Disruptive Tendencies

Wi-Fi: Moving the Dial

(Originally posted at http://www.von.com/blogs/guest/2009/11/wi-fi-moving-the-dial.aspx

One of the most common questions I get when talking with wireless and wireline operators around the world, is how to monetize Wi-Fi services. Indeed, as subscribers are coming to expect Wi-Fi services for free, whether at Starbucks or with their iPhones, it is a complicated question.

In fact, many were skeptical when Cablevision, a BelAir Networks customer, announced its plans to launch “Optimum Wi-Fi” and to give away the service to its residential broadband subscribers as subscriber-retention play.

A key difference, over previous models, is that Cablevision focused its Optimum Wi-Fi deployments in “shopping centers, on main streets and train platforms, in parks, marinas, and at sports fields - the places you go everyday.” They’re delivering the service where their customers eat, shop and congregate – not striving for ubiquitous coverage.

And has this strategy been successful?

When Cablevision reported its numbers earlier this month, Q3 profit tripled, revenues grew 5 percent, ARPU is up 6 percent, net new adds were up 4 percent for broadband, and the stock jumped 3.2 percent on the results.

Craig Moffett, senior analyst at Sanford Bernstein, said free Wi-Fi is one reason why Cablevision customers haven't switched to Verizon. "Perhaps it's time to start giving Cablevision's free Wi-Fi network some of the credit," Moffett said in a research note. "For all of its vaunted capabilities in wireless, free wireless broadband is something that Verizon Wireless simply can't match."

Can you build a business case on free Wi-Fi? I’d say let the numbers speak for themselves.

That’s my .02!

Martin Suter is vice president of business development at BelAir Networks, a provider of broadband mesh solutions for Wi-Fi, WiMAX, 4.9 GHz Public Safety and 5.9 GHz ITS networks. Previously, Martin was the CEO at Cohda Wireless, where he raised the company’s profile and negotiated a licensing deal with a Fortune 100 vendor in its core franchise. Prior to Cohda, he was vice president of business development at MeshNetworks Inc., a classic tech transfer/disruptive technology success story that achieved a major liquidity event for its investors in Q4/2004 with its acquisition by Motorola. Martin also was responsible for building several high profile alliances with and for leading technology companies, including Fujitsu, Microsoft, Netscape, Sun Microsystems, and Teradata. Additionally, Martin has successfully negotiated technology transfer, distribution and/or licensing deals with companies like 3Com, BioChem Pharma, Dow Chemical, Exodus, Fujitsu, IBM, Microsoft, Motorola, Netscape and Sun.

 

Wi-Fi: No Longer the Rodney Dangerfield of Wireless

(Original posted at http://www.von.com/blogs/guest/2009/05/wi-fi-no-longer-the-rodney-dangerfield-of-wireles.aspx )

 

I may be dating myself here, but I’m sure many remember Rodney Dangerfield’s famous line – “I get no respect.” Until recently, that has been the general attitude toward Wi-Fi in certain circles, but the tide appears to have turned. Finally, Wi-Fi is starting to get the respect that it deserves.

Much has been written this past week on the rumored partnership, between Verizon and Boingo, as first reported in the WSJ. Yet to be confirmed, it is expected that this will allow Verizon broadband subscribers to roam across Boingo hot spots, at no additional cost. If this is the case, it suggests that Verizon is a fast-follower (in telco terms), to comparable offerings from AT&T and Cablevision for their subscribers. In no way does this diminish the significance of this potential announcement – it is a bold move by an 800-pound gorilla and one which I’m sure was heavily debated internally.

So why would a service provider embrace Wi-Fi today? The motivation depends on the type of service provider we’re talking about, but the answer really lies in the fact that the number and type of mobile devices and data-rich applications has reached the tipping point, and that it’s been embraced by their subscribers.

Wireline broadband providers have been in the Wi-Fi business for years now, with Wi-Fi-enabled, home gateways as the standard CPE for cable and DSL broadband customers. But now, these same subscribers are walking around with dual-mode handsets, Wi-Fi cameras, gaming devices, netbooks and are demanding broadband connectivity, outside the home. It makes sense for these same service providers to enable a similar experience outside of the home as well. Not ubiquitous coverage, à la failed muni, but targeted coverage where they eat, shop and congregate.

But how do you make money if you’re giving away the service? The answer lies in the question: What’s a subscriber really worth?

All service providers report information like monthly or quarterly churn, average revenue per user (ARPU) and adjusted operating cash flow (AOCF). One way of quantifying the value of a subscriber is to calculate the net present value of the expected revenue stream (ARPU) or net cash flow (AOCF) over the average lifetime of a subscriber. Reducing churn, increasing ARPU and improving margins (AOCF) all have a positive impact on customer valuation.

