Will RIM Surrender?

Now that Nokia has signed a licensing agreemwnt with NTP involving five wireless patents, the big question is whether Research in Motion will follow suit. When the world's biggest wireless device maker – at least for now – gives in, it seems logical that RIM would see the light as well. Given RIM has spent millions of dollars to defend itself against NTP since the legal dispute broke out two years ago, RIM may be dug in for a long battle. The risk, however, is that RIM will lose a recent appeal, and be forced to pay NTP anyway. Perhaps RIM knows something Nokia didn't.

The Who's Who of Canadian Telecom

In an industry starting to see more than its share of conferences again with less-than-inspiring speakers, the 2004 Canadian Telecom Summit has managed to come up with an impressive list of speakers. The agenda includes Cisco CEO John Chambers, Nortel CEO Bill Owens, Telus CEO Darren Entwistle and CRTC chair Charles Dalfen. Chambers is clearly the star attraction given how his company dominates the telecom equipment industry and has its sights set on the telecom sector. But Owens' first public speech since taking over as Nortel's CEO in April should be interesting from a public relations and strategic perspective. So what does Owens say to his first live audience other than everything's going to be great once the company's accounting issues are resolved? So far, Nortel's PR efforts has been a home run – highlighted by a series of “friendly” stories in the Ottawa Citizen after Owens gave an exclusive interview to veteran tech writer Jim Bagnell. In terms of timing, the show is happening at a fascinating juncture as the Canadian telecom industry goes through a consolidation that has seen Manitoba Telecom acquire Allstream Inc., Bell Canada buy 360Networks' Canadian assets, and Telus make a hostile bid for Microcell Telecommunications. The only “independent” left is Call-Net Enterprises Inc., which should have made a bid for Microcell to become a more vibrant national player. Maybe CEO Bill Linton, who will also make a keynote speech at the show, will let us in on his plans.

Wi-fi Marries Cellular

One of the more intriguing developments is how wireless carriers are looking to off-load some of their traffic to broadband or PSTN networks when customers are in their homes. The idea is that a person's wireless phone would connect to a Wi-Fi base station, and then onto the PSTN or Internet – rather than connecting to the wireless network right away. It's a way wireless carriers can encourage usage while keeping traffic off their own networks. A company playing in this space is Kineto Wireless, a wireless software developer working on technology that will allow a cellular call to be switched from a handset to a home Wi-Fi network without interruption. Kineto picked up US$35-million of private equity earlier this week.

RIM's Patent Fight

It will be interesting to see the transcripts of RIM's 15 minutes in court yesterday as it battles NTP over patents apparently crucial to the Blackberry. This battle is already costing RIM millions of dollars in contingency and legal fees. The potential for a licensing agreement seems unlikely given that court-imposed talks between RIM and NTP went nowhere after RIM lost a lower court decision last year. While it could be a disaster if RIM loses, this case talks to a more important issue: the ability for individuals and/or companies to broadly apply patents against new technology. It is becoming increasingly obvious there is something wrong about how the U.S. Patent Office awards patents for technology that is a very slight modification to existing standards, and how patent holders have been allowed to make life difficult for companies coming up with new products. NTP's six patents, for example, cover technology involving “electronic mail system with RF communications to mobile processors” The question is: do these patents encompass everything involving e-mail and wireless networks? If so, is it fair and would it keep product developers such as RIM from introducing great new products such as the Blackberry? Stay tuned….

Is that it?

After day after Nortel CEO Bill Owens and CFO Bill Kerr finally provided analysts with an audience, we now know the slow talking Owens is bullish about the company's future and committed to installing new financial systems. Unfortunately, there remain no clues into why Frank Dunn was canned as CEO and the magnitude of the accounting “irregularities”. It appears many financial analysts have decided to look forward rather than worry about accounting issues that happened in the past. After the conference call yesterday, Blaylock & Partners Gabriel Lowy decided Nortel had said what it needed to say, and promptly reiterated his US$5 stock target price. UBS also gave the ongoing business – VOIP in wireless, in particular – some attention in its mini-report. Perhaps it is time for the investment community to get over it given there is really nothing you can do about the past – other than restate your books. With this in mind, maybe investors to look at Nortel's fundamentals and the industry's growth outlook. Then again, it is difficult to tell whether Nortel is actually making money from equipment sales until the company's accountants get their acts together.

Michael Sabia's Core Strategy

Over the past two years, BCE CEO Michael Sabia has pursued a strategy focused on core telecom network assets. In pulling a u-turn away from predecessor Jean Monty's ambitious multi-billion dollar convergence agenda, Sabia has returned BCE back to its roots. From buying the 20% stake back from SBC Communications and privatizing Bell Mobility to acquiring 360Networks' Canadian assets earlier this week for $275-million, Sabia's strategy is clear. The big question is how long will Sabia hold on to BCE's media assets – the Globe & Mail and CTV. In a conference call earlier after the 360Networks deal, he danced around the subject – citing the Globe's good performance and the fact CTV has 14 out of the top 20 shows. He mentioned that BCE is trying to figure out where content fits into its communications strategy. Hah! Sabia simply waiting for market conditions to improve so he can sell BellGlobeMedia to the right buyer at the right price. With 360Networks in the fold, watch Bell pour lots of money into going after Telus Corp.'s corporate business in Alberta and B.C. If Telus CEO Darren Entwistle thought he had problems with a contentious labor situation, a wireline business that is eroding and a difficult hostile bid for Microcell Telecommunications Inc. he ain't seen nothing yet.