Archive for May, 2008

Business Observations: May 12, 2008 Edition

Monday, May 12th, 2008

Update: Since I’ve broken my schedule for weekly posts, I might as well break my schedule for monthly posts.  From now on, I’ll be providing updates as I collect a readable collection. Today, it’s all about business observations (previously called “business models” but it was always more than just that…).

As the Mobility Era matures, obviously a key question will be “how to make money?”. There are plenty of opinions on the best answer to this question. The below is very inclusive and I provide no editorial functions, so don’t take from my selections, ordering, headlines, etc. any indications of the interests or plans of my employer (if you do, you’ll undoubtedly be disappointed when they don’t play out):

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Now playing: Mark Heard – When His Luck Runs Out

Why the New Clearwire Makes Sense

Wednesday, May 7th, 2008

Back in July 2007, Sprint announced deals with Google and Clearwire. At the time, I sang the praises of the two agreements. Today, the three companies, together with three cable providers and Intel, announced a much more far-reaching relationship.

The July Clearwire announcement was about network sharing. Sprint would build a 4th generation wireless WiMax network covering part of the country. Clearwire would build a WiMax network covering the rest of the country. And then each company’s customers could roam onto the other’s network when traveling. At the time, I called out the single most significant benefit of the arrangement as: “By splitting the country and agreeing who will build where, capital and time aren’t wasted building networks that compete with each other in popular geographies. The full capital plans of each company can be working together to accelerate and broaden availability faster and farther than either company could achieve on its own.”

Today’s announcement goes even further, merging the WiMax operations of Sprint with Clearwire to create a new independent company, under the Clearwire brand, but 51% owned by Sprint. The benefits I previously called out still hold true: more efficient capital spend, more efficient communication of the value proposition, and a stronger position with technology vendors.

However, the inclusion of the cable companies takes it another step further. As you may recall, a consortium called SpectrumCo, led by Comcast, acquired 137 licenses in the AWS auction back in 2006. Although these cable companies could credibly have built their own network, instead investing in the new Clearwire is a much better way to get what they want with the most efficient use of capital.

For Clearwire and Sprint, of course, the cable companies represent a tremendous sales channel. The wholesale agreements with the cable companies appear to be well suited to integration into convergence bundles that could help rapidly drive broad adoption of WiMax.

Comcast’s CEO, Brian Roberts said “This transaction is attractive to us strategically and financially and puts in place very attractive wholesale relationships for access to Sprint’s existing 3G and Clearwire’s 4G networks, giving us complete flexibility to introduce wireless mobility in terms of product innovation and deployment.”

Similarly, Glenn Britt, Time Warner Cable’s CEO said “”This exciting new venture enables Time Warner Cable to help shape the next generation of wireless services in ways that will complement and enhance our products and services.”

So, best of all worlds, we don’t have mad capital being thrown at building competing networks, instead we have tremendous marketing power being focused to drive utilization scale for an asset intensive business.

But what about Google?

Last July, I noted: “But Sprint’s commitment to open APIs for developers like Google to innovate on top of the Sprint (and Clearwire) networks is even better. We have a sense that increased availability (because products and services are fully useful wherever you go) and contextual relevance (because they will adapt to the context in which you’re using them – where, when, with whom, etc.) is what will drive new value in the Mobility Revolution. But, we can only guess at how that new value will actually be realized. Only by putting this power into the hands of innovators will the full potential of mobility be realized. … Sprint and Google both, in this announcement, are clearly signaling their commitment to enabling the kind of innovation that can truly revolutionize how we interact with the world, how we do our jobs, and how we run our businesses.”

Google seems to agree and has put a sizeable investment behind this belief. On the official Google blog, Larry Adler wrote: “We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire. Such freedom will mirror the openness principles underlying the Internet and enable users to get the most out of their wireless broadband experience. As we’ve supported open standards for spectrum and wireless handsets, we’re especially excited that Clearwire intends to build and maintain a network that will embrace important openness features. In particular, the network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.”

The Clearwire deal is well aligned with complementary Sprint announcements over the past couple of days that also drive freedom for users and innovation by third parties.

