AllThingsD » carriers

Is Google or PayPal Leading the Charge in Mobile Payments?

Tricia Duryee — Fri, 25 May 2012 21:30:58 +0000

PayPal made a big splash yesterday, saying that it now has commitments from 16 major retailers to roll out PayPal at the register.

Additionally, it said it is partnering with four software providers to gain access to 50,000 small- to medium-sized merchants.

Meanwhile, tomorrow will be exactly a year since Google launched its mobile wallet.

So, you ask, which large technology company is winning the race to gain the hearts and wallets of consumers and retailers?

Pretty clearly, it’s neither.

Google may have gotten off the blocks first, but ever since, it has been plagued by execution issues and management departures. In contrast, PayPal has a lot of institutional advantages, but it still has a long way to go before it is synonymous with Visa or MasterCard.

Here’s just a snapshot of the two companies’ advantages and disadvantages:

Google:

Pros: It has relationships with 25 national retailers, totaling 140,000 locations.

Cons: It bet too early on using near field communication technology. Sprint, the third-largest U.S. wireless carrier, is the only provider so far that is backing it and it’s deployed on only six Android devices.

PayPal:

Pros: There are 110 million people using PayPal worldwide, who are on track to spend a record $7 billion in mobile payments this year using PayPal on the phone.

Cons: The company is expecting to deploy with 20 retailers by year’s end, but based on the 16 retailers announced yesterday, I calculated that it has access to about 16,000 U.S. locations (far fewer than Google Wallet). That does not include the thousands of locations that those 50,000 small- to medium-sized retailers would contribute if they signed up for it.

Clearly, it is still early days.

And when you look at the broader market opportunity, the race is not just between Google and PayPal. All of the incumbents, including American Express, MasterCard and Visa, have announced digital wallet strategies. And then there are the start-ups, such as Square, which is seeking a $4 billion valuation in its next funding round.

There are two points to be made on the debate between PayPal vs. Google Wallet that can’t be stressed enough: PayPal has the user base, and it has the technology with the lowest barriers to entry.

In theory, if a consumer has signed up for the service from their PayPal account, they will be able to conduct a transaction using their mobile phone number and PIN – without changing carriers or phones. Likewise, merchants won’t have to upgrade their point-of-sale hardware.

In an interview, PayPal President David Marcus acknowledged there’s a chicken and egg problem: Without a lot of locations, there won’t be a lot of consumers using it. But this year is about learning and testing, he said, and next year, “it will be about iterating and full-on execution.”

If you asked the folks at Google, I’m sure they would agree. A Google spokesperson declined to comment for this story, but already, there are signs that Google has learned a lot and has started to pivot.

Rick Oglesby, a senior analyst with Aite Group, believes that Google is distancing itself from NFC and from being the merchant of record.

“I think they will follow the path of least resistance, because for them, it’s not about payments — it’s about advertising,” he said. “It’s about pay-for-performance marketing. Just like how they get paid for a click-through on the Web, they want to get paid when you walk through the door — but no one is monitoring that.”

Last month, Google purchased TxVia, a little-known payments technology company, another sign that it’s changing directions.

Tony Felice, a senior strategist for Red Door Interactive who has worked with TxVia in the past, said TxVia and Google Wallet together can be very powerful. He said TxVia has all the banking relationships, which will help enable payments, gift cards and other services, and also has the ability to produce analytics about what consumers are doing and spending money on.

“Together, they will be able to get a 360-degree picture from the moment of truth to purchase,” he said. “In order to do that, you have to pull in disparate sources and synthesize it in a single place. The transactional data from TxVia is just one piece of a puzzle.”

Oglesby said despite Google’s hiccups, it’s not yet out of the race.

“It’s been a slow-growing situation, and there’s been big turnover on the executive team, but they are reassessing the situation and have made an acquisition,” he said. “I wouldn’t say they’ve screwed up because no one has run way ahead of them. They were leading the market, and tried an approach, and now there’s other approaches for them to try.”

Carriers Willing to Live With High iPhone Subsidies for Now

John Paczkowski — Mon, 21 May 2012 12:00:32 +0000

Much as U.S. wireless carriers would like to reduce the high subsidies they pay on Apple’s iPhone, there’s little chance that they’ll do so anytime soon.

Why?

They’re far too worried about what would happen to their customer-retention rates if they did so.

“We continue to believe carriers would lower iPhone subsidies if they collectively felt that competing devices would drive the same economics as iPhones,” says BMO Capital’s Keith Bachman. But right now, they don’t. And with no other hero handset to mitigate the risks of the spike in customer churn that might follow a reduction in iPhone subsidy, we’re unlikely to see one in the near term.

There are other reasons, as well, one being the presumed launch of a new LTE iPhone. That device will likely inspire a strong surge of upgrades late in the year. And with carriers looking to move subscribers onto their LTE networks, they’re probably not going to mess with a device that will surely be instrumental in helping them do it.

Finally, as we’ve noted here before, Apple’s multiyear agreements with its carrier partners very likely prevent them from changing iPhone subsidy pricing. These deals are said to have most-favored-nation clauses, so that any reduction in subsidy offered to one carrier would have to be offered to the others. And with Verizon and Sprint both newly locked into their contracts for some time, Apple has no cause whatsoever to even entertain the idea of a lower iPhone subsdidy.

