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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.

At MWC, T-Mobile is planning to demonstrate unlicensed LTE in the 5GHz band with Nokia Networks, something that would give it an immediate capacity jump.

AT&T, meanwhile, is threatening to sue over Title II reclassification. Randall Stephenson says it’s not a matter of “if” but “when”. We noted, meanwhile, that in Q4, AT&T’s newly integrated Cricket prepaid business was gaining subscribers but not as many as the GoPhone brand was losing. They’re doing something about that, upping the data bundles and offering unlimited calls to Mexico on the $60 option.

Verizon Wireless, meanwhile, is deploying 400 small cells in the centre of San Francisco to add more LTE capacity. Not surprisingly, the city contains some of their heaviest data users. The cells are installed on lampposts, at intervals (i.e. half the cell radius) of 250 to 500 feet.

They’re also shuffling the exec deck this week. Dan Mead, who headed VZW from 2010, is going to retire once the sale of some wireline assets to Frontier closes. As a result, a new post of EVP and President of Operations has been created to oversee both VZW and the core wireline business, and John Stratton moves over from Verizon Enterprise Solutions to take it. Interestingly, AT&T chose to integrate wireless and enterprise and leave wireline out of the new structure, while Verizon has merged wireless and wireline and left enterprise out.

Sprint has raised $1.5bn through an issue of bonds that was, somewhat surprisingly, so oversubscribed they added an extra $500m at the last minute. They now claim to have added tri-band LTE to another 48 markets.

And the first congressman has publicly opposed Comcast-TWC.

Pre-MWC buzzwords: radio cloud, SpiderCloud, OpenCloud, 5GWA

After that Nokia/T-Mobile announcement, it’s probably time for some pre-MWC networks news. Nokia Networks is pushing what it calls a “radio cloud”, consisting of all the middle-level functions of the RAN virtualised across a server fabric, linked by fronthaul fibre to the radio heads at the base stations and by backbone fibre to the data centre with the core network.

Nokia is also trying to link its IoT and 5G strategies, but this piece also makes clear they don’t expect to see deployments before 2020.

SpiderCloud, the Vodafone-backed small-cell startup, has a major new customer, Warid. It’s probably more impressive that at least some of the small cells we mentioned in Verizon’s SF deployment are theirs. They’ve also announced a new product, a small cell that supports hosting multiple operators. Interesting detail: the devices contain a Bluetooth Low Energy beacon, so you can configure them from an app without climbing into the rafters to get at them.

Alcatel-Lucent and Freescale are cooperating on a “universal remote”, which turns out to be a remote as in remote radio head, not something you point at the telly.

Telekom Austria claims to have run the first fully virtualised 4G network, using Metaswitch and OpenCloud technology, at its Serbian subsidiary VIP.

Among all these buzzwords, what better than a new abbreviation to remember? Meet the 5GWA, or 5G World Alliance, a new talking shop being launched next week on the pattern of the NGMN.

And Ericsson is going to launch something called “Digital Telco Transformation”. There’s a serious bug in big Cisco routers.

VFUK: lop off some BT-EE spectrum; Numericable unbundling terms; easier vertical fibre; OFCOM vs Eurocrats

Jeroen Hoencamp, Vodafone UK CEO, speaks about the upshot of BT-EE and O-3. He thinks OFCOM should make BT-EE disgorge some spectrum and make its wholesale infrastructure available on easier terms, and he also mentions that the Project Cornerstone infrastructure-sharing agreement between Vodafone and O2 has a costly break clause that might fire if Hutchison took O2 out of the deal.

In Ireland, Vodafone is looking at launching a TV service, apparently via some sort of set-top box.

Virgin Media has revived its “small cells as a service” concept, having signed up Arqiva as a partner. The product offers hosting and connectivity for operators’ small cells on 400,000 structures such as lamp posts and road signs. At the same time,VMED has cut its fixed broadband prices.

In France, Numericable has complied with the regulatory requirement to publish wholesale cable terms of service that was imposed after their merger with SFR. Two options are foreseen - a white-label or reseller option, in which Numericable STBs would be used, and a bitstream/VULA option, under which the customer provides the STB and the service is presented at a Numericable POP.

Pricing is frankly aggressive. There is a €5m one-off fee per operator, plus a €50k “technical study fee”, and a €250k annual maintenance charge. Then, in the reseller option, you pay €12/mo per line for capacity between 30 and 100Mbps or €16/mo above that level, and €10/mo for each Mbps of data actually used. (As Mbps is a flow, not a stock, that’s presumably billed at the 95th percentile.) Under the bitstream option, line rental is more expensive by €1/mo and traffic is cheaper by €1/mo. Either way, €22/mo/user of OPEX for the first speed increment seems unlikely to be viable, as was presumably intended. The offer is roughly aligned with the most expensive France Telecom reseller offering as used by Iliad for the last 4.6% of their lines that aren’t unbundled.

The French government has moved ahead with legislation that (among many other things) makes it much easier to deploy fibre “vertically” into apartment blocks and sets the regulatory framework for network-sharing.

Here’s an interview with the new head of ARCEP, in which he says he wants to “wean the industry off national roaming” and that he envisages a solution in which the operators share their rural networks and compete in the high density zones (ZTDs).

Orange saw fairly awful revenue loss, 7-8% annually in France (due to Free Mobile) and Spain (horrible economy).

This is a surprise: the European Commission doesn’t like the proposed OFCOM rules for BT wholesale fibre access. OFCOM wants to force BT to leave the independent ISPs enough scope to make a margin, and it specifically refers to BT’s acquisition of football rights in its decision. The Eurocrats, however, think BT should get a let-off on its wholesale pricing to take into account that it spent all that money on football!

The regulator, meanwhile, has proposed its changes to spectrum licence fees. OFCOM denies that the proposal includes the quid-pro-quo for the operators’ shift to geographic coverage targets, and says that’s still to be negotiated, but the key proposal is a 10% cut in the licence fee on the 900 and 1800MHz bands.

Tele2 is offering 4G M2M products in Sweden for things like digital signage.

Kingston Communications has announced that it’s upping its FTTH deployment target, pushing on from 45k homes passed towards 60k. A new European lobby for local fibre.

A rural fixed-wireless network in Teesdale is in trouble. It seems to have sub-licensed spectrum from UK Broadband aka Relish, which would now like it back, or at least to derive more cash from it, and it can’t afford to operate at the new pricing.

Carphone Warehouse, meanwhile, has a deal with Rootmetrics to put their coverage data on their sales staff’s tablets.