Today, Google and Sprint also announced partnering on the 3G network that Sprint will continue to own and operate. Kevin Packingham, Sprint’s VP of Product Managment said “Our partnership with Google is a great example of how Sprint is making the mobile Internet experience even more customer-friendly and useful to our customers.” And Doug Garland, Google’s VP of Product Management noted “We both believe in openness and providing compelling, easy-to-use mobile services that consumers can use every day. We look forward to working together to deliver a great experience.”

Sprint also amplified that commitment to freedom (that’s freedom as in “free speech” not “free beer”) at the JavaOne conference this week. Sprint announced, among other things, a relaunch of the Professional Developers’ Program, providing APIs for developers to access GPS, address book, and messaging information.

Bottom line, what does it all mean?

I believe these announcements provide a much more rapid path to a broadband mobile (not just wireless) network that delivers multi-megabit speeds and the openness to innovation that will unleash unimaginable developments. But it also means marketing partners that share the vision and can drive this mobility revolution to the mass market.

And that really makes sense for driving the mobility revolution forward!

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Now playing: Phil Keaggy – Water Day

Big Bell Dogma

Wednesday, May 7th, 2008

Nearly two years ago, I introduced the concept of “Big Bell Dogma” on this blog. I also discussed the concept last year in my book.

Since that time, I’ve found the concept very useful for many purposes, but I’ve never gone back to do a good job of defining what Big Bell Dogma really is or why it matters. Today I plan to fill that gap.

The name “Big Bell Dogma” is a reference to the original “Ma Bell” – AT&T – when they were the nationwide monopoly for telecom services in the United States. (Of course, there were other monopoly telephone companies serving specific cities and regions, including GTE and United Telephone – later renamed Sprint and then Embarq, but none of them had the power or arrogance of Ma Bell.) The “Dogma” piece comes from the attitude of the monster monopolist which played itself out in a series of beliefs that shaped decisions and actions made by the company.

Some good examples come from a few of my favorite books:

Nerds 2.0.1: A Brief History of the Internet by Stephen Segaller was originally a PBS series (which I’ve never seen) but became a book which is a fascinating read if you’re into history, technology, or both. In the book, there are a series of quotes from the men and women behind the original creation of ARPnet (the Internet), including several that describe AT&T’s “Big Bell Dogma.”

Larry Roberts: “I gave speeches about this in the 1967-to-1969 timeframe…Defense Communications Agency; AT&T; and the other people around had all these engineers who actually booed and hissed… ‘Everything would go wrong, and it couldn’t possibly work.’ … AT&T and DCA laughed at me. In fact, they more than laughed. They actually were very nasty. I felt like people were throwing rotten eggs at me when I was giving speeches as we were preparing for this, because they basically thought we were crazy.”

Dave Walden: “The telephone companies seemed to me to be working pretty hard to discredit packet switching. They would go give speeches. They’d talk to their customers and say this isn’t a good idea. It can’t be. The telephony attitude is not very compatible with packet switching… the telephony attitude is about guaranteed levels of service and capacity. It’s about investments that you make that you get back over decades.”

Len Kleinrock: “I would say, ‘Please give us good data communications,’ and they would reply, ‘The United States is a copper mine – we have phone lines everywhere so use the telephone network.’ I would counter, ‘But you don’t understand, it takes twenty-five seconds to set up a call, you charge me for a minimum three minutes, and all I want is to send a millisecond of data.’ Their reply was, ‘Go away, children, the revenue stream from data transmission is dwarfed by that of our voice traffic.’ So the children went away and created the Internet!”

Bob Taylor: “When I asked AT&T to participate in the ARPAnet, they assured me that packet switching wouldn’t work. So that didn’t go very far.”

Another great technology history book is Wireless Nation: The Frenzied Launch of the Cellular Revolution in America by James B. Murray, Jr.

In it, the author describes AT&T’s behavior when the first cellular spectrum licenses were distributed by the FCC: “On June 8, the day following the Round I filings, AT&T and GTE announced that they and the rest of the wireline applicants had agreed to split ownership of the top thirty markets. The two wireline heavyweights had successfully intimidated scores of smaller independent telephone companies, convincing them that they could never assemble the capital or expertise needed to launch these new cell phone businesses. If the small companies would just stand aside, AT&T and GTE declared, they would graciously condescend to share minority interests in the contested markets. But AT&T and GTE would, of course, be in charge – and they would bill their minority partners for the service.”

A third fascinating read is End of the Line: The Rise and Fall of AT&T by Leslie Cauley.

