New features

First off, the default installation is for a virtualized environment. As Mark Baker, Ubuntu Server product manager at sponsor company Canonical, told me, this is because users are increasingly deploying the OS on hypervisors and Canonical wants to show off the OS’s capabilities there.

“While KVM has been big on Ubuntu since 2008, it’s not the only game in town,” Baker said. “We’re seeing customers wanting to understand integration or compatibility between ESX and Ubuntu, or even Hyper-V and Ubuntu, and we’re ensuring testing on these – and of course KVM and Xen — so when we are engaged with customers or users we can say we know Ubuntu provides a robust experience on the prevalent hypervisors.”

The other major aspect of this release is its integration with the new Grizzly release of OpenStack. Canonical has been involved with OpenStack since the start, and the release cycles for the two products are aligned (Grizzly came out a few weeks ago).

Ubuntu 13.04′s Juju orchestration “charms” have been updated to deploy OpenStack for high availability – for example, when the user deploys MySQL, the charm will set up 3 nodes in a failover configuration, and a similar approach applies to the deployment of the Rabbit messaging server. Of course, those deploying in a test environment won’t be too keen on running 2 or 3 of everything, so it will still be possible to install in a “less highly available way”, as Baker put it. The Juju GUI has also seen a lot of work this cycle “to improve usability”, he added.

Meanwhile, the Ceph storage subsystem is now fully integrated with Ubuntu and OpenStack, in order to please Canonical’s telco and service provider clients, and Ubuntu’s Floodlight OpenFlow controller has also been updated. Although Canonical and VMware are working closely on Nicira, “having an open-source alternative to Nicira is also important,” Baker pointed out.

Carrier adoption

Speaking of carriers and service providers, this is the market segment where Canonical appears to be thriving.

“OpenStack certainly has been the biggest growth areas for us in the last 12 months,” Baker said. “We have got engaged with the types of customers that we could only have dreamed of, looking back a few years. OpenStack is gaining adoption with carriers, and most people doing that to scale are doing that with OpenStack on Ubuntu. Most of the major telcos, the global names that you’ll see, are deploying their OpenStack on Ubuntu.”

Baker also claimed that OpenStack is seeing traction in the big data space, with users deploying Hadoop and Cassandra on Ubuntu – he suggested this may be out of “developer affinity” with the Linux distro.

“It’s fair to say the bread and butter of our user base is running web infrastructure,” Baker said. “A lot of that user base is moving that web infrastructure into the cloud. We’ve gained significant popularity on Azure – there is a fair proportion of that running Linux. While you wouldn’t think it a natural fit to provide Ubuntu on a Microsoft cloud, we actually think it’s quite exciting.”

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It’s not my intention here to to attack my peers, but I think it’s necessary to point out we’re descending a slippery slope if we start tossing around the term 5G loosely. 5G doesn’t exist except as the barest concept. It hasn’t been defined by any standards body. The mobile industry only recently began addressing what constitutes 5G, assigning its biggest brains to investigate the technologies that might make up 5G networks in the future.

I understand the frustration of my fellow tech bloggers. Presented with a bunch of byzantine acronyms, how do you explain to the average reader the differences between an HSPA network and HSPA+ network, or between an LTE and an LTE-Advanced network, in a single sentence? When dealing in headlines of limited length and Twitter posts of 140 characters, it’s easy to fall into the comfortable trap of using terms like 4G and 5G to explain the differences in technologies (I’m guilty of falling into that same trap as well).

But I think we owe it to our readers to spell out those nuances. Otherwise we’re not truly explaining mobile technology. Instead, we’re just repeating the marketing messages of carriers and vendors that have every interest in exaggerating the capabilities of their networks.

To my knowledge, T-Mobile isn’t publicly labeling its forthcoming network as 5G, but the operator has a reputation for this kind of technology inflation. In 2010, T-Mobile relabeled its HSPA+ service as 4G out of the blue. I had some sympathy for T-Mobile at the time, because it was presented with a quandary: Sprint had long used the term 4G to describe its WiMAX network, but T-Mobile’s ostensible 3G network was routinely beating Sprint in raw speed tests.

