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Telco 2.0 Transformation Index launches: Telco 2.0 News Review

Don’t delay: places are going fast for the Digital Arabia event in Dubai on the 11th and 12th of November

Mobile voice “the most discounted product” in telecoms; Joyn? No thanks; Telco 2.0 Transformation Index launch

Fixed service revenue may grow faster than mobile in Europe, Analysys Mason reckons. Or rather, it’s going to shrink less. The really interesting quote is this one:

Mobile voice appears to be the most discounted part in the marketing of quadruple-plays. The knock-on effect is a swift erosion of the value of mobile voice in the market as a whole. For example, almost all of the revenue and EBITDA erosion caused by Free Mobile’s entry to the French market (with an entry-level EUR2 per month offer when bundled with a fixed triple-play) was attributed to mobile, whereas revenue attributable to fixed-line services did not shift from its long-term trajectory

We pointed out that “reverse quad-play” - pushing fixed services to the people drawn through the door by the low, low mobile prices - was a big part of Free’s business model back at the time.

They also point out that the fixed operators have largely succeeded in keeping the notion of a line rental charge alive while its value proposition shifts from voice to data, and therefore have protected a big chunk of their revenues. Arguably, rebundling plays like Vodafone RED are trying to achieve something similar by establishing an overall price point that’s independent of the service mix inside the bubble.

So, mobile voice is the most discounted product in the industry. How’s that new Joyn thing coming on? Not so good.

According to the researchers, of the 40 or so MNOs and MVNOs, only 7 per cent now believe Joyn is the solution to combat the threat of Over The Top (OTT) voice and messaging services. A further 29 per cent say they believe that Joyn had the potential to be the solution, but it has taken too long to launch — seven years from concept to commercial launch compared to six months for WhatsApp. In fact, a full 29 per cent believe that Joyn is, flatly, not the solution, and more than a third (36 per cent) are uncertain of the impact the GSMA-based standard will have on their ability to tackle OTT players.

And in the US, FierceWireless recently pointed out that US carriers’ subscriber growth has been flattered by the flow of refugees from Sprint Nextel’s iDEN network, and that with the final shutdown, this support will end. Sprint had the very first voice applications ecosystem, with a remarkable range of enterprise applications built on top of the iDEN network in things like WinForms. They chose a strategy of tearing off the plaster, rather than trying to organise a graceful transition…and it looks like 60-70% of the subscribers just left.

If anyone’s nostalgic, though, here’s a tutorial on how to send (or indeed receive) SMS inside an Excel spreadsheet.

So, we face an industry disruption. Where do we go from here?

AT&T tells Mobile World Live that the future is bright and the future is M2M. 14 million connected devices is a lot, but we can’t help but notice that they’re not saying much about the ARPU on that, still less the margin.

The idea of “sender-pays data” is one that’s been discussed for years, and apparently it’s been getting some consideration in the US - ESPN, for example, was looking at paying carriers to zero-rate its video content. But Verizon CFO Fran Shammo isn’t sounding hugely enthusiastic, pointing out that the practicalities of such a business model get involved with advertising media metrics, as if that wasn’t complicated enough in itself.

He also makes the worthwhile point that VZW’s Share Everything tariff, which bundles unlimited voice and messaging, has the big advantage that it generates fewer calls to customer service, and as a result, VZW might never use the time-of-day and other dynamic billing capabilities it has.

For our part, Telco 2.0 has been beavering away at a new project, which aims to measure how well major global operators are coping with the environment of systematic disruption they face. The Telco 2.0 Transformation Index provides in-depth analysis into 8 multinational carriers in phase 1. Our MD and Chief Strategist, Chris Barraclough, introduces the project:

Telco 2.0 customers can download a sample here.

O2 LTE; EE user study; Israeli voice price wars

O2 UK announced its plans to launch LTE, and the plan is very similar to Vodafone’s and EE’s - a couple of quid more on the basic tariff. O2 bundles more content at the basic level than Vodafone, but doesn’t offer as much data, and throws in access to its WLAN hotspots.

If you believe EE’s user study, that shouldn’t matter too much, as the LTE users they polled claim to use WLAN hotspots much less since they moved to 4G. They even have some who claim to use fixed broadband less.

