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Vodafone results; Cable deals; B4RN; Voice; Google CAPEX - Telco 2.0 News Review

The Telco 2.0 Transformation Index, launched today, gives an overall comparative benchmark and in-depth analysis of the progress of five leading telcos (AT&T, Verizon, Telefonica, SingTel and Ooredoo) in terms of transforming their operations and building new ‘Telco 2.0’ business models. Overall, it shows that SingTel and Telefonica have made more progress than AT&T, Verizon and Ooredoo, but that all are still at a relatively early stage of maturity and have much still to do. Click the image for more details:

Telco 2 Transformation Index.png

Vodafone FY - basically horrible in all developed markets; M-PESA moves on shore in Kenya

Vodafone’s results for the year are in. Where you stand on Vodafone basically depends on whether you think the price war in the US will be more brutal than the continuing economic crisis in peripheral Europe. If yes, it looks like selling VZW was sensible. If no, it looks like they sold the best mobile operator in the world to buy more assets in a string of bombed-out economies. It’s fair to say that the results back the second option; service revenue was down 4.8% quarter on quarter, with yet another double digit slide in Spain and Italy. You might have hoped that the Southern European markets would have bottomed out by now, but the slide is actually accelerating, with Italy off by 16.6%.

It’s not just the Mediterranean, though.

Elsewhere around the company, Vodafone UK has 370,000 LTE subscribers, which compares poorly with EE’s 2 million. And Vodafone service revenue fell 7.9% in Germany. Despite the hype about “Project Spring”, CAPEX was £1.8bn, up from £1.5bn the year before, which is hardly the stuff of a major strategic initiative.

There was some good news - service revenue in India, Turkey, and South Africa grew strongly, and both enterprise and M2M did well. Zooming in, Vodacom saw revenue up 10.5%, data revenue up 40%, and subscribers 12.3%. 23.3% of its subscribers are M-PESA users, and M-PESA accounts for 20% of its revenue in Tanzania, the biggest single Vodacom M-PESA deployment.

In Kenya, the original M-PESA market, Safaricom’s new mobile banking product, M-Shwari, has 24 billion Kenyan shillings in deposits and 7.8 billion in loans after the first year of operations.

Vodafone Group takes about 11 per cent of Kenyan M-PESA revenues as a royalty, we learn in an interesting Business Daily Africa story. This is going to change; so far, M-PESA the software application has been hosted in a Vodafone data centre in Germany, but Michael Joseph, Safaricom director and Vodafone Group head of mobile money, expects to move it onshore in Kenya this year. Specifically, the move will happen when the next major version, currently in testing, deploys. As a result, the royalty agreement will be renegotiated, letting Safaricom keep more of its money. It’s also telling that Kenyan data centre infrastructure is now up to the job.

Vodafone’s statement mentions a lot of fixed activity:

Our organic fibre build programmes in Spain and Portugal are on-going, and planning for our fibre-to-the-cabinet project in Italy, fibre-to-the-business in South Africa and DSL expansion in Spain are now at an advanced stage

So it’s no surprise people are speculating about a re-entry to the UK residential fixed market. As ThinkBroadband points out though, Vodafone would face the challenge of differentiating itself from all the other players who are basically resellers of BT’s VDSL product. The CEO is apparently concerned about a possible BT femtocell-plus-MVNO threat.

Elsewhere, DTAG buys out the other investors in Czech T-Mobile, Boost Mobile punches prices in the US again, offering open slather voice and messaging and 2.5GB of LTE data for $35/mo for the first six months, AT&T stops paying T-Mobile subscribers to churn, and a couple of appointments at Zain.

Vodafone bids £5.8bn for barely profitable Spanish cableco; TWC numbers

Meanwhile, Vodafone’s bid for Ono is official, and they’re offering £5.8bn for the Spanish cableco. We shall see how Liberty Global responds. Perhaps not much, going by the following key figures:

Ono provides telephone, television and internet services to its customers and had revenues of €1.57bn in 2012 but took in just €52m in net profit

As we wait for the next move in the Charter-TWC deal, TWC’s results show us why it’s up for sale. Over the full year, it lost about 7% of its customer base, with 217,000 net losses of video customers in Q4. TWC, unlike the other US cablecos, chose to put off the DOCSIS 3 upgrades rather than pushing broadband speeds - it may well have been reaping the rewards.

That said, they’re now trying to catch up. While video revenues fell by $436m, nonvideo (primarily broadband) revenues were up by $734m, and broadband net-adds were enough to get the customer base into positive territory on a “primary service unit”, i.e. unique subscriber, basis.

