T-Mobile's exit strategy

Since having its $39b sale of T-Mobile USA to AT&T nixed on antitrust grounds, Deutsche Telekom AG has been trying to figure out another way to exit the US market.

Today DT announced that its US subsidiary (#4 with 33.2 million subs) will be merged with the #5 US carrier, MetroPCS (with 9.3 million subs). The press release is here and the story is covered by Fierce Wireless (among many others)

It’s being called a “merger” but it’s clearly an acquisition (structured as a recapitalization), since T-Mobile USA will retain its name, technology, HQ and CEO — while MetroPCS will lose all four. It will retain its NYSE stock listing but presumably not its PCS ticker.

Although the cash payout is only $1.5b — funded by a $2.4b sale/leaseback of T-Mobile USA towers — MetroPCS shareholders will own 26% share of the new company. I haven’t seen any estimate of the value of the acquisition. The market suggests that the cash only accounts for one third of the value: today MetroPCS has a market cap (on inter-day trading) of about $4.5b, vs. $4.2b yesterday and $3.5b a month ago.

So instead of being paid $39b to exit, DT is paying $1.5b cash to build up a more stable company. I would presume that DT hopes that it will be able to gradually unload its 74% holding in the combined company through open market sales.

The two companies will be run as separate operations until T-Mobile can get all MetroPCS customers to phase out their CDMA handsets in favor of GSM ones. At today’s press conference, T-Mobile said it hopes to pull the plug on the MetroPCS network by the end of 2015. In the meantime, T-Mobile gets cheap LTE spectrum that both types of customers can share as the CDMA voice footprint goes down and the GSM voice footprint goes up. Or perhaps both end up on VoIP, i.e. VoLTE) which MetroPCS announced it plans to introduce in 14 US markets by early next year.

The acquisition puts pressure on #3 Sprint (56.4 million subs), which was a more obvious buyer for MetroPCS (which would have avoided the disastrous technology incompatibilities of its Nextel purchase). But so far, Sprint shareholders seem not to have reacted (either way) to the news.

One thing I haven’t seen mentioned: this is the merger of the iPhone outsiders: the #1, #2 and #3 carriers have the iPhone but #4 and #5 do not. Perhaps this will make Sprint want to buy the #6 carrier (which does have the iPhone): San Diego’s Leap Wireless which has 5.9m subscribers on its Cricket network.

However, the two hitches are technology and pride. Sprint is migrating its 4G strategy from WiMax to LTE, while Cricket uses TD-LTE, the Chinese variant not used by the top 5 carriers. (However, Cricket only offers LTE service in Tuscon right now, so perhaps it could drop the incompatible LTE if its acquired soon).

The other problem is that Leap turned down acquisition efforts by MetroPCS since 2007. Perhaps its due to bad blood between the companies that wouldn’t apply to Sprint, or perhaps Leap will realize that it lacks scale to operate its own network indefinitely in an ever-commoditized market.

Whither T-Mobile USA?

The Obama Justice Department filed suit Thursday to block AT&T’s proposed acquisition of T-Mobile USA. The case against the merger is compelling, but I never thought the administration would make the political decision to block the merger.

Perhaps the Justice officials bought into a slippery slope argument: if they don’t say “no” to AT&T buying T-Mobile, how could they say no to Verizon buying Sprint. Or maybe it was the strong signs of opposition from the Democrat majority in the Senate.

Even the Wall Street Journal reported that Ma Bell’s efforts to build political support never solved the legal condurum:

If breadth of backers was the main criteria, AT&T's $39 billion purchase of T-Mobile USA would have sailed through regulatory review. … But good corporate citizenry and lobbying expertise aren't the only criteria. And as the Justice Department's court challenge to the deal Wednesday demonstrated, the deal was always long on hype for how it would help consumers, and short on robust legal arguments.
…
AT&T's problem is that the legal issues aren't on its side. Antitrust lawyers had said in recent days that the company's chances of winning approval rested on political issues trumping legal concerns. The fact that the government challenged—months earlier than observers had expected—demonstrates that the legal issues won the day.

On the most basic level, it was evident before the filing, the combination exceeds concentration of market share levels—as defined by the Herfindahl-Hirschman index—that the federal government generally finds acceptable. Divestitures could resolve the concentration risk, of course. But AT&T will find it harder to get around the reality that a merger would reduce the number of national wireless firms from four to three—in the process eliminating a low-priced competitor.

