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Nokia in China; Indian M&A; Cable Q3s; Niel after TI - Telco 2.0 News Review

Nokia gets another CMCC win, back into AT&T; Nokia, Alcatel Q3s; “4.5G” gets a brand; SKT 5G trial by 2017?

Whale ahoy! Nokia Networks signs another monster contract with China Mobile. This time it’s mostly core networking, for the 2G, 3G, and 4G services, plus an Internet of Things platform and Nokia consultants for the entire roll-out, for a total of €930m, which conveniently converts to $1bn. This comes only a few weeks after a huge order for TD-LTE Advanced base stations. So far, it’s their third enormous sale in China this year. The point is made that China Mobile is going back to what it knows after the TD-SCDMA adventure - they made China’s first GSM call using Nokia kit back in 1994 and largely built their 2G network with it.

Not surprisingly, then, the Q3 results were strong.

Profits from Networks were €391m, and operating margin was 13.6% in the quarter, handily beating Ericsson and rivalling Huawei. Nokia is celebrating by returning $4bn of cash to its shareholders The other half of the merger, Alcatel-Lucent, also saw some progress - operating income was up to €212m and margin to 6.2% from 5.2% a year ago.

The improvement at ALU mostly came from IP routers and VoLTE systems. Interestingly, non-telco sales were up sharply - this is an effect of the middle-weight 7750 series routers being a hit with ISPs and enterprises. Also, ALU is now planning to keep the submarine cable business.

Nokia was also added to the AT&T Domain 2.0 list of suppliers this week, suggesting both that the real purpose of Domain 2.0 was to get the vendors to take SDN seriously, and that Nokia is forgiven about all those small cells AT&T bought for Project Velocity before they realised how much site rental would cost.

If you liked LTE, you’ll love LTE-Advanced. And LTE-Advanced PRO even more. Huawei has persuaded the 3GPP to let them have an official brand for “4.5G”, so expect a barrage of hype.

GSMA is happy that so many countries have put in proposals to WRC-15 to refarm TV spectrum under 700MHz for mobile.

Here’s a bit more detail about Ericsson and SK Telecom’s test of “network slicing” in 5G. The applications were augmented reality (i.e. both high speed and low latency), IoT (i.e. low bandwidth), and general enterprise traffic. SKT says it wants to launch a 5G service by 2017, but reading between the lines, it sounds like it will be mostly around their labs.

Huawei gadgets; Samsung growing again; Apple smashes Q3, again; fate of ChromeOS?

If Nokia keeps killing it like this, surely it will have a serious impact on Huawei in the end? That’s the thesis in our recent Huawei EB. If that happens, they’ll be dependent on smartphones for growth. In Q3, they reported shipments up 63% year-on-year. One-third were priced above RMB2,000/$315, therefore competing with Samsung. The question of course is how much Huawei, rather than Qualcomm, Mediatek, or Intel, value-added there is in each one.

Speaking of Sammy, it saw shipments growing for the first time since Q1 2014 as it sorted out the mix of S6 and S6 Edge gadgets and cranked up the marketing machine. Market share is still down year-on-year, but it’s up 2 percentage points sequentially. Also, world shipments are rising again. That said, Christmas is coming, and with it, the world’s supply of iPhones.

There are those who actually do bet on Apple missing its quarters. They were disappointed again in Q3, Apple’s fourth quarter, as iPhone sales beat records yet again.

HTC’s next gadget is here.

Google may be cooling on ChromeOS, and considering merging it with Android. However, the company vigorously denies this. And the OnHub WLAN router/smart home STB turns out to be a modified Chromebook under the bonnet. It’s possible that something subtly different is in prospect, for example, using the Android kernel for ChromeOS rather than Gentoo Linux. 

Julie Larson-Greene, the Microsoft exec who was responsible for Xbox, OneNote and the UX elements of their cloud products, as well as being the first woman to lead the Windows engineering team, is taking over Office.

Reliance buys Sistema; Chinese Q3s; Telenor chairman out; Project Loon gets a customer; Oi-TIM back on?

For the first time in 7 years, there’s a carrier merger in India: Reliance Comms buys Sistema, via a stock-swap that leaves the Russian investors behind Sistema with 10% of the business and snags RCOM very significant amounts of 800MHz 4G spectrum, as well as nine million more subscribers One down, eleven MNOs to go. Meanwhile, here’s the DNS lookup that proves some Indian MNOs are blocking anyone else’s VoIP or even instant messaging.

