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3UK/O2, APAC Special, Google Cloud, European M&A, Apple: Telco 2.0 News Review

3UK/O2 - Wholesale 30% of O3 capacity, or leave O2 independent?

The 3UK/O2 deal just gets more interesting. Hutchison apparently proposed to offer as much as 30% of the combined network’s capacity as wholesale for MVNOs, and sell its 50% stake in Tesco Mobile to the eponymous supermarket. It also suggested offering a strategic partner a long-term MVNO agreement, perhaps rather like the national roaming agreement between Orange and Free Mobile. The Financial Times reckons the partner is Sky, but it could equally be TalkTalk or Virgin Media.

OFCOM, meanwhile, issued an econometric study comparing prices between 3-operator and 4-operator markets, with a special focus on the presence of “disruptive” operators. Not surprisingly, going from 4 to 3 operators tends to mean prices go up. Interestingly, though, the presence of a disruptive operator has an impact on prices of similar size. As OFCOM considers 3UK to be disruptive, it follows that they expect a really substantial price hike if we both move down to 3 operators, and lose a disruptor. Get the document here. Also, the Austrian regulator reckons the 3 Austria-Orange merger led to some smartphone tariffs going up over 50 per cent.

Li Ka-shing’s company tends to love a deal, and the more complicated the better. This one will be no different - they’re already thinking about selling a piece of the business to an outside investor. Their finance director, Frank Sixt, says they’d be looking for someone to take 10-20 per cent of O2. Obviously this would mean they wouldn’t need to raise as much cash themselves. But they also seem to think it would help from a regulatory point of view if O2 UK wasn’t consolidated in the books, but rather run on as an autonomous firm. Surely OFCOM, or the Euregulators, would see through that?

Canning Fok, joint managing director of CK Hutchison (i.e. the new top-level holding company), meanwhile says 3UK stopped being a price disruptor in 2014. They certainly chose to can their unlimited data plans, and you can see why, as average data traffic per user has reached 5GB/month. It’s numbers time, and 3 Group Europe reported subscriber growth of 4%, service ARPU up 5% year-on-year at €18.14/mo, and EBITDA up 12%. The Hong Kong and South-East Asian businesses were pretty strong too.

(No surprises there - 3UK did very well in our 4G Global Rollout Analysis Executive Briefing.)

Three out of the four UK MNOs approve of the government’s plans to reform the electronic communications code. Oddly, no word from Vodafone. Meanwhile, the idea of setting a 10Mbps universal service obligation, as announced by the prime minister, has mysteriously vanished from the government budget.

China Mobile FY, 4G numbers, flushes 3G sites; China Unicom numbers; MyRepublic countdown ticks on; Elop @ Telstra

China Mobile spent 2015 adding 4G subscribers at a ferocious pace, going from 90 million to 312 million LTE subscribers in 12 months. At the same time, the overall subscriber base is still growing, up 2.4%. They hope to reach 500 million 4G lines this year, which would mean about the same growth rate. The upshot of this is data traffic up 143%, and their revenues crossing over from majority-voice to majority-data. Overall, net profit was down 0.6% while revenue was up 2.6%, so there’s just the faintest hint of margin erosion.

China Unicom, though, is doing it tough. The user base is shrinking, by 5.4% in the year. Mobile service revenue was off 8%, and net profits 12%. Voice is down to 31% of total revenue, but unlike China Mobile, they measure these things including SMS, so this doesn’t imply they’re winning themselves to death with data. The simplest explanation is that customers want 4G and are churning to China Mobile to get it - CMCC is about 37-38% 4G by customers, Unicom about 17.5%.

The challenge of keeping up with the market leader is daunting. China Mobile finished 2015 with 1.1m eNode-Bs in service, having installed 290,000 of them in 12 months. They expect to add as many again in 2016.

Their motivation in this forced march to 4G is pretty clear from this story - the authoritative Chinese magazine Caixin quotes a CMCC employee in Jiangsu saying that there is an “irreversible trend” of closing down 3G infrastructure, although the executives they asked on the record denied it. The problem is that they can’t criticise the decision to impose the TD-SCDMA technology on China Mobile publicly. But they can scrap it and replace it with Nokia kit as quickly as possible, especially in the light of the top-level political push for more broadband.

Of course, the more cynical could let lower-level managers in their provincial OpCos make the decision for them and take the fall if it all goes wrong.

Lenovo is restructuring, and has let Rick Osterloh go as head of the Motorola Mobility unit.

Xavier Niel’s MyRepublic has signed up for a $128m loan from Goldman Sachs and DBS ahead of the bidding for the 4th Singaporean MNO licence. Worth noting that the spectrum allocation will be at least a 60MHz virtual carrier, i.e. what Nokia Networks reckons is the minimum for a gigabit LTE service.

In Thailand, market leader AIS is trying to turn off 900MHz GSM and it’s a struggle.

Telstra has decided it needs someone to take on a combined CTO and strategy role, rather like John Donovan’s at AT&T. The new hire is…Stephen Elop, formerly Nokia’s CEO. Meanwhile, the operator had its second massive outage in six weeks.