Given that reality, it’s hard to understand why AT&T claimed to be surprised. Shareholders should demand an immediate investigation as to what Kool-Aid® they’ve been passing out at Whitacre Tower, headquarters for SBC AT&T in San Antonio.

AT&T may fight for half a loaf, but any partial AT&T victory would leave T-Mobile in even weaker shape that when the deal was announced — except for the temporary salve of the $3 billion breakup fee.

The problem is, T-Mobile USA (misleading ads with spokesbabe notwithstanding) has no 4G strategy and has been under-investing in the business as an endgame strategy. It’s too expensive to compete with Metro PCS (or Sprint’s Virgin Mobile) and lacks the phones or service quality to compete with the big three.

Of course, if #2 AT&T can’t buy #4 T-Mobile then #1 Verizon certainly can’t. That leaves #3 Sprint, or perhaps some foreign entrant.

Some may claim that this will force a Sprint-T-Mobile merger, but it’s hard to see how. The two have incompatible technologies, and buying the Nextel incompatible technology almost killed Sprint. Also, Sprint’s market cap today is about $11 billion so there’s no scenario where they could approach AT&T’s $39 billion offer or even the $20-25 billion that analysts estimated last Christmas.

My best guess: T-Mobile AG will run the property further into the ground, with no 4G strategy and its advertising-driven price war. Then in a few years, the world’s richest man (not Mr. Bill) will buy T-Mobile USA for less than half of the $39 billion, and integrate it with América Móvil, Latin America’s most successful mobile phone business. It could put together special roaming agreements for the millions who live and call on both sides of the 30th parallel.

Meanwhile, T-Mobile USA won’t have the spectrum or money to build a 4G network, so someday it will have to rent time on a virtual 4G network, whether Sprint’s partner Clearwire or Leap’s Lightsquared.

I’m (temporarily) a T-Mobile subscriber. I suspect the prices will remain attractive as long as T-Mobile is fighting to preserve its subscriber base and prop up the eventual sale price. I’m curious to see whether T-Mobile will start any price wars, or will remain reactive to MetroPCS and Virgin price wars, but in the end I don’t think it will have any bearing on its survival.

Regulated duopoly vs. real competition

Last week, a Senate subcommittee held a hearing entitled “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?” The CEOs of three of the four major cellular companies got a chance to present their positions in between political grandstanding.

I was fortunate to catch the replay Sunday on C-SPAN (one of the few channels my monopolist cable company still provides on basic cable.) A low resolution version of the 2½ hour hearing is also available on the Senate website.

The expert (if self-interested) testimony confirmed what I already knew. As with any consolidation of four major firms down to three, the merger is about reducing rivalry, supplier power and buyer power — good for the surviving companies, bad for suppliers, customers and the smaller rivals.

The Case Against the Merger

The most enlightening testimony came from Victor Meena, CEO of small rural carrier (Cellular South) that (according to Wikipedia) is the 8th largest in the US (after Verizon, AT&T, Sprint, T-Mobile, MetroPCS, US Cellular and Cricket/Leap).

As someone who has spent 15 years studying the history of the US cellular industry — from the prehistory of the 60s and 70s to the boom era of the 90s — I believe Meena has it exactly right. Reducing competition back to a duopoly will bring us back to duopoly-style pricing and duoopoly-style non-competition.

Meena described the merger as a major step backwards for the industry and its customers:

When I began in this business in the late-1980s, there was a local duopoly in every market.… Carriers had virtually no market incentive to innovate or improve service offerings.… In a duopoly, the market can quickly reach equilibrium and, if both providers are reasonably happy with their position, innovation stagnates and prices rise.

The industry changed for the better in the late 1990s, when the FCC, pursuant to Congressional mandate, auctioned off PCS licenses and a substantial number of competitive carriers entered markets—launching a new, healthy competitive era of wireless in the U.S.
…
But this all began to change in the middle of the last decade. Through unfettered mergers and acquisitions, it has become clear that our industry is on a glide path toward Ma Bell reconstituting herself into the 2 Bell Sisters of the wireless industry: AT&T Wireless and Verizon Wireless.
…
Not surprisingly, this concentration of market power has led to less choice for consumers and the routine abuse of market power in an effort to prevent competition at every turn. Specifically, AT&T has used its enormous acquired scale to

1. restrict competitive carrier and consumer access to devices,
2. withhold roaming agreements, and
3. leverage its control over device and infrastructure vendors to Balkanize new spectrum and slow the deployment of 4G LTE technology in the U.S.

