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February 29, 2016

Post-MWC Extra Edition: Telco 2.0 News Review

5G Accelerating Along the Hype Curve

This year’s MWC was all about three things: 5G, the cloud, and the Internet of Things. It was almost a mantra, endlessly repeated, or one of those Chinese political slogans that always come as a numbered list. As Informa’s Scott Bicheno points out, though, the big difference between this year and last was that there was no more talk of “special generations”, “the last G”, or 5G being a “behaviour” or a “state of mind”. Instead, there was action.

Inside 5G has a round-up of demos. Every significant vendor had something to show off; the main distinction was whether they claimed it was already 5G, like Nokia, Ericsson, Intel, SK Telecom, Ooredoo, Samsung, DTAG, and Huawei, or contented themselves with “pre-5G”, like ZTE. Also, there were a whole swath of new “partnerships” - Vodafone says its 5G partners are Huawei, Nokia, Ericsson, Intel, and Qualcomm, or to put it another way, everyone.

After AT&T and VZW, T-Mobile USA has taken a partner, or rather two, for 5G trials - Nokia and Ericsson.  Tests are expected to begin this year, but CTO Neville Ray is playing it down and says it won’t be a big deal before 2020.

That said, the results from VZW’s field trials with the two vendors are in and they seem…encouraging. The “early 5G” consensus around the key semiconductor vendors plus Nokia and Ericsson seems to be stronger than ever - Nokia CEO Rajeev Suri went as far as suggesting we might see production deployments in 2017. It’s probably no coincidence that’s also the timing VZW suggested, especially as VZW is usually joined at the hip to what used to be Alcatel.

Intel, especially, is emerging as an important actor. It has partnerships with a wide range of carriers and plans to run field trials with KT in 2018, and it also brought a 5G experimental cell site to the show. Fascinatingly, the site consisted entirely of three Xeon rackmount servers running a virtualised base station and a pair of CDN nodes, plus a whole lot of National Instruments USRPs, open-source software radios. It wasn’t what you’d call femto, but the high content of IT hardware and open source was telling.

A standards initiative has been set up by NTT DoCoMo, the Koreans, and VZW to standardise 5G test methods and configurations. Meanwhile, some poor souls were on the road again immediately after MWC, as the ITU-R met in Beijing and agreed the criteria it would use to evaluate potential 5G air interfaces.

As always at these moments, there’s a race to come up with the most hype-tastic names possible. Turk Telecom says it’s launching “5G Internet” on the 1st of April, but this actually turns out to be 4.5G LTE-A or A-Pro with aggregated WiFi. Interestingly, they’re licensing the solution KT uses in South Korea for its gigabit wireless service.

ETSI is sounding suitably concerned about all the marketing, but another reading of its warning is just that the European carriers are falling badly behind. Ericsson CEO Hans Vestberg said as much, and so did CTO Ulf Ewaldsson later in the week. Ewaldsson compared EU spectrum policy with the FCC’s efforts since 2009’s National Broadband Plan very unfavourably. Here are some Eurocarrier executives being really defensive.

You can’t say that about the European vendors, though. Nokia Networks has completely redesigned its core base station products, announcing a new architecture to replace the Flexi BTS line everyone’s familiar with. Interestingly, it uses the AirFrame servers they offer for Mobile Edge Computing to support the software elements of the setup.

Nokia, Intel, Ericsson, Qualcomm - you just kept running into those four at MWC, in some configuration or other. They seem to be getting very much interested in neutral-host or shared small cell systems, which is the key use case for MuLTEfire, the unlicensed 4G technology they announced together at MWC.

Interestingly, they seem to have convinced at least one WiFi vendor, and probably the technology leader at that, that they’re not planning to crush WiFi under the wheels of LTE-U - Ruckus Wireless is on board! Their CEO explains why in this FierceWireless piece.

Speaking of LTE-U, Qualcomm was telling everyone who’d listen that they’d fixed LTE-LAA and it actually makes the WiFi go faster. Well, than it would if only other WiFi networks were interfering. For some reason, though, they’re still determined to deploy the original LTE-U, i.e. without the listen-before-talk coexistence protocol, in the US.

All this radio innovation is likely to hit the backhaul before it hits anywhere else. The end points don’t have to be tiny and don’t need to be marketed to billions of consumers, and they work in obscure and uncontroversial corners of the microwave spectrum, so they can move quickly. Hence Mobinil is deploying 5Gbps fixed-wireless links.

Another interesting consequence of RF innovation was on show at Qualcomm’s pre-MWC briefing, where they wanted to demonstrate how they plan to recover from the surge of competition in mobile SoCs and the topping-out of smartphone adoption (100% global penetration, how are you?). All eyes are on their IoT products and their effort to break into the data centre market, but fully half, $18bn, of their projected growth is meant to come from RF Front End products like filters, antennas, tuners, and such.

Huawei 4.5G announcements. Ericsson and Mediatek sort out interoperability for VoWiFi in the mid-market. ZDNet complains bitterly about the 4G, but one thing that stood out at MWC this year was that Vodafone’s LTE-A coverage was singularly excellent. The company is currently running an ad campaign boasting of “la millor xarxa de veu e dades”, and in fact it worked more often than the WiFi and substantially faster. Which suggests this analyst might be right, and both DSL and even cable operators’ lower speed tiers need to watch out.

Merging the cloud and the network: Ericsson, AWS, AT&T, Facebook and more

So, here’s a turn-up for the books. Ericsson has a strategic partnership with Amazon Web Services, apparently to get its telco customers to use the force. Sorry. Use the cloud. You might also wonder if part of the point was to get AWS interested in using the telcos’ facilities in order to get closer to their customers.

There was quite a lot of that kind of distributed-cloud, edge computing stuff floating about. Nokia and EE brought their video solution from Wembley Stadium along. Nokia also wants you to store all the data in your network in its Shared Data Layer so the edge nodes can just plug into that. Orange is running the licensed version of Akamai’s CDN in its network, as an NFV virtualised app. To do this, they’re using the OpenStack virtual infrastructure manager, or rather HP Enterprise’s Helion flavour of it, plus HPE’s NFV Director orchestrator.

Brocade joined the ETSI MEC group in H2 2015, and they’re now touting their 5600 vRouter as the ideal solution. Between Quortus, ACS, and Stratacache, they came up with a complete MEC setup to demonstrate on the Intel stand (them again). EMC has a “Provider Cloud” solution.

Here’s the Telecoms Infra Project, modelled on the cloud’s Open Compute Project and inspired like it by Facebook. The key partners are Nokia, Intel, SK Telecom, and DTAG. We do seem to keep seeing them together.

Goldman Sachs reckons AT&T is going to be the world’s single biggest user of OpenStack, with upwards of 500,000 virtual machines. AT&T CSO John Donovan took part in a panel on Day 1, and provided quite a lot of data on AT&T’s transition to NFV and open source.

AT&T originally planned to have virtualised 75% of the network by 2020, and 5% by the end of 2015. In fact it achieved 5.7%, and now hope to have 30% of the network in NFV by the end of 2016, with 69 different VNFs in production compared to 21 at the moment, and 70% of its sites moved to a common hardware platform. Further, the usage of open-source software has gone from 5% of the total to 10%, and a new target of 50% OSS by 2020 set.

Interestingly, a blog post claims that efficiencies through NFV made it possible to start offering an “unlimited” data product again.

ETSI says its MANO NFV project is now going to consist of open-source software. This means it’s going to align with this project, OSM, which is actually cutting code and which includes both a lot of key OSS companies (e.g. Red Hat and Canonical), and some telcos.

One of them is Telefonica, which raises an interesting question. Telefonica is both taking part in the OSM project, and also deploying an NFV infrastructure. So far, the production infrastructure started off as being a multivendor standard, and then became a single-source contract to HP Enterprise, before Telefonica sacked HPE from the project. At MWC, Ericsson announced it had taken over the job. But why all this faffing around if there’s a decent solution somewhere in the lab?

Vimpelcom, meanwhile, is going to virtualise the core in five markets, starting with Kyrgyzstan and Laos. The contractor is ZTE.

Verizon is getting a SD-WAN service going, using Viptela’s technology. Here’s a use case.

Spotify is dumping AWS in favour of Google Cloud.

Internet of Dramatically Fewer Things Than Previously Expected

MWC had plenty of Internet and a great many Things. SK Telecom, always a good bet for something innovative or just weird, showed off a whole suite of wearable devices for pets but for some reason didn’t get an actual dog to wear them, just some vaguely creepy squeezy dolls (and some interesting technology).

But the biggest IoT news item, as Nick Hunn points out, was probably that Ericsson has shaded down its forecast for “connected devices” a bit. Well, a lot. Nearly half. Rather than 50bn things by 2020, they’re now saying 28bn. Still a lot of things, of course.