Here’s an old-school cableco story: Virgin Media is suing one of the four men found guilty in 2012 of running a pirate network with 6,600 subscribers out of a house in Derby, trying to recover £2.5m in lost business.

Virgin Media Business, meanwhile, has scored a major contract with 3UK to provide their backbone network, linking 15 aggregation sites and 3 data centres around the UK.

B4RN, the fastest broadband in Europe; British rural broadband policy descends into utter shambles

Forbes reports on B4RN, the Lancashire-based community fibre provides that provides the fastest rural broadband network in Europe. For a £150 signup and £30/month, its subscribers get gigabit connectivity, plus the spectacular condescension of this BT spokesman:

A spokesman from the UK’s biggest telco BT questioned B4RN’s long term viability and sustainability. What B4RN is doing is epic, but can they achieve the extras, he asked?

Perhaps those extras include 3% packet loss, which BT Wholesale told one of its ISP customers doesn’t count as a fault.

Bitterness is growing about the fate of the UK’s BDUK rural broadband project. In Devon, a local council leader refused to allow a vote to be taken on whether to proceed with a community FTTH project or to accept a subsidised BT FTTC build, while also ruling that a report on the BT offering was “commercially sensitive” and therefore secret.

Here’s an argument that OFCOM should intervene to make BT publish its network maps. Elsewhere, community fibre builders at Wessex Internet are looking at deploying fixed-wireless to reach beyond their footprint. The South Yorkshire Digital Region project is shutting down, but not surprisingly, the subscribers don’t want to leave.

What, precisely, is the Broadband Stakeholder Group and what is it doing?

The good news is that a DCMS consultation is open about the future of the UK ISP infrastructure, so it’s your opportunity to be the squeaky wheel that gets the grease.

Netflix vs. Verizon - neutrality controversy, or another Cogent depeering spat? Competing with YouTube; YouView in trouble

The spice, or rather online video, must flow. Except when Netflix and Verizon are having a peering dispute which impacts subscribers’ quality of service. The Public Knowledge blog explains the issues and asks why the FCC seems both unengaged, and more worryingly, incurious about the problem. It’s telling, meanwhile, that a content provider like Netflix can be involved in a peering dispute.

GigaOm speculates that it’s something to do with net neutrality, but between the comments there and Public Knowledge’s links, it seems quite plausible that it has more to do with Netflix’s move to take its CDN in-house. Apparently, they buy a lot of transit from Cogent, and the IP carrier price leader’s record of peering disputes speaks for itself.

Dean Bubley, meanwhile, is sceptical of “sender-pays” as a business model.

Here’s a long and interesting piece on being a major content producer for YouTube. Jason Calanicas argues that a) the platform and Google support are enormously impressive and also that b) it’s too expensive, and wonders if “10 of those [major content creators] got together and built a competitor it might be a major blow to YouTube”. We suspect he is hugely underestimating how much engineering and infrastructure (notably in the data centre) goes into making the YouTube platform as awesome as he says.

BT is offering streaming movies for sale via its YouView TV platform. That said, the BBC is looking increasingly sceptical about the troubled project.

Building “ski lifts” with WebRTC; Sprint goes with Broadsoft; US diplomats needed RedPhone; Chromebox for Meetings

Here’s a really good piece on the opportunities for Voice 2.0 in the call centre, using it to create a “ski lift” to the customer’s real problem, with a neat graphic:

WebRTC-Contact-Center.png

Ericsson networks EVP Johan Witberg argues that major VoLTE investment will begin in the second half of 2014, and that a key motivation will be clearing the 2G and 3G spectrum preparatory to refarming.

Sprint picks Broadsoft’s BroadWorks voice applications server, tooling up for both VoLTE and richer unified comms features.

Chris Kranky points out that the sheer bulk of new features in HTML5 is a barrier to awareness of WebRTC. He’s trying to do something about that, with the new WebRTC Weekly. But voice awareness is a problem for a lot of people.

Like the US State Department. It turns out that US diplomats typically have encrypted data service on their mobile devices (i.e. a VPN) but not encrypted voice. As a result, “someone” (probably the Russians) intercepted them discussing Ukrainian politics and leaked it on the Internet, where the politically sensitive and foul-mouthed conversation ended up as a house remix (note: swearing). You see what comes of not using a secure voice app like Moxie Marlinspike’s Redphone.

Twilio blogs a customer using their service and LiveOps’ call centre platform to deliver pizza during the Super Bowl.

Public Knowledge provides details of the FCC’s IP transition trials.

