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“4.5G”, Erisco, Eurecovery, M-PESA, Qualcomm, Facebook: Telco 2.0 News Review

4.5G Huawei; Nokia/CMCC 5G; Ericsson-Cisco deal; Reliance Jio update; GSMA at WRC15; more LTE-LAA

Huawei is very, very keen to push what it calls 4.5G. This week saw announcements with 3 Hong Kong and HKT. The substance of the product seems to be, essentially, more LTE carrier aggregation, going from tri-band to quad-band. Not surprisingly, throwing more spectrum at the problem generates high theoretical maximum download speeds, which is what Huawei - like all vendors - most wants.

As we discuss in this note, they also seem to be worried about the possibility that a viable “early” or “phase 1” 5G standard is delivered quickly, which might hit their lead in 4G deployments. Interestingly, although the 4.5G announcements were all about speed, speed, and speed, the CEO’s new strategy statement is heavy on the Internet of Things. The advanced IoT features are coming either in “early” 5G or in the 2020 timeframe as part of the real deal, depending on who you believe, so this doesn’t quite fit the 4.5G story.

Huawei managers also recently said they think the company is like Nokia in 2000. Nokia seems to think it’s more like Huawei in 2015 after their string of huge China Mobile contracts, and this is borne out by their 5G research partnership with China Mobile R&D.

Among other things, CMCC and Nokia will be coordinating their approaches to standards forums in future. This suggests a powerful push for the carrier-focused agenda we identified at 3GPP RAN a few weeks ago: mobile broadband capacity (more of it), cost (less of it), and carbon dioxide (less of that).

Ericsson has signed a strategic partnership with Cisco. There’s a lot of big talk about services, IoT, and innovation, but the key element is that Cisco wants to sell more routers to Ericsson’s telco customers, and Ericsson would like to sell consulting services to Cisco’s enterprise customers. Very interestingly, the two parties also agree to licence each others’ patents and discuss FRAND policies - nothing definite is stated about this, except that Cisco will pay Ericsson some licence fees. Also, you’ll be able to use your Ericsson OSS/BSS with Cisco infrastructure.

Ericsson has been trying for years to get into the IP router business - does anyone remember that time they bought Redback? or the deal with Juniper - and this will certainly give them something to sell, although it also implies they’ve accepted that Cisco owns the router market. Hans Vestberg said as much in the Q&A. Compare Alcatel-Lucent, which struggled for years but eventually succeeded in fielding a router that sold (the 7750s).

Vestberg reckons Ericsson could gain $1bn a year by 2018 in extra sales from the deal, plus a billion kroner in savings (that’s $115m). Meanwhile, Chuck Robbins reckons the main advantage of it is that it can close “now”. He’s probably delighted just to have pushed Juniper out of Ericsson’s client base.

Beyond that, Ericsson has signed up Telkomsel and Indosat for two major rollouts, which ought to shift plenty of RBS 6k units.

Reliance Jio is in a hurry to roll out the India-wide 4G network it promised. So far they’re deploying 300 small cells a day against a target of 1,700. As with everyone who’s tried a huge small cell deployment, they’re hoping automation will save them. Here’s an interesting video:

The GSMA’s durable CTO, Alex Sinclair, who’s also currently keeping the director general’s seat warm, says WRC-15 needs to get the 700MHz and 1400MHz bands harmonised globally and also get the 3.4GHz started.

Meanwhile, the Wi-Fi Alliance reaches out to the 3GPP and suggests an LTE-LAA/WiFi coexistence workshop, but none of the vendors want to lend them a base station.

And this British ISP is seeing 49% IPv6 traffic.

Eurecovery: Telefonica, DTAG, TDC, TI Q3s, Orange CAPEX plans

Telefonica reports the first year-on-year growth in its Spanish division in seven years in Q3. Revenue was up 0.2%, albeit 1.3% quarter-on-quarter, while groupwide revenue was up 11%, or 4.8% at constant exchange rates. Brazil contributed 5.2% growth and the other Latin American businesses 12.6% - although this makes the “turnaround” in Spain look pretty thin, it’s worth pointing out that revenue from O2 Germany actually fell 1.1%. You may remember that O2.de and E-Plus came out of this exercise pretty poorly.

