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Sprint announced that it will roll out its no-contract, no-credit-check, no-activation-fee mobile phone plan, Boost Mobile, in Hawaii. Pricing is lower than local operator Mobi PCS, according to this Star-Bulletin article. I discussed Mobi PCS on 21 May 2007. Verizon, AT&T and T-Mobile have announced US$99 per month unlimited mobile plans, but these require contracts. Contracts are one way to lock-in customers, as I noted earlier today. Competition for mobile phone customers has become more intense in the last few months, as I noted on 26 January 2008.

Wired, Engadget Mobile and The Register have posted their updates on the FCC’s 700 mHz auction. Bidding started last Thursday for the right to use these frequencies, which include the UHF band that is used by US broadcast television channels 14 and higher. US television stations will stop using these frequencies in January 2009 as part of a long-planned conversion from analog to digital television that will support high-definition television.

In other words, this kind of auction is a rarity. It’s like finding new beachfront property in Waikiki. Of course, no one owns the airwaves. By international agreement, the radio-frequency spectrum is tightly regulated. This helps manufacturers and governements prevent radio-frequency interference (RFI), so that devices don’t overwhelm each other with static and overlapping signals. Specific portions of the spectrum are allocated to certain uses, and countries control how some frequencies are used within their borders.

This FCC auction will decide which companies rent the 700 mHz or C block for the next few decades in the USA.

These frequencies would provide better mobile phone reception than the current bands of 800 mHz to 1900 mHz. Users might get better reception inside a building, for example. As part of the deal, the FCC has mandated that the winners must allow open access to the new networks. That’s not the same as free or inexpensive access, but that requirement does mean the winner won’t have a monopoly. Someone has to design, build and sell the new hardware to use these frequencies.

AT&T, Apple, Google and Verizon have each been rumored as bidders. Current mobile telcos covet the additional bandwidth and coverage. Apple and Google could develop their own mobile data services together or independently.

Google executives have stated the company will match the US$4.6 billion reserve price of the auction, if the FCC agreed to certain conditions. The FCC said no, but there’s no good estimate on how high the auction might go. Perhaps Google was signaling that it was willing to meet the reserve price, but is the company or any other bidder willing the exceed it? Whoever wins the auction has to build out the network and earn enough money from their new services to satisfy stockholders and the market.

As expected, AT&T is benefiting from its exclusive relationship with Apple. The telecommunications company reported on Thursday that it has 2 million iPhone customers. iPhone monthly sales figures doubled in December.

As the US market becomes saturated with mobile phone users, the telcos rely more on getting customers and corporate accounts to switch providers. As I discussed on 13 January and 11 January 2008, carriers and manufacturers are rushing new handsets and features to market. it’s a new level of competitive rivalry, and the timing is good for consumers and corporate accounts. Stockholders may suffer, however.

Wired has published a brief history of the iPhone’s development, as mentioned in Engadget. As I mentioned to my IS 7010-T students last Thursday, it is well known that Apple CEO Steve Jobs is a difficult boss. This article provides a few examples of how he led Apple to develop the iPhone, a device that has spurred almost every mobile phone manufacturer and carrier to reevaluate their business models… even Microsoft.

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.