Blogging has been light this past month, as my wife and I have been moving to our first house.  I borrowed a cute photograph from Ross Rader's blog (Byte.org) which captures the essence of the experience.  Ross was absolutely right - this can in fact be one of the most stressful events a human can experience.  But to add a bit of pain - how about doing it amidst the adverse weather conditions of the Canadian winter (snow and -15 Celsius temperatures followed by continuous rain for a day and about +5 Celsius)?  Not enough?  How about doing it over the Christmas/New Year break, when getting a van, piano movers, etc. gets to be harder?  Well, the worst part is over, and now comes the "order in progress" part (i.e. clearing out all the boxes and re-arranging some furniture).  At least the computer is out of the box and the Internet service is up and running - so blogging is back!

The National Post had a good editorial today, peppered with some interesting comments about the cellular service gap between the U.S. and Canada. Surely, the wireline story this side of the border is good - here in Canada we enjoy good, reliable service at very reasonable rates.  But on the wireless front, the story is totally different.  Currently, we only have three options as far as mobile operators are concerned: Bell Mobility (NYSE:BCE), Rogers Wireless (NYSE:RCN) and Telus (NYSE:TU).  

The editorial made some fine points (I suspect that both techie reporters from the National Post - Mark Evans and Kevin Restivo contributed to the article).  One of the main themes was the fact that the Canadian wireless market is in fact more of an oligopoly in comparison to the highly competitive U.S. mobile communications environment.  One of the reasons mentioned was the fact that Canada is in fact a small market, so the subscribers up here do not benefit from the highly competitive pressures of other markets such as the U.S., Europe and Asia/Pacific.  As a result, features are lacking and prices tend to be higher. 

One example that I can mention is voice mail: all major U.S. wireless operators offer voice mail for free for any customer signing a two or three year plan.  By contrast, in Canada, all long-term deals from Bell, Telus or Rogers only offer free voice mail for a few months, and after that, users have to pay a monthly fee for the service (usually in the $3 to $4 range). 

The article's example is pretty compelling - Cingular Wireless' offering of 1,000 "anytime" minutes for US$39.99 a month, including long-distance, within the continental U.S. simply cannot be matched in Canada, with the closest deal being $35 per month for 310 local minutes during peak business hours and unlimited evening and weekend calling, with extra charges applying for long distance. 

Other differences in the Canadian versus U.S. plans include billing (per minute versus per second billing) and the lack of "rollover" minutes (in the U.S. unused minutes from one month could be added to the next month).  Another factor that reduces the competitive pressures in Canada is the lack of Wireless Number Portability (WNP).  Americans can switch their mobile carriers without needing to change their cellular numbers.  Canadian operators, fearing that WNP would allow subscribers to lower their fees by playing one company off against others, have thus far not offered this important feature.  

From my own perspective, I can also add a few insights on this subject.  First, Rogers' acquisition of Microcell effectively took out the most price competitive offering in the marketplace.  Rogers (which beat out Telus on that acquisition) claims that it will keep the Fido brand, but obviously, it will not keep the Fido prices (note that the CP story was picked up by the Telus site).  So the only other alternative player that might offer slightly more competitive prices could potentially be Virgin Mobile, although relying on the Bell network might leave Virgin little room to maneuver its price.

Second, from my personal experience, it seems that Canadian operators seem to offer new customers better deals than their existing ones - which is interesting, given the low churn rates of our wireless industry.  Case in point: my own contract with Bell Mobility recently expired, and I had gotten a very tempting offer from Rogers, but in the end, after some negotiating and "social engineering" with the Bell call center agent, she matched the deal and I stayed with Bell (the tie breaker being the "one bill" bundle).  Contract expiry time seems to be the only time when subscribers get a bit of leverage to negotiate better deals.  But VM still costs me an extra $4 per month...

So the Sprint (NYSE:FON) and Nextel (Nasdaq:NXTL) merger was concluded after all the speculation and some naysayers claiming that elements such as the disparate networks of both operators would make a fusion practically impossible.  The new merged company will have about 40 million subscribers, compared to 47 million subs from Cingular, the industry leader.  In the deal (called "a merger of equals"), Sprint (the number 3 wireless operator) is purchasing Nextel (the number 5 wireless carrier) in exchange for stock and cash.