And Softbank will start selling electricity.

Sprint: rebrand? 300Mbps demo, wireless backhaul. YouTube joins Binge On!

Softbank, of course, owns Sprint, even if its commitment to them has started to look a bit faint these days. It’s suggested here that Sprint ought to rebrand - what about “Softbank USA”? - and emphasise the improvements in its network.

They’re having a go - this week, they demonstrated 300Mbps 3xCA LTE with a Samsung S7.

As usual, they took the opportunity to talk up the 2.5GHz spectrum block. A comment by CFO Tarek Robbiati suggests they might end up using it for wireless backhaul in support of their small cells, and apparently Softbank has been using an Airspan Networks multipoint wireless backhaul solution in Japan. However, Robbiati also said:

“Priority No. 1 is cost takeout,” Robbiati said at the Deutsche Bank conference. “No. 2 is cost takeout, No. 3 is cost takeout. In case you haven’t heard it, the top priority is cost takeout.”

T-Mobile USA has come to an agreement with YouTube, and YouTube videos will now flow under its Binge On! zero-rating program. It looks like T-Mo will flag requests under Binge On!, and YouTube will selectively serve the content in a format that complies with T-Mo’s requirements. Therefore, everyone ought to be happy - YouTube gets to control how it transcodes video content into the required format, and the users can always opt out if they so wish (there’s now a shortcode to turn it on or off).

Meanwhile, Verizon beats AT&T to the first Cuban interconnect now sanctions are lifted.

Google wins Apple cloud business; DTAG Open Cloud opens; ONOS v6 launches, with AT&T CORD; AT&T’s new service platform

This could be an iconic moment for the cloud: Google wins Apple’s cloud business off Amazon Web Services. Well, about half of it, but it’s $400-600 million, and it’s Apple. (If you’ve got a GMail address, you can try their service out free here.)

The last couple of weeks have been difficult at AWS. As well as Apple, Spotify has taken its business over to Google, and Dropbox has scaled out of the cloud altogether, moving into its own data centres.

Deutsche Telekom’s Huawei-powered Open Telekom Cloud is open for business, and it has its first client: CERN, no less.

The sixth release of ONOS is here, which integrates it into the broader Open Platform for NFV (OPNFV) infrastructure. It also upstreams the AT&T CORD (Central Office Re-Architected as a Data centre) work into ONOS itself. CORD itself is expanding, with mobile infrastructure features being demonstrated at the Open Networking Summit this week.

AT&T, meanwhile, announced another new target - 80% of their applications to move into the cloud by the end of 2016 - and further announced their new ECOMP orchestration-and-management solution. This is the project all the AT&T/Mirantis work on the OpenStack Fuel modules is supporting. The whitepaper is here.

Our new Executive Briefing on Telefonica’s NFV and cloud strategy is out now

Metaswitch and Genband are suing each other.

Cable merger edges closer; Comcast DOCSIS 3.1 is live, $70/mo; upgrades coming to Europe; PTel shutting down copper

We’re getting close to signing off the Charter/TWC/Bright House merger, at last. Chairman Wheeler is expected to circulate the FCC draft report & order to the other commissioners any moment now. (There’s a good profile of “Lawman” Wheeler here.) It apparently includes restrictions on some programming contracts and measures to promote high-speed broadband. After that, all they need is anti-trust clearance from the Justice Department and a final tick in the box from the California state Public Utilities Commission.

Comcast, meanwhile, is going to put DOCSIS 3.1 gigabit cable in production in Atlanta. The service will cost $70/mo (aligning with AT&T GigaPower, other cablecos, and Google Fiber) if you’re willing to commit to a three-year contract. Their business services division, meanwhile, is offering direct peering with AWS for its Ethernet customers.

Ovum reckons European high-speed broadband takeup is going to surge ahead, although there’s no sign of anything like the recent surge of US fibre builds. (Mediacom plans to pass 3m homes with gigabit service; here’s an all-new fibre overbuilder that’s actually trademarked “scary-fast Internet”.)

This might help. In France, Altice is going to start upgrading SFR customers to DOCSIS 3.1 using Arris’ new Converged Edge Router. They also say they won’t be making any more acquisitions this year. Adtran, meanwhile, claims it has trials running of the new XGS-PON standard, which provides multiple 10Gbps wavelengths over GPON fibre.

Benoit Felten points out that telcos deploying FTTH need a strategy to shut down the copper network, like Portugal Telecom is doing.

Ironically, AT&T wants more information from other telcos about where they have fibre, ducts, and poles under the FCC inquiry into special access. Partly this is regulatory trolling, but they are doing a lot of FTTH roll-outs…

They’re also, interestingly, launching an ads exchange for their TV products.

Comcast hires HP IoT boss; SKT, Swisscom deploy LoRa; Orange IoT announcements; horrible IoT experience

An interesting hire, meanwhile, at Comcast. Sridhar Solur, who ran HP’s IoT and wearables businesses, is joining as SVP, Xfinity Home and IoT Products. He reports to the EVP and Chief Product Officer for Cable and joins the product leadership team.