Google to Expand Mobile-Device Partnerships

Amir Efrati — Tue, 15 May 2012 21:30:35 +0000

Google Inc. plans to give multiple mobile-device makers — rather than just one partner — early access to new releases of its Android mobile operating system and to sell those devices directly to consumers, said people familiar with the matter.

Google’s strategy is a shift from its previous practice, when it partnered with only one hardware maker at a time to produce seven “lead devices” that showed off the newest Android software features, before releasing the software to other device makers. The change is a bid to exert more control over the apps that run on smartphones and tablets powered by Android, thus reducing the influence of wireless carriers over such devices, these people said.

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Meet the 22-Year Old College Student Who Hopes to Shake Up the Cellphone Business

Ina Fried — Tue, 15 May 2012 01:18:16 +0000

John Mardini still has another year left before he gets his college degree, but he’s already onto his third business, and this time he’s aiming big.

Mardini, with the backing of family and friends, is launching Voyager Mobile, a start-up that aims to bring cut-rate cellphone services to the masses. The company is launching with two rate plans with service via Sprint’s network. The company will charge $19 a month for unlimited talk and text, and $39 (plus tax) for unlimited talk, text and Web.

The 22-year-old Mardini, who is entering his senior year at New York University, told AllThingsD that he decided to get into the cellphone business after noticing how high his bill had gotten.

“It was just one of those things,” he said in a telephone interview. “I pay so much for my cellphone. I was thinking there has to be a better way to make it cheaper for everyone.”

Despite the low prices, Mardini said he believes he can offer a range of phones, including some fairly high-end Android devices, such as Samsung’s Galaxy S II, also known as the Epic 4G Touch. The company will also sell tablets, data cards and hotspots, though the rate plans for those have yet to be finalized.

Voyager is the latest in a growing number of companies looking to resell service on another carrier’s network.

Among the most high-profile such start-ups are Republic Wireless and FreedomPop.

The notion of a virtual mobile network operator has been around for a while. Some have persisted, while others — like ESPN Mobile and Disney Mobile — have faded. In recent months, though, a new wave of companies have cropped up, promising to bring new business models and economics to the wireless business.

Voyager Mobile has said it will announce details of its plans on Tuesday at 6 am ET. Its Web site promises unlimited service starting at $19 a month, but offers only the barest of details, along with a countdown clock. However, details started trickling out on Monday, including its rate plans and phone lineup, which were reported by several sites, including PhoneScoop and CNET.

Though still in college, Mardini has been involved with several other companies, with the first one tracing its roots back to some DJ gear that he got at age 9. The record business evolved into a local tech firm, and eventually led Mardini to launch Munifi Networks, a broader IT services company.

Mardini said he is using proceeds from those and other family businesses to launch Voyager, which is starting out with just seven employees, and is based in his hometown of Knoxville, Tenn. Given its tiny workforce, Voyager is relying on outsourcing to handle many aspects of its operations. Its small size is a key to the low prices, Mardini insists.

“In the end, we are able to offer the best price to our customers,” he said.

Update: Well, it looks like Voyager had some problems getting off the ground.

“During its Tuesday, May 15 launch, Voyager Mobile experienced a malicious network attack to its primary website: voyagermobile.com,” the company said on its Web site. “Due to the network outage, Voyager Mobile is postponing its launch to a time and date in the very near future.”

The company added that it won’t be derailed.

“Our goal of low cost wireless service for all will not be undermined and we strive to continue the voyage for a better wireless world,” it said.

On Twitter, Mardini said that the Web site was hit with a packet attack, and that the company is working to restore service.

Also, we weren’t the only ones to track down Mardini ahead of the launch. Fred Fishkin had an interview that ran before ours.

Apple CEO: Enough of This iPhone Subsidy Silly Talk

John Paczkowski — Wed, 25 Apr 2012 11:13:14 +0000

Apple CEO Tim Cook has some advice for investors concerned that subsidy cuts and/or stricter upgrade policies by U.S. wireless carriers could undermine iPhone sales.

Don’t worry so much. Apple doesn’t.

Remarking on the subsidy issue during the company’s second-quarter earnings call Tuesday, Cook dismissed it, essentially saying that the iPhone is so exceptionally profitable for carriers that they’re not likely to mess with it.

“From the carriers’ perspective, it’s important to remember the subsidy is not large relative to the payments across a two-year contract period,” Cook said. “Any delta between the iPhone and another phone is even smaller.”

Beyond that, there are a number of advantages to carrying the iPhone.

“A number of carriers have told me that churn from iPhone customers is lowest of any phone they sell,” Cook said. “That’s obviously a significant, direct financial benefit to the carrier.”

But the iPhone’s greatest advantage is this: It’s a device that customers want to use every day.

“At the end of the day, the vast majority of carriers want to provide what their customer want to buy,” Cook said. “That’s what motivates them. … The iPhone is the best smartphone on the planet to entice a customer who is currently using a traditional phone to upgrade to a smartphone. This is by far the largest opportunity for Apple and our carrier partners. It’s a win-win. All of these factors are missed in this discussion of subsidy.”

