SMS costs in Canada are already disproportionately high versus the unrealistically high costs for SMS across the entire wireless industry. This article suggests that SMS costs are, in the aggregate, 4x higher than getting data from the Hubble space telescope. Global SMS revenues are larger than the Hollywood movie, music and video game industries combined.

The quote from the Telus spokesperson is hilarious:

“The growth in text messages has been nothing short of phenomenal,” wrote Telus spokeswoman Anne-Julie Gratton in an e-mail to The Globe and Mail, “This volume places tremendous demands on our network and we can’t afford to provide this service for free any more.”

The same article refers to the latest statistics from the Canadian Wireless Telecommunications Association that pegs the number of text messages sent in Canada at more than 45.3 million per day. According to recent reports from IEMR the number of wireless subscribers in Canada was 20.4 million in 2007, and wireless subscribers in the UK (which has roughly double the population of Canada) for the same year numbered 71.7 million. Sweden, with a third of the population of Canada’s has better than half as many subscribers. Canada is trending remarkably behind nearly every comparable western nation.

These stats are great, in that they illustrate the problem with subscriber growth that shareholders and analysts are presently appreciating. There’s clearly something wrong with the wireless business in Canada, and it’s not something that the recent spectrum auctions are likely to quickly address.

Allow me to translate Ms. Gratton’s TelecomSpeak in a way that more accurately reflects what went down in the boardroom:

“The growth in text messages has been nothing short of phenomenal,” said Telus’ Business Development Manager, “This is an unprecedented opportunity to exact greater revenue from the customer base without spending a penny on service development!”

The Canadian wireless market has been infantilised by the greed and short-sightedness of our wireless carriers and the mismanagement of our asleep-at-the-wheel regulators. Whereas (according to Wikipedia) the average user in the Philippines sends 10-12 text messages a day, doing some quick math from the stats above reveals that the average Canadian use of text messaging is far lower at 2-3 messages per day.

Still, this 45.3 million SMS messages per month business must be creating a stress on the Telus service network, you’d think. Right?

Well, if you send 45.3 million SMS messages all at the maximum size of 140 characters, you’ll get almost 6 Gigabytes in total storage volume – or, roughly the size of the hard drive I had on my IBM Thinkpad in 1999. That’s a lot of data to store (in 1972, that is). At the end of the day, this means that the entire Canadian SMS relay network has to be able to sustain about 144Kb/s of data transfer (thanks to Gersham for helping me with the math). My Mac Mini has a 1GB/s ethernet interface and is ultimately connected to a (for Canada anyway) smokin’ 30MB/s internet pipe this means that I could personally store-and-forward all of Canada’s SMS traffic myself via my Novus broadband in Yaletown, and it would have limited impact on my BitTorrenting.

SMS uses the signaling overlay path of wireless carrier networks, and from the wireless perspective SMS messages ride in the carrier byte packet. As such it costs the network exactly nothing and uses no bandwidth that isn’t already in use — traffic load is the same on the network even if no SMS messages are being transferred. The networks themselves need to invest in this infrastructure anyway, so there is perhaps an added provisioning and data processing impact created by SMS for wireless carrier network planners, but it is not substantial.

For TELUS to suggest that this traffic is in any way meaningfully impactful to their operating costs suggests that either they’re lying, or perhaps they should go back to operating mechanical switches.

This is a cash grab. Pure and simple. But then, you knew that…

There is, in most respects, not much room for the little guy. Still, many companies attempt to eke out a living by raising capital and earning free cash flow on the basis of moving the needle down a couple of stairs in the telecom industry’s giant race to the bottom. Frankly speaking, as consumers, we need these guys … they create the price pressure that leads to market pressure that forces the cabal to lower their prices. Without them we’d all still be paying $1/minute to call one or two counties over. But rarely (and I suspect Bernie Ebbers would verify this) do they ever make any real money over the long-term.

Because of my history as one of Cisco’s early Packet Telephony product managers, and having architected and helped to launch a few different services including BuzMe and RingCentral, I see a lot of VoIP deals. I’ve taken to referring to many of them as “stupid phone tricks” (in a nod to Letterman) which are clearly designed to take advantage of some gap in arbitrage within the telecom industry.

Unfortunately, this has been the model of telecom “innovation” for many, many years. The first Cowboys in the telecom game were of course the CallBack kids. They allowed you to make calls from Brazil to the USA, for example, paying the long-distance rate for calling from the USA to Brazil instead of the other way around by “ringing both ends” of the call after you first dialed their local or toll-free number to instantiate the call. This significant inconvenience was trumped by the massive savings incurred for folks living in Brazil calling to their USA-resident relatives.

With long-distance deregulation came the rise of prepaid calling card services, which did something similar. Again you traded the convenience of just simply dialing the person you wanted to call for having to call a pilot number, entering a complex string of unmemorable digits, and THEN entering the number you wanted to call in order to save a little dough. The services made money, though, because you and I would usually lose our cards or forget our numbers before we fully expended the value in the cards. This model is called “breakage”. To my utter disappointment this represented the larger part of the market I was dealing with while at Cisco.

More than 8 years ago I recall being asked by my boss, Alistair Woodman, to write an opportunity evaluation of the recently-ratified SIP protocol. My response, over the course of weeks of researching and talking to everyone involved, was a breathless vision espousing nothing short of a complete re-think of the entire Telecom industry. SIP has some epic flaws and paradoxes, like its assumption that we’d all be on IPv6 by 2001, and its paradoxical empowerment of edge devices while making no accommodations for firewall/NAT traversal or P2P.