However, this is based on opinion polling, rather than measurement - smartphones are famous for camping on whatever WLAN is available, so do the users really notice the difference? And does EE actually know? If the user takes their fixed service, presumably yes, but it’s quite possible that the OS vendors know more about this than the operators.

Perhaps the most interesting fact in there is that occasionally, EE is seeing more uplink than downlink traffic. Better touchscreens and web browsers demanded more downlink; perhaps better cameras demand more uplink.

Vodafone, meanwhile, is constantly under fire over its tax affairs. Both the company and the UK government insist that they are in order, but a lot of people are convinced VF is getting away with something. As a result, the staff of the 360 Oxford Street Vodafone shop in central London have become inured to angry demonstrations outside their front window - probably because demonstrating outside Vodafone’s suburban HQ in Newbury wouldn’t get much attention, but it’s got to be rough on the shop workers.

And this week, Vodafone has indeed had to pay out a substantial sum in back tax, in order to settle a dispute with the Revenue. However, as part of the settlement, they also got a €67 million refund from the Irish taxman, so it’s probably fair to say nobody is happy.

Elsewhere, Reuters reports that T-Mobile USA’s operational revival has gone down very well indeed with the bond market, where its credit has improved dramatically.

Verizon, meanwhile, is quietly getting on with fibre deployment - Fran Shammo expects 300,000 more FiOS lines this year.

Canadian operators have come up with another reason why Verizon shouldn’t be allowed to enter the market: the Americans will spy on everyone! It would be a good point…if Canada wasn’t a full member of the Anglo-American intelligence alliance, and therefore almost certainly up to its eyeballs in the whole issue.

In Israel, Cellcom’s results are suffering, as a price war crushes margins on mobile voice. Where have we heard *that* before?

China Mobile’s KPIs for H1 show “traditional” voice revenues down 1.2% and SMS revenues down 5.5%, from a subscriber base that grew 8.4%. It sounds hellish, but on the other hand, data revenues were up 62%, enough to push up operating-level revenues across the board 10%.

iPhone! iPhone! iPhone! iPhone! iPhone!

We can probably expect a lot of iPhone news, or rather “news”, from now until the 10th of September. Forbes points out that if you’re looking for something with real impact on Apple’s bottom line, it probably has to involve selling them in China, which both implies that the devices will need to be cheaper and that Apple will need to sell them to a Chinese operator. If that’s China Mobile, they will also need to have a TD-SCDMA radio.

The Gordian solution would be, of course, to go with China Unicom instead and dodge the whole standards issue. But Apple has spent so much time and money courting China Mobile..surely they wouldn’t do a thing like that. Of course they would.

Something else Apple’s done: patented hyperlinks embedded in an audio stream.

Bad news for Samsung: NTT DoCoMo has dropped the Galaxy S4 from their range for this winter, because they didn’t sell enough.

Things at BlackBerry aren’t going well, and last week they started a committee to look at selling or breaking up the company. John Paczkowski at AllThingsD looks at the patent portfolio and argues that it might be worth as much as $3bn. The big question would be whether the buyer is another industry participant, or just a patent-troll.

Meanwhile, The Verge reports on an alternative plan that would have seen them dump BB OS 10 and concentrate on the enterprise side of the company.

You will no doubt be as touched and reassured as we are by the news that CEO Thorsten Heins is likely to make a lot of money whatever happens. In the event of a sale, his change-of-control clause pays out $56 million; if he’s just fired without a change of control, he gets $22 million.

But the good news for BlackBerry is that at least they’re not HTC. Not so long ago, they were so pleased with getting Dr Dre’s headphones startup on board, they wanted to buy a stake in the company. Now, Beats Audio wants to buy them out. At this rate, Beats will be trying to buy HTC next week.

Handelsblatt interviews the head of Nokia’s location services, who does a great job generally pushing maps but doesn’t escape the point that the division isn’t making money.

And Tesco wants its own tablet - is it more about selling content, or about crosspromoting goods, and how does Tesco’s MVNO play into this?

