Section 0, Investment Recommendation:

Through our study of the industry over the course of the semester we have selected to main areas to invest in: 4g technologies, and Internet TV. These two trends seem to hold the key to the future for the industry and we feel they would be the wisest areas to look to invest. In an industry troubled by new technology becoming quickly outdated, we looked to something that may become popular down the road rather than something that is a huge current profit generator. Although recommending any investment in this industry seems difficult, we are confident these are two segments that will prosper in the future.

First, many people recognize that 4g may be the future as far as the wireless segment goes, yet there seems to be one glaring problem, money. The rollout of 4g by major service providers will be extremely costly when they chose to expand. Announced last year, Sprint, who holds the claim for the nation’s first 4g network, spend 1.2 billion dollars to expand 4g operations(Seeking Alpha, 2009). The costliness for the major providers may pay off much further down the road, but we caution that that payoff may become threatened with the introduction of newer, more advanced technology. Thus, we recommend investing in Clearwire, a company that is used by Sprint to provide 4g to its customers. Both Sprint and Clearwire have faced a number of issues in the past, including mounting debt concerns. With this said, if Sprint wishes to expand services, they must go through Clearwire to do so. The decision, at least up front, would not depend on the success of Sprint or what they are doing to retain customers but simply the fact that they want to expand.

If we step back and look at Clearwire from a shareholder perspective, it is interesting to see who owns stake in the company. As of last year Sprint represented about 51% of its shareholders (Barrons, 2010). Other notable companies included Comcast, Google, and Time Warner (Barrons, 2010). In addition to our observation of the potential profitability to increase, we have several indications that lead us to believe this may be the case. In the third quarter of this year for example we saw a 402% increase from last year in terms of subscribers (Barrons, 2010). The report also goes on to say that they expect four million subscribers by years end, which was double their initial estimate. Other indications include the fact that their revenue is up 114% from last year in addition to their growth in customers. Their network is now available to 100 million people domestically (Barrons, 2010). With all of these figures available, it seems likely that Clearwire will improve vastly from its meager potential in the past and we are already beginning to see signs of it doing so.

Another secondary place in the market where we believe there is growth potential is in the Internet TV segment. The traditional method of watching television programming normally came from your local provider. This age old practice has the potential to become threatened. While we aren’t advocating that there will be no need for traditional providers, we see great opportunity for those involved in the Internet TV business to thrive. In recommending this segment we have broken it down into two main areas that we see potential in. One: the offering of shows online that would be available to anyone at any time. Secondly, we see the companies investing in televisions that contain Internet connectivity becoming increasingly popular. Google TV for example allows users to search content, set homepages, and stream media all to your television set since it is connected via the Internet.

In conclusion, the uncertainty of who will pull ahead in this area of the market is not clear. Google is competing with several manufacturers who have their own software that provide different services. While we don’t have a specific company recommendation, we feel the area contains a huge opportunity for growth. The ease of use and convenience should propel this segment into something we may take for granted as standard.

Sources:

"Clearwire Reports Record Subscriber and Revenue Growth in Third Quarter 2010." Barrons. N.p., 04 011 2010. Web. 21 Nov 2010. .

"Sprint Expands 4G Network, Reduces Deb." Seeking Alpha. N.p., 18 011 2009. Web. 21 Nov 2010. .

Verizon Considers Change in Data Plan Pricing

Verizon Communications Inc. executives are considering changing the prices of data plans if they decide to implement new 4G technologies. These packages would charge more for plans that ran on 4G service. "If you want to pay for less speed, you would pay for less speed and consume more, or you can pay for high speed and consume less," said Chief Financial Officer Fran Shammo. However, this new pricing strategy largely depends on whether or not Verizon decides to embrace 4G technologies. If it did, it would be following in the footsteps of Sprint Nextel Corp. and T-Mobile USA. Because Verizon has not previously offered tiered pricing for data plans, it is planning on testing the strategy during this years holiday season by offering a $15 plan with a capped amount of data as an option against their typical Unlimited data plan.

Verizon currently dominates the cell phone service industry, so when they decide to make a change it reflects a larger change that is occurring across the market. 4G is clearly the next move that all cell phone providers will need to take in order to remain competitive in the field, just as 3G was a few years ago. This will be a long and expensive process for most companies, as it requires building entirely new infrastructure across the US. Therefore, companies such as Clearwire Corp., that build 4G infrastructure will probably be the first to profit from the 4G switch in the next few years, with the cell phone provider companies seeing these profits once the new infrastructure has been established. The tiered pricing change reflects higher consumer demand for options in data as they have seen options for calling plans for years. More and more phones are being used as mini computers rather than simply as calling devices, and greater variety in data plans really reflects this switch in use.

section 9

In general the analysts of the telecommunications industry say that there are some sectors of it that are presinting signs og being declining but the its market as a whole seems to be very stable. The wired telecommunications sector is now giving more attention to the broadband services, since the demand for the land lines  is falling as the volume of calls reduces due to alternative technologies. Many users are now moving to the wireless sector since its prices are relatively rational and because of the internet utilities they have. Todd Rosenbluth, an Integrated Telecom Services Analyst, says, “With the proliferation of the Internet, data traffic is quickly becoming the voice of the future.” According to CTIA-The Wireless Association,  the number of wireless suscribers in United States, is now almost four times what it was ten years ago, rising from 86 million in December 1999 to 285.6 in December 2009.