But it was a pretty good stab at unhanding control of telecom from the cabal and placing it in the hands of scrappy innovators. And as the VON shows once attested, there are some pretty feisty and intelligent people lurking within the telecom business. For a time I hoped to have been one of the more noteworthy ones.

With the benefit of hindsight we now know that SIP just hasn’t panned out (certainly not in the way I had hoped it would). It’s become just another signaling protocol in the transport of fairly uninteresting voice calls within the existing structure of telecom. Let me repeat that in another way: The incumbents took a protocol which was conceived and designed to blow them out of the water, and used it to cost-optimize their networks. As a protocol, SIP is incredibly successful in having propagated in Telecom in the less than 7 years it’s been deployable, but I suspect its effects on the industry would today leave its creators a bit cold.

My breathless assertions that thanks to SIP the web geeks would take over Telecom — first derived in 1997 and held by me until at least 2002 — have never even come close to fruition. SIP, because it unbundles signaling from the calling path and especially because it allows for rich metadata to travel through the network with SIP messages, is rife with potential for adding value — but no one, not even Skype (which uses a protocol clearly inspired by SIP but which fixes a lot of its problems) has deployed it in a way that takes complete advantage of this to stimulate innovation.

A few weeks ago I wrote about Cubic Telecom. There’s a small amount of real innovation there, but it largely falls into my “Stupid Phone Tricks” category. It might or might not save you a lot of money making and receiving long-distance calls while you roam on your mobile phone, but does nothing to abate the greater crime that is mobile roaming charges. After I wrote about Cubic, David Pogue of the NY Times was attracted into their orbit, but got burned when others realized Cubic’s rates weren’t quite so attractive as they’d said they were. Controversy erupted and their launch marketing was irreversibly damaged (see here also) by the Streisand Effect of their attempts to correct and adjust perception.

A Googling of “telecom innovation” yields 10,700+ hits but, sadly, no real innovation. What you will read, instead, are examples of creative cost-optimization (Voice Mail was really a way to eliminate the answering machine at home, and the receptionist at the office). You’ll also see some incredibly creative and extravagant attempts to defeat the inconvenience associated with the CallBack model. Cool, but not fundamentally enabling.

What Cubic is presently caught up in is the fact that their dubious cost savings are hampered by the fact that calling mobile phones, for example, in Europe is always going to be expensive and hugely differentiated in terms of pricing from calling land lines in Europe. The rise of draconian mobile pricing models combined with the steep decline in global long-distance calling rates results in a more and more limited opportunity to cost-optimize and more and more pitfalls for the consumer. Unfortunately, Cubic’s a great example of how this happens and how it can bite one in the ass.

There are a number of artificial bottoms in the telecom industry. Long-Distance was the first and most obvious of these: when there was sufficient market pressure from a few successful VoIP guys (and other telco competitors) to reduce costs, the incumbents simply did so. Why? Their costs to provide long distance were arbitrary. Their only consideration was how much margin they could take without losing customers.

There are a couple of false bottoms in mobile at the moment (who am I kidding, there are half a dozen) including roaming, long-distance, and SMS. SMS is a great modern example of this and here’s why:

The cost for a mobile network to transact an SMS message are incalculably small — on par with your ISP handling an email message. Yet it’s become an enormous cash cow for the mobile phone industry — imagine if your ISP charged you a penny for every email sent or received. A small number of companies such as hotxt (now trutap) rose to try and take a notch out of the carriers on this front, but were ultimately thwarted by the fact that they have to take pot shots at the carriers from within their own ecosystem.

It’s not that easy to attack the SMS business model by requiring users to instead install an app and send and receive messages over wireless data, which is also ridiculously expensive.  It’s kind of like borrowing from Peter to pay Paul, and in any case I’m not sure what it accomplishes for the third-party service.  Not fun. And not particularly innovative.

There is encroachment now, by mobile telecom into terrestrial telecom, and subsequently by platforms like the iPhone and OpenMoko and the rumored GPhone. I guess this means there’s some hope for change. But all of them appear to be embracing the traditional approach to telecom and stepping up to milk the cow in collusion with the big carriers. And this, friends, is a shame. Because innovation will only be barely perceptible if we continue to allow Telecom Monopolists to write the rulebook.

-Ian.

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.

http://www.nytimes.com/2003/07/05/business/worldbusiness/ 05VOIC.html?pagewanted=all

CCRA, Ghana, July 3 — The Internet bubble has long since popped in the United States, Europe and Asia. But in parts of Africa the Internet is serving as a powerful force for change, primarily by allowing companies and individuals to make international telephone calls far less expensively than through conventional channels.

Calls in and out of sub-Saharan Africa have long been among the world’s most costly, strangling business opportunities and burdening ordinary people. Services have been tightly controlled by government-owned telephone companies, many of which are rife with corruption and incompetence. Governments also imposed high tariffs on international calls, seeing it as a lucrative source of revenue.

But now, thanks to what is called voice-over-Internet, phone alternatives are flourishing, sharply lowering costs and expanding opportunities for business and consumers in some of the poorest places on earth — even as they pose a competitive threat to government-sanctioned telephone companies.

Sending telephone calls over the Internet is gaining ground in Africa because it makes possible a range of new services, linking the sub-Saharan to the world’s major industrial centers in ways unimaginable only a few years ago. And better digital connections, mostly via satellite, are raising the hope that Ghana — the most peaceful country in a West African region besieged by civil wars and ethnic strife — may become the regional hub for an information-technology industry.