Indian, Indonesian data usage surges; Indian spectrum auction; new CEO at Telstra

Mobile data traffic has gone up from 49 to 85PB a year in India, Nokia reckons. For the first time, in Q4, 3G data volumes surpassed those on 2G. This is likely to mean a further surge of demand, as a typical 3G user gets through 680MB/month while a typical 2G user did 219. Also, there are a lot more 3G and indeed 4G-ready devices in circulation than there are active subscriptions. About half the 3G device fleet, for example, has a 3G data plan, and out of 6 million 4G devices, 85k are active. So falling prices could bring about very fast adoption.

Indosat reports that its major network upgrade is complete, adding 11,000 4G base stations, and the results? Data traffic multiplied by three in the first 9 months of 2014, while data revenue was up 8%.

All the usual suspects will be bidding in the Indian spectrum auction, except Sistema, which isn’t happy about the 800MHz reserve price. Signs are that Tata might spend big.

And Telstra’s CFO Andrew Penn takes over as CEO from David Thodey.

TI plans for Brazil, Italian FTTH; Telefonica/GVT is a go; Telefonica M2M arrives in Brazil

Telecom Italia has put a number on its intentions in Brazil. Over the next three years, they’re planning to spend €4bn expanding the TIM Brasil LTE net around the country. They’ve also pencilled in €10bn for Italy, targeting 75% population coverage with FTTH and 95% with LTE, as against 30% and 80% at the moment. They need it - revenue groupwide was down 5.5% and EBITDA 6.8%, and Italy was off 7.5% and 10.6% respectively.

TIM Brasil itself reported revenue off 2.2% year on year, but profitability was up, with EBITDA up 6.4% and net income 2.7%. They also spent €500m on 700MHz spectrum. Meanwhile, another perennial consolidation target, Telecom Argentina, saw its net income up 17%.

CADE, the Brazilian anti-trust regulator, has given a preliminary OK to the Telefonica acquisition of GVT. As ANATEL, the telecoms regulator, has already signed there shouldn’t be much in the way of closing the deal now.

Telefonica’s M2M partner programme, meanwhile, has landed in Latin America. It rolled out earlier this year in Peru and Mexico and is going to deploy to Brazil, Argentina, Chile, and Colombia later this year.

Let’s use SIMs to secure the Internet of Things. Oops.

It’s a Snowden week, and this one’s a biggy. GCHQ and the NSA hacked Gemalto, manufacturer of most of the world’s SIMs, in order to obtain the Ki encryption key used to sign the SIMs and the OTA keys used to validate SIM Toolkit applets pushed out over the air. And before you ask, they probably did Giesecke & Devrient too. The result is that all those “we’ll use our trusted SIM infrastructure to secure something” business models are now seriously damaged because the SIMs can’t be trusted any more.

Also, suddenly the whole eSIM/soft-SIM project is called into question. The nice thing about a physical, removable SIM is that you can remove it. It may be expensive to swap out physical SIMs in a fleet of M2M devices, or a carrier subscriber base, but it’s a lot more expensive to swap out the devices themselves.

And that’s saying nothing about the attack on hard disk firmware.

Meanwhile, Lenovo decided to ship adware with some of its laptops. The adware installed a dodgy SSL certificate that let it pose as any HTTPS site you visit. The certificates were all signed with the same key, so anyone who managed to extract it could spy on any Lenovo user. Check for vulnerability here. Mozilla, meanwhile, is planning to issue a blacklist of bad certificates.

Here’s a database of 10 million passwords. Debian Linux may soon be able to prove its binaries are identical with the published source code. Interpol is confused about number portability.

Apple’s new EU datacentres; MS turns back to third-party CDNs; Rackspace Q4s; Heroku strategy

Apple has found a use for $2bn of its cash pile: two big new data centres, one in Ireland, one in Denmark. Each site will be 166,000 square feet and entirely wind-powered. Notably, this permits keeping European users’ data in the EU.

Microsoft seems to be ramping up its use of third party CDNs. Between 2009 and 2011, they moved as much as 95% of their requirements in-house, but now the flow has reversed dramatically to about 75% external. The buzzword here is Edgecast, but they’re using Level(3), Akamai, and Limelight Networks as well. LLNW, which for a while seemed to be focusing on media services, has been investing in the pure CDN again and this may be paying off.

Rackspace beat all the estimates for its Q4s, with revenue up 16%.

Heroku is developing an enterprise proposition.

How to pick a CDN.

Joyent is putting the popular Node.js framework under the control of an independent foundation, but the governance of the project is causing real trouble.

What needs to change for Linux software routers to keep scaling up.

James Hamilton of AWS fame turns out to have been hosting his blog with GoDaddy for years, but not any more.

WebRTC on AWS; Twilio looks towards an IPO

Should you use AWS for WebRTC servers? Chris Kranky tries to answer the question with experiments and data. His answer: it works in terms of performance and cost, the only problem is that sometimes a virtual machine just stops randomly and drops your call.

Twilio has a new feature, TaskRouter, that provides a simple way to build support desks, queues, and the like. An example with code is here, while here’s one with Voicebase transcription.

They also claim that they’ve reached $100m in revenue in 2014, so it must be time to IPO!

Yahoo!’s pitch to developers: MONEY. And is Sony getting out of phones?

Yahoo! has announced its new mobile developer suite, which seems remorselessly focused on revenue. It’s all about analytics, ads, and tools for generating more ads by sharing your UX analytics data with advertisers.

Samsung has acquired LoopPay, a payments startup that can use existing merchant terminals (it says 90% of them). This is obviously much more universal than something NFC-dependent like Apple Pay, but it works with the magnetic stripe, so it’s not obvious how it will work in countries that have EMV4 (aka Chip and PIN) deployed.

Is Sony going to drop its mobile device operation?

BlackBerry has virtualisation for QNX.

Here’s a case that ARM has a brighter future than Qualcomm.

Tomi Ahonen reckons about 8% of world smartphone demand is covered by second-hand devices.

Microsoft Signature Edition, aka “PCs without the rubbish”.

And Facebook is planning to build its own village. Where everyone knows your name and just a little too much about your business.

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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”

Comcast can hardly complain - Michael Powell, Bush-era FCC chairman and CEO of the cable lobby NCTA, says

“Customer service right now is completely unacceptable..I think the industry needs to really—not double, triple—make a 10-year commitment to the recovery of that relationship”

Here’s a case that the Comcast-TWC deal is now doomed, on the grounds that the FCC now sees broadband as the primary telecoms service, and under the new 25Mbps definition, Comcast-TWC would have an undeniably dominant share of the market. Further, Comcast-TWC has been willing to offload TV assets in order to gain approval, clearly showing what they think is important.