Deutsche Telekom reported a strong Q3 with group revenue up 9.3% and net profits up 60%. This isn’t as bullish for Europe as it looks, because the key driver was T-Mobile USA - mobile revenue in Germany was off 0.4% and total revenue off 0.1%, while Europe-wide revenue was down 3.6%. It’s no surprise business was pretty bleak in Greece, but Austria and the Netherlands were especially bad and they have no such excuse. Clearly this Eurecovery thing isn’t settled yet.

That said, the European recovery story is largely about CAPEX. DTAG says it’s going to add another 2.4m FTTH lines this quarter. Orange revealed its plans, at a Huawei event (guess who’s getting the job then?), and they are substantial. The company plans to spend about €15bn over the next three years, targeting 95% population coverage with LTE or LTE-A across Europe, and aims to increase user-plane data capacity by a factor of three. In aid of this, they intend to buy more 700MHz spectrum. In Spain, they hope to pass 14 million premises with fibre by 2020. That’s another Euro-telco clicking over into the investment phase, then, after Vodafone, Telefonica, and DTAG.

Also, TDC’s revenues were up 4.5% year-on-year. Telecom Italia, though, is still shrinking, but interestingly, it’s TIM Brasil that’s the problem, and their Italian mobile revenue is actually up, as is the Sparkle submarine cable business.

On the other hand, there’s Vimpelcom. In Q3, the company had to set aside $900m for damages over a corruption scandal in Uzbekistan. Oh, and revenue was down 31%.

The UK government wants to give you a “right to request a 10Mbps connection” as a broadband universal service obligation. Surely you can request one now?

EE, via MVNE Transatel, has lost a substantial MVNO client, The People’s Operator, which is off to 3UK with the following quote:

‘The deal we had with EE was probably our oldest deal, back from 2012 so we’ve been looking at it for a little while and we spoke with a number of people and from a product and commercial side we went with Three … It is a better quality 4G network, and operationally and commercially it is better’.

And the first speed tests are filtering through from the York FTTH joint venture.

VZ out of wireline, or only enterprise? Centurylink selling DCs; Orange-Akamai VPNs; huge Chinese video deal; AWS comes to the UK

Verizon may be about to sell its troubled enterprise business, Reuters reckons. A price of $10bn is given for the Terremark data centres, plus the storied MCI and UUNet global carrier networks. There’s no hurry but Citigroup is acting as financial adviser and Centurylink has apparently shown an interest in some or all of the deal. That said, Centurylink may be selling its data centres. Does that mean they want out of the data centre business, or they’re willing to sell in order to raise the cash to buy VES?

There’s some insight over at Data Centre Knowledge, which points out that Centurylink’s cloud business is cannibalising its colocation and managed hosting, and also that it doesn’t own most of the data centres themselves. A legacy of the old Savvis business model, they are usually leased from third parties.

Verizon management, meanwhile, briefed that they need at least part of wireline for mobile backhaul. This is of course true, although as the piece points out, VZW has always been very much a (Vodafone-inspired) state within in a state inside Verizon. Even from an Internet perspective, VZW shows up in the routing table as a dozen of its own AS numbers with their own peering relationships, rather than being behind Verizon’s AS701.

Here’s an interesting product: Orange Business Services has a partnership with Akamai to route your corporate VPN through Akamai’s overlay network, and if your cloud applications are ones that Akamai hosts, directly to the nearest serving node. The application-layer multicast VPN that links Akamai’s CDN nodes together is an under-reported strength of theirs, and this is a product that explicitly makes it available to customers.

Speaking of CDNs, Limelight Networks seems to be picking up some business from Apple and also from Microsoft. This may explain why Akamai is complaining about traffic growth slowing down and nobody else has noticed.

China’s Amazon clone, Alibaba, is investing $3.67bn in China’s YouTube clone, taking the huge video host private.

Huawei is offering what sounds like a big MVNO hosting platform and some content delivery functions, out of a UK data centre. Amazon Web Services is also coming here, planning to open a cluster of data centres in Britain late next year as part of an expansion that also adds a new AWS region in South Korea.

