis — figuring out how to pay SBC — when it’s in the middle of an ample one in the form of Teleglobe. Teleglobe is a genuine meltdown and the banks and bondholders are gearing up for a fight to recover about $2.5-billion (U.S.) in debt. So far, it appears that BCE is willing to make some sort of offer to the debtholders. Even if it’s only 20 cents on the dollar, that’s $500-million, not to mention the funding requirements to keep Teleglobe’s capital expenditure program alive.

Would BCE be able to afford to satisfy the Teleglobe debtholders, fund Teleglobe, pay off SBC and still pay its 5-per-cent dividend?

Unlikely. Something would have to give. BCE should assume that SBC will exercise its put option this year and make plans accordingly. Eliminating one expense — Teleglobe — by walking away from it seems the sensible solution.

ereguly [at] globeandmail [dot] ca

Until six months ago, Onstar was quietly building up a mobile services powerhouse and is now beginning to throw their weight around.

Their 800,000 subscribers statistic is probably a little misleading. Since luxury cars come with 1 year of Onstar bundled into the price, those “subscribers” may not even be using the service at all. The telling factor will be what their churn is like at the end of the one year cycle.

-Ian.

—— http://dailynews.yahoo.com/htx/cn/20010808/tc/at_amp_t_wireless_to_ride_with _daimlerchrysler_1.html

Wednesday August 08 12:00 PM EDT

AT&T Wireless to ride with DaimlerChrysler By Sandeep Junnarkar CNET News.com

Automaker DaimlerChrysler announced Wednesday that it has selected AT&T Wireless to provide voice and data services in its Chrysler vehicles in the United States.

Telematics–the use of wireless and satellite communications devices in cars–is a service that automakers are increasingly offering to consumers. It can include the ability to receive roadside emergency assistance, hands-free cellular telephone calls and help with road directions–and even trade stocks.

The advanced telecommunications services offer another source of revenue to carmakers beyond the initial sale, financing fees and maintenance charges.

Financial terms of the partnership were not disclosed.

Although DaimlerChrysler offers telematics in its Mercedes-Benz line, it is well behind the curve on its U.S. line of cars. General Motors is on cruise control with about 800,000 people subscribing to OnStar–a system found in roughly one out of every four GM vehicles. Other automakers, such as Toyota’s Lexus and Honda’s Acura, have signed deals with OnStar, which debuted about three years ago as an option on Cadillac luxury sedans.

Last year, GM’s OnStar unit struck an alliance with Motorola to develop and manufacture wireless devices for cars.

DaimlerChrysler said Wednesday’s alliance reflects the company’s strategy to align itself with specialized partners, rather than only attempting internal technology development.

Chrysler vehicles equipped with telematics may hit the road as soon as the end of the year, the carmaker said.