NCTA, meanwhile, is planning to sue the FCC (led by its former boss Tom Wheeler) in the hope of holding up Title II reclassification. Here’s an interesting story about the Republican Party’s efforts to sell its opposition to net neutrality to the tech industry lobby - it’s not going very well. Ars Technica has a good piece on the history of anti-net neutrality lobbying. Harold Feld has chapter and verse on why Title II doesn’t imply rate regulation.

Sprint, meanwhile, reiterated its support for Title II.

Here’s a piece about “the end of subsidies in the US wireless market”, swinging off how many of T-Mobile’s subscriber base are on instalment-plan tariffs. It doesn’t mention, however, that T-Mobile’s hardware pricing is so sharp it loses money on equipment sales (see this Executive Briefing).

Screenshot from 2015-02-16 12:03:14.png

On the same theme, T-Mobile will be offering Android tablets for no money down, and Sprint will let you “lease” an iPhone 6 and an iPad Mini 3, with unlimited everything for the phone and 2GB of data for the tablet, for $100/mo. AT&T, meanwhile, has added rollover data to its Mobile Share plans.

Facebook zero-rating product launches in India, Google may respond, but does it actually raise prices?

The ultimate price war is of course just giving the product away. This week saw a burst of stories involving zero-rated data, something that is also deeply controversial from a regulatory point of view.

Facebook has reached agreement with Reliance Comms to launch its Internet.org app in India. This, of course, involves zero-rating various apps, notably Facebook, and therefore has been a bit of a hard sell to the GSM operators who remain the only option for Internet access in these parts.

Google may be doing something similar as part of its Android One program, although the story is poorly sourced.

Here’s a vigorous case that universal access will be achieved by promoting municipal and community networks and finding more spectrum for WiFi rather than playing with balloons.

And Rewheel argues that the ban on zero-rating in the Netherlands has led to a drop in end-user pricing, with the following nice chart.

Screenshot from 2015-02-16 12:22:49.png

Is Google a potential crisis club? Brin & Page sell $4.4bn of shares; SG6 news; Microsoft-Samsung settlement

Are we looking at a Google crisis? Kas Thomas argues that we might be, as Google’s spending on R&D keeps rocketing and there is little sign of compelling new products. More worryingly, Google’s spending on SG&A keeps rocketing ever higher:


Google spends six dollars on research for every dollar Apple spends on research, but it’s hard to say that this is either generating new products, or else generating new enabling technology like Bell Labs. Instead the company is just as dependent on AdSense as ever. Kas suggests that at some point, there will be a crisis in the ads business and mass layoffs will follow.

After all, does it really need to spend $1.2m leasing an enormous aircraft hangar from NASA? More to the point, does it need to spend the money leasing the private golf course that comes with it? There are some interesting comments from an ex-Googler here.

And, you know, Sergey Brin and Larry Page are cashing out $4.4bn worth of stock.

Google Helpouts, the ask-an-expert service in Hangouts, is closing. Motorola has refreshed the Moto E entry-level smartphone, a big Android seller, adding LTE and more storage.

On the topic of Android, here’s a roundup of Samsung Galaxy S6 leaks ahead of MWC. At Samsung, meanwhile, there’s a push on to sell more chips to external customers as sales of their own devices have sagged - however, they’re also flushing Qualcomm SoCs out in favour of in-house products.

And Microsoft and Samsung have settled their Android patent dispute.

Microsoft’s $75 Afriphone; MTN-Telkom, Unicom-Telecom merger talk; TEF to TEF - hurry up in Mexico

Microsoft, for its part, is planning to launch a range of $75-100 smartphones on Windows Phone in Africa. The devices are described as “an evolution” of one they trialled with Huawei two years ago, so you may be able to guess who the technology partner based in Shenzhen might be.

MTN is sounding out Telkom about the prospects for a merger, or failing that some sort of cooperation, perhaps with Telkom outsourcing its mobile network to MTN under a network-sharing agreement. Telkom is the fourth mobile operator in South Africa, although it is also the fixed-line incumbent and 40% owned by the state. At the same time, Vodacom is in talks to buy Neotel, the second-biggest fixed operator.

In China, there’s a rumour that China Unicom and China Telecom might merge, creating a stronger mobile challenger to China Mobile with its 60% market share. However, this would also create a fixed-line monopoly, while the government is trying to create more competition in the fixed space, so it doesn’t sound likely to happen.

A Chinese cableco, Topway, has signed up Ruckus Wireless to build a WiFi network around Shanghai.

Singtel’s Q3 was pretty good - 11% higher net profit, thanks - and it was strong basically everywhere, with the standouts being Airtel, up 37%, and Globe with 48%. Telstra’s H1 was more than reasonable too, and Telenor grew its revenues 5.3% for the full year and added 20 million subscribers.

America Movil said its net profit fell 78% in Q4. They’re blaming foreign exchange hedging that went wrong, but they’re also hoping that once AT&T finishes buying Iusacell and NexMex, the regulator will decide they’re not “economically dominant” any more and get off their back.

The chairman of Telefonica in Mexico & Central America has said the company needs to act fast to deal with the wave of consolidation in Latin America. He’s keen on buying a cableco, like Televisa. Where have we heard of that before?

And Rostelecom says it’s now passed 25m households with fibre.

VMED Q4s, £3bn build-out; Altice x Bouygues; BT punts football higher; Sigfox bags telco investors

In the UK, Virgin Media is going to invest £3bn in its network, in order to add another 4 million homes passed and more capacity. CAPEX will rise from between 21-23% of revenue to 25-28%. The build is expected to run over the next five years, and is going to include a new product aimed at businesses, providing managed fibre to buildings in multiple occupancy. This will amount to 60% population coverage, and they intend to trial DOCSIS 3.1 next year, so a lot of the investment will be in the distribution network to make room for gigabit access. The last-mile builds are going to be targeted on a sign-up, Google Fibre/Hyperoptic basis, through the form here.

Meanwhile, they had Q4 results, with 64k net adds and ARPU up a hair (0.7%) at £49.36/mo. 28% of the customer base are on 100Mbps+, while half are on the “entry level” 50Mbps+ speed tier (or as BT calls it, superfast).

In other cable news, Altice (i.e. Numericable) is thinking aloud about buying a mobile operator again. Specifically, they’re looking at buying Bouygues, so another go-round of the French merger waltz is in prospect. The Altice CEO reckons that the regulator is cool with going back down to 3 operators, so long as there are no job losses.

EE is planning to spend £1.5bn in three years building out more coverage. The project aims to increase population coverage to 99% and geographical coverage to 90% (thus fulfilling the notspot agreement), including 90% road coverage, while deploying LTE-A in 20 cities. EE’s 2G and 3G coverage is already close to those values, but they also want to start shutting down the 2G network in 2017. The interesting bit is that they want to use 1,500 small cells to target individual notspots.

