Motion to Change Time of Oral Argument Concerning Defendants' Motion To Dismiss And Scheduling Conference Pursuant to Local Rule 6-3 filed by Think Computer Corporation. (Carroll, Michael) (Filed on 3/13/2012) Text modified on 3/14/2012 (bwS, COURT STAFF).
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page1 of 36
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
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Michael Brooks Carroll (Bar #54904)
Kevin A. Flautt (Bar #257892)
LAW OFFICES OF MICHAEL BROOKS CARROLL
300 Montgomery Street, Suite 650
San Francisco, California 94104
Telephone: (415) 788-7600
Facsimile: (415) 421-7379
carroll_law@sbcglobal.net
Attorneys for Plaintiff
THINK COMPUTER CORPORATION
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
San Jose Division
THINK COMPUTER CORPORATION,
)
)
Plaintiff,
)
)
v.
)
)
ROBERT VENCHIARUTTI, in his official
)
capacity as Deputy Commissioner of the
)
California Department of Financial
)
Institutions; WILLIAM HARAF, in his official )
capacity as Commissioner of the California
)
Department of Financial Institutions; TRACI )
STEVENS, in her official capacity as Acting )
Secretary of the California Business,
)
Transportation and Housing Agency; JACOB )
A. APPELSMITH, in his official capacity as )
Senior Advisor to the Governor of the STATE )
OF California; EDMUND G. BROWN, JR. in )
his official capacity as Governor of the State of )
California; and KAMALA HARRIS, in her
)
official capacity as Attorney General of the
)
State of California,
)
)
)
Defendants.
Case No. CV11-05496-HRL
PLAINTIFF’S MOTION TO CHANGE TIME
OF ORAL ARGUMENT CONCERNING
DEFENDANTS’ MOTION TO DISMISS AND
SCHEDULING CONFERENCE PURSUANT TO
LOCAL RULE 6-3
Before the Honorable Howard R. Lloyd
Complaint Filed: November 14, 2011
First Amended Complaint Filed: January 31, 2012
Trial Date: None Yet Set
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MOTION TO CHANGE TIME PURSUANT TO LOCAL RULE 6-3 - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page2 of 36
Plaintiff, Think Computer Corporation (hereinafter, “Plaintiff” or “Think”), hereby respectfully
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moves this Court to adjust the timing set forth in its Notice (Docket No. 32) for the following reasons:
I.
1.
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2.
On January 23, 2012, the parties jointly stipulated that the State Defendants would
answer or otherwise respond to Plaintiff’s First Amended Complaint, filed on January 31, 2012, in
accordance with Federal Rule of Civil Prodcedure 15(a)(1). The State Defendants filed their Motion to
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Dismiss on February 14, 2012.
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
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On January 12, 2012, the parties jointly stipulated to extending the State Defendants’
time to respond to Plaintiff’s initial Complaint until January 23, 2012.
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Previous Time Modifications
3.
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On March 12, 2012, the Clerk to this action filed and served electronically NOTICE
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REGARDING MOTION HEARING AND INITIAL CASE AND MANAGEMENT CONFERENCE
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(Docket. No. 32). This notice states that the hearing on State Defendants’ Motion to Dismiss (Docket.
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No. 24) has been continued to April 17, 2012 at 10:00 A.M, and the initial case management conference
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has been continued to May 29, 2012 at 1:30 P.M. The effect of the continuances, namely the delay of
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time, substantially increases the threat of significant irreparable injury to Plaintiff.
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II.
Reasons for Requested Shortening of Time
2.
Plaintiff’s field of business, internet-based mobile payment technology, is intensely
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competitive. Plaintiff’s inability to operate its business in the State of California and nationwide as a
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result of the State Defendants’ actions causes it irreparable harm with each passing week that it cannot
offer its products and services. See Exhibit D.
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Plaintiff’s competitors do not all necessarily abide by the law (First Amended Complaint,
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¶ 10), and the State Defendants’ arbitrary enforcement of the Money Transmission Act has allowed
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many of them to continue operating even while Plaintiff cannot. See Exhibit B, Declaration of Aaron
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Greenspan, President & CEO, Think Computer Corporation (“Greenspan Declaration”).
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MOTION TO CHANGE TIME PURSUANT TO LOCAL RULE 6-3 - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page3 of 36
4.
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Commissioner of the Department of Financial Institutions effective Friday, March 16, 2012, this Court
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should furthermore give the parties the opportunity to present and solve the issues at hand while all
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parties to these proceedings are still available. As no reason for Defendant Haraf’s resignation has been
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publicly announced or otherwise stated, it is unclear if he will continue to be present in this District after
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March 16, 2012. See Exhibit C.
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III.
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Efforts to Obtain a Joint Stipulation
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Counsel for State Defendants have indicated to counsel for Plaintiff that they do not
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oppose “having the matter heard on an earlier date.” Counsel for State Defendants have previously
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
Given the announcement of the resignation of Defendant William Haraf as
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indicated their desire to resolve all outstanding matters as soon as possible.
IV.
Nature of the Motion
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The underlying dispute centers around the State Defendants’ Motion to Dismiss.
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Plaintiff has argued that its facial and as-applied challenges to the constitutionality of the Money
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Transmission Act are valid and well substantiated by numerous facts. State Defendants have argued
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that Plaintiff has failed to state a claim upon which relief can be granted, and even if valid claims exist,
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that the issues are not ripe for judicial review. State Defendants further allege that Congress expressly
authorized the states to regulate internet-based commerce three full years before the commercial internet
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began to exist.
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V.
Harm and Prejudice Would Affect Plaintiff Without The Change Of Time
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The injury to Plaintiff in the absence of a shortening of time significantly outweighs the
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potential harm that expediting proceedings might cause the State Defendants. Greenspan Declaration,
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supra. (“Think Computer Corporation has more to lose than the State of California in this matter.”)
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Plaintiff will forfeit substantial market opportunities the longer it is unable to operate due to the
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regulatory uncertainty caused by the State Defendants. Plaintiff has been shut down since July 1, 2011.
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MOTION TO CHANGE TIME PURSUANT TO LOCAL RULE 6-3 - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page4 of 36
8.
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employees in California aside from Mr. Greenspan, and Plaintiff cannot hire additional employees in
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good faith under the cloud of uncertainty caused by the State Defendants. Mr. Greenspan has chronic
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health conditions that make his need for health insurance paramount. The health insurance contract in
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question is up for renewal within the next three months.
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VI.
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Effect on Case Schedule
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Scheduling the hearing and conference date sooner, rather than later, would neither
disserve the public interest nor adversely affect the case schedule. Id. (“[T]he public stands to lose
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nothing if arguments on the State’s Motion to Dismiss are heard sooner rather than later.”) Combining
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
Plaintiff will be unable to renew its principal’s contract for health insurance without any
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the two events into one would increase the overall efficiency of the proceedings for all of the parties
involved and hopefully allow discovery to begin sooner.