During the recession of 2008 many companies within the industry experienced a downfall in their trend but as it ended in mid 2009 they started stabilizing. According to Standard & Poor’s, during 2009 “the industry experienced growing competition, lower prices, increased service availability, technological innovation, and a widening variety of product offerings.” Reports from the CTIA show that the average monthly bill of wireless carries drecreased from 50.07 in 2008 to 48.16 in 2010.

According to Casey Thormahlen, the wired telecom sector’s trend is going to decrease in the next five years. His prediction in based on the actual decreases in call volumes that the industry is facing do to services such as voice over ip and wireless technologies that are many times cheaper. He says that this sector’s life cycle “is all downhill from here”. In the other hand the wireless sector is predicted to expand rapidly. IBISWorld’s analysts, in the other hand, predict that the wireless sector is going to expand in a rapid way; since the new technologies that have been developed such as 3G and 4G data services, are creating a increasing demand for this sector of the industry.

Section 5

Many influential leaders have created what today you see as the telecommunications industry. The companies that constitute this industry employ from thousands to hundred of thousands employees, to be able to lead organizations of this magnitude you need very intelligent and visionary people. One of them is the chairman of Telefónica, César Alierta Izuel, one of the biggest mobile carriers in the world possessing a 169 millions customer base. Lowell McAdam, the president and CEO of another mobile carrier, Verizon Wireless, has brought his company to the top creating a 86 million customer base just in US. Scott Forstall, is another leader that has influenced the industry. He is the senior VP of the Iphone’s software, the platform of the device that has “changed they way people handle telecommunications”.

The organization of this industry is dived into four sectors: wired, wireless, satellite and other telecom establishments. The wired sector, that includes the phone landlines, DSL, cable TV and Internet services, is the biggest of the four sectors followed by the wireless and satellite.

According to the US Department of labor the telecommunications industry employed one million jobs in 2008. Twenty-six percent of those jobs were office and administrative support occupations, that included telephone operators, financial clerks and customer service representatives. Another twenty six percent were installation, maintenance and repair occupations. The remaining 48 percent represented sales, professional, management and business related occupations.

Even though the demand for the industry’s services is rising, a nine to ten percent decrease in jobs is expected from now to 2018. The reason of this is that as technology evolves the demand for the jobs in the industry decreases. Another cause for this decrease in jobs, in the US, is the outsourcing and offshoring plans that this industries have.

In the telecom industry the degree of competition between companies is very high and in order to remain competitive companies have to reduce their costs by using those two strategies, outsourcing and offshoring. A recent NSN APAC survey made to US telecom companies showed that 60 percent of the industry’s companies are going to implement outsourcing and offshoring in the next 12 to 18 months.

In the other hand, jobs such as installing, repairing, maintaining and customer service representatives, which tend to have the higher levels of turnovers in the industry, can not be outsourced. These jobs will be the ones with the higher demand in these upcoming years.

 In addition, the telecom industry, locally, is going to be investing in engineering mostly. According to The U.S. Bureau of Labor Statistics “Product design engineers or new product development engineers are in demand due to the changing demands for new technology”.

Telecom Corporative structures

The telecommunications industry in contrast to some other industries is wide spread. This characteristic of the industry makes it have a lot of cultural differences and different business ethics. So corporate structures in this industry need to be chosen very carefully and taking in consideration hundreds of external factors that vary if the companies are local, national or global.

The telecom companies can’t stick to a single structure because it is likely impossible that one strategy could work for the marketing, finance or implementing the correct prices for different countries. In Latin America for example the prices are lower than in the United States, if a telecom company would charge the US prices to Latin American countries the demand for the services would decrease since the majority of the people in those countries can’t pay the same prices as the people in US. In my interview with a global telecom company’s manager, I learned that mobile carriers in general tend to use a hybrid structure, a combination of vertical and horizontal structure to manage their foreign part of the company. In this way companies that use this structure are able to have their foreign part of their company with their own marketing, finance or management sectors, as horizontal structured companies do. But in this case each sector those foreign parts of those global companies(finance, marketing, management) have to report to those same sectors of the main company. As I said before not every company can use the same structure so there are also companies within this industry that use vertical or horizontal structures too.

