This is no mere transfer of network title, though. Sprint plans to shut down U.S. Cellular’s network completely some time in those two metropolitan regions in the next several months (Champagne, Ill., and South Bend, Ind., will also be affected). And despite the fact that U.S. Cellular’s systems uses the same CDMA technology in the same PCS frequencies, Sprint isn’t supporting its existing handsets. All of those customers must either start over with new devices and new service plans on the Sprint network or go find a new mobile operator entirely.

Sprint Regional VP for the Midwest Kevin Gleason told GigaOM that Sprint planned to make the transition as easy as possible for U.S. Cellular’s customers by offering them plenty of incentive to move to Sprint.

“I believe our recapture rate will be high,” Gleason said. “We’ve already started communicating with them and several of them have already made the switch.”

Sprint has sent out an initial batch of letters notifying them about the transaction but Gleason said Sprint will soon follow up, detailing the timing of the network shutdown and the discount offers Sprint is making to draw those customers under the Sprint umbrella.

While Gleason wouldn’t give any specific details on the exact amount of the discounts, he said they would take many forms: device discounts over Sprint’s usual subsidies, trade-in fees for older phones, porting credits for making the switch and activation fee waivers.

Many customers will be able to get new phones and comparable service plans without having to pay a dime, he said. Many will also be able to upgrade to fancier devices such as the iPhone 5 or Samsung Galaxy S 4 for a much lower than price than other customers would pay, Gleason said. He added that switching customers would also have a great deal of flexibility in plan choices, since Sprint is extending the discount offers to its Boost Mobile and Virgin Mobile prepaid brands as well.

In general, Sprint and U.S. Cellular’s contract plans are comparable, and in the case of its unlimited data plans, Sprint is actually cheaper. But depending on the circumstances, not every customer will be getting an equitable deal.

For instance if you happen to have just bought a new high-end smartphone or tablet, Sprint incentive discounts won’t cover the full cost of replacing it. What’s worse is that brand new smartphone essentially become useless in a few months when the Chicago and St. Louis networks go dead (though it would work on U.S. Cellular’s other networks). Some customers may also balk at the idea of signing new two-year contracts if they want to take full advantage of the discount offers.

Gleason acknowledged that some customers will feel like they’re getting a raw deal, but he expects those cases will be kept to minimum. He pointed out that 60 percent of U.S. Cellular customers in affected cities have let their contracts lapse and the large majority of them use feature phones. Those subscribers are ripe for an upgrade, he said.

That’s one of the main reasons why U.S. Cellular opted for a wholesale replacement of U.S. Cellular’s networks and devices, rather than a gradual phase out like Sprint is doing with its Nextel iDEN network, Gleason said. So many of those U.S. Cellular devices are old or obsolete that it decided to start fresh with phones optimized for Sprint’s new Network Vision architecture, which boasts the most up-to-date CDMA and LTE technologies.

We’ll know more details about the sunset timeline and the specific discounts in the next couple of weeks. And if you’re a Chicagoan, you’re probably wondering what will happen to the name of U.S. Cellular Field, the home of the White Sox, now that the carrier is leaving the city. Well, it won’t become Sprint Field. Gleason said U.S. Cellular is keeping the naming the rights.

U.S. Cellular Field hoto courtesy of Shutterstock user Alan Mars

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And yet, we are glad to use Verizon’s tagline, “Can you hear me now?” all the time. In fact, we think of Verizon as the paragon of phone call quality in this country. And the reason we do that is because we have very low or little expectations from the voice experience. It is virtually impossible do have a decent conversation these days on any device. Calling mom via AT&T long-distance? The good news is that I don’t have to hear what she has to say about my marital status.

Calling my sister on the phone in Midwest on what is a Verizon-to-Sprint call is like playing a guessing game. Dropped calls on an AT&T network are routine. The blame goes squarely on carriers not investing enough in their voice infrastructure; instead, they invested all their dollars on data, which is essentially a big giant ATM machine for the mobile operators. The IP-ization of voice only added to the declining voice quality.

Thanks to constant complaints from consumers, availability of more bandwidth and, of course, new technologies, we can hope that those days bad calling experience are behind us. We have the emergence of what we’ll call HD, or hi-def voice, to thank.

