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Ring! Ring! Hot News, 3rd November 2008

We’re often noticeably keen on BT; but we’re not always right. This week, it happened. BT issued a profit warning combined with the message that it might have to chip in more cash to its pension scheme; the shares duly tanked. The hit to profits came at the company’s growth centre, BT Global Services, as its enterprise clients cut back on their IT spending. Perhaps, however, that’s a good problem to have; at least compared to those telcos whose core telecoms business is spiralling rapidly downwards.

But it can’t have helped that France Telecom announced numbers this week that were entirely satisfactory, with mobile broadband helping to compensate the steady decline of the fixed voice business. (Or is it cannibalising it?)

Back in the Telco USSR, meanwhile, Sprint-Nextel management is making a virtue of necessity. They have cancelled the attempt to sell Nextel, three years and $36bn in writedowns after they bought it. Now, due to the financial crisis, they’re talking about “rejuvenating” the network that gave you Push To Talk and specialist public-safety voice & messaging. Their tell us:

“The iDen network is a key differentiator for Sprint,” said Dan Hesse who took over as Sprint Nextel’s chief executive at the start of this year. “It allows us to offer products and services no other carrier in the industry can match.”

Someone has finally noticed that the money’s in enterprise voice and messaging. How different things were a few months ago when all Nextel did was get in the WiMAX rollout’s way. In support of this, there was some good news for fellow crisis club Motorola, as Sprint is renewing the longstanding agreement under which they support iDen technology.

And Moto needs the good news; the numbers at its handset division are so bad that it looks unlikely that they can actually get rid of it. Instead, there’s going to be one last try, to either turn the job around or at least put it in a condition to sell. As a result, many of Moto’s OS platforms are being axed. Only their proprietary low-end one, Google Android and Windows Mobile will be supported. Supposedly, hundreds of engineers have already been reassigned to work on Android. This leaves the LiMo mobile Linux looking a little shaky. Relatedly, the latest release of Ubuntu is apparently full of mobility features, so maybe we’ll see the PC platform go mobile, just not in the way Bill Gates would ever have hoped for.

Apple, meanwhile, smashed its way into the handset-shipping top 10; incredibly, what with the revenue-sharing agreement and the whacking handset subsidy and the $900m hit to profits, AT&T is now giving its iPhone subs free WLAN. Just what did Steve Jobs do to those people? As a result, iPhone developers are in short supply — this may be a first for the mobile software business, and one which really marks out Apple’s success with the Jesus Phone.

Yahoo!, meanwhile, has lashed its various APIs together and called it Yahoo! OS v1.0. And over at Forum Nokia, Robin Jewsbury doesn’t think much of Steve Ballmer’s thoughts on mobile.

Via David Isenberg, we learn that Verizon claims that fibre-to-the-home cuts maintenance truck rolls by 39%. Just what are we waiting for?

But then, it’s always the way — the non-telecoms problems are the hardest to solve. The saga of the dispute between Altimo (Alfa Group’s telecoms business) and Telenor over various shareholdings in the former Soviet Union just took off again; Telenor won a case in an obscure Russian court, Alfa (or what looks like a front for them) overturned it in another.

Telenor did much better with its investment in Pakistan. Now, facing falling profits at home, it’s trying to repeat this in India by buying 60% of Unitech.

We’ve often said that the industry needs a new business model. In Sri Lanka, fixed-line operator Lanka Bell’s got one: they’re paying customers to receive international calls, after connecting up to FLAG slashed their costs. How long before Sri Lanka develops a lot of call centres?

PCCW chairman and major shareholder Richard Li is planning to take the company private, thus reversing the massive and much hyped IPO of 1999. Does anyone remember when people actually called it “Pacific Century CyberWorks”? Me neither…

The Australian government is still dreaming of censoring the Internet, and the French Senate kept the three-strikes proposal despite its beating in the European Parliament.

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Two thoughts
First, about why not fiber to the UK, the answer has to be weakness at OFCOM and any BT competitors. If Verizon can do 20M fiber homes without subsidy and France is well on its way, it's nonsense to think BT - a very competent outfit with substantial cashflow - couldn't do similar. They need incentive - a competitor that would push them out of business if they build a second rate network. London deserves an Internet comparable to Paris, Amsterdam, New York and Tokyo; Liverpool should be able to match Marseilles and Lyon.

Second, unfortunately, is that BT's financials are probably worse than they seem. I like and respect many of them, but declines this severe are rarely the result of problems for a quarter. Far more likely is that they've been building for a while, being patched over with quarter to quarter measures that eventually run out. I hope I'm wrong, but problems deeper than any of us know could easily have been why Ben was pushed out. The world is going wireless; carriers without wireless may be in rougher shape than we realize (Qwest, BT).

Ben is bringing to Alcatel a similar switch to "services," as what failed at BT. I hope he has better luck, but the problems with BT's services should remind us how hard it is to create a new culture and strength.

Good luck with the conference. Sorry I can't come over, but no travel budget.

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