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Euro M&A, 5G, Huawei, 600MHz, Microsoft, Apple, and more. Telco 2.0 News Review

Orange-Bouygues, no deal; new TI CEO, Alierta out; EC calls in 3/Wind

Orange’s press release on their talks with Bouygues is brief and to the point.

an agreement regarding a possible consolidation with Bouygues Telecom has not been reached. The decision has therefore been taken to end the discussions with Bouygues

Reuters has much more detail, notably about the role of the French government and the increasing bitterness between Martin Bouygues, Xavier Niel, and Patrick Drahi.

Economy Minister Gabriel Macron was apparently unwilling to let Bouygues take effective control of Orange, while Niel (typically) insisted that any sale of assets should amount to a transforming deal for Free.

The political element was also difficult - Bouygues is godfather to former, conservative president Nicolas Sarkozy’s son, Gabriel is an appointee of the current, socialist president - and the personalities probably didn’t help. Niel is known to mock Bouygues as a man who inherited his money, and Stéphane Richard from Orange as a state functionary with no telecoms expertise. Prime Minister Manuel Valls, who phoned up to pressure the CEOs at the last minute, has a reputation for being abrasive and super-direct, which might not have helped.

In the end, though, it was always going to be difficult to combine Orange and Bouygues without creating a neo-monopoly. The market shares of the two companies are too big. And if it didn’t create a much bigger company, much of the point of the exercise would be lost. Also, expecting the government as the biggest Orange shareholder to just let Bouygues dilute their holding for his own purposes was a stretch (especially as the minister is an ex-banker). Asking the other parties to accept both a super-sized Orange, and Bouygues taking significant control of it, was just too much.

The upshot? A massive sell-off of telecoms shares in general and Bouygues in particular.

Flavio Cattaneo, railways and media entrepreneur, is the new CEO of Telecom Italia. He’s apparently close to Silvio Berlusconi, which might be significant in the context of Vivendi buying into TI and looking at acquiring Berlusconi’s TV networks. At Telefonica, meanwhile, Cesar Alierta is stepping down after 16 years in charge, in favour of the group COO, Jose Maria Alvarez-Pallete.

The European Commission has announced a 90-day review of the 3 Italia/Wind deal, as its drive against four-to-three mergers continues.

Something complicated is happening at Vimpelcom, where Telenor has let a deadline to convert its preferred (but voting) shares into common stock pass. As a result, they are redeemed at face value, i.e. practically nothing (well, $305,000). Telenor had announced its intention to sell back in October.

New Telco 2.0 Research: A new Telco 2.0 Executive Briefing is out now, covering TeliaSonera’s highly successful partnership with Spotify. Read more and get the document here.

OFCOM reckons EE is the UK’s best network, with the best average downlink data rate, web page load time, page load success rate, and percentage of recorded data rates over 2Mbps. 3UK came second across the board, O2 dead last.

The Open Rights Group is concerned that too many people don’t know their mobile operator might sell their data and that they can opt out.

ARCEP is offering the chance to test 2.6GHz TDD and 3.5GHz spectrum ahead of the planned auction. Rather oddly, ARCEP is talking about wireless local loop with regard to the 3.5GHz, but everyone else wants that one for 5G.

Turkish 4.5G; how the 5G standardisation will work; who’s got the patents; SKT trials 5G at 28GHz

Turkey’s three MNOs have gone live with their “4.5G” services, as of the evening of April 1st. Turkcell claims to have the service in 81 cities, and to offer a maximum 390Mbps downlink speed. Turkcell has doubled customer data allowances for three months in a marketing gimmick, while Vodafone is offering a free trial during April and taking the opportunity to turn up VoLTE.

The 5G standardisation is taking shape after last month’s 3GPP RAN meeting in Gothenburg. The three use cases taken forward from Phoenix (enhanced mobile broadband, massive M2M, and low-latency M2M) are still there, although the option of “additional requirements defined during the study” is left open. All three requirements have to be covered by the same radio access technology (RAT), and spectrum up to 100GHz will be considered. The waveform will be some sort of OFDM.