Another Down Day for Apple Shares

John Paczkowski — Mon, 16 Apr 2012 19:33:19 +0000

Looks like Apple shares’ meteoric rise has been paused for the time being. The stock is down for its fifth straight trading day after hitting an all-time high of $644 last week, a high that pushed the company’s market capitalization past $600 billion.

This morning alone, Apple shares fell more than 3 percent. And they’re down nearly 8 percent from last Monday’s close (caveat: The stock is still up well over 40 percent this year).

So what’s dragging the stock down?

Any number of things, really. The antitrust charges recently filed against Apple and major book publishers by the Department of Justice. Concerns that Apple’s carrier partners are tired of offering high subsidies on the iPhone and will soon begin to rein them in, cutting into the company’s high margins on the device.

Another thought: This could be profit-taking, plain and simple.

Or, as ISI Group analyst Brian Marshall suggests, the stock could just be cooling off a bit. “We believe this could be a simple ‘collapsing’ on its own weight given the year-to-date move (i.e., AAPL up ~45 percent vs. S&P 500 up ~10 percent).”

Carriers Band to Fight Cellphone Theft

Rolfe Winkler — Tue, 10 Apr 2012 11:40:20 +0000

The nation’s major wireless providers have agreed to a deal with the U.S. government to build a central database of stolen cellphones — part of a broad effort to tame an explosion of thefts nationwide.

The database, which the wireless companies will build and maintain, will be designed to track phones that are reported as lost or stolen and deny them voice and data service. The idea is to reduce crime by making it difficult or impossible to actually use a stolen device, reducing resale value.

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Google Writes Check to Acquire Payments Technology Company TxVia

Tricia Duryee — Mon, 02 Apr 2012 23:06:23 +0000

In an effort to regain some momentum in mobile payments technology, Google has acquired TxVia, a payments technology company.

In a blog post, Google disclosed the purchase but did not reveal the terms. The New York-based company was working on a number of payment technologies, including prepaid and gift cards.

It is no secret that Google Wallet has had a difficult time since launching about a year ago.

Since then, any momentum it had created was squelched when it failed to secure partnerships with the four major wireless providers in the U.S. Today, it only works on a handful of Android smartphones sold by Sprint. Other carriers — most notably, Verizon Wireless — have refused to adopt the Wallet and instead are working on their own mobile payments strategy in a joint venture called ISIS.

Additionally, the Google Wallet technology relies on near field communication, or NFC, which is not available at all retailers or embedded in many phones.

In the meantime, other companies have had some successes. EBay’s PayPal has rolled out its payment technology in all 2,000 Home Depots, and other companies, like Square, are going after the small-to-medium-sized businesses.

Google has also faced a number of internal setbacks, including a couple of departures from the team, such as the resignation of Vikas Gupta, who was the head of consumer payments, and the reassignment of Stephanie Tilenius. Additionally, it was reported today that Google Wallet’s co-founding engineer Rob von Behren has joined Square, according to NFC Times.

Osama Bedier, Google wallet and payments VP, wrote in the blog post that TxVia has partnerships with some of the industry’s best-known brands and manages more than 100 million accounts.

“Their leadership team has played an instrumental role in defining the fast-growing prepaid card segment of emerging payments,” he said. “We’ve worked closely with TxVia over the last year, and they’re a forward-thinking team that will help us take the next steps in realizing the future of commerce. We welcome the TxVia team to Google.”

4G or Not 4G: A Guide to Cut Through All the "Fast" Talk

Walter S. Mossberg — Wed, 28 Mar 2012 01:07:26 +0000

Of all the confusing technology terms used in consumer marketing today, perhaps the most opaque is “4G,” used to describe a new, much faster generation of cellular data on smartphones, tablets and other devices. It sounds simple, but there are many varieties of 4G and conflicting claims.

[ See post to watch video ]

AT&T claims “The nation’s largest 4G network,” and T-Mobile says it has “America’s largest 4G network.” Verizon Wireless boasts “America’s fastest 4G network,” and Sprint says it had the first 4G network.

Yet the technology used by T-Mobile, and mostly comprising AT&T’s 4G network, isn’t considered “real” 4G at all by some critics, and the one used by Sprint has proven to be a dead end and is being abandoned. The flavor being used by Verizon is now being adopted by its rivals, but won’t be interoperable among them.

Verizon offers LTE, which is the fastest variety of 4G.

It’s a headache for consumers to grasp. So here’s a simplified explainer to some of the most common questions, based on interviews with top technical officials at all four major U.S. wireless carriers.

What is 4G?

It’s the fourth and latest generation technology for data access over cellular networks. It’s faster and can give networks more capacity than the 3G networks still on most phones. There’s a technical definition, set by a United Nations agency in Europe, and a marketing definition, which is looser, but more relevant to most consumers.

Who needs 4G?

It’s mostly for people with smartphones, tablets and laptops who often need fast data speeds for Web browsing, app use and email when they’re out of the range of Wi-Fi networks. It can give you the same or greater data speeds as home or office Wi-Fi when you’re in a taxi. In hotels and airports, it’s often faster than public Wi-Fi networks.

