Dial Zero
A look at what's surprising, silly, scary or stupid in telecommunications and data

Friday, February 27, 2009

Cablevision lost money because of newspaper purchase

Cablevision Systems had a fourth-quarter loss amid a $402 million write-down from the company's recently acquired Newsday newspaper and slowing subscriber growth at its cable business.

Despite the trouble, Cablevision continued to generate healthy cash flow, and the company's chief operating officer Tom Rutledge said cable-subscriber growth in the current quarter has so far exceeded that of last year's first quarter at the same point.

"There doesn't appear to be any significant change at all in our metrics with regard to the economic situation," Rutledge said. He added that the cable business tends to be "countercyclical."

Cablevision, which last year added Newsday to its holdings that include the New York Knicks basketball team and the New York Rangers hockey team, swung to a loss of $321.4 million, or $1.11 a share, from year-earlier net income of $6.6 million, or two cents a share.

Revenue rose 11% to $2.1 billion. The company said two weeks ago it expected to take a write-down of between $375 million and $450 million at Newsday, for which it originally paid $650 million last year.

Rutledge outlined a strategic plan for Newsday for the first time, saying Cablevision would shutter the newspaper's free Website, potentially offering it as a service for Cablevision and Newsday customers.

"When we purchased Newsday, we were aware of the long-term issues facing the traditional newspaper industry," Rutledge said. "We plan to end the distribution of free Web content and make our news-gathering capabilities a service for our customers."

Newsday focuses on Long Island, New York, where Cablevision has the bulk of its subscribers, and the move is said ti be aimed at thwarting customer defections from Cablevision.

Shares of Cablevision fell six cents to $13.31 at 4 p.m. in composite trading on the New York Stock Exchange. The stock has dropped about 49% over the past 12 months, partially on concerns about Cablevision's liquidity and its ability to repay bond maturities coming due this year.

Cable television providers have been seeing slowing subscriber growth because of the sagging economy and rising competition from telecommunications companies, such as Verizon. (info from The Wall Street Journal)

Thursday, February 26, 2009

Bankrupt Nortel will fire 3,200 more, and they won't get severance pay

Nortel Networks plans to eliminate 3,200 more jobs over the next several months, as the telecom equipment vendor tries to restructure under bankruptcy court protection.

The layoffs are in addition to 1,800 job cuts the company announced last year. Nortel won't be paying severance to the employees who lose their jobs.

Once Nortel completes the job cuts, the company's work force will have dropped to about 25,000. During its heyday in the 1990s, Nortel employed about 93,000 people.

The company filed for bankruptcy protection in Canada and the US in January and has been delisted from the New York Stock Exchange. It still trades on the Toronto Stock Exchange, and was at 8 US cents Wednesday.

Chief Executive Mike Zafirovski said Wednesday that executives were working to have a restructuring plan ready in March. "We are moving with speed, but we are not moving in haste," he said. He didn't rule out future rounds of layoffs.

Zafirovski said one priority was trying to keep Nortel's current customers on board, but admitted that few were willing to invest in the company's new technologies. He declined to say whether the company would stake its future on selling network gear and services to telecom carriers or to corporations running private networks, where it competes against giant Cisco Systems.

Since its filing, Nortel has suspended plans to sell its promising Metro Ethernet business, leading some analysts to believe that Nortel will focus on its shrinking but highly profitable wireless business. (info from The Wall Street Journal)

Wednesday, February 25, 2009

Dead man's widow got his $1,000 bill for phone sex, but he's been dead for 20 years

In Nebraska, 86-year-old Arlene Hald recently received a credit card bill for over $1,000 in phone sex calls addressed to her husband, Sylvester, who died nearly 20 years ago.

Hald said they never had a credit card, yet an account in his name was charged. The family suspects identify theft.

Hald's daughter called the billing company, which agreed to remove the charges.

The daughter says the family thought that was the end of it -- until another bill arrived for over $70. The billing company agreed to remove the latest charges and never bill Hald again. (info from The Associated Press)

Tuesday, February 24, 2009

Moto dumping mobile email business

Motorola has found a buyer for Good Technology Inc., the mobile email provider it bought for about $500 million just two years ago to help it compete against BlackBerry and other messaging devices. Visto Corp., a company whose messaging services are offered through carriers including T-Mobile and Vodafone, is purchasing the business to expand its client base.

Terms of the transaction weren't immediately disclosed, but are likely to represent a steep drop in Good's value since Motorola's acquisition. The deal is expected to be announced this week.

The sale comes as Motorola plans to sell some assets as it tries to raise cash and cut expenses to stem losses at its rapidly shrinking cellphone unit. It also eliminates the potential expense of fighting litigation that Visto initiated against Good in 2006.

