NAKINA SYSTEMS BLOG

Nakina partner Nokia Siemens Networks (NSN) announced a potential mega-contract yesterday with wireless startup Lightsquared (try saying “Nakina Nokia” ten times fast). When was the last time you saw the words “startup” and “wireless carrier” in the same paragraph?

NSN’s contract is worth a potential $7 Billion, and it covers the purchase, design, build, install, and operate phases of a hybrid 4G satellite network that is the brainchild of New York hedge fund Harbinger Capital.

I love competition, and I love to see new entrants in markets that are lacking in competitive dynamics, so I’d love to see Lightsquared make it. That said, I’m old enough to remember Iridium’s startup dog & pony show. It took a lot more years and a lot more billions to make that business plan fly than anyone expected back then, and it makes me wary. There couldn’t be a better time to launch a new supplier for radically mobile high speed data, though — just look at AT&T’s Q2 results posted earlier today, with a 27.2% jump in wireless data revenues, up nearly a billion dollars over last year’s quarter. That’s a lot of bits in the air.

Ericsson CEO Hans Vestberg yesterday predicted that by 2020 the internet will count 50 billion connected devices. And earlier this week, Morgan Stanley research head Mary Meeker released an authoritative compendium predicting that mobile internet usage will surpass the tethered variety in only five years (the growth stats on iPhone and iTouch growth are truly mind-boggling; iPad will only add fuel to the inferno, and Apple announced today that international marketing will be postponed while the company catches up with overwhelming US demand).

I buy the notion that the mobile internet is the fulcrum of innovation, and that service providers are on the verge of massive transformation. It’s not just LTE and 4G, there are new approaches to fixed wireless access needed to accommodate smart grid, healthcare, consumer electronics, and as yet un-invented applications. The pace of capacity addition to backhaul networks will have to accelerate yet further, and the potential for disruptive innovation among content, device, and network providers is high.

What baffles me, however, is the continuing primitive state of the operations technology that is supposed to sit behind all of this and make it work: to ensure that the connectivity stays up, that new networks roll out as quickly as the content and devices are demanded, and that the whole intricate mesh remains reasonably secure from intentional or inadvertent harm. The pace of innovation in operations technology has been glacial, and this is not a sustainable practice. For every cool new location-based advertising service or must-have device, there is a consequence in the complexity, scale, and criticality of operations support.

Ivan Seidenberg and Eric Schmidt penned a joint op-ed piece in yesterday’s WSJ lauding aspects of the US FCC’s National Broadband Plan. Free markets make strange bedfellows, as they say. So what might inspire the emperor of the internet-based new economy to spoon with telco Tsar Ivan?

Stacey Higginbotham at GigaOM wrote a good piece advancing the “enemy of my enemy” theory, which is a compelling start. It goes like this (extended to fit my interpretation): Google is the Apple antithesis: open garden vs. closed, hardware agnostic vs. vertical hard/soft integration, sponsor-paid vs. subscriber-paid. Verizon is the ATT antithesis: CDMA vs. GSM, FiOS vs. UVerse, Atlantic bellheads vs. Southwestern cowboys. Google and Verizon can agree on what’s good for America, because they both know that what’s not good for America is iPhones on an AT&T network.

Of course none of this newfound friendship may matter in a few months when Verizon is selling CDMA iPhones and Google is using its experimental network to make FiOS look like 56KB dial-up, but it’s heartwarming for the moment.

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