Worse still, they’re now saying that maybe 1.3bn of those will have their own cellular connection and the rest will talk to a gateway via one or other low-power radio network. Once you factor in the connected cars, that leaves only about 500m additional devices for the mobile operators to fight over.

The IoT’s alphabet soup of standards was also out in force at MWC, with the vendors demonstrating NB-IoT aka LTE-M, LTE Class 1, and EC-GSM. A new strategic partnership, Ngena, was launched centered on DTAG and SK Telecom (what, again?).

It’s not as if there’s any lack of innovation either. The Linux Foundation is building a new open-source real-time operating system for really constrained devices. We noticed LPWAN-focused IoT platform Actility signing up with Cisco - perhaps their strategy to ward off Amazon Web Services’ entry into IoT is to get bought, like Jasper? - and Jasper itself signing up to integrate with Gemalto’s eSIM provisioning. ARM has a new ultra-low power CPU. Vorto is a new approach to IoT interoperability that uses cross-compiling and information models rather than standards as such.

It’s just that, perhaps, there’s not that much money in there for operators that isn’t straightforward M2M, or else connected car. And AT&T might just eat all the cars. If you want to remember what IoT optimism felt like, try this VZW press release about the 4,000 developers who signed up for its platform.

Chinese webcams are always watching. How to steal any connected car. Apple vs. the FBI.

But perhaps that’s not such a bad thing. If the Things end up on a LoRa network behind a gateway, at least it might not be as easy to cause a massive security fiasco as it is now. Behold the webcams that automatically join a P2P network in China and uplink dozens of gigabytes of….what?…every day. You can turn the “feature” off, but this doesn’t stop them doing it unless you turn them off using a hammer.

While that’s a bit worrysome, this is dangerous - you can do all sorts of things to any Nissan Leaf electric car over the Internet, so long as you know the vehicle ID number. Which is engraved on the windscreen. And can be guessed statistically. Extra detail - the fact there is NO AUTHENTICATION OF ANY KIND was discovered by Leaf owners hacking on the API to develop an alternative to the official app, because the app was so awful.

The popular Linux Mint distribution got hacked.

And while we were all at MWC, an epic courtroom battle was developing between Apple and the FBI. The FBI wants Apple to push a special update that would let them decrypt the storage on one specific iPhone, belonging to a dead terrorist. Apple refuses, fearing this would set an anti-encryption precedent and the exploit code would probably leak. Apple is getting support from surprising quarters (Verizon CEO Lowell McAdam) and less surprising ones (Google). Technical and legal detail is here.

Uganda had an election and the government censored the Web. Now they have 1.4m Android users with VPN apps. Telegram is up to 100m users, 15bn messages/day. Encrypted messaging app Cryptocat shuts down for a deep re-engineering effort, possibly after a major flaw was discovered. Open Whisper Systems dev Frederic Jacobs joins Apple. A new encrypted messaging app seems to be behind a sudden surge of dark website creation.

BlackBerry buys a security consulting shop. Robots invade the Google Play store, and all they want is pornography - rather, they open a hidden browser window and hammer away on porn ads to drive click-fraud revenue.

Robots; LG’s quirky weirdness battles the black slabs; HP, ARM news

Speaking of robots, there were a lot of them at MWC. We were torn between the disturbingly alien LG Rolling Bot, a pure white sphere made in two halves that can rotate independently so it can roll in any direction, and the heartbreakingly cute little fella on the Canonical stand who can kick a ball but not quite trap the return pass without falling over. (As well as Canonical’s bot that can’t quite play football, Huawei had a robot arm that can’t quite play air hockey, and IBM had an artificial intelligence that can’t answer questions about networking at all.)

Humanoid robots are technically difficult, and this one was really charming, but we preferred the LG bot’s random otherness. LG reckons the killer app for it is security - it hears a noise, rolls over to it, and sends you video of what’s happening - in which case they’ve reinvented the white spheres from The Prisoner. Beyond that, Ericsson had a flock of tiny drones they kept in a perspex tank next to a bust of L.M. Ericsson, and Intel had some bigger ones flying in a cage outside. Is it us, or is this emphasis on confinement somehow worrying?

Perhaps this is the explanation of all the bots - Mercedes-Benz has decided it needs to replace robots with human workers, because the cars have become too customised. Maybe they’re looking for work. It puts another light on the SK Telecom boss’s worryingly ambiguous contention that “the 5G robot is another killer app”.

Anyway, this wouldn’t be an MWC report back without shiny phones. LG announced the G5, a flagship Android device that brings back the modular phone concept. For example, you can clip on hardware camera controls, a better lens, and much more battery. Or high-end audio, or VR headgear. The idea is pretty close to Jolla’s Other Half, if anyone remembers that. (Jolla, by the way, is still around and has a distribution deal in India.)

LG has come up with 8 modules and presumably hopes an ecosystem will spring up. They’re aiming high - they want to be the No.3 vendor, and hope that the eccentricity will differentiate them from Samsung.

Speaking of Samsung, the S7s landed at MWC, and they went for a conventional or perhaps classic design, a high-spec black glass slab. They also threw Qualcomm a bone, perhaps in exchange for their manufacturing business - North American S7s will ship with a Snapdragon 820, everyone else gets an Exynos 8.

Xiaomi’s new devices are out. They, too, use the Snapdragon 820, and the company best known for its low-cost Androids has gone for high spec. After all, 72% of urban Chinese now have a smartphone, so they face a choice between fighting ever harder for a smaller volume of ultra-cheap devices, or trying to rebuild margins a bit in the high end.

The official Best Product at MWC was a British-made, ruggedised smartphone that includes a thermal imaging camera. Surely the answer to the old chestnut “what phone would James Bond use?”

HP has an interesting business-focused phablet out, the Elite X3, and is trying to design its mobile devices around Windows 10. It comes with a Palm Foleo. Sorry. Huawei, meanwhile, has a device that looks a hell of a lot like a Elitebook Folio or Microsoft Surface.

A lot of people in the telco world like to talk about “offloading processing” from mobile devices to the cloud, especially for gaming. ARM would like to point out that they expect to be faster than dedicated games consoles next year. Perhaps the awful numbers from Nintendo aren’t that surprising.

Here’s a profile of Apple’s head of semiconductors, Johny Srouji. The Foxconn acquisition of Sharp has fallen through.

Microsoft is taking the Office 365 Android apps in some interesting directions.

OFCOM decisions are in; £150m, 15 mast project binned; those buried MWC week stories in full

OFCOM’s Communications Market Review hasn’t fully reported yet, but we now know some key details. BT gets to keep Openreach, but under conditions; OFCOM wants to impose duct and pole access, change the licensing regime to favour rural coverage, make it easier to complain, and change Openreach’s structure. The first point is already meant to be in force under PIA (Passive Infrastructure Access), and there’s a lot more detail here.

Changes to Openreach would mean giving it more independence from BT and perhaps letting other operators have more influence within it - see here for some reaction. As for the licensing changes, there’s more here. ISP operator RevK argues it was actually easier to deal with pre-separation BT, and points out that a lot of his problems are with relationships between BT Wholesale and Openreach.

The British government’s Mobile Infrastructure Project, famous for managing to build 15 masts in four years, is being wound up.

Not surprisingly, Sprint’s bid to be considered a CLEC rather than a mobile operator is getting pushback. AT&T sues Louisville, Kentucky to keep Google Fiber out. Google Fiber, meanwhile, is buying up dark fibre everywhere it finds it.

Vimpelcom has settled with the US and Dutch governments, paying a $835m fine for alleged corruption in Uzbekistan. It did so on the Friday before MWC. MTN Nigeria has dropped its lawsuit against the Nigerian government and paid the first $250m of “that fine” as a “goodwill gesture”. It did so the day after MWC.

Indian consolidation; T-Results; Sprint numbers; AT&T investment; Vodafone-Liberty deal; French PSTN shutdown

Indian consolidation is well under way. After Reliance Comms started the process of acquiring SSTL, Aircel is now selling up too. RCOM will take a 50% stake, while both companies will contribute an equal amount of debt to the joint venture. RCOM will also roll in the SSTL assets, while Aircel will contribute the block of 2.3GHz spectrum it was planning to sell to Bharti Airtel. That would create India’s second operator, behind Bharti and just ahead of Vodafone by a hair. Telenor, meanwhile, has given some details of its 4G launch, but not many. Vodafone is in trouble with the Indian taxman again. The Indian government says that Google’s Project Loon must pick a carrier partner, and it should probably be BSNL.

(Ulf Ewaldsson remarked at MWC that Loon consisted of “Balloons - in the cloud!” Burn.)

DTAG Q4s are out and they’re pretty decent, with revenue up 5% and a billion-euro profit. Most of this comes from “international”, or to put it another way, “T-Mobile USA”. T-Mo took a bit of a breather from frenetic subscriber acquisition in the quarter, but the reduction in smartphone giveaways meant an automatic boost to profitability. They’ve also been quietly buying up small operators’ 700MHz holdings.

