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July 28, 2004

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Charlie Sierra

I want to say take a chill pill.

re:The absent Carriers

I've posted this on Om's blog before but it bares repeating.

Technologies are not disruptive, its the business models that clever people build around them are.

So Voice over WiFi, especially B, is still a joke on the QoS, etc. But its a massive danger to the wireless carriers because it pricks the last bubble, the most fundamental assumption of the entire $93B industry. That being the inherently MORE valuable business day MOUs, ie. Peak minutes.

Heres how the pieces fit together. ARPU (average revenue per user), is made up of MRC + MOP + Data. MOP is overage/minutes over plan, MRC is the monthly recurring charge, ie your plan.

If subscribers do start to substitute WiFi access for WAN access that means that MOP/Overage starts to decline, and rapidly. Further it means that subscriber could be satisfied with small minute buckets and thus lower MRC.

If this happens its great for subscribers, but since all carriers have used gobs of debt financing, any hint of softening revenue prospects means, they're screwed.

The only carrier that is playing along is only doing so out of a lack of other choices.

T-Mobile simply doesn't have the spectrum or resources to commit to W-CDMA in America yet, so actually marketing WiFi only makes sense for them.

The thing to watch in this space is the major airports.

The highest cellphone usage in America is around the 3 NYC airports. If those airports start to agressively pursue the voice roaming market, watch out.

That will be the first sign of real trouble.

Frankly the horror of Avaya is a bit over the top. Big companies always push lock-in.

Lastly, the carriers have one asset that can't be easily matched by would be enterprise IP-PBX interlopers(?), and that asset is LEGAL RECOURSE. Unlicensed spectrum has no LEGAL RECOURSE. Carriers should be selling LEGAL RECOURSE as an add-on for on-site nano and pico cell installation. As it is, if you get hacked over 802.11 your SOL. This is a very scary prospect for Corporate America, aka Adult Daycare.

The explicit selling of LEGAL RECOURSE will be a big deal in the future.

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