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Apple, Samsung, KDDI, Verizon, Google, Comcast, Iliad: Telco 2.0 News Review

[Ed: We’ve just published a new report ‘Key Questions for The Future of the Network, Part 2: Forthcoming Disruptions’, which looks at the key disruptive forces on the network.]

Samsung sales dive in China; Chinese MNOs cut 4G prices; KDDI is 57% WiFi

IDC has its reckoning of Q1 Chinese smartphone shipments out, and the message is pretty clear. Apple is No.1. Samsung’s shipments into China are down by 50% year-on-year. And the land-grab is over - the fraction of shipments made up by smartphones is approaching 100%, and growth is slowing down. For the first time ever, Q1 wasn’t a new record.

IDC China Shipments.png

Future growth will have to come the hard way, won from the competition rather than from new adoption. So we’ve got an answer to the question “Who’s going to win Chinese smartphones?” and it’s “Apple”.

It’s also bad news for Xiaomi - it looks like their chance to be no.1 in China and then look abroad has been and gone, and they’re mostly gaining share from ex-Samsung users rather than Apple ones.

Horace criticises the notion of saturation, pointing out both that IDC has called the top before and been wrong, and that there will still be considerable growth from featurephone-smartphone switchers for some time to come. However, more and more sales will be driven by brand loyalty and Apple has camped right on top of that.

Mind you, here’s someone who really didn’t like the watch.

Meanwhile, the Chinese government has been putting the arm on the MNOs to boost 4G adoption. Prime Minister Li Keqiang wants more people on wireless broadband as part of an agenda to rebalance the economy away from industrial exporting and to tilt its development away from the rich coasts. Clearly, you don’t say no to him; all three operators cut their 4G data prices by between 20 and 30 per cent.

Elsewhere in Asia, KDDI says it’s now offloading 57% of its mobile data traffic to WiFi and hopes to increase that to 65% by the end of the year. Softbank reported full-year revenues up 30%, mostly because it started consolidating Sprint in its accounts. That said, they also say Sprint’s net sales were up sharply. Here’s an NTT presentation giving some more detail about their B2B2X strategy.

It looks like Lebara and Lycamobile are going to be the first MVNOs to launch in India. Xavier Niel’s MyRepublic is offering a 1Gbps FTTH plan with no contract in Singapore, although as it turns out, it’s not the first similar product (200Mbps and 500Mbps have been done).

Verizon buys AOL; startling regulatory news; AT&T SBS; T-Mobile 4G coverage

Verizon has acquired AOL, for $4.4bn. This brings them a portfolio of content investments, some advertising businesses, and the startlingly large base of customers who still have an AOL account. For context, they make up over half AOL’s operating profits. Although the official statement about the deal is all about mobile first, video, and ads, Verizon would almost certainly do best to sell FiOS and 4G service to the AOL customer base.

Here’s an interesting regulatory story: Florida Power & Light says in a filing with the FCC that Verizon has stopped arguing with it about access to its poles and ducts, because it expects to be an all-wireless operator within 10 years! The document is here.

Meanwhile, SMBs in the FiOS footprint can now pick and choose which cable TV channels they want in their bundle, as VZ responds to the cable operators’ push on small businesses.

Sprint and VZW will have to pay $158m in fines for letting dodgy premium SMS companies run up their customers’ bills.

AT&T’s CFO, John Stephens, says their strategic services are beginning to outrun their losses in legacy business products like T-carrier and frame relay. However, there’s an initial hit to margins from CAPEX and greater competition, which they hope to recoup from operational savings as the legacy networks are shut down. This story gives us an idea of how far away that might be - we’re now at 5% of AT&T’s fixed assets converted to SDN against a target of 75% by 2020.

See our in-depth coverage here.

T-Mobile’s Neville Ray says they now have 280 million POPs with LTE, more than Sprint and “only” 20 million behind the dynamic duo.

Details of the Canadian 2.5GHz auction are now available.

Unknown MNOs “blocking Google ads”; refresh of Google AdWords; NFC - so last century; Kevin Martin, Facebook lobbyist

Unspecified European MNOs are threatening to block advertising, says the Financial Times quoting an Israeli company that makes deep-packet inspection gear, Shine Networks. This would, of course, be hugely provocative from a regulatory point of view. The BBC’s Rory Cellan-Jones talks to an operator:

When I contact one major operator to ask about the idea of installing Shine’s software an executive tells me it would be “utterly insane.” He says that at a time when the industry is treading carefully over net neutrality and other regulatory issues, acting to control traffic in this way would be “beyond suicidal.”

The precedent is probably that time Free.fr pointed their DNS records for Google Ads domains into a black hole. Back then, their transit provider Cogent was involved in a peering dispute with YouTube, and the idea was to do something to provoke Google. Eventually, Google paid France Telecom for transit, and much later, Free accepted Google Global Cache CDN servers.

Speaking of Google ads, they are beginning to respond to the challenge from Facebook, deploying a range of new ad formats for autos, hotels, and financial products, new media-buying tools, and new analytics features. This is the biggest refresh for Google advertising in quite some time.

Amazon’s VP of payments, Patrick Gauthier, says anyone working on NFC is working on last century’s problem, and the real opportunities in the sector are about what happens before the moment of payment.

Oddly enough, we said something like that in this briefing, this strategy report, and this brand new authentication briefing.

Facebook has a new option for news organisations, a format for interactive articles that are hosted by Facebook and open instantly from the newsfeed. Meanwhile, they’ve recruited the former FCC chairman Kevin J. Martin as their chief lobbyist.