Even though BT’s buying EE, its investment priorities are rather different. BT’s spending on football has risen 30% in the recent auction, closing in on a billion for three years’ worth, while its entry into the market has driven up prices across the board. Sky, for example, has seen its football bill increase 83%. This has taken the total price at the auction through £5bn for the first time.

At the absolute opposite end of the market, Gigaclear has announced it’s building out FTTH to 6,000 more homes, with a total investment of £6.5m.

OFCOM has given the go-ahead for TV whitespace spectrum in the UK, after the experiments with the big database of everything turned out to work after all. Most use cases are around the Internet of Things, although Neul pulled out of it on the grounds that it’s too broadband-oriented and resource-heavy.

An alternative would be one of the so-called LPWAN (Long-range, low-Power Wide Area Network) options like Sigfox. This week, Sigfox raised $115m in investments, the biggest VC round ever for a French startup. The investors are interesting - aside from a French utilities group (GDF Suez) and an industrial company (Air Liquide), there are three telcos, Telefonica, NTT DoCoMo, and SK Telecom.

Telekom Austria is offering satellite broadband to fill in its long copper runs. The service apparently offers 6Mbps uplink and 22Mbps down from Eutelsat’s Ka-band 16A.

And here’s an interesting European project - rather like Open Street Map for indoor navigation. Did you know hospitals deliberately over-buy equipment because it’s too difficult to find it when you need it?

TeleCity/Interxion deal; Cisco Q4s; new Facebook switches; Akamai Q4s, mCDN investment

TeleCity and Interxion are merging, creating the biggest datacentre provider in Europe. It will be the No.1 in the UK and the Netherlands, the 1st and 4th markets respectively, but the lead is even bigger in the rest of Europe outside the top four.


The deal is organised as a Telecity offer for Interxion, valued at €2.2bn.

Elsewhere in the data centre, Cisco had a strong Q4, with revenue up 7% and net income up 67%. The drivers behind this were cost-cutting, enterprise products, and wireless LAN, while core routing, carrier voice and video, and security were flat to falling.

Facebook has demonstrated its latest in-house hardware. The 6-pack is a modular device containing a dozen of their Wedge switches in a non-blocking topology, and Facebook uses them to interconnect the Wedge switches deployed to the top-of-rack. Each of the 12 independent switches has 1.28Tbps of capacity and the whole gadget can be managed in software. There’s much more detail on the Facebook engineering blog.


Meanwhile, will Samsung buy Freescale?

Akamai’s full-year earnings were up 24%, beating the spread in Q4. Interestingly, the strongest lines were classic CDN and acceleration rather than anything funky. They finished the year with 170,295 servers deployed.

They’re also investing in Saguna Networks, an Israeli startup that deploys cloud nodes forward in the mobile RAN. So is the VC division of SoftBank.

And here’s the company that bought the Nokia radio test chambers.

Apple CAPEX implies iFlood; Apple TV becomes more serious; iSolar, iFactory; Apple Pay @ fed.gov; ARM Q4

It looks like Apple’s CAPEX is taking one of its ominous upward jags, presaging another avalanche of shiny hurtling towards the competition.


Somebody points out in comments that Horace’s forecasts imply that about $200 of the price of an iPhone is accounted for by machinery and buildings. Apple is a manufacturer, but that doesn’t necessarily mean we believe it’s going to start manufacturing cars, as rumoured this week.

That said, the sheer mass of cash accumulating at Apple tends to fuel speculation of every kind. Faultline points out that the Apple TV is quietly becoming a success rather than a side project, with an installed base of 25 million. Will they do something dramatic in content?

Alternatively, they might do something less dramatic in their own supply chain. According to Tim Cook, who ought to know, they are spending $850m building a solar power farm not far from Cupertino. That would be enough electricity for all their activities in California. The main advantage is that the cost of the power is fixed, being the cost of capital, so we might wonder if Apple will make use of more of its abundant capital to lock down costs. They’ve also decided to recycle the failed artificial sapphire factory in Arizona as a major data centre.

The US federal government has started supporting Apple Pay, but this may not be that big a deal.

Putting the chips in Apple is a profitable line of business if you’re ARM.

£650m nicked from banks; sysadmin credentials compromised, again; Android “catches up with Windows” for viruses

Kaspersky has discovered a gang of Russian hackers who may have stolen as much as £650m from a variety of western banks over the last two years. The attack is described as very sophisticated, but the details given mention only that they managed to obtain administrator credentials by spear-phishing.

Lauren Weinstein points out not only that companies always say this when a systems administrator has been fooled into giving away a privileged log-in, but that it’s their own fault for relying on mere passwords to secure the keys to the kingdom when much better technology is available and some of it is free. He argues that executives should be prosecuted until they get the point.

Amazon’s retailing operation was down across Europe this weekend, but oddly enough AWS seems to have been OK.

Not only do Samsung TVs listen, they also put adverts into movies you paid for, presumably logging which ones you watch as they do so.

Alcatel-Lucent reckons there are 16 million virus-infected mobile devices, and Android is catching up with Windows.

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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.

It looks like wireless is very much included, although “reasonable network management” is explicitly allowed. Public Knowledge, as is its job, thinks it’s not quite enough. Benoit Felten argues that competition between ISPs hasn’t been enough to ensure net neutrality, that paid-prioritisation has been a disappointment when tried, and that European (usually E-5) operators are mostly still lobbying for it because it would look weak to back down after all this fuss. Dan Rayburn points out that the interconnect language doesn’t create any rules, just states that the FCC can accept complaints.

FCC chief Tom Wheeler has put his case in a Wired op-ed.

Elsewhere, the agency has kicked off the complex process of the so-called incentive auction for the 600MHz band. It looks like the blowout AWS-3 auction has driven up spectrum prices generally, as the opening bids are much higher than expected, by a factor of five in the case of Chicago.

And the Comcast-TWC deal is still hanging fire, a year after it was announced. It begins to look as if the moment has passed, what with the FCC’s swing to populist (in both senses) self-assertion.

DISH, small business; Sprint may sell 2.5GHz waves, gagging for cash; VZ sells $10.5bn of wireline; price war goes on

In the AWS-3 auction, one of the big winners was DISH, which spent $10bn and came away with a great deal of spectrum, almost entirely downlink. Bizarrely, it managed to get a “small business credit”, letting it off $3bn of the cost of the spectrum, because it used two shell companies as straw-bidders. Not that AT&T or Verizon Wireless have been averse to doing just that, as it turns out. However, as Harold Feld points out, this is a side issue - the real one being that AT&T and VZW managed to carve up the great bulk of the AWS-3 bands between themselves, again.

