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Title II, Fibre-to-the-Cell, Skype for Browsers, HD WiFi, AWS: Telco 2.0 News Review

‘Digital Asia 2014’ Executive Brainstorm and Innovation Forum, run by STL Partners in collaboration with Telkom Indonesia, is designed to equip 250 specially-invited business leaders from across the region’s telecoms, enterprise and technology sectors with new, breakthrough ideas, methods and tools on how to grow significant new revenues in the next 12-18 months leveraging Mobile, Cloud and Big Data.

Obama’s Title II speech uncorks lobby-fest; AT&T “pauses” fibre build they’d already stopped

Fight! Fight! So last week, President Obama said he wanted the FCC to reclassify broadband under Title II. This week, FCC chairman Tom Wheeler put off a vote on the issue, asking for more time to “consult” the industry.

AT&T, meanwhile, responded by “pausing” its gigabit fibre rollout, a threat that would be more convincing if they hadn’t announced that their broadband rollout under Project VIP was over in their Q3 results a week earlier, with a $3bn cut in their CAPEX guidance (see News Review for the 10th November).

The FCC hit back, demanding to know exactly what they were “pausing” and how that relates to the commitment they made to the FCC over the DirecTV merger.

The lobbying storm picked up, with the GSMA wanting a carve-out for mobile, and Republicans denouncing the whole idea.

Netflix, meanwhile, says the money it pays Comcast is 60% of the total cost of serving one of their customers. This discussion at 10pm UK time tonight sounds interesting. Is being a utility the highest compliment a business can get?

If carriers are worried about “uncertainty” due to the Title II announcement, they didn’t show it in the AWS-3 spectrum auction; Fierce reports that they pushed the first round of bidding to $1.77bn. Perhaps it shouldn’t be surprising as there’s a 2x10MHz block over New York City in there.

And the FTC wants answers from Apple about what it will do with HealthKit data.

[NB For our part, the answers we’re after are on ‘The Future of the Network’ - a new research programme into. If you’re thinking about network strategies, regulation, spectrum, fibre-t-t-x, 5G, IoT nets, etc., we’d appreciate your input via this short online survey.]

T-Mobile USA’s secret: fibre; US data usage over 2GB/mo; Vodafone, Telefonica suffer; putting BTw in Openreach

How has T-Mobile USA coped with the massive swing to growth its price war has unleashed? CFO Braxton Carter mentions something interesting - T-Mo has been pulling fibre to its cell sites for the last five years and now has fibre at 50,000 out of 60,000 Node-Bs.

We also pointed out that fibre to the cell is a key differentiator in our recent Differentiated Mobile Data Executive Briefing. Of course we’ll be keeping an eye on this in our continuing Future of the Network research stream. For the moment, let’s just point out that Centurylink, Virgin Media, and Zayo (ex-Abovenet) seem to be emerging as specialist fibre-to-the-cell providers.

Chetan Sharma puts some numbers on why you might need gigabit and quite possibly 10 gigabit to the tower. US average mobile data consumption is now over 2GB/mo, a year after it passed 1GB. It took 20 years to reach 1GB. Pricing, meanwhile, has collapsed, with the marginal price falling 77% year-to-date as the price war rages on.

Vodafone’s H1s reflect this in as much as the operator is becoming increasingly fixed broadband-centric. Fixed service revenue is now 18.7% of the total, and is expected to reach 25% by the end of 2015. That said, as we point out in Differentiated Mobile Data, even the Project Spring investments will only get them to 30% fibre-to-the-cell, and the core mobile business is still shrinking in Europe, with service revenue down 6.5% year-on-year. After a strong performance in emerging markets was counted in, that left the groupwide top line down 3%.

Telefonica’s Latin American operations are singing a happy tune, but the best news in Europe is that the “rate of decline is declining”. Also, data traffic and the smartphone ration are way up, but that’s no good if you can’t carry it profitably. Net income was down 13%.

SingTel, meanwhile, is seeing an 11% ARPU uplift when it converts an ADSL household to fibre. Iliad Q3s are in, and they scored 480k net adds and 30% revenue growth in mobile, plus 70k net adds in the all-important fibre ISP business. Remember, each one of those is another base station for the mobile operator.

In the UK, TalkTalk has decided to trim its subscriber base where its own network doesn’t reach, selling the customers who are on BT bitstream products. As their ARPU is 25% higher for an unbundled customer than a wholesale line rental customer, you can see why they might do that. Ironically, Virgin Media is doing something similar, selling off its ADSL business to concentrate on the cable network, and the buyer is TalkTalk! The point is that TalkTalk probably thinks it can port the Virgin customers onto its own unbundled wires quickly. TalkTalk has also renewed its MVNO agreement with Telefonica UK, adding 4G.