As part of the fallout of the deal, there has been some speculation that Motorola (NYSE:MOT) would lose its privileged monopoly status with Nextel.  This is because Sprint's 20.1 million customers rely on CDMA technology, whereas Nextel's 15.3 million subscribers belong to iDEN (Integrated Digital Enhanced Network), a network based on Motorola's digital radio technology.

However, Sprint Nextel management claimed that it plans to continue investing in the iDEN network through 2007. Therefore, based on that, there does not seem to be likely for there to be an impact to Moto's short term bottom line, particularly given the fact that the deal is not expected to be finalized at least until late 2005. Moreover, there is the push to provide dual-mode iDEN/EV-DO phones to the new company.  Despite that, the margins for these dual mode phones are not expected to be as attractive, particularly due to the CDMA royalties on the handsets and the high level of complexity in such dual mode devices. 

Motorola will have a challenge in trying to get additional CDMA cell phone business at Sprint.  For one thing, the competition will be tough: Samsung and Sanyo have a good penetration at Sprint, whereas LG is apparently the only vendor that seems to be gaining some better traction. 

The satellite radio market got a boost this week, as Toyota (the fourth largest automaker in the U.S. behind GM, Ford and Chrysler) announced this past Tuesday that it has selected XM Satellite Radio for factory-installations starting from 2006.  XM (Nasdaq:XMSR) already had an existing relationship with Toyota, in which the Japanese car manufacturer was offering XM as a dealer-installed option.  Another part of the deal is that Toyota also selected XM as its supplier for data services, such as XM’s NavTraffic real-time traffic information service.  The number of models offering XM as a dealer-installed option will increase in 2005, with new models such as the Toyota Avalon and the Lexus GS 330 being added to the already existing 10-model lineup. XM also has partnerships with Honda and GM.

On the same day, SIRIUS (Nasdaq: SIRI) also announced that Toyota has selected SIRIUS as a post-production (dealer installed) option beginning in February 2005 for the 9 models on which Toyota is already offering XM as a dealer-installed option.  It is widely believed that this deal came as a result of Sirus' relationship with Penske, the largest owner of Toyota dealerships in the U.S.  While the Toyota deal was a positive for Sirius, factory-installations still are the holy grail, and typically drive a substantially higher volume of activations, making things more difficult for the company to replace XM.  Moreover, XM is better entrenched due to the NavTraffic (the real-time traffic information service) portion of its deal with Toyota.  The company already offers NavTraffic on the 2005 Acura RL model, with service currently available in 20 U.S. metropolitan areas.

After AOL introduced AOL Journals and Google acquired Blogger to offer it as a blog publishing service, you knew Microsoft (Nasdaq:MSFT) would not stand pat. Last week, Microsoft's MSN Internet division introduced a preliminary version of MSN Spaces, a new blogging service "for the masses", as quoted by Blake Irving, an MSN corporate VP.

Any subscriber to Microsoft services such as Hotmail or MSN Messenger can setup a free blog on MSNSpaces.  The blog publishing service is supported by subscriptions and advertising revenues.  MSDN Channel 9 has a 14 minute video demo of the MSNSpaces' features, some of which include user restricted access, photo albums, favorite song lists, etc. Readers can subscribe to their favorite blogs via the RSS (Really Simple Syndication) web publishing system. 

Leslie Walker (techie reporter from the Washignton Post) testdrove the system and reported that MSNSpaces still is pretty much a work in progress.  Of course, in the future, Microsoft will devote its impressive resources towards this endeavor as well, thereby improving this offering.  Time will tell what the user adoption curve will be like, but thus far, I find that the existing Blogware system that I am using for Technology Futurist (courtesy of the folks from Tucows, who so generously donated the space on their server) offers blogmeisters a much richer environment and customization features.

Last week, the U.S. Supreme Court agreed to review an Appeals Court ruling that can potentially force cable companies to give third-party ISPs access to their networks.  In October of 2003, the U.S. Court of Appeals for the 9th Circuit in San Francisco held that MSOs should allow competing Internet Service Providers on their broadband networks.  This ruling went against the FCC opinion made public in March 2002 - namely, that cable operators should not be regulated as telecom carriers, since High Speed Internet (HSI) over cable was just an "information service" that is different than a telecom service.

