For the Week Ending August 20, 2010

This Week’s Stories______broadcast their songs. Existing U.S. laws demand radio stations pay royalties to songwriters, but not labels or artists--broadcasters contend that radio airplay provides Facebook Checks in with New free promotion and drives music purchases and concert Places Feature ticket sales, but with CD sales in steep decline, the RIAA August 19, 2010 is exploring new revenue alternatives.

Facebook yesterday announced Facebook Places, an Although both the U.S. House of Representatives and update to its mobile platform that will allow users to "check Senate Judiciary Committees have passed bills that would in" to locations on their smarpthones. award labels and artists a share of radio advertising revenues generated by playing their music, legislation has stalled in the face of overwhelming opposition from the The new feature is currently available in a limited rollout, NAB. Broadcasters, looking to expand their audience through the most recent version of the Facebook reach, have now proposed a new settlement, agreeing to application for iPhone. Users can also access Places from pay the RIAA around $100 million in annual royalties on touch.facebook.com if their mobile browser happens to the condition that lawmakers mandate the inclusion of FM supports HTML 5 and geolocation. radio chips in mobile phones and other portable devices. Congress is expected to act on the proposal sometime this According to a post on the company's blog, users can also fall. "Nothing is locked down just yet, but we're on the tag friends who are with them, just as they can tag a friend precipice of an historic breakthrough," RIAA chairman and in a status update or photo. CEO Mitch Bainwol told the Associated Press.

As Facebook continues to deflect criticisms about its "This is two old-media industries attacking the new privacy controls, yet another layer of information was sure wireless broadband industry," said Consumers Electronics to draw scrutiny. The company says that Places offers Association head Gary Shapiro. "We don't think Congress users adequate control of their location information. should accept a back-room deal on how an iPhone should be designed. We think consumers should choose and companies should choose." Jot Carpenter, vice president Only "friends" can see when a user visits or is tagged at a of government affairs for wireless industry trade place, unless the user has specifically sets the master organization CTIA, states there is "not a huge desire privacy control to "Everyone." Users also can set more [among consumers] to listen to over-the-air, ad-laden restrictive customized settings. radio" on mobile devices, adding there is scarce demand for phones with FM radio chips. Facebook suggests that users may want to share check-in information with third-party applications that build http://www.fiercemobilecontent.com interesting experiences around location, such as travel planning. Product & Service News______Location also has the potential for users to collect discounts from businesses when they check in, as is the case with other services like Foursquare. Links New Smartphones to Live http://www.wirelessweek.com/ August 17, 2010

Microsoft is bringing its video-game expertise to the Music Royalty Negotiations Shift to FM forthcoming Windows Phone 7 line, an attempt to Radio in Mobile Phones capitalize on the success of the as the software August 19, 2010 maker tries to compete with Apple's iPhone.

The Consumer Electronics Association is lashing out at a Microsoft says a dedicated group inside of Microsoft proposal from the Recording Industry Association of Game Studios will develop video games for Windows America and the National Association of Broadcasters that phones, help outside game publishers and scout out would mandate mobile device manufacturers to integrate small, independent game makers. Video game companies FM radio chips into all wireless phones manufactured and will be able to use the same tools to make a game for a sold in the U.S. The proposal is the latest chapter in a Windows phone or for the Xbox 360 console. long-running dispute between terrestrial radio broadcasters and the recording industry over music The company is also announcing a preliminary lineup of royalties, with the NAB battling the RIAA's push to require games that will be available when the phones go on sale radio stations to pay labels and performers for the right to during the holidays. The list includes popular Xbox 360

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console games such as "Halo Waypoint," ''Crackdown 2:  125 free monthly carryover minutes, one text per Project Sunburst" and "Guitar Hero 5," as well as each minute and a free handset. newcomers including "ilomilo," a puzzle game in which players try to unite cute little cartoon critters separated by SafeLink is available in 24 states, Puerto Rico and increasingly tricky paths and mazes. Washington, D.C. Assurance, which is one of Sprint's prepaid brands, is available in 10 states and offers Microsoft is linking the Windows phone games hub to its customers 200 free minutes and a free handset. Both Xbox Live service, which about 25 million Xbox and PC programs are subsidized through the federal government. gamers already use to check out new games, keep track of scores and send messages to fellow players. On The actions are a small part of a wider battle in the Windows phones, Xbox live members will be able to do prepaid sector, populated by the likes of TracFone's those things, plus interact with their animated game-world Straight Talk prepaid unlimited service, Sprint's Boost — a cartoon character customized to look like Mobile service, MetroPCS and Leap Wireless, among them. others.