“As Ghana improves its connectivity to the outside world, it has the potential to become for Africa what Bangalore became for India,” said Paul Maritz, a former senior executive at Microsoft who recently visited Accra to survey the nascent high-tech scene here.

Last Thursday, at a United Nations conference in New York, the secretary general, Kofi Annan, delivered a message that developing countries also need to include wireless access, known as Wi-Fi, in building an Internet system.

“It is precisely in places where no infrastructure exists that Wi-Fi can be particularly effective,” Mr. Annan said, “helping countries to leapfrog generations of telecommunications technology and empower their people.”

As the movement advances, though, many government-owned telephone companies, which dominate wired service in most African countries, are fighting a rear-guard action.

Internet telephony “is presented as the salvation for business and society in Africa,” said Oystein Bjorge, chief executive of Ghana’s national telephone carrier. “It is not.”

Mr. Bjorge, a Norwegian telecommunications consultant hired recently to do battle against the Internet telephone services, said it wreaks havoc with the economics of phone companies. Here in Ghana, the national phone company is waging a sporadic campaign against its own citizens who use the Internet to make or receive telephone calls from America and Europe, periodically turning off the lines of those suspected of doing so.

Three years ago, the government even jailed the heads of some of Ghana’s leading Internet providers. Though later exonerated by a court, the dissidents fear another crackdown. “Internet telephony is changing the whole power structure,” said Francis Quartey, chief technology officer of Intercom Data Network and one of those jailed. “The dangerous thing is that the power elite is responding out of fear and ignorance.”

Despite this opposition, American companies are experimenting with new ventures in Ghana, seeing if enthusiasm for Internet telephony can transform local technology entrepreneurs into a force for genuine economic advancement.

For example, Rising Data Solutions, which is based in Gaithersburg, Md., introduced a call center here last month, where a dozen Ghanaians — trained in American-style English — are trying to sign up customers in the northeastern United States on behalf of a wireless phone company. At least three other call centers are expected to open in Accra later this year, all relying on Internet telephony instead of telephone carriers.

Internet telephony also aids companies like Newmont Mining , which is searching for gold in Ghana, the second-largest gold producer on the continent, after South Africa. To help manage its operation, Newmont plans to link its operations within Ghana to the wider world through the Internet.

Acquiring reliable phone service is essential, foreign investors say, which is why they bypass the government-owned telephone company. Ghana Telecom has an order backlog of more than 300,000 lines; bribery is the fastest — indeed, usually the only — way to obtain new service. Even those with service suffer from frequent failures and inaccurate bills. Roughly every other call results in a busy signal, an indicator of what Ghana Telecom calls “network congestion.”

Under the circumstances, Internet telephony — which has failed so far to make serious inroads into the American telephone market because of lower voice quality — seems positively fabulous to many weaned on Africa’s creaky systems.

“Internet gives me control over my destiny,” said Sambou Makalou, chief executive of Rising Data. “My business needs to be up 24-7; we can’t get a busy signal.”

Busy signals are common in Ghana because the public phone networks are overloaded. As recently as four years ago, a dial tone was among the scarcest resources in the country, which had fewer than 200,000 phone lines in a nation of 19 million.

Few people realized how much demand for phone service was waiting to explode until Ghana’s most successful wireless company, Spacefon, was introduced in 1996. Before it started, executives thought the potential customer base was probably 3,000 people, at most 12,000. Seven years later, Spacefon has more than 300,000 subscribers.

The country’s total phone lines are now approaching 750,000, roughly two-thirds of them wireless. But completing a call is still difficult, especially between rival networks (there are five), and neither Ghana Telecom, nor the country’s legal wireless operators offer a reliable connection to the Internet.

In response to these limitations, private businesses have built scores of data networks, relying on satellite- and radio-based Internet-access systems.

But telephone service became appealing because of the high network costs: Companies typically pay from $2,000 to $5,000 a month for a robust connection to the Internet, an enormous sum when economic output per person is only about $400 a year.

“I’m paying $2,000 a month for Internet access, so I want to use the technology to the fullest,” said Austin Addo, chief information officer of Ghana Link Network Services.

Mr. Addo’s company, which began operations here early this year, helps the government calculate duties on goods imported into the country, relying on frequent updates, via the Internet, of product values. The company’s partner is based in Madrid, so Mr. Addo uses a standard device to make international calls over his computer network. He is not billed for the calls, which would otherwise cost him roughly 75 cents a minute, including the cost of line.

His telephone calls are not really free, since he pays $2,000 a month for Internet access. But he is still saving lots of money because he can speak as long as he wants without worrying about the cost. “Five years ago to get this level of communication,” he said, “I’d have to fly to Spain — several times a week.”

Such productivity gains have been a cause for celebration almost everywhere in the world. But official anxiety over Internet telephony is widespread throughout Africa and particularly rife in Ghana. At a public meeting in May, held at the largest Internet cafe in Accra, a regulator defended the government’s latest campaign against those who use the Internet to bypass authorized telephone providers. “The players have been apprehended or will be apprehended soon,” said Bernard Forson, deputy director of the National Communications Authority of Ghana.

The government is not opposed to any particular technology, Mr. Forson explained, but merely wants “regulated entities to provide telephone service,” not unlicensed and untaxed wildcatters.

Other African countries face a similar quandary, aware of the appeal of Internet voice service but fearful of its damage to the state-owned telephone company.

Neighboring Togo, for instance, allowed Internet telephony until the end of last year, when the government cracked down on behalf of Togo Telecom. So many foreign calls in tiny Togo were being routed over the Internet that a small “com” center — ubiquitous in Africa, offering calls for a fee — took in $10,000 a month from just two phones.