How does 4G differ from another term being advertised, ‘LTE’?

LTE, which stands for “Long Term Evolution,” is the fastest, most consistent variety of 4G, and the one most technical experts feel hews most closely to the technical standard set by the U.N. In the U.S., it has primarily been deployed by Verizon, which offers it in over 200 markets. AT&T has begun deploying it, offering LTE in 28 markets so far. Sprint and T-Mobile are pivoting to LTE, though they have no cities covered by it yet.

What are these other versions of 4G?

Sprint uses a technology called WiMax. T-Mobile and AT&T deployed a technology called HSPA+, a faster version of 3G that they relabeled as 4G, and which many technical critics regard as a “faux 4G.” Sprint will begin switching to LTE later this year, and T-Mobile in 2013.

Sprint uses a 4G technology called WiMax.

How fast is 4G?

Claims vary and performance depends upon the type of device, location, and time. In my tests, 4G phones, tablets and data modems for laptops typically deliver from three to 20 times the download speeds of 3G devices. The speed king is LTE. The LTE devices I’ve used have typically averaged download speeds of between 10 and 20 megabits per second, with frequent instances of over 30 megabits per second. The other forms of 4G have generally produced download speeds well under 10 mbps in my tests. But all of these are better than 3G, which in my tests on all networks and many devices, averages download speeds of under 2 mbps.

How does LTE compare with common wired home Internet speeds?

Although it is wireless, LTE is often faster than most Americans’ wired home Internet service. According to Akamai, a large Internet company, the average broadband speed in the U.S. in the third quarter of 2011 was a mere 6.1 mbps.

How does LTE compare with Wi-Fi?

Wi-Fi is usually a wireless broadcast of a wired Internet service, so, if the average U.S. broadband speed is 6.1 mbps, that’s around what the average Wi-Fi speed is. But, in public places, the shared Wi-Fi is often much, much slower than LTE. In tests I did this week at Dulles Airport near Washington, and at a hotel outside Boston, the public Wi-Fi networks delivered well under 1 mbps on the new iPad. But the Verizon LTE cellular network on the iPad averaged over 32 mbps in both places.

T-Mobile and most of AT&T’s network use HSPA+.

Is LTE only faster at downloads? What about uploads?

It’s faster at both than 3G, in my experience.

Will these speeds drop as more people adopt LTE?

Probably, but it’s hard to say by how much, since LTE also offers more capacity, as well as speed. Verizon’s LTE network is believed to be used by less than 10% of its total subscribers.

What does LTE cost?

Prices vary by carrier and device. Verizon and AT&T use tiered pricing, where you pay escalating prices for larger and larger buckets of data. So far, they haven’t raised these prices for LTE, though people with LTE may find they use more data, and thus will need bigger buckets. One example: On the Verizon version of the new LTE iPad, prices range from $20 a month for 1 gigabyte of data to $80 a month for 10 gigabytes.

If I have an LTE phone or tablet, will I use more data faster than if I have 3G?

Quite possibly. The same amount of content, received at the same quality, won’t use more data on LTE than it does on 3G. However, because LTE is so much faster, users may be tempted to download or stream more data, like video, than with 3G. And they may choose to view higher quality video, which uses more data. Also, some apps and websites, sensing the higher LTE speed, will automatically send down larger, higher quality, data files, especially video.

AT&T is starting to roll out LTE.

How does LTE affect voice calls?

It doesn’t. It’s all about data, so far. Voice calls are handled by other, parallel networks. But companies are hoping to move voice traffic to LTE.

What if I have an LTE phone or tablet, but I move into an area without LTE coverage?

On Verizon, you fall back to a 3G network. On AT&T, you fall back to HSPA+, which is a slower 4G network, but still faster than 3G.

Who has the biggest 4G network in the U.S.?

Even if you accept all the carriers’ definitions of 4G, it’s hard to tell. Carriers measure the size of their networks differently — sometimes by the number of people to whom it is theoretically available, and sometimes by the number of cities and markets, which can be defined differently. Verizon has the largest LTE network. Both AT&T and T-Mobile claim the biggest 4G network, but the first has only a limited LTE deployment and the second has none.

Does LTE work overseas?

Yes, but there is less LTE rollout going on overseas than in the U.S. So, in most countries, your shiny new American LTE device may wind up falling back to slower networks.

Will an LTE phone from AT&T work on Verizon, and vice versa?

No. The technology is the same, but the networks use different bands, or frequencies. So, at least today, LTE devices aren’t interoperable among networks.

Email Walt at walt.mossberg@wsj.com.

U.S. Proposes Sharing Airwaves

Amy Schatz — Wed, 28 Mar 2012 00:02:53 +0000

Obama administration officials proposed requiring the Defense Department and other federal agencies to share a chunk of the airwaves they currently use with wireless companies after concluding it could be too expensive and time-consuming to move the federal agencies to other airwaves.