A small part of the AT&T story is how, at the breakup of AT&T and the formation of the seven “baby bells,” AT&T gave away the nationwide cellular licenses described above. Cauley describes it this way: “They also got AT&T’s operational licenses for a brand-new service that appeared to have no future. …That cache of operational licenses? They were wireless licenses. … At the time nobody expected wireless to amount to much. AT&T’s own internal studies had concluded that the wireless market might attract 1 million users, at most. So when a young attorney named John Zeglis urged Brown to give the licenses to the Bells as a consolation prize, he didn’t hesitate.”

However, Big Bell Dogma isn’t just about how Ma Bell historically acted. In fact, a more accurate name might be Incumbent Intransigence, but Big Bell Dogma sounds so much better!

Big Bell Dogma stems from the power that comes from incumbency. Any person or organization creates power over time. For companies, this power comes from their market position, their relationships with customers, their brand, their physical assets, etc. For individuals, this power comes from knowledge and experience, and from relationships with others that enable them to be successful doing their jobs.

The net result is that, over time, any new idea or change becomes a threat to this power.

Think about your own job, assuming you’re currently successful. If tomorrow your boss came to you and said “I’m transferring you to a new group to do a new job that you’ve never done before working with people you don’t know,” your confidence in your ability to succeed undoubtedly would be challenged and you’d immediately want to do whatever you could to stay where you are doing what you’re doing (and maybe get a promotion that incrementally adds to the scope of your current success).

The same holds true for companies.

And the more entrenched an incumbent is, the less flexible they become, the less open they are to new ways of doing things, and the more aggressively they attack anyone who tries to introduce new ideas into the marketplace.

It’s easy to point at Sprint’s two largest competitors, who happen to still be “Big Bells” and tag them with the BBD tag, but I recognize that anyone who has any incumbency at all suffers to some degree from this malady. I try to spot the symptoms in my own behavior and self-correct before I kill a really good idea.

So, what are the symptoms? The attitudes that, to me, are symptomatic of Big Bell Dogma include:

  • Change is risky. Status quo is safe.
    Status quo protects the stability of networks and systems. It also protects the power of incumbents.
  • Flexibility is risky. Rigidity is safe.
    Flexibility introduces uncertainty which threatens the performance of the networks and systems. It also threatens well understood and steady cash flows.
  • Distributed control is risky. Centralized control is safe.
    Centralized control ensures that nothing happens without an understanding of the impacts on all aspects of the system and without the ability to “roll back” to the previous stable state. It also ensures that incumbents are in control and determine which changes are in their best interest.

Can you spot these attitudes in your own behaviors? Are you willing to drive them out?

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Now playing: Greg Adkins – On The Edge

Converged Products: May 7, 2008 Edition

Wednesday, May 7th, 2008

Update: Instead of sticking to a regular schedule, as I collect a readable number of interesting links in a topic area, I’ll share. Today, it’s all about converged products.

The most convenient way that mobility is getting built into products is through the convergence into the cellphone of capabilities that previously existed as standalone products. That way, those products are now with you and available for your use whenever you need them wherever you go

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Now playing:
The Normals – Brittle Bone

Enabling Technology: May 4, 2008 Edition

Sunday, May 4th, 2008

Update: Instead of sticking to a regular schedule, as I collect a readable number of interesting links in a topic area, I’ll share. Today, it’s all about technology.

The Law of Mobility talks about value increasing with mobility. The impact of this law is being felt because the barriers to building mobility in are being obliterated week after week. Here are examples of technology advances enabling this to happen:

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Now playing: Ashley Cleveland – Soon And Very Soon

Mayday!

Thursday, May 1st, 2008

Thanks at least in part to broadened responsibilities at work, keeping on top of industry news in a handful of categories so that I can post every weekday has become a substantially larger burden than when I started this blog a couple of years ago. To restore (some of) my sanity and reduce stress, I’ve decided it’s time to pull back on the daily postings. Instead I’ll try to write meaningful commentary more frequently. I will also continue to provide end-of-the month lists of some of my favorite topics.

If my decision creates a hole in your daily reading, may I recommend a few blogs that are chock-full of news on a daily basis:

Of course, keep your “dial tuned to this station” for increasing commentary and perspectives on how mobility is revolutionizing how we live and work.

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Now playing: Kevin Max – Stranded 72.5