But some African countries have embraced Internet telephony as a way to end decades of frustration. In Nigeria, for example, the government has not officially approved telephoning over the Internet but looks the other way, partly to ease congestion on its authorized networks.

Still, the legal confusion surrounding Internet telephony has prompted some to avoid it. Affiliated Computer Services , which is based in Dallas, set up shop in Accra two years ago, relying on a private satellite connection to the Internet that supports both a data and a telephone network. Today, it is one of Ghana’s largest private employers, with 1,200 people and plans to hire another 700.

While the company runs call centers in Jamaica, Mexico and India, it does not intend to do such telephone work in Ghana. “We can’t use satellite lines” because of the brief delay in hearing a response, said Tom Blodgett, the executive who started the Ghana operation. And for now, he adds, “there is no suitable wired alternative.” A legal one, anyway.

But for all their efforts to restrain the movement, African telecom companies are probably fighting a losing battle.

“Periodically the police confiscate equipment or the telco turns off phone lines,” said Russell Southwood, a London-based consultant and publisher of a weekly newsletter on Africa’s telecom scene, Balancing Act’s News Update. “But it’s about as hopeless as Canute trying to turn

Instead, they’re hedgehogs, rolling up into a spiky ball every time anyone “threatens” the crutches they use to sustain their faltering businesses. Only by systematically removing these artificial retention tools can we force these carriers to become creative, innovative marketers who bring us services we actually need.

In the meantime, fuck ’em. Let’s force them to jump through expensive hoops and remove all of their spikes. They’ve been milking captive markets for too long.

-Ian.

—- http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030416/ap_on_hi_te/ cell_phone_numbers

Wireless Cos. Fight Rule on Phone Numbers Wed Apr 16, 9:15 AM ET Add Technology – AP to My Yahoo!

By DAVID HO, Associated Press Writer

WASHINGTON – Despite static, dropped calls and dead zones, Jeff Danielson sticks with his cell phone service, not out of loyalty but because he can’t stand the thought of asking clients to call a new phone number.

“I’ve been unhappy with the service, but I’ve given up doing anything about it because I really don’t want to lose the number,” said Danielson, 27, a Washington technology consultant. “I’m afraid I would lose clients that way.”

Federal regulators are sympathetic with Danielson’s plight and have ordered cell phone companies to let people take their numbers with them when they switch to a competitor. The wireless providers asked a federal appeals court Tuesday to block the regulation, arguing that keeping the same phone number is a convenience, not a necessity.

The cell phone companies told a three-judge panel of the U.S. Court of Appeals for the District of Columbia that the Federal Communications Commission (news – web sites)’s “number portability” rules will raise costs while doing little to increase competition.

“It’s very speculative to say this even offers consumer benefits,” said Andrew McBride, an attorney representing Verizon Wireless and the Cellular Telecommunications and Internet Association.

McBride asserted the FCC (news – web sites) overstepped its authority and made legal errors in its order. Retaining the same phone number is not an essential service like making wireless providers supply enhanced 911 systems to help authorities locate cell phone users during emergencies, he argued.

The judges are not expected to rule for several months. Without court intervention, the regulations are to take effect Nov. 24.

Congress decided in 1996 that people can keep their traditional local phone numbers when they change phone companies. The FCC decided soon after that wireless carriers should offer that same ability to people in the largest 100 U.S. cities by June 1999.

The FCC extended that deadline three times, most recently granting a yearlong extension last summer after Verizon Wireless asked the commission to eliminate the requirement.

“Wireless companies will have stronger incentives to provide better service and lower prices if consumers can take their numbers,” said Chris Murray, an attorney for Consumers Union, publisher of Consumer Reports magazine. He said small businesses and self-employed people are particularly harmed when switching carriers because they lose numbers known by customers.

Most wireless companies argue that their industry is competitive enough and doesn’t need a regulatory boost. They say about 145 million people subscribe to U.S. cell phone systems, and about a third of them change carriers each year.

“The wireless industry is the most competitive telecommunications market on the planet,” McBride said after the hearing. He said the expense of providing the number switching service will take money away from better cell phone coverage and cheaper phones.

The wireless industry estimates the requirement will cost more than $1 billion in the first year and $500 million each year after that.

The industry also says the FCC’s number portability rules are unclear regarding traditional landline phone companies and give them an unfair advantage. The wireless companies want the FCC to declare that traditional landline phone companies must allow their customers to keep numbers when switching to cell phones.

Many cell phone users outside the United States, in Britain, Australia, Hong Kong and other places, already have the option of keeping their numbers when they switch carriers.

-Ian.

—— http://www.nytimes.com/2002/11/18/technology/18CELL.html

November 18, 2002 Success of Cellphone Industry Hurts Service By SIMON ROMERO

Americans’ use of cellphones has increased so quickly that wireless networks are becoming overloaded, causing a growing number of customers to complain about calls that are inaudible or are cut off or are never connected in the first place.

And things could get worse before they get better, industry experts say, because even as cellphone companies are rolling out fancy features like digital photography and Internet-based games, they are hard-pressed to spend the money needed to improve basic service.

“This is a situation in which the wireless industry is a victim of its own success,” said James D. Schlichting, a deputy chief of the wireless communications bureau at the Federal Communications Commission.

Many of the industry’s service problems are a result of a huge growth of new customers. In 56 percent of the nation’s households, someone now subscribes to wireless phone service, more than double the percentage in 1995.

The surge in users is overwhelming the capacity to handle calls on wireless systems — whether because local transmitters are too few or too small, or because the local airwaves have become too crowded and carriers are unable to obtain larger swaths of radio frequencies.