Service providers constantly have to grapple with the “spend” per sub relative to the increase in value. Increasing ARPU is one way, but seldom realistic, given downward price pressure by competitive offerings from substitute providers. In many cases, maintaining ARPU by creating additional value-add is a more realistic approach.

Furthermore, upfront customer acquisition is expensive, so retaining that subscriber for as long as possible is critical. Service providers are finding that reducing churn is a key element in their financial success and long term viability. Those companies that are losing or that churn customers are valued very differently than those that are seeing net new subscriber adds.

This is a slightly simplistic explanation, but the market appears to be speaking. It is possible to generate an IRR that justifies the investment required to add Wi-Fi to an existing service offering. Wi-Fi is fast becoming table stakes for the major MSOs, wireless and wireline operators as they compete for a share of our wallet.

RIP Rodney.

That’s my .02!

Martin Suter is vice president of business development at BelAir Networks, the global market share leader in service provider Wi-Fi, enabling 3G data offload for wireless carriers, quad-play for cable operators, and managed WLAN business services. Previously, Martin was the CEO at Cohda Wireless, where he raised the company’s profile and negotiated a licensing deal with a Fortune 100 vendor in its core franchise. Prior to Cohda, he was vice president of business development at MeshNetworks Inc., a classic tech transfer/disruptive technology success story that achieved a major liquidity event for its investors in Q4/2004 with its acquisition by Motorola. Martin also was responsible for building several high profile alliances with and for leading technology companies, including Fujitsu, Microsoft, Netscape, Sun Microsystems, and Teradata. Additionally, Martin has successfully negotiated technology transfer, distribution and/or licensing deals with companies like 3Com, BioChem Pharma, Dow Chemical, Exodus, Fujitsu, IBM, Microsoft, Motorola, Netscape and Sun.

 

Unlicensed Spectrum + Wi-Fi = Opportunity or Threat

(Originally posted at http://www.von.com/blogs/guest/2009/03/unlicensed-spectrum-wi-fi-opportunity-or-threat.aspx )

Having been on the bleeding edge of wireless for the past nine years, it is gratifying to finally see a major market disruption move from the theory to reality.

I have noticed that the industry is largely clustered around two ends of the spectrum (no pun intended). There are the “cellular” guys, who maintain that licensed spectrum, cell towers, and complex cell planning are all required to deliver robust, wireless service to their subscribers. And there are the “enterprise” guys, who have embraced unlicensed spectrum, low-cost APs, and ad-hoc deployments to deliver wireless service to their clients.

But finally, the line is blurring.

It is now impossible to deny that one can deliver superior customer performance at a fraction of the cost using Wi-Fi. There are very interesting upload, download and latency figures based on millions of worldwide SpeedTests. Their conclusion: “Overall, we found that Worldwide 3G average download speeds to be 956 Kbit/s versus upload speeds of 153 Kbit/s and a 484 ms latency. This compares to average free Wi-Fi network speeds of 2,502 Kbit/s download, 774 Kbit/s upload, and 205 ms latency clearly demonstrating the superiority of Wi-Fi network performance. See our summary chart for additional details...”

Leaders in the cable industry are now moving rapidly into delivering a quad play for their subscribers. Cablevision, a leading MSO, is rolling out a reported 18,000 outdoor access points across its footprint in New York, New Jersey and Connecticut. Why? Verizon, the nation’s largest wireless carrier is moving into Cablevision territory with its own home Internet and content delivery called FiOS. So, unencumbered by the need to purchase expensive spectrum, or the burden that handset subsidies place on carriers, Cablevision has changed the rules of the game. And how are they doing head-to-head? According to a report from market research firm Dell'Oro Group, “Optimum Wi-Fi contributed to “more than 70 percent sequential growth” in Cablevision's net subscriber additions in the fourth quarter of 2008, “a rate higher than any other cable operator in North America.”

And others, like Comcast, have begun rolling out their own trials.

Embracing disruption, just as they did with VoIP only a few short years ago.

In the United States, AT&T is a great example of a traditional wireless carrier that “gets it.” Faced with the challenges brought on by the success of the iPhone and the stresses the mobile Internet were placing on its 3G network, AT&T went out and added wireless data capacity nationally by spending $275 million to acquire Wayport. This gave AT&T an instant data network capacity upgrade at 20,000 locations where people congregate across the country. And are they done? Not if you listen to Greg Williams: “You can think of Wi-Fi as a giant offload point for wireless data traffic. Look at the growth in smartphones and data traffic, and it’s pretty clear that Wi-Fi can be a real plus to AT&T.”

