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Rich Tehrani

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The Good, the Bad and the Locatable

Why Wireless Carterfone is Needed

The Carterfone ruling (www.tmcnet.com/2426.1) is what allowed the AT&T network to be opened up to competition. Ironically, it was the result of AT&T attempting to stop a company from adding a device to its network via an acoustic - not an electrical - connection.


The 1968 Federal Communications Commission allowed the Carterfone and other devices to be connected directly to the AT&T network, as long as they did not cause damage to the system. This famous ruling (13 F.C.C.2d 420) created the possibility of selling devices that could connect to the phone system using a protective coupler, and opened the market to customer-owned equipment.


Many companies including Skype have tried to apply this ruling to the wireless market (www.tmcnet.com/2427.1) and change the practice of bundling service and device with long-term contracts consisting of early-termination penalties. I actually thought this matter was over long ago (www.tmcnet.com/2428.1).


But recently I came across a press release from The Phoenix Center, (www.tmcnet. com/2429.1) which says that if the FCC were to regulate the way the mobile industry operates, consumers would ultimately lose out. Their point is that the result of such moves will be higher costs for mobile devices with no guarantee of lower service costs.


This is why their press release is right:


Long-term service contracts do indeed partially include financing charges on the device which you use. If you keep your phone for the length of the contract, you are doing well and any change to this practice could hurt you.


Here's why this idea is wrong:


Nobody wants to be locked into a service contract. People generally want short commitments, not long ones.


When service providers subsidize equipment, they ensure that the equipment functions in a way that does not eat into service provider revenue. This is why service providers in the U.S. have crippled the Bluetooth function on phones (www.tmcnet.com/2430.1) so customers are forced to buy equipment or service from the provider so they can share photos, music, etc.


America lags behind Asia and Europe when it comes to mobile devices. The iPhone aside, Americans just don't get to experience some of the world's best devices. As mentioned above, carriers cripple certain functionality of the phones that they agree to subsidize. Thus customers who want full feature functionality end up paying more for devices that are not subsidized by the carriers.


Moreover, device manufacturers despise American wireless carriers because they can't get their phones in the hands of Americans without having to go through service providers who set the rules and charge fees and dictate terms. This just can't be good for customers.


The iPhone showed the world that service providers are the wrong people to hold the keys to the mobile device gate. Increased and open wireless competition will lower device prices. If you are spending $400 on a phone, it had better be awesome. People will actually demand better products and manufacturers who produce substandard products just won't make money.


If "Wireless Carterfone" comes to fruition, the benefits will far outweigh the drawbacks.


I am not the head of a think tank such as the Phoenix Center, but my long experience in telecom gives me the feeling that "open" is always better than "closed" and that's often true for reasons we can't foresee. In my career, I have always advocated open approaches to communications and have published magazines on CTI, which espoused openness in communications equipment and Internet Telephony, which espoused openness in communications over a network.


In every case, the open solution was better. Look at solutions like Asterisk for more proof that open solutions help customers. I just have to disagree with the Phoenix Center over the long term. Sure, in the short term a situation could arise where a consumer must pay a few hundred more dollars for a cell phone but over time, but a greater number of alternatives will bring the prices down quickly and the devices will have full functionality, which is always a good thing.


Finally - and this is corny, I agree - closed markets are just un-American.


AT&T Boosts GPS with A-GPS


AT&T recently announced their support of A-GPS or Assisted GPS, which is a technology that leverages the best of both GPS and cellular worlds, allowing faster and more accurate position tracking. GPS devices, while fairly accurate, can take minutes to initialize and require a fairly strong signal to work accurately. Quite often in fact, GPS does not work indoors or in areas where there is dense foliage.


A-GPS truly "assists" GPS by enabling the cellular network to tell the device generally where it is situated, which means that the GPS receiver can narrow down its search for satellites, which in turn means faster and more accurate positioning results.

In a press release (www.tmcnet.com/2431.1), AT&T explains it will further launch two new navigation applications - MapQuest Navigator and AAA Mobile Navigator. The new applications add to the company's AT&T Navigator and AT&T Navigator Global Edition offerings.


Depending on how the public responds to this technology, it is possible A-GPS will replace GPS as the favored positioning technology, which would result in most GPS devices getting some assistance from cellular towers. If this comes to pass, it will add to the logic of a company like Nokia purchasing Navteq - the company providing digital map information to many GPS devices.


Additionally, we can expect more service providers to roll out AGPS as they look to monetize local search while competing with Google. In fact, service providers have an opportunity of a lifetime to embed themselves in the local search business before companies like Google and Yahoo! take it over.


A major question is whether partners like AAA, Zagats and others will be strong enough partners to help providers worldwide compete with Google when customers are searching for local restaurants, department stores and more.


Aside from the many Google ads, there exists a good reference on A-GPS (www.tmcnet.com/2432.1), as well as a Wikipedia entry (www.tmcnet.com/2433.1) for more.


Fonality Gets More Funding


Fonality recently received a $12 million financing round by Draper Fisher Jurvetson Growth Fund (www.tmcnet.com/2434.1). It's a powerful statement by this top fund that they really believe in the open source communications story. To be quite honest, it is tough to disagree with them - this is a great space to be in as most every vendor in the open source communications space is doing well.


I have covered Fonality extensively before (www.tmcnet.com/2435.1) - the company makes quality PBX products and I have had a chance to test the Trixbox PBX and remain impressed.


Getting back to Draper - the fund has had some great investments including Hotmail, Baidu, Focus Media (advertising in China), Skype, Overture, Divx and many others. Some of the lesser known, current investments include Jobfox in the recruitment space; Kajeet, in mobile services; and Visto in wireless e-mail.


But getting back to Fonality, the company has employed an interesting twist in the communications space as their PBX has taken some of the best parts of open source and fused this with a hosted model - allowing, for example, the recording of phone calls on Fonality servers, which do not reside in your office.


At this point it should be obvious that the open source communications market remains one of the most exciting spaces in telecom.


John Chambers on Visual Networking


I missed John Chambers live on CNBC recently. I wanted to hear what he had to say but unfortunately I was being interviewed about ITEXPO at the exact same time Chambers was on. Thankfully, Michael Dinan, a TMCnet editor, was on hand to listen to Chambers and write up what he had to say (www.tmcnet.com/2436.1).


Chambers seems relatively bullish on technology and anticipates growth between 12-17 percent for the long term. In addition, the world's largest networking company announced a net of over $10 billion for the fourth quarter. This is the first time the company has exceeded the $10 billion bogey.


Chambers also spent a good deal of time focusing on visual networking and the growth of this market. Since 1997 the company has predicted a CAGR of 46 percent growth rate in visual networking based upon their Visual Networking Index or VNI (www.tmcnet.com/2437.1).


As many of us probably expect, Cisco cites the tremendous growth in wikis, blogs, social networking and video sites like YouTube as reasons for the explosion in the VNI. The good news is there seems to be no end to the number of catalysts which increase the need for ever-faster networking and computing gear.


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