The problems are compounded by basic economics. Customers have been attracted by the plunge in prices for wireless service. The average per-minute cost has dropped to 11 cents this year from 56 cents in 1995. For the phone companies that has meant a decline in average revenue per customer to $61 a month, from $74 in 1995.

And so, just when the wireless companies need to invest more money to accommodate all those new users, the companies are under increased financial strain.

As a result, the complaints are piling up.

The F.C.C. tracks only the few hundred complaints it receives each quarter — it recently reported fewer than in past years — but acknowledges that an increase in subscribers had worsened service problems. And surveys conducted for the industry itself show that complaints are rising.

“If I make 10 calls, at least three have to be redialed because they don’t go through,” said Orville Mills, who lives near Van Cortlandt Park in the Bronx and recently switched carriers to Sprint from T-Mobile. “The new services are just a distraction from not having the basics down.”

The percentage of all wireless subscribers who have called customer-service centers at least once in the last year to complain about service or because they had other problems has climbed to 61 percent, from 53 percent in 2000, according to J. D. Power & Associates, a company that measures customer satisfaction in many industries and sells it to the companies being scrutinized.

The level of such calls is higher than for many other consumer-service providers, including land-line telephone companies, cable-television operators and stockbrokers, according to Power. About 30 percent of the calls to customer-service centers were complaints related to dropped calls, bad reception or calls not going through, up from 19 percent in 2000. Other reasons included complaints and questions about billing, equipment and services.

The author of the study, Kirk Parsons, said the wireless companies are aware of the problem. He said he expected complaints to grow as the companies add new services, contributing to stress on the networks and subscribers’ confusion.

“It’s important to remember that cellphones are glorified radios,” said Travis Larson, a spokesman for the Cellular Telecommunications and Internet Association, the wireless industry’s main trade group. “They’re subject to interference from a lot of things, from building walls to sunspots to the weather. There will always be a trade-off between mobility and call quality.”

Meanwhile, the stock prices of AT&T Wireless Services and Sprint PCS, the two largest stand-alone publicly traded carriers, are down more than 45 percent this year on investor concern about revenues. And the two largest carriers, Verizon Wireless and Cingular Wireless, which are controlled by regional Bell companies, are struggling to find and pay for additional swaths of airwaves to carry calls.

The industry received something of a financial reprieve last Thursday from the Federal Communications Commission, which ruled that wireless companies would not have to pay the $16 billion they had offered for additional airwave licenses during a bidding process that is now being contested. The licenses had been seized by the F.C.C. from NextWave Communications and auctioned after NextWave filed for bankruptcy protection. But the licenses, and the airwave capacity they represent, are tied up by NextWave’s appeal of that seizure, which is now pending before the Supreme Court.

Another industry problem is the sheer technical complexity of sending and receiving wireless calls. Unlike conventional telephone systems, in which every customer is hardwired to the network, wireless systems rely on a delicate mesh of thousands of antenna towers — which often face resistance from local governments — and cellular relay stations.

The stations can easily be flooded by an increase in calling volumes. That vulnerability became clear in the hours after the Sept. 11 terrorist attacks in New York and Washington, when the local wireless networks were effectively shut down by the surge of attempted calls.

Various new companies are trying to develop towers and other forms of transmission technologies that could handle such surges. But so far carriers remain reliant on systems that, in some ways, still resemble radio communications networks that were first developed in World War II.

Because of brisk demand, financial problems at wireless carriers are not as severe as those in other areas of telecommunications, where large companies like WorldCom and Global Crossing have sought bankruptcy protection. Even so, some investors think the only way to ensure industry stability will be to winnow the competing wireless players. Instead of six nationwide carriers, they say, a more economically feasible number might be three or four.

“Consolidation among wireless companies can’t fix these problems, but it can make them less severe,” said Frank J. Governali, an analyst at Goldman, Sachs.

For months, investors have been waiting for mergers that would shrink the number of large competitors. No deals have yet materialized, though, partly because of technical obstacles. Unlike nations in Europe and Asia with higher wireless usage rates, the United States does not have a single wireless technical standard that would make it easy for carriers with different systems to combine operations.

Verizon and Sprint, for instance, employ an American-designed standard called code division multiple access, or C.D.M.A. Meanwhile, AT&T Wireless, Cingular Wireless and T-Mobile, formerly known as VoiceStream, use the global system for mobile communications, or G.S.M. format, common in Europe and Asia. Another large American carrier, Nextel, uses its own technology, called Iden.

Carriers have also resisted measures that would make the industry more consumer-friendly. In response to industry lobbying, for example, the F.C.C. has postponed until next fall a deadline for companies to start allowing “number portability” — letting customers keep their cellphone numbers even when they switch providers. The companies are reluctant to implement the measure, fearing it will create new costs while also encouraging customer defections.

“I’ve had the same number for three years,” said Sarah Vanderslice, a student at the Benjamin N. Cardozo School of Law in New York who subscribes to Sprint’s service. “The fear of losing it is the only thing that keeps me from dropping my cellular company.”

The F.C.C. has also repeatedly extended the industry’s deadlines for improving emergency-call abilities for wireless phones. Calls from cellphones are still much more difficult for emergency officials to pinpoint than calls from land-line phones. And the issue has become more pressing as the number of emergency calls from cellphones has grown to the current rate of more than 30 percent of 911 calls.

“The wireless industry is in need of a stricter taskmaster,” said David Heim, the managing editor of Consumer Reports magazine, which publishes an annual feature each year on cellular service problems. Although the F.C.C. has jurisdiction on certain operational matters, the wireless industry remains largely unregulated.