Commerce Department officials released a report Tuesday on a band of government airwaves long coveted by wireless carriers saying that while it would be possible to switch the block to commercial use, it could cost $18 billion and take a decade. Instead of moving federal agencies off of the airwaves and auctioning them off to wireless carriers, Commerce officials instead proposed that commercial and government users share them.

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Clearwire, Leap Make Wholesale Pact

Greg Bensinger — Thu, 15 Mar 2012 00:15:06 +0000

Clearwire Corp. signed a five-year wholesale deal with Leap Wireless International Inc. to supply the pay-as-you-go carrier with high-speed mobile broadband service, an initial milestone in Clearwire’s effort to reposition itself primarily as a wholesaler.

Clearwire has been hunting wholesale customers since at least September, when Chief Executive, Erik Prusch, said he was in discussions with AT&T Inc., Verizon Wireless and MetroPCS Communications Inc. Leap, which operates the Cricket brand, is the smallest U.S. carrier with a national reach, with roughly half the customers of MetroPCS, its nearest competitor.

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Retailers Join Payment Chase

Robin Sidel — Fri, 02 Mar 2012 00:20:00 +0000

Wal-Mart Stores Inc. and Target Corp. are among roughly two dozen retailers working together to develop a mobile-payments system to compete with similar products from Google Inc. and big cellphone companies, according to people with direct knowledge of the project.

The push represents an effort by frustrated merchants to get the upper hand in the fast-developing market that turns cellphones into payment devices. The race pits the retailers against banks, credit-card networks, telecommunications firms and technology companies.

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AT&T Plan Would Let App Makers Pay for Subscribers' Data Use

Anton Troianovski — Mon, 27 Feb 2012 18:06:38 +0000

AT&T Inc. is preparing a service that would let content providers and developers of mobile applications pay the wireless carrier for the mobile data its customers use, the carrier’s network and technology head John Donovan said in an interview Monday.

Mr. Donovan likened the service to toll-free calling for the mobile-broadband world. The move comes as carriers are hunting for new ways to make money on the rising data traffic on their networks, while mindful of limits on what consumers are willing to spend.

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T-Mobile USA Reports Huge Customer Defections, Says It Will Launch LTE in 2013

Ina Fried — Thu, 23 Feb 2012 06:56:15 +0000

Deutsche Telekom said on Thursday that T-Mobile USA will launch high-speed LTE service sometime next year, but noted that the most recent quarter was a brutal one for its U.S. mobile business.

“For T-Mobile USA, the past year was characterized by significant challenges, particularly in the fourth quarter, following the market launch of the new Apple iPhone model by the three major national competitors in October,” T-Mobile said. In the fourth quarter alone, T-Mobile USA lost 802,000 contract customers.

Revenue dropped 3.3 percent, to $20.6 billion.

The company is the last major U.S. carrier to announce LTE plans, and it has been questioned whether it would be able to amass enough spectrum to offer the service.

T-Mobile said it will use a combination of spectrum acquired from AT&T, a further $1.4 billion in additional investment, and “refarmed frequencies” to launch LTE service. It also plans to continue its “challenger” brand strategy and more agressively pursue business customers.

T-Mobile’s future has been very much in question ever since its deal to be purchased by AT&T fell apart last year.

At January’s Consumer Electronics Show, T-Mobile had promised it was back as an independent force, but was vague on new details of what its strategy would be. At the time, T-Mobile USA CEO Philip Humm noted that there was no second AT&T deal out there to easily unload the company.

That said, Deutsche Telekom did get some hefty concessions from AT&T when the deal collapsed, including billions in cash, roaming agreements and wireless spectrum.

Humm promised more details on a revised strategy would be coming shortly.

Bill Is a Boon for Wireless

Amy Schatz — Thu, 16 Feb 2012 19:56:51 +0000

Wireless carriers could be among the biggest beneficiaries of Congress’s plan to extend the payroll-tax cut because the legislation currently includes a provision to raise billions of dollars by auctioning off television airwaves.

Congressional negotiators were still hammering out details, but the legislation would authorize the Federal Communications Commission to auction off TV-station airwaves to wireless companies for next-generation phones and gadgets. A portion of the auction proceeds would help cover the cost of extending jobless benefits, which is also part of the payroll-tax legislation.

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Secondary iPhone Market a Boon for AT&T, Verizon -- and Apple, Too

John Paczkowski — Tue, 17 Jan 2012 11:55:09 +0000

Where do old iPhones go to die?

Some are thrown away. Others are forgotten. Still others are passed on to children and become iPods. But many find a new life with a new owner. Turns out that the secondary market for the iPhone is nearly as robust as the primary market. And it’s growing steadily larger and more important for Apple’s carrier partners, and for Apple itself.

Consumer Intelligence Research Partners (CIRP) recently surveyed the secondary iPhone market in the U.S. and found it to be thriving. Since the Oct. 14, 2011, debut of the iPhone 4S, 53 percent of new iPhone buyers have introduced their old phone into the secondary market. Of those, 49 percent were iPhones, 21 percent were BlackBerrys and 15 percent were Android devices.

Why does the secondary market skew so heavily toward the iPhone?

