Mobile News: Security, Spectrum, and Mergers

Lately in the news, there’s been heavy talk about the mobile industry. News reports have generally been on these topics: hacks/security flaws, spectrum, and mergers. Tech blogs and websites have to been reporting different experiments and studies on the security flaws of either Android or iPhones. Technolog previously reported that paperclips could unlock iPhones and magnets could unlock iPads. While CNBC recently reported about an Android Bug that is released via a link opened from a spam text or email.

As far as spectrum, we are all being warned that, at some point in the not-too-distant future, data will slow tremendously from overuse of radio spectrum. While cell carriers may offer unlimited data, reaching a certain point will slow your data. For example, T-mobile slows data from 4G/3G to a G after 2gbs of data has been used within a billing cycle. This speed reduction or the use of limited data plans is to prevent congestion on wireless spectrum, which causes slow networks.

The other solution to congested spectrum is to acquire more of it. Some media entities have spectrum to sell.  Right now, Verizon Wireless is trying to buy spectrum from Comcast, Time Warner Cable, and Brighthouse Networks. If that deal is approved, Verizon Wireless would walk away with better and more spectrum placing them at a greater advantage then their competition. Another way to acquire spectrum is to merge. AT&T and T-mobile attempted to merge, but the government disapproved on the basis it could deplete competition.

AT&T is Preparing for a Failed Deal with T-Mobile

In an attempted slick PR move, AT&T announced on Thanksgiving that the company is setting aside some cash just in case their deal with T-Mobile falls out. According to Stacy Cowley of CNNMoney.com, “AT&T said Thursday that it will take a $4billion accounting charge this quarter to cover part of the break-up fee it will owe, if its bid to acquire T-Mobile fails to gain regulatory approval”. 

Back in March, AT&T and T-Mobile announced plans to merge. Doing so would make the new company the biggest cell carrier thus lowering the amount of competition in the cell carrier market. This fact has prompted some to oppose the merger including the Department of Justice. The article stated the DOJ “filed an antitrust lawsuit in August to block the merger” and two days ago, the Federal Communications Commission “[recommended] that AT&T’s proposed $39 billion takeover of T-Mobile go to an administrative hearing”. With two government agencies in objection, AT&T and Deutsche Telekom, owner of T-Mobile, has withdrawn their FCC applications.

Clearly, AT&T is prepared and probably expecting the worse.  They figured by releasing their epiphany on Thanksgiving no one would notice. Unfortunately, their news is featured on almost every major business news outlet. It is a clear PR trick to release bad news on a holiday, (a certain politician did the same when announcing their resignation from office), but in the world of social media, news travels fast and quick, rarely hidden. AT&T and every business should think twice before using old school PR tactics in a new school social media world.

P.S.

For those who celebrate Thanksgiving, hope your day was great!

Oracle Insults Autonomy's Price Tag and HP Purchase

Hewlett-Packard (HP) thought their troubles were beginning to fade away as the company ousted their CEO and hired Meg Whitman. A public verbal spat between Oracle and Autonomy is bringing to light criticism about HP’s purchase of the latter company. “Oracle-Autonomy battle rages with HP in the wings” by Paul Sandle of Reuters.com reports HP’s decision to buy Autonomy for $12 billion sparked a debate about the price tag.

The Autonomy purchase was one of the last big moves of former CEO Leo Apotheker. The article reports the purchase “has alienated Wall Street because of its steep price tag”.  HP’s new CEO Meg Whitman has stood by the purchase. But last week, CEO of Oracle Larry Ellison announced to investors that “Oracle had been pitched a sale during an April meeting but walked away because the company, with a $6 billion market value at the time, was priced ‘absurdly high’.”

Autonomy CEO Mike Lynch has admitted the two met but it wasn’t a sales pitch. Ellison is claiming he has proof of the sales pitch. The proof: a PowerPoint presentation by Lynch, and Frank Quattrone, a dealmaker who Ellison claims was present at the pitch. Ellison has gone a step further by posting the slides online at Oracle.com/PleaseBuyAutonomy.

While this verbal dispute between Oracle and Autonomy is entertaining, the actual matter is whether HP paid too much money for the latter. The matter has gone from inquisitive to insulting. While Autonomy feels the need to respond (which I believe they shouldn’t have responded), this is HP’s problem. Meg Whitman needs to clarify the purpose of Autonomy’s purchase and the value of the $12 billion price tag. 

iPhone 5 Coming to Sprint but Could Help AT&T

Sprint is joining Verizon and AT&T as a carrier of the iPhone. According to “Sprint to Get iPhone 5” by Joann S. Lublin and Spencer E. Ante of WSJ.com, Sprint will debut the iPhone 5 in October.

