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Skyhook Wireless announced Monday that it is integrating GPS into its geolocation service to get an even more accurate fix for location-based services.

Up until now, Skyhook's geolocation service, which is used on Apple's iPhone, among other services and devices, has used Wi-Fi hot spots to get a fix on location. The service works very well in densely populated areas where there are a lot of Wi-Fi radios transmitting signals. And it's great for locating places indoors or in cities with a lot of tall buildings, all places where satellite-based GPS, or Global Positioning System, technology has difficulty getting a location fix.

But for all of the benefits of Wi-Fi, it doesn't work in rural areas where hot spots are few and far between. This is where the GPS technology comes in.

"Our technology works great in populated areas," said Ted Morgan, co-founder and CEO of Skyhook. "But on the open road it's more difficult. Now with GPS integrated, iPhone users, for example, can get turn-by-turn navigation anywhere they go."

The way the Skyhook service originally worked is that it would triangulate and get a fix on location-based data on known Wi-Fi hot spots. The company has a database of where Wi-Fi hot spots all over the country are located. Specifically, it uses the Mac address, a unique identifier that every piece of hardware on the Internet must have, to identify the router, and it matches that identifier with the location. Using multiple signals in the same geographic location, the Skyhook technology is able to pinpoint a location.

Now Skyhook has integrated GPS into its technology, which it is putting in chipsets that go into mobile phones and other devices that also have GPS recievers. GPS will allow Skyhook to cover more ground with its geolocation technology. The Wi-Fi/GPS technology should also help services that used GPS only to get information about location more quickly. Because GPS uses three or four low-orbiting satellites to pinpoint a location, it can take a few seconds before it's able to calculate a location. Skyhook's Wi-Fi technology can get location information much faster.

So where might we see this new technology? The original Wi-Fi-based Skyhook technology is already on the iPhone. Morgan couldn't say for sure that the new "hybrid" Wi-Fi/GPS technology will be used on the iPhone 3G that comes out next week. But one of the upgrades in the new iPhone 3G is the addition of a GPS chip, so it would make sense that the Skyhook technology would be used on it. Morgan did say that Apple has access to all of its technology.

Verizon Wireless has upped the ante in its efforts to take on Apple's iTunes store in the digital music market by offering DRM-free music for all purchased music plus a new subscription service. But will it be enough to make a dent in Apple's dominance?

On Monday, Verizon Wireless will announce the revamped V Cast music store, which will be loaded with digital music that is free of the pesky digital rights management encryption on all songs that are purchased through the store. Verizon is joining Amazon as the only other digital music distributor that will be selling DRM-free music from all four of the major record labels, including, Sony BMG, Universal Music Group, Warner Music Group, and The EMI Group.

The company is also offering its first ever music subscription service courtesy of its relationship with Real Networks' Rhapsody America service. Verizon announced it was partnering with Rhapsody last year. And through this partnership, the company has redesigned its music store and the V Cast user interface.

The new service clearly puts Verizon Wireless in a new category when it comes to digital music. Verizon cell phone subscribers as well as nonsubscribers can download the DRM-free music onto a PC and sync it to any MP3-enabled device for $0.99 a song. Songs can be purchased over Verizon's cell phone network onto a Verizon phone for $1.99 a pop. And the new V Cast service also allows Rhapsody subscribers to sync their phones to the subscription service, much the same way AT&T subscribers can access the Napster subscription service.

But even though it has potential to become a major player, it's still unlikely that the cell phone company's moves will have much impact on market leader Apple. Instead, experts believe that Verizon is much more likely to help grow an already underperforming market.

"The issue isn't whether Verizon can take down iTunes," said Russ Crupnick, a senior analyst at the NPD Group. "But rather, can it help grow the market? And I think the answer to that is yes. Verizon is very well-positioned for that."

The music industry is in dire straits. Sales of CDs have been plummeting over recent years, and the industry hasn't been able to make up for the losses through digital distribution. Apple is by far the leader in digital downloads, hitting the 5 billionth song download mark from its iTunes music store just a couple of weeks ago. According to Crupnick, over three-fourths of the full music tracks downloaded come from the iTunes store. Amazon is a distant second, with other players such as Wal-Mart trailing even further behind.

So far, freeing music downloads from DRM protection hasn't done much to move the needle. Amazon and Wal-Mart have been offering DRM-free music for almost a year, and they still lag behind Apple. The reason for this could simply be that Apple is so far ahead in terms of market share that few people have reason to see DRM protection as a problem.