"Good was either going to fade away or be given to someone," said Ken Dulaney, a mobile-computing analyst at Gartner Inc. "They get rid of a failed business, take some employees off the books and end a lawsuit."

Visto said the deal would enable it to better compete for business from carriers looking to promote their brands through messaging services that can run on any device. "This is a story about Visto's consolidation of the non-Microsoft and non-BlackBerry community of users," said Chief Exec Brian Bogosian.

Motorola currently sells Good's mobile email through carriers including AT&T, Sprint Nextel and Verizon Wireless. In terms of users, Good and Visto lag behind market leader Research In Motion Ltd., maker of BlackBerry devices.

Despite the expected sale, engineers and other staff who worked on Good's email service are now central to Motorola's efforts to develop a new class of cellphones. These phones, focusing on social-networking and expected later this year, are at the core of Motorola's efforts to turn itself around.

Motorola acquired Good in early 2007, at the height of the ultraslim Razr phone's popularity and on the eve of the company's spectacular collapse from the No. 2 maker of cellphones by market share to No. 5 today. The purchase was part of a series of acquisitions and share buybacks that drained $6.6 billion of the company's $11.2 billion cash pile in a single quarter.

At the time, the world's largest cellphone companies moved to acquire the makers of such software. But turmoil within Motorola's leadership frustrated plans to focus on consumer email, and the unit was integrated into the former Symbol Technologies Inc., which made handheld scanners and other devices for blue-collar workers. That unit had a hard time convincing its retail, delivery services and industrial clients of the need to purchase email services for field staff.

Visto has aggressively sought to defend its patents regarding the "push" email technology and has sued seven rivals. Last year, it settled a case against Microsoft for an undisclosed amount. A separate suit against Research In Motion was stayed in July pending the US Patent and Trademark Office's reexamination of five disputed patents. (info from The Wall Street Journal)

Monday, February 23, 2009

Pumping Federal money into rural broadband may be a waste

With the first concerted federal program to subsidize high-speed Internet services in rural areas, the new economic stimulus package will create some jobs and could get hundreds of thousands of households online. Yet there's doubt whether the economy would be more energized by spending that money on other things.

Because Internet access is already widespread and still being expanded even in a shrinking economy, injecting more money for broadband may be unnecessary.

"From the rural Vermont that we see, broadband is happening, happening fast," said Michel Guite, president of Vermont Telephone Company. The company, which serves 21,000 lines, is able to borrow from commercial lenders when it needs to invest in expanding Internet services, Guite said. Although he wouldn't decline cheaper loans from the government, Guite said Congress could help his company better by cutting red tape, particularly when it comes to freeing up spectrum for wireless services.

The stimulus bill provides $7.2 billion for grants, loans and loan guarantees, primarily for areas that lack broadband or are "underserved," though the term is not defined. Some of that money is set aside to expand Internet access at public centers like community colleges and public libraries.

One reason the money won't likely have much impact is its small size: less than 1 percent of the overall stimulus package, and substantially less per citizen than some countries, like Ireland and Sweden, have spent on improving their networks. The Obama administration is looking at creating a more comprehensive plan to get the whole country covered by broadband, but it's not yet clear if that would mean more subsidies.

Larry Sarjeant, vice president of legislative affairs at Qwest Communications, said the phone company could use $3 billion to expand Internet access to 2 million households and small businesses in 14 Western states, many of them thinly populated.

Because Qwest is unlikely to get that large a share of the funds, and the number of households that sign up for service will be smaller still, the net effect would be at most a few hundred thousand new Internet subscribers. Qwest added 236,000 broadband subscribers on its own last year.

In 2007 and 2008, the Pew Internet and American Life Project asked households that lacked broadband why they haven't signed up. Lack of availability was ranked fourth, given by 14 percent. Most answered that they didn't need the Internet, that it was too expensive or too hard to use. Many people who don't use the Internet simply don't have computers.

About 95 percent of households can already get broadband, according to the National Cable & Telecommunications Association. But the industry hasn't been very forthcoming in saying exactly where it's available, and that's part of what the stimulus package wants to address - it has allocated $350 million to mapping US broadband access.

There are signs that the money will do at least some good to rural areas. A study of 3,000 people in Michigan, Texas and Kentucky found those in areas that received broadband Internet grants from the federal Rural Utilities Service quickly signed up for service, matching the penetration rates in cities. That happened where network investment was coupled with community programs aimed at convincing people about the benefits of Internet access. Home broadband users were more likely to start businesses or take classes online, and less likely to move away, researchers found. (info from The Associated Press)

Friday, February 20, 2009

Comcast wasted $600 million on Clearwire

Comcast, the nation's largest cable TV provider, said Wednesday its fourth-quarter earnings fell 32 percent, hampered by a $600 million write-down of its investment in wireless technology provider Clearwire.