Here’s a surprise - Sprint’s recovery story has always been about the huge chunk of 2.5GHz spectrum it bought back in the day, that will one day be brought fully on line. This is especially true since Softbank bought it, as Softbank’s Japanese operation is mostly 2.5GHz, and this offers useful synergies in buying devices and network equipment. Now, Masayoshi Son is talking about selling some of it. If you revalue the spectrum based on the prices paid during AWS-3, as Bloomberg Businessweek points out, you come to somewhere between $86-116bn depending on your assumptions. And Sprint’s enterprise value is $48bn, so the spectrum is worth about two Sprints, at least so long as the spectrum price surge persists.

What Sprint is short of is cash. In Q4, the carrier managed to get its postpaid net-loss of subscribers down to 19k from 272k in the prior quarter, but like all US operators, this comes at a price. They lost $2.5bn in the quarter, and the good news is that $2.1bn of that was an accounting writeoff on the value of the Sprint name. Churn is running at a terrifyingly high 2.3% in postpaid (VZW’s was 1.14% in Q4). Like everyone else, it’s also been selling smartphones on instalment, which means piling up receivables from customers while paying up front for the piles o’shiny. Their “cost of products” line item, tracking the smartphone bonanza, has risen steadily through 2014 while the “cost of services” item fell, and the company burned $2.9bn in net cash in the first 9 months of its 2014 financial year. It now has about half the cash on hand it had in Q2 2013. They’re now trying to sell the pile of customer receivables and draw down all available credit lines, so you can see why selling spectrum might be attractive.

This didn’t stop them picking up 1,500 old Radio Shack stores, though.

AT&T, meanwhile, has spent $18.5bn on spectrum at the same time it’s picked up two Mexican mobile networks. As a result, it’s getting rid of some data centres, for $2bn. But it’s Verizon that’s really going for a big network trim - it’s selling $10.5bn worth of wireline assets, in California, Texas, and Florida, to Frontier Communications. That includes some FiOS fibre builds, for a total of 3.7m primary voice lines (of which 2.2m take “high-speed” data, including 1.6m FiOS Internet customers, and 1.2m FiOS TV customers). It also sold $5bn worth of towers and leased them back.

Meanwhile, the price war goes on. Two weeks after saying it wouldn’t “chase low-value users”, VZW slashes between $5 and $10/mo off its data bundles.

And stop blaming the operators, or NBC, for the Super Bowl video stream, says Dan Rayburn.

BTEE finalised; VF results; UK infrastructure, the game of chess begins; Free.fr keeps disrupting; KPN Q4s

BT and EE have signed off the terms of their merger. DTAG gets 12% of the combined company and a director, Orange 4% and more cash, and the minority shareholdings are locked up for the next three years except for transactions between them.

The consequences, though, are only beginning. Vodafone CEO Vittorio Colao has come out and called on 3UK to end its infrastructure-sharing alliance with EE. If the 3UK-O2 deal goes ahead, 3UK will be in both the MBNL joint venture with EE, and the Cornerstone agreement with Vodafone.

Colao wants 3UK to rely exclusively on the O2 element of Cornerstone, and therefore on Vodafone-C&WW backhaul, but we can’t see 3UK agreeing as it has 90+% fibre-to-the-cell coverage and probably won’t give that advantage up. If they didn’t, there would either be a Swedish situation with overlapping alliances, or else Vodafone would lose the cost benefits of sharing hard infrastructure.

EE management points out that MBNL doesn’t cover 4G, “just” 3G, so the EE and 3UK 4G networks are (more) independent. And Colao also thinks BT Openreach should be spun off.

Well, of course. It looks like Vodafone is going to announce a fixed ISP and also a TV product, so last-mile issues are suddenly very important to them. TalkTalk has succeeded in getting to 11% of the SIM-only market, which is actually more than Vodafone - ironic, as Vodafone is the MVNO supplier. Are they going to launch a WiFi-based “MVNO plus”? Dixons Carphone is going to be an MVNO, running on 3UK, as well as a reseller for all networks.

After all this excitement, the actual results seem a bit dull. EE’s results showed a 2.4% drop in revenue during the year. Vodafone, meanwhile, reported results that are getting to be a pattern.

Revenue was down 2.7% in Europe, but up 5.9% in Africa, the Middle East, and Asia-Pacific - the overall upshot was “organic” revenue growth of 0.7%. Within Europe, revenue was actually growing (0.9%) in the UK, but down 7.4% in Italy, 8.9% in Spain, and 1% in Germany. VF now claims 65% 4G coverage in Europe. Although Project Spring is officially 50% complete and 50,000 cell sites have received “high capacity” backhaul, it looks like only 25% of them have fibre, and the target for the end of Spring (in fact, the beginning of next spring) is 30%. That’s already been revised down from 36% promised in H2 2013, as you’d know if you read this Exec Briefing.

The impact of Free Mobile continues to shake the French market. ARCEP data shows that the proportion of subscribers on short contracts has gone from 9.5% to 51% in three years, while penetration continues to grow, with an additional 3.1m SIMs in circulation during 2014. In Q4, market-wide gross adds were 846k, of which 324k were M2M, and prepaid saw a net-loss of 507k, leaving the market up 663k on a net basis.

And KPN saw a small rise in revenue in Q4, 2.1%, narrowing its net loss to €37m. On the agenda: bigger data bundles, more TV, 1800MHz carrier aggregation.

Orange shopping for more African networks; Lebara Mobile flips to “digital hub”; Aussie NBN satellite runs out of space

When Orange gets paid for the BT-EE deal, it’s going shopping. There’s the Jazztel deal in Spain of course, but there’s also this - Orange is apparently looking at a bid for Bharti Airtel’s African networks and perhaps even some Millicom (i.e. Tigo) assets too, which would be folded into a new entity called something like “Orange Africa”. Apparently it’s “less interested” in Bharti’s networks in English-speaking countries, which is most of them.

International-calls MVNO Lebara is pivoting towards a new business model as a “digital hub for migrant workers”. This involves a money-transfer service that goes live this year (well, beyond the UK where it’s been trialling), a VoIP application, and a community platform described as follows:

“If they want to buy services then they can but this is about helping each other as migrants. Who are the good lawyers? Which are the good schools? We manage a trusted brand with the migrant community,” he says.

The point is to get away from free calls, which are increasingly well served by Skype, Facebook, Whatsapp, and a thousand imitators. It’s a sight more ambitious than most telcos - as our new Executive Briefing makes clear.