What’s the reason for my optimism? Some recent developments:

• Skype recently introduced Opus, a new codec that it will use as part of its service and is also making it available for others to adopt. It is now an IETF standard. Skype argues that Opus is better quality than other existing codecs. They offer test results, but frankly like anything, we better believe our own ears than take word of a company that considers clutter to be a great user interface.
• Google is pushing its own hi-def codecs as part of Google WebRTC. Could it eventually find its way into Android? Maybe.
• But the biggest development came this week when Apple announced what it calls “wideband audio,” which is its attempt to create a better call experience. Apple announced that it was initially working with 20 carriers across the globe and I am guessing more and more will join in the future.

 In 2009, columnist Dan Berninger wrote:

iPhone and the Apple App Store may have set a new standard for design and availability of mobile apps, but the iPhone operates within the same decades-old voice quality constraints as other handsets. Indeed, the rapid pace of handset innovation does not change the fact that AT&T, BT, Telefonica et al cannot improve voice quality.

Apple has been good at pushing new technologies at scale. And thanks to the fact that iPhone is still a must sell-device for the carriers, we can expect wider adoption of wideband audio. We have been crying for HD voice for a long time. As Dan further observed, “people will embrace the HDVN as they experience the benefits of improved voice quality in contexts that involve emotional content.”

We agree. Earlier this year, my colleague Kevin Tofel played around with Bria for Android and was amazed by the wideband audio calls he was able to make. He shared his impressions with readers and like him, I cannot wait for improved quality of voice. Perhaps, maybe once again, voice will sound like voice and be as reliable as that BMW.

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According to a report this week from Open Rights Group and the London School of Economics, many local mobile operators are using aggressive — but haphazard — child protection filters by default, leaving adult customers unable to see perfectly ordinary websites instead of preventing kids from accessing adult material.

As the report says (PDF):

“There are serious consequences to badly implemented, default child protection blocking systems. They include restrictions on markets, censorship, a failure to address young people’s diverse needs and a false sense of security for parents.”

The document outlines more than 60 reported cases where websites have been erroneously flagged as containing adult content — and these are just the small number of cases reported to the Open Rights Group’s blocked.org.uk complaint service.

This really isn’t just an oddity. I regularly run into blocks when browsing news or data online on my phone, which is on a business tariff with Vodafone — surely a product most kids wouldn’t be using.

And in fact, just yesterday we received a message saying that the adult filter for France Telecom-owned Orange was blocking GigaOM.

Now, I know we’re a site for grown-ups, but that’s just silly.

If your operator is deciding on your behalf that what we write is off limits — including now, of course, the fact that we’re telling you that these blocks are faulty — then there’s really no reason to suspect it couldn’t happen to anybody, at any time.

Spreading censorship

And it’s not just in Britain, either. This sort of approach is happening all over Europe, in a variety of ways.

In a piece for Foreign Policy, the author and activist Rebecca Mackinnon outlines some of the incursions being made — and points out that, crucially, none of this is happening because of regulatory pressure.

“This type of problem is serious enough, in enough countries, to have made its way to the U.N. Human Rights Council. Last year, the U.N. special rapporteur on freedom of expression, Frank La Rue, delivered an official report to the council that not only condemned the censorship and surveillance practices of authoritarian countries, but also warned of dangerous trends in the democratic world that threaten citizen rights to free expression in the Internet age.

“One of his major concerns is ‘over-broad private censorship, often without transparency and the due process of the law’. He singled out two examples of how governments are, ironically, using law to delegate enforcement responsibilities and functions to the private sector: Britain’s Digital Economy Act, which could potentially disconnect Internet users suspected of illegal downloading, and France’s similar ‘three strikes’ law.

The result of all this?

In the name of protecting us, mobile operators are now becoming the de facto censors of the web, whether we’ve asked them to or not.

Photograph copyright Shutterstock/Pixel 4 images

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Will domestic and global mobile operators like AT&T, Vodafone, Telefónica and others “play ball” with Apple? Many in the U.S. were surprised six years ago when AT&T capitulated to Apple’s terms to become the first carrier to offer the iPhone six years ago. Conventional wisdom is that the struggling operators compromises, not a leading operator like AT&T. But Apple makes everyone “think different.”