The Clearwire write-down was expected. Other Clearwire investors like Google, Intel and Time Warner Cable have recently taken similar charges against their earnings. The companies invested in Clearwire to develop wireless services, which cable operators need to offset an advantage held by phone companies.

Comcast's revenue and adjusted earnings beat Wall Street estimates, and the company raised its dividend 8 percent. However, the company showed markedly slower growth in its video, high-speed Internet and phone businesses. Comcast said competition from phone companies has intensified, and fewer customers have been moving their subscriptions to more expensive levels of service.

But the company said it has not seen a massive scaling down from customers who now choose to watch TV shows online. Time Warner Cable, the nation's second-largest provider, warned of the threat of that trend two weeks ago, calling it "the beginning of cord-cutting."

The economy's effect on the pay-TV sector thus far hasn't been disastrous. Providers have been offering discounts and trying to lure customers with "bundled" services of video, Internet and phone that are cheaper than a la carte.

In the fourth quarter, Comcast earned $412 million, or 14 cents per share, compared with $602 million, or 20 cents per share, in the year-ago quarter. Excluding items such as the Clearwire charge, Comcast earned 27 cents per share, up 7 cents per share from the same quarter last year. Comcast's revenue rose 9 percent to $8.77 billion, ahead of analyst forecasts for $8.64 billion in revenue.

Comcast said that in the fourth quarter, customers ordered 537,000 new lines of service - whether video, Internet or phone - down 57 percent from the same quarter a year earlier.

Comcast's video revenue rose 3.5 percent to $4.74 billion. The company lost 233,000 video subscribers - which left it with 24.2 million overall, down 2 percent from a year earlier. However, Comcast's count of digital customers, who pay more for service, increased by 247,000. That helped Comcast's average revenue per video customer rise 9 percent to $113.80 per month.

Revenue from broadband Internet services rose 9 percent to $1.86 billion. Comcast added 184,000 Internet subscribers during the quarter, down 46 percent from the 341,000 it added in the year-ago quarter. The company ended the period with 14.9 million broadband customers.

Revenue from Comcast's digital phone segment rose 45 percent to $731 million. However, the company's addition of 344,000 digital phone customers was down 44 percent from the amount added in the fourth quarter of 2007.

Advertising revenue fell 5 percent to $409 million. Comcast has been reducing costs, cutting 3,300 jobs in the third and fourth quarters. (info from The Associated Press)

Thursday, February 19, 2009

Thousands of confused and pissed-off people called FCC about end of analog TV

The FCC said today that it received more than 28,000 calls on its consumer help line Tuesday, with more expected in coming days, as hundreds of TV stations shut off their analog transmitters.

The FCC said that the calls on Tuesday came in response to only a portion of the broadcasters who completed their transitions to all-digital TV broadcasting during the day, or from owners of digital TVs who did not know they needed to perform a channel rescan, as some digital TV stations moved their digital channel assignments at the same time.

However, the majority of the 421 stations that had notified the FCC of their analog termination plans did not actually turn off their broadcasts until midnight, so a greater volume of calls was expected on Wednesday.

The FCC’s help line, 1-888-CALL-FCC, received on Tuesday 28,315 calls, which was up 37 percent over Monday’s 20,673 call volume, and preliminary results for Wednesday indicated a 5 percent increase. From midnight until 11 a.m.

The FCC’s call center was established to help consumers with information about why their analog TVs are no longer receiving channels and how they can take action to receive new digital broadcasts, either by using new digital TVs, or by connecting their current TVs to an over-the-air TV converter box or to cable or satellite TV service.

The FCC said about 220 stations made the transition before Tuesday, for a total of 641 stations having made the transition by the end of Tuesday -- 36 percent of the full-power stations nationwide.

Stations making the transition before Tuesday included those in the Wilmington, NC market, which made the transition on Sept. 8, 2008, and Hawaii, which made the transition on Jan. 15.

The FCC said many of the calls that came in Tuesday were from consumers who were unaware that they should run the “scan” function on their digital televisions or converter boxes in order to get reception from a station that changed its digital channel after the transition. (info from TWICE)

Wednesday, February 18, 2009

Competitors Qualcomm and Nokia will get together

In the past I've had cellphones made by Qualcomm and by Nokia. I may soon be able to get a phone made possible by the cooperation of the two rivals.

