AT&T May Ride Out Verizon iPhone Storm

AT&T collected US$31.5 billion in revenue and delivered $3.59 billion — 60 cents per share — in profit, according to Thursday’s second quarter earnings report. Profits were down 10 percent from last year’s second quarter profit of $4 billion. Revenue rose 2.2 percent over last year. The performance was in line with forecasts.

Total wireless subscribers were up 1.1 million for the quarter, reaching 98.6 million. The growth was down from last year’s second quarter subscriber growth of 1.56 million. Total wireless revenue, including equipment sales, rose 9.5 percent. Wireless service revenue grew 7.4 percent. Voice revenue fell 12 percent. Total churn — customers who cancel services — was 1.43 percent, up from last year’s 1.29 percent.

AT&T didn’t show any serious wounds from Verizon’s entry into iPhone sales. AT&T sold more iPhones in the second quarter of 2011 than it did in the second quarter of 2010. iPhone churn was down, and nearly a quarter of iPhone additions were new subscribers.

The company reported it has increased planned capital expenditures for 2011 from $19 billion to $20 billion in anticipation of bolstering its network. It also reiterated its expectation that its acquisition of T-Mobile is set for early 2012.

The Verizon Factor

Since AT&T continues to add iPhone subscribers, it seem the company has dodged the bullet of Verizon competition. Verizon started selling iPhone subscriptions in February, so it was in competition with AT&T for the entire second quarter. Yet not much happened to rock AT&T’s boat. Still, that could be a matter of timing.

“The migration of subscribers from one carrier to another is difficult for a user because of early termination fees. They can’t move quickly,” Chris Hazelton, research director for mobile and wireless at the 451 Group, told the E-Commerce Times. “The potential move is going to be gradual. There were a portion of iPhone users on AT&T who were waiting, and many who were out of contract have moved.”

Many iPhone subscribers were motivated to switch to Verizon because of complaints about AT&T’s service. AT&T has recently taken steps to close its service gap with Verizon, however.

“AT&T invested a lot in the network, especially to support iPhone users,” noted Hazelton. “They’ve invested heavily over the past year in the hot spots like New York City and San Francisco — the large urban areas.”

Possibly due to those improvements, the customers eager to switch from AT&T to Verizon appears to be a dwindling population, according to ChangeWave, the research arm of the 451 Group.

“We show that in December of 2010, 15 percent of AT&T iPhone subscribers said they were likely to switch to Verizon in the next 90 days,” said Hazelton. “That has dropped to 13 percent in June of 2011. I attribute that to the investment AT&T has made in its network.”

Android Takes a Bite

Android is a force to be reckoned with. Not only is it challenging the iPhone in the open market, it is challenging the iPhone within AT&T.

“AT&T’s iPhone sales and subscriber base peaked with the iPhone 4 launch in Q3 2010. Since then, the iPhone’s sales at AT&T have been dipping,” Neil Shah, analyst for wireless devices strategies at Strategy Analytics, told the E-Commerce Times.

“In Q4 2010, the emergence of Android’s share at AT&T stunted Apple’s growth prospects slightly, and since the arrival of iPhone 4 at Verizon Wireless in Q1 2011, the overall sales contribution from iPhone at AT&T has been falling despite selling the iPhone 3GS at attractive price points.”

AT&T plans to continue pursue strategies for easing pressure on its network, Shah noted.

“Employing data caps on these data-hungry smartphones has helped,” he said. “So has upgrading the radio network to HSPA+ or LTE and improving the overall core network. That should provide some breathing space for AT&T.”

T-Mobile Deal in the Wings

There has been considerable noise about AT&T’s attempt to purchase T-Mobile. Those against the deal claim that it clearly violates market consolidation regulations.

“The results on the T-Mobile acquisition will be out early next year,” said Shah.

“Both, ‘for’ and ‘against’ parties have provided strong defenses to support their cases. However, technically speaking, this horizontal merger easily surpasses the Department of Justice market concentration threshold indices, which makes the chances for approval theoretically bleak,” he said. “Yet, practically anything is possible in Washington.”

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License Change May Spark New Pricing Trend for Open-Source Projects

software license

Cloud-native microservices platform Lightbend wants open-source licensing to better meet developers’ needs and is doing something to make that happen. However, the replacement fix is not a traditional open-source license. Rather, it transitions there in time.

The company, whose user base includes some of the world’s largest brands, on Wednesday announced significant changes to the licensing model for its Akka technology. The platform is used extensively by industry leaders in financial services, e-commerce, automotive, web services, cloud infrastructure, and gaming.

Akka offers devs the ability to deliver concurrent, distributed, and resilient event-driven applications for Java and Scala. Lightbend is changing the license on all Akka modules from Apache 2.0 to Business Source License (BSL) v1.1, starting with Akka v2.7 which will be delivered in October.

That change will bring hefty licensing costs to high-end users. But Lightbend expects it to bring no major problems on open-source projects.

“The goal is to have as little impact on the open-source community and projects as possible. Open-source projects using Akka can contact Lightbend and apply for a license to use Akka within the realms of the open-source project. We have already called about the Play Framework in the Additional Usage Grant in the license itself,” Jonas Bonér, Lightbend’s founder and CEO and the creator of Akka, told LinuxInsider.

The new license will ensure a healthy balance between all parties, shared responsibility, and by extension, contribute to Akka’s future development, he explained.

Addresses Broken Business Model

The “open core” business model on which Akka is based has shown its limitations for Lightbend and many other organizations in similar circumstances, he offered. The toolkit’s licensing changes will ensure its future development.

Once an OSS project becomes so critical to an organization’s daily operation, many larger enterprises turn to self-supporting this software, without contributing anything more to its development or the community at large, Bonér observed. In many instances, these organizations are generating significant profits leveraging this “free” technology.

Under Akka’s new licensing model, any organization with less than $25 million in annual revenue will not require license fees for production usage of the software. However, Lightbend must still grant those users a $0 commercial license.

Larger businesses with more than $25 million annual revenue must now acquire a paid license plus a subscription for production usage. The BSL is available with several options. The new license does not permit back-porting of any software released.

“I think it is a viable path toward sustainable open source. I expect more companies that are building a business around open source to go down this path,” Bonér noted about the impact the BSL license switch will have on open-source projects.

How It Works

MariaDB Corporation crafted the BSL v1.1 now used by Cockroach Labs and other organizations. The BSL is not an open-source license.

In short, the difference is slight between the BSL 1.0 and BSL 1.1, explained Bonér. Version 1.1 fixed the loophole where a company could opt to never convert to a “change license” by now making it explicit that it could not be more than four years. A full discussion of the version change is available at MariaDB.

Akka’s new license works in two stages. First it has commercial overtones. Then it becomes “customizable.”

Under the commercial stage, users can view the source code of the software they obtain for the $0 license. They can download and use it in non-production environments. However, production usage requires users to obtain an upgraded software license from Lightbend.

The second stage kicks in under an open-source license after three years. That version then is released under the current Apache 2.0 license. It offers a customizable “Additional Use Grant” that will be used to grant usage for other OSS projects such as the Play Framework.

Pricing and Versioning Matters

Each new minor version of the software will have its own change date. A “minor version” is defined as a release that changes the second digit of the version number.

For example, a change from Akka 2.7.19 to 2.8.0 would reset the change date. A patch build change from 2.7.19 to 2.7.20 would not, according to Bonér.

Based on this license revision, here is Lightbend’s revised pricing and packaging for the Akka software:

Lightbend's Akka platform, packaging and pricing options

Organizations seeking more information about the implementation of BSL licensing can explore Bonér’s blog.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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