billso.com

There’s two articles in today’s Honolulu newspapers about local Internet usage.

An article in the Honolulu Advertiser’s business section reports that Honolulu residents tend to spend more time on the Internet than the average US Internet user.

Oceanic Time Warner’s Road Runner cable modem service recently celebrated its 10th anniversary in Honolulu. The company reports that Honolulu is one of its most mature markets, with 220,000 customers. Many customers use residential broadband service to work from home.

Meanwhile, the lead story in the Honolulu Star-Advertiser’s business section examined the coffee shop office. At the bottom of the article, there’s a nice set of netiquette tips for public WiFi users. One major item in this list – people who buy little or nothing from a coffee shop while they use the free WiFi. Squatters beware!

Sadly, there wasn’t a single meaningful mention of security and privacy issues in either article. I recommend that anyone who uses their computer in a public place buy and use a privacy filter. This is a thin piece of polarized plastic that completely covers the screen. The filter restricts the viewing angle, making it difficult for anyone but the user to read the screen. 3M has a nice selection of filters that will fit most laptops. The Gadgeteer has a good review here.

The next two pictures demonstrate how a privacy filter works, by comparing a bare screen  on the left with the filtered screen on the right.

More public WiFi services are offering encrypted sessions, but it’s a good idea to use a VPN (virtual private network) to encrypt traffic. For companies whose employees tend to use public WiFi, a VPN is an easy expense to justify. Residential users can also set up their own VPN with a router, open source software or web-based services like GoToMyPC.

This article mentioned Kokua Wireless, a free municipal WiFi service that covers my office building in downtown Honolulu. Kokua’s coverage of downtown Honolulu is quite good, as shown in this screen shot from their mapping application.

Residential broadband providers have joined the battle for customer loyalty. Road Runner has Speed Zone, its own public WiFi network for its residential and business customers. Hawaiian Telcom partnered with Skywave to offer HT Spots, its own attempt at satisfying this key success factor. Users must have be a broadband subscriber to use these either of these services.

In the last few months, I’ve noticed more people around town using mobile data cards from Sprint, AT&T and Clearwire. These devices are more expensive and more secure than some public WiFi connections. Both HawTel and Oceanic offer encrypted public WiFi connections, of course.

Yesterday, Forbes reported on eBay’s continuing problems with Skype. Om Malik also discussed this development yesterday.

eBay purchased the VoIP company in 2005. eBay CEO Deb Whitman wanted eBays sellers and buyers to use Skype as a real-time communications tool during and after auctions.

eBay management is scrambling to save Skype

It hasn’t worked out well for eBay. The massive Skype outage that I discussed on 17 August gave new entrants and existing competitive rivals more opportunities to convert disgruntled Skype customers. Forbes published an article about the outage here.

… eBay’s stock barely moved on news Monday that Skype’s founder and chief Niklas Zennstrom is leaving and that eBay will take $1.4 billion in charges related to the acquisition in the third quarter. When eBay makes its quarterly report on Oct. 17, analysts won’t expect Skype to contribute more than 5% of the company’s revenues — that’s how much it coughed up in the second quarter, just $90 million…

In our local market, there are several VoIP providers who have targeted business and residential customers. Pacific LightNet, Oceanic Time Warner, and AlohaTone. Google recently purchased GrandCentral, which provides users with a single mainland phone number that redirects incoming calls to the user’s other phone numbers. The New York Times discussed GrandCentral in this 15 March article.

Even the incumbent local exchange carrier (ILEC), Hawaiian Telcom, offers CallWave VoIP voicemail services to cits mobile customers. See this 19 September 2005 Pacific Business News article for the initial announcement.

Meanwhile, one of the best-known national VoIP providers, Vonage, is losing patent-infringement lawsuits filed by Sprint and Verizon. Here’s Malik’s summary from 25 September. Vonage lost its CEO in April, and is struggling to keep customers.

It’s hard to compete when the key success factors in an industry are not in your favor.

According to a report in tomorrow’s Business Week, developers are building applications for the Google Phone. I mentioned the gPhone on 27 August. This 6 September article has additional details.

Of course, everyone has signed non-disclosure agreements (NDA) and Google management is doing its best to dispel these persistent rumors of a web-centric Linux-powered mobile phone.

Google and Apple have a fruitful partnership, as I mentioned on 21 June. But the mobile communications industry keeps growing, and Google needs new ways to increase its advertising revenue. The gPhone would provide a great opportunity to create a mobile advertising industry.

Google seems to building a platform that programmers can use to easily build mobile applications, with plenty of hooks into Google services like Gmail, Google Maps, and the Google Search engine.

If Google does open up this application programming interface (API) so that programmers can build true mobile applications that run on the gPhone and tap the Internet, it will be much easier for developers to distribute their gPhone software on the mobile Internet.