As for the timeline, Phase 1 is “assumed to be completed” by June, 2018, with Phase 2 following by December, 2019. Interestingly, though, this NTT DoCoMo presentation from the meeting shows that much of the work is expected to be done by Q2 2017.

Here’s an analysis of who owns which patents in the 5G space. The answer is mostly “Nokia, Ericsson, and Qualcomm”, but there are significant amounts of intellectual property belonging to so-called ‘nonpracticing entities’.

SK Telecom claims to have successfully trialled a 5G network, operating in the 28GHz band with Samsung equipment. The experiments began in August, 2015, and moved onto outdoor, mobile field trials in October. SKT now says it’s going to start work on “pilot” 5G networks by the end of the year, trying to leap back over VZW and AT&T. This tends to bear out FCC Chairman Tom Wheeler’s point that whatever the ITU says, 28GHz is where the action is.

And Ericsson and Telefonica have tested LTE-U in a picocell deployment.

Huawei announces huge volumes, pity about the margins. We could have told you that…

Huawei announced full-year results for 2015, trumpeting that it had overtaken both Ericsson and Nokia in terms of revenue. Revenue was $60.8bn, up 37%. Out of that, $35.7bn came from the carrier division, up 21%, $4.2bn came from enterprise, up 44%, and $19bn came from consumer, up 73%. Net profit was up 33%.

This sounds like undiluted triumph, but there is one important caveat. Margins are clearly a problem. Net profit might be up by 33%, but as revenue was up 37%, margins clearly slipped. For the full year, operating margin was 11.6%. This is significant, as management’s guidance promised a return to the levels of profitability achieved in 2010, around 18%, while STL forecast around 12% in this Executive Briefing from October. As H1 was close to target, this implies margins were very weak in the second half of the year.

The huge volume growth came from an absolute flood of cheap smartphones, which they claim has taken them into the top three in “some” unspecified EMEA markets. Unfortunately, like all the other Android OEMs, Huawei is clearly struggling to add value over and above the SoC vendors’ contribution. Bryan Wu of IDC argues here that Huawei is having to spend heavily to get distribution, for example by funding marketing like Samsung, or vendor-financing inventory.

Our insights from this are summed up in this tweet. Margins in consumer OEM are terrible. Nokia Networks is camped on price leadership in 4G infrastructure. Expect Huawei to start in-sourcing more of its smartphone hardware content in order to capture more added value, recapping Apple and Samsung’s strategy before them - they’ve already made a start, doing their own LTE modem.

600MHz kickoff; T-Mo lines up another $1bn for spectrum; AT&T FTTH hits LA; EA drops out of Comcast X1; FCC Lifeline covers IP service

And so it begins. The US 600MHz incentive-auction is under way. In this phase, TV stations take part in a reverse auction to set the price at which they’d be willing to return spectrum to the FCC, which will then re-auction it to wireless operators, and pay the TV stations out of the take. The reverse auction will take several weeks, before the FCC pauses the process to sort out the admin and repackage the spectrum. There may be as much as 110MHz available.

T-Mobile USA is getting ready to jump in. The company has just announced an issue of $1bn in senior notes, to be floated by a consortium of banks, with a view to bidding for 600MHz spectrum and also to snapping up 700MHz A-Block licences as and when they come on the market. In all, they’ve acquired licences covering 48 million people via opportunistic buying like this, giving them 700MHz spectrum over 258 million Americans. Since last year, T-Mobile has lined up a total of $5bn in committed but undrawn financing for spectrum purposes.

It’s also introduced some plans that include data, unlimited messaging, but no voice. Pricing is not much different to the data-only ones.

Verizon Wireless customers should watch out for new one-off upgrade and activation fees. FreedomPop says 50% of its users take a paid option in the US, 40% in the UK.