The Aussie NBN, meanwhile, has been telling ISPs using its wholesale satellite broadband service to withdraw their bundles above 20GB/mo. The problem is that the service isn’t ready yet, and only an “interim” service is being provided by reselling commercial satellite service, and too many users have shown up.

Android OEMs aren’t making money; Lenovo isn’t making money; Qualcomm pays $1bn fine; ALU Q4s

Last week we had the shock of Android shipments actually falling; now it’s the turn of profitability. Charles Arthur teases out per-phone profitability, and it seems that the Android OEMs are struggling to generate much margin at all.

Screenshot from 2015-02-09 15:02:54.png

He argues that this is because unlike Apple they “don’t control the software”, but it’s worth noting that a lot of Apple’s value-add is that it controls the hardware to a great extent, via its own-design chips and general influence over the supply chain. As a result, the Samsung number should probably be adjusted to reflect the profits other Samsung divisions make on components that go into their phones.

Lenovo bears out the point. The company boasted that it’s the third biggest vendor and the credible alternative to Samsung and Apple, threatened via the Motorola COO that Samsung would lose its No.1 status, announced that its shipments were up 118%…and made a $89m pre-tax loss. HTC, meanwhile, said its expected its sales to grow in Q1 and it might make a profit.

Nothing daunted, Alibaba is buying into Chinese smartphone manufacturing, making a $590m investment in Meizu.

Qualcomm, meanwhile, is preparing to settle its dispute with the Chinese government. The price is likely to be a billion-dollar fine, plus a 30% cut in their royalty rates in the PRC. When you realise Qualcomm made literally half its revenues in China last year, you can see why it would be worth it.

The other half of the Motorola we once knew, Motorola Solutions, is up for sale. Here’s a reasonable set of Alcatel-Lucent results - not only is it profitable, but it generated cash for the first time in ages in Q4, €264m of it. That said, all the revenue numbers are “excluding managed services”, presumably not because managed services is doing so well.

A visit to Waterloo, Ontario after BlackBerry’s crisis. 66% of Nigerian OpenSignal users are dual-SIM, and they’re mostly Samsungs. Blackberrist and Telco 2.0 ally Alec Saunders, meanwhile, has joined Microsoft Ventures.

Ubuntu phones are going on sale. Apple is developing an Android app for a streaming music service it bought.

Avaya has a tie-up with VMWare similar to that between VMWare’s vCloud Air service and Google Compute Engine. Here’s a new WLAN router that automatically forms mesh networks. The Internet of Useless Things.

IBM’s Watson AI project has gained an API with some interesting services, notably speech-to-text.

Samsung: don’t talk about anything private around one of our smart TVs, they tell tales

Speech to text, eh? Great idea. Until this happens. It turns out that the EULA for Samsung smart-TVs includes a warning not to discuss anything private near the telly in case it might be listening, especially as its “Siri-like” voice command functionality sends your voice to a service in the cloud for analysis.

To provide you the Voice Recognition feature, some voice commands may be transmitted (along with information about your device, including device identifiers) to a third-party service that converts speech to text or to the extent necessary to provide the Voice Recognition features to you. In addition, Samsung may collect and your device may capture voice commands and associated texts so that we can provide you with Voice Recognition features and evaluate and improve the features. Please be aware that if your spoken words include personal or other sensitive information, that information will be among the data captured and transmitted to a third party through your use of Voice Recognition.

US health insurer Anthem boasts that it either covers, or used to cover, 80 million Americans, a quarter of the population. Unfortunately, a wide variety of personally identifying information about all of them has now leaked onto the Internet.

The EU’s ENISA security thinktank reports on the security aspects of the smart home. The French government, meanwhile, took powers to censor “terrorist” websites by decree and within hours Free.fr had changed their DNS to return for thepiratebay.se. Because home taping is killing music, and that’s like terrorism, presumably. And the creator of GPG said he couldn’t afford to keep going. Now he’s trying to work out what to do with all the money people sent.

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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.


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.


To put it another way, Facebook has managed to move over from a volume business to something more like an exclusivity one, deliberately rationing the supply of ad inventory and vetting the content. The enormous majority of its revenue comes from mobile ads, which are only shown within the news feed, and they have reduced the numbers of ads served into the feed substantially, both in order to create scarcity and to protect the user experience. They also seem to have been filtering promotional content that isn’t channelled through their ads.

Meanwhile, a much-trimmed version of the app is coming for basic smartphone users.

Compare and contrast, Google. Google’s net income was up quite a bit for Q4 - $4.76bn vs $3.38bn a year ago - but the interesting bit is that their operating margins are steady falling, 24% vs 28% a year ago, and revenue missed expectations.

The drivers of this are twofold - first, although paid clicks were up 14%, cost-per-click was down 3% year-on-year and also 3% sequentially over Q3. CPC for Google’s own websites, which make up 69% of revenue and rising, was off 8% year-on-year. Interestingly, Network sites, i.e. third parties, did much better, up 6% year-on-year and 10% sequentially - but these days that’s just 20% of the business. So while Facebook’s ad pricing is going up, fast, Google’s ad pricing is falling.

The other driver is that Google remains a distinctly spendy sort of business. Bloomberg Businessweek points out that they are now spending more OPEX, $6.78bn in Q4, up 35% year-on-year, than Apple, who make more than five times as much revenue.

Perhaps opening up Google Now to advertisers will help? A vetted list of 30 or so brands will be allowed to push their stuff into it.

There’s been some distinctly tepid news from the core search business, too. In mid-January, Google began running messages on its home page - effectively own-account ads - encouraging Firefox users to change their default search engine back to Google. The explanation is that the deal between Yahoo! and Mozilla to make Yahoo! the default search engine in Firefox seems to be having a material effect on Google’s share of the search market. For the first time in years, Google has less than 75% of US search. The following chart shows very clearly that it’s the Firefox users.


On Google’s content side, this is interesting. YouTube creators who use Nintendo games in their work are facing a dilemma - should they take Nintendo up on its offer to pass them back 70% of YouTube ContentID ad revenue associated with their stuff, or does this implicitly accept that Nintendo has some sort of ownership in their work?

On the other hand, YouTube itself has picked a fight with cellist Zoe Keating. Google has a new product coming up, Music Key, basically a premium subscription version of YouTube. The problem arose when a YouTube representative threatened that if she didn’t agree to the Music Key terms and conditions, which are quite restrictive, they would stop paying out ad revenue on her existing works. Google denied it, but it turns out she recorded the rep. A campaign is heading to the FTC.

YouTube is also making a big technical change this week: by default, video will stream in HTML5 rather than Adobe Flash. And Google’s CFO reckons the Chromecast is now the most popular streaming device in the US.

