Hello! And welcome to our Friday column, Worst of the Week. There's a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!

And without further ado:

So, word on the street is that the mobile industry is going prepaid crazy. This new track has been highlighted by the dearth of new postpaid customers signing up for wireless services, and those that are signing contracts look to be just switching from another carrier.

In response, just about all carriers have over the past six months gone ape-poop in rolling out or creating new prepaid options for customers that allow them nearly all the perks of postpaid plans without having to go through a pesky credit check – always painful unless conducted by a trained professional – or committing to remain loyal to their carrier for 24 months no matter how poorly they are treated or face a break-up fee. (Nothing says “I really respect you as a customer” than swinging a cancellation fee over your head to make you stay loyal.)

Any sane person would look at these options and realize that signing a contract is for suckers and the only real option is to go prepaid. (Thus my decision to recently re-up some members of my family on new contracts. Hey, I got a degree in journalism, not reasoning.)

This rush to cater to those customers that have either by choice decided that they don't want to commit to one carrier for 730 days or by circumstance do not possess the credit “number” that backs up their signature is fascinating to watch.

In one corner there are Sprint Nextel and T-Mobile USA, the nation's No. 3 and No. 4 largest carriers that while nationwide in scope have failed to keep pace with the customer growth and free-spending nature of their larger rivals Verizon Wireless and AT&T Mobility. Thus, these two have been forced to try to attract the “underserved” population of consumers looking for prepaid service.

Sprint Nextel has indeed been the most aggressive as of late now offering four different ways to get customers on its network without being forced by a contract to stay. T-Mobile USA on the other hand has kept its prepaid offerings fairly simple, though to what I can only assume is the consternation of current contract customers is offering a better monthly value to those selecting prepaid.

In another corner you have the traditional no-contract carriers in MetroPCS and Leap/Cricket that continue to pound their heads against the wall in trying to remain a viable presence in the eyes of consumers, trading network scope for more features on calling plans. This trade off seems to be holding as both carriers announced solid first quarter growth numbers, though the financial future of their offerings is still suspect.

All of these carriers that have changed their focus, or continue to focus on prepaid are also forced to balance out consumers' desires to pay as little as possible for a phone (preferably a feature-packed smartphone that provides more capabilities than a Cray supercomputer for the low, low price of on the house) with the fact that without a contract there is no guarantee they will ever receive enough revenue in return to pay back a subsidy offered on a device. This has forced most of these carriers to charge a premium (or in effect, the real price) for mobile devices.

These carriers also don't seem to mind the "negative" connotations long held by the mobile industry of who prepaid customers are, and I say good for them.

In the meantime, the industry's heavyweights Verizon Wireless and AT&T Mobility remain on the sideline of this prepaid battle choosing to instead offer token no-contract services that look compelling when compared with their postpaid offerings, but fall flat when stacked up against the prepaid competition. Or at best they are keeping offers that run on their networks, like offerings from Tracfone, at arm's length in an attempt to keep investors worried about the possible financial impact that prepaid can have on a carrier's bottom line. And they seem happy to do so.

I liken this mentality to people that decide to cover up their tattoos or remove any visible piercings before heading into the country club for fear they may give the wrong impression.

This divergent view of how to deal with prepaid is sure to mutate over time, especially with carriers looking to push data services that seem to provide further confusion as to how carriers want to differ their marketing of prepaid and postpaid services.

So, where does this leave us? Well, to me it would seem to leave the wireless industry in some sort of mixed up, nether world. Prepaid is definitely where the growth seems to be coming from and this is the area that carriers more interested in showing growth to their shareholders than bottom line profits are heading. On the other hand, the current financial metrics of prepaid have left those carriers more interested in keeping the investors happy with higher margins on the outside of the prepaid battle.

My suggestion for clarifying these divergent paths. More commercials touting coverage and network speeds, maybe mixed with more apes. There is nothing like a diversion to make everything seem better.

OK, enough of that.

Thanks for checking out this week's Worst of the Week column. And now for some extras:

--In the some-number-of-degrees-of-separation bin, those wacky folks over at ChaCha recently put out the results of a survey showing that – you may want to sit down for this – teens like to text. (Cliffhanger. And cut to commercial.) The survey results showed that in a survey – that relied on text messaging to gather responses – more than two-thirds of those respondents that claimed to be teens or young adults – or really old toddlers – said text messaging was their favorite way to communicate. This is nothing new to anyone that has seen a roving pack of teens – or young adults or very old toddlers – in which nearly every member of that heard is looking down at their cellphone while standing in the middle of a group of what are supposed to be their friends.

While the most popular form of communication was not a surprise, the shocking numbers from the survey was the .29% that selected e-mail (has e-mail already jumped the shark?) and the 1.24% that selected “other.” Since the survey included choices that seemed to include just about every form of communication I can only assume that the “other” category had to include mental telepathy and sky writing.