“We think the secondary market for the iPhone is more established, since iPhone has the longest track record for a single device/platform, and for many it is the aspirational entry-point smartphone,” CIRP co-founder Mike Levin told AllThingsD. “IPhones also had the advantage of having a useful second life as iPod touch substitutes, which made their used value a little clearer from the start. As a GSM phone, AT&T iPhones also could be [unlocked] for use on other GSM networks, so there was an early secondary market for iPhones on other carriers — though this was, of course, limited to more savvy and aggressive technology consumers.”

Now here’s where things get interesting: Among consumers who gave their old iPhone to someone else, 87 percent expected the recipient to activate it on a wireless carrier. Extrapolating from that, CIRP estimates that 11 percent of iPhone activations since the launch of the iPhone 4S, on Oct. 14, 2011, have been used iPhones.

That’s a significant number for a few reasons: It explains the discrepancy we sometimes see between carrier activation numbers and iPhone sales. And it allows CIRP to put a value on secondary market iPhone activations — activations for which AT&T and Verizon, the two carriers with the most legacy iPhones on their networks — aren’t subsidizing hardware.

The research firm believes that, for every used iPhone that carriers activate, they save around $400. In the fourth quarter of 2011 alone, CIRP figures that secondary-market activations saved AT&T and Verizon between $400 million and $800 million in subsidy costs.

So a thriving secondary market for iPhones, or any smartphone for that matter, is good news for the carriers.

But what about Apple? Every iPhone purchased on the secondary market is one that’s not bought at full retail price from Apple or one of its partners. There’s got to be some harm there, even if it’s only minor.

“We think the secondary market is both detrimental and beneficial to Apple,” said Levin. “It hurts Apple because it creates competition for new iPhones, which we see in the relatively modest sales of reduced-price iPhone 4 and free iPhone 3G units. But it also benefits the company because used iPhone customers aspire to own the newest and best iPhone, so they are likely future new phone customers. In fact, they are likely new entrants to the Apple ecosystem, who otherwise would not have found a way in.”

And every new entrant to the Apple ecosystem is another potential customer for the company’s iTunes Store. That, too, is good news for Apple, and for app developers and content creators.

“Secondary-market iPhone owners are new content and app consumers,” said Levin. “We don’t know if these customers have the same budget for content compared to new iPhone customers, but reactivated iPhones will more likely consume content and download apps than forgotten old phones left in drawers.”

In other words, the secondary iPhone market is doing far more good than bad for the broader ecosystem.

“It makes me think of an analogy from the used-car market: It’s not perfect, but it’s not bad, either,” said Levin. “In the early days, used cars cannibalized new-car sales, but now they create brand loyalty in customers that can’t afford new cars, and they create a new revenue stream in repairs and accessories for the original manufacturer.”

Carrier IQ: How to Hack Back Your Phone

Lauren Goode — Fri, 02 Dec 2011 13:30:29 +0000

The findings of a Connecticut-based systems administrator have sparked alarm in millions of smartphone users, after security researcher Trevor Eckhart published a video showing how a cellphone software company has the ability to log users’ Web searches and keystrokes.

The technology, made by Carrier IQ, is currently deployed on more than 150 million devices worldwide.

Research In Motion and HTC — the maker of the phone targeted in the security demo — have issued statements denying that Carrier IQ is preinstalled on their devices. Meanwhile, U.S. Sen. Al Franken (D-Minn.) has sent a letter to Carrier IQ seeking more information on what the software does.

Carrier IQ has told AllThingsD that while its software has the ability to receive a tremendous amount of information, some of which could be relayed to a carrier for diagnostics purposes, the company doesn’t log keystrokes and the software is not being used to gather intelligence about the phone’s user.

But while we wait for more answers, what’s a smartphone user to do?

Google Android Phones: If you’re wondering whether your Google Android phone might have Carrier IQ installed on it, Eckhart, the researcher behind all of this, points people to a Logging Test app that he claims can be used to verify “what logging is being done on your phone and where the data is going to.” If successfully installed — which we hear may take some finagling, including emailing the app link to yourself to access it, and “rooting” your phone first — the $1 app is meant to detect Carrier IQ and remove it.

According to his blog post, Eckhart has tested this app on the HTC Evo 3D phone; he believes it works on the Sprint Evo 4G and HTC Thunderbolt, as well.

But since the Google Android operating system runs on devices from multiple manufacturers, it is not known at this point which models could be running Carrier IQ and which ones are not.

It should be noted that some manufacturers have denied responsibility for the app; HTC, for example, has put the blame on wireless carriers, and basically advises HTC phone owners to contact their carriers. The company did add it was looking into an option for allowing its customers to opt out of the Carrier IQ application, but no further details were given beyond that.

Sprint has not yet responded to my inquiry as to whether the wireless company was actively involved in the installation of Carrier IQ, or how users might disable such applications on Sprint. AT&T said it uses Carrier IQ solely to improve its network performance; Verizon claims not to use it at all, although my colleague John Paczkowski reports that may not be the case.

RIM BlackBerrys: While RIM hasn’t explicitly pointed to wireless carriers as HTC did, the BlackBerry maker also denies any involvement with Carrier IQ, stating “RIM does not pre-install the CarrierIQ app on BlackBerry smartphones or authorize its carrier partners to install the CarrierIQ app before sales or distribution.”