Nokia plans to use Qualcomm chips in high-end phones. Qualcomm and Nokia were bitter rivals in the courtroom until last year, when Nokia agreed to pay royalties to settle a protracted patent dispute. The new arrangement is the first since the companies' settlement.

Nokia and Qualcomm said Tuesday at the Mobile World Congress that they expect the new phones be available by mid-2010. Nokia has never used Qualcomm chips before.

Companies are struggling in the handset market, which is expected to decline for the first time since 2001. In January Qualcomm issued a disappointing forecast for its fiscal second quarter.

The deal represents a small but promising move for Qualcomm. Finland-based Nokia has roughly 40% of the global market but lags behind in North America. Nokia has long talked about pushing into the lucrative US market. Ironically, years ago Nokia was a pioneer in the American cellphone market as the major supplier of phones sold by Radio Shack. (info from The Wall Street Journal)

Tuesday, February 17, 2009

iPhone app helps to win at blackjack

California gaming authorities tipped off their Nevada counterparts to a blackjack card-counting program that can be used on either the Apple iPhone or the Apple iPod Touch portable music player. "The program calculates the true count and does it significantly more accurately," according to a Gaming Control Board memorandum sent to casino operators last week warning of the electronic device.

Card counting is not illegal in Nevada casinos. However, using a device to aid in the counting of cards is considered a felony under Nevada laws governing cheating, control board member Randy Sayre said. Gamblers using the iPhone card-counting program can be detained by casino operators and arrested by state gaming agents. "We wanted to put the industry on notice to be aware this device is out there," Sayre said.

He added that there haven't been any reports of the device being used in Nevada. Sayre and the agency consider the iPhone program an electronic method for cheating.

Operators of a Northern California Indian casino discovered customers using the program and alerted the California Bureau of Gambling Control. The program is installed through the iTunes Web site. It makes counting cards easier, Sayre said.

The program uses four different strategies for card counting. It also operates in the "stealth mode," in which the phone's screen is shut off. The program can be run effortlessly without detection as long as the user knows where the keys are.

Sayre said it is up to individual casino operators to decide policies concerning the use of cellphones and other electronic devices at gaming tables. Last year, state gaming regulators eliminated the ban on cellphones inside race and sports books.

After iPhones came on the market in 2007, Harrah's Entertainment halted their use at the World Series of Poker. Cellphones are banned at the tournament, although iPods and other MP3 players are allowed. "We're looking at this internally and this is an issue that needed to be in the public domain," Sayre said. (info from Las Vegas Review-Journal)

Monday, February 16, 2009

Only a sort-of lobbyist, SPRINTer to help plan telecom policy

The Obama administration has tapped a Washington executive of Sprint Nextel to help run an agency that shapes telecommunications policy and will dole out billions of dollars in federal stimulus money to wireless providers.

As a vice president of government affairs for Sprint, Anna Gomez wasn't registered as a lobbyist so she isn't restricted by President Obama's new ban on hiring lobbyists to oversee the issues they influenced in the private sector. A separate provision in the administration's new ethics rules -- one that restricts appointees' work with recent employers -- will limit Gomez's official duties, preventing her from reviewing contract bids by Sprint for two years. But she could still play a role shaping policies that affect her former employer.

Gomez was named deputy director of the National Telecommunications and Information Administration on Feb. 3. She is currently acting director of the agency, which shapes the president's telecom policy within the Commerce Department. Under the stimulus bill, the NTIA will handle as much as $6.65 billion in wireless and broadband grants available to Sprint and its competitors.

White House spokesman Ben LaBolt said Gomez's telecommunications expertise made her a good pick for the agency. "During the course of her 12-year tenure as both a policy maker and legal adviser at the FCC, Anna Gomez obtained skills and knowledge on issues from international telecommunications to satellite spectrum that make her uniquely qualified to serve consumers and enforce the law at the NTIA," Mr. LaBolt said. He added that it is unlikely she will encounter matters that directly involve Sprint, but she will recuse herself from meetings and discussions that do.

But Gomez might still play a role in decisions about Sprint's competitors or policies that affect the industry more broadly. The NTIA manages spectrum use by federal agencies and negotiates spectrum policy internationally -- decisions that indirectly affect the entire wireless industry.

While Gomez wasn't a registered lobbyist, she worked for three years for Sprint trying to influence telecommunications policy at the FCC, where she was employed from 1994 to 2006. At Sprint, Gomez also worked on compliance with regulatory law and pressed her company's case with state agencies.

Public records at the FCC show more than 50 contacts between Gomez and the commission in the past two years.

