Subject: [NEXTEL-1] Hop-On Raises Security Concerns-

From: Marcel <[email-masked]>
Date: Wed, 02 Apr 2003 16:36:02 -0500

Hop-On Raises Security Concerns-

Looks like Hop-On is rolling out a new phones. I'm disappointed that there is no mention
of built in E-911 phase II capabilities. Hop-On uses GSM, CDMA, and TDMA protocols. GSM
phones can operate at 900 MHz, 1800 MHz, or 1900 MHz, and TDMA phone can operate at 800
MHz or 1900 MHz, and their CDMA phones can operate at 800 MHz. Only carriers with "Network
Based" E-911 Phase II solutions will be able to supply location information for these
handsets. This coupled with the "NO ID Required" policy of many carriers this leaves the
door open for abuse by Criminals and Terrorists..
(see:http://groups.yahoo.com/group/WFHSG/message/1703
http://groups.yahoo.com/group/WFHSG/message/1679 )

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Hop-On Expands Its Product, Availability

Hop-On.com Inc., which introduced the world’s first disposable cellular phone last fall,
is extending its product line and availability. The current phone model, equipped with
minimal technology, looks like a plastic calculator. Available in a handful of Walgreen’s
drug stores in southern California for $40, the phones are equipped with 60 minutes of
pre-paid calling time and an emergency 9-1-1 button, but has no roaming charges or long
distance fees. Though less than 1,000 phones have been sold thus far, Hop-On believes the
phone will appeal to credit-challenged consumers, vacationers, frugal parents, and
emergency conscious consumers. A second generation of models will come equipped with LCD
screens, text messaging capabilities, a phone book and caller ID. Hop-On now has
agreements with Best Buy and Target to sell the disposable phone.

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IN THE PIPELINE: Toss-Away Phone
Good For An Hour's Gab

By DONNA FUSCALDO

Of DOW JONES NEWSWIRES

NEW YORK -- Charlie Abujudeh couldn't live without his high-tech
cell phone, which lets him surf the Web, send text messages and, of
course, make phone calls.

But that didn't stop the Laguna Hills, Calif., businessman from snapping
up a handful of no-frills, disposable mobile phones when he was
perusing the aisles of a Walgreen store in Southern California this past
fall.

The phones, from start-up Hop-On .com Inc. (HPON), cost $40, look
like a $5 plastic calculator and come loaded with nothing more than an
hour of talk time.

Still for Abujudeh it was worth paying $40 each for the peace of mind he gets knowing his
family will
have access to a cell phone in case of an emergency. So Abujudeh outfitted his family's
cars with the
phones and even picked one up for himself to serve as a backup if his battery dies or he
loses his cell
phone. He was so smitten by the product, he even bought stock in Hop-On , which trades for
less than
$1 on the pink sheets.

Abujudeh's reaction is exactly the kind of response Hop-On was hoping for when it started
selling these
phones this past fall.

For two years, the Irvine, Calif., start-up has been lauding the benefits of its
disposable, mobile phones.
The company had long promised these inexpensive handsets would quickly find their way on
store
shelves.

So far, however, the reality hasn't met the hype.

Hop-On's handsets have only been selling in a handful of Walgreen Co. (WAG) stores in
Southern
California, and the discount chain has complained about spotty shipments.

But Hop-On hopes to change that.

Thanks to an outsourcing deal it signed in early March with electronics manufacturer
Flextronics
International Ltd. (FLEX), the start-up expects to begin shipping 10,000 phones by the end
of April.
That's a far cry from the less than 1,000 they've sold so far, but still a drop in the
bucket compared with
the 423 million handsets sold world-wide last year.

Hop-On has agreements with Best Buy Co. (BBY), Walgreen and Target Corp. (TGT) to sell the

phones in their stores and hopes to make them a mainstay in convenience stores and
airports.

The company is also hawking the phones outside the U.S., particularly in South America and
India. It
signed a letter of intent to ship two million handsets to Bharat Sanchar Nigam Ltd., or
BSNL, India's
state-run telecommunications carrier, and an unnamed company in South America.

60 Minutes For 90 Days

Hop-On's disposable cell phones, which sell for $40 for 60 minutes of airtime, are geared
toward
credit-challenged consumers, vacationers and parents who don't want their children running
up exorbitant
phone bills. No credit check is required, nor are there any contracts to sign.