If this was The Big Short, this would be the moment the analyst looks up from a spreadsheet and yells “It’s like 2+2 equals…FISH!” Craig Moffett reckons Sprint’s leasing model is concealing a seriously loss-making core business. Jennifer Fritzsche from Wells Fargo is more optimistic, but says she’s carefully watching Sprint’s cash flow. So, hedged then…

AT&T, meanwhile, is planning to spend $10bn CAPEX on its enterprise segment. No wonder the whole open-source industry wants to be its best mate these days. Verizon buys dark fibre player XO Communications for $1.8bn.

The big story at Telefonica was meant to be that the dark ages were behind them and revenue growth was back. Oops. O2 UK is apparently the standout.

Vodafone-Liberty Global is here! But only in the Netherlands.

Orange and Google are cooperating on a $40/mo, voice, data, and smartphone offering for the Middle East and Africa.

And Orange itself has named the date to shut down the French PSTN.

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February 19, 2016

WeChat: A Roadmap for Facebook and Telcos in Conversational Commerce

We’ve published a new research paper: WeChat: A Roadmap for Facebook and Telcos in Conversational Commerce. Messaging services are increasingly enabling interactions and transactions between consumers and businesses. Largely pioneered by WeChat in China, the growing integration of digital communications and commerce services looks like a multi-billion dollar boon for Facebook and a major headache for Amazon, eBay and Google. It also poses a strategic dilemma for Apple and telcos: Can they turn their communications apps into shopping channels while championing privacy and security?

This report is part of the Telco 2.0 Dealing with Disruption stream and you can read an excerpt here.

For more information on any of our services, please email contact@telco2.net or call +44 207 247 5003.

Extract chart from the report:

wechat fig 1.png

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February 15, 2016

5G, NFV, Cloud, Security, APAC: Telco 2.0 News Review

AT&T: heading for 5G via NFV

Last week, we saw the FCC filings; this week, AT&T gave details of its “roadmap to 5G”. Field trials are going to begin this year, in collaboration with Ericsson and Intel, and AT&T intends to feed back experience from them into the 3GPP standards process. Interestingly, although the FCC special authorisation provides for mobile, AT&T only refers to fixed-wireless in the press release. Re/code points out that AT&T has a considerable interest in, and a regulatory commitment to, replacing its rural copper with broadband wireless.

Much more interestingly, throughout the statement, they repeatedly link 5G, SDN, and NFV. This combination of new radio technology, cloud, and network virtualisation is the zone of disruption STL Partners identified in our May, 2015 Executive Briefing How 5G is Disrupting Cloud and Network Strategy Today. This week, we’ve issued a new Executive Briefing, AT&T: Fast Pivot to the NFV Future, which provides an in-depth update on AT&T’s cloud and NFV strategy and how far the transition has come on the way to 75% virtualisation by 2020. If we may be forgiven a spoiler: it’s going pretty well.

The New York Times profiles CEO Randall Stephenson’s brother Kevin, an AT&T lineman in Moore, Oklahoma, who got his kid brother a job with Southwestern Bell in 1982. It goes on from there to detail the consequences of the transition for hordes of AT&T workers, who are being encouraged to re-train. In much of the sprawling fixed network, surprisingly little has changed since divestment, and there is likely to be change ahead.

Wind River, the embedded Linux company Intel bought, has a new virtualised CPE product out. Virtual CPE is one of the highest priority topics across the NFV ecosystem, so this is quite a big deal.

Here’s a really outstanding interview with Red Hat chief technologist, Chris Wright, on the development of 5G. The very fact that Red Hat is contributing to a 3GPP standardisation tells us a lot about the increasing integration of 5G and the cloud.

5G’s ultra-low latency targets (the industry is discussing end-to-end latencies between services and service consumers on the order of 1ms round-trip) are the real challenge, though: It not only requires a new radio access technology, but the physical limits of speed-of-light mean that some services, including their compute and storage, will have to move closer to the users and their share of the latency budget will be much smaller than today. This means more decentralization and improvements in management and orchestration of infrastructure and workloads. We also need more work on further reducing response times of massively scalable distributed systems.

The vendor that has internalised this the most seems to be Nokia. How’s the quarter been. then? It’s the last one before ALU is consolidated, and here goes. Not bad; net sales were up 2.8% and operating-level income 46%. However, the core Networks business was actually down, as infrastructure spending in China slowed down (that doesn’t sound good!). The difference is made up by licensing revenue from Nokia Technologies, notably a patent payout from Samsung, and the sale of HERE to the German car makers.

Rajeev Suri brings the bad news, admitting that some jobs are duplicated and will go. Interestingly, he promised the French government that they wouldn’t be in France. He also says he wants to avoid the “internal politics” that resulted from the Siemens acquisition.

Meanwhile, Nokia launched Ava, a “cognitive services platform”. That seems to mean some sort of semi-automated network-management and customer-care setup. To be honest, we were on the embargoed briefing and we’re none the wiser. Perhaps the demo at MWC will make it a bit clearer.

And tiny Manx Telecom has moved all its fixed voice to a virtualised IMS, from Metaswitch. This is mostly interesting because its big brother O2 UK often tests new stuff there.

Exit VZ; AWS surge; Google, Qualcomm team up on ARM servers; Netflix’ last server; Akamai Q4

The cloud is an awfully crowded market. In the US enterprise space, Microsoft and Amazon Web Services are growing like crazy. Centurylink, having bought Savvis’ data centres, is now pulling out. AT&T’s Strategic Business Services line is doing great business. And Verizon is shutting down two of its cloud services, Public Cloud Reserved and Marketplace. Users have to move by April 12th before their data is “irrevocably deleted”, and VZ recommends they move to their Virtual Private Cloud product.

Last week, Facebook announced the shutdown of its PaaS offering, Parse. The Amazon Web Services Official Blog provides detailed instructions on how to move a wide range of projects out of Parse and into AWS. They’ll probably do the same for VZ cloud users…if there are enough to make it worth their while, which you might ask.

As we pointed out in this Executive Briefing, AWS is growing its revenue and also its margins.

Google may be helping Qualcomm develop a 64-bit ARM processor for data-centre applications. That’s a big deal - so far, servers have been a staple and hugely lucrative market for Intel x86 processors, because power consumption isn’t as brutally constrained as it is in mobile. Only a few weird pioneers like Free’s Scaleway have experimented with very densely packed racks of low-end ARM-based servers. It’s also a big deal because Google buys 300,000 CPUs a quarter. 100,000 a month. That’s a launch customer all on their own. And it’s bad news for Intel’s historic arch-enemy AMD, which is also working on an ARM server product.

Meanwhile, Google and Level(3) have renewed their peering agreements. This wouldn’t be news, but the terms have changed quite significantly. It used to be a traditional peering relationship, but now it’s a “bit-mile agreement”. This means it takes into account how far traffic is carried. In practice that might mean a shift from the default Internet “hot-potato routing” (X hands off traffic to Y as soon as possible) to “cold-potato” (X carries traffic as far as possible before handing off to Y).

Netflix has closed down its last dedicated server, as it completes its transition to 100% cloud. This is being described as moving the whole company to AWS, but that’s not true; as well as the IT running in the cloud, Netflix has a huge CDN infrastructure pushing the video out of the door.

Which brings us to Akamai. Q4 results are in. Profits were up 8% year-on-year for the quarter, 12% for the full year. Within that, their security products were the growth star, interestingly enough. The company is re-organising into two divisions, one for web, one for media.

And Cisco-owned cloud voice specialist Tropo is coming to Europe. Cisco itself says it’s yet to see any benefit from the Ericsson deal, but its profits were up substantially.

Comcast prepares to rock the Bells; TIM Brasil 4.5G; TurkTel CAPEX; EE Q4s; bidding on T-Mobile.nl

Comcast announced last week that gigabit cable is rolling out. Specifically, they’re going to hit the top 5 AT&T GigaPower markets first, as FierceTelecom points out here. And then they’re going after Verizon’s 9-state FiOS service area. Fight! Fight! According to the cable vendor, Arris, delivering this means pulling more distribution fibre and adding capacity at the head-ends. Of course, Comcast’s business Ethernet operation has been growing like crazy for some time, so that might not be much of a challenge.

This will certainly help - CableLabs and Cisco are working together on a virtualised CPE implementation for the cable world.

Not that the cableguys are going to have it all their own way. Google Fiber surged into Atlanta, and now Comcast is leafleting the city with the message “Don’t believe the hype”, emphasising their X1 set-top boxes, but as one recipient pointed out, very much not emphasising their usage cap. Centurylink, which had a reasonable quarter, is looking at trialling a cap.

Elsewhere, New York City is sceptical of the Altice-Cablevision deal and is lobbying against it. Verizon, Frontier, and Florida Power & Light are having a row about access to electricity poles. FP&L is threatening to tear down the lines, that VZ is selling to Frontier, if it doesn’t get what it wants. Louisville wants to let competing ISPs (read: Google Fiber) use city-owned and AT&T poles. Neither AT&T nor Time Warner Cable, also present, are in the least bit happy about that.