Compare this scenario with the Apple iPhone, which restricts developers to web-based mobile applications. Apple likes to lock down their hardware to keep it stable and secure. AT&T, like any sensible mobile carrier, wants to keep its network secure and free from rogue applications. It’s a classic walled garden.

The closed software model works for the iPod, but it remains to be seen if customers will tolerate a closed iPhone. Corporate customers want to add their own software to the iPhone, of course, but it’s so much easier when the API is open and available.

Google and Apple are each looking at the upcoming FCC auction for the analog television spectrum. Business Week speculated on their plans in this 10 September article. The winners of this auction would control a nice range of convenient, unused bandwidth in North America after television stations switch to HDTV transmission in early 2009. That spectrum is a great place to build a national mobile telecommunciations network that’s independent of the mobile phone carriers.

Given Apple’s closed model, it’s easy to guess that an Apple mobile network would feature Apple hardware, software and services, with Apple calling the shots on pricing.

Google, on the other hand, looks more likely to let multiple hardware vendors build compatible devices for the gPhone, and let software developers write the applications, as long as Google services are easy to bundle and use.

Building a new national mobile network would be an expensive proposition, especially as Sprint continues to plan its WiMax strategy. See this 28 August article and this 7 September article, both on Engadget, for more details. Clearwire, the current leader in WiMax deployment, continues with its national plans, as I described on 14 June. However, Clearwire stock took a beating Monday, as its joint work with Sprint hasn’t impressed investors yet, according to a 10 September report in Forbes. This 19 July Forbes article has some additional background on the Sprint-Clearwire national WiMax network.

WiMax makes sense for laptop users, because a laptop battery can deal with the radio modem’s power requirements.

Mobile phones need small batteries, however, and the analog television spectrum is an ideal place for residential wireless connectivity. If I were running a landline telephone company, I’d be worried.

EarthLink, the primary contractor for Honolulu’s municipal WiFi project in Chinatown, is laying off more than 900 employees and closing 4 offices, according to news reports. This is a massive cut that affects almost half of the company and several business units.

In one of yesterday’s posts, I discussed some of the changes in the wireless Internet industry. EarthLink’s retrenchment in municipal WiFi was announced earlier this year, when the company said it wouldn’t pursue new contracts until it had a better idea of the financial returns on current projects. Sprint’s recent alliance with ClearWire, Google’s continued efforts in mobile applications and wireless access, and the stagnating economy are other factors that have affected EarthLink’s competitive position.

Helio hath no fury… or market share

It isn’t the WiFi market that’s hurting EarthLink, though. The company’s investment in Helio has not worked out well. I mentioned Helio on June 17 and April 17. The iPhone and the industry’s various responses to that service have put Helio in a lousy position for a startup company. According to The Register, Verizon is moving fast with its new offerings, with some help from Samsung.

ESPN announced yesterday that it was shutting down its mobile virtual network, Mobile ESPN, at the end of 2006. See these articles in Forbes and Gearlog for details.

I was wondering if anyone was buying these phones or using this service. I’ve seen their advertisements on ESPN all year, but I’ve never ever seen anyone who used these phones.

The target market had to be 21 to 30 year old men, but most of them already have a cell phone.

One analyst noted that ESPN should have marketed the service for a few more months, at least until the end of the college and professional football seasons. Every additional month would bring ESPN more opportunities to promote the service, and provide more potential customers who were at or near the end of their mobile phone contracts.

Very few people want to pay for two cell phones, especially from two different carriers.

Granted, the target market I’ve identified includes a lot of gamblers. Gamblers will buy almost anything if they think it will provide them an edge. Mobile ESPN is an attractive service for these men, as the service delivered text and video content from ESPN’s television networks directly to the customer phone.

Keep in mind that ESPN didn’t operate the mobile phone network. It bought minutes and network management from Sprint, and resold the service to its customers.

Now ESPN plans to license its mobile applications to other carriers. Good luck! There are other mobile virtual network operators in the US such as Disney Mobile, Amp’d Mobile and Helio.

Helio is a joint venture between EarthLink and SK Telecom, led by EarthLink founder Sky Dayton, and partnered with MySpace as its core content source. It’s hard to argue with the man who built the second-largest ISP in the United States, or with the News Corp social networking juggernaut.

But Helio seems to be in trouble. I haven’t seen anyone who uses their phone or their service. Quite frankly, Helio’s teenaged target market has even less disposable income than the Mobile ESPN crowd. Helio does offer a tradeup program that lets customers sell their handset to Helio, but the rules are seem too complicated for most 16 to 25 year olds to follow.

Helio’s latest announcement is a combination EVDO-WiFi card, combining the fastest cellular data service in the US with 802.11 b/g access. Helio is also developing devices with built-in EVDO-WiFI access for release next year. The card is just a stopgap measure.

Imagine a Helio branded PDA or laptop that can access MySpace wherever there’s a decent cell phone signal.

I could imagine an ESPN branded device - but ESPN has thrown in the towel for now.