And in hindsight, the first iPhone deal was a brilliant strategy that has continued to pay huge dividends to AT&T. In the last quarter just reported, four out of five smartphones AT&T sold were iPhones.

Apple changed the formula of the relationship between operator and handset vendor, with Apple having more bargaining power than the operator for the first time in mobile history. And that’s the point.

Apple will make an offer carriers can’t refuse

Today, mobile operators would have a hard time saying “no” to the world’s largest and fastest growing company, which builds the devices everyone wants. Apple tends to have its way with operators. Any reluctance on the carrier’s part to offer Apple a sweetheart wholesale deal would be outweighed by the huge business opportunity presented. It’s a classic case of “The Prisoner’s Dilemma.” The carrier’s biggest fear is that if it says “no”, the business and growth would go to a competing carrier and it would be kicked the curb.

It’s no secret that Apple has been thinking about this strategy for some time. Apple filed a patent for “Dynamic Carrier Selection” on October 10, 2006, just a few months before Apple announced the first iPhone. The diagram in the patent application portrayed Apple as the wireless service provider connecting to multiple carriers. This would allow Apple to make wholesale cellular agreements with and connect to multiple carriers so it could offer its customers choices in carriers, plans and services. Apple has clearly put a lot of thought into its dynamic carrier selection architecture.  And lest anyone think Apple isn’t serious about this, last June Apple extended the filing in what many considered confirmation of its plans.

Adding further fuel to the fire, Apple recently has been fighting with other handset vendors, including Nokia, over a new, smaller-sized SIM card for GSM and LTE handsets. According to some, such a SIM would allow Apple to bypass carriers entirely, and activate a new customer through the iTunes Store. Whether it uses the NanoSIM, virtual SIM or other variant, Apple could have the ability to activate and sell voice, data, messaging and roaming subscription plans before the ink dries on a carrier wholesale agreement.

Apple has all of the pieces necessary to offer wireless service directly to customers. They have the world’s leading brand, a loyal following who will pay a premium for Apple’s products and services, and 363 retail stores around the world, growing to 400 by the end of the year. And with iTunes, it has the digital content and billing platform to offer service with one-click simplicity. The infrastructure is in place today, with the patented architecture ready for Apple’s next big move.

iPhone customers typically spend as much as twice or more the U.S. national average monthly wireless bill, which was about $44 in the last year. So these are high value customers. And they buy apps and content – music, videos, TV shows and movies – through Apple today. By offering mobile service with iPhones and iPads, the company could provide the full Apple experience to its users.

How likely is this to happen? Given the patent filing more than five years ago, it wouldn’t surprise me if Apple is already talking to mobile operators, nor would I be surprised if the mobile operators initiated the conversation.

And what about Google?

Might Google offer mobile service directly to its customers, for the rumored Google Android Tablet or any Android smartphone? With Google acquiring Motorola Mobility, it, too, will be able to manufacture handsets to its own specifications. But it won’t be nearly as easy for Google to follow Apple’s likely path. While Google has a great brand — number two in the world and second only to Apple — it doesn’t have the retail stores, the experience with subscription services, and the customer care that Apple offers. Nor does it have the elegant ecosystem that enables single-click app and content purchasing that Apple has through its iTunes Store.

Whitey Bluestein, a 25-year telecom veteran, is a strategic advisor and corporate development specialist focused on prepaid, applications, payments and services. For more information, go to http://whiteybluestein.com

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For instance, if an operator wants to see how a new high-profile smartphone is interacting with its network, it can have every one of those devices send back detailed radio signaling data, which an operator could use to fine-tune future versions of the device. Or, if an operator expands an LTE network in a particular market and wants to optimize its coverage, it can order all LTE devices to send back specific logs on cell-to-cell hand-over and dropped data calls.

Those are both examples Carrier IQ provided, but it’s not hard to imagine an operator using IQ Agent’s huge menu of available metrics to gather marketing data on their customers. Carrier IQ readily admits its software can track URLs visited, when applications are activated or deactivated or when IP data sessions begin and end. So if an operator wanted to test the viability of a new social media data plan, it could track how often a subset of its customers access sites or apps like Twitter or Facebook versus communicating via SMS. The operators have a lot of demographic data about their customers, which they could easily marry to the near-real-time device and network information it collects from IQ Agents. There’s a potential market research bonanza buried in that app.