An interesting contrast is Verizon, where the old school cellular perspective has meant clinging to the status quo. Recently, this manifested itself in their signing an exclusive deal with RIM for the Blackberry Storm that shipped without Wi-Fi. The blogosphere lit up over this, as people revolted over not being able to leverage Wi-Fi, even at home or the office.

In the face of competition, leading cable companies see Wi-Fi as an opportunity to deliver a true Quad Play for their subscribers. (In fact, my colleague, Dave Park, will be discussing that topic at a few upcoming events including The Cable Show, NAB and a webcast).

AT&T sees Wi-Fi as an opportunity to add low-cost data capacity at better than 3G data rates.

Verizon sees Wi-Fi as a threat and doesn’t even allow it on a cool, new Blackberry.

Which are the disruptors and which will be the disrupted?

That’s my .02!

Martin Suter

Martin Suter is vice president of business development at BelAir Networks, a provider of broadband mesh solutions for Wi-Fi, WiMAX, 4.9 GHz Public Safety and 5.9 GHz ITS networks. Previously, Martin was the CEO at Cohda Wireless, where he raised the company’s profile and negotiated a licensing deal with a Fortune 100 vendor in its core franchise. Prior to Cohda, he was vice president of business development at MeshNetworks Inc., a classic tech transfer/disruptive technology success story that achieved a major liquidity event for its investors in Q4/2004 with its acquisition by Motorola. Martin also was responsible for building several high profile alliances with and for leading technology companies, including Fujitsu, Microsoft, Netscape, Sun Microsystems, and Teradata. Additionally, Martin has successfully negotiated technology transfer, distribution and/or licensing deals with companies like 3Com, BioChem Pharma, Dow Chemical, Exodus, Fujitsu, IBM, Microsoft, Motorola, Netscape and Sun.

 

Apple’s Wi-Fi Strategy: Hiding in Plain Sight?

(Originally posted at http://www.von.com/blogs/guest/2009/03/apple-s-wi-fi-strategy-hiding-in-plain-sight.aspx )

A year ago, during an earnings call, Peter Oppenheimer, Apple CFO, laid out Apple’s view of the iPod: “We view the iPod market as bigger than the market for simple music players. We believe one of the iPod’s future directions is to become the first mainstream Wi-Fi mobile platform.”

Certainly the iPhone’s impact on the mobile Web has received the lion’s share of attention and deservedly so. But what of Apple’s ambitions vis a vis evolving the iPod Touch?

There’s been a flurry of very interesting data lately about the impact that Apple is having on the Mobile Web. According to AdMob’s January Mobile Metrics Report, Apple devices accounted for 29.1 percent of U.S. Wi-Fi Internet access requests, split roughly 60/40 between the iPhone and the iPod. But what is very interesting is the rate at which the iPod Touch is growing as an Internet device. Over the Christmas holiday, the iPod grew 3.4X over the November numbers and sustained these levels into January.

So what does this mean for service providers?

It opens the door to a wide range of companies to provide Mobile Web services without having to buy (or consume) spectrum or pay any handset subsidies. Leading companies, like Cablevision, are building out wide areas of Wi-Fi coverage to do just that – delivering mobile broadband services, at data rates that are faster than 3G, and system capacities far greater than any of the cellular carriers.

It’s safe to say that Apple is executing on its ambition to make the iPod the first mainstream Wi-Fi mobile platform. We live in exciting times, indeed!

That’s my .02!

Martin Suter

Martin Suter is vice president of business development at BelAir Networks, a provider of broadband mesh solutions for Wi-Fi, WiMAX, 4.9 GHz Public Safety and 5.9 GHz ITS networks. Previously, Martin was the CEO at Cohda Wireless, where he raised the company’s profile and negotiated a licensing deal with a Fortune 100 vendor in its core franchise. Prior to Cohda, he was vice president of business development at MeshNetworks Inc., a classic tech transfer/disruptive technology success story that achieved a major liquidity event for its investors in Q4/2004 with its acquisition by Motorola. Martin also was responsible for building several high profile alliances with and for leading technology companies, including Fujitsu, Microsoft, Netscape, Sun Microsystems, and Teradata. Additionally, Martin has successfully negotiated technology transfer, distribution and/or licensing deals with companies like 3Com, BioChem Pharma, Dow Chemical, Exodus, Fujitsu, IBM, Microsoft, Motorola, Netscape and Sun.

