March 25, 2015

Facebook: Telcos’ New Best Friend?


Facebook needs telcos’ help to succeed in its huge ambitions, but can telcos find a way to work with Facebook to mutual benefit? We analyse this opportunity in depth in our latest research Facebook: Telcos’ New Best Friend?.

Facebook has changed substantially since we first analysed the company in 2011. In the new report, we explore the accuracy of our 2011 predictions regarding users, revenue and strategy, and renew our forward views. The chart below shows that we were slightly under on volume forecasts back in 2011, but we’re feeling pretty smug about the revenue forecasts in the full report.

We also examine Facebook’s current aspirations and challenges and explain why, where and how operators should be working with Facebook to build value.

facebook march 2015 fig 3.png

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March 23, 2015

Telco 2.0 News Review: Bregulation, TV, 5G, Facebook F8

[Ed: Also, we’ve just published a new report on The Internet of Things: Impact on M2M, where it’s going, and what to do about it? as part of our new ‘Executive Briefing Service’.]

OFCOM VULA decision; fibre-to-the-cell key to UK mergers; “ultrafast” is slower than today’s cable

So, OFCOM has decided to regulate BT’s unbundling prices to ensure independent ISPs can make a margin between wholesale and retail pricing. In doing so, it’s decided to take the effects of BT Sport into account, both as an advantage for BT and also as an additional cost. However, having made the momentous decision, OFCOM also decided things are pretty much OK as it stands and there’s no reason to activate the ruling. Nicely done.

Elsewhere, the lobbyfest ahead of the OFCOM Strategic Review is beginning to crank up. The terms of reference are out (get them here) and they seem to include OTT services but count out content, although only tentatively.

At the same time, the Competition & Markets Authority has opened the parallel anti-trust review of the BT-EE deal with a request for comments. As well as the obvious retail services, the CMA has asserted a special interest in the market for mobile backhaul. It’s as if they read our BT/EE: Huge Regulatory Headache and Trigger for European Transformation Executive Briefing. Quote of note:

“When BT was giving us all the same sort of service without being in the game, that was OK,” said one rival executive, quoted by the FT. “But it will own the largest mobile group and will in effect be paying itself for access to its mobile backhaul.”

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March 17, 2015

The IoT: Impact on M2M, where it’s going, and what to do about it?


We’ve just published a new research paper ‘The Internet of Things: Impact on M2M, where it’s going, and what to do about it?’. The report contains a high-level analysis of the M2M market, including the strategies of Vodafone, AT&T and Telefonica, and discusses the impact that the Internet of Things and new entrants such as Google and others will have with new business models. What are the implications for operators, and where is it all leading?

The report is part of the Executive Briefing Service, and you can read an excerpt of the report here. For more on any of our services, please email contact@telco2.net or call +44 207 247 5003.

Extract chart from the report:

Digital IoT Convergence.PNG

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March 16, 2015

Telco 2.0 News Review: Small Cells, Regulation, Free, Cable, IoT

[Ed: Also, we’ve just published a new report on NFV: Great Promises, but How to Deliver? as part of our new ‘Cloud and Enterprise ICT’ Stream.]

VZW not daunted by AT&T 40k plan failure; “total” mobile data doubled in 2014; Super COW

Last week we learned that AT&T was backing out of its plan to deploy 40,000 small cells, after it proved unexpectedly difficult to get site access, backhaul, power, regulatory approval, and all that boring-but-important stuff sorted out, and Leap’s macro-network assets became available. This week, Verizon CFO Fran Shammo said that the carrier would be deploying small cells with fibre backhaul, especially into markets where they didn’t win any AWS-3 spectrum. “Markets where they didn’t get AWS” includes Chicago, so this is a big deal. We also know that VZW has tapped Vodafone-backed startup SpiderCloud for its enterprise deployments.

FierceWireless points out that this means a lot more fibre-to-the-cell, and notes that three regional carriers have recently started developing a speciality in it. Fairpoint has fibre to 1100 of 1700 base stations it serves, Cincinnati Bell seems to be specialising in serving a major carrier (that sounds like VZW) after exiting the mobile market, and Lumos is doing more.

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March 12, 2015

NFV: Great Promises, but How to Deliver?


NFV (Network Functions Virtualisation) potentially offers operators benefits of up to 80% network opex reduction and significant improvements in agility, and threatens a shake-up of the vendor landscape. We look at the challenges to making it happen, and what telcos and vendors need to do to succeed in our latest briefing ‘NFV: Great Promises, but How to Deliver?’, part of our Cloud and Enterprise ICT in-depth research stream.

Figure 1 - Intel: comparative hardware performance gains
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March 9, 2015

MWC Special 5G Issue: Telco 2.0 News Review

Net neutrality is here; Eurotelcos launch massive pushback at MWC; where is Andrus?; Indian spectrum auction

So, MWC. It was certainly busy, although news-wise it’s probably fair to say that this one was for the connoisseurs - fewer shiny gadgets and developer events, more network infrastructure and regulation. On that score, the whole event was under the sign of net neutrality, as Tom Wheeler’s FCC formally voted to introduce the iconic measure the week before, and Wheeler himself showed up in Barcelona to bring the gospel to the mobile industry. After all, one of the biggest changes that his new rules will bring is precisely that it covers mobile data.

