WiFi to Challenge Cellular?

Wi-FiIt’s a rather new phenomenon, but we are seeing the beginning of a shift to making more voice calls on WiFi networks than on cellular networks. As Americans have become more conscious about making data connections on WiFi they have opened the door to using WiFi for their voice usage.

The trend of using WiFi for voice, as it matures, could really shake up the cellular industry. The AT&T and Verizon cellphone plans are among the most profitable products sold by any corporation and that makes them a target for competitors, and a place for consumers to save money.

It’s funny how the industry has changed so much. I remember twenty years ago going to state commissions and asking, and being rejected, for $2 rate increases in local telephone rates because the regulators feared that people couldn’t afford to pay it. And yet a decade later families went from having a $30 home phone to paying three and four times that much for cell phone plans.

There are several companies that have been selling WiFi calling for the last few years. FreedomPop, which started in 2012, offers a product that uses a network of over 10 million hot spots in places like McDonald’s or Starbucks. FreedomPop’s phones will automatically join WiFi networks much like a normal cellphone automatically connects to a cell tower. Their rates are really low and for $5 a month a customer can have a WiFi-only plan that connects to the network of WiFi hot spots. There are other slightly more expensive plans that use a combination of WiFi hot spots and Sprint’s cellular network when WiFi isn’t available.

Republic Wireless has a similar set of products. For $5 a month, customers can make calls or connect to the Internet solely over WiFi. For $10 a month, they can use both WiFi and Sprint’s cellular network. Republic Wireless has developed a technique that lets customers roam between hot spots (but this roaming is more suited to walking than driving in a car).

Scratch Wireless has an even more aggressive plan and using their WiFi network for voice, text, and data is free as long as you buy their $99 Motorola Photon Q phone. They then sell pay-as-you-go access to voice on Sprint’s cellular network starting as low as $1.99 per month.

These companies are growing rapidly. FreedomPop says it is doubling its customer base roughly every four to six months; Republic Wireless says its customer base is growing 13 percent a month. But both companies are still really tiny compared to the big carriers and are mostly catering to those who live mostly around WiFi and who are cost conscious. From what I can see, both companies get rave reviews from their customers.

Cablevision recently announced a WiFi-only plan for $30 a month for non-cable customers but only $10 for bundled customers. I don’t understand their pricing, which obviously is not going to be very attractive to non-Cablevision customers. Cablevision operates an extensive network of hot spots in New York, New Jersey, and Connecticut.

The real disruptor might be Google. They announced that they are going to be offering cellular phone plans and the industry seems to think that they will be WiFi-based. Certainly in the markets where they have fiber networks they could saturate the market with outdoor WiFi hotspots and offer a true competitor to cellular. Google has always said that they think bandwidth ought to be ubiquitous, and since they don’t own cellular spectrum, they are going to have to go the WiFi route and also make a deal for off-network minutes from Sprint or T-Mobile.

One also has to think that Comcast has their eye on this. They certainly are rolling out a huge WiFi network as they turn customer routers into public hot spots.

And so the phenomenon is starting to grow. The large cellular companies say they aren’t worried about this, but one has to think that in the Boardrooms they are keeping an eye on this trend. For now there are issues with using these products. One is data security as it’s fairly well known that public WiFi hot spots are loaded with danger for users. This has to be the case whether you are hitting a hot spot with a PC or a cellphone.

I know that personally I will probably stick to a bigger company plan. When I travel it is more often to out-of-the-way places than to big cities. And those kind of places generally have coverage of some sort by the big carriers, but are often uncovered by smaller carriers like Sprint and T-Mobile. I would not like to find myself in a small town for a few days with no cellphone coverage. Other than that travel, I work at home and could easily use my own WiFi rather than pay for cellular.

For the product to be competitive, it’s also going to have to be usable on the major phones being sold. Not having this product for the iPhone or Samsung Galaxy limits the target audience. For now the small carriers like Republic load their own proprietary software on the phones they sell to users. But as that turns into a downloadable app I could see this product picking up a lot of traction in cities.

AT&T and Verizon are right to not be worried about this today. But if you look forward a few years this could grow into a significant competitor to cellular. Which, even if it doesn’t mean a loss of a lot of customers for the big companies, will mean overall lower prices for cellphone plans. That is something they ought to be worried about.

 

The Battle to Track Your Cellphone

HTC-Incredible-S-SmartphoneWe all know that advertising is what drives the Internet today. There is a sophisticated system in place to track desktop users through cookies and numerous other techniques that let companies amass information on who you are and how you use the internet. But these same tracking tools are largely not available for cellphones. The slimmed down operating systems for cell phones have created an environment that is very unfriendly to cookies and the other kinds of tools that are used to track desktop users.

Tracking and profiling customers is now key to advertisers. They are only willing to spend big bucks on web advertising if they can send directed ads to consumers. I live in Florida and I’ve barely been able to visit any web site in the last month where I didn’t get an ad about the Florida governor’s race. The tracking tools for web sites are good enough to know where I live and then give me ads appropriate to where I live and to my interests. The rest of the year my ads are directed more to me specifically and I get very different ads on my computer compared to what my wife gets.

You can’t blame the advertisers. The real value in web advertising is through the ability to direct ads that try to match the advertisement and the offers made to the person receiving the offer. They don’t want to try to sell a sports product to a non-sports fan or a cooking application to someone who has no interest in food. And so directed advertising is helping them to narrow the target audience to improve their chance of success. One of the main drivers behind developing big data techniques is to hone the ability to track people over time, across multiple devices and multiple web sites to form profiles on each of us.

