A recent Forbes article suggests that efforts to confuse the debate are continuing anew.  The article March of the SkypeTube from the June 08 edition of Forbes leads me to wonder if there is not still a movement to confuse the debate around network neutrality (especially wireless network neutrality) with a specific bit of misinformation.  From the article:

Creating stable economic value in these markets depends on creating stable service-content-bandwidth bundles. Amazon’s Kindle is a good example. The elegant tablet runs on bandwidth that Amazon purchases wholesale from Sprint; Amazon then embeds the cost in the price of the books, magazines and such that it sells and delivers. Everyone prospers–publishers of books and magazines, middlemen like Amazon, manufacturers of the hardware that handles the delivery at the customer’s end and secures copyrights at the same time, and customers, who seem to be delighted with the whole package. Maybe that’s why nobody has dared point out that the whole setup is a grave affront to “network neutrality”–Amazon’s bits get preferential carriage on Sprint’s bandwidth, until Google or Ebay strike their own deals.

I added the emphasis to the claim that Amazon receives preferential treatment for Kindle traffic that moves across Sprin’t network.  I have looked and looked for evidence of an arrangement between Sprint and Amazon to give priority to Kindle data packets over other data packets. I have found no such mentions of data prioritization being an element of Amazon’s contract with Sprint for wireless connectivity for Kindle e-book readers.   I do not believe that any such arrangement exists,  I do acknowledge that details of the contract between Sprint and Amazon are by nature proprietary, and so it is conceivable that Mr. Huber has access to legitimate information that I do not.  However, I am fairly certain that this is not the case.  Such an arrangement would no doubt cost Amazon a premium, and the latency-tolerant nature of Kindle data does not mandate data prioritization.

Generally when there is a discussion of providing priority to specific types of traffic on an Internet backbone or wireless data network the application being discussed is a latency intolerant application or medium.  Real-time media such as voice over Internet, video and high-transaction business applications are put forward as the examples of applications backbone providers would want to prioritize.  End users will see a real difference in the experience or the performance of prioritized traffic: the applications will perform noticeably better in most cases where their packets are given higher priority and therefor greater effective throughput from point of original to point of destination.

The electronic books, publications and blog entries on the Kindle are not consumed in real time the same way an on-line video or Internet phone call is.  In other words, giving the data priority over other data on Sprint’s wireless network would not make any difference to how the end user experience.  The difference in performance would be a matter of seconds for a piece of information that the suer consumes over the course of hours, days or weeks.  There is zero reason to give such latency-tolerant data priority.

The fact that electronic books are latency-tolerant, combined with the lack of any mention of priority treatment for Amazon’s data on Sprint’s wireless network, leads me to conclude that indeed no such arrangement exists.  As the Obama administration, Congress and the still forming FCC re-examine the debate over network neutrality, I believe this is an attempt to subtly introduce additional confusion into that debate.

Item the First: Amazon Kindle complete with Sprint EV-DO

The week of Thanksgiving Amazon entered the tumultuous space of e-book readers with the Kindle.  A lot has been written about the status of e-books in general and the utility of the Kindle in specific.  Some have caught on to what I think is one of the most revolutionary elements of the service: bundled Sprint high-speed EV-DO wireless data service.

The real revolution here is the wireless service bundled with another device and service and sold as an element completely independent from traditional mobile telephone or data services.  Kindle points us to a day when standard devices will have on-board mobile data connectivity as a bundled service element.  You won’t need to migrate your phone carrier from AT&T to T-Mobile in order to take advantage of the discrete connectivity provided by some new gadget or doo-dad.  This is an example of the new business model.

Item the Second: Verizon Wireless says they will open their network to any device

In a completely unexpected move, Verizon Wireless announced that they will open up access to their wireless network to any device that is approved through a technical review process to ensure the integrity of the network.  Once again the whole tech world asked “WTF?” all at once, but this time with a great sense of optimism.  While a number of details need to be hammered out, this move does represent a truly game-changing development.  Obviously the wireless industry is going to be turned upside-down.  Other industries and business models are going to be revolutionized as wireless connectivity becomes ubiquitous (two industries that jump immediately to mind are consumer electronics and automotive).

Two major details that need to be hammered out are what the vetting process will look like and what pricing models will be made available.  If the barriers to technical certification are set too high or take too long innovation will be greatly slowed.  I fully expect other carriers to announce plans to open their own networks as well, and getting the best and most demanded gadgets on your network is going to be a dimension of competition among the wireless carriers.  

The second issue to be addressed is pricing.  Already AT&T have tried to make the case that their network is already open because any device that uses a SIM can be connected to their network.  While there is an element of truth to this (one reason I’ve always preferred GSM to CDMA is the flexibility offered by a SIM card), the SIM card model is still based on pricing built around the concept of the mobile phone service.  