The Lobbying Disclosure Act requires individuals to register as lobbyists if they spend more than a fifth of their time attempting to shape policy with certain members of the executive branch, including top officials at the FCC. Publicly disclosed communications -- such as Gomez's recorded contacts with the commission -- are exempt from that calculation.

Gomez therefore avoided the new president's executive order barring lobbyists -- as defined by federal statute -- from joining his administration to handle issues they have dealt with in the previous two years. But critics cite her appointment and others as signs that Obama is stretching the spirit, if not the letter, of his pledge to curb the influence of special interests in his administration. (info from The Wall Street Journal)

Friday, February 13, 2009

Even a Taliban can love the iPhone

I don't know if he'll be joining Justin Long, the "I'm a Mac" guy in Apple commercials, but Mullah Zaif, a former Taliban official, raved about his iPhone to Al Jazeera correspondent Hamish McDonald during a visit in Kabul.

"I'm addicted," he said, "the internet is great on this, very fast."

Last year the Taliban was threatening to blow up cellphone towers if wireless operators didn't observe a curfew, ostensibly to prevent attacks by the American military. When the conservative Taliban religious movement ruled Afghanistan, it banned almost all modern technologies. (info & photo from Al Jazeera via ValleyWag)

Thursday, February 12, 2009

Verizon (now owning MCI) revives "Friends & Family"

Verizon Wireless is expected to announce that subscribers on some plans will be able to pick five or 10 phone numbers that they can call for free, without using their plan's minutes. Verizon Wireless, now the country's largest cellular carrier, is calling the feature "Friends & Family." MCI, which Verizon bought several years ago, had a long-distance plan called "Friends & Family" in the early 1990s.

There is no added charge for the service. It mimics a popular feature called "My Circle" at Alltel Corp., a smaller cellphone carrier that Verizon Wireless bought in January.

Verizon Wireless' announcement means that former Alltel customers will be able to keep the feature when they sign up for new plans, and expands the availability to other Verizon Wireless customers.

The new plan will be available starting Sunday. Customers on single-line plans starting at $60 per month will get five free numbers, and those on family plans starting at $90 per month for two lines will get ten free numbers. Customers will need to sign up for the feature and pick their numbers online.

T-Mobile USA, the fourth-largest carrier, has a similar feature, which it calls "myFaves." (info fro mThe Associated Press)

Wednesday, February 11, 2009

Feds get fooled on analog TV shut-off plans

About 40% of the nation's local TV broadcast stations want to shut off analog transmission by next week. Thousands of Americans soon could lose TV service despite Congress's recent decision to postpone the digital TV switch. Lawmakers didn't anticipate that so many stations would want to shut off analog signals next Tuesday, and the development raises the likelihood that people will become even more confused about what to do.

Congress approved delaying the mandatory switch to digital-only television to June 12, but local stations can ask to switch earlier than that. Many want to do so, hoping to save thousands of dollars they would have to pay to continue broadcasting in both analog and digital for a few more months.

The FCC is considering denying some stations' requests so communities won't be left without at least one local channel.

Most Americans won't be affected by the switch to digital because they subscribe to cable or satellite TV services. About 20 million US households rely on free over-the-air TV, although millions of viewers have already prepared for the digital switch by installing set-top converter boxes. An estimated six million homes are unprepared for the switch.

For viewers wondering what to do, the FCC will post on its Website a list of the stations that plan to shut off service early. Local stations must also inform viewers of their intentions.

Nearly 500 stations asked the FCC for permission to shut down their older analog signals on Tuesday of next week, the original date of the mandatory switch. An additional 190 local stations either already have permission or have done so already.

People in some markets would be affected more than others. In Bloomington, Ind., and Utica, NY, for example, just one station plans to shut off its analog signal next week. Five stations in Dayton, Ohio, would switch to digital-only, leaving analog viewers with only one.

A waiting list for government coupons that help pay for the set-top converter boxes needed to keep older TVs working is now about 3.7 million requests long. Congress has included $650 million for more coupons in the economic-stimulus plan that passed the Senate Tuesday, but it could take a few months for the backlog of requests to be eliminated.

Some consumers may soon have difficulties finding converter boxes in stores. Government estimates of converter-box demand didn't account for a delayed transition, which means there may not be enough to go around until late spring.

Consumer-electronics makers estimate that there are from three million to six million converter boxes available for sale now, far fewer than the number needed to fill demand. (info from The Wall Street Journal)

Tuesday, February 10, 2009

Now LoJack tracks people

LoJack, maker of wireless devices that allow cops to find stolen cars, is announcing the launch of a radio device designed to locate people.

Several companies already offer devices that use wristband radio transmitters to help police locate people quickly. But advocates for the elderly and disabled say there's a large and unmet need for more such services.