No Cash Necessary

According to the Wall Street Journal, AT&T, Verizon, and T-Mobile are embarking on a venture that will allow mobile phone users to pay for goods and services using their cell phones. The project has been called Isis and will allow a person to wave their phone in front of a scanner in order to pay for an item. All three major wireless companies will be working together.

The venture will utilize near-field communications technology, also called NFC. NFC is already found in cards used at drugstore chains and gas stations to get discounts. The NFC chips transmit signals short distances and will enable customers to make these payments via cell phone. Currently, companies use NFC stickers or chips that are inserted into the phone but beginning next year, for example, RIM will begin integrating the technology directly into their BlackBerry phones. Other companies plan to use this technology as well. The Chief Executive of Google Inc. recently showed off a prototype of a phone utilizing both an Android operating system and an integrated NFC chip. The Isis will use Discover Financial Services' payment network and came about as major credit card companies such as Visa Inc. and MasterCard Inc. began to push their mobile payment initiatives.

The link between wireless companies and credit payments will be very interesting. The amount of competition that credit card companies will see is going to be immense because cell phone payments will be so convenient for many consumers. As of 2009, 91.3% of the population had wireless subscriptions. People are becoming so dependent on cell phones that this will simply add one more reason to always carry a cell phone. It's arguable whether this is a good thing. Yes, it will be more convenient, but it is just a way for these big cell phone companies to create growth increase revenue.

Ethics and CSR Section

In today’s market, the telecommunications industry revolves around the storage of personal information. From using PayPal to buy a book on Amazon.com, to sharing information between an iPhone, MacBook, and iPad via MobileMe, to Google compiling a database of all Wi-Fi networks for use on Google Earth, to Bing tapping into people’s preferences on Facebook to personalize search results, it seems that there is no end to the amount of information that users are willing to give companies in the telecommunications industry. Because of this, most ethical issues arising in the telecommunications industry revolve around the security of this personal information. Many have started to question how much information is too much, how these companies will protect consumer’s private, secure information, and why these companies would be interested in protecting this information.

Generally, companies care because that is how they will maintain a positive CSR. As mentioned earlier, Google, Inc. is a giant in the telecommunications industry. Recently, Engineer David Barksdale was fired for breaking Google’s strict internal privacy policies. Mr. Barksdale was an engineer in Google’s Seattle office who allegedly accessed information of several users who were minors. This breach occurred while Google was already responding to probes in the U.S. and overseas for privacy matters, including inadvertently collecting personal data on unsecured WiFi Internet networks as well as a privacy flap in February over the release of a social networking site called Buzz (Efrati, 2010). Google’s reaction proves to their consumer base, and to potential consumers, that they take the security of this private information extremely seriously. Although there have been concerns raised recently about whether Google’s amassing of personal data is ethical or not, the quick dismissal of this employee will undoubtedly help Google’s reputation regarding ethics and privacy considerations. However, Google is planning on launching a new social networking site, GoogleMe, and this venture will certainly test their ethics regarding security and privacy as they attempt to connect GoogleMe to Gmail, YouTube, and other information-sharing sites (Efrati, 2010).

Another telecommunications giant previously mentioned is Apple Inc. Apple has maintained a loyal customer base while sustaining continual growth, largely because of their exceptional CSR. Apple is focused on being seen as a “green” company, and this goal is discussed on their website so consumers can understand their efforts: “That’s why we design them to use less material, ship with smaller packaging, be free of many toxic substances, and be as energy efficient and recyclable as possible. With every new product, we continue our progress toward minimizing our environmental impact.” (“Apple and the environment,” 2010). On the same page, Apple offers links to read “Environmental FAQs” or to learn more about the “Apple Recycling Company” as well as to “Supplier Responsibility,” which discusses another pillar of CSR, ensuring that “our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes.” (“Supplier responsibility,” 2010).

Aside from being environmentally concerned and socially responsible, both especially important aspects of CSR for telecommunication companies, Apple’s CSR also concentrates on the main ethical issue facing the telecommunications industry: security. Found in Apple’s Ethics Policy: “The company’s continued success and growth depends on our ability to preserve the confidentiality of our confidential, proprietary and trade secret information, as well as that of others in our possession.” (Apple, Inc., 2010).
Sources:

Apple and the environment. (2010). Retrieved from http://www.apple.com/environment/

Apple, Inc., (2010). Ethics: the way we do business worldwide California, USA: Retrieved from http://media.corporate-ir.net/media_files/irol//10/107357/corpGov/AppleEthicsPolicy.pdf

Efrati, A. (2010). Google fired worker after customer breach. Wall Street Journal, Retrieved from http://online.wsj.com/article/SB10001424052748704285104575492440245394392.html?mod=WSJ_newsreel_technology

