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January 11, 2011

Verizon iPhone, at&t Androids – Mobile Data is the Winner

Today's announcement of the Verizon Wireless (VZW) iPhone and last week's announcements of Androids for at&t mean that we're going to have better mobile data networks at lower prices. That's the most important consequence of being able to choose your phone and your network separately. We in North America have a long way to go to have the mix and match choices of phones and service that most of the world has, but we're moving forward.

Since we will be able to purchase the same phones (roughly) to work on either network, at&t and VZW are left to compete on network quality, technical capability, coverage, and price. That's what we consumers want them to be doing. The beneficial effects of that competition are already visible.

Network Quality: Today's announcement by VZW was full of not-very-subtle innuendo about the at&t network, which failed to handle the iPhone load adequately in congested areas. Industry insiders say that VZW has invested heavily to assure that their boasts don't come back to bite them. The VZW network has stood up under the load of the surprising number of Droids sold – more new activations recently than iPhones (competition with Google may be why Apple released the iPhone to VZW). At&t has poured money into its network in a partially successful attempt to overcome its service problems before iPhone devotees had a network choice.

Top data speeds on at&t's 3G data network are higher for technical reasons than those on VZW's 3G network. But, because of less network congestion on VZW, EFFECTIVE data speeds (the speed that you actually get) are often better on VZW. Great to have them competing to sell us higher speeds.

Technical Capability: The CDMA technology that VZW uses cannot handle voice and data at the same time; at&t's GSM technology can. My VZW Droid can't browse the web while I'm on the phone; Mary's at&t iPhone can. I've found this more an annoyance than a serious problem so far – but, as I begin to use the data functions of my phone for much more than web browsing, this restriction will, I think, become unbearable. Although I can buy a plan which lets me use my Droid as hotspot for up to five devices (something at&t doesn't offer), I had to buy a separate device to be my hotspot because I can't give up having a phone while I'm on my computer. VZW is moving quickly to rollout a 4G technology called LTE (Long Term Evolution) which does handle voice and data at the same time and supports much higher speeds. At&t is also moving to LTE but at least a year behind VZW; meanwhile their marketing people have labeled an upgrade of at&t's current technology, which does improve data speed, as "4G". Sometimes we engineering types have to rely on the marketers to bail us out when we can't deliver.

Coverage: "Can you hear me now". VZW was first off the mark to use nationwide coverage as a distinguishing feature. There are claims and counterclaims and both networks have holes. Here in Vermont VZW has better coverage than at&t; but there are certainly places where at&t works and VZW doesn't – that's the reason Mary and I have phones on different networks. Some people sacrificed coverage to get the iPhone they wanted; we won't have to make that tradeoff anymore; so there will be increased market pressure on the network operators to improve coverage. That's great news in rural areas: even though there are not enough of us living in some places to justify a cell tower just to serve us, at&t and VZW know that, when the city people come up to visit, they expect their phones, which are also their web browsers and navigation devices, to keep working. Nationwide coverage is important to everybody and head-to-head competition means we'll get there sooner rather than later.

Price: at&t and VZW prices are roughly the same – but VZW's current $29.99 data plan for smart phones is unlimited; $25 at at&t gets you only 2GB (gigabytes) with a $10/GB charge for going over. Once you start watching video on your phone (my Droid can drive a television screen), 2GB won't be hard to consume. VZW hasn't yet confirmed that this data pricing will apply to the new iPhone, but it's very likely that it will. Long term VZW has said that it wants to go to charging incrementally for data; but, so far it seems that they'd rather make the marketing point that their network can handle unlimited data and at&t can't.

Which brings us to Sprint. They have Androids but no iPhones. They have a smaller network than at&t or VZW and may be hindered by their early adoption of WiMAX instead of LTE as a future architecture. But Sprint has unlimited data plans not only for phone but also for computers and various tablets. If we are left with a duopoly of at&t and VZW, I think we'll eventually not have any unlimited data plans to choose from. But, if Sprint can survive and compete, we'll benefit in price and quality from that competition. BTW, Sprint CEO Dan Hesse was my boss at the old AT&T when we popularized all-you-can eat $19.95/month for dialup. If Dan hadn't understood the benefit consumers would see in not having to worry about going over a quota and running up a big bill, AT&T would never have allowed me to offer that plan. I'm sure he hasn't forgotten the market reaction.

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