Sprint is the “third-largest carrier” and is experiencing a loss of subscribers. Their recent subscription report, 52 million, doesn’t come close to the volumes of Verizon and AT&T, 106 million and 99 million, respectively. The addition of the anticipated iPhone 5 is sure to bring more subscribers towards Sprint. Sprint will also get the iPhone 4, which should attract customers who do not wish to pay the price tag of a newly released iPhone.

But, according to the article, there is a caveat to having the iPhone 5…

…“the deal could also hurt Sprint by helping AT&T improve its chances of winning approval from regulators for its $39 billion purchase of T-Mobile USA”.  The AT&T – T-mobile merger would create the largest cell carrier. Sprint has worked hard to prevent the merger, including submitting their own research to the government allegedly proving that AT&T could improve and expand without using T-Mobile.  Sprint uses the argument of competition to fight the merger but honestly, they are more fearful of being pushed to the bottom or out of the market by the future AT&T- T-mobile entity.

The article didn’t go into detail about the reasons the Sprint iPhone would help AT&T. But considering the merger could be approved if AT&T could argue that it doesn’t reduce competition, the iPhone could be used as a means to support the idea that Sprint will not suffer from the merger because the iPhone is increasing competition.

Ford and Toyota Teaming Up on Hybrid Vehicles

Ford and Toyota are collaborating to hopefully introduce rear wheel hybrid vehicles with sync technology. “Toyota, Ford to collaborate on hybrid truck” by Bernie Woodall of Reuters.com reports Ford CEO Alan Mulally and Toyota CEO AkioToyoda have been in talks for some years about working together and yesterday, it was announced that the partnership is official. The article reports the vehicles should be in the market by the end of the decade.

The first thought most would have about the news is shock. Ford prides itself as the essential American-made rough-and-tumble brand while Toyota is all about fuel efficiency and has enjoyed some success in the U.S. market at the time in which Ford experienced some problems. Most of us see Toyota and Ford as different competitive brands, most unlikely to collaborate. But the article mentions that both have something the other wants.

Ford is well known for their trucks and has excelled in vehicle technology with their Sync system, “an option that allows drivers to control stereos and cell phones with voice activated commands.” Ford has yet to introduce a hybrid able to achieve the success of the Prius. Mulally is quoted saying, “This is the kind of collaborative effort that is required to address the big global challenges of energy independence and environmental sustainability”.

Google Entering Mobile Manufacturing with Plans to Buy Motorola Mobility

Yesterday, Google announced it is buying Motorola Mobility. Motorola Mobility is the recent result of a split of former Motorola into the mobile division and Motorola communications earlier in the year. According to “Google agrees to buy Motorola Mobility for $12.5 billion” by Nathan Olivarez-Giles of LAtimes.com, the paid price mentioned is reported as “a premium of 63% over the closing price of Motorola Mobility shares on Friday”.

Larry Page, CEO of Google, Inc. is hoping the purchase will be approved and completed by the end of this year or early next year.  Google would become a mobile manufacturer competing with Apple in both manufacturing and software. The article reported that Motorola Mobility would function as a separate company.

The most important aspect of this deal is patent ownership. Google will own Motorola’s patents and Page believes it will benefit competition:

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”.

Recently, patent/trademark disputes by Apple have resulted in Samsung getting their Galaxy Tab booted out of the EU, except the Netherlands. Google has a point that patent stealing accusations are too close to anti-competitive behavior.  They will be able to defend their placement in the mobile game and stretch their power into manufacturing. Google will also compete with other manufacturers that use their Android platform. Despite plans to keep Motorola Mobility as a separate entity, Google will function as both business partner and competitor with many other companies.

Sprint Claims AT&T Could Expand w/o Merging w/ T-Mobile

AT&T and T-Mobile are currently in the process of defending their future merger to the government. As mentioned in a previous post, the merged company would become the largest cell carrier with about 42% of the market. This would leave Sprint third in market, thus they are not a supporter of the merger. One of the strategies to prevent the merger is Sprint has attacked one of the main reasons for the merger offering an alternative.  “Sprint offers AT&T spectrum solution without merger” by Jasmin Melvin of Reuters.com reports AT&T has defended the merger as a means to use T-Mobile’s spectrum to improve their speed and  performance.

