Wireless Vibrations

Software has been identified on many handheld devices that logs various user behaviors and has been the subject of privacy outrage this week. Elsewhere, AT&T Mobility LLC has had to rethink its strategy for acquiring T-Mobile USA, Inc. in a setback in its battle to become the largest U.S. carrier network. Lastly, Research in Motion, Ltd. (RIM) has announced the successor to the BlackBerry Enterprise Server (BES) as the company becomes device-agnostic with its platform management tools.

Focal Points:

• After noticing some unrecognized traffic coming from mobile devices on his company's Wi-Fi network, a Connecticut system administrator identified network diagnostic Carrier IQ, Inc. as the culprit. The software is designed to assist carriers in diagnosing problems related to dropped calls, difficulty with text message transmissions, and poor data network performance. However, the application runs as a service on many leading smartphone devices and cannot be stopped unless a phone is "rooted" to remove the software. Carrier IQ claims that its software is not a security threat as it does not track or transmit sensitive user information like key presses, photo information, and Web sites visited, and that data is primarily used in aggregate to troubleshoot problems across a carrier network. The software's presence is never fully disclosed on the devices on which it is preinstalled and concerns have arisen regarding user privacy and whether it violates user security and carrier privacy policies. Numerous handheld device manufacturers have claimed that carriers require them to install the software and several carriers are being cagy or denying the usage of the software. Two class action lawsuits have been filed and the Federal Trade Commission (FTC) has been asked to open an investigation into the company.
• AT&T withdrew its bid with the Federal Communications Commission (FCC) to acquire the fourth largest wireless carrier, T-Mobile, this week after Chairman Julius Genachowski announced his disapproval of combining the two entities. Further, Genachowski declared his intention to pass the request to the Department of Justice (DOJ) and seek to prevent the merger on antitrust concerns.  Though AT&T did this, in part, to prevent the Commission from publishing its findings it chose to do so anyway. Therein, the Commission detailed the reasons why it disagreed with AT&T's arguments that fourth-generation (4G) wireless expansion would increase, competition would increase, consumer service prices would fall, jobs would be created, and network expansion would come at no cost to the company. Despite this setback, AT&T has stated that it still intends to pursue the merger and will fight with the DOJ first before refilling with the FCC. 
• RIM has announced a mobile management platform, called BlackBerry Mobile Fusion, which is capable of managing devices running Apple Inc.'s iOS and Google Inc.'s Android operating systems as well as BlackBerry products. BlackBerry Mobile Fusion is slated for general availability in March, at which time it will be able to oversee tasks including app management, policy definition and enforcement, and security. BES functionality such as calendar and e-mail synchronization will remain in the short term and will be controlled by BlackBerry Mobile Fusion. However, the Mobile Fusion server is intended to supersede BES with version 2.0 of the platform as enterprises adopt RIM smartphones running the new BBX operating system. Up to 10,000 devices can be managed from a single Mobile Fusion server or virtual machine. In related news, RIM is taking a $485 million charge in the third quarter due to deep discounting of its PlayBook tablet and a $50 million charge for the three-day global BlackBerry outage in October.

Experton Group believes carriers may be using the data collected from the Carrier IQ software in a completely legitimate manner designed to improve network performance and user experience. It is not perfectly clear, however, that Carrier IQ's behaviors comply with enterprise security policies or with the carriers' own privacy policies. The surreptitious nature of the Carrier IQ software installation and usage is cause for concern, especially for enterprises with high degrees of security requirements that require well-defined performance and privacy protection from their carrier partners. IT executives should investigate the usage of Carrier IQ on existing enterprise equipment and take carriers to task contractually for the software’s installation and behavior. Moreover, steps should be taken to get carriers to better disclose the usage of such software and prevent such potentially egregious violations of trust and security in the future. The AT&T/T-Mobile merger is far from over despite the retraction of the FCC request, as the companies gear up to fight the battle starting with the DOJ. It is hard to tell whether AT&T will be able to successfully convince the courts that the acquisition is a good decision given all the compelling arguments against the combination.

IT executives should continue to stay abreast of ongoing developments over the next 12 or more months as this story continues, but should not fear that either company's service levels or pricing will change dramatically – if at all – during the merger process. RIM's Mobile Fusion platform has the right mix of management and enforcement capabilities but is a very late entrant to a market that is heavily entrenched with powerful and capable players. It is unlikely that the release of Mobile Fusion or new devices based on the upcoming BBX platform will be convincing enough to restore lost enterprise trust. The consumer market has already seen huge successes realized from other vendors and "righting the ship" will be extremely difficult, if not impossible, for the troubled vendor. IT executives that remain deeply entrenched in BlackBerry infrastructure should continue to review changes from RIM and determine the enterprise risk and value of adopting new solutions versus moving to alternative platforms.