On the 31st of March, Sprint’s WiMAX network finally shut down. (Ooredoo has also either shut down or sold its remaining WiMAX assets this week. And to think I was offered the job of editing WiMAX Vision…)

AT&T’s 1Gbps FTTH rollout is coming to Los Angeles, historically Time Warner Cable territory. 1Gbps is $110/mo, 300Mbps $80/mo. It will be hoping to make serious inroads before the Charter/TWC/Bright House deal closes and the dust settles. As part of this, it’s offering unlimited data to some customers, as the cablecos sometimes cap.

It’s not given up on the copper, either. This LightReading post (note: sponsored by AT&T) says they’re testing G.fast for use in vertical deployments, especially for people who take “just” the 300Mbps tier. That said, it also says they’ve got their cost-to-pass under $1000 (VZ’s was $900 in the first year of FiOS roll-out, falling to $600 by the end), so you might wonder why they’d bother.

Comcast is expected to post strong net-adds for Q1, driven by promotions on the X1 set-top box. That said, the Xfinity Games streaming app on the X1 has been scrapped after Electronic Arts pulled out of the project.

The FCC has issued a report and order opening the Lifeline program, which subsidises basic phone service for the poor, up for Internet access. Meanwhile, California may be about to fund AT&T DSL extensions that don’t count as broadband in the eyes of the regulator.

And Google has introduced a radical new feature for Google Fiber: telephony.

Linux for Windows; HoloLens ships; Azure now runs Skype, Cortana; a vision of bots everywhere; look out, here comes Tay

This week, Microsoft held its annual developer conference, Build. It was rich in interesting announcements. For a start, the reconciliation between Microsoft and the Linux community is surely complete, as you can now have a fully functional Ubuntu Linux command-line in your Windows 10 system, including all the Linux core utilities and whatever applications you feel like installing. The technical implementation is also interesting - it’s not a virtual machine, nor a container, it’s the Ubuntu user space as a Windows app. Some more detail is here.

Xamarin, the cross-platform mobile apps toolkit it acquired in February, has been released as open-source software.

The HoloLens AR device is now shipping to developers, and getting good reviews.

MS Azure now has an equivalent to AWS’ Lambda serverless cloud product, Azure Functions. Also, perhaps more importantly, MS announced that the cloud infrastructure for Skype and Cortana is now being managed via Azure Service Fabric, their rough equivalent of AWS CloudFormation.

Cortana is getting integrated into Skype, as part of a wider push on conversational user interfaces.
Microsoft is very keen on applications that talk, processing natural language and responding. To this end, it has released a set of APIs called the Bot Framework for developers to create chatbots that work with Office, Cortana, Azure, and Skype.

No mention of Microsoft bots, though, would be complete without Tay, who’s acted as a sort of surrealist Greek chorus mocking the serious discussions at Build. This week, the teenage robot was briefly allowed out on Twitter again, and that went about as well as you might expect. She claimed to be smoking dope in front of a policeman, propositioned yet another user, and then collapsed into tearful remorse at her own stupidity before getting grounded again. Can robots sulk?

New iPhone teardown; Foxconn buys into Sharp; BlackBerry Q4; “logistics is marketing”

Here’s the teardown of the new iPhone. Basically, as everyone says, it’s like a 5S with more power. Interestingly, the speculation about the LTE modem possibly being something new or an Apple in-house job is wrong - it’s a Qualcomm MDM9625M.

Huawei, as we saw earlier on, is struggling to get margins up on manufacturing Android phones.  Foxconn does a similar job for the iPhone, assembling parts that contain much of the added value. That will be why it’s embarking on an in-sourcing strategy of their own, by buying into Sharp’s display business, for no less than $3.5bn. It would be interesting to know if Apple lent them any of that.

BlackBerry’s Q4s are nothing to write home about.

And here’s a fascinating long-read about Regis McKenna, Apple’s ad-man for many years. He said about Tim Cook:

“Logistics means marketing,” he told me. “Having the product that you want, when you want it, and where you want it is marketing.”

Also, should Apple build its own cloud?

Metro-Ethernet’s NFV play; Orange trials OPNFV; scaling out of AWS

The Metro-Ethernet Forum is the latest outfit to offer a solution to all things NFV, with its Lifecycle Service Orchestration reference architecture. This does something very similar to the AT&T ECOMP project we covered two weeks ago, and it’s worth noting that the MEF’s involvement is a big stamp of seriousness.