Taking the operators at face value

I’m not saying the operators are collecting this kind of market research on their customers, but the capability is definitely there, and Carrier IQ isn’t throwing up any barriers to accessing that goldmine. Part of the standard kit it provides to every operator is a Market Service Intelligent Platform (MSIP), which gives carriers a fine degree of granularity in determining what data to collect and how to analyze it. If an operator wants to implement a specific case study, it merely has to select the types of customers or devices it wants to gather information on – or even select individual customers – and the MSIP reaches out to devices, updating their IQ Agent profiles to start retrieving the relevant data. Of course, Carrier IQ wipes its hands of any responsibility for how operators use the platform, which to me sounds like a cop-out. It just gave the operators the gun; it didn’t tell them at whom to point it or to pull the trigger.

In the U.S., AT&T, Sprint and T-Mobile have all admitted to using Carrier IQ (Verizon does not), but all have stated they use IQ Agent solely for diagnostic and troubleshooting purposes. If we take them at face value, you could construe this kind of targeted monitoring as harmless. Carrier IQ gives operators the ability to collect hundreds of individual metrics from every device. But rather than sending massive batches of data from every device, they only need to collect the information pertinent to a specific optimization or diagnostic issue. Why fill up databases with billions of useless data points if you only need a few specific metrics?

But these types of targeted analytics do escalate the creep factor of the Carrier IQ controversy. I’m already uncomfortable with the idea of my operator collecting data from my device without my knowledge, even if it is only for diagnostic purposes. If my operator is “activating” my phone at random intervals to serve in one of its ad hoc focus groups, then I would be doubly freaked out. I suppose I could accept this if my operator were more upfront about it and gave me the option to opt out. But if my operator is using all of Carrier’s IQ capabilities to turn me into an unwitting guinea pig for mobile market research, well, then it’s time to switch to Verizon, MetroPCS or any other operator that disavows Carrier IQ.

What else Carrier IQ is saying (and not saying)

There’s one other item in the Carrier IQ document worth noting: The company acknowledged it actually was sending some tex- message content back to the operators, but this was due to a bug in the software. When IQ Agent is set to track signaling data, it sometimes accidentally captures SMS messages, which are also transmitted over the over the network’s signaling channel. This only happened when an SMS was sent or received during a data session or voice call. In any case, the content of the SMS is still encrypted in the signaling log. Carrier IQ said it’s fixing this bug, but it’s a moot point really. If operators really wanted to read your text messages, they’d just intercept them as they passed through their own SMS routing infrastructure.

While Carrier IQ’s document was highly detailed, it still didn’t address the issue of its non-operator relationships. Carrier IQ hinted at other business models in the document, but it didn’t come out and say whether it was distributing its IQ Agent at the behest of any handset vendors or independent research firms. Carrier IQ did say it wasn’t selling or sharing the operators’ data to any other entity, though it hosts some of that data on its own servers. But that still doesn’t answer the question of whether Carrier IQ is collecting information independently for other companies.

Apple has already admitted to using Carrier IQ on the iPhone, and Nielsen has some sort of data sharing partnership with the company. There’s also evidence Carrier IQ has shopped its platform to other research firms. The Yankee Group told us it considered buying Carrier IQ metrics at one point, but ultimately decided against it. While Carrier IQ is being transparent about the carrier side of the business, there’s still a big aspect of its business model that remains opaque.

Image courtesy of Flickr user jurvetson

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Yankee Group research director Sheryl Kingstone concluded that Carrier IQ and its partners did a horrible job when it came to the public implementation of its diagnostic platform, but she found that there was no nefarious intent behind it. The report also states that keystroke-logging tool found rooted in the depths of Trevor Eckhart’s HTC smartphone was not Carrier IQ’s phone performance monitoring software, but rather a factory testing app that HTC failed to deactivate before shipping.

If Carrier IQ had done a better job at educating customers about the presence and purpose of its app, it might have been welcomed by the public, rather than sued, Kingstone said. The Yankee Group’s consumer survey found that 85 percent of mobile phone using respondents wanted their operators to have access to detailed information about their device’s performance when they contacted a call center with a problem.