Advertisers are desperate to be able to direct ads as accurately on cellphones as they do on desktops. This is incredibly important to advertisers because ad space on cellphones is so much more limited, and thus more valuable. On a cellphone you can’t do popups or even insert ads in any meaningful way onto the smaller screens when a cellular customers looks at a cellular version of a website. When I visit the typical commercial website on my laptop probably 20% or more of each page has been made available for the insertion of ads. And there is a huge industry that has sprung up to fill the space on those millions of web pages.

Recently both Verizon and AT&T have been experimenting with a new way to track wireless users. They have been inserting tracking numbers into the headers that identify individual cellphones. Apparently these headers have been very successful for advertisers and several of them have announced that they have had great success tracking phones through these identifying headers.

Several years ago the manufacturers of smartphones tried building an identifying number into each cellphone they made. But there was a huge outcry from the public and from privacy critics and these device IDs were either eliminated or somehow encoded and protected so that outsiders could not use them to identify an individual cellphone.

But the cellphone companies are desperate to find something that will enhance advertising revenues and so they now are putting identification in the headers. This means that every time that a cellphone visits any website, when that web site scans who is making a request they can gather these identifying numbers.

Verizon and AT&T say that these numbers are not for advertising and that they regularly rotate the numbers, in the same manner that they are supposed to change IP addresses for landline Internet connections. But we know in practice that in this age when people no longer log off the Internet that homes sometimes maintain the same IP address for months at a time. The wireless carriers don’t say how often the identifying headers are changed at a given cellphone.

AT&T notified customers in 2013 that it would be inserting these identifiers as part of a ‘test’ of future advertising products, and they offered their customers the ability to opt out of the program. But it’s been reported by those who opted out (and who are savvy enough to track this sort of thing) that they are being given these tracking numbers today and that there is apparently no way to elect out of the process.

The real proof that the tracking numbers are effective is the buzz that this has created in the wireless advertising world. Numerous advertising firms are now touting advertising programs that can help their clients track cellular customers in ways similar to desktop users.

Interestingly, Google has proposed a new Internet protocol they are calling SPDY that would eliminate and prevent these kinds of advertising headers. However, since Google makes the vast majority of their revenue from directed advertising these days, one has to think that this just means that they have found a different way to achieve the same results and want to eliminate one of the tools of their competitors.

Let’s face it. Our cellphones and other devices are amazing tools that bring us all a lot of benefits. But with those benefits it is just assumed that the carriers and advertisers are going to find a way to track us. It seems that if we want the benefits these devices bring us that the cost is our privacy.

The Skinny on U.S. 4G Data Speeds

Cell-TowerI am a statistic freak and I read any and all statistics I can find about the telecom industry. A lot of statistics are interesting but require a lot of heavy lifting to see what is going on beneath the numbers. But I ran across one set of statistics that sums up the problems of wireless 4G data in this country in a few simple numbers.

A company called OpenSignal has an app that people can use to measure the actual download speeds they see on LTE 4G networks. This app is used worldwide and so we can also compare the US to other parts of the world. In 2014 the comparisons were made from readings from 6 million users of the app.

The first interesting statistic is that the US came in 15th in the world in LTE speeds. In 2014 the US average download speed was a paltry 6.5 Mbps across all US downloads using 4G. At the top of the chart was Australia at 24.5 Mbps, Hong Kong at 21 Mbps, Denmark at 20.1 Mbps, Canada at 19.3 Mbps, Sweden at 19.2 Mbps and South Korea at 18.6 Mbps. Speeds drop pretty significantly after that, and for example Japan was at 11.8 Mbps. So beyond all of the hype from AT&T and Verizon touting their network speeds, they have not done a very good job in the US.

But the second statistic is even more telling. The speeds in the US dropped from 9.6 Mbps in 2013 to 6.5 Mbps in 2014. The US was the only country on the list of the top fifteen countries that saw a significant percentage drop from one year to the next. Sweden did have a drop, but they went from 22.1 Mbps to 19.2 Mbps

So what does this all mean? First, the drop in speed can probably best be explained by the fact that so many people in this country are using wireless data. Large amount of users are obviously overwhelming the networks, and as more people use the wireless data networks the speeds drop. Our wireless networks are all based upon the total bandwidth capacity at a given cell site, and so to the extent that more people want data than a cell site is designed for, the speeds drop as the cell site tries to accommodate everybody.

But for the average 4G speed for the whole year to only be 6.5 Mbps there has to be a whole lot more to the story. One might expect Canada to be faster than the US simply because we have a lot more large cities that can put strains on wireless networks. But you wouldn’t expect that to make the Canadian 4G experience three times faster than the US experience. And there are very few places on earth as densely populated as Hong Kong and they have the second fastest 4G networks in the world.

It’s obvious from these numbers that the US wireless carriers are not making the same kinds of investments per customer as other countries are doing. It’s one thing to beef up urban cell sites to 4G, but if those cell sites are too far apart then too many people are trying to use the same site. I would have to guess that our main problem is the number and spacing of cell sites.

But we also have a technology issue and regardless of what the carriers say, there are a lot of places that don’t even have 4G yet. I don’t have to drive more than 2 miles outside my own town to drop to 3G coverage and then only a few more miles past that to be down to 2G. A few weeks ago I was in Carlsbad California, a nice town halfway between LA and San Diego and right on I-5. I couldn’t even find a 2G network there at 5:00 in the evening, probably due to all of the traffic on the interstate.

I hope the FCC looks at these kinds of statistics because they debunk all of the oligopoly hype we get from the wireless carriers. I laugh when people tell me they are getting blazing fast speeds on 4G, because it’s something I look at all of the time when I travel and I have never seen it. When I hear of somebody who claims that they are getting 30 Mbps speeds I know that they must be standing directly under a cell tower at 3:00 in the morning. I like speed, but not quite that much.