The software maker plans to make its games-related http://www.fiercewireless.com announcements Tuesday at a video game conference in Germany. Verizon Targets Sprint's Simply While Microsoft has been working on its next-generation Everything with $99 Unlimited Tests smart phone system, the iPhone and devices running August 18, 2010 Google Inc.'s Android system have exploded in popularity. Apple, in particular, has advertised its iPhone and iPod Verizon Wireless is testing a postpaid plan that offers Touch — essentially an iPhone without the phone — as unlimited talking, texting and data for $99 per month, ideal mobile gaming devices. according to findings from research firm Current Analysis. The tests stand as a direct attack on the nation's No. 3 Microsoft's Xbox chops may help sway some phone carrier, Sprint Nextel, which has made its $99 per month buyers who are already into video games. The company is Simply Everything plan a cornerstone of its marketing also hoping that Xbox Live on Windows Phone 7 devices pitch. might get a boost from the upcoming launch of , a motion-sensing game controller for the Xbox 360. Like the Verizon is testing the plans in retail outlets in Los Angeles Nintendo Wii, Kinect is expected to lure people who and San Diego. The tests represent a $20-per-month haven't traditionally been interested in video games. reduction from what Verizon currently charges for unlimited talking, texting and data. http://www.wirelessweek.com Verizon's current postpaid Nationwide Talk & Text TracFone Expands SafeLink Service to unlimited plan goes for $89.99 with a two-year contract. In L.A. and San Diego, however, Verizon is offering that Compete with Sprint Offering service for $69.99 per month. The addition of the carrier's August 17, 2010 $29.99 per month unlimited smartphone data plan brings the total cost of unlimited talking, texting and smartphone TracFone Wireless expanded the lineup of plans for its data to $99.99 per month--the same price as Sprint's SafeLink wireless service, which is offered to low-income Simply Everything offering, which includes limitless talking, customers. The service is now competing more directly texting, data and other services. T-Mobile USA also offers with Sprint Nextel's Assurance Wireless offering. unlimited talk, text and data for $99 per month.

TracFone said the expansion, which is starting in A Verizon Wireless spokeswoman described the offering Delaware, means eligible customers will now have more as a limited-time promotion available for single lines only choices in addition to the plan they can get under that includes calling in the carrier's national footprint. She the federal government's Lifeline plan. That plan offers said it's not available for family plans, and includes customers 68 free monthly carryover minutes, 3 texts per domestic long distance. each minute, international long distance to more than 100 destinations and a free phone. The new plans break down While the tests may never result in a nationwide launch, as follows: they are a further indication of serious pricing experimentation by the nation's largest wireless carrier.  250 free monthly non-carryover minutes, one text Verizon in parts of Texas and Louisiana is testing per each minute and a free handset. Unlimited Any Mobile plans, which offer inexhaustible calling to any mobile number in the United States

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regardless of service provider. That offering is a direct been eclipsed in the smartphone processor market by response to a similar nationwide plan from Sprint--the Qualcomm's Snapdragon and Samsung's Hummingbird. carrier's Any Mobile, Anytime offering. Verizon also is testing a $50 prepaid monthly unlimited plan across the http://www.fiercewireless.com Southeast, likely a response to the growing number of inexpensive, unlimited prepaid offerings from the likes of Sprint's Boost Mobile, MetroPCS, Cricket provider Leap Wireless and others. Industry News______

