Novatel Wireless’ MiFi service helps Bell drive data revenue and backhaul – for now

Novatel Wireless, of San Diego CA, has signed deals this past week with Bell Mobility for its MiFi 2372 Intelligent Mobile Hotspot (Mi-Fi), and with Bell subsidiary Virgin Mobile Canada for its Broadband2Go Data Stick – two transitional technologies that, according to analysts, will drive data revenue and backhaul demand off Bell’s high-speed packet access (HSPA) network. “The Bell HSPA network, which we share with Telus, has a maximum back end speed of 100 megabits per second for fibre, and 160 on microwave,” Julie Smithers, a Bell spokesperson, tells Tech Media Reports. “We fully anticipate that we can handle the backhaul.” Virgin’s Broadband2Go Data Stick (also known as the Novatel Ovation MC760) is being offered at $149.99, with no annual contract or activation fee. Broadband2Go users can get their first month or 1GB at no charge if they activate online. After that, the service costs $45 for 1GB or for 1 month of use, whichever comes first. By comparison, the MiFi 2372 is a separate, battery operated device that offers simultaneous Wi-Fi connectivity for up to five devices or users and delivering download speeds to 7.2 megabits per second. It costs $99.95 on a three-year contract or $249.95 without a contract, but the real money is to be made on the plans, which range from $30 a month for 500 MB and $65 for 3 GB. If you go over, you’ll pay $0.05 for each MB. To keep things complicated and consumer unfriendly, all plans have a $35 activation fee. “This is not so much a partner as a vendor relationship,” says John F. Bright, a director at Avondale Partners, an independent investment banking firm headquartered in Nashville TN. “The carriers are looking for products to attract and differentiate themselves for incremental ARPU .” The view is that products like those offered by Novatel can encourage more data traffic, but that they are essentially transitional. “This technology is very fleeting,” suggests Samuel Wilson, and analyst with US-based JMP Securities. “Other companies are starting to do it. It is hard to generate anything that is a priority, or that’s lasting.” Competitors in this space include Vancouver’s Sierra Wireless, as well as Chinese behemoth Huawei Technologies. But the real threat comes from smartphones themselves, which are the ultimate converged device. “The new generation of smartphones all offer tethering capabilities,” says Wilson. “I don’t need a USB stick – I can use BlueTooth on my BlackBerry, and laptops and netbooks have modules built in.” It’s possible that Bell beat up Novatel a little on price, given that the product was released a few months ago and, according to Wilson, the slowing economy and rapid technological changes have put the squeeze on vendors. “Novatel had to announce last quarter that that uptake was not as strong as they had hoped, and the channel has to absorb this. These products have a six-month window or less.” What they do offer consumers – and perhaps even small enterprises – is the opportunity to save on voice by running VoIP applications off of data networks. “I can see this for long-distance mobile phone calls,” says independent telecom analyst Jon Arnold of J Arnold & Associates, Toronto. “Straight up cell plans are expensive, and I’m not aware of a mobile VoIP plan. You could run Skype or Truphone.” But these are still cellular networks, so though one might be able to make VoIP calls off a Bell Mobility hotspot, the carriers won’t do you any favours when you leave the country: US data roaming charges run at $3 MB. For Bell, the use-case scenarios for the hotspot fall into specific business and consumer activities. “We think the hotspot would be useful for people who want to have meetings with colleagues on the road,” says Smithers from Bell. “Or for families at the cottage who want to connect to the internet.” In October, Manitoba Telecom Services rolled out the MiFi 2200 hotspot on its 3G EV-DO network. Time Magazine has recognized this product as “among the top 25 of the world’s best gadgets in 2009”, but this and other data modems are seen by analysts as, essentially, bridges to a world where 4G is the norm, and all phones are “smart”. “It’s the devices that are driving the market,” says Arnold, and Wilson from JMP Securities agrees, saying that this spells trouble for the traditional carrier revenue model. “The point behind all this stuff is that there is effectively no money left on the voice side of the business,” says Wilson. “There is no upsell here: all the opportunity is on the data aside.”

Novatel Wireless’ MiFi service helps Bell drive data revenue and backhaul – for now

News | December 6, 2009

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