Verizon Wireless will be using SpiderCloud’s distributed antenna system to test LTE-U.

TIM Brasil is getting ready to launch LTE-A, specifically, 2-band carrier aggregation across the 1800 and 2600MHz bands. The carrier claims it’s now up to 59% coverage of the Brazilian urban population - a qualifier that speaks volumes - with 4G and 82% with 3G. They also say 70% of their traffic (although again, not their cell sites) is now on fibre backhaul.

Millicom’s opco Tigo Senegal is now up to 495 cells on 3G in 101 localities, while the Orange acquisition of Cellcom Liberia has been approved. Orange went on to snap up Millicom’s Tigo DRC.

ViaSat throws out a handful of announcements about its planned 100Mbps satellite service. Don’t ask about the latency.

Turk Telekom is investing $3.4bn in what it calls a “digital revolution”, which seems to be more FTTH. Their revenues are up 7% year-on-year.

EE’s revenue is flat, or up 1.1% when you ignore regulatory changes. They are now at 31.5m subscribers, and the installed base of M2M devices is growing 13% year-on-year - so flat revenue implies the M2M ARPU is truly awful. EBITDA is up, however, 12% year-on-year. 4G does seem to be good for your margins. Meanwhile, a Rootmetrics survey is in and it suggests EE was best on all the indicators except for “reliability”, which went to 3UK. 3UK actually came second overall, having placed a strong second for “Mobile Internet performance” and aced “reliability”.

BT says it’s demonstrated that the latency-sensitive “fronthaul” link in a C-RAN can work over copper using G.fast. Just because you can do it doesn’t necessarily mean you should.

Telefonica said it was going to spin out a towers company, and here it is.

And we’re down to two private equity bidders for T-Mobile Netherlands. Apparently the one headed by former Ziggo CEO Réne Obermann isn’t going to turn around and sell it to Ziggo parent Liberty Global. Apparently, even though mobile-cable integration works everywhere else and Tele2 NL is about to throw a Xavier Niel-style price disruption.

Terrifying Cisco, Microsoft security flaws; GSMA IoT advice; creepy ad company knows how you vote

Cor. If you’re a network engineer in a Cisco shop, this security advisory probably already destroyed your weekend. A specially crafted UDP packet is enough to force some Cisco machines to reboot, or as if that wasn’t bad enough, to execute arbitrary code. And where is the vulnerability? In the firewalls! Worse, the patch seems to cause weird side effects with some NAT configurations.

Once you’ve got that one under control, there’s a critical Microsoft Windows vuln out there that affects everything from Vista to Server 2016 Tech Preview 4. Attackers could trick you into clicking on a crafted Journal file to get full remote code execution. What else?

The GSMA has issued a 200-page manual on security considerations for IoT systems.

Ad company Dstillery claims it tracked tens of thousands of voters around the Iowa caucus. Because you vote by physically joining a caucus, that means it knows who they voted for. How did they do this? By piggy-backing on online advertising networks. No wonder Google changed its mind and cleared ad-blockers back into the Play Store.

Russian hackers discover how to reverse banking transactions, so they can withdraw unlimited amounts of cash.

A Massachusetts police officer tried to access a suspect’s iPhone with a view to destroying video evidence. He destroyed the evidence all right, by guessing the password wrong enough times that the phone automatically erased everything. Which of course also made it very, very obvious he tried to get in.

TSMC snags iBusiness; Error 53; Qualcomm; grim Q4 at Twitter, Tango, Rocket Internet

Korean news reports suggest that the applications processor in the next iPhone will be fabbed by TSMC, not Samsung. TSMC supposedly won the 10nm device, while Samsung concentrates on 14nm work for its own Exynos SoCs and Qualcomm, and researching 7nm for the iPhone after that.

Apple is being sued by users whose iGadgets are returning “Error 53”. Basically, the Secure Enclave chip in the iPhone periodically asks the touch sensor to cryptographically sign a message it then checks against some Apple-provided key material, in order to guarantee that it’s not been replaced by, say, a device that always responds “Yes”.

If it has in fact been replaced by another touch sensor, and the key hasn’t been updated, you’re out of luck. This typically happens if you had a third-party repair, because only Apple stores can update the key. That said, remember the story about the policeman above…

Qualcomm clears its pre-MWC announcement queue. They’re offering an LTE Pro modem, the X16, which is meant to be good for 1Gbps, plus a “wearables platform” based on the Snapdragon 2100, as well as three mid-market phone SoCs.

LG won’t be showing a payments system at MWC.

Here’s an interesting Google hardware project - a high-spec microcontroller that might be used in numbers to make a networking switch or a parallel computer.

Zyptonite is a voice app that wants to be like Skype when Skype was like Skype.

Twitter Q4s are in. They’re pretty awful; the company lost money in the quarter, although it was profitable for the full year, revenue is disappointing, and the user base actually shrank. Still, at least they remembered to rename “favourites”.

It’s the new Silicon Valley - unicorns making job cuts. Tango just slashed 20% of the work force, the second round of layoffs in three months.

On a similar theme, German super-VC Rocket Internet, famous for its global clones of US Internet brands, hasn’t been doing so well and the shares are sinking fast. At the beginning of February, it put a string of food delivery businesses in Spain, Italy, Mexico, and Brazil on the market. British competitor Just Eat took them for €150m. And what does Rocket do with the money? Buy back stock.

More specifically, the company issued a large sum in convertible bonds last summer, and now it’s buying them back. The idea is apparently that the possibility of them converting into shares is an overhang, but then, the break-even price for conversion is €47/share, Rocket floated at €42.50, and the shares are trading around €21. It’s as if they were more worried about the 3% cash coupon.

It’s not as if Rocket doesn’t have good ideas. Here they are with a venture to sell insurance in Africa with local Internet company, African Internet Group, and mobile operators Millicom and MTN.

1bn Indian subscribers; how Free Basics failed; Opera sold; Telenor, Softbank Q4s

One. Billion. Mobiles! Ovum reckons India is now the second country to pass a billion subscribers, although it doubts it will catch up with Chinese mobile broadband adoption, data usage, or ARPU any time soon.

In that light, this discussion of Facebook’s Free Basics and how it managed to alienate India is interesting. Facebook offered cheaper Facebook, but the Indians were more interested in building out more infrastructure and developing Indian Internet startups. It seems reasonable.

More detail of TRAI’s decision is here. Discrimination based on content is out, and so is zero-rating, with a fine set per day and an exception for grave emergencies (e.g. free Whatsapp during a flood).

A Chinese consortium is buying browser maker Opera for $1.2bn. You wonder whether the Opera Mini proxy will go behind the great firewall.

Here’s an interesting blog post on Chinese UX design.

Telenor finishes the year with 203 million subscribers, having gained 17 million in 2015, 6.6m of those in Q4. More than 50% of its revenue now comes from the six Asian networks. That said, they lost money in Q4 thanks to a writedown of the Danish opco after the Euregulators shot down the merger with TeliaSonera.

Softbank says its revenue is up 7.9% and Sprint is showing “signs of a turnaround”. All the shareholders could see was the $4.4bn buyback they’re offering - with negative interest rates, surely a bit of a no-brainer.

Opportunity: Oman’s third MNO.

Just thank your lucky stars you weren’t responsible for the “embarrassing human error” that brought down Telstra’s 2G, 3G, 4G, ADSL, and NBN services all at once.

RIP Ken Olsen

Ken Olsen, founder of Digital and creator of the iconic PDP/8, PDP/11, and VAX-series minicomputers, has left us. Well-known users of the PDPs included NASA, the young Bill Gates, the young Steves Jobs and Wozniak via the People’s Computer Company, the young Werner Vogels, Bell Labs digital switching, the early ARPANET, and most of all, tens of thousands of enterprises which computerised for the first time. The Soviet computer industry even copied them. Even if Ken did say that:

“The personal computer will fall flat on its face in business”


Forecasting makes fools of us all.

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February 11, 2016

What To Expect at MWC 2016

It’s that time again. We’re off to Barcelona next week for Mobile World Congress 2016 (and there’s a partner discount code below too if you’re looking for a last minute deal). 

Last year we outlined why we think the Congress holds an abiding interest. This year, the strapline is ‘Mobile is Everything’, and there are all the big telco and vendor guns you might expect on the podium, plus Mark Zuckerberg is back, and there’s a fair spread of speakers from commerce and industry too, such as Mercedes, Mastercard, Paypal, WPP and GE. The reason for this is of course that mobile commerce and the Internet of Things are becoming even hotter topics as the industry steps up its search for new business models.

So what is the Telco 2.0 team expecting from this year’s show? We will of course bring you back our in-depth analysis, but for now here’s what we’re looking out for.