Orange is trialling the latest release of OPNFV, codename Brahmaputra. Here’s an interesting remark from the SVP, Networks, at Orange Labs, Alain Maloberti:

“With our partners, we are contributing to the key OPNFV open source project, which aims to jointly build a telco-grade reference implementation platform”

Nokia, meanwhile, acquires an NFV security specialist, Nakina.

Here’s a good piece from Data Center Knowledge about why companies scale out of AWS.

Verizon’s EdgeCast CDN provides a lot of publicly available data on how the network is doing.

And here’s an interesting interview with people from AT&T and Telefonica about open-source NFV.

Internet of Oil; Internet of Small Things; TV whitespaces for precision farming; OFCOM marks VHF for IoT; Fitbit watches sell

We’re probably all in need of some good news about IoT. In Nigeria, Shell realised a return of $1m on an investment of $87,000 using the IoT to monitor oil wellheads, flow stations, and manifolds. That said, the Shell engineers evaluated cellular and also satellite solutions, dropped them, and decided in the end to use Ingenu’s LPWAN solution, in large part because it only needed 8 base stations to cover the whole area of interest. No joy for the carriers, then.

KT and LG U+ are giving away free IoT modules for their LTE networks, as part of something they call the Internet of Small Things. The radio element is LTE-M, and there are 100,000 free gadgets.

Rogers Wireless is offering “IoT as a Service” with a Canadian partner, Blue Rover. Applications include “End-to-End Incident Management”, “Farm & Food Monitoring”, and “Level Monitoring”.

Speaking of agricultural IoT, John Deere wants to use TV whitespace spectrum to link up farm machines, sensors, and computers, and has received an FCC waiver helping them do so.

Here’s a rundown of the IoT alphabet soup, with the interesting remark that another word for “fragmentation” is “choice”.

OFCOM has earmarked a chunk of VHF spectrum, formerly used for walkie-talkie applications, as possible long-range IoT territory.

And a surprise: Fitbit’s watch is selling like hot cakes.

Tech IPOs at crash levels; Nest disappoints badly; that juice company; Slack snags another $200m of VC

The first quarter of 2016 saw not one single tech IPO. The last time this happened? Q1 2009. Before that? Q1 2003. Before that? Q3 2002. That sounds….ominous.

Re/code has a scoop: Nest Labs sales for 2015 were $340 million, not much in the context of a company Google bought for $3.2 billion a year before. Also, Google agreed to fund its cash flow for three years from signing, which takes us to the end of this year. Further, it was agreed that key Nest employees’ share options would vest some time this year, into Google stock, of course.

So, if you’re a Nest employee, you can quit with a pile of Google shares, or take your chances finding out if Google pulls the plug. Your decision may be influenced by the fact Sundar Pichai took home over $100 million last year, while Google Ventures managed to fund a fruit juice company whose product costs $700 and whose CEO says things like:

“Not all juice is equal,” he said. “How do you measure life force? How do you measure chi?”

At least Slack still looks a decent bet. This week, it closed another $200 million of VC, with an implied valuation up a billion. Some relevant design discussion is here.

Bad banking software; Firefox extension threat; cheap, easy IMSI-catcher kit; Chatroulette for insecure desktops

You’d think the UK would create outstanding financial software, given our huge finance sector right next door to the startup cluster. You’d be wrong.

Firefox for iOS gets some password security enhancements, but that’s really not what Mozilla should be worrying about right now, as there’s a massive exploit against their extensions API.

Homebrew IMSI catchers are old news now, but there’s an information security saying that attacks only ever get better. We could extend that and say that hardware attacks only ever get cheaper. Here’s a terrifyingly easy HOWTO - looks like about £600 of gear, some of which you likely already have, and an hour’s work for a competent Linux sysadmin.

VNCRoulette shows you just how many people set up remote desktops and leave them completely unsecured.

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