"When you have 80 percent market share on Apple devices," Crupnick said, "there isn't much demand from people to get unprotected music. They don't seem to encounter any issues with it."

Ed Ruth, director of digital music for Verizon, said that the company is simply trying to offer customers choices.

"Of course we recognize that Apple has done a great job," he said. "They have helped tell the digital music story quite well, and they've tilted the ecosystem in one direction. But in some ways they have trapped people into one experience. And that's the problem we're trying to solve."

Meanwhile, Verizon could also have an uphill struggle in getting people to use the Rhapsody subscription service, which costs about $15 a month for unlimited access to millions of songs. In the online world, only a small niche of music aficionados use services like Rhapsody and Napster. And so far, the model hasn't proven to be much more successful in the mobile world. AT&T has been offering the Napster music service, and even though the company hasn't published figures on how many customers are using the service, analysts say it hasn't been a runaway success.

But some analysts think that a service that does a good job of integrating Verizon's V Cast with Rhapsody could help attract new users to the subscription model.

"If they can make the experience of Rhapsody on a handset complimentary to what they are already doing with V Cast, I think it will make Verizon a stronger player by attracting new music subscribers," said Susan Kevorkian, an analyst at IDC.

While Verizon may never be able to beat Apple in the online music game, there's reason to believe that the company could beat out its fellow cell phone carriers and other music downloading services for market share. And in such a nascent market, Verizon still has an opportunity to make a significant amount of money from its music store and help move the carrier away from simply being a phone company.

Verizon claims that record labels have told it that in terms of revenue, it is already second to Apple when it comes to the money that is made from full track downloads. And in a recent survey of Internet users conducted by NPD Group, Crupnick said that over half of the respondents had heard of the V Cast music service. This was higher than awareness for music services from other cell phone companies such as Sprint Nextel or AT&T. But it was also higher than some well-established music brands, such as Microsoft's Zune music store, Rhapsody, and Napster. Still, only about 7 percent of the respondents said they had ever used the V Cast music service to download songs.

But Crupnick believes this consumer awareness could someday translate into growth for Verizon's V Cast service. Verizon also has other attributes that some of these other music distribution channels don't have. In addition to selling full track songs, Verizon is also able to help the record labels monetize the same songs in multiple ways by selling ringtones, ring-back tones, and wall papers of the artists. The company has even begun working to help produce some albums using a mobile recording studio.

What's more, Verizon has access to a wide variety of music playing devices, something that Amazon and Wal-Mart don't readily offer themselves. And it already has an established billing relationship with most of the customers that will likely use its site to download music. All of this bodes well for Verizon. But is it enough to really challenge Apple's dominance?

The answer is probably no. But it could be enough to make it a strong alternative. At the end of the day, Verizon's Ruth said that it's all about forming good relationships with the music industry and providing a great service to customers.

"Our approach is to be as good a partner to the music industry as we can be, " he said. "And we always keep the customer experience and expectations in mind when designing and delivering the service. I think we've done that so far and as a result have earned the trust of our customers."

The Federal Communications Commission on Friday formalized its plans to auction off a section of wireless spectrum to buyers who promise to provide free Internet service that filters out pornography and other inappropriate content, and offers open access to third-party devices and applications.

The agency is seeking public comment on the plan details, of which are posted here. Winning bidders of the 25 megahertz of spectrum in the 2155MHz band would also be required to provide free wireless coverage to at least half of the United States within four years, and to at least 95 percent of the population by the end of the 10-year license, according to Reuters and the FCC posting.

The plan could face opposition from wireless service providers, who have traditionally opposed any stipulations imposed on wireless spectrum auctions. CTIA, the trade organization representing the industry, has already filed comments with the commission urging it not to put requirements on the spectrum.

Given that free wireless Internet business models have yet to be proven successful, it could prove challenging for the FCC to find bidders willing to take on the above stipulations.

Verizon Wireless has certified the first device that will operate on its Open Development network, the company said Friday during a conference call to update developers participating in the program.

Anthony Lewis, vice president for open development at Verizon, said that at least one device developer has completed the certification process that was first launched in March. The device that has been certified was already in the works when Verizon made details of the Open Development Initiative public just a few months ago.

Lewis said he was unable to provide details about the new handset. He wouldn't even name its manufacturer. He also didn't give a time frame for when the device will be commercially available on the open network. Still, he wanted to show the developer community that progress is being made.

