What’s interesting is Shaw stated that wifi is free and they can more easily set up a wifi network than a cellular network.

“Given that Wi-Fi spectrum is free and there are no device subsidies, we can build extensive Wi-Fi coverage at a substantially lower cost relative to a traditional wireless network and still provide our customers with an excellent broadband wireless experience,” Shaw said.

Maybe this means a city-blanketing wifi network that you can pay to have access to. wifi capable devices such as iPhones and iPod touches can be activated using a VOIP client similar to Shaw’s home phone, and it would work anywhere in the city. Of course getting wifi stations in sparsely populated areas isn’t exactly practical, but for denser regions, a home phone that works in the city might be plenty for most people. Interesting idea.

The other option is that Shaw might choose to buy out one of the new wireless companies, or perhaps even merge. With the lines between mobile and home broadband becoming blurred, it may make sense for a wireless-only and wired-only company to merge in order to more effectively compete with the big three.

One thing is for sure, Shaw’s home broadband plans are second to none in Canada right now, so a buyout of Shaw by Rogers would be a terrible thing for consumers.

iMessage looks to be Apple’s version of BlackBerry Messenger. It will do standard text messages, but also adds the ability to message any iOS device – iPods and iPads included. Now, if I can send a message from one wifi iPod to another wifi iPod, it can’t be using a telecom’s text message protocol. I wonder if the same is true for iPhone-iPhone messages.

If this is indeed true, it looks like text message revenue is about to go through the floor. Why pay for all those extra text messages when you can get them free with iMessage?

The second interesting bit is that now apps like WhatsApp have to tout their cross-platform nature. WhatsApp is a $0.99 app that is available on multiple platforms and allows sending text-like messages between users of WhatsApp. The messages are of course free, which means it can be a useful app if you send a lot of messages and have friends on the service. Because one of the biggest value propositions of WhatsApp is free messaging, it could be in some trouble now that iMessage seems to be setting itself up for free iOS-iOS messaging.

I try to stay away from regurgitating rumours, but this has interesting implications for Canada. Sprint runs a WiMax 4G network which has very little implication for Canadian carriers, but the fact that the new iPhone may be able to run on T-Mobile’s “4G” (I say that because it is in fact HSPA+ and not true 4G/LTE) network could mean big things for Canadians.

T-Mobile runs on the same AWS band that new entrants Wind Mobile and Mobilicity run on – whatever phones work with T-Mobile’s high-speed network should also work with Wind and Mobilicity. The new entrants haven’t had much trouble growing their subscriber base, but there are still potential customers waiting in the wings because they want the iPhone.

One only needs to look south of the border to see how big a boost an AWS iPhone will be for Wind and Mobilicity. When the CDMA iPhone 4 finally came to Verizon, it was the most successful phone launch in Verizon history.

Microsoft is behind the times with its smartphone operating system. Windows Mobile fell behind BlackBerry and Symbian, and all were taken by storm when the iPhone and Android hit the market. BlackBerry is still holding on and may come back with a resurgence, Symbian finally looks like it is going away, and Microsoft sent a strong signal that it wants to remain relevant with Windows Phone 7. While this OS is reportedly a fine smartphone platform, it is late out of the gate.

What do you do when you are late to the game? You buy someone to get in, and make some noise. This is where Skype comes in.

Skype is the best known service for making phone calls through your computer, and is probably the best known service for making VOIP calls from your smartphone. You can associate a phone number with your Skype account (Skype-In), and can use Skype to call regular phone numbers (Skype-Out). You can talk to someone from your smartphone to their smartphone for free if you are both Skype users, and can even video chat if you have a capable device. What’s more, it is cross platform – you can video chat from an iPhone to an Android phone. This makes switching phones and platforms easy as you are not tied into any one particular system on one particular phone.

By integrating Skype directly into a future release of Windows Phone (8?), Microsoft will provide customers with a very compelling value proposition. Windows Phone to Windows Phone calls can be free. All calls can go over VOIP/data and not require standard voice minutes. All your calls can be made over wifi, reducing your data needs. Your computer can become your phone.

Windows Phone 8 – $30/month with 6 GB data and unlimited calling in Canada/US?

This is potentially great news for Wind and Mobilicity.