Supplier responsibility. (2010). Retrieved from http://www.apple.com/supplierresponsibility/

van Dijk, Michiel, & Schipper, Irene. Stichting Onderzoek Multinationale Ondernemingen (SOMO) Centre for Research on Multinational Corporations , (2007). Apple csr company profile Amsterdam: Retrieved from somo.nl/publications-nl/Publication_1963-nl/at_download/fullfile

Marketing Section

Marketing Section

As a service industry, telecommunications companies often compete in the marketplace over who has the newest, fastest, or most reliable service to offer. Because infrastructure is so expensive and reputation is so important, new companies have a hard time breaking into the telecommunications industry, creating a minimally competitive landscape for companies.

Consumers in the telecommunications industry are consistently looking for the company that is offering the best combination of new technology that is also fast, reliable, and affordable. As Alicia Hinds, Online Marketing Manager for Comcast Corp. said, “People are just starting to embrace technology. People are always looking for ways to simplify their time and people want information. Now they’re starting to realize that technology is the way to get both.” (Hinds, 2010). Therefore, mobile and wireless services have been booming in telecom. Consumers have also embraced high-speed cable Internet over slower DSL and dial-up. Cell phone service seems to be quickly moving from 3G to 4G, with major companies like T-Mobile USA and Sprint Nextel Corp. already embracing the new technology (Cheng, 2010). Television is also moving from the traditional subscription service to offering shows on-demand or online, fitting with consumer want for greater ease in accessing media.

The telecommunications industry in the United States is not nearly as competitive as most other industries because of how difficult and expensive it is to enter the industry. The technology and infrastructure needed to operate as a telecom company makes it extraordinarily difficult as a starting company. Also, most telecom companies rely on their reputation to set them apart from other companies and a fledgling company obviously lacks this. However, consumers definitely influence prices and service choices as there are, generally, enough companies offering similar services so consumers can comparison shop. This can be seen in the market of cell phone service providers. AT&T, for example, offers a plan of 450 minutes for $39.99 (8.89 cents per minute) (“Individual cell phone,” 2010) and T-Mobile offers a 500-minute plan for the same price (8.00 cents per minute) (“T-mobile cell phone,” 2010). The difference in price per minute is minimal, and AT&T gets away with charging slightly more it has a reputation for more reliable service and offers greater choices in phones.

Telecommunications companies differentiate themselves based on what services they offer, what price they are offered at, and what products are offered with certain services. For example, AT&T is the only company that provides service for the iPhone, which has proved to be very profitable for the company. It is estimated that three-quarters of its net new monthly bill-paying customers are iPhone users (Carew, 2009). This is a huge number as AT&T had 92.8 million subscribers reported in September 2010, closely trailing Verizon Wireless for having the most wireless subscribers (“Mobile world live,” 2010). Sprint and T-Mobile have been feuding as T-Mobile began advertising that it owns “America’s largest 4G network.” Sprint advertises itself as “the first wireless 4G network” and has been doing so for the past two years. Sprint claims that T-Mobile’s advertised 4G is actually well disguised 3G service, knowing that this was an important feature to differentiate their service from other wireless providers (Cheng, 2010).
In the TV sector, cable companies, such as Comcast, differentiate from satellite companies, such as Direct TV, by offering on-demand service for their shows (Hinds, 2010). This advantage allowed many cable companies to stay afloat during the recession when many consumers “promotion hopped” to cheaper satellite companies but soon returned to cable companies for service that was more reliable and offered more features (Hinds, 2010).

Carew, S. (2009). At&t profit boosted by iPhone, video, Internet. Reuters, Retrieved from http://www.reuters.com/article/idUSTRE53L29L20090422
Cheng, R. (2010). T-mobile, sprint sow confusion over '4g'. Wall Street Journal, Retrieved from http://online.wsj.com/article/SB10001424052748703506904575592700833942346.html

GSM world. (2010). Retrieved from http://www.gsmworld.com/

Hinds, A. (Interviewee). (2010, November 12). Interview with Comcast online marketing manager.

Individual cell phone plans - AT&T wireless. (2010). Retrieved from http://www.wireless.att.com/cell-phone-service/cell-phone-plans/individual-cell-phone-plans.jsp?_requestid=244610

Mobile world live. (2010). Retrieved from http://www.mobileworldlive.com/default.asp
T-Mobile cell phone plans. (2010). Retrieved from http://www.t-mobile.com/shop/plans/Cell-Phone-Plans.aspx?catgroup=Individual&WT.z_shop_plansLP=individual

Possible Investment

Clearwire Corporation, Maker of 4G Infrastructure

http://online.barrons.com/article/PR-CO-20101104-912586.html

Sections 4 and 6

Entrepreneurship:

Historically, the telecommunications industry in the recent past has been fairly one sided, mostly dominated by large companies with huge revenues. Just ten years ago it seemed that the entrepreneurial spirit was absent as there was little room for startups to enter the industry. Recently however, we have seen this fact disproved and now see potential that will be sure to increase as time goes on. The industry is currently broken into several subclasses and impacts more external industries than ever previously thought. There is further opportunity for innovation particularly when it comes to Internet and wireless technologies which all could prove to be a big challenge to the traditional providers.