"I want you to know the process works," he said during the conference call. "We believe the time is right to have this open development program. And I'm happy about some of the devices I've already seen."

Lewis also emphasized the importance of partnerships and collaboration in the process.

"We are here for you," he told the developers. "We're listening to you, and we are working to find the most effective way for you to bring your products and services to the network and out to the general population."

Verizon first announced plans for an open development network in November with the hope that it would make it easier and less expensive for third-party developers to bring new devices and applications to its network. Ultimately, Verizon hopes its open network will help spur innovation and provide a testing ground for new devices, applications, and services.

The new certification process is much more streamlined than the process companies must go through if they want to sell a Verizon-branded phone. Verizon is trying to make the new process as easy and open as possible. The company recently updated its Web page with a link that will allow those seeking product certification to track their device's progress from the initial stages all the way through to final certification and testing.

Developers urged to work directly with device makers
Since the device specifications for the open development network were released a few months ago, application developers have been clamoring for more information about how to get their applications on these new devices. Lewis said that Verizon is working with device makers first to lay the foundation for the open network. And he said the developers should work directly with device makers to develop applications.

"We are leaving the door wide open for applications," he said. "We are not going to evaluate applications on ODI (Open Development Initiative) devices. Any certification for applications we will leave up to device manufacturers."

He added that developers are free to use any operating system they choose on their devices whether its Google's Android, the open Linux platform Limo, or Microsoft's Windows Mobile.

Even though Verizon won't be taking an active role in certifying applications, the company will help bring application developers together with device makers. And Lewis encouraged application developers to join the Open Development Initiative and to contact Verizon to help initiate and facilitate conversations with device makers.

Lewis also confirmed that devices running on the ODI network will not be sold with contracts. This means that Verizon will not be subsidizing the cost of the devices. But it also means that Verizon will not charge those controversial early termination fees when customers ditch its service. Exact pricing details or ODI service plans haven't been made public yet. Lewis said Verizon is still working out the details, but it's likely the company could offer "pay as you go" and month-to-month service.

"We want to make sure the plans are simple," he said.

Local investors have rescued Philadelphia's citywide Wi-Fi network.

Former Verizon executive Mark Rupp is part of an effort to complete and improve the $17 million project that was built but abandoned last week by EarthLink, according to a report Tuesday in the Philadelphia Inquirer. Philadelphia Mayor Michael Nutter said during a news conference Tuesday that no public funds would be used to complete or operate the project, although no further financial details were released.

The group plans to create an ad-supported service that would be free to residents, but businesses would be charged, according to the investment group.

EarthLink, which had filed a proceeding in federal court to start removing Wi-Fi radios from city streetlights and cap its potential liability at $1 million, reportedly welcomed the announcement and said it would work with the new owners on a smooth transition.

EarthLink announced on June 10 that it was abandoning the project after being unable to find a buyer for the network, which has been 80 percent completed. It also claimed that after months of negotiations with the city and a nonprofit group interested in running the network, it was unable to close the deal.

EarthLink, which won the contract in 2006 to build what was at the time to be the largest citywide Wi-Fi deployment in the nation, said earlier this year that it's getting out of the Wi-Fi business.

After the death of EarthLink CEO Garry Betty in early 2007, the company began wiggling out of several contracts with cities such as San Francisco and Houston. Early this year it announced it was abandoning the business altogether, and it started negotiating with five cities in which networks had already been built or partially built.

Ditching that old-school landline could pay off.

Verizon Communications says it will offer discounts to landline-free wireless customers who combine Internet or TV service from the company. The discounts will range from $8 to $21 a month, depending on the wireless package.

The Associated Press reports that Verizon will introduce the Flex Double Play bundle starting next week for those who combine a Verizon Wireless plan with broadband or Fios TV, the company's cable TV service.

The discount applies to DSL service with downloads at 3 megabits per second, and to Fios (fiber-optic) broadband at up to 20Mbps, the AP reports. The fastest DSL plan, at 7Mbps, and the fastest Fios service, at 50 mbps, are not eligible for the bundle.

The FlexDouble Play represents the latest pricing move by wireless operators to appeal to consumers who are dropping their traditional phones and looking to consolidate their communications bills.

Now, how about a cool-retro discount for those of us who still like to talk on phones with cords attached?