1. The Gigabit Race

Vendors and operators have been vying all year to outdo each others’ speed records. This has been going on in the lab, in trials, and in the field. Claims of outlandish theoretical maximum data rates are nothing new in wireless, but let’s take Tele2 Netherlands’ new 4G network as an example. They’re shooting for 375Mbps, but the telling detail is that if they had more spectrum, like the competing Vodafone OpCo, they could go much higher. Observed speeds from sites like OpenSignal are always sobering in this light, but their top performers are already well past DSL speeds and threatening lower-tier cable packages. Between 5G and 802.11ac Wave-2, the primary access network is going to be wireless; the question is whether the backhaul is fibre to a cell site, or co-ax to a WLAN router.

Expect a lot of announcements, some of which might even be honest. And don’t forget that the faster the network gets, the less pageload time comes from data transfer as opposed to latency. Which brings us to….

2. The Cloud is the Network is the Cloud

If the latency targets in 5G are going to be worth the effort - and it’s going to be gigantic - apps and services will have to migrate towards the network edge to take full advantage. This might yet give mobile operators another roll of the dice in cloud, hosting, and infrastructure services. After 5G, we expect NFV to be Top Buzzword this year - but look out for literally every vendor of anything that could be described as software splattering it all over the same old products. (Also, watch for billing systems companies suddenly being “Big Data” or “Analytics”.) Announcements about Mobile Edge Computing will be worth watching, as will the regulatory ones floating down the hill from the ministerial sessions…hold on, it’s not down the hill any more, is it?

3. Silicon Wars

The last couple of years have been a bit…dare we say it…dull when it comes to devices. On the one hand, there’s Apple and its A-series chips. On the other, there’s Samsung and everyone else with the latest Qualcomm Snapdragons. But now things are hotting up.

Samsung dramatised this by binning the Snapdragon 810 from the Galaxy S6 devices, ironically for hotting up far too literally. Instead, Samsung turned to its own in-house Exynos SoCs. Since then, Qualcomm has been desperate to break back in with a completely new architecture, codenamed Kryo (heat was obviously on everyone’s mind). Perhaps that’s why Qualcomm is getting the Snapdragon 820s fabbed on the same 14nm process at Samsung as the Exynos. Huawei is easing itself into the game by making its own RF modems. Intel hasn’t given up, and has a new mobile x86 line out. And there’s a wild card, with Imagination Technologies bringing back the MIPS architecture. Meanwhile, at the low-end, there is new ARM intellectual property available, Intel’s Skylake chips are finally here for the laptops, and IBM and partners are pushing OpenPOWER8 hard for server applications.

Chip wars tend to bring out the creativity in the rest of the industry, so it’s going to be interesting to see how much of this gets traction and what we do with it.

4. The Internet of (Terrible) Things

Expect even more hype than usual about the Internet of Things. There’s a standards war to fight here, between a couple of different flavours of LTE, an IoT-optimised version of GSM, and several different long-range, low-power radio technologies. There’s also a fight for the future applications platform, with a whole range of players nervously eyeing Amazon Web Services and IBM. And the silicon vendors are pushing hard for market share. The names are slightly different - Freescale is a much bigger player - but Qualcomm recently announced a special platform for connected cars. Not coincidentally, connected cars seem to be the only segment in the IoT that’s unambiguously profitable.

5. Ambiguous Angst

Beyond the serious stuff, though, there’s also a steady flow of terrible ideas coming out of Silicon Valley, driven by chips that are cheap as chips and easy to program, venture capital that’s also pretty cheap and desperate for a home, and a large pool of general-purpose software developers. There’s a decent chance of a major shakeout here in 2016, perhaps catalysed by regulatory or political events that might themselves be cued in by a really big security/privacy disaster - we’ve already had the baby monitors that leak pictures of your kids and the French dam whose controls are exposed on Shodan. And while all this is going on, the online advertising sector is in full-on crisis…with one exception, Google.

Commodity prices are tanking and there’s been a massive sell-off in shares, especially banks. Meanwhile, money is flooding out of China. Both Apple and Samsung have cut back their orders into the supply chain. On the other hand, even European telcos are beginning to see some growth, and the industry is in investment mode. The US price war, though, rages on with no end in sight, and it’s even beginning to eat into VZW’s margins. How scared should we be?

6. A Good Old-Fashioned Net Neutrality Row

And then there’s the combination of T-Mobile USA’s Binge On!, Verizon Wireless’s FreeBee sponsored data product, and Facebook’s Free Basics (deceased, but still walking). The net-neutrality debate, it turns out, is not over, but rather has been reframed around zero-rating rather than throttling. And the effect of net-neutrality legislation has been to make the issue more political than ever. The Indian debate over Free Basics took in a huge range of issues, from the fate of Indian startups to the development of Indian infrastructure. We expect this to be a major theme of MWC.


See you in Barcelona… and as we’re proud to be partners with the GSMA again this year, why not take advantage of our special 15% discount - click on the link here to register and take advantage of (use code OSPT1572).

mwc_300X250_Static.jpg

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AT&T: Fast Pivot to the NFV Future

We’ve published a new research paper, AT&T: Fast Pivot to the NFV Future.

In 2014, AT&T launched its Domain 2.0 Programme to virtualise 75% of its network functions by 2020. So how is it going, and what are the lessons for others on the complex journey to the virtualised / agile Telco 2.0 digital vision?

This report is part of the Telco 2.0 Transformation Stream, Future of the Network Stream, and Cloud and Enterprise ICT Stream and you can read an except of the report here.

For more information on any of our services, please email contact@telco2.net or call +44 207 247 5003.

Extract chart from the report:

Thumbnail image for ATT-NFV-thumbnail.png

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February 8, 2016

5G, Vodafone, Comcast Q4s, APAC: Telco 2.0 News Review

5G - AT&T goes next; LTE-U trials get the go; Nokia, Ericsson pre-MWCs; VF Turkey just misses the gig

The race to get 5G into the field is picking up, with the 2020 deadline moving forward to 2018 and perhaps even sooner. We knew the Korean carriers were shooting for 2018, but now TeliaSonera has joined them, Verizon Wireless is promising a trial this year, and now AT&T has applied for a licence to test 5G technology around Austin, Texas during the next three years. The operator wants to use four frequency bands ranging from 3.4GHz to 27.5GHz and to test both fixed and mobile stations. The motivation seems to be that they want to have some testing data in hand to inform the standards process. You can download the document here.

It wasn’t that long ago that AT&T’s Glenn Lurie rubbished the VZW project at last year’s CTIA. Now they’re getting up off the wall.

Meanwhile, the FCC has granted permission for VZW to test LTE-U at two locations between now and the 30th of July. VZW will use a mixture of macrocells and residential femtos, and the 5GHz unlicensed element will be downlink-only. This has brought about a predictable salvo of regulatory letters from the WiFi industry, which is still deeply suspicious of LTE-U.

FCC CTO Julius Knapp blogs that any further tests would still require a further, case-by-case authorisation from the FCC and that any devices put on the market will need to pass FCC lab tests. Interestingly, his blog post mentions a draft testing plan prepared by the FCC and the WiFi Alliance to settle the question of whether LTE-U will coexist with WiFi - perhaps the test campaign is connected? Another possibility would be running the subtly different LTE-LAA technology favoured in Europe. Qualcomm says it trialled LTE-LAA with Deutsche Telekom. Again, the source document is available here.

Nokia Networks has given details of its planned MWC feature dump for LTE Advanced and Advanced-Pro, although we’re aware of a major announcement they’re saving up for the night. Ericsson has similarly been briefing out its planned announcements, again promising more speed.

According to OpenSignal, the United States has some of the best levels of LTE coverage in the world, but “only” speeds of around 10Mbps, compared to 37Mbps in Singapore. That said, the 3G/4G transition is usually a 10x improvement in latency, so 81% coverage of the whole United States is quite an achievement even at 10Mbps. Also according to OpenSignal, T-Mobile is the pick of the US carriers, not least because it’s not neglecting the 3G network while building out the 4G. VZW won for coverage, Sprint (surprisingly) for latency, and T-Mobile for outright speed.

Here’s a bit of detail on VZW’s investment in 4G capacity around the Super Bowl site - 16 new macrocells, 75 small cells, a distributed antenna system inside the stadium itself, 14 cells on wheels, and 37 sites getting an additional carrier. That apparently cost $70m.

Goodbye, Sprint/Clearwire WiMAX.

A report reckons 100m gigabit homes by 2020. At this rate you might wonder whether the mobile industry might manage to shift that.  Vodafone Turkey, for example, just hit 942.5Mbps in a trial with four aggregated frequency bands, 800/1800/2100/2600MHz. As VF has those pretty much throughout its European footprint, you can see the potential to move quickly.

They must be kicking themselves about the missing 81.5Mbps (or 57.5 if we stretch a point and let them use marketer’s maths) though. We’re not angry with you; we’re disappointed, as all our scariest schoolteachers used to say. Perhaps you just didn’t want it enough.