But few people expect the Bush administration’s F.C.C. to try to exert significant new authority. And even a former F.C.C. chairman from the Clinton years says that, in the main, it would be prudent to avoid more regulation.

“We have a robustly competitive wireless industry,” said Reed E. Hundt, the former F.C.C. chairman, who is now a senior adviser on information technologies for the management consultant firm McKinsey & Company. “Younger people recognize this in opting for wireless over wire line and putting up with some flaws in exchange for freedom of movement.”

Like their counterparts in Europe, carriers in the United States are hoping new services like text messaging and transmission of digital photos will eventually generate the additional revenue they need to put their finances on stronger footing. But aside from a small but loyal following of mainly younger subscribers that exchange text messages, none of the new services have attracted a large number of users.

And anyone who expects competitive market forces to quickly improve cellphones may be overly optimistic, some experts say. They note that the conventional wired telephone system has been evolving for more than a century and became widely dependable only in recent decades.

“Don’t hold your breath,” said Jeffrey Kagan, an independent telecommunications analyst in Atlanta. “Service and the economic evolution of wireless are works in progress — it might be years before customers are truly satisfied.”

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.

———–

SmartMoney.com – One-Day Wonder Ring-a-Ding-Ding! By Lawrence Carrel

Sprint PCS (NYSE:PCS – news) Share price as of Monday’s close: $10.02 Share price now: $12.60 Change: 25.8%

THE JURY REMAINS out on whether the telecom debacle is over, but if the first-quarter results of Sprint PCS (NYSE:PCS – news) are any indication, the momentum may be turning.

While the nation’s fourth-ranked wireless company posted a first-quarter loss of 15 cents a share after the market closed Monday, that was a lot better than the 40 cents lost a year earlier, and beat Wall Street’s expectation for a 20-cent loss.

Especially encouraging was the 150% surge in earnings before income taxes, depreciation and amortization (Ebitda) to $640 million from $253 million a year earlier, on a 41% jump in operating revenues. PCS Group achieved these results by lowering its cost to acquire a new customer to $305 from $325 a year earlier, while raising the average monthly revenue per user by a dollar to $60.

For an industry that has seen much gloom in the form of bankruptcies, accounting scandals and balance sheets overwhelmed with debt, the PCS news seemed like a rare ray of light. PCS stock leapt 25.8% Tuesday, sending the entire sector on a strong rally.

Things weren’t quite so rosy over at PCS’s earthbound sibling, Sprint (NYSE:FON – news), which is made up of Sprint’s traditional phone and Internet business. The No. 3 U.S. long-distance telephone company said the weak economy, slim demand for data- and voice-transmission services and stiff competition as the Baby Bells entered the long-distance market weighed on sales, which slid 8% to $4.03 billion. While first-quarter earnings of 32 cents a share beat the Thomson Financial/First Call estimate by two cents, they marked an 11% drop from the 36 cents earned last year. On the bright side, the company did say long-distance rates were stabilizing after the brutal price wars, and reiterated its guidance for the year. In a sector starved for even tolerable news, that was enough to send Sprint’s stock up 20.7%.

Quote:

“We continue to believe that Sprint PCS has the assets, capital structure and product offering to outperform the wireless group over the long term,” wrote William Power, an analyst at Robert W. Baird & Co., in a research note Tuesday morning. “Sprint PCS remains our top big-cap pick.” Power doesn’t hold a position in the stock and the firm doesn’t have a banking relationship with Sprint.

I am the broadband Bermuda Triangle Internet service providers beware: I have powers to invoke bankruptcy beyond the ken of mortal man.

– – – – – – – – – – – – By Mike Masnick

Dec. 6, 2001 | I am the broadband Bermuda Triangle. Offer me a broadband connection, and your company is doomed to fail. If I even ask about your broadband service, start reading up on how to file for bankruptcy protection. Originally, I did not believe it was my fault, but after getting kicked off five different systems in the past 10 months, there is only one obvious factor in common: me.

The U.S. government says it is working on ways to stimulate broadband growth. I have a solution: kick me out of the country. With that one, simple move, broadband will again be free to thrive and grow and help boost the rest of the sagging tech sector.

A year ago, broadband was still considered the “next big thing.” I decided it was time to join the 21st century, and thus began Hurricane Mike’s path of broadband destruction.

It began, simply enough, last December when I signed up for Northpoint DSL through Megapath, a popular broadband ISP. Northpoint, of course, was one of the “big three” wholesalers of DSL service (along with Rhythms and Covad).

Once my connection was up and running, it only took two weeks for Northpoint to declare bankruptcy.

This brings up my second evil power: I turn employees at broadband ISPs into liars. I spoke with a vice president at Megapath the day after Northpoint declared bankruptcy, asking what it all meant. He explained that there was “zero” chance I would lose my broadband connection since they knew this was coming and they had “contingency” plans in place and ready to go.

It turns out that contingency plans mean many different things to many different people.

For Megapath, contingency plans apparently meant waiting until Northpoint shut down their network completely before preparing for alternatives. The end result was nearly two months without broadband access, while I waited for Megapath to set me up with Bachelor No. 2 in the DSL dating game: RhythmsNet Connections.

A few days before RhythmsNet turned on my new account, I started reading reports of financial difficulties at Rhythms. I called Megapath again, where I was told (repeatedly!) that Rhythms was a “solid” company — especially now that it had taken on so much of Northpoint’s lost business. I told the guy about my experience with Northpoint going out of business, and he said, “Yeah, that was a surprise because they were a really solid company.” Like “contingency,” apparently “solid” means very different things to different people. It was at this point that I knew Rhythms was doomed and cancelled the service soon afterwards (just slightly before they declared bankruptcy and shut down their network).