An estimated 18,000 people are already using wristband radio-tracking devices made either by Care Trak International, a LoJack competitor, or by Locator Systems, a Canadian company acquired by LoJack last year. Some of them are distributed by police departments. On average, they cost about $25 to $30 a month to use, though in cases of need, they may be provided free.

There are an estimated 5.2 million Americans with Alzheimer's, and more than half of those affected sometimes go on random and dangerous walks, according to the National Alzheimer's Association. Wandering is considered among the most life-threatening behaviors associated with the illness.

When an autistic child or an adult with dementia wanders off and gets lost, finding them quickly sometimes can make a difference between life and death. The National Autism Association says 92% of respondents to a poll said their child was at risk of wandering. In the past four years, the group says, 14 autistic children died because of wandering, including a 7-year-old boy who froze to death. Autistic children often don't respond when rescuers call out for them, so tracking technology would help.

Such technology was first rolled out on a very small scale in the mid-1980s when an Illinois company called Wildlife Materials went beyond its core business of tracking endangered animals. A subsidiary called Care Trak International built a radio transmitter worn on a wrist that would emit a signal to a receiver, usually placed in a police car.

LoJack chief executive Ronald Waters says the company hopes to leverage its nationwide network of 1,900 police departments that already use its car-tracking system. LoJack plans to give away receivers for free, and charge clients a $30 monthly fee, on top of a $99 enrollment fee. Project Lifesaver International, which works exclusively with LoJack, is now approaching police departments with offers to switch from the Care Trak technology.

Referring to LoJack's marketing might, Care Trak vice president Mike Chylewski says he expects a tough battle. "It's David and Goliath," he says. Each company says its product is superior. Care Trak claims its frequency band is free from interference by wild animals wearing tracking devices. LoJack says its frequency is not affected by interference from some television channels. Before signing up for any tracking service, people should check with their local police departments to inquire about support. (info from The Wall Street Journal)

Monday, February 09, 2009

Microsoft expanding in cellphone biz

Microsoft is planning a series of new programs and services for cellphones, responding to stiff competition from Apple and other rivals. The offerings will include an online bazaar for distributing software to phones that run Microsoft's Windows Mobile operating system. Such services have become an important complement to advanced cellphones since Apple introduced its iPhone App Store last year.

In coming weeks Microsoft also will offer a new version of the operating system, called Windows Mobile 6.5, that provides a more-sophisticated interface and could further narrow the gap with the iPhone.

Microsoft needs to energize its mobile strategy as web-enabled smartphones take on many chores associated with computers and take a bigger share of the overall cellphone business. Although it was one of the earliest computer-industry entrants in the smartphone business, Microsoft is widely perceived to have lost technological ground to Apple's iPhone and Google's Android software, both of which are particularly good for calling up Websites.

Even Palm, a smartphone pioneer that stumbled badly in recent years, is grabbing attention with new mobile software and a device called Pre, due out later this year. Microsoft's share of the smartphone business increased to 13.3% last year from 11% the prior year, but Apple tripled its share during the same period, rising to 9% from 3%.

One factor is that Microsoft focused largely on business functions such as easy access to corporate email systems, though smartphones stopped being seen by many users as purely work devices. Company executives have said they plan to place a much greater emphasis on multimedia and other functions of interest to consumers, such as photos and music.

One new service the company is already talking about, called My Phone, wirelessly synchronizes data stored on Windows Mobile smartphones, including contacts, calendar appointments, photos and text messages, to a Website. The service is designed to make it easier for users to back up their information in case their phone is lost or stolen. My Phone will compete with a similar service from Apple called MobileMe, though it currently lacks a MobileMe feature that synchronizes data from users' cellphones to applications running on their computers. Microsoft will offer My Phone for free, while Apple charges $99 a year for MobileMe.

Microsoft's Windows Mobile is already a target for other programmers, who have generated thousands of applications for the operating system. But they aren't all stored in a single online marketplace that is as easily accessible as Apple's iPhone App Store, which has been a big hit with consumers.

Google, too, hosts an application store, dubbed the Android Market, for phones running its Android mobile operating system, the first of which is the G1 from T-Mobile USA. This week Google will start allowing developers to charge for software sold through the Android Market. (info from The Wall Street Journal)

Friday, February 06, 2009

Blackberry bosses will pay BIG BUCKS in lawsuit

The co-executives of BlackBerry-maker Research in Motion will pay most of about $62 million in fines and restitution to settle allegations they participated in a practice known as stock option backdating. The settlement is one of the biggest in the history of the Ontario Securities Commission, and marked a rare occasion where some of Canada's most prominent executives appeared before the commission for wrongdoing.