Most previous talk about LTE/4G has centered around the 700 MHz band in the upcoming spectrum auctions both in Canada and the US. This spectrum is highly coveted because it penetrates buildings well. Currently, no network operators own this spectrum so the bidding process is expected to be highly competitive.

In Canada, the limited resources of the new entrants means that they would have to rely on the CRTC to block off a certain amount of spectrum for them, or else Bell, Rogers, and Telus would simply buy it all up. Even still, the allocated amount would likely not be great, and would still be quite costly for the new entrants. With their future networks on the line, this would be a significant investment which they would eventually have to recoup from their customers.

The new entrants can not afford to miss out on the prime spectrum, not because it is inherently good, but because of the devices that will be built for it. With all the large US telecoms going for 700 MHz LTE spectrum, this is where the iPhone (6,7,8?), the iPad (3,4,5?), the new BlackBerrys, and the best Android devices will operate. None of these companies is going to make a special version of their devices for a Canadian telecom with 300,000 subscribers.

However, the decision by AT&T to use the AWS spectrum to build out LTE in the US will make all the big device manufacturers plan for AWS capable devices. Wind and Mobilicity just got a big helping hand from AT&T. Furthermore, with AT&T being a GSM network, it opens up the possibility of bringing AT&T devices north with a SIM to operate on AWS networks here.

Then there’s the possibility of better roaming agreements for Wind and Mobilicity in the US.

It will be interesting to see what Bell, Rogers, and Telus do with their LTE plans. They currently each have some AWS spectrum sitting unused as well. Will Canada’s LTE use 700 MHz and 1700 MHz, or will we have an annoying split still?

While fuller details can be had by reading the [pdf] on the AT&T investor relations site, the plans for the T-Mobile network are essentially to convert current T-Mobile users over to AT&T’s 3G network frequencies, using T-Mobile’s cell cites to add capacity to the stressed AT&T network, followed by transitioning T-Mobile’s 1700 MHz AWS spectrum over to future LTE use.

This looks like a great way for AT&T to rapidly add capacity while simultaneously adding spectrum for LTE deployment.

With Verizon already rolling out 4G service, and with Sprint already operating a WiMax network, AT&T will undoubtedly push for some LTE AWS phones ASAP.

DALLAS & BONN, Germany–(BUSINESS WIRE)–AT&T Inc. (NYSE: T) and Deutsche Telekom AG (FWB: DTE) today announced that they have entered into a definitive agreement under which AT&T will acquire T-Mobile USA from Deutsche Telekom in a cash-and-stock transaction currently valued at approximately $39 billion. The agreement has been approved by the Boards of Directors of both companies.

This move will make AT&T the largest US telecom by a substantial margin and could have interesting repercussions for devices around the world.

T-Mobile USA is a relatively new company and as a result, their 3G network is on the new 3G-AWS band. This band offers speeds similar to standard 3G, but requires a 3G-AWS chipset in the mobile device in order to work at those speeds. Essentially, this means that all the popular 3G devices (iPhones, most android phones etc) won’t work well on T-Mobile’s network. Many new telecoms around the world, including Wind and Mobilicity in Canada, also operate a 3G-AWS network and thus have a very limited selection of phones to offer their customers.

Hardware manufacturers are not willing to make AWS-compatible versions of all of their devices, so the new telecoms are generally left out. As some consumers make the handset their primary focus when choosing a phone plan, this eliminates a lot of customers for the new telecom companies.

This merger will mean that AT&T will absorb T-Mobile’s 34 million subscribers and 3G-AWS network. Adding this to AT&T’s 96 million subscribers turns AT&T into a company with 130 million subscribers and a 3G-AWS capable network.

This could mean one of two things:

1. Any hope for AWS-capable premium handsets (iPhone) is essentially dead.
2. AWS-capable premium handsets just became a lot more viable.

Which way it goes depends entirely on AT&T’s strategy going forward. On the one hand, manufacturers could see it as the death of a 34 million subscriber AWS company and see little need at all any more to produce AWS versions of phones. This would make the fight to get good devices just that much harder for Wind and Mobilicity.