Chinese operator Q3s. China Mo reports revenue up 9.9%, with EBITDA up 12.8%. The key variable here is LTE adoption; they now have 247m 4G subscribers or 30% of the total, having added 50m in the quarter. By contrast, China Unicom is seeing declines in revenue, profits, and subscribers. And although China Telecom saw a hair over 1% growth on all three, they are talking about “3G/4G” subscribers - as if they didn’t want to say how many are on 4G. It’s as if all those Nokia eNode-Bs were doing CMCC some good…

Telenor, largely an Asian operator of course, reported 4.5% revenue growth year-on-year, but that couldn’t save the chairman. After the decision to bale out of VimpelCom, the Norwegian government, which eventually controls the company, has lost confidence in him.

It looks like both Vimpelcom and MegaFon will be hiving off their towers in Russia.

Telstra’s investment in the Philippines is estimated at $1bn. Meanwhile, PLDT and Globe have got around to setting up IP peering rather than sending their traffic out via some transit provider in Hong Kong or Los Angeles.

Mike Quigley, previously of Alcatel and NBN Co, points out that the cost of FTTH equipment has fallen dramatically since they started building, but the decision to keep the copper and cable means there’s no going back.

We have a first actual customer for Google’s solar balloons - in fact, three of them. Indonesia’s three MNOs have signed up to use them, or rather, to trial using them to fill in notspots before making a decision on a bigger rollout.

Indosat’s customer base is growing strongly, enough so that parent Ooredoo’s is up 20% year-on-year. Revenue on a constant-currency basis was up 4%, but it didn’t seem so clever on a real terms basis. There was a similar story at Etisalat. Zain was a bit different - as well as forex and Iraq security costs, it seems to be underpricing data.

MTN Nigeria has been threatened with a $5.2 billion fine for not registering SIM cards quickly enough.

And Russian telecoms investor Mikhail Fridman, of Alfa/Altimo fame, is trying to revive an Oi-TIM Brasil merger. He says he’s in for $4bn. Oi has signed an exclusivity agreement and agreed to “consider” opportunities.

US cablecos’ mammoth Q3; better broadband, or sexy STBs? Comcast enterprise up 19%; Akamai struggles

The US cablecos are reporting strong customer numbers in Q3. Charter was up 12k net video adds, and 131k net broadband adds. Last year, and for the last three years, they’ve been losing video customers, so this is a substantial swing. Revenue, meanwhile, was up 7.2%.

In Q2, the wider cable sector lost 625k net video subscribers, a record, and analysts had expected this to continue. But Comcast reported only 48k net losses, TWC 7k, and as we just saw, Charter was in positive territory. So, is cord-cutting still a phantom menace? Interestingly, the telcos’ IPTV products seem to be suffering - Verizon’s net gains were down to 42k, and AT&T U-Verse net-lost 92k.

The answer might be that cable is gaining in broadband and selling TV through to the broadband net gainers. Also, a key driver of cord-cutting was that cash-strapped consumers were swapping cable subscriptions for Internet options that were cheaper or free. Now, they’re not as cash-strapped any more. And the cablecos are offering new STB products - Comcast is now deploying 40,000 X1s a day, and has reached 25% penetration. At least one analyst thinks this might move them into positive territory in Q4. The latest version adds both 4K and high dynamic range (HDR) support.

TWC, however, wants to swap its STBs for either a web browser or a Roku 3, not least because streaming to browsers and mobile phones doesn’t generate truck-rolls. Arris, the world’s biggest STB vendor, seems to be struggling with revenue down 14%, largely because AT&T U-Verse and Verizon FiOS TV spending is way down.

By the numbers, though, the broadband explanation seems stronger. Comcast net-gained 320k broadband customers, TWC 232k, and Charter 131k in Q3, while AT&T net-lost 106k and Verizon essentially broke-even. All these new broadband subscribers are the obvious people to upsell with TV, and being new signups, they’re the ones who are getting the new gadgets first.

Our in-depth coverage of the US market has been tracking this since Q1 2014: Triple-Play in the USA and Gigabit Cable Attacks This Year refer.

In the light of this triumph, it seems churlish to point out that Comcast’s streaming video app has missed its launch deadline. Meanwhile, their biggest revenue growth line-item is the new business services division, up 19.5%.

And Akamai’s Q3s were pretty bad, as Apple, Microsoft, and Facebook brought more of their CDN needs in-house. (Or in Microsoft’s case, into Verizon’s ex-Edgecast CDN.) This quote is gold:

At the end of the call Akamai said, “media growth rates are going to be effectively flat to up very significantly, or down very significantly.”

The Hole in the Air - IoT moves into 2G just as 2G shuts down

The Hole in the Air: MNOs are frantically trying to fill up their long-since amortised GPRS networks with IoT devices, because why not, and the device developers are frantically trying to put a SIM into anything they can think of. The problem - the same MNOs are also planning to shut down the whole GSM network in a few years’ time in order to refarm the spectrum and incidentally get rid of the ugly security mess it’s become. Moving up to 3G or 4G is out of the question - the GPRS modules only cost $10-ish and the monthly ARPU is often around $1, but the minimum buy-in for LTE is about four times that. And the 3G networks’ days are pretty much numbered, too.