Instead of trying to explain the differences to its customers – which admittedly would have been quite difficult — T-Mobile took the easy way out and simply claimed 4G as its own. Of course, that led AT&T to do the same for its even slower 14.4 Mbps HSPA+ network. Eventually, the standards body responsible for defining the various ‘G’s, the International Telecommunication Union, caved to industry pressure and retroactively defined 4G as pretty much whatever carriers wanted it be.

4G became a meaningless term, and we tech journalists reinforced its meaninglessness by swallowing the terminology carriers fed us. If carriers get their hooks into the acronym 5G, you can bet the exact same thing will happen. Once one carrier succumbs, others will race to redefine their perfectly serviceable 4G networks as 5G networks. An the next operator to gain the slightest technical edge will start bandying about the term 6G.

I’m not dissing T-Mobile’s technical accomplishments. As I’ve written before, T-Mobile’s new LTE network, by virtue of its newness, has definite advantages over other carriers’ networks. T-Mobile will be able to upgrade to new LTE-Advanced technologies faster and cheaper than its competitors. But T-Mobile certainly doesn’t have an LTE-Advanced network today, it won’t have one in the near future and it will be years before it can legitimately make the claim to owning one. LTE-Advanced is an incremental technology, and many of its key techniques aren’t even commercially available to carriers yet.

In my opinion, carriers are already abusing the term LTE-Advanced. They haven’t started compounding that abuse by advertising their current or forthcoming LTE networks as 5G, but it’s only a matter of time. Let’s not help them along by doing their marketing for them.

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Overall, Verizon brought in $29.4 billion in revenues for the quarter, and posted a 15 percent year-over-year increase in profits.

Verizon’s LTE network now covers 491 markets and 287 million people, which is roughly 95 percent of its current 3G footprint. CFO Fran Shammo said it plans to match 4G coverage to its 3G coverage by the end of this quarter, and he reiterated Verizon’s plans to start building its second 4G network this year over recently acquired Advanced Wireless Services (AWS) airwaves. Shammo said Verizon would start offering its first LTE-only devices – with no CDMA fallback – next year, which should coincide with the launch of its voice-over-LTE service.

Verizon saw 5.9 million LTE device activations in the first quarter, bringing its total 4G retail connections to 26.3 million, about 28 percent of its total contract subscribers. Shammo said roughly half of Verizon’s 4 million iPhone activations were for the LTE-capable iPhone 5.

As more customers upgrade to LTE devices, more of Verizon’s data load moves over to its high-capacity networks: 54 percent of its data traffic is now on LTE, compared to 50 percent in the fourth quarter.

The mix of Verizon’s mobile subscribers is also getting interesting. It’s been moving a big chunk of its customer base over to its new shared data plans since it implemented the tiers last year. About 30 percent of Verizon’s accounts are on a Share Everything plan, and the carrier is averaging 2.67 devices per account. But Verizon also acquired 43,000 net new prepaid subscribers. That’s not a huge number in the world of prepaid, but Verizon has been focusing a lot more attention on the budget segment lately, particularly as its 3G network starts to empty.

Shammo said that while Verizon isn’t getting overly aggressive in prepaid, it’s by no means ignoring it. “We will look for niches in which we can make an impact,” he said.

On the wireline side, Verizon continued to recalibrate its business toward FiOS. Its fiber service now accounts for 69 percent of all consumer revenue. Verizon added 188,000 FiOS internet subscribers and 169,000 TV subscribers. Meanwhile, Verizon shed another 89,000 DSL subscribers.

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Apigee manages, monitors and optimizes mobile application programming interfaces (APIs), which act as the glue connecting technologies, services and data sources across networks. So far Apigee has focused on the mobile industry, attempting to whip into shape the different network APIs used by hundreds of different carriers and present them to developers as a simple common interface.

Now Apigee plans to go after other industries such as healthcare and the airlines. Those industries have a lot of useful information, from frequent flier miles to health records, that developers would love to access if only it weren’t so fragmented. On Thursday Apigee announced what it’s calling the API Exchange, which essentially takes the model it’s devised for telecom and applies it to any other industry.

Healthcare companies and airlines actually have a lot in common in mobile carriers, said David Andrzejek, who heads up the Exchange for Apigee. Their industries are highly regulated and dominated by multiple, very large, vertically integrated companies using proprietary technology that is unfathomable to all but the most committed developer. “The barriers are normally just too high for any developer to build anything against,” Andrzejek said.