Under the settlement, Jim Balsillie and Mike Lazaridis, co-CEOs of RIM, as well as former chief financial officer Dennis Kavelman will contribute the bulk of the fines. Also included are several other executives.

The allegations surround stock option backdating, a practice that was once commonplace in the technology sector. The provincial stocks regulator said the executives were negligent in overseeing the option backdating, but did not commit fraud. "The sanctions send the right message that the conduct we saw here won't be tolerated by anyone," OSC litigator Sasha Angus said after the record-high settlement was announced.

Lazaridis, who founded the company, will pay a $1.2 million penalty to the commission. Balsillie, who has already stepped down as chairman, will pay US$4 million to the commission and $570,000 toward the Ontario Securities Commission investigation. Balsillie will also be prevented from being a director of any company for a year - although he will be allowed to remain an executive of RIM.

The two men and Kavelman must also repay a total of $31.1 million) plus $4.3 million in interest to RIM. And they must pay US$36.5 million to cover the company's investigative costs, of which they have already contributed US$12.3 million.

Kavelman, who was RIM's chief financial officer from 1995 to 2007 and has been chief operating officer since then, is prohibited from acting as a director or officer of any Canadian reporting issuer for five years.

RIM's lead director, John Richardson, said the company is pleased the parties have resolved the matter. The company's statement said the staff of the U.S. Securities and Exchange Commission has reached settlements with RIM and its senior executives, which remain subject to final approval.

The OSC said RIM employees improperly gained $54 million through backdated options, and have given back only about half of that amount through repayments and canceled options. The commission also said executives and directors allowed financial reports to be issued that contained "the misleading or untrue statement that options were priced at the fair market value of RIM's common shares at the date of the grant."

Stock options - especially popular in Silicon Valley during the high-tech boom - give employees the right to buy shares of stock at a predetermined time. The options are a coveted incentive to lure and keep talent, particularly when granted by newly public companies with the opportunity for rapid growth. Backdating options make the rewards even more lucrative by retroactively setting the exercise price to a low point in the stock's value. Usually, a stock option's exercise price coincides with the market value at the time of a grant to give the recipient an incentive to drive the price higher. If companies backdate options without properly disclosing and accounting for the move, it can cause profits to be overstated and taxes to be underpaid.

The US Securities and Exchange Commission has investigated more than 100 companies, including Apple over the issue in recent years and has reached settlements with a number of companies and executives. (info from The Associated Press)

Thursday, February 05, 2009

MetroPCS expanding cell service to NY and Boston

MetroPCS’s upcoming expansion to New York and Boston will change the prepaid cellphone provider from a regional carrier to one that can compete more with national companies like Verizon and AT&T.

MetroPCS CEO Roger Linquist said the company will be building its New York City network — including the five boroughs as well as parts of New Jersey and upstate New York — throughout 2009. MetroPCS ultimately intends to connect that area with Boston and Philadelphia, where it already has cellphone coverage.

Until recently, the company has focused on areas such as Greater Dallas and parts of California and Florida, and charged roaming fees when customers travel outside their home areas. It has a deal with regional carrier Leap Wireless that lets their customers avoid the fees in each other’s coverage areas. Creating a bigger coverage area will attract more roaming subscribers, Linquist said. “Having a wider, broader footprint across the nation is attractive.”

MetroPCS’s prepaid plans, which tend to be less expensive than postpaid offerings by bigger carriers, are appealing to cost-conscious consumers. In 2008 it gained 520,000 net new subscribers, ending the year with 5.4 million. AT&T added four times as many wireless subscribers in its fourth quarter, but its customer base is more than 14 times the size of MetroPCS’s. (info from The Wall Street Journal)

Wednesday, February 04, 2009

Groups oppose Verizon sale of cellphone territory to AT&T

In the bidding for the roughly $3 billion in wireless assets Verizon Wireless must divest as part of its purchase of Alltel, one strong but controversial contender is emerging: AT&T.

AT&T, Verizon's chief rival, is among the bidders, along with a joint bid from private-equity firms Carlyle Group and Kohlberg Kravis & Roberts & Co. and a separate bid from Providence Equity Partners LLC and at least one cable TV company.

Verizon Wireless agreed to sell the assets to get government approval for the $28.1 billion Alltel purchase, which closed last month. Assets include 2.1 million wireless subscribers in 22 states, as well as wireless spectrum and other assets necessary to run the businesses in those markets. The assets are worth roughly $3 billion. AT&T is in the strongest financial position of the interested companies and is in a good position to walk away with a large chunk of the assets.