Meena and Sprint CEO Dan Hesse identified two other negative impacts of increased market power. As chairman of the CTIA, Hesse has been attempting to negotiate lower rates for wireline backhaul for cellular base stations — rates that AT&T and Verizon want to be high but the rest of the industry want to be low. And by consolidating carriers, Meena notes there will be fewer options for smaller carriers to find roaming agreements for 3G and 4G data, as mandated by the FCC last month.

Supporting Cast

As expected, AT&T CEO Randall Stephenson said little to convince me that the merger is good for anyone other than AT&T, while T-Mobile USA CEO Philipp Humm seemed intent on deferring to his new boss. Verizon’s CEO was strangely absent, either to avoid making arguments that would haunt him when he wants to buy Sprint, or to avoid reminding people that two companies will control 80% of the market if the merger goes through.

Among the leftist activists, the self-appointed “consumer” representative was far more persuasive and honest than the union president. At least she knows what a Herfindahl-Hirschman Index is. Tellingly, she also asked: “have you ever seen AT&T advertise against Metro PCS or Cricket?”

The quality of dialog from the top of the dais was also mixed. The two ranking members of the subcommittee — Sen. Kohl and Sen. Lee — asked intelligent questions that attempted to draw out the witnesses. Two other senators (Franken and Grassley) were dim bulbs acting like a prosecutor and defense attorney for the accused. (Sens. Klobuchar and Cornyn were only slightly better — but at least viewers were spared Chuckie Shumer).

If Not Competition, then What?

Meena offered a stark (and I believe accurate) contrast between the two paths forward:

The prospect of this transaction brings us to a critical decision point for policy-makers: are we are going to continue down the path toward an era of nationwide duopoly, or are we going to lay the foundation for a second competitive era in wireless. There is no third option – either AT&T will be allowed to acquire T-Mobile (paving the way for Verizon to acquire Sprint and cementing a national wireless duopoly); or it will not.

If AT&T’s takeover of T-Mobile is approved, all that will remain is the endgame, where the remaining non-Bell carriers wait their turn to be acquired or bled dry by the biggest two carriers.

And, Meena notes, the likely consequence of returning to duopoly is returning to FCC micromanagement:

[I]f the takeover goes forward, policymakers must begin preparations to regulate every aspect of the day-to-day business of the duopolists. Without effective competition as a check on market abuses, the government will have to interject itself to ensure that consumers – the true owners of wireless spectrum – are protected. This means subjecting a future wireless communications duopoly to the same type of regulatory oversight that wireline telephone and electrical power utilities have operated under for decades.

This idea was echoed by Sen. Klobuchar, who suggested that a more concentrated US market — like the rest of the world — would be a more tightly regulated market.

Of course we know that government (or any central command-and-control bureaucracy) usually does a bad job of assuring either innovation or efficiency. So if the choice for consumers — and app developers and handset makers and website owners — is real competition or regulated duopolists, the best option is obvious.

Saving T-Mobile

If the merger is killed, it still leaves the question of maintaining T-Mobile as an effective competitor. It will take more than just a cute spokesmodel and dishonest branding to have it maintain its market share.

In particular, both Stephenson and Humm pointed to T-Mobile’s looming quandary in the 4G era, given that it hasn’t bought new spectrum in the recent auctions. Actually, the solution for the #4 carrier is relatively simple: do what the #3 and #7 carriers are doing for a 4G network: rent one.

Clearly T-Mobile is not going to join Sprint using Clearwire’s WiMax network, but if Clearwire switches to LTE, it would be an attractive option.

If not, it can follow the lead of Leap Wireless (dba Cricket) in renting the LightSquared network. It’s LTE, it promises to be nationwide, and the T-Mobile/Cricket customer base would be enough to make an attractive business (at least until MetroPCS buys Leap).

I dumped Sprint, but they're right

As I threatened more than a year ago, today I finally quit Sprint after more than 13 years. The long term reason was their smartphone surcharge — $80 for any smartphone — which prevented me from using a Palm Pre that I owned without paying the surcharge.

The final impetus came when my third Treo failed exactly the same way, but they refused to replace it (despite a $50/year repair agreement) due to false claims of “water damage”. Hah! More than a decade of loyal service wiped out by a penny-pinching denial of a legitimate claim. (I went 2 weeks without a cellphone before walking into T-Mobile and getting a SIM card for the Symbian phone I only use in Europe.)

Still, I couldn’t agree more with Sprint’s full page ad (which ran Sunday in my copy of the Merc and apparently the San Francisco Chronicle as well) attacking SBC’s ongoing attempts to re-assemble Ma Bell.