TT is one of the three partners in the joint FTTH build in York. This week, the project’s operating company was registered and it applied for permission to dig. It’s needed: via an Advertising Standards Authority complaint, it turns out that BT has covered 0.7% of the UK with FTTH as against its original commitment to 25%.

Another of those partners, CityFibre Holdings, has signed an agreement with EE and 3UK to provide them with dark fibre to the cell in Hull. In Differentiated Mobile Data we pointed out that 3UK’s success is built on its 90%+ coverage of fibre to the cell; this is both very important to the mobile operators, and a potential launch-customer for CityFibre.

BT, meanwhile, wants to move BT Wholesale into Openreach, seeing as Openreach’s dark fibre and Ethernet products are taking over from BTw’s traditional carrier-services operation. At face value, this would be a case of BT volunteering to move a sizeable business into a more restrictive regulatory regime, so watch out for them trying to get concessions out of OFCOM.

EU Commissioner Günther Oettinger is leaning towards the telcos again, suggesting they might get a let-off on long contracts.

Here’s the final reckoning on Phones4U; its bondholders will get back 10 pence in the pound, the taxpayer will get back nothing from £168m it owed the revenue, while its banks will recover the whole lot of a £19m overdraft and owners BC Partners get to keep the 30% return they made on the deal.

Nick Hunn points out that if we start decommissioning 2G networks, the cost of an M2M module will jump dramatically just at the moment it needs to be falling fast. Fortunately, SK Telecom has an idea: an overlay 2G network backhauled by the LTE network. SKT is thinking of it in terms of failover, but it might also be a neat way to provide continuing 2G service for M2M applications cheaply. Which is exactly the kind of thing we want to look at in our Future of the Network survey

Skype moves onto the Web; Matrix.org, novel signalling framework; Cisco’s HD VoWiFi

Microsoft has just brought the whole WebRTC/Object-RTC issue to a head, by launching Skype in the browser. On Internet Explorer 10 and beyond, it will be native because ORTC is present, but it will need a plugin in Firefox, Chrome, and other WebRTC-supporting browsers.

MS is giving Skype some attention at the moment - they’ve also rebranded the Lync client as Skype for Business, re-launching an old brand in the process, and integrated a lot of Skype look-and-feel, while on the consumer side they’ve relaunched Qik, the vlogger app Skype acquired years ago. We wrote back in 2011 in our What Skype/Microsoft means for telcos Executive Briefing that what Skype really needed was better integration with the Web - perhaps they’re getting there? Tsahi Levent-Levi says something similar.

Matrix.org is an encrypted, distributed HTTPS-based signalling network for WebRTC call setup, messaging, M2M, or what you like. Here’s a really interesting interview with its inventor, plus extra discussion of its similarities and differences with XMPP in the comments.

Cisco has a new carrier-WiFi product optimised for high-definition voice. It seems to be targeted at cable operators.

After last week’s stinker review of Verizon’s Advanced Calling VoLTE product, here’s a favourable review of T-Mobile’s VoWiFi app.

AWS: 3 million servers; will new data centre starts slow down? Ericsson, Nokia Networks cloud news

Amazon Web Services is up to 3 million servers, according to talks at their re:Invent conference, with between 50k and 80k physical machines in each data centre.

AWS announced that several of their products have started to emit event notifications when things happen, which you can use in the new AWS Lambda service. This lets you write node.js code and upload it, and executes it when a specified event comes in, as a zero-administration computing platform.

IDC reckons that the rate of new data centre construction will peak in 2017, although actual square footage or power density will keep climbing. To put it another way they expect existing sites to keep growing.

Facebook’s latest data centre uses smaller clusters so that it can have a flat network architecture, which might help to scale out within the facility.

Ericsson is going to cut jobs, while it also tries to increase its non-telco revenue from 10% to 25% by 2020.

Nokia Networks, meanwhile, is going to ship its NFV products on top of HP’s version of OpenStack.

Streaming video alliance; Amazon-Hachette settlement; iCloud numbers; Rocket plans 10 IPOs next year

The Streaming Video Alliance includes content owners, vendors, and some telcos, notably TI, Telstra, and KT, as well as L(3) from the core Internet and Charter and Comcast from cable.

Amazon and Hachette have settled their dispute, and Amazon has accepted an agency business model, although it seems Hachette made some concessions on pricing.

Horace tries to estimate the size of iCloud. As with most Apple analysis, the stand-out ends up being just how huge the iPhone hardware and the apps business are.

Rocket Internet is going to float another 10 startups this coming year.

Google has withdrawn the Google Wallet Digital Goods API.

Uber. And Spotify. Together. More Silly Valley it doesn’t get.

MasterCard and Visa want to shut down Verified by Visa/MasterCard SecureCode and replace it first with mobile two-factor authentication and then biometrics at some point in the future.

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