 

On Hype, Troughs & Enlightenment

(Originally published at http://www.von.com/blogs/guest/2008/10/on-hype-troughs-and-enlightenment.aspx )

Let me begin with a short story:

"Once upon a time, a technology is announced that generates significant press and industry interest. There’s a period of over-enthusiasm and unrealistic projections, a flurry of well-publicized activity by technology leaders ... some successes, but more failures... The only enterprises making money are conference organizers and magazine publishers. Because the technology doesn’t live up to its over-inflated expectations, it rapidly becomes unfashionable. Media interest wanes, except for a few cautionary tales. However, focused experimentation and hard work by an increasingly diverse range of organizations lead to a true understanding of the technology’s applicability, risks and benefits... Finally, the real-world benefits of the technology are demonstrated and accepted ... increasingly stable as the technology enters its 2nd and 3rd generation. The final height of the plateau varies according as to whether the technology is broadly applicable or benefits only a niche market..."

How familiar is this story?

Most of us in technology have seen Gartner’s famous Magic Quadrant. Many of us, in startups, have taken the published version for a particular space, copied it into PowerPoint and inserted our companies in the lower right (Visionaries) for presentation to investors and potential strategic alliance partners. The implication is, of course, that by aligning with a larger company with the "Ability to Execute", together we could own the coveted Magic Quadrant.

But another Gartner tool that I find even more compelling is the Gartner Technology Hype Curve. The story above is simply the definitions of each of the five steps in the model strung together: Technology Trigger, Peak of Inflated Expectations, Trough of Disillusionment, Slope of Enlightenment and the Plateau of Productivity.

What blows me away is how consistently this cycle reflects reality.

I’ve spent a lot of time in wireless. Intuitively, it is possible to place a given technology somewhere on this curve.

If I were to say "outdoor Wi-Fi" today, most people would quickly come back with "Trough of Disillusionment.” Given the media reports of the past 6-12 months, it’s easy to see why, but that’s what the cycle does. I personally believe that outdoor Wi-Fi is now on the ascent up the Slope of Enlightenment, as witnessed by major build-outs that are happening (“Cablevision more than doubles Wi-Fi coverage area”), but it will take some time for the public perception to catch up.

But if I were to say "WiMAX", what would you think?

Judging from all of the press and conference hype (see Gartner definition about the only people making money), and it’s easy to see that it’s on the ascent and climbing inexorably toward the Peak of Inflated Expectations. Having attended WiMAX World a couple of weeks ago, I can attest to the hype that is being generated, but the Hype Curve tells us that it is inevitably heading for the dreaded Trough ("What do you mean it doesn’t do 70 mbs over 70 kilometers?!?").

What about LTE? If you read the press, you’d think it was imminent, and there’s not even consensus on what the 4G standard is, with some proposing that LTE and Mobile WiMAX somehow merge into “4G.”

It’s amazing how accurate this model has proven to be, and how it can be used to explain market behaviors. Entrepreneurs produce buzzword compliant business plans early on in the lifecycle, and find funding in the Technology Trigger phase. Money starts to dry up and vendor shakeouts occur during the dark days of the Trough. Management teams and the resolve of boards are tested, and only the strongest survive. It is a Darwinian process, but those that do, those that have differentiated themselves and executed, emerge from the other side as real companies. There is money to be made the old fashioned way, not by hype driven valuations, but by rational, solid business fundamentals and execution for the few and the brave.

It’s easy to buy into the hype - it’s always about the "next greater thing." WiMAX is better than outdoor Wi-Fi ... Who needs WiMAX with LTE ... and so on. But is WiMAX really better than Wi-Fi? Does it matter? LTE’s at least five years out, but we have iPhones today. What can we do to empower users today with wireless broadband connectivity? It ain’t EDGE, it ain’t WiMAX, and it won’t be LTE for a long time yet.

It’s important to recognize hype for what it is. Outdoor Wi-Fi is on the Slope of Enlightenment and its second coming. Embrace it.

That’s my .02!

Martin Suter is vice president of business development at BelAir Networks, a provider of broadband mesh solutions for Wi-Fi, WiMAX, 4.9 GHz Public Safety and 5.9 GHz ITS networks. Previously, Martin was the CEO at Cohda Wireless, where he raised the company’s profile and negotiated a licensing deal with a Fortune 100 vendor in its core franchise. Prior to Cohda, he was vice president of business development at MeshNetworks Inc., a classic tech transfer/disruptive technology success story that achieved a major liquidity event for its investors in Q4/2004 with its acquisition by Motorola. Martin also was responsible for building several high profile alliances with and for leading technology companies, including Fujitsu, Microsoft, Netscape, Sun Microsystems, and Teradata. Additionally, Martin has successfully negotiated technology transfer, distribution and/or licensing deals with companies like 3Com, BioChem Pharma, Dow Chemical, Exodus, Fujitsu, IBM, Microsoft, Motorola, Netscape and Sun.