Tom Wheeler, however, would point out that the new settlement is patterned in large part on the one that exists for mobile voice, as he said during his MWC keynote.

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February 23, 2015

T-Mobile Q4s, Vodafone, Telstra, Cloud: Telco 2.0 News Review

[Ed: We’ve just published a new report on valuing early stage digital businesses as part of our new ‘Transformation’ Stream. Plus if you’d like to meet us at the GSMA’s Mobile World Congress in Barcelona, next week let us know by emailing contact@stlpartners.com - though we’ve only got a few slots left!]

T-Mobile Q4s; AT&T vs Title II; VZW small cells; politicians vs. Comcast-TWC

T-Mobile’s John Legere says the AWS-3 auction was a disaster for US consumers because AT&T and VZW got so much of the spectrum and DISH got away with using a “small business” credit. He wants a special 40MHz carveout in the next auction and a ban on non-operators buying spectrum.

The T-results, meanwhile, weren’t at all bad. The company was profitable to the tune of $101m in Q4 and $219m for the full year, and service revenue was up 17% annually. Q4 was a net-adds monster, with 2.1m net-adds taking them to over 55 million subs, about 800k shy of overtaking Sprint. ARPU was down $2.87 at $48.26. If you count in device instalments you can say it rose, but then, the example of VZW and AT&T’s Q4s was that those device instalments contribute heavily to revenue but precious little to margin. Everyone’s margins are being shredded - it’s a choice between protecting ARPU by slashing device pricing, or slashing ARPU and hoping to recoup on the gadgets.

Continue reading "T-Mobile Q4s, Vodafone, Telstra, Cloud: Telco 2.0 News Review" »

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February 19, 2015

Valuing Digital: A Contentious Yet Vital Business (Part 1 of 2)


We’ve just published a new research paper ‘Valuing Digital: A Contentious Yet Vital Business (Part 1 of 2)’. The valuation of digital businesses is vital because it drives key strategy and investment decisions, yet highly contentious, as there are many different possible approaches. In the first of two reports on this topic, we appraise the main external valuation methods, and their suitability for use or otherwise with new telecoms business models.

The report is part of our newly launched ‘Telco 2.0 Transformation’ stream, and you can read an excerpt of the report here. For more on any of these services, please email contact@telco2.net or call +44 207 247 5003.

Extract chart from the report:

Valuing Digital Fig 1.PNG

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February 16, 2015

Comcast-TWC, Title II, Google, Apple, BRICs: Telco 2.0 News Review

[Ed: We’ve just published a new report on Key Questions for The Business Case for Future Network Investment as part of our new ‘Future of the Network’ Stream. Plus if you’d like to meet us at the GSMA’s Mobile World Congress in Barcelona, March 2-5 - we are making our plans for the week now. Here is how, and here are our thoughts on why its worth going in general.]

Comcast-TWC: doomed or saved? cable lobby vs. cable lobbyist over Title II; price war

Comcast-TWC has got at least one regulator on its side, the California state PUC, but it’s not happy about the conditions. California insists that Comcast expand its Internet Essentials offering, required by the NBCUniversal merger conditions, that provides basic service to the poor, increase the speeds, provide free WiFi routers, and bring broadband to schools and libraries in underserved areas. The target dates and penetration levels have also been increased, which Comcast isn’t happy about. And they’ve got to do something about their customer service:

One provision requires improvements to customer service and would prevent Comcast from pressuring customers not to cancel subscriptions. Much of Comcast’s worst publicity has come from customers recording cancellation calls in which customer service agents practically refuse to disconnect service. Comcast employees have also changed customers’ billing account names to “asshole,” “whore,” “dummy,” and “super bitch”

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February 9, 2015

Title II, Sprint, Spectrum, BT-EE, Lebara, Overly Smart TVs: Telco 2.0 News Review

[Ed: We’ve just published a new report on whether telcos’ digital ambitions are unrealistic as part of our new ‘Telco 2.0 Transformation ’ Stream. Plus if you’d like to meet us at the GSMA’s Mobile World Congress in Barcelona, March 2-5 - we are making our plans for the week now. Here is how, and here are our thoughts on why its worth going in general.]

Title II reclassification is here - the document, the detail, the reaction

Title II reclassification is here. The FCC has issued a fact sheet detailing its intentions, and they include “no blocking, no throttling, and no paid prioritisation”. They also state that Title II reclassification includes wholesale service, making it possible to bring interconnection disputes to the regulator. On the other hand, the regulator “forebears” to impose Universal Service Fund charges on broadband, to regulate prices, or to require last-mile unbundling. However, broadband providers will be required to offer special access, i.e. access to their poles, ducts, and conduits, and we can see Google Fiber among others getting right into that.

Continue reading "Title II, Sprint, Spectrum, BT-EE, Lebara, Overly Smart TVs: Telco 2.0 News Review" »

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February 5, 2015

Reality Check: Are operators’ lofty digital ambitions unrealistic given slow progress to date?