The real revolution in the pricing of open wireless wide-area connectivity is going to be a move away from the traditional mobile phone pricing models.  This is important because the truly game-changing element of open networks is creating opportunities for machine-to-machine connectivity.  One the wireless network of the future a large percentage of the traffic will be computers talking to one another.  Pricing models will need to be developed, either directly or indirectly, that support a mix of constant and variable connectivity requirements for a wide array of devices.  The per-bit charges must be sufficiently low for device manufacturers and value-added services to be priced at levels that will deliver value for end customers.

We are on the verge of a very exciting time in the wireless space.  Other carriers are going to follow VzW’s lead, and if Google wins any piece of the airwaves in the upcoming 700 MHz spectrum auction we can expect them to be a very aggressive and innovative competitor in this space.  Within a couple of years we will come to take ubiquitous connectivity of certain devices for granted.  Some product/service combinations we can easily foresee:

* Constant diagnostic data from cars and other durable goods
* Improved energy efficiency of home heating and cooling
* Real-time remote home security
* Internet audio and video in your car or through mobile devices
* Location-based services, such as luggage that is never lost

These are just some of the concepts off the top of my head.  I have no doubt that I am only scratching the surface and not even tapping into the deep veins of opportunities that some very imaginative people will develop.

“Imagine accessing YouTube.com and MySpace.com literally on the fly,” Sprint Chief Executive Gary Forsee told a news conference, referring to the popular online video and social networking sites.

Imagine that– a telecommunications executive not bitching about how people aren’t paying enough for his pipes but rather being delighted at the notion of delivering connectivity and value to customers.

Some commentators have questions the ability for Sprint to make a profit following such a capital investment, but I have to contrast this effort with some efforts to bypass the local exchange carriers in the past. Specifically I’m contrasting this $4 billion in capital investment to the around $100 billion pre-SBC AT&T spent to buy cable companies TCI and MediaOne in the late 1990s. At the time I actually thought AT&T’s strategy would pay off, and I think Wall Street unduly beat up on then AT&T Chairman C. Michael Armstrong, forcing him to tear down this strategy. Thanks to the progressive march of technology Sprint will get to bypass the ILECs for around 4 percent of what AT&T once spent. If Sprint can market the service well I think they’ve got a good shot at making this profitable in short order.

Also, keep in neutral, Sprint. Stay classy, San Diego.

Tags: Sprint, WiMax

So, getting back to the commentary on alternative distribution for content offered by Sirius and XM, it seems that Sirius have struck a deal to offer selected content to Sprint PCS customers. This is, evidently, going to be achieved via streaming digital audio content to mobiles.

I’m still a bit skeptical that we’re to a price point yet where customers would want to pay for the limited quality available via a mobile phone network. I think carriers have a tough story to tell with respect to sound quality. This is why I think the real value of the Motorola/Apple iPhone will be to let users bypass the carriers’ networks by trading songs with their PCs using Bluetooth. Even then I’m still somewhat wary that a phone has the proper form factor to make it an enjoyable music device.

It’s still good to see the satellite radio networks pursue alternative distribution. I’m just not sure this is the right way to go. I think Podcasting content (we all KNOW that it’s coming) would provide more bang for the buck with lower costs and without having to appease partners as touchy as the wireless carriers.

One exciting tidbit is that Reston, Virginia will be the headquarters for the merged corporation. Some good news for Northern Virginia which has been hard hit by the telecom industry collapse. At least some of the consolidation is sucking some jobs our way. Too bad for Kansas, I guess.

The new company is going to be based largely on wireless services. The rumor is that the merged company is going to spin off Sprint’s local services business, which should fetch some decent coinage. Maybe from the likes of Alltel or one of the RBOCs. I’m not sure where all Sprint have their local businesses.

A big question for me with this merger is on the wireless technology front. Sprint use CDMA and Nextel use iDEN. The latter is a proprietary, TDM-based wireless protocol which makes Nextel’s stand-out (and annoying) push-to-talk function work. The CDMA carriers Verizon Wireless and Sprint have made their own forays into the PTT arena with limited success. Nextel even ripped on Verizon Wireless for having long connect times for PTT. How will they consolidate these networks? How will the merged company continue to meet the expectations customers have for PTT responsiveness through the technology transfer? What manufacturers are going to be able to make equipment for the merged company? How does this impact Sprint’s recent announcement of approximately $3 billion in capital into their wireless infrastructure? Considering the technology hurdles these companies will have to overcome, how long before stockholders see the benefits of “synergy?”

Unlike the Cingular-AT&T Wireless merger, this is not a merger of similar technologies. I suspect that this merger is going to take much longer to deliver any value to shareholders. Considering the integration challenges of Cingular and AT&T Wireless that’s really saying a lot.