As a result of the FCC's classification, the MSOs would not be forced to share their networks with other ISPs (an obligation that they would need to comply with should HSI be ruled a "telecommunications service").  That was the de-facto standard until Brand X, a Santa Monica ISP challenged the FCC view in court, which eventually lead to the appeals court decision last October. 

The FCC and NCTA were granted a stay of the court decision pending a request of the Supreme Court to hear the case.  MSOs have in fact resisted the telecom service notion of "open access" for a long time, claiming that it would create a lot of constraints to the industry due to new regulation, and create technical issues. 

One interesting point about this case is that the courts often seek the advice of expert agencies when pondering upon complex policy nuances such as the current telecom versus information service debate.  But the Appeals Court in San Francisco chose its own interpretation rather than deferring the decision to the FCC. 

It will be interesting to see how the Supreme Court will rule - just because it agreed to review the case, that does not imply that it cannot remand the case to the FCC for further clarification.  The FCC has been deliberating on the regulatory issue of how to classify VoIP for years, and thus far, it chose a rather friendly stance, in order to help the industry flourish.  The oral arguments are set to begin on March 23rd, 2005, with a ruling anticipated before the Supreme Court recess in June.

Of course no sooner than the issue of Philadelphia's mega-WLAN deployment was discussed here, Verizon changed its initial position in support of the controversial House Bill 30, and allowed the project to go through (at least for Philly).  The bottom line was that HB 30 was still signed, and the implication of that is that ILECs such as Verizon would have the right to keep local governments from setting up paid services like Philadelphia after January 1st, 2006.

Philly sought assurances from Verizon that the carrier would not fight its WiFi project in the event that its in-service date would not meet the requirements of HB 30.  There are indications that the city believes it will complete the $7-10 million deployment only by June of 2006.  So what's the bottom line?  Other cities in Pennsylvania will only be able to deploy a similar service until the first day of 2006.  After that, the ILEC will get the first rights of refusal (in other words, the local government will have to offer the ILEC the right to provide the service).  This bill will not affect free services.

It is laudable that Verizon allowed the Philly deployment to go through.  But the issue still is that the RBOC will have a first hand say (after the start of 2006) about which service gets deployed in each municipality from its ILEC region.  The fundamental question then becomes: will this law set a precedent that will influence similar projects in cities across the U.S.?

Amidst the flurry of announcements about the acceleration of Project Lightspeed, the availability of residential VoIP services and the IPTV deal with Microsoft, SBC also publicized its plans about a new offering geared towards VoIP service providers.  Namely, in a filing made on November 24th, SBC made the FCC aware of its TIPToP (True IP to PSTN) service, which enables VoIP providers to connect IP traffic to circuit-switched network through a specially designed interface

This last announcement did not go unnoticed by folks like Jeff Pulver, Om Malik, or groups such as the Internet Innovation Alliance.  So what's the issue?  Well, FCC Chairman Michael Powell, who is known for his VoIP friendly stance, stated:

"Should we conclude that this tariff is being used to justify the imposition of traditional tariffed access charges on VoIP providers or to discriminate against SBC's competitors, the commission will take appropriate action."

Powell already has three decisions to make related to charges applicable to VoIP services.  One of the matters to be resolved is related to intercarrier compensation.  He remains committed to ensuring the commission avoids any action that might slow down the "IP services revolution". 

Even though SBC still has not made the tariff public, there is some concern that offerings such as TIPToP might block some competitors from using the tandem interconnection altogether - making it not a viable option.  These tandem connections allow the LECs (Local Exchange Carriers) to connect with each other.  Some players such as Vonage go through CLECs to tap into the RBOC networks.

SBC is claiming that TIPToP is a voluntary product that should not impact the FCC's ruling on intercarrier payments, and that it has already gotten some interest in the offering.  BellSouth (NYSE:BLS) has already been promoting a similar service since May of 2003 (although BellSouth's service converts the VoIP call into signaling traditional phone networks understand, a more complicated and costly process than what is provided by SBC), whereas Verizon (NYSE:VZ) offers a nationwide VoIP service, but it requires customers to maintain their local main lines with the company, marketing the service as a second-line replacement.

Soon, we will find out where Powell will draw the line.  The key issue is that even as a "voluntary" service, TIPToP can potentially become a back-door way to impose the access charges that were initially rejected by the FCC.