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WHEREFORE, Plaintiff respectfully requests that the Court:
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1.
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Regarding both the (i) hearing on the State Defendants’ Motion to Dismiss and (ii) the
initial case management conference, reset each date to the earliest date possible for the Court.
2.
Regarding both the (i) hearing on the State Defendants’ Motion to Dismiss and (ii) initial
case management conference, consolidate both events into one timeslot, and set the combined date to
the earliest date possible for the Court.
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Dated: March 13, 2012
Respectfully submitted,
LAW OFFICES OF MICHAEL BROOKS
CARROLL
By: /s/ Kevin A. Flautt__________
Kevin A. Flautt, Esq.
Attorneys for Plaintiff THINK COMPUTER
CORPORATION
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MOTION TO CHANGE TIME PURSUANT TO LOCAL RULE 6-3 - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page5 of 36
CERTIFICATE OF SERVICE
I, Kevin A. Flautt, hereby certify that this document filed through the ECF system will be
sent electronically to the registered participants as identified on the Notice of Electronic Filing
(NEF) and paper copies will be sent to those indicated as non-registered participants.
By
/s/ Kevin A. Flautt
Kevin A. Flautt
Law Offices of Michael Brooks Carroll
300 Montgomery Street, Suite 650
San Francisco, California 94104
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page6 of 36
EXHIBIT A
[Proposed] Order Granting Change of Time
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page7 of 36
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
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Michael Brooks Carroll (Bar #54904)
Kevin A. Flautt (Bar #257892)
LAW OFFICES OF MICHAEL BROOKS CARROLL
300 Montgomery Street, Suite 650
San Francisco, California 94104
Telephone: (415) 788-7600
Facsimile: (415) 421-7379
carroll_law@sbcglobal.net
Attorneys for Plaintiff
THINK COMPUTER CORPORATION
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
San Jose Division
THINK COMPUTER CORPORATION,
)
)
Plaintiff,
)
)
v.
)
)
ROBERT VENCHIARUTTI, in his official
)
capacity as Deputy Commissioner of the
)
California Department of Financial
)
Institutions; WILLIAM HARAF, in his official )
capacity as Commissioner of the California
)
Department of Financial Institutions; TRACI )
STEVENS, in her official capacity as Acting )
Secretary of the California Business,
)
Transportation and Housing Agency; JACOB )
A. APPELSMITH, in his official capacity as )
Senior Advisor to the Governor of the STATE )
OF California; EDMUND G. BROWN, JR. in )
his official capacity as Governor of the State of )
California; and KAMALA HARRIS, in her
)
official capacity as Attorney General of the
)
State of California,
)
)
)
Defendants.
Case No. CV11-05496-HRL
[PROPOSED] ORDER GRANTING
PLAINTIFF’S MOTION TO CHANGE TIME
OF ORAL ARGUMENT CONCERNING
DEFENDANTS’ MOTION TO DISMISS AND
SCHEDULING CONFERENCE PURSUANT TO
LOCAL RULE 6-3
Before the Honorable Howard R. Lloyd
Complaint Filed: November 14, 2011
First Amended Complaint Filed: January 31, 2012
Trial Date: None Yet Set
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[PROPOSED] ORDER GRANTING PLAINTIFF’S MOTION TO CHANGE TIME - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page8 of 36
Having read and considered Plaintiff Think Computer Corporation’s Motion to Change Time of
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Oral Argument Concerning Defendants’ Motion to Dismiss and Scheduling Conference Pursuant To
Local Rule 6-3, and good cause appearing, the Court hereby grants the Motion to Change Time and
IT IS HEREBY ORDERED that the oral argument concerning the Defendants’ Motion to
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Dismiss and the scheduling conference shall take place on:
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[ ] March 20, 2012 at 10:00 A.M.
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[ ] March 27, 2012 at 10:00 A.M.
[ ] April 3, 2012 at 10:00 A.M.
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[ ] Some other time as the Court deems proper
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
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Dated:
Honorable Howard R. Lloyd
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[PROPOSED] ORDER GRANTING PLAINTIFF’S MOTION TO CHANGE TIME - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page9 of 36
EXHIBIT B
Declaration by Aaron Greenspan, President & CEO, Think Computer Corporation
PDF Page 11
Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page10 of 36
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
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Michael Brooks Carroll (Bar #54904)
Kevin A. Flautt (Bar #257892)
LAW OFFICES OF MICHAEL BROOKS CARROLL
300 Montgomery Street, Suite 650
San Francisco, California 94104
Telephone: (415) 788-7600
Facsimile: (415) 421-7379
carroll_law@sbcglobal.net
Attorneys for Plaintiff
THINK COMPUTER CORPORATION
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
San Jose Division
THINK COMPUTER CORPORATION,
)
)
Plaintiff,
)
)
v.
)
)
ROBERT VENCHIARUTTI, in his official
)
capacity as Deputy Commissioner of the
)
California Department of Financial
)
Institutions; WILLIAM HARAF, in his official )
capacity as Commissioner of the California
)
Department of Financial Institutions; TRACI )
STEVENS, in her official capacity as Acting )
Secretary of the California Business,
)
Transportation and Housing Agency; JACOB )
A. APPELSMITH, in his official capacity as )
Senior Advisor to the Governor of the STATE )
OF California; EDMUND G. BROWN, JR. in )
his official capacity as Governor of the State of )
California; and KAMALA HARRIS, in her
)
official capacity as Attorney General of the
)
State of California,
)
)
)
Defendants.
Case No. CV11-05496-HRL
DECLARATION OF AARON GREENSPAN IN
SUPPORT OF PLAINTIFF’S MOTION TO
CHANGE TIME OF ORAL ARGUMENT
CONCERNING DEFENDANTS’ MOTION TO
DISMISS AND SCHEDULING CONFERENCE
PURSUANT TO LOCAL RULE 6-3
Before the Honorable Howard R. Lloyd
Complaint Filed: November 14, 2011
First Amended Complaint Filed: January 31, 2012
Trial Date: None Yet Set
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DECLARATION OF AARON GREENSPAN IN SUPPORT OF MOTION TO CHANGE TIME - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page11 of 36
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I am the President and CEO of Think Computer Corporation, the plaintiff in this matter.
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My company has invested a substantial sum of time and money in developing proprietary intellectual
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property that serves the purpose of conducting electronic payments via the internet. Business on the
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internet moves at a rapid pace, and this is especially so in the burgeoning field of mobile payments.
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2.