Ubuntu’s biggest crowdfunding ever fails, cloud business does better; Rackspace adds 52 servers/day

The crowdfunding drive for the Ubuntu Edge has been the biggest ever, but it needs to find another $20 million in the next six days, or give all the money back.

A cynic might suggest Mark Shuttleworth threw the whole thing as a publicity stunt. Here’s an interview with him - he claims that Canonical could become profitable at any time by scaling back to its server and cloud activities, but he’s willing to fund it because (basically) he wants to believe.

That said, the Ubuntu shop has more revenue-earners than just orange Tux mugs - as well as the Red Hat-style consulting and support business, and the proprietary Landscape data centre management tools, Canonical earns royalties when cloud computing firms provide Ubuntu virtual machines to their customers, and there are a hell of a lot of those around. Interestingly, some of the biggest providers of Ubuntu in the cloud are telcos, including some of the same ones who expressed an interest in the mobile version.

Canonical, of course, is a major contributor to OpenStack, like Rackspace. For their part, Rackspace claims to be adding 52 physical servers a day to its cloud infrastructure, bringing them to 98,884 machines under management at the end of Q2.

Amazon Web Services, meanwhile, has a whitepaper out on the best practices for their Elastic MapReduce big-data product, and has just added a bulk-notifications feature to EC2.

Google flips server encryption on; fun with censorship; “pay per gaze”

If your data is in the cloud, it’s where the feds can get at it. This was always a favourite complaint of grizzled old hackers, but these days it’s on everyone’s mind. Google has just announced that data in its Compute Engine storage services will be encrypted on the server by default. With this move, Google catches up to where Amazon Web Services was in October, 2011, although in fairness AWS requires the user to opt for encryption and Google’s is default-on.

At the same time, Google’s been arguing that the UK’s privacy laws don’t apply to it, rather like they argue the tax laws don’t apply to them. Perhaps the new European HQ is technically an independent state. They also recently claimed that GMail users have no “reasonable expectation of privacy” because of the ads, but it might have been going too far to convince everyone they had no reasonable expectation of service with last week’s 5 minute total Google outage.

A UK court ordered ISPs to block a website that offers unauthorised football, and hilarity ensued - the site used a DNS redirection service, and the court managed to ban the redirection service, thus incidentally censoring all their other customers. RevK points out that such a site could easily include the IP addresses of important third parties in its DNS records as a defence strategy.

Hackers make Samsung smart-TVs watch you.

Google has patented the use of Google Glass’s eye-tracking technology to find out which adverts you look at, and bill the advertiser on a “pay-per-gaze” basis. Those could be adverts in Glass, or indeed adverts on billboards, TV, or the printed page.

The Snowden wars, New Zealand edition.

Twitter’s radical origins. Emergency mesh networking that Bruce Schneier likes. How Lavabit used to work.

Cord-cutting has arrived, and telcos benefit!

There’s been a lot of talk over the years about “cord cutting”, the idea that what with all the video all over the Internet, Americans will stop paying for cable TV. (It’s usually Americans; pay-TV is so much more about live sport elsewhere.) It now seems to be happening, with the caveat that there is a strong seasonal effect and this might just be a big seasonal downswing. The beneficiaries seem to be Netflix and telco-provided TV services, in that order, as a fine chart shows.


In Germany, a court has ordered the regulator to look again at the acquisition of KabelBW by LibertyGlobal, which might have to divest large contracts or break up the venture.

BT Sport screened its first football match, and 764,000 people tuned in (if that’s the right word), not counting users of their app. Sky’s big kickoff got 3.1m viewers - in fairness, that was a Manchester United game, but then BT’s featured Liverpool.

French tower company TDF wants to sell its French towers to pay off debts, but can’t.

And is PeerCDN going to wreck the CDN industry’s tea party?

“I’m 13 and none of *my* friends use Facebook!”

Here’s a SMS applications tool, a bit like FrontlineSMS or RapidSMS, but with a visual programming editor reminiscent of Yahoo! Pipes.

The Indie Web wants you to self-host everything. On your Ubuntu Edge, no doubt.

Goodbye, “20 per cent time”.

And finally, it’s the 30th anniversary of MIDI, the networking standard for musicians.

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