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Euregulators, WiFi, Google, Apple R&D, Alibaba, 5G: Telco 2.0 News Review

Euregulators nix 3UK/O2, probe DTAG vectoring; OFCOM consults on 160MHz more WiFi

Rewheel’s latest report points out that there is a drastic disparity in data pricing within Europe, and it’s between the markets with three or fewer operators, and the rest. In three-operator Germany, Vodafone users get 1GB of data for the same money, €35/mo, that gets Vodafone users in the four-operator UK 20GB. Typical data bundles in Holland doubled at the same price point after Tele2 launched the fourth 4G network. And France, once the dearest and least competitive market in Europe, is now the second-cheapest, powered by Free Mobile’s price-slashing.


It’s no surprise, then, that the European Commission has announced its veto on the 3UK/O2 deal.

This immediately started the horses running on who else might take O2 UK off Telefonica’s hands - perhaps Liberty Global, via Virgin Media, or else maybe the durable industry figure Tom Alexander with backing from private equity funds? A Virgin-O2 merger would be a fearsome mobile/cable powerhouse, and it would also link the UK’s two infrastructure alliances and start all kinds of regulatory complexity.

Vimpelcom says it’s confident that the 3 Italia/Wind deal is going ahead, but you certainly wouldn’t bet on it now that the regulators have drawn a very clear line on four-to-three MNO mergers. The Zegona bid for Yoigo seems to be back on after the bidder found some funding - they may have bid as much as €600m this time.

Swiss operator Sunrise reported a strong Q1, with more subscribers, EBITDA, and profitability. So did Bouygues, where sales were up 6 per cent, EBITDA margin is stable at 25%, and the net loss is down to €33m. Iliad is planning to launch operators in the French overseas territories - their economies are notorious for pricey, monopolistic retail sectors, so hold tight for disruption.

European regulators are looking into DTAG’s plans to deploy a lot more vectoring DSL, on the grounds that it is likely to lock out competitors.

In the UK, meanwhile, a coalition of ISPs and mobile operators has started a fresh lobbying drive to demand the independence of Openreach from BT. TalkTalk’s surge of subscriber gains has gone into reverse, caught between last month’s security disasters and the challenge from BT’s massive football spending. Virgin Media added 70k net broadband subs in Q1. And BT Wholesale has started to make “naked”, i.e. no phone service, FTTC available.

OFCOM has opened a consultation on finding two more 80MHz channels for WiFi in the 5GHz band. 3UK has discovered that its VoLTE users sometimes roam accidentally, which causes their calls to be billed as data, to their delight and 3UK’s horror.

Three more Telenor execs have resigned over the Vimpelcom corruption affair. Meanwhile, their Grameenphone operation in Bangladesh is doing superbly well. Telecom Italia, however, can’t say that about TIM Brasil, whose revenues crashed by 36%. It has also, finally, put in a bid for Metroweb, valuing the company at €820m.

Google under pressure; Android share gains; Apple R&D spend surges; Buffett bids for Yahoo!

Those Euregulators are busy. Having killed off 3UK/O2, they’re also looking at imposing a truly enormous fine on Google, as much as €3bn, for pushing organic search results down below its adverts. Meanwhile, the US Federal Trade Commission is seeking more information on the workings of Google Search, with a view to re-opening its own investigation. And it turns out the collaboration between the Deep Mind research group and five London hospitals is quite possibly illegal - neither the Royal Free Hospital, nor Google, have applied for approval from a research ethics committee, nor have they registered the app as a medical device. And Google engineers are having to explain to the court in Oracle vs. Google what an API is.

Google Lawyer is going to be in demand, as is Google Lobbyist.

On the other hand, there’s good news from the Android ecosystem, where market share has increased sharply as Windows Phone slides beneath the waves and the Samsung S7s sell like hot cakes. And here’s something interesting: Google has released its natural-language processing technology as open-source software. That’s the sort of thing that used to give Google its aura of techy cool.

That said, the same report that says Android is gaining share says four of the top five apps belong to Facebook. Rather, one of them is WhatsApp and the rest all are different versions of Facebook itself. Here’s an interesting long read about how Facebook’s Internet.org/Free Basics project failed in India. Note the involvement of former FCC chairman Kevin J. Martin, now a telecoms lobbyist.