In the past week alone—as has been the case every week since we began working on
mobile payments full- time in 2009—several events have transpired in the marketplace that would
concern any savvy businessperson handcuffed by regulation. A company previously unrelated to
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San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
I, Aaron Greenspan, hereby declare:
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payments, but relevant to mobile technology in general, was acquired by a large payment processor for
tens of millions of dollars. A consortium of telephone companies and credit card issuers demonstrated
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its mobile payment product in public for the first time at a conference in Austin, Texas. Yet another
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startup company in this District raised over $5 million from a prominent venture capital firm based on
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its mobile payment system that is, in many ways, functionally equivalent to ours.
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3.
Some of these companies are blatantly ignoring the California Money Transmission Act,
the legislation at issue in these proceedings, and others are complying with it. Either way, my firm is
unable to compete, and that inability is causing irreparable harm with every day that goes by.
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Merchants are choosing which mobile payment system they will be likely to adopt for the next decade
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or more, and so long as our product is not on the radar, we do not stand a chance down the line. Our
business depends on the ability to operate not just in California, but nationwide, and so these
proceedings are of the utmost concern to us.
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It could not be meritoriously asserted that expediting the resolution of this case would in
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some way cause harm to the public. To the contrary: I strongly believe that in light of substantial
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existing case law related to federal internet regulation, we will prevail on the merits of our case. Either
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way, the public stands to lose nothing if arguments on the State Defendants’ Motion to Dismiss are
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DECLARATION OF AARON GREENSPAN IN SUPPORT OF MOTION TO CHANGE TIME - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page12 of 36
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Defendants in this matter—and we have already suffered greatly.
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I personally suffer from a number of medical conditions (including but not limited to
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spontaneous pneumothroax) that make it imperative for me to continuously carry health insurance. To
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the best of my knowledge, Think Computer Corporation’s insurance provider requires that the company
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have at least two California W-2 employees for its contract to be renewed. Currently I am the only
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employee, and I cannot foresee hiring additional employees until I more definitively know that the
company has some prospect for resuming operations. In the past I have been declined for numerous
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300 Montgomery Street, Suite 650
San Francisco, CA 94104
LAW OFFICES OF MICHAEL BROOKS CARROLL
heard sooner rather than later. Certainly Think Computer Corporation has more to lose than the State
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individual health plans due to my medical conditions, making group health insurance coverage my only
realistic option.
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I would respectfully request that the Court consider expediting our case to the fullest
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extent possible so that we may ultimately either resume operating as soon as possible, or in a worst case
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scenario, decide upon a new course of business.
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I declare under penalty of perjury under the laws of the State of California that the foregoing is
true and correct.
Executed March 13, 2012 at Palo Alto, California.
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Aaron Greenspan
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DECLARATION OF AARON GREENSPAN IN SUPPORT OF MOTION TO CHANGE TIME - Case No. CV11-05496-HRL
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Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page13 of 36
EXHIBIT C
“Calif. Financial Commissioner to Step Down,” American Banker, March 12, 2012
Case5:11-cv-05496-HRL Document33 Filed03/13/12 Page15 of 36
EXHIBIT D
Various Articles Indicating Immediate Competitive Pressures on Plaintiff
PDF Page 17
The Bancorp Bank Is the New
Issuer for the PayPal Debit MasterC...
Case5:11-cv-05496-HRL
Document33http://www.businesswire.com/news/home/20120312005763/en/Ba...
Filed03/13/12 Page16 of 36
March 12, 2012 12:00 PM Eastern Daylight Time
The Bancorp Bank Is the New Issuer for the PayPal Debit MasterCard Card
WILMINGTON, Del.--(BUSINESS WIRE)--The Bancorp Bank Payment Solutions Group, a division of The Bancorp Bank
(“Bancorp”), a wholly owned subsidiary of The Bancorp, Inc. (Nasdaq: TBBK), today announced that it is the new issuer for the
PayPal Debit MasterCard® card. The PayPal Debit MasterCard card can be used worldwide at ATMs, online, and everywhere
Debit MasterCard is accepted. It also offers the possibility to earn 1 percent cash back whenever a cardholder is enrolled into
the PayPal Preferred Rewards Program.
“We are thrilled to work with PayPal to bring the PayPal Debit MasterCard card to their 106
million active users,” said Jeremy Kuiper, Managing Director – The Bancorp Payment
Solutions Group. “Consumers want to be able to feel secure when shopping online with a
debit card, and with PayPal's dedication to security, we're able to deliver a great solution with
the PayPal Debit MasterCard card."
The PayPal Debit MasterCard card is issued by The Bancorp Bank pursuant to license from
MasterCard International Incorporated. The Bancorp Bank; Member FDIC. MasterCard is a
registered trademark of MasterCard International Incorporated.
“Consumers want to be
able to feel secure when
shopping online with a
debit card, and with
PayPal's dedication to
security, we're able to
deliver a great solution
with the PayPal Debit
MasterCard card.”
About The Bancorp Payment Solutions Group
The Bancorp Payment Solutions Group, a division of The Bancorp Bank (“Bancorp”), a wholly owned subsidiary of The
Bancorp, Inc. (Nasdaq: TBBK), offers secure, creative and innovative payment solutions to the prepaid card industry. As a
leading issuer of prepaid cards, The Bancorp Payment Solutions Group contributes to the success of Fortune 500 companies
through the development of cutting-edge prepaid card programs that meet the rapidly changing needs of the prepaid industry.
Through long-standing relationships with the MasterCard, Visa, and Discover card associations, leading program managers
and processors, The Bancorp Payment Solutions Group designs innovative and flexible prepaid card programs which deliver
outstanding results. For more information about The Bancorp Payment Solutions Group please visit www.thebancorp.com.
Contacts
The Bancorp Bank
Andres Viroslav, 215-861-7990
aviroslav@thebancorp.com
1 of 1
PDF Page 18
Clover Raises $5.8M FromCase5:11-cv-05496-HRL
Andreessen Horowitz; Launches As
A...
http://techcrunch.com/2012/03/08/clover-raises-5-8m-from-andree...
Document33
Filed03/13/12 Page17 of 36
Clover Raises $5.8M From Andreessen
Horowitz; Launches As A One-Click Mobile
Payments Platform
LEENA RAO
Thursday, March 8th, 2012
A new mobile payments startup is entering the market. Clover
is exiting from stealth today as
a fast, simple mobile payments technology that aims to allow consumers to checkout from a mobile site or app in under
five seconds with one-tap. The company is also announcing that it has raised $5.8 million from Andreessen Horowitz and
Sutter Hill Ventures.
As CEO Bryan Lamkin explains, Clover is trying to build the fastest, simplest and most secure payment network for
mobile and tablet devices. The startup believes there is still a tremendous amount of friction in mobile checkout and
payments, resulting in shopping cart abandonment and low conversion rates for merchants, retailers, and developers.
Today, Clover is releasing an SDK for Android, iPhone and the iPad that will allow developers to integrate Clover into
their apps. Here’s how it works. In order to use Clover, consumers have to have the Clover app downloaded to their phone.
