billso.com

If you have a television in the state of Hawaii, and you want to see if your set is ready for digital television, tune into KGMB during its Monday 19 May 2008 newscasts at 5, 6 and 10 pm.

The station will do a 10-second switchover to its DTV signal, simulating what will happen on 17 February 2009 when the analog television channels go dark.

If you have more than one television set, test them all.

It doesn’t matter how you get your TV signal. The test will work with local cable, satellite and antenna systems.

If your TVs show the picture and audio, not static, during the KGMB test, you’re ready.

If not, you’ll need a new set top box from Time Warner Cable or a local electronics store.

See KGMB’s article, FAQ and the Honolulu Advertiser for more information.

Related posts and pages on billso.com

• Digital television
• 25 March 2008: Digital TV is coming
• 5 July 2004: San Diego Padres promote HDTV

Google is teaming up with Clearwire, Sprint, Time Warner Cable, Comcast and Intel to build a national WiMAX network. See the New York Times, the Washington Post, and Branding Post for more details.

The new joint venture will retain the Clearwire brand name and Clearwire’s existing consumer WiMAX business. Sprint contributes its network infrastructure and 2.5 gHz frequency allocation. It’s possible this deal will clear the FCC and antitrust regulators, because Google isn’t a major owner in the JV.

Yesterday, a Wall Street journal blog referenced my billso.com article of 18 April 2008 in a discussion about Yahoo and Google’s possible cross-licensing deal. The Clearwire deal is a more direct combination that may help the JV partners lock in consumers, businesses and advertisers.

Too many partners?

I’m reluctant to believe if this large joint venture can actually work. Sprint is the lead partner with a 51 percent stake, and this seems like a desperation move to being acquired outright by Deutsche Telekom or another company.

Pricing and marketing may determine if consumers will pay any attention to this JV. Can Clearwire and Sprint can offer their existing customers some compelling reasons to get some new hardware and try WiMAX? Verizon earns 23 percent of its wireless revenue from data calls on that company’s EVDO and other networks.

Google does need a vast network in the US to support its Android smartphone platform, and the company can’t wait or afford to build it from scratch.

WiMAX would give Google an alternate medium for data service, instead of relying on one telecom carrier as Apple has done with AT&T. Even with 3G service, the iPhone’s data transfer rates will seem slow when the user can’t get WiFi access.

Yes, the iPhone does support WiFi. But I’m sure Clearwire and its partners will market Android phones that support WiFi as well as WiMAX and the sponsoring carrier’s cell phone service, but the battery drain for a typical mobile device user may be a serious problem.

Related posts on billso.com

• 6 May 2008: T-Mobile’s parent may buy Sprint
• 29 April 2008: New iPhone will be subsidized, faster and thinner
• 22 April 2008: Android vs iPhone
• 18 April 2008: Antitrust regulators would fight a Yahoo-Google combination
• 18 March 2008: The 700 mHz auction is over
• 28 February 2008: The Google cable
• 22 February 2008: Customer lock-in
• 20 January 2008: Nokia, Sprint announce layoffs
• 9 December 2007: The mobile office in Honolulu
• 12 September 2007: The Google Phone and the iPhone – both looking for software and spectrum
• 27 August 2007: Wireless providers gird themselves for battle
• 14 June 2007: Clearwire signs WiMax deal with DirecTV, EchoStar
• 5 February 2007: Wireless from the inside out

One strategy that telecommunications companies have adopted is bundling, or selling a combination of services at a reduced price. The goal is customer lock-in, a situation in which the buyer is more or less trapped in their purchase. In many cases, lock-in happens when the customer satisfices or compromises to gain value or convenience. Customers might grow dissatisfied over time, but they are unlikely to leave because alternative services are not available, or their perceived switching costs are too high.

A variety of US cable television and telecommunication companies have offered bundling programs. The usual items include television service and broadband Internet.

Companies that offer cable modems usually offer these services through the same “pipe” or connection – the coaxial cable drop found in many homes.

Local exchange carriers (LECs) offer POTS (traditional or “plain old telephone service”), and the final connection to the home is the familiar RJ-11 modular phone jack found in most US homes. Some LECs also offer mobile phone plans in their bundles.

Landline connections may be offered through VoIP or POTS, depending upon the carrier’s technology.

Agonizing over savings

Alina Tugend of the New York Times provided a great example of this decision-making process in her article last week. Customers sometimes obsess over lock-in when their friends brag about how much they saved by switching. Yes, lock-in also works well for insurance companies, too!