For the mobile carriers, the problem has always been that developers couldn’t just tap into a single API to use their location, presence or payment services – developers have to tap into the separate APIs of hundreds of carriers around the world. Consequently no developer wanted to deal with carriers, further marginalizing them. The mobile industry spent years trying to develop a common set of APIs that would present a unified front to the developer world. They failed spectacularly.

When Apigee took over the GSM Association’s OneAPI program, it pretty much gave up on the dream of standardizing under a single set of carrier APIs (which makes the program’s name a bit outdated). Instead, Apigee took to connecting all of the carriers’ different APIs to a single platform and then translating them into a single meta-interface that any developer could hook into. At Mobile World Congress this year, Apigee and the GSMA presented the initial fruits of that labor: an identity-management API any app developer could use to authenticate users via their phone numbers.

It’s still early days for the OneAPI project, but Apigee feels it’s learned enough dealing with the fickle mobile carriers to take on other big complex industries. Just like the carriers, airlines and insurance companies haven’t standardized under any common APIs, and for competitive reasons they’re unlikely to do so.

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Customers who buy a device from T-Mobile through one of its financing plans (for instance, the iPhone 5 can be had for $100 up front and 24 monthly payments of $20) will still get locked devices. But T-Mobile CMO Mike Sievert said whenever a customer finishes paying off his or her financing plan, T-Mobile will unconditionally unlock the device.

Earlier this month, I wrote that the phone locking was a symptom of the broken subsidy model used by carriers. T-Mobile is now fixing the subsidy system, but it’s not ending the practice of locking. What gives?

Well, the answer is a bit nuanced. Instead of diving headlong into the murky depths of full-cost devices, where customers wind up fronting the costs of a $500 or $600 smartphones on day one, T-Mobile is easing customers into the model with interest-free financing plans.

Though it’s separating the device from service plan – and eliminating the contract in the process – T-Mobile is still on hook for the device cost, and it wants ensure that its customers won’t take their new iPhone or Galaxy S 4 and then bolt to another carrier. As with any loan, customers are still bound by financing contract, but T-Mobile wants extra insurance that they won’t renege.

T-Mobile USA CEO John Legere

At the event on Tuesday, T-Mobile went to lengths to explain that it is against the idea of locking all phones for the mere sake of binding customers to a specific carrier. In fact, T-Mobile hopes to benefit enormously from an unlocked device market, said T-Mobile USA CEO John Legere. He’s hoping AT&T customers will take their out-of-contract and unlocked devices over to T-Mobile, giving them a second life on T-Mobile’s network.

Legere also said that T-Mobile is a strong advocate of device portability — Customers can take an unlocked phone to T-Mobile for a month, and if they’re not happy they can move on to the next carrier. T-Mobile expects to win out in any head-to-head contest with a major carrier over unlocked devices because it won’t be factoring contract subsidies into its pricing plans. “The rate plan is just going to be about the service,” Legere said.

With that philosophy in mind, T-Mobile will unlock any device as soon as the customer’s financial obligation for it is over. If a customer buys a phone up front, T-Mobile will unlock it, Sievert said. If they accelerate their financing agreement and pay the phone off early, then T-Mobile will unlock it, Sievert said. If they return the phone to T-Mobile before the contract ends, T-Mobile will credit their financing agreement with the current market value of the device, Sievert said.

It’s not an ideal situation. There are uses for unlocked phone even if you’re sticking with your service provider – traveling overseas for instance – but I can understand why T-Mobile is imposing the locking practice. Ultimately it seems that if we want to be free of the carrier yoke entirely, we’ll have to start buying our devices outright.

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I don’t know for certain what will emerge at the event tomorrow, but I expect we’ll hear at least one, if not all, of the following three revelations:

T-Mobile finally gets the iPhone

The build-up to this single handset announcement has been endless, but tomorrow may well be the day that T-Mobile officially becomes an iPhone retailer. T-Mobile has confirmed the iPhone is coming. It just hadn’t set a date.

According to CNET’s sources, the iPhone will play a prominent role at tomorrow’s event. That’s sweet, but T-Mobile really needs to give specifics on availability and pricing tomorrow or it really shouldn’t even bother mentioning the iconic Apple device. Practically every discussion about T-Mobile USA for the last two years has revolved around when or if it would get the iPhone. As T-Mo has made abundantly clear, it’s getting the iPhone. The only thing we want to know is when we can buy it.