When signing up they share credit card details, their mobile phone number and other billing information and then they are
ready for one-click payments using the platform.
On the developer side, Clover says that it has minimized network round-trips to increase the chance of successful
transactions on spotty mobile networks. There’s also simple SMS-based initial authentication that is used to lock Clover
accounts to a phone number and the platform employs two-factor authentication by default, using mutually authenticated
SSL and a PIN. The startup says that because there’s no username and password, and because they lock accounts to phone
numbers, the threat of account takeovers, which is a common problem with online payment services, is largely averted.
For a developer who has integrated Clover, the payments experience will simply include a “pay with Clover” interface to
checkout, and the SDK will detect those who have Clover installed. For existing Clover users, they can simply enter their
phone number and or a separate mobile PIN for authentication and complete the checkout experience in under five
seconds.
For those who do not have a Clover account, they will be prompted to download the app and sign up for the service. To
encourage the user to download the Clover app (and to compensate the developer for helping the platform build the
network), Clover will offer an instant refund of up to $5 on the consumer’s credit card transaction when they install
Clover. And to help incentivize developers to start using Clover, the startup is announcing a $100,000 developer fund.
1 of 2
PDF Page 19
Clover Raises $5.8M FromCase5:11-cv-05496-HRL
Andreessen Horowitz; Launches As
A...
http://techcrunch.com/2012/03/08/clover-raises-5-8m-from-andree...
Document33
Filed03/13/12 Page18 of 36
Clover. And to help incentivize developers to start using Clover, the startup is announcing a $100,000 developer fund.
Clover charges a 3% per transaction fee. Early adopters include Lolapps, Coupon Trade and Yorder.
When asked about the competition from PayPal, which also offers a one-click mobile payments option, Lamkin explains
that Clover has been specially designed for developers who are feeling the conversion pain on mobile payments. “The
design has been built around speed and security, with the native app as a gateway,” he explains.
It’s definitely ambitious for Clover to take on the likes of PayPal, Google and others when it comes to mobile payments.
But the company is on to something by identifying a huge problem in the mobile payments industry-simplicity and ease of
use. It appears that the startup or company that can provide a fast mobile checkout experience (while also promising
security and incorporating consumer behavior) will be the true winner on online mobile payments.
2 of 2
PDF Page 20
Green Dot to Acquire Loopt
| Business Wire
Case5:11-cv-05496-HRL
Document33http://www.businesswire.com/news/home/20120309005422/en/Gr...
Filed03/13/12 Page19 of 36
March 09, 2012 08:30 AM Eastern Daylight Time
Green Dot to Acquire Loopt
Loopt is a pioneer in mobile user interface design, real-time location-based mobile rewards marketing, and geo-location
application technology
MONROVIA, Calif.--(BUSINESS WIRE)--Green Dot Corporation (NYSE: GDOT), a provider of widely distributed, low-cost
banking and payment solutions to a broad base of U.S. consumers, has entered into a definitive agreement to acquire Loopt,
Inc., of Mountain View, California. The transaction is expected to close by the end of the first quarter of 2012 and is subject to
regulatory approvals and other closing conditions.
The acquisition of Loopt will provide Green Dot with a number of key strategic benefits that
are expected to a) improve customer acquisition and retention of its current prepaid debit
card products, b) drive the adoption of new banking and payment products targeted to new
segments of consumers, and c) provide the opportunity for Green Dot to become a leader in
mobile wallets, rewards and payment solutions at retailers nationwide. Furthermore, Loopt
holds several patents that are applicable to mobile marketing in the context of location-based
messaging delivered real-time to a mobile handset. Green Dot believes that these patents
will be important strategic assets as it pursues its mobile business opportunities.
“We believe that mobile
phones have the potential
to change the way people
interact with their
bank, control their money
and pay for goods and
services”
"We believe that mobile phones have the potential to change the way people interact with their bank, control their money
and pay for goods and services,” said Steve Streit, Chairman and CEO of Green Dot. "Loopt has innovative mobile technology,
market leading mobile programming capabilities and compelling intellectual property. Meanwhile, Green Dot has a large
customer base, a robust enterprise-level financial services infrastructure and retail point-of-sale financial
transaction capabilities deployed at major retailers nationwide. When Loopt’s assets are layered into Green Dot’s platform, we
believe that a significant opportunity emerges for Green Dot to become a large-scale player in mobile technology solutions at
the retail point of sale."
Loopt co-founder and CEO Sam Altman stated, “It’s been exhilarating to see mobile become such a critical part of our
collective daily lives. As this technology truly reaches the masses, I believe we're going to see the banking and payments
industry fundamentally reshaped in a way that’s better for everyone. My team and I look forward to being part of this
transformation and are eager to bring cutting edge mobile banking and payment solutions to Green Dot's retail partners and
Green Dot's millions of current and future customers."
Upon closing of the transaction, Loopt’s current headquarters in Mountain View, California will become the new Silicon Valley
hub for Green Dot’s mobile technology and product development team.
Green Dot will pay total consideration of $43.4 million in cash for the company, which includes approximately $9.8 million to be
set aside as a retention pool for key Loopt employees. Green Dot expects this transaction will result in approximately $14
million of incremental operating expenses during the remainder of this year which will reduce the Company’s previously guided
2012 full year adjusted EBITDA accordingly. This amount includes the above mentioned retention payments, ongoing salaries
and benefits for retained Loopt employees, wind-down expenses of current Loopt services and other expenses associated with
the costs of integrating Loopt’s technology into Green Dot’s operating infrastructure.
Green Dot will provide further details about this acquisition, including information on Green Dot’s mobile strategy, during its Q1
earnings call on April 26, 2012.
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About Green Dot Corporation
Green Dot is a publicly traded (NYSE:GDOT) bank holding company regulated by the Board of Governors of the Federal
Reserve System. The Company provides widely distributed, low cost banking and payment solutions to a broad base of U.S.
consumers. Green Dot's products and services include its market leading category of General Purpose Reloadable (GPR)
prepaid cards and its industry-leading cash transfer network which are available directly to consumers online and through a
network of approximately 59,000 retail stores nationwide where 95% of Americans shop. Green Dot is headquartered in the
greater Los Angeles area. For more details, visit www.greendot.com.