In Honolulu, Oceanic Time Warner, Clearwire and Hawaiian Telcom each offer bundles. Oceanic has a standard cable television package that includes cable modem service, long distance calling and VoIP calling plans. Oceanic staff can connect the customer’s RJ-11 telephone jacks to the company’s network, so customers can continue to use their existing landline handsets and equipment.

Clearwire offers broadband Internet service, long distance calling and VoIP telephone numbers through its WiMax network. Customers can hook their landline phone into Clearwire’s modem. The Clearwire service does not require an installation visit, but the coverage areas are somewhat limited. This article at DailyWireless.org has several interesting diagrams of business telephone systems.

Hawaiian Telcom keeps struggling

The HawTel package includes a POTS landline, long distance calling and DSL. HawTel is still working on its IPTV offering, which has been delayed by implementation problems. IPTV would let HawTel offer television service through the same RJ-11 telephone drop used by its landline and DSL offerings.

As a side note, I hated HawTel’s obnoxious “Savers Unite” advertising campaign, and am glad that it has been replaced. Was the tagline a call to action or an insult? It was hard for me to tell. The radio and television ads reinforced a stereotype of the “thrifty local” who clips coupons, hoards travel-size toiletries and wears old clothes to pay the “price of paradise”. Then again, telecom marketing campaigns usually strive for the “common touch”, in an effort to hold the average customer.

Telecom bundles are subject to a host of Federal, state and local regulations. Pricing is often controlled by government agencies and franchise agreements. On 18 August 2007, I discussed HawTel’s naked DSL option, which let consumers order DSL service without a voice landline. HawTel was late to act, as thousands of subscribers adopted mobile phones and dropped their landlines. These customers switched to Oceanic, Clearwire, or other broadband Internet services.

Customer lock-in is difficult to achieve when companies fail to implement their industries’ key success factors well. On 16 November 2006, I discussed HawTel’s billing problems after the company was purchased from Verizon. Mike Ruley never overcame these earlier issues and lost his post as HawTel’s CEO earlier this month, as I mentioned on 5 February 2008.

Hawaiian Telcom CEO Mike Ruley was dismissed yesterday. His replacement is Stephen Cooper, co-founder or Kroll Zolfo Cooper, a New York City-based interim management firm. Cooper is best known as the Enron’s CEO during the company’s bankruptcy. Today’s Star-Bulletin article has a brief biography of Cooper. Kevin Nystrom, a senior director at KZC, will join HawTel as COO.

While Cooper stated in today’s Honolulu Advertiser that HawTel is not a “distressed company”, it’s now clear that the Carlyle Group is unhappy with their acquisition’s performance. HawTel has lost thousands of subscribers to mobile carriers and Time Warner Oceanic’s VoIP services, leading to US$137 million in financial losses since 2006. I mentioned some of the operational issues on my old blog on 16 November 2006, and last week BusinessWeek discussed how market forces have affected the US telecom industry overall.

The Advertiser noted that Ruley put his Kahala home on the market in early January, which is a possible indication that changes were coming at HawTel. The company has eliminated over 100 management positions since October 2007.

We had a brief discussion in last night’s IS 7010 class about digital television and business models. This Cnet article reports that 21 million viewers in the USA are still watching broadcast TV with a good old fashioned antenna. It’s free television, of course, but the channel selection is very limited.

In January 2009, analog television will be replaced by digital television in the USA. The FCC is giving away US$40 coupons for digital converter boxes so that viewers can still use their old analog TV sets. I guess you plug in the converter box and keep your analog set tuned to channel 3 or 4, like it was a video game.

That same Cnet article also reports that less than half of the viewers surveyed would buy a converter box. It’s a small sample of 1,153 households, but there are indications that the average American has no idea why their TV service might change.

Cable and satellite television companies have hoped for a one-time bump in subscriber revenue, as some broadcast TV viewers might decide that it’s easier to have the cable guy hook them up to digital television.

The survey also discloses that only 12 percent of the respondents would consider switching to pay TV. Oceanic Time Warner and Hawaiian Telcom will have an easier time recruiting customers, as the digital television broadcast signals are weak or nonexistent for many island residents. According to the Honolulu Star-Bulletin, CBS affiliate KGMB finally agreed to let Oceanic carry its digital and HD signals last week, after 2 years of negotiations.