LTE goes live

This one is almost a given. T-Mobile has promised we’ll see a live LTE network this month, and there are only a few more days left in March. We’ve already seen a big spike in LTE testing activity in eight major cities across the country, and TMoNews has obtained internal documents indicating T-Mobile will launch in seven markets this week.

Either way, the carrier is well ahead of schedule. After its planned merger with AT&T flopped, T-Mobile launched an ambitious spectrum-refarming project designed to give it an LTE network in the second half of 2013. The impending launch of the iPhone, however, gives its LTE rollout new urgency since it wants to support the iPhone 5’s full radio capabilities as soon as it goes on sale.

Death to all device subsidies

New CEO John Legere has promised T-Mobile will remake the mobile industry by ending its long practice of heavily discounting devices in exchange for long-term pricey service contracts.

T-Mobile USA CEO John Legere

We’ve already seen the basic framework of that strategy emerge over the last year in T-Mobile’s Value plans, which still require contracts but offer much lower voice and data rates. Over the weekend, T-Mobile revamped its Value plans once again, making unlimited voice and SMS standard on all pricing tiers.

What we’re still waiting to hear about are the specifics of T-Mobile’s big strategy – to see whether it can truly separate service from the handset. Many operators have complained about the subsidy system in the past, but so far T-Mobile is the only major U.S. carrier to do anything about it.

What I’m waiting to see is whether T-Mobile truly follows through on its commitment to eliminating subsidies completely or if it just maintains its current policy of offering unsubsidized plans as an option. If it’s the former, T-Mo would take a huge risk, but it could change the U.S. mobile industry for the better.

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The details of this information remain sketchy, although the report suggests that French carriers are concerned that Apple’s contracts hold back competition by setting excessively high quotas for iPhone sales, thereby making it difficult to assign marketing resources to rival smartphones. While no one is forcing the operators to sell the iPhone, they really want to do so because customers want it, and that means agreeing to Apple’s demands. The terms of such contracts are always secret.

Here’s a statement sent out on Friday by Antoine Colombani, spokesman for Competition Commissioner Joaquín Almunia:

“The markets for smartphones and tablets are very dynamic, innovative and fast-growing. Samsung’s growing market position and the success of Google’s Android platform are good reasons to believe that competition is strong in the markets for smartphones and tablets.

“The Commission has been made aware of Apple’s distribution practices for iPhones and iPads. There have been no formal complaints, though. The Commission is currently looking at the situation and, more generally, is actively monitoring market developments. We will intervene if there are indications of anticompetitive behaviour to the detriment of consumers.”

I find it hard to believe this will come to anything. As the statement suggests, iOS devices are not the only game in town — in fact, the iPhone only has around 25 percent share of the smartphone market across the five biggest European economies. Apple certainly has a lot of weight to throw around in the mobile market, but nowhere near enough as to constitute a monopoly.

A good (though not perfect) point of comparison here would be Intel, which found itself the subject of a $1.45 billion EU fine back in 2009 for abuse of its dominant position. Intel, which utterly dominated the x86 processor market as it does now, gave secret kickbacks to computer manufacturers and retailers for not stocking AMD-based products. It even paid manufacturers to delay or cancel the launch of non-Intel products.

That was a clear-cut case of illegal practices, hurting consumers by limiting their choices. It’s hard, if not impossible, to argue that consumers in the EU do not have easy access to non-Apple mobile devices. In the Intel case, those manufacturers and retailers did not seriously have the option of telling the chipmaker to show itself the door. In this Apple business, the anonymous carriers in question could likely have done what U.S. Cellular did, and just not stock the iPhone. There are plenty of alternatives.

I suspect that the carriers in this situation are simply trying to weaken Apple’s hand in contract negotiations, and that the Commission is highly unlikely to step in and help.

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All of that legislation and bluster, however, isn’t going to solve the fundamental problem that produced the practice of locking devices in the first place: handset subsidies.

There’s a reason why carriers lock phones. They’re heavily discounting the cost of most devices, which is why you can get a $500 smartphone for $100 and many mid-range and low-end handsets for free. Carriers make their money back through monthly subscription fees that factor in those subsidy costs. For carriers to get the full value of the phone back, subscribers need to finish out their contracts, and locking devices to their networks functions as their insurance policy. It’s a hell of lot easier than repossessing phones.