Yankee also asked what consumers’ expectations were when they called their operator with a problem. The top three answers were: 1) fixing the problem immediately, 2) remotely diagnosing the problem, and 3) empowering the call center agent to remotely fix it. If you go by Yankee’s data, consumers don’t just want their operators to know what’s going inside their phones, they want them to actively poke around inside whenever there’s a problem. Here’s what Kingstone said on Yankee’s mobile blog:

“It’s an issue of transparency, not malicious intent. Carriers — and especially consumers — want the best possible customer experience, and Carrier IQ’s software aims to do just that. Where it, and device vendors and carriers, erred was in their lack of transparency and failing to enable end-users to opt out of the service. If they had taken the opposite tack, revealing the existence of the software to end-users and providing them a potential option to opt in to ensure a better level of care, there would be no controversy, just better customer service. And that would be a win-win for all involved.”

Carrier IQ needs to be honest about its business model

I agree with Kingstone’s conclusions, so long as Carrier IQ is used only as a diagnostic tool. Networks are complicated things that require endless fine tuning, and on-device performance testing would be critical tool for optimizing those networks. I’d prefer my operator to let me know it’s recording actions on my phone, and then give me a chance to opt out, but the truth of the matter is my operator already knows plenty about me even without software like Carrier IQ’s. It knows where I am, where I’ve been, every SMS I’ve ever sent and every person I’ve ever called. We consumers have no problem with this, otherwise we would have freaked out the first time we ever saw our highly detailed phone bills.

But Carrier IQ is doing more than just selling network diagnostic info to operators, it’s selling — or at least trying to sell — to marketing analytics companies, which don’t own networks to diagnosis. Nielsen is working with Carrier IQ to integrate its device performance data with its own mobile metrics, though it will only to do so only on an opt-in basis, just as it recruits participants for all of its other measurement panels.

And Carrier IQ is definitely shopping its service around to other marketing and analysis companies. Kingstone said the Yankee Group last year investigated the possibility of buying data from Carrier IQ and other network measurement firms, but ultimately decided against it — the data was too technical to be of any much use while privacy concerns would have required Yankee to seek explicit permission from each consumer involved, she said. (The Yankee Group said that it has no current or former relationship with Carrier IQ.)

When Carrier IQ says it’s only selling data to the operators it’s either straight-up lying about the full extent of its business model or its misleading the public about its future intentions. It’s very possible this side business is innocuous, requiring explicit permission from the owner of any phone Carrier IQ tracks. Even if that’s the case, Carrier IQ needs to be upfront about that business model. Hopefully we’ll know more next week, when Carrier IQ is expected to respond to U.S. Senator Al Franken’s (D- Minn.) very detailed questionnaire about its activities.

Who else will get caught in the fallout?

Meanwhile, the voices calling for Carrier IQ’s head are growing deafening. On Friday Google CEO Eric Schmidt condemned the company at a conference in the Hague, saying that Google not only disapproved of Carrier IQ’s implementation into Android – it can not be uninstalled or de-activated – or the company’s methods, which he described as keylogging, the Telegraph reported.

Carrier IQ will most likely become a casualty of its own controversy, but whom else will it drag down? In a GigaOM Pro report, Stacey Higginbotham examines what other entities would suffer (subscription required) if Carrier IQ’s monitoring software winds up being more than it claims to be. Operators’ already fragile reputations are on the line, but Stacey concludes that consumers could wind up being the biggest losers. As faith in the operator and handset vendor erodes, consumers will be less likely to embrace new technologies and services that require a degree of trust to function. Emerging industry like mobile payment and finance as well as telemedicine could be the first casualties.

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BelAir today took the cover off of a new set of Wi-Fi controllers designed to scale metro networks into hundreds of thousands of access points, delivering far more capacity than even the operators’ most data-hungry customers can consume. Operators can then take that excess capacity and sell it to their mobile virtual network operator (MVNO) partners, ISPs, third-party hotspot providers, even their competitors if they choose, said Ronny Haraldsvik, chief marketing officer at BelAir.