I welcome your comments. Please send me an e-mail at dmeyer@ardenmediaco.com.

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The Federal Communications Commission said the wireless industry is more concentrated, rather than effectively competitive, in its 14th annual report on competition in the wireless sector. The commission also said innovation abounds in devices and applications, but that capital investment is declining relative to the growing size of the industry.

The report could impact the FCC's ongoing development of mobile broadband policies, including the National Broadband Plan and its efforts to reclassify some broadband services in order to be able to regulate them. The report covers the years 2008 and some of 2009.

While the report said key trends include a movement toward a data-driven traffic and that access to spectrum is important to competition, other findings may cause concern for operators that are fighting against more regulation. “There appears to be increasing concentration in the mobile wireless market. One widely used measure of industry concentration indicates that concentration has increased 32 percent since 2003 and 6.5 percent in 2008,” the FCC noted.

Further, the agency had a mixed message regarding industry's capital investment in wireless products and services, a point that carriers and other wireless players have been touting in their arguments for less regulation. The FCC stated: “Providers continue to invest significant capital in networks, despite the recent economic downturn. One source reports capital investment at around $25 billion in both 2005 and 2008, while another shows that capital investment declined from around $25 billion to around $20 billion during the same period. Because industry revenue has continued to grow, both sources show that capital investment has declined as a percentage of industry revenue over the same period (from 20 percent to 14 percent).”

For its part, CTIA was unimpressed with the FCC's findings. “We believe the commission missed an opportunity today to truly highlight one of the few glowing examples of investment, innovation and consumer choice in the U.S. economy. While we understand that the commission is not making any conclusion about the state of competition in the market, nor are they suggesting that the marketplace has changed to the detriment of consumers during 2008, we nonetheless are disappointed and confused as to why they've chosen not to make a finding of ‘effective competition' for that year,” said CTIA President and CEO Steve Largent in a prepared statement. “The hairman has committed to a fact based, data driven commission. We have embraced that and placed numerous facts, in the record, about each element of the wireless ecosystem. We believe, based on the facts submitted, that a determination of effective competition in the wireless marketplace is not only inescapable, but is actually quite simple – ask any American. Whether based on HHI, the raw number of competitors in each market, investment, handset and network innovation, price or consumer choice, the U.S. wireless market is the envy of the world. That is why the lack of a finding is so troubling.

“In the same week that the European Commission releases its Digital Agenda for Europe, where they conclude that EU Information and Communications Technology research and development spending is 40 percent of the amount spent in the U.S., we believe that all policymakers should be celebrating, indeed applauding, the more than $44 billion that the wireless industry invested in networks and spectrum in 2008. That amount is significantly more than Germany, France, Italy, Spain and the U.K. invested – combined – in their wireless networks.”

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HONOLULU, Hawaii--As WiMAX networks roll out across the globe, device manufacturers and operators are hoping to move beyond the dongle and computer modem to more innovative products, according to panelists at the Global WiMAX Business Development Forum.

Even as Sprint Nextel Corp. gets ready to launch the HTC Evo 4G handset in a few weeks, global operators are hoping that WiMAX chips get embedded in more nontraditional devices. For example, in Pakistan, a WiMAX chip embedded into a television could be a way for the nation's wireless broadband users to connect to the Internet, said Dr. Tanveer uI Haq, CTO at Pakistani WiMAX operator Wi-tribe. While there are only 7 million PC users in Pakistan, there are about 95 million cellular users and 95 million people who own TVs.

The technology is available to install a chip in a set-top box, said Craig Miller, VP of marketing and business development at Sequans. The trick is getting the consumer electronics manufacturers to include the chip in the manufacturing process.

As the WiMAX ecosystem develops, more products are getting embedded to support the various frequencies WiMAX operates in across the globe, said Kevin Jones, Intel Corp.'s Global 4G evangelist. Intel's 6250 adapter, for example, supports 2.3 GHz, 2.5 GHz and 3.5 GHz as well as Wi-Fi and is in more than 200 netbooks.

WiMAX operators also are interested in partnering with cellular providers to sell dual-mode handsets that marry 2G coverage for voice with 4G coverage for data. If operators ink those deals, device manufacturers will build products for them, but the carriers have to be able to sign deals with 2G cellular providers.

WiMAX chips are going to be embedded in a number of M2M devices, including smart-grid modules, said Lars Johnsson, VP of business development and marketing at chip-maker Beceem. “Utility companies want to use WiMAX as a gateway into the home.” Video surveillance cameras are another opportunity, he said. Video apps can't run on a 2G network so any kind of remote monitoring is another opportunity.

Panelists also questioned why Russian operator Yota failed in its attempt to bring a WiMAX handset to market two years, but a major difference between the Yota handset and Sprint Nextel's Evo handset is pricing: While the Yota handset, manufactured by HTC Corp., cost $1,000, Sprint Nextel's Evo handset is being sold at $200.