Competition is everything
…
Competition is American, Competition plays fair.
Competition keeps us from returning to a Ma Bell-like, sorry-but-you-have-no-choice past.

As the #3 cellphone carrier, of course Sprint is fiercely opposed to the merger of #1 and #4. Right now T-Mobile is the industry’s sick child, but if the merger happens that dubious honor will pass to Sprint.

It doesn’t help that the early betting is that the Obama administration won’t block the deal, but let the deal happen with conditions.

The problem for consumers — but not Sprint — is that the arguments being used to justify the AT&T/T-Mobile merger would then justify Verizon Wireless buying Sprint.

This means an oligopoly would become a duopoly. After the two mergers, the top two carriers with 152 million and 130 million subscribers — with more than 90% of the US market of some 300 million subscribers. The next seven carriers would total 21 million, led by MetroPCS with slightly more than 8 million.

Independent analysts say that AT&T’s problems are of its own making — delayed LTE rollout, dropped calls, lack of capacity. It also removes T-Mobile scrapping for customers, offering a low priced alternative to the big two vendors.

So while I’m no longer a Sprint customer, I agree with its (self-interested) argument that the merger is bad for the US telecom industry. Unfortunately for Sprint, the new AT&T is the largest corporate donor and lobbyist in the US — and third overall after a Democrat PAC and a public employee union. No how many citizens file complaints, it seems like 2012 will have a very different competitive landscape than what we have today.

Skype and that river

Da Nile is flowing through Bonn and the global T-Mobile headquarters. The German carrier is blocking Skype iPhone use on both its network and also its Wi-Fi hotspots. Skype’s general counsel responded

I find it quite telling that Deutsche Telekom would be so bold as to announce this arbitrary blocking of Skype. They pretend that their action has to do with technical concerns: this is baseless. Skype works perfectly well on iPhone, as hundreds of thousands of people globally can already readily attest. But their announcement also demonstrates that some operators do not fear the customer or regulatory consequences of their bad behaviour. It’s worth noting that even if German consumers wanted to change mobile providers, they could not: like Deutsche Telekom, every other German mobile operator contractually forbids consumers from using VoIP applications. (this is the same in France, actually).

…

Yet, no one can do anything about it: German or EU regulation does not forbid such blatantly unfair practices, and the new EU legislation for telecoms which the European Parliament and European governments are supposed to adopt later this month will not help either, it seems from the latest texts being considered in Brussels: it may even make things worse, by legitimizing restrictions put in place by operators to users’ Internet access, as long as they inform consumers.

AT&T is more open in its criticism as told to USA Today:

Jim Cicconi, AT&T's top public policy executive, says AT&T has "every right" not to promote the services of a wireless rival.

"We absolutely expect our vendors" — Apple, in this case — "not to facilitate the services of our competitors," he says.

"Skype is a competitor, just like Verizon (VZ) or Sprint (S) or T-Mobile," he says, adding, Skype "has no obligation to market AT&T services. Why should the reverse be true?"

Now (self-styled) consumer activists are asking regulators to intervene (in a longstanding regulatory case) on Skype’s behalf and end VoIP blocking once and for all:

"This issue is not new -- it is simply unresolved. Wise voices at the FCC have long said that the Internet Policy Statement applies to wireless," said Ben Scott, policy director of Free Press. "As more and more consumers begin to access the Internet wirelessly, it is critical that the FCC clarifies that online consumer protections that prohibit blocking are the same regardless of how we access the Web."

A similar argument came Monday from Voice on the Net (VON) — a DC-based VoIP lobbying group featuring Google, Microsoft and Intel — which has asked the EU to overturn the T-Mobile decision.

Again, this is an unwinnable fight. I’m guessing that the carriers figure they can get a 0.5-2 years by stalling in the US, and longer in Europe where their status as former government departments (PTTs) will allow them to exploit nationalism against the Luxembourg-based Skype (owned by the big bad American eBay).

Google is in a particularly odd position. It is pro-VoIP, pro-Skype and wildly in favor of “Net Neutrality” in addition to being a co-sponsor of the VON Coalition. However, for its Android-based G1 phone is kowtowing to T-Mobile’s restrictions in the US.

Thus far, Skype has only released the Java-based client “Skype Lite” for various top five phone vendors and specifically for Android. The “Lite” means VoIP-free: it makes calls over the voice network, thus mollifying carriers.