Forward-Looking Statements
This press release contains forward-looking statements, which are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are statements that could be
deemed forward-looking statements. For example, statements regarding the key strategic benefits that Green Dot expects from
the acquisition, their expected impact on Green Dot’s product and customer initiatives, the timing of closing and the projected
financial impact to Green Dot are all forward-looking statements. Risks, uncertainties and assumptions include the possibility
that the acquisition does not close or that the companies may be required to modify aspects of the transaction to achieve
regulatory approval; the market for the sale of certain products and services may not develop as expected; that development of
these products and services may not proceed as planned; that customer acceptance of any new products may not develop as
expected; Green Dot’s limited experience with acquiring companies and technologies, potential difficulties in integrating
operations of acquired companies and acquired technologies, and any unexpected increases in Green Dot’s other operating
expenses. Additional risks and uncertainties are detailed in Green Dot’s filings with the Securities and Exchange Commission,
including its annual report on Form 10-K, which is available on Green Dot’s investor relations website at ir.greendot.com and
on the SEC website at www.sec.gov. All information provided in this release and in the attachments is as of March 8, 2012, and
Green Dot assumes no obligation to update this information as a result of future events or developments.
Contacts
For Green Dot Corporation
Investor Relations
Christopher Mammone, 626-739-3942
IR@greendot.com
or
Media Relations
Brian Ruby, 203-682-8268
Brian.Ruby@icrinc.com
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i s s u e 10
|
2 012
Complimentary article reprint
The Mobile
Elite:
Meeting the Growth Challenge
in the 4G Era
by Scott Wilson and Phil Asmundson
> Illustration by Dongyun Lee
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally
separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients
under the rules and regulations of public accounting.
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rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect
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the mobile elite
The Mobile Elite:
Meeting the Growth Challenge in the 4G Era
by Scott Wilson and Phil Asmundson
> Illustration by Dongyun Lee
“A good hockey player plays where the puck
is. A great hockey player plays where the
puck is going to be.”
— Wayne Gretzky
The hypercompetitive
mobile sector
M
obility is everywhere.
But with this growing
ubiquity comes a set of
unique challenges for companies
riding the wireless wave of opportunity. Throw the impending arrival
of the broadband 4G era into the
mix and uncertainty levels are set
to spike as the scramble for competitive advantage reaches fever
pitch. Given the current volatility
of the U.S. mobile sector, it could
be argued that a period of hypercompetition1 is engulfing the formerly
stable wireless industry. Established
markets are constantly threatened
by new entrants with technologies
or business models that throw
traditional standards and rules
into flux, resulting in periods of
prolonged market volatility.
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Perhaps because of this heightened uncertainty, much of the established U.S.
mobile sector still finds itself treading water, unsure of where and how to capitalize on new opportunities. Such companies can embrace the prospects of a more
democratized digital world or staunchly defend existing businesses and protect
traditional revenue streams. The decision is not so clear-cut, and now more than
ever, the challenge is to do both. To begin with, incumbents must find new ways
to compete against the waves of innovation emerging from Silicon Valley that
have shifted the locus of creativity in mobile to the West Coast. But how should
companies ride out this volatility? In the short term, viable pathways to growth
need to be secured—or else the masters of old mobile risk being marginalized by
a growing army of upstarts.
Welcome to the open mobile world
C
urrently, the core elements of mobile disruption are centered on a patchwork
of seismic events unfolding around three pillars of change: the rapid accelera-
tion of innovative mobile Web technology; rising consumer demand for new mobile products and data services; and an evolving regulatory policy debate pushed
along by the U.S. Federal Communications Commission, which seems inclined to
pursue a more open, competitive market environment—the likes of which the industry has yet to experience. Collectively, these elements are the cornerstones of the
open mobile era—a macro-level phenomenon that reaches far beyond the boundaries
of the traditional U.S. mobile industry, into the surrounding technology and media sectors and across myriad adjacent vertical industries adopting wireless technologies.
For a number of years, Deloitte’s* telecoms industry group has been researching
the likely impact of the open mobile era and publishing a series of studies that offers incumbents guidance on how to capitalize on emerging growth opportunities.
Findings from the latest study, focused on surveying a select group of senior executives in and around the mobile industry, once again point to growth and innovation as the dominant issues of the day. The gentle breeze of change is long gone,
and in its place, a full-blown, Schumpeterian headwind threatens to leave a trail of
creative destruction in its wake. The industry’s leaders are seemingly challenged
on an almost daily basis by floods of new entrants. Many of these incumbents have
limited experience in developing cutting-edge, mobile-technology-based business models, proving that experience in itself is not a harbinger of success in this
mobile era.2
* As used in this article, “Deloitte” means Deloitte LLP. Please see www.deloitte.com/us/about for a
detailed description of the legal structure of Deloitte LLP and its subsidiaries.
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the mobile elite
Our research suggests that, in periods of market volatility, resources—often
more so than market position—can be a determining factor of success. The pressing need for new organizational capabilities to compete and capitalize on new
opportunities is evident. What is also apparent is the expanded role of platform
leadership and ecosystem development to support top-line growth and innovation
initiatives. However, the understanding of the roles that capabilities play in deploying these strategies remains inconsistent. At the heart of this issue is perhaps a
growing tentativeness among incumbents to fully embrace open platform tactics.
Mobilizing and managing new open ecosystems becomes crucial to business model
innovation, especially in light of recent sector events that are rapidly redrawing the
competitive landscape. But in which areas, and to what extent, should strategic approaches be built upon open methods of collaboration with third parties?
Mining for gold
T
he backbone of the open mobile growth era is the rollout of 4G (fourth generation) LTE (Long Term Evolution) and WiMax (Worldwide Interoperability
for Microwave Access) wireless network technologies, which are gathering speed.
The long-awaited network upgrade is set to address voracious U.S. consumer demand for higher download speeds and greater bandwidth capacity, which should
provide enhanced mobile data products and services. On paper, 4G networks
promise to usher in a new wave of mobile ubiquity, opening the door for innovation to increase across all areas of the mobile value chain and beyond. And although
nationwide 4G coverage is still being developed, the network standards battle
between WiMax and LTE has tilted in favor of LTE. The majority of U.S. wireless
service providers have announced support for the LTE standard, which is designed
to be backward compatible with 3G GSM and HSPA technologies, giving it a cost
advantage over WiMax in the process. LTE will also provide network operators 2–5
times greater spectral efficiency than the most advanced 3G networks, reducing
the transmission cost per bit and allowing better economics for carriers and end
users.3 Recent market forecasts suggest LTE services will generate more than $11
billion in service revenue in the United States by 2015, and global LTE subscribers
will number 303.1 million by 2014.4
From a growth perspective, the implications of the move to 4G are significant.
Carrier voice revenue declined 7 percent over the last four years, while data revenue
soared 132 percent and now accounts for 35 percent of the total revenue for the wireless
industry.5 This trend is set to grow significantly over the short term and, with it, new
revenue opportunities distinct from their traditional network services will emerge for
incumbents. 4G is expected to provide the highway to this new value creation.