NBC chose to stream the Super Bowl live on its TV Everywhere app, but this was a painful lesson that mass, live video streaming is not a solved problem. The stream repeatedly fell behind the game, so that viewers could hear TV viewers cheering before they saw who had just scored. Worse, they got the reaction on Twitter before they saw who scored.

YouView, meanwhile, has integrated the BBC’s Connected Red Button interactive-TV product.

And Instagram has launched a purge of spambots. With two days, 29% of all followers were zapped. The only problem is that some quite famous users believed they were real and are now all hurt about it.

Apple made ALL THE MONEY in Q4; Android shipments fall; Samsung sacks Qualcomm 810 chip, own software from GS6

Apple’s Q4 results dropped this week, with a bang. It was literally the biggest quarter ever for Apple, driven by enormous sales of iPhones, 75 million of them vs. 51 million a year before, against a consensus forecast of 66. Pretty much everything else was good, too. Gross margin was 39.9%, beating expectations. Revenue is up 30% year-on-year. Revenue in China is up 70% year-on-year, at $16bn, which means it will pass Europe sometime this year. Net profit was $18bn, or literally more than any other company has ever made in three months in the history of capitalism.

Apple is No.1 for world smartphone shipments again, and perhaps sweetest of all, shipments of Androids actually fell in Q4, for the first time ever. 217 million ‘droids shipped in Q3, but only 206 million in Q4, even though it’s the Christmas spike quarter. Even the rebel forkdroids dropped back by 1%.

Screenshot from 2015-02-02 13:27:48.png

It all makes the battle for third place between Lenovo, Xiaomi, and Huawei look a bit pathetic. Lenovo results are expected later today, with a forecast of $186m in net income.

Meanwhile, Samsung must respond or face the Applocalypse (NB we suggested a strategy for this last year in Samsung and Google versus Apple?). Its first step appears to be throwing away its TouchWiz Android skin and a variety of its own apps. Perhaps the South Koreans are thinking of those Korean War fighter aces who used to strip all kinds of supposedly vital equipment off their F-86s in order to go faster and catch up with the MiGs?

To be honest, as a Samsung user, the only thing wrong with the analogy is that the kit was thought to be vital and nobody has ever thought that about this stuff.

It must have been a week for big decisions at Samsung. When the Galaxy S6 arrives at MWC, it’s coming with one of Samsung’s own Exynos chips rather than the Qualcomm Snapdragons that powered most of the Galaxies since the S II. Qualcomm’s Q4 results showed strong sales and net income, but margins were down as it shipped more radios and fewer complete SoCs - almost certainly because the iPhone 6s paired a Samsung/Apple/ARM SoC with a Qualcomm radio. Crucially, Qualcomm also confirmed that it has lost a major customer, in the context of reports that Samsung had rejected the Snapdragon 810 because it kept overheating.

Samsung has in the past shipped Galaxy S devices with Exynos SoCs, but kept most of them for the Korean market and a few others, so it’s going to be interesting to see how the S6 does with the new engine.

Microsoft’s Lumia phones saw better volumes, lower prices, and margin of around 14%. They’re also investing in alternative Android ROM, Cyanogen. Ben Evans points out that the supply chain established to support the mass adoption of smartphones has generated a new ecosystem of low-power embedded hardware. Intel has bought an Infineon division specialising in IoT devices, as if to bear out the point.

As if to bear it out again, the Raspberry Pi 2 is here, with 6 times the power and twice the RAM of the original, at the same price, using an ARM Cortex A7 in a Broadcom SoC.

FCC moves on muni-fibre; Canadian, Dutch net neutrality; AWS-3 done; German 700MHz; OFCOM super-review coming?

Over at the regulators, the FCC is busy again this week, as it’s about to take steps to pre-empt state laws that ban muni-fibre deployments. “Pre-empt” here is a term of art that means “take the issue away from the state and put it under the feds’ control”. A draft NPRM should be circulated this week and a vote taken on the 26th of February. Opponents are trying to pass a bill through Congress to stop it, but President Obama can veto that and, in his newly aggressive mood on telecoms issues, probably would. A Republican FCC commissioner criticises the idea in a blog post, but as far as we know, he doesn’t have a majority.

Canadian regulators have asserted net neutrality with regard to Bell Canada and Videotron’s respective TV-anywhere apps, ordering them to stop zero-rating them for mobile data.

The Dutch regulator did something similar, imposing a fine on Vodafone.nl for zero-rating and another on KPN for jamming VoIP traffic on its WiFi hotspots. In other fines, AT&T was fined by the FCC for letting microwave backhaul radios operate outside their frequency band, and Verizon for failing to complete calls from some RLECs.

The AWS-3 auction is over, and $45bn has been spent by the US carriers. AT&T spent $18bn, mostly on downlink spectrum (details are here). Verizon Wireless spent $10bn. T-Mobile $1.8bn. But what is DISH planning with the $13bn worth of uplink-only spectrum it bought, bidding through nominees in order to snag special small business terms? Presumably, lobby like hell to get it refarmed?

Germany will be auctioning 60MHz of 700MHz spectrum in May. The spectrum will be auctioned together with the re-issue of the 900MHz and 1800MHz bands, whose licences expire this year. Successful bidders must commit to providing 98% population coverage, plus 97% population coverage in each province separately, with a data rate of at least 50Mbps per antenna sector and at least 10Mbps to the subscriber. They must also cover all motorways and high-speed rail routes. Expressions of interest are to be in by the 6th of March.

In the UK, Hutchison is preparing to face the OFCOM inquiry into its bid for O2. Hutch’s strategy will be to seek a full-dress competition review of the whole UK telecoms market, ideally including content, infrastructure, fixed, mobile, and wholesale, in the hope that this kills off the BT-EE deal. Interestingly, Sky and Vodafone are both likely to argue for this as well. To be honest, with the BT-EE and 3UK-O2 deals active at once, it’s going to be hard for the regulator to avoid a full review.

Get our in-depth coverage here - note that if OFCOM goes for a review encompassing fixed and mobile retail, content, infrastructure, and wholesale, that would be another good call from Telco 2.0 to go with these.

No wonder Benoit Felten thinks the digital single market is already here. Also, it looks like Hutchison has turned around to offer a piece of O3 to various sovereign wealth funds, with China, Singapore, or Qatar being mentioned. They might take a stake of up to 30%, substantially easing the challenge of finding the £10bn price tag. That said, Hutch has apparently already lined up a £6bn loan from HSBC.

And Cablevision is suing Verizon over who has the best WiFi.