At some point, there will be a real Skype for Android phones. So then what will Google do? Block it? Have the VON Coalition attack T-Mobile while Google knifes Skype from the Android Market?

G1 Limitations

The Nokia Blog is posting an article by a tech writer who tried the Android G1 and gave up.

Obviously the site is biased, but still it is instructive to see what blogger Chris Walters hated: the camera build quality, camera quality its looks, and the carrier lock-in. He did find the G1 user interface much more elegant than S60, particularly for how messaging is handled.

He also liked the nascent App Market more than either the commercial (Download!) or free (MOSH) Nokia download services. However, he doesn’t analyze the app store capabilities to the same degree as (say) Michael Mace.

His conclusion:

After a week with the G1, my conclusion was that Android is loaded with promise, but the G1 represents a squandered opportunity for T-Mobile and HTC. I’m certain upcoming firmware updates will iron out kinds in the Android OS, and may even make the camera usable for basic snapshots, but you can’t fix ugly design or poor build quality over-the-air. The G1 is definitely not a smart phone, and with the lack of a headphone jack, decent speakers, or the ability to record video or take decent photos, it’s not even really a feature phone.

From the things he likes, I suspect he will like the 2.0 or 3.0 much better.

gPhone tire kicking

I finally saw my first HTC G1 today. I stopped by the T-Mobile strip mall store and spent 10 minutes with one (although it had the anti-theft hook attached).

The phone design was small and slick. Unlike many phones, the SD card was readily available and removable. As with other HTC phones, the PC and power cable is a standard USB mini 4-pin connector. There was a dedicated button for bringing up a Google search window.

However, with its sideways keyboard and half-VGA screen, it seemed more like an upgrade to T-Mobile Sidekick than an iPhone killer. I did a little bit of web browsing, including to my SDTelecom blog. The screen was sharp and almost wide enough for the text — certainly wider than my Nokia E65 (my only other web browsing phone). The crucial test would be website compatibility — presumably similar to the iPhone WebKit browser but I didn’t have a large sample.

The Android Market was a major disappointment due to minimal selection. Perhaps it’s the lack of incentives: free applications, versus the paid apps available at third party gPhone stores such as Handango (let alone the stores of Apple or various carriers).

Overall, the form factor was interesting, but I couldn’t really see anything distinctive about the software. The iPhone has a wow! while the BlackBerry and Symbian S60 are mature, complete platforms. Right now, the G1 has a long way to go.

EU carriers pay dearly for iPhone exclusive

This morning, Steve Jobs unveiled the iPhone that will ship in the UK on Nov. 9. As rumored since July, the iPhone is exclusive to O2. With an initial price of £269 and an 18-month contract, that works out to a £899 commitment ($1795) vs. $1799 over 24 months for the US phone after the price cut (but everything in London is more expensive).

There were a few interesting developments. Unlike in the US, the iPhone will not only be sold by the carrier and by Apple, but by a third party store, Europe’s Carphone Warehouse.

Somewhat surprisingly, it’s still only 2.5G, which Jobs blamed on the power consumption of 3G. (Is this inherent to 3G, or just the current implementations?) Despite all this, the interest crashed O2’s online stores, as buyers rushed to be the first to get an iPhone: the 1,500 visitors a second meant “the website has had more hits today than we normally do in a week.”

As predicted, the world’s largest carrier Vodafone refused Apple’s terms, and so Apple went with other carriers — O2 in the UK, Orange in France and T-Mobile in Germany; Jobs reportedly will be making the other announcements over the next two days. Interestingly, these are all the former national monopoly phone companies (BT spinoff O2 is now owned by the Spanish Telefonica monopoly).

The London Times reports O2 will give Apple 10% of the revenue from the iPhone, while the Guardian put it at 40%. (I suspect that’s for data revenues or profits, not the gross). Telefonica’s CEO aggressively fought to get the deal away from Orange and T-Mobile (both with big UK operations).

Also odd is that in June Orange sounded angry at Apple’s control of the music download market, but now (according to Le Figaro) is willing to pay Apple more than 10% of revenues for exclusive rights in France.

The Guardian said that the carriers were annoyed at getting pitted against each other to pay Apple the highest possible price — exactly as Apple did with Verizon and Cingular in the US. Students, what would we call this?

Photo from SlashGear.

Technorati Tags: Apple, iPhone, Orange, O2, Steve Jobs, T-Mobile

Cingular is terrible, but …

David Pogue is a onetime Mac trade journalist who made it to the big time with a NYT column. I don’t read the NYT anymore because (among other reasons) they now charge for opinion columns — presumably arguing that (Walter Isaacson’s latest complaints notwithstanding) ranting is more more expensive to generate than hard news.