Vodafone Q4s; Liberty Global talks back on; KPN Q4s; US price war moves into prepaid

Vodafone, meanwhile, announced its Q4 results. The headline is that service revenue was, kinda sorta, on an organic basis, normalised for currency movements, if you screw your eyes up funny…up. Specifically, up 1.4% year-on-year at £9.2bn, the sixth successive quarter of improvement. Or down, 6.3%, on a reported basis. Revenue from the African, Middle Eastern, and Asia-Pacific segment was up 6.5%, while Europe was still down but only by a hair, 0.6%, compared to 1% in the previous quarter. Project Spring is apparently 92% complete, although we note they’ve stopped giving a number for fibre backhaul.

Meanwhile, the talks are back on with Liberty Global, which might be interested in creating a joint venture in the Netherlands, where Liberty Global owns the No.1 cable operator and Vodafone has a mobile network. This will of course re-open the mothballed Vodafone/Virgin rumour mill. As a knock-on effect, T-Mobile.nl is now likely to go to a financial investor.

The Euregulators have cleared Liberty’s acquisition of BASE in Belgium.

KPN managed to push its net profits up in 2015, while revenues and operating-level profits slid quite ominously. Revenue was off 5.2%. The problem can be summed up by the fact mobile revenue was up 3.9% and EBITDA 42%, while the business services division’s revenue was down 8.9%.

Orange CEO Stéphane Richard says he expects talks with Bouygues to continue until March.

Verizon Wireless doesn’t usually care much about prepaid, but now they’re having a crack - the $45/mo bundle goes from 1 to 2GB and the $60 from 3 to 5. Still relatively pricey; Sprint/Virgin Mobile USA will sell you 4GB for $40 and 6GB for $60, and throw in their music streaming product, after last quarter saw them lose 491k prepaid customers.

T-Mobile, however, is still determined to be the price leader. If you can find three other people to club together, you can get unlimited data (well, 23GB/mo before they apply a speed restriction) for $150/mo, or $37.50 each. On the conservative assumption that the 23GB limit applies per account, not per line, that’s considerably cheaper than Sprint and vastly cheaper than VZW. If it’s per line, there’s no comparison.

Virgin Media CEO: 3UK/O2 is great. 3UK vs OFCOM. Openreach, meet the builders.

Here’s a surprise. Virgin Media CEO Tom Mockridge comes out in favour of the 3UK/O2 deal. This is being read as meaning he might be interested in assets the combined company would have to hive off to get regulatory clearance, perhaps upgrading VMED’s mobile product from an MVNO on EE’s network (that is to say, BT’s, which is to say, Virgin’s biggest competitor) to a light MNO.

3UK, or rather, Hutchison responded to OFCOM director Sharon White’s open letter this week, with an open letter from MD Canning Fok. In the letter, Fok complains about White supposedly going public without giving them an opportunity to complain earlier, and goes on to make three commitments - not to raise prices for five years, to invest £5bn CAPEX over 5 years, and to sell “fractional shared ownership in its network capacity”.

The first is simple enough, but as Vodafone CEO Vittorio Colao rather dryly pointed out, prices are falling, so granting yourself a price freeze isn’t much of a concession. The obvious question about the second is whether that’s over and above 3UK and O2’s existing joint CAPEX spend. £5bn is a big number, but it would be fairer to describe it as £1bn/year for five years. 3UK spent £141m in the 6 months to July 2015, so the increment is significant.

And the third sounds designed to pre-empt any move by the Euregulators to make them disgorge spectrum or infrastructure to a new 4th MNO, by offering rivals a minority interest instead.  Meanwhile, 3UK has scrapped its £15 unlimited One Plan, and many of the customers who’ve still got one will see their bills double. That’ll do the ARPU some good, but you can see why they’d be annoyed.

The British business lobby, specifically the manufacturers’ lobby EEF, is not happy with BT Openreach.

The government, meanwhile, has a deal with Openreach and the House Builders’ Federation that should make sure new construction gets “superfast broadband” installed during construction, while it’s easy. ThinkBroadband discusses it in some detail. The (not particularly informative) release is here.

Britain does not come out of the OpenSignal numbers at all well.

Vodafone India 4G; 2nd biggest smartphone base; Free Basics banned; Jas Mobile might miss the kickoff

Vodafone India has set dates for its 4G launch in Mumbai and Bangalore - Wednesday and Thursday respectively, after they switched on service in New Delhi last week.

India now has the second-biggest installed base of smartphones, with 220 million in use, just barely more than the US. That puts penetration at 30%, solidly in the mass adoption phase. Not surprisingly, this is an attractive prospect, and there are now 150 distinct brands of device on the market. Samsung is the market leader, with Indian manufacturers Intex and Lava in 2nd and 3rd place. 

Here’s a profile of Intex CEO Narendra Balsal, who started off delivering cordless phones and later started selling Ethernet NICs and computer peripherals like keyboards. Interestingly, he reduced his reliance on distributors for the phone business; you tend to think they are crucial in places like India.

The controversy over Facebook’s Free Basics (Internet.org as was) zero-rating scheme has come to a head, and the Indian regulator TRAI has simply banned it.

Google’s Project Loon, meanwhile, has a new partner - the government of Sri Lanka, which just bought a 25% stake in the element that covers the country. Google and the state are forming a joint venture, and they intend to sell 10% of the shares to local MNOs.

Jas Mobile, the green field 4G network in Thailand, is apparently struggling to make the down payment on the 900MHz block it won at their auction last month. The bill is $2.1bn. Jas must pay a first instalment, and provide proof of funds over the rest, by the 21st March or hand back the licence. The plan was to borrow from Bangkok Bank, but the bank’s CEO says they still haven’t decided whether or not to release the money. Their competitor, True Corp, hasn’t found this a problem - Siam Commercial Bank has agreed to front the first instalment, and they are preparing to raise the rest as equity from a rights issue.

In Australia, the three MNOs plus enterprise telco TPG have acquired 1800MHz spectrum in an auction that raised $396m for the state. Optus (aka Singtel) was the biggest spender.

Japan Display is struggling, as Apple trimmed its orders and Samsung’s AMOLED technology competes. Lenovo had a poorish Q4 although at least the PC business, which you might think was vulnerable to a slowdown, was steady.

And Singtel is planning a 10Gbps FTTH service with XG-PON technology. It’s not cheap.

Comcast Q4: DOCSIS 3.1 is go for launch, Business Svcs up 19%, even TV is net-adding

Comcast will be rolling DOCSIS 3.1 out during the rest of the year. The operator already has 18 million homes passed with 2Gbps fibre, but look for explosive growth in coverage as the cable network gets upgraded. Atlanta and Nashville go first, followed by Chicago, Detroit, and Miami.

Meanwhile, the Business Services division continued its run of success. Revenue was up 19% in Q4 at $1.3bn, and the new large enterprise subsegment has already gained 20 customers. And the TV segment, which has been gradually shrinking for years, actually gained 89k net-adds in the quarter.

Comcast management attribute this to better segmentation and targeting, although another reason might be that US unemployment is under 5% and wages are rising at last. Industry-wide, pay-TV subscriptions are up even though FiOS TV gains at Verizon ground to a halt and DirecTV gains are barely enough to make up for mass desertion from AT&T U-Verse.

Overall, Comcast reported Q4 revenue up 8.3% and operating cashflow up 7.7%. Out of that, cable revenue was up 5.9% and ARPU was up 3.5% at $145/mo, with margins about 40.4%. In this light, it’s no surprise that AT&T is rolling out more fibre, again. 21 communities in and around Chicago, Dallas, Atlanta, and Miami will be added to the existing deployment target.

Bell Canada says it hopes to have 3 million homes on 1Gbps service by the year-end, and to drop FTTN for FTTH as far as possible to strip out OPEX. What with all this investment, it’s no surprise Adtran is growing.

Here come three more Google Fiber markets, and something new: Google Fiber Voice.

Google Q4s - $3.6bn of trainsets, profits up 29%; Yahoo! up for sale; Cisco buys Jasper; Imagination CEO out

Google, sorry, Alphabet results dropped too late to get into last week’s review, so here goes. Absolutely no surprise that basically all the money came from ads, perhaps some surprise there was so much - Google revenues were up 18% year-on-year for Q4, and operating profit was up 29% at $6.7bn, or 13% and 23.3% respectively for the full year. This influx of money then gets spent; all the other stuff, aka Other Bets, lost $3.6bn in the full year, compared to $1.9bn the year before. Other Bets has some revenue of its own, $448m of it, so the total call on Google’s profits was closer to $3.2bn or about half.

Google Fiber is getting through a fair bit of CAPEX, $869m in 2015, as it rolls out its network. However, it also contributes most of Other Bets’ revenue. Meanwhile, Google itself spent $8.85bn on CAPEX in the full year - that’s a lot of data centres, and CFO Ruth Porat also pointed out that by no means all Google’s R&D has been transferred into Other Bets. An example: Seesaw is a Linux-based load balancer for hyperscale applications, which Google just released as open-source software.