Xavier Niel’s merry men at Free will lease you a dedicated server with an OpenPOWER8 core for €1500 a month. Pay what? The answer’s here - blasting through big ugly enterprise workloads, fast.

IBMbench_published_575px.pngAnd Telefonica has been testing NFV with the Alcatel 7750 router.

BlackBerry PRIV; HTC drowning in inventory; Qualcomm Q3; Android One scaled down

The new BlackBerry PRIV is available, and is getting widely reviewed. It provides a very fresh Android (5.1.1), high hardware specs, and a keyboard. BlackBerry says it will deliver Android updates monthly, with critical hotfixes being deployed as soon as they are available, and they are willing to push them even without waiting for carrier approval. The launch has come with very little marketing beatup, and it’s hardly priced to go - the SIM-free device is £599, or £49.99/mo with a £59.99 down payment at Carphone Warehouse.

An interesting feature of the phone is Dtek, an app that monitors what other apps are up to. This demonstrated to ZDNet that the threats to their privacy were still pretty intense.

HTC’s management refuses to give a Q4 forecast because, as Charles Arthur points out, it would be shockingly terrible. Among other things, the company is absolutely crammed with inventory:

screenshot-2015-11-03-08-59-43.pngIt’s probably because the One A9 turns out to be not OK on Verizon and shipments to the US are on hold. Also, the red and gold ones are mysteriously delayed even longer than the rest.

Qualcomm’s quarter was pretty dreadful, with revenue off 18% and net income down 44%. They blame this on Chinese vendors taking their time to sign licensing agreements, but it’s also telling that MSM-series smartphone SoCs aren’t selling all that well, with shipments off 14% sequentially. S6 (Exynos) sales are finally pulling, perhaps Mediatek is cutting in as well, and the non-Apple, non-Samsung smartphone makers who are Qualcomm’s staple market are looking a bit HTC-y.

Huawei, for example, is up to second place among Android vendors in Europe, as Sony, Motorola, and HTC weaken. But on the other hand, 56% of Chinese iPhone buyers were switching from Android.

The ultra-cheap, WiFi-plus-MVNO FreedomPop has snagged an investment from Intel Capital to make its own phone around an Intel SoC.

Meanwhile, although BlackBerry is promising quick Android patches, Google’s own Android One has stopped promising them and in fact it’s far from clear what it’s promising any more. It sounds like another Silicon Valley crusade to save India that foundered on being clueless about the place - why on earth would they refuse to sell them via local resellers?

Google’s Project Tango advanced 3D developer kit has just had another price cut, perhaps because this Apple indoor survey app appeared.

MTN CEO OUT; Telkom bid for Cell C; M-PESA; Japanese Q3s; Sprint Q3; how to beat Comcast’s call centre

MTN CEO Sifiso Dabengwa has resigned after the carrier copped a $5.2bn fine from Nigerian regulators. Well, he probably better. Chairman Phuthuma Nhleko takes over for six months while they negotiate with the Nigerians and look for a permanent successor. The biggest shareholder, the South African sovereign wealth fund, still isn’t happy and wants more heads, while the South African government is “concerned” and is pursuing the matter diplomatically. The Nigerian regulator is standing firm about the fine so far, but it looks like they’re also trying to signal readiness to come to some sort of agreement - in the background, MTN’s spectrum licences have been extended to 2021.

Telkom, meanwhile, has come back with a better offer for Cell C after the owner, STC, rejected their first bid.

M-PESA is still doing great business. Safaricom broke out quite a bit of data on the platform in its Q3 results, and it’s now the operator’s biggest source of revenue growth. There are now 15.7m active users, and revenue was up 24% year-on-year. Two-thirds of the volume is person-to-person, and this segment is growing at 16%. As for the rest, business-to-business makes up 15% and is growing at 65%, and business-to-person is 18% and growing over 100% annually.

Vodacom says its data revenues are up 33% and its profits up 6% year-on-year in H1 after it rolled out more LTE coverage.