First, in the Cable, Internet, and Television market, we see huge growth opportunity for those willing to challenge the status quo. Traditional key players such as Comcast, Dish Network, and Time Warner are facing mounting pressure to stay ahead of the curve thanks to Internet based video companies. Youtube has certainly skyrocketed over the past few years and gained so much appeal is was acquired by Google. With that said, the popularity of YouTube will unlikely effect the bottom line for cable providers due to copyright laws. One company that could pose a potential threat however is Hulu. Started in 2008, Hulu has teamed with several major networks included NBC, Bravo, and Beliefnet (White, 2009).This enables anyone to legally watch an episode of television on their pc or smartphone for free, all without paying that hefty fee for cable tv to a provider. While data doesn’t currently show Internet video significantly impacting bottom lines, the potential is certainly present. If, for example, Hulu and other sites were to partner with all major networks, it would make little sense to pay to watch the same shows on a television set. In today’s world most new laptops are equipped with an hdmi port which would enable you to watch your favorite show on your hdtv, not just your small computer screen, leaving the potential for there to be a world with no traditional provider. While these are still emerging technologies it will be interesting to see what happens to the major providers of these services if this technology becomes prevalent in society.

Next, one of the fastest growing segments in the telecom industry is no doubt the wireless sector. With an annual revenue of 193.6 billion dollars (IBIS World Telecommunications: Wireless, 2010), it’s easy to see why we focus so much attention on it. The biggest news in the past five years was Verizon’s acquisition of Alltel. This allowed Verizon to not only increase it market share, but also provided far more opportunity to expand infrastructure. Nearly every company has been in the process of rolling out 4G technologies, a very expensive venture. Analysts are expecting this investment to pay off in the year 2012 when hardware manufacturers and software developers take full advantage of the new bandwidth (Reisinger, 2010). Due to excessive regulation by the FCC and various other international organizations, this segment often requires innovation in the form of intrepreneurs. Apple for example has gone above and beyond most other companies to harness the power of 4G technology. Their new facetime technology incorporated in the iPhone 4 allows users to have a live video chat anywhere they receive a cell phone signal. In the United States AT&T has restricted it to WiFi only, a move to limit network traffic in fragile geographical locations. Despite this, the technological capability is still present.

The future appears very promising for the industry in terms of innovation. Though these are only few examples, others successes such as Google’s Android software, Clear’s Mobile 4G, and OnDemand video are all emerging technologies that will have a direct impact on the industry’s future. The ever-growing competitive landscape of the industry will force large companies to innovate or change pricing strategies to keep up with emerging competition despite the regulatory issues that prevent conventional entrepreneurs from entering the market.

Telecommunications: Wireless. (2010). Ibis world. Retrieved October 12, 2010, from http://www.ibisworld.com/industryus/default.aspx?indid=1267

Cable Internet and Television. (2010). Ibis world. Retrieved October 12, 2010, from http://www.ibisworld.com/industryus/ataglance.aspx?indid=1264

White, B. (2009, April 30). Hulu becomes 3rd largest video website. Retrieved from http://www.bloggingstocks.com/2009/04/30/nbc-news-corp-s-hulu-becomes-third-largest-video-website-in-mar/

Reisinger, D. (2010, October 12). Mobile video calling to hit 29 millions users by 2015. Retrieved from http://news.cnet.com/8301-13506_3-20019298-17.html

Technology:

In the telecommunications industry the role of technology is particularly interesting. Emerging trends in the wireless sector, such as 4g, in addition to those in the wire-line segment, all come together to complete the whole picture. When analyzed on a macro level, the influence of technology provides great explanations for overall trends in the industry including globalization, shifts in the supply chain, as well as a revolution in customer service.

In the past, many large telecom companies had a clearly focused and defined goal, one that was handled internally. In the past few decades however, the amount of competition in the industry has forced companies to outsource many of the tasks they once were solely responsible for. A typical supply chain for a large company in the industry would be similar to this: infrastructure services, infrastructure operators, access providers, service integrators, and application developers (Ellsworth 2002). Not all companies are structured in the same manor but all have become quite complex, thus creating the need for outsourcing. There are now companies that specialize in each and every one of the areas described in the supply chain process, firms that are looked upon by giants such as AT&T and Verizon to help implement their services regionally.