Some operators likely won't want to offer handsets as they market themselves to be DSL alternatives.

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The unemployment rate ticked up to 8.7% in the telecommunications sector in April, following the national unemployment rate, which also rose to 9.9%, the U.S. Bureau of Labor Statistics reported.

The telecommunications sector lost 6,700 jobs from March to April, according to recent figures. A total of 934,500 jobs are categorized in that sector.

Employment in the wireless sector remained relatively flat, down 200 positions from February to March, with 195,400 positions assigned to the wireless sector, according to the Labor bureau. Its wireline sibling didn't fare as well, losing 3,900 positions in March; 607,900 jobs are in the wireline carrier segment. California, which employs most people in the telecommunications carriers segment, lost 1,200 positions to total 107,900 positions in March. Texas lost 400 jobs to total 89,900 telecommunications sector positions. Georgia's telecom sector lost 200 positions to 50,600, as did New York, which now counts 49,800 positions. Kansas lost 100 positions to total 19,800. New Jersey bucked the trend by adding 200 positions to total 37,400. All data is preliminary and likely will be adjusted during the month. Sixteen mass layoffs took place in March, the most recent month for which data is available.

Overall the computer and electronic products segment added 100 jobs from March to April to reach 1.0298 million jobs. Drilling down into that sector, the semiconductor and components sector added 1,600 jobs in April, while the communications equipment sector lost 100 positions. Computer and peripheral equipment added another 300 jobs, which was offset by 1,300 jobs lost in the electronic instruments category.

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Has Google’s Inc.’s Android operating system hit an inflexion point?

Data released today by The NPD Group Inc. would indicate that possibility as the research firm reported that the sale of devices powered by the OS outsold Apple Inc.’s iPhone OS during the first quarter of the year putting it right behind Research In Motion Ltd.’s Blackberry OS in total sales.

According to NPD’s research, RIM continued to lead OS sales during the first quarter garnering 36% of the OS market. Android climbed into the No. 2 position at 28%, while Apple’s iPhone OS was No. 3 with 21%. And this despite NPD’s research not including corporate or enterprise sales that have traditionally favored RIM’s OS.

The NPD Group noted that the strong sale of Android-powered smartphones at Verizon Wireless helped propel the nation’s largest carrier to within a whisker of AT&T Mobility’s iPhone-fueled smartphone sales for the quarter. AT&T Mobility continued to lead in market share at 32%, but Verizon Wireless slotted in a close No. 2 at 30%, followed by T-Mobile USA Inc. at 17% and Sprint Nextel Corp. at 15%.

Smartphone sales are becoming increasingly important to carriers as most require customers to sign up for data packages that range up to $30 per month in addition to regular voice and messaging packages.

A brief trip through the carrier Web sites shows a diverse reliance on different OSs depending on carrier.

Verizon Wireless is heaviest with those powered by Microsoft Corp.’s Windows OS counting seven different models including its two new Kin models. Next for the carrier is Blackberry with a half-dozen distinct devices, followed by four Android devices and a pair of Palm Inc.’s devices running its WebOS. In total the carrier has 19 distinct smartphones currently for sale.

For AT&T Mobility, RIM is large and in charge with six distinct models, followed by five running a variation of Windows, two running Nokia Corp.’s Symbian OS and two iPhone models (3G and 3GS). AT&T Mobility also has a single device running Linux in Garmin International Inc.’s Nuvifone and at this point only a single Android model in Motorola Inc.’s Backflip. AT&T Mobility has a total of 17 distinct smartphones for sale.

Sprint Nextel has the smallest number of distinct smartphones for sale with just 10 models. Those include three powered by RIM’s Blackberry OS and three powered by a version of Windows, and a pair each sporting Palm’s WebOS and Android.

T-Mobile USA has 11 distinct smartphones for sale, including five powered by Android, three powered by a Windows variation, a pair of Blackberry models, and a single device each powered by Symbian and the Danger Inc. OS in its Sidekick series, which is actually owned by Microsoft.

Nearly all of the nation’s top operators have a slew of smartphones slated to launch in the coming months with those powered by Android the most numerous.

“As in the past, carrier distribution and promotion have played a crucial role in determining smartphone market share,” said Ross Rubin, executive director of industry analysis for NPD, and a current contributor to RCR Wireless News’ “Analyst Angle” feature. “In order to compete with the iPhone, Verizon Wireless has expanded its buy-one-get-one offer beyond RIM devices to now include all of their smartphones.”

The NPD Group also noted that continued strong sales of smartphones and messaging devices pushed average selling prices of mobile phones up 5% during the first quarter compared with the same quarter of 2009 to $88, though ASPs for smartphones actually decreased 3% year-over-year to $151.

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