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To begin with, much of the industry believes that an explosion in mobile services, distinct from revenue that comes from straightforward mobile advertising
and software applications, will provide the greatest revenue opportunities in the
next three to five years. Services, rather than hardware per se, are thought to represent a greater source of future value (see figure 1). It is important to define services in the context of emerging mobile business models in popular consumer
and enterprise areas such as entertainment, social networking, mobile payments,
mobile cloud services and productivity, and so on. The SoLoMo mantra (“sociallocal-mobile”) is becoming commonplace across the industry and growing louder
by the day. Companies should expect to find opportunities in the overlap of social
media platforms such as Facebook and location-based mobile services and mobile
OS platforms such as Android or iOS. The startup successes of location-based mobile companies, including the likes of Foursquare and Gowalla, provide a perfect
example of where future value could emerge in this category.
Figure 1. What will drive future mobile revenue opportunities?
Percentage of respondents
0%
20%
40%
60%
80%
100%
Services
Hardware
Apps
Overall
Mobile Device Manufacturer
Network Carrier
Software Developer
Infrastructure and Component
Manufacturers
Source: Deloitte Open Mobile Analysis 2011
The rise of the machines
I
n a similar vein, at the sector level, the emergence of 4G will accelerate widespread mobile business model innovation across a number of vertical indus-
tries such as healthcare and life sciences, which are already adopting wireless
technologies. Others are quickly following suit, and industries such as consumer products and financial services are likely to experience higher rates of new
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mobile business model growth over the next five years (see figure 2). This is generally in alignment with current market trends; the rise of mHealth and smart grid
energy technology, in particular, offer huge potential revenue opportunities for
mobile incumbents to expand top-line growth.
Machine-to-machine (M2M) wireless technology is often the cornerstone of
these opportunities. Although M2M technologies are certainly not new to the industry, worldwide M2M connections are on a steady upward march forecasted to
reach 225 million by 2014. Industry-wide M2M operator revenues is estimated to
continue its rise from $4.3 billion in 2008 to $12.9 billion by 2012. On a global
scale, the figures are even stronger; revenue from mobile connected M2M and embedded devices is set to rise to $18.9 billion by 2014.6
Figure 2. Which vertical industry has most potential for new mobile growth and
value generation?
Percentage of respondents selecting
top three industries
0%
20%
40%
60%
80%
100%
Health care/life sciences
Consumer products/retail
Financial services/commerce
Automotive
Energy
Government
Manufacturing
Mobile Device Manufacturer
Network Carrier
Software Developer
Infrastructure and Component
Manufacturers
Source: Deloitte Open Mobile Analysis 2011
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Smarter energy and smarter healthcare
Several forces are driving this surge in the M2M market, including the declining cost of mobile device and infrastructure technology; increased deployment of IP, wireless and wireline networks;
and a low-cost opportunity for carriers to eke out new revenue
streams by utilizing existing infrastructure in new markets. This
opportunity will be most prominent across a number of enterprise verticals with energy likely to lead the way: Smart grid
and smart metering technologies are set to experience the most
growth in the M2M market. The Obama administration’s targeted economic stimulus package of $3.4 billion to modernize
the nation’s power grid will further accelerate development of
this market.7 At the broadest level, the emergence of smart grid
networks will provide improved tracking of energy utilization,
mainly in the form of smart grid metering, for real-time communication between consumers and the electricity grid. This
will enable significant energy and cost-saving features not possible with today’s grid. Growth opportunities are significant;
forecasts suggest the U.S. smart grid market will grow from
$21.4 billion in 2009 to $42.8 billion in 2014.8 By 2014, 88
percent of this market is projected to consist of device and hardware manufacturers, software developers, and providers of communications infrastructure and equipment.
The healthcare sector is also set to gain from increased adoption of mobile technology, which should benefit carrier service
revenue in the United States where the market for wireless
home-based healthcare applications and services is estimated to
grow at a five-year CAGR of 80 percent and become a $4 billion
industry by 2013.9 Mobile Health, or mHealth, is emerging as
a significant growth opportunity for companies looking to capitalize on advances in wireless healthcare utilizing M2M technology. Analyst forecasts estimate the potential value of the mHealth
market to be approximately $4.6 billion as early as 2014.10 The
driving forces behind this expected uptick are numerous. Mounting
pressure to cut burgeoning costs in the U.S. healthcare system is a
government-mandated objective; in particular, preventable readmissions cost an estimated $12–17 billion per year.11 On top of this lies
the trend of an aging population, exacerbated by the size of the baby
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boomer demographic. Americans aged 60 or older represented 18 percent of the
U.S. population in 2009, and this segment is expected to grow to 27 percent
by 2050.12
Wireless healthcare solutions offer a way to deal with these and other pressing
issues. Advances in the area of remote patient monitoring (RPM) are expected to
have a big impact across targeted disease areas where chronic conditions are a leading cause of the readmissions problem. RPM can equip healthcare providers with
timely information about patients’ health while improving the speed and accuracy
of diagnoses. Wearable body sensors and remote monitoring can keep chronic patients out of hospitals and improve their quality of life while significantly reducing
admission expenses. Continuous remote monitoring of patients through wireless
sensors and wireless networks also allows caregivers to detect and respond to intermittent problems and improve medical providers’ abilities to schedule visits.
This, in turn, helps alleviate pressures pertaining to resource planning, especially
problems related to unnecessary call-outs.
Improving disease management, despite an increasing incidence of chronic diseases, is a particularly promising avenue, considering seven out of 10 deaths among
Americans each year are the result of chronic diseases; heart disease, cancer and
strokes account for more than 50 percent of all deaths each year. In 2005 alone, 133
million Americans—almost one out of every two adults—had at least one chronic
illness.13 Given this situation, the numbers are stark. Costs associated with chronic
disease management accounted for more than four-fifths of the total healthcare expenditure, or $2 trillion annually by 2009, and are expected to increase 6.1 percent
per year over the projection period 2009–2019.14 But, if as expected, adoption of
such RPM technology becomes suitably widespread, savings are expected to reach
$197 billion over the next 25 years.15
With these opportunities only set to grow bigger, many mobile technology
and wireless companies are planning to collaborate in high profile alliances with
counterparts across the energy, healthcare and life sciences sectors. The immediate
benefit will come from combining resources and knowledge to push the growth
of wireless technology in these industries to the next level. The key challenge for
wireless incumbents will be to position themselves at the center of new ecosystems and create differentiated platforms for growth that will allow them to exploit
new business models in the process. But unlocking value in nascent markets will
require sustained collaboration, a problem area for many mobile incumbents.
One solution could be to learn from the software-driven “open” development
tactics used by mobile’s new elite, which could help establish a roadmap to growth
for traditional incumbents.
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Software, the great disruptor
P
erhaps the biggest element of mobile hypercompetition is the impact that
so-called “Web companies” continue to have in transforming the traditional
competitive landscape. A majority of Deloitte’s Open Mobile survey respondents,
who were not affiliated with network carriers, believe Web-based companies are
likely to have an increasingly dominant role in mobile over the short term. Google
and Apple in particular continue to be the keystones of the new-wave vanguard in
mobile that also sees the likes of Facebook, Amazon and Twitter—all giants of the
Internet economy—exert more and more influence over the design and utilization
of Web-enabled mobile devices and services. Google provides a prime example.