Bandwave Systems LLC is a company that works with clients across the country to deliver telecommunication services of all kinds to small and medium sized businesses. Although outsourcing and off shoring customer service positions to places like India seem all too common, my conversation with Mr. Zaidi revealed something I felt was often overlooked. In a company of only ten individuals, they are able to provide support well after the original implementation, without ever having to leave their office. New trends such as GoToMeeting and other related services, some even created by those in the telecom industry, prove vital for their business operations. Going even further, he explained to me that they had partnerships with all of the major service providers in the nation to gain exclusive access to their internal system in order to provide assistance to customers. This means that someone in New Jersey could assist a client in San Diego by simply accessing Cox Communication’s portal system. This revolution provides unprecedented support that doesn’t require you to ship any jobs overseas, keeping jobs here and in theory providing a more personal support experience.

Companies in the telecom industry are no doubt using the global stage to reduce production costs. Many of the raw materials needed for infrastructure obviously comes from overseas in addition to the creation of jobs needed to support the development of services abroad. We often overlook new innovations, such as remote access, that help not only the service provider but also these smaller firms that are essential to the overall process. The rapidly developing nature of the industry makes highlighting these new technological aspects essential. People always want the next best thing and it is up to the industry to respond to those needs which, more times than not rest solely on technological development.

Sources

Ellsworth, M. (2002). Impact on the Telecom Supply Chain. Stratvantage Consulting. Retrieved November 9, 2010, from http://www.stratvantage.com/opinion/telecomexcerpt.pdf

Politowski, J. (2010). [Interview with Adhil Zaidi, Director of Organizational Mangement]. Bandwave Systems LLC

Acquisition Delay May Hurt Sprint in Short Term

Competition in the industry has been on the rise, especially when it comes to 4G technologies. Sprint, who claims to have the nation's first 4G network, may be facing some tough financial decisions in the coming months regarding expansion. According to the Wall Street Journal, Sprint is looking to make a "multibillion-dollar upgrade." Analysts predict that if they go forth with that, it would also give struggling Clearwire a large cash infusion. There is only one problem. Likely CFO candidate Joseph Euteneuer is caught up in an acquisition of Qwest by Century Link.

Sprint is clearly looking for new leadership when it comes to planning out its future for the next decade. These investments are huge decisions for the company considering they only actually generate 1-2 billion a year (WSJ). They are seeking to fill the position which will be vacant after the retirement of current CFO Robert Brust. The move will have several implications within the industry if it goes through, forcing competitors to upgrade their networks. Although nothing is definite, Mr. Euteneuer has dealt with large scale change in the past at his previous position with Sirius XM and would likely be a good fit for Sprint (WSJ).

From a personal standpoint I think that people such as Mr. Euteneuer should be commended even though I don't know a great deal about him. The article insinuates that he really takes his job seriously and is committed to his position because he refuses to resign to join Sprint until his company goes through the acquisition. Surely, Sprint would probably provide higher compensation, yet he remains committed to the current position. From a business perspective I think that may benefit Sprint in the long run when he is hired and may contribute to Sprint's revival, since currently hey are third in market share. It will be interesting to see how decisions such as these shape the wireless segment for years to come as most of these investments have long term effects.

http://online.wsj.com/article/SB10001424052748704756804575608680802278918.html?mod=WSJ_Tech_LEFTTopNews

Regulation Impacts Telecom Industry

If you were to walk down the street and ask about how government regulation effected business, most likely you would get responses that had to do with consumer banking. Recently however, there has been quite an uproar about the concept of net neutrality and if there is in fact a place for government in the internet. In a recent article published in the Wall Street Journal, they highlight what could prove to be a dramatic new development in the fight for regulation of the world wide web.

According to the article, all 95 candidates that said they support the idea that the government should be allowed to have a role in monitoring internet traffic, lost in the midterm elections. Stepping back for a second, if the legislation were to have passed and you were using too much of a provider's bandwidth, you would be charged extra. Some companies have already begin to cap data to prevent overloading their network. This is not only a concern for traditional cable providers, but also the wireless segment. There is a reason after all that AT&T has not allowed for the use of Facetime on the new iPhone 4, despite the device being capable of doing so on other carriers abroad.

