What's going on in the Wireless industry?

The times they are a'changing. The structure of the mobile industry has been fairly static for a long time. The last big earth shattering events- the Sprint/Nextel merger and the rollout of 3G networks. There have been fad phones that have been super popular for a time, and there has been a definite shift in preference to smartphones, like the iPhone. But the basic structure has remained the same- big wireless companies offering limited phone choice, long term contracts and maximizing ARPU.

However, I'm now starting to see some datapoints that don't support this historical norm. Most of these are driven by customers that want more options and less costs, but some are being driven by technological change. And now rides in our friendly government regulators. Here is the story from Amol Sharma at the WSJ:

The Department of Justice has begun looking into whether large U.S. telecommunications companies such as AT&T Inc. (T) and Verizon Communications Inc. (VZ) are abusing the market power they have amassed in recent years, according to people familiar with the matter.

The review, while in its early stages, is an indication of the Obama administration's aggressive stance on antitrust enforcement. The Justice Department's antitrust chief, Christine Varney, has said she wants to reassert the government's role in policing monopolistic and anticompetitive practices by powerful companies.

The law that covers such behavior, the Sherman Antitrust Act, has been used in the past against giants ranging from Standard Oil to Microsoft Corp. It lay essentially dormant during the Bush years, with the agency bringing no major case. The telecom industry is among several sectors now coming under scrutiny. Others include health care and agriculture.

The Justice Department is already cracking down on certain agreements. It recently filed an objection to plans by airlines in the global Star Alliance to cooperate more closely on international routes and fares. It has targeted payments large pharmaceutical producers sometimes make to generic-drug makers to delay cheap copies of medicines. In addition, Ms. Varney is investigating Google Inc.'s settlement with authors and publishers over its Book Search product.

The telecom review isn't a formal investigation of any specific company, and it isn't clear it will ever become one. The review is expected to cover all areas from land-line voice and broadband service to wireless.

One area that might be explored is whether big wireless carriers are hurting smaller rivals by locking up popular phones through exclusive agreements with handset makers. Lawmakers and regulators have raised questions about deals such as AT&T's exclusive right to provide service for Apple Inc.'s iPhone in the U.S. Big carriers say limiting exclusive deals would hurt innovation.

The department also may review whether telecom carriers are unduly restricting the types of services other companies can offer on their networks, one person familiar with the situation said. Public-interest groups have complained when carriers limit access to Internet calling services such as Skype.

Second, Apple is talks with Verizon about creating a CDMA iPhone. Verizon turned down the iPhone a couple of years ago. There is lots of speculation as to why. Now,

It cannot have escaped Verizon's notice that AT&T proclaimed in a widely circulated memo that the recent launch of the iPhone 3GS was the "largest order day in att.com history" and the "best ever sales day in our retail stores." AT&T sold a million of the new iPhones in 3 days. It took 74 days to sell a million iPhones when they were first launched in 2007.

With AT&T's exclusivity agreement due to expire in the next year, pressure is mounting amongst Verizon customers and shareholders for Verizon to come to some sort of agreement with Apple to offer the iPhone on their network.

Pressure is also coming from current AT&T iPhone users for Verizon to offer the device, as dissatisfaction with AT&T's coverage, and especially their DaVinci Code-ish billing practices continues to grow.

Third, the DC Metro is going offer wireless service to more than one carrier? I missed this news when it first came out in March, but I think it's so significant that I'm going to list it here anyway. As many of you know, the one mobile service that operated inside the Metro is Verizon, working off of a Bell Atlantic contract they first won back in 1993. Sprint was allowed to roam there recently, but a lot of DC people wouldn't switch away from Verizon because of the lack of service in the Metro (where a lot of suits spend a lot of time). As Rob Pergoraro says in a WaPo Faster Forward blog post:

I'm pleased and amazed by the news... although I'm not exactly an unbiased observer of this situation. I take Metro to work and to many non-work occasions, and being able to use my phone at those times -- to let my wife know that I'm on my way home, to answer a quick call from the copy desk, to scan through the latest updates on Twitter or Facebook, to check my e-mail, to look up the score of the Nats game -- is a major convenience.

And it looks like the rollout of the network will happen reasonably fast, according to WMATA's press release:

Twenty of the busiest underground rail stations will have expanded cell phone service by the end of this year and the entire rail system will be equipped by 2012.

I'm not sure what this all means but it feels like the the glaciers are starting to crack and shift. What do you think?

There was a very interesting webinar this morning organized by Washington Technology magazine and featuring Ray Bjorkland of FedSources.

Here is couple of tidbits I found interesting:

• there will be fewer government opportunities over the next few years but those that exist will be bigger
• it is increasingly important to get on an IDIQ contract or get on an existing team
• pure A-76 contracts will be rare, but mostly used for small scale staff augmentation deals
• the impact of the 2008 election will be minimal until the 2009 budget due to the length of the government budgeting cycle (well....duh)
• eGov initiatives seem to have broad based bi-partisan support and won't see much change over the next few years
• IPv6 is not a high risk change for government, but poses a huge managerial and cultural challenge. Will the government develop and implement a viable plan for all the ancillary changes that need to be addressed? Still up the in air.
• there a strong resurgence of interest and budgets in health IT. Electronic health records are driving budget growth as well as funds to directly support warfighter and veterans
• there will be increasing collaboration among government agencies, ie IWIN with DOJ/DHS. However, in the end, most contracts of this sort tend to get driven by one or another of the agencies involved.