I then started relying solely on my Metricom Ricochet wireless broadband connection provided by the ISP Wireless Web Connect. I was assured, again, that WWC was working on “contingency” plans should Metricom shut down — which it soon did.

For Wireless Web Connect, contingency plans meant begging Ricochet users to e-mail technology reporters urging them to write stories about how we all missed Ricochet.

Once it was clear that the Ricochet network was not coming back to life, I started to look at other options. Covad, having seen the damage I had done to Northpoint and Rhythms, declared preemptive bankruptcy in a successful attempt to play dead and have me pass them by.

PacBell (the local phone company) had apparently heard about my powers as well and told me “we don’t cover” my area (despite the fact my former DSL lines were provisioned from PacBell).

As if sensing my need for something different, a postcard arrived telling me about the wonders of Sprint’s “Fixed Wireless” broadband option that would place a pizza-box-sized receiver on top of my house and give me all the advantages of a broadband connection. I called up Sprint on a Friday and a representative confirmed that it was available in my area. I hesitated before signing up so I could spend the weekend researching the offering, and determining whether or not my neighborhood homeowner’s association would freak out at the pizza box on my roof.

Sprint apparently spent its weekend researching me, as well. When I called back Monday morning to sign up, the woman I spoke to told me it was no longer available where I lived. I pointed out that it had been available three days earlier, and she spun a wonderful story about how they were doing “technical improvements” in my region, and would call me when they were offering it again. A few days later Sprint admitted it had felt my touch of death and announced it was getting out of the fixed wireless business completely.

My magic powers had worked wonders again.

I had now destroyed two (possibly three) DSL companies and two wireless broadband offerings. That was when I heard that Excite@Home (whose headquarters are almost within rock-throwing distance of my house) was filing for bankruptcy. How could this be? I hadn’t even thought about signing up for their service. However, in a delusional epiphany I thought if Excite had already declared bankruptcy, perhaps the Bermuda Triangle of broadband would work in reverse and I could save them by signing up.

I called AT&T Broadband (which provides the service here) and asked them what the Excite@Home bankruptcy meant for me as a potential customer. A very nice, yet very clueless woman explained to me that (1) I had nothing to worry about, (2) it wasn’t “Excite@Home” that was bankrupt, but merely Excite.com, (3) “The company isn’t bankrupt, they’re just financially restructuring” and (4) no matter what happened, AT&T had “contingency” plans that would involve no downtime. When pressed for her definition of contingency plans, she refused to go into detail.

I had learned my lesson about these so-called contingency plans. I also knew that most of the other points the woman had told me were complete hogwash, so I did some additional research on my own. I read where Mike Paxton, a cable analyst with Cahners-Instat, said that @Home subscribers are “not going to wake up and find they don’t have cable broadband anymore.”

Here was an official “cable analyst” telling me I would wake up each morning happily surfing at high speeds. Believing the expert, I signed up for service on Halloween.

This past Saturday morning, a month after I first started using AT&T@Home, I woke up and found I didn’t have cable broadband any more.

Mr. Paxton kindly answered my e-mail demanding an explanation, saying, “the situation had changed” since he made his original comments. Of course it had changed! I had signed up for the service — signaling the end of any hope for Excite@Home. Mr. Paxton, it appears, was unaware of the powers of my broadband blackhole.

I have learned my lesson. I am no longer looking for any new broadband providers, but if the U.S. government wants to stimulate broadband acceptance in this country, they should do the only sensible thing. Get me out of here. I am willing to be the sacrificial lamb for the broadband industry (and by association) the tech sector as a whole. If the government would like, I would even consider ruining broadband connections in other countries around the world. It’s too bad the Taliban aren’t heavy users of cable modems.

– – – – – – – – – – – – About the writer When not destroying broadband companies, Mike Masnick helps tech executives avoid information overload at Techdirt.

Of course, the fact that WAP sucks is old news on FOIB, but this article is really funny.

At the root of the problem are the Wireless Service Providers, now shifting like sand dunes to avoid their PR problems. Combining the instability of internet technologies with the sheer unreliability and slow speed of the wireless network is not a marketable phenomenon: a telecom engineer once described AT&T’s wireless network to me as “utter chaos” — combine this with the chaos of IP and waddya get?

Finally people are getting down to the fundamentals:

– Low-res LCD screens with 5 lines and 15 columns are insufficient to view practically any information – Numeric Keypad entry is slow, ineffective, and frustrates users (even with dictionaries) – Speed is a major factor — the best uses of wireless data are streaming, and that won’t scale on present or even 3G wireless networks – Charging access fees on a per-minute or per-KB basis contravenes most of the fundamental attributes of internet access

The emperor has no clothes. Finally people are starting to get it.

-Ian.

——— http://www.suck.com/daily/2001/01/29/1.html

“a fish, a barrel, and a smoking gun” for 29 January 2001. Updated every WEEKDAY.

WAP, Bam, No Thank You, Ma’am courtesy of Greg Knauss

The evolution of the wireless application protocol ‹ or “WAP,” the method that most cellular devices use to communicate with the Internet ‹ from long-touted pipe dream to widely released technology promises to be a profit windfall for the telecommunications industry ‹ largely because anybody who uses the damned thing will have to replace their phone, once they smash it to bits in frustration. Heralded as the Second Coming of the Internet, WAP is an unmitigated disaster ‹ a half-finished, half-assed service enthusiastically targeted at mainstream consumers without the reliability, convenience or price that those silly mainstream consumers have foolishly come to expect.