Much of Android’s growth in mobile is driven by the one-two punch of its mobile
search and advertising platform, which has increased revenue by more than 500
percent since 2009.16 Not to be outdone, key competitor Apple has aggressively
pursued its own double whammy of leading-edge consumer hardware design, combined with world-class software development, to carve out its own commanding
presence. Driven by the rapidly evolving iOS operating system platform and an expanding portfolio of mobile devices and tablets, the results have been overwhelmingly positive, leading to the July 2011 announcement that the company is now
the number one global smartphone producer.17
The significance of this shift in the balance of power toward firms that leverage software and media content at the core of their mobile strategies cannot be
overestimated. One of the biggest drivers of value generation in the open mobile
era is the development and proliferation of mobile software applications, or simply “apps,” which rapidly blossomed into a multimillion dollar industry of their
own. The app economy is booming and likely to be worth in excess of $2 billion
by 2012 with fortunes undoubtedly being made and lost in the process.18 Significantly, some analysts estimate software innovation outpaces network innovation
by a factor of five to one, meaning new product introduction lifecycles for mobile
software can average three to six months while network service innovation can take
18–24 months.19 Not surprisingly, network services are often left playing catch-up
with software innovation.
The incumbent challenge
From a carrier perspective, the rise of software in their network-dominated
world poses interesting questions for the wireless incumbents, especially with regard to how they leverage collaboration to take advantage of growth opportunities in adjacent industries. With the “content is king” mantra ringing in their
ears, there is little doubt that software innovation is driving platform innovation,
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which in turn is driving device adoption that ultimately helps fuel the growth of
network data services. The challenge for incumbents will be to exert their stillpowerful presence and compete in an area in which they have traditionally
lacked expertise, allowing them to carve out new business models
that extend beyond the boundaries of the traditional wireless
sector. Responses from the mobile executives in our recent
Open Mobile survey suggest this is a priority—a large
majority believe carriers must make the transition
from the walled gardens of the past to new organizational forms built around open ecosystems to enable enhanced collaboration with
developers. Others suggest that the most
likely route to sustained success may
come from a managed open strategy—
where carriers retain prioritized control over premium applications and
assets but allow third parties access
to core network functions.
The good news for incumbents is that this message seems
to be hitting home. Only a few
years ago, U.S. carriers were virtually impenetrable for the majority
of software developers, but this is
starting to change. Today, each member of “the big 3” is making a bigger effort to attract more developers to
collaborate and build out their ecosystems.
For instance, both Sprint and AT&T have
recently launched new initiatives focused on
building out new centers of innovation and processes to facilitate co-development with third parties.20 This should help build platforms that could see
new apps and services launched in areas such as messaging,
geolocation and M2M. Beyond this increased network access, carriers are also looking to develop new app storefronts that will cater to
multiple third party platforms and handsets directly linked to new external developer channels. This will offer developers a range of economic, technical, sales
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Figure 3. Does your company have an open mobile strategy in place?
40.5%
YES
Strategy in place
and operational
26.2%
YES
Strategy in
planning stage
13.5%
NO
No strategy planned at this
moment / not a strategic objective
9.5%
N/A
10.3%
?
No, Not applicable
Don’t know
Source: Deloitte Open Mobile Analysis, 2011
and marketing benefits in return for creating the apps with the best revenue potential to run on their networks. And perhaps in a nod to the likes of Apple’s WWDC
program, each of the big 3 now hosts its own annual developer conference with the
goal of growing a sustainable developer community to foster more collaboration.
All of these steps suggest carriers are beginning to follow a collaborative product
and services strategy to keep pace with threats from the likes of Google and Apple
and win the prized developer mindshare. But in order to get there, an increased
focus on developing appropriate capabilities is critical.
Navigating the path to growth
A
gainst the backdrop of change in mobile, the twin strategies of platform
leadership and ecosystem development are central to capitalizing on emerg-
ing growth opportunities. Our surveyed executives agreed, and most indicated that
their organizations were on track with planning and investing for the open mobile
era despite the lingering effects of the recent economic downturn. The broader role
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Figure 4. Ranking the importance of organizational capabilities to compete in the
4G era (by industry).
LEAST
Importance
MOST
Innovation in product, service or
market
Innovation in business model
or process
Vision and leadership
commitment to mobile platform
leadership
Mobilizing an external ecosystem
around your organization’s mobile
technology platform
Adapting dynamically to a
changing business environment
Building trust with ecosystem
partners
Collaboration with external
subject matter experts to
stimulate innovation
Fostering an internal culture of
collaboration
Ability to understand and
navigate regulatory policy on
mobile broadband
Mobile Device Manufacturer
Network Carrier
Software Developer
Infrastructure and Component
Manufacturers
Source: Deloitte Open Mobile Analysis 2011
of platform leadership within organizations planning for mobile growth seems to
be taking hold. Digging deeper, the simplicity of applications development and
user experience, cross-industry potential, open interface access and modular technology architectures, and the use of a vibrant ecosystem to support and develop the
platform are considered the most critical elements for platform success.
The effectiveness of the formation and deployment of a platform-based ecosystem
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Figure 5. Will carrier competitiveness in the 4G era be dependent on transitioning
from “walled gardens?”
YES
83.8%
Mobile Device Manufacturer
NO
16.2
%
84.0%
16.0
89.5%
10.5
91.1%
8.9
Software Developer
Network Carrier
Infrastructure and Component
Manufacturers
%
%
%
Source: Deloitte Open Mobile Analysis 2011
can differ between various sectors of the mobile value chain, but the building block
capabilities of alliance formation, knowledge management, trust-building and collaboration in general are seen by respondents as the keys to developing platforms
and ecosystems to stimulate innovation. Competence in each of these areas should
be a top priority.
Follow the mobile elite
The call for incumbents to move toward a more open form of market competition has been a consistent theme throughout our research. Studying the strategies
and tactics of the Silicon Valley elite may prove useful in constructing the path forward. Most surveyed executives seemed to believe that carrier competitiveness in
the 4G era will be dependent on dismantling the closed platforms of the past and
replacing them with more open forms of organization (see figure 5). This is considered essential to stimulate business model innovation beyond the walls of the
traditional wireless industry and ensure new platforms will gain sustainable footDeloitte Review
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holds amid market turbulence. In this market era, innovation in software drives
OS and device utilization and boosts network asset utilization. Incumbents prone
to exerting restrictive control and access over software applications, content, media
and network applications should realize the risks to market share in doing so.