The price of postpaid unlimited wireless service has Mobile Data Offloaded Will Grow 100- tumbled in recent months. In January, Verizon cut the cost of its unlimited talking plan by a full $30, from $99.99 per fold by 2015 month to $69.99 per month. AT&T Mobility instituted August 16, 2010 similar pricing just hours after Verizon's announcement. Mobile data offloading is forecast to triple in the next five years. According to a new study from ABI Research, about http://www.fiercewireless.com 16% of mobile data is diverted from mobile networks today, and that is expected to increase to 48% by 2015. LG Plans 10 More Smartphones in 2010, But data traffic itself will have grown by a factor of 30, Leans on Nvidia For Chips meaning that offloaded data will expand 100-fold. August 19, 2010 The serious, well-publicized traffic overloads (including content data and radio signaling) that are starting to choke LG Electronics plans to release 10 more smartphones many mobile networks will only worsen as smartphones before year-end and is aiming to reach 5 million and other mobile devices proliferate, and operators must smartphone sales this year, a company executive extend capacity. Brute force network expansion, requiring said. The statement indicates that the South Korean firm a doubling of capacity, isn't an option. is taking its smartphone struggles seriously.

Instead, several approaches and technologies will play The company is going to ramp up its handset R&D budget specific roles in relieving network congestion. These by one-third and increase marketing, actions that will put a include Wi-Fi, femtocells, mobile CDNs (content delivery bind on handset margins, Chang Ma, vice president of networks) media optimization, and more. marketing for LG's handset division, told Dow Jones Newswires. LG plans to make the majority of its smartphones run Google's Android platform, but also As ABI Research practice director Aditya Kaul explains, plans to support Microsoft's forthcoming Windows Phone "Each of these offload and optimization technologies is 7. aimed at solving a particular problem and they will all coexist. Wi-Fi is effective in covering limited areas containing many users, such as transport stations and LG still holds the No. 3 handset ranking, but its sports venues. A femtocell, in contrast, is a good solution smartphone market share is tiny--1.2 percent in the for targeting small numbers of heavy data users. Mobile second quarter, according to Gartner. LG's handset unit CDNs attack the problem of frequently-used content, for posted an operating loss of $101 million in the quarter, a example a video that has ‘gone viral', by caching the file dramatic reversal of the $524 million profit it recorded in locally rather than loading it onto the network for each the year-ago period. download request."

To reverse those trends, LG is planning a major launch One of the most effective tools is media optimization - with its Optimus line of Android phones this fall. The effectively improved compression - which is already being company has not said whether it will partner with a U.S. used widely. Media optimization will grow the fastest and carrier on the phones, but plans to release its flagship deliver the greatest traffic reduction of all these methods. phone, the Optimus One, through 120 operators. Ma said the phone will be a "gateway" phone for first-time smartphone users. Data offloading saves money as well as relieving network traffic. "Moving data costs a surprising amount," says Kaul. "Wi-Fi and femtocells in particular do that at a tiny fraction "We think it's reasonable for us to provide this to people of the per-Gigabyte cost of a 3G network. The ABI who hesitate to buy or don't have enough experience with Research report precisely quantifies these savings." smartphones," he said. "This is a clear answer to them."

Most of these solutions are being offered to operators by a In a bit of a coup, LG said it is using Nvidia's dual-core number of suppliers. Prominent among them: Belair Tegra chipsets for its Optimus phones. So far, Nvidia has Networks for carrier Wi-Fi; Ubiquisys for femtocells;

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Akamai for CDN; Stoke, Inc. for core offloading; and for Apple phone, according to a recent survey conducted by media optimization, Bytemobile and Openwave. the Yankee Group.

"Mobile Network Offloading" explores the market drivers And it looks like there is pent up demand for the iPhone on and end-user demand for each mobile data offloading other carriers, despite the fact that wireless users on other technology. networks now have the choice of many other competing phones, such as the Google Android phones. The Morpace survey also found that half of Verizon Wireless's It is part of two ABI Research Services, Mobile Networks current customers said they were likely to get an iPhone and Femto and Small Cell. once it comes to Verizon's network. This is interesting considering the strong sales that Verizon has seen for the http://www.fiercemobilecontent.com Google Android phones, such as the HTC Incredible and the Motorola Droid, Droid 2 and Droid . The Yankee Group also found that a third of all smartphone owners of Will AT&T iPhone Users Really Defect all types who intend to buy a smartphone intend to buy an for Verizon? iPhone. In fact, Apple is the most popular choice for a August 16, 2010 future smartphone among all mobile phone owners, according to a blog post written by Carl Howe, an analyst Will they stay or will they go? with Yankee Group. Whether or not consumers will be as loyal to AT&T as they That's the big question AT&T executives are likely asking are to Apple and the iPhone is the big question. themselves about the millions of iPhone customers who may consider leaving the operator once the popular Consumers on Verizon's network continue to give the smartphone is offered on other carrier networks in the U.S. company high marks in terms of satisfaction for its network. In May, ChangeWave Research released data While AT&T has not said when its exclusive deal for the from a March 2010 survey that found 49 percent of iPhone ends, the company has been preparing Verizon's customers said they were very satisfied with shareholders for a day when the iconic device will be their service. In second place was Sprint Nextel with a 35 available to its competitors. Rumor has it that Verizon percent satisfaction rate. T-Mobile and AT&T both tied for Wireless, AT&T's chief competitor, will get a version of the last with only 23 percent of their customers who said there iPhone in January. were very satisfied.