As it typically takes two years to launch an IoT project, this is an urgent problem, and that’s why there’s a rush on to roll-out LPWAN technology, whether Sigfox, LoRa, or something else. Cracking blog from Nick Hunn.

The 3GPP world is hastening to address this before the LPWAN or IEEE802 folk build up an installed base. Hence, this demo by Ericsson, AT&T, and Altair, which takes the new(ish) NB-IOT or LTE-M narrowband 4G standard and adds a new software mode in the SGSN to reduce power consumption. They claim it could deliver 10-year, LoRa-like battery life for IoT devices. Unfortunately, it’s an Ericsson proprietary thing, and might not make it into LTE R13.

Verizon Wireless, meanwhile, announced an IoT strategy, a new platform called Thingspace, and a gaggle of projects at an event in San Francisco. This includes a pharmaceutical track-and-trace system, a connected winery(?), and connected cars. They also gave a number of 1,000 partners to go with the $495m in revenue they already claimed. In parallel, Sigfox is deploying with the San Francisco city government.

Vodafone says its connected car business is growing 25-30% annually. DTAG says it has a million of them. Orange says it has 80 automotive customers. Factoids from here.

Xavier Niel buys into TI; BT-EE signed off, 3UK-O2 called in; EU package passes

Xavier Niel has acquired 15% of the voting rights in Telecom Italia, the second-biggest stake after Vivendi. Italian financial regulators are investigating whether he’s formed a concert party with Vivendi to take over the company - it seems unlikely. But he’s up to *something*.

Meanwhile, the UK Competition and Markets Authority has given “provisional” approval for BT to buy EE, without any remedies being imposed. The key question, therefore, is what OFCOM decides in its communications market review, due to report in the spring. The 3UK-O2 deal, however, has been called in by the European Commission for an in-depth review.

The Digital Single Market package has become law. With it, intra-European roaming charges are meant to disappear, although in practice there is scope for some sort of charge to discourage “permanent roaming”. Similarly, it institutes net neutrality but also creates quite a few exceptions from it.

BT’s revenues and EBITDA in Q3 are both roughly flat. EE, meanwhile, is readying another push on enterprise customers, promising gigabit speeds in the first half of next year. They’ve also snagged the contract to provide the emergency services with their wireless communications, which is controversial because although EE proposes to replace the Airwave TETRA network with its 4G service, the 4G public safety standard’s not finished yet.

Numericable-SFR says it’s “stabilised” its shrinking subscriber base, but only by dint of spending heavily on acquisition.

Developer-focused MVNO Simwood Mobile cuts its prices.

T-Quarter - another net-adds monster, in profit, mostly taken from AT&T and Sprint

T-Mobile Q3s are in, and it was yet another big quarter. With 2.3m net-adds, of which 843k were postpaid smartphones, they handily beat VZW, and AT&T only dodged this because they booked a lot of low-value M2M SIMs. VZW added 694k postpaid smartphones, and AT&T actually saw a net loss in this key subsegment. Churn was down, average billings up, while ARPU was down but still very decent at $47.99/mo in postpaid. Also, the operator was in profit by $138m, with EBITDA up $600m year-on-year and margins up from 24% to 30%.

The porting ratios suggest Sprint (no surprise) and AT&T (ok, more surprising) are the major sources for the subscriber growth. Also, T-Mo has done well retaining the MetroPCS customers. An announcement is planned for next Tuesday.

Towers entrepreneur thinks VZW and AT&T will between them deploy 100k small cells in the next 12 months.

AT&T is offering something new for its Cricket Wireless MVNO customers when they’re roaming in Mexico or Canada: data roaming. Errr..

Sprint has apparently been opening up its offices so people can see each other, getting rid of executive lunches and limos…and reducing the severance money offered to people it lays off.

TalkTalk, Vodafone UK hacked; gov.uk backs out of crypto wars; cheap IMSI catcher; 1993 app store

It perhaps wasn’t so surprising TalkTalk’s billing system got hacked - the SSL certificates were a mess, much of their webmail was in the clear, and call-centre employees had access to user passwords.

Vodafone UK, meanwhile, lost precisely 1,827 customer records to someone who obtained an employee’s credentials.

The British government’s flirtation with trying to ban encryption is over, but parts of it seem to be confused about that.

Make your own IMSI catcher for $1,400.

Malware that physically eats CPUs.

Beating Android device encryption.

The prehistory of the App Store: NeXTSTEP had one in 1993.

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