The phones work like this: A customer purchases the prepackaged mobile phone, which comes
with its
own phone number, and has 90 days once the phone is activated to use the 60 minutes of air
time. Once
the minutes are used, the customer can either call a toll-free number to add more talk
time, buy Hop-On
phone cards with additional minutes on them, toss the phone away, or send it back to
Hop-On for a $5
rebate. Hop-On charges 25 cents per extra minute up to 180 minutes and 20 cents for
minutes
thereafter, and there are no roaming charges.

Others like AT&T Wireless Services Inc. (AWE), Virgin Mobile USA LLC, and Verizon Wireless
also
sell pre-paid phones, but are pricier than Hop-On . AT&T Wireless, for example, charges
$99 for a
phone and 10 minutes of airtime via a calling card which is good for 45 days. Additional
national minutes
cost anywhere from 22 cents to 85 cents a minute depending on the size of the plan.
Roaming fees are
deducted from the pre-paid minutes.

Hop-On's phones run on Verizon Communications' (VZ) network but a later version will
utilize triband
technology, which will allow it to be compatible with other phone networks.

The mobile phones do have one glaring drawback, at least for fashion-conscious people:
they're about as
flashy as a deck of playing cards and look more like a plastic calculator than a mobile
handset. But
Hop-On says the spare design was completely intentional.

"The best way to design a phone is to keep it simple and stupid," said Peter Michaels,
chairman and chief
executive at Hop-on . "There's no LCD screen and no fancy features. We designed this phone
to make
(calling) real simple."

Hop-On is able to sell the phones on the cheap mainly because they lack the bells and
whistles that many
other cell phones have. To lower the costs of making the phone, Hop-On eliminated a large
amount of
the memory and other costly components.

A second generation of Hop-On's disposable phones, which will be on the market within
three months,
will have LCD screens, text messaging capabilities, a phone book and caller ID. The phones
will replace
the current offering, and will also be priced at $40. Hop-On's Michaels said the company
will be able to
sell a more feature-rich phone for the same price mainly because it will be using a
cheaper chip.

The Next Disposable Camera?

Hop-On entered the market for pre-paid cell phones in 2001. After enduring the
frustrations of breaking
a cell phone at the exact time he needed it, Michaels came up with the idea to make a
no-frills, pre-paid
phone that people could use as a backup or to store in their car in case of emergency.
Michaels figures
throw-away cell phones will be as popular as disposable cameras.

But disposable cameras had an uphill battle to find a place with consumers. In the early
days, critics
wondered why someone would want a cheap camera, and were quick to dismiss the product.
Eventually
it did catch on and Isaac Ro, an analyst at Aberdeen Group in Boston, thinks the same
could thing could
occur with disposable cell phones. Throw-away phones could become "something you pick up
alongside
batteries," said the analyst.

In the past cell phone operators have had a tough time making money in the pre-paid
market, mainly
because of the costs associated with manufacturing the phone, but Ro said a low cost
handset, like
Hop-On's, solves that problem. Initially Hop-On's handsets will cost $48 to make, but that
will drop
15% to 25% with the second generation of phones. The company is selling the phones at a
loss but
hopes to make money on the additional air time it sells.

While Hop-On is targeting a market that by many accounts is underserved, John Jackson, an
analyst at
Yankee Group in Boston, still questions whether consumers will be willing to plunk down
$40 for a
bare-bones phone with only 60 minutes of talk time.

"Why would you go to Walgreen and pay $40 for a disposable cheap handset when you can walk
into
AT&T and get a real handset for free with a pretty cheap plan," he said. "If you sell the
phone for $5 and
make it relatively easy to get new minutes then that changes the equation." In 2002,
Jackson said, 34%
of mobile phone users in the U.S. paid nothing for their cell phone, while 85% paid less
than $100.
Moreover, the analyst said even among those with bad credit, it's relatively easy to get a
cell phone and
plan.

Still Michael Polzin, a spokesman for Walgreen, says the phones fit a need among its
customers and sell
at a price they are willing to pay. Although the discount retailer has only received about
200 of the
Hop-On disposable cell phones so far, Polzin said those have sold fairly quickly.

"We think this will have an appeal to customers that don't normally need a cell phone or
have credit
difficulties and wouldn't be able to sign up for a regular cell phone," he said. "We think
it's at a good
price point where people can have a long enough period to use the minutes and not make a
big
investment."

Walgreen is awaiting further shipments of the phones, to test in its stores in Southern
California, before
deciding if it will roll them out in a larger number of stores. "We need to get a
significant number in our
stores and see how it does," said Polzin. "If it looks good we may roll it out
nationwide."

http://online.wsj.com/article_email/0,,BT_CO_20030401_004607-search,00.html?collection=autowire%2F30day&vql_string=hop%2Don%3Cin%3E%28article%2Dbody%29

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