Embedded Wireless: A Step Towards Dumb Pipes?

from the open,-but-not-that-open dept

At a FierceWireless panel during the CES show today, panelists from Verizon, AT&T and T-Mobile discussed the progress the embedded sector has seen over the past year and is expected to show in 2010. Embedded wireless, from a consumer electronics perspective, means factory installing a cellular radio into a (non-phone) device. The devices range from the obvious Netbooks and Kindles, to the less obvious cameras and media players, and more. The panelists were keen to point out that in the past year, the pieces of the puzzle all fell into place -- what had been lacking was affordable embedded modules, strong data networks, and flexible enough rate plans that didn't try to capture $60 a month from every device. I would agree that the carriers have finally become eager to consider a range of pricing models, all in the past year. From ad hoc daily netbook connection fees, to the integrated pricing seen on the Kindle, the Nook, and Garmin Nav devices, we're finally seeing some flexibility in the way carriers charge for data access. It's about time, too: for too long mobile data followed the $80 Rule, where the only way to get cellular data was an $80/mo lengthy contract.

As an example of the changes from just the last year, Verizon Wireless previously offered just a $60/mo contract for laptop connectivity, where now they sell a prepaid day pass, a week pass, and different tiers of subscription plans. That's good progress, but market forces are going to demand a wider range of solutions, and at more reasonable discounts for lower tiers. For example, how long will the market support Verizon's 5GB/mo subscription at $60 and their 250MB plan at $40? The lower plan is 5% of the throughput at 66% of the price! Clearly, there is room for these prices to move a little more.

An interesting point raised by Sue Marek of FierceWireless was whether embedded connectivity deals like that on the Kindle relegate the carrier to dumb pipe status. After all, when a great embedded wireless user experience is created, the carrier becomes invisible. Good question, but I think the answer is no. The carrier becomes a white label partner, but not a dumb pipe. That's because, so far, most of these deals have involved cooperation between the CE vendor and the telecom operator, in order to make the activation seamless and simple for the user. The carrier has been integral to the development, activation, and service management. That trend is likely to continue for the reason I explain in the following paragraph.

Consumer Electronics makers, like Garmin, could just put a GSM radio in their devices and say "connect to your choice of service provider by inserting your SIM". However, the cellular module costs are hovering just under $100, and that's a big nugget to add to the Bill of Materials on any CE product. And the CE makers know that they have leverage, since they have the ability to steer their customers onto a specific wireless carrier, and that any carrier will be attracted to a block of new subscribers. Guess what happens... that old, familiar word, subsidy. If Garmin chooses to partner with a specific carrier, the carrier will pay for the opportunity and in effect subsidize the device's radio. This brings down the cost, and the MSRP of the product, which in turn helps Garmin and the consumer. For this reason, until the radio modules are very cheap (like Wi-Fi modules are), we will generally see embedded wireless tied to a specific carrier.

Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: dumb pipes, embedded wireless, wireless

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. icon
    Derek Kerton (profile), 8 Jan 2010 @ 3:01pm

    Re: $100 GSM module cost - not

    Got a source for your pricing doubts? Can you show that cheaper prices are the norm? I'm not saying this is rock solid, but it was an Ericsson rep on the panel that roughed out that price, and they are the leading vendor.

    If you look for cheaper module prices, make sure it's multi-band 3G at least. I mean, I'm not sure we can go with your gut feeling and a comparison of 3g mini-pci modules with 20-yr old PHS technology on one band in China.

    Meanwhile, I'll look into it, too.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.