This not only has business implications but also effects consumers directly. The general public has made it clear that we do not want regulators touching the internet, or our service providers being able to set limits on us. We pay for unlimited bandwidth, who are they to limit what is rightfully ours as long as we are downloading in a legally manor? Why shouldn't we be able to Facetime anywhere considering the amount of money we not only pay for the device but also the hefty monthly fee for "unlimited" data. Furthermore, AT&T is now charging extra if you want to tether your iPhone to a laptop. All of these questions and concerns expressed by consumers have one very clear message: keep government out! This message was expressed as a country last week and it is very interesting to see how even the political shift in this nation can be felt within the telecom industry.

http://online.wsj.com/article/SB10001424052748704353504575596562893007720.html?KEYWORDS=net+neutrality

Google Raises Pay to Increase Employee Retention

To encourage retention of its employees, Google Inc. is giving a 10% pay raise to each one of its 23,000 employees. This is in response to increased competition from Facebook Inc. Many Google employees have gone on to work for Facebook; these veterans making up about 10% of Facebook’s employees. Former Google employees are extremely attractive to many other Silicon Valley companies as well. Chief Executive Eric Schmidt wrote in an e-mail to employees regarding the raise: "We want to make sure that you feel rewarded for your hard work. We want to continue to attract the best people to Google." This raise in pay will obviously hit Google’s profit margins hard, so it shows how important staff retention is to the search engine giant.

This decision illustrates how vital the Human Resource department is for a huge company, like Google, with equally huge competitors, like Facebook. If Google did not take notice of the fact that they were losing so many employees to Facebook and act to correct this, Google could lose its competitive edge. Something unique to the telecommunications industry is how important human capital is, particularly in the areas of innovative ideas. This is essentially an industry of intellectual innovation, so if a company loses their employees then they’re basically losing what makes them profitable, especially if they are an industry leader. Google obviously recognized this and, hopefully, the impact of this pay raise on their profits will be out done by the profitability of their employee’s ideas.

http://online.wsj.com/article/SB10001424052748703523604575605273596157634.html#ixzz14vjBxqUB

Research in Motion

Research in Motion, the makers of Blackberry phones, is now a company determined to acquire great success in the telecommunications industry. According to The Wall Street Journal, Research in Motion (RIM) will launch their "PlayBook" tablet computer, in North America, in the first quarter of 2011. The tablet computer will be available globally in the second quarter of 2011, the company announced on Wednesday. The company is very optimistic about the success they expect from this launch. According to the company's co-chief executive, there is a high demand for their product, especially from international retailers. South Korea and Japan will be key markets for selling their product.

RIM's tablet computer will be 7 inches and run on a new operating system built by a Research in Motion unit called QNX Software Systems. It seems that RIM has locked Apple Inc. in as their main competitor. RIM has confirmed that their tablet will cost under $500, although declining to give a specific amount. This is compared to the iPad, which starts at $499 and goes to $829. Not only is the price of the PlayBook more attractive than that of the iPad, but also, the PlayBook will support Adobe Systems Inc. Flash Technology. This is necessary for playing many games and watching videos available on the Internet and is technology that the iPad does not support. The tablet computer market isn't the only market that RIM hopes to compete and potentially surpass Apple Inc. in. The co-chief executive also expects RIM's global market share in mobile operating systems to surpass Apple's in the next coming quarters.

Apple has sold more than seven million iPad tablets and Samsung expects to sell more than one million Galaxy Tab tablet computers by the end of the year. This data shows the strength in the tablet market. It is difficult not to wonder if these tablet computers will simply turn into trends, or if they will lead to the extinction of traditional laptop computers. Although this is unlikely to happen anytime soon, it's impossible not to wonder what new technology tablet computers will lead to.

Telecom Trend and Marketing Errors

Between December 1999 and December 2009 there was a huge increase on the number of users of wireless services, in ten years the demand increased by 331%. After 2009 the technology that was used faced some changes and many different services were offered; the industry also had a lot of competition and consequently lower prices. Standard and Poor’s believe that the industry’s trend will continue rising especially with the innovations that they are presenting such as the high-speed 3G and 4G data services.

Standard and Poor’s predictions will probably not stick to T-Mobile a mobile carrier owned by Deutshe Telecom.  T-Mobile is being accused for lying about their 4G data service that turned out to be the same old 3G technology but a little faster. The international standards body for telecommunications defined the term 4G before they were promoting thins supposedly technology they were offering. The trends for T-Mobile according to Yahoo’s Financial review have not been promising for the company this pasts years and this is probably not going to help.

Leaving aside why T-Mobile was not doing so well before, this 4G error is fault of the marketing department. They should have been aware of what was the environment of the market in respect to their product thing that they failed to do. Errors like this clearly affect the image of the company and its relation with the customers.

http://finance.yahoo.com

http://www.infoworld.com/d/mobilize/the-4g-lie-gets-worse-165

Claudio Lacayo

Outsourcing and Offshoring

The telecommunications industry, as I said on my previews post, has not much competition compared to other industries but the businesses that are part of it maintain a a level of competitiveness that is unique. Each of those businesses are trying to get all the customers possible. To achieve this they offer the same product and the same quality with a lower price. Many telecommunication companies have being outsourcing and offshoring their businesses in order to obtain lower costs of production and as a result obtain higher profits. Doing this they can also lower their prices and beat the competitor's prices. This strategies have been used for many years now but today it is one of the hottest topics on this industry. A survey made to major telecommunication firms shows that many companies are investing in outsourcing and offshoring and in 2011 sixty percent of the industries' companies are going to be using this strategies.