Verizon Wireless Palm Centro

(Credit: Palm)

It's not quite the Palm Treo 850 or Treo 800w news we were hoping for, but we're sure Verizon Wireless customers will still be happy to hear that they'll be able to get their hands on a Palm Centro starting Friday, June 13. Like the AT&T and Sprint models, Verizon's version of the entry-level smartphone will carry the same affordable price tag of $99 (with a two-year contract) and comes in a cobalt blue color.

Details are still trickling in as far as what the Verizon Palm Centro will include (Palm was finalizing the releases when we talked to a rep yesterday afternoon), but we imagine the feature list won't be too different from the other models. This includes integrated Bluetooth; EV-DO support; Documents to Go 10; a 1.3-megapixel camera; and PocketTunes Deluxe. For e-mail, you have your choice of using VersaMail 4.0 with built-in support for Microsoft Direct Push Technology and Exchange ActiveSync, or you can choose Verizon's proprietary Wireless Sync e-mail solution. It does not appear that the Centro will work with the carrier's V Cast streaming media services, nor will it support the A2DP Bluetooth profile. We'll be getting the full story from Palm later today, so check back soon.

Verizon Wireless' plan to buy regional cell phone company Alltel will make it the largest cell phone operator in the country with more than 80 million subscribers. But for consumers, is a behemoth Verizon a boon or a beast?

That's the question that regulators will ultimately decide. The biggest fear for consumer advocates when companies merge is that consolidation means fewer choices for consumers, and fewer choices often leads to higher prices.

So far consumer advocates seem split on the issue.

"If the deal goes through, two companies, Verizon and AT&T, will control about 150 million of the 260 million wireless customers in the U.S.," Gigi B. Sohn, president and co-founder of Public Knowledge, said in a statement. "With Sprint in a weakened condition, this deal will speed the unfortunate trend of giving consumers fewer, rather than more choices in telecommunications services, while giving a few companies more control over the lives of consumers."

But other groups seem less concerned.

"We'll ask for a careful review, but I don't see enormous antitrust problems," Gene Kimmelman of the Consumers Union told The Wall Street Journal.

The reason is that there are relatively few markets where Verizon Wireless and Alltel are the only two carriers offering service. And in places where there are the only two cell phone companies offering service, it's likely that regulators would force Verizon to sell off some of its assets to another provider.

For the most part, analysts say that the Verizon-Alltel merger by itself will have relatively little impact on pricing. But if the market continues to consolidate and other small players are gobbled up by bigger players, or one of the four major players buys another major player, then prices could stagnate, especially for data services.

"Alltel being bought won't be enough to impact pricing," Tole Hart, an analyst with Gartner said. "But if there is more consolidation that could eliminate some competition. And it could further slowdown future price drops."

Currently, the wireless industry is a poster child for competition throughout most of the U.S. There are four major nationwide wireless operators--AT&T, Verizon Wireless, Sprint Nextel, and T-Mobile USA--which operate in almost every major market in the U.S. Over the last few years, this four-player oligopoly has successfully forced down pricing on voice minutes.

But in the past year, prices have stabilized, with all of the major players offering similarly priced plans starting at about 450 to 500 minutes of talk time per month for about $39.99. Competition has also forced these players to offer unlimited talk plans for around $99 a month.

Differing on data plans
Where prices differ the most is in data plans for smartphone users. While Verizon offers 450 minutes of talk time and unlimited data for $79.99 a month, Alltel offers a similar plan for $69.99. Sprint Nextel also offers its Simply Everything plan with 450 voice minutes and unlimited data and messaging for $69.99. AT&T's lowest cost data and voice plan is comparable to Verizon's at about $75 a month.

But where consumers often get the best deals is in rural areas where smaller, regional players, such as Metro PCS and Leap Wireless operate. These providers offer all-you-can-eat plans for a low fixed price. For example, MetroPCS offers regional calling plans for $30, $35, $40, $45 or $50, depending on which features are selected.

While these operators are relatively small--MetroPCS only has 3 million subscribers--they are also the most likely to be gobbled up by bigger players. And if that happens, many of these low-cost, no-contract plans will go away.

The big cell phone operators have already shown interest in some smaller players. AT&T late last year completed its purchase of Dobson Communications. And Verizon Wireless is also in the middle of acquiring Rural Cellular.

But acquisitions of these smaller rural carriers will only affect a limited number of customers in small markets. The biggest impact on pricing from consolidation could occur if Sprint Nextel or T-Mobile USA, the No. 3 and No. 4 national carriers respectively, were to be bought.