On the other hand, AT&T could be fully integrating the AWS network into their own, in order to help boost their network in weak spots. They may encourage the use of the AWS network and this would entice hardware manufacturers to make an AWS version of all of their phones.

It is an interesting question I would like to see answered.

Lacavera had this to say:

“Earlier today, the shareholders of Russian mobile telephone operator VimpelCom voted in support of a $6 billion deal to acquire WIND Telecom, whose assets include Orascom Telecom, a significant shareholder in WIND Mobile. The parties are now moving to close the deal, likely sometime in the first half of 2011.

This transaction would create the world’s fifth largest mobile operator by subscribers – more than 173 million subscribers!

This is great news for us. Our partner, Orascom, will be even larger and stronger as a financial partner. This gives us more leverage and increased scale with telecom network equipment manufacturers and more importantly, for devices including handsets and tablets. This will also give us more access to international cooperation for roaming and long distance services. All of that means the ability to deliver even more value to all of our customers.

I will keep you posted as new details emerge.”

Interesting development for sure. This could mean better international rates for Wind subscribers, as well as more capital for buying spectrum in the upcoming auctions, and sway with hardware providers for cheaper network equipment and access to handsets.

The structure of the deal should be interesting, considering that Wind has had trouble dealing with Canada’s foreign ownership rules regarding telecom companies in the past. Expect the CRTC and the current telecom companies to look into this.

The executive summary is this:

• Mobile video traffic will exceed 50 percent for the first time in 2011. Mobile video traffic was 49.8 percent of total mobile data traffic at the end of 2010, and will account for 52.8 percent of traffic by the end of 2011
• The top 1 percent of mobile data subscribers generate over 20 percent of mobile data traffic, down from 30 percent 1 year ago. According to a mobile data usage study conducted by Cisco, mobile data traffic has evened out over the last year and now matches the 1:20 ratio that has been true of fixed networks for several years. Similarly, the top 10 percent of mobile data subscribers now generate approximately 60 percent of mobile data traffic, down from 70 percent at the beginning of the year.
• Average smartphone usage doubled in 2010. The average amount of traffic per smartphone in 2010 was 79 MB per month, up from 35 MB per month in 2009.
• In 2010, 3 million tablets were connected to the mobile network, and each tablet generated 5 times more traffic than the average smartphone. In 2010, mobile data traffic per tablet was 405 MB per month, compared to 79 MB per month per smartphone.
• There were 94 million laptops on the mobile network in 2010, and each laptop generated 22 times more traffic than the average smartphone. Mobile data traffic per laptop was 1.7 GB per month, up 49 percent from 1.1 GB per month in 2009.
• Two-thirds of the world’s mobile data traffic will be video by 2015. Mobile video will more than double every year between 2010 and 2015. Mobile video has the highest growth rate of any application category measured within the Cisco VNI forecast at this time.
• The average smartphone will generate 1.3 GB of traffic per month in 2015, a 16-fold increase over the 2010 average of 79 MB per month. Aggregate smartphone traffic in 2015 will be 47 times greater than it is today, with a CAGR of 116 percent.

Early Adopters Penalized

My main comment is that Cisco’s study shows that video is becoming very relevant on mobile networks already, representing about 50% of mobile data transferred. That is only going to grow as more users get smartphones and view online video. Instead of implying “high traffic users” are leeches on the system, ISPs should look to them as a preview of what the average user will look like in 5 years.

The data show that the top 1% of users aren’t necessarily deserving of the negative stamp they get by ISPs. Their share of mobile data usage is going down as “regular” users adopt the habits of the top 1%. Regular users are downloading more video and streaming music.

The data use in wired networks probably follows a similar trend – average users are using more and taking up a larger share of the data as HD video increases in availability and appeal.

Is there any other industry where early adopters of new technology are penalized like this? Sure, your Prius might cost more because it’s a hybrid, but Toyota doesn’t charge you disproportionately more for one in an attempt to get you back into a Corolla like other “normal” users.

If anything, this presents an opportunity for network operators. Encourage the high-bandwidth users to use your network. Ask them what they use. Find out when they use it. How much, where, why. This information can then be used for network load balancing, QoS optimization, and forecasting. If you ignore and shun the high bandwidth users today, you’ll have no idea what your customers 3-5 years from now will look like.