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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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