However, the next part of RIM’s statement on the BlackBerry developers forum indicates that it’s possible Carrier IQ could live on a BlackBerry device.

According to BlackBerry Development Advisor Mark Sohm: “If the Carrier IQ application is present on a BlackBerry smartphone, it does not mean that the Carrier IQ application has ‘hacked’ the BlackBerry platform. It means that either the BlackBerry smartphone user or the user’s BlackBerry Enterprise Server admin explicitly installed the application and authorized it to run.”

In other words, if it’s on your phone, you may have granted it access in some way, shape, form or click of your Qwerty keypad.

Apple iPhones: Apple has issued a statement to AllThingsD declaring that the company stopped supporting Carrier IQ with iOS 5, its latest version of mobile software, and plans to remove it from future mobile software updates, too.

But what if you’re running an earlier version of iOS on your iPhone and are worried about where your data is going? Apparently, you can opt out of having your usage data submitted for diagnostics. To do that, go to to Settings → General → About → Diagnostics & Usage. Select “Don’t Send.”

More info to come as I get it.

Related Posts on Carrier IQ:

Exclusive Interview: Carrier IQ Gets Transparent About Its Mobile Monitoring

Carrier IQ: How to Hack Back Your Phone

Carrier IQ Speaks: Our Software Monitors Service Messages, Ignores Other Data

Apple: We Stopped Supporting Carrier IQ With iOS 5

RIM, HTC, Google on Carrier IQ: Blame the Carriers

Carrier IQ Improves My Wireless Service by Logging My Keystrokes? Please Explain.

Full Carrier IQ Coverage »

Sprint Gearing Up to Offer Services on the iPhone

Ina Fried — Thu, 03 Nov 2011 23:42:11 +0000

One of the challenges for carriers that sell the iPhone is that it is a lot harder for them to put their stamp on that phone compared with other devices.

With other operating systems — Android, BlackBerry, Windows Phone — carriers are able to include their logo on a phone, bundle their own apps and services, and do other things to clearly put their brand on the device.

On the iPhone, though, there are far fewer opportunities for customization, as Apple tightly controls how the devices are packaged, marketed and shipped to consumers.

That’s something Sprint is now adjusting to, having finally landed the device after years of being on the outside looking in. Still, with competition fierce for iPhone customers, Sprint is working to find ways to stand out — including bringing its own service to the iPhone.

In an interview at Sprint’s developer conference in Santa Clara on Thursday, VP Kevin McGinnis said that the Sprint Zone app should be ready for download before the end of the year; other services, such as Sprint TV, will follow shortly thereafter.

“Our customers see us as a trusted adviser,” McGinnis said.

Much of the battle over iPhone marketing among carriers is centered around pricing and features, with AT&T touting speed and capability to talk and surf; Verizon pitching its network quality; and Sprint pointing to its unlimited data plans.

But services and apps can also help the carriers stand out from one another.

As is the case with other providers, though, Sprint will have to convince customers to download its apps, since it can’t preload them on Apple’s iOS as it does on other platforms.

Of course, that’s a far better problem to have than the prior one — not having the iPhone at all.

Cellphone Users to Get Billing Alerts Under New Voluntary Standards

Amy Schatz — Mon, 17 Oct 2011 12:30:52 +0000

Wireless-phone customers will begin receiving real-time alerts next year if they are about to go over their monthly voice, data or text-message limits under new voluntary industry standards set to be announced on Monday.

Wireless carriers have agreed to send warnings to consumers in danger of exceeding their monthly subscriber minutes or data plans under a deal with the Federal Communications Commission. The companies will provide the alerts to consumers within 12 to 18 months, FCC officials said.

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Sprint Plunges on Concern Over 4G, iPhone Costs

Greg Bensinger — Mon, 10 Oct 2011 21:46:13 +0000

Sprint Nextel Corp. shares fell Monday to their lowest level since February 2009 on continued concerns about the costs from rolling out a fourth-generation wireless network and selling Apple Inc. iPhones.

Monday, Standard & Poor’s warned that it could downgrade Sprint’s debt further into junk territory, citing the likelihood the carrier would spend more money than it takes in through 2013 and the potential for it to refinance its debt.

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Vodafone Becomes Latest Carrier to Set Up Shop in Silicon Valley

Ina Fried — Fri, 09 Sep 2011 00:00:31 +0000

Even if they don’t offer wireless service in the U.S., it has become fashionable for overseas carriers to establish a beachhead in Silicon Valley.

It makes sense, given that many of the hottest wireless apps and services are being developed here, not to mention the fact that the region is home to both Apple and Google. The latest to hop on the trend is Vodafone, which on Thursday is opening a research and development facility in Redwood City.

“It’s a corporate objective to accelerate innovation of products,” center director Fay Arjomandi said in an interview on Thursday.

The goal is that once Vodafone has decided to work with a partner, that company’s service will be running in user trials in a Vodafone market within nine months.

The facility offers office space to partners, as well as a sample Vodafone network to allow them to develop and test their products. Companies can stay for several months or just a day or two, Arjomandi said.