Outsourcing and offshoring are thought to be a necessity in the telecom industry to remain competitive in the market. This necessity is causing a lot of negative effects too; the economy as a whole is being affected for the amount of local jobs that are being replaced by those cheaper foreign jobs. The competition for these businesses will never end since they will be always seeking for lower production prices and if this continues many more jobs will be local lost for not being cost-effective.

Claudio Lacayo

http://www.fiercewireless.com/nextgenspotlight/story/operators-look-outsourcing-way-reduce-costs-transform-network

T-Mobile, Sprint Disagree Over 4G

Though 3G still seems like a relatively recent addition to cell phone service technology, most service providers are quickly moving on to bigger and better things in the name of 4G. T-Mobile USA is the most recent company to advertise 4G service, claiming it owns “America’s largest 4G network.” Sprint Nextel Corp., however, disagrees, saying that T-Mobile’s advertised 4G is actually well disguised 3G service. Sprint labels itself as “the first wireless 4G network” and has been doing so for the past two years.

Sprint’s network is being built by partner Clearwire Corp., and will run on a technology called WiMax. T-Mobile is using a faster technology called HSPA+. T-Mobile downloads data at speeds faster than Sprint, and has thus been defending its right to label its network as 4G. However, according to the International Telecommunications Union (ITU) neither one qualifies as 4G service, which must reach speeds of 100 megabits per second, while T-Mobile has speeds from 5-8 and Sprint from 3-6.

While it may seem unethical for T-Mobile and Sprint to clearly mislabel their services, it is understandable from a marketing standpoint that they do this, because it certainly sparks interest from consumers in their product. The main point of differentiation in telecommunications is the level of technology offered by a company, so often which ever company is offering the newest and most efficient service will see an increase in profits. These companies, however, may find it a better marketing strategy to simply advertise their download speeds rather than label their services as 4G, because if it is discovered by the majority of the consumers that this is a mislabel then the company will lose a lot of credibility.

Turkey Blocks YouTube

According to The Wall Street Journal, Turkey has blocked YouTube in response to a sex scandal video concerning former leader of the republic's main opposition Republican People's Party, Deniz Baykal. The video contains Mr. Baykal dressing with his lover in a hotel room and forced him to resign when it was posted on the Internet earlier this year. Turkish authorities and "volunteers" succeeded in removing the videos from YouTube.com, but on Monday YouTube said it would reinstate the videos. The company hoped that Turket would still allow YouTube to stay open, but this did not happen. Google is the owner of YouTube.com. It seems that by not allowing the Turkish government to force them to remove the videos, Google was taking a stance in order to ensure that other governments would not try to make the same move. Turkey has blocked as many as 5,000 websites since new laws took effect in 2007.

The relationship between Google, an American company, and Turkey shows the trouble of international business. In America, these videos are clearly not viewed as immoral or blatantly detrimental, but this is obviously not the case in Turkey. It is important to recognize that Google has refused to give in to the Turkish governments wishes even though they are losing customers in Turkey.

New Startup Takes Aim at Google

One very common phrase used in society lately has been "let me Google that." It is such terminology that Google Inc. could only hope continues in the future. With a huge part of the market already locked up, it presents quite a challenge for competitors to enter into the search engine spectrum. That doesn't, however prevent them from trying. In an article published in yesterday's Wall Street Journal, they highlight Blekko.com, a new company aimed at capitalizing on the flaws it sees in the search giant.

With a team composed of ex-Google and Yahoo engineers, they seem more than capable of putting a scare into Google, or at least possibly having them rethink various aspects of their search engine. You may be asking what exactly they hope to do to differentiate their site from the numerous engines that have failed in the past. One key problem they see with the results that Google yields is that they are often not of high quality and sources tend to be ambiguous. They hope that by allowing users to narrow searchers it will bring about more accurate results. According to CEO Rich Skrenta, this method will eliminate the acceleration of spam and give users more reliable and academic sources.

It is pretty unrealistic to think that they have a legitimate chance at actually overtaking Google, but that isn't their goal. Google already accounts for an overwhelming majority of internet searches, more than double that of Microsoft's recent Bing engine. Blekko hopes that their project will gain them the number three spot in the market, still a tall task to accomplish. Although the site just launched yesterday, it will be interesting to see if it gains as much recognition as they hope. Listed below is the link to the site where you can find an informational video explaining all of the features.

www.blekko.com

http://online.wsj.com/article/SB10001424052748704477904575586551374128996.html