LinkedIn, meanwhile, has started manufacturing its own data centre switches.

Yahoo! is up for sale again.

Cisco acquires Jasper Wireless, the long-standing M2M platform currently deployed with 27 MNOs, for $1.4bn. They intend to roll their existing M2M/IoT activities into it. Something that’s not at all clear is how this will affect the Cisco/Ericsson partnership - Cisco just became a very serious competitor to its partner’s IoT business, while between them, the two vendors have just become a much more dominant force in the IoT.

Bouygues has created a new subsidiary, Obgenious, to market its LoRA network.

After a profit warning and a dreadful Q4, Imagination Technologies says goodbye to the CEO, Sir Hossein Yassaie.

Mozilla is shutting down Firefox OS and “concentrating on the Internet of Things”, which sounds like they’ve been knocked out of the FA Cup.

GoPro told the markets to expect a horrible Q4, and it turned out even worse.

Reaction to Facebook’s closure of Parse, from High Scalability.

WhatsApp breaks one billion users. Twitter wants to move to an algorithmically-curated feed and nobody else does.

Publisher Usborne has released its iconic 1980s coding books for kids as free downloads. I had the Introduction to Computer Programming one. That said, we were raised tough in those days: Machine Code for Beginners, anyone?

The Internet Archive’s project to preserve old software in a JavaScript emulator has been highly praised, but this is even cooler. They’ve created a museum of the viruses they found infecting the old websites.

Anti-trust may start watching the concentration ratio of data

This is interesting. If two companies who both own a huge quantity of data merge, is that a move towards monopoly even if they don’t sell the data? The head of Germany’s anti-trust agency thinks it is, and importantly, it looks like European commissioner Margarethe Vestager does too. One to watch.

The EU and the US have signed a provisional agreement on the transfer of personal data, replacing the previous Safe Harbor deal that was struck down by the courts. The new one includes provisions for transparency and regular inspections, and requires the parties to review the agreement regularly.

Meanwhile, the US and Britain are negotiating about the terms under which British cops could access US telecoms data. The Americans seem a little surprised just how authoritarian we can be.

Euregulators want to hand the whole 700MHz band to mobile.

T-Mobile USA is complaining that the FCC should “tread lightly” in investigating Binge On!, after various people filed papers arguing that it’s not net-neutral. The horse, meanwhile, is out of the stable and galloping off down the road - Verizon Wireless just zero-rated its go90 video app, and did so as part of its FreeBee sponsored data program, just for extra controversy.

It looks like T-Mo’s 464XLAT technology, which helps IPv4-only apps work on their IPv6 network, is buggy. T-Mobile recently pushed out an update deploying it to Apple iProducts, and now apps that use UDP streaming, notably Facetime, don’t work although they do over a VPN. Alternatively, maybe the Binge On! proxy is misbehaving? That doesn’t do UDP either.

Narendra Bansal
Narendra Bansal
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February 3, 2016

Digital Partnering: Success Factors and AT&T Drive Case Study

We’ve published a new research paper, Digital Partnering: Success Factors and AT&T Drive Case StudyPartnering is a key competence for building telco digital services offerings, but many past attempts have failed. So what does it take to succeed? In this briefing we review viable strategies, key success factors and barriers, and profile the highly effective approach used in AT&T’s Drive Ecosystem.

This report is part of the Telco 2.0 Transformation stream and you can read an except of the report here.

For more information on any of our services, please email contact@telco2.net or call +44 207 247 5003.

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digital partnering fig 3.png

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February 1, 2016

Q4 Results Special: Telco 2.0 News Review

Q4 Results Watch: Apple, Facebook, Ericsson, Alphabet, Xiaomi

Apple Q4s are out and, as usual, they broke records - Apple’s revenue has never been higher and neither has its profits. With $75.9bn in revenue and a gross margin of 40%, you might expect everyone to be happy. But nothing is more characteristic of Apple than perfectionism, except perhaps bevelled corners. Apple’s guidance for Q2 is between $50bn and $53bn, and if the out-turn is towards the lower end, it will actually be lower than Q2 2015, the first drop in Apple revenues in 10 years.

Part of the story here is that the first half of 2015 was driven skywards by Apple’s triumph with the iPhone 6 and 6S. There is no such big new product at the moment, so you’d expect some reversion to the mean. That said, Apple could legitimately start to worry about the iPad line, as its sales were off 25% year-on-year even with the iPad Pro and Mini 4 to push. Interestingly, as ZDNet points out here, sales of services and software were very strong and Apple executives have been talking up the importance of this business and the opportunity represented by the installed base.

Not, of course, that they’re going to give up on hardware.

9to5Mac has the key rumour, which promises a new 4-inch iPhone backporting the new stuff from the 6/6S, a new iPad Air, and some new Watches. The launch event is expected in the week of 14th March.

A less cheery gloss on the results would be this story. Strategy Analytics reckons world smartphone shipments grew 6% in Q4 2015, the slowest rate ever, having slowed in each quarter. We may all be running out of customers.

Xiaomi looks like it might be a pressure point if that’s the case - having repeatedly revised their shipments target down, and missed it, they’ve also missed their services revenue target by about 44%, $563m rather than a billion.

Qualcomm’s Q4 was frankly bleak; shipments are down 10%, and the distribution is skewed to the high-end, as revenue was off 19% and net income 24%. Oh, and $100m of revenue is frozen due to a dispute with LG.

Ericsson’s sales were down 1% on a comparable basis, but net income was up 68%; the answer is that they received a large payout from Apple under their patent settlement.

Despite all this, Samsung is promising that it will increase shipments and margins. Its own Q4 showed a slight reduction in smartphone shipments, a 4% drop in Mobile Communications segment revenue, but an increase of 13.8% in the segment’s net income. They blamed an inventory adjustment for the drop in shipments, for what it’s worth. The Galaxy S7, meanwhile, leaked.

Both Microsoft and Sony are shuffling and looking at the door. Windows Phone shipments are down to 4.5m, and the company just isn’t talking about them. At the same time, Sony says it’s taken a strategic decision not to pursue scale in the smartphone business.

However, they’re certainly not turning their back on mobile. Sony just acquired Altair, a maker of LTE modems and developer of one of the new low-power LTE profiles aimed at the Internet of Things market.

Jolla says it will deliver the 600-ish tablets crowdfunders paid for in advance and then stop. Here’s an interesting gadget: Asus’s ZenFone Zoom has the world’s thinnest optical zoom, and an Intel Atom CPU.

Having bounced off with its effort at a smartphone, Amazon is trying a different tack, trying to get more deeply integrated into Android vendors’ software.

Juniper Networks rounds off 2015 with revenue up 20%, chiefly on North American and APAC telco and cloud spending.

Facebook was next in the financial reporting diary tent, and there was really nothing to complain about: revenue is up 57%, of which 80% is mobile advertising, and the operating margin has gone from 29% to 44% in a year. CAPEX is running around $690m/qtr, but then, free cash flow is $2bn/qtr. Here’s another way to look at it - that’s a global ARPU of $3.73/quarter, $1.24/mo. The global average obscures a lot of variance. North American users generate about $4.5/mo, a respectable emerging market carrier number, but APAC is closer to 53 US cents/mo. The driver here is just the level of ad spending - Facebook’s ad sales in Europe are precisely half what they are in North America.

Everyone was waiting for the first set of Alphabet results, but they still hadn’t landed as we prepared this News Review. Reuters previews the show here. Here’s some detail about the flying Internet robot project - it seems to be 28GHz 5G based on a drone, which requires a complex phased-array antenna to get the range, which further requires a lot of power, but the drone is meant to be solar-powered…meanwhile, here’s a completely crazy story about the proliferation of fake locksmiths and how far they will go to fool the Google. No wonder they employ a thousand ad-scrubbers.

And finally, the problem with wearables is that people don’t wear them.

Strong prepaid Q4 for AT&T; the churn mystery; Sprint Q4, and another cunning plan

It’s Q4 time for the carriers, too. AT&T reported a positively T-Massive quarter, with 2.2m net-adds. Breaking this down, they had 526k post-paid net-adds, or a third of VZW’s, they consolidated the Mexican operation’s 593k net-adds into the total, and the Cricket Wireless prepaid brand claimed 469k net adds, a big swing from the 67k net loss in Q4 2014. 

Both consumer mobility and the mobile segment of Business Solutions saw revenues declining - this was hardly significant at Business, but consumer was off 8.1%, suggesting that the secret to the net-adds triumph was discounting. AT&T has been trying hard to create a strong prepaid smartphone offer around the $45 price point with Cricket, and one suspects this involves discounting the devices heavily. That said, they seem to be benefiting from the “LTE margin boost”, with service margin of 46%.