Sprint claims “AT&T could forgo the T-Mobile takeover and increase its network capacity by more than 600 percent by 2015 by simply putting its current resources to better, more efficient use.” The point being that the proposed reason for the merger is invalid. The detailed claims about AT&T being able to help itself expand were presented to the FCC yesterday. Sprint is also claiming that AT&T investing in this improvement “would cost far less than the $39 billion AT&T would spend to take over T-Mobile”. The response from AT&T:

“A company that has outsourced the management of its own network shouldn’t be giving advice to others”

Microsoft Looking to Buy Skype

Last week, I saw a L.A. Times tweet stating Google or Facebook might buy Skype. Facebook would buy Skype to fully incorporate it with their social media creating a Skype-facebook service which would bring FaceBook to another phase of communication; it would be a genius move for Facebook. Previously when reading about Groupon refusing Google’s buyout offer, I learned that Google has had a bad experience moving into social media; thus, I could not see that collaboration happening. Yesterday, I read Microsoft is most likely to buy Skype. “Microsoft Near Deal to Acquire Skype” by Anupreeta Das and Nick Wingfield reports the deal may be close and the price tag is estimated between $7 billion and $8 billion.

Skype would become an extension of Microsoft’s efforts to further market their brand and gain market share. Beyond XBOX and their office suites, Microsoft has their mobile operating systems, kinect, and Bing (all three have major competitor[s]). Skype could give Microsoft many ways to utilize the service and possibly bring Microsoft the popularity of Skype. The article reports integrating Skype to the Windows phone might not be the easiest route as “Skype could give consumers a way to make cheap phone calls over the Internet from mobile phones, without paying higher rates to the carriers” and carriers wouldn’t support a Skype phone.

AT&T + T-Mobile = Biggest Cell Carrier

News broke Sunday that AT&T is buying T-Mobile. I read “AT&T to Buy T-Mobile USA for $39 Billion” (New York Times) by Andrew Ross Sorkin, Jenna Wortham, and Michael J. De La Merced and I also read “AT&T to Buy T-Mobile: Here’s Why” (Wall Street Journal) by Shira Ovide. Both articles have significant information about the deal but I will write about a few points.

This will make AT&T/ T-Mobile the biggest Cell Carrier

Both T-Mobile and AT&T have 42% of the market. This would obviously reduce competition that could ignite regulators to try to prevent the merger. According to New York Times (NYT) “the deal requires approval from both the Justice Department and the Federal Communications Commission. It is unclear how regulators will react, but the companies clearly know the deal faces serious regulatory hurdles”. AT&T and T-Mobile will have to fight off theories that they are “monopolizing” the market.

“Wireless service will be awesome”

As Wall Street Journal (WSJ) reports, the assumption is the wide range of coverage both companies have will combine to give better service than current AT&T and T-Mobile service. But it has been previously reported that AT&T is the worst carrier in the U.S. The plan should be for AT&T to become better but the fear amongst people so far in news outlets and blogosphere is that it will make service worse for T-mobile consumers. NYT reports some expect higher prices from the merger considering T-mobile has “some of the lowest rates in the country” and mergers usually don’t result in lower prices, especially if it is a consolidation of services with little competition. NYT also reports AT&T will “honor current contracts” but “T-Mobile Customers may have to pay higher rates once those contracts expire.”

AOL Buys The Huffington Post to Become Huffington Post Media Group

What do you call it when a struggling company buys a successful, popular entity? A golden combination for that struggling company. AOL which been declined in the past few years, has acquired the Huffington Post, resulting in a combination of the companies named Huffington Post Media Group. According to “Betting on News, AOL is Buying The Huffington Post” by Jeremy W. Peters and Verne G. Kopytoff, AOL is paying $315 million for the acquisition. A great price considering The Huffington Post started with $1 million.

For The Huffington Post, they are receiving capital to help them grow bigger and faster. They will also have the ability to pay investors in the company considering the company hasn’t shown interest in an IPO. Arianna Huffington, co-founder and Editor-in-Chief will gain more titles, becoming president and editor-in-chief of Huffington Post Media Group. According to the article, “the arrangement will give her oversight not only of AOL’s national, local and financial news operations, but also the company’s other media enterprises like MapQuest and Moviefone.” She states on her post on The Huffington Post her resolution for the site was to go global and offer better video content. She sees this “merger” as Huffington Post’s ability to achieve those resolutions.