The bottom line is most consumers don’t really own their phones. They’re mortgaging them. Just like you can’t sell your home without paying off your bank loan, carriers don’t want you selling your phone or taking it to another carrier without finishing your contract and paying off your handset loan.

Thus, we’re left with the locking mess, which leads to all of the problems pointed out by locking’s critics: Having to jump through hoops to get your carrier to unlock a phone when your contract is up, the inability to use another carrier’s SIM card when traveling overseas, and the difficulty of building a resale market for phones when the majority of devices are locked.

Why unlocking phones doesn’t solve the problem

Making it legal and easy to unlock phones might seem like an easy solution to this problem, but I guarantee you carriers will find some other way to protect their investments. Carriers could require deposits, implement some kind of collateral fee, institute more onerous contract restrictions, or they could simply raise prices. If carriers start losing money when customers skip out on the contracts, you can bet the customers that remain will have to make up the difference.

I’m not saying it’s right. I’m just saying that in this messed-up subsidy system, everyone is trying to protect their own interests. Consumers will try to unlock their phones, and carriers will try to stop them.

If we get rid of subsidies completely, though, all of those conflicting interests go away. Once you separate the service from the device, carriers have no interest — and no right — to lock devices. You may still be under contract, but since there is no subsidy recovery fee bound up in your monthly bill, carriers could care less what you do with your device.

Of course, paying full price for your phone is an expensive proposition. An unsubsidized iPhone 5 costs between $649 and $849, as opposed to the $200 to $400 most carriers charge with contract. But in the long run buying your phone up front will probably save you money. T-Mobile has been a trailblazer in this area, charging cheaper monthly rates for voice and data if you don’t opt for a phone subsidy. What’s more, once subsidies are gone, handset makers will be able to sell their wares directly to consumers, which could lead to a greater variety of devices and more price competition in the device market.

Ultimately, mobile voice and data rates are so high because our phones are so cheap — artificially cheap. If we reverse that equation, we wind up with cheaper subscriptions, more choice and phones we can do with as we please.

What can you do with an unlocked phone?

Unfortunately, having an unlocked device doesn’t leave you with too many options in the U.S. If you travel internationally with a GSM-capable phone you can plug in a local carrier’s SIM card and pay local rates. But in the U.S. itself there isn’t much mobility between carriers.

U.S. operators are split between GSM and CDMA camps, and while it is possible to activate a Verizon phone on Sprint’s network or bring an AT&T device to T-Mobile, there’s no guarantee that you’ll have to access every network or service they offer. U.S. carriers don’t just use different radio technologies, they use different spectrum bands. The band fragmentation problem got even worse with the introduction of LTE.

But there are signs that things will get better. T-Mobile is in the process of overhauling its network, aligning its 3G bands with those of AT&T. In 4G, we’re starting to see some LTE network convergence around the Advanced Wireless Services (AWS) band. We’re even seeing more dual-mode GSM-CDMA devices making their way into the market.

With emerging smart antenna and radio module technologies, handset makers will soon be able to pack a dozen bands into a single device. Eventually we might even see a universal phone in the U.S. that can work on any carrier’s networks, no matter what combination of technologies and frequencies they use. And if that point we’re no longer weighed down by subsidies, contracts or locked devices, consumers will be able to switch to any operator at their whim. That’s not a bad choice to have.

Mortgage image courtesy of Shutterstock user Stuart Miles; Smartphones image courtesy of Shutterstock user Reno Martin; SIM cards image courtesy of Flickr user mroach

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According to a new report from Chetan Sharma Consulting, data accounted for 44 percent of all U.S. operators’ service revenue in the 4^th quarter, and the rapid transition from dumb phones to smartphones is driving that number upwards. Meanwhile, unlimited talk plans are proliferating even as voice plan pricing is falling. That’s causing average voice revenue per subscriber to drop.

Eventually the rising data line and falling voice line will intersect on the industry’s revenue graph. Sharma plots that meeting point in the 4^th quarter of 2013, at which point operators will start to look more like ISPs than phone companies.

I wouldn’t expect an overnight transformation once they pass that halfway mark, but it’s fair to say carriers will start behaving differently as the economics of the mobile market shift. Operators will most likely attempt to accelerate their gains in data, while de-emphasizing voice even more.