We’ve just published a new research paper ‘Reality Check: Are operators’ lofty digital ambitions unrealistic given slow progress to date?’. Supported by a recent global survey of telco executives, our analysis suggests operators’ digital ambitions are rising fast but, given 9 substantial implementation challenges, too little is currently being done to engender successful industry-wide business model transformation. Lessons are also drawn from NTT DoCoMo, one of the operators that has made the most overall progress towards a ‘digital’ model.

The report is part of the Executive Briefing Service and our newly launched ‘Telco 2.0 Transformation’ stream.
You can read an excerpt of the report here. For more on any of these services, please email contact@telco2.net or call +44 207 247 5003.

Extract chart showing variations in ambition between regions and functions (not actual performance today):

Reality Check Figure 3.PNG

Source: Telco 2.0 CSP Survey, November 2014, n=55

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February 2, 2015

Big Q4 Resultfest: Facebook, Google, Apple, Samsung, Amazon, Comcast, AT&T, BT…

[Ed: We are delighted to be partners of the GSMA’s Mobile World Congress in Barcelona, March 2-5 - and are making our plans for the week now. If you’d like to meet us there here is how, and here are our thoughts on why its worth going in general. We’ve also just published a new report on Telco-Driven Disruption: Hits & Misses (Part 1) as part of our new ‘Dealing with Disruption in Communications, Content and Commerce’ Service.]

Facebook ad prices surge ahead in Q4, Google’s sink; YouTube copyfights, default HTML5, search trouble; Instagram battles the robots

Facebook is two entirely different businesses, says Quartz, after its Q4 results this week show that it’s generating revenue in North America and Europe, but not adding users, and adding users in the rest of the world but not monetising them much if at all. Well, it’s generating revenue in North America; elsewhere not so much. But it’s getting close to an ARPU of $10 in the US and Canada.

facebook-average-revenue-per-user-by-region-us-canada-europe-worldwide-asia-rest-of-world_chartbuilder1.png

As a result, it’s beginning to make substantial amounts of money, getting on for $3.5bn a quarter in sales and $701m in profit. Exactly how this is happening is really interesting, because the volumes of ads it serves up are actually falling.

Screen-Shot-2015-02-02-at-08.55.43.png

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January 29, 2015

Telco-Driven Disruption: Hits & Misses (Part 1)


Although telcos aren’t generally associated with disruption, many operators around the world have attempted to disrupt adjacent markets, such as digital commerce, entertainment and financial services. In some cases, telcos have even disrupted their core broadband and communications markets.

While many of these moves have fizzled out or have flown below investors’ radar screens, several have had a major impact on both the telco’s revenues and relevance. These include SK Planet, M-Pesa, Au Smart Pass and BT Sport. In our latest research report Telco-Driven Disruption: Hits & Misses (Part 1 of 2) we look at why some disruptive moves by telcos succeed and others fail? You can see an extract here. It’s part of our new research stream ‘Dealing with Disruption in Communications, Content and Commerce’.

telco disruption jan 2015 title.png

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January 26, 2015

O3, Verizon, Euregulators, Cablevision, Apple in China: Telco 2.0 News Review

[Ed: We are delighted to be partners of the GSMA’s Mobile World Congress in Barcelona, March 2-5 - and are making our plans for the week now. If you’d like to meet us there here is how, and here are our thoughts on why its worth going in general.]

3UK-O2 is official; Sky and others want MVNOs; full reaction

Here’s the statement - Hutchison has started exclusive negotiations with Telefonica over a bid for O2 UK. A price of £10.25bn is named, almost all of which would be in cash and up front. Depending on how you count M2M subscribers, the combined O3 would have as much as 41% of the UK market.

The point is made here that this still doesn’t settle the fibre-to-the-cell or quad-play issues - so it’s interesting to see that Sky has approached O2 about an MVNO agreement, and so have both TalkTalk and Virgin Media. (Note that the CEO of Belgacom is talking about quad-play and fixed-mobile integration here.)

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Barcelona here we come: see you there?


Our analyst team will be attending this year’s Mobile World Congress in Barcelona (March 2-5), where they will be discussing the latest industry trends with our clients. If you are interested in meeting with our analysts to hear what we have to say on a particular topic or learn more about our research, we would invite you to request a meeting.

Additionally, if you are an established start-up or a Telco with a proven innovation in mobile and digital technology and are looking to develop new channels and opportunities to grow your innovation, we would like to hear from you - providing you meet the criteria below…

Why should I talk to you?

STL Partners’ Innovation Scouting Service is a unique integrated proposition for innovators and innovation decision-makers alike. It combines our core strengths in telecoms consulting and research with our strong industry network to help Service Provider identify, evaluate and deliver innovation quickly.

ISS Overview jan 2015.png

By participating in our Innovation Scouting Service, you will be added to our “opportunities roster”. STL Partners will introduce your innovation to appropriate Telcos globally, providing you with the opportunity to position your service or product with a tightly defined market of potential buyers and partners, building visibility and providing new routes to growth.

What sort of innovations are we looking for?

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Telco 2.0 Strategy Report Out Now: Telco Strategy in the Cloud

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