Sharing Wi-Fi access points certainly isn’t a new concept, as operators augment their networks with capacity from hotspot aggregators worldwide such as Boingo and iPass. But BelAir proposes to reverse the business model. Rather than rely on the existing network of coffee shops, convention centers and airports — which aren’t the only places mobile operators need capacity — they can build outdoor and indoor networks focused on where their customers consume the most mobile data. Operators can then turn around and sell excess capacity to whoever wants it, whether its Boingo looking to expand its footprint or Cablevision looking to bulk up its free Wi-Fi service for cable broadband customers. Operators could even become wireless ISPs, selling metro Wi-Fi connectivity to those iPad and Android tablet customers who aren’t buying the 3G and 4G services they’re selling. Carriers resell voice and data all the time to other operators in the form of wholesale partnerships and roaming agreements. Why not do the same with Wi-Fi?

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But why wouldn’t they be? Thanks to apps such as Twitter, texting or even email we are assured that someone is out there on the other end, listening and caring about us. And if the repercussions of such easy and electronically limited socializing mean that we have less time for reflection, or less time for dull or difficult conversations with those who are standing right in front of us (one in ten iPhone users admit to breaking off a relationship via electronic means according to TeleNav), then it’s worth asking what that means for people, society and business. I will confess to sitting in the car texting away in the front seat instead of interacting with my family, or instigating yet another round of campfire songs.

Business benefits from our addiction

My employer and I benefit at the expense of my family (although my husband may not mind losing out on my singing), which is backed up by Ofcom’s results. From the survey:

Thirty per cent of smartphone users say they regularly take part in personal phone calls during working hours, compared with 23 per cent of regular mobile phone users. However, smartphone users are more likely to take part in work calls while on holiday or annual leave. Seventy per cent say they have ever done so, with a quarter (24 per cent) admitting to doing so regularly, compared with just 16 per cent of ordinary mobile phone users.

So there is a productivity boost to be had from partaking of our new addiction, but at what cost? Here the survey disappoints. It spends a lot of time focused on the use of the technology:

The vast majority of smartphone users (81 per cent) have their mobile switched on all of the time, even when they are in bed, with four in ten adults (38 per cent) and teens (40 per cent) admitting using their smartphone after it woke them. Over half (51 per cent) of adults and two-thirds (65 per cent) of teenagers say they have used their smartphone while socialising with others, nearly a quarter (23 per cent) of adults and a third (34 per cent) of teenagers have used them during mealtimes and over a fifth (22 per cent) of adult and nearly half (47 per cent) of teenage smartphone users admitted using or answering their handset in the bathroom or toilet.

But think of the children!

However, the real result is that we don’t know how this will affect people. Can we trace massive e-coli infections to people tapping away on smartphones that have transitioned from the bathroom to the dinner table? Can we say if those teens are texting with their parents while socializing with friends? Can we show that today’s toddlers and pre-schoolers are irreparably damaged by their parents sending emails or tweets instead of talking to their little darlings? Ofcom doesn’t say, and in truth, we don’t know.

What we do know is that this shift and “addiction” is driving people to spend more money and time on these devices, which can be a doubled-edged sword for the mobile operators, but in general is good for the entire mobile ecosystem. The survey notes that “while it took 15 years for half of the UK population to get a mobile phone and 14 years to get multi-channel TV, newer technologies such as online catch up TV and social networking websites reached this landmark in just four years.” People consuming mobile and IPTV or multichannel TV services also spend 12.8 percent more in real terms from a decade ago, a figure which has actually declined since 2005.

It’s not just smartphones, it’s the web.

The addiction to smartphones is just one example of the spread of broadband into everyday life. The Ofcom survey does spend time on that shift as well, which is much deeper and more pervasive than mere smartphone addiction. Those broadband connected devices will change our society and require us to adapt in ways that may be harmful in some cases and beneficial in others.

So rather than using words like “addicted” and emphasizing how much time people spend on smartphones, perhaps it would be better to focus on how broadband, like electricity will change the way people live and the businesses they can build. Sure, electricity used to be considered harmful in some circles (I have a grandparent who considered air conditioning the decline of civilization), but it enabled a great many new industries and changed the way we live. Enabling technologies such as broadband can’t be considered through one lens. So while smartphones may be addictive, they are also the beginning of a new era that will generate new opportunities and shift the way society behaves. We are only just discovering how.

Baby image courtesy of Flickr user zackwitnij.

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