Voice revenues are actually declining faster than data revenues are growing. For every 48 cents in new data revenue operators raked in the fourth quarter, they lost 64 cents in voice revenue, Sharma found. To make up for those losses, they will try to upsell their customers on data plan tiers and — in the case of AT&T and Verizon at least — try to force more of their customers off grandfathered unlimited data plans. They will also try to swing more of their customers toward smartphones and tablets and migrate more subscribers to new LTE networks — both of which will drive more data use.

Carriers won’t have to prod their customers too much. While the 4G-connected tablet market is still slow, smartphones accounted for 84 percent of fourth quarter handset sales in the U.S. In just two years, Verizon has moved 21.6 million subscribers over to its LTE network. Simultaneously the typical consumer’s hunger for mobile data is only increasing.

“The smartphone data consumption at some operators is averaging close to 1 GB/mo,” Sharma wrote in the report. “Some devices are averaging close to 2 GB/mo. As we move into 1GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount.”

The swift decline in average voice revenue per subscriber will matter less and less to operators as data takes over, as voice will account for far less of their overall revenue. In fact, you’ll probably see a complete shift in the way operators treat voice and data in their pricing plans from what we saw five years ago. When voice and SMS were king and queen, operators had variety and sophistication in their pricing tiers, while data plans were a commodity — for an additional $15 to $30 a month you got as much as you wanted.

Now voice and SMS have become the commodity, increasingly available only in unlimited packages, while data plans have become more and more granular. Verizon and AT&T have taken the ultimate step toward commoditizing voice and SMS, making them unlimited-use features standard in their family plans, just like voicemail. I suspect that this trend will not only continue, but voice prices will drop further as carriers put all of their chips into selling data.

We won’t just see more and increasingly larger data tiers, but operators will begin creating specialty plans to differentiate between different types of data, just as they created nights-and-weekends and friends-and-family plans in the boomtown days of voice. Customers will be able to buy plans that give them unlimited access to IP communications services or social networking. They could choose to pay extra fees each month to access faster speeds than their neighbors.

If there is a way to slice and dice data into an appealing tiered plan, operators will figure out how to do it. Once they pass that halfway mark, there’s no looking back. They will become mobile ISPs with voice businesses on the side.

Eclipse photo courtesy of Shutterstock user Igor Kovalchuk; Buffet image courtesy of Flickr user Wesley Fryer

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To accomplish this the GSM Association launched a new initiative called the OneAPI Exchange at Mobile World Congress in Barcelona. The idea is to create an application programming interface (API) that any mobile app developer can use to authenticate new users against a carrier’s subscriber identity data. So far AT&T, Orange, Deutsche Telekom, Telefónica and Vodafone have all signed on to the program, and together they represent a healthy chunk of the world’s mobile subscribers.

At first glance, the initiative seems like a nifty idea. If there is one thing every mobile subscriber in the world has it’s a phone number, making it ideal as a universal credential. But operators are also hoping to be more than just a username replacement. In a demo at Mobile World Congress, the GSMA showed off a bike rental app, in which carrier data was used not only to identify the user, but verify location and charge the rental to the customer’s mobile bill.

Obviously carriers are looking to make themselves relevant once again in the applications market and take a cut from any mobile transaction. This time they actually stand a chance of succeeding. Unlike previous API initiatives, the GSMA has actually figured out a way to make OneAPI near universal. Instead of tapping into separate APIs and crafting separate business agreements with every operator, developers just have to build to one API and strike one carrier deal, but the identity feature will work across all carriers’ networks.

The development house that built the OneAPI Exchange, Apigee, wasn’t able to eliminate the widespread fragmentation among carriers’ API platforms, but it rather ingeniously found a way around it. Apigee’s head of marketing, Dave Jordan, explained that the exchange acts as universal bridge between the operators’ disparate network interfaces.

A developer just picks a single operator to deal with and then builds to that operator’s API, Jordan said. If the app is downloaded on a different operator’s network the exchange will automatically map that carrier’s API onto the app, he said. For instance, if a developer were to pick AT&T’s API, any Orange or Telefónica customer could log in to the app using his carrier’s credentials, but AT&T would federate all of the transactions across those networks.

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