Comcast becomes No.1 for broadband; more Google fibre; NTT DoCoMo quadplay; BT results

Under the FCC’s new dispensation, with broadband defined as at least 25Mbps downlink and 3 up, Comcast becomes by far the biggest provider of broadband in the US, with 57% of the subscribers. Interestingly, they argue that this might not be a problem for the Comcast-TWC deal because TWC’s network can’t quite cut it:

less than one tenth of TWC customers enjoy speeds at or above 25 Mbps, whereas more than half of Comcast customers enjoy such speeds

But when those nice new Broadcom cable modems start flowing, that might change pretty quick. Google, meanwhile, has announced four new locations for Google Fiber.

Here’s something interesting: the US’s independent fibre-to-the-cell providers. PEG Bandwidth has fibre to 2,000 cell sites scattered around the Midwest, Mid-Atlantic, and North-East, while WOW Business is planning to pull about 1,200 miles of new fibre around Chicago and reach 500 or so sites.

Teresa Mastrangelo argues that cable competition is the key driver of gigabit FTTH.

NTT DoCoMo has an interesting gigabit FTTH product, which bundles their mobile service with their fibre, but only the Layer 2 element of it - you get to pick from a list of ISPs running over the fibre. While we’re there, their results for the first 9 months are a bit poor, with OPEX rising at the same time as revenue fell sharply.

BT Openreach is promising 500Mbps using the G.fast evolution of VDSL2. A trial should start this year, with serious deployment around 2020. Some of the cabinets used for FTTC might be converted, which is important as the technology won’t work for a copper run of more than 250m, but this could be problematic from a power point of view.

By then, though, what will the cable world be offering? Even now, you can get 100Mbps from Virgin Media for £20/mo, admittedly a promotional gimme. And Zimbabwe is getting GPON fibre.

Meanwhile, Openreach claims it added 375,000 FTTC connections in Q4, of which 44% went to independent ISPs. It also claims to have passed 630,000 more premises under the BDUK programme.

BT Group’s Q3 and nine-month results were out, and rather unexciting; revenue was down 3% sequentially, but EBITDA up 2%, implying margins improved a bit. The pension bill for the next three years is settled at £2bn a year, a bit less. By far the biggest contributor to EBITDA (and free cash) was Consumer. No wonder Gavin Patterson wanted to talk about mobility!

AT&T Q4s: gadget giveaway; Oi “open to all options”; NokiaNet sales up, Ericsson down; $400 satphones; WHOOOSH!!

The Q4s roll in. AT&T had 854k postpaid net-adds over Christmas, beating the spread. Very impressive. When you break down the headline number, though, there were some 969k net postpaid tablets, so they must have net-lost 115k postpaid phone subscribers. In fact, the net-adds number for postpaid smartphones was only 148k, suggesting that Christmas involved a lot of tablets going out of the door as customer-retention gimmes. On the prepaid side, AT&T had a net loss of 180k subscribers, suggesting that the plan to consolidate GoPhone, Leap, etc. into Cricket isn’t working so well, and also lost 65k wholesale customers.

They did, however, gain 1.3m M2M devices. The picture of a massive gadget giveaway is confirmed by the revenue numbers - total wireless was up 7.7%, but service revenue was actually down 3.7%, while equipment sales were up 72.3%. Postpaid phone ARPU was off 10.7% year-on-year, and even including quick-upgrade plan billings, it was still down 4.1%.The net impact of all this was to drag operating margins down from 21.4% to 16.3%. Price war is for everybody!

Meanwhile, after they bought Nextel Mexico and Iusacell, AT&T CEO Randall Stephenson said they definitely won’t buy any America Movil assets in the country, but they will “leverage” the spectrum DirecTV owns elsewhere in Latin America. Nextel, for its part, is going to pour the AT&T money into CAPEX in its Brazilian unit.

Oi, meanwhile, says it’s open to all options.

Ericsson says its sales in North America declined about 5% in Q4 as LTE rollouts were finished for the time being. Nokia’s customers there obviously haven’t finished yet, because Nokia Networks sales in North America nearly doubled, helping to push up sales overall by 8% and get the company into profit.

TeliaSonera reported that its revenues from Eurasia were down 2.2%, and as a result, the bottom line was down 3.1%. Tele2 says its profits are up 78% on service revenue up 7%.

Thuraya reckons it can now deliver a satellite phone for $400, roughly on a par with a flagship smartphone, and its voice rates are comparable with mobile voice roaming prices. Zain lost 4% of its customers because the Sudanese government wanted to know who they were. They also had to put this bit in the Q4 release:

The escalation of political instability in Iraq during the second half of 2014 has seen several million people displaced internally. Additionally Zain Iraq endured frequent temporary network interruptions and associated higher network operational costs. These unavoidable occurrences had a drastic effect on Zain Iraq’s and consequently Zain Group’s overall key financial metrics…Political unrest in South Sudan also affected Zain Group’s results as the country also witnessed significant displacement of its people, with access to and repair of many network sites in parts of the country proved to be difficult, causing frequent interruptions and higher maintenance costs.

That said, their EBITDA margin is 41.8% so at least the shareholders won’t make any trouble. The Palestinians are having trouble deploying 4G because the other lot are being difficult. The last time this happened they asked Tony Blair to sort it out.

Vodafone Qatar, meanwhile, made a small loss for the first 9 months after a prepaid price war broke out, which actually seems to be more trouble than a real war.

3UK is turning up its 800MHz LTE, and VoLTE at the same time. Orange is taking a punt on some African startups. And the Bloodhound SSC land-speed record team has its own LTE network to provide voice, telemetry, and streaming video from the car, the chase plane, and a few other things, an ideal excuse for this video.

Amazon prepares to break out AWS numbers; Google-VMWare cloudmash; Line turns into a shop

Amazon reported its Q4s this week and, as usual, despite owning everything under the sun it didn’t make a penny. There was a net loss of $241m for the full year 2014, although Q4 was $214m in profit. AWS saw its sales up 90% year on year in Q4, and Amazon says it will start to break the division out in its accounts for their Q1. On the other hand, all they would say about the Fire Phone is that there is $80m worth of the things left in stock.

AWS, meanwhile, is going to start providing e-mail, specifically, an IMAP server in the cloud providing e-mail, calendaring, etc, with all the usual EC2 options.

Google, meanwhile, is integrating its Compute Engine cloud with VMWare’s vCloud Air. Would that be the first of those federated clouds we used to hear so much about?

Germany is worrying that its data centre sector isn’t growing as fast as that in Sweden or the Netherlands. They blame the price of electricity.

Microsoft is putting off the launch of new Windows Server until next year.

And Line, the Japanese messaging app, is branching out into groceries. It’s no stranger than a bookshop hosting servers….

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