Critics, including consumer advocates and Verizon's smaller competitors, say such a deal -- allowing one giant telecom provider to transfer customers to another -- wouldn't be in the interest of consumers. AT&T and Verizon Wireless have a combined 160 million subscribers, nearly 60% of the US market.

Gigi Sohn, president of the public interest group Public Knowledge, said the government should encourage Verizon to sell the assets to smaller players to enhance competition. The Department of Justice, which must approve the divestitures, says it would examine affected markets and any competitive issues that a sale would raise as part of the approval process.

Trade groups representing rural cellphone operators are concerned AT&T could charge high roaming fees if it takes control of the Alltel assets. Carriers pay roaming fees to other providers when their customers use a cellphone outside their home coverage area. Laurie Itkin, director of government affairs for Leap Wireless International, a small wireless provider that opposed the Verizon-Alltel merger, is also concerned about radio spectrum. "If it ends up going from one mega-carrier to another mega-carrier we think that's a bad outcome for consumers," she said.

Antitrust lawyers say the Justice Department generally evaluates divestitures based on competitiveness in each individual market area. "If Verizon divests assets to AT&T in areas where AT&T doesn't have a significant presence now, the traditional analysis would say there's no problem with that," said Donald Russell, a former Justice Department attorney who reviewed several major telecom mergers.

Others say it doesn't make sense to look at the wireless market in individual market slices, since the companies set national rates for consumers and benefit from national scale in their roaming negotiations with competitors. (info from The Wall Street Journal)

Tuesday, February 03, 2009

Porn replaced Super Bowl in Arizona

Comcast is examining whether a malicious attack is behind the interruption of its Super Bowl broadcast Sunday by a pornographic film in some areas of Tucson. The interruption, which lasted less than 30 seconds, affected customers watching the company’s standard definition coverage but not high-definition.

Comcast asked the FCC and local authorities to investigate. An initial review showed that the company’s technical systems functioned properly at the time of the incident, suggesting that someone deliberately interrupted the broadcast rather than a glitch.

“We are mortified by the incident and we apologize to our customers,” a Comcast spokeswoman said. The company will likely issue credits to customers who were affected, though the amount remains to be determined.

The TV station that supplied the signal was KVOA, which said it provided Cox with a feed via a fiber-optic line, which Cox subsequently sent to Comcast, also via fiber. KVOA said that only Comcast customers saw the porn and that customers of other operators, like DirecTV Group and Cox, as well as over-the-air viewers, received “clean feeds.”

The Comcast spokeswoman said it was not immediately apparent how or where the breach occurred. Cable signals pass through several transmission facilities, including out to an operator’s local offices and to customers' homes. This is the first time the company is aware of its signal being tampered with in this way, the Comcast spokeswoman said. (info from The Wall Street Journal)

Monday, February 02, 2009

AT&T cuts TV push while Verizon expands TV

As the recession speeds the decline of the traditional phone business, AT&T and Verizon are pursuing different strategies as they try to surpass each other.

AT&T is staking its growth largely on the wireless market by aggressively marketing high-end devices such as the iPhone, while Verizon is pushing premium television services to homeowners.

AT&T has its own TV offering, but said Wednesday it plans to slow the roll out of its U-verse service as part of a broader move to slash capital spending as the company posted a 23% decline in fourth-quarter profit.

Verizon, while also counting on growth at Verizon Wireless, is pressing forward with an aggressive expansion of its FiOS TV and high-speed Internet services. Verizon said it has no plans to slow its FiOS expansion this year, which ran ahead of schedule in 2008.

Industry observers say it is too early to tell which strategy will be better. While AT&T has taken a conservative tack, Verizon's FiOS gambit has always been more of a risk financially because it will take time to generate healthy margins on the video business. FiOS is expected to generate positive cash flow for the first time in 2009. But long term, Verizon's ability to offer TV as part of a bundle of TV, phone and Internet services may give it a leg up in the battle against cable providers for customers.

Verizon is "of the opinion it can't roll out FiOS fast enough," because one in five potential customers in the markets it covers sign up for the service.

AT&T's U-verse service added 264,000 customers in the fourth quarter, bringing its total subscribers to one million at year end. But it lags behind FiOS, which added 303,000 TV customers in the fourth quarter and ended 2008 with 1.9 million subscribers. AT&T is banking on wireless. The company added 2.1 million net new customers, including 1.3 million high-value post-pay customers, who pay monthly bills and generally sign two-year contracts. AT&T ended the year with 77 million customers; Verizon Wireless had 72.1 million. Its recent acquisition of Alltel brought its total to about 80 million. (info from The Wall Street Journal)