Speaking of India and problems of cultural communication, here’s Marc Andreesen making a fool of himself.

Here’s something interesting: Apple’s spending on R&D has surged dramatically, both in absolute terms and as a percentage of revenue.


Does this mean they’re planning something big? Like a car? Well, perhaps, although we’d point out that they kept ramping up spending after the iPhone launch, as they brought more and more of its value-added in house. Anyway, why speculate? Here’s the next story. Apple just invested $1bn in a Chinese ride-hailing app.

Meanwhile, Chinese smartphone makers are struggling precisely because of rising incomes and cheaper iPhones. The Foxconn acquisition of Sharp is back on after the Japanese banks agreed to go easy on Sharp’s pile of debt. The Apple Music-ate-my-MP3s crisis turns out to be a bug in iTunes. There are those who would say a multi-billion R&D budget might only just be enough to sort iTunes out.

Why are music startups so fragile? Not surprisingly, it’s the licensing costs. It’s still somewhat surprising to realise just how exceptional Last.fm was in making a successful exit with $280m of CBS money. Sadly, it’s since joined Friends Reunited and Psion/Symbian among British startups who did it all, first, and paid the price.

HTC is burning cash at a fearsome rate and flogging any assets it can find to do it. Here’s a bear case on Cisco.

Another buyer is in for Yahoo!, and to everyone’s surprise it’s Warren Buffett, who wants to take the whole firm. He also just bought a boatload of Apple stock.

Big Tech really likes “adjusted” financial reporting:

Inevitably, non-GAAP figures are diverging ever further from accounting reality. In a study of 380 S&P 500 companies, the Analyst’s Accounting Observer calculated that their “adjusted” net income rose 6.6 per cent to $804bn last year. It sounds great until you discover that under GAAP precisely the opposite was happening. Net income at those same companies actually declined almost 11 per cent to $562bn — a full 30 per cent less.

AMD has signed a deal to licence its technology in China, which could mean a surge of revenue from the server/data centre market. Also, their new PC chip, Zen, is coming later this year.

Alibaba/Softbank’s cloud partnership; AWS invests in submarine cables; beyond containers; transit prices

In the cloud business this week, Alibaba.com and Softbank have started a project to push cloud computing for Japanese businesses. In China, cloud services are a fast-growing line of business for Alibaba, increasingly a clone of Amazon.com behind the great firewall. (Revenue from cloud tripled year-on-year in the most recent quarter, although it’s still only $153m.) Softbank will own 60% of the joint venture, whose first task will be to build a big data centre.

It will be tough to shake NTT’s grip though. Its full-year results were formidable to say the least.

Amazon.com has invested in a new submarine cable from the US to Australia and New Zealand, the third major system on that route. Interestingly, it lands in Oregon specifically to be close to the cloud cluster around the hydroelectric dams of the Bonneville Power Administration.

Meanwhile, AWS announced a new product, the Application Discovery Service, which digs through your network to find whatever random apps might be in there.

Here’s an interesting interview about the future of SDN and NFV - it may be necessary to get rid of the notion of a virtual machine, and even move beyond containers.

And Dan Rayburn updates North American IP transit pricing - down 10% year-on-year, again.

What happens to the data? This week’s leaks; 100m ABP users

So we put all the data in the cloud. But that wasn’t the whole story. We put the data in a bubble, and the bubble put it in the cloud! When the bubble bursts, the data will still be there. In the cloud. The Atlantic reports on exactly what happens when a unicorn stuffed with other people’s data goes bust. Data might be one of the most valuable assets left in the company, and it’s easy to imagine someone unscrupulous simply buying it from the official receiver.

Hell, if there were to be a proper .com crunch, you could make a business model of going round failed companies buying data sets up in bulk and cross-indexing them! Fortunately there is a precedent for the FTC to get involved and require that the data only be transferred to a company in the same line of business.

Danish researchers scraped 70,000 records from OKCupid and uploaded them to a public repository of scientific papers. Who thought that was a good idea? Meanwhile, it turns out that Runkeeper doesn’t stop tracking your movements when you stop running, and in fact it sells them to advertisers.