However, the NYT is quite happy to e-mail me the Pogue e-newsletter for free. After remarking how great the pocket digicam has become, in today’s column Pogue then lists several product categories that are not there yet. #2 on the list is

The great cellphone carrier. When the iPhone came out, everybody grumbled and moaned about how Apple had chosen AT&T as its exclusive carrier. I grumbled along with them—and then it hit me: Whom wouldn’t people have grumbled about? People also hate Verizon, and T-Mobile, and Sprint. Everybody feels oppressed by the contracts, mistreated by customer service and victimized by billing gaffes.

I don’t know why one of these cell executives doesn’t just wake up one morning and realize that the way to dominate the cellphone industry isn’t taking out more ads on billboards and newspapers. It’s creating a service that’s so good, the customers love you, recommend you and (here’s the big one) don’t leave you at the first opportunity.

I think that’s fair — if Cingular (aka AT&T) is terrible, the others aren’t much better. My sense is that each is terrible on at least one thing, each creating a legion of anti-fans. (Although perhaps Mr. Pogue didn’t read this morning’s NYT article about AT&T’s 300-page phone bills for iPhone owners).

I’ve stayed with Sprint because they’re cheap (regular readers know I like cheap), because when I signed up they had excellent San Diego coverage, and now their Bay Area coverage has gotten better. They built up enough loyalty that I stuck with them after they fouled up my bill last fall, which took several hours on the phone (in 5 phone calls across 3 months) to straighten out. But this sort of billing snafu — particularly for a brand new customer — would often make an enemy for life.

That raises the question: is this an inherent problem of telecom oligopolists? Do the carriers that have good networks get hated for arrogant customer service, contract or pricing policies? (With the remaining carriers offering lousy coverage and lousy networks?) Or is there a cell phone carrier somewhere in the world that is generally loved? (Please let me know)

I would not be surprised if Metro PCS or Leap Wireless have devoted customers, if for no other reason that their flat-rate pricing model avoids the huge surprise overages that piss people off, and probably avoids most potential billing hassles too. (IIRC, they also don’t require contracts). However, neither has a national license so they’d only be suitable for customers who plan to stay within a specific metro region — clearly making enemies of people who bought the service not understanding this major limitation.

Technorati Tags: AT&T, Cingular, mobile phones, Sprint, T-Mobile, Verizon

Da Nile Runs Through Barcelona

To read this week’s accounts of the 3GSM speech by the CEO of T-Mobile, da Nile is no longer just a river in Egypt. Hamid Akhavan said that while VoIP may be cannbializing the wireline voice business, it will have “far less impact” on the mobile phone business.

Translation: we have a closed and locked business model, we control the handset, and we will refuse to let our customers use VoIP.

Some choice quotes:

"When people talk about VOIP, they think free," Akhavan said. "With any mobile service provided over the Internet, you're going to need to buy a data package."

Translation: we will charge them so much that VoIP is uneconomical.

“There are all sorts of technical issues that make mobile VOIP services difficult to implement,” he said. Technical issues related to how networks pass on IP addresses of mobile users have not been completely resolved, he noted. “Take reachability, for example: How can the call come to me?”

While SkyPE is certainly aware of mobile phone issues, I guess Akhavan hasn’t noticed that problems such as routing incoming calls and emergency phone location have been solved with cell phones and are being solved with landline VoIP.

Certainly all these things may happen. But I have a two word retort: Wi-Fi hotspot. Even ignoring VoIP-over-3G deals, who’s going to buy a smartphone that doesn’t work with free (or more reasonably priced) Wi-Fi hotspots? The operators who cripple their handsets (like Cingular does with the Nokia E62) will find that people will go to other vendors (or buy uncrippled phones like the E61 on the open market).

All this tells me is that T-Mobile does not see business users as important to their US market share. T-Mobile has spent more than $100 million to wire every Starbuck’s in sight, but apparently they’re not serious about leveraging the possible synergies to drive cellphone subscriptions.

Meanwhile, Hamid Akhavan argues that the impact of mobile data services will be greater than that of the (fixed line) Internet. Apparently he hasn’t listened to Mike Mace. (Big mistake).

As the cartoon says, he must be on something.

Graphic credit: “Pepper … and Salt,” Wall Street Journal, Feb. 14, 2007

Technorati Tags: business models, mobile phones, T-Mobile, VoIP, Wi-Fi