Although DirecTV scored 214k net-adds, that wasn’t enough to make up for the 240k net-losses spilling out of U-Verse TV. That said, the acquisition certainly makes the new Entertainment division look stronger - it made $1.5bn on revenue of $13bn in the quarter, compared to a $296m loss a year ago (notional, as the division didn’t exist).

Strategic services are now at $2.8bn in revenue and still growing 10% annually, with margins in the Business Solutions division up to 35%, while the residential division is net-adding broadband subscribers again, 192k in Q4. This is a significant turnaround, as AT&T’s FTTC net-adds usually weren’t enough to compensate for net-losses from the DSL user base to cable. It’s probably why the company is now thinking about extending the FTTH build beyond the planned 14 million homes. Although they are carefully not talking about financials in the residential wireline segment, the Internet service ARPU has started to rise significantly since the FTTH build began.

Verizon, meanwhile, seems to be concerned by its FiOS subscriber numbers. Net adds were 99k versus 145k a year ago, and they have no plans to roll out further. As a result, they’re offering a 100Mbps symmetric product for $69/mo in a bid to get more in-fill, which puts their 100Mbps pricing very close to AT&T and Google’s gigabit pricing. Embarrassingly close. Anyway, their fixed-line results are in - like AT&T, their TV product is struggling, with only 20k net-adds and 35% penetration, but that said, FiOS revenues are up 6.8% and margins are strong.

Sprint reported 491k net-adds for Q4. That broke down to 501k postpaid net-adds, of which 366k were phones and hence primary accounts, 481k wholesale net-adds, and a 491k net-loss in prepaid. That gives them an epic 5.8% prepaid churn rate, up from an already troublesome 3.9% in 2014. Churn in the States is weird at the moment; everyone is reporting postpaid churn numbers that are strong and getting better, but at the same time they’re also reporting millions of net-adds. Either the regionals and MVNOs are getting hammered again, or something’s up with the data.

Revenue is still falling, by 10% year-on-year for the third successive quarter. Service ARPU in postpaid is coming down just as fast, while prepaid ARPU is actually up - which would help if they weren’t spilling prepaid customers at a rate of knots. The less bad news is that they have managed to cut $3bn of OPEX, so the loss has come down from $2.4bn in Q4 2014 to $836m for Q4 2015. The OPEX saving, in practice, looks like this. Sprint has laid 2,500 staff off, while at the same time posting 1,300 new jobs. Most of this churn is concentrated in sales, especially the old RadioShack estate.

Last week we discussed their latest scheme to fix the network. There’s an interesting discussion of it here, suggesting that it involves lots of small cells, microwave backhaul, and some very, very tall macro sites located on public sector land.

This last bit is probably a regulatory strategy where Sprint might claim to be a fixed-line CLEC rather than a CMRS provider like all the other wireless operators, triggering open access obligations. There is likely to be opposition to this, and after the DISH spectrum caper one might imagine Lawman Wheeler taking a careful look.

CEO Marcelo Claure responded to the story by denouncing Re/Code’s coverage, while also quietly confirming most of it (notably the very, very tall towers and the microwave backhaul). Sprint certainly is trying to get a regulatory break of some sort - check out this story, in which it lobbies the FCC to get a price cut on backhaul links it uses under special access. FierceWireless points out that there are plenty of other dark fibre providers beyond the big two.

And there’s a new clever idea: after the special-purpose vehicle for leased phones, meet the SPV for network equipment. Hocking the network is meant to find $5bn in 2016, or enough to cover the accrued loss for the year at current rates, but what happens after that? This Businessweek piece interviews Claure and others but doesn’t tell us much more than they’re hoping the 2.5GHz comes good in the end.

Telcos join Open Compute; Facebook kills off Parse; PaaS shakeout; Microsoft Q2s

Open Compute Project, the open-source initiative led by Facebook to standardise data-centre hardware, has started work on telco/NFV gear. AT&T, Deutsche Telekom, EE, SK Telecom, and Verizon are the first operators to sign up, while Nokia Networks is saying that it might use the designs in its Airframe line of edge computing servers. Not surprisingly, it seems to be AT&T that’s pushing this one.

Starting in 2013, Facebook made a major effort to become the host of choice for mobile apps’ back-end servers with its Parse PaaS. Not any more; they’ve announced that the service is closing down, giving developers a year to move their stuff, and releasing their implementation of Parse as open-source software for the ones who want to self-host rather than rewrite the client apps.

It was probably a bad sign for Parse when Facebook started recommending Heroku as a solution. Interestingly, the Salesforce-owned PaaS is also the lifeboat of choice for apps fleeing dotCloud. VentureBeat makes the point that the PaaS sector seems to be shaking out - arguably a sufficiently strong IaaS will always beat a PaaS.

Microsoft, meanwhile, just gets cloudier and cloudier. Q2 results beat the spread and it was very noticeable that all the growth is coming from Office 365, MS Azure, and Dynamics CRM.

T-Mobile spins Binge On!; Nokia LTE Broadcast trials; FCC vs. STBs; patenting the word “react”

T-Mobile USA has shared some detail about its controversial Binge On! zero-rating. One of the services it covers has seen a 79% surge in daily viewers, while four more video sources have joined (Amazon Video, Fox News, Univision NOW, and WWE Network). They’re also now offering a shortcode to opt out of the service. Clearly, T-Mo is trying to manage the controversy better than it did when it declared war on the EFF - as well as pushing the service’s popularity (the 79%), and making it easier to opt out (the shortcode), they also claim a non-Binge On! video source saw 33% more traffic, presumably because users had more data allowance left.

Buzz continues that AT&T will try some sort of broadcast/broadband integration.

Nokia Networks talks up the results of its big LTE Broadcast trial in Munich. They argue that low-power 700MHz is optimal.

Lawman Wheeler wants open set-top boxes. He points out that while Moore’s law drove the price of everything electronic down, the rental fees for STBs remained suspiciously steady. The cablecos don’t want any of this and they allege he’s in cahoots with Google.

Interestingly, the Nokia trial we mentioned above claims it demonstrated you can use a smartphone to receive the LTE Broadcast TV signal and cast it onto any TV that happens by, which would incidentally render STBs obsolete.

And this is ironic: a pair of YouTube microcelebs decided to do something very un-millenial and try to copyright the word “react” and the broad concept of filming a reaction shot. It didn’t work.

OFCOM turns against 3UK/O2; Free.uk? TeliaSonera CAPEX; BT Q4; smart meters aren’t

OFCOM director Sharon White has written to the European Commission asking it to block the 3UK/O2 deal. She argues that it would drive up prices, disadvantage independent retailers and MVNOs, and disturb the infrastructure-sharing setup. She specifically takes sides between the “bigger operators for investment” and “competition for investment” schools of thought. The letter is here.

Rumours keep swirling about a possible Xavier Niel project in the UK, usually assuming that the regulator forces 3UK/O2 to sell substantial assets. Sharon White mentioned recreating a fourth network as one solution, albeit an expensive one. Is that who she’s thinking of?

O2 UK claims 90% of its planning applications in London are refused.

TeliaSonera says its current CAPEX cycle will peak in 2016 at around $1.7bn. It better had, as they’re still losing money. TDC, for its part, says its revenues are up but its EBITDA is sliding. As a result, they intend to “leverage” the 4G network, start an MVNO in Norway, and upgrade the cable network. Specifically, that means Huawei will deploy 1Gbps DOCSIS 3.1 throughout its Danish co-ax assets. In Germany, meanwhile, LibertyGlobal opco Unitymedia is upgrading to 400Mbps.

BT says its revenue is up 4.7% in Q4, and profits are up 14%. It’s the best result in 7 years, and BT celebrated by announcing its post-EE merger structure. There will be 6 business units - one each for fixed and mobile in each of the consumer, enterprise, and wholesale segments.

After the revelation that the EE-run emergency services network won’t work in the tube, they’re now saying it will or at least that the old system will be maintained until it does.

Here’s a really crushing assessment of the UK smart metering programme.

Bharti Airtel Q4; Idea 4G; NTT 9Ms; KT, Nokia LTE-M; South African OTT lobbying row

Bharti Airtel’s Q4s are in, and it looks like they’re winning the Indian 4G race so far. Revenue was up 3.7%, while data revenue rose 51% year-on-year, users 30%, and traffic 73%. On the other hand, voice ARPU fell 13%, and net income was off 22% thanks to the CAPEX bill.

Airtel is also planning to buy unused 2.3GHz spectrum off Aircel.

Meanwhile, Idea Cellular turned up 4G in Bangalore.

NTT DoCoMo is looking pretty solid - revenue up 1.7% for the first 9 months, net income up 29%, and they’re planning to add a lot more LTE-A sites, pushing peak speeds towards 375Mbps.

KT and Nokia Networks claim the first field trial of LTE-M.

And South Africa’s top two MNOs want the government to tax OTT apps - third operator Cell C, however, thinks they’re great.

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