The Internet of Doorbells that let other people watch the inside of your house on CCTV.

Facebook, Twitter, and Google all face a lawsuit in France demanding that they do a better job of getting rid of anti-Semitic uploads.

Here’s a really terrible backdoor left in some cheap Android devices. Claims spammer generated
17.5m robocalls, fined £250k, went bust and won’t pay it.

Joint FTC/FCC action on Android security patches. Adblock Plus is up to 100 million users. And General Motors is trying to rush a V2V system into production before any of the security features have been completed. Why do they insist on vehicle-to-vehicle comms rather than radar or lidar? Because only with the comms option can you sell advertising!

Cable, the future of 5G? Detail on AT&T 5G plans; full duplex on test; Nokia Q1; China Unicom upgrades

Dave Burstein makes an important point here - future WiFi and 5G technology is likely to be very disruptive for cablecos, because they have so many potential access points in people’s homes, hooked to DOCSIS 3.1 gigabit backhaul. A potential Virgin/O2 deal should be seen in this light too.

VZW and AT&T are both saying that they expect 5G to include massive, multiple-user MIMO and they see this as even more important than millimetre wave technology. More specifically, AT&T is planning to start testing this summer at 15GHz, add 28GHz later on, and then add the 3.5GHz and lower at the same time as mobility is added to the tests, in early 2017. Meanwhile, the AT&T engineers will be spending most of this year rolling out 2.3GHz LTE in volume, getting started on the 1.7 and 2.1GHz bands in 2017.

Telecom Italia has a full-duplex radio system in field trials, using the technology developed by Kumu Networks, a company funded by both Verizon and Cisco.

Nokia has been testing MuLTEFire with Saudi Telecom. They also had a very mixed Q1 - net sales were down 8%, but operating profit was up 25%.

Turkey has reached 40m 4G subscribers, a month from launch. The question is, will this “launch by stealth” approach - the phones had the capability already, you didn’t need to get a “4G phone” - work for 5G?

China Unicom is planning to spend $2.2bn on its network in Shanghai alone, notably adding a lot of FTTH and 3-band carrier aggregation.

Vodafone says NB-IoT is coming next year.

Sprint and Amazon, Sprintlink for sale? Malone free of FCC conditions; 900MHz for NB-IoT; FirstNet going nowhere, still

The price war takes another twist. Sprint is offering a plan with 40GB of shared LTE data, plus a year of Amazon Prime membership. Question: is it reselling the Amazon service, or is Amazon spending some customer acquisition money? T-Mobile, not surprisingly, responded by bringing back another big-bundle plan.

It’s dawning on everyone that Sprint’s announcements last week basically mean no significant investment this year. There’s an argument here that it thinks the network is fixed, and it is concentrating purely on selling. The alternative would be that it is quite simply desperate for cash. The enterprise wireline/global carrier division, Sprintlink as was, has been reorganised to give it full P&L responsibility, which looks a lot like “prepared to be sold off”.

Republic Wireless, meanwhile, looks like it’s going to ditch Sprint for T-Mobile as its wholesale partner.

This is interesting: the California state PUC signed off the Charter/TWC/Bright House deal, which can now close. But guess who doesn’t have any FCC conditions at all? John Malone, despite the fact he personally owns 18 per cent of New Charter and a whole bunch of other cable and content assets.

Comcast, meanwhile, has bought a French programmatic advertising company.

The FCC is holding a public workshop to demonstrate how the 600MHz reverse auction will work, right down to the actual web application used.

The regulator is also keen to get the people who own 900MHz M-LMS spectrum to hand it over, or else find a use for it. This allocation was created to support a vehicle-tracking and navigation technology that was never deployed because GPS was cheaper and better. Now, the long-range, wall-busting 900MHz looks very valuable indeed, and the FCC wants it put to good use or else handed back. One of the owners has filed for a licence change to let them run NB-IoT in the band. Sounds interesting.

Sigfox says it’s going to cover 100 US cities by the end of the year.

The FirstNet emergency services/universal broadband show rolls on but it’s still not making any progress.

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