A recent survey by the market research firm Morpace Verizon also came out on top in the fewest number of found that 34 percent of those surveyed who already own dropped calls in the ChangeWave survey. Only 1.5 an AT&T iPhone are waiting to upgrade their phones until percent of customer calls were lost over the prior three the iPhone becomes available on another carrier. And months. The dropped call rates were 2.4 percent for Sprint about 47 percent said they'd at least consider moving over and 2.8 percent for T-Mobile, while AT&T was at the to Verizon for the iPhone. About a quarter of all AT&T bottom with customers reporting 4.5 percent of their calls subscribers said they were somewhat or very likely to being lost. The dropped call rates marked Verizon's best switch to Verizon for an iPhone. since September 2008 and AT&T's worst over the same time frame. Morpace's sample was relatively small. Out of 1,000 respondents, only about 100 were current AT&T iPhone But when it comes to retail satisfaction or customer subscribers, but Jay Heyboer, vice president of technology support, Verizon drops to the bottom of the pack. A recent and Advanced analytics at Morpace, said the findings are JD Power and Associates survey ranked T-Mobile USA as still statistically valid. the highest in price promotions and in-store sales. Sprint came in second, AT&T third, and Verizon Wireless was last in this survey. The results aren't too surprising given the flood of bad press AT&T has gotten over the past couple of years. In terms of customer service, Vocal iPhone users around the country, particularly in urban Laboratories(Vocalabs) recently released results from a areas, have flooded the Web with complaints about the survey that indicates that Verizon placed lastout of the four iPhone's slow 3G speeds and dropped calls. Preorder major U.S. wireless carriers when it came to satisfying problems with the iPhone 4 didn't help AT&T's reputation customer service calls. Customers were interviewed either as millions of potential customers were shut out of following customer service calls to rate their experiences ordering the phone ahead of its launch in June. following the calls.

One thing seems to be clear: iPhone owners are very loyal to the iPhone and Apple brand. About 77 percent of current iPhone owners say they intend to buy another

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When you compare actual churn rates, or the rate at which customers drop one carrier's service for another, AT&T and Verizon are neck and neck. For the second quarter of 2010, Verizon reported a churn rate of 1.27 percent and AT&T reported a churn rate of 1.29 percent for AT&T.

By contrast, Sprint and T-Mobile still have much higher rates of churn than either AT&T or Verizon. What this means is that regardless of whether they are satisfied or not, customers are much more likely to stay with AT&T or Verizon than they are these other carriers. And customers are just as likely to leave Verizon as they are AT&T.

Could this change when the iPhone finally comes to Verizon? Perhaps. But analysts warn that what consumers say they will do and what they actually do are two different Half of current Verizon Wireless customers said they things. are very likely to buy an iPhone once it comes to Verizon's network. (Credit: Morpace) "There seems to be a significant number of people willing to consider switching from AT&T to Verizon for the http://news.cnet.com iPhone," said Morpace's Heyboer. "Of course, the percentage of people who actually make that switch will probably be lower. But I think we are certainly picking up on dissatisfaction of some consumers and an openness to pursue other options."

Nearly half of current AT&T iPhone customers say they would consider switching to another carrier for the iPhone and a third say they are waiting to upgrade until the iPhone goes to another carrier. (Credit: Morpace)

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