Xavier Niel’s investment in Israeli mobile is up for sale - Golan Telecom is going, going, gone to Cellcom for $301m, if the regulator accepts it, after Golan outbid Bezeq. The operator has about 900,000 subscribers and revenues of $127m.

In Japan, carrier Q3s are in, and KDDI saw revenue up 6%, subscribers up 7, and ARPA up 2.5%. Smartphone penetration was 56%, so there’s some way to go just from diffusion. NTT DoCoMo saw revenue growth of 1.9% but much better profitability, although service revenue was down 19% - selling a lot of iPhones - while Softbank saw revenue 10% higher and net income off 24%. The answer was pretty simple: Sprint is costing a lot in interest.

Sprint’s Q3 was acceptable, just. For the first time in two years, it saw actual growth in postpaid phone net-adds, and the topline net-adds were just over a million. However, even chucking in the kitchen sink (no fewer than 866k wholesale), that was half what T-Mobile or AT&T achieved and 200k behind VZW. And the postpaid phone growth consisted almost entirely of people switching from Boost or Virgin to Sprint mainline, something that was achieved by ringing them up and making them an offer. Also, the famous leasing special-purpose vehicle still hasn’t shown up, and the company booked $600m additional CAPEX with respect to “device leasing in our indirect sales channels” - is that something to do with offering the switchers new phones? Revenue was off 6%, but the net loss narrowed somewhat thanks to cost cutting.

Comcast has been telling its call centre staff that their data cap has nothing to do with network congestion. Also, they are briefed to escalate anyone who says the words “net neutrality” to a manager immediately. So now you know! Suddenlink, meanwhile, openly says that cap busters are a significant source of revenue.

And Forbes is an MVNO now, apparently competing with Truphone.

Facebook Q3s; Square IPO; really bad ad malware; surveillance bill; IoT forecasts are rubbish

Facebook Q3s are interesting. So far, they’ve done well out of the advertising crisis, with their strategy of rationing access to users’ news feeds. Ad revenue is up 45% year-on-year, while other revenues are actually shrinking. So much for diversification away from ads. Operating profits, though, are up 4%. That can only mean that margins are suffering, and yes, operating margin has come down from 44% to 32%. And in true Silly Valley style, it’s an expensive company to run - total costs and expenses are up 68% year-on-year. Out of $3bn total expenses, $780m is CAPEX, and the rest is presumably ads, salaries, and pizza.

Elsewhere in the Valley, Square is hastening to go public, so much so that it’s pricing the IPO below its last VC round valuation. The cut is substantial, too - the last private valuation was $6bn, and the IPO is set around $3.9bn, so either they’re leaving a third of the company on the table, or at least a third of the valuation was hot air. And if the eventual IPO price is less than $18.56 a share, some of the VC investors have a right to get more shares, which dilutes the founders, notably CEO Jack Dorsey. Who is also CEO of Twitter, in case you missed that. It all looks like a rush to the market before closing time.

If you browse to AdWeek on your phone you might get this ad trying to steal your Facebook account. The possibility of registering advertisers is discussed, and the point made that $10,000 as a signup will render it irrelevant. Even TV ad rates are in the loo.

One of those anti-adblocker companies that tries to detect people using ABP or whatever and show them a shame screen got hacked and used to distribute some fairly vicious malware. So not only is there malware in the ads, there’s malware in the pro-ads ads. New Android viruses can root your phone, and will probably both spread using ad networks, and make money by showing you ads.

The Garden Bridge is controversial enough already, but now it wants to follow your phone around. Fortunately they seem to mean tracking wireless LAN MAC addresses, and recent iOS and Android have that covered.

The British government’s new surveillance law is out and although it doesn’t contain a crypto ban, it does basically legalise everything GCHQ was up to. In defending the bill, Home Secretary Theresa May also admitted that the government had invoked the weird clause in the 1984 Telecoms Act that lets them give orders to anyone regulated by OFCOM as long ago as 2001 and demanded the handover of all the CDRs. Meanwhile, the defensive half of GCHQ will no longer do accreditation for security specialists because who needs that.

Samsung apps on the Galaxy S6 Edge are buggy. Terrible Java exploit discovered. And current forecasts for IoT growth would need the US to spend 10% of GDP just on that.

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