“We’re here in Silicon Valley to identify the best and brightest,” said Rick Rasmussen, who heads operations and logistics for the new facility.

Vodafone, which is a part owner of Verizon Wireless, is also partnered with that company on the new center. Its facility will also have a Verizon test network; Verizon’s facilities in Waltham, Mass., and a just-opened one in San Francisco, also offer Vodafone test networks.

Unlike other European carriers with a U.S. presence, though, Vodafone has no interest in offering products here, Arjomandi said. France Telecom’s Orange, for example, doesn’t offer wireless service in the U.S., but has launched some products, such as its ON Voicemail service.

Sprint to Get iPhone 5, Sources Say

Joann S. Lublin and Spencer E. Ante — Tue, 23 Aug 2011 19:41:08 +0000

Sprint Nextel Corp. will begin selling the iPhone 5 in mid-October, people familiar with the matter said, closing a huge hole in the No. 3 U.S. carrier’s lineup and giving Apple Inc. another channel for selling its popular phone.

The timing, however, indicates Apple’s new iPhone will hit the market later than expected and too late to contribute to sales in the company’s fiscal fourth quarter, which ends in September. Most observers had expected the device to arrive next month.

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Sprint Abandons Plans for 4G PlayBook

Greg Bensinger — Fri, 12 Aug 2011 20:16:35 +0000

Sprint Nextel Corp. has abandoned plans to sell a version of the BlackBerry PlayBook tablet that runs on its high-speed network, citing a lack of demand from business customers.

The decision is a setback to Research In Motion Ltd. and comes at a difficult time for the company, which has seen its stock price tumble nearly 60% this year as sales of its signature phones have been losing ground to competitors. Sprint’s reversal means the device hasn’t yet found any support from the three largest U.S. wireless carriers, which includes AT&T Inc. and Verizon Wireless.

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Carriers, Credit Card Companies Make Headway on Mobile Payments

Tricia Duryee — Tue, 19 Jul 2011 17:39:36 +0000

Three of the major wireless carriers in the U.S. today made major headway in rolling out a mobile payments strategy by announcing partnerships with Visa, MasterCard, Discover and American Express.

The credit card companies said today they are committed to the Isis joint venture formed by AT&T, T-Mobile USA and Verizon Wireless.

The deals are a big coup for the carriers, which face many hurdles in stitching a payments network together that spans banks, merchants, hardware manufacturers and consumers.

The participation of the major credit card companies will go a long way toward creating a usable service, and is notable, given that all of the companies are pursuing some sort of digital payments strategy of their own.

It’s important to note that Sprint is the only major U.S. carrier not participating in Isis.

There has been some question as to whether it was originally part of the carrier’s plan to have such an inclusive approach, or if it later realized that the project would be impossible if it did not attempt an open approach. Isis executives have downplayed any drastic shift in strategy.

Since Isis was formed, Google has launched its mobile wallet strategy and others have announced digital wallets as well, such as Visa and American Express. MasterCard has partnered with Google. Other start-ups, like Square, are also competing in the market.

Isis announced it was going to launch initially in Salt Lake City and Austin, Texas, using near field communication. It plans to roll out in the first half of 2012 with support from all four payment networks.

What’s in Their Wallets?

Tricia Duryee — Thu, 14 Jul 2011 13:30:31 +0000

What’s in your wallet?

That’s the question I asked some digital money experts, whose job it is to push the creative boundaries on payments.

So, having captive reps from some of the key companies — BOKU, BilltoMobile, Intuit and Tapjoy — involved in leading the charge to do away with cash and plastic, I wanted to know what they carried around daily.

And — given I was moderating a panel for the MobileBeat 2011 conference, titled “The Likely Winners In Mobile Payments: Carriers, PayPal?” — it seemed like an appropriate query.

You’d think they would be on the cutting edge, right?

Wrong!

In fact, two of the panelists were still carrying around checks; one had dozens of credit and debit card options from banks around the world; and two were even carrying business cards from their previous employers, because they believed they could get discounts at rental car agencies.

Only one had a digital wallet.

That was Steve Klebe, VP Business Development & Strategy, BilltoMobile, who actually had an NFC-enabled sticker on the back of his phone, which was connected to his Discover account. But he’d only used it once.

It was also Klebe who carried around a blank check, in case of an emergency. Ron Hirson, BOKU’s SVP Product & Marketing, also had the kind of money that folded — a $50 American Express travelers check.

Remember those?

Omar Green, Intuit’s director of strategic mobile initiatives, had the biggest wallet — bursting — with a giant pile of cards stuffed in it. Deng-Kai Chen, director of product management at Tapjoy, easily won for carrying the lightest wallet — he claimed it was bad for your back if you sat on anything bigger in your pocket.

Everyone also had a variety of loyalty cards, photos, receipts and transportation passes.

What about me?

As the solitary female representative at the table I was the only one with coins, including about $2 in pennies (because I’m too lazy to ever spend them). I also probably had the most cash — around $28, mostly in $1 bills.

So how close are we to a mobile wallet revolution?

Judging by what was in our wallets, you might want to wait a while.

Photo Credit: allie.