WAP sucks. WAP devices suck. Anybody with the initials “WAP” sucks. A capital “W” next to a capital “A” even kerns badly. WAP-enabled devices (and the acronym menagerie that goes along with them) combine the rock-solid reliability of the Internet with the rock-solid reliability of a cell phone. Plus per-minute usage charges, the elegant legibility of a calculator wristwatch and the handy convenience of a portable sink for hand-washing obsessive-compulsives. The act of offering WAP as a “feature” rather than “some sort of extravagant expression of self-hatred” should be considered fraud.

That such a pointless, gutless, brainless gob of standards-body sputum is being shotgunned at the public as the next, next, new, new thing demonstrates that wireless providers are so desperate for features that they’re willing to slap a price tag on whatever emerges from their collective ass and shill it to the public at large. All the usual suspects ‹ greed, stupidity, arrogance ‹ are conspiring to push WAP on an ignorant populace, whether either is ready or not. The result is a train wreck, because WAP functions far better as a bad joke than as an emerging technology.

The problems are legion, miles wide and fathoms deep. There is no aspect of the protocol and its supporting and surrounding accouterments that are not plagued by woes: non-standard standards, lowest-common-denominator assumptions, fetal technology. And while there’s plenty of technical hoo-ha you can throw at WAP ‹ where it sticks, like darts in shit ‹ the fundamental problems are at the consumer level: reliability, speed, usability, cost and the ultimate near-pointlessness of browsing anything while you’re sitting at a bus stop.

There are some who will excuse each of these complaints by conveniently pointing the finger elsewhere ‹ speed and reliability problems are networking issues, they say, and usability troubles come from the form factor of the telephone. But WAP is more than simply a protocol: It is the public face of wireless, the placeholder for a dozen other acronyms, and feeble technical excuses will do exactly nothing to mitigate the profoundly unsatisfactory experience that the whole mongrel family provides.

For all the ad dollars spent pushing the “wireless Internet” ‹ a phrase that sounds better than the dropped-fish splat of “WAP” ‹ you’d think that the cellular companies would make sure their networks, y’know, actually work. But the reliability of most WAP-serving connections is laughable. With wireless companies busy inventing new names for themselves to duck justly embarrassing reputations ‹ GTE/Bell Atlantic, no, Verizon; SBC/Bell South, no, Cingular ‹ the industry and its technology have all the reliability of someone fleeing a credit fraud charge.

Not that a stalled-out connection and a fully functioning one are easy to tell apart. The networks that deliver WAP are currently pegged at a soul-destroying 9600 baud, or six times as pokey as that miracle of technology, a 1997-era modem. Next generation WAP devices will tear along at twice that speed, or fully a third of what people already consider far, far too slow.

Of course, once the data has managed to crawl over the airwaves, it’s well-nigh impossible to read. At fifteen characters wide by five lines high, a typical WAP-enabled phone holds the dubious distinction of being perhaps the only modern device out-resolutioned by a VIC-20. But extracting data is a sublime pleasure compared to entering it ‹ the only way to type on a numeric keypad is to repeatedly press a number, cycling through its associated letters. The four-letter name of a particularly surly Web site becomes “77778822255,” and that just 77778822255s.

And this grandly luxuriant experience is costing you, for every teeth-grinding second you spend on-line. While the wired on-line services managed to evolve out of per-minute connection fees some time in the Mesozoic, a WAP session is billed out the same as a cellular call, either as cash or as time off your plan. So while you wait ‹ and wait, and wait ‹ for the server to do you the favor of responding, for your eyes to noodle out LCD hieroglyphics, for your fat American fingers to squeeze out some four-letter response, money is draining out of your pocket, rounded up to the nearest minute. You pay for the privilege of downloading the spam in your in-box, so you can curse at it in the supermarket.

Of course, all these limitations and stupidities pale in the face of a single, unalterable fact: there is almost nothing that needs to be done on-line while you’re not sitting at a desk. Cellular technology is ideally about messaging ‹ communication ‹ and the over-the-top “flexibility” that WAP devices provide stinks of run-rampant featuritis. The whole notion of “browsing” via a phone is insane, ignoring everything that makes the experience possible (even pleasurable) on a computer, save the actual to-and-fro of the data. But then sanity rarely enters into it when money is involved: The whole point of WAP seems to be as yet another commerce channel. One ad feebly touts the ability to bid at eBay while sitting in a waiting room; another sings the praises of never, ever being unable to shop. Ladies and gentlemen, the 21st Century: Nordstrom’s through a pinhole. Rah.

WAP apologists compare the state of the service today with the Internet-at-large in 1994. But the Internet-at-large in 1994 was a smallish lab experiment, a physicist-ruled backwater inhabited by people willing to wear hip-waders to get around. WAP ‹ in all its awful glory ‹ is being offered up as a mainstream consumer service, something that grandma can use, by providers too stupid or greedy to know they’re gibbering incompetents. Their wild over-promises reduce to outright lies and the protocol, the service, the whole idea are nowhere near ready. Even if, some happy day, bandwidth and display technologies give the public the wireless equivalent of Netscape 1.0, the current herd of WAP devices will have so effectively alienated anybody who blew precious minutes of their lives using them that all their crossed-heart assurances will be roundly and rightly ignored. WAP proponents and providers are so blinded by their paternity that they can’t see the baby as the ugly, malformed thing it is.

But everybody else can, and the only WAP they’re going to be interested in is the sound the hammer makes when it comes down.