The popular FreePBX project, a development of Asterisk, has recently added support for high-availability configurations with failover between active/active pairs of servers. Here’s a short talk from the Digium corporate blog:

And here’s a surprise: Chromebox for Meetings, a Google videoconferencing product, and it’s hardware! Asus makes the gadget, which runs Chrome OS on an Intel Core i7 CPU (i.e. quite some power) and uses Google Hangouts as the server. It costs $999, plus a recurring $250 annual fee.

Google CAPEX surges in 2013; is it data centres, or network?; Facebook looks at faster construction

Up in the cloud, Google spent $7.3 billion on data centres in 2013. This is double what it spent in 2012, and marks a major acceleration in data centre investment. Until quite recently, a $1bn CAPEX quarter for Google was exceptional, but Google broke through the barrier in all four quarters in 2013. All the investment is going into further phases at existing sites, rather than green field projects. (And some people think 10 or so videographers could build a competitor to YouTube…)

The architect of all this is of course Urs Hölzle. Here, he recalls the very first Google cage in their very first data centre.

What are they doing with all that money? The answer may be “running fibre between the data centres”. Matt Asay argues that much of the investment in the data centre infrastructure is going into networking, and that networking is Google’s angle vis-a-vis Amazon Web Services.

High Scalability discusses how Google backs up data, a major engineering challenge in itself.

IBM offers a service that virtualises your data. Facebook is looking at how it could build a data centre in half the time, and it is considering two different approaches. Fascinatingly, the demands of Facebook’s scaling are changing the architecture of the building as well as the technology inside it.

Apple: “artificial sapphire for 100 million, Alex”; HTC turnaround plan; HTML5 second-best paying ecosystem

Google created a data centre industry; Apple creates a manufacturing industry. 9to5Mac has detail of the factory it’s paying for in Arizona that makes artificial sapphire displays. The first batch of 518 machines is apparently capable of producing 106 to 113 million screens a year. Critically, their new set of quality inspection tools from Intego GmbH were shipped in January, so we should be expecting product fairly soon. Here’s a picture of an artificial sapphire furnace:

asf_crop_web.jpg

After that, Steve Wozniak saying that Apple should do an Android phone seems tame. The importance of Apple and Samsung’s deep value manufacturing investment is nicely shown up by HTC’s turnaround plan, specifically this quote:

“Many years ago we started looking at smartwatches and wearables, but we believe that we really have to solve the battery problems and the LCD light problems,” she said in the interview. “These are customer-centric problems.”

That said, IBM is considering getting rid of its fabs, although it will keep the chip design operation.

Microsoft is occasionally touted as a possible candidate to fork Android and replace Windows Phone. Ars Technica explains why the Google apps are the real issue and the real way Google influences the project.

Meanwhile, Nokia and HTC are the latest phone makers to settle their patent disputes.

Samsung will launch the Galaxy S5 at MWC. Apparently, they’re hoping to dispel the perception that the S4 was too similar to the S3. They may also show a Tizen phone, but it may not matter much, as Sprint, Telefonica, and NTT DoCoMo have all lost interest.

The UK is 59% smartphone, with 27% Android and 26% iPhone. Jolla has an interesting API for hardware add-ons. Google now owns a chunk of Lenovo.

Vision Mobile’s Developer Economics report, meanwhile, reckons that iOS is the best paying ecosystem, but the surprise is the second:

median-revenue.jpg

Snowden “scraped the NSA intranet”; IMSI catchers mounted on drones; BlackPOS news

Edward Snowden wrote a web scraper to collect the whole of the NSA’s internal wiki, it turns out. Meanwhile, much more data is disclosed on how the NSA uses telecoms call-detail records and various network exploits, notably an IMSI catcher mounted on a drone, to cue-in drone strikes and commando raids.

The potential impact on the politics of the Internet is discussed.

HP’s security research blog analyses the BlackPOS virus used by the attackers who took control of Target’s credit card terminals. The CEOs of the retailers, meanwhile, were hauled over the coals at the US Senate’s Judiciary Committee.

All you need to spy on GSM users: an account with a managed HLR company. Tunnelbear is a slightly cutesy but very simple mobile VPN app.

100 years of wireless history, in 135 slides at the 3G & 4G & 5G Wireless Blog. It’s NANOG60 this week, and the notes will be along shortly as always.

And the French privacy regulator, CNIL, ordered Google to pay a fine and place a message on the google.fr home page. The message included a link to CNIL’s web site. Predictably, CNIL’s web site couldn’t serve the traffic.

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