SKT is going to build a national LPWAN, and it’s going with LoRa, having secured regulatory approval to use the 900MHz band and let devices transmit at up to 200 mW. You can see the attraction - it’s going to spend some $84m to get national LoRa coverage, peanuts by telco standards.

Swisscom is deploying a national LPWAN, and it’s LoRA.

Orange made a clutch of IoT announcements, saying that they expect to cover the first 17 French cities with LoRa by mid-2016. They’ve also offered 5,000 employees “connected lamps”. These flip the usual IoT model - rather than being devices that use the network, they’re devices that provide network connectivity for others.

Here’s an Apple Watch app for your robotic lawnmower.

Another dreadful user report on Samsung SmartThings.

TI CEO out, FY results; Orange-Bouygues inch towards a deal; Yoigo up for sale

During the previous week, Vivendi upped its stake in Telecom Italia to just under the mark where it would have to mount an official takeover bid. Now they’ve used it - CEO Marco Patuano is gone. He wanted to keep TIM Brasil, they wanted to sell it. There’s no word yet on the status of the €18bn CAPEX plan he unveiled last week.

There are, however, full-year results. The company is profitable, although the out-turn was down quite a bit on the previous year. However, the result attributable to shareholders is much worse, a tax loss, due to a decision to buy back a substantial quantity of the company’s bonds.

Deeper down, the Italian business is still just about shrinking year-on-year, but it’s growing sequentially. Consumer mobile revenues are up, marginally. TIM Brasil, however, is being battered by the Brazilian economic downturn. Although TI booked €328m from selling 85% of its towers, it also had to book a €240m writedown on the unit’s value.

Elsewhere, Orange and Bouygues are close to a deal. Apparently, SFR will pay €4bn for some Bouygues assets - Telecoms.com says the subscribers, Telegeography doesn’t say - and Free will pay €2bn for some more. Telecoms.com says Free will take network assets. Orange pays €4bn for the rest - maybe the spectrum?

German super-MVNO and ISP Freenet is buying a 23% stake in Swiss MNO Sunrise.

TeliaSonera is in exclusive negotiations with Zegona Communications, a London-listed company, about selling them Yoigo, their Spanish OpCo. Zegona seems to be a pure acquisitions vehicle run by ex-Virgin Media execs - a statement from them confirms the talks and says the reverse-takeover rules require them to suspend their shares.

Günther Oettinger says he wants Europe to “lead in 5G”. Inside 5G explains why this is nonsense.

New iPhone, iPad, CareKit; PlayStation VR; 275m insecure Androids; Google says goodbye to the giant robot

Of course, there was an Apple product event. The heavily trailed iPhone 5SE landed, although it’s just an iPhone SE without the number. It looks very much like the iPhone 5, in terms of form factor and industrial design, but it gets both the A9 CPU and M9 sensor co-processor. Pricing starts at $399, making it the cheapest iPhone ever by some distance. It gets 4K video support and a 12 megapixel camera (better than most of the iPads).

The compromise to fit the A9 SoC and the new camera in a smaller gadget and a much lower price seems to be that it doesn’t have the full range of LTE carrier aggregation that the 6S does, implying that it has a different modem and RF chain. Is it possible Apple homebrewed one?

There’s also a new iPad, basically an iPad Pro in the original 9.7” form factor with some new accessories like a USB-to-Ethernet adaptor, a substantial update to tvOS, and a cheaper entry-level Watch. Perhaps the most interesting announcement was CareKit, a toolkit for medical devices and apps, which is being released into open source, a rare but usually significant move for Apple.

Cryptographer Matthew Green has discovered a zero-day exploit that permits the decryption of iMessages.

Janus Friis’s startup, Wire, has added end-to-end encrypted video calling to its app. It sounds like Friis has decided to invent Skype, again.

Nokia announced that they’re looking for one-minute VR experiences to promote the Ozo camera. Content is obviously a big hurdle for VR/AR hardware. Sony’s PlayStation VR peripheral is priced to go, while they’re also looking at a refresh of the PS4 with more poke.

There’s a new implementation of the Stagefright exploit of Android about, and 275 million devices are at risk.

Make sure you get your Kindle software update or you might have to side-load new firmware.

The hacker responsible for the “Celebgate” disclosure of vast quantities of naked celeb photos has pleaded guilty. The hack turns out to be quite boring - far from discovering an iCloud exploit, he just sent out phishing e-mails claiming to come from Microsoft or Google and waited for the passwords to roll in.

Facebook says ad exchanges are stuffed with worthless cruft and malware, don’t bother with them.

How do different virtual assistants cope if you’re suicidal? Microsoft’s Cortana turns out best, which is interesting when you remember she is also programmed to holler back at creeps.

And Google has admitted that you’re not getting a self-driving car any time soon. They’ve also put the giant dog robot up for sale. It looks like the new financial reporting structure is focusing minds.

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