Currently, these operators have been the ones putting the most pricing pressure on AT&T and Verizon to stay competitive with their cell phone plans. T-Mobile's MyFaves program allows callers to call any five numbers on any network without using their minutes. And Sprint has long offered competitive data pricing.

While AT&T and Verizon haven't responded to these pricing structures by lowering their prices, they have been trying to offer customers more services and features for the same price.

Right now it's hard to imagine either Sprint Nextel or T-Mobile being bought. Sprint is the most likely major wireless carrier to be acquired, but there aren't many potential suitors. Verizon is the only major carrier that uses its CDMA technology, and it has no reason to take on Sprint's mountain of problems.

T-Mobile's parent company Deutsche Telekom has supposedly been eying the struggling cell phone operator, but the two companies use different wireless standards that would make integrating the networks complex and expensive.

So for now, it doesn't appear that consumers have much to worry about when it comes to a Verizon/Alltel marriage. That said, consumers are anxious about consolidation. What do you think? Feel free to share your thoughts in the Talk Back section of this blog.

The third time must have been the charm for Verizon Wireless and regional cell phone operator Alltel.

Verizon Wireless supposedly has looked at buying Alltel twice in the past three years. And on Thursday it finally pulled the trigger, announcing that it plans to buy Alltel in a deal valued at $28.1 billion. As part of the deal Verizon will pay $5.9 billion and assume $22.2 billion in debt. The acquisition will make Verizon Wireless the largest cell phone company in the U.S., stripping AT&T of that title.

The Verizon Wireless version of LG's voyager phone.

(Credit: Verizon Wireless)

Verizon Wireless expects to close the deal by the end of the year, pending regulatory approvals.

Alltel was sold only last year for $27.5 billion to the buyout arm of Goldman Sachs and private equity firm TPG Capital. And, according to The Wall Street Journal, the banks that financed the deal, including Goldman Sachs, Citigroup, Barclays, and Royal Bank of Scotland Group, still owe about $24 billion in loans and bond financing. Alltel's sale to Verizon will eliminate this hefty debt burden, which has become more acute since the credit crunch started this year.

A takeover of Alltel by Verizon Wireless will create the largest cell phone operator in the country by adding Alltel's 13.2 million customers bringing the total to some 80 million subscribers. AT&T, which is currently the nation's largest cell phone provider, reported at the end of last quarter that it has 71.4 million customers. Verizon Wireless, jointly owned by Verizon Communications and U.K.-based Vodafone Group, would gain customers mainly in the Midwest and South where Alltel operates.

The merger will likely be carefully scrutinized by regulators in the Department of Justice and the Federal Communications Commission. And it's likely that Verizon will be asked to divest some of its assets in markets where the companies overlap.

Verizon Wireless was among the companies that considered buying Alltel last year when the company first started shopping itself around. And rumors had circulated back in 2005 that Verizon was interested in purchasing the regional cell phone operator. Both times the company didn't make its move.

In the first quarter of 2008, Alltel reported an 18 percent increase in earnings. Both Alltel and Verizon Wireless seem to be benefitting from troubles at Sprint Nextel, which has been bleeding customers since its 2005 acquisition of Nextel. As Sprint Nextel loses customers, Alltel and Verizon have been adding customers, which is has helped grow their bottom lines.

And the deal makes sense for Verizon Wireless. The two companies both use the CDMA (code division multiple access) cellular technology, so integrating the networks should not be a huge obstacle. The companies also share a similar technology road map. Earlier this year, Alltel said it would use a next-generation wireless technology called LTE to build its 4G network, the same technology Verizon has said it will use to build its 4G network.

What's more Verizon Wireless is in a good financial position to make such a purchase. Even though the company has just laid out $9 billion for new spectrum in the FCC's recent 700 MHz spectrum auction, it isn't carrying a heavy load of debt relative to its earnings. So the deal makes good sense for Verizon.

But the bigger question now is, who will be next? Acquisitions often occur in multiples. And given the current state of the economy, it's likely that more phone companies will merge in order to gain efficiencies and ultimately reduce costs.

Rumors have floated around that German-based Deutsche Telekom has been eying the struggling Sprint Nextel. I think this is a highly unlikely scenario since Deutsche Telekom's T-Mobile USA uses a different technology standard GSM. But perhaps there will be more consolidation among the smaller regional carriers. AT&T and T-Mobile USA could start gobbling up these smaller players, many of which use their GSM technology.