A Foolish Week of Telecom

A better name for Frankenstorm Sandy would have been Godzilla. The hurricane ripped up the mid-Atlantic region every which way, including taking out 25% of the cell towers in a 10-state area. Many that are still operating, at least as of Thursday, are doing so with the help of generators -- as long as there's fuel to run them.

Especially hard hit was Manhattan. After power was cut to the southern part of the island, data centers could not handle all the traffic while running on their backup power sources. Some of Verizon's (NYSE: VZ  ) operations downtown were flooded, disrupting its wireline Internet and phone services, the company admitted. A spokesman said, "two critical switching centers in Manhattan ... were severely affected due to flooding and power outage issues."

AT&T (NYSE: T  )  was not so forthcoming about its problems, initially stating only that it was "in the initial stages of performing an on-the-ground assessment of our network for damage," said its spokesman, according to Dow Jones Newswire.

A Sprint Nextel (NYSE: S  ) spokeswoman said, "We are definitely experiencing some impact," and that lower Manhattan had "an extended loss of commercial power."

The effects of this monster storm could end up costing the telcom and cable industries hundreds of million of dollars, according to Reuters. And that price could go as high as $550 to $600 million, estimated one analyst, James Ratcliffe of Barclays.

Meanwhile, on the left coast...
But while wind and waves were battering the east coast Monday, Microsoft (Nasdaq: MSFT  ) was trying to whip up some excitement in San Francisco with the unveiling of its latest mobile operating system, Windows Phone 8.

Nokia (NYSE: NOK  ) , Samsung, and HTC are three of the companies that will produce phones running WP8. Nokia especially has its fingers crossed that this updated OS will be able to boost sales of its Lumia line of Windows Phone-based smartphones, drawing users from Apple's (Nasdaq: AAPL  ) tremendously successful iPhones, and from phones running Google's (Nasdaq: GOOG  ) Android mobile operating system.

Verizon gave some support for Nokia on Monday when it said it would be launching this fall Nokia's Windows Phone 8-based and LTE-capable Lumia 822.

Tit for tat
Remember that Sino-American brouhaha stirred up by the House Intelligence committee when it warned that Chinese telecom equipment makers Huawei and ZTE, under orders from the Chinese government, want to infiltrate our telecommunications infrastructure and send back to China our deepest secrets?

Then it should not come as a shock that there would be some payback extracted from American companies doing business in China.

China Unicom (NYSE: CHU  ) was so concerned about security breaches coming from routers supplied by Cisco (Nasdaq: CSCO  ) that it removed them from a key Chinese backbone network node on Tuesday, as reported by Chinese-language news portal 21cbh.com, according to FierceTelecom.

Security experts quoted by 21cbh.com said the security problems "could paralyze China's information network."

Hey, that's my phone!
If you have a smartphone, you would be advised to hold on to it tightly when out in public, especially in an urban area. An FCC fact sheet (link opens PDF) states, "More than 40% of all robberies in New York City involve smartphones and other cell phones," and that in Washington, D.C., theft of cell phones had grown 54% between 2007 and 2011.

Obviously, something needed to be done about this problem.

U.S. mobile carriers have introduced a new database that will be more effective at blocking stolen phones. The database will keep a record of the heisted device's IMEI number, which identifies the phone itself. The old system targeted a phone's SIM card, but a SIM card could be exchanged for another one and the phone could still be used.

"The goal is to not only protect the consumer by cancelling the service, but by ultimately protecting the consumer by drying up the aftermarket for stolen phones," said Chris Guttman-McCabe, a vice president at the wireless industry trade association, CTIA.

Currently, AT&T and T-Mobile have combined their databases, while Verizon and Sprint offer theirs separately. By November of next year, the databases from all four carriers will be combined and will cover most of the cell phones used in the U.S.

When is an apology not an apology?
Apple had its knuckles rapped again by a U.K. court. Last July, a British patent court denied Apple's petition to ban the sale of Samsung's Galaxy Tab tablets. But Apple lost some face, too, along the lawsuit. The court ruled that Apple must put a notice on its website and in British national newspapers and trade journals that Samsung had not infringed on Apple's design for the iPad.

Apple also lost its appeal of that ruling, and, last week posted the apology on its website. Only it turned out not to be so much an apology as it was a displaying of the patent losses that Samsung had incurred in other jurisdictions.

This struck the British appeal judges as not quite cricket.

"I'm at a loss that a company such as Apple would do this," Bloomberg reported Judge Robin Jacob saying. "This is a plain breach of the order."

And when Apple said it needed 14 days in which to put up a more appropriate statement, it was met with this bit of scorn from the judge: "I would like to see the head of Apple make an affidavit setting out the technical difficulties which means Apple can't put this on" their website, said Judge Jacob. "This is Apple. They cannot put something on their website?"

Apple may feel it never has to say it's sorry because of the tremendous success it's had rewriting the mobile computing rulebook. But will the apparent hubris generated by its accomplishments make it more susceptible to a fall? By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the company, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.

Fool contributor Dan Radovsky owns shares of AT&T and Nokia. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, Microsoft, and AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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