The European Commission is asking for information about Qualcomm and its competitors’ chip licensing practices as it prepares its anti-trust dossier.

The German car makers are looking for more investors to back their bid for Nokia HERE, perhaps from private equity. They’re apparently willing to put up $700m each, but that won’t be enough seeing as Uber’s backers are already in for $3bn.

Skype is opening up access to the preview of its translator some more, while it’s also signed up AT&T as a global partner for Skype for Business conferencing.

Telefonica is putting $200m into a digital VC unit. Wait a moment - didn’t they do that before? Here’s an interesting study of Chinese mobile UX design. How to create a “unicorn” from scratch and end up with $0.

And RIP, Venkat Panchapakesan, head of YouTube engineering.

OFCOM: BT dark fibre on the table; Eurotelco Q1s; exit Baksaas; Iliad Q1s

OFCOM puts its cards on the table - if BT is going to merge with EE, and the Hutchison-O2 deal further cuts up the backhaul ecosystem, BT will have to start providing dark fibre as a regulated wholesale product, throughout the UK except central London and KCOM’s fief in Hull. The consultation runs until July, with a final decision in early 2016 and implementation before April 2017.

The incumbent operator is, of course, not happy about that, not least because one of OFCOM’s arguments is that it takes Openreach so long to deliver leased lines someone else should have a go.

Think Broadband wonders if the increased availability of dark fibre might harm the independent deployers like CityFibre. CityFibre welcomes the proposal, but has some caveats about the pricing:

While CityFibre welcomes Ofcom’s decision as a clear validation of our business model, we urge it in the strongest possible terms to ensure that any future approach to pricing in no way distorts the market or discourages investment by independent infrastructure builders.

To put it another way, they’re worried that BT would comply, and slash its prices to drive the independents out. Meanwhile, ThinkBroadband has a chat with the Openreach CEO, and the Institute of Directors thinks the government should spend more on broadband.

TalkTalk reported its 2015 results, with revenue up 3.9% and EBITDA up 15%, but the interesting bit was about their FTTH plans. 1,200 homes have been passed so far by the build in York, which isn’t much, but it has validated their estimate that the cost to pass would be under £500/home.

And Tesco Mobile is up for sale, while ultra-low cost MVNO FreedomPop is launching in the UK.

Telefonica CEO Cesar Alierta says their Q1 is the start of a new growth cycle. Net income was up 162%, but €1.3bn of the €1.8bn boost was a tax gain on the sale of O2 and some of the rest was a lucky foreign exchange movement. After all, western European smartphone sales were rather poor, with a sharp drop in average selling prices, and the impact was concentrated in France and Spain.

That said, there are some reasons to be positive about the European wireless market. Last week we noted that Telecom Italia was seeing out-of-bundle data revenue again. Deutsche Telekom Q1s show, as well as the revival of T-Mobile USA, service revenue growth of 2.8% in Germany and a strong performance in Austria and Hungary.

Vimpelcom, however, was quite a bit more gloomy. They confirmed that the Italian OpCo, Wind, is going to merge with 3 Italia in an EE-like joint venture.

Telenor has named Sigve Brekke, the head of their operations in Asia, to replace Jon Fredrik Baksaas as CEO. Baksaas, who they described as a “giant CEO”, is retiring, as well as being the GSMA chairman until the end of 2016.

Free.fr has Q1s and they’re still crushing it. Group revenue was up 7%, with mobile up 18.5% to €438m, and there were another 420k net adds in the quarter, taking them to 10.5m mobile subscribers and a market share of 15%, as the operator added another 950 4G base stations. Fixed wasn’t as exciting, with revenue up 0.3%.

After the Turkish president suggested just forgetting 4G and going straight to 5G, the auction has been put off for three months.

3-D mapping, Sprint, Crown Castle, and small cells; Comcast joins OpenDaylight; drones with apps

Nokia’s Chris Stark thinks small cells are the “key to the future mega-city”, but also points out that some forecasts suggested we’d already have deployed 750,000 of the little chaps by now and the real out-turn is more like 8,000. The main problems: “site acquisition, jurisdictional approval, coordination with building owners, backhaul access and electrical hookups.” Nokia is trying to address these with new deployment tools based on its 3-D mapping products. Obviously time to sell the mapping division, then?

Sprint, for its part, is taking advice from Softbank, an early adopter of small cells, and concentrate its next effort to finally fix the network on the technology. RCRWireless’s sources think they may deploy as many as 20,000 of them. In Japan, Softbank has both as many as 150 small cells per square kilometre in the urban core, and several thousand village small cells installed on local post offices.

Crown Castle is selling its Australian towers in order to reinvest in small cells and distributed antenna systems. Cambridge Broadband Networks is trying to sell its 28GHz point-to-multipoint backhaul to US carriers for their small cells.

Comcast is joining OpenDaylight, the Linux Foundation’s SDN standard, the first network operator to do so. First up, they want to virtualise their set-top boxes.

Gartner says don’t build an OpenStack private cloud unless you know just what you’re doing.

Three of the most common hypervisors share a serious bug that permits an attacker with a VM to break out of the virtualisation and attack both other VMs and the host system itself. The bug is in a floppy disk controller nobody’s looked at for years. Xen (i.e. Amazon), KVM, and QEMU are affected.

Samsung has a new line of Internet of Things devices, ranging from a Bluetooth Low Energy beacon to an octo-core processing module, basically a smartphone with the shiny scraped off.

And what’s better than a drone? A drone running Ubuntu Core, that comes with an app store.

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