Despite a growing recognition that the move to open platforms is necessary,
transitioning away from closed, proprietary business models is not easy. Winners in
this era will be the ones who can astutely mobilize new ecosystems, manage highly
distributed network alliances, build trust with new partners in the innovation process and generate value from mobile technology platforms that, in turn, will form
the core of new business model development. Companies that fail in these key areas
may struggle to compete.
Run to where the money will be
For incumbents, finding new, nontraditional sources of wireless growth will
become imperative to sustaining their leading positions. Companies active in areas
such as wireless healthcare, smart grid energy management, financial services and
retail are set to experience significant growth in the use of mobile technology. New
business models with wireless technologies at the core of their platforms will drive
value generation. Top-line growth will become increasingly dependent on how well
incumbents, particularly carriers, can organize to collaborate with players in adjacent industries where they do not possess leading knowledge or prior experience.
Go toe-to-toe with the new wave
The art of innovation lies at the core of the incumbent challenge in mobile.
The question becomes how to balance the daily grind of defending hard-won market share with the need to find unexplored opportunities. Our research highlights
the strategies used by successful new entrants—the mobile elite—to focus on two
main tactics: the development of astute open platform leadership and the mobilization of flexible innovation ecosystems. To seize the moment with emerging growth
opportunities, incumbents should consider similar tactics to reenergize their innovation process.
The first step will be to focus on areas of the value chain that are still underserved by new entrants. Survey insights point to targeting innovation at the services level, across the adjacent vertical industries where wireless technology is set to
disrupt established markets. By following a managed open strategy, wherein careful targeting of open platform development is balanced with retaining proprietary
control of core value-generating assets, incumbents can go toe-to-toe with the new
wave. Tactics should include extending third party developer collaboration in areas
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of promising value generation such as M2M in the healthcare and energy sectors. Fostering innovation in areas such
as mobile cloud computing and mobile commerce, combined with making bold plays in the ever-expanding field
of mobile social media, could also pay dividends.
By developing supporting innovation communities
that use dispersed networks of development partners,
drawn together from disparate geographies, companies
can reconfigure talent, resources and capabilities to serve
and feed their platforms and ensure innovation is regenerated beyond their own four walls, thus allowing incumbents to reach beyond the boundaries of their established
footholds and strike out into new frontiers. DR
Scott Wilson leads Technology, Media and Telecommunications research
within Deloitte Research, Deloitte Services LP.
Phil Asmundson is vice chairman and U.S. Media & Telecommunications
sector leader of Deloitte’s Technology, Media & Telecommunications industry
practice. He is a partner of Deloitte & Touche LLP.
Deloitte Review
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the mobile elite
Endnotes
1. Hypercompetition, as described by Prof. Richard D’Aveni, denotes hyper-inflated market competition that can emerge in
sectors prone to rapid technological disruption with competitive advantage often difficult to sustain. See D’Aveni, R.
(1994): Hypercompetition: Managing the dynamics of strategic maneuvering, New York: The Free Press
2. Charles S. Golvin, “A rebirth of competition in mobile connections,” Forrester Research, September 20, 2010; Thomas
Husson and Julie A. Ask, “2011 Mobile Trends,” Forrester Research, January 24, 2011.
3. For more on LTE see Next Generation Mobile Networks (NGMN) < http://www.ngmn.org/home.html>; Also, GSMA
.
4. ABI Research “LTE Services in the US Will Generate More than $11 Billion in 2015,” ABI Research, December 16, 2010;
Francis Sideco, “LTE Momentum Expected to Easily Overcome WiMAX Head Start,” iSuppli, February 3, 2011.
5. Jenna Wortham, “Skype-Style Calls Force Wireless Carriers to Adapt,” The New York Times, May 15, 2011.
6. “Embedded Mobile & M2M Connected Devices to rise to 412 million globally by 2014,” Juniper Research, January 19,
2010; “Embedded Mobile and M2M Device Revenues to Rise to $19 Billion by 2014,” Cellular News, February 9, 2010.
7. Michele Pelino, “The M2M Market Is A Blossoming Opportunity,” Forrester Research, March 16, 2010.
8. ZPryme Research “Smart Grid: Hardware & Software Outlook,” ZPryme Research & Consulting, December 2009.
9. “Wireless Home Healthcare to be $4 Billion Industry by 2013,” Park Associates, August 5, 2009.
10. Sophia Yan and Christopher Flavelle, “Boeing Blocks GE, Philips Wireless Spectrum for Patient Monitoring Device,”
Bloomberg, July 22, 2010.
11. Stephen F. Jencks, M.D., M.P.H.; Mark V. Williams, M.D., and Eric A. Coleman, M.D., M.P.H., “Rehospitalizations
Among Patients in the Medicare Fee-for-Service Program,” The New England Journal of Medicine. 360; 14, April 2, 2009,
pp. 1418–1428.
12. Philip Seligman, “Industry Surveys Healthcare: Product & Supplies,” Standard & Poor’s, August 20, 2011. See also United
Nations, World Population Ageing 2009, Department of Economic and Social Affairs, United Nations, December 2009
13. Chronic Diseases and Health Promotion, Centers for Disease Control and Prevention, updated July 7, 2010; HC Kung et al., “Deaths: final data for 2005.” National Vital
Statistics Reports 2008;56(10) .
14. Laurence C. Baker, Scott J. Johnson, Dendy Macaulay and Howard Birnbaum,“Integrated Telehealth And Care Management Program For Medicare Beneficiaries With Chronic Disease Linked To Saving,” Health Affair, 30:9, Sept. 2011, pp.
1689–1697; Centers for Medicaid and Medicare Services, National Health Expenditure, .
15. Robert E. Litan, “Vital Signs via Broadband: Remote Health Monitoring Transmits Savings, Enhances Lives,” October 24,
2008, Kauffman Foundation/Brookings Institution report. Available at: .
16. Additionally, the company reports 550,000 Android devices activated per day, while the Android Market has seen more
than 6 billion apps installed. As of October 2011, Google had a cash reserve of $42.56 billion (Source: Google Inc, Q3
2011 Earnings Conference Call).
17.
“Apple Becomes World’s Number One Smartphone Vendor in Q2 2011,” Strategy Analytics, July 29, 2011.
18. Strategy Analytics, “Strategy Analytics: Apple Dominates Mobile App Space with Content while Android Aims for
Numbers,” Businesswire, July 21, 2011
19. “Developer Economics 2011,” VisionMobile Research, June 2011.
20. Dan Hesse, Sprint CEO, Delivering on the Sprint Promise: Enabling the Developer Ecosystem, presented at the 2010 Sprint Developer Conference, Santa Clara, CA, USA, October 26–28, 2010; See also, E.B. Boyd, “Why AT&T is opening itself up
to app developers,” Fast Company, September 14th 2011 available at ; and, “AT&T ups the innovation ante with new collaboration center